Slide 1: Q1'24 Financial Results
Q1’24 FINANCIAL RESULTS Jim Heppelmann CEO Neil Barua CEO-elect Kristian Talvitie CFO January 31, 2024
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 expected effects of strategic investments and initiatives. Because such statements deal with future ev
Slide 3: Jim Heppelmann, CEO
JIM HEPPELMANN, CEO 4
Slide 4: Neil Barua, CEO-elect
NEIL BARUA, CEO-ELECT 4
Slide 5: Agenda for Today's Call
What I have learned about PTC Drivers of PTC’s durable and consistent growth Driving further value creation through AGENDA disciplined and consistent execution FOR TODAY’S CALL Q1’24 results and guidance for FY’24 and Q2’24 – Kristian will cover Question and answer session 5
Slide 6: Digital transformation at product companies is driving demand for our core offerings
Digital transformation at product companies is driving demand for our core offerings \ 6
Slide 7: Product companies have started to leverage product data across their organizations
PRODUCT COMPANIES HAVE STARTED TO LEVERAGE PRODUCT DATA ACROSS THEIR ORGANIZATIONS Cross-functional transformations Manufacturing Efficiency typically outperform their single- function counterparts by 30-40%* PRODUCT DATA Engineering from CAD & PLM Service Excellence Optimization Improved collaborat
Slide 8: The PTC Team is strong and capable
France Hungary The PTC Team is strong India Japan and capable Romania South Korea Spain 8 8
Slide 9: Leadership Continuity
LEADERSHIP CONTINUITY JAMIE PAPPAS KEVIN WRENN MARTIN INGRAM STEVE DERTIEN DAVID KATZMAN CATHERINE KNIKER Chief Revenue Officer Chief Product Officer Chief Digital Chief GM, Velocity Chief Strategy and Information Officer Technology Officer Group and Marketing Officer MIKE DITULLIO KRISTIAN TALVITIE
Slide 10: Sustainability of PTC's Top-Line Growth
SUSTAINABILITY OF PTC’S TOP-LINE GROWTH PTC: Double-Digit ARR Growth1 Every Year Since FY’17 $ in Accretive Growth in SLM with ServiceMax millions 23% $2,000 16% Accretive Growth in ALM with Codebeamer $1,500 17% 12% 12% 11% On-Premise to SaaS Strategy for Core CAD/PLM Mid- $1,000 13% Specific Teens
Slide 11: Sustainability of PTC's Bottom-Line Growth
SUSTAINABILITY OF PTC’S BOTTOM-LINE GROWTH PTC: 20% Operating Efficiency1 Expansion between FY’16 and FY’23 38% Operational Rebalancing 40% 32% 28% 29% 30% 26% Aligning to SaaS Principles and Best Practices 20% 21% 20% 18% 10% Improving Commercial Discipline 40%+ Specific to PTC: Mid-Term 0% Layers
Slide 12: Disciplined and Consistent Execution Across the Largest Value Creation Opportunities
DISCIPLINED AND CONSISTENT EXECUTION ACROSS THE LARGEST VALUE CREATION OPPORTUNITIES PLM ALM SLM CAD SaaS Product Lifecycle Application Lifecycle Service Lifecycle Computer Aided Converting our Management Management Management Design installed base 12
Slide 13: It Is an Exciting Time to Be at PTC
IT IS AN EXCITING TIME TO BE AT PTC STRONG CLEAR PATH FOUNDATION TO UNLOCKING TO BUILD ON FURTHER VALUE Strong portfolio Prioritizing time and strategy and resources Positioned to Enhancing deliver durable execution on the and consistent opportunities that ARR and FCF drive the most growth value 13
Slide 14: Kristian Talvitie, CFO
y y yo y (GW KRISTIAN TALVITIE,CFO y y
Slide 15: Solid ARR and Cash Flow Results
SOLID ARR AND CASH FLOW RESULTS ARR: Solid growth across geographic regions and product groups $ in millions Q1'24 Q1'23 YoY Change Q1'24 Guidance ARR as reported $2,057 $1,663 24% Constant currency ARR $2,016 $1,636 23% $1,995 - $2,010 Organic ARR as reported1 $1,883 $1,663 13% Organic constant cur
Slide 16: Solid ARR Results Across Geographic Regions
SOLID ARR RESULTS ACROSS GEOGRAPHIC REGIONS Q1’24 compared to Q1’23 Europe Americas 26% growth; 16% organic 25% growth; 12% organic Constant currency: APAC Constant currency: 23% growth; 13% organic 15% growth; 10% organic 25% growth; 12% organic Constant currency: 20% growth; 14% organic Inorganic
Slide 17: Solid ARR Results Across Product Groups
SOLID ARR RESULTS ACROSS PRODUCT GROUPS CAD: Product data authoring PLM: Product data management software and process orchestration software $ in millions $ in millions $1,252 $1,231 +34% +33% YoY YoY $936 $924 $805 $785 $727 $712 +11% +10% YoY YoY As Constant Reported Currency Q1'23 Q1'24 Q1'23 Q1'
Slide 18: Balance Sheet and Share Repurchases
BALANCE SHEET AND SHARE REPURCHASES Balance sheet as of December 31, 2023 Cash and cash equivalents of $265 million Gross debt of $2.267 billion with an aggregate interest rate of 5.7% comprised of: $1.0 billion of senior notes with an aggregate interest rate of 3.8%, $500 million term loan with a v
Slide 19: FY'24 and Q2'24 Guidance
FY’24 AND Q2’24 GUIDANCE FY’24 YoY FY’24 Previous FY’24 Q2’24 $ in millions Growth Guidance Guidance Guidance Guidance Constant currency ARR (FY'24 Plan FX rates)1 $2,190 - $2,250 $2,190 - $2,250 11% - 14% $2,050 - $2,065 Operating cash flow ~$745 ~$745 ~22% ~$245 Free cash flow2 ~$725 ~$725 ~23% ~$
Slide 20: Q2'24 Illustrative Constant Currency ARR Model
Q2’24 ILLUSTRATIVE CONSTANT CURRENCY ARR MODEL What does PTC need to deliver to achieve the midpoint of Q2’24 constant currency ARR guidance? Using FX rates as of September 30, 2023 What you need to Actual Actual Actual Actual Actual Actual Actual Actual Actual believe $ in millions Q1'22 Q2'22 Q3'2
Slide 21: FY'24 Illustrative Constant Currency ARR Model
FY’24 ILLUSTRATIVE CONSTANT CURRENCY ARR MODEL What does PTC need to deliver to achieve the midpoint of FY’24 constant currency ARR guidance? Using FX rates as of September 30, 2023 What you need to Actual Actual Actual believe $ in millions FY'21 FY'22 FY'23 FY'24 Beginning ARR $ 1,179 $ 1,379 $ 1,
Slide 22: Q&A
Q&A
Slide 23: Thank You
THANK YOU ptc.com
Slide 24: Appendix: FY'24 Guidance and Mid-Term Targets Assumptions
APPENDIX: FY’24 GUIDANCE AND MID-TERM TARGETS INCLUDE THE FOLLOWING ASSUMPTIONS We provide ARR guidance on a constant currency basis, using our FY’24 Plan foreign exchange rates (rates as of September 30, 2023) for all periods. Foreign exchange fluctuations during Q1’24 had a favorable impact on our
Slide 25: Appendix: FX Impact on ARR
APPENDIX: FX IMPACT ON ARR Using FY'24 Plan FX rates as of Sept 30, 2023 FY'23 FY'24 In millions Quarter Ended Quarter Ended 31-Mar 30-Sep Guidance Guidance Constant Currency ARR by Product Group 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec Midpoint 30-Jun Midpoint CAD (product data authoring) $ 712 $ 730 $ 7
Slide 26: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this document that are not historic facts, including statements about our future financial and growth expectations and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ m
Slide 27: Operating Measures
OPERATING MEASURES ARR: ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, cloud, SaaS, and support contracts as of the end of the reporting period. We calculate ARR as follows: We consider a contract to be active when the product or service contr
Slide 28: Operating Measures Continued
OPERATING MEASURES CONTINUED As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total
Slide 29: Non-GAAP Financial Measures
NON-GAAP FINANCIAL 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 view of our op
Slide 30: Reconciliation of Non-GAAP Financial Measures to GAAP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP ARR: Reported vs. Constant Currency In millions FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 ARR (as reported) 807 914 1,010 1,111 1,264 1,468 1,572 1,979 ARR (constant currency using FY'23 Plan Rates) 739 832 930 1,043 1,156 1,353 1,572 1,941