Q2'24
FINANCIAL RESULTS
Neil Barua
CEO
Kristian Talvitie
CFO
May 1, 2024
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 events, actual results may differ materially from those projected in the forward- looking statements. Information about factors that could cause actual results to differ materially from those in the forward-looking statements can be found in the appendix to this presentation and in PTC's Annual Report on Form 10-K, Forms 10-Q and other filings with the U.S. Securities and Exchange Commission.
IMPORTANT INFORMATION ABOUT OPERATING AND NON-GAAP FINANCIAL MEASURES
This presentation includes supplemental operating and non-GAAP financial measures, targets and estimates. The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. The definitions of these items and reconciliations of non-GAAP financial measures to comparable GAAP measures are included in the appendix to this presentation.
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NEIL BARUA, CEO
DISCIPLINED AND CONSISTENT EXECUTION ACROSS OUR 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 |
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PLM EXPANSION ACROSS A MEDICAL EQUIPMENT COMPANY
Goal
With over 50% of their revenue based on products developed in the last 5 years, this MedTech company is focused on driving faster growth by significantly improving their new product introduction timelines
Solution and Impact
Expand the use of Windchill PLM within R&D across all business divisions
Ensure traceability of work performed and updates made by standardizing on Windchill as the authoritative source of truth for their product data
Leverage their Windchill PLM foundation as a backbone for cross -functional enterprise collaboration around their product data
Drive real-time collaboration across the company by expanding the use of Windchill beyond R&D to teams including Manufacturing, Supply Chain, Quality,
Regulatory/Compliance, and Marketing
Shorten new product introduction timelines byenabling the work to progress
concurrently
Provide teams outside of Engineering with visibility to relevant product data through
Windchill, enabling issues to be identified and resolved significantly earlier in the process
PTC 3-year ARR Growth (Q2'21 to Q2'24): Over 200%
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CROSS SELLING SERVICEMAX INTO OUR BASE
Goal
One of the largest elevator companies in the world is focused on growing their services
business in terms of both revenue and profit
Because this company intends to drive a complete service transformation - from disparate, disconnected systems that have held them back to a unified and streamlined solution - they want to leverage best-in-class technology
Solution and Impact
ServiceMax will help provide the Services business with an enriched view of their customers, enabling new service-relatedrevenue streams, as well as improved field service productivity and efficiency
Elevators are long lived assets, and this customer will be using the ServiceMax application to provide their field service technicians with critical information to drive improved service outcomes (for example, the as-maintained state of a specific elevator, and a summary of the previous work history on that specific elevator)
The elevator business is highly regulated and this customer will also leverage the ServiceMax application to ensure and automate strong regulatory compliance processes
The customer's multi-yearexperience as a Windchill PLM and Creo CAD customer was an important aspect of closing the deal
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KRISTIAN TALVITIE, CFO
SOLID ARR AND CASH FLOW RESULTS
ARR: Solid growth across geographic regions and product groups
$ in millions | Q2'24 | Q2'23 | YoY Change | Q2'24 | |||
Guidance | |||||||
ARR as reported | $2,088 | $1,882 | 11% | ||||
Constant currency ARR | $2,075 | $1,850 | 12% | $2,050 - $2,065 | |||
CASH FLOW: Solid growth driven by ARR increase and operating efficiency1 expansion
$ in millions | Q2'24 | Q2'23 | YoY Change | Q2'24 | |
Guidance | |||||
Operating cash flow | $251 | $211 | 19% | ~$245 | |
Free cash flow | $247 | $207 | 19% | ~$240 | |
Exceeded our Q2'24 guidance for ARR and cash flow and extended our track record of disciplined operational management
Over the mid-term, we expect free cash flow to grow faster than ARR, with non-GAAP operating expenses expected to grow at roughly half the rate of ARR
1 Operating Efficiency % = Cash generation less non-GAAP cost of revenue and non-GAAP operating expenses, divided by cash generation; Cash generation = ARR + Perpetual revenue + Professional services revenue
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ARR BY PRODUCT GROUP AND GEOGRAPHIC REGION
CAD: Product data authoring software1
$814 $808
+9% +11%
$748
$730
Q2'23Q2'24
Growth primarily driven by Creo
$ in millions
AsConstant
Reported Currency
PLM: Product data management and process orchestration software2
$1,275 $1,267
+12% +13%
$1,134 $1,119
Q2'23Q2'24
Growth primarily driven by Windchill
Americas
$1,029 $1,029
+11% +11%
$929 $929
Europe
$758 $744
+14% +14%
$667 $654
APAC
$302 | $302 | |
$286 | +6% | +13% |
$267 |
Q2'23Q2'24
Q2'23Q2'24
Q2'23Q2'24
1 CAD includes Creo, Onshape, Vuforia Augmented Reality, and Arbortext
2PLM includes Windchill, Arena, Retail PLM, Codebeamer ALM, ServiceMax SLM, Thingworx IoT, Servigistics, and Classic products
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BALANCE SHEET AND SHARE REPURCHASE PROGRAM
Balance sheet update
$ in millions | Q2'24 | Q1'24 | Change | |||
Cash and cash equivalents | $ | 249 | $ | 265 | $ | (16) |
Senior notes with an aggregate interest rate of 3.8% | $ | 1,000 | $ | 1,000 | $ | - |
Term loan with a variable interest rate of 6.9% | $ | 497 | $ | 500 | $ | (3) |
$1,250 revolving credit facility with a variable interest rate of 6.9% | $ | 514 | $ | 767 | $ | (253) |
Gross debt with a weighted average interest rate of 5.4% as of Q2'24 | $ | 2,011 | $ | 2,267 | $ | (256) |
Debt/EBITDA ratio and gross debt expectations
Debt/EBITDA ratio at the end of Q2'24 was 2.3x and is expected to remain below 3x throughout the rest of FY'24 Gross debt is expected to be approximately $1.7 billion at the end of FY'24
We expect to use substantially all of our FY'24 free cash flow to pay down debt in FY'24
Share repurchase program
We expect to prioritize paying down our debt in FY'24
Our long-term goal, assuming our Debt/EBITDA ratio is below 3x, is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic opportunities
Fully diluted share count expected to increase by approximately 1.5 million in FY'24
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PTC Inc. published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 10:43:11 UTC.