PTC Inc at Citi TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : I know it's Q4. There's a lot of business you guys are closing this month. But Neil, I thought it would be great to start with you, somewhat new to the CEO role, but one of the top priorities, I think you had coming into that role was just to meet with as many customers as possible. So I thought it would be great just to get your impressions after traveling the globe, talking to customers. What were some of the most surprising takeaways as you met with customers about PTC?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Got it. And I mean, you talked about CAD and PLM. Obviously, those are really broad categories, especially all the different products you touch. I mean, imagine some of this was just kind of educating customers on everything you could do for them in some of those situations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 4:50PM, PTC.OQ - PTC Inc at Citi TMT Conference

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. And touching on that strategic positioning. I know you don't comment on market speculation, but I think on the last earnings call, you did talk about PTC being a strategic leader in the category and maybe not being surprising that others could be interested in that. But how do you just kind of think about that strategic positioning in the context of the broader market? And how are you thinking about the -- driving shareholder value from here?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Right. And I guess translating that into your conversations with customers, you have made some changes to the go-to-market since you took over. I think you talked about verticalization and some other things. Just give a sense for those changes, where we are in those changes and how you're thinking about the tailwinds or the benefits of those investments you've made as we head into FY26?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. And I guess that's a good segue on the topic of growing net new ARR to bring in Kristian on the financials a little bit. But post the Liberation Day and a lot of the uncertainty, you did bring down your full year growth targets to the high single digits range. You did take the low end up after last quarter of kind of better execution and everything. Could you just walk us through what you're seeing in the demand environment maybe both from a macro perspective, but also some of these go-to-market changes that Neil was talking to and just kind of your confidence level and in hitting those targets?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : On the ramp versus kind of -- okay. Got it. And obviously, it's early to talk about FY26 at this point. But just as you look across the product portfolio and if we were to get accelerated growth on a net new ARR basis in '26. And again, absent some dramatic improvement in the macro environment, like what products or maybe segments from the go-to-market perspective do you think could drive that? Like what are you most excited about that you think kind of has that acceleration potential?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Got it. Got it. Okay. And maybe just thinking about the product segmentations that you'll break out. Starting on the PLM side, a lot of different great products in there. You talked about Windchill being used by NVIDIA and ServiceMax, where you kind of came into the company through. Like give us a sense of just what could be the biggest growth drivers within that bucket because we often get the question from investors, how to think about the growth of that going forward. And again, when you have various parts that are growing at different rates, at different stages of maturity curve, it's sometimes kind of difficult to get a consolidated number.

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : I see. So the -- everything is like IoT or other --

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : So it's interesting to hear you really talk a lot about the kind of the incremental resource allocation, particularly on Windchill, right? I think that's been a product that's been around for a very long time for PTC. But like what are those -- what do those new users look like? Like where is this expanding to? And then is there something you're also seeing on the competitive front where maybe there's an opportunity for you to replace other PLM products?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. No, that's super interesting. And I guess you touched on AI a little bit, but one of the things we heard of -- we had -- your friends in Autodesk, here this morning talking about kind of the AI strategy, but one of the big pieces to kind of unlock that is this data readiness, right? And a lot of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 4:50PM, PTC.OQ - PTC Inc at Citi TMT Conference these systems, you have file-based architectures, which doesn't necessarily mean that that data is usable in an AI construct. So how are you thinking about that transition for PTC to kind of, whether you want to call it a cloud-based data model or a data model that's usable by AI?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Got it. Makes sense. And I guess on the topic of customer conversations, I know you've been on the road a lot lately, but would you say that you're seeing any change or increased optimism just in terms of your customer conversations over the last couple of months versus prior this year, like whether it's around AI or kind of looking past the initial shock waves of the Liberation day or --

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Got it. You alluded to ServiceMax earlier. I just wanted to go back to that. Can you just refresh like the some of the headwinds that you might have seen in that business. It sounds like those are in the rearview, maybe you saw some green shoots this past quarter. But how should we just think about the growth rate potential of that business over time?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. And was that related to Salesforce at all on the churn? Or was it -- is it different?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. Yes. Okay. And maybe, Kristian, on the profitability side, I think despite the choppiness in the macro environment, the free cash flow has continued to hold up. You've had a pretty high degree of, I guess, accuracy on the guidance and your ability to kind of maintain that. Just talk to us about the levers you have in that business? And how do you kind of think about long-term margin expansion, the additional efficiency unlocks that are ahead? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 4:50PM, PTC.OQ - PTC Inc at Citi TMT Conference

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Yes. And maybe related to the cost side, but I would be curious to if there's any examples on the revenue or customer side. But what are some of the examples of internal use of AI that PTC has had, whether that's cost savings, among developers or contact center, not that you have a big contact center, but any examples or projects stand out?

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Right, right. And how do you think about the M&A environment, obviously, ServiceMax being kind of one of the larger acquisitions, you've made some other interesting kind of higher-growth acquisitions, I guess, before ServiceMax, whether it was Onshape and Arena. What type of assets or technologies are interesting at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 4:50PM, PTC.OQ - PTC Inc at Citi TMT Conference

Question: Tyler Radke - Citigroup Global Markets Inc. - Analyst : Right, right. Awesome. Well, I think that's a good place to leave it. We're out of time. Neil, Kristian, really appreciate you making the time, and thanks for everyone for joining.