PTC Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

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

Question: Brett Klein - Morgan Stanley - Analyst : Awesome. That's really helpful framing. Neil, I know I asked this last year, you were a couple of months in as CEO. You've been at PTC for, I don't know, a little over a year, I believe, at that point in time. A year later, in the seat, like what are some of the key learnings now on the business and the opportunity for the future growth?

Question: Brett Klein - Morgan Stanley - Analyst : That's great. And 40 years in, still a super innovative culture across the employee base, really fun to see.

Question: Brett Klein - Morgan Stanley - Analyst : That's really awesome. You talked about the driver of digital transformation. But what are some of the other key demands or challenges that your customers are facing in market today that they're coming to you and saying, help me with your solution, solve these problems in my business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 10:35PM, PTC.OQ - PTC Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Brett Klein - Morgan Stanley - Analyst : Okay, great. You brought up AI generative AI. How do you believe your customers will be impacted by AI? And then how do you tie that into PTC's product road map with AI embedded in your own solutions?

Question: Brett Klein - Morgan Stanley - Analyst : That's great. And I know you've been talking about just this data angle and like as one example, sharing PLM data with the manufacturing floor. Unpack maybe that example or a couple of other examples where data is being used from maybe a PLM tool that you have in other areas of operations and manufacturing.

Question: Brett Klein - Morgan Stanley - Analyst : Super interesting. Maybe just flipping back to AI as well. Just what are some of the initial use cases that you envision or have in market for AI with your customers. Give us a few examples.

Question: Brett Klein - Morgan Stanley - Analyst : Super cool. Kristian, let's pull you in here. On Unvarnished opinions on ASC 606. I'm kidding. Kristian, we're a few months into the calendar year and midway through the second fiscal quarter. How would you characterize the macro environment and spending environment across your customers?

Question: Brett Klein - Morgan Stanley - Analyst : And then maybe specifically, within customers that are potentially impacted by government to not you serving governments yourself, but maybe industrial, aerospace and defense, I know it's early and new, but what are you all hearing from them on the demand side? And any disruptions you're seeing with those verticals?

Question: Brett Klein - Morgan Stanley - Analyst : Certainly, and it sounds like PTC will be very fundamental to that ongoing transformation in a world with a lot of uncertainty.

Question: Brett Klein - Morgan Stanley - Analyst : Excellent. We're going to pivot now. You referenced some of the go-to-market changes. Let's go in a little deeper last quarter. Some real announcements around changes to go-to-market or realigning sales, success, marketing to be more vertically integrated, brought in a new Chief Revenue Officer, Rob Dahdah. What prompted these changes? And I know it's still early, but are you starting to see them bear fruit already?

Question: Brett Klein - Morgan Stanley - Analyst : That's great. And I know the last quarter, you talked about the cross-sell opportunity. Just one example I picked up was Codebeamer, the ALM solution and the cross-sell into the PLM customer base. What are some of those top of mind cross-sell opportunities that you see across the portfolio?

Question: Brett Klein - Morgan Stanley - Analyst : Okay. That's great. And let's just go a little bit deeper on the ALM opportunity when you acquired Codebeamer is pretty automotive-focused from a vertical perspective, how broad is the opportunity across your other industries that you address for the Codebeamer products? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 10:35PM, PTC.OQ - PTC Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Brett Klein - Morgan Stanley - Analyst : Okay. Great. Neil, you came over with ServiceMax 2 years ago. PTC's own the business 2 years now. What are some of the opportunities around ServiceMax you're really excited about? I know PTC addresses the full life cycle now from design, development, operations and service. How do you see the ServiceMax opportunity going forward?

Question: Brett Klein - Morgan Stanley - Analyst : Okay. Great. Maybe I'll pause there and see if there's any audience questions for Neil or Kristian. Put your hand up, any questions? I'll give you another opportunity in a few minutes. Could you provide us an update on SaaS uptake within your customer base? And SaaS has been in a lot of horizontal business apps. What are the unique benefits for SaaS within industrial manufacturers in your 5 major verticals? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 10:35PM, PTC.OQ - PTC Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Brett Klein - Morgan Stanley - Analyst : And for customers that do want to deploy SaaS, talk about the competitive differentiation and landscape of your offerings in SaaS versus some of the traditional competitors out there. Do they have true SaaS or no?

Question: Brett Klein - Morgan Stanley - Analyst : Okay. Great. Kristian, let's put you back in here, too. Very simple, high level on what are the key metrics investors should be looking at? What are you looking at each quarter to judge the performance and health of the business?

Question: Brett Klein - Morgan Stanley - Analyst : Cash is king. Talk through a little bit of your either one of you can answer this, actually, your framework around growth versus profitability? And then also maybe as you think about investments in the business, M&A, inorganic investments and return of capital, two separate questions.

Question: Brett Klein - Morgan Stanley - Analyst : Great. Let me pause and give back the floor... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 10:35PM, PTC.OQ - PTC Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Brett Klein - Morgan Stanley - Analyst : The question here upfront. If we have a mic, quickly. Hold on one sec, sir. Unidentified Participant Regarding your AI -- do you have any speed and accuracy which industry group of your customers do you expect to be the first movers in adopting your AI offerings?

Question: Brett Klein - Morgan Stanley - Analyst : Maybe one quick last one in the last 30 seconds. Long-term vision, call it, 3 to 5 years for PTC. What do you think the business looks like? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 10:35PM, PTC.OQ - PTC Inc at Morgan Stanley Technology, Media & Telecom Conference