PTC (PTC) 10-K risk factor changes: FY2024 vs FY2023

Malicious code, viruses or vulnerabilities that are undetected by [added: us or] our service providers may disrupt our business operations generally and may have a disproportionate effect on those of our products that are developed and delivered in the cloud environment.

Our success depends upon our ability to attract and retain highly skilled employees to develop [added: and sell] our products and solutions and to operate and grow our business.

If we are unable to attract and retain employees with the requisite skills to develop [added: and sell] our products and solutions, or to guide, operate and support our business, we may be unable to compete successfully, which would adversely affect our business, financial condition, results of operations, and prospects.

Manufacturers worldwide continue to face uncertainty about the global macroeconomic environment due to, among other factors, the effects of earlier and ongoing supply chain disruptions, [removed: rising] [added: high] interest rates and inflation, volatile foreign exchange rates and the current relative strength of the U.S. Dollar, and the U.S. government’s focus on technology transactions with non-U.S. entities.

Whether we will be successful and will accomplish our business and financial objectives is subject to risks and uncertainties, including but not limited to: [removed: customer demand, attach and renewal rates, channel adoption,] our ability to further develop and scale infrastructure, our ability to include functionality and usability in such offerings that address customer requirements, our ability and the ability of our partners to transition existing customer implementations [removed: and subscriptions] to SaaS, [added: customer demand, attach] and [added: renewal rates, channel adoption, and] our costs.

Accordingly, while we strive to maintain a comprehensive compliance program, an employee, agent or business partner may violate our policies or U.S. or other applicable [removed: laws] [added: laws, as has occurred in the past,] or we may inadvertently violate such laws.

Risks Related to [removed: Acquisitions and Strategic Relationships][added: Acquisitions]

We have many [removed: strategic] [added: strategic, technology,] and [removed: technology] [added: software partner and system integrator] relationships with other companies [removed: with which] [added: that provide technologies and software that] we [added: embed in our solutions, that provide implementation services to our customers, that we] work [added: with] to offer complementary solutions and services, [added: and] that market and sell our [removed: solutions, and that provide technologies that we embed in our] solutions.

If these companies fail to perform [added: as we expect,] or if a company terminates or substantially alters the terms of the relationship, we could [removed: suffer] [added: experience] delays in product development, reduced [removed: sales] or [removed: other operational difficulties] [added: delayed sales, customer dissatisfaction,] and [added: additional expenses, and] our business, financial condition, results of operations, and prospects could be materially adversely affected.

As of November [removed: 17, 2023,] [added: 14, 2024,] our total debt outstanding was approximately [removed: $2,307 million and €85] [added: $1,668] million, $1 billion of which was associated with the 3.625% Senior Notes and 4.000% Senior Notes (together, “Senior Notes”) issued in February 2020, which mature in February 2025 and 2028, respectively, and are unsecured; [removed: $807 million and €85] [added: $177] million of which was borrowed under our credit facility revolving line, which matures in January 2028; and [removed: $500] [added: $491] million of which was borrowed under our credit facility term [removed: loan, which begins] [added: loan \[which began] amortizing in March [removed: 2024.][added: 2024\].]

As of November [removed: 17, 2023,] [added: 14, 2024,] we had unused commitments under our credit facility of approximately [removed: $350] [added: $1,073] million.

Despite our current level of indebtedness, we and our subsidiaries [removed: may still be able to] [added: might] incur substantially more debt and other obligations.

We and our subsidiaries [removed: may be able to] [added: might] incur significant additional indebtedness and other obligations in the future, including secured debt.

[removed: If new] debt is added to our current debt levels, or we incur other obligations, the related risks that we now face could [removed: intensify.][added: increase.]

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity [removed: capital] [added: capital,] or restructure or refinance our indebtedness.

Our quarterly operating results fluctuate depending on many factors, including the effect of ASC 606 on revenue recognition for the on-premises software subscriptions we offer, variability in the timing of start dates for our subscription [removed: and SaaS] offerings, length of contracts, and renewals, and significant unexpected expenses in a quarter.

Accordingly, our quarterly results are difficult to predict and we may [added: be unable to confirm or adjust expectations with respect to our operating results for a quarter until that quarter has closed.]

Because we transact business in various foreign currencies, the volatility of foreign exchange rates has had and may in the future have a material adverse effect on our revenue, [removed: expenses] [added: expenses, cash flows] and operating results.

Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes could be different from what is reflected in our [removed: historical] [added: reported] income tax provisions and accruals.

[Table of Contents](#toc_page)

We have a large ecosystem of strategic, technology, and software partners and system integrators that enable us to enhance our products and offerings, expand our market reach, and accelerate our customers’ digital transformation journeys.

Failures by those partners or termination of those relationships could adversely affect our business, financial condition, operating results, and prospects.

[Table of Contents](#toc_page)

Competition for such employees in our industry is intense worldwide.

[Table of Contents](#toc_page)

We and our customers are subject to an increasing number of laws and regulations related to sustainability matters, compliance with which could adversely affect our business, financial condition, results of operations, and prospects.

We are subject to an increasing number of laws and regulations promulgated by multiple countries and jurisdictions that require new and expansive disclosure on sustainability topics and, in some cases, remediation of adverse effects, that will increase our compliance costs and expose us to risks associated with regulatory compliance.

These laws and regulations include those promulgated pursuant to the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) and its Corporate Sustainability Due Diligence Directive (“CSDDD”).

CSRD requires new and expansive disclosures related to sustainability risks and opportunities.

CSDDD will require us to conduct due diligence to identify, prevent, mitigate, and account for actual and potential adverse impacts on human rights and the environment arising from our own operations and our value chains and to remediate any such adverse impacts.

Compliance with these directives requires significant investment in resources, including the implementation of new reporting systems, data collection processes, and due diligence procedures.

As many of our customers and potential customers, particularly those in Germany and elsewhere in the European Union, are also subject to such laws and directives, those companies will increasingly be required to assess our sustainability efforts and impacts; if we are unable to satisfactorily address their requests for information or other sustainability related requests, contracting periods with those companies may be extended or those companies may elect to use other suppliers or switch suppliers, which could adversely affect our business, financial condition, results of operations, and prospects.

The regulatory landscape for sustainability continues to evolve and expand and the introduction of additional laws or regulatory requirements may impose further compliance burdens and further increase our compliance costs.

We are committed to meeting existing and future regulatory requirements; however, the financial and operational impact of current and future laws and regulations remains uncertain and could materially adversely affect our business, financial condition, results of operations and prospects.

Increased scrutiny and expectations around environmental, social, and governance (“ESG”) matters may require us to incur additional costs or otherwise adversely impact our reputation, business, and prospects.

Our stakeholders, including investors, customers, suppliers, and employees, are placing greater emphasis on our ESG performance and transparency.

This increasing stakeholder attention to and expectations around ESG matters, particularly sustainability matters, and our response to the same, may result in higher costs (including higher costs related to compliance, stakeholder engagement, and contracting), adversely impact our reputation, or otherwise negatively affect our business performance and prospects.

Our statements about our sustainability, environmental and human capital initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change.

If our related data, processing and reporting are incomplete or otherwise inaccurate, or if we fail to achieve progress on our stated targets or initiatives when or as expected, our business, financial condition, operating results, and prospects could be adversely affected.

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

If new

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

Competition for such employees in our industry is intense worldwide, and particularly in the Boston, Massachusetts area where our global headquarters is located.

Our inability to maintain or develop our strategic and technology relationships could adversely affect our business and prospects.

We may not realize the expected benefits from these

relationships and such relationships may be terminated by the other party.

be unable to confirm or adjust expectations with respect to our operating results for a quarter until that quarter has closed.

Our cash flow growth is attributable to [removed: strong collections driven by our] solid top-line growth [removed: from] [added: due to] our subscription business model and operational discipline.

We ended [removed: FY’23] [added: FY’24] with cash and cash equivalents of [removed: $288] [added: $266] million and gross debt of [removed: $1.70] [added: $1.75] billion, [removed: with] [added: which debt carried] an aggregate weighted average interest rate of [removed: 5.2%.][added: 5.1%.]

[removed: The] [added: Under ASC 606, the] timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue and growth rates.

For discussion of our [removed: FY'22] [added: FY'23] results and comparison to our [removed: FY'21] [added: FY'22] results, refer to *Management's Discussion and Analysis of Financial Conditions and Results of Operations* in our Annual Report on Form 10-K for the year ended September 30, [removed: 2022.][added: 2023.]

| | | [removed: 2023] [added: 2024] | | | | [removed: 2022] [added: 2023] | | | | Actual | | | | Constant Currency(1) | | |

| ARR [removed: as of September 30] | | $ | [removed: 1,978.6] [added: 2,254.7] | | | $ | [removed: 1,572.0] [added: 1,978.6] | | | | [removed: 26] [added: 14] | % | | | [removed: 23] [added: 12] | % |

| Total recurring revenue(2) | | $ | [removed: 1,907.9] [added: 2,134.0] | | | $ | [removed: 1,736.2] [added: 1,907.9] | | | | [removed: 10] [added: 12] | % | | | [removed: 13] [added: 12] | % |

| Perpetual license | | | [removed: 38.6] [added: 32.2] | | | | [removed: 34.1] [added: 38.6] | | | | [removed: 13] [added: (17] | [removed: %] [added: )%] | | | [removed: 17] [added: (16] | [removed: %] [added: )%] |

| Professional services | | | [removed: 150.5] [added: 132.2] | | | | [removed: 163.1] [added: 150.5] | | | | [removed: (8] [added: (12] | )% | | | [removed: (5] [added: (12] | )% |

| Total revenue | | | [removed: 2,097.1] [added: 2,298.5] | | | | [removed: 1,933.3] [added: 2,097.1] | | | | [removed: 8] [added: 10] | % | | | [removed: 12] [added: 9] | % |

| Total cost of revenue | | | [removed: 441.0] [added: 444.8] | | | | [removed: 386.0] [added: 441.0] | | | | [removed: 14] [added: 1] | % | | | [removed: 16] [added: 1] | % |

| Gross margin | | | [removed: 1,656.0] [added: 1,853.7] | | | | [removed: 1,547.4] [added: 1,656.0] | | | | [removed: 7] [added: 12] | % | | | [removed: 11] [added: 12] | % |

| Operating expenses | | | [removed: 1,197.6] [added: 1,265.6] | | | | [removed: 1,100.0] [added: 1,197.6] | | | | [removed: 9] [added: 6] | % | | | [removed: 11] [added: 6] | % |

| Operating income | | $ | [removed: 458.5] [added: 588.1] | | | $ | [removed: 447.4] [added: 458.5] | | | | [removed: 2] [added: 28] | % | | | [removed: 10] [added: 27] | % |

| Non-GAAP operating income(1) | | $ | [removed: 758.9] [added: 894.3] | | | $ | [removed: 732.2] [added: 758.9] | | | | [removed: 4] [added: 18] | % | | | [removed: 8] [added: 17] | % |

| Operating margin | | | [removed: 21.9] [added: 25.6] | % | | | [removed: 23.1] [added: 21.9] | % | | | | | | | | |

| Non-GAAP operating margin(1) | | | [removed: 36.2] [added: 38.9] | % | | | [removed: 37.9] [added: 36.2] | % | | | | | | | | |

| Diluted earnings per share | | $ | [removed: 2.06] [added: 3.12] | | | $ | [removed: 2.65] [added: 2.06] | | | | | | | | | |

| Non-GAAP diluted earnings per share(1) | | $ | [removed: 4.34] [added: 5.08] | | | $ | [removed: 4.58] [added: 4.34] | | | | | | | | | |

| Free cash flow | | $ | [removed: 587.0] [added: 735.6] | | | $ | [removed: 415.8] [added: 587.0] | | | | | | | | | |

See *Non-GAAP Financial Measures* below for a reconciliation of our GAAP results to our non-GAAP [added: financial] measures and *Impact of Foreign Currency Exchange on Results of Operations* below for a description of how we calculate our results on a constant currency basis.

Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and [removed: cloud] [added: hosting services] revenue.

Changes in foreign currency exchange rates were a [removed: headwind] [added: slight tailwind] to reported income statement results in [removed: FY’23.][added: FY’24.]

[removed: However,] ARR was positively impacted by improvements in currency exchange rates, particularly the Euro to U.S. Dollar exchange rate, as of September 30, [removed: 2023] [added: 2024] compared to September 30, [removed: 2022.][added: 2023.]

Our constant currency disclosures are calculated by multiplying the results in local currency for [removed: FY'23] [added: FY'24] and [removed: FY'22] [added: FY'23] by the exchange rates in effect on September 30, [removed: 2022.][added: 2023.]

If [removed: FY'23] [added: FY'24] reported results were converted into U.S. Dollars using the rates in effect as of September 30, [removed: 2022,] [added: 2023,] ARR would have been lower by [removed: $38] [added: $47] million, revenue would have been lower by [removed: $59] [added: $22] million, and expenses would have been lower by [removed: $26] [added: $10] million.

If [removed: FY'22] [added: FY'23] reported results were converted into U.S. Dollars using the rates in effect as of September 30, [removed: 2022,] [added: 2023,] ARR would have been the same, revenue would have been lower by [removed: $112] [added: $17] million, and expenses would have been lower by [removed: $50] [added: $12] million.

We continue to convert existing [removed: perpetual] support contracts to on-premises subscriptions, resulting in a shift to up-front recognition of on-premises subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract.

We expect that over time a higher portion of our revenue will be recognized ratably as we [removed: continue to] expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS.

| | | [removed: 2023] [added: 2024] | | | | [removed: 2022] [added: 2023] | | | | Actual | | | | Constant Currency | | |

| License(1) | | $ | [removed: 747.0] [added: 806.9] | | | $ | [removed: 782.7] [added: 747.0] | | | | [removed: (5] [added: 8] | [removed: )%] [added: %] | | | [removed: (1] [added: 8] | [removed: )%] [added: %] |

| Support and cloud services(2) | | | [removed: 1,199.5] [added: 1,359.4] | | | | [removed: 987.6] [added: 1,199.5] | | | | [removed: 21] [added: 13] | % | | | [removed: 25] [added: 13] | % |

| [removed: Total software] [added: Software] revenue | | | [removed: 1,946.6] [added: 2,166.2] | | | | [removed: 1,770.3] [added: 1,946.6] | | | | [removed: 10] [added: 11] | % | | | [removed: 13] [added: 11] | % |

| Total revenue | | $ | [removed: 2,097.1] [added: 2,298.5] | | | $ | [removed: 1,933.3] [added: 2,097.1] | | | | [removed: 8] [added: 10] | % | | | [removed: 12] [added: 9] | % |

Includes support on perpetual licenses, the support portion of on-premises subscription sales, SaaS, and [removed: cloud] [added: hosting] services.

Professional services revenue decreased in [removed: FY'23] [added: FY'24] as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services [removed: ourselves, including the Q3'22 sale of a portion of our PLM services business to ITC Infotech (which branded the business DxP Services).][added: ourselves.]

| Software revenue | | $ | [removed: 1,946.6] [added: 2,166.2] | | | $ | [removed: 1,770.3] [added: 1,946.6] | | | | [removed: 10] [added: 11] | % | | | [removed: 13] [added: 11] | % |

PLM software revenue growth in [removed: FY'23 benefited from contributions] [added: FY'24 was driven by growth in Europe and the contribution] from ServiceMax [removed: and Codebeamer.][added: (acquired in early Q2'23).]

[removed: CAD ARR] [added: Revenue] grew [removed: 12% (10%] [added: 10% (9%] constant currency) in [removed: FY'23] [added: FY'24] compared to [removed: FY'22, driven by Creo.][added: FY'23.]

| | | [removed: 2023] [added: 2024] | | | | [removed: 2022] [added: 2023] | | | | Percent Change | | |

Despite the overall demand environment, which has been challenging for many quarters now, ARR grew 14% (12% constant currency) to $2.25 billion as of the end of FY'24 compared to FY’23.

Cash provided by operating activities grew 23% to $750 million in FY'24 compared to FY'23.

Free cash flow grew 25% to $736 million in FY'24 compared to FY'23.

Our acquisition of ServiceMax in early Q2'23 contributed to FY'24 revenue growth.

[Table of Contents](#toc_page)

| Cash provided by operating activities | | $ | 750.0 | | | $ | 610.9 | | | | | | | | | |

| Capital expenditures | | | (14.4 | ) | | | (23.8 | ) | | | | | | | | |

[Table of Contents](#toc_page)

| Professional services | | | 132.2 | | | | 150.5 | | | | (12 | )% | | | (12 | )% |

Software revenue growth in FY'24 was driven by PLM, which included the contribution from ServiceMax (acquired in early Q2'23), and CAD.

License revenue growth in FY'24 was mainly driven by CAD and PLM growth in Europe and Asia Pacific, offset by lower license revenue in the Americas, particularly in PLM.

A higher proportion of sales in FY'24 were SaaS, which adversely affected license revenue growth in the Americas and Europe.

Support and cloud services revenue growth in FY'24 was mainly driven by PLM (which included contribution from ServiceMax) in the Americas and Europe.

[Table of Contents](#toc_page)

| | | 2024 | | | | 2023 | | | | Actual | | | | Constant Currency | | |

| PLM | | $ | 1,333.4 | | | $ | 1,186.0 | | | | 12 | % | | | 12 | % |

| CAD | | | 832.8 | | | | 760.6 | | | | 9 | % | | | 10 | % |

Year-over-year PLM software revenue growth for FY'24 excluding Q1'24 ServiceMax revenue would have been 9% (9% constant currency).

PLM ARR grew 15% (13% constant currency) from September 30, 2023 to September 30, 2024.

CAD software revenue growth in FY'24 was primarily driven by revenue growth in Europe and Asia Pacific.

CAD ARR grew 13% (10% constant currency) from September 30, 2023 to September 30, 2024.

Excluding intangible amortization expense, license gross margin percentage was consistent year over year.

Support and cloud services gross margin growth in FY'24 was in line with support and cloud services revenue growth.

Cost of support and cloud services in FY'24 grew at a similar rate to revenue, driven by higher intangible amortization expense, compensation expense, and royalty expense.

[Table of Contents](#toc_page)

| | | 2024 | | | | 2023 | | | | Percent Change | | |

Total headcount increased by 4% between September 30, 2023 and September 30, 2024.

a $16 million increase in stock-based compensation expense, driven in part by acceleration of expense on equity grants held by our former chief executive and chief operating officers (which expense is included in General and administrative and Sales and marketing), as well as the impact of an FY'24 change in eligibility for continued vesting upon retirement for a subset of prospective equity grants;

a $14 million increase in outside services, driven by consulting services related to corporate initiatives; and

a $10 million increase in software subscription related costs;

a $16 million decrease in acquisition and transaction-related costs, largely driven by costs associated with our Q2'23 acquisition of ServiceMax; and

[Table of Contents](#toc_page)

| | | 2024 | | | | 2023 | | | | Percent Change | | |

| Interest expense | | $ | (119.7 | ) | | $ | (129.4 | ) | | | (8 | )% |

Interest expense in FY'23 also included $30 million of interest on a deferred acquisition payment associated with the ServiceMax acquisition.

The decrease in interest expense was driven by the lower aggregate average of debt and deferred acquisition payment liability balances outstanding in FY'24 compared to FY'23.

| | | 2024 | | | | 2023 | | | | Percent Change | | |

Other income, net was lower in FY'24 compared to FY'23 due to a $2.0 million impairment loss related to an available-for-sale debt security.

| | | 2024 | | | | 2023 | | | | Percent Change | | |

The effective tax rate for FY’24 was lower than the effective rate for FY’23.

ARR grew 26% (23% constant currency) to $1.98 billion as of the end of FY'23 compared to FY’22.

Organic ARR, which excludes contributions from the ServiceMax business we acquired in Q2'23, grew 15% (13% constant currency) year over year to $1.81 billion.

Organic ARR growth was driven by double-digit growth across all product groups and geographies.

We generated $611 million of cash from operations in FY’23 compared to $435 million in FY’22, an increase of 40%.

Free cash flow of $587 million in FY'23 increased 41% from $416 million in FY'22.

Interest payments were $41 million higher in FY'23 compared to FY'22, while restructuring payments decreased $39 million year-over-year.

Revenue growth of 8% (12% constant currency) in FY'23 compared to FY'22 was primarily due to the contributions from ServiceMax and Codebeamer.

Interest expense was $75 million higher in FY'23 compared to FY'22, which adversely affected our net income and earnings per share results.

The increase was driven by debt and liabilities related to the ServiceMax acquisition.

| Cash flow from operations(3) | | $ | 610.9 | | | $ | 435.3 | | | | | | | | | |

| Capital expenditure | | | (23.8 | ) | | | (19.5 | ) | | | | | | | | |

(3)

Cash flow from operations for FY'23 and FY'22 includes $1.5 million and $40.8 million of restructuring payments, respectively.

Cash from operations for FY'23 and FY'22 includes $19.6 million and $11.8 million of acquisition and transaction-related payments, respectively.

Software revenue in FY'23 benefited from contributions from ServiceMax, acquired early in Q2'23, and Codebeamer, acquired in Q3'22.

Changes in foreign currency exchange rates were a headwind to year-over-year revenue growth.

Within software revenue, license revenue is impacted by the quantity and size of expiring and renewing multi-year on-premises subscription contracts, along with the duration of those contracts that start in the period.

In FY'23, the weighted-average duration of contracts starting in the year decreased compared to FY'22 primarily due to a few high-value renewal contracts in FY'22 that had longer than typical durations.

Because longer duration contracts typically have a higher total contract value, which drives the amount of upfront license revenue recognized for on-premises contracts, this year-over-year duration decrease represented a headwind to license revenue growth in FY'23.

Changes in foreign currency exchange rates also contributed to the year-over-year revenue decline.

These decreases were partially offset by ServiceMax professional services revenue.

Our expectation is that professional services revenue will continue to trend down over time as we execute on our partner strategy and deliver products that require less consulting and training services.

| Product lifecycle management (PLM) | | $ | 1,186.0 | | | $ | 980.5 | | | | 21 | % | | | 24 | % |

| Computer-aided design (CAD) | | | 760.6 | | | | 789.8 | | | | (4 | )% | | | 0 | % |

Excluding contributions from ServiceMax and Codebeamer, constant currency revenue growth was driven by Windchill and IIoT in the Americas.

PLM ARR grew 36% (34% constant currency) from Q4’22 to Q4'23, driven by ServiceMax, which contributed $171 million of ARR; Windchill; IIoT; and Codebeamer.

CAD software revenue was negatively impacted by changes in foreign currency exchange rates.

Constant currency revenue growth was flat due to decreases in Creo revenue in Europe due to shorter durations of on-premises subscription contracts, offset by Creo revenue growth in the Americas and Asia Pacific.

Support and cloud services gross margin increased in FY’23 compared to FY’22 due to higher support and cloud services revenue, partially offset by increases in cost of support and cloud services, which were driven by higher royalty expenses, compensation costs, higher intangible amortization expense due to the ServiceMax acquisition, and cloud hosting costs.

Total headcount increased by 11% between FY'22 and FY'23, primarily driven by our acquisition of ServiceMax.

an $11 million increase in software subscriptions and internal hosting costs;

a $10 million increase in travel expenses;

a $38 million decrease in restructuring charges, primarily due to the restructuring plan initiated and substantially completed in FY'22.

| Interest and debt premium expense | | $ | (129.4 | ) | | $ | (54.3 | ) | | | 138 | % |

Other income (expense), net in FY'23 was related to foreign currency exchange losses.

Other income (expense), net in FY’22 included $36 million of recognized gains from the sale of assets, primarily related to the sale of a portion of our PLM services business, offset by a $35 million loss associated with an equity investment in a publicly traded company.

| | | 2023 | | | | 2022 | | |

Cash from operations in FY'23 includes $1.5 million of restructuring payments and $19.6 million of acquisition and transaction-related payments compared to $40.8 million of restructuring payments and $11.8 million of acquisition and transaction-related payments in FY'22.

Cash used in investing activities in FY'22 was driven by the acquisition of the Codebeamer business for $278.1 million, offset by $46.9 million of proceeds from the sale of an investment and $32.5 million of proceeds from the sale of a portion of our PLM services business.

Cash used in financing activities in FY’22 includes repayments of $355.0 million under our credit facility and repurchases of common stock of $125.0 million, offset by borrowings of $264.0 million to fund our acquisition of the Codebeamer business.

We enter into foreign currency forward contracts [removed: and options] to manage our exposure to fluctuations in foreign exchange rates that arise from receivables and payables denominated in foreign currencies.

Our non-U.S. revenues [removed: generally] are [added: generally] transacted through our non-U.S. subsidiaries and typically are denominated in their local currency.

Based on current revenue and expense levels (excluding restructuring charges and stock-based compensation), a $0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately [removed: $30] [added: $38] million and $6 million, respectively.

Our foreign currency hedging program uses forward contracts [removed: and options] to manage the foreign currency exposures that exist as part of our ongoing business operations.

The contracts are primarily denominated in the Euro, [removed: Swedish Krona, and] Swiss [removed: Franc] [added: Franc, and Swedish Krona] currencies, and have maturities of less than four months.

The majority of our foreign currency forward contracts [removed: and options] are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings.

Because we enter into these derivative contracts only as an economic hedge, any [removed: gain] [added: gains] or [removed: loss] [added: losses] on the underlying foreign-denominated balance [removed: would be] [added: are generally] offset by the [removed: loss] [added: losses] or [removed: gain] [added: gains] on the derivative contract.

As of September 30, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

| Currency Hedged *(in thousands)* | | [removed: 2023] [added: 2024] | | | | [removed: 2022] [added: 2023] | | |

| Euro / U.S. Dollar | | [added: $] | [removed: 383,227] [added: 781,398] | | | [added: $] | [removed: 316,869] [added: 383,227] | |

| British Pound / U.S. Dollar | | | [removed: 6,058] [added: 24,810] | | | | [removed: 7,368] [added: 6,058] | |

| Israeli Shekel / U.S. Dollar | | | [removed: 11,852] [added: 12,535] | | | | [removed: 12,052] [added: 11,852] | |

| Japanese Yen / U.S. Dollar | | | [removed: 4,770] [added: 42,340] | | | | [removed: 25,566] [added: 4,770] | |

| Swiss Franc / U.S. Dollar | | | [removed: 32,766] [added: 74,939] | | | | [removed: 25,559] [added: 32,766] | |

| Swedish Krona / U.S. Dollar | | | [removed: 35,085] [added: 48,596] | | | | [removed: 35,713] [added: 35,085] | |

| Chinese Renminbi / U.S. Dollar | | | [removed: 16,660] [added: 32,124] | | | | [removed: 23,965] [added: 16,660] | |

| New Taiwan Dollar / U.S. Dollar | | | [removed: 11,855] [added: 16,368] | | | | [removed: 13,906] [added: 11,855] | |

| Total | | $ | [removed: 523,636] [added: 1,058,478] | | | $ | [removed: 483,178] [added: 523,636] | |

In addition to the $1 billion due under our 2025 and 2028 Senior Notes, as of September 30, [removed: 2023,] [added: 2024,] we had [removed: $702] [added: $753] million outstanding under our credit facility.

As of September 30, [removed: 2023,] [added: 2024,] the [added: weighted average] annual rate on the credit facility loans was [removed: 7.18%.][added: 6.9%.]

[removed: This change in cash flows and earnings has been calculated based] [added: Based] on the borrowings outstanding [removed: at] [added: and interest rates in effect as of] September 30, [removed: 2023 and] [added: 2024,] a 100 basis point per annum change in interest rate applied over a one-year [removed: period.][added: period would have an $8 million impact on annual earnings and cash flows.]

As of September 30, [removed: 2023,] [added: 2024,] cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased.

At September 30, [removed: 2023,] [added: 2024,] we had cash and cash equivalents of [removed: $35] [added: $36] million in the United States, [removed: $111] [added: $127] million in Europe, [removed: $121] [added: $86] million in Asia Pacific (including India), and [removed: $21] [added: $17] million in other non-U.S. countries.

Given the short maturities and investment grade quality of the portfolio holdings at September 30, [removed: 2023,] [added: 2024,] a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents.

Changes in foreign currencies relative to the U.S. Dollar had a favorable impact of [removed: $2.9] [added: $3.2] million and [removed: an unfavorable impact of $24.2] [added: $2.9] million on our consolidated cash balances in [removed: FY'23] [added: FY'24] and [removed: FY'22,] [added: FY'23,] respectively.

[Table of Contents](#toc_page)

| All other | | | 25,368 | | | | 21,363 | |

The impact in FY'24 was due in particular to changes in the Brazilian Real, Swedish Krona, Chinese Renminbi, and New Taiwan Dollar.

[Table of Contents](#toc_page)

| Canadian Dollar / U.S. Dollar | | $ | 5,135 | | | $ | 2,731 | |

| Singapore Dollar / U.S. Dollar | | | — | | | | 3,637 | |

| Korean Won / U.S. Dollar | | | 6,157 | | | | 4,919 | |

| Danish Krone / U.S. Dollar | | | 6,731 | | | | 3,192 | |

| Australian Dollar / U.S. Dollar | | | 452 | | | | 3,269 | |

| All other | | | 2,888 | | | | 4,432 | |

We also had a $620 million deferred acquisition payment liability related to the fair value of the $650 million installment for the ServiceMax acquisition, which we paid in October 2023 leveraging financing from our credit facility.

If there were a 100 basis point change in interest rates, the annual net impact to earnings and cash flows would be $7 million.

The impact in FY'23 was due in particular to changes in the Euro and the Korean Won.

Our [removed: software portfolio includes award-winning] offerings [removed: that enable companies to author] [added: include CAD (Computer Aided Design) solutions for] product data [removed: (our computer-aided design (CAD) portfolio solutions)] [added: authoring] and [removed: to manage] [added: PLM (Product Lifecycle Management) solutions for] product data [removed: and orchestrate processes (our product lifecycle] management [removed: (PLM) portfolio solutions).][added: and process orchestration.]

[removed: We pursue multiple strategic initiatives designed] [added: Our strategy aims] to create value for our customers, increase our Annual Run Rate (ARR) and [removed: free] cash flow, and deliver long-term value for [removed: stockholders.][added: shareholders.]

[removed: A] [added: With a] digital [removed: thread manages product] [added: thread, the right] data [removed: and makes it accessible and useful] [added: is delivered] to the right [removed: people,] [added: people] at the right [removed: time,] [added: time] and in the right [removed: context.][added: context across the value chain.]

[removed: PLM Expansion][added: PLM]

[removed: |] PLM [removed: Software Products For Product Data Management] [added: software products for product data management] and [removed: Process Orchestration | | CAD Software Products For Product Data Authoring |][added: process orchestration]

Our Windchill® PLM application suite manages all aspects of the product development lifecycle—from concept through service and [removed: retirement—by enabling a digital thread of product parts, materials, and configuration information.][added: end-of-life.]

Windchill provides real-time information sharing, dynamic data visualization, and the ability to collaborate across [removed: geographically-distributed] [added: geographically distributed] teams, enabling manufacturers to elevate their product development, manufacturing, [removed: and] field [removed: service] [added: service, and end-of-life] processes.

Our ServiceMax® [removed: field] service [added: lifecycle] management [removed: (FSM) solutions enable] [added: (SLM) solution enables] companies to improve asset uptime with optimized in-person and remote service, boost technician productivity with the latest mobile tools, and deliver metrics for confident decision making.

Our Arena® [removed: SaaS] [added: Software as a Service (SaaS)] PLM solution enables product teams to collaborate virtually anytime and anywhere, making it easier to share the latest product and quality information with internal teams and supply chain partners and deliver innovative products to customers faster.

[removed: CAD][added: CAD]

We derive [removed: most] [added: approximately 75%] of our sales from products and services sold directly by our sales force to end-user customers.

[removed: Approximately 25%] [added: The rest] of our sales of products and services are through third-party resellers.

Our sales force focuses on large accounts, while our reseller channel provides a cost-effective means of covering the small- and medium-size business [removed: market.][added: markets.]

Our strategic [removed: alliance] [added: reseller and software] partners enable us to increase our market reach, offer broader solutions, and add compelling technology to our offerings.

For our [removed: AR products, our primary competitors include Microsoft, TeamViewer SE, and Scope Technologies US Inc. For our] ALM products, we compete with IBM, Jama Software, Inc. and Siemens AG.

At PTC, we’re [removed: motivated] [added: working] to [removed: become an impactful contributor] [added: contribute] to the [removed: dematerialization and] decarbonization [added: and circularity] of global manufacturing.

While we have a climate action plan committed to [removed: reduce] [added: reducing] our company’s “footprint,” we believe far larger benefits will flow from our “handprint” stemming from our software offerings.

Our [removed: submitted] near-term commitment is to reduce [added: by 2030] combined Scope 1 (direct emissions from owned/controlled operations) and Scope 2 (indirect energy use) emissions by 50% and reduce Scope 3 - Category 1 (Purchased Goods and Services) [added: by] 25% compared to our 2022 [removed: baseline by 2030.][added: baseline.]

Our long-term net-zero commitment is to reach net-zero across all scope emissions by 2050, with absolute reductions of over 90% across Scopes 1-3, with accredited carbon removal offsets for the remaining [removed: <10%] [added: 10% (or less)] as needed.

[removed: While we await SBTi approval of our near-term and net-zero targets, we] [added: We] have already begun to implement programs and pursue initiatives to reduce our emissions and carbon footprint, including:

[removed: increasing our] [added: providing a] subsidy for employee’s public transportation commute costs; and

With our software, manufacturers can [removed: drive] [added: support their] sustainability [removed: improvement,] [added: and compliance initiatives,] including by designing with less material, enhancing product repairability and circularity, improving factory efficiency, and enabling remote service.

[removed: ][added: ]

As of September 30, [removed: 2023,] [added: 2024,] PTC had [removed: 7,231] [added: 7,501] full-time employees.

[removed: ][added: ]

[removed: ][added: ]

PTC provides a comprehensive and competitive compensation and benefits package designed to attract, retain, motivate, and engage talent around the [removed: world.][added: world, including base salaries, and, for eligible roles, incentive and equity compensation.]

Our [removed: benefits] [added: benefit] offerings are designed to meet the needs of our employees and their families around the world.

Meanwhile, our DEI ambassadors are aligned with [removed: functions across the] business [added: functions] to amplify and enhance our efforts in these areas.

Finally, to cultivate a community of belonging, our [removed: 12] [added: 11] Employee Resource Groups foster an inclusive culture and facilitate safe spaces for employees to navigate social issues and challenges.

You can find more information about our employee initiatives in our [removed: 2023] [added: 2024] Impact Report, which we expect to release in [removed: December 2023.][added: early 2025.]

PTC is a global software company that enables manufacturers and product companies to digitally transform how they design, manufacture, and service the physical products that the world relies on.

Headquartered in Boston, Massachusetts, PTC employs over 7,000 people and supports more than 30,000 customers globally.

We primarily serve customers in the following industry verticals:

Industrials

Federal, Aerospace and Defense

Electronics and High Tech

Automotive

Medical Technology and Life Sciences

Our customers are focused on improving their competitiveness in the face of global competition and increasing product complexity, and our suite of software offerings is a strategic enabler of this and their digital transformation initiatives.

We enable our customers to establish a strong product data foundation and leverage that foundation to drive cross-functional collaboration, accelerate new product introduction timelines and deliver higher product quality.

[Table of Contents](#toc_page)

Within the overall PLM category, our offerings also include ALM (Application Lifecycle Management) and SLM (Service Lifecyle Management).

Given the breadth and openness of our portfolio, we can enable end-to-end digital thread initiatives, which leverage a connected flow of product data across design, manufacturing, service, and, ultimately, reuse.

A digital thread enables product companies to break down silos, streamline workflows, and achieve interoperability across departments, functions and systems with a single version of truth.

It also secures the quality, consistency and traceability of product-related data, ensuring that the data is up-to-date, accessible, reliable and actionable.

Our business is based on a subscription model, with 93% of our 2024 revenue being recurring in nature.

Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability.

Our Codebeamer® and pure::variantsTM application lifecycle management (ALM) solutions enable companies to accelerate the development of products that contain software, including software-defined products which require multiple software variants to be created and updated over the life of the product.

CAD software products for product data authoring

[Table of Contents](#toc_page)

Enabling technologies

Our principal products and services are enhanced by a collection of enabling technologies, including SaaS versions of our Creo® CAD and Windchill® PLM software, artificial intelligence software, our ThingWorx® Internet of Things software, and our Vuforia® augmented reality software.

The primary focus of these technologies is to deliver value-added capabilities to our principal products and services, such as the improved security and collaboration environment of a SaaS platform; unlocking productivity with artificial intelligence; moving product data more quickly across engineering, manufacturing, and service using IoT; or automatically analyzing the quality of a manufactured product with augmented reality.

We focus our resources on the following five solutions, where we believe we can create the greatest customer value:

ALM

SLM

SaaS or Software as a Service

Our growth is primarily driven by existing customers that continue to expand their PTC footprint, largely relating to their focus on improving their competitiveness through digital transformation.

To a lesser extent, our growth is also supported by new customers and price increases.

[Table of Contents](#toc_page)

Our emission reduction plan was validated by the Science Based Targets initiative (SBTi) in September 2024.

entering into a Virtual Power Purchase Agreement (VPPA) to reduce our future carbon footprint;

selecting suppliers with decarbonization targets.

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

PTC is a global software company that provides a portfolio of innovative digital solutions that work together to transform how physical products are engineered, manufactured, and serviced.

Our software can be delivered on premises, in the cloud, or in a hybrid model.

Our customers include some of the world's most innovative companies in the aerospace and defense, automotive, electronics and high tech, industrial machinery and equipment, life sciences, retail and consumer products industries.

We generate revenue through the sale of subscriptions, which include term-based on-premises software licenses and related support, Software-as-a-Service (SaaS), and hosting services; perpetual licenses; support for perpetual licenses; and professional services (consulting, implementation, and training).

Recent Developments

We acquired the ServiceMax® cloud-native field service management business in Q2’23, broadening our PLM solution set to encompass the service phase of the product lifecycle.

We paid the first purchase payment installment of $835 million, as adjusted for working capital, indebtedness, cash, and transaction expenses, in January 2023, and the second and final installment of $650 million in October 2023.

Refer to *Note 6.

Acquisitions and Disposition of Businesses* of Notes to Consolidated Financial Statements in this Annual Report for additional discussion about the ServiceMax transaction.

Our Strategy

Subscription Business Model

Our transition from a perpetual and maintenance model to a subscription business model continues to be key to driving growth.

Our subscription model offers greater benefits of scale and growth potential, drives higher customer engagement and retention, and provides better business predictability, with over 90% of our annual revenues being recurring in nature.

Customer Expansion

Our solutions portfolio encompasses the entire product life cycle, from design to manufacture to service, enabling companies to adopt a “digital thread” strategy to drive innovation and productivity.

The digital thread is particularly valuable for customers with complex products that tend to have longer life cycles.

We seek to drive value for our customers by offering new and enhanced features and products that enable our customers to pursue and expand their digital thread strategies.

Our acquisition strategy targets companies with products that complement ours and that we believe will appeal to our existing customer base, allowing us to pursue cross-selling opportunities.

The addition of ServiceMax in 2023 for the SLM part of our PLM portfolio further extends what was already a unique portfolio of interconnected digital thread capabilities across the full product life cycle.

The addition of Codebeamer in 2022 for the ALM part of our PLM portfolio strengthened our offerings in the ALM space as software becomes integral to more and more products, especially in regulated industries where traceability is safety-critical.

PLM is at the heart of digital transformation and has become essential technology at industrial companies.

No longer confined to the Engineering department, PLM data is driving decision-making across organizations, enabling them to improve how products are designed, manufactured, and serviced.

Our goal is to be the category leader in PLM and to provide our customers with best-in-class solutions to drive innovation and productivity.

SaaS Transition

We continue to invest in the transformation of our technology portfolio to include more SaaS offerings.

Our acquisitions of Onshape, Arena, and ServiceMax brought cloud-native solutions to our portfolio, and we continue to work towards creating and expanding SaaS offerings for our existing products.

We believe that SaaS products represent a strong value proposition for our customers, offering reduced complexity; lower costs to implement, upgrade and administer; better user collaboration and mobility; and scalability.

This is a longer-term strategy as we expect that SaaS adoption in the CAD and PLM markets will be gradual at first, then accelerate significantly, given constraints such as the length and cost of conversion projects and budgeting timelines of our customers.

Our Principal Product Groups

| | | |

| --- | --- | --- |

PLM

With its open architecture that integrates with other enterprise systems, Windchill provides a solid foundation for a product-driven digital thread.

Our ThingWorx® platform is flexible and purpose-built for Industrial Internet of Things (IIoT).

It offers a rich set of capabilities that enable enterprises to digitally transform every aspect of their business with innovative solutions that are simple to create, easy to implement, scalable to meet future needs, and designed to enable customers to accelerate time to value.

Primary use cases include remote asset monitoring, remote maintenance and service, predictive maintenance and asset management, and optimized equipment effectiveness.

Our ThingWorx Digital Performance Management solution enables manufacturers to identify, prioritize, and overcome their most significant production bottlenecks.

Our Codebeamer® application lifecycle management (ALM) and model-based systems engineering capabilities enable companies to accelerate the development of software-intensive products through system modeling, software configuration, and requirements, risk, and test management.

Our FlexPLM® solution provides retailers with a single platform for merchandising and line planning, materials management, sampling, and more.

Our Kepware® portfolio of industrial connectivity solutions helps companies connect diverse automation devices and software applications.

For the Fiscal Year Ended: September 30, [removed: 2023][added: 2024]

The aggregate market value of our voting stock held by non-affiliates was approximately [removed: $14,078,377,983] [added: $22,558,974,797] on March [removed: 31, 2023] [added: 28, 2024] based on the last reported sale price of our common stock on the Nasdaq Global Select Market on that date.

There were [removed: 118,333,823] [added: 119,716,947] shares of our common stock outstanding on that day and [removed: 119,244,754] [added: 120,129,080] shares of our common stock outstanding on November [removed: 16, 2023.][added: 12, 2024.]

Portions of the definitive Proxy Statement in connection with the [removed: 2024] [added: 2025] Annual Meeting of [removed: Stockholders (2024] [added: Shareholders (2025] Proxy Statement) are incorporated by reference into Part III.

ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR [removed: 2023][added: 2024]

| Item 1A. | [Risk Factors](#item_1a_risk_factors) | [removed: [9](#item_1a_risk_factors)] [added: [8](#item_1a_risk_factors)] |

| Item 1B. | [Unresolved Staff Comments](#unresolved_staff_comments) | [removed: [17](#unresolved_staff_comments)] [added: [18](#unresolved_staff_comments)] |

| Item 2. | [Properties](#properties) | [removed: [17](#properties)] [added: [20](#properties)] |

| Item 3. | [Legal Proceedings](#legal_proceedings) | [removed: [17](#legal_proceedings)] [added: [20](#legal_proceedings)] |

| Item 4. | [Mine Safety Disclosures](#mine_safety_disclosures) | [removed: [17](#mine_safety_disclosures)] [added: [20](#mine_safety_disclosures)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#market_for_registrants_common_equity_rel) | [removed: [17](#market_for_registrants_common_equity_rel)] [added: [20](#market_for_registrants_common_equity_rel)] |

| Item 6. | [Reserved](#reserved) | [removed: [17](#reserved)] [added: [20](#reserved)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#managements_discussion_analysis_financia) | [removed: [18](#managements_discussion_analysis_financia)] [added: [21](#managements_discussion_analysis_financia)] |

| Item 7A. | [Quantitative and Qualitative Disclosures about Market Risk](#item_7a__quantitative_and_qualitative_di) | [removed: [33](#item_7a__quantitative_and_qualitative_di)] [added: [37](#item_7a__quantitative_and_qualitative_di)] |

| Item 8. | [Financial Statements and Supplementary Data](#item_8__financial_statements_and_supplem) | [removed: [35](#item_8__financial_statements_and_supplem)] [added: [39](#item_8__financial_statements_and_supplem)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#item_9__changes_in_and_disagreements_wit) | [removed: [35](#item_9__changes_in_and_disagreements_wit)] [added: [39](#item_9__changes_in_and_disagreements_wit)] |

| Item 9A. | [Controls and Procedures](#item_9a__controls_and_procedures) | [removed: [35](#item_9a__controls_and_procedures)] [added: [39](#item_9a__controls_and_procedures)] |

| Item 9B. | [Other Information](#item_9b__other_information) | [removed: [36](#item_9b__other_information)] [added: [40](#item_9b__other_information)] |

| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspection](#item_9c__disclosue_regarding_foreign_jur) | [removed: [37](#item_9c__disclosue_regarding_foreign_jur)] [added: [41](#item_9c__disclosue_regarding_foreign_jur)] |

| Item 10. | [Directors, Executive Officers and Corporate Governance](#item_10__directors__executive_officers_a) | [removed: [38](#item_10__directors__executive_officers_a)] [added: [42](#item_10__directors__executive_officers_a)] |

| Item 11. | [Executive Compensation](#item_11__executive_compensation) | [removed: [38](#item_11__executive_compensation)] [added: [42](#item_11__executive_compensation)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item_12_security_ownership_certain) | [removed: [38](#item_12_security_ownership_certain)] [added: [43](#item_12_security_ownership_certain)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#item_13__certain_relationships_and_relat) | [removed: [38](#item_13__certain_relationships_and_relat)] [added: [43](#item_13__certain_relationships_and_relat)] |

| Item 14. | [Principal Accounting Fees and Services](#item_14__principal_accountant_fees_and_s) | [removed: [38](#item_14__principal_accountant_fees_and_s)] [added: [43](#item_14__principal_accountant_fees_and_s)] |

| Item 15. | [Exhibits and Financial Statement Schedules](#exhibits_financial_statement_schedules) | [removed: [39](#exhibits_financial_statement_schedules)] [added: [44](#exhibits_financial_statement_schedules)] |

| Item 16. | [Form 10-K Summary](#form_10k_summary) | [removed: [39](#form_10k_summary)] [added: [44](#form_10k_summary)] |

| [Exhibit Index](#exhibit_index) | | [removed: [40](#exhibit_index)] [added: [45](#exhibit_index)] |

| [Signatures](#signatures) | | [removed: [42](#signatures)] [added: [47](#signatures)] |

| | [Report of Independent Registered Public Accounting [removed: Firm](#report_of_independent_registered)] [added: Firm](#report_of_registered_public_acctg_firm)] (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238) | [removed: [F-1](#report_of_independent_registered)] [added: [F-1](#report_of_registered_public_acctg_firm)] |

In particular, statements that are not historical facts, including but not limited to, statements about our anticipated financial results, capital development and growth, [removed: as well as about] [added: stock repurchases, our environmental sustainability initiatives, and] the development of our products, markets and workforce, are forward-looking statements.

References to our PTC.com website in this Annual Report and to our [removed: 2023] [added: 2024] Impact [removed: Report] [added: Report, to be published in early 2025,] are provided for convenience.

The content on PTC.com and in our [removed: 2023] [added: 2024] Impact Report is not incorporated by reference into this Annual Report unless expressly stated.

[Table of Contents](#toc_page)

[Table of Contents](#toc_page)

| Item 1C. | [Cybersecurity](#item_1c_cyber_security) | [18](#item_1c_cyber_security) |

[Table of Contents](#toc_page)

We are subject to various cybersecurity risks in connection with our business.

For more information on our cybersecurity related risks, see the section entitled “Risks Related to Our Business Operations and Industry” in Item 1A of this Annual Report.

Our Approach

PTC takes a holistic, multi-layered approach to cybersecurity and privacy that combines traditional Defense-in-Depth methods with next-generation Zero Trust principles.

In today’s globally interconnected world, we consider every entry point on the attack surface critical, and we aim to secure the points under our control.

In developing our cybersecurity risk management program, we are informed by industry benchmarks and standards, including the cybersecurity framework created by the National Institute of Standards and Technology (“NIST”).

We also have various security-related certifications and authorizations, including ISO 27001, SOC 2 Type II and FedRAMP, for certain of our products and services.

People.

PTC recognizes that technology alone cannot mitigate all security threats, so we focus on developing our most critical resource: our people.

Security is the responsibility of everyone employed by PTC and is independent of departmental affiliation.

PTC’s corporate cybersecurity awareness activities are combined with enterprise-wide and department-specific tools and mandatory employee training, providing everyone employed by PTC with the knowledge and resources to support our efforts to mitigate security threats.

Process.

An educated workforce needs a governance framework to guide and monitor its activities.

PTC has processes and policies in place to try to anticipate security risks and facilitate compliance with applicable contractual obligations, regulations and standards, as well as address any incidents or violations.

PTC focuses on continuous improvement and is constantly maturing its processes to keep pace with the rapidly evolving cybersecurity threat landscape.

Technology.

PTC seeks to automate these processes and remove the potential for human error to the extent feasible by implementing technology solutions.

From fundamental IT security to development of our software products and keeping our customers’ data safe in the cloud, PTC aims to maintain a secure infrastructure that is continuously monitored for possible threats.

These three key elements of people, process, and technology are tightly interwoven to support our aim to secure our environments and data.

Governance

Cybersecurity is a risk area with oversight at the highest levels of the organization, including the Executive and Board Level.

The overall operational program is led by the Cybersecurity Strategy Council, a cross-functional team of executives and subject matter experts, including our Chief Product Security Officer, Chief Information Security Officer and Chief Compliance Officer.

The Cybersecurity Strategy Council oversees a “Three Lines Model” of Operations, Risk Monitoring and Oversight, and Audit, to effectively address cybersecurity, risk management and control.

All Cybersecurity, Risk and Internal Audit functions report to the PTC Executive Leadership Team.

[Table of Contents](#toc_page)

PTC’s Cybersecurity Program is supported by robust processes and procedures at all levels.

Our matrixed cybersecurity organization is governed by industry-standard frameworks, and to ensure that they are executed, we involve the Executive Leadership Team, the Cybersecurity Strategy Council, and business unit security leads and cybersecurity analysts across the enterprise.

We provide regular updates on our cybersecurity strategic plans, programs, and initiatives, and vulnerabilities and any applicable remediation efforts to the Cybersecurity Committee of the Board of Directors at its four regularly scheduled meetings per year.

Our Incident Response Plans provide for notice, and continued updates, to the Cybersecurity Committee of applicable incidents on a timely basis.

Ongoing program assessments are performed to monitor progress and identify opportunities for growth.

Risk Assessment

PTC conducts an annual cybersecurity maturity assessment.

Periodically, we engage a third-party security consulting firm to conduct an Enterprise Security Maturity Assessment.

This independent assessment provides a mechanism to benchmark our current risk profile and enables us to measure progress as we make program improvements.

Identified cybersecurity risks are reviewed by the Cybersecurity Strategy Council, which ensures that risk tolerances are established and used to appropriately manage risks.

Third-Party Vendor Risk Management

Our Vendor Risk Management (VRM) program supports PTC in meeting its cybersecurity, privacy, regulatory and compliance obligations and managing risk associated with third-party vendors who have access to PTC IT systems and data.

Prior to outsourcing or allowing third-party access to PTC or customer systems, IP, or data; risks associated with such activity are clearly identified and documented.

The process of selecting a third-party vendor includes due diligence of the vendor service or product in question.

Third-party companies using PTC facilities or accessing PTC’s IT Systems are subject to PTC’s VRM review and are required to demonstrate that proper security measures are in place before they have access to any PTC IT systems or data.

We currently have [removed: 83] [added: 75] office locations used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work.

Of our total of approximately [removed: 1,076,000] [added: 1,060,000] square feet of leased facilities used in operations, approximately [removed: 421,000] [added: 401,000] square feet are located in the U.S., including approximately 250,000 square feet at our headquarters facility located in Boston, Massachusetts, and approximately [removed: 267,000] [added: 268,000] square feet are located in India, where a significant amount of our research and development is conducted.

On September 30, [removed: 2023,] [added: 2024,] the close of our fiscal year, and on November [removed: 13, 2023,] [added: 12, 2024,] our common stock was held by [removed: 952] [added: 884] and [removed: 950] [added: 877] shareholders of record, respectively.

[Table of Contents](#toc_page)

[removed: As required by SEC Rule 15d-15(b), we carried out an evaluation,] [added: We evaluated,] under the supervision and with the participation of management, including our principal executive and principal financial officers, [removed: of] the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report.

Based on this evaluation, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, [removed: 2023.][added: 2024.]

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, [removed: 2023] [added: 2024] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control-Integrated Framework (2013)*.

Based on this assessment and those criteria, our management concluded that, as of September 30, [removed: 2023,] [added: 2024,] our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of September 30, [removed: 2023] [added: 2024] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears under Item 8.

There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, [removed: 2023] [added: 2024] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

[Table of Contents](#toc_page)

Management excluded ServiceMax from its assessment of internal control over financial reporting as of September 30, 2023 because it was acquired in a business combination in the current fiscal year.

ServiceMax's total assets and total revenues represent approximately 1% (excluding the impact of goodwill and intangibles from the acquisition) and 7%, respectively, of our total assets and total revenues, as of and for the year ended September 30, 2023.

During the quarter ended September 30, [removed: 2023,] [added: 2024,] the following Section 16 officers [removed: and directors] adopted Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K of the Exchange Act).

| [removed: Catherine Kniker,] [added: Catherine Kniker,] Executive Vice President, Chief [removed: Strategy] [added: Strategy, Marketing,] and [removed: Marketing] [added: Sustainability] Officer | | Adopted August [removed: 15, 2023] [added: 12, 2024] | | Ends August 8, [removed: 2024] [added: 2025] | | [removed: 4,857,] [added: 6,580,] plus all net vested shares issued for the [removed: FY2023] [added: FY2024] Corporate Incentive Plan, plus [added: 15% of] all [added: net vested] shares [added: that vest on November 15, 2024 under performance-based RSU awards granted on November 17, 2021, November 16, 2022, and November 15, 2023, plus all shares] purchased under the 2016 Employee Stock Purchase Plan for the offering periods ending on January 31, [removed: 2024] [added: 2025] and July 31, [removed: 2024(1)(2)] [added: 2025(1)(2(3)] |

| [removed: Aaron] [added: Aaron] von [removed: Staats,Executive] [added: Staats Executive] Vice President, General Counsel | | Adopted August [removed: 24, 2023] [added: 8, 2024] | | Ends [removed: May 31, 2024] [added: August 15, 2025] | | [removed: 3,835,] [added: 8,618,] plus all net vested shares issued for the [removed: FY2023] [added: FY2024] Corporate Incentive Plan, plus [removed: 40.5%] [added: 10%] of total shares that vest on November 15, [removed: 2023] [added: 2024] under [removed: the] performance-based RSU awards granted on November 17, [removed: 2020,] [added: 2021,] November [added: 16, 2022, and November 15, 2023, plus 80% of all net vested shares that vest on November 15, 2024 under performance-based RSU awards granted on November] 17, 2021, [removed: and] November 16, [removed: 2022(1)(3)] [added: 2022, and November 15, 2023(1)(2)] |

The total number of shares that would be issued for the [removed: FY2023] [added: FY2024] Corporate Incentive Plan could not be known when the plan was adopted as the [removed: FY2023] [added: FY2024] performance period had not yet ended and attainment of the performance measure was not known.

The total number of shares that will be purchased under the 2016 Employee Stock Purchase Plan for the offering periods ending January 31, [removed: 2024] [added: 2025] and July 31, [removed: 2024] [added: 2025] could not be known when the plan was adopted.

The total number of shares that would be earned and vested under the performance-based RSU awards for the [removed: FY2023] [added: FY2024] performance period could not be known when the plan was adopted as the [removed: FY2023] [added: FY2024] performance period had not yet ended and attainment of the performance measures was not known.

Amendment to PTC By-Laws

On November 14, 2024, in connection with a periodic review of corporate governance matters and certain recent changes to Securities and Exchange Commission rules and the Massachusetts Business Corporation Act (the “MBCA”), the Board of Directors (the “Board”) of PTC approved and adopted an amendment and restatement of the Company’s By-Laws (as so amended, the “Amended and Restated By-Laws”), which became effective upon approval.

The Amended and Restated By-Laws amend and restate the By-Laws in their entirety to, among other things: (i) permit virtual only meetings of shareholders; (ii) revise the advance notice provisions of the By-Laws to expand the informational and other requirements for shareholder proponents and director nominees in connection with shareholder proposals and shareholder director nominations; (iii) address matters relating to Rule 14a-19 under the Securities Exchange Act of 1934, as amended; (iv) provide processes and procedures for shareholders seeking to call a special meeting of shareholders and obligations and rights of the Board with respect to such requests and the conduct of such meetings; (v) state how abstentions and broker non-votes are treated with respect to the determination of whether a quorum of shareholders exists and of the number of shares voting on a matter; (vi) provide that any shareholder soliciting proxies from other shareholders must use a proxy card color other than white, with the white proxy card being reserved for the exclusive use by the Board; (vii) provide that the Board may adopt such rules, regulations, and procedures as the Board may deem appropriate for the conduct of any meeting of shareholders; (viii) clarify and confirm that the Board, except as otherwise provided by law, and to the extent permitted by law, may limit its exercise of the powers of the corporation pursuant to an agreement approved by the Board; (ix) provide that removal of a director may occur only at a meeting called for the purpose of removing such director, the meeting notice for which must state that the purpose or a purpose of the meeting is the removal of the director; and (x) make various updates throughout to conform to the MBCA and to make ministerial changes, clarifications, and other conforming revisions.

The foregoing description of the Amended and Restated By-Laws does not purport to be complete and is qualified by reference to the full Amended and Restated By-Laws, a copy of which is filed as Exhibit 3.2 to this Form 10-K and incorporated herein by reference.

[Table of Contents](#toc_page)

Director and Executive Officer Adoption, Modification or Termination of 10b5-1 Plans in Q4’24

| Kristian Talvitie Executive Vice President, Chief Financial Officer | | Adopted August 2, 2024 | | Ends February 2, 2025 | | 15,050, plus all net vested shares issued for the FY2024 Corporate Incentive Plan, plus all net vested shares that vest on November 15, 2024 under performance-based RSU awards granted on November 17, 2021, November 16, 2022, and November 15, 2023(1)(2) |

*Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.*

On November 16, 2023, Michael DiTullio, President and Chief Operating Officer of the Company, Kristian Talvitie, Executive Vice President, Chief Financial Officer, Catherine Kniker, Executive Vice President, Chief Strategy and Marketing Officer, and Aaron von Staats, Executive Vice President, General Counsel entered into new Executive Agreements with PTC Inc. (the “Company”).

The new Executive Agreements replace the executives’ existing Executive Agreements with the Company.

The Executive Agreements provide certain compensation and employment protections to the executives.

Each Executive Agreement provides that, upon a change in control of the Company, (i) all performance measures under any outstanding equity award held by the executive will be deemed to have been met at the target level, and (ii) the executive will receive a payment in an amount equal to the pro-rata portion of the executive’s target incentive bonus for the current year.

Upon any termination of the executive’s employment after a change in control of the Company, (i) all equity awards held by the executive will accelerate and vest in full, (ii) the executive will receive a payment in an amount equal to: (a) 100% of the executive’s highest base salary in the six months preceding the termination date, plus (b) 100% of the executive’s highest applicable target bonus, and (iii) the executive will be entitled to continued participation in the Company’s medical, dental and vision benefit plans (the “Benefit Plans”) for one year, or payment of an amount sufficient to purchase substantially equivalent benefits if continued participation is not permitted under the applicable Benefit Plan or if the Benefit Plan is terminated.

The Executive Agreement also provides that, upon termination of the executive’s employment by the Company without cause (i) the executive will receive a payment in an amount equal to 100% of the executive’s highest base salary in the six months preceding the termination date plus 100% of the executive’s target bonus for the year in which the termination occurs, (ii) all equity awards held by the executive that would have vested in the twelve months following the termination date will vest, and (iii) the executive will be entitled to continued participation in the Benefit Plans or payment in lieu thereof as described above.

The Executive Agreement also provides that upon termination of the executive’s employment by the Company due to the executive’s death or disability, all equity held by the executive will vest in full.

Mr. DiTullio’s Executive Agreement also provides that if he voluntarily terminates his employment after September 30, 2025, or if he is terminated without cause, all outstanding equity held by him will continue to vest after such termination in accordance with its terms, which continued equity vesting after termination without cause replaces the equity acceleration described above in the event of termination without cause.

To receive the payments and benefits under the Executive Agreement, the

executive must execute a release of claims in favor of the Company and continue to comply with the terms of the executive’s Proprietary Information Agreement with the Company.

The preceding description of the Executive Agreements is qualified by reference to the full text of such agreements, copies of which are filed as Exhibits 10.5 and 10.6 of this Form 10-K.

*Insider Trading Arrangements*

| James Heppelmann, Chairman and Chief Executive Officer | | Adopted August 7, 2023 | | Ends February 12, 2024 | | 35,000 |

| Kristian Talvitie, Executive Vice President, Chief Financial Officer | | Adopted August 31, 2023 | | Ends February 29, 2024 | | 22,240 |

[Table of Contents](#toc_page)

The information required by this item [removed: with respect to our directors and executive officers] [added: not set forth below] may be found under the headings [removed: “Proposal 1: Election of Directors,”] “Corporate [removed: Governance,” "Information About Our] [added: Governance and the Board of Directors," “Insider Trading Policies and Procedures,” "Our] Executive Officers," [added: “Delinquent Section 16(a) Reports,”] and “Transactions with Related Persons” appearing in our [removed: 2024] [added: 2025] Proxy Statement.

[removed: *Code] [added: Code] of Ethics for Senior Executive [removed: Officers*][added: Officers]

We have adopted a Code of Ethics for Senior Executive Officers that applies to our [added: President and] Chief Executive Officer, [removed: President,] Chief Financial Officer, and [removed: Controller,] [added: Chief Accounting Officer,] as well as others.

If we make any substantive amendments to, or grant any waiver from, including any implicit waiver, the Code of Ethics for Senior Executive Officers to or for our [added: President and] Chief Executive Officer, [removed: President,] Chief Financial Officer or [removed: Controller,] [added: Chief Accounting Officer,] we will disclose the nature of such amendment or waiver in a current report on Form 8-K.

Changes to Shareholder Director Nomination Procedures

As described in Item 9B of this Annual Report, our By-Laws were amended and restated on November 14, 2024 to, among other things, revise the advance notice provisions of the By-Laws to expand the informational and other requirements for shareholder proponents and director nominees in connection with shareholder director nominations.

Those provisions are set forth in Section 2.3 of the Amended and Restated By-Laws filed as Exhibit 3.2 to this Annual Report and incorporated herein by reference.

Information with respect to director and executive compensation may be found under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation [added: Tables,” “Compensation] Committee Report,” [removed: “Compensation Tables,”] and “Pay Ratio Disclosure” appearing in our [removed: 2024] [added: 2025] Proxy Statement.

[Table of Contents](#toc_page)

Information about our common stock ownership may be found under the heading “Information about PTC Common Stock Ownership” appearing in our [removed: 2024] [added: 2025] Proxy Statement.

| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | | Weighted-average exercise price of outstanding options, warrants and rights | | | | Number of securities remaining available for future issuance under equity compensation plans | | | [removed: |]

| Equity compensation plans approved by security holders: | | | | | | | | | | | | | [removed: |]

| 2016 Employee Stock Purchase Plan(2) | | | — | | | | — | | | | [removed: 2,223,947 |] [added: 2,036,133] | |

This amount represents the total number of shares remaining available under the 2016 Employee Stock Purchase Plan, of which [removed: 105,794] [added: 90,333] shares are subject to purchase during the current offering period.

as of September 30, 2024

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2000 Equity Incentive Plan(1) | | | 2,061,934 | | | | — | | | | 6,064,590 | |

| Total | | | 2,061,934 | | | | — | | | | 8,100,723 | |

as of September 30, 2023

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2000 Equity Incentive Plan(1) | | | 2,580,222 | | | | — | | | | 7,257,075 | | |

| Total | | | 2,580,222 | | | | — | | | | 9,481,022 | | |

Information with respect to this item may be found under the headings “Independence of Our Directors,” “Review of Transactions with Related Persons” and “Transactions with Related Persons” appearing in our [removed: 2024] [added: 2025] Proxy Statement.

Information with respect to this item may be found under the headings “Engagement of Independent Auditor and Approval of Professional Services and Fees” and “PricewaterhouseCoopers LLP Professional Services and Fees” in our [removed: 2024] [added: 2025] Proxy Statement.

[Table of Contents](#toc_page)

| | [Report of Independent Registered Public Accounting [removed: Firm](#report_of_independent_registered)] [added: Firm](#report_of_registered_public_acctg_firm)] (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238) | [removed: [F-1](#report_of_independent_registered)] [added: [F-1](#report_of_registered_public_acctg_firm)] |

| | [Consolidated Balance Sheets as of September 30, [removed: 2023] [added: 2024] and [removed: 2022](#consolidated_balance_sheets)] [added: 2023](#consolidated_balance_sheets)] | [F-4](#consolidated_balance_sheets) |

| | [Consolidated Statements of Operations for the years ended September 30, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021](#consolidated_statements_operations)] [added: 2022](#consolidated_statements_operations)] | [F-5](#consolidated_statements_operations) |

| | [Consolidated Statements of Comprehensive Income for the years ended September 30, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021](#consolidated_statements_comprehensive_in)] [added: 2022](#consolidated_statements_comprehensive_in)] | [F-6](#consolidated_statements_of_comprehensive) |

| | [Consolidated Statements of Cash Flows for the years ended September 30, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021](#consolidated_statements_cash_flows)] [added: 2022](#consolidated_statements_cash_flows)] | [F-7](#consolidated_statements_cash_flows) |

| | [Consolidated Statements of Stockholders’ Equity for the years ended September 30, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021](#consolidated_statements_stockholders_equ)] [added: 2022](#consolidated_statements_stockholders_equ)] | [F-8](#consolidated_statements_stockholders_equ) |

| 3.1 | [removed: —] | [Restated Articles of Organization of PTC [removed: Inc. adopted August 4, 2015 (filed as Exhibit 3.1 to our Annual Report on Form] [added: Inc.](https://www.sec.gov/Archives/edgar/data/857005/000085700515000042/ptc9302015ex31.htm) | | | |] 10-K [removed: for the year ended September 30,] [added: | | November 23,] 2015 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700515000042/ptc9302015ex31.htm)] | [added: | 3.1 | | 0-18059 |]

| 4.1 | [removed: —] | [Indenture, dated as of February 13, 2020, between PTC Inc. and Wells Fargo Bank, National Association, as [removed: trustee (filed as Exhibit 4.1 to our Current Report on Form] [added: trustee](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm) | | | |] 8-K [removed: filed on] [added: | |] February 13, 2020 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm)] | [added: | 4.1 | | 0-18059 |]

| 4.2 | [removed: —] | [Form of 3.625% senior unsecured notes due [removed: 2025 (filed as Exhibit 4.2 to our Current Report on Form] [added: 2025](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm) | | | |] 8-K [removed: filed on] [added: | |] February 13, 2020 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm)] | [added: | 4.2 | | 0-18059 |]

| 4.3 | [removed: —] | [Form of 4.000% senior unsecured notes due [removed: 2028 (filed as Exhibit 4.3 to our Current Report on Form] [added: 2028](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm) | | | |] 8-K [removed: filed on] [added: | |] February 13, 2020 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/0000857005/000119312520035604/d882560dex41.htm)] | [added: | 4.3 | | 0-18059 |]

| 4.4 | [removed: —] | [Description of Securities Registered under Section 12 of the Securities Exchange Act of [removed: 1934 (filed as Exhibit 4.4 to our Annual Report on Form] [added: 1934](https://www.sec.gov/Archives/edgar/data/857005/000085700519000040/ptc93019ex44.htm) | | | |] 10-K [removed: for the year ended September 30,] [added: | | November 18,] 2019 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700519000040/ptc93019ex44.htm)] | [added: | 4.4 | | 0-18059 |]

| 10.1* | [removed: —] | [2000 Equity Incentive [removed: Plan (filed as Exhibit 10.1 to our Current Report on Form] [added: Plan](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_1.htm) | | | |] 8-K [removed: filed on] [added: | |] February 21, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_1.htm)] | [added: | 10.1 | | 0-18059 |]

| [removed: 10.1.5] [added: 10.1-2*] | [removed: —] | [Form of Restricted Stock Unit Certificate [removed: (U.S.) (filed as Exhibit 10.1.11 to our Annual Report on Form] [added: (U.S.)](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10111.htm) | | | |] 10-K [removed: for the fiscal year ended September 30,] [added: | | November 18,] 2016 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10111.htm)] | [added: | 10.1.11 | | 0-18059 |]

| [removed: 10.1.12*] [added: 10.1-5*] | | [Form of Restricted Stock Unit Certificate [removed: (U.S.).](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_112.htm)] [added: (U.S.)](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_112.htm)] | [added: | | | 10-K | | November 20, 2023 | | 10.1.12 | | 0-18059 |]

| [removed: 10.1.13*] [added: 10.1-6*] | | [Form of Restricted Stock Unit Certificate (U.S. Section 16 and U.S. [removed: EVP).](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_113.htm)] [added: EVP)](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_113.htm)] | [added: | | | 10-K | | November 20, 2023 | | 10.1.13 | | 0-18059 |]

| [removed: 10.1.14*] [added: 10.1-3*] | | [Form of Restricted Stock Unit Certificate (U.S. [removed: Section 16 and U.S. EVP).](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_114.htm)] [added: EVP)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex10_1-3.htm)] | [added: | X | | | | | | | | |]

| 10.2* | [removed: —] | [2016 Employee Stock Purchase [removed: Plan (filed as Exhibit 10.2 to our Current Report on Form] [added: Plan](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_2.htm) | | | |] 8-K [removed: filed on] [added: | |] February 21, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_2.htm)] | [added: | 10.2 | | 0-18059 |]

| [removed: 10.3.1*] [added: 10.3-1*] | [removed: —] | [Executive Agreement by and between the Company and James Heppelmann dated September 30, [removed: 2020 (filed as Exhibit 10.1 to our Current Report on Form] [added: 2020](https://www.sec.gov/Archives/edgar/data/0000857005/000156459020045937/ptc-ex101_8.htm) | | | |] 8-K [removed: dated September 30,] [added: | | October 6,] 2020 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/0000857005/000156459020045937/ptc-ex101_8.htm)] | [added: | 10.1 | | 0-18059 |]

| [removed: 10.3.2*] [added: 10.3-2*] | | [Amendment No. 1 to Executive Agreement by and between the Company and James Heppelmann dated February 16, [removed: 2023 (filed as Exhibit 10.3 to our Current Report on Form] [added: 2023](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_3.htm) | | | |] 8-K [removed: filed on] [added: | |] February 21, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000095017023003309/ptc-ex10_3.htm)] | [added: | 10.3 | | 0-18059 |]

| [removed: 10.4.1*] [added: 10.4-1*] | | [Offer Letter dated July 24, 2023 by and between the Company and Neil [removed: Barua (filed as Exhibit 10.1 to our Current Report on Form] [added: Barua](https://www.sec.gov/Archives/edgar/data/857005/000119312523194613/d398527dex101.htm) | | | |] 8-K [removed: filed on] [added: | |] July 26, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000119312523194613/d398527dex101.htm)] | [added: | 10.1 | | 0-18059 |]

| [removed: 10.4.2*] [added: 10.4-2*] | | [Executive Agreement between the Company and Neil Barua dated July 24, [removed: 2023 (filed as Exhibit 10.2 to our Current Report on Form] [added: 2023](https://www.sec.gov/Archives/edgar/data/857005/000119312523194613/d398527dex102.htm) | | | |] 8-K [removed: filed on] [added: | |] July 26, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000119312523194613/d398527dex102.htm)] | [added: | 10.2 | | 0-18059 |]

| 10.5* | | [Form of Executive Agreement dated November 16, 2023 by and between PTC Inc. and each of Kristian Talvitie, Catherine Kniker, and Aaron von [removed: Staats.](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_5.htm)] [added: Staats](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_5.htm)] | [added: | | | 10-K | | November 20, 2023 | | 10.5 | | 0-18059 |]

| 10.6* | | [Executive Agreement dated November 16, 2023 by and between Michael DiTullio and PTC Inc.](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex10_6.htm) | [added: | | | 10-K | | November 20, 2023 | | 10.6 | | 0-18059 |]

| 10.10 | [removed: —] | [Office Lease Agreement dated as of September 7, 2017 by and between PTC Inc. and SCD L2 Seaport Square [removed: LLC (filed as Exhibit 10 to our Current Report on Form] [added: LLC](https://www.sec.gov/Archives/edgar/data/857005/000119312517278944/d454992dex10.htm) | | | |] 8-K [removed: filed on] [added: | |] September 7, 2017 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000119312517278944/d454992dex10.htm)] | [added: | 10 | | 0-18059 |]

| 10.11 | [removed: —] | [First Amendment to Lease dated as of October 5, 2017 by and between PTC Inc. and SCD L2 Seaport Square [removed: LLC (filed as Exhibit 10.23 to our Annual Report on Form 10-K for the period ended September 30,] [added: LLC](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc93017ex1023.htm) | | | | 8-K | | November 29,] 2017 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc93017ex1023.htm)] | [added: | 10.23 | | 0-18059 |]

| 10.16 | [removed: —] | [Fourth Amended and Restated Credit Agreement dated January 3, 2023 by and among PTC, PTC (IFSC) Limited, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders named [removed: therein (filed as Exhibit 4.4 to our Current Report on Form] [added: therein](https://www.sec.gov/Archives/edgar/data/857005/000095017023000061/ptc-ex4_4.htm) | | | |] 8-K [removed: filed on] [added: | |] January 3, 2023 [removed: (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000095017023000061/ptc-ex4_4.htm)] | [added: | 4.4 | | 0-18059 |]

| 21.1 | [removed: —] | [Subsidiaries of PTC [removed: Inc.](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex21_1.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex21_1.htm)] | [added: | X | | | | | | | | |]

| 23.1 | [removed: —] | [Consent of PricewaterhouseCoopers LLP, an independent registered public accounting [removed: firm.](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex23_1.htm)] [added: firm](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex23_1.htm)] | [added: | X | | | | | | | | |]

| 31.1 | [removed: —] | [Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13(a)-14(a) and [removed: 15d-14(a).](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex31_1.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex31_1.htm)] | [added: | X | | | | | | | | |]

| 31.2 | [removed: —] | [Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13(a)-14(a) and [removed: 15d-14(a).](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex31_2.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex31_2.htm)] | [added: | X | | | | | | | | |]

| 32 | [removed: —] | [Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section [removed: 1350.](https://www.sec.gov/Archives/edgar/data/857005/000095012323011049/ptc-ex32.htm)] [added: 1350](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex32.htm)] | [added: | X | | | | | | | | |]

[removed: | 101 | — | The following materials from PTC Inc.'s Annual Report on Form 10-K for] [added: We have audited] the [removed: year ended September 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as] [added: accompanying consolidated balance sheets] of [removed: September 30, 2023] [added: PTC Inc.] and [removed: 2022; (ii) Consolidated Statements] [added: its subsidiaries (the "Company") as] of [removed: Operations for the years ended] September 30, [removed: 2023, 2022] [added: 2024] and [removed: 2021; (iii) Consolidated Statements of Comprehensive Income for the years ended September 30,] 2023, [removed: 2022] and [removed: 2021; (iv) Consolidated Statements of Cash Flows for] the [removed: years ended September 30, 2023, 2022] [added: related consolidated statements of operations, of comprehensive income, of stockholders’ equity] and [removed: 2021; (v) Consolidated Statements] of [removed: Stockholders’ Equity] [added: cash flows] for [added: each of] the [added: three] years [added: in the period] ended September 30, [removed: 2023, 2022 and 2021; and (vi) Notes] [added: 2024, including the related notes (collectively referred] to [removed: Consolidated Financial Statements. |][added: as the "consolidated financial statements").]

| 104 | [removed: —] | The cover page of the Annual Report on Form 10-K formatted in Inline XBRL (included in Exhibit [removed: 101).] [added: 101)] | [added: | | | | | | | | | |]

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the [removed: 17th] [added: 14th] day of November, [removed: 2023.][added: 2024.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below, on the [removed: 17th] [added: 14th] day of November, [removed: 2023.][added: 2024.]

| (ii) Principal Financial [removed: and Accounting] Officer: | | |

| [removed: (iii)] [added: (iv)] Board of Directors: | | |

| [added: | By: |] /s/ NEIL BARUA | [removed: | Director |]

Report of Independent [removed: Registered] [added: Registered] Public Accounting Firm

We also have audited the Company's internal control over financial reporting as of September 30, [removed: 2023,] [added: 2024,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] and the results of its operations and its cash flows for each of the three years in the period ended September 30, [removed: 2023] [added: 2024] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2023,] [added: 2024,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the consolidated financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (i) [removed: relate] [added: relates] to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

During the year ended September 30, [removed: 2023,] [added: 2024,] the Company recognized revenue from contracts with customers of [removed: $2,097] [added: $2,298] million.

The principal considerations for our determination that performing procedures relating to revenue recognition - identification of distinct performance obligations, is a critical audit matter are the (i) significant judgment by management when identifying the distinct performance obligations, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s identification of distinct performance obligations within contracts with [added: customers.]

[Table of Contents](#toc_page)

| | | | | | | Incorporated by Reference | | | | | | |

| Exhibit Number | | Description | | Filed Herewith | | Form | | Filing Date | | Exhibit | | SEC File No. |

| 3.2 | | [Amended and Restated By-Laws of PTC Inc.](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex3_2.htm) | | X | | | | | | | | |

| 10.1-1* | | [Form of Restricted Stock Unit Certificate (Non-Employee Director)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex10_1-1.htm) | | X | | | | | | | | |

| 10.1-4* | | [Form of Restricted Stock Unit Certificate (U.S. Section 16)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex10_1-4.htm) | | X | | | | | | | | |

| 10.1-8* | | [Form of Restricted Stock Unit Certificate (Non-U.S.)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex10_1-8.htm) | | X | | | | | | | | |

| 10.1-9* | | [Form of Restricted Stock Unit Certificate (Israel)](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex10_1-9.htm) | | X | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

[Table of Contents](#toc_page)

| | | | | | | | | | | | | |

| 10.17 | | [Amendment No. 1 dated October 1, 2024 to the Fourth Amended and Restated Credit Agreement dated January 3, 2023 by and among PTC, PTC (IFSC) Limited, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders named therein](https://www.sec.gov/Archives/edgar/data/857005/000095017024113213/ptc-ex10_1.htm) | | | | 8-K | | October 7, 2024 | | 10.1 | | 0-18059 |

| | | | | | | | | | | | | |

| 19.1 | | [Trading in Company Securities Policy](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex19_1.htm) | | X | | | | | | | | |

| | | | | | | | | | | | | |

| 19.2 | | [Rule 10b5-1 Plan Policy](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex19_2.htm) | | X | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| 97.1 | | [Executive Compensation Recoupment Policy](https://www.sec.gov/Archives/edgar/data/857005/000095017024127231/ptc-ex97_1.htm) | | X | | | | | | | | |

| | | | | | | | | | | | | |

| 101.INS | | Inline XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document | | | | | | | | | | |

| | | | | | | | | | | | | |

| 101.SCH | | Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents | | | | | | | | | | |

| | | | | | | | | | | | | |

[Table of Contents](#toc_page)

| | | Neil Barua President and Chief Executive Officer |

| /s/ NEIL BARUA | | President and Chief Executive Officer |

| (iii) Principal Accounting Officer: | | |

| /s/ ALICE CHRISTENSON | | Chief Accounting Officer |

| Alice Christenson | | |

| /s/ JANICE CHAFFIN | | Chair of the Board |

| | | |

| --- | --- | --- |

| Exhibit Number | | Exhibit |

| 1.1 | — | [Share Purchase Agreement dated as of November 17, 2022, by and among PTC Inc., ServiceMax JV, LP, and ServiceMax, Inc. (filed as Exhibit 1.1 to our Current Report on Form 8-K filed on November 17, 2022 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000119312522287299/d396117dex11.htm) |

| 3.2 | — | [Amended and Restated By-Laws of PTC Inc., as amended through June 24, 2021(filed as Exhibit 3.2 to our Annual Report on Form 10-K for the year ended September 30, 2022 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000095017022025211/ptc-ex3_2.htm) |

| 10.1.1 | — | [Form of Restricted Stock Unit Certificate (Non-U.S.) (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex104.htm) |

| 10.1.2* | — | [Form of Restricted Stock Unit Certificate (Non-Employee Director) (filed as Exhibit 10.1.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2013 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700513000018/exhibit1011formofrsucertif.htm) |

| 10.1.3 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.9 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex1019.htm) |

| 10.1.4 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.10 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10110.htm) |

| 10.1.6 | — | [Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.12 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10112.htm) |

| 10.1.7* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.13 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10113.htm) |

| 10.1.8 | — | [Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.14 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10114.htm) |

| 10.1.9 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.15 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10115.htm) |

| 10.1.10* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.16 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10116.htm) |

| 10.1.11* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.17 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (File No. 0-18059) and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10117.htm) |

* Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.

| | By: | /s/ JAMES HEPPELMANN |

| | | James Heppelmann Chairman of the Board and Chief Executive Officer |

| /s/ JAMES HEPPELMANN | | Chief Executive Officer |

| James Heppelmann | | |

| /s/ JAMES HEPPELMANN | | Chairman of the Board |

| /s/ JANICE CHAFFIN | | Lead Independent Director |

We have audited the accompanying consolidated balance sheets of PTC Inc. and its subsidiaries (the “Company”) as of September 30, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended September 30, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded ServiceMax, Inc. from its assessment of internal control over financial reporting as of

September 30, 2023 because it was acquired by the Company in a purchase business combination during fiscal 2023.

We have also excluded ServiceMax, Inc. from our audit of internal control over financial reporting.

ServiceMax, Inc. is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 1% and 7%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2023.

customers.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

*Acquisition of ServiceMax, Inc. – Valuation of the Customer Relationships and Purchased Software Intangible Assets*

As described in Note 6 to the consolidated financial statements, the Company completed its acquisition of ServiceMax, Inc. on January 3, 2023, for purchase consideration of $1,448.2 million, net of cash acquired.

The Company has accounted for the acquisition of ServiceMax, Inc. as a business combination.

Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date.

The purchase price allocation resulted in $512.7 million of customer relationships and $106.9 million of purchased software being recorded.

The principal considerations for our determination that performing procedures relating to the valuation of the customer relationships and purchased software intangible assets in the acquisition of ServiceMax, Inc. is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships and purchased software acquired, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues, costs and the discount rate for the customer relationships and future revenues and the discount rate for the purchased software intangible assets; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships and purchased software acquired.

These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships and purchased software acquired; (iii) evaluating the appropriateness of the discounted cash flow models used by management to develop the fair value estimates; (iv) testing the completeness and accuracy of the underlying data used in the discounted cash flow models used by management to develop the fair value estimates; and (v) evaluating the reasonableness of the significant assumptions used by management related to future revenues, costs and the discount rate for the customer relationships and future revenues and the discount rate for the purchased software intangible assets.

Evaluating management’s assumptions related to future revenues, costs and the discount rate for the customer relationships intangible asset and the future revenues and the discount rate for the purchased software intangible asset involved considering (i) the consistency with external economic and industry data, (ii) the past performance of the acquired business, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models and the reasonableness of the discount rate assumptions.

November 17, 2023