Slide 1: Q3'22 Financial Results
Q3’22 FINANCIAL RESULTS Investor Relations July 27, 2022
Slide 2: Forward Looking Statements
2 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
Slide 3: Q3'22 Highlights
Q3’22 HIGHLIGHTS JIM HEPPELMANN – PRESIDENT & CEO
Slide 4: Strong Q3'22 Financial Results
4 STRONG Q3’22 FINANCIAL RESULTS Top Line Bottom Line ARR in Q3 Cash Flow in Q3 $1.54 billion, up 9% YoY $117 million cash from operations, up 33% YoY $1.63 billion constant currency, up 16% YoY $112 million free cash flow, up 33% YoY $1.61 billion organic constant currency $132 million adjusted fre
Slide 5: Strong Q3'22 Bookings Performance
5 STRONG Q3’22 BOOKINGS PERFORMANCE Strength in both Digital Thread and Velocity, driven by demand for digital transformation and SaaS Top Line Bookings High-20s % organic constant currency bookings growth YoY Digital Thread strength led by Core (CAD and PLM) and FSG, with strong growth in the Ameri
Slide 6: Our Business Model: ARR and Bookings Dynamics
6 OUR BUSINESS MODEL: ARR AND BOOKINGS DYNAMICS Q3’22 Constant Currency ARR Growth YoY Illustrative ARR Scenarios In millions ARR (Illustrative) Growth In millions 16% growth Base case ARR beginning of year $1,500 Bookings $300 Churn ($100) ARR end of year $1,700 13% Like 2009 Great Recession ARR be
Slide 7: Margin Opportunity Is Expanding
7 MARGIN OPPORTUNITY IS EXPANDING Organizational optimization J-Curve businesses are scaling into produces near-term expansion profitability over the mid-term PTC Overall PTC Startups Change in Customer Success reduces Velocity: Arena is profitable, Onshape at inefficiency while improving customer s
Slide 8: Strong ARR Performance Across Geographies
8 STRONG ARR PERFORMANCE ACROSS GEOGRAPHIES Americas1 Strength across all product groups, including double-digit growth in Digital Thread – Core 14% growth 5% growth and mid-20s % growth in Velocity 14% growth CC 1 17% growth CC 1 Europe1 4% growth Strength across all product 16% growth CC 1 groups,
Slide 9: Digital Thread ARR Performance
9 DIGITAL THREAD ARR PERFORMANCE 1 In millions (constant currency) Core Growth FSG 6% YoY 13% YoY 11% YoY $1,110 14% YoY CC 19% YoY CC 17% YoY CC $976 $214 $213 $180 $181 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 CAD and PLM both grew in the ARR growth near “2 handle” Organic constant currency growth doub
Slide 10: FSG: Codebeamer Is Off to a Strong Start
10 FSG: CODEBEAMER IS OFF TO A STRONG START Best-in-class ALM (Application Lifecycle Management) capability and usability High demand in regulated industries, including automotive and medical devices Targeting Digital Thread revenue and cost synergies Expect FSG to sustain mid-single digit constant
Slide 11: Vestas
11 VESTAS Challenge With more than 154 GW of wind turbines in 87 countries, Vestas has installed more wind power than anyone else. Vestas needs to manage the growing challenge of product complexity, while driving improvements in product and process quality. Solution Vestas is leveraging PTC’s Digita
Slide 12: Velocity ARR Performance
12 VELOCITY ARR PERFORMANCE 1 In millions (constant currency) 29% YoY ▪ Cloud-native, pure-SaaS, CAD/PLM 29% YoY CC market leader $89 ▪ Low-40s % Onshape ARR growth $69 driven by upsell/expansions and improved churn rate ▪ Mid-20s % Arena ARR growth driven by upsell/expansions, new logos, and improv
Slide 13: Wavemaker Labs
13 WAVEMAKER LABS Challenge Wavemaker Labs needed an integrated SaaS CAD and PLM solution to improve concurrent engineering across multiple portfolio companies. Solution The Onshape CAD and Arena PLM solutions enable the Wavemaker Labs team to design more quickly and efficiently, and manage the enti
Slide 14: Upcoming Investor Events
14 UPCOMING INVESTOR EVENTS November 17, 2022 May 15 – 16, 2023 FY’23 Investor Day (virtual) LiveWorx (in-person in Boston) Focused on financial plan for Focused on strategy and customers FY’23 and beyond Large global event with customers, partners, investors, and employees Dedicated investor track,
Slide 15: Wrap Up
15 WRAP UP STRONG POSITIONED TO STRONG PROFITABILITY PORTFOLIO DRIVE STRONG EXECUTION EXPANSION AND STRATEGY GROWTH Portfolio of products is Strong YTD results Optimized SaaS Business model, market unique and compelling operational model position, and execution Forecasted to be our 5th support conti
Slide 16: Q3'22 Financial Review
Q3’22 FINANCIAL REVIEW KRISTIAN TALVITIE – EVP & CFO
Slide 17: Q3'22 Results vs Prior Year
17 Q3’22 RESULTS VS PRIOR YEAR In millions Constant Currency ARR Cash Flow1 Revenue 16% $1,625 6% $16 $462 Codebeamer 33% 23% $436 $1,406 33% $132 $117 $112 $107 $88 $85 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 ARR growth of 9%, 16% constant Cash flow performance reflects Revenue growth of 6%, 12% consta
Slide 18: Balance Sheet and Share Repurchases
18 BALANCE SHEET AND SHARE REPURCHASES Strong balance sheet as of June 30, 2022 Cash and cash equivalents of $322 million Gross borrowings of $1.434 billion with an aggregate interest rate of 3.5% $1.0 billion of senior notes with an aggregate interest rate of 3.8% $434 million drawn on revolving cr
Slide 19: FX Dynamics: Impact to ARR
19 FX DYNAMICS: IMPACT TO ARR FY'21 FY'22 ARR by Product Group (Constant Currency) Qtr Ended Qtr Ended 30-Sep Using FX rates as of September 30, 2021 Guidance 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun Midpoint (in millions) ARR by Product Group: Digital Thread - Core $ 940 $ 956 $ 976 $ 1,013
Slide 20: FX Dynamics: ARR Sensitivity to EUR/USD and USD/Yen
20 FX DYNAMICS: ARR SENSITIVITY TO EUR/USD AND USD/YEN In millions End of Q3'22 ARR base $1,544 Estimated impact of $0.10 change in EUR/USD rate $38 Estimated impact of 10 Yen change in USD/JPY rate $8 As of the end of Q3’22 Approximately 50% of our ARR is transacted in USD Approximately 25% of our
Slide 21: Financial Impact of Codebeamer and DxP Services
21 FINANCIAL IMPACT OF CODEBEAMER AND DxP SERVICES Constant Currency ARR: $16 million increase in Q3’22, due to Codebeamer Free Cash Flow: Expected to be immaterial in FY’22 and accretive in FY’23
Slide 22: FY'22 and Q4'22 Guidance
22 FY’22 AND Q4’22 GUIDANCE 1 FY’22 Previous FY’22 FY’22 YoY Growth Q4’22 In millions except percentages Guidance Guidance Guidance Guidance ARR at Constant Currency 2 $1,640 - $1,665 $1,660 - $1,690 13% - 15% $1,660 - $1,690 Cash from Operations ~$430 ~$430 ~17% ~$35 Free Cash Flow ~$405 ~$410 ~19%
Slide 23: FY'22 Illustrative Constant Currency ARR Model
23 FY’22 ILLUSTRATIVE CONSTANT CURRENCY ARR MODEL What does PTC need to deliver to achieve the midpoint of constant currency ARR guidance? What you need to Actual Actual Actual Actual Actual Actual Actual believe in millions Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Beginning ARR 1,258 1,302 1
Slide 24: FY'22 and Q4'22 Guidance Assumptions
24 FY’22 AND Q4’22 GUIDANCE ASSUMPTIONS We provide ARR guidance on a constant currency basis, using our FY’22 Plan foreign exchange rates (rates as of September 30, 2021) for all periods. Unfavorable changes in foreign exchange rates have been a headwind to our reported ARR. At end of Q3’22 foreign
Slide 25: Forward-Looking Statements
25 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 actua
Slide 26: Operating Measures
26 OPERATING MEASURES ARR: We provide an ARR (Annual Run Rate) operating measure to help investors understand and assess the performance of our business as a SaaS and on-premise subscription company. ARR represents the annualized value of our portfolio of active subscription software, cloud, SaaS, a
Slide 27: Non-GAAP Financial Measures
27 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
Slide 28: Non-GAAP Reconciliation
28 NON-GAAP RECONCILIATION In millions Q3'22 Q3'21 Cash from Operations $116.8 $88.0 Capex ($4.5) ($3.4) Free Cash Flow $112.3 $84.6 Restructuring payments $10.2 $2.0 Transaction-related payments $9.7 $3.8 Non-ordinary course tax payments - $16.9 Adjusted Free Cash Flow $132.1 $107.3
Slide 29: Thank You
DIGITAL TRANSFORMS PHYSICAL THANK YOU ptc.com Go900