Our FY'22 guidance now reflects the expected operating results of the Codebeamer business and the effect of the DxP transaction, as well as the impact of business combination accounting, incremental interest expense, and all acquisition and transaction-related charges. 

Our FY'22 and Q4'22 financial guidance includes the assumptions below:              

• We provide ARR guidance on a constant currency basis, using our FY'22 Plan foreign exchange rates (rates as of September 30, 2021) for all periods. Unfavorable changes in foreign exchange rates have been a headwind to our reported ARR. At end of Q3'22 foreign exchange rates, FY'22 ARR would be lower by approximately $85 million, compared to our constant currency guidance (previously $34 million, based on foreign exchange rates as of the end of Q2'22).
• We expect FY'22 organic churn, excluding the impact of our exit from Russia, to improve by approximately 150 basis points (previously 100 basis points) over FY'21.
• Due to invoicing seasonality, the majority of our collections occur in the first half of our fiscal year. Q4 is our lowest cash flow generation quarter.
• Our operating costs are expected to increase in FY'22 due to hiring, increased SaaS investments, merit increases that took effect in Q3'22, and the acquisition of the Codebeamer business in Q3'22 (updated). At the mid-point of ARR guidance, we expect FY'22 GAAP operating expenses to increase approximately 4% to 5% (previously 3% to 4%) and non-GAAP operating expenses to increase approximately 2% to 3% over FY'21.
• FY'22 GAAP P&L results are expected to include the items outlined below, totaling $281 million to $291 million (previously $293 million to $308 million), as well as their related tax effects:
• $170 million to $180 million (previously $160 million to $170 million) of stock-based compensation expense
• $61 million (previously $58 million) of intangible asset amortization expense
• $37 million (previously $35 million to $40 million) of restructuring charges
• $11 million (previously approximately $5 million) of acquisition and transaction-related charges
• $32 million (previously $35 million) of FY'22 net realized losses from the sale of investments
• $30 million gain associated with the sale of a portion of our PLM service business (new)
• Related to restructuring, for FY'22 we expect:
• P&L charges of $37 million (previously $35 million to $40 million), which have been incurred in the first nine months of FY'22.
• Cash outflows for restructuring payments of $40 million to $45 million, of which $38 million was paid in the first nine months of FY'22. Restructuring payments in FY'22 include $5 million related to prior period actions, primarily the relocation of our headquarters in FY'19.
• Our FY'22 GAAP tax rate is expected to be approximately 20% and our non-GAAP tax rate is expected to be approximately 19%.
• FY'22 capital expenditures are expected to be approximately $20 million (previously $25 million).
• Our long-term goal, assuming our Debt/EBITDA ratio is below 3x, is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic opportunities (updated).

PTC's Fiscal Third Quarter Results Conference Call

The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, July 27, 2022 .  To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735 and provide the passcode 7328695, or log in to the webcast, available on PTC's Investor Relations website . A replay will also be available.