PTC to Acquire SaaS PLM Leader Arena Solutions

Combination of Onshape and Arena to Enable PTC to Deliver Complete CAD + PLM SaaS Solution

PTC Reaffirms Cash Flow Targets for FY'21

BOSTON,Dec. 14,2020 --PTC(NASDAQ: PTC) today announced that it has signed a definitive agreement to acquire Arena Solutions,Inc. (Arena Solutions) the industry's leading "software as a service" (SaaS) product lifecycle management (PLM) platform provider. The acquisition will further PTC's strategy to be the leader in the rapidly-growing market for SaaS-based product development software,enabling the company to deliver a complete CAD+ PLMSaaS solution. Under the terms of the agreement,PTC will acquire Arena Solutions for $715 million in cash. Subject to customary closing conditions and completion of regulatory review,the acquisition is expected to be completed in PTC's fiscal Q2 2021.

PTC has signed a definitive agreement to acquire Arena Solutions,the industry’s leading SaaS PLM platform provider.

"A year ago,PTC entered the SaaS world for product development software with our acquisition of Onshape," said Jim Heppelmann,president and CEO,PTC. "That move reflected our strong conviction that our market is nearing a tipping point in its willingness to adopt SaaS technology,following the trend seen in many other software markets. The effects of COVID-19 have dramatically accelerated this inevitable shift,with PTC customer surveys indicating a 25% increase in readiness for SaaS PLM since the pandemic started. We expect the acquisition of Arena will significantly extend our leadership position as we continue to redefine the future of our industry."

With headquarters in Foster City,California,Arena Solutions serves more than 1,200 customers across the electronics,high-tech,and medical-device industries,including world-class innovators such as Nutanix,Peloton,Sonos and Square. In addition,Arena will broadly extend PTC's presence in the attractive mid-market,where SaaS solutions are becoming the standard.

"As the SaaS PLM pioneer,we were first to see that engineers and product developers would benefit from a new paradigm in the way they collaborate and drive product innovation," said Craig Livingston,Arena Solutions president and CEO. "We were ahead of the market in the early days,but in the past several years we've seen an acceleration of market receptivity and demand. This acquisition validates our original vision,and we are pleased to be joining an established leader in CAD and PLM capable of hastening the movement of our market to SaaS."

The Arena Solutions product realization platform unifies PLM,quality management,and requirements management,allowing every participant throughout the product design and manufacturing process – as well as across an extended supply chain – to work together in a secure,high availability cloud environment.

"This acquisition is the logical next step in PTC's strategy to be the industrial SaaS leader," continued Heppelmann. "A big first step was the acquisition of Onshape,the SaaS leader in CAD and collaborative design capabilities. Arena will enable us to round out the solution with full PLM capabilities and deliver the only complete CAD + PLM SaaS solution in the industry."

Financial Impact

Arena Solutions is expected to end calendar year 2020 with approximately $50 million in annualized recurring revenue,reflecting double-digit growth over 2019. The transaction is expected to be neutral to PTC's FY'21 cash flow from operations target of $365 million and 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 FY'22 and beyond. The transaction will be funded with cash on-hand and amounts borrowed under PTC's existing credit facility.

PTC management will provide additional details about the transaction at its Investor Day virtual meeting scheduled for Tuesday,December 15.

Advisors

Centerview Partners LLC is the exclusive financial advisor to PTC and Morgan,Lewis & Bockius LLP is acting as its legal counsel. Barclays is the exclusive financial advisor to Arena and JMI Equity,and Goodwin Procter is acting as their legal counsel.

Additional Resources

Arena SolutionsAcquisition Landing Page

Arena SolutionsAcquisition FAQ

SaaS Landing Page

Onshape Acquisition Press Release

Forward-Looking Statements

This news release contains statements about future events and expectations,including the closing of the acquisition,the effect of the acquisition on our future growth and financial results,including our cash flow from operations and free cash flow,the expected value of the acquired technology to our business,and market adoption of industrial SaaS solutions. These statements are "forward-looking statements" that involve risks and uncertainties that could cause actual results to differ materially from those projected,including that the closing conditions may not be satisfied when or as we expect or may be waived; the acquired 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; 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; customers may not adopt SaaS solutions for product development as we expect,which would adversely affect our revenue; 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 would impact our earnings and free cash flow; and other risks and uncertainties described in PTC's filings with U.S. Securities and Exchange Commission.

About PTC (NASDAQ: PTC)

PTC enables global manufacturers to realize double-digit impact with software solutions that enable them to accelerate product and service innovation,improve operational efficiency,and increase workforce productivity. In combination with an extensive partner network,PTC provides customers flexibility in how its technology can be deployed to drive digital transformation – on premises,in the cloud,or via its pure SaaS platform. At PTC,we don't just imagine a better world,we enable it.

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