Slide 1: Q4'23 and FY'23 Financial Results
Q4’23 AND FY’23 FINANCIAL RESULTS Jim Heppelmann CEO Neil Barua CEO-elect Kristian Talvitie CFO November 1, 2023
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: Q4'23 and FY'23 Highlights
Q4’23 AND FY’23 HIGHLIGHTS JIM HEPPELMANN, CEO
Slide 4: Solid Top-Line Results
SOLID TOP-LINE RESULTS ARR Q4'23 $ in millions Q4'23 Q4'22 YoY Change Guidance ARR as reported $1,979 $1,572 26% Constant currency ARR $1,941 $1,572 23% $1,935 - $1,950 1 Organic ARR as reported $1,807 $1,572 15% Constant currency organic ARR1 $1,770 $1,572 13% Broad-based strength across product gr
Slide 5: Solid Bottom-Line Results
SOLID BOTTOM-LINE RESULTS CASH FLOW Cash flow growth driven by ARR growth and operating efficiency1 expansion Q4'23 $ in millions Q4'23 Q4'22 YoY Change Guidance Operating cash flow $50 $38 29% ~$44 Free cash flow $44 $29 52% ~$42 Operational changes and solid execution continue to generate the posi
Slide 6: Solid ARR Results Across Geographic Regions
SOLID ARR RESULTS ACROSS GEOGRAPHIC REGIONS Q4’23 compared to Q4’22 Europe Americas 31% growth; 21% organic 25% growth; 12% organic Constant currency: APAC Constant currency: 24% growth; 13% organic 16% growth; 10% organic 25% growth; 12% organic Constant currency: 18% growth; 12% organic Inorganic
Slide 7: Solid ARR Results Across Product Groups
SOLID ARR RESULTS ACROSS PRODUCT GROUPS1 CAD: Product data authoring PLM: Product data management software and process orchestration software $ in millions $ in millions (constant currency) 12% YoY (constant currency) 36% YoY $752 10% YoY CC $1,188 34% YoY CC $685 14% ServiceMax $887 Q4'22 Q4'23 Q4'
Slide 8: Durable and Consistent Growth
DURABLE AND CONSISTENT GROWTH NEIL BARUA, CEO-ELECT
Slide 9: CEO Succession Going Well
CEO SUCCESSION GOING WELL Moved from California to Boston Started world tour with Jim Met with customers, partners, employees, and investors Great company with a strong foundation, and I’m excited about our future 9
Slide 10: Sustainability of PTC's Top-Line Growth
SUSTAINABILITY OF PTC’S TOP-LINE GROWTH PTC: Double-Digit ARR1 Growth 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: Summary of FY'24 Guidance and Mid-Term Targets
SUMMARY OF FY’24 GUIDANCE AND MID-TERM TARGETS Subscription license model provides improved business durability and consistency over time FY'24 Growth $ in millions FY'24 Guidance FY'25 Targets FY'26 Targets Guidance ARR at constant currency $2,190 - 2,250 11% - 14% Mid-teens % growth Mid-teens % gr
Slide 13: Q4'23 and FY'23 Financial Review
Q4’23 AND FY’23 FINANCIAL REVIEW KRISTIAN TALVITIE, CFO
Slide 14: Q4'23 and FY'23 Results vs Prior Year
Q4’23 AND FY’23 RESULTS VS PRIOR YEAR $ in millions CONSTANT CURRENCY ARR CASH FLOW 1 REVENUE Constant Currency ARR 40% 41% Revenue 23% $611 $587 8% $1,941 $2,097 9% $435 $1,933 ServiceMax $416 $1,572 $435 8% 29% 52% $508 $547 $38 $29 $50 $44 Q4'22 Q4'23 Q4'22 FY'22 Q4'23 FY'23 Q4'22 FY'22 Q4'23 FY'
Slide 15: Balance Sheet and Share Repurchases
BALANCE SHEET AND SHARE REPURCHASES Balance sheet as of September 30, 2023 Cash and cash equivalents of $288 million Gross debt of $2.322 billion with an aggregate interest rate of 5.7%; paid down $43 million of debt in Q4’23 $1.0 billion of senior notes with an aggregate interest rate of 3.8% $500
Slide 16: A Look Back at Results Versus Initial FY'23 Guidance
A LOOK BACK AT RESULTS VERSUS INITIAL FY’23 GUIDANCE Solid FY’23 results, despite the macroeconomic environment FY'23 Initial FY’23 Initial FY'23 FY'23 $ in millions Growth Guidance Guidance Actual Growth Actual Results (Organic) (Organic) (with ServiceMax) (with ServiceMax) Constant currency ARR (F
Slide 17: FY'24 Guidance and Mid-Term Targets
FY’24 GUIDANCE AND MID-TERM TARGETS KRISTIAN TALVITIE, CFO
Slide 18: FX Dynamics: Impact to ARR
FX DYNAMICS: IMPACT TO ARR ARR as reported includes significant impacts due to foreign exchange rate fluctuations Using FY'23 Plan FX rates as of Sept 30, 2022 FY'22 FY'23 In millions Quarter Ended Quarter Ended Constant Currency ARR by Product Group 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun
Slide 19: Recast Constant Currency ARR History for Comparability
RECAST CONSTANT CURRENCY ARR HISTORY FOR COMPARABILITY IN FY’24 RECAST - Using FY'24 Plan FX rates as of Sept 30, 2023 FY'22 FY'23 In millions Quarter Ended Quarter Ended Constant Currency ARR by Product Group 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep CAD (product data authoring) $ 645
Slide 20: FY'24 and Q1'24 Guidance
FY’24 AND Q1’24 GUIDANCE FY’24 YoY FY’23 FY’24 Q1’24 $ in millions Growth Actual Results Guidance Guidance Guidance Constant currency ARR (FY'24 Plan FX rates)1 $1,979 $2,190 - $2,250 11% - 14% $1,995 - $2,010 Operating cash flow $611 ~$745 ~22% ~$185 Free cash flow2 $587 ~$725 ~23% ~$180 Revenue $2
Slide 21: Investing in Growth While Delivering Solid FCF
INVESTING IN GROWTH WHILE DELIVERING SOLID FCF Free Cash Flow1 Non-GAAP R&D1 in millions in millions $800 $400 $700 $350 $600 $300 $500 $250 $400 $200 $300 $150 $200 $100 $100 $50 $0 $0 Free Cash R&D Flow Non-GAAP 1 Refer to the Non-GAAP reconciliation tables on slides 33 and 34 21
Slide 22: 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 23: Q1'24 Illustrative Constant Currency ARR Model
Q1’24 ILLUSTRATIVE CONSTANT CURRENCY ARR MODEL What does PTC need to deliver to achieve the midpoint of Q1’24 constant currency ARR guidance? Using FX rates as of September 30, 2023 What you need to Actual Actual Actual Actual Actual Actual Actual Actual believe $ in millions Q1'22 Q2'22 Q3'22 Q4'22
Slide 24: FY'24 Illustrative Free Cash Flow Model
FY’24 ILLUSTRATIVE FREE CASH FLOW MODEL1 What does PTC need to deliver to achieve FY’24 free cash flow guidance? $ in millions FY'23 Actual FY'24 Illustrative Comments Annual Run Rate (ARR) $ 1,979 $ 1,979 $ 2,200 $ 2,200 For FY'24, using midpoint of constant currency ARR guidance range Perpetual re
Slide 25: Mid-Term Targets
MID-TERM TARGETS $ in millions FY'25 Targets FY'26 Targets ARR at constant currency Mid-teens % growth Mid-teens % growth Operating cash flow $850 - $900 ~$1,025 Free cash flow1 $825 - $875 ~$1,000 External factors that could positively or negatively impact mid-term targets include Macroeconomic env
Slide 26: Our Mid-Term Free Cash Flow Targets in Context
OUR MID-TERM FREE CASH FLOW1 TARGETS IN CONTEXT Extending our track record of strong free cash flow growth; factoring in cash taxes and interest FY’21 through FY’23 Actuals FY’24 through FY’26 Targets and Expectations 40% 3-year Free Cash Flow CAGR ~20% 3-year Free Cash Flow CAGR Driven by: Driven b
Slide 27: Durable and Consistent Growth
DURABLE AND CONSISTENT GROWTH STRONG PORTFOLIO STRONG MARGIN SOLID ARR AND FCF AND STRATEGY EXECUTION EXPANSION GROWTH Portfolio of products is FY’24 forecasted to be our Hiring and investing in-line Targeting mid-teens % unique and compelling 8th consecutive year of with macroeconomic constant curr
Slide 28: 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. We expect churn to remain low. For cash flow, due to invoicing seasonalit
Slide 29: 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, guidance, and targets, and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cau
Slide 30: 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 31: 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 32: 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 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 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) 739 832 930 1,043 1,156 1,353 1,572 1,941 R&D Expense: GAAP vs. Non-GAAP In millions FY'08 FY
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Free Cash Flow In millions FY'93 FY'94 FY'95 FY'96 FY'97 FY'98 FY'99 FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 Net cash provided by (used in) operating activities $49 $84 $119 $237 $196 $182 $151 $52 $51 ($23) $6 $101 $130 $65 $127 $222 Capital expenditures (8) (
Slide 35: Thank You
DIGITAL TRANSFORMS PHYSICAL THANK YOU ptc.com o9o00