Our FY'22 financial guidance includes the assumptions below:

• We assume the current macro environment to remain consistent H1'22, beginning to moderate in H2'22.
• ARR growth is expected to be approximately 15% in Q1'22, stronger than in the remainder of fiscal '22, since Q1'21 did not include ARR for Arena, which was acquired in Q2'21. From Q2 through Q4 of fiscal '22, we expect approximately linear performance, with consistent year-over-year growth rates.
• We expect churn to improve by approximately 100 basis points over FY'21.
• At the mid-point of ARR guidance, we expect GAAP operating expenses to increase approximately 4-5% and non-GAAP operating expense to increase approximately 2-3%.
• Costs are expected to ramp throughout the year due to hiring and increased SaaS investments.
• Total estimated pre-tax adjustments of $275 million - $280 million outlined below, as well as any additional tax effects and discrete tax items (which are not known or reflected).
• $58 million intangible asset amortization expense
• $172 million stock-based compensation expense
• $45-50 million restructuring and other charges.
• Fluctuations in the value of our Matterport investment are excluded from both GAAP and non-GAAP guidance.
• Related to the restructuring, we expect:
• P&L charges of approximately $45 million to $50 million, primarily in Q1'22.
• Cash outflows for restructuring payments of approximately $50 million to $55 million, with approximately two-thirds occurring in H1'22 and the majority of the remaining payments in Q3'22.
• Capital expenditures are expected to be approximately $30 million.
• In FY'22, our GAAP tax rate is expected to be approximately 20% and our non-GAAP tax rate is expected to be approximately 19%.
• We target to return approximately 25% of our free cash flow excluding restructuring payments to our shareholders through share repurchases, as we continue to rapidly de-lever. After de-levering, we would expect to resume returning 50% of our FCF to shareholders through share repurchases.

PTC's Fiscal Fourth Quarter and Full Year 2021 Results Conference Call
The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, November 3, 2021.

To participate in the live conference call, dial (888) 330-2384 or (240) 789-2701and provide the passcode 4098724, or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.

Important Disclosures

Important Information About Our Non-GAAP Financial Measures 
PTC provides supplemental non-GAAP financial measures to its financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. These non-GAAP financial measures should not be construed as an alternative to GAAP results as the items excluded from the non-GAAP financial measures often have a material impact on our operating results, certain of those items are recurring, and others often recur. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results.

Non-GAAP operating expense, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and non-GAAP EPS exclude the effect of the following items: stock-based compensation; amortization of acquired intangible assets; acquisition-related and other transactional charges included in general and administrative expenses; restructuring and other charges, net; certain non-operating charges; and income tax adjustments. Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in "Non-GAAP Financial Measures" on page 25 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. In FY'21, we incurred tax expense related to a South Korean tax matter which is excluded from our non-GAAP financial measures as it is related to prior periods and not included in management's view of results for comparative purposes. We also recorded a tax benefit in FY'21 related to the release of our U.S. valuation allowance as a result of the Arena acquisition and our conclusion that it is now more likely than not that we will realize the majority of our deferred tax assets in the U.S. As the non-GAAP tax provision is calculated assuming that there is no valuation allowance, this benefit has been excluded from our non-GAAP financial measures.

Free Cash Flow - PTC provides information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long-term goals and intent to return approximately 50% of our free cash flow to shareholders via stock repurchases. Free cash flow is net cash provided by (used in) operations net of capital expenditures.  Free cash flow is not a measure of cash available for discretionary expenditures.

Constant Currency (CC) Change Metric - We present CC information to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency rate fluctuations. To present CC information, FY21 and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the foreign exchange rate as of September 30, 2020, rather than the actual exchange rates in effect during that period. All discussion of FY22 and comparative prior period ARR results (including FY21 baseline amounts) are reflected using the foreign exchange rates as of September 30, 2021.

Operating Measures
ARR - To help investors understand and assess the performance of our business as a SaaS and on-premise subscription company we provide an ARR (Annual Run Rate) operating measure.  ARR represents the annualized value of our portfolio of active subscription software, cloud, SaaS, and support contracts as of the end of the reporting period.  ARR includes orders placed under our Strategic Alliance Agreement with Rockwell Automation, including orders placed to satisfy contractual minimum commitments.