NEWS: PTC to Acquire SaaS PLM Leader Arena Solutions
Combination of Onshape and Arena to Enable PTC to DeliverComplete CAD + PLM SaaS Solution
PTC Reaffirms Cash Flow Targets for FY’21
BOSTON, MA — December 14, 2020 — PTC (NASDAQ: PTC) today announced that it hassigned a definitive agreement to acquire Arena Solutions, Inc. (Arena Solutions) the industry’sleading “software as a service” (SaaS) product lifecycle management (PLM) platformprovider. The acquisition will further PTC’s strategy to be the leader in the rapidly-growingmarket for SaaS-based product development software, enabling the company to deliver acomplete CAD + PLM SaaS solution. Under the terms of the agreement, PTC will acquire ArenaSolutions for $715 million in cash. Subject to customary closing conditions and completion ofregulatory review, the acquisition is expected to be completed in PTC’s fiscal Q2 2021.
"A year ago, PTC entered the SaaS world for product development software with ouracquisition of Onshape,” said Jim Heppelmann, president and CEO, PTC. “That movereflected our strong conviction that our market is nearing a tipping point in its willingness toadopt SaaS technology, following the trend seen in many other software markets. The effectsof COVID-19 have dramatically accelerated this inevitable shift, with PTC customer surveysindicating a 25% increase in readiness for SaaS PLM since the pandemic started. We expectthe acquisition of Arena will significantly extend our leadership position as we continue toredefine the future of our industry.”
With headquarters in Foster City, California, Arena Solutions serves more than 1,200 customersacross the electronics, high-tech, and medical-device industries, including world-classinnovators such as Nutanix, Peloton, Sonos and Square. In addition, Arena will broadly extendPTC’s presence in the attractive mid-market, where SaaS solutions are becoming thestandard.
“As the SaaS PLM pioneer, we were first to see that engineers and product developers wouldbenefit from a new paradigm in the way they collaborate and drive product innovation,” saidCraig Livingston, Arena Solutions president and CEO. “We were ahead of the market in theearly days, but in the past several years we’ve seen an acceleration of market receptivity anddemand. This acquisition validates our original vision, and we are pleased to be joining anestablished leader in CAD and PLM capable of hastening the movement of our market toSaaS.”
The Arena Solutions product realization platform unifies PLM, quality management, andrequirements management, allowing every participant throughout the product design andmanufacturing process – as well as across an extended supply chain – to work together in asecure, high availability cloud environment.
“This acquisition is the logical next step in PTC’s strategy to be the industrial SaaS leader,”continued Heppelmann. “A big first step was the acquisition of Onshape, the SaaS leader inCAD and collaborative design capabilities. Arena will enable us to round out the solution withfull PLM capabilities and deliver the only complete CAD + PLM SaaS solution in the industry.”
Arena Solutions is expected to end calendar year 2020 with approximately $50 million inannualized recurring revenue, reflecting double-digit growth over 2019. The transaction isexpected to be neutral to PTC’s FY’21 cash flow from operations target of $365 million and freecash flow target of $340 million (which reflects the deduction of approximately $25 million ofcapital expenditures from cash flow from operations) and accretive to FY’22 and beyond. Thetransaction will be funded with cash on-hand and amounts borrowed under PTC’s existingcredit facility.
PTC management will provide additional details about the transaction at its Investor Dayvirtual meeting scheduled for Tuesday, December 15.
Centerview Partners LLC is the exclusive financial advisor to PTC and Morgan, Lewis & BockiusLLP is acting as its legal counsel. Barclays is the exclusive financial advisor to Arena and JMIEquity, and Goodwin Procter is acting as their legal counsel.
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Onshape Acquisition Press Release
This news release contains statements about future events and expectations, including theclosing of the acquisition, the effect of the acquisition on our future growth and financialresults, including our cash flow from operations and free cash flow, the expected value of theacquired technology to our business, and market adoption of industrial SaaS solutions. Thesestatements are “forward-looking statements” that involve risks and uncertainties that couldcause actual results to differ materially from those projected, including that the closingconditions may not be satisfied when or as we expect or may be waived; the acquiredtechnology may not provide the access to new customers and markets that we expect ifthose customers and markets are not receptive to the technology; we may be unable tointegrate the acquired technology when or as we expect, which could adversely affect ourability to offer additional SaaS solutions; customers may not adopt SaaS solutions for productdevelopment as we expect, which would adversely affect our revenue; key Arena Solutionsemployees may not stay with PTC, which could disrupt the Arena Solutions business and ourability to successfully integrate and operate the Arena Solutions business; we may incurunanticipated costs associated with the integration of Arena Solutions, which would impactour earnings and free cash flow; and other risks and uncertainties described in PTC’s filings withU.S. Securities and Exchange Commission.
(NASDAQ: PTC) PTC enables global manufacturers to realize double-digit impact with software solutions thatenable them to accelerate product and service innovation, improve operational efficiency, and increase workforce productivity. In combination with an extensive partner network, PTCprovides customers flexibility in how its technology can be deployed to drive digitaltransformation – on premises, in the cloud, or via its pure SaaS platform. At PTC, we don’t justimagine a better world, we enable it.