ARR (USD Billion)

4bebd876faa122ede7cd0ea8c35c11aaca6b988a9773ae802b9bbe3709727924

| Metric [USD Million] | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Americas             | **226.9**  **[0000950170-23-002335_ptc-20221231.htm:18]**  | **256.4**  **[0000950170-23-017177_ptc-20230331.htm:24]**  | N/A     | N/A     | **267.3**  **[0000950170-24-010527_ptc-20231231.htm:6]**  | **260.6**  **[0000950170-24-052860_ptc-20240331.htm:7]**  | **253.6**  **[0000950170-24-089978_ptc-20240630.htm:7]**  | N/A     |
| Europe               | **167.2**  **[0000950170-23-002335_ptc-20221231.htm:18]**  | **209.1**  **[0000950170-23-017177_ptc-20230331.htm:24]**  | N/A     | N/A     | **197.0**  **[0000950170-24-010527_ptc-20231231.htm:6]**  | **257.3**  **[0000950170-24-052860_ptc-20240331.htm:7]**  | **170.6**  **[0000950170-24-089978_ptc-20240630.htm:7]**  | N/A     |
| Asia Pacific         | **71.8**  **[0000950170-23-002335_ptc-20221231.htm:18]**   | **76.7**  **[0000950170-23-017177_ptc-20230331.htm:24]**   | N/A     | N/A     | **86.0**  **[0000950170-24-010527_ptc-20231231.htm:6]**   | **85.1**  **[0000950170-24-052860_ptc-20240331.htm:7]**   | **94.4**  **[0000950170-24-089978_ptc-20240630.htm:7]**   | N/A     |

e755518ed89cf87cb28a4b41b6d7cfbe5ddc05ab182c463fe62b0bcde7d52f5c

6941391b702fb263a5c1cf15527cafc8b33fbed10515302ae1587dfb6d8d032c

b2d91c74fb7d7a2442c293bf40e0c1fcb8d606eb629199d46289928cb0526e2f

| Metric [Unit: USD Million] | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| License Revenue            | **172.7**  **[0000950170-23-002335_ptc-20221231.htm:29]**  | N/A     | **192.9**  **[0000950170-23-038543_ptc-20230630.htm:25]**  | N/A     | **184.0**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | **234.3**  **[0000950170-24-052860_ptc-20240331.htm:20]**  | **149.1**  **[0000950170-24-089978_ptc-20240630.htm:20]**  | N/A     |
| Support and Cloud Services Revenue | **257.7**  **[0000950170-23-002335_ptc-20221231.htm:29]**  | N/A     | **313.7**  **[0000950170-23-038543_ptc-20230630.htm:25]**  | N/A     | **330.5**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | **336.4**  **[0000950170-24-052860_ptc-20240331.htm:20]**  | **339.5**  **[0000950170-24-089978_ptc-20240630.htm:20]**  | N/A     |
| Professional Services Revenue | **35.6**  **[0000950170-23-002335_ptc-20221231.htm:29]**  | **41.1**  **[0000950170-23-017177_ptc-20230331.htm:23]**  | **35.7**  **[0000950170-23-038543_ptc-20230630.htm:25]**  | N/A     | **35.7**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | **32.3**  **[0000950170-24-052860_ptc-20240331.htm:20]**  | **30.0**  **[0000950170-24-089978_ptc-20240630.htm:20]**  | N/A     |
| Total Software Revenue     | **430.4**  **[0000950170-23-002335_ptc-20221231.htm:29]**  | **501.1**  **[0000950170-23-017177_ptc-20230331.htm:23]**  | **506.7**  **[0000950170-23-038543_ptc-20230630.htm:25]**  | N/A     | N/A     | **570.8**  **[0000950170-24-052860_ptc-20240331.htm:20]**  | **488.6**  **[0000950170-24-089978_ptc-20240630.htm:21]**  | N/A     |
| Total Revenue              | **465.9**  **[0000950170-23-002335_ptc-20221231.htm:29]**  | **542.2**  **[0000950170-23-017177_ptc-20230331.htm:36]**  | **542.3**  **[0000950170-23-038543_ptc-20230630.htm:25]**  | N/A     | **550.2**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | **603.1**  **[0000950170-24-052860_ptc-20240331.htm:20]**  | **518.6**  **[0000950170-24-089978_ptc-20240630.htm:20]**  | N/A     |
| PLM Revenue                | N/A     | **304.7**  **[0000950170-23-017177_ptc-20230331.htm:37]**  | **314.4**  **[0000950170-23-038543_ptc-20230630.htm:26]**  | N/A     | **314.7**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | N/A     | **300.3**  **[0000950170-24-089978_ptc-20240630.htm:21]**  | N/A     |
| CAD Revenue                | N/A     | **196.4**  **[0000950170-23-017177_ptc-20230331.htm:37]**  | **192.3**  **[0000950170-23-038543_ptc-20230630.htm:26]**  | N/A     | **199.8**  **[0000950170-24-010527_ptc-20231231.htm:18]**  | N/A     | **188.3**  **[0000950170-24-089978_ptc-20240630.htm:21]**  | N/A     |

16a04f9f90d15a79d5642a37ab1b96082d41a3013cfb160ce707ad924e28b9ad

| Metric (Unit) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|
| ARR (USD Billion) | $1.66  **[0000950170-23-002335_ptc-20221231.htm:28]** **[0000950170-23-002335_ptc-20221231.htm:27]**  | $1.88  **[0000950170-23-017177_ptc-20230331.htm:33]** **[0000950170-23-017177_ptc-20230331.htm:33]**  | $1.93  **[0000950170-23-038543_ptc-20230630.htm:22]** **[0000950170-23-038543_ptc-20230630.htm:22]**  | $1.98  **[0000950123-23-011049_ptc-20230930.htm:25]** **[0000950123-23-011049_ptc-20230930.htm:25]**  | $2.06  **[0000950170-24-010527_ptc-20231231.htm:16]** **[0000950170-24-010527_ptc-20231231.htm:16]**  | $2.088  **[0000950170-24-052860_ptc-20240331.htm:19]** **[0000950170-24-051256_ptc-ex99_1.htm:0]**  | $2.1261  **[0000950170-24-089978_ptc-20240630.htm:19]** **[0000950170-24-088530_ptc-ex99_1.htm:0]**  | $2.255  **[0000950170-24-127231_ptc-20240930.htm:29]** **[0000950170-24-122235_ptc-ex99_1.htm:0]**  |

d10d58a26afe270ec81baa93db2c84e3b9e5f43ca62ea2bf5bfaa9285c654bb2

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

eaf851e59e7fc2a27355bcce66a0b83593360615e859871ecf9bda66533cf01c

PTC is a global software company that specializes in providing digital solutions to transform the engineering, manufacturing, and servicing of physical products **[0000950170-24-127231_ptc-20240930.htm:4]**. The company primarily serves industries such as industrials, aerospace and defense, electronics and high tech, automotive, and medical technology and life sciences **[0000950170-24-127231_ptc-20240930.htm:4]** **[0000950170-24-127231_ptc-20240930.htm:77]**. PTC's product offerings are categorized into several key areas, including Computer-Aided Design (CAD), Product Lifecycle Management (PLM), Application Lifecycle Management (ALM), and Service Lifecycle Management (SLM) **[0000950170-24-127231_ptc-20240930.htm:4]** **[PTC_3388990_1]** **[PTC_3395346_2]**.

1. **Product Lifecycle Management (PLM)** - Offers solutions for managing the entire lifecycle of a product from inception, through engineering design and manufacturing, to service and disposal, led by the Windchill product.
2. **Computer-Aided Design (CAD)** - Provides tools for creating precise drawings and technical illustrations, driven by the Creo product.
3. **Application Lifecycle Management (ALM)** - Delivers software solutions for managing the lifecycle of applications, ensuring quality and compliance.
4. **Service Lifecycle Management (SLM)** - Focuses on optimizing the service and maintenance of products to enhance customer satisfaction and operational efficiency.

975f81b1a355451a7cb1b41b00e924b04da9801e269f12ac2f486456d4a01f18

1. Your fiscal '25 ARR growth guidance midpoint has decreased from double digits to single digits over the past 90 days; what specific factors have led to this reduced outlook?  **[PTC_3406242_17]** 

2. You've mentioned potential near-term disruptions due to the go-to-market realignment; can you elaborate on the challenges you anticipate and how you plan to mitigate them to avoid impacting sales performance?  **[PTC_3406242_2]** **[PTC_3406242_3]** 

3. With macroeconomic uncertainties and possible budget impacts post-election, how confident are you in achieving your fiscal '25 targets, and what contingency plans are in place if market conditions worsen?  **[PTC_3406242_16]** 

4. Given that your R&D expenses are growing at approximately **11%** CAGR while SG&A is growing at approximately **4%**, how will this imbalance affect your ability to drive sales and marketing effectiveness in a challenging selling environment?  **[PTC_3406242_4]** 

5. As you shift to a vertically aligned go-to-market strategy focusing on five key industries, how are you ensuring that specialization doesn't lead to siloed operations and that cross-industry opportunities are not overlooked?  **[PTC_3406242_2]** **[PTC_3406242_3]** 

1b71284a7221b9b20a5b58f5350101098c861e580a1c2fd170c8a57ba0138a8b

aae2d4cda587dcfa23512ca1b67dda40b298dbe0318fb2e17b23ee16140e4c6f

Americas

- United States

Europe

- Germany

Asia Pacific

Pacific Rim

Japan

Total Revenue

8985158f638c08b4f5199d83d69018b4e4dda96efbdf7d6cda7f6655bfa24e10

### Q4 2024 Earnings Call
- **Issued Period:** Q4 2024
- **Guided Period:** FY 2025 and Q1 2025
- **Guidance:**
  1. **Constant Currency ARR Growth:** 9% to 10% for FY 2025 and approximately 10.5% for Q1 2025  **[PTC_3406242_6]** .
  2. **Free Cash Flow:** $835 million to $850 million for FY 2025 and approximately $230 million for Q1 2025  **[PTC_3406242_6]** .
  3. **Revenue and EPS Guidance:** Provided but not specified; ARR and free cash flow emphasized as key metrics  **[PTC_3406242_6]** .
  4. **Operating Expenses:** Non-GAAP operating expenses expected to grow at roughly half the rate of ARR over the medium term  **[PTC_3406242_4]** .
  5. **Cash Interest Payments:** Approximately $90 million in FY 2025  **[PTC_3406242_8]** .
  6. **Cash Tax Payments:** $110 million in FY 2025  **[PTC_3406242_8]** .
  7. **Share Repurchase:** $2 billion authorization through FY 2027, with $300 million planned for FY 2025  **[PTC_3406242_5]** .

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** Q4 2024 and FY 2024
- **Guidance:**
  1. **Constant Currency ARR:** $2.2 billion to $2.22 billion for Q4 2024, with 11% to 12% year-over-year growth  **[PTC_3395346_7]** .
  2. **Free Cash Flow:** Approximately $83 million for Q4 2024 and $725 million for FY 2024  **[PTC_3395346_7]** .
  3. **Fiscal Year 2025 Preliminary Guidance:** Low double-digit ARR growth and free cash flow of $825 million to $875 million  **[PTC_3395346_7]** .
  4. **Share Repurchase:** Potential resumption around $300 million in FY 2025  **[PTC_3395346_7]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** Q3 2024 and FY 2024
- **Guidance:**
  1. **Annual Recurring Revenue (ARR):** $2.05 billion to $2.065 billion for Q3 2024, with 11% to 12% year-over-year growth  **[PTC_3371447_6]** .
  2. **Free Cash Flow:** Approximately $240 million for Q2 2024 and $725 million for FY 2024  **[PTC_3395346_7]** .
  3. **Revenue and EPS:** Provided but not specified; ARR and free cash flow emphasized as key metrics  **[PTC_3371447_6]** .
  4. **Share Count:** Expected increase by approximately 1 million shares in FY 2024  **[PTC_3371447_6]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** Q2 2024 and FY 2024
- **Guidance:**
  1. **Annual Recurring Revenue (ARR):** $2.05 billion to $2.065 billion for Q2 2024, with 11% to 12% year-over-year growth  **[PTC_3371447_6]** .
  2. **Free Cash Flow:** Approximately $240 million for Q2 2024  **[PTC_3371447_6]** .
  3. **Full Year Guidance:** 11% to 14% ARR growth for FY 2024  **[PTC_3371447_6]** .

These metrics reflect PTC's focus on ARR and free cash flow as primary indicators of business performance.

880031506134864cf0f71be621efa56277b2f58e9150a84ecb4a57b7396aeb55

| Name               | Position                                                      | Start Date         | Short Bio                                                                                                                                                                                                 |
|--------------------|---------------------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Neil Barua         | President and Chief Executive Officer                         | February 14, 2024  | Neil Barua is the **President and CEO** of PTC Inc. He became CEO on **February 14, 2024**, after being CEO-Elect since **July 2023**. He joined PTC through the acquisition of ServiceMax, where he was CEO  **[0001104659-24-000848_tm2322323-3_def14a.htm:9]** **[PTC_3400565_1]** **[0000950170-24-105898_ptc-20240911.htm:1]** .                        |
| Kristian Talvitie  | Executive Vice President and Chief Financial Officer          | May 2019           | Kristian Talvitie has been the **Executive Vice President and CFO** of PTC since **May 2019**. He previously held roles at PTC, including Corporate VP of Finance and SVP of Financial Planning and Analysis  **[0001104659-24-000848_tm2322323-3_def14a.htm:29]** .                              |
| Alice Christenson  | Chief Accounting Officer                                      | N/A                | Alice Christenson is the **Chief Accounting Officer** at PTC, overseeing accounting functions. Her beneficial ownership of PTC securities was reported on **February 14, 2024**  **[0001654954-24-001777_xslF345X02/section16.xml:0]** .                                                            |
| Michael DiTullio   | President and Chief Operating Officer                         | February 2023      | Michael DiTullio served as **President and COO** from **February 2023** until **September 30, 2024**. He has been with PTC since 1999, holding various roles, including EVP of Global Sales  **[0001104659-24-000848_tm2322323-3_def14a.htm:29]** **[0000950170-24-105898_ptc-20240911.htm:1]** **[0000950170-24-083751_ptc-20240714.htm:0]** .                                          |
| Catherine Kniker   | Executive Vice President, Chief Strategy and Marketing Officer| February 2023      | Catherine Kniker is the **EVP, Chief Strategy and Marketing Officer** since **February 2023**. She joined PTC in 2016 and has held various strategic roles, including Chief Strategy and Sustainability Officer  **[0001104659-24-000848_tm2322323-3_def14a.htm:29]** .                           |
| Aaron von Staats   | Executive Vice President, General Counsel                     | 2003               | Aaron von Staats has been the **EVP, General Counsel, and Secretary** at PTC since **2003**. He joined PTC in **1997** and has held various legal roles before becoming General Counsel  **[0001104659-24-000848_tm2322323-3_def14a.htm:30]** **[0001308179-22-000428_ptc4124081-def14a.htm:32]** .                                                 |

46daed24ad36e1349172515e7de3bfcd913694a37122c3d08c313445197957ee

| Program Details           | Program 1       |
|---------------------------|-----------------|
| Approval Date             | October 1, 2024  **[0000950170-24-127231_ptc-20240930.htm:35]**  |
| End Date/Duration         | September 30, 2027  **[0000950170-24-127231_ptc-20240930.htm:35]**  |
| Total additional amount   | **$2 billion**  **[0000950170-24-127231_ptc-20240930.htm:35]**  |
| Remaining authorization amount | N/A |
| Details                   | Return approximately **50%** of free cash flow to shareholders via share repurchases. Plan to repurchase approximately **$300 million** in fiscal year 2025.  **[0000950170-24-127231_ptc-20240930.htm:35]** **[PTC_3406242_1]** **[PTC_3406242_5]**  |

c3da3a02429edab54cb678d08e67184df62cedb7b394894778fff7fd5a299bb3

**Quarterly guidance for Q1 2025:**
- **Constant Currency ARR Growth**: 10.5%  **[PTC_3406242_6]**  (no prior guidance)  
- **Free Cash Flow**: $230 million  **[PTC_3406242_6]**  (no prior guidance)

**Annual guidance for FY 2025:**
- **Constant Currency ARR Growth**: 9% to 10%  **[PTC_3406242_6]**  (lowered from low double-digit  **[PTC_3395346_7]** )  
- **Free Cash Flow**: $835 million to $850 million  **[PTC_3406242_6]**  (lowered from $825 million to $875 million  **[PTC_3395346_7]** )  
- **Share Repurchase**: $300 million  **[PTC_3406242_5]**  (no change from prior guidance  **[PTC_3395346_7]** )  
- **Operating Expenses**: Non-GAAP operating expenses expected to grow at roughly half the rate of ARR over the medium term  **[PTC_3406242_4]**  (no prior guidance)  
- **Cash Interest Payments**: Approximately $90 million  **[PTC_3406242_8]**  (no prior guidance)  
- **Cash Tax Payments**: $110 million  **[PTC_3406242_8]**  (no prior guidance)  

e0c9ad283a1f0588d38a576211281d7c6200be6bf2b8edbcdb07b1146ab8bd98

- **PTC's go-to-market realignment may introduce significant near-term risk and uncertainty, potentially disrupting fiscal 2025 performance.**  **[PTC_3406242_16]**
- **No specific vertical has significantly advanced in adopting multiple PTC solutions, indicating challenges in cross-selling and achieving comprehensive digital thread adoption across industries.**  **[PTC_3406242_15]**
- **Persistent macroeconomic uncertainties, including geopolitical tensions and supply chain disruptions, may continue to impact customers' budgets and lead to cautious spending, potentially affecting PTC's growth prospects in the near term.**  **[PTC_3406242_16]**

cc2dba8492455d3a32697ea25bdfb306913be654a4d26d97625ec3d0b9435777

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1992  **[0000950170-24-127231_ptc-20240930.htm:72]**    | Present  | Current auditor   |

b9a69077e29e27ca1276ba212f2c88d51d9cbf4965bf7f981dc9232a0a622283

fb4b94643631acb94123df33b37f940d7318092f3cf5961da29847c472b0fdb6

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $626.6 million (+15% YoY)  **[0000950123-23-011049_ptc-20230930.htm:28]** **[0000950170-24-127231_ptc-20240930.htm:31]**   
- License: $239.5 million (+30% YoY)  **[0000950123-23-011049_ptc-20230930.htm:28]** **[0000950170-24-127231_ptc-20240930.htm:31]**   
- Support & Cloud Services: $353 million (+9% YoY)  **[0000950123-23-011049_ptc-20230930.htm:28]** **[0000950170-24-127231_ptc-20240930.htm:31]**   
- Professional Services: $34.2 million (-10% YoY)  **[0000950123-23-011049_ptc-20230930.htm:28]** **[0000950170-24-127231_ptc-20240930.htm:31]**   
- Americas: $306.39 million (+17% YoY)  **[0000950123-23-011049_ptc-20230930.htm:86]** **[0000950170-24-127231_ptc-20240930.htm:86]**   
- Europe: $234.47 million (+15% YoY)  **[0000950123-23-011049_ptc-20230930.htm:86]** **[0000950170-24-127231_ptc-20240930.htm:86]**   
- Asia Pacific: $85.63 million (+6% YoY)  **[0000950123-23-011049_ptc-20230930.htm:86]** **[0000950170-24-127231_ptc-20240930.htm:86]**   
- Operating Income: $194 million (+60% YoY)  **[0000950123-23-011049_ptc-20230930.htm:74]** **[0000950170-24-127231_ptc-20240930.htm:74]**   
- Net Income: $127 million (+**178%** YoY)  **[0000950123-23-011049_ptc-20230930.htm:74]** **[0000950170-24-127231_ptc-20240930.htm:74]**   

6abe0d8a93829cb686884a14102199b2fe6293d73e9fe17ffbaf8fd8016faea8

eb3caceef77ab9c989ed114eb602f2f36f3effac07642eec0336a5afa46d13a8

da3bd45e7f6dd58f2d28e1eb0fc7e21d3f6194273dec6cc6e9469c672e895144

| Year | Amount Due (in millions) | Debt Type              | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|----------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2025     | $500.0 **[0000950170-24-127231_ptc-20240930.htm:97]**               | 3.625% Senior Notes        | 3.625 **[0000950170-24-127231_ptc-20240930.htm:97]**         | 28.5% = ($500.0 / $1,753.0) * 100 **[0000950170-24-127231_ptc-20240930.htm:97]** **[0000950170-24-127231_ptc-20240930.htm:35]**                                 |
| 2025     | $21.9 **[0000950170-24-127231_ptc-20240930.htm:97]**                | Credit Facility Term Loan  | 6.9 **[0000950170-24-127231_ptc-20240930.htm:97]**           | 1.2% = ($21.9 / $1,753.0) * 100 **[0000950170-24-127231_ptc-20240930.htm:97]** **[0000950170-24-127231_ptc-20240930.htm:35]**                                   |
| 2028     | $500.0 **[0000950170-24-127231_ptc-20240930.htm:97]**               | 4.000% Senior Notes        | 4.000 **[0000950170-24-127231_ptc-20240930.htm:97]**         | 28.5% = ($500.0 / $1,753.0) * 100 **[0000950170-24-127231_ptc-20240930.htm:97]** **[0000950170-24-127231_ptc-20240930.htm:35]**                                 |
| 2028     | $490.6 **[0000950170-24-127231_ptc-20240930.htm:35]**               | Credit Facility Term Loan  | 6.9 **[0000950170-24-127231_ptc-20240930.htm:35]**           | 28.0% = ($490.6 / $1,753.0) * 100 **[0000950170-24-127231_ptc-20240930.htm:35]** **[0000950170-24-127231_ptc-20240930.htm:97]**                                 |
| 2028     | $262.0 **[0000950170-24-127231_ptc-20240930.htm:35]**               | Credit Facility Revolver   | 7.0 **[0000950170-24-127231_ptc-20240930.htm:35]**           | 14.9% = ($262.0 / $1,753.0) * 100 **[0000950170-24-127231_ptc-20240930.htm:35]** **[0000950170-24-127231_ptc-20240930.htm:97]**                                 |

22543bf09c579ce14396e7a43edf5dc3b94c4c0f0e3fb1c9e6b293d2cd499f69

Annual Run Rate (USD millions)

PLM ARR year-over-year growth (as reported) (percentage)

PLM ARR year-over-year growth (constant currency) (percentage)

CAD ARR year-over-year growth (as reported) (percentage)

CAD ARR year-over-year growth (constant currency) (percentage)

Additional performance obligations (USD millions)

10a782f948bee4f39a7cedeee1ad97c7e43ecb4b54c7bdf21177a69fd29a0b45

- **PTC is experiencing strong double-digit growth in its CAD business**, driven by the success of **Creo** and the growing **Onshape** platform. Customers are consolidating their systems and moving from 2D to 3D modeling, providing opportunities for PTC's products to gain market share.  **[PTC_3381896_20]**
- Despite a challenging macroeconomic environment, **PTC continues to deliver solid financial performance**, with consistent ARR growth and confidence in meeting their targets. The company's **subscription model** contributes to a strong run rate, and management remains focused on executing their organic priorities effectively.  **[PTC_3381896_20]** **[PTC_3381896_16]**
- **PTC is strategically refocusing resources towards high-value areas** such as PLM, ALM, and SLM, integrating IoT and AR technologies with core systems like **Windchill** and **ServiceMax**. This repositioning is expected to enhance operational efficiency and strengthen their customer value proposition.  **[PTC_3381896_19]**

233595095478167f207c68b02a9beef5f12e1e0b0f4b8a1e659d1b25ec2abdaa

- **PTC continues to deliver solid performance in a challenging macro environment, with no discernible change in demand trends, unlike some competitors.**  **[PTC_3395346_11]** **[PTC_3395346_9]**
- **Organizational changes, including a flatter structure and alignment with five key priorities, are expected to enhance effectiveness and execution, with minimal risk of disruption.**  **[PTC_3395346_10]** **[PTC_3395346_13]**
- **Customers remain committed to digital transformation initiatives regardless of macroeconomic or political uncertainties, supporting steady demand for PTC's solutions.**  **[PTC_3395346_8]** **[PTC_3395346_18]**

f81dc461970d403eb642b0cdcd50e1344c6ec8fbd0af8461ea38d84b640d5ab9

- **PTC lowered the high end of their Annual Recurring Revenue (ARR) guidance by $20 million**, indicating potential challenges in meeting growth expectations.  **[PTC_3395346_7]** **[PTC_3395346_14]**
- **The sales environment remains challenging, with close rates being difficult**, and no discernible improvement expected in the near future, which may impact future revenue.  **[PTC_3395346_11]** **[PTC_3395346_9]** **[PTC_3395346_8]**
- **PTC is undergoing significant organizational changes**, including the elimination of key executive roles such as Chief Operating Officer and Chief Revenue Officer, which could lead to disruptions in operations and execution risks.  **[PTC_3395346_10]** **[PTC_3395346_13]** **[PTC_3395346_2]**

85a7c8b66c9899c167bd911e7ac69fe312549d7793844c75a464e1a8c141d05e

- **PTC is experiencing a sluggish sales environment**, particularly around customer approval cycles, which have been elongated for several years without improvement.  **[PTC_3371447_7]**
- **Despite the persistent sluggish sales environment, PTC's growth guidance depends on achieving significant net new ARR in the second half of the year**, which may be challenging under current conditions.  **[PTC_3371447_7]**
- **The company's confidence in meeting its second-half targets relies on pipeline opportunities and historical seasonality**, but without any expected change in the sales environment, there is risk if deals take longer to close or fail to materialize.  **[PTC_3371447_7]**

0a29df0dd28216b0be7b9fcbcda8a04540dd1684c626dea581c1892d95e465ab

- PTC's **ALM business**, led by **Codebeamer**, is experiencing rapid growth and is expected to surpass **$100 million in ARR** this year, contributing significantly to company growth and acting as a strategic high ground. ** **[PTC_3371447_25]** **[PTC_3371447_24]** **
- The company's core on-premises products, such as **Creo** and **Windchill**, are delivering solid **double-digit growth**, which is sustainable and provides confidence in meeting guidance. PTC anticipates continued strong performance in these areas, even before any significant impact from their SaaS offerings. ** **[PTC_3371447_10]** **[PTC_3371447_16]** **
- PTC has a **strong pipeline of opportunities** and is confident in the number and size of deals expected in the second half of the year, supporting their **ARR growth guidance** despite a sluggish sales environment. **[PTC_3371447_8]**

d0f36a1eba4ec192f66425722347b713fc2f29505b321699f4068c681f596f83

1. **SaaS Transition Impact**  
   **Q:** Is the SaaS transition affecting long-term financial targets?  
   **A:** Neil Barua stated that the industry will eventually move to SaaS, estimating it to be a **10-plus-year journey**.  **[PTC_3371447_12]**  The on-premise business is delivering solid growth, particularly in PLM and Creo.  **[PTC_3371447_12]**  There are **no changes to medium- or long-term financial targets**, and the SaaS transition is expected to contribute to ARR growth over time.  **[PTC_3371447_16]** 

2. **ARR Growth Confidence**  
   **Q:** What gives confidence in second-half net new ARR growth?  
   **A:** Confidence comes from a strong pipeline of opportunities, including the number and size of deals, and the criticality of customers.  **[PTC_3371447_8]**  The guidance doesn't assume changes in the selling environment but leverages historical seasonality where such deals have been closed in the second half.  **[PTC_3371447_8]** 

3. **ServiceMax Cross-Sell Progress**  
   **Q:** How is the cross-sell with ServiceMax progressing?  
   **A:** After integrating teams, PTC implemented a more direct selling process, aligning ServiceMax sellers with PTC's team.  **[PTC_3371447_9]**  This year focuses on building momentum, with expectations of **mid-teens-plus growth** for ServiceMax in subsequent years.  **[PTC_3371447_9]** 

4. **ALM Business Growth**  
   **Q:** How significant is the ALM business and its growth?  
   **A:** The ALM business, including Codebeamer, is growing at an **exciting pace**.  **[PTC_3371447_24]**  It's expected to surpass **$100 million in ARR** this year and is growing faster than the overall company, making it **accretive to growth**.  **[PTC_3371447_24]** 

5. **Creo CAD Resilience**  
   **Q:** Can Creo CAD continue double-digit growth this year?  
   **A:** PTC expects **double-digit growth** for Creo to be sustainable.  **[PTC_3371447_10]**  The strength lies in Creo on-premises, with **Creo+ impact being limited** in the near to medium term.  **[PTC_3371447_10]** 

6. **Focus on Priority Areas**  
   **Q:** How are you approaching investments in IoT and AR?  
   **A:** While IoT and AR remain important, PTC is prioritizing investments in the highest value creation opportunities like PLM, SLM, ALM, and CAD.  **[PTC_3371447_13]**  They may **de-prioritize** areas with a less strong outlook.  **[PTC_3371447_13]** 

7. **Contract Length and Churn Rate**  
   **Q:** Are you focusing on increasing contract length, and what's the churn rate?  
   **A:** PTC will continue to move contracts to longer terms, with the average contract length hovering around **2 years**.  **[PTC_3371447_11]**  The **churn rate continues to be low and steady**.  **[PTC_3371447_11]** 

8. **Operating Expenses and Investments**  
   **Q:** What are the areas of increased investment affecting OpEx?  
   **A:** OpEx guidance remains unchanged.  **[PTC_3371447_14]**  Incremental investments are directed into **ALM**, SaaS products like **Windchill+**, **Creo+**, and **Atlas**.  **[PTC_3371447_14]** 

9. **China Business Performance**  
   **Q:** How did your business in China evolve during the quarter?  
   **A:** PTC hasn't seen China be a **drag** on the business.  **[PTC_3371447_18]** 

10. **Ansys Partnership and Synopsys Acquisition**  
    **Q:** How might Synopsys' proposed acquisition of Ansys affect your partnership?  
    **A:** Ansys has been a good partner and will continue to be.  **[PTC_3371447_17]**  If the deal goes through, there's **zero overlap** with Synopsys, which might create an **opportunity** for PTC.  **[PTC_3371447_17]** 

62b465249ac735c8969ff8c4037daf3117b3f5d13aff29ae0d591161bf70d9f6

1. **Lowered Midterm ARR Growth Outlook**  
   **Q:** Why did you lower your midterm ARR growth target?  
   **A:** CEO Neil Barua explained they updated the constant currency ARR guidance to **11% to 13%** for this year and view "low double digits" as plus or minus that range. Over the past **5 years**, growth has averaged about **12%** through varying macroeconomic conditions. Given current market conditions, they felt it appropriate to adjust the midterm target from mid-teens to low double digits.  **[PTC_3381896_7]** 

2. **Capital Allocation and Share Buybacks**  
   **Q:** Why not start share buybacks sooner given deleveraging progress?  
   **A:** CFO Kristian Talvitie stated they still have over **$2 billion** in debt outstanding, and the interest rate environment is not favorable, with rates on their revolving credit facility at almost **7%**. They prefer to wait a couple of quarters to reassess. CEO Neil Barua added that while they will always look at M&A opportunities, the focus is currently on executing organic priorities.  **[PTC_3381896_9]** 

3. **Challenging Selling Environment**  
   **Q:** Has the sluggish selling environment bottomed out?  
   **A:** CEO Neil Barua doesn't see any change in the selling environment, which has been tough for at least **6 quarters**. The challenging conditions particularly impact larger deals, especially large digital transformation projects worth **7 to 8 figures**. They haven't seen a change yet in the current market.  **[PTC_3381896_12]** 

4. **Resource Allocation to PLM**  
   **Q:** What's next in focusing investments on PLM?  
   **A:** CEO Neil Barua emphasized reallocating resources from IoT and AR to focus on PLM, particularly enhancing **Windchill** with improved user experience, stronger integration with **Creo** (CAD) and **Codebeamer** (ALM), integration with **ServiceMax** (SLM), and leveraging AI capabilities within Windchill. The goal is to drive greater customer value by focusing on core products.  **[PTC_3381896_13]** 

5. **AI Impact on Sales Cycles**  
   **Q:** Is AI affecting customer IT budgets and slowing pipelines?  
   **A:** CEO Neil Barua stated **absolutely not**. In their market segment, AI is not taking away from IT prioritization. They are involved in AI use cases and believe a digital foundation is necessary before practical AI at scale, which requires systems like theirs. AI is not causing a difference in the selling environment.  **[PTC_3381896_18]** 

6. **Indirect vs. Direct Sales Performance**  
   **Q:** How is the indirect channel performing versus direct?  
   **A:** CEO Neil Barua is ensuring the channel operates with the same energy and focus as the direct side. They are working on enablement and prioritizing focus areas to improve pipeline and ARR growth. He has high expectations that channel partners must deliver the same results as the direct teams.  **[PTC_3381896_21]** 

7. **SaaS Transition with Creo Plus and Windchill Plus**  
   **Q:** How are Creo Plus and Windchill Plus resonating?  
   **A:** CEO Neil Barua stated that SaaS is a priority, and they continue to build momentum with **Creo Plus** and **Windchill Plus**. They view it as a **10-plus year journey**, working through conversions and investing resources to prepare for at-scale conversion into their Plus strategy. Progress is considered "okay to good" over the last few quarters.  **[PTC_3381896_22]** 

8. **Continued CAD Growth**  
   **Q:** What drives double-digit growth in CAD beyond SaaS?  
   **A:** CEO Neil Barua attributes CAD growth to having a great product in **Creo** and the rising adoption as customers consolidate CAD systems. For example, a medtech customer expanded Windchill and also replaced disparate CAD systems, benefiting PTC. Additionally, the shift from **2D to 3D** models in markets like Japan opens opportunities for **Creo** and **Onshape** to displace competitors.  **[PTC_3381896_20]** 

9. **Predictability of 606 Revenue Recognition Effects**  
   **Q:** Can you predict the 606 effects on revenue and guidance?  
   **A:** CFO Kristian Talvitie stated that predicting 606 effects is challenging due to variables like contract type and term length. While they try to incentivize certain customer decisions, it's difficult to predict the volatility caused by these factors.  **[PTC_3381896_15]** **[PTC_3381896_16]** 

10. **Retention and Business Variability with Integration**  
    **Q:** How does closer product integration affect retention and variability?  
    **A:** CEO Neil Barua emphasized they remain open in integrations, allowing customers to choose best-of-breed solutions. However, customers are pushing for more distinct integration points between products like **Codebeamer** and **Windchill**, and **ServiceMax** and **Windchill**. He believes this customer-driven approach will win out in the long term.  **[PTC_3381896_14]** 

11. **Performance of Onshape and Arena**  
    **Q:** How are Onshape and Arena performing?  
    **A:** CEO Neil Barua is enthused about **Onshape**, seeing momentum in its SaaS-based CAD offering. **Arena** is also showing positive trends, particularly with supply chain modules. Both are important parts of the business with potential to become high-priority areas. They are not abandoning IoT and AR but are repositioning focus to align with core systems like Windchill and ServiceMax.  **[PTC_3381896_19]** 

12. **Outlook on Large PLM Deals**  
    **Q:** How do you view close rates for large PLM deals?  
    **A:** CEO Neil Barua can't predict when the selling environment will change but is focused on demonstrating the critical value of enterprise PLM to customers. He believes that companies without enterprise PLM won't survive in the future. If the selling environment improves, they have a large pipeline that could lead to ARR growth higher than current aspirations.  **[PTC_3381896_23]** 

57f6bcd599002af8ef763d713cbb53cd8f77fe6b304a969c799a87bc6d22a934

- **PTC has reduced its midterm Annual Recurring Revenue (ARR) growth targets from mid-teens to low double digits**, reflecting a less optimistic outlook due to current market conditions.  **[PTC_3381896_7]**
- **The company continues to face a challenging selling environment with no improvement**, particularly impacting larger digital transformation deals, which have been stalled for over six quarters.  **[PTC_3381896_12]**
- **PTC decreased the high end of its fiscal 2024 ARR guidance by $10 million due to customer contract renegotiations**, resulting in $10 million of deferred ARR being moved to future periods. This indicates potential challenges in customer commitments and sales cycles.  **[PTC_3381896_5]** **[PTC_3381896_16]**

a983e55656b1955e55576f065f24b1b7c066979b9e1046782d4da54f93ea5a5b

1. **Guidance Revision and Conservatism**  
   **Q:** Why is guidance now single-digit growth instead of double-digit?  
   **A:** Management explained that the guidance is now more conservative due to potential impacts from the go-to-market realignment.  **[PTC_3406242_17]**  They emphasized that the guidance has been revised to **single-digit ARR growth** from the previously indicated **double-digit growth** to account for any disruption during the transition.  **[PTC_3406242_17]** 

2. **Western Europe Demand and Automotive Sector**  
   **Q:** What is the outlook for customer spending in Western Europe?  
   **A:** Management noted that while they delivered solid results, some deals in Western Europe, particularly in the **automotive sector in Germany**, were delayed or reduced in size.  **[PTC_3406242_12]**  Automotive companies are under pressure but need PTC's solutions like **Codebeamer** and **Windchill** to remain competitive.  **[PTC_3406242_12]** 

3. **Go-To-Market Realignment and Industrial Demand**  
   **Q:** Will the go-to-market changes align with potential industrial demand improvement?  
   **A:** Management stated that teams are already executing the new plan and are prepared to capitalize on any increase in demand.  **[PTC_3406242_13]**  They believe their vertical strategy positions them to quickly respond if industrial sentiment improves.  **[PTC_3406242_13]** 

4. **Vertical Focus: Federal, Aerospace & Defense, Med Tech**  
   **Q:** Are there notable trends in other key verticals?  
   **A:** Significant demand and backlog are evident in the **Federal, Aerospace & Defense** sector.  **[PTC_3406242_14]**  In **Med Tech and Life Sciences**, companies need to develop products faster, driving adoption of PLM solutions like **Windchill** and **Codebeamer**.  **[PTC_3406242_14]** 

5. **Automotive Exposure and Codebeamer Adoption**  
   **Q:** How has PTC's exposure to automotive changed?  
   **A:** PTC's foothold in automotive has significantly shifted, focusing heavily on **Windchill** and **Codebeamer**.  **[PTC_3406242_15]**  They are assisting customers in building **software-defined vehicles** rapidly to compete with Chinese OEMs.  **[PTC_3406242_15]** 

6. **Go-To-Market Disruption and Guidance**  
   **Q:** Will there be peak disruption due to go-to-market changes, and is growth guidance conservative?  
   **A:** Management does not expect disruption but acknowledges possible friction during transitions.  **[PTC_3406242_10]**  They have set guidance conservatively to allow room for any short-term disruptions.  **[PTC_3406242_10]** 

7. **Digital Thread Adoption Across Verticals**  
   **Q:** Which verticals are adopting multiple solutions most rapidly?  
   **A:** No single vertical is significantly ahead in adopting multiple solutions.  **[PTC_3406242_15]**  However, there is substantial opportunity to promote integration of PTC's products across all key verticals.  **[PTC_3406242_15]** 

8. **Impact of Election on 2025 Budgets**  
   **Q:** Has the election increased uncertainty about 2025 budgets?  
   **A:** Management believes customers' needs remain consistent regardless of the election outcome.  **[PTC_3406242_16]**  They continue to require PTC's technology to move product data faster and remain competitive.  **[PTC_3406242_16]** 

7f4999bcf8b5d73d72e105691eee796d70dd80e7ef0a209a966ef403ed3693ca

- **PTC is experiencing strong momentum in its key products, particularly Codebeamer and Windchill, with significant expansion in the automotive vertical. For example, in Q4, two of the ten largest automotive OEMs expanded their use of Codebeamer.**  **[PTC_3406242_11]**
- **The company's strategic realignment towards vertical markets is expected to enhance effectiveness and drive sustainable ARR growth, aiming for low double-digit growth over the medium and long term.**  **[PTC_3406242_15]**
- **PTC's strong free cash flow generation enables it to invest in future growth and return value to shareholders, as evidenced by the announcement of a $2 billion share repurchase authorization.**  **[PTC_3406242_1]**

c8ba8a21e1233d2c1e883745972d5491d0ac34f29947a34ddd4b2d32c48b4f9b

1. **Lowered ARR Guidance**  
   **Q:** What's causing the lowered ARR guidance?  
   **A:** The reduction in ARR guidance reflects how Q3 deals will roll into ARR in Q3, Q4, and beyond. There were no changes to deferred ARR, and it's based on the composition of closed deals and expectations for close rates in Q4.  **[PTC_3395346_14]** 

2. **Free Cash Flow Timing**  
   **Q:** Did a delayed deal affect free cash flow and ARR?  
   **A:** No, the free cash flow miss of **$10 million** was due to timing of collections scheduled on a weekend. The cash was received shortly after, and there's no change to the full-year forecast. It wasn't related to any delayed deals affecting ARR guidance.  **[PTC_3395346_15]** 

3. **Demand Environment Stability**  
   **Q:** Has the demand environment changed this quarter?  
   **A:** No significant changes were observed. Demand remained consistent across geographies and verticals, with a strong pipeline going into Q4. Close rates remain a challenge but are not worsening.  **[PTC_3395346_8]** **[PTC_3395346_17]** 

4. **Competitive Landscape**  
   **Q:** How is PTC affected by competitors' weaknesses and geopolitics?  
   **A:** PTC did not experience the same issues as competitors and saw no discernible change due to geopolitics. The company continues to operate effectively in a challenging sales environment.  **[PTC_3395346_11]** 

5. **Organizational Changes Impact**  
   **Q:** Will go-to-market changes disrupt results?  
   **A:** The organizational adjustments aim to improve effectiveness without causing disruptions. The intentional moves are from a position of strength, and PTC feels confident in managing these changes.  **[PTC_3395346_13]** 

6. **Close Rates and Pipeline**  
   **Q:** Are close rates impacting ARR guidance, especially for new products?  
   **A:** Close rates remain consistent with prior periods and continue to be a challenge. For Codebeamer and ServiceMax, there is excitement about their momentum and pipeline, which should contribute positively in the future.  **[PTC_3395346_17]** 

7. **Impact of U.S. Election**  
   **Q:** How does the U.S. election affect customers and guidance?  
   **A:** Customers are proceeding with digital transformation regardless of election outcomes. PTC does not anticipate significant changes due to the election and has considered this in guidance.  **[PTC_3395346_18]** 

8. **CAD Market Competitiveness**  
   **Q:** How will PTC respond if the CAD market becomes more competitive?  
   **A:** PTC is confident in its CAD offerings, Creo and Onshape, and believes its comprehensive solutions position it well against competitors. The company continues to invest in innovation and integration across products.  **[PTC_3395346_20]** 

9. **ARR Composition**  
   **Q:** What's driving Q4 ARR growth?  
   **A:** ARR growth is expected from consistent pricing benefits, stable channel performance, base business transactions, and large deals. Large deals introduce volatility, but trends remain consistent.  **[PTC_3395346_21]** 

160c4cd99e6d90520f13a3f5299a9ca62cf36ed685208bd8f0e0996bb44b372d

PTC Inc (PTC)

Financials