Delivers a Solid Start to Fiscal 2020

BOSTON — (BUSINESS WIRE) — January 22, 2020 — PTC (NASDAQ: PTC) today reported financial results for its fiscal first quarter ended December 28, 2019.

“PTC continued to see solid demand for our product development and digital transformation technologies across all major geographies. Sales execution was strong in the quarter, and our partner ecosystem continued to expand our global reach,” said James Heppelmann, President and CEO, PTC.

“PTC is entering this new decade with a robust portfolio that positions us to deliver an impressive combination of growth and profitability. We see a lot of momentum in the core CAD and PLM business, while our IOT and AR businesses continue to generate very strong growth,” continued Heppelmann.

“The addition of Onshape brings the industry’s only multi-tenant SaaS platform into our portfolio, providing significant new opportunities for companies who want to reap the benefits of developing products in a fully cloud-based environment,” concluded Heppelmann.

First quarter 2020 highlights¹
Key operating and financial highlights are set forth below. For additional details, please refer to the prepared remarks and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com.

• ARR was $1.16 billion. Growth of 11% compared to Q1’19 reflects solid performance in our Growth and Core product groups, and in our global channel.
• Cash flow from operations was $8 million in Q1’20. Free cash flow was $3 million and adjusted free cash flow was $12 million, compared to negative free and adjusted free cash flow in Q1’19. On a trailing twelve-month basis, free cash flow growth was 27%, and adjusted free cash flow growth was 34% in Q1’20, compared to Q1’19.
• Operating margin was 9% in Q1’20 on a GAAP basis compared to 9% in Q1’19; Q1’20 non-GAAP operating margin was 26%, compared to 24% in Q4’19, and 27% in Q1’19.
• Total cash, cash equivalents, and marketable securities as of the end of Q1’20 was $294 million; total debt, net of deferred issuance costs, was $1.12 billion.

Fiscal 2020 Outlook
“Given our solid Q1 performance, our visibility into the remainder of fiscal 2020, and favorable foreign exchange rates, we are raising our guidance ranges for ARR, Adjusted Free Cash Flow, Revenue and EPS,” said Kristian Talvitie, EVP and CFO, PTC.

Fiscal 2020 Guidance
Our fiscal 2020 financial outlook includes the following general considerations:

• Guidance includes the financial contribution from the recently completed Onshape acquisition.
• Operating expenses are expected to grow roughly 9%, slightly elevated due to the Onshape acquisition.
• Allows for potential impact of moderate weakening of macroeconomic conditions.
• GAAP tax rate is expected to be 15%, 500 bps lower than previous guidance due to accounting related to the Onshape acquisition. Non-GAAP tax rate remains 19%.
• Reflects operating cash flow of $245 million to $265 million.

1. Free cash flow and adjusted free cash flow exclude capital expenditures of $27 million. Adjusted free cash flow also excludes restructuring payments of $42 million.
2. The FY’20 non-GAAP guidance excludes the estimated expense items outlined in the table below, as well as any tax effects and discrete tax items (which are not known nor reflected).