Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
New Assignment for Leader of Global Sales
On January 15, 2021, in connection with the closing of the Arena SaaS PLM
acquisition, Michael DiTullio, Executive Vice President, Global Sales, was
appointed to lead PTC's expanded SaaS Business Unit. Jamie Pappas, a PTC Sales
veteran, will assume the position of Executive Vice President, Global Sales.
Item 7.01Regulation FD Disclosure.
On January 19, 2021, PTC announced that it expects its ARR growth for its first
quarter of fiscal 2021 ended December 31, 2020 is expected to be near the high
end of the guidance range provided by PTC on December 15, 2020
PTC also announced that Arena Solutions, acquired by PTC on January 15, 2021,
ended calendar year 2020 with approximately $50 million in annualized recurring
revenue, reflecting double-digit growth over 2019.
PTC further stated that it continues to expect that the acquisition of Arena
Solutions will be neutral to PTC's FY'21 cash flow from operations target of
$365 million and FY'21 free cash flow target of $340 million (which reflects the
deduction of approximately $25 million of capital expenditures from cash flow
from operations) and accretive to its financial results for FY'22 and beyond.
Management plans to update investor guidance as part of its fiscal first quarter
earnings release on January 27, 2021.
Our Operating and Non-GAAP Financial Measures
ARR. To help investors understand and assess the performance of our business as
an on-premise subscription company we provide an ARR (Annual Run Rate) operating
measure. ARR represents the annual value of our portfolio of active renewable
customer contracts as of the end of the reporting period, including subscription
software, cloud, and support contracts. ARR includes IoT and AR orders placed
under our Strategic Alliance Agreement with Rockwell Automation and includes
orders placed to satisfy contractual quarterly minimum commitments. We believe
ARR is a valuable operating metric to measure the health of a subscription
business because it captures expected subscription and support cash generation
from new customers, existing customer renewals and expansions, and includes the
impact of churn, which reflects gross churn, offset by the impact of any pricing
increases. Because this measure represents the annual value of renewable
customer contracts as of the end of a reporting period, ARR does not represent
revenue for any particular period or remaining revenue that will be recognized
in future periods.
Annualized Recurring Revenue. Arena uses an annualized recurring revenue
operating measure to help investors understand the value of its portfolio of
recurring revenue contracts as of the end of the period. Annualized recurring
revenue represents the annualized amount of recurring revenue attributable to
contracts existing at the end of the period. Because this measure represents the
annualized value of recurring revenue attributable to customer contracts as of
the end of a period, annualized recurring revenue does not represent revenue for
any particular period or remaining revenue that will be recognized in future
periods.
Free Cash Flow. We provide information on "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 50% 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. Free cash flow is not a measure of cash
available for discretionary expenditures.
Constant Currency. We provide our view of expected operating and financial
results without including the effects of foreign currency rate fluctuations as
we cannot accurately predict those fluctuations or their effect on our operating
and financial results.
Forward-Looking Statements
The statements above regarding PTC's expectations regarding PTC's Q1'FY'21 ARR
results, the effect of the Arena Solutions acquisition on PTC's FY'21 cash flow
targets and financial results for FY'22 and beyond, FY'21 capital expenditures,
and its intent to update FY'21 guidance are forward-looking statements that
involve risks and uncertainties that could actual results to differ materially
from those projected. The risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements include that:
the COVID-19 pandemic impact on the global macroeconomic environment and our
business could be more severe and prolonged than we expect; customers may delay
or reduce purchases of new software, reduce the number of subscriptions they
carry, or
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delay payments to us due to the COVID-19 pandemic, all of which would adversely
affect ARR and our financial results, including cash flow; the macroeconomic
and/or global manufacturing climates may deteriorate further and/or economic
conditions might not improve in the second half of FY'21 as our current plans
assume; our businesses, including our Vuforia Augmented Reality, Onshape, and
Arena Solutions SaaS businesses, may not expand and/or generate the revenue or
ARR we expect if customers are slower to adopt those technologies than we expect
or if they adopt competing technologies; the Arena Solutions technology may not
provide the access to new customers and markets that we expect if those
customers and markets are not receptive to the technology, which could adversely
affect our financial results and growth expectations; we may be unable to
integrate the acquired technology when or as we expect, which could adversely
affect our ability to offer additional SaaS solutions when or as we expect;
customers may not adopt SaaS solutions for product development as we expect,
which could adversely affect our financial results and growth expectations; key
Arena Solutions employees may not stay with PTC, which could disrupt the Arena
Solutions business and our ability to successfully integrate and operate the
Arena Solutions business; we may incur unanticipated costs associated with the
integration of Arena Solutions, which could adversely impact our financial
results; orders associated with minimum purchase commitments under our Strategic
Alliance Agreement with Rockwell Automation may not result in subscription
contracts sold through to end-user customers, which could cause the ARR
associated with those orders to churn in the future; and our strategic
initiatives and investments may not generate the revenue or ARR we expect. 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.
Item 9.01.Financial Statements and Exhibits.
(d)Exhibits.
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