PTC (PTC) 51st Nasdaq London Investor Conference summary

Business overview and industry context

• Achieved over $2.2 billion in annual recurring revenue, growing at low to mid-teens rates, with strong free cash flow generation.

• Operates globally with over 7,000 employees, focusing on technical software for design, manufacturing, and service of physical products.

• Competes mainly with Siemens Digital Industries, Dassault Systèmes, and partially with Autodesk in a mature, high-retention, mission-critical software market.

• Software is essential for customers' evolving product portfolios, especially as electrification and software content in products increase.

• Emphasizes speed to market and product innovation as key customer needs.

Business model transformation and financial discipline

• Transitioned from a perpetual license to a subscription model over four years, completed in 2020, now with 99%+ of software sold as subscription.

• Subscription model increased predictability, flexibility for customers, and financial stability, supporting continued investment even in turbulent environments.

• Operating expenses have grown at less than half the rate of ARR, with guidance for over $830 million in free cash flow for fiscal 2025 and a $1 billion target for 2026.

• Budgeting process now sets conservative initial budgets, releasing incremental funds as performance exceeds expectations, improving operational efficiency and visibility.

Product pillars and growth drivers

• Core product areas include CAD, PLM, ALM, and SLM, with PLM expanding beyond engineering into enterprise-wide digital transformation initiatives.

• PLM now serves as a system of record for product data, enabling a digital thread across organizations and supporting feedback loops for continuous improvement.

• ALM (Codebeamer) addresses growing software complexity in products, especially in regulated industries, providing requirements management and traceability.

• SLM (ServiceMax) supports long-lived assets in the field, improving service efficiency, spare parts management, and integration with CAD-driven digital work instructions.

• Significant cross-sell opportunities remain, especially between CAD and PLM, with newer products like Codebeamer and ServiceMax gaining traction.