PTC (PTC) 29 Apr 202020 Q2 Earnings call transcript

Good afternoon ladies and gentlemen. Thank you for standing by, and welcome to the PTC 2020 Second Quarter Conference Call. [Operator Instructions] I would now like to turn the call over to Tim Fox, PTC's Senior Vice President of Investor Relations. Please go ahead.

Great. Valorie. you, Thank and PTC’s everybody ‘XX for us joining Good call thank to on conference QX discuss today afternoon you our results. fiscal

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

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

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

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

otherwise constant to And Jim. growth references unless over call turn lastly, that, be to rates in let the me currency noted. will With

Tim. thank joining you I hope this are you your well afternoon and families Thanks us. and crisis. safe for and everyone Good during

we'll thousands into world loyalty. thanking quarter, start our review to our our jump relationships customer around this of for Many customers I'd date to through tens been like been important parties. I both back Before together their of continued get and have of of the by two and relationships We've support and three several decades how now, which one the shows through too. crises

has and our to in and The the testament strategic work employees built pushing like PTC. work globe here to we their the culture a base, way embraced commitment global leaning hard at initiatives environment, remote the also is to PTC’s while during support X,XXX crisis. forward great the to customer around I'd thank our team for

bookings final being quarter weeks of and We ACV did pleased impact the the The year-over-year. and XX% new revenue related pressure late and experience channel Asia delivered growth. the in to and smaller very ARR fiscal some mid-teens QX came pandemic we down greater growth Europe Overall, XXX% with XX% was growth, the EPS bookings quarter, are resulting our within our in customers. in results. We in

the Renewals QX. were essentially unaffected in by crisis

I mindful for we bookings Looking in ahead, PTC of continue organic we’re would in pressure challenges later that. ARR, the potential the of well. remains reflects the in the pleased that very Kristian that the renewal double despite such strong call. year, a the as demand Still guidance able target that on severe our full factoring pandemic to and to growth EPS very outline headwinds am provide place will given revenue and guidance modest assumptions and conservative new outlook, digit

our but not are earlier attributable over past we crisis our successful outlook pure and to These results even to or the luck QX this few strong we've SaaS happenstance, executed to taken in and a referring strategic once growth positioned several Our before actions this are our proving successful shareholder value the to company model to initially stronger Because and during are AR drive restructuring up due high the in were manner, operational crisis well years. is changes, hold growth and PTC to particularly through initiatives of these expansion premium pandemic positioned in fortuitous well very the passes. downturn Onshape acquisition creation are timeless as markets, but they transition, recent the embrace we future current into environment. business arrived. IoT I software position to a of and the did a PPC be am year

Group. low prepared were the nothing growth the single in expected business notable Each in the just and The XX% performed have and the crisis. particularly we the would Focus business, without Growth Solutions level business, rates Core remarks below datas there's modestly the XX% for ARR digits QX in there.

time So changes results, to going to PTC you and future. we've take longer my instead changes Understanding me have deeper that's these confidence help let into illuminate positioned made in our through will of this instead the strategic use transform into well a we QX company our downturn. guidance the term for in

fiscal that been double has of and software over XX% business change revenue decline completed for crisis, bookings to where we recurring. model biggest digit double wrapped XXXX The to transition fall stark In was declines is PTC. subscription to our led financial successful digit revenue up a XXXX. as last contrast the our Today earnings

allowing of Our drive This targeting the significant competitive to without flow with cash further investments that our us growth revenue and solid materially guidance growth, year-over-year EPS to is margins earnings QX to free even protect flow. digit is declines assumption fiscal The positioning. bookings of levels in higher recurring expanding our plus strong ARR new our ability make QX. key largely our is extend cash growth of in double nature XXXX model businesses bookings and and and impacting organic declines despite growth more QX

the product big second we serve, changes over strategic portfolio. has by – challenge our expansion in second big the of the past The few enabled the change been years markets

crisis of inside think the consensus to that it I to this worse situation. terrible productive coming much there's us a technologies digital avoid are keeping is that and rescue broad many

embraces anything digital the and compelling is empowers seen that video workforce with we've As of a all. distributed most remote work calls,

distributed and of these and work. Digitizing be Fortunately the for data, IoT, used factory by and very point ARR PTC workforce technologies. it about PLM so all is a can are data that worker expertise remote product

follows this will We than high AR ever. PLM crisis already make the more tailwind stronger IoT normal will that that the and new markets expect to create and growth relevant

frontline and me supporting explode usage but and and seen training AR to with, remote allows knowledge suite for digitize reality. tools all Vuforia human Teams to Go of workers. to accelerates. are workers, on is there three AR industrial value click in augmented purposes does, these strong for We’ve frontline times really frontline does workers. don't bring double knowledge a essentially Meeting leader Vuforia Let frontline and as And what benefit collaborating on companies AR enterprise for stands more workers, adoption world. expertise any PTC’s workers PTC Zoom, workers. capture than the Vuforia to Zoom but

AR world capability allows to point. to see Think Vuforia is interesting In access the companies It's as to support factory decided making Rockwell of Automation the with and entry problem first we period, partnered workers’ us suite. remote that FaceTime we real to to site. at the the frontline for and up thousands friction mark of helpful free who in initiative. like Vuforia proof were promoting Here quickly solving. you Chalk, for an the crisis, response crisis Vuforia for this work companies level or call the the incredibly and sales immediate By and Chalk introduced of Chalk time provide environment desperate other a free for the solution. eliminated an

the NAM has AR Vuforia to key Here the line productivity, beyond. a and the co-authored nice collaboration I more, Chalk front and constituents including daily on higher website. in on our a amazing Michael crisis. a Please is ptc.com/freechalk Porter Investor can pipeline and find QX drive levels Chalk promoted you Professor of check workers. been Chalk soared further it These U.S. than embraced which in for factory of currently initiative. a AR using Chalk use Toyota's Manufacturers case big Chalk and largest the remote learn support The was times of to free and traffic pursue provide our of upsell worker that Chalk XX AR published our out companies before represent to customer. using that topic paper incidentally a discusses to The step Toyota went strategy National study manufacturing their to Association as adoption

to and the the companies IoT IoT. solutions monitoring PTC's factories. medtech PTC beginning, new of crisis. IoT smart to From story rush about of respond to on diagnostics treatment already smart equipment connected as products usage remote Many diagnostics remote we've experienced use COVID connected medical has connected in to large and spikes been launch monitoring several and smart IoT customers Moving

value of a customers strong found Because real frequently to projects monitor value transformation, from published, study IoT remote experts adding allow the safety that while with used see of both AR, to their remotely allow workers XX% such with and see and solutions ThingWorx IoT to joint in PTC homes. are AR together of that Vuforia troubleshoot to collaboratively of digital and started recently In added that BCG IoT. and drivers front-line XX% AR and then projects are in diagnose we assets even

Toolbox. a first for computing takeaway important will Last starting form but for work AR be comes to spatial very IoT new on. This called build this just the and spatial called foundation here. wave computing. world has excited big, PTC best-in-class week, an era real factories the launched in together. and Spatial I'm the our Vuforia it's competitive together form. advantage offering about and industrial solutions There's sites to computing plants, and spatial as IoT PTC of AR possibilities with a wave

ability access real matter have, a have or participate in to has application device data been from you the hero where been Windchill start. and COVID are It has pure product software you to Windchill still too, full a doesn't the because Our the full web during process. what crisis you

from stop. was used. received because a broaden We to site deployments been any software paper their customers home process regarding how abrupt in the at manual transition their Many based where Because in have customers hiccup or process work to Windchill to PLM accelerate asked an their from us numerous accolades there no came was help every effective and has environment.

PLM is been. has fashion than now in it more ever

and and workstations. is are story. to with contain denied an the is today were about that remote on environments prove scenario AR, CAD workstation market office a more a home applications of their from at in PLM professional Mainstream installed seats XX% because These their access IoT on-premise CAD different all work, challenging both work engineers desktop CAD CAD data. While current

in have will the that the to to work, I'd our a new change PTC highlight, change which is Onshape me effort software full industry, remote leveraging strategic transition normal next engineering situation like our to SaaS which acquisition. brings the embraces This to

workstations a Citrix big office. don't been tool CAD software to access data they the like on. difficult using workstation many software at Working painful engineers No is which the in companies home to forced with back CAD workarounds on because from CAD mainstream industrial gain and matter the more use, implement to load to have have home the

system PLM OEM. home from engineering. and knowledge working unlike I he has his the has client. now company a workers uses challenges a His talked of competitor's of been said He that automotive biggest to that an CIO last major week have Windchill fat a thousands

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could Frankly, our acquisition of been Onshape timelier. not have

If time all lives their functionality SaaS engineering, users on development you on tablet. home access want at device, from can They and Onshape the from cloud work a is thrived including at during and only Chromebook, market. their or any data product the native because Onshape the in phone work all SaaS any times. easily platform MacBook, home

go it. up true and to a you take about or see Fire If is click ventilator a what link the blown implementation our SaaS done, full a CAD, Investor to seconds, you're The a to production. it's means Relations and with robot website system professional on there. then in test. Onshape model XD XX you be interacting imagine XX this web That's you'll pick. browser of hard In second in CAD

the year-over-year like had our There's of to this as major performance than years bookings QX phase strong growth. enter platform, veteran lines because the and SaaS lead that six and team in PTC in and build the million that $XXX industry relative of has a all acceleration. yet, we to but business a product more Onshape plan took the best it nothing Onshape big not is showed

the Because aiming response As with equipment grew develop Onshape globally. deepens, and easy interest dozen get crisis programs so protection started the and community-based of forward. pipeline Onshape than commensurately to a the strong more going to new adopted is it's emergency personal ventilators level very

park forces This joining Onshape using These CAD and than to and efforts commercial academic, a fit combination common securing to just discussed to a implement an or quickly start that entities, involve we some typically perfect we rather a can now. government of for manufacture respond It's place novel go approach design Uber is right the teams a can quickly calling and Onshape, emergency to system it. either a buying car shortages. like

speed projects strategies. observed supply and And these The companies happening level saw rigid lubricate in instead, phenomenon and chain their the a impromptu industrial technologies community to in education encourage We for rethink collaboration. use look of innovation is to they causing market. related can

a schools must all frequently programs. major PC computer engineering are workstations most Many on XD generally like room CAD in forced SolidWorks universities Students and iPads. campus or a and where be done. Chromebooks high STEM or provide because their students CAD have CAD on SolidWorks run special exclusively to Windows many work using have all MacBooks, systems curriculum

showstopper from has get especially because a schools Onshape pain signups the it's because needed the crisis, work the But work computer school a middle of because have has during a has dorm the never solution an inaccessible or education school this work on of room levels lot for back and home become from track, computer simply seen before, money year. extra soared a immediate been to – to can't The work their room classroom. students in and computer always

based Likewise had Robots physical teams program virtual worked coronavirus, than season, robotics because back with to virtual the spring to and and to more online Rescue building life program of offer the the cancel we competition. this popular FIRST join quickly but to XXX first robot student robot CAD their

the infusing really hires points share with in market already of has back-to-school Onshape summer to up I months. two planning an We important education XX is education estimate And the because things past five during college to Winning heat taken so season. the the the expect new point that and really hire by that accelerate proven the thinking industry in influence We believe a several COVID CAD engineering years. will marketing them that SaaS approach is industry. latest they sales software commercial for can the crisis companies and tipping that

this SaaS more we've been thinking With belief, about broadly.

As For a What there? example, installed the platform. Atlas. November, been using as our We prize big introducing at customer we base? a what viewed as the we've heavily the built code SaaS We'll platform application underlying mentioned do CAD thesis on acquisition in light platform this a CAD be there. new live multipurpose as system saw about a it, and we shining SaaS on Onshape investing can in name works our

the the PTC SaaS world Think its Vuforia deep great on portfolio that extend the and the required and it We're Atlas Atlas into the making generative AR will capabilities to shoulders. carry to progress PTC more design work carry have broadly we're suite. across frustum

event a welcome seamless have first converted XXXX. We'll works, in we'll to that and The more the market live that has a you're deliverables info goal been new expect long-term way a broad virtual based attend. have at PTC calendar which the to Atlas infrastructure. I the SaaS yet is to in portfolio by at common sharing brand have all

the acquisition have of timing it and ever but the that work-from-home go a years competition clear like The in ahead PLM, more and is back AR need and need The now. than waterfront. workforce been could even and more before. future we back I SaaS I won't bottom more this liked IoT, ever will will embrace known not now bottle based November, agile better. line it's The really in and PTC’s to CAD Onshape distributed that genie That we've across

management. change talk The is I want and about cost to last restructuring

shift announced a our entered initiatives. fiscal into plan we we to resources restructuring As SaaS XXXX,

us in the hiring reduced our that travel a This lower for costs cancellation than which the with that's our well winter, plan, various restructuring like can executed in toward below higher an coupled more we events slowdown costs. you has we number live costs spending strategy original intentional and throughout fall year. the plus see plan As of and tracking LiveWorx

like SaaS in margin aggressively invest deliver new in expansion expect AR, continue still we fiscal operating XXXX. we strong to as technologies Even to and

Creo I the is in to during two like just which period. share of X launched weeks that other market Before piece news, PTC up, I'd the one wrap important work-from-home ago

it huge generative frustum and us ANSYS improvements lays for is the dynamics because release to capabilities design with fluid EM simulation the manufacturing to It market fall. It more. host and live This to introduces ship adds additive brings the suite a mainstream and has body a Creo for to groundwork technology. related a simulation of design this multi

in is the to advancement a continue line. product in and opportunity customers win ability to Creo about to SaaS, flagship meantime, terms that's While share take long-term our big to X renew In of I'm strategy. this Creo a transition the our with excited

summary, into during business and expand very model previously cost will decisions action launch because to new the AR PTC in Onshape growth the normal downturn of perform work In well to and the our to the turnaround the with thrive IoT to SaaS to tough and in We're change to bring. positioned inevitable like markets our on structure.

difficult a positioning It's couldn't there, in be I market out with but pleased PTC’s it. more

I'll to through over And take you quantitative to results. it with Kristian turn that, the

Thanks, Jim, everyone. and good afternoon,

Before our and non-GAAP that I'll be references to I and will results, I I'd in be constant – all discussing growth begin before currency. guidance like rate results review note

balance provided start results of Let our which billion review $X.XX XX% was and ARR a on than QX guidance and we commentary business better is then brief the our last of second the year. call remainder of off representing call. update XX for with the our consistent outlook growth, with spend me quarter slightly March year-over-year quarter on the the

last the other few new deterioration did software we of peers, in weeks to a quarter. the Similar in bookings see

strong on earlier, in dates, churn as growth. as such timing came essentially and factors Jim plan. And of QX to new we ACV due achieved start backlog still However, mentioned

of growth. was net all result So XX% that the ARR

QX margin was XXX% $XXX and non-GAAP revenue driven year-over-year up lastly, Operating EPS XX% almost of points basis QX over revenue of growth. XX%, by year-over-year. XX% XXXX million, increased X,XXX increased $X.XX recurring of

free the and $XX payments. workforce reduction payments QX our included flow cash restructuring related actions began million million of million of in acquisition was and with expectations within $X of primarily associated XXXX we $XX QX

$X.X ended senior debt, $XXX our balance billion securities facility. $XXX including we we and and notes outstanding on million of Moving billion with credit cash revolving our million. And to $X.X of QX on marketable sheets, had of

we in $XXX As announced of we May year. due you January know, notes XXXX on XX in this of redeem X% will million the that

and Following $X weighted average this senior redemption, notes noting respectively it's X.X% also that of we will of million economic these We cash this with to in XXXX worth of will a structure, approximately have new light extended notes and a backdrop. attractive of debt XXXX billion and capital have marketable dates especially the on $XXX is the very securities. and maturity of cost current believe stable

Now guidance. the turning

on assumptions Let me guidance providing by of and balance for begin the our some underlying the context our outlook year.

earlier, As renewal weeks new quarter. the on did while were some QX. pressure the we of strong Conversely, final pleased results, activity throughout Jim bookings we was see with QX discussed our in

In of rates addition, the were majority place renewal track. on of month our QX and the first April renewals during quarter the largely take

period XXXX is a continued been therefore new perspective, has the and you and really committed it and a demand a new the only that certain our our slowdown, not macroeconomic a the environment the the in duration year. bookings From new not yet and was meaning relates impacted to deterioration we've of induced of assume ACV depth committed. portion will current downturn by recall prior that for fiscal remainder uncertainty our economic business backlog, assumption previously demand Given around the outlook the of to revised

in range. this market given Well, share the not of are or same time, and the can any ARR specifics contracts, our only the contemplates demand experience nuance base. proportion I the that sold ARR deals both low important renewal contracts period outline guidance the understand high do not you we and do at new up expiring think to of it's how range end can full the so for churn, At of

year-over-year. thinking with fiscal of me At and the as backdrop, we in the share a new our of growth a on low bookings So quarters remainder ARR range, in disruption let the approximately QX down the with severe with for QX XX% both that end you year. assume

but To of appropriately this calling given an forecast wanted uncertainty conservative environment, we be low to for clear, the provide what our is the not of level deterioration outlook the internal is for, end.

back QX mid-point below performance the scenario in XX% bookings also of on fiscal QX, down for. The about bookings is what new line our line XXXX. range are as the well provided the are March internal of sequential the again, with in improvement forecast it's range down new below The XX% year-over-year half. with is in XXth, in But assumes about well This as we in assumes our commentary also end in expectation. calling year-over-year, down modestly internal modest but high and still XX% this

low account the the back increased to range. of addition rate the on of high-end lower and in In retention the both churn half the for year, of our rates assumptions possibility we've

remainder modest related Now, a of to in churn, in customer assuming with QX, of primarily Through for our instead factoring downgrades. to a churn X% the customers improvement rate the in of fiscal loss, the was XXXX. XX% channel approximately approximately churn of related smaller churn we're year-over-year

apparel we're over more retail like postponed seeing industries Southern heavily Europe, paused quarters. are face next and where headwinds being Lastly, the impacted. or anticipating and services our will footwear are We're few automotive and professional regions projects and business like

temporary On to services the most the new slow geographies extent is implementation, potential are projects. remotely, for the where out lesser able down a so ongoing teams our being work related positive deals professional pushed pause into are to a their side, primarily and continue

declines particularly and year. double-digit saw for to model more churn, training be in is the Jim and in could Germany with mentioned as targeting countries markets we're growth format earlier, business in these still ARR What of and is increased recurring move conservative a evident. Italy. strong the We PLM that even virtual such the also like and a not Even bookings CAD is noteworthy of the new more strength areas

accelerating we're for billion this FX negative that's of a and rate ARR to ARR QX. approximately impact, we growth our Relative specifics, driven the is X% single-digits deals $X backlog of XX%. both guidance XXXX growth X expect This and of be in to growth by of $X.XX ARR normal primarily high Now billion, ARR to in increase new in QX includes our fiscal with QX, prior booked of business million expecting to seasonality our $X.X periods.

Now turning to free cash flow.

For payment million fiscal to XXXX, we're a we've million expecting of to impact. the a half reorganization haven't for is $XX and first though guidance includes additional some we $XX charges deliver back in And our approximately down caution $XXX $X change and negative of million, about restructuring prior our our which from customer the related half year. million seen into built even in collections material also FX activity, forecast the

the of of restructuring the $XX million $XX $XX and payments approximately range. guidance million cash acquisition-related investments For of million in full includes payments, $XX year, million flow costs, interest low-to-mid CapEx free

Now, turning of company for XXXX under million fiscal on-prem guidance. revenue the is an to $X.X to expecting ASC the P&L $X.XX that’s of at somewhat revenue XXX. a Again, about decrease $XX funny mid-point concept billion, subscription of guidance, we're

million about So in we're million reduction resulting will basis terms, billings XX opt of our subscription trailing down durations is year additional be backdrop. and $XX at on down professional revenue our the is reduction midpoint, more given shorter revenue while essentially in XX% growth $XX which is license million, one for reflecting perpetual as expected customer million month ARR, services, a XX%. The an $XX seeing contract range the $X revenue to and macro support

that top travel can earnings despite mitigate early flow, by such to on live line our critical in to earlier, up margin in a businesses, beyond ensure impact mentioned restructuring on steps lower compensation $XX expense, front to expense the taking and limiting in us new midpoint. cash variable expected the control the additions headcount to on we're additional at deliver I well roles events as reduction our of As conjunction growth lower we growth with works revenue expenses lower and sets million spend lesser actions

guidance XX% basis XXX points expect points be a an of of $X.XX to increase that, to with EPS which result and XX%. represents to $X.XX, year-over-year. Non-GAAP our XXX XX% $X.XX year-over-year. of basis to is decrease The now XX% the is we compared margin to range XX% previous This of operating guidance is of at growth is a to XX% expected only mid-point tighter

So to we feel ability of measures and to up, without earnings control prudent further has amount businesses current to sum all expenses guidance taken appropriate positioning. the extend in an growth key impairing we've to our and considering protect and our our factors, exoticness conservatism, make investments competitive our

free flow expect less put softness, acquisitions compared of and approximately restructuring, ARR will with years, we even in this related our under new has And payments strong is scenario noting in growth time. that to expect the place support to $XX million that fiscal acquisition worth and interest XXXX. expense Bear restructuring lastly, other $XX there generate structure would at guidance and stable still expect forward. spending many cash of mind, strategy not while that we free PTC have a demonstrated we expect payments grow. a assuming capital control we profitable we million going and we CapEx flow less assuming and in is structure approximately no expected same in no to debt outlook, Well, the in cash we're providing to It fiscal economic roughly given decrease for growth. will continue to XXXX some XXXX And XXXX, ballpark, tailwinds of the $XX mid-XXs also fiscal be fiscal million

our market to had changing So downturn a growth ARR We wrapping well solid which cash believe, rapidly. value and and delivering perform turn drive we're into continue up, significant positioned quarter, to flow customers, is recognized in the free during will the we future. but well the

So Q&A. thank the to to call their I'd I'll over time to the like turn with operator for and begin everyone that,

Barclays of Our Thank you. question Instructions] from Kalia Capital. [Operator Saket first comes

line is Your open.

Hey, Saket.

prepared here. great. for in Okay, think Kristian. you. of for clearly big the pipeline Jim, for remainder maybe, taking the year? the this of questions interest/pipeline not IoT how talk in IoT signed the of to little said Jim, you hey bit end about we this But deals being first lot my quarter. a Thanks for about remarks Can I business? environment March the Hey there a Hey particularly the in closer

Saket. Yes,

morning is is in the And to some from the pipeline go rates whatever, pipeline call. that Just QX and QX and of risk of close pretty kind the we for back or QX. actually IoT this pushes did pipeline QX strong. for the quarter a to us question through preparation that The

office plenty then wait don't software, Kristian guidance have double doubt the range because sent close being know said, get in the end how to until just conservative we it's might I is our the we've to given was, we Plenty buy software bigger work that had it of at home and implemented to the all So implement. canceled. everybody if you forecast ticket just We're conservative you rates we worried going back needed we're saw come you being is in support quarter implement buy it's it, around about being we'll then. as But and well want to to what to to But and forecast the guidance, above to has be with. to purchases you. in delayed. get that, the

of across that question And And it's a really to that's it's rates. close me the of But pipeline, the really is so true question a not board. generally risk.

But just to starting in churn That you your that another of makes talk for about that where my sort customers. think assumption guide, comes talked You element versus any that I'm the is about of about reductions customers are maybe follow-up forecast? a curious, at bit from the would for downgrades you, can little conservatism? you as higher that see sense. Kristian, smaller maybe contribute that you slightly assumption? lot of headcount maybe to Or a

Yes.

factor to the seen market right a headcount extra to thing base. now. provide again, really So again, some reductions that thought here, a dicey we We our in an and customer haven't to, It's prudent was churn. environment But major conservative do outlook. right effort in

seen Yes this, thus we've to but not Kristian said COVID-related far. churn reiterate,

helpful Very Thanks color. it. much Got very the for guys.

Thanks again.

you. Thank

of question Vruwink Joe next Baird. Our comes from

Your line open. is

Joe. Hey

Hey Joe.

to be hello Hey, internal I just guidance on, I guess, wanted clear expectations. everyone. versus

to seeing you referred and ultimately? to the actually Is a guidance dramatically, I'll a presents say, what in internal you're are today expectations your So market that characterization? closer worse scenario fair that

That's Yes. last forecast. new expectation. internal our mind, I bookings mean, were quarter. Keep XX% have we down a in

down but range Going gave forward, XX%, that forecast above entire have Kristian more would our it you. the still than

to is happen So We none don't. the us the coming going know in just what's quarters. truth of

looking surprise, So be surprised we're certainly, rather a range. bad, be the of of get the But there's side. assume will going end it's hopefully, And be bad. it's when to it's good it kind going that's high forecast assuming at if than a the good and we're to to guidance above

low the saw right? levels in in kind to QX in that, provided the follow-on to the guidance something call Analyst at just the And of QX. We've and bookings contemplates environment. the range difficult that again even we where deterioration the put Day XX% new end even that just scenario. more And our than it, to down, back That's range, of that XXXX, midpoint

in Okay, to I that’s PTC regards back and and provided how around anything with surprisingly the now during held of period up, the of of detail then guess, update, were to the in new time. mid-March lot XXXX, compare XXXX portfolio better? helpful. lot the ACV trended playbook. guess when seem pieces that of contrast be And has you going that I companies to has just Obviously, a a

you there, with last when strength then pieces newer helping how been that environment but over Onshape offset, the some the and provide that's pretty of tough to this is customers or and at the resiliency the maybe decade, have given spoke the pieces to through? provide obviously, you look are a your And the added, you helping speak can going

mean, Yes. for sure. I

digits substantial crisis definitely, business business, company. CAD SaaS a and but if businesses I markets it at growth immediately. is And actually, for have upper a not time time. were those were Maybe to PLM our AR upfront immediately, those you think our and growing say, some And this probably the We engines didn't I of we tailwind at single will have combined really probably digits, look a create now. XXXX, lot we our IoT the spent single combined – of business. COVID happening

pipeline AR Our is charts. the off

our sure compare crisis portfolio assumes and then in relevant said, And the a we than worse had the to know portfolio to guidance assumes of say as we as Kristian So definitely the high XXXX, of context that as I context than end much it's in how low it's the sort this of for hard end crisis. guidance of it's would this to XXXX. a XXXX. and more year of our have bad growth

very That’s Thank helpful. great. Okay, you.

Thank you.

comes RBC Markets. from next Capital question of Hedberg Matt Our

line Your open. is

Matt. Hi,

Hey helpful. variety you your which guys, lot to outlines ARR. appreciate is of Jim, my helpful taking that booking of I'm questions. new for wondering, guys relative that's scenario, Really guidance the a super a thanks detail do I gave, think

loaded comment what trends if can thus It seeing Now any booking signs April? on given this this maybe is and a new But I'm QX? sounds new you said, renewals, change in bookings, strong in Kristian clearly in of you're if are wondering quarters, as like wondering far beyond you back-end you saw month. remained seeing

it's is done in do what early. that what versus meaningful point And forecast, it's it's Yes, is the fine. this not relatively as relative back-end quarters. number, I track to done and But mean, this number we typical said, that the do we just call And done you said, percent when we quarter? the are which have a loaded early we

of are anything if of I in Asia, of weakness And then got got in quarter. stabilization if number, those as of pockets internationally think these in little you your diversified bookings some often. terms in to note model up in helpful. I can then maybe comment of like that use a I'm on, And thinking or guess, any model, And improvement your we I'm some Europe some done to and you're this global remarks, particular signs the though that open Asia, a globally. seeing like I economies noted obviously if bit? past China, wondering of showing you've start That's there very you more signs pockets prepared new reopening. of

end Yes. it's I at the the forecast this in we come of last we quarter-over-quarter, in hints the even by up quarter, up mean, back of it's nicely. China saw quarter, particular, and when look for definitely

we two China U.S. back and course behind I that, system. back So coming the The spending is right. of coming do steps see into online think

So and last deeper the was funk U.S. by Europe we'll see in quarter, quarter Europe a know. improving. end the than maybe don't the of I

now know, is the us right us to none of And know problem happen. what's going none part of of

prudence we with guidance we said. tried of it decide do on the transparent own then put the world. your based in to to as more that a So lot of be less be what what's you And of so if the guidance Kristian in give or on happen can is level should going prudence deal

details. Sounds a Thanks good. lot the all for Thanks guys.

Thank you.

Thanks Matt.

you. Thank

Borg comes question next Adam of from Stifel. Our

open. is line Your

commentary question, the guys. taking for all well. Thanks Great. as appreciate the again, And

Just real ARR. on quickly

the Kristian, you've the of year. So deals ramp in talked about back in the past, half

confirm talked any deals of a I those haven't to those some committed ramp impact you follow-up? deals want that I and we've curious, that about, ramp that to have have seen been or renegotiated Just

this No, to committed I point, seeing, think… previously we're mean, not changes meaningful the at ramps. I

contract, And our there's reaction said somebody too to a renegotiate understand we'd once wouldn't is, the – that have of is we contracts and you their mean, whole you hypothetically, I to we'd lot comes we renegotiate. that, thing contracts. sign if Well, like to a like have

brand to been six with empty me. it a I'd the doesn't on It's a to new vendor want that, but have renegotiate for We lease weeks. headquarters. like renegotiate seem to

isn't in just us too that and for win something saying it there's simply up get and are loss to I'm unless just that. be them these down a for there us So to difficult taking sign renegotiation would contracts,

I I partnership can the Rockwell, in Perfect. the a on Simulation anything any – that. Microsoft appreciate yet Creo Thanks quick Live heard the And ANSYS, I bit did don't with how provide color quarter? Creo about Live, we talked but think even a Simulation about again. follow-up, little and you just as partnerships Rockwell

on Yes. had all, Rockwell, wins. them to I speak general, wanted about we Rockwell I sales. ANSYS, partnerships on think anything. And strongest. did that new some accounts. passed quarter. but with weren't good perspectives, into in of great Rockwell had Microsoft strategic also with Probably main wins. talk plan their were us with save has But on I the had plan some simply ANSYS, in some about taken some time the to I'll because was okay then all amazing let three accounts but probably with we and we the them we great don't

them So context of particularly I think three to all quarter. decent None suffered notable either the of in in a partnerships a late posted happened in bit everybody the quarter. direction, little of them all what

Thanks Great. again.

Adam. Thanks

Thank you.

from Griffin comes Securities. question Jay of next Our Vleeschhouwer

is open. line Your

question the or strategy Thanks. close on the about. perhaps release. your Onshape are that those validate you strategic the is Atlas maybe lifecycle that. outlook talked we've milestones it interesting, the there forthcoming the that that in throw and comments to in to were Good some could of in about impact talked put you think quite your strategy for What having management some of about Jim, and strategy all with My roadmap product that evening. is including before Kristian reference viable, my that metrics comments context an is comments the you've the would of marketplace follow-up into

given end last XXXX outlook. bookings months down that since your efforts in then positions. open your decline And containment number, large is understandable In certainly sales for there suppose quite apparent I large reduction secondly, all an open the over positions for Kristian, few openings, XX% were the in of especially the very was over which cost the from

of in anything in along or you’re terms your of lines. is even were to an of anything SaaS, perhaps thinking But generally how there maybe implication of there you more product longer Maybe those of in lifeing about end some support driving further and structured Onshape line sales consolidations, term inside kind R&D or and thinking about any structure. sales

Yes.

with people terminology based rather say share To one. some Vuforia first the on take so be than sounds will I'll funny. which Jay, Onshape, So

will will also than platform. acquired evolve over say bring will look because And in we different Atlas. some Atlas And based from we've on the point as time platform be Atlas actually Onshape materially other onto taken Let's it well. and we based other what Atlas Vuforia is this it at Onshape and on technologies will directions

and Creo. needs okay. Vuforia lot it a so gist we example, significant the the with cycle of vision a but in engine particular a forth. computer engine but life But being for didn't, has on-premise, AI have do No question Onshape we For anything story to today, subscription also Windchill a Atlas sell platform SaaS. on-premise, as in to management that that's get of IoT And then will closed properties for vision have and needs loop your and but engine computer that

suite so XXX% do passes to what SaaS we'd the have a And management complete that is closed-loop like that somewhere down life cycle XX-second road, based test.

in of you're suites that seconds, XX within we anything can and link, doing the a on part click You do. any

the the We are way. not there today, there industry is and by far from but

we was a Kristian have three to that's an now I said, thought factor but lot as be be move up have quicker might it this to call months that ago. and PTC that it's won't so exogenous is I lead what to see industry pronto SaaS a than think wake pronto going has a And quick, and

going ahead I definitely pulling industry try the might the But significant and industry hard everybody to so share And from represent of Because advantage and is benefit work that SaaS we're shift. quarters we years. industry think as of PTC there, of to coming lot require it's SaaS. press we our this And and the going to a to as can could it that. far in to company us even goes is the be from brings a

that of taking But why education. now this couldn't context started to I you as in market is to that. can story know, in up That's I or of points dreamed crisis. months. I seeing it in We're XX happen two have educational five points the imagine share

answer And the Jay to seventh second questions… then through

that. least At

into one. all That wrapped you sneakily

out half, was actually did that more try the a certain to taken of Let unrelated. PTC reorganizing me pre-global and perhaps To the costs way. reorganization now was And, pandemic originally sum as anticipated. we just it the up the which It fortunate had in really with timing degree, than first struck, businesses. around more actually around growth we this was therefore this

want where at But how, cost the to think as we're can start that as now get all much we a puts and looking just us in to where of that want back it we is half the back a position we about control, stage when spicket. happening. all really hiring to release growth We and

that be we mindful to going the carefully watching and of in want So on we're market. what's

a But capacity be like in advantage the situation. take we're to thoughtful about the now more meantime, and to we're when most of slow pretty where adding it's we're drip on and right trying where hiring

the to problem. and associated new restructuring, and to to two And we've it's that leave be might in One might this might forth if said, can a anyway I then Maybe but that causing tidbits to they add when moved pressures force, what people. that so commute with some be out reduction do a headquarters some we we Yeah. this did we set is helpful.

So why don't we program the and retirement an have program. way, voluntary a by early

adoption good and with we serve we of happen. And really retirement up fairly two estimate voluntary those programs but so an programs. only And what might of early had the

reduction guess we We're hire have a back. that's said, So We them hire them to people not we force. taking okay, what? ended than out out taken But by back. probably going in fine. more would up We'll

might a in back almost then going headcount So force we intended to like it's go done at and by electing the we've not below say, to up. reduction be you

portfolio hiring. a making our little and business, definitely then, work business in the we developers there why so and I you we're within much. has down selective here portfolio. hiring structure in that's cost So doing what our we're bit also and still our come AR tell SaaS for hires And sure are can

shifted Onshape fair the So sellers did into for a we've for recently. we've based on selling Onshape, example, seen inside just that demand amount of

market. interesting responding we're don't as yet what see results. in the demands to But have So we

just we suddenly We – CAD we the intended else channel If that turning a But them premier the alone let's Onshape. or hey, that. SaaS-based minute. to hadn't also our and doing we we're with do did it, loose industry something not right wait this to now, miss said, wants turned loose resellers, sell We have opportunity.

capacity it. put Let's on

portfolio the move doing some is strongest. and that within thinking to headcount also demand ecosystem, is just to within where resources the So the management the we're

Thank you.

Thank you, Jay.

Thank you.

Sterling of JPMorgan. from question comes next Our Auty

open. line Your is

Sterling couple how of tonight. Thanks. on Onshape. go the side, This us Jim, Question you We're Ader clicks. for can our is explained using to motion. from go-to-market maybe any Jackson on of ptc.com

on the So an maybe Onshape, for flavor or just onboarding Can new give required friction was relative just the I Onshape premise you less legwork to for relative easier us curious, world. with a just net an how to there is much logo on-premise? with, the

data Yes, the and well, again, software there's customer no at no there's sites.

digitally, we with skip a might installation are expect of web. so all you then SaaS the all and done virtually the product, those forth. over And demonstrations So so forth phases as and

a So and go-to-market digital trying definitely up process what that's for leverage. we're set to really is Onshape

forth. you conversations switching switching might call so there's on live more Now deals, and to people if risk where in have costs, want them that have said, and get more in perceived bigger to, matter you're no switching, to with you what

So cold the stuff old pounding it's direct definitely and like of calls way. the pavement just it's I kind the over fashioned think but more web, all at making sales and selling that than like not

our that's resellers it's more we're our of and I inside middle in somewhere the sales game. and pulling So why think the more of into

follow-up you. Thank the great. And then Okay, services. on question

services still services the types which services? you are of and were which cut but most, what services cut mentioned – where maybe So happening

categorize just but by my type, me let do Well, probably to say, let me it hard it's best.

there So work because customer probably onsite to generally we're way, that allowed we're have allowed went to to we anyway. not onsite, is not the be a by speaking, services And problem, the if performed any travel go wouldn't be onsite, there.

problem the say a is. where work I So onsite is characterization, as would

is amount take so advantage been and and really years labor lower offsite in cost part has of work forth. Good done for to our of

So if going a Romania, you in even Europe, us that. it the is project in we're actual France or if project do like give something probably to in

assess work really for in a onsite ahead, to but So has that up do factory speed example, hard kind stand connect of are determine project it's going go how work that if full without to it's and requires and gone them. And the there IoT physical that ever that the really all somebody the in to to to you're has assets to being factory. services factory,

in to to at be to you kick have go factory You the maybe the there off have the least time, project. all but don't

So in challenged. near-term, in while it's lockdown I think require mode the work projects onsite that that most we're those are

Thank sense. you. Makes

Jackson. Thanks,

Thank you.

Steve next Our comes from Wedbush. question of Koenig

line is Your open.

Hey, Steve.

question. question. for taking gentlemen. Hey. – my one just Thanks make it Hi I'll I'll

you across in thinking you're scripted robust. So about how comparison and heard the by of if it I'm particularly composition curious, with view remarks. and I your repetitive apologize remarks – though curious that QA and XX, as on Jim, I sensible look this I'm on is out your and wondering either it I'm pretty – the with guidance vertical sounds sounds or can that do of chain generalizations the your kind relative, if verticals maybe verticals you and the make want verticals. crisis those rank your maybe it and it to, them any the way you relevant other affect resilience on financial the disruptions supply regarding crisis versus of but impact or and kind any to relative is this of one verticals to factors stack

saying Deere I'm to the point from our be to and tools by call highest Carrier Maybe biggest we have factories at would could time. equipment. That industrial. going That's John be, vertical in start would Yes, everything conditioning what I this air generalized well. to where machine concentrations

we're particularly Our second the much, not which Defense, in. not U.S. vertical is is is is they're strong, side really suffering back, Aerospace leading that dialing defense the way and on where by government the

type of The be that's it's electronics, more High-Tech, business-to-business not Electronics consumer electronics equipment. third really really but would and thing

you our like Automotive, which down And So places three then is good get is would industry. biggest talking automotive a you're because be tough to if those exposures. single-digits

not big, we're than commercial defense. If you bigger into it's that aviation, again, get much

If there airlines. than been you questions think is less Well about X%. are about places airlines like,

together is it's flying spare own going get airlines more don't by up I long think do not. parts think so we for managing sales, own them, than those that's to whether them spare we they're parts of And any still to parts airplanes on airline they're not airlines they and I with as the those business renewals. our retail less management. stop air if they way, because business. And X% spare are they won't don't around put is going be about – back about much They'll or in to give ARR. the airplanes, new never parts. able business the spare into the again, And And it's as in

has the probably I it of And economy particular that particular, really which PTC feels I'm exposure. to be. parts of here, think I toughest automotive like the So to worst referring where places this in not the is places hit the probably the one are deepest

it. Jim. Well, Got Kat. Great. thanks, Thanks,

Steve. Thanks,

Steve. Thanks,

the conference to to Jim back closing any I’d over turn you. for remarks. now Thank like

thanks and you, Thank us today. everybody for joining

are Conference on to XXth. as So in virtual, JP TMT at lot Global this going with LiveWorx be going in of of May bunch them a investor quarter beginning going addition to well. a We're Morgan’s virtual

for So, website the look they posted. as events our get other out on

on in is can you for And evening. up the safe circuit, hopefully. well. your And a and later. interest hopefully us if So for join and we PTC not, you you to that LiveWorx seeing the do thank website look the as event, on lastly, Bye-bye. forward great at See conference have information you all

Thank you.

now Ladies disconnect. conclude you and may Thank does participating, gentlemen, conference. for this today's you