Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the PTC 2021, Fourth Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. I would now like to turn the call over to Matt Shimao, PTC Head of Investor Relations.

Please go ahead..

Good afternoon. Thank you, Paula. And welcome to PTC's 2021 Fourth Quarter Conference Call. On the call today are James Heppelmann, Chief Executive Officer, and Kristian Talvitie, Chief Financial Officer. Today's conference call is being broadcast live through an audio webcast, and a replay of the call will be available late today at www.ptc.com.

During this call, PTC will make forward-looking statements, including guidance as to future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause these factual results to differ materially from those in the forward-looking statements can be found in PTC's annual report on Form 10-K, Form 10-Q, other filings with the U.S. Securities and Exchange Commission, as well as in today's press release.

The forward-looking statements, including guidance provided during the call are valid only as of today's date, November 3rd, 2021, and PTC assumes no obligation to publicly update these forward-looking statements. During the call, PTC will discuss non-GAAP financial 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 in today's press release made available on our website.

With that, I'd like to turn the call over to PTC's Chief Executive Officer, James Heppelmann..

Thanks, Matt, and welcome again to PTC. It's been great to get you on board and thanks for your help in preparing for today's call. We have a lot of exciting news for our investors today, so we plan to allow a little more time than usual for the call. No doubt there will be follow-up interest, so we've also scheduled our Annual Investor Day.

In mid-December, and we expect to be active on the IR circuit in the weeks ahead. Starting then with Slide 4. Given the news, we're going to follow a somewhat different agenda for today's call. I'm going to start with highlights of our Q4 and fiscal 2021 performance. Then I will take you through an abbreviated version of our product line results.

Next, Kristian will complete our discussion of Q4 and Fiscal 2021 with his financial reviews. Then turning to the future, I'll address the changes we announced today, which are designed to accelerate our SaaS transition and margin expansion. Following that, Kristian will take you through our go-forward guidance and reporting structure.

We've reserved extra time for your questions at the end. Moving to Slide 5, Q4 was an outstanding quarter for PTC and it capped off another strong year. We came in at the high end of our guidance for ARR growth and we exceeded our free cash flow guidance.

Despite the pandemic, every part of the business performed well in fiscal '21, with growth in every product line and in every geography. Fiscal '21 was our fourth consecutive year of double-digit organic ARR growth and we're guiding for fiscal '22 to be the fifth.

Furthermore, by continuing our strong focus on operational discipline, we've been able to translate our top-line growth into strong bottom-line free cash flow performance. Kristian will take you through free cash flow in more detail later in the call.

Taking a look at the key factors driving our top line performance, and turning to slide 6, our Q4 bookings results were outstanding. Bookings were up mid-teens organically, and high-teens overall from the blockbuster Q4 we had a year ago.

Remember then in Q4 of fiscal '20, bookings bounced back sharply following a downturn in Q2 and Q3 during the depths of the pandemic. Surpassing last year's strong Q4 number is a great accomplishment. Bookings were strong across all product lines and geographies.

Because Q4 of fiscal '20 had been such an outlier, our plan targeted Q4 '21 organic bookings to be roughly flat to last year's number. Creo was slightly above plan, while everything else was well above. FSG and Onshape led the way with bookings growth of more than 90% and 70%, respectively.

IoT and ARR bookings were both up mid-teens year-over-year to record levels for each, with IoT bookings growing more than 120% sequentially while ARR bookings grew more than 60% sequentially. PLM bookings were up high-single digits year-over-year.

Keep in mind that a good percentage of our Q4 bookings, especially those done later in the quarter don't start until October or later. So they end up in what we used to call backlog but now call deferred ARR. Deferred ARR ended the year $20 million above the original plan we had for fiscal '21.

So in summary, not only did we hit the high end of our Fiscal '21 ARR guidance range by delivering 12 points of organic ARR growth, we also booked about a 0.5 more growth in the deferred ARR, which will benefit future periods. Turning to ARR on Slide 7, on a top-line basis, fiscal '21 was a big success.

In Q4, we came in at 12% organic ARR excluding Arena, and 16% ARR growth overall. Looking at our core products in Q4, we continued to deliver market-leading growth. Creo came in at low double-digit growth, while Windchill grew mid-teens.

According to data published by Jay Vleeschhouwer, Creo and Windchill have significantly outperformed Siemens in DSOs, CAD and PLM businesses lately, as they are relatively flat with 2019, while we're up more than 20%. We've been seeing a solid growth trend in our core CAD and PLM business for years now, and we expect this to continue.

I'll come back to this important point during the second part of my prepared remarks. Next, looking at our growth products, IOT grew mid-teens coming in below our target. However, bookings were strong in Q4 and we expect stronger ARR growth in Fiscal '22 following bookings momentum and the launch of our new digital performance management solution.

Vuforia AR, Vuforia Augmented Reality grew mid-teens, which is better than it sounds when you factor in that this growth came on top of very strong 77% growth in our previous Q4 that we're comparing against. I'm happy with the roughly 40% [Indiscernible] over the past two years.

In fiscal '22, we're positioned to continue good growth in AR based on our bookings momentum. Onshape grew over 50%. It's now been 3 years since we acquired Onshape and we're very pleased with the acquisition and the progress made by the Onshape team. Arena grew over 20%.

This represents good acceleration from mid-teens pre acquisition growth rates driven by go-to-market investments we've made coupled with synergies gained by being part of PTC. Turning to FSG, growth was 6% primarily driven by strong performance of our systems and software engineering offerings where we benefited from several large deals.

Turning to slide 8, while Creo and Windchill are powerful independently, these products generate even more value when leveraged together.

A great example of this integrated story can be found in our recent announcement that the entire Volvo Group will adopt PTC's Creo product as their primary CAD solution, mirroring what they did several years ago with our Windchill PLM solution. This is a big competitive displacement for Creo.

In addition, our answers powered Creo simulation live technology, together with Creo ANSYS simulation, continues to drive customer interest in simulation. I've been saying for some time that as the product system of record, PLM is a critical element of any manufacturing Company's digital transformation strategy.

This is exactly what led to our largest ever PLM order in Q4 of '21 a multi - year committed ramp deal coming from a large global medical device Company. This too, was a competitive displacement for Windchill. nPLM, we saw our average deal sizes increasing with numerous expansions in the quarter.

In IoT this past week, we launched our digital performance management or DPM solution at our manufacturing live event. If you miss the event, by the way, you can find the replay on our Investor website.

DPM is our new solution designed to be a comprehensive, turnkey, out-of-the-box solution that addresses our customer's biggest IoT value-creation opportunities. It will be the perfect antidote to the so-called pilot programs to our problem the IoT industry has been discussing.

You may have also noted separately the press release announcing that PTC is the only industrial IoT player recognized as a leader by all 4 major industry analyst firms. Also in the IoT space, Microsoft yesterday officially launched its Cloud for Manufacturing and we're thrilled to be a lead partner.

Our alliance with Microsoft continues to go well with Q4 being our best quarter to-date in terms of co-selling with Microsoft. Vuforia delivered a healthy mix of expansions, cross-sell and net new logos.

We landed our largest ever AR order from a large pharmaceutical Company, which will use Vuforia to deliver augmented digital work instructions to improve the speed and quality of production line changeovers.

Also, with all the buzz you hear about Metaverse these days, you might enjoy watching the amazing, live industrial Metaverse demonstration that our CTO, Steve Dertein and I delivered as part of our manufacturing live keynote, using our Vuforia Spatial Toolbox technology.

If you look carefully at the graphic on the right side of Slide 8, that is Steve and I standing in front of our anonymized digital representations whose movement and activity is being measured and analyzed in real-time.

This is a peek into our concept of Digital Taylorism, named after the famous work or Frederick Taylor, who was the father of industrial engineering more than a 100 years ago. Turning now to Onshape and Arena on Slide nine. Onshape performance has been driven by strong win rates against competitors, coupled with solid expansion rates.

Onshape captured nearly 1,000 new logos in Fiscal '21. During the year, churn improved by 10 points, while net retention improved by 15 points. And these metrics now look quite strong compared to similar sized SaaS peers of all types.

Naturally smaller companies have been drawn to Onshape because it's lightweight SaaS footprint enables agile hardware development processes.

But thanks to 17 more product releases during the past year, Onshape's maturing functionality also led to several significant orders in Q4 from larger companies and the robotics and medical device fields, who love the product for similar reasons. The amazing adoption that Onshape experienced in the education market in fiscal '21 is icing on the cake.

It contributed little to the financials, but sets the stage for mass adoption by the next-generation workforce in future years. Arena saw numerous expansions driving larger deal sizes too. Arena is also proving to be a great acquisition.

Like Onshape, Arena is the cloud-native market leader in PLM, with particular strength in TechCentric markets such as electronics and medical devices. We're on track with the integration plan that we laid out for the acquisition of Arena, with new sales capacity coming online in the U.S. and Europe.

The combination of Onshape and Arena makes PTC the clear market leader in Cloud-native, PLM and CAD solutions. And these offerings make a great pairing for fast-moving high-tech manufacturers who want to develop hardware using the same agile process methodology as software. Next, Slide 10, shows our geographic ARR performance.

America was up 19% led by double-digit growth in core products and Arena. Europe was up 13% led by high single-digit in core products, low 40's growth in growth products, and double-digit growth in FSG. And APAC was up 17% led by mid-teens growth in core products and low 30's growth in growth products.

There are thousands of people at PTC that contributed to our outstanding fiscal '21, and I'd like to say thank you to all of them. With that, I'll hand it over to Kristian to complete the portion of today's call focused on Q4 and fiscal '21..

Thanks, Jim. Good afternoon, everyone. Before I review our results, I'd like to note that I'll be discussing non-GAAP results and guidance later in the discussion, and all growth rate references will be in constant currency. So turning to Slide 12. We delivered ARR growth at the high end of our guidance range.

Fiscal '21 ARR of $1.47 billion increased 16% year-over-year, excluding Arena, ARR growth was 12%. FX was a small $4 million headwind in fiscal '21 for us. As Jim highlighted earlier, our bookings were very strong in Q4. With this, we had an uptick in -- within this, we had an uptick in ramp deals.

And that's why our bookings performance did not result in even stronger ARR growth.

Instead, the vast majority of our bookings up went into deferred ARR that will benefit future periods, primarily fiscal '23 [Indiscernible] Organic churn improved approximately a 130 basis points year-over-year, slightly ahead of our guidance of approximately a 100 basis points of improvement, primarily driven by strong execution and CAD, PLM, FSG, as well as modest continued improvement in both IoT and AR.

Fiscal '21 free cash flow of $344 million grew 61% year-over-year and was slightly above our guidance. Note that our free cash flow for the year included an unforecasted $18 million outflow related to a foreign tax dispute, $15 million in acquisition-related fees, and $15 million in restructuring payments.

These one-time headwinds were offset by other one-time tailwinds, including some one-time tax benefits, Arena working capital, versus original expectations. Improvements in AR aging also helped drive a one-time uptick in free cash flow in '21.

Fiscal '21 revenue of $1.81 billion increased 24% year-over-year as reported, or 20% in constant currency, and was above guidance. As we've discussed previously, revenues impacted by ASC606.

So in Q4 and throughout fiscal '21, longer than anticipated contract duration and support to subscription conversions positively impacted the amount of upfront subscription revenue recognized in the quarter and in the year. I'd like to remind you that over the long term, ARR and recurring revenue growth rates should be approximately the same.

However, in any period, revenue is subject to much more volatility due to ASC606, which is why we feel that our, our annual run rate, which is also very close proxy for subscription billings is the true in better indicator of PTC's growth in fiscal 21 non-GAAP operating margins were a 35% and increased approximately 610 basis points over fiscal 20.

This was due to the strong revenue performance I just mentioned, as well as maintaining good discipline on our operating expense structure. Non-GAAP EPS of $3.97 increased 58% year-over-year and was above guidance.

I'd like to point out that our GAAP results reflect a gain of $69 million related to our investment in Matterport, which we mark-to-market. And as you may recall, Matterport went public and begin trading on July 23.

In addition, our GAAP results also included the release of $137 million valuation allowance related to our deferred tax assets and a tax benefit of $42 million related to the Arena acquisition. Moving to the next slide, another way to think about PT's performance is using the cash flow model we often share.

And as you can see here on Slide 13, ARR plus perpetual revenue, plus professional services revenue equals our cash generation, which was $1.455 billion is up about $200 million over fiscal '20. You can also see the total expenses of $1.173 billion.

This was up about $138 million over fiscal '20, which leads to a net cash contribution margin of $473 million with an increase of about $62 million. Or if you think about cash contribution margin as a proxy for cash EBITDA EBITDA, we delivered a 29% cash contribution margin. And this was up about a 100 basis points compared to fiscal '20.

In this format, you can see most of the one-time headwinds and tailwinds I discussed earlier are below the line. As in terms of cash tax headwinds and tailwind, M&A related expenses, improvements in aging, which actually resulted in net positive working capital in fiscal '21, which one would normally expect to be negative in a growing business.

Moving to Slide 14, I'll begin with our balance sheet. We ended with fiscal '21 with cash and cash equivalents of 320 million. In addition, we had medium-term investments of $78 million primarily related to our investment in Matterport. Our gross debt was $1.45 billion with an aggregate interest rate of about 3.2%. During Q4.

Before we paid down 40 million on our revolving credit facility. And we also made our $19 million semi-annual bond interest payment. With our leverage ratio now less than 3 times, which we told you as our goal.

We resumed our share repurchase program, that $30 million of cash we used to repurchase shares in Q4 was approximately equal to our free cash flow generation in the quarter. All-in-all Q4 wrapped up a solid year for PTC from both an ARR and the free cash flow perspective. With that, I'll turn it back to Jim..

Thanks, Kristian. PTC is at an exciting point in our history. Despite bumpy macro conditions, we have established a 4-year track record of double-digit, top-line organic growth based on a recurring revenue model, and driven by widely recognized technology leadership positions in an industry increasingly motivated by digital transformation.

In parallel, our decade long track record of strong operational discipline has driven our margins up. Enabling us to benefit significantly from leverage as we scale. You see that in the 61% free cash flow growth, I highlighted at the start of the call.

Given the strength of our financial performance in Fiscal 2021, the restructuring we announced today might come as a surprise to some of you. But sit tight because I think you will like what we're doing.

For some time now, I've been telling investors about our plans to leverage the Atlas platform that we acquired with Onshape to pivot the whole Company toward a SaaS future. As I had previously discussed it, much of the upside benefits of the SaaS pivot would come in fiscal 2024 and beyond.

Many of you have asked why we wouldn’t invest more to get to that SaaS upside more quickly. Frankly, that was a good question and one that we've thought long and hard about. We even hired Mckinsey that help us think through it and develop a strategy. Today, I will explain how, thanks to the changes we're making.

We will invest substantially more in our SaaS initiatives while actually decreasing our overall run-rate spending projections significantly. Let me hit the financial summary first on slide 16 and then explain the strategy and operational changes behind it.

In terms of the financial view or the restructuring, we're reducing our spending run rate by approximately 60 million compared to fiscal 2021 as we improve the efficiency of our organizational structure. We've also eliminated about 30 million of previously contemplated new spending run rate from our fiscal '22 plans.

So compared to the plan for fiscal '22 that existed prior to the restructuring, we now have -- we now expect to reduce our planned fiscal '22 run-rate spending by approximately $9 million and then reinvest about half of that into initiatives that accelerate our transition to SaaS with the other half falling to the bottom line.

Key SaaS investments will be used to increase capacity on the Atlas, to accelerate work to adopt Atlas into our core products and to operate those products as SaaS and into Onshape than Arena product development and sales capacity.

Despite what will be a very significant investment, we expect to expand cash margins by approximately 400 basis points in FY22.So we are accelerating both growth and margin expansion at the same time.

Restructuring related cash outflows are expected to be approximately $50 million to $55 million with about 2/3 occurring in the first half of '22, and the majority of the remaining payments to be made in Q3.

In other words, the restructuring will obscure the great cash flow progress for the next 2 or 3 quarters, but the benefits will start shining through after that. Already by Q4 of fiscal '22, we should be seeing a net free cash flow tailwind as a consequence of the restructuring. Then as Kristian will outline, fiscal '23 and beyond will look great.

Let's go to slide 17 and I will start by explaining why a SaaS pivot is so interesting to PTC. There are three reasons why we think now is the time for PTC to align with and invest more in the SaaS transition. First the industrial software market wants to go to SaaS. COVID has greatly amplified the interest in SaaS.

PTC is already the recognized SaaS leader in our industry. Onshape and Arena have proven what's possible and they've dramatically elevated PTC's credibility. We are far ahead of competitors in terms of understanding what SaaS is and what it is not. Customers are looking for PTC to lead the whole industry through a transition to SaaS.

We see the need to accelerate SaaS initiatives while better aligning with SaaS best practices in order to meet the needs of the market. The investments we're making now will allow us to play offense to capture the market demand. Third, we believe our new SaaS strategy will accelerate a major growth driver for PTC.

Giving us more pathways to mid-teens growth in the mid-term, and helping to de -risk our growth ambitions. Meanwhile, cost savings from the restructuring itself are expected to de -risk our free cash flow growth targets even if the growth should prove slower to materialize than I expect.

Turning to Slide 18, owning the industry's only cloud-native CAD and PLM combo has been a big advantage. By comparing our Onshape and Arena businesses work as compared to the balance of BDC. We can see that certain ways in which PTC has been organized are quite inefficient.

At the same time, we see an opportunity to serve customers better too, and that's why we're choosing to evolve our organization to be more SaaS-like. I'd like to review several of the larger changes.

Previously in addition to working with sales, our customers would have more than a half dozen touch points across our broad customer success organization, including renewal sales, pre sales, post-sales consulting, customer success management, technical support, our cloud organization, a group called customer experience and others.

In comparison, most SaaS companies have a 2 in the box model where each customer has just 1 sales and 1 customer success contact. Not only is PTC's current model inefficient, perhaps more importantly, customers hate being repeatedly passed from one contact to another as they proceed through their journey with PTC.

So we are re-configuring to deploy the same tool box model, the SaaS companies utilize. This reconfiguration has no impact on the sales side of the equation. In fact, the sales side of the equation -- in fact, we're adding direct quota carrying capacity into the current model.

Aside from where we expand coverage, the vast majority of customers will retain the same sales contacts they know and love today. The bigger change for the customer will be that they now have one customer success contact rather than many. There's nothing but goodness here for everybody.

Customers prefer this model and it will save PTC a lot of money as it is much more scalable. The other major changes on the product development, delivery and support side. With Onshape and Arena or any true SaaS Company. This is all done by a single organization using modern DevOps practices.

But within the core PTC product lines the development, cloud delivery, and technical support organizations have been entirely separate. With the latter two belonging to the field organization. You simply can't get to SaaS that way.

As part of our reorganization, we have merged our cloud delivery and technical support groups into the product organization to mirror the modern SaaS practices deployed by Onshape and Arena and everybody else in the SaaS world. This too will create significant operating efficiencies and a much improved customer experience at the same time.

Nothing but goodness here to. To better understand the demand drivers, let's take a look at an illustrative value proposition on slide 19, typical of what customers see in the transition from on-premise to SaaS.

For every dollar a customer pays PTC or any other vendor for on - prem PLM, they have an estimated additional $2 to $3 and cost of ownership associated with on-premise servers and store agent system administrators plus SI who help with on-site installations and upgrades and all that. Their total cost of ownership can be $3 to $4.

When the deployment, maintenance, and delivery responsibility for the software is shifted back to PTC, we can leverage significant efficiencies to serve that same functionality back to the customer for roughly an incremental dollar at margins that are attractive to us.

Therefore, each dollar of on-premise software ARR today represents potentially $2 of future SaaS, ARR for PTC plus a savings of a dollar or 2 for the customer. The customer also gets to enjoy the many other benefits of SaaS. It is device-agnostic. It's ideal for a hybrid work environment. Data is shared with employees and suppliers in real-time.

Plus no more upgrades to do as everyone is always on the latest version. This value proposition for SaaS is not really new news to any of you, it's what Marc Benioff at salesforce.com has been espousing for 2 decades now. More than half of the overall commercial software industry has already made this pivot.

But that's not yet the case in our world of industrial software, where SaaS has low single-digit penetration. As Salesforce did in CRM, some Company will have to lead the way to SaaS and the CAD and PLM industry. We think the time is right for industrial companies to move to SaaS and PTC is best positioned to lead that transition.

Turning to Slide 20, we've been delivering more and more new PLM projects as SaaS in recent years, as customer preference has shifted there. But going forward, we will make SaaS our primary delivery model and deliver on-premise only when required by the customer. But we also have a large existing customer base with on-premise systems.

In order for existing customers to get the SaaS, each customer has to go through a lift and shift process. This process entails lifting the on-premise deployment, upgrading, and decustomizing it as necessary to eliminate technical debt, and then shifting it into the PTC Cloud from where we can serve it back to the customer as a service.

We plan to focus the lift and shift program first on Windchill, where the biggest opportunity lies and bring Creo and other products into the fold in subsequent phases over time. So you may be wondering, will, how will this.

Helped to accelerate growth? The answer is that our organizational changes, and the associated wave of investment, enable us to scale up to make SaaS the default for new sales, and start to lift and shift process now, here in fiscal22, though the value proposition for transitioning to SaaS 's sound, we still have to go through a sales cycle of each customer.

Returning the sales teams lose now with this proposition, and we expect the first projects to begin showing up in the back half of fiscal 22, The Windchill SaaS capability will be deployed into Azure and into the manufacturing Cloud at that. So Microsoft is eager to help us sell this proposition.

I'd like to think of this project as the last upgrade for each customer. Because when the lift and shift projects done then PTC will take it forward from there. Therefore, a good time to sell this program is whenever customers start planning their next upgrade.

Customers tend to upgrade Windchill systems, once every 2 or 3 years, so we get a shot at a good portion of the base each year and expect success to accelerate in fiscal 23 and beyond. There are thousands of Windchill deployments out there, so I anticipate this process will take numerous years, perhaps a decade, and we won't get them all.

Naturally we'll focus first on the most ready customers and work on the long tail further out. In the end, I expect we will ultimately get about 75% of the customers to transition and we'll continue to offer on-premise variance of the product. Born of the same code-stream on an indefinite basis for those who do not want SaaS. PTC is all-in on SaaS.

The program we're launching is a major cross-functional effort on par with the highly successful program. We executed the move from perpetual to where we are today with 98% of our software revenue now being subscription.

Like that subscription program, the SaaS transition program involves numerous changes to our offerings, to our pricing and packaging, to compensation, and more. We have the same program leader driving it.

An important difference though, is that the SaaS transition program is all about growth acceleration within the recurring software business model, we currently have in place.

Which means we will not have the same, same so-called valley of depth effect that our cash flow went back, that went through back then? Now we'll have all of the gain, but none of that pain. Taking you deeper into the elements of this program will be a key agenda topic at our December Investor Day.

One last related change we're making is to organize into two main business units as shown on Slide 21. With plans to leverage SaaS now in place and underway across the entire Company, it no longer makes sense to have a SaaS business unit per say.

Therefore, we plan to reunite Vuforia AR with the CAD PLM and IoT product lines into a business unit designed to promote higher levels across selling, across this integrated product portfolio. This new business unit, which focuses on the digital transformation driver, will be all about growing the base and leading them to SaaS.

It will be called the Digital Thread Business Unit to reflect the highly integrated nature of its portfolio of products. Troy Richardson has been our Chief Operating Officer for the past year, is being promoted to become a president of this business unit. Troy has already been managing them, go-to-market side of these businesses.

But now the product developments are more important to him as well to drive tight alignment. Naturally, I'll stay involved in the technology road map because as you probably know, that's where my passion lies. You'll get more time with Troy Richardson at the upcoming Investor Day.

Onshape and Arena will remain together under their current President, Mike DiTullio.6 This will be called the velocity business unit, to reflect that the Cloud-native pure SaaS value proposition of Onshape and Arena is most attractive to companies who want to deploy agile product development processes and move fast.

This business unit is all about disrupting the competition and landing new logos, which in many cases are SMB customers. But we are seeing larger companies being drawn to Onshape and Arena solutions still because their existing vendor simply doesn't have anything that compares.

Companies like Gear Motion, for example, the $4 billion automotive turbocharger Company we've profiled at our fiscal 2020 Investor Day last year, who switched to Onshape from a high-end CAD competitor to gain increased business velocity. You'll have more time with Mike DiTullio too at the Investor Day.

[Indiscernible] business unit’s presidents report to me. I help drive their respective strategies while Troy and Mike preside over the operating cadence of each business unit. A related change is that the Atlas platform will move under our very capable CTO, Steve Dertein, who will develop the shared platform to meet the needs of both units.

Steve will continue to report to me. I know that was a lot of information to take in. Turning to Slide 22. Let me summarize and then I'll hand it back to Kristian for more specific go-forward guidance. First from a top-line perspective, our SaaS acceleration pivot unlocks another powerful multiyear growth catalyst for PTC and our shareholders.

Exiting fiscal '21 Creo and Windchill together represent more than $1 billion of ARR growing double-digits organically. This growth pattern has been in place for 4 years now, right through the pandemic, with the strong performance driven by the role both products play in the digital transformation strategies of industrial companies.

With the SaaS program that we're launching, we're layering an additional growth driver into this core business that we expect could last a decade. Therefore, in our core business, we see double-digit ARR growth being sustainable well into the future.

Together with the growth drivers in IoT and AR, plus Onshape and Arena, we're creating more pathways to drive ARR growth to the mid-teens. In my deal, PTC's growth story's alive and well.

Second from a bottom-line perspective, the strategic improvements we're making will drive up our cash contribution margins considerably and help de -risk our cash flow targets under a broader range of ARR growth scenarios. Kristian will expand on this.

Given our confidence in growth coupled with the higher margins, we remain committed to the midterm free cash flow targets that we set at our Investor Day last year. Recall that our guidance was for mid-term free cash flow growth of approximately 25% to 30%. After we get beyond the restructuring payments, we expect to perform in that range.

Perhaps earlier than you might have expected.

Our guidance for fiscal 22 assumes we'll get a small positive impact from the SaaS transition in the back half of the fiscal year, which is counterbalanced by slower assumed growth rates in FSG, and somewhat conservative assumptions we have around Rockwell has contribution as they work their way through the Plex integrate.

Let me be clear that our commitment to the partnership with Rockwell remains as strong as ever, and that we are energized to work together because of the great potential we see ahead. In particular, we see tremendous potential for the DPM offering sold through Rockwell and their Calypso consulting app. Kristian, back over to you..

Thanks, James. I'll now take you through our financial guidance and go-forward reporting structure. Turning to Slide 24. First, let me reiterate how exciting a time this is for PTC. The restructuring that we're going through right now is really the single biggest somatic investment PTC has made that I can remember.

This reorganization is designed to better align PTC to our SaaS future, and as an interesting consequence it should also derisk our path towards delivering on the midterm ARR and cash flow growth targets we discussed at our Investor Day last November. Starting with guidance on slide 24, we continue to target mid-teens ARR growth in the mid-term.

Jim did a good job of outlining the many pathways we have to get into these targets with the SaaS opportunity in both the velocity and core businesses. With the addition of solutions to the portfolio starting with DPM, coupled with the general strength of the existing portfolio. More specifically, for fiscal22, we expect ARR of 1..

Ladies and gentlemen, please standby. Today's conference will resume momentarily. Thank you for your patience, your lines will once again be placed on music hold until we resume the call. All right. We are back..

This is James Heppelmann, I think we apparently got dropped from the call, which is a brand new experience for us, but I understand this happened just as Kristian was starting out with our FY 2022 guidance. So Kristian, can you pick it up again from the beginning of the FY 2022 guidance discussion..

Great. Thanks, Jim. So back to the financial guidance and go-forward reporting structure. First, let me reiterate how exciting time this is for PTC. The restructuring we're going through right now is really the single biggest somatic investment PTC has made that I can remember. This reorganization is designed to better align PTC to our SaaS future.

And as an interesting consequence, it should also de -risk our path to delivering on the mid-term ARR and cash flow growth targets we discussed at our Investor Day last November. So starting with guidance on Slide 24, we continue to target getting to mid-teens ARR growth in the mid-term.

Jim did a good job outlining many of the pathways we have to getting to these targets with the SaaS opportunity in both the velocity and core businesses with the addition of solutions to the portfolio starting with DPM, coupled with the general strength of the existing portfolio.

More specifically, for fiscal '22, we expect ARR of 1.615 billion to 1.66 billion. That's a growth rate of 10 to 13% on a constant currency basis. Following four consecutive years of double-digit ARR growth. It's also worth mentioning that we expect continued churn improvement in fiscal 22 and are targeting another 100 basis points improvement.

From a linearity perspective, we would again expect flattish ARR growth throughout the year on a constant currency basis. So using the midpoint of guidance that would imply about 11.5% ARR growth each quarter. Obviously this can fluctuate given bookings, performance, start dates, et cetera. But we believe we provided for that within the range outlined.

The one thing worth pointing out is that ARR growth in Q1 of '22 are expected to be approximately 15% since Q1 '21 did not include ARR for Arena. In order to help with the modeling, we've provided historical constant currency performance in the data tables, on the website and I'll touch more on this in a little bit.

Turning to cash flow, we also continue to target approximately 25 to 30% annual free cash flow growth over the mid-term. For fiscal '22 specifically, we're guiding for free cash flow of approximately $400 million.

As a consequence of the restructuring, we're expecting cash outflows of approximately $50 million to $55 million with approximately 2/3 occurring in the first half and the majority of the remaining payments to be made in Q3.

Excluding restructuring, our expected free cash flow in fiscal '22 would be approximately $450 million, representing 25% growth compared to the $359 million we generated in fiscal '21 on the same basis.

Doing some directional math and using round numbers on the mid-term targets, this means we would expect free cash flow in the $550 million to $600 million range in fiscal '23 and would expect $700 million to $750 million of free cash flow in fiscal '24.

Regarding the linearity of free cash flow in fiscal 22, excluding restructuring, we expect to see a similar pattern as in fiscal 21 with more than 60% of free cash flow generation in the first half of the year. Collections are stronger in the first half and we expect expenses to increase as we. And hiring and our SaaS investments throughout the year.

As Jim discussed, the restructuring not only creates strategic improvements in how we're organized, but also enhances our profitability profile. So we believe we'll be able to deliver strong free cash flow growth even if we don't accelerate the ARR. Come back to this point on the next slide.

And finally turning to revenue guidance on for fiscal '22 we're expecting revenue of $1.85 billion to $1.98 billion, which corresponds to a growth rate of 2% to 9% on an as-reported basis or 4% to 11% on a constant currency basis.

ASC606 makes revenue fairly difficult to predict in the short term for on-premise subscription companies, hence the wide range. Note that revenue has no impact on ARR or free cash flow as we continue to primarily bill customers annually upfront.

And again, over the longer term, we expect recurring revenue growth to align with ARR growth, particularly as we transition the Company to SaaS and evolve towards increasingly ratable revenue recognition.

So moving onto Slide 25 using the same free cash flow model we showed earlier, this slide illustrates a directional view of what fiscal '22 could look like, assuming the approximate midpoint of our ARR guidance range. ARR here grows at approximately 11.5%. Cash generation is up $170 million.

We see continued growth and expenses but given the new operating model, as Jim pointed out earlier, our cash contribution margin expands almost 400 basis points. Said differently, the new operating model is expected to add more than a $120 million of cash contribution margin versus the 60 plus we add as last year on similar slightly less ARR growth.

On the expense front, as Jim mentioned, we're reducing spending in certain areas to fund investments to accelerate our SaaS transition. Additionally, there are some other items that will impact OpEx this year such as the accounting for commissions which is impacted by ASC606, increased travel merit, and so on.

So as far as the P&L is concerned, the net result is that we are guiding for fiscal 22 non-GAAP operating expense to grow by approximately 3% at the midpoint of guidance, which is certainly lower than the 50% of our targeted ARR growth for the year, even though we're significantly increasing our SaaS related spending.

On an organic basis, factoring in the Arena acquisition, which closed in Q2 of fiscal 21, we actually expect non-GAAP OpEx growth to be closer to 2% at the midpoint of our range. We also have a modest. $5 million uptick in CapEx this year.

Hawaii cash taxes remained approximately flat and we see some expansion in the other category which is really the restructuring charge and change in working capital as the business grows. Moving to Slide 26, as you know, we currently present our ARR and revenue in three product categories, core, FSG, and growth.

Going forward, as Jim explained, we'll have 2 business units, digital thread and velocity, so to align our reporting with how we look at the business, we'll be changing our ARR and revenue reporting buckets accordingly. Digital thread will consist of core FSG and also IoT and ARR from the current growth products.

And when we report Digital Thread going forward we'll provide forward -- we'll provide the detailed split one level below. On the slide, the categories in bold taxed on the left represent our current disclosure, the categories on the right in bold green text represent our go-forward disclosure.

And velocity will consist of Onshape and Arena from the current growth products. Slide 27 shows what the recast ARR data looks like. I won't spend a lot of time on this as we publish 3 years of historical ARR and revenue data in our new format within the financial data tables file on the IR website. There are a couple of points I would make.

First, please note that all of the historical constant-currency ARR figures have been calculated using our fiscal '22 plan FX rates.

Second, in addition to the digital thread and velocity recast, we did We did a small recast of a portion of our view for ARR business, which removes approximately $6 million of ARR in both fiscal 21 and fiscal '20 and $5 million in fiscal '19.

We made this change because we've come to realize there are certain buyers with marketing oriented use cases who purchased Vuforia engine for short-term promotions without a true intention to use it on a recurring basis. The bulk of the Vuforia Suite is unaffected and will continue to be sold on a recurring basis.

We adjusted the historical amounts to enable go-forward comparability. And then lastly, just in terms of expectations for fiscal 22, starting with the digital thread core, we are targeting fiscal 22 ARR growth of 10% to 12%. This is consistent with our historical performance for digital thread growth.

We are targeting fiscal 22 ARR growth accelerating back into the 20% plus range. For digital thread FSG, we target fiscal 22 ARR growth of approximately flattish, again, consistent with historical performance and expectations. So in total for digital thread, we're targeting ARR growth of 10% to 12%.

For velocity, we're targeting fiscal 22 ARR growth in the 20 plus percent range given the strength of both Arena and Onshape. Moving on to Slide 28 and to provide some additional context, the highlight of our guidance assumptions. They're all listed in our press release and I've covered a few of them already, so I won't cover them all here.

One point worth calling out is that we target to return approximately 50% of our cash flow to shareholders through share repurchases. In fiscal '22 we will also focus on delivering. Therefore, assuming $450 million of free cash flow, excluding restructuring, we would expect our buybacks to be about 25% of that amount with the rest going to delivering.

So wrapping up, we had strong financial performance in fiscal '21, delivered on 4 quarters of meeting our ARR and free cash flow guidance, and this was our fourth consecutive year of double-digit ARR growth, while maintaining discipline on the expense structure.

And most importantly, of course, we believe we're well-positioned to deliver on the midterm targets we provided at our Investor Day last November. We're unlocking a significant multiyear catalyst by accelerating our SaaS transition. And we're also optimizing how we go-to-market with our digital thread and velocity business units.

I'm encouraged by how PTC continues to rapidly evolve to meet the needs of our customers. Moving on to Slide 29, we look forward to discussing today's news during the Q&A session and follow-up calls. Also, we will host an investor meeting on December 15th to further discuss our strategy and targets. Please save that date on your calendars.

With that, I will turn the call over to the operator to begin Q&A..

Ladies and gentlemen, the floor is now open for your questions. We do ask that you please limit yourself to 1 question only. Your first question comes from Gal Munda of Berenberg..

Hi, thanks for taking my questions. The first 1 is just I'd like to understand a little bit around the dynamics around the ARR guide for next year. If you can help us unpack. The guidance is a little bit wider than we have this year to 13%.

What you're thinking behind, and what gets you to the higher end of the range versus the lower end of the range? Yeah..

Everyone, please standby. One moment. Please standby the conference will resume momentarily. Once again, please standby on the conference will resume momentarily. We will return to music hold until the call cameras are on. Thank you for your patience..

Thanks. It will still be step-by-step? Yeah. However, it will start sooner and the phases will be dramatically compressed, thanks to $45 million in new spending, which is a lot of new spending..

Thanks James. Thanks a lot..

Thank you..

Your next question comes from Matthew Broome of Mizuho Securities..

Hey Matt..

Hey guys. Just in terms of you mentioned that the $60 million of savings, now you're expecting to free up us as FY 2021. You did talk about saving money in your sales organization.

But there are other areas where you are planning to spend less and any of those areas and revenue generating activities, just trying to get a better understanding of where that $60 million is coming from..

Apologies, everyone. Please standby. Once again, we will be on music hold until the conference can resume. Thank you so much for your patience. We are back and your back on with Matthew Broome..

Matt great to be on with you. Can you please re-ask your question? Thank you..

Maybe we should go to the next question..

Okay. The next question comes from Ken Wong of Guggenheim Security Partners..

Thanks for taking my questions and to make you feel better, supposedly HubSpot ran into some issues at the beginning as well. So not to this [Indiscernible]..

Thanks. But no, it doesn't make us feel better..

I feel like someone in the [Indiscernible] that people forgot to make their picks for the question is now falling on me, this is great. So lots of moving pieces here.

I just wanted to touch on -- as far as the Cloud transition as you guys are changing tires while the car is still in motion, should we think about the near-term guidance, the outlook as maybe being a little more conservative? And then as you look longer-term, you start to feel more confident because like you said, there are more, I guess there's more optionality.

Is that the right way to think about how you're approaching the next few years? Or if I'm wrong there, please let me know if you guys have a different approach in terms of how we should be thinking about the numbers that you guys laid out..

Yeah. I mean, I think to a degree, right? For sure. I mean, setting aside and macro and the fact that we don't have a crystal ball there and everything like that. We're launching a major SaaS initiative, but don't have in our guide big assumptions it will hit this year. I think it will hit next year and hit even harder in the years that follow.

But we haven't planned a lot into this year. Partly because, again, we need to get this earnings call out there, we need to launch everything, we need to start the sales cycles, and then we need to close the orders.

And if you put 6 to 9 month sales cycles on things and we're not exactly sure how long it will take, but 6 to 9 months lands you in Q3 or Q4 already. And so we're just not sure. Then when the start dates might be and all that type of stuff.

So we're fairly conservative about the cloud impact to fiscal '22, but quite bullish about it to fiscal '23, '24, '25, and beyond. The other thing is as we've said, we're a little bit conservative, more so than in past years as it relates to Rockwell.

It could be wrong there, but we're just saying, let's not get ahead of ourselves in case they get distracted with this integration Plex. I don't think Rockwell thinks they'll get distracted, but again, we're just trying not to get out over [Indiscernible]..

And as far as all the sales motion that are going to change the 2 in the box, I guess have you had efficiently factored in potential disruption to this year as you guys worked through that or is it kind of these motions or just kind of typical PTC and you guys feel you can pivot on the fly here..

Yeah well, what's happening on the sales side of the two in the box is pretty typical stuff that happens every year and which is to say not that extreme. A few more resources here and shifting a little bit what are overlays and not overlays, things like that. That's pretty typical. And I don't see any unusual degree of risk there whatsoever.

What's happening on the other side is a little bit more dramatic, but frankly, most of that is what happens after the customer buys from us. And I actually think it's all good changes anyway.

So I don't see that disrupting sales, I see it actually making customers happy because they stop getting passed around from one person to another and having to re-explain who they are and all that kind of stuff. So I don't know. I don't think it's a high-risk change. Certainly, I don't see it that way. And we're eager to go execute it..

Got it. Great. Thank you, guys..

Your next question comes from Matthew Broome of Mizuho Securities..

Okay Matt, sorry, we didn't get to you last time around. We're going to try to disconnect halfway through your questions..

Nowhere to tell. My question was just about the $50 million in relative savings of FY21.

You did mention saving money in your sales organization, but in what other areas that you're spending less to free that money out? And is that likely to affect any sort of revenue generating activities?.

Yeah, no. Again I want to be clear it's not in sales. It's really in customer success, where we used to have many organizations that took turns talking to customer. They all had management change. They all had overlapping responsibilities, etc. So the place we've taken the most money out of would be in customer success.

The stuff that happens after the customer buys. And we're doing that not by just reducing capability, but by simply implementing a much more efficient model with many less silos, much less management involved, and so forth. So that's all, goodness. There are other places we'll have efficiencies. Let me give you an example.

If you belong to a field organization working technical support, your mission is to make the customer happy even if it means solving the same problem dozens or hundreds of times quickly.

If you're part of the product organization, your goal is to go back and talk to the product guys and tell them, make this product go away in the SaaS offering quickly, so that no other customers are even aware that it ever did exist. You can see those real efficiencies in terms of how you solve customer problems.

Are you trying to make them happy while they have the problem? And repeat that hundreds of thousands of times or are you trying to make the problem go away so that the rest of the customers never knew it happened? Just to summarize. These are great efficiencies that we're going to go pursue..

Now that makes a lot of sense.

If I could also just ask just given the [Indiscernible] how the unfavorable change in relationships with the channel and does it change that rolling in anyway?.

Yeah, I think if you look at the different classes of partners, it affects them differently. Let's start with Microsoft elated about this as you might expect, because it will bring a lot of business their way.

If you look at Rockwell, Rockwell too is leaning into SaaS, and frankly, all of our SaaS products are easier for Rockwell to digest and to deliver onto their customers then would be the on-premise variance. So I think Rockwell quite likes the strategy and maybe some of their own thinking about SaaS was born in our boardroom i don't know.

You'd have to ask Blake that, but I might speculate..

And then I think if you look at our resellers, it'll change their world a little bit, they still need to go sell the software. They won't be as evolved in delivering it, but then they are very much involved in the implementation of it at the customer side.

So I don't want you to think as it relates to resellers or SIs that SaaS companies don't have SI partners. My God, Salesforce has a massive SI ecosystem. They just don't install software and perform upgrades at the customer site. They do system integration, they do adoption, and they do business process transformation.

They do all that stuff which still has to happen. So that's kind of long term. I think SIs have to take the posture they have relative to Salesforce and all those other SaaS companies, which will help them through and the bigger ones like Accenture already know that play.

And then for the smaller resellers, the other thing worth noting is that most of our resellers sell Creo and Kepler. And those products are further out on the SaaS road map anyway, so that will be several years down the road before we even really come to that bridge..

Right. Thanks, Jim..

Your next question comes from Jason Celino at KeyBanc Capital Markets..

Hi Jason..

Hi Jason..

Hi guys. Thanks for fitting me in. A little deja vu here with the transition, but maybe sell the subscription transition on the pricing change. With that transition will be a deployment change.

When we think about the Cloud opportunity for PLM, when we think about the sources of possible acceleration, will it be more of a share gain type story or a pricing uplift from the lift and shift?.

Yes. I think it will be both, but let me first redefine pricing up lift so we don't confuse anybody. We will deliver more value to the customer and they will pay us more for that value while saving money on their side, above and beyond. So is that a pricing increase? I don't know. It's a value increase.

And that could drive a tremendous amount of business. Creo and Windchill are a billion-dollars and you could double $750 million of that over a decade with that $750 million of more value delivered to the customer base and monetize.

However, what we're seeing with Arena and to a degree with Windchill is we have the cloudiest sassiest solutions in the market and that does help take share. Every piece of business that Arena is winning. They're taken from somebody else or it's a start-up Company that they're winning on somebody else's expense.

And Arena is a fastest growing P1 solution in the market right now. So I do think it's both, and you know exactly what the balance would be, I don't know. I do think monetizing the customer base by delivering more value is a high probability and it will drive a lot of growth by itself..

Excellent. Thank you..

Welcome..

The next question comes from Joe Vruwink of Baird..

Hey Joe..

Hi. Great. Hi everyone. Just focus on new Digital Thread Business Unit. It maybe seems like there is rising interest in both platform deals. I just think about the way Rockwell expanded, the scope of the partnership so with more products or even both.

I think when they were talking about the big CAD PLM deal, they spoke about this better pairing with existing IoT they have set up in their clients.

So I'm just wondering, A, am I characterizing the demand environment correctly and then B, does the new business unit actually allow you to maybe better execute time cross-sold, done house than the case?.

Yeah well, let me hit the second question first. The new business unit is fundamentally formed to help us better execute on cross sells, because we do see that platform deal structure happening more and more.

The example you gave with Global, I could repeat a dozen more examples of that, of customers who started with 1 product and pretty soon they have 2 and then 3 and they're trying off the fourth one and so forth. And we think that our products Creo, Windchill ThingWorx, Vuforia work beautifully together.

Like voices in a choir, they make beautiful music together.

And rather than selling these things separately, yes, we can use them all as entry points, but let's pursue entry points that then can be up-sold and cross-sold, And so, I think Troy Richardson was one of the first people to ask, why don't you guys configure differently -- us guys now that he's here, but why don't we configured differently and go pursue this harder, this cross-sell motion, so that's exactly what we're doing is that's a little bit how the name digital thread came to be..

Great thank you very much..

Your next question comes from Tyler Radke of Citi..

Hey, Taylor..

Hey, good evening. I wanted to ask you a little bit more about the TLM SaaS transition. It sounds like that's starting now, so assume that in some ways that products already obviously, it's probably going to get better over time.

But how are you thinking about pricing as a lever to push customers towards that? Whether it'd be price increases on the on-time side or maybe initial discounts to get early customers over to the SaaS offering..

Yes. Well, let me comment on the first part of your question and then the second part. So again, we've been on boarding customers' SaaS for a while with PLM. And think of it that they're coming in at one margin and what our goal is to make improvements behind the scenes that take them to another margin even at the same cost to the customer.

So whether it's single-tenant, multi-tenant, if you're the customer on the customer end, you don't even know. But we on the PTC end, we see the efficiencies we're gaining or not gaining, we do know.

And so a lot of our investment is aimed at making the product more efficient for PTC to deliver, as opposed to different from the usage end at the customer side. Now that said, if you look what we did with the subscription program, we pulled every lever we could come up with.

Do you remember that program when we used to talk about it, we used to say, and I don't know Kristian. Kristian actually was the program executive. We had 28 work-streams and 300 people working on it. We changed pricing and packaging to favor subscription over at the time perpetual. We paid more commission on a perpetual deal.

We had certain offerings they were only -- I'm sorry we paid more commission I said that wrong on a subscription deal. We had certain offerings that were only available, attractive sexy offerings including the answer stuff by the way, there was only available subscription.

So we basically stack the deck in every customer conversation in a way that everybody wanted it to go subscription. We got the band back together, we're putting the same program together, and we’ll stack the deck again in favor of SaaS this time..

Thank you..

Your Next question comes from Adam Borg of Stifel..

Hello, Adam..

Thanks so much for taking the question. Just real quickly on IoT, I think you mentioned during the prepared remarks that it was slightly below our expectations in the quarter. So maybe to talk a little bit more about what led to that. And the confidence you have in that improving in fiscal '22, maybe even in the context of DPM. Thanks so much..

Yes. So first Adam, let's be clear. Exactly what I said. Bookings in the quarter were very strong. However, much of the bookings in a Q4 does not land in the ARR in the Q4, it's back to that start base discussion. What I said is that ARR was less than we wanted it to be. It was mid-teens and frankly, we've said we wanted to have a 2 handle.

Now, bookings in every quarter of fiscal '21 were higher than the previous year quarter in fiscal '20. So there is some bookings momentum happening. And then another thing is we launched this DPM solution that frankly we've been working for 2 years. It's a major piece of software that we launched in, already has quite some customer interest.

So we feel like the combination of the bookings momentum we have including and especially in Q4 and then the launch of DPM and the trends we're seeing. They bode well for what should happen next year..

Great, thanks so much..

Hi, Operator. I think we have time for maybe one more question..

Certainly. Your final question comes from Blair Abernethy of Rosenblatt Securities..

Hey, Blair..

Hey, Blair..

Hey guys. Thanks for taking the time. Just two quick things. First on the DPM, Jim, what's sort of the -- is there a shift in the go-to-market with this solution of R and are their more solutions coming this year, next year in behind us..

Yeah, I think what she should I think first of all, is it DPM, will become a category of solutions. And what we're launching first is DPM for factory. Digital performance management of what happens in a factory. There will be solutions that are more focused on digital performance management of a fleet of products out in the field at customer sites.

But fundamentally what we are trying to do is move from selling a toolkit where the customer does the solutioning themselves to selling a turnkey solution with a very strong value proposition, sold to executives not to developers, sold on the basis of the business value it will generate, and then implemented quickly in the production.

So yeah, it's a very different sales motion. I mean, number one, we're selling to executives not selling to developers. Number 2, we're selling business value, not speeds and feeds, technical stuff. And I think it's really where we wanted to take this business for a while. So I'm very pleased with the solution.

It took us a while to develop it, as I said, but it's a powerful piece of software and it really gives us a new platform to build on going forward with IoT. It makes IoT f I could, a lot like how we sell PLM. We sell PLM to executives based on business value.

We were selling IoT to developers as a toolkit, and now we'll sell PLM and DPM as business value to executives. Different executives mind you but executives. Great. Thank you. Well, Operator maybe I'll just take it from here. First again my apologies. This is like the strangest earnings call I've had again, and it's the 44th one as CEO.

So it's a bit odd, but nonetheless, I think we got a lot of good information out there and you guys had some great questions and I appreciate it. So in closing, I mean, we're in a great place. I really like PTC setup going forward. The changes we announced are good for growth, they're good for profitability.

They're going to put us in a stronger position to hit both the top-line and bottom-line targets that we have out there. So we're looking forward to continuing a discussion with you on follow-up calls at investor conferences.

I'm going to be at the Berenberg Conference, at least virtually next week or I guess it's 2 weeks out maybe, it’s No, it's next week. And we look forward to seeing you at our investor meeting on December 15th. So thanks, everybody, and have a good evening..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's call. You may now disconnect..