PTC(US:PTC)2021-04-29 03:10Financial Data and Key Metrics Changes - PTC reported a Q2 ARR of $1.39 billion, reflecting a 15% year-over-year increase, with organic ARR growth of 11% [53] - Revenue for Q2 was $462 million, up 22% year-over-year, driven by strong execution and the impact of ASC 606 on revenue recognition [53] - Free cash flow was strong at $116 million, with non-GAAP EPS growth of 83% year-over-year [18][53] Business Line Data and Key Metrics Changes - ARR in the Focused Solution Group (FSG) was flat, but significant wins in retail and defense are expected to drive future growth [21] - The core business saw double-digit ARR growth, while the growth business achieved 27% organic constant currency year-over-year growth [22] - The CAD segment delivered high single-digit ARR growth, with strong demand for Creo 7 and the newly announced Creo 8 [23][25] Market Data and Key Metrics Changes - Americas ARR growth was 21%, driven by Arena and augmented reality, while Europe saw 8% growth and APAC delivered mid-teens growth [44][45] - The economic environment is improving globally, with PMI numbers returning to or exceeding pre-COVID levels in many regions [11] Company Strategy and Development Direction - PTC is focusing on a SaaSification strategy, gradually transitioning its portfolio to a SaaS model, which is expected to significantly enhance ARR over time [42][66] - The company aims to leverage its digital transformation initiatives to align with customer needs, enhancing growth in engineering, manufacturing, and service sectors [19][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for core products and SaaS offerings, supported by a robust pipeline heading into the second half of 2021 [11] - The company is transparent about the mix of deferred and active ARR, indicating a solid foundation for future growth [90] Other Important Information - PTC's partnership with Microsoft saw a 30% year-over-year increase in bookings, indicating strong demand for AR solutions [46] - The integration of Arena is progressing smoothly, with strong traction in upselling and customer retention [39] Q&A Session All Questions and Answers Question: Insights on PTC's move to SaaS - Management described the SaaSification strategy as insidious, allowing customers to adopt products incrementally rather than all at once [66][70] Question: Drivers behind CAD and PLM replacements - The strength of Windchill as a PLM system and its integration with IoT and AR capabilities are key factors driving replacements [77][79] Question: Demand breakdown across product lines - Demand is strongest for Vuforia and Onshape, followed by ThingWorx, PLM, and CAD, reflecting the maturity of these products [121] Question: Opportunities for Onshape and Arena - Both Onshape and Arena are expected to see growth through increased sales capacity and global expansion, particularly for Arena [108][109] Question: Impact of 5G on ThingWorx adoption - The rollout of 5G is seen as a tailwind for ThingWorx, encouraging industrial companies to enhance their operations [111] Question: Strength in Rockwell partnership - The partnership's strength is attributed to new talent at Rockwell and an overall improvement in the industrial automation market [116]