PTC - Earnings call transcript Q1 2025

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to PTC's 2025 First Quarter Conference Call. [Operator Instructions] I would now like to turn the call over to Matt Shimao, PTC's Head of Investor Relations. Please go ahead.

Matthew Shimao

Good afternoon. welcome XXXX and Call. Quarter Sarah, you, to First PTC's Conference Thank

is through the Barua, replay today Financial www.ptc.com. Talvitie, call Neil today of Officer. broadcast Executive conference On be are at Kristian the Chief call call available and audio an webcast, Officer; will and Today's being a live later Chief

from deal guidance those may operating results. future this PTC call, to results forward-looking the will During in actual such projected make with statements statements. as differ events, forward-looking materially statements, including future Because

Additional materially well information with PTC's filings Form concerning in as be forward-looking to factors XX-K, that could release. other as in cause from statements the today's press actual U.S. results annual found the Form and differ report Securities on those and in XX-Q Commission can Exchange

guidance including and X, February during these forward-looking provided today's are statements. obligation update this XXXX, of as valid to statements, forward-looking The only date, PTC no assumes call

non-GAAP discuss reconciliation During not on of the A can available the will financial accordance PTC the principles. today's presented website. most call, measures. non-GAAP non-GAAP in GAAP release measures press measures generally accounting be measures comparable in our made to are with accepted directly These found financial

turn to that, I'd to Executive PTC's Chief Neil call With like Barua. the over Officer,

Neil Barua

our Thank underscores changes. our execution. with free business the and guidance you, we and which focus of fiscal our Matt, provided flow in and macro started and better consistency our anticipated good go-to-market the than strength afternoon, a our diversified first as cash coming on XXXX everyone. PTC model slightly quarter results The contemplated of ARR disciplined difficult

comments I'll many key my as well initiatives with am momentum. business to as doing today. have AI. exit internally during in XXXX ensure intensity by we the releases, have transformation selling augmented While increased purposeful environment important we sluggish more we see go-to-market our on share the continue work product in are the includes we with QX, fiscal focus we I This on these to pleased a

guidance For fiscal QX we 'XX, appropriate. we've think the reiterated our and flow the we Kristian year will for through ARR guidance the full is free ranges, and cash you take details. and provided

Turning to X. Slide

like quarter changes our an on go-to-market the First organization. to the update off, be significant and last our progress, approach announced We've we provide to made changes I'd vertically oriented to efforts our are and These for are us to shareholders. designed positioned opportunities align value our ensure energizing long-term with our and we customers remain team reshaping to and growth well customers. deliver

transformation, for Chief promise. we December. Dahdah the Revenue enterprise impact and Rob's and standards our team growth setting on focus on already sustained stages software evident. is teams, in our also As time. Rob over part welcomed as His this sales sales, Officer instilling reputation across marketing of excellence his and Rob alignment in are for greater customer in early success stage the performance showing is

to raise In success. is across Rob, addition organization. sales perspectives standards in the marketing, we've customer enablement, added bar bring enablement and and growth and their high fresh leadership roles These key technical hires to mandate our

in low our not There focus far. time encouraged year. the organizational critical we as these efforts Our off sustainable, To will take the our clear, a hitting changes are and take speed, seeing I'm vertical is to delivering ARR be so stride and we double-digit approach to fruit, I'm what expect foot and by growth. exit will be we pedal. and bear to change step

Slide portfolio to Let's our which strategy. highlights move and now X, product

core digital and That's as our transformation what enable. customer focusing areas We're believe possible customers resources higher the which portfolio our without not product complexity workflows, to pace Our their introduce greatest products with the need X products new value. can that our and across a is even of create faster increases. at we attention quality on

driven which Windchill primarily product; which which As by areas PLM, are primarily by by primarily our focus Codebeamer focus products; our on SLM, lastly, is product; driven X product; CAD, a driven driven SaaS. our is ALM, these and ServiceMax our reminder, is Creo by which our continued is

In structure instructions. employees, more Creo some of our innovative extend in Today, floor upcoming design ALM, open work View composite PLM further customers past solution. which and our their XD Creo of thermal release physics we are Codebeamer capabilities the our advancements Both I'd we're ALM to shop modules enabling CAD, Windchill from generative within about and for get like from milestone FedRAMP in AI-driven areas. new value to opens engine. embedded adds of certification excited will the to these with use highlight cases highly a data. quarter, digital design market-leading across to designs. exciting for product X.X, our In these Navigate and instructions scalability focus new Starting PLM XX opportunities up that with extending FA&D Work new competition In the SLM, achieved leapfrogs this vertical. ServiceMax, critical just We're

tools. place, the in for year, cloud-native including delivering XX CAM SaaS over platform Onshape, and also advance, to industry's CAD new at significant also continues advanced releases only a cloud-native the And and servicing SaaS, PDM remarkable past

we're encouraged further AI, presents. and offerings opportunity by We are this the differentiating also with our core

this into get let's So area.

the fundamentally data a AI promise be use. on is heart The the industries and in customers' the Creo, manage serve in create, be businesses. at believe in material PTC front. could to leader on to We or product transformed design Windchill data data a based and data great ServiceMax. it used time requirements bills access data in Codebeamer, are history is position of to of This this our data of over that is PTC share service by we be and to solutions AI, putting in will

speed in quality and their use everyday operations of have data workflows, We how this that we it are that product our productivity. impact advantaged in of and development, with experience employee the has on decades customers

understanding sauce. said AI for secret a AI Our Throughout AI. front work our our in and We've for have our is value-based data I taking the been access store, blueprint for been and customer how and It's prominent to on use practical products XXXX, of our identified this use applying and cases has our hard in applications concert this approach portfolio most across customers. at PTC feedback. with

information, allowing of tasks interrogate Our operate notifying and in their a data assistant-like requirements automate the to offerings confirm such workflows change. to as capacities engineers systems proactively or in accelerate design customers

task. to pleased information map domain the to these workflows connecting have specialty engineering, embedded scenes, that their offerings will specific next and launch domains share and agents will interact also complete AI first agents sources a service within across in out the data information AI offerings These specialized or of will best week they'll manufacturing ServiceMax. intelligently the them. and These to I'm behind with serve

technology, and through the natural job for workforce automate instance ServiceMax ServiceMax mode offering top proactive recommendations them manual technicians GenAI much everyone. Using with offering customers, and the interact latest or specific it's in access have the language. tasks several The for agents all a predictive for of to that ready a questions maintenance. beta delivery agents can and XXXX documentation asset, now about scheduling AI agents enablement. includes These in service with This assist scheduling, was data can answer AI review and with stored ServiceMax and

here The main doing time. technicians, in greater goal is for more less efficiency

ServiceMax This be of entry part ServiceMax are customers a will point AI AI-powered charge, for As what introducing will a be this features. per we're subscription user the launch, new month to. SKU, is used which which per

road ServiceMax large other models AI ServiceMax SKU. by AI-powered fiscal map based that capabilities same Our language be and can 'XX the accessed for includes features on

improve more models. accessing adoption AI-powered the us faster customers. to lead and ways learn This that continue believe will of offerings We pricing and will to features happier allow and more to

of In a I'm potential been with critical beta to event November because on version at generative meeting testing the feedback, product Microsoft's of to much AI These requirements. in development of AI customers. and their regulatory for software importance and process fanfare. hardware product and many Volkswagen software-defined Ignite for so Microsoft, for customer strategies we in customers safety excited features Codebeamer addition, requirements real overall around store Codebeamer, the in and here have Codebeamer for demonstrated Based our which Group data we

functionality features become and previews new AI will requirements, the encourage workflows. improve more draw upcoming the they'll can help as products, offerings new engineering our against requirements Creo, upgrades We're Air AI and provide AI other and Paris the of Windchill, to Arena, the also These Onshape, goal compare standards. within quality and of work Ultimately, value customers, HMI to and incremental critical new Show. existing you at with such teams customers duplicate on quality requirements is hard expect the day-to-day at Servigistics existing events even remove

now customer Turning QX that examples offerings. highlight to core some our from

Moving Slide X. cross-sell customers. opportunity base about to ALM Codebeamer previously our We've to to talked of Windchill our

Today's This to market. beyond to since business time theme. deploying to help enable customer customer in investing engineering increasingly platform highly story Windchill driven. differentiated products, area customer together XXXX, collaboration The has Windchill working medtech as all enterprise-wide highlights broadly software in. leveraging As of in their a drive types Codebeamer been are X become first environment, products and this an it core accelerate to a we our is space,

Software-defined a differentiation. area software focus has driver a become are of products as customer their this for product key

to existing software rapid are software software-driven and able over comes software the that upgrades with need product in to time. developed value their main same number opportunity customers challenges managing be fact, products. with that the new and for unique upgradable are products time, the updated add At the In associated of for they configurations charge their expansion to growth

these use their of the and plans. Furthermore, to focused regulatory fragmented map part in catalyst and is a compliance. the and their of is is defense system vertical adoption help was now customer similar They decided there happy ALM driving are ALM. is med a this and and Codebeamer, Codebeamer, customer user to software legacy on X deal. on ALM releases needs with of modernizing of federal, vendors. This including key of why expanding future their and aerospace road managing Windchill This automotive verticals, Codebeamer's standardize displacing Cross-selling all they safety future variants tech that an and current aligns additional that

rapid development the of for the are their required automate enables for in ensure modern embedded most ALM industries components, Codebeamer is processes. and is Traceability help compliance tools is agile an and regulatory regulated software to environment. increase that in hardware this companies product looking highly With that safety-critical,

our of we positioned vertical. Codebeamer business in some are PTC XX use device example, customer and to top specific grow this well footprint the expand fashion, our manufacturers we public this medical in Beyond and XX believe

ALM focus. represents verticals really in alignment interesting opportunity our growth with across multiple a PLM

As working such, we to have Codebeamer, and been our alongside increasing Creo in leadership. investments our accelerate Windchill

story Slide production. to drive leadership of aerospace Turning This vertical high-growth a federal, that to invest next demand a strong is digital and good in company well-established the X. transformation customer This customer and customer our in growth in example to and is competitive is continues needs environment. increase on defense market in a seeing to

customers makes that for wind difference. a are amount their at designs where resistance We're are talking possible. addition, physically boundary In what the big a products of state-of-the-art small about very is asking of

product this enterprise challenges, in their engineering in depends and data. and this because why is backbone customer and R&D-centric improvements this an it they tackle tools as for their enterprise best-in-class is for materials. add Generative engineering Simulation chose invest on design design to focus Live, these excellence to Creo Design continue To help Windchill advanced Creo will for further competitive. that's and customer this capabilities, Design. their produce with quality to in stay lighter using at faster Creo less pace These products weight To higher will modules modules, a Composites including they customer needs

gone operational collaboration This Windchill expand its also access quality, to platform data. supply gains. They driving customer provided real-time viral, enterprise product to to including sales functions, and is has system continuing an usage productivity data have as chain, service, around Windchill drive trusted product

and employee follow-on These with ARR more to on this from order are base in product to for run. seats more and Creo benefits factory Windchill, the a to as outcomes Currently, large expansion data customer's customer's significantly to approximately access room floor. well further this has grown having XX% leading employees Windchill as of

closing, where immensely about remain heading. In I is optimistic PTC

for are your focus we we over understand Combine that and traction, gaining you you why Thank are that customers. initiatives strategic PTC. focused transformative can innovations Our are support you. with in are energized. everything purposeful on changes in we with Kristian, go-to-market and driving and accountability and do, to resonating to interest

Kristian Talvitie

with Starting Thanks, Neil, off Slide everyone. X. hello, and

flow our results and guidance. free were with in line ARR in QX cash Our

basis. believe As help metrics to of our flow cash ARR performance, $X.XXX you guidance our we FX performance ARR disclose constant our billion, important a impact up on end fiscal of using constant 'XX currency most business. At To the we and ARR assess 'XX, our the rates know, were was currency of ARR free and the plan QX excluding provide our FX understand volatility, year-over-year. XX% the results business investors

which ARR earnings QX, we experiencing years continues previous QX with rates. now, in saw quarter currency for a environment growth impacted continuation impact was our a and called selling expectations In we to from the been by challenging this our on a ago, of call. of Also couple factors, constant out close we've our X consistent

ARR factor contracts in back first that factor which a couple the year. And to fiscal QX, second fiscal the in deferred churn The this later resulted are come 'XX. into of of ARR linearity was contracted in was

Moving that our on focus realignment, QX flow. the QX, Note million of to free to areas related time. $XXX in of go-to-market we continue line our free which million the our with XX% cash is expectations. our year-over-year we as cash was flow at up to cash key in in invest flow same $XX absorbed generated outflows In

Slide to Turning XX.

our Let's detail. growth constant look ARR at more in currency

driven ARR Americas driven by X% constant and in IoT the at primarily X% year-over-year year-over-year and currency Looking Europe constant primarily in a by our basis, in in ARR XX% Codebeamer, XX% product PLM, grew groups, On Asia growth our Windchill, Creo Pacific. by currency CAD, ServiceMax. both was and and

our top unique is aligns based our resilience, times. our our low portfolio, with our R&D ARR product good shown customers. and supported line selling churn prioritize to digital which customer environment, overall of challenging model, has investments through Our the base subscription the by growth Despite transformation the for their rate on propensity needs

of Turning with the and equivalents $XXX gross million. ended QX we levered. were to XX. Slide X.Xx We cash was and $X.XXX At of QX, billion, cash debt end

down under program. buy debt, our We repurchase shares started and billion continue to diligently pay we back $X to our share

stock. During debt used $XXX QX, to our XXX,XXX million repurchase $XX and our of down we paid cash by million of common shares

expiration February, to million on intend all coming know, drawing due hand have credit bond with and we $XXX on cash you As our revolving by that's we a facility. in which retire upon

the cash the consistency Given aim and we predictability of balance. business, to low maintain a

return authorization As we we place to assuming shareholders. a have now how that. to such, have us in cash, of do flexibility The we we expect lot excess in it gives

million with million currently expected $XXX In $XX line we said in previously, to what approximately another of we've intend common our with back approximately fiscal 'XX, buy QX. of stock in repurchases

into approximately share also XX% the taking consideration our Our shareholders debt-to-EBITDA strategic while to long-term free to rate return environment flow and cash opportunities. remains via assuming below goal, of ratio repurchases is Xx our interest

Finally, fully fiscal approximately fiscal million, currently was and to be 'XX. diluted flat XXX shares diluted our expect in we share 'XX in count fully

I'll you Slide that, With through on take XX. guidance our

ARR this the slide are rates on September XXXX. of 'XX on based of our All fiscal plan XX, as amounts

allowing take we are go-to-market constant expect subscription given taken our X% their to growth QX fiscal fiscal investments business market expected 'XX that of For and effect, differentiated XX% for changes of model, X.X% opportunities have time to currency approximately time and we've over our actions for of with approximately to intended 'XX. portfolio, the ARR, the product align to our resilience our

not consulting cash revenue our our lines restructuring On sales million the flow get severance go-to-market We're fiscal to will of through out in all cash next charge, slides. we're guiding related million we've fees on X to $XXX for ARR to cost of $XX of absorbs $XXX flow, realignment on and approximately previously. million currency on marketing 'XX, more cash and the a detail this and discussed I'll into which P&L. calling so flow free the constant outflows of

flow of cash reinvesting on go-to-market we our year this our previous first and free to Based cash said we the In on value fiscal X with lowest flow largely cost-cutting years. our a the to this 'XX, believe to expect greatest we've a As outflows, deliver customers. generation organization to We're expect is generated we expected areas the our exercise. similar seasonality in invoicing our the the approximately of XX% in not previously, be compared focus for cash and be half quarter. QX fiscal

approximately $XX approximately cash currency we're million, to Note fiscal of on for related flow absorbs that $X total our of not free $XXX cash is the outflows of QX realignment. a basis. million 'XX, For guidance which guiding constant of go-to-market million flow our

an fluctuations So approximately impact XX% operating non-GAAP XX% in foreign of have are of ARR currencies. in Approximately our can either transacted and foreign FX direction. and cost transacted in is expenses revenue of our currencies

somewhat natural So of we hedge. have a

said, FX seeing FX and We'll we some at QX point, still as have pressure how this progress of move flow see an feel with significant rates moves cash we 'XX. through guidance the year. for That year. our can for fiscal and we're impact, comfortable this that But

in we our to the interest in regulations have we predict, structure can a our disciplined flow to be tax the rates place. confidence FX, in difficult collections and process high have predictability and forecasting free While cash degree changes cash of of due budgeting

X bill contract at regardless over consistent maintained our upfront practices primarily a billing time, of time. lengths. We Importantly, term we've customers year annually

having internal our cash budgeting inflows. that begin free by X internal flow growth subscription our comparable. process. we've over for business we are It Furthermore, at over year fiscal end results Then of our our the time funding forecast. model predictable low cash with each starts business optimized ARR years, a So generates past the

environment cash that or the in do anything we're delivering FX of By proceeding short-term movements. match of we our said, the this flow. that increase impacts because way, business in progresses, dynamics year manner, on not free level agile seeing. predictable investments funding based while the growth long-term That As market able also to would to maintain we an prospects of we're the the

at expect than roughly expenses Over the of to rate grow free continue operating the we grow expected term, to faster cash with half flow to medium ARR. our ARR our non-GAAP

A there's that we is model help and as basic revenue To from leverage benefit subscription ARR your that natural business and with tenet budgeting guidance. we're EPS operating you our process providing of our grows. models,

I'd on PTC to these for and like from call performance of to new you're and However, necessarily the on-premise difficult that on significantly vary may ASC based reiterate favorite business. contracts I revenue since XXX teach-in to a relevant sell 'XX EPS subject revenue that QX my on reminder, the we if is variables PTC. the primarily to refer to can predict want to our recognized makes subscription fiscal you aren't this did way

the ARR summary believe best The the our website. to free and is, performance and You are the revenue operating metrics we the presentation find rather Investors can income our assess business. section of on of cash than flow

Slide on Next, XX.

predict to given any ARR being with new over slide hit of ARR that growth the of go-to-market shows and of it's precision, QX. currency the impossible past quarter the changes need constant model right growth net that far sequential we illustrative environment $XX the the for illustrates an This and Obviously, million X.X% on years. we're level to column making. mindful Here's And ARR we're new sequential couple of our for net macro QX.

much of volatile given quarter, of new years, we can how how renewals, the know, given our timing cetera. in any timing results you of somewhat on new such timing bookings, quarter over the the based given churn any et expect our in in deferred of the much starts any quarter, bookings ARR starting, few new dynamics our the be As in ARR as given net quarter, past

It's quarterly our net new ARR to results. see not unusual in sequential volatility

investment remain fiscal we a for decisions year, on to over as churn the ARR fiscal throughout of full our growth. we focus expect low new 'XX. net course Also, we make forecast year to continue Importantly, internal incremental the

XX. Slide to Moving

model Here illustrative is a 'XX. for similar fiscal

You along which constant on ARR the 'XX can range. midpoint ARR our see need of over currency guidance and to that past by million a guidance, our column the range, new our X is our with the right and QX years, This we year QX supported the our this of indicates pipeline hit and results obviously, internal year, fiscal $XXX forecast. results illustrates net loaded back-half

we Our QX. pipeline and continues significant stable large QX a have in to grow, opportunities and of our

net 'XX $X we that, compared to approximately Note to in than 'XX would 'XX guidance million at 'XX. million the incremental due 'XX, ARR $XX of fiscal $XX that fiscal 'XX our flattish ARR to million new less less adding be range, net fiscal compared fiscal that for At approximately year. deferred and midpoint new 'XX, our ARR in in benefited approximately Adjusting fiscal approximately indicates 'XX growth midpoint and XXXX

point this exit into fiscal In and new Neil growth meantime, year. believe ensure X% work go-to-market for year that growth the releases our we ARR is new right we're net guidance why the drive range exactly ARR continue resilient, outlined this such evolution, currency 'XX XX%. we ones this 'XX to this constant as with beyond. product and model with to think our earlier, hard I fiscal momentum the to that is augmented evolving We're business to organization with at highlights

operations that has creation consistent conclusion, a our so in business strategy, can discipline manner. a record We're a scale opportunities. aligning most on and PTC we we matters customers, what value focused are for portfolio track and In our clear strong and our of operational product

for to today's to With over like I'd Q&A the that, session. turn call the operator

Operator

question [Operator from comes first Securities. Jay of line with Griffin Instructions] Vleeschhouwer the Your

Jay Vleeschhouwer

And about one this products, a segment products how a your the new on comments thing, specifically. product in it effort? Is interesting ask Maybe Is organizing comments about, that various is AI is these you managing you're or to development I'd to investing product-specific your group extensions Neil, about or central developments. are of me. like and all those. talk AI could quite

So the for AI commonality there's some your proliferation. within company

then to clearly into This competitors, larger alluded And business the on X is this in. up that manufacturing you? area and incrementally some Dassault investing just important finish you have been in and case product your Siemens process. seeing to expansion or something use side, an of new application for Is

Neil Barua

second that, Yes, thanks Jay. for question, the I'll piece. take On the

In value we number the that data ERPs resides. manufacturing floor that in with conjunction the we've manufacturing fact, systems had into our PLM employees of today PLM to data is through and where are the world Windchill manufacturing The on of we those a approaching deeper approach at believe of to we workflow, contingent the that is people, the is working way MES our see side. the provide partners the as systems will that And here category week to we well value this got. extending process working and as Seaport it we're

the piece able on our the as to innovate other ServiceMax, AI and were of about, On experiment with be XXXX the with course for teams technologies as over letting XXXX. you we talked self-introduce know, and we've AI,

was talked new all that, way, February the GAing job on AI with team a really ServiceMax piece, about, a technologies Onshape with and working also betas different approaches and that the nice for as ServiceMax done which by on within customers ServiceMax has saw here, team. nice I ServiceMax the You XXth thinking through now, done by job. really doing

the we've alignment and subsequently, of Conference we're AI and doing on innovations Codebeamer seen an in interest what the launch the there's in in and out are group that alignment now we happening doing we're Creo, Codebeamer across that making product and But already Microsoft for now have of the we're and centered and what the with actually with Windchill our all Ignite our with segment. work Volkswagen started a is that process sure got

we're So evolving it.

sure to customers and time to it valuable practical an make over said, I always be approach to and that's for there's PTC. was value As can going and accrete

changing already nimble jog that on were energized, addition move great the of stage crawling very around based this is and around feedback the the we will products customer very this. for space capabilities could you it's is And tell, evolving into getting I pace into think towards to company. time we're we and that year, are walking at where run started last And as to around AI But quickly be the things we're manner. what the we're

Operator

question with next Capital from comes The KeyBanc Markets. Celino Jason

Jason Celino

are PLM on Ironically, Any you kind sidelines? to in does Jay's to Actually of fall to out off European parters. all environment? seems just competitive the competitors, of from these? changes be changes on have rates? involved battling Jay's really PTC Two happy your building this? I Or of be any mean, you it other. watching seen the be share win Are to Where ones your one of you your seem in of some -- the the side. one to taking

Neil Barua

like industry So this boats players I you here. in And the know. Jason, occasion I'm as sidelines kind where optimistic would Onshape, being have And CAD no arena, here, and Windchill have aftermarket to front us all on said, amazing capabilities. of I And remarkable given from glad of perspective, X to around really Creo, how our we're we suite. that being say is really is, what product years as transformation the we're digital and all PTC obviously center nerve us next and in over great a is us That our focus capabilities we X for of Codebeamer the this of will strategically, translate number tools in SLM fully needs. in the see think rising lifting competitors. are these of said, all our very because of I the

the week, a past Our not that there. showing coordination happening not Creo competitors, in they're manufacturing approach. actually get Jay as mentioned is cycles. development X just within is the what's of into how it kind whether do PLM differentiated does embedded customer, which there. about approach, which manufacturing of you the really it systems, the software We're about. CAD your And Windchill with And to you product We're think data battling And versus utilization how in our talked others. We're be out as this going heard, side, floor. the that's you our or

competitors, out does our positioned X real-time about focused actually our there. intent through in very how conjunction, the manufacturing Codebeamer and we're democratization on where our other enterprise data side. moving versus strategic and the understanding play of is X and let good need really differentiated the We're So product we Windchill, that competitors feel

Operator

question comes Oppenheimer & from next Ken The of Company. Wong

Hoi-Fung Wong

just wanted of ask meld at of maybe When to comments that subseasonal I the then I a look I Neil's trajectory Kristian, with and little about being QX that you kind NRR. hit it assume that at net should looking to guys ARR until of subseasonal you go-to-market Is fourth your hit that until kind won't new be we slightly QX. fair quarter? stride

Kristian Talvitie

Yes.

QX, edges not we're back comments, there. half-loaded guidance loaded maybe as typical specific of this half of point. kind do the But year, for have PTC, back year in we're we usual think course, providing is and around than we at prepared said pretty QX I slightly a more even the

Operator

comes with question Siti from next The Mizuho. Panigrahi

Sitikantha Panigrahi

to Rob years. exiting fiscal side look side. metrics about you other made after macro the the help comfortable back the macro manufacturing given in -- X XX And you recently feel saw PMI bouncing as side above what Neil, go-to-market on at on XX% 'XX also us Wondering on the and progress grow maybe that recently your 'XX, also, we have comments understand alignment with on CRO. joined momentum

Neil Barua

again why X I'll of the these Siti. question, one, all want process in making the it. go-to-market changes. the for level I to and set the main thanks on for just for take first reinforcing we're reasons Thanks

First are And scale, we second the as ARR from at serving make to more made. like centered the So sustain is right? in what is over changes low growth sure being us make double-digit our target medium that effective to customers. that's we term, our on we're all the

executing. X well showing the changes are And motivated, we're early in are as to But being the we've promise seeing and in now like QX, this terms reacting of already teams undertaken in well. customers dynamics things the underway I'm and

in verticalized automotive, and QX, we tech. as electronics are about, tech high med Top talked go-to-market products, is our FA&D, First industrial verticals and we approach.

that the been account put transition, and as sure execute QX here place. lifting the go So to make heavy we're the plans in to in the we starting to did all has messaging, do

you'll If around messages see verticals. the you marketing tailored industry very LinkedIn, watch

So one. number point

is we're sure way in and example, new really as operating brought should getting of Rob's Rob December, business. is He's Chief processes. also He's a ton pipeline far. as go-to-market Two consistent infusing make efforts he's working Officer, which an well combined real our CK, the the to management in, our depth weekly more into, through early overall discipline -- they're so targeted -- we strategy. CRO and Marketing He's sure grow great vertical in rhythm, predictable working to a make execute their this to to our this with across Rob's acclimated

for technical adding to our marketing, go-to-market that this QX. removed few will key we've success. company. And on flywheel talked overall number did you course running foundation pace to roles now We've that here and mentioned All at veteran scope of the Siti, also the that I that we for the that and believe backdrop, of laying really team working the quota-carrying about potential all work to next PTCers is we just team We start this -- I layers. enablement roles starting I leadership now the us great to add levered quarters reason people making, to allow We're of prominent by execution and in elevated exited up give is give of well. QX And the salespeople growth you as lastly, change that we're us in sales customer that because the we've in get of that the a year. the the over

and it. the And good is we ahead we're so of around around it, feel feeling about work but compelled far, us, opportunity

On we your PMI. look around question at second of macro, yes, course, the

could the opportunities. a pipeline, perspective. to we're morning We'll to we macro see around Christmas a And it's is pipeline that greater look Of good feel at even focus putting discipline stop is the talked now sales see more the take of internally, that over favor. what when good said, course, really rates we're that's out summary up by we And deals, of about, environment, we deals. metric we when watch a energized saying size the really we back the But half continue I'm when every the laser the we our the quality I'll sluggish about gets what the close higher at That's being that there look how have PMI which greater macro changing But when of fact pipeline. add changes, at. go-to-market the obviously a XX%. where macro the even wake better, it's like the could Kristian looking an we predictably we on already pipeline, from

Operator

question comes Citi. next Radke with The Tyler from

Unknown Analyst

In XX%. customer This presentation, to seats expanding Peter medtech XX% example a is to there's of Tyler. line their on from your Windchill over an the for XX%

count an PLM curious to and opportunity departments, that's Just team dive base other manufacturing. seat engineering and the is much outside within of how of like there like see into core chain like left existing expansion, quality, that supply like deeper whether customer still

Neil Barua

PLM been there. reason a PDM-like this CAD seats, PLM stages PLM a all and started around last the existing of just of now I And tool. expanding not every early call repository of already enterprise February There's have like base every opportunity a are expansion value tool, example PLM. of driven, across at is PLM the seeing customers a a to start depository or why now becoming customers The about in I opportunity since we've are of being that talking significant examples that our did. call the Yes. -- enterprise we the customer mid still It

critical reason we're what with prop could to why known is is do they it the that get integrated So customers. enterprise Codebeamer, with also PLM value pushing cylinders a all on and our very to

is we even when and their better that. that, than and the expand. to data priority the automotive gets think are in how area federal the expand it that more prove energized How aerospace does we very customers And to That of of to using needing out feel to just Windchill faster So really companies a product company this moving to enterprise. create the we're clear is business. utilization advanced approach we're it vertical about

Operator

comes The Steve next question from Tusa of JPMorgan.

C. Stephen Tusa

the I wish like the PMI. with about I ISM as do got guys excited you Christmas morning macro or data the as

the at focus just are AI normally time the budgets? you specifically of and On decisions seeing more than on impact happens what front, macro year this budgets the on how

Neil Barua

they AI Within last quarter our to quarter you last space before, of most data this sure that Steve, I could make and I think a structured which apply talked by set to have tool. the still -- or need customers our

the supply as it's procurement and around number prior like a systems enterprise apply chain folks, for data for of spreadsheets folks have AI. you So PLM engineers don't when to hard data, very or still use question, product your flows and antiquated generative

they So the in the talked call this pipeline is digital robust feel, I half is order. Steve, and see really we about year, your it the in of we Kristian We that get house second enterprise, models across why make their CAD to to model-based that across fact their drawings. Codebeamer deployed, definition and have systems by inspired get going on getting XD XD sure people the get move need PLM

management on understand make here get interesting requirements flames with we necessity the when Codebeamer what's creates they so actually a an add of as a to that can then the AI AI to generative HMI, like of stoking customer that be benefit example, Codebeamer AI sure the Codebeamer the at the And their we're launching. underlying it really is capabilities people really concept tool going deploy real value we're that for to

customer now with house us actually creating digital AI spot. to I get in a think secret additional it's sauce with we're to offerings, give a our it's So because I think we our concert order. in And which them in from to Steve, good base a good their benefit have them,

Operator

Tilton The question Joshua comes Research. with next Wolfe from

Arsenije Matovic

in is not expected growth really in changing, for what still net below it performance. recovery question after looked of for what Josh were a even I was there front the expectations? you had like This within back still and just adjusting deferred is half? kind expecting the environment, Arsenije really channel timing was versus but is Look, impact it within some channel on year-over-year, ARR guidance, it range and irrespective just better of Tilton. visibility even underperformance exactly Or mixed. the on ARR, of I it occurred, on the guess the the the with

Neil Barua

and then, Kristian. start me Let

internal this. we're This account, the thereabouts. and the we all structured quarter, towards go-to-market pipeline, we we an into we making came as Even took sluggish changes such. and guided in obviously, saw from the number in We guidance expectation, the the environment, sales

the perspective. the we're really What So from it past QX, machinery focused on go-to-market mentioned, in working, expected was as I on our is as get we're let's side.

and targets. for year, CK a by that can out, second really path which we in end already year, go Let's customers next ARR has of product which to into out the have a it releases sustainable which I Rob and really a it, our when into growth transformation long-term close tail get get this to message we by these buying go-to-market the rhythm really humming and half mentioned of we and double-digits now medium low been keep pipeline robust real adding see year, as this

add? Kristian, anything to

Kristian Talvitie

Yes.

you in what to a this we the close pretty our reiterating internal quarter -- came had Channel, said, strong quarter. actually, Just targets.

all, was in all as expected. So it I think largely

Operator

from comes question Berenberg. next Naing Nay of The Soe

Nay Soe Naing

got I've questions, if I X may.

what that a scheduled of whether is ahead It much these pretty from just changes. to it pretty in The I progress made question is the on first any think or I if And quarter one QX. quite you is a get to disruption want go-to-market like good that, sense was on that sounded weren't of you expecting then of everything go-to-market Neil, that -- correctly, a last track? sales said changes. I you lot to secondary is you remember major

that front, it's that we an quarter, please? a get Now update been can on

Neil Barua

Sure.

the in, some liked earlier month the running was where when acquainted terms of well here, gap for where he's team would month and a versus that in I we didn't we're ground with to of thought. he back of Obviously, joined we pleased where December, did, In folks a we come in the I get are and hit moved have the December, wait the he I'm really out Rob with to had join in company plan. before him but transformation at. the

So would the of in specific a laying that in good had I very feel a QX. foundation I in lot say, for all, transformation, that accomplished we've general, we this project plan

had of that really account frame. now time LinkedIn really -- Now plans kickoffs good time in January the our had we've are are -- to transitions launching you're if we've kind in get watching comp the January this all a out, we've done, again,

get a bear, I talking take experience as is about my It now vertical here. the would mentioned, that, the the catch that just takes moving reason discipline to we're but why for the bringing few the quarters Rob's will we to And quarters the some it framework, approach, rhythm. could machinery say next few time operational happen to really believe faster,

around to disruption, addition the go-to-market going reiterated have from this I'd Rob And is and taking is vertical CK in this, of call today there changed. that why a terms year. that remains we a the is, to is to of we changes approach range be XX% what of why we ARR out by that's are we we when said, in the say to about proactively estimation piece on is that should to you sluggish, came this level a changes look, impact In macro our the and framework different guidance, which quarter for came our the we last again that X% QX. in And thought made like lot taking and

Nay Soe Naing

to AI your ServiceMax or going makes will The squeeze All if quick One very product question, and in, I exciting. limited across all just that could sounds are all right. are it. if sense. launches But Codebeamer upcoming, product be to that's portfolio? be entire Got they

Neil Barua

Windchill tuned. The we've this that we've CodeBeamer be is you reuse. applied as Microsoft. on. know, more big around through Volkswagen, Hannover Messe, gate. element spending Great lot first a AI working working is at spending a been parts on the a on been with of time element stay question, that ServiceMax We're one we'll out working Obviously, time

doing work Onshape has of been on lot this. a

on So few the learning right innovative in and got hopper, now we but that, from stay areas really more the and moving. focusing core a on we're technologies a that's tuned very

a around with our learning value really versus conjunction just important message. we're that So here real marketing customers. in That's show to

Operator

comes question Barclays. Kalia next from Saket of The

Saket Kalia

Kristian, example. feels question X are other their to the those of more it And drag for in of that parts There much question, sense? are additive evolution of of clearly, of or right? PLM in how SaaS growth maybe here, terms the higher free those grow talked of like there of coin, your is, there anymore those drives go because in part but the to ALM CAD, few solid I want for you, does side an SLM then prepared businesses like in a Maybe position IoT, maybe lot I right? being segments where and that faster. that pillars competitive and are -- aren't are the Neil, just an a growth about kind parts of comments, right? of the businesses but in like strong or to a business Neil, the their scale, business So the think are back in growth? So have please potential make the maybe some pillars feel to chime a that to in X moving you that

Neil Barua

creates there customer's end I me expand boats is I opinion. our real a marketplace, PLM want to value this end in PLM with room clear. to and amount us and growth opinion, be the The for customer. those Well, in us differentiated bar Yes. and here. strong any that the for our believe to take just a lot none, color of significant mentioned we like ALM to a a for can really potential in with the X my think rise we in that seats the customer best-in-class ability suite, add grow offering the then Codebeamer, in let to front example, integrated When there's Kristian

part that we many right, very increase we a around just rate structured want the approach, business. growth more be potentials in we marketplace. really vertical messaging So to is see to clear, I And this the driver as ePLM PLM get strong the get as for growth just of of in

So on accretive I'm our and the pull some that and -- SaaS will taking. we're in approach ALM, of relying not terms and then way view, just actually of we're inflector growth. in be to SLM not PLM the just its

you drag, the of some mentioned them. of terms In

interfacing Work with it rates those And that growth what, using As to extending work to of instructions those XD product I ThingWorx shop about to instructions, floor, recall on organizing you we're our technology indicated View value personas. guess do the Navigate great X beyond the how stand-alone with augment No. as digital we're other number businesses we're That's thinking different core ourselves our of to Windchill to where using allowing if from them technologies. We're doing Good. customers Kristian? growth don't rates technology we're of on took same we how some more sets versus internally. moved some the PLM ThingWorx, provide from better months make resources perspective sure we really our make of the a core actually, and do of and sure expand customers ago, well capabilities a that. and

Operator

Neil Please closing connected as remarks. session. to question-and-answer it remain the concludes turn This I for

Neil Barua

Stanley will your in In York. Morgan Thank again, the attend which Baird LOOP in Conference Stifel Also Conference X to us you. attending in the conference Thanks Matt you, and and engaging Conference, San in the everyone, today. in and participate conferences, Kristian together Kristian New March, New March, additional Francisco for with the Conference York. Matt forward in with attend virtual Utah, be and look I'll Wolfe questions City, In will joining Park Kristian and and the we Matt. will for will be February,

Operator

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

You may now disconnect.

PTC (PTC) 5 Feb 252025 Q1 Earnings call transcript