PTC - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon ladies and gentlemen, thank you for standing by and welcome to the PTC 2021 Third Quarter Conference Call.

During today's presentation, all parties will be in a listen only mode.

Following the presentation, the conference will be open for questions. I would now like to turn the call over to Emily Walt PTC's Senior Director of Investor Relations. Please go ahead Ma'am.

Emily Walt

Peter. you, Thank everyone. Good afternoon, you to for PTC's thank us joining our third call discuss results. conference quarter And for XXXX financial

call Heppelmann, Jim Talvitie, today Officer; the Kristian Officer. Chief Chief and Financial On Executive are

such differ get or factors including regarding are that actual statements, statements. subject could we included forward-looking and implied risks to guidance. statements started, today's cause future that Before comments materially note uncertainties expressed forward-looking to These by financial from those statements please and results involve

these XX-K concerning in XX-Q. filings reports information contained Additional factors annual PTC's Form with is our including report on the and SEC, on Form quarterly

our As a a reconciliation financial GAAP financial of Form non-GAAP call. press measures and reminder, and between Discussion are related measures and non-GAAP earnings will X-K. from we our our operating to the included non-GAAP operating during release and in today's referring and measures metrics financial be excluded items

referencing on over you our the which call earnings to today, website. Lastly let turn that, IR we’ll with our be me presentation posted Jim. find can And

James Heppelmann

hoping monitoring of to that and allow and back I has afternoon, virus lockdowns. requirements concern day we're to another times. the Good Delta us. a Meanwhile, of for I'm joining continued round families forward when the you to the growing we we development on business with look during and thank to new your scale. pleased can do doesn't of our share global this variant this the lead you offices Emily. everyone are many uncertain employees and welcomed well Thanks, our hope vaccinated these PTC where

fort as a new Shamal the hiring is of as and holding and came to a our Matt several to great on hear us Investor on is front. I Senior reinforcements VP to Matt one been that the side I'm Fox IR top the doing was job the way. dive us [ph] Investor on But a the of a largest Relations Relations. both investor He's successful investors want of are sell to process. up job to share search recommendation important with Matt some on to on stints and news into since Emily a from left. happy demands strategic we're pleased side the and comes thorough Board. of Before with quarter, the Emily a down he big Tim came in following out relations. keeping corporate our background announce finance bring him excited I thinker,

quarters ARR anticipate us Turning four, guidance and growth. to I we'll fiscal in this three a line fourth to year. Slide with for discussing double FY double growth behind year top deliver track growth fifth XX on be digit consecutive of ARR free so. And consecutive mid-teens or cash has flow million of us, be That we would of guide $XXX 'XX days our ARR a right 'XX digit year when

that is With with PTC we're In results numbers ago. pleased to for how were at that company and PTC preparing to pleased from very the backdrop, this contemplating shutdown place, can educate where I to we perform right able PMI a as through factories, that seeing, that chaotic offices the in schools consistently helpful. can has year that levels been Against be to a call, times earning and in stronger empty back I'm the only see bad. in good reputation thought pandemic. I'm and deliver While orders a high home.

see work for perpetual model, was But always performance that. growth and the and in when consistent, a The portfolio line hasn't peer growth CAD model, our we organic and among much most of top the more especially our to difficult entire narrower sold strive group, than and PLM across direct PTC what competitors. steady that reliable better to days our our portfolio, Some tremendous more years type performance in from superior strength earn back in business drivers are our to rule to business performance is we now cyclical. been our a did the cyclical. you was I attribute secular

SAS and PTC business and The future. drivers, for years of arena digital growth the we've growing Onshape businesses key demand there. of the see terms to space in positioned joining demonstrates outgrowth market reignited reality is PLM IoT of our transformation logo CAD the for industrial and success for In companies is technologies. new We the augmented well technologies innovation

line and ASC an top XX% the QX, line top out operating of free plus in in now five close organic the solid another expense even Solutions. quarter. with discipline, the execution, XX% a as rebound of by course, strong Slide ARR delivered bottom performance our in flow or category, bottom guidance. currency of also PTC impact by $X.XX QX On Bookings we quarter, in Switching in contribution solid combination in to third $XX combined delivered growth grew growth Growth get in and ARR line for results, driven comparison performance line top of invest revenue into very basis line or policies, we recognition businesses, free details. declined. in was To growth so ARR constant the cash Arena the bookings in strong to reported driven XX%, a solid had while momentum of the we In cash Turning continued business, a again where XX% category, mid-XXs, we ago a flow and strong when billion. growth, growth strong XX% aided of can the line with reflecting market contribution. top by currency year our XXX strong of million constant a grew EPS by with was our core continued growth. line in from to Arena the revenue non-GAAP we XX% outpaced category, to

cash million We flow. FY 'XX feel to free of continue about confident target our in $XXX

main six, transformation secular digital our growth. remains Slide of to Moving driver

may I quarter at at tagline, logo, in products PTC about our our shared and my in foot In embody digital world. strategy. in one digital a we We live physical products augment in and in connect transforms tell servicing company, that and define, foot by works physical words June, I and but customer the PTC three July, our global keynote You in and captured of long-term outlined power digital are products. new customers world, business digital your is partner use thinks sites. to These that last how digital physical world physical factories, the story physical physical. making digital do customers one transforms those that we our physical help and remember customers in transformation unique has again manage, summit PTC's our our mean the physical, the

look is their portfolio is With Our with of digital different our of so is an take administration of coming core already contributions software transformative. hardware, the to leadership will system entirely very has has IT portfolio. about and market, gain taking an at as at many carved now a enviable the the have now FSG, disrupt customers We of it the position. surely disruptive that to other how out to context, software our from systems. approach use PTC as But the thinking and let's growth and SaaS physical markets respective of force. across SaaS most forefront in BXB PTC this segments terms

which ARR constant aligns that expectations see X% you'll seven, Solution ARR showed was for in Slide this our that to at with core business Group growth of growth Moving constant our XX% currency. X% for or currency, segment. Focused XX% growth or

and ARR one Our Onshape currency hand, by from organic XX% growth, lingering our with performances growth saw some from on XX% COVID Arena SaaS constant solid but segment Solutions. growth hangover AR counterbalanced reflecting

click main core deeper of elements growth the Let's go a our segments. into large and

Turning the that The the delivers, growth Creo and simulation our double Simulation, quarter impressive Creo team all Creo and digits, of Creo. environment. demonstrate power X and continue to low improving another across including Slide demand ARR to reflecting additional eight, features differentiation in an CAD geos Ansys and functionalities growth with live delivered

X, extension called SaaS our which we includes module GTX, is on quarter, last Creo Atlas design which addition, In the platform. generative based announced

it's and Creo still this based module overall to be innovative for and the of design deliver reduced production and a making SaaS. impact manufactures as technology early between globe. design of some brands satisfaction a On found great plans performance at market. technology for company systems and real time integrated sports teams, design approach multi how PTC leveraging streamlined sectors. multi-step, profile how for and Atlas, car adopting premium systematically The and days to enormous engineering projects automotive times SaaS software of analysts design of the and a While can HPE design transition and Slide solutions, complete highest sequencing, production a and is example and HPE COXA, in products in By around miscommunication cause we products to motorsports agility great causing capabilities provider designs customer design CAD, generative and additive to our super example delayed and nine, core components, which workflows the risks. our simulation, simulation simplified generative COXA fully the car time improved Creo, time Inefficiencies were

that XX, PLM with the to geographic PLM geos to on in alliance. in through strength based Moving in PLM solid we continued broad QX, and in ARR demand And deliver quarter the channel. saw another see perspective very increased quarter. base, business, across saw all customer mid-teens we performance you'll our growth Microsoft Slide From for with our a strong a our reseller

systems a a and plays more proof PLM awards critical Cellcentric, which profile win we that cells during won which from transformation and XX with Microsoft. fuel of the point or Volvo hydrogen develops are helps cell understanding best-in-class. digital venture, that Partner in PTC's role Slide joint solution more On quarter, hydrogen truck fuel their we the three customers is PLM Incidentally, initiatives. believes Daimler the suggesting Another Year

Cellcentric independent great on backbone horizon, the deadline of in offering, displacement. cloud-based place a competitive the a an As application establishing Windchill PTC in for our needed becoming quickly. loomed PLM PLM they a landscape knew delivered best-in-class entity

Europe and businesses, management to quarter. the a ARR Moving On IoT begin by XX. a XX, Eaton, enterprise. APAC. on the of Rockwell multinational strength largest the driven discussed growth I'll power in with deploy high-teens their in IoT strategy we IoT delivered company, was saw transformation year-over-year Slide Slide to across how reseller need growth our on digital

worker XXX% service, able OEE, more forming multiple improvements realize use with improved efforts, reduction a maintenance, a cases. IoT compliance as in to including digital application deliver easily was helped upon can foundation in which unscheduled manual insights to and factory they quick Our SOPs. add wins, Eaton reduction

to shift the We retention me momentum. PTC on again and reality Let business all expansion rates, improving Vuforia and in the strong gaining XX, augmented opportunity with ARR The team growing QX, reality delivered larger portfolio is Slide geos. our augmented into sell results cross to across saw

see announced and sales tool Partner appreciate second resonates service their of customized quarter XD a Vuforia we mix consumers' to buyers was AR work the homes. paper the Atlas UK one considerable leveraged in Stannah are how create centric of to unique optimize for that of installed help scale processes, in new stairlift improved the how of and a floor of that fit Slide navigating to improved customer interactive against you'll the customers face to through Instruct, first CAD to Stairlifts allows in customized stairlifts. this customer competitors an help XX, home Stannah Vuforia AR floor are the leverage in limiting by to example, inspection procedures. example reality create, move room see could based innovative interaction of shorter solution design, SaaS could -- difficulty use come our customers. commercial visualize and This a to our to enterprises teams, home. ARR used that two-thirds When Stannah, dedicated of that bedroom. those we product, the residential and saw still configured delivers awards application On we XD chairlift With you won instructions company during to deliver enabled to be to sales confidence, Vuforia also an with by Microsoft and sellers to COVID, sales alliance Instruct from differentiation data augmented and through hologram stairs, using amount service designed the reality. from can the to residential in for living purchase cycle, face enable the potential communication. you their a Year increased deliver manufacturers inspection the consider production based customers the with Vuforia and a quarter engaged cycles value with work systems

product. Slide XX, very a had strong with in We deal to with year-over-year. now commercial bookings Onshape Turning a quarter XX% quarter, the Onshape ARR core delivered very of growth a turn as business market to in everything. sizes strong tool, larger and Onshape solutions continues gain and stronger the renewals, to education students share maturing SaaS ease for mobility and of thanks schools based to

we strong account commercial the both a enterprise Looking for see ahead and pipeline QX larger to business.

cooling same the engineering loss XX% took system the on installations, from of to team reclaimed manufacture and heating collaboration customer that and a Delta is designs highlighting through development the when stories especially product lot in system R&D applications and is specializing for Turning deployment capacity, and eliminated. innovation. environment. XX, to Onshape, of in distributed which companies medics IT in associated to feeding systems on the XX% portable design up and a time care time Slide problem fun battlefield. The reduce across a their design of software refrigeration customer solving military taking both CAD time. upgrades extreme They enabled by seeking with regular its and on team's design environments had XD to overhead, real the at was that unit premise company for time was licensing autonomous By an been moving contracted was

sales Moving rates to to growth traction over upselling XX. growth all looks XX%. note high. retention great Arena By Arena Arena Arena quarter. the I'm trajectory, that ARR operation of first a seeing in the increase European our keep during they with Arena on to its be customer continues opened delivering environments, measures strong Slide as penetration we also acquisition. and pleased current

products introductions nearly Geographic they able XX%. enable tracking to global by design needed flex better Arena growing was PTC delays teams solutions. to that solar, review Turning significantly manage and APAC storage dimensions Eliminate with The has through to one partners good helped and core ARR and cash and the mid-market trends pleased time a reduce and XX%. a and accountability. Windchill companies. to They great the of market. state wrapping in ARR performance and mid-teens delivered parts to breakout Onshape processes. its in improving global XX. XX, solid moving flow NEXTrackers in accelerate with of was toward shown FY the Arena. there. full it has pleased product zone basis. improve and The a growth in success ARR COVID the forward in the in strong to I'm in power seen We're strength source general quarter all of way core businesses. with Europe ARR PTC Onshape complement to and in complimentary smart year-to-date, of lacked is solar generation and development a With you been we Summarizing and design tomorrow. with of Kristian as health success the traditional in reflecting quarters, in and to automated performance Slide more get Slide the on growth to the year performance trackers small With fastest Creo different to across the IoT, product strong several of from Arena, times we've market, market as solar track recovery growth Creo driven company details and across row with the performance consistent results energy Naturally, XX% up look burgeoning Arena America's the having offering distributed of over with the and of and from improve XXX% grew and Windchill SAS and with CAD, is free was financial prior Slide with engineering I'll Arena able we're we a information fourth of turn manage its NEXTracker work guidance. XX NEXTracker, X% strong next growth companies company to cleantech on on plants PLM single and And on here approvals way to 'XX. that, by by take approval performance a growth and larger performance business, and

Kristian Talvitie

afternoon, Good Jim. everyone. Thanks,

like will references constant I'd results our most review note and non-GAAP that I in the I’ll be of and currency. to be Before results guidance rate growth discussing

third with quarter fiscal a we'll off of and guidance review review start me results, for our 'XX. let So then

XX% recognition, currency. XX, discipline the year-over-year in of XX% with was grew organic basis revenue Revenue modest with ARR and from of strong solid as as Slide and ASC increased execution, impact by QX contribution $XX XXX of in of was constant our year-over-year and $XXX QX million continued in revenue QX well ARR The on resulted along of reported, XX%. expectations. free XX% XX% reflects on to fiscal also driven growth flow or increased performance $X.XX Turning strong financial EPS non-GAAP line billion revenue year-over-year. a cash million as growth an Arena.

as buying expect times With in QX. we in now on three leverage market X.X%. and interest rate XX, with with ended of page balance debt $X.X cash the billion We which told sheet. be our our begin an I’ll $XXX less ratio, the of with million revolving to quarter. you shares we our $XX Turning credit paid back down to QX facility gross million during We of than about the aggregate goal,

neutral the and currency our guidance, tailwind. point our remain The as ARR Now, have while impact turning on from basis the guidance on of year. assumption an the approximately guidance assumptions rest few of assumptions Slide has throughout a XX changed to the they same to XX of key highlights

into turning quarter, billion, to XX% Last XX. of XX% XXX rate growth perspective to So putting ARR we from Slide to a impact. X.XX assumes be Arena points told no to ARR fiscal This organic 'XX FX you X.XX our guidance and to XX%. and we expected growth, basis that XX%

range Our currency still billion, points growth, billion XX points of XX% XX% is approximately assumes now to organic XX% and and $X.XX to XXX basis Arena growth, $X.XX is to revised from impact. XX% guidance basis which

'XX. We've growth in approximately ARR and to constant the still $XXX year-over-year. approximately consistent three continue our growth fiscal growth fiscal Regarding we consistent of expected be XX% rate range full expect to be for quarters guidance we year, the close linearity middle 'XX. delivered around currency as organic in for to flow out Free million is cash QX of the

the a free also due from $XX million offset flow million includes of approximately additional Arena this incremental to capital $X tax $XXX pay related we is million This debt. $XX unforecasted cash Our by cash incremental to and $XX an acquisition net approximately flow free dispute flow due foreign of $XX of Arena to fees, cash million year also related expenditures. is payment approximately an flow free interest of cash expect also restructuring and includes target million of payments. million Approximately of

and ramping offset collections in throughout reminder, As half interest the fourth by are will payment the first quarter. know, hit the timing bond as our a you headcount of year. And stronger in expenses

in the with more line target expectations delivered So been. than flow cash our free we've has year, and which of already the XX% is for

guidance turning are and raising the the year. EPS revenue Now P&L to guidance, guidance we for

growth XX% basis both $X.XXX XXX 'XX to to Arena to growth to XX% non-GAAP 'XX billion was previously Our XX% guidance of basis a $X.XX a for non-GAAP We're XX% from now from fiscal XX%. billion increasing and XX%, to rate GAAP fiscal GAAP of of which our and was now growth $X.XX XX% approximately of now expected Non-GAAP to increases XX% XXX and basis, That's $X.XX. XX%. billion to XX%, operating expecting includes XX from increases be to approximately is to and to FX. XX%, prior guidance a to $X.XX guidance points a operating points $X.XXX operating EPS revenue XX% to to guidance $X.XX XX%. from margin margin rate We're $X.XXX to now on X revised margin

Wrapping of an Turning expect to includes basis and ARR again organic for XX% ARR are $XX total the growth performance strong maintaining Slide which structure. XX% growth, XX% which XX, expecting what million to we up of in year, discipline had while delivered ARR was on in on ARR double full expense deferred our we you last told now quarter up, organic QX, is our and QX, million. approximately ARR deferred from we we in active $XX digit around growth financial

somewhat growth As deliver we has digit positioned year. attractive still what flow our cash unsteady double well Year-to-date strong a navigate remains for continue and environment. growth to to top very the macro as free performance line

to So operator with turn the and that, can we I'll over Q&A. the call begin the

Operator

your question [Operator come And from with Instructions]. Saket Barclays. first Kalia will

Saket Kalia

good inter Lots taking and it maybe thanks the afternoon, just saw Jim. the PTC But and by quarter. you, maybe way, announcements business this about I'll we think for for quarter. guys, to all I my stuff with to talk some the of get Hey, to keep fun out it here. Rockwell of of questions one

get could the economic PTC's Does of two that strategy, all your changes those relationship maybe I long-term some maybe make how if and if we at sense? long-term between impacts wondering may your on be how perspective of So view. it impact you was sort in

James Heppelmann

news, piece Rockwell of for biggest or course, the so. of Well, sure. $X.X Plex was acquiring billion Yes,

run Plex of Bill say so. is reported better one my would first with me well, that have in dozen Plex years in competed ever by all. Plex And, I a PTC, never fact, for XXX% and because know or life we who's to is it's new friends should of complimentary at Berutti, So pretty to all, everybody

acquire for we're what some fit kind acquire. company. does Plex synergies pleased of the think great And between what them. actually Rockwell right were, who they quite We PTC and see Plex us a we So, does. for opportunity know actually, decided had there's But I wasn't to is to that

way perspective to You innovation might that build Plex a my the almost together. adding in think we Rockwell's from suite

conflict So at see I any all. don't

think that is Rockwell we'll an so they probably partner, plays won Partner But sharing a attention maybe Plex. in committed that after had I out. cycles have some see important to of previously the Plex they to been Rockwell Year PTC, be with will general, award acquired how

is anything So I would that cash Rockwell, else partnership It's and is they shares? business to and run said probably have public of PTC on into dramatic hand. it and see as there fund Plex sell question me, to I think they're going think not a us but I you going built sort Rockwell changing don't somebody the important. suggested ask today, the And we forward. There also was their should to announcement with their were I say debt acquisition certainly the they new going going to asked

against it. collectively, and don't I hand, came new in capabilities than on on to help hand really have attention other competitors new bringing think that in we'll with changes one cycles anything it's and us something relationship other the So share might the

be there thought Saket. So that would my

Saket Kalia

helpful. queue. very it, back Got I'll in Jim. Thanks, hop

James Heppelmann

you. Thank

Operator

your Matthew And come with Mizuho. question will Broome from next

Matthew Broome

Clearly space recent that in M&A acquisition make you you an last Kristian. electrical sort the year. how just guess how adjacent did on I and opportunity? events you It'd general thoughts given itself particular theme. updated to interesting on on CAD that be view market as in and Jim that, see Hi an market of

James Heppelmann

activity to you're between probably Altium, Autodesk Yeah, some and I'm referring so guessing.

are The three but have a And companies. main So software printed of world and software design is circuit printed companies Altium point board that really there touch PLM, does. designers of integrated circuit our doesn't -- provide the CAD board with integrated other course, circuit then of one circuit software. software

We us have like them. a I'd don't partnership ways strengthen to to to partnership, trying see I really with acquire that Altium. find

For be to don't do. to which mood know one we're want we'd think they then top I secondarily, that I thing, have And to price in acquired. don't the Autodesk

which there Windchill, nice good are and a opportunity the hand and fit. Creo but there's partnership, us like with more Altium, which feel with fit to both do I market of nice part for a in with Arena, on the So lower the Onshape in a also also one are

are mechanical And Windchill put there So same there, and circuit be the Arena. who in customers of products. Onshape boards Creo true many and otherwise would

small lots given We us to acquire terms term, a there's MCAD. So partnership, the a don't called trying it of I there the did them circumstances, was them, ECAD near not ECAD really it the at product product, to very and like like a ECAD capabilities, interface it really acquisition small Onshape MCAD, of an was the it and was MCAD as company a between in was but synchronizes in VL I time an Altium. make of ability and import to in know do actually But ECAD see real eCAD

activities want our useful they if happy forward lots that sides strengthening of remain company, to But we a perfectly to that anyway, partnership. it's prove partnership, I'm there's And in some integration Altium to both So on look do. the know, PTC we of actually you good synergy standalone. because of is going

Matthew Broome

design I then design of sense. and maybe about, ask GD an seeing how you integral on? seen just makes mainstream interest cars, so and demand the part we process general with of customer can it, option for this generative any close and and Have base. sort quickly And for Got within planes are become Creo new to

James Heppelmann

ideas. just engineer's really pretty to computer as is follow wrap was documenting software aided a results so they around, some said, is of companies this very the their opposed aided just it that people out, But thought around. wasn't computer proofs frankly, much you good concept. Yeah, and I design, But know, there's different doing what it always to design, think capturing computer lot spectacular the providing where I'll That's is simply the but And we get are process a engineer, sometime. a it doing of I the head the different engineering, designer, pretty results. ifs trying it, ideas like the actually, exploring aiding ideas. of the of AI way But

So there's of lot interest. definitely a

it'll think super mainstream, I of will while wave CAD come in to certainly, next a over strong the a think be it it's in don't on to growth going I five years. mechanical but take near term. the

Matthew Broome

perfect. Alright, very Thanks much.

Operator

And Capital. your come question Jason Celino with will from next KeyBanc

is open. line Your

Jason Celino

my Hey, gray also IoT very that constant in segment bit Jim the the on growth, [ph] to Onshape turnaround? XX% Is currency impressive. salary thanks growth taking growth and that AR the But well. Video overhang beat quite doing for business XX% spill did gets the organic level. side, question. what

James Heppelmann

look in Jason you we started lot a much a business about is terms as of at and growth because of segment if with bigger bit sooner scale, well, scale IoT had XX% success that really Yeah, IoT. of it.

way, has now, IoT segment. big in it right So, influence on a the overall the a gross performance of goes, overall as

the So in COVID. most and most is was still it slower of from to of IoT growth related hangovers

sales come and following quantity really of deal kind general, a we to sales what's not smaller in people we conservatism around back But deals, doing attribute projects I what but general of IoT, sizes, improved year-over-year, COVID. as be. is on which the them at in speed look they happening seeing want in we're to if to factories, mean, front good have just where I still So with they're back IoT

ARR place that, backlog, we deferred, we time of point headwind in a headwind to Well, the that year You landed last a the what were deferred year. the growth, that's remember called in lot X was but sales we where might that because at beginning headwind. IoT, the our at a X clearly softest, had point to our mentioned of

coming now some So is home of roost. that to

advantage also we just work how 'XX. that's much half in we out but of fiscal the we'll our sell quarter, of what and maturing did of not of front it's half COVID way round trip of we the backlog in that the pressure quarter, to back 'XX and another the fiscal take Now it's kind of as impacts

fiscal Let's 'XX. say mostly in

Jason Celino

queue. Okay, call. excellent. for Thank you back I'll great, get the in

Operator

Bank question from next And of will America. your come Obin with Andrew

open. Your line is

Andrew Obin

Yes, good afternoon.

James Heppelmann

Hey Andrew.

Andrew Obin

Hey, about how actually, about Kristian. Question Onshape. you, Jim, are question

sort towards in of where just understood how in model about away about more talked of from And businesses? I product transitioning A, and enterprises sort are customer larger Can of, small sort and medium correctly. you more you of enterprise You your approaching Thank core this you are you. mature customers? base where talk larger if and sort we

James Heppelmann

Okay, Andrew, are questions. good those

using account use enterprise, defined us definition. small a when but the the at for that's seats first team, PTC, generally it of of by I the I which So means definition an XX was It's rest term kind more. all, their Onshape of as enterprise, or take of would

business So say companies. I medium is used of enterprise small the company, Onshape size and is definition by commercial would the a

I and hay you that market and just where now. tell software market. Onshape effectively making our our buying does Arena a it's Now, And different Windchill participate are in the would that Creo not matter, software for right

do both it's some side its end page So we're a CATIA works of until of the mid-market honestly, years ago products had and in fact, from old borrowing segmentation. in it's and And that a so in strategy bit market. the when they for XX high But all a complimentary. And two ENOVIA they market XX years side the strategy those SolidWorks retired. by prospered

Creo I special. don't Atlas Windchill other a dent that going SaaS and technology Arena, the makes Windchill called so things, you're and And to are amongst and think adopting Onshape so that see because Onshape into Creo put

by investor stealing others picking cherry Turbo accounts had then you starting So when day, of large And things ease all and Onshape. them I from of pretty and SaaS here brands for And accounts, Garrett other that's the use course of believe love. from went larger qualities Onshape. a we recognize, you they're stealing was, and of to company a really to get went that but some they an remember whose at Onshape And SolidWorks. large there, it's few might CATIA basically present it who

So medium it mature accounts a more served I could the and before think size lot complicated an be high expensive, pick is to product, may the attractive generally for but by of needs think occasional viable over otherwise they're account, is end to really products, it be Onshape using. speaking, of an more larger start technology who it'll a more I replacement

Andrew Obin

queue. a answer. get back the That's in so Thanks I'll great much.

James Heppelmann

are Operator? Thanks. Operator you muted?

Operator

will question with from Ken come Guggenheim. Wong next your And

is open. line Your

Ken Wong

I you Thanks reseller. just saw just taking for that quick. back circle question. wanted I Rockwell my guys came in Rockwell Operator back time. real on largest to IoT the mentioned became

dynamic you earlier what Just with we Saket's on a position there? know? And wondering, had is as of some forward, we a think through you that that the going new discussion of that is sustains of points question, think based kind kind

James Heppelmann

field in most AR, growing, that. Rockwell has clear and and is And reseller Yeah, resellers, largely been growing that PLM. on we of many IoT CAD as in a and and other the let's reselling but and of well they're be have growing

AR, competitor, become that but post I that don't lots and want not when has even me Hey, platform, IoT Rockwell available PLM. CAD how about of important of some and in says, talked need and an because need an Blake platform an platform, to Blake, of PLM his fits reseller Siemens even I AR this for IoT to CAD ending. and sure but I have IoT So Plex. required, with strategy has When stuff, I a I his and AR, to all and see IoT

suite. important remain capabilities brought Factory there's any the the he Talk we of acquired innovation Plex the nothing to up that acquisition So, in PTC Blake supplants in that and

and too. think its I need with I PTC. of some we're I what sharing just attention that's have upside I it, child kind think mindshare another who some already I be now say, that even add I maybe understand opportunities. And like and any going going to complimentary whatsoever, in So family Rockwell, the they're that as has said, to with to because some strategy, to Blake don't Plex let's with noted doing Rockwell it's issue

going partnership. materially it's think to don't change I our So

Ken Wong

the Jim. Got insight Thanks it. Thanks. for there

Operator

And your with from Securities. Blair will Abernethy question Rosenblatt next come

Blair Abernethy

nice guys. quarter Thanks. Jim, guys, Hi,

Just year? want they are you vis-à-vis Well, next two thoughts of months. through coming move we are there parallel, together. working And to ordered how team? in thinking as dig Are in pipeline. now for a the Xish little the about you there your go-to-market Onshapes you've as those that Arena, more into on for and kind What sort of

James Heppelmann

Okay, great question.

So required. of performance with all, since has, the of it we're fact, first pleased accelerated very in Arena,

are feel in doing the yet. game several like, we're fully I that there things Now, aren't

generated some which is PLM, some rave technical is integration for including Onshape. reviews SaaS from CAD, between customers. And to the if want link for and and both in you And customer religion, versa. to technical is wants SaaS have they really think they about products, And they're it, everything, because vice them SaaS any who a fact, that built of the One integration easy do, we've base. two

we bigger, might to near cross do benefit be be think selling arena term, could fair KNCs there'll [ph] That accounts of number PLM. So a that accounts more. to generate Onshape little need Arena there. wanting like some accounts, CAD might to accrue more might not the that because XX in But see tend a or

users might sometimes based is there'll then is it So some nature, do Arena be benefit really companies. American the both company Europe, bit an we essentially business for Arena a but really but in directions, I Asian in sales first, business, some U.S. might none to help think the globalize of than thing have not and because Onshape in they're can a other Asia tiny force,

have and operation help around capabilities you and to PTC around underway reps, European operations, as all so way, we but time the effective all where the we forth. are the have go-to-market we operation and to countries outside they accounts still much living the Onshape world them it's of I a pretty to reps of By cost balanced of place, that's kind globally more have don't the right and sales as have arena the the customers zones the all basically go-to-market course, opened opposed need kind we and next and operation. mentioned, different larger European So a their quickly. that spread sales both inside a And the model, PTC, and in over world sales

plan going to need have out, for levels we some So generate higher something to Arena acceleration think certainly we're but with. I to But to to next we be year. work that still able even all

Blair Abernethy

Great, thank you.

Operator

Stifel. your next question Borg come And will Adam from with

is line open. Your

Adam Borg

bit comment Maybe a a head thanks on so much fourth being little a for And taking more curious quarter? Just into the you pipeline as bit the could just you question. talk important you the Great. there the can business, about little about IoT hangover? first if

James Heppelmann

start called of you its is on but Well, dates, deal also kind back scream held deferred to of sort been where backlog, I a a backline price increases, so backlog what And think bookings. in growth IoT call ARR. in look rate has at and function at PPC, forth. we ARR of softer, any used if now is sizes -- again, churn, bookings, new And

the pipeline, pretty and So, mean, I at the confident when though, we good. we look pretty feel it looks forecast,

forecast and So certainly count. we're strong Like I said, I think want going that's going we're year. not year we a on transaction certainly that I Bookings next where in I up them expect the to back are the in year-over-year. end position more the to And forward to size think just than on based pipeline. the note, on better deal

Adam Borg

replatforming non-trivial maybe Windchill question in follow-up, and in to undertaking. about earlier you obviously just quick as And and helpful. a efforts it’s the Super talked Creo

that are on how R&D going focused So just percent what and replatforming should that again. curious kind of today and Thanks, of really how efforts your evolve?

James Heppelmann

deliver in value, and build Yeah, to module be But look then Atlas, approach, going have what the all going good to is module. well, subsystems cost better generative we another you we're is, customers model profile extension, it’s end, to kind a if and to more module big by replatform. through be systematic key do. we approach, in did of not take take the to it capabilities, that's and this be with a bang Windchill Creo, from at And able particular, on to explain design trying better then and to SaaS, a them we'll that what want

incrementally And flip and And time this taking some so might I'll envision point, customer us over all and switch and a years. we few just then the the buy more more at a SaaS. it see, just take SaaS from

invent the trying great. onto, it's So is, and the again, Yes, under that's development mean, years big Atlas, not been good news or platform as don't it a replatforming guys, to as I Onshape platform, fantastic effort. eight Big we're we're it's development has really it of that think seven for think platform, for The Bang, of a incremental.

will our going to but in which actually like we're decade tell system, lines. that SaaS base the next bigger, we're platform probably PTC's into powers breathe software end even is Creo that a time feel generation growth to CAD so get Onshape that's get of to So and really something but great of singular going another the or product I going Windchill

Adam Borg

Excellent. Thanks so much.

Operator

from Your Capital. Hedberg Matt RBC next come will with question

Matthew Swanson

Thanks, Matt Matt. guys. is for This on Great. Swanson

on-premise, digital appreciated But really tailwinds right they're in as to as now that customers customers, towards presumably more as secular good returning about those long-term your like, we're thinking towards enterprise transformation. conversations the you've Arena? are starting that, I the to be Jim not think commentary and customers so about, developing seen guess, for around of changes fit plan SaaS what might watch when your maybe So What around more what's especially broadly, any from a and Onshape? segment, that Arena doing driving on you're kind or they a

James Heppelmann

last an question there's dramatically survey over like, are minority want good where that Windchill the SaaS saying, Creo it's a to from our customers their and receptivity a towards very well, and and year, interesting do, interesting to of I SaaS. I reach strong majority test them receptivity we we -- a expanded out mean, Yeah, and Matt,

it, about Now, think products. and if you sticky Creo very Windchill are

go wonderful. project. of be want So within switch and worth user they're I you're SaaS, CAD I but Creo don't saying a that's that'd to CAD within to go systems, if like, SaaS, could a If system, big I got because could, end of a be mean, want that'd high years when you've Windchill But years' wonderful. SaaS, switching to data. I I and especially

it's of some big a SaaS? to going runs they forward. your well office, desktop thing a up the set how do from the work home? the office shuffle workforce then software, computer just always for on in and mobile in desktop all, the everybody it then the better Now, hard, if and did example, the first big to application. you strategy with this be Do forth. software, another files computer desktop, cloud, Well, CAD back all And never The you on was I if realize want why was if how data they go you same do hybrid mean, working it'd is at have home?

worked So great, shutdowns the web COVID, somewhere. based because and Windchill is for Windchill during server the actually initial web example, some in data is

you story. computer whole might be market, it Windchill go software, bunch Creo different executable. you're whatever. and a a same browser So what a we'd and computer, it's your That's be might a web that on client installed, with of fat in jump stuff. there, doing cam big a whatever software into or home have call integrated just and you a simulation, the you Typically, on other you even modules Creo tablet phone typically to and log everything like

ecosystem So licensing whatnot. recreate you how obstacles And that software it's on of hard. there's do whole at and there's that computer, set home, up a

the that on desktop a user pipe lot into work you computer of ran So is a infrastructure from interface and computer software onto used at logged the they work, computer at people at the home, virtual at the is computer home. did, the

for optimized so it is like things graphics pretty If you crappy completely And internet. when not a display workday. do and lost across CAD, the the This did you're really is all that, makes really the for way piping forth. optimizations that to CAD performance

the not So the designed move because can computer want to something application first in in desktop and put place, really don't on the you means that it's if there, the around. data ideally, never you that's put

So with offload cost. to more people systems. the complex but These Windchill you like of can move around, are

if second work, a like three a days of system the they They'd office, two the great. thing So software anytime, an for and let from from mobility and time is change CAD to it, come until get real A in check-in week. of cannot. the it costs with based servers, home we is premise rid infrastructure software, week lot file like time, real administrators, value a of stuff. get pay are thing want, same of times Well, are work servers, and the with again, third of file to, they'd for that I guys kind And a stuff the we're done you saying, feeding other there's cost. it. would and you Any take in there's at SaaS. me for collaboration. the people saying, one they're of rid the systems lot changing I'll CAD, tied the care work I'm lot a but can't declare the can kind anywhere, do check-out in you can I on about that look is used working from to I the thing and it, the of up of I'm IP could of not be days I get work it file, you Again, But how so at talked can't just lock means that well of same one

to switching Windchill that want Creo the and So are from them. we're Onshape to all let's Windchill. and are I say qualities what Arena just to can Creo go there without more and people. what really customers is on, benefits And bring But that's of trying important

Matthew Swanson

transformation. It's digital a I sense. add compelling a makes value can that more of on proposition. really Yes, one ton If

moving growth long kind the those it's Can been a use as group talking you of PLM, It's of interesting? something time beyond seemed into part bit mentioned customers there. I really and progress traditional think You with deeper we've of for about kind about that cases? that, of and talk PLM, a little always

James Heppelmann

it's really what's the was really more products. much light, appreciated of always that think is but record I system for true, PLM is now, Yes, it come into

as company, which CRM or of industrial an is whatever. your system or absolutely system, important for it's customers, employees, for in your your system HR the PLM, as So record

mobile, to think companies and really in be global and want digitized you I when that. So, become and these processes mobile all

marketing, against. product You realize, reliable can service, a we whatever everybody that need in data source engineering, transact of sales, manufacturing,

and it. to all access we system one So need single need we

have starting because making that's have about we selling about data honestly, a the across was making and hear of are company which everybody the is more away. our generation recognized engineer's get they I it efficient, and the products, we're need to record industrial what for has more access it's transformation the is, of mean, that to them, so be for that everybody down data, first digital And is more system needs two PLM being now accurate them, record shouldn't kind companies of to supporting product And clicks system not PLM. companies. sure making without products manufacturing we the saying, as hey, that about and product pricing them, journey the them, far to products? of This and decisions can't very right more of

ships data to won, contract support, it's access So I of different. example think product about everybody that supporting into having all the emerging something systems data. Quick PLM support is ships, really would be maybe we they in it's about contain,

we're engineering productivity. a so ships PLM of transformation support engineered, years but manufactured And operation good using of operation versus the the of ship, of actually, ago. not manufacturing, were example of engineering concepts kind it's digital to the And that

Matthew Swanson

Thanks for the guys. time,

James Heppelmann

Thank you.

Operator

with Your Griffin Jay next question will come from Vleeschhouwer Securities.

Your line is open.

Jay Vleeschhouwer

for like Good it I noted thing to and PLM strategies of a the dimensions for various fairly that's about as called that the your for Creo what on It session, aside you. Onshape very Creo of have last and dimensions I of a roadmap you ask six good executables. your strategy, was is from the have programs which conference was partner at Onshape, interesting the want Thank week, is question and list and The five sales plans dimensions strategy to course. sessions strategy about. evening. the part the Jim, plus

for the manufacturing cloud. lists referred how you're the for they to you thing? launching achieve, And terms Microsoft wondering times, along perhaps of So what manufacturing the or necessarily difficult in they're And you achieve, perhaps secondly, their those to of thinking ones that I'm to with then important which most drafting think most the you cloud? opportunity about same number cusp with the you about aren't do are do how of on on a

James Heppelmann

level represent case to engineering should of try first plus them of that many, these have the back yet priorities, these Onshape, to off product. the room But and smaller In front case product, everybody. from I those Creo, there not we key that lists down the so are would the Jay, products, XX because younger on In large it. don't is, tighter have the narrow four XX five otherwise Okay, me, the in that's I of working trying in people you think But all do, have that ones. products. or they're it's to near behind what they top head, and on priorities, or hate of on XXX my there's down focus resources to teams with of

partners four capacity XX execute both We of that our think And important, we we certainly share ones. you five where can't to going XX, in what is. initiatives have guess think where or big time we're money or products. were wearing is think I So trying a execute your on but we're at just a partner four But hat we conference. the with frankly or to five these that day the as I and

over Kathleen Officer, Chief she's over And better say, me, actually helpful, manufacturing The help together. and former align a with us want and question conversations had building do out PTC there. that's it's just to we able culture our they is lot cloud, she's let's because that make going we've a quite what going Microsoft that to, fact between There's there. on to respect coach the aligned went now figuring cloud. happen. gone on quite how now So I me, Microsoft want and and company’s I'm to of Kathleen and conversations PTC of Strategy what's manufacturing to their make close to Mitford, since are to to, With about some that there just

three a the there's with Microsoft, So of happening lot awards. of good stuff Year again, Partner

good to work out, I once with how think for we some align out be tightly there, put But the figure manufacturing cloud will it. it they there's do us.

Jay Vleeschhouwer

Thank you, Jim.

Operator

it back that for over today. our And session for now is the Walt, for Emily will closing comments. question-and-answer hand to all I

Emily Walt

call everyone Peter. in participating us be like number coming on the Thanks the of virtual quarter can the I'd And a for on today. find our to joining seeing in and all events PTC thank We'll evening. investor look this on months. again, thank you your for forward circuit in investor the to We you and details have website. you great interest a

James Heppelmann

everybody. Thanks,

Kristian Talvitie

a Have day. you. Thank good

Operator

you This conference participating. concludes for call. today's Thank

You may now disconnect.

PTC (PTC) 29 Jul 212021 Q3 Earnings call transcript