FINANCIAL ANALYST SOURCE BOOK

Transcription

1 FINANCIAL ANALYST SOURCE BOOK PTC Investor Relations Nasdaq: PTC April 26, 2018

2 PTC s Source Book is intended to provide the investment community with a single point of reference to learn about our company including our products and addressable markets, our corporate strategy, our financial targets, and our historic performance and risk factors. Please be aware that this source book speaks only to financial data as of April 26, 2018 and will not be updated to reflect any changes in PTC s business or financial condition after that date. The most up to date information may be found in our SEC filings, press releases, and other investor materials on our investor relations website at investor.ptc.com. This document should not be used as a substitute for, but rather a supplement to, those resources. Further, we caution you that forward-looking statements in this source book are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties are detailed on page 22 and from time to time in reports we file with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. As you gain a better understanding of our business, please do not hesitate to contact the Investor Relations team with any questions. T IM F OX SVP, Investor Relations tifox@ptc.com OFFICE: (781) J A S O N H O W A R D Sr. Director, Investor Relations jahoward@ptc.com OFFICE: (781) Thank you for your interest in PTC. 2

3 OPERATING AND NON-GAAP FINANCIAL MEASURES This Source Book includes operating and non-gaap financial measures and targets. All prior period results and future period expectations and targets are non-gaap measures. These non-gaap measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-gaap financial measures to the most directly comparable GAAP measures can be found on pages Future period non-gaap financial targets cannot be reconciled to GAAP targets as items that affect GAAP results cannot be predicted. Important information about our non-gaap financial measures can be found on page 24. An explanation of our subscription transition operating measures, including bookings and mix-adjusted measures, can be found on page 25. ASC 606 Please note that this presentation does not take into consideration the impact of ASC 606, which PTC will adopt as of October 1, 2019 (fiscal year 2019). 3

4 Table of Contents 05 HI STORY OF PTC 06 OUR LOGO, OUR M ISSION EXECUTIVE TEAM & BOARD OF DI RECTORS 10 GLOBAL PRESENCE 11 VERTI CAL M ARKETS OVERVIEW STRATEGIC OVERVIEW 15 SEGM ENT OVERVIEW 16 COMPUTER AIDED DESIGN (CAD) 17 PRODUCT LIFECYCLE M ANAGEM ENT (PLM) 18 SERVICE LI FECYCLE M ANAGEM ENT (SLM) I NTERNET OF THINGS (I OT) PTC FI NANCI AL I NFORMATION SUBSCRIPTION FAQ 4

5 History of PTC PTC Inc. was founded as Parametric Technology Corporation by Dr. Samuel Geisberg in 1985, based on his vision of a radically new approach to Computer-Aided Design (CAD) software. Historically, CAD was a two-dimensional tool, but this new approach would be based on solid geometry and would use feature-based parametric techniques for defining parts and assemblies in a three-dimensional atmosphere. This advanced design software, Pro/ENGINEER, was launched in 1988 and the first two copies were sold to Deere & Company, PTC s first and longest-standing customer. By 1998, PTC was established as an industry leader surpassing $1 billion in CAD sales just ten years after the launch of Pro/ENGINEER. Also in 1998, PTC acquired Computervision, a Bedford, Massachusetts based company, for approximately $260 million. Along with the acquisition came Computervision s interest in Windchill Technologies, an early pioneer in product data management for the enterprise. This technology soon became known as Product Lifecycle Management (PLM) and grew to a $5 billion industry. More recently, PTC has established itself as a leader in the Industrial Internet of Things (IIoT) market through a series of acquisitions of leading-edge companies combined with break-through organic development efforts which integrate IoT technology, including machine learning and predictive analytics, as well as Augmented Reality (AR) with PTC s core CAD, PLM, and SLM offerings. Since launching the IIoT business in late 2013, PTC has experienced rapid IoT customer growth, developed a large and expanding partner ecosystem, and established itself as a thought leader in the IIoT marketplace. PTC is well-positioned to address this emerging market opportunity as it helps companies fundamentally transform the way they design, operate and service products in a smart, connected world January December September January July December October May October December August May January July PTC Founded First launch of PTC goes public at PTC surpasses $500 Pro/Engineer September $12/share Million in annual rev enue John Deere becomes PTC's first customer PTC completes acquisition of Computerv ision October PTC surpasses $1 Billion in annual rev enue December First launch of Windchill, PTC's internet -based PLM solution PTC acquires PTC acquires Arbortext, a leader CoCreate, a CAD in dynamic modeling solution publishing James E. PTC acquires MKS, Heppelmann a platform for appointed CEO software application lifecycle management November PTC launches Creo, a scalable suite of interoperable, open and easy to use design applications PTC acquires Serv igistics, a dev eloper of serv ice lifecycle management software solutions PTC acquires ThingWorx, a leading IoT application platform PTC acquires Axeda, a prov ider of secure connectiv ity for IoT August PTC announces PTC acquires ColdLight, a prov ider of big data machine learning and predictiv e analytics PTC acquires Kepware, a prov ider of connectiv ity to industrial automation env ironments PTC's ThingWorx named a global leader in IoT Platforms by IDC Marketscape October PTC's IoT business capital allocation November surpasses $100 strategy to return PTC acquires Million in annual ~40% of Free Cash Vuforia, an rev enue Flow to augmented reality November shareholders technology PTC's Windchill platform named a leader in PLM for manufacturers by Forrester Research 5

6 Our Logo, Our Mission PHYSICAL WORLD Unlocking the value created by the convergence of the PHYSICAL and DIGITAL worlds DIGITAL WORLD Our logo is emblematic of physical and digital convergence. It represents the yin and yang of the physical and digital worlds -- how opposite forces are actually complementary and interdependent. PTC's solutions are helping our customers unlock value from this convergence, which is increasingly being called the fourth industrial revolution. PTC is specifically focused on the industrial IoT, which is expected to be the largest segment of the overall IoT market, as enterprises drive productivity across their operations, leverage the value of predictive service and fundamentally transform their businesses. 6

7 Executive Team James Heppelmann President and Chief Executive Officer James (Jim) Heppelmann is the president and chief executive officer (CEO) of PTC, responsible for driving the company s global business strategy and operations. During Mr. Heppelmann s leadership tenure, PTC has assembled the industry s most robust technology capabilities to enable companies to create, connect, analyze, operate, and service the products and systems that comprise the Internet of Things. He also serves on PTC s Board of Directors. Mr. Heppelmann has emerged as a driver and thought leader in the Internet of Things (IoT) space. Together with Harvard Professor Michael E. Porter, he has co-authored three highly influential articles regarding the transformational impact of the Internet of Things on business, including the November 2014 Harvard Business Review cover story How Smart, Connected Products are Transforming Competition, the companion article How Smart, Connected Products are Transforming Companies published in the October 2015 Harvard Business Review and the November-December 2017 article Why Your Company Needs an AR Strategy. Mr. Heppelmann was named one of 7 IoT Leaders to Watch in 2017 by Hewlett Packard Enterprise and has previously been recognized as IOT CEO of the Year by PostScapes, Technology CEO of the Year by the Massachusetts Technology Leadership Council, and received the CAD Society Leadership Award for his work with the Internet of Things. A dynamic speaker, Mr. Heppelmann has been featured as a keynote presenter at the National Association of Manufacturers (NAM) events on topics such as How Smart, Connected Products Are Redefining Manufacturing and was a featured speaker on the role of digitization in America s advanced industries at the Brookings Institution. He has been published and quoted in numerous global business and trade media, including The Wall Street Journal, Forbes, and Bloomberg Businessweek. Mr. Heppelmann attended the University of Minnesota, where he earned a bachelor s degree in mechanical engineering with an emphasis on computer-aided design. Andrew Miller Executive Vice President and Chief Financial Officer Andrew Miller is the executive vice president and CFO at PTC. Mr. Miller joined PTC in 2015 from Cepheid, a high-growth molecular diagnostics company, where he had served as Chief Financial Officer since April While at Cepheid, Miller built world-class finance and information technology teams and a nationally recognized investor relations program. Mr. Miller s career also includes financial leadership positions at Autodesk, MarketFirst Software, Cadence Design Systems, and Silicon Graphics. In each role, he helped build and shape strong teams focused on financial strategy and operations. As the Vice President of Finance and Chief Accounting Officer of Autodesk, Mr. Miller was part of the team that drove their business transformation effort focused on corporate growth, productivity improvements, and profit expansion. Mr. Miller began his career at accounting firm Deloitte. Mr. Miller currently serves on the Board of Directors of irobot Corporation and previously served on the Board of Directors of United Online. Mr. Miller graduated Summa Cum Laude with a BSC in accounting from Santa Clara University. 7

8 Executive Team (CONTINUED) Barry Cohen, Ph.D. Executive Vice President, Chief Strategy Officer Matthew Cohen Executive Vice President, Field Operations Kathleen Mitford Executive Vice President, Products Barry Cohen, Ph.D. is an executive vice president and Chief Strategy Officer at PTC. Dr. Cohen also leads PTC s corporate development, global education, and the human resources organizations. Dr. Cohen joined PTC in January 1998 when PTC acquired Computervision. Prior to the acquisition, he served with Computervision for four years as senior vice president for human development and organizational productivity. Before joining Computervision, Dr. Cohen was the president of Possibilities Inc., an executive consulting firm specializing in organizational change and executive coaching, where he served for thirteen years. Dr. Cohen earned his doctorate degree in logic and philosophy of science from the State University of New York at Buffalo. Matt Cohen is the executive vice president of Field Operations at PTC. In this role Matt is responsible for driving business value and creating a differentiated experience for our customers. He leads all PTC field functions including Sales, Marketing, Customer Success, Technical Support, Cloud Services and Professional Services. Since joining PTC in 2001, Matt has served in a series of leadership roles across the sales and services organizations, most recently leading the customer success organization. In this role he rearchitected PTC s approach to delivering rapid time to value and a better customer experience. Within PTC's global services organization, Mr. Cohen has helped set sales, product and training strategy. He has also led the rapid development and roll out of PTC s cloud strategy. Mr. Cohen earned a bachelor of arts degree in Psychology from Harvard University. Kathleen Mitford is Executive Vice President, Products at PTC. In this role Kathleen drives portfolio management, product strategy, and agile development to further enhance PTC s leadership role in the fast changing markets of IoT and AR, and to continue strong performance in core CAD and PLM. Kathleen is responsible for researching market opportunities and developing highly aligned and innovative product plans across both the ThingWorx IoT and Augmented Reality Platform as well as the CAD/PLM/ALM/MFG/SLM solution offerings. Ms. Mitford earned a bachelor of science degree from Philadelphia University. Anthony DiBona Executive Vice President, Focused Solutions Group Anthony (Tony) DiBona is the executive vice president of the Focused Solutions Group at PTC. In his current position, Mr. DiBona has management responsibility for the PTC Servigistics Business Unit, the PTC Retail Business Unit and the PTC Classic Products Group. He has been with PTC since 1998 and in that time has served as vice president, global business partner group and VP for major account sales. Prior to joining PTC, Mr. DiBona served at Data General Corporation where he managed the U.S. sales organization. Before joining Data General in 1989, he spent 11 years with Unisys Corp. Mr. DiBona earned a master s degree in business administration and a bachelor of science degree in business management from Bentley University. Aaron von Staats Corporate Vice President, General Counsel Aaron von Staats is a corporate vice president, general counsel and secretary for PTC. In this position, Mr. von Staats is responsible for worldwide legal and compliance matters, including corporate governance, securities, compliance, mergers and acquisitions, intellectual property, technology licensing, litigation, employment, real estate and corporate subsidiary management. Mr. von Staats earned his juris doctor degree from Boston College Law School. He earned a bachelor of arts degree in Psychology from the University of Massachusetts. 8

9 Board of Directors Robert Schechter Independent Chairman PTC director since Chief Executive Officer (Retired), NMS Communications Corporation, a provider of hardware and software solutions for the communications industry. Mr. Schechter served as Chairman and Chief Executive Officer of NMS from 1995 to Janice Chaffin Independent Director PTC director since Ms. Chaffin most recently served as Group President, Consumer Business Unit of Symantec Corporation from April 2007 to March Prior to that, she served as Chief Marketing Officer of Symantec. Prior to joining Symantec, Ms. Chaffin spent 21 years at Hewlett-Packard Company where she held a variety of marketing and business management positions. Phil Fernandez Independent Director PTC director since Venture Partner at Shasta Ventures. Founder and former Chief Executive Officer and Chairman of the Board of Marketo, Inc., a leading provider of engagement marketing software and solutions. Prior to co-founding Marketo, Mr. Fernandez served as President and COO for Epiphany, Inc., COO at Red Brick Systems and held leadership positions at Metaphor Computer Systems, Stanford University Medical Center, and Masstor Systems. Donald Grierson Independent Director PTC director since Chief Executive Officer (Retired), ABB Vetco International, an oil services business. Mr. Grierson was Chief Executive Officer and President of ABB Vetco Gray, Inc. from 1991 to March 2001 and from September 2002 to November Mr. Grierson served as Executive Director of ABB Vetco Gray, Inc. from March 2001 to September James Heppelmann President & CEO See Executive Team biography. Klaus Hoehn Independent Director PTC director since Vice President, Advanced Technology and Engineering, Deere & Company, an agricultural, construction, commercial and consumer equipment manufacturer, since January Dr. Hoehn joined Deere & Company in 1992 and served in a number of engineering and product development roles at the company before assuming his current position. Paul Lacy Independent Director PTC director since President (Retired), Kronos Incorporated, a global enterprise software company. Mr. Lacy served as President and Secretary of Kronos from May 2006 through June Prior to that, Mr. Lacy served as President, Chief Financial and Administrative Officer, Treasurer and Secretary of Kronos from November 2005 through April 2006, and as Executive Vice President and Chief Financial and Administrative Officer of Kronos from April 2002 through October Dr. Corinna Lathan Independent Director PTC director since Dr. Corinna Lathan is the Chief Executive Officer, Co-Founder and Chair of the Board of AnthroTronix, Inc., a biomedical engineering research and development company. Prior to that, Dr. Lathan was an Associate Professor of Biomedical Engineering at The Catholic University of America and an Adjunct Associate Professor of Aerospace Engineering at the University of Maryland, College Park. Committee Composition Audit Compensation Corporate Governance Robert P. Schechter Chairman Donald K. Grierson Independent Director Paul A. Lacy Independent Director Janice Chaffin Independent Director Klaus Hoehn Independent Director Phil Fernandez Independent Director Dr. Corinna Lathan Independent Director James E. Heppelmann President & CEO Chair Member 9

10 Global Presence 6,000+ Employees in 30 countries around the world 1,800+ Support and service professionals 750+ Partners, including value-added-resellers, enterprise software and performance team partners, hardware and system integration partners, and service and training partners Total Non-GAAP Revenue FY 17 Revenue % by Region Recurring Non-GAAP Software Revenue Growth Rates YoY in Constant Currency AMERICAS 43% EUROPE 37% APAC 20% Please visit PTC s Investor Relations website at investor.ptc.com for more information about our financial performance, including an update to our long-term financial model and how our transition to a subscription business model has impacted our recent reported results. 10

11 Serving a World-Class Customer Base 32% FY 17 REVENUE BY VERTICAL (9% in other verticals not listed below) 16% 15% 14% 9% 5% Industrial Federal, Aerospace & Defense Electronics & High Tech Automotive Retail & Consumer Life Sciences 11

12 Strategic Overview Driving Significant Shareholder Value STRATEGY Our FY 21 target financial model includes three key components: 1. Increase our Growth Rate and reach a 10%+ CAGR, which is predicated upon capitalizing on a high-growth IoT market opportunity while reinvigorating our Solutions Group with smart, connected technology, as well as improved focus and execution. 2. Convert to Subscription and drive 95% recurring software revenue. 3. Increase our Margins to the low 30% range on a non-gaap basis through ongoing portfolio management, continued cost discipline, and scaling the IoT business. Revenue Growth Our target model assumes we achieve market growth rates by FY 18, maintain continued cost discipline and execute the company s capital allocation strategy. MARKET OPPORTUNITY Our customers are transforming their products with the addition of sensors enabling connectivity the Internet of Things. Experts predict 50B things will be connected to the Internet by 2020.¹ PTC has an industry-leading IoT platform that enables customers to achieve significant improvements in product uptime, productivity, and return on investment. These capabilities, combined with PTC s enterprise applications that help customers create, operate, and service their products, and ThingWorx Studio s game-changing Augmented Reality (AR) technology, uniquely position us to drive growth and increase value for customers. Margin Expansion Subscription Transition BUSINESS MODEL TRANSITION Beginning in FY 15 and fully operationalized in FY 16, PTC began offering subscription pricing in addition to perpetual licensing. Subscriptions benefit our customers by offering greater flexibility at a lower entry price point. Subscriptions also provide greater transparency into what customers value as the most critical aspects of our software, helping to drive focus and enhancements in our R&D efforts, all of which we believe will drive incremental value over time to PTC. With industry leading products and a near 99% retention rate of our top 500 customers since 2002, this new model benefits our customers, PTC and our shareholders. In FY 16, we launched Phase II of our subscription program, which resulted in increased demand for our subscription offerings. Effective January 1, 2018, new software licenses for our core solutions and ThingWorx platform (other than Kepware) are available only by subscription in the Americas and Western Europe. In January 2018, we announced that effective January 1, 2019, new software licenses for our core solutions and ThingWorx platform (other than Kepware) would be available only by subscription worldwide, excluding China, Korea, Taiwan, Russia, Turkey and India. ¹SOURCE: McKinsey Global Institute, The Internet of Things: Sizing up the opportunity December

13 Driving Significant Shareholder Value (Continued) INCREASE OUR GROWTH RATE FY 21 Target: 10%+ CAGR CONVERT TO SUBSCRIPTION FY 21 Target: 95% Recurring Software Revenue INCREASE OUR MARGINS FY 21 non-gaap Target: low 30% Capitalize on High-Growth IoT Market P&L Troughed in FY 16 Ongoing Portfolio Management Reinvigorate Core Solutions through IoT and Augmented Reality Improve Focus and Execution Software Revenue Growth Returned in FY 17 Targeting 80% Subscription Mix in FY 18 Scaling IIoT Business Margin Expansion Began in FY 17 13

14 Capital Strategy PTC is committed to a disciplined capital strategy based on: Returns-based capital allocation Lean balance sheet with ample liquidity Maintaining a strong double B rating target Commitment to return of capital to shareholders 14

15 Software Overview PTC s operating model is structured into two areas: Solutions, which contains CAD, PLM, and SLM, and IoT. We estimate that the markets for our core Solutions software are growing at a weighted average estimate of 5-6% per year (approximately 5% for CAD, 6% for PLM and 10% for SLM) 1 and that the market for our IoT software solutions is growing at an estimated 30-40% per year 2. We estimate that the combined, weighted average growth rate of these markets is approximately 12-13% and we have established a bookings growth CAGR target of 10%+ through FY 21. From FY 15 through FY 17, we have grown total bookings at a CAGR of 10%. Computer-Aided Design (CAD) software enabling the conception, detailed design, validation and manufacturing of product designs. Key products include PTC Creo, PTC Mathcad and PTC Creo Elements/Direct. These technologies support parametric modeling, direct modeling, as well as 2D and 3D approaches. CAD data can also be leveraged in our ThingWorx Studio Augmented Reality (AR) technology. Solutions Product Lifecycle Management (PLM) software aimed at supporting the collaborative creation, management and use of a product throughout its lifecycle. This includes the inception of the product through the retirement of the product and all of its associated parts. Our PLM segment also includes our ALM software and systems engineering solutions. Service Lifecycle Management (SLM) software that enables after-market service organizations to drive new sources of revenue growth and margin improvement through improved access to dynamic, 3D service information, improved spare parts optimization, dynamic parts pricing, and improved operational and technician efficiency. Connected SLM enables service organizations to connect and monitor equipment, predict service issues and optimize the spares network. IoT Internet of Things (IoT) software platform and applications, including Augmented Reality (AR) in the industrial enterprise, that enable companies with networks of devices or things, connected to the internet, to autonomously monitor and manage connected assets, and orchestrate activities that improve their operations. ¹SOURCE: IDC, CIMdata 2 SOURCE: ABI Research, Gartner, IoT Analytics, McKinsey 15

16 Our CAD products enable users to create conceptual and detailed designs, analyze designs, perform engineering calculations and leverage the information created downstream utilizing 2D, 3D, parametric and direct modeling. Our principal CAD products are shown in the diagram below. MOMENTUM CUSTOMER SATISFACTION CAD has notably high customer retention rates. We have deep, longlasting customer relationships, with approximately 90% of customers renewing their annual agreements. Looking at our top 500 customers since 2002, all but 6 (or 99%) remain customers today. NEW CREO OFFERINGS The majority of CAD revenue is now driven by Creo Packages and extensions. NEW RELEASE Creo 5.0, released in March 2018, complements our breakthrough IoT and AR functionality with new capabilities in the areas of Additive Manufacturing, Topology Optimization and Mold Machining. Creo Direct Creo Schematics Creo Layout Creo Sketch Creo Parametric Creo Illustrate Creo Simulate Creo Options Modeler Creo View MCAD Creo View ECAD OPPORTUNITIES MID-MARKET / CHANNEL PRESENCE PTC s CAD products are designed to meet the needs of both SMB and Enterprise accounts, through a single product offering that scales as product design needs develop. CONNECTING AR WITH THE ENTERPRISE Creo enables organizations to further leverage engineering data and publish basic AR experiences directly out of Creo Parametric. Designers, Engineers and Product Owners can share, review and understand designs virtually to better understand form, fit and function beyond a 2D drawing. CONNECTING THE DIGITAL AND PHYSICAL Creo is IoT ready CAD software. Creo Product Insight enables organizations to replace design assumptions with facts. In addition, it enables designers, engineers and product owners to improve quality, ensure products better meet the needs of consumers and better target design and development efforts. 16

17 Our PLM products (including our ALM software and systems engineering solutions) support the collaborative creation and management of a product across the enterprise. MOMENTUM Operate OPPORTUNITIES INDUSTRY LEADING TECHNOLOGY PTC named a leader in The Forrester Wave : Product Lifecycle Management For Discrete Manufacturers, Q Report with the top score in the current offering category, and among the highest scores in the strategy category. Support Produce DIGITAL ENGINEERING TRANSFORMATION Expansion from CAD data management to wider use cases across organization, e.g. product, software, system, service and manufacturing engineering. CLOSED LOOP With leading IoT capabilities, PTC has developed smart, connected offerings for closing the loop in product development with complete lifecycle management in our most recent release, Windchill 11. SOFTWARE & SERVICE MIX Improving profit through better mix of software and services, driven by our growing partner ecosystem and value-ready-deployment offerings. THINGWORX NAVIGATE The fastest growing product line in PTC history, ThingWorx Navigate is an example of how PTC is leveraging its ThingWorx IoT platform technology to transform the competitive landscape in the PLM market. Plan Develop Test USABILITY ThingWorx Navigate enables users to easily access product data from multiple devices and browsers easy: for both the daily and occasional user. EXPANDING REACH Expanding both the value and reach with PTC cloud services for PLM. CROSS SELL OPPORTUNITIES Repeatable and compelling sales plays focused on large base of customers provide opportunities to upsell and cross sell additional solutions. 17

18 Our SLM products are a set of software solutions that enables users to create and deliver technical product information at the point of service, more effectively manage spare parts by delivering greater customer value and operational efficiency in a service environment, and solve problems before the customer is aware of them. MOMENTUM OPPORTUNITIES LEADING PRODUCTS SLM portfolio anchors service and parts information and service parts management. NEW CONNECTED SERVICE OFFERING With leading IoT capabilities, PTC has developed a differentiated offering for IoT Service use case of connecting, monitoring and remotely servicing field assets; ThingWorx Asset Advisor for service Service & Parts Information Service Parts Management Smart, Connected Service for Smart, Connected Products Platform Machine Learning Augmented Reality CROSS SELL Opportunity to sell SLM solutions to core broad base CAD and PLM customers where penetration remains low. CONNECTED SLM Service is a strong use case for IoT. Providing opportunities to cross sell our connected solutions which enable service organizations to connect, and monitor equipment, prevent service issues and optimize the spares network. SMB CHANNEL Growing opportunity to sell SLM solutions to small and mid sized businesses through our resellers. Connected Service Applications Connected Connected Field Service Service Parts (ServiceMax ) Management Remote Service Connected Service Application Development Equipment Service Predictive Service FOCUSED GO-TO-MARKET A new Servigistics division will drive opportunity for industry-leading service parts management software sales. 18

19 Enabling the rapid development of applications and Augmented Reality (AR) experiences that help deliver smart, connected operations, products and software for industrial businesses. MOMENTUM TECHNOLOGY LEADER Based on industry reports from Forrester Research, IDC and others, PTC is a leader in the rapidly-growing IoT sector. HIGH GROWTH END-MARKET Potential economic impact of $2.7T - $6.2T per year and 80% - 100% potential reach across manufacturing vertical by 2025¹. We estimate that our addressable market is approaching $1 billion today and growing at a rate of 30-40% per year to approximately $4 billion in INTEGRAL TECHNOLOGY PLATFORM & APPS The ThingWorx Platform is made up of modules industrial connectivity, foundation, analytics, utilities and studio. Working together, they enable the rapid development, deployment and extension of apps and AR experiences. ThingWorx Apps are built on the ThingWorx Platform and are designed to solve role-based challenges in specific markets. ¹SOURCE: McKinsey Global Institute Analysis 2 SOURCE: ABI Research, Gartner, IoT Analytics, McKinsey OPPORTUNITIES CONNECTED APPLICATIONS Connected apps are the combination of our IoT technology platform and existing PTC solutions. These can also be customer or partner developed using the ThingWorx Platform. EXPANSION PTC s IoT partner network is rapidly growing and consists of system integrators, value added resellers, solution partners, Telco operator partners, IoT strategic partners and ThingWorx Ready partners. INNOVATIVE APPROACH The first App Store for the IoT is the ThingWorx Marketplace. Here, partners can market extensions, services and applications that they build on or for the ThingWorx Platform. Partners have the opportunity to advertise and monetize within the ecosystem. LAND & EXPAND Capture and retain new customers and expand the use of our technologies inside their businesses by proving value and solving additional challenges. 19

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21 Capabilities Portfolio Attractiveness FINANCIAL ANALYST SOURCE BOOK RECOGNIZED TECHNOLOGY LEADER Recognized Technology Leader in IoT Worldwide IoT Platforms (Software Vendors) 2017 Vendor Assessment Strong Current offering IOT SOFTWARE PLATFORMS Q4 16 Challengers Contenders Exosite. Strong Performers SAP LogMeln.. PTC.. Amazon Services. Ayla Networks. Zebra Technologies Leaders. IBM... GE Microsoft Cisco Jasper INDUSTRIE 4.0/IOT VENDOR BENCHMARK 2016 Product Challenger Capgemini Device Insight Cumulocity Eurotech Cognizant Infosys Axiros QSC HP CSC PTC Bosch SI Atos Deutsche Telekom Intel IBM Microsoft Leader 100% 50% Market presence Strategies Weak..... Weak Full vendor participation Strategy Strong 0% Follower Market Challenger 0% 50% 100% Competitive Strength Source: IDC MarketScape Source: Forrester Research Source: Experton Market Insight 21

22 FINANCIALS AN EXCEL VERSION OF OUR FINANCIAL DATA TABLES CAN BE FOUND ON OUR INVESTOR RELATIONS SITE AT INVESTOR.PTC.COM 22

23 FORWARD LOOKING STATEMENTS Statements in this presentation that are not historic facts, including statements about our third quarter and full fiscal 2018 targets, and other future financial and growth expectations and targets and anticipated tax rates, and our plans to repurchase $100 million of our common stock in an accelerated repurchase transaction in the third quarter, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may deteriorate; customers may not purchase our solutions or convert to subscription when or at the rates we expect; our businesses, including our Internet of Things (IoT) business, may not expand and/or generate the revenue we expect; foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense; the mix of revenue between license & subscription solutions, support and professional services could be different than we expect, which could impact our EPS results; our transition to subscription-only licensing in the Americas and Western Europe could adversely affect sales and revenue; sales of our solutions as subscriptions may not have the longer-term effect on revenue and earnings that we expect; we may be unable to expand our partner ecosystem as we expect and our partners may not generate the revenue we expect; we may be unable to improve performance in Japan when or as we expect; we may be unable to generate sufficient operating cash flow to return 40% of free cash flow to shareholders and other uses of cash or our credit facility limits or other matters could preclude share repurchases. In addition, our assumptions concerning our future GAAP and non-gaap effective income tax rates are based on estimates and other factors that could change, including the geographic mix of our revenue, expenses and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected are detailed from time to time in reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 23

24 IMPORTANT INFORMATION ABOUT NON-GAAP REFERENCES PTC provides non-gaap supplemental information to its financial results. We use these non-gaap measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. We believe that these non-gaap measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals, communicated internally and externally, for managing our business and evaluating our performance. We believe that providing non-gaap measures affords investors a view of our operating results that may be more easily compared to the results of peer companies. In addition, compensation of our executives is based in part on the performance of our business based on these non-gaap measures. However, non-gaap information should not be construed as an alternative to GAAP information as the items excluded from the non-gaap measures often have a material impact on PTC s financial results and such items often recur. Management uses, and investors should consider, non-gaap measures in conjunction with our GAAP results. Non-GAAP revenue, 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: fair value of acquired deferred revenue, fair value adjustment to deferred services cost, stock-based compensation, amortization of acquired intangible assets, acquisition-related charges included in general and administrative costs, restructuring charges, headquarters relocation 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 beginning on page 33 of our Annual Report on Form 10-K for the fiscal year ended September 30, A reconciliation of non-gaap measures to GAAP results is provided within this presentation. PTC also provides information on free cash flow and adjusted 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 goal of returning approximately 40% of our free cash flow to shareholders via stock repurchases. Free cash flow is net cash provided by (used in) operating activities less capital expenditures; adjusted free cash flow is free cash flow excluding restructuring payments and certain identified nonordinary course payments. Free cash flow and adjusted free cash flow are not measures of cash available for discretionary expenditures. 24

25 IMPORTANT DISCLOSURES Reporting metrics and non-gaap definitions Management believes certain operating measures and non-gaap financial measures provide additional meaningful information that should be considered when assessing our performance. These measures should be considered in addition to, not as a substitute for, the reported GAAP results. Software licensing model A majority of our software sales historically were perpetual licenses, where customers own the software license. Typically, our customers choose to pay for ongoing support, which includes the right to software upgrades and technical support, and attach rates on support are in the high 90% range with retention rates also in the 90% range. For fiscal 2016, fiscal 2017, and fiscal 2018, a majority of our new license bookings have consisted of ratably recognized subscriptions. Under a subscription, customers pay a periodic fee for the continuing right to use our software, including access to technical support. They may also elect to use our cloud services and have us manage the application. We began offering subscription pricing as an option for most PTC products in Q1 FY 15, and as of January of 2018, we no longer offer new perpetual licenses in the Americas and Western Europe, except for Kepware. We believe subscription has proved attractive to customers as it: (1) increases customer flexibility and opportunity to change their mix of licenses; (2) lowers the initial purchase commitment; and (3) allows customers to use operating rather than capital budgets. Over a four to five-year period we believe the value of a subscription is likely to exceed that of a perpetual license, assuming similar seat counts. However, initial revenue, operating margin, and EPS will be lower as revenue is recognized ratably in a subscription, rather than up front. Bookings Metrics We offer both perpetual and subscription licensing options to our customers, as well as monthly software rentals for certain products. Given the difference in revenue recognition between the sale of a perpetual software license (revenue is recognized at the time of sale) and a subscription (revenue is deferred and recognized ratably over the subscription term), we use bookings for internal planning, forecasting and reporting of new license and cloud services transactions. In order to normalize between perpetual and subscription licenses, we define subscription bookings as the subscription annualized contract value (subscription ACV) of new subscription bookings multiplied by a conversion factor of 2. We arrived at the conversion factor of 2 by considering a number of variables including pricing, support, length of term, and renewal rates. We define subscription ACV as the total value of a new subscription booking divided by the term of the contract (in days) multiplied by 365. If the term of the subscription contract is less than a year, the ACV is equal to the total contract value. Note that both in FY 16 as well as FY 17, the weighted average contract length of our subscription bookings was approximately 2 years. License and subscription bookings equal subscription bookings (as described above) plus perpetual license bookings plus any monthly software rental bookings during the period. Total ACV equals subscription ACV (as described above) plus the annualized value of incremental monthly software rental bookings during the period. Because subscription bookings is a metric we use to approximate the value of subscription sales if sold as perpetual licenses, it does not represent the actual revenue that will be recognized with respect to subscription sales or that would be recognized if the sales were perpetual licenses, nor does the annualized value of monthly software rental bookings represent the value of any such booking. Navigate Allocation -- Revenue and bookings for Navigate, a ThingWorx-based IoT solution for PLM are allocated 50% to Solutions and 50% to IoT. Annualized Recurring Revenue (ARR) - To help investors understand and assess the success of our subscription transition, we provide an Annualized Recurring Revenue operating measure. Annualized Recurring Revenue (ARR) for a given quarter is calculated by dividing the portion of non-gaap software revenue attributable to subscription and support for the quarter by the number of days in the quarter and multiplying by 365. (A related metric is Subscription ARR, which is calculated by dividing the portion of non-gaap revenue attributable to subscription for the quarter by the number of days in the quarter and multiplying by 365.) ARR should be viewed independently of revenue and deferred revenue as it is an operating measure and is not intended to be combined with or to replace either of those items. ARR is not a forecast of future revenue, which can be impacted by contract expiration and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of income. Subscription and support revenue and ARR disclosed in a quarter can be impacted by multiple factors, including but not limited to (1) the timing of the start of a contract or a renewal, including the impact of on-time renewals, support win-backs, and support conversions, which may vary by quarter, (2) the ramping of committed monthly payments under a subscription agreement over time, and (3) multiple other contractual factors with the customer including other elements sold with the subscription or support contract. These factors can result in variability in disclosed ARR. Foreign Currency Impacts on our Business We have a global business, with Europe and Asia historically representing approximately 60% of our revenue, and fluctuation in foreign currency exchange rates can significantly impact our results. We do not forecast currency movements; rather we provide detailed constant currency commentary. We employ a hedging strategy to limit our exposure to currency risk. Constant Currency Change Measure (YoY CC) Year-over-year changes in revenue on a constant currency basis compare reported results excluding the effect of any hedging converted into U.S. dollars based on the corresponding prior year s foreign currency exchange rates to reported results for the comparable prior year period. 25

26 FY 21 TARGETS $1.8B Total Revenue and $1.6B Software Revenue; both growing double-digits 85% Subscription Mix Low-30% Non-GAAP OPM 4 5 $4.15 Non-GAAP EPS $525M Free Cash Flow 26

27 BALANCE SHEET FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Consolidated Balance Sheets Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Dec 31-Mar (in millions) ASSETS Current assets: Cash and cash equivalents $ 168 $ 490 $ 242 $ 294 $ 273 $ 278 $ 173 $ 243 $ 261 $ 280 $ 292 $ 300 Short term marketable securities Accounts receivable, net Prepaid expenses and other current assets Deferred tax assets Total current assets Property and equipment, net Goodwill ,013 1,069 1,170 1,159 1,162 1,176 1,183 1,185 1,192 Acquired intangible assets, net Deferred tax assets Long term marketable securities Other assets (1) Total assets $ 1,630 $ 1,792 $ 1,829 $ 2,200 $ 2,210 $ 2,346 $ 2,197 $ 2,334 $ 2,292 $ 2,360 $ 2,306 $ 2,329 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 77 $ 66 $ 66 $ 77 $ 111 $ 102 $ 96 $ 102 $ 94 $ 116 $ 98 $ 104 Accrued compensation and benefits Accrued income taxes Deferred tax liabilities Current portion of long term debt Deferred revenue Total current liabilities Long term debt, net of current portion (1) Deferred tax liabilities Deferred revenue Other liabilities Total liabilities ,346 1,350 1,503 1,378 1,486 1,456 1,475 1,417 1,401 Shareholders equity: Common stock Additional paid-in capital 1,805 1,823 1,787 1,597 1,553 1,599 1,598 1,623 1,598 1,609 1,595 1,619 Accumulated deficit (919) (954) (810) (650) (603) (657) (666) (667) (668) (651) (638) (630) Accumulated other comprehensive income (loss) (65) (73) (51) (94) (92) (100) (114) (110) (95) (74) (69) (62) Total shareholders equity Total liabilities and shareholders equity $ 1,630 $ 1,792 $ 1,829 $ 2,200 $ 2,210 $ 2,346 $ 2,197 $ 2,334 $ 2,292 $ 2,360 $ 2,306 $ 2,329 Days Sales Outstanding (1) PTC has updated results for new debt accounting guidance to show the deferred debt issue costs related to the senior notes net against total outstanding debt. Q4'16 and Q1'17 results reflect this updated guidance but other historical periods have not been updated. 27

28 GAAP INCOME STATEMENT FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Consolidated Statements of Operations - GAAP Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions, except per share amounts) Revenue: Subscription $ 0 $ - $ 10 $ 27 $ 65 $ 118 $ 54 $ 66 $ 75 $ 84 $ 279 $ 100 $ 113 Support Total recurring revenue Perpetual license Total subscription, support and license revenue ,009 1,078 1, Professional services Total revenue 1,167 1,256 1,294 1,357 1,255 1, , Cost of revenue: Cost of license and subscription Cost of support Total cost of software Cost of professional services Total cost of revenue Gross profit Operating expenses: Sales and marketing Research and development General and administrative Amortization of acquired intangible assets Restructuring and other charges (credits) (0) Total operating expenses Operating income (loss) (37) Interest and other income (expense), net (13) (7) (1) (10) (15) (30) (11) (9) (11) (12) (42) (11) (11) Income (loss) before income taxes (67) (7) (1) 1 5 (1) 6 12 Provision (benefit) for income taxes (18) 26 (21) (13) (12) (8) (7) 4 Net income (loss) $ 85 $ (35) $ 144 $ 160 $ 48 $ (54) $ (9) $ (1) $ (1) $ 17 $ 6 $ 14 $ 8 Basic net income (loss) per share $ 0.73 $ (0.30) $ 1.20 $ 1.36 $ 0.41 $ (0.48) $ (0.08) $ (0.01) $ (0.01) $ 0.15 $ 0.05 $ 0.12 $ 0.07 Diluted net income (loss) per share $ 0.71 $ (0.30) $ 1.19 $ 1.34 $ 0.41 $ (0.48) $ (0.08) $ (0.01) $ (0.01) $ 0.15 $ 0.05 $ 0.12 $ 0.07 Weighted average shares outstanding -- Basic Weighted average shares outstanding -- Diluted Gross margin 69.4% 70.4% 71.2% 72.5% 73.3% 71.4% 71.3% 70.8% 71.8% 73.0% 71.7% 72.9% 72.8% Gross margin on license and subscription 91.6% 91.2% 89.0% 88.5% 84.7% 76.1% 77.3% 77.9% 79.8% 80.8% 79.1% 81.8% 83.0% Gross margin on support 87.9% 87.6% 87.6% 87.7% 87.8% 86.8% 84.9% 84.1% 83.2% 83.6% 84.0% 83.1% 81.8% Gross margin on professional services 2.4% 10.1% 11.1% 12.5% 12.0% 13.6% 15.1% 14.3% 15.3% 14.0% 14.7% 12.2% 17.5% Operating margin 10.0% 10.2% 9.8% 14.5% 3.3% -3.2% 1.6% 2.7% 3.9% 5.7% 3.5% 5.7% 7.3% S&M % of total revenue 30.5% 30.7% 28.9% 27.1% 27.6% 32.2% 31.7% 31.3% 32.0% 33.1% 32.0% 32.4% 31.9% R&D % of total revenue 18.1% 17.1% 17.2% 16.7% 18.1% 20.1% 20.2% 20.6% 20.5% 19.8% 20.3% 20.9% 20.2% G&A % of total revenue 9.2% 8.7% 9.2% 9.7% 17.9% 12.8% 12.8% 13.1% 12.1% 11.8% 12.5% 11.4% 10.8% Tax rate 18.3% 129.3% -13.9% 13.9% -79.3% 18.9% -40.6% -4.5% 236.1% % 543.7% % 31.4% 28

29 NON-GAAP INCOME STATEMENT FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Consolidated Statements of Operations - Non-GAAP Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions, except per share amounts) Revenue: Subscription $ 0 $ - $ 10 $ 28 $ 67 $ 121 $ 55 $ 66 $ 75 $ 84 $ 281 $ 100 $ 113 Support Total recurring revenue Perpetual license Total subscription, support and license revenue ,012 1,079 1, Professional services Total revenue 1,170 1,258 1,297 1,358 1,259 1, , Cost of revenue: Cost of license and subscription Cost of support Total cost of software Cost of professional services Total cost of revenue Gross profit , Operating expenses: Sales and marketing Research and development General and administrative Amortization of acquired intangible assets Restructuring and other charges (credits) Total operating expenses Operating income (loss) Interest and other income (expense), net (7) (7) (7) (10) (15) (28) (11) (7) (11) (12) (41) (11) (11) Income (loss) before income taxes Provision (benefit) for income taxes Net income (loss) $ 152 $ 183 $ 219 $ 260 $ 259 $ 138 $ 31 $ 35 $ 33 $ 40 $ 138 $ 36 $ 40 Basic net income (loss) per share $ 1.29 $ 1.54 $ 1.83 $ 2.20 $ 2.26 $ 1.20 $ 0.27 $ 0.30 $ 0.28 $ 0.34 $ 1.19 $ 0.31 $ 0.34 Diluted net income (loss) per share $ 1.26 $ 1.51 $ 1.81 $ 2.17 $ 2.23 $ 1.19 $ 0.26 $ 0.30 $ 0.28 $ 0.34 $ 1.17 $ 0.31 $ 0.34 Weighted average shares outstanding -- Basic Weighted average shares outstanding -- Diluted Gross margin: 71.5% 72.4% 73.4% 74.6% 75.7% 74.6% 74.6% 74.2% 75.0% 76.5% 75.1% 76.1% 75.9% Gross margin on license and subscription 96.1% 95.8% 94.2% 93.2% 90.5% 84.9% 85.0% 85.2% 86.3% 87.1% 86.0% 87.1% 88.1% Gross margin on support 88.5% 88.1% 88.2% 88.2% 88.4% 87.6% 85.7% 85.0% 84.0% 84.6% 84.8% 83.7% 82.4% Gross margin on professional services 4.3% 12.0% 13.3% 14.8% 14.8% 16.5% 18.4% 18.0% 19.0% 18.2% 18.4% 16.6% 21.4% Operating margin: 17.7% 19.6% 22.1% 25.1% 24.2% 15.1% 15.4% 16.0% 15.4% 17.7% 16.1% 16.5% 17.6% S&M % of total revenue 29.4% 29.4% 27.7% 26.1% 26.4% 30.8% 30.3% 29.8% 30.8% 31.6% 30.6% 30.8% 30.3% R&D % of total revenue 17.3% 16.4% 16.5% 15.9% 17.1% 19.2% 19.1% 19.2% 19.5% 18.4% 19.0% 19.9% 19.1% G&A % of total revenue 7.0% 7.0% 7.1% 7.5% 8.0% 9.5% 9.8% 9.2% 9.3% 8.9% 9.3% 8.9% 8.9% Tax rate 23.6% 23.9% 21.6% 21.1% 10.4% 4.9% 7.5% 7.5% 5.3% 6.1% 6.6% 9.1% 8.5% 29

30 RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES Reconciliation FY'11 FY'12 Between FY'13 FY'14 GAAP FY'15 and FY'16Non-GAAP (CONTINUED) FY'17 FY'18 Consolidated Statements of Operations - Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended Reconciliation between GAAP and Non-GAAP 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions, except per share amounts and %) GAAP revenue $ 1,167 $ 1,256 $ 1,294 $ 1,357 $ 1,255 $ 1,141 $ 286 $ 280 $ 291 $ 306 $ 1,164 $ 307 $ 308 Fair value adjustment of acquired deferred subscription revenue Fair value adjustment of acquired deferred support revenue Fair value adjustment of acquired deferred perpetual license revenue Fair value adjustment of acquired deferred services revenue Non-GAAP revenue $ 1,170 $ 1,258 $ 1,297 $ 1,358 $ 1,259 $ 1,144 $ 287 $ 281 $ 292 $ 307 $ 1,167 $ 307 $ 308 GAAP cost of revenue $ 357 $ 372 $ 373 $ 374 $ 335 $ 326 $ 82 $ 82 $ 82 $ 83 $ 329 $ 83 $ 84 License and subscription stock-based compensation expense (0) (0) (0) (0) (1) (1) (0) (0) (0) (0) (1) (0) (0) Support stock-based compensation expense (3) (3) (3) (4) (4) (5) (1) (1) (1) (1) (5) (1) (1) Professional services stock-based compensation expense (5) (6) (6) (6) (6) (5) (1) (2) (2) (2) (6) (2) (2) Fair value adjustment to deferred services cost Software amortization of acquired intangible assets (15) (16) (19) (18) (19) (25) (6) (6) (7) (7) (27) (7) (7) Professional services amortization of acquired intangible assets Non-GAAP cost of revenue $ 334 $ 347 $ 345 $ 345 $ 306 $ 291 $ 73 $ 72 $ 73 $ 72 $ 290 $ 73 $ 74 GAAP gross profit $ 810 $ 884 $ 921 $ 983 $ 921 $ 815 $ 204 $ 198 $ 209 $ 224 $ 835 $ 224 $ 224 Fair value adjustment of acquired deferred revenue Stock-based compensation expense Fair value adjustment to deferred services cost (0) (1) (0) (0) (0) (0) (0) (0) (0) (0) Amortization of acquired intangible assets Non-GAAP gross profit $ 836 $ 911 $ 952 $ 1,013 $ 953 $ 853 $ 214 $ 208 $ 219 $ 235 $ 877 $ 234 $ 234 GAAP gross margin 69.4% 70.4% 71.2% 72.5% 73.3% 71.4% 71.3% 70.8% 71.8% 73.0% 71.7% 72.9% 72.8% Fair value adjustment of acquired deferred revenue 0.2% 0.2% 0.2% 0.1% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% Stock-based compensation expense 0.7% 0.7% 0.7% 0.8% 0.8% 0.9% 1.0% 1.1% 1.0% 1.1% 1.1% 1.0% 0.9% Fair value adjustment to deferred services cost 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Amortization of acquired intangible assets 1.3% 1.3% 1.4% 1.3% 1.5% 2.2% 2.2% 2.3% 2.2% 2.4% 2.3% 2.2% 2.1% Non-GAAP gross margin 71.5% 72.4% 73.4% 74.6% 75.7% 74.6% 74.6% 74.2% 75.0% 76.5% 75.1% 76.1% 75.9% GAAP sales and marketing expense $ 356 $ 386 $ 373 $ 367 $ 347 $ 367 $ 91 $ 88 $ 93 $ 101 $ 373 $ 99 $ 98 Stock-based compensation expense (11) (16) (14) (13) (14) (15) (4) (4) (3) (4) (15) (5) (5) Non-GAAP sales and marketing expense $ 344 $ 370 $ 359 $ 354 $ 333 $ 353 $ 87 $ 84 $ 90 $ 97 $ 358 $ 94 $ 93 GAAP research and development expense $ 211 $ 215 $ 222 $ 226 $ 228 $ 229 $ 58 $ 58 $ 60 $ 61 $ 236 $ 64 $ 62 Stock-based compensation expense (9) (9) (9) (10) (12) (10) (3) (4) (3) (4) (14) (3) (3) Non-GAAP research and development expense $ 203 $ 206 $ 213 $ 216 $ 216 $ 219 $ 55 $ 54 $ 57 $ 56 $ 222 $ 61 $ 59 GAAP general and administrative expense $ 108 $ 109 $ 119 $ 132 $ 225 $ 146 $ 37 $ 37 $ 35 $ 36 $ 145 $ 35 $ 33 Stock-based compensation expense (18) (18) (17) (17) (14) (30) (8) (10) (7) (9) (35) (8) (6) Acquisition-related costs (8) (4) (10) (13) (9) (3) (0) (1) (0) (1) (2) (0) (0) US pension plan termination-related costs (0) (73) (0) - (0) - - Pending legal settlement accrual (28) (3) Non-GAAP general and administrative expense $ 82 $ 88 $ 93 $ 102 $ 101 $ 109 $ 28 $ 26 $ 27 $ 27 $ 108 $ 27 $ 27 GAAP operating income (loss) $ 117 $ 128 $ 127 $ 197 $ 42 $ (37) $ 5 $ 8 $ 11 $ 18 $ 41 $ 17 $ 22 Fair value adjustment of acquired deferred revenue Stock-based compensation expense Fair value adjustment to deferred services cost (0) (1) (0) (0) (0) (0) (0) (0) (0) (0) Acquisition-related costs US pension plan termination-related costs Pending legal settlement accrual Restructuring and other charges (credits) (0) 8 0 (1) Headquarters relocation charges Amortization of acquired intangible assets Non-GAAP operating income (loss) $ 207 $ 247 $ 286 $ 340 $ 304 $ 173 $ 44 $ 45 $ 45 $ 54 $ 188 $ 51 $ 54 30

31 RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 Consolidated Statements of Operations - Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended Reconciliation between GAAP and Non-GAAP 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions, except per share amounts and %) GAAP operating margin 10.0% 10.2% 9.8% 14.5% 3.3% -3.2% 1.6% 2.7% 3.9% 5.7% 3.5% 5.7% 7.3% Fair value adjustment of acquired deferred revenue 0.2% 0.2% 0.2% 0.1% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% Stock-based compensation expense 3.9% 4.1% 3.8% 3.7% 4.0% 5.8% 6.3% 7.7% 5.7% 6.7% 6.6% 6.0% 5.5% Fair value adjustment to deferred services cost 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Acquisition-related costs 0.7% 0.3% 0.8% 1.0% 0.7% 0.3% 0.1% 0.2% 0.1% 0.2% 0.1% 0.0% 0.0% US pension plan termination-related costs 0.0% 0.0% 0.0% 0.0% 5.8% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% Pending legal settlement accrual 0.0% 0.0% 0.0% 0.0% 2.2% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Restructuring and other charges (credits) 0.0% 2.0% 4.0% 2.1% 3.5% 6.7% 2.2% 0.2% 0.5% -0.1% 0.7% 0.0% -0.3% Headquarters relocation charges 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% Amortization of acquired intangible assets 2.9% 2.9% 3.5% 3.7% 4.4% 5.1% 5.0% 5.1% 5.0% 5.0% 5.0% 4.7% 4.7% Non-GAAP operating margin 17.7% 19.6% 22.1% 25.1% 24.2% 15.1% 15.4% 16.0% 15.4% 17.7% 16.1% 16.5% 17.6% GAAP net income (loss) $ 85 $ (35) $ 144 $ 160 $ 48 $ (54) $ (9) $ (1) $ (1) $ 17 $ 6 $ 14 $ 8 Fair value adjustment of acquired deferred revenue Stock-based compensation expense Fair value adjustment to deferred services cost (0) (1) (0) (0) (0) (0) (0) (0) (0) (0) Acquisition-related costs US pension plan termination-related costs Pending legal settlement accrual Restructuring and other charges (credits) (0) 8 0 (1) Headquarters relocation charges Amortization of acquired intangible assets Non-operating gains (losses) 5 1 (6) Income tax adjustments (28) 99 (78) (44) (51) (20) 0 (3) (0) (15) (17) (11) (0) Non-GAAP net income (loss) $ 152 $ 183 $ 219 $ 260 $ 259 $ 138 $ 31 $ 35 $ 33 $ 40 $ 138 $ 36 $ 40 GAAP basic net income (loss) per share $ 0.73 $ (0.30) $ 1.20 $ 1.36 $ 0.41 $ (0.48) $ (0.08) $ (0.01) $ (0.01) $ 0.15 $ 0.05 $ 0.12 $ 0.07 Fair value adjustment of acquired deferred revenue Stock-based compensation expense Fair value adjustment to deferred services cost (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) Acquisition-related costs US pension plan termination-related costs Pending legal settlement accrual Restructuring and other charges (credits) (0.00) (0.01) Headquarters relocation charges Amortization of acquired intangible assets Non-operating gains (losses) (0.05) Income tax adjustments (0.24) 0.83 (0.65) (0.37) (0.45) (0.17) 0.00 (0.02) (0.00) (0.13) (0.15) (0.10) (0.00) Non-GAAP basic net income (loss) per share $ 1.29 $ 1.54 $ 1.83 $ 2.20 $ 2.26 $ 1.20 $ 0.27 $ 0.30 $ 0.28 $ 0.34 $ 1.19 $ 0.31 $ 0.34 GAAP diluted net income (loss) per share $ 0.71 $ (0.30) $ 1.19 $ 1.34 $ 0.41 $ (0.48) $ (0.08) $ (0.01) $ (0.01) $ 0.15 $ 0.05 $ 0.12 $ 0.07 Fair value adjustment of acquired deferred revenue Stock-based compensation expense Fair value adjustment to deferred services cost (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) Acquisition-related costs US pension plan termination-related costs Pending legal settlement accrual Restructuring and other charges (credits) (0.00) (0.01) Headquarters relocation charges Amortization of acquired intangible assets Non-operating gains (losses) (0.05) Income tax adjustments (0.23) 0.83 (0.64) (0.36) (0.44) (0.17) 0.00 (0.02) (0.00) (0.12) (0.15) (0.09) (0.00) Non-GAAP diluted net income (loss) per share $ 1.26 $ 1.51 $ 1.81 $ 2.17 $ 2.23 $ 1.19 $ 0.26 $ 0.30 $ 0.28 $ 0.34 $ 1.17 $ 0.31 $ 0.34 FY'17 FY'18 31

32 STATEMENT OF CASH FLOWS FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Consolidated Statements of Cash Flows Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions) Cash flows from operating activities: Net income (loss) $ 85 $ (35) $ 144 $ 160 $ 48 $ (54) $ (9) $ (1) $ (1) $ 17 $ 6 $ 14 $ 8 Stock-based compensation Depreciation and amortization Accounts receivable (32) (6) 20 (22) Accounts payable and accruals (4) (8) 6 9 (26) 47 (54) 13 (7) 33 (15) (53) 14 Deferred revenue (12) (40) Pension settlement loss Income taxes (16) 101 (55) (1) (53) (37) (6) (9) (3) (11) (29) (14) 0 Excess tax benefits from stock-based awards (2) Other (65) (3) (19) (14) (28) 7 (28) (3) 9 12 (9) (4) 3 Net cash provided by (used in) operating activities $ 84 $ 219 $ 225 $ 315 $ 180 $ 183 $ (48) $ 76 $ 74 $ 33 $ 135 $ 25 $ 111 Cash flows from investing activities: Capital expenditures $ (28) $ (31) $ (29) $ (25) $ (31) $ (26) $ (7) $ (8) $ (5) $ (6) $ (25) $ (6) $ (5) Cost of acquisitions, net (280) (0) (246) (324) (98) (166) - - (5) - (5) - (3) (Purchase of)/proceeds from investments (11) (1) (Purchase of)/proceeds from marketable securities (45) - 1 (2) (0) (1) (1) (5) Other investing activities (3) (1) Net cash used in investing activities $ (308) $ (32) $ (274) $ (349) $ (140) $ (237) $ (6) $ 7 $ (12) $ (6) $ (16) $ (9) $ (13) Cash flows from financing activities: Proceeds (payments) on debt, net $ 200 $ 170 $ (112) $ 354 $ 56 $ 90 $ (20) $ (20) $ - $ - $ (40) $ 30 $ (100) Proceeds from issuance of common stock Payments of withholding taxes in connection with vesting stock-based awards (23) (21) (15) (27) (29) (21) (19) (1) (7) (0) (27) (33) (0) Repurchases of common stock (55) (35) (75) (225) (65) (35) (16) (51) - - Excess tax benefits from stock-based awards (2) Contingent consideration (11) (3) - (8) - (11) (3) - Other financing activities (2) (2) - (8) (4) (7) - (0) - - (0) - - Net cash provided by (used in) financing activities $ 145 $ 133 $ (197) $ 95 $ (42) $ 52 $ (41) $ (17) $ (50) $ (10) $ (118) $ (7) $ (93) Effect of exchange rate change on cash $ 6 $ 1 $ (1) $ (9) $ (18) $ 7 $ (10) $ 3 $ 5 $ 2 $ 1 $ 3 $ 3 Net increase (decrease) in cash and cash equivalents (72) 322 (248) 52 (20) 5 (105) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ 168 $ 490 $ 242 $ 294 $ 273 $ 278 $ 173 $ 243 $ 261 $ 280 $ 280 $ 292 $ 300 Free cash flow (1) Net cash provided by (used in) operating activities $ 79 $ 218 $ 225 $ 305 $ 180 $ 183 $ (48) $ 76 $ 74 $ 33 $ 135 $ 25 $ 111 Capital expenditures (28) (31) (29) (25) (31) (26) (7) (8) (5) (6) (25) (6) (5) Free cash flow (1) $ 51 $ 187 $ 195 $ 279 $ 149 $ 157 $ (55) $ 69 $ 69 $ 27 $ 110 $ 19 $ 106 Repurchases of common stock (55) (35) (75) (225) (65) (35) (16) (51) - - Free cash flow return % (1) 108% 19% 38% 81% 44% 50% 60% 46% Adjusted free cash flow Free cash flow $ 51 $ 187 $ 195 $ 279 $ 149 $ 157 $ (55) $ 69 $ 69 $ 27 $ 110 $ 19 $ 106 Restructuring payments Legal settlement payments U.S. pension plan termination-related payments Adjusted free cash flow $ 100 $ 208 $ 233 $ 300 $ 229 $ 240 $ (38) $ 82 $ 78 $ 28 $ 150 $ 19 $ 108 (1) PTC has announced a long-term goal of returning approximately 40% of free cash flow to shareholders via stock repurchases. This information provides the substantive information investors can use to evaluate the Company's performance relative to that goal. (2) Effective the beginning of fiscal 2018, in accordance w ith the adoption of ASU , "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," excess tax benefits are now classified as an operating activity on the statement of cash flow s rather than as a financing activity. The prior period excess tax benefits have been reclassified for comparability. 32

33 REVENUE BY LINE OF BUSINESS FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Line of Business Performance Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar GAAP revenue change year over year: Subscription (84%) (100%) NM 169% 140% 81% 145% 178% 135% 107% 136% 84% 72% Support 12% 10% 7% 5% (1%) (4%) (12%) (12%) (13%) (10%) (12%) (13%) (11%) Total recurring revenue 12% 10% 9% 8% 4% 3% 6% 13% 11% 14% 11% 12% 15% Perpetual license 16% 2% (1%) 5% (22%) (39%) (28%) (31%) (28%) (5%) (23%) (1%) (17%) Total subscription, support and license revenue 14% 7% 5% 7% (5%) (8%) (1%) 5% 4% 10% 5% 10% 12% Professional services 23% 11% (4%) (2%) (19%) (13%) (7%) (7%) (13%) (14%) (10%) (10%) 1% Total revenue 16% 8% 3% 5% (7%) (9%) (2%) 3% 1% 6% 2% 7% 10% Non-GAAP revenue change year over year: Subscription (84%) (100%) NM 174% 143% 80% 146% 171% 131% 105% 133% 82% 71% Support 13% 10% 7% 5% (1%) (4%) (12%) (12%) (13%) (10%) (12%) (13%) (11%) Total recurring revenue 13% 10% 9% 7% 5% 3% 6% 12% 11% 13% 11% 12% 15% Perpetual license 16% 2% (1%) 5% (22%) (39%) (28%) (31%) (28%) (5%) (23%) (1%) (17%) Total subscription, support and license revenue 14% 7% 5% 7% (4%) (8%) (0%) 5% 4% 10% 5% 10% 12% Professional services 23% 11% (4%) (2%) (19%) (13%) (7%) (7%) (13%) (14%) (10%) (10%) 1% Total revenue 16% 8% 3% 5% (7%) (9%) (1%) 3% 1% 6% 2% 7% 10% GAAP revenue change year over year in constant currency: Subscription (84%) (100%) NM 166% 152% 85% 144% 180% 137% 104% 135% 81% 64% Support 9% 12% 9% 5% 7% (2%) (12%) (11%) (12%) (11%) (12%) (15%) (15%) Total recurring revenue 9% 12% 10% 8% 12% 5% 6% 13% 12% 13% 11% 10% 10% Perpetual license 12% 4% 1% 5% (15%) (37%) (27%) (31%) (27%) (7%) (23%) (5%) (20%) Total subscription, support and license revenue 10% 9% 7% 7% 3% (6%) (1%) 5% 5% 9% 5% 8% 7% Professional services 19% 13% (3%) (2%) (12%) (10%) (7%) (7%) (12%) (16%) (11%) (14%) (7%) Total revenue 12% 10% 4% 5% (0%) (7%) (2%) 3% 2% 5% 2% 4% 5% Non-GAAP revenue change year over year in constant currency: Subscription (84%) (100%) NM 171% 155% 84% 145% 172% 133% 101% 132% 79% 64% Support 9% 12% 9% 5% 7% (2%) (12%) (11%) (12%) (11%) (12%) (15%) (15%) Total recurring revenue 9% 12% 10% 7% 12% 5% 6% 13% 12% 12% 11% 10% 10% Perpetual license 12% 4% 1% 5% (15%) (37%) (27%) (31%) (27%) (7%) (23%) (5%) (20%) Total subscription, support and license revenue 10% 9% 7% 7% 3% (6%) (1%) 5% 5% 9% 5% 8% 7% Professional services 19% 13% (3%) (2%) (11%) (10%) (7%) (7%) (12%) (16%) (11%) (14%) (7%) Total revenue 12% 10% 5% 5% 0% (7%) (2%) 3% 2% 5% 2% 4% 4% 33

34 REVENUE BY REGION FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Revenue by Region Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions) Revenue by region (GAAP): Americas $ 429 $ 480 $ 523 $ 559 $ 530 $ 488 $ 125 $ 124 $ 124 $ 128 $ 501 $ 127 $ 128 Europe $ $ APAC $ $ Total revenue $ 1,167 $ 1,256 $ 1,294 $ 1,357 $ 1,255 $ 1,141 $ 286 $ 280 $ 291 $ 306 $ 1,164 $ 307 $ 308 Revenue % of total (GAAP): Americas 37% 38% 40% 41% 42% 43% 44% 44% 43% 42% 43% 41% 42% Europe 40% 38% 37% 39% 37% 37% 36% 36% 38% 39% 37% 40% 40% APAC 23% 24% 22% 20% 20% 20% 20% 20% 19% 19% 20% 19% 19% Total revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenue change year over year (GAAP): Americas 11% 12% 9% 7% (5%) (8%) (1%) 5% 2% 5% 3% 2% 3% Europe 20% 3% (0%) 10% (11%) (9%) (4%) 0% 2% 11% 3% 17% 20% APAC 15% 9% (2%) (7%) (5%) (11%) 2% 2% (5%) (0%) (0%) 1% 6% Total revenue 16% 8% 3% 5% (7%) (9%) (2%) 3% 1% 6% 2% 7% 10% Revenue change year over year in constant currency (GAAP): Americas 11% 12% 9% 7% (4%) (8%) (2%) 5% 2% 5% 2% 2% 3% Europe 15% 9% (1%) 7% 3% (5%) (2%) 3% 5% 8% 4% 10% 8% APAC 8% 8% 5% (3%) 3% (11%) (2%) (1%) (6%) 0% (2%) (0%) 1% Total revenue 12% 10% 4% 5% (0%) (7%) (2%) 3% 2% 5% 2% 4% 5% Revenue by region (Non-GAAP): Americas $ 431 $ 481 $ 525 $ 560 $ 534 $ 490 $ 125 $ 125 $ 124 $ 128 $ 503 $ 127 $ 129 Europe $ 104 $ 101 $ 112 $ 119 $ 436 $ 122 $ 122 APAC $ 58 $ 55 $ 56 $ 59 $ 228 $ 58 $ 58 Total revenue $ 1,170 $ 1,258 $ 1,297 $ 1,358 $ 1,259 $ 1,144 $ 287 $ 281 $ 292 $ 307 $ 1,167 $ 307 $ 308 Revenue % of total (Non-GAAP): Americas 37% 38% 41% 41% 42% 43% 44% 44% 43% 42% 43% 41% 42% Europe 40% 38% 37% 39% 37% 37% 36% 36% 38% 39% 37% 40% 40% APAC 23% 24% 22% 20% 20% 20% 20% 19% 19% 19% 20% 19% 19% Total revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenue change year over year (Non-GAAP): Americas 12% 12% 9% 7% (5%) (8%) (1%) 5% 2% 5% 3% 1% 3% Europe 20% 3% (0%) 10% (11%) (9%) (4%) 0% 2% 11% 3% 17% 20% APAC 15% 9% (2%) (7%) (5%) (11%) 2% 2% (5%) (0%) (0%) 1% 6% Total revenue 16% 8% 3% 5% (7%) (9%) (1%) 3% 1% 6% 2% 7% 10% Revenue change year over year in constant currency (Non-GAAP): Americas 12% 12% 9% 7% (4%) (8%) (1%) 4% 2% 5% 2% 1% 3% Europe 15% 9% (1%) 7% 3% (5%) (2%) 3% 5% 8% 4% 10% 8% APAC 8% 8% 5% (3%) 3% (11%) (2%) (1%) (6%) 0% (2%) (0%) 1% Total revenue 12% 10% 5% 5% 0% (7%) (2%) 3% 2% 5% 2% 4% 4% Revenue (GAAP / Non-GAAP Adjustments): Americas $ 1 $ 1 $ 2 $ 1 $ 3 $ 3 $ 1 $ 0 $ 0 $ 0 $ 2 $ 0 $ 0 Europe $ 0 $ 0 $ 0 $ 0 1 $ 0 $ 0 APAC $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0 Total revenue $ 3 $ 2 $ 3 $ 1 $ 4 $ 3 $ 1 $ 1 $ 1 $ 0 $ 3 $ 0 $ 0 34

35 SOFTWARE REVENUE BY GROUP FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Software Revenue by Group Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 2-Apr 2-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions) Software Revenue by Group (GAAP): Solutions $ 900 $ 960 $ 1,009 $ 1,073 $ 980 $ 871 $ 219 $ 213 $ 222 $ 239 $ 894 $ 239 $ 234 IoT $ 29 Total Software Revenue $ 900 $ 960 $ 1,009 $ 1,078 $ 1,030 $ 944 $ 240 $ 235 $ 248 $ 265 $ 987 $ 265 $ 262 Software Revenue % of total (GAAP): Solutions 100% 100% 100% 100% 95% 92% 91% 91% 90% 90% 91% 90% 89% IoT 0% 0% 0% 0% 5% 8% 9% 9% 10% 10% 9% 10% 11% Total Software Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Software Revenue change year over year (GAAP): Solutions 14% 7% 5% 6% (9%) (11%) (4%) 3% 2% 10% 3% 9% 10% IoT 0% 0% 0% 0% 923% 48% 64% 26% 21% 17% 29% 23% 33% Total Software Revenue 14% 7% 5% 7% (5%) (8%) (1%) 5% 4% 10% 5% 10% 12% Software Revenue change year over year in constant currency (GAAP): Solutions 10% 9% 7% 6% (1%) (9%) (5%) 3% 3% 8% 3% 7% 4% IoT 0% 0% 0% 0% 934% 48% 64% 26% 22% 17% 29% 22% 30% Total Software Revenue 10% 9% 7% 7% 3% (6%) (1%) 5% 5% 9% 5% 8% 7% Software Revenue by Group (Non-GAAP): Solutions $ 902 $ 963 $ 1,012 $ 1,073 $ 980 $ 871 $ 219 $ 213 $ 222 $ 239 $ 894 $ 239 $ 234 IoT $ 29 Total Software Revenue $ 902 $ 963 $ 1,012 $ 1,079 $ 1,032 $ 946 $ 241 $ 235 $ 248 $ 265 $ 989 $ 265 $ 263 Software Revenue % of total (Non-GAAP): Solutions 100% 100% 100% 99% 95% 92% 91% 91% 90% 90% 90% 90% 89% IoT 0% 0% 0% 1% 5% 8% 9% 9% 10% 10% 10% 10% 11% Total Software Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Software Revenue change year over year (Non-GAAP): Solutions 14% 7% 5% 6% (9%) (11%) (4%) 3% 2% 10% 3% 9% 10% IoT 0% 0% 0% 0% 778% 44% 67% 23% 19% 15% 27% 20% 31% Total Software Revenue 14% 7% 5% 7% (4%) (8%) (0%) 5% 4% 10% 5% 10% 12% Software Revenue change year over year in constant currency (Non-GAAP): Solutions 10% 9% 7% 6% (1%) (9%) (5%) 3% 3% 8% 3% 7% 4% IoT 0% 0% 0% 0% 787% 45% 66% 23% 20% 15% 27% 19% 28% Total Software Revenue 10% 9% 7% 7% 3% (6%) (1%) 5% 5% 9% 5% 8% 7% Total Software Revenue (GAAP / Non-GAAP Adjustments): Solutions $ 3 $ 2 $ 3 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - IoT $ Total Software Revenue $ 3 $ 2 $ 3 $ 1 $ 3 $ 2 $ 1 $ 0 $ 0 $ 0 $ 2 $ 0 $ 0 35

36 BOOKINGS FY'14 FY'15 FY'16 FY'17 FY'18 License and Subscription Bookings Growth Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar (in millions) Bookings (1): License and subscription bookings $ 395 $ 346 $ 401 $ 90 $ 95 $ 90 $ 144 $ 419 $ 104 $ 99 Subscription ACV Subscription solutions % of bookings (2) 8% 17% 56% 65% 71% 64% 72% 69% 67% 78% Bookings change year over year: Americas 14% (9%) 32% 59% 16% (9%) (23%) 0% (3%) 19% Europe 46% (23%) 2% 27% 22% 21% 39% 29% 35% (13%) APAC (12%) (2%) 13% (2%) (4%) (45%) 1% (16%) 26% 7% Total bookings 15% (12%) 16% 31% 11% (14%) 1% 4% 16% 4% Bookings change year over year in constant currency (3): Americas 14% (8%) 32% 59% 15% (9%) (23%) 0% (3%) 19% Europe 42% (9%) 7% 28% 24% 25% 32% 28% 23% (23%) APAC (10%) 5% 13% (2%) (6%) (46%) 3% (16%) 21% 1% Total bookings 14% (5%) 18% 31% 11% (13%) (1%) 4% 11% (1%) (1) License and subscription bookings consist of new license bookings plus new subscription solutions annualized contract value (ACV) bookings multiplied by 2 (an annualized contract value booking is the actual value of the booking over the life of the subscription period divided by the number of days in the subscription period multiplied by 365; for subscription contracts for less than a year, the ACV is equal to the contract value). For the periods prior to FY'14 subscription solutions ACV is immaterial and considered to be zero. (2) Subscription bookings mix w as immaterial in periods prior to FY'14. (3) Constant currency measures are calculated by multiplying the actual results for the later period by the exchange rates in effect for the comparable period in the prior year. 36

37 SUPPLEMENTARY DATA FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 Supplementary Data Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Yr Ended Quarter Ended Yr Ended Qtr Ended 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep 31-Dec 1-Apr 1-Jul 30-Sep 30-Sep 30-Dec 31-Mar Sales efficiency (1) Revenue % by distribution type (2) Direct 77% 77% 77% 78% 77% 75% 75% 74% 72% 72% 74% 72% 73% Channel 23% 23% 23% 22% 23% 25% 25% 26% 28% 28% 26% 28% 27% Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenue % by industry Automotive 12% 13% 12% 14% 14% 14% 14% 14% 13% 13% 14% 14% 14% Electronics & High Tech 17% 17% 18% 16% 18% 16% 15% 15% 16% 15% 15% 15% 15% Federal, Aerospace & Defense 20% 18% 18% 19% 16% 15% 14% 16% 15% 17% 16% 15% 15% Industrial Products 31% 30% 31% 31% 31% 32% 31% 31% 32% 32% 32% 34% 32% Life Sciences 5% 4% 4% 5% 5% 5% 5% 5% 5% 5% 5% 6% 6% Retail & Consumer 7% 7% 8% 8% 7% 8% 8% 9% 9% 9% 9% 8% 9% Other 9% 11% 9% 8% 8% 10% 12% 10% 9% 9% 9% 8% 10% Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (1) Sales efficiency = trailing 12-month license and subscription bookings divided by trailing 12-month sales and marketing expenditure (2) In Q2'18 a small set of customers were re-classified between Direct and Channel resulting in small changes to historical revenue % by distribution type 37

38 SUBSCRIPTION FAQ 38

39 PTC Subscription FAQ Q. PTC s revenue, margins and earnings declined in FY 16, despite strong license bookings. Why was the bookings growth not evident in PTC s reported financial statements? A. Unlike in a perpetual license model, where license revenue is generally recognized in the quarter the software is sold and shipped, revenue in a subscription model is recognized over the life of the subscription contract, which in PTC s case has been two years on average. This dynamic causes revenue, margins and earnings to decline in the near-term, but over the long-term, revenue, margins and earnings are expected to begin to accelerate. To help investors understand the impact of subscriptions on our financial performance, we provide a view of our financial results in our prepared remarks which adjusts for the impact of subscription mix. In our most recent quarter, Q2 18, due to the rapid adoption of our subscription offering, we experienced YoY revenue growth for the fifth consecutive quarter, evidence that PTC has exited the subscription trough. Q. How should I interpret the changes in PTC s deferred revenue due to the transition to a subscription business model? A. Evidence that the growth in subscriptions is creating long-term value for PTC can be seen in the growth of our billed and unbilled deferred revenue. In our Q2 18 reported results, total deferred revenue grew $382 million, or 43% year-over-year and $94 million, or 8% sequentially. Total deferred revenue of $1.26 billion was comprised of deferred revenue on the balance sheet of $498 million (which is the deferred revenue that has already been billed) and unbilled deferred revenue of $765 million. We do not include unbilled deferred revenue on our balance sheet until we invoice the customer, which for subscription contracts is generally on an annual basis. Unbilled deferred revenue is contractually committed and non-cancellable. Q. Isn t a subscription model riskier than a perpetual model because customers can turn off their subscriptions? A. In the enterprise software market, it has been demonstrated that the subscription model is very stable, with high renewal rates, particularly for critical software products like PTC s. In fact, peers in the enterprise software industry have subscription renewal rates in the 95% range, which is even higher than typical support (maintenance) renewal rates. In the industry, subscription renewal rates tend to exceed support renewal rates because a customer must stop using the software if not on subscription, but a customer who cancels support can still use the software. Q If your subscription break-even point is four years, isn t there a risk that you won t recoup the license revenue if customers stop using your products? A. Given the mission critical, industry-leading software we offer, coupled with the strong ongoing support services provided to our customers, we believe the risk of customer churn is very low. In fact, if you look back at our top 100 customer since 2002, all of them are customers today. And, if you look back at our top 500 customers since 2002, all but 6 (or 99%) remain customers today. Our high support renewal rates (>90%) are another strong indicator of the likelihood of low customer churn. 39

40 PTC Subscription FAQ (Continued) Q. For the full year FY 17 and into FY 18, customers were converting their Support contracts to Subscription and increasing their annual run-rate by approximately 50%. Why are customers willing to pay this much for software they already own? A. Since Q1 16, approximately 263 of our enterprise customers, many of which are very large, sophisticated enterprises, converted their support contracts to subscription. On average, customers that converted are paying 25% to 50% more under their subscription contracts, which is a clear indication that our customers see significant value in subscription licensing. The reason why some customers are now paying upwards of 50% more than under their previous support contract is that, in addition to being able to reconfigure or restack their existing software footprint, they are buying more software upon conversion. The lower up-front payments and ongoing flexibility of a subscription license is very attractive to our customers, whose software configuration needs may shift over time. In fact, for the majority of the conversions last year, customers increased their usage of PTC software. When a customer converts to subscription, we include only the incremental ACV of the new subscription (the amount in excess of the prior annual support contract amount) in our Total ACV and Bookings metrics. Q. In addition to reporting subscription Annual Contract Value (ACV), you report subscription bookings, which is 2 x ACV. Can you explain why you do this and why 2x? A. We provide a bookings metric so investors can compare our operating performance each quarter with the previous year on an apples-to-apples basis. Because we sell both perpetual licenses and subscriptions, we need a way to equate the two licensing models. We arrive at the two factor by modeling out the license revenue we would expect to collect under a subscription contract, using what we believe are very conservative assumptions for customer lifespan (five years) and churn (10%). Given the earlier comments above regarding PTC s average customer lifespan and enterprise software subscription churn, you can see that the factor is quite conservative. In addition, the weighted average contract term of our subscription contracts has been approximately two years. 40

41 NASDAQ: PTC PTC Corporate Headquarters 140 Kendrick Street Needham, MA 02494, USA Contact Investor Relations: Website: investor.ptc.com