Slide 1: Q3'21 Earnings Presentation
Q3’21 Investor Relations EARNINGS PRESENTATION July 28, 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation includes forward looking statements regarding PTC’s future financial performance, strategic outlook and expectations, anticipated future operations, and products and markets. Because such statements deal with future events, actual results may differ mater
Slide 3: Q3'21 Highlights
Q3’21 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO 3
Slide 4: Track Record of Results
TRACK RECORD OF RESULTS ARR GROWTH FSG Core Growth • Delivering double-digit ARR growth over past ~14%- 16% 14% three years and on track to achieve guidance 12% 10% range for FY’21. • Consistent cash generation and on track to achieve target operating cash flow ~$365M and FCF ~$340M in FY’21. FY'18
Slide 5: Delivering Shareholder Value
DELIVERING SHAREHOLDER VALUE • Solid Q3’21 bookings growth in the mid – 30% driven by secular tailwinds. Market • Industrial Digital Transformation catalyzed by pandemic-driven operational challenges. Demand • Customers creating frictionless supply chains, connecting products and factories, bringing
Slide 6: How Digital Transforms Physical
HOW DIGITAL TRANSFORMS PHYSICAL DIGITAL DIGITAL DIGITAL DIGITAL Defines Manages Connects Augments PHYSICAL PHYSICAL PHYSICAL PHYSICAL DIGITAL THREAD CAD PLM IIoT AR SaaS DIGITAL Disrupts PHYSICAL 6
Slide 7: Product Group ARR Performance
PRODUCT GROUP ARR PERFORMANCE Focused Solutions Group Core Product Group Growth Product Group ARR ARR ARR +14% YoY +11% YoY CC +60% YoY +4% YoY +57% YoY CC +1% YoY CC Q3'20 Q3'21 Q3'20 Q3'21 Q3'20 Q3'21 • Q3’21 ARR increased 4% YoY (1% CC). • Q3’21 ARR growth of 14% YoY (11% CC) in line • Q3’21 ARR
Slide 8: CAD Highlights
CAD HIGHLIGHTS • Consistent performance across all geos with ARR growth in the low double digits (high single digits CC). • Creo Simulation Live continues to gain traction, driven by migration to Creo 7, with increasing expansions. • Launched Creo 8, which includes the Generative Design Extension mo
Slide 9: CAD / HPE COXA
Creo Advanced Simulation & Analysis CAD / HPE COXA The Challenge Inefficiencies due to a multi-step, multi-software approach to design were causing miscommunication between design and analyst teams, stalled production times, and customer satisfaction risks. The Solution The fully integrated generati
Slide 10: PLM Highlights
PLM HIGHLIGHTS • Mid-teens ARR growth as reported (low- teens CC) continues to outpace market growth. • Growth across all geos, especially Americas and APAC. • Broad-based strength across customer base. • Increasing demand for PLM through Microsoft alliance.
Slide 11: Cellcentric
Digital Thread in Automotive CELLCENTRIC The Challenge • As the deadline of becoming an independent entity loomed on the horizon, Cellcentric knew they needed a PLM backbone in place - and fast. The Solution • The IT strategy included establishing a best-in-class application landscape for both PLM a
Slide 12: IoT Highlights
IOT HIGHLIGHTS • High teens ARR growth as reported (and CC) driven by strength in Europe and APAC. • Rockwell Automation was the largest reseller of IoT in the quarter. • High customer adoption of integrated PTC/Rockwell Factory Talk Innovation Suite.
Slide 13: Eaton
Smart Connected Operations EATON The Challenge Manufacturers have two paths to digital transformation. They can either develop unique applications for each manufacturing facility—which would produce inconsistent results—or they can focus on common, high impact use cases that drive value at scale. Th
Slide 14: AR Highlights
AR HIGHLIGHTS • ARR growth of over 50% as reported (and CC) with strong performance in the Americas. • Momentum cross-selling as part of larger PTC portfolio. • Introduced Vuforia Instruct, a SaaS-based solution for creation and delivery of augmented 3D work instructions to optimize inspection proce
Slide 15: Stannah
Improving Purchase Confidence STANNAH The Challenge A residential stairlift is a significant investment and is difficult for customers to picture in their homes and as part of their daily lives. The Solution Stannah leveraged Vuforia Engine to create an application for their sales team that would al
Slide 16: Onshape Highlights
ONSHAPE HIGHLIGHTS • ARR growth of over 40% as reported (and CC). • Strong performance in commercial, with increases in average deal size and strong renewals. • Strong pipeline heading in Q4’21 on both commercial and enterprise. • Expanding customer base in the Education market.
Slide 17: Onshape / Delta Development
ONSHAPE / DELTA DEVELOPMENT Challenge Delta Development was seeking to reduce its IT overhead, which was taking up 20% of the team’s product design time. Solution Delta Development switched from an on- premise CAD system to the Onshape Software- as-a-Service (SaaS) product design platform, eliminati
Slide 18: Arena Highlights
ARENA HIGHLIGHTS • ARR growth of over 20% as reported (20% CC). • Renewal rates remained high. • Strong expansion and increasing penetration into current customers. • Europe office and initial GTM presence established.
Slide 19: Arena / NEXTracker
ARENA / NEXTRACKER Improve Traceability and Product Introduction Arena Challenge NEXTracker needed to modify its product development practices. The company did not have a single source to track and manage its engineering design and development processes. Solution Arena’s cloud-based PLM solution all
Slide 20: Regional ARR Performance
REGIONAL ARR PERFORMANCE • Americas ARR (CC) growth driven by solid Core performance and Arena. • Europe ARR (CC) growth consistent +21% growth +15% growth with prior several quarters, with strength in Core and improving +21% growth CC +9% growth CC growth in IoT. +19% growth • APAC delivered the fo
Slide 21: Summary
SUMMARY • Strong execution in the quarter with 18% ARR growth (15% CC). • Bookings growth across all geos, consistent with improving PMI numbers and despite continued macroeconomic uncertainty. • Core businesses continue to outpace market growth. • Growth businesses delivered more than 20% YoY organ
Slide 22: Financial Review
FINANCIAL REVIEW KRISTIAN TALVITIE – EVP AND CFO 22
Slide 23: Q3'21 Results vs Prior Guidance
Q3’21 RESULTS VS PRIOR GUIDANCE ARR 14 - 16% Cash Flow ~55% 18% ~60% $1,445 - $1,470 ~$365 • ARR growth of 18% (15% CC). $1,425 ~$340 • Organic ARR growth of 14% (11% CC). $1,205 – Fx changes positively impacted $105 $99 Q3’21 ARR growth by ~60 bps. $88 $85 • Strong operating and free cash flow in Q
Slide 24: Other Operating Performance Highlights
OTHER OPERATING PERFORMANCE HIGHLIGHTS • Strong balance sheet as of June 30, 2021 – Cash and cash equivalents totaled $366 million. – Gross borrowings of $1.5 billion. • $1.0 billion of senior notes with an aggregate interest rate of 3.8%. • $490 million of revolving credit with an interest rate of
Slide 25: FY'21 Guidance Assumptions
FY’21 GUIDANCE ASSUMPTIONS REVISED TO REFLECT CURRENCY IMPACT • Our current guidance assumes a ~60 bps positive currency effect on ARR in FY’21. • Macroeconomic conditions related to the COVID-19 crisis improve in the second-half of FY’21. • Organic ARR growth of 10% to 12% on a constant currency ba
Slide 26: FY'21 Revised Guidance
FY’21 REVISED GUIDANCE ARR Cash Flow 14 - 16% 14 - 16% ~55% • Previous ARR guidance assumed: ~55% ~60% $1,445 - $1,470 $1,453 - $1,478 ~60% ~$365 ~$365 ~$340 ~$340 – 10% - 12% organic constant currency growth $1,270 – 400 bps from Arena $234 $214 – No impact from Fx • Current ARR guidance assumes: F
Slide 27: Understanding Active and Total ARR
UNDERSTANDING ACTIVE AND TOTAL ARR1 Deferred • We expect organic Active ARR growth of 10% to 12% for FY’21. ARR 10% - 12% • We now expect ~$95 million in Deferred ARR as we Total exit fiscal 2021. Organic Active ARR • Total ARR growth, including Deferred ARR, was 12% on an organic basis due to stron
Slide 28: FY'21 Guidance Summary Table
FY’21 GUIDANCE SUMMARY TABLE Previous In millions except per share amounts Revised Guidance Guidance YoY ARR $1,445 - $1,470 $1,453 - $1,478 14% - 16% Cash from Operations ~$365 ~55% Free Cash Flow (1) ~$340 ~60% Revenue (2) $1,710 - $1,740 $1,733 - $1,763 19% - 21% GAAP Operating Margin (2) 15% - 1
Slide 29: Appendix
APPENDIX 29
Slide 30: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this press release that are not historic facts, including statements about our future financial and growth expectations and targets, and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cause actual r
Slide 31: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES PTC provides supplemental non-GAAP financial measures to its financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a
Slide 32: Non-GAAP Financial and Operating Measures
NON-GAAP FINANCIAL AND OPERATING MEASURES Operating Measures ARR - To help investors understand and assess the performance of our business as a SaaS and on-premise subscription company we provide an ARR (Annual Run Rate) operating measure. ARR represents the annualized value of our portfolio of acti
Slide 33: Unaudited Consolidated Statements of Income
PTC Inc. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended Nine Months Ended June 30, June 27, June 30, June 27, 2021 2020 2021 2020 Revenue: Recurring revenue $ 387,175 $ 310,621 $ 1,186,978 $ 931,852 Perpetual license 7,259 6,773 22,644 23,988 Pro
Slide 34: Supplemental Financial Data for Revenue and Stock-Based Compensation
PTC Inc. SUPPLEMENTAL FINANCIAL DATA FOR REVENUE AND STOCK-BASED COMPENSATION (in thousands, except per share data) Revenue by license, support and services is as follows: Three Months Ended Nine Months Ended June 30, June 27, June 30, June 27, 2021 2020 2021 2020 (1) License revenue $ 163,583 $ 118
Slide 35: Non-GAAP Financial Measures and Reconciliations
PTC Inc. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Nine Months Ended June 30, June 27, June 30, June 27, 2021 2020 2021 2020 GAAP gross margin $ 340,591 $ 272,497 $ 1,055,149 $ 817,778 Stock-based compensation 5,094 3,165 14,
Slide 36: Unaudited Condensed Consolidated Balance Sheets
PTC Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, September 30, 2021 2020 ASSETS Cash and cash equivalents $ 365,756 $ 275,458 Marketable securities - 59,099 Accounts receivable, net 432,980 415,221 Property and equipment, net 93,659 101,499 Goodwill and acquired intan
Slide 37: Unaudited Condensed Consolidated Statements of Cash Flows
PTC Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended Nine Months Ended June 30, June 27, June 30, June 27, 2021 2020 2021 2020 Cash flows from operating activities: Net income $ 51,203 $ 34,678 $ 183,980 $ 77,289 Stock-based compensation 43,068 25,185