10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

FORM 10-Q

____________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

Commission File Number: 0-18059

____________________________________________________

PTC Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________

Massachusetts	04-2866152
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

140 Kendrick Street, Needham, MA 02494

(Address of principal executive offices, including zip code)

(781) 370-5000

(Registrant’s telephone number, including area code)

____________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer	þ	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller reporting company)
						Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

There were 117,829,713 shares of our common stock outstanding on July 27, 2018.

PTC Inc.

INDEX TO FORM 10-Q

For the Quarter Ended June 30, 2018

		Page Number
Part I—FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements:
	Consolidated Balance Sheets as of June 30, 2018 and September 30, 2017	1
	Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017	2
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended June 30, 2018 and July 1, 2017	3
	Consolidated Statements of Cash Flows for the nine months ended June 30, 2018 and July 1, 2017	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	49
Part II—OTHER INFORMATION
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 6.	Exhibits	51
Signature		52

PART I—FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PTC Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	June 30, 2018			September 30, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	266,552		$	280,003
Short-term marketable securities	22,356			18,408
Accounts receivable, net of allowance for doubtful accounts of $591 and $1,062 at June 30, 2018 and September 30, 2017, respectively	130,079			152,299
Prepaid expenses	46,600			49,913
Other current assets	122,625			165,933
Total current assets	588,212			666,556
Property and equipment, net	64,456			63,600
Goodwill	1,182,462			1,182,772
Acquired intangible assets, net	214,657			257,908
Long-term marketable securities	31,816			31,907
Deferred tax assets	138,958			123,166
Other assets	35,070			34,475
Total assets	$	2,255,631		$	2,360,384
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37,773		$	35,160
Accrued expenses and other current liabilities	58,296			80,761
Accrued compensation and benefits	87,401			110,957
Accrued income taxes	6,683			5,735
Deferred revenue	474,957			446,296
Total current liabilities	665,110			678,909
Long-term debt	693,053			712,406
Deferred tax liabilities	5,862			17,880
Deferred revenue	8,994			12,611
Other liabilities	48,227			53,142
Total liabilities	1,421,246			1,474,948
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued	—			—
Common stock, $0.01 par value; 500,000 shares authorized; 115,491 and 115,333 shares issued and outstanding at June 30, 2018 and September 30, 2017, respectively	1,155			1,153
Additional paid-in capital	1,524,399			1,609,030
Accumulated deficit	(612,600		)	(650,840		)
Accumulated other comprehensive loss	(78,569		)	(73,907		)
Total stockholders’ equity	834,385			885,436
Total liabilities and stockholders’ equity	$	2,255,631		$	2,360,384

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Revenue:
Subscription	$	126,712		$	74,859		$	339,651		$	195,001
Support	121,127			140,428			379,007			433,624
Total recurring revenue	247,839			215,287			718,658			628,625
Perpetual license	25,780			32,348			82,604			94,099
Total subscription, support and license revenue	273,619			247,635			801,262			722,724
Professional services	41,158			43,658			128,041			134,936
Total revenue	314,777			291,293			929,303			857,660
Cost of revenue:
Cost of license and subscription revenue	24,010			21,648			71,505			62,333
Cost of support revenue	22,223			23,635			67,453			69,028
Total cost of software revenue	46,233			45,283			138,958			131,361
Cost of professional services revenue	35,323			36,985			109,187			114,852
Total cost of revenue	81,556			82,268			248,145			246,213
Gross margin	233,221			209,025			681,158			611,447
Operating expenses:
Sales and marketing	107,741			93,101			305,386			271,568
Research and development	61,218			59,850			187,381			175,474
General and administrative	33,082			35,294			101,439			108,789
Amortization of acquired intangible assets	7,850			7,973			23,566			23,986
Restructuring and other charges, net	1,627			1,551			1,846			8,300
Total operating expenses	211,518			197,769			619,618			588,117
Operating income	21,703			11,256			61,540			23,330
Interest expense	(10,646		)	(10,200		)	(31,072		)	(32,239		)
Interest income and other expense, net	(1,086		)	(357		)	(2,481		)	2,049
Income (loss) before income taxes	9,971			699			27,987			(6,860		)
Provision (benefit) for income taxes	(7,026		)	1,650			(10,809		)	4,336
Net income (loss)	$	16,997		$	(951	)	$	38,796		$	(11,196	)
Earnings (loss) per share—Basic	$	0.15		$	(0.01	)	$	0.33		$	(0.10	)
Earnings (loss) per share—Diluted	$	0.14		$	(0.01	)	$	0.33		$	(0.10	)
Weighted average shares outstanding—Basic	115,774			115,615			115,915			115,511
Weighted average shares outstanding—Diluted	117,500			115,615			117,687			115,511

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net income (loss)	$	16,997		$	(951	)	$	38,796		$	(11,196	)
Other comprehensive income (loss), net of tax:
Unrealized hedge gain (loss) arising during the period, net of tax of $0.6 million and $0.3 million in the third quarter of 2018 and 2017, respectively, and $0.1 million and $0 million in the first nine months of 2018 and 2017, respectively	3,910			(2,298		)	950			224
Net hedge (gain) loss reclassified into earnings, net of tax of $0 million in both the third quarter of 2018 and 2017, respectively, and $0.3 million and $0.1 million in the first nine months of 2018 and 2017, respectively	242			75			2,327			(777		)
Unrealized gain (loss) on hedging instruments	4,152			(2,223		)	3,277			(553		)
Foreign currency translation adjustment, net of tax of $0 for each period	(21,628		)	17,553			(8,859		)	3,893
Unrealized gain (loss) on marketable securities, net of tax of $0 for each period	67			21			(379		)	(50		)
Amortization of net actuarial pension loss included in net income, net of tax of $0.1 million and $0.2 million in the third quarter of 2018 and 2017, respectively, and $0.5 million and $0.7 million in the first nine months of 2018 and 2017, respectively	386			597			1,143			1,687
Change in unamortized pension loss during the period related to changes in foreign currency	884			(1,721		)	156			(343		)
Other comprehensive income (loss)	(16,139		)	14,227			(4,662		)	4,634
Comprehensive income (loss)	$	858		$	13,276		$	34,134		$	(6,562	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine months ended
	June 30, 2018			July 1, 2017
Cash flows from operating activities:
Net income (loss)	$	38,796		$	(11,196	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization	65,303			64,187
Stock-based compensation	52,015			56,139
Other non-cash items, net	304			1,536
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	21,195			34,913
Accounts payable and accrued expenses	(16,539		)	2,594
Accrued compensation and benefits	(22,348		)	(50,518		)
Deferred revenue	82,794			45,985
Accrued income taxes	(30,005		)	(17,832		)
Other current assets and prepaid expenses	(5,434		)	(7,317		)
Other noncurrent assets and liabilities	(759		)	(16,028		)
Net cash provided by operating activities	185,322			102,463
Cash flows from investing activities:
Additions to property and equipment	(18,666		)	(19,333		)
Purchase of intangible asset	(3,000		)	—
Purchases of short- and long-term marketable securities	(18,063		)	(14,173		)
Proceeds from maturities of short- and long-term marketable securities	13,640			13,440
Acquisitions of businesses, net of cash acquired	(3,000		)	(4,960		)
Purchases of investments	(1,000		)	—
Proceeds from sales of investments	—			15,218
Net cash used by investing activities	(30,089		)	(9,808		)
Cash flows from financing activities:
Borrowings under credit facility	200,000			150,000
Repayments of borrowings under credit facility	(220,000		)	(190,000		)
Repurchases of common stock	(100,000		)	(34,994		)
Proceeds from issuance of common stock	7,472			3,978
Credit facility origination costs	—			(184		)
Contingent consideration	(7,750		)	(11,054		)
Payments of withholding taxes in connection with vesting of stock-based awards	(44,797		)	(26,244		)
Net cash used in financing activities	(165,075		)	(108,498		)
Effect of exchange rate changes on cash and cash equivalents	(3,609		)	(1,397		)
Net increase (decrease) in cash and cash equivalents	(13,451		)	(17,240		)
Cash and cash equivalents, beginning of period	280,003			277,935
Cash and cash equivalents, end of period	$	266,552		$	260,695

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. The September 30, 2017 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30. Our fiscal quarters end on a Saturday following a thirteen-week calendar, and may result in different quarter end dates year to year. The third quarter of 2018 ended on June 30, 2018 and the third quarter of 2017 ended on July 1, 2017. The results of operations for the nine months ended June 30, 2018 are not necessarily indicative of the results expected for the remainder of the fiscal year.

Reclassifications

Effective at the beginning of fiscal 2018, in accordance with the adoption of ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, excess tax benefits are now classified as an operating activity on the statement of cash flows rather than as a financing activity. The prior period excess tax benefits have been reclassified for comparability.

Segments

In fiscal 2017, we had three operating and reportable segments: (1) the Solutions Group, which included license, subscription, support and cloud services revenue for our core CAD, SLM and PLM products; (2) the IoT Group, which included license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions; and (3) Professional Services, which included consulting, implementation and training revenue.

With a change in our organizational structure to streamline our operations, we merged our Solution Group segment with our IoT Group segment and revised the information that our chief executive officer, who is also our chief operating decision maker ("CODM"), regularly reviews for purposes of allocating resources and assessing performance. As a result, effective with the beginning of the first quarter of fiscal 2018, we changed our operating and reportable segments from three to two: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services.

Revenue and operating income in Note 10. Segment Information have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Stock Compensation

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We adopted ASU No. 2016-09 in the first quarter of 2018.

5

Effective with the adoption, stock-based compensation excess tax benefits or deficiencies are reflected in the Consolidated Statements of Operations as a component of the provision for income taxes when the awards vest or are settled. Previously they were recognized in equity. Upon adoption, under the modified retrospective transition method, we recognized the previously unrecognized excess tax benefits of $37.0 million as increases in deferred tax assets for tax loss carryovers and tax credits, $36.9 million of which were offset by an increase in our U.S. valuation allowance.

Additionally, on our Consolidated Statements of Cash Flows excess tax benefits from stock-based awards will no longer be separately classified as a financing activity apart from other income tax, and will be presented as an operating activity. As a result of the adoption of ASU 2016-09, the Consolidated Statement of Cash Flows for the nine months ended July 1, 2017 was adjusted as follows: a $0.4 million increase to net cash provided by operating activities and a $0.4 million decrease to net cash used in financing activities.

Finally, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which resulted in a cumulative effect adjustment of $0.7 million to reduce retained earnings as of October 1, 2017.

Pending Accounting Pronouncements

Derivative Financial Instruments

In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-12, "Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities", which amends and simplifies existing guidance to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2018 (our fiscal 2020) including interim reporting periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Income Taxes

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). The purpose of ASU 2016-16 is to simplify the income tax accounting of an intra-entity transfer of an asset other than inventory and to record its effect when the transfer occurs. The guidance is effective for annual reporting periods beginning after December 15, 2017 (our fiscal 2019) including interim reporting periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. We expect to record a net deferred tax asset of approximately $77 million upon adoption, primarily relating to deductible amortization of intangible assets in Ireland.  Post adoption, our effective tax rate will no longer include the benefit of this amortization, which is reflected in our effective tax rate reconciliation under the current guidance. 

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will replace the existing guidance in ASC 840, Leases. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and to disclose important information about leasing arrangements. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 (our fiscal 2020) and interim periods within those annual periods. Early adoption is permitted and modified retrospective application is required. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The FASB has also issued additional standards to provide clarification and implementation guidance on ASU 2014-09.

The core principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration that is expected to be received for those goods or services. Under the new guidance, an entity is required to evaluate revenue recognition through a five-step process: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when (or as) the entity satisfies

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a performance obligation. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In applying the principles of ASU 2014-09, it is possible more judgment and estimates may be required within the revenue recognition process than is required under existing U.S. GAAP, including identifying performance obligations, estimating the amount of variable consideration to include in the transaction price, and estimating the value of each performance obligation to allocate the total transaction price to each separate performance obligation.

ASU 2014-09 is effective for us in our first quarter of fiscal 2019. Companies may adopt ASU 2014-09 using either the retrospective method, under which each prior reporting period is presented under ASU 2014-09, with the option to elect certain permitted practical expedients, or the modified retrospective method, under which a company adopts ASU 2014-09 from the beginning of the year of initial application with no restatement of comparative periods, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application, with certain additional required disclosures. We currently expect to adopt ASU 2014-09 using the modified retrospective method.

While we are continuing to assess the impact of the new standard, we currently believe the most significant impact relates to accounting for our subscription arrangements that include term-based on-premise software licenses bundled with support. Under current GAAP, revenue attributable to these subscription licenses is recognized ratably over the term of the arrangement because VSOE does not exist for the undelivered support element as it is not sold separately. Under the new standard, the requirement to have VSOE for undelivered elements to enable the separation of revenue for the delivered software licenses is eliminated. Accordingly, under the new standard we will be required to recognize as revenue a portion of the subscription fee upon delivery of the software license. We currently expect revenue related to our perpetual licenses and related support contracts, professional services and cloud offerings to remain substantially unchanged. Due to the complexity of certain of our contracts, the actual revenue recognition treatment required under the new standard may be dependent on contract-specific terms and, therefore, may vary in some instances.

Upon implementation of the new standard in fiscal 2019, we expect to make prospective revisions to contract terms with our customers that will result in shortening the initial, non-cancellable term of our multi-year subscriptions to one year for contract periods that begin on or after October 1, 2018. This change will result in annual contractual periods for most of our software subscriptions, the license portion of which will be recognized at the beginning of each annual contract period upon delivery of the licenses and the support portion of which will be recognized ratably over the one-year contractual period. As a result, we anticipate one year of subscription revenue will be recognized for each contract each year; however, more of the revenue will be recognized in the quarter that the contract period begins and less will be recognized in the subsequent three quarters of the contract than under the current accounting rules.

Under the modified retrospective method, we will evaluate each contract that is ongoing on the adoption date as if that contract had been accounted for under ASU 2014-09 from contract inception. Some license revenue related to subscription arrangements that would have been recognized in future periods under current GAAP will be recast under ASU 2014-09 as if the revenue had been recognized in prior periods. Under this transition method, we will not adjust historical reported revenue amounts. Instead, the revenue that would have been recognized under this method prior to the adoption date will be an adjustment to retained earnings and will not be recognized as revenue in future periods as previously expected. Because we expect that license revenue associated with subscription contracts will be recognized up front instead of over time under ASU 2014-09, we expect a material portion of our deferred revenue will be adjusted to retained earnings upon adoption. During the first year of adoption, we will record and disclose the amount of this retained earnings adjustment and intend to provide supplemental disclosure of how this revenue would have been recognized under the current rules.

Another significant provision under ASU 2014-09 includes the capitalization and amortization of costs associated with obtaining a contract, such as sales commissions. Currently, we expense sales commissions in the period incurred. Under ASU 2014-09, direct and incremental costs to acquire a contract are capitalized and amortized using a systematic basis over the pattern of transfer of the goods and services to which the asset relates. While we are continuing to assess the impact of this provision of ASU 2014-09, we likely will be required to capitalize incremental costs such as commissions and amortize those costs over the period the capitalized assets are expected to contribute to future cash flows.

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Furthermore, we have made and will continue to make investments in systems and processes to enable timely and accurate reporting under the new standard. We currently expect that necessary operational and internal control structural changes will be implemented prior to the adoption date.

2. Deferred Revenue and Related Customer Receivables

Deferred Revenue

Deferred revenue primarily relates to software agreements billed to customers for which the subscription and support services have not yet been provided. The liability associated with performing these subscription and support services is included in deferred revenue and, if not yet paid, the related customer receivable is included in prepaid expenses and other current assets. Billed but uncollected support and subscription-related amounts included in other current assets at June 30, 2018 and September 30, 2017 were $108.7 million and $160.9 million, respectively.

3. Restructuring and Other Charges

Restructuring Charges (Credits)

In fiscal 2016, we initiated a plan to restructure our workforce and consolidate select facilities to reduce our cost structure and to realign our investments with what we believe to be our higher growth opportunities. The actions have resulted in total restructuring charges of $84.5 million, primarily associated with termination benefits associated with approximately 800 employees. This restructuring plan was substantially completed in 2017.

The following table summarizes restructuring accrual activity for the nine months ended June 30, 2018:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2017	$	1,736		$	4,508		$	6,244
Credit to operations, net	(509		)	(505		)	(1,014		)
Cash disbursements	(1,247		)	(1,207		)	(2,454		)
Foreign exchange impact	20			(80		)	(60		)
Accrual, June 30, 2018	$	—		$	2,716		$	2,716

The following table summarizes restructuring accrual activity for the nine months ended July 1, 2017:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2016	$	35,177		$	1,431		$	36,608
Charges to operations, net	2,582			5,718			8,300
Cash disbursements	(33,979		)	(1,351		)	(35,330		)
Other non-cash charges	—			(704		)	(704		)
Foreign exchange impact	(800		)	98			(702		)
Accrual, July 1, 2017	$	2,980		$	5,192		$	8,172

Of the accrual for facility closures and related costs, as of June 30, 2018, $1.6 million is included in accrued expenses and other current liabilities and $1.1 million is included in other liabilities in the Consolidated Balance Sheets. The accrual for facility closures is net of assumed sublease income of $3.1 million. The accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets.

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Other - Headquarters relocation charges

Headquarters relocation charges represent accelerated depreciation expense recorded in anticipation of exiting our current headquarters facility. In 2019, we will be moving into a new worldwide headquarters in the Boston Seaport District, and we will be vacating our current headquarters space. Because our current headquarters lease will not expire until November 2022, we are seeking to sublease that space. Further, if we are unable to sublease our current headquarters space for an amount at least equal to our rent obligations under the current headquarters lease, we will bear overlapping rent obligations for those premises and will be required to record additional headquarters relocation charges related to any rent shortfall. A charge for such shortfall will be recorded in the earlier of the period that we cease using the space (which will likely occur in the second quarter of our fiscal 2019) or the period we exit the lease contract. Additionally, we will incur other costs associated with the move which will be recorded as incurred. In the third quarter and first nine months of 2018, we recorded $1.9 million and $2.9 million, respectively, of accelerated depreciation expense related to shortening the estimated useful lives of leasehold improvements in our current facility.

4. Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock unit (RSU) awards based on the fair value of RSU awards on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as the principal equity incentive awards, including performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Beginning in the first quarter of 2018, we account for forfeitures as they occur, rather than estimate expected forfeitures.

Our employee stock purchase plan (ESPP), initiated in the fourth quarter of 2016, allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period. 

Restricted stock unit activity for the nine months ended June 30, 2018	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units October 1, 2017	3,487		$	45.57
Granted (1)	2,167		$	75.99
Vested	(1,804	)	$	43.94
Forfeited or not earned	(531	)	$	50.95
Balance of outstanding restricted stock units June 30, 2018	3,319		$	65.48

_________________

(1) Restricted stock granted includes 184,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2018.

	Restricted Stock Units
Grant Period	Performance-based RSUs (1)	Service-based RSUs (2)
	(Number of Units in thousands)
First nine months of 2018	961	1,022

_________________

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(1) Substantially all the performance-based RSUs were granted to our executive officers. Approximately 189,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period. RSUs not earned for a period may be earned in the third period. An additional 250,000 shares are eligible to vest based upon a 2018 performance measure. To the extent earned, those performance-based RSUs will vest inthree substantially equal installments on November 15, 2018, November 15, 2019 and November 15, 2020, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. An additional 500,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period in fiscal years 2021, 2022 and 2023. RSUs not earned for a period may be earned in the third period.

(2) The service-based RSUs were granted to employees, our executive officers and our directors. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

Compensation expense recorded for our stock-based awards was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Cost of license and subscription revenue	$	421	$	347	$	1,242	$	954
Cost of support revenue	527		1,139		2,025		3,638
Cost of professional services revenue	1,471		1,505		4,846		4,500
Sales and marketing	4,910		3,296		14,827		11,047
Research and development	3,283		2,805		9,626		9,753
General and administrative	6,046		7,482		19,449		26,247
Total stock-based compensation expense	$	16,658	$	16,574	$	52,015	$	56,139

Stock-based compensation expense includes $1.1 million and $3.2 million in the third quarter and first nine months of 2018, respectively, and $0.9 million and $2.2 million in the third quarter and first nine months of 2017, respectively, related to the ESPP.

5. Earnings per Share (EPS) and Common Stock

EPS

Basic EPS is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding RSUs using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of unrecognized compensation expense as additional proceeds.

	Three months ended					Nine months ended
Calculation of Basic and Diluted EPS	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
	(in thousands, except per share data)
Net income (loss)	$	16,997	$	(951	)	$	38,796	$	(11,196	)
Weighted average shares outstanding—Basic	115,774		115,615			115,915		115,511
Dilutive effect of restricted stock units	1,726		—			1,772		—
Weighted average shares outstanding—Diluted	117,500		115,615			117,687		115,511
Earnings (loss) per share—Basic	$	0.15	$	(0.01	)	$	0.33	$	(0.10	)
Earnings (loss) per share—Diluted	$	0.14	$	(0.01	)	$	0.33	$	(0.10	)

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There were 0.1 million antidilutive shares for the nine months ended June 30, 2018. Total antidilutive shares were 2.0 million for the nine months ended July 1, 2017. For the nine months endedJuly 1, 2017 the diluted net loss per share is the same as the basic net loss per share as the effects of all our potential common stock equivalents are antidilutive, because we reported a loss for the period.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors periodically authorizes the repurchase of shares of our common stock. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

On September 14, 2017, our Board of Directors authorized us to repurchase up to $500 million of our common stock in the period October 1, 2017 through September 30, 2020. In the first nine months of 2018 and 2017, we repurchased $100 million and $35 million, respectively, of our common stock. The 2018 repurchase was accomplished through an accelerated share repurchase ("ASR") agreement with a major financial institution that we entered into in April 2018. Under this ASR, we repurchased our common stock at a purchase price determined by the average market price over a period of time, with final settlement in June 2018.

In July 2018, our Board of Directors has authorized us to repurchase up to an additional $1,000 million of our common stock through September 30, 2020. We entered into a new $1,000 million ASR as described in Note 14. Subsequent Events. Final settlement of this ASR is expected to occur in 7.5 to 10 months.

6. Goodwill and Intangible Assets

In 2017, we had three operating and reportable segments: (1) Solutions Group, (2) IoT Group and (3) Professional Services. Effective with the beginning of the first quarter of 2018, we changed our operating and reportable segments from three to two: (1) Software Products and (2) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments.

As of June 30, 2018, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,366.8 million and our Professional Services segment was $30.3 million. As of September 30, 2017, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,410.0 million and our Professional Services segment was $30.6 million. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

We completed our annual goodwill impairment review as of June 30, 2018 based on a qualitative assessment. Our qualitative assessment included company specific (financial performance and long-range plans), industry, and macroeconomic factors, and consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date. Based on our qualitative assessment, we believe it is more likely than not that the fair values of our reporting units exceed their carrying values and no further impairment testing is required.

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Goodwill and acquired intangible assets consisted of the following:

	June 30, 2018						September 30, 2017
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	1,182,462					$	1,182,772
Intangible assets with finite lives (amortized) (1):
Purchased software	$	362,992	$	247,694	$	115,298	$	362,955	$	228,377	$	134,578
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	357,904		262,982		94,922		359,932		241,554		118,378
Trademarks and trade names	19,080		14,643		4,437		19,138		14,186		4,952
Other	4,013		4,013		—		4,030		4,030		—
	$	766,866	$	552,209	$	214,657	$	768,932	$	511,024	$	257,908
Total goodwill and acquired intangible assets					$	1,397,119					$	1,440,680

(1) The weighted-average useful lives of purchased software, customer lists and relationships, and trademarks and trade names with a remaining net book value are 9 years, 10 years, and 10 years, respectively.

Goodwill

Changes in goodwill presented by reportable segments were as follows:

	Software Products			Professional Services			Total
	(in thousands)
Balance, October 1, 2017	$	1,152,917		$	29,855		$	1,182,772
Acquisition	4,350			—			4,350
Foreign currency translation adjustment	(4,542		)	(118		)	(4,660		)
Balance, June 30, 2018	$	1,152,725		$	29,737		$	1,182,462

Amortization of Intangible Assets

The aggregate amortization expense for intangible assets with finite lives was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Amortization of acquired intangible assets	$	7,850	$	7,973	$	23,566	$	23,986
Cost of license and subscription revenue	6,798		6,517		20,029		19,294
Total amortization expense	$	14,648	$	14,490	$	43,595	$	43,280

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7. Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Money market funds, time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

Certificates of deposit, commercial paper and certain U.S. government agency securities are classified within Level 2 of the fair value hierarchy. These instruments are valued based on quoted prices in markets that are not active or based on other observable inputs consisting of market yields, reported trades and broker/dealer quotes.

The principal market in which we execute our foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. Our foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The fair value of our contingent consideration arrangements is determined based on our evaluation of the probability and amount of any earn-out that will be achieved based on expected future performances by the acquired entities. These arrangements are classified within Level 3 of the fair value hierarchy.

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Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	85,382	$	—	$	—	$	85,382
Marketable securities
Certificates of deposit	—		219		—		219
Corporate notes/bonds	52,962		—		—		52,962
U.S. government agency securities	—		991		—		991
Forward contracts	—		4,956		—		4,956
	$	138,344	$	6,166	$	—	$	144,510
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	2,100	$	2,100
Forward contracts	—		1,190		—		1,190
	$	—	$	1,190	$	2,100	$	3,290

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	49,845	$	—	$	—	$	49,845
Marketable securities
Certificates of deposit	—		240		—		240
Corporate notes/bonds	47,673		—		—		47,673
U.S. government agency securities	—		2,402		—		2,402
Forward contracts	—		1,163		—		1,163
	$	97,518	$	3,805	$	—	$	101,323
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	8,400	$	8,400
Forward contracts	—		4,347		—		4,347
	$	—	$	4,347	$	8,400	$	12,747

Changes in the fair value of Level 3 contingent consideration liability associated with our acquisitions were as follows:

	Contingent Consideration
	(in thousands)
	Kepware			Other		Total
Balance, October 1, 2017	$	8,400		$	—	$	8,400
Addition to contingent consideration	—			2,100		2,100
Payment of contingent consideration	(8,400		)	—		(8,400		)
Balance, June 30, 2018	$	—		$	2,100	$	2,100

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	Contingent Consideration
	(in thousands)
	ColdLight			Kepware			Total
Balance, October 1, 2016	$	2,500		$	17,070		$	19,570
Change in present value of contingent consideration	—			392			392
Payment of contingent consideration	(2,500		)	(9,600		)	(12,100		)
Balance, July 1, 2017	$	—		$	7,862		$	7,862

 In the Consolidated Balance Sheet as of June 30, 2018, $1.1 million of the contingent consideration liability is included in accrued expenses and other current liabilities with the remaining $1.0 million in other liabilities.

Of the $8.4 million payments in the first nine months of 2018, $7.8 million represents the fair value of the liabilities recorded at the acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows. Of the $12.1 million payments in the first nine months of 2017, $11.1 million represents the fair value of the liabilities recorded at the acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows.

In connection with our acquisition of Kepware, the former shareholders were eligible to receive additional consideration of up to $18.0 million, which was contingent on the achievement of certain Financial Performance, Product Integration and Business Integration targets (as defined in the Stock Purchase Agreement) within 24 months from April 1, 2016. The estimated undiscounted range of outcomes for the contingent consideration was $16.9 million to $18.0 million at the acquisition date. As of June 30, 2018, we had made $18.0 million in payments and had no liability remaining.

8. Marketable Securities

The amortized cost and fair value of marketable securities as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	221	$	—	$	(2	)	$	219
Corporate notes/bonds	53,474		—		(512		)	52,962
U.S. government agency securities	1,000		—		(9		)	991
	$	54,695	$	—	$	(523	)	$	54,172

	September 30, 2017
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate notes/bonds	47,811		2		(140		)	47,673
U.S. government agency securities	2,407		—		(5		)	2,402
	$	50,458	$	2	$	(145	)	$	50,315

Our investment portfolio consists of certificates of deposit, commercial paper, corporate notes/bonds and government securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. All unrealized losses are due to changes in market interest rates, bond yields and/or credit ratings.

We review our investments to identify and evaluate investments that have an indication of possible impairment. We concluded that, at June 30, 2018, the unrealized losses were temporary. The following tables summarize the fair value and gross unrealized losses aggregated by category and the length of

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time that individual securities have been in a continuous unrealized loss position as of June 30, 2018 and September 30, 2017.

	June 30, 2018
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	219	$	(2	)	$	—	$	—		$	219	$	(2	)
Corporate notes/bonds	31,516		(358		)	21,446		(154		)	52,962		(512		)
U.S. government agency securities	—		—			991		(9		)	991		(9		)
	$	31,735	$	(360	)	$	22,437	$	(163	)	$	54,172	$	(523	)

	September 30, 2017
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	240	$	—		$	—	$	—		$	240	$	—
Corporate notes/bonds	15,254		(43		)	28,885		(97		)	44,139		(140		)
U.S. government agency securities	—		—			2,402		(5		)	2,402		(5		)
	$	15,494	$	(43	)	$	31,287	$	(102	)	$	46,781	$	(145	)

The following table presents our available-for-sale marketable securities by contractual maturity date as of June 30, 2018 and September 30, 2017.

	June 30, 2018				September 30, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(in thousands)				(in thousands)
Due in one year or less	$	22,300	$	22,170	$	18,274	$	18,244
Due after one year through three years	32,395		32,002		32,184		32,071
	$	54,695	$	54,172	$	50,458	$	50,315

9. Derivative Financial Instruments

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our most significant foreign currency exposures relate to Western European countries, Japan, China and Canada. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the U.S. Dollar value of anticipated transactions and balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts, to manage the exposures to foreign currency exchange risk to reduce earnings volatility. We do not enter into derivatives transactions for trading or speculative purposes.

Non-Designated Hedges

We hedge our net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated

16

balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in interest income and other expense, net.

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Australian / U.S. Dollar	$	3,226	$	1,585
Canadian / U.S. Dollar	7,421		12,809
Swiss Franc / Euro	—		7,157
Chinese Yuan offshore / Euro	—		10,423
Euro / U.S. Dollar	309,733		244,000
Japanese Yen / Euro	—		17,694
Israeli Shekel / U.S. Dollar	7,677		8,820
Japanese Yen / U.S. Dollar	18,152		3,198
Swedish Krona / U.S. Dollar	8,568		4,627
Danish Krona / U.S. Dollar	2,645		1,743
Hong Kong / U.S. Dollar	2,628		915
All other	8,151		5,548
Total	$	368,201	$	318,519

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017:

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income	Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)
		Three months ended					Nine months ended
		June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
		(in thousands)
Forward Contracts	Interest income and other expense, net	$	(9,392	)	$	6,669	$	(6,370	)	$	(1,422	)

In the three and nine months ended June 30, 2018, foreign currency losses, net were $2.2 million and $5.4 million, respectively. In the three and nine months ended July 1, 2017, foreign currency losses, net were $0.7 million and $3.2 million, respectively.

Cash Flow Hedges

Our foreign exchange risk management program objective is to identify foreign exchange exposures and implement appropriate hedging strategies to minimize earnings fluctuations resulting from foreign exchange rate movements. We designate certain foreign exchange forward contracts as cash flow hedges of Euro, Yen and SEK denominated intercompany forecasted revenue transactions (supported by third party sales). All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of foreign exchange forward contracts is 15 months.

Cash flow hedge relationships are designated at inception, and effectiveness is assessed prospectively and retrospectively using regression analysis monthly. As the forward contracts are highly effective in offsetting changes to future cash flows on the hedged transactions, we record the effective portion of changes in these cash flow hedges in accumulated other comprehensive income and subsequently reclassify it into earnings in the period during which the hedged transactions are recognized in earnings. Changes in the fair value of foreign exchange forward contracts due to changes in time value are included in the assessment of effectiveness. Our derivatives are not subject to any credit

17

contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts designated as cash flow hedges with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Euro / U.S. Dollar	$	44,699	$	64,831
Japanese Yen / U.S. Dollar	11,830		22,675
SEK / U.S. Dollar	10,521		14,091
Total	$	67,050	$	101,597

The following table shows the effect of our derivative instruments designated as cash flow hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017 (in thousands):

Derivatives Designated as Hedging Instruments	Gain or (Loss) Recognized in OCI-Effective Portion					Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion	Gain or (Loss) Reclassified from OCI into Income-Effective Portion						Location of Gain or (Loss) Recognized-Ineffective Portion	Gain or (Loss) Recognized-Ineffective Portion
	Three months ended						Three months ended							Three months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	4,468	$	(2,627	)	Subscription, support and license revenue	$	(277	)	$	(86	)	Interest income and other expense, net	$	52	$	(29	)
	Nine months ended						Nine months ended							Nine months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	1,086	$	256		Subscription, support and license revenue	$	(2,659	)	$	888		Interest income and other expense, net	$	17	$	(23	)

As of June 30, 2018, we estimated that all amounts reported in accumulated other comprehensive income will be reclassified to income within the next twelve months.

If an underlying forecast transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to interest income and other expense, net on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2018 and July 1, 2017, there were no such gains or losses.

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The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	June 30, 2018		September 30, 2017		June 30, 2018		September 30, 2017
	(in thousands)				(in thousands)
Derivative assets (1):
Forward Contracts	$	1,994	$	540	$	2,962	$	623
Derivative liabilities (2):
Forward Contracts	$	16	$	2,352	$	1,174	$	1,995
(1) As of June 30, 2018, $4,956 thousand current derivative assets are recorded in other current assets, in the Consolidated Balance Sheets. As of September 30, 2017, $1,128 thousand current derivative assets are recorded in other current assets, and $35 thousand long-term derivative assets are recorded in other assets in the Consolidated Balance Sheets.
(2) As of June 30, 2018, $1,190 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets. As of September 30, 2017, $4,329 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities, and $18 thousand long term derivative liabilities are recorded in other liabilities in the Consolidated Balance Sheets.

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

The following table sets forth the offsetting of derivative assets as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
	(in thousands)
Forward Contracts	$	4,956	$	—	$	4,956	$	(1,190	)	$	—	$	3,766

The following table sets forth the offsetting of derivative liabilities as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(in thousands)
Forward Contracts	$	1,190	$	—	$	1,190	$	(1,190	)	$	—	$	—

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10. Segment Information

Effective with the beginning of fiscal 2018, we changed our segments, see Note 1. Basis of Presentation for additional information. We operate within a single industry segment -- computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales & marketing or general and administrative expense to our operating segments as these activities are managed on a consolidated basis. Additionally, segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance.

The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.

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	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(in thousands)
Software Products
Revenue	$	273,619		$	247,635		$	801,262		$	722,724
Operating Costs (1)	96,422			94,325			293,417			273,196
Profit	177,197			153,310			507,845			449,528
Professional Services
Revenue	41,158			43,658			128,041			134,936
Operating Costs (2)	33,945			35,588			104,634			110,681
Profit	7,213			8,070			23,407			24,255
Total segment revenue	314,777			291,293			929,303			857,660
Total segment costs	130,367			129,913			398,051			383,877
Total segment profit	184,410			161,380			531,252			473,783
Unallocated operating expenses:
Sales and marketing expenses	102,831			89,805			290,559			260,521
General and administrative expenses	25,458			27,263			80,272			81,270
Restructuring and headquarters relocation charges, net	1,627			1,551			1,846			8,300
Intangibles amortization	14,648			14,490			43,595			43,280
Stock-based compensation	16,658			16,574			52,015			56,139
Other unallocated operating expenses (3)	1,485			441			1,425			943
Total operating income	21,703			11,256			61,540			23,330
Interest expense	(10,646		)	(10,200		)	(31,072		)	(32,239		)
Interest income and other expense, net	(1,086		)	(357		)	(2,481		)	2,049
Income (loss) before income taxes	$	9,971		$	699		$	27,987		$	(6,860	)
(1) Operating costs for the Software Products segment includes all cost of software revenue and research and development costs, excluding stock-based compensation and intangible amortization.
(2) Operating costs for the Professional Services segment includes all cost of professional services revenue, excluding stock-based compensation, intangible amortization, and fair value adjustments for deferred services costs.
(3) Other unallocated operating expenses include acquisition-related and other transactional costs, pension plan termination-related costs and fair value adjustments for deferred services costs.

11. Income Taxes

In the third quarter and first nine months of 2018, our effective tax rate was (70)% on pre-tax income of $10.0 million, and (39)% on pre-tax income of $28.0 million, respectively, compared to 236% on pre-tax income of $0.7 million, and (63)% on a pre-tax loss of $6.9 million in the third quarter and first nine months of 2017, respectively. In the first nine months of 2018 and 2017, our effective tax rate was lower than the statutory federal income tax rates (21% and 35%, respectively) due to U.S. tax reform, as described below, and our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland. In 2018 and 2017, the foreign rate differential predominantly relates to these Irish earnings. Our foreign rate differential in 2018 and 2017 includes the continuing rate benefit from a business realignment completed on September 30, 2014 in which intellectual property was transferred between two wholly-owned foreign subsidiaries. For the first nine months of 2018 and 2017, this realignment resulted in tax benefits of approximately $9 million and $21 million, respectively.

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On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, (the "Tax Act"), which significantly changed existing U.S. tax laws by a reduction of the corporate tax rate, the implementation of a new system of taxation for non-U.S. earnings, the imposition of a one-time tax on the deemed repatriation of undistributed earnings of non-U.S. subsidiaries, and by the expansion of the limitations on the deductibility of executive compensation and interest expense. As we have a September 30 fiscal year-end, there is a blended U.S. statutory federal rate of approximately 24.5% for our fiscal year ending September 30, 2018 and 21% for subsequent fiscal years. The Tax Act also provides that net operating losses generated in years ending after December 31, 2017 will be carried forward indefinitely and can no longer be carried back, and that net operating losses generated in years beginning after December 31, 2017 can only reduce taxable income by up to 80% when utilized in a future period.

We estimate no federal income taxes payable as a result of the deemed repatriation of undistributed earnings as we estimate that the tax will be offset by a combination of current year losses and existing attributes which had a full valuation allowance recorded against the related deferred tax assets. In the third quarter we reduced our estimate for state income taxes payable by $5.4 million to reflect additional guidance on the state implications of the Tax Act. In the first nine months of 2018, we recorded a reasonable estimate of state income taxes payable on the deemed repatriation of $1.7 million.  We also recorded a deferred tax benefit of $14.1 million as a reasonable estimate of the impact of the Tax Act on our net U.S. deferred income tax balances. This was primarily attributable to the reduction of the federal tax rate on the net deferred tax liability in the U.S., and the ability to realize net operating losses from the reversal of existing deferred tax assets which can now be carried forward indefinitely and can therefore be netted against deferred tax liabilities for indefinite lived intangible assets.

We are continuing to assess the effects of the Tax Act on our indefinite reinvestment assertion and the realizability of our U.S. deferred tax assets. We are not able to make reasonable estimates at this time of the effects of certain provisions of the Tax Act that will apply to us beginning in our fiscal year ending September 30, 2019, including the Global Intangible Low Tax Income tax (the "GILTI" tax).

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, actions taken by U.S. state governments and taxing authorities in response to the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign currency exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. We currently anticipate finalizing and recording any resulting adjustments by the end of our current fiscal year ending September 30, 2018.

We have concluded, based on the weight of available evidence, that a full valuation allowance continues to be required against our U.S. net deferred tax assets as they are not more likely than not to be realized in the future. We will continue to reassess our valuation allowance requirements each financial reporting period.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.

As of June 30, 2018 and September 30, 2017, we had unrecognized tax benefits of $9.7 million and $14.8 million, respectively. If all our unrecognized tax benefits as of June 30, 2018 were to become recognizable in the future, we would record a benefit to the income tax provision of $9.7 million, which would be partially offset by an increase in the U.S. valuation allowance of $3.8 million. 

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to

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the resolution of multi-jurisdictional tax positions could be reduced by up to $2 million as audits close and statutes of limitations expire.

In the fourth quarter of 2016, we received an assessment of approximately $12 million from the tax authorities in Korea.  The assessment relates to various tax issues, primarily foreign withholding taxes. We have appealed and intend to vigorously defend our positions. We believe that upon completion of a multi-level appeal process it is more likely than not that our positions will be sustained.  Accordingly, we have not recorded a tax reserve for this matter. We paid this assessment in the first quarter of 2017 and have recorded the amount in other assets, pending resolution of the appeal process.

In the first quarter of 2018, as a result of the adoption of ASU 2016-09, we recognized previously unrecognized tax benefits of $37.0 million as increases in deferred tax assets for tax loss carryovers and tax credits, primarily in the U.S. A corresponding increase to the valuation allowance of $36.9 million was recorded to the extent that it was not more likely than not that these benefits would be realized.

12. Debt

At June 30, 2018 and September 30, 2017, we had the following long-term debt obligations:

	June 30, 2018			September 30, 2017
	(in thousands)
6.000% Senior notes due 2024	$	500,000		$	500,000
Credit facility revolver	198,125			218,125
Total debt	698,125			718,125
Unamortized debt issuance costs for the Senior notes (1)	(5,072		)	(5,719		)
Total debt, net of issuance costs (2)	$	693,053		$	712,406
(1) Unamortized debt issuance costs related to the credit facility were $1.3 million and $2.0 million as of June 30, 2018 and September 30, 2017, respectively, and were included in other assets.
(2) As of June 30, 2018 and September 30, 2017, all debt was included in long-term debt.

Senior Notes

In May 2016, we issued $500 million in aggregate principal amount of 6.0% senior, unsecured long-term debt at par value, due in 2024. We used the net proceeds from the sale of the notes to repay a portion of our outstanding revolving loan under our current credit facility. Interest is payable semi-annually on November 15 and May 15. The debt indenture includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions. We were in compliance with all the covenants as of June 30, 2018.

On or after May 15, 2019, we may redeem the senior notes at any time in whole or from time to time in part at specified redemption prices. In certain circumstances constituting a change of control, we would be required to make an offer to repurchase the senior notes at a purchase price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the senior notes in such event may be limited by law, by the indenture associated with the senior notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the senior notes as required by the indenture, it would constitute an event of default under the indenture governing the senior notes which, in turn, may also constitute an event of default under other obligations.

As of June 30, 2018, the total estimated fair value of the Notes was approximately $520 million, based on quoted prices for the notes on that date.

Credit Agreement

In November 2015, we entered into a multi-currency credit facility with a syndicate of sixteen banks for which JPMorgan Chase Bank, N.A. acts as Administrative Agent. We use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements. As of June 30, 2018, the fair value of our credit facility approximates its book value.

The credit facility consists of a $600 million revolving loan commitment. The loan commitment may be increased by an additional $500 million (in the form of revolving loans or term loans, or a combination

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thereof) if the existing or additional lenders are willing to make such increased commitments. The revolving loan commitment does not require amortization of principal and may be repaid in whole or in part prior to the scheduled maturity date at our option without penalty or premium. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full.

PTC and certain eligible foreign subsidiaries may borrow under the credit facility. Any borrowings by PTC Inc. under the credit facility would be guaranteed by PTC Inc.’s material domestic subsidiaries that become parties to the subsidiary guaranty, if any. As of the filing of this Form 10-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors.  In addition, PTC's and certain of its material domestic subsidiaries' owned property (including equity interests) is subject to first priority perfected liens in favor of the lenders of this credit facility. 100% of the voting equity interests of certain of PTC’s domestic subsidiaries and 65% of its material first-tier foreign subsidiaries are pledged as collateral for the obligations under the credit facility.

As of June 30, 2018, we had $198.1 million in loans outstanding under the credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by PTC as described below. As of June 30, 2018, the annual interest rate for borrowings outstanding was 3.88%. Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.75% above an adjusted LIBO rate for Euro currency borrowings or would range from 0.25% to 0.75% above the defined base rate (the greater of the Prime Rate, the FRBNY rate plus 0.5%, or an adjusted LIBO rate plus 1%) for base rate borrowings, in each case based upon PTC’s total leverage ratio. Additionally, PTC may borrow certain foreign currencies at rates set in the same range above the respective London interbank offered interest rates for those currencies, based on PTC’s total leverage ratio. A quarterly commitment fee on the undrawn portion of the credit facility is required, ranging from 0.175% to 0.30% per annum based upon PTC’s total leverage ratio.

The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $75.0 million for any purpose and an additional $200.0 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

• a total leverage ratio, defined as consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed 4.50 to 1.00 as of the last day of any fiscal quarter;

• a senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter; and

• a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of not less than 3.50 to 1.00 as of the last day of any fiscal quarter.

As of June 30, 2018, our total leverage ratio was 2.45 to 1.00, our senior secured leverage ratio was 0.73 to 1.00 and our fixed charge coverage ratio was 6.82 to 1.00 and we were in compliance with all financial and operating covenants of the credit facility.

Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility.

13. Commitments and Contingencies

Legal and Regulatory Matters

Korean Tax Audit

In July 2016, we received an assessment of approximately $12 million from the tax authorities in Korea related to an ongoing tax audit. See Note 11. Income Taxes for additional information.

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Legal Proceedings

We are subject to various other legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a reporting period could be adversely affected.

Accruals

With respect to legal proceedings and claims, we record an accrual for a contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For legal proceedings and claims for which the likelihood that a liability has been incurred is more than remote but less than probable, we estimate the range of possible outcomes. As of June 30, 2018, we estimate approximately $1.1 million to $3.1 million in legal proceedings and claims, of which we had accrued $1.0 million.

Accounts Receivable

Accounts receivable as of June 30, 2018 includes an amount invoiced under a multi-year contract for which the period of performance, and related revenue recognized, has spanned a number of years (with no revenue recognized since the first quarter of 2017). The invoiced amount is being disputed by the customer. If we are unable to reach a mutual business resolution, we intend to vigorously pursue collection of the full invoiced amount. If we are unsuccessful in collecting the full invoiced amount, there could be a write-down of accounts receivable and professional services revenue, which could range from $0 to $17.3 million.

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements in the ordinary course of our business. Under such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.

14. Subsequent Events

Investment in PTC

As part of a strategic partnership, on July 19, 2018, Rockwell Automation made a $1,000 million equity investment in PTC, by acquiring 10,582,010 shares at a price of $94.50 per share, which represented a premium over our closing share price on June 11, 2018, the date upon which we entered into a securities purchase agreement. The Chairman and CEO of Rockwell Automation has joined PTC's board of directors.

Share Repurchases

We entered into a $1,000 million accelerated share repurchase ("ASR") agreement with a major financial institution ("Bank") on July 20, 2018. We used cash proceeds from the Rockwell Automation investment to fund the repurchase.

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On July 20, 2018, 8,244,873 shares repurchased at the market price of $97.03 per share were delivered to us (totaling $800 million). The remaining $200 million represents the amount held back by the Bank pending final settlement of the ASR. Upon settlement of the ASR, the total shares repurchased by us will equal up to $1,000 million divided by a share price equal to the average daily volume weighted-average price of our common stock during the term of the ASR program less a fixed per share discount. Final settlement of the ASR will occur between 7.5-months and 10-months after execution, at the Bank's discretion. All shares repurchased are automatically restored to the status of authorized and unissued.

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not historic facts, including statements about our fourth quarter and full fiscal 2018 targets, and other future financial and growth expectations and targets and anticipated tax rates, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may deteriorate; customers may not purchase our solutions or convert existing support contracts to subscription when or at the rates we expect; our businesses, including our Internet of Things (IoT) business, may not expand and/or generate the revenue we expect; foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense; the mix of revenue between license & subscription solutions, support and professional services could be different than we expect, which could impact our EPS results; our transition to subscription-only licensing could adversely affect sales and revenue; sales of our solutions as subscriptions may not have the longer-term effect on revenue and earnings that we expect; bookings associated with minimum ACV commitments under our strategic alliance agreement with Rockwell Automation may not result in subscription contracts sold through to end-user customers; we may be unable to expand our partner ecosystem as we expect and our partners may not generate the revenue we expect; we may be unable to improve performance in Japan when or as we expect; we may be unable to generate sufficient operating cash flow to return 40% of free cash flow to shareholders and other uses of cash or our credit facility limits or other matters could preclude share repurchases. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including the geographic mix of our revenue, expenses and profits, as well as other risks and uncertainties described below throughout or referenced in Part II, Item 1 A. Risk Factors of this report.

Business Overview

PTC is a global computer software and services company. We offer industrial Internet of Things (IoT) solutions that enable companies to connect smart things and environments, manage and analyze data generated by those things and environments, and create industrial IoT applications and Augmented Reality (AR) experiences that transform the way users create, operate, and service products. We also offer a solutions portfolio of innovative Computer-Aided Design (CAD), Product Lifecycle Management (PLM) and Service Lifecycle Management (SLM) solutions that enable manufacturers to create, innovate, operate, and service products.

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2018 Strategic Goals

	Sustainable Growth	Our goals are predicated on continuing to drive bookings growth both in the high-growth IoT market and in our core CAD and PLM markets.
	Expand Subscription Licensing	Our goal is to increase the percentage of licenses sold as subscriptions to increase our recurring revenue. Effective January 1, 2018, new software licenses for our core solutions and ThingWorx solutions are available only by subscription in the Americas and Western Europe. Perpetual and subscription licenses will be available to customers outside the Americas and Western Europe through December 31, 2018. Effective January 1, 2019, only subscription software licenses for our core solutions and ThingWorx industrial innovation platform will be available. Kepware will continue to be available under perpetual licensing.
	Cost Controls and Margin Expansion	Our goal is to drive continued margin expansion over the long term. We continue to proactively manage our cost structure and invest in what we believe are high return opportunities in our business. We expect to deliver continued operating margin expansion in 2018, and we expect further margin expansion in 2019 and beyond, as we realize the compounding benefit of our maturing subscription business.

Operating and Non-GAAP Financial Measures

Our discussion of results includes discussion of our operating measures (including “license and subscription bookings” and other subscription-related measures) and non-GAAP financial measures. Our operating measures and non-GAAP financial measures, including the reasons we use those measures, are described below in Results of Operations - Operating Measures and Results of Operations - Non-GAAP Financial Measures, respectively. You should read those sections to understand those operating and non-GAAP financial measures.

Executive Overview

Our revenue results in the quarter reflect the adoption of subscription licensing by our customers and the compounding effect of the subscription business model as subscription revenue recurs and new subscription revenue is added in the year. Subscription revenue, software revenue and total revenue were all up over the third quarter of 2017, despite a 1,400 basis point increase in subscription mix year over year. Recurring revenue represented approximately 91% of our software revenue in the third quarter of 2018, up from 87% a year ago. Our revenue results also drove our operating margin results for the quarter despite increases in sales and marketing and research and development expenses, with both GAAP and non-GAAP operating margins, and EPS up over the prior year period.

In fiscal 2018, we have focused on several new strategic partnerships. We continued to see momentum with the Microsoft partnership that we signed early in the second quarter, closing ten new joint deals in the quarter. In the third quarter, we entered into a significant strategic alliance agreement with Rockwell Automation to align our respective factory automation software solutions and sell a combined software suite into our respective markets. We also entered into a strategic agreement with Ansys to embed breakthrough simulation capabilities inside our Creo product to create the first fully-integrated CAD and real-time simulation solution.

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	Three months ended						Constant Currency Change		Nine months ended						Constant Currency Change
	June 30, 2018		July 1, 2017						June 30, 2018		July 1, 2017
Revenue					Change								Change
	(in millions)
Subscription	$	126.7	$	74.9	69	%	65	%	$	339.7	$	195.0	74	%	69	%
Support	121.1		140.4		(14	)%	(17	)%	379.0		433.6		(13	)%	(16	)%
Total recurring revenue	247.8		215.3		15	%	12	%	718.7		628.6		14	%	11	%
Perpetual license	25.8		32.3		(20	)%	(23	)%	82.6		94.1		(12	)%	(15	)%
Total subscription, support and license revenue	273.6		247.6		10	%	7	%	801.3		722.7		11	%	7	%
Professional services	41.2		43.7		(6	)%	(8	)%	128.0		134.9		(5	)%	(10	)%
Total revenue	$	314.8	$	291.3	8	%	5	%	$	929.3	$	857.7	8	%	5	%

	Three months ended								Nine months ended
Earnings Measures	June 30, 2018			July 1, 2017			Change		June 30, 2018			July 1, 2017			Change
Operating Margin	6.9		%	3.9		%			6.6		%	2.7		%
Earnings (Loss) Per Share	$	0.14		$	(0.01	)	1,859	%	$	0.33		$	(0.10	)	440	%
Non-GAAP Operating Margin(1)	17.9		%	15.4		%			17.3		%	15.6		%
Non-GAAP Earnings Per Share(1)	$	0.36		$	0.28		29	%	$	1.00		$	0.84		20	%
(1) Non-GAAP measures are reconciled to GAAP results under Results of Operations - Non-GAAP Financial Measures below.

We ended the quarter with cash, cash equivalents and marketable securities of $321 million. We generated $185 million of cash from operations in the first nine months of 2018, compared to $102 million in the first nine months of 2017. As part of our previously announced share repurchase program, we completed a $100 million accelerated stock repurchase agreement and retired 1.15 million shares during the quarter. We borrowed $150 million, in part to finance the share repurchase, $100 million of which was repaid prior to quarter end. At June 30, 2018, the balance outstanding under our credit facility was $198 million and total debt outstanding was $693 million, net of deferred financing fees.

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Operating Measures

We provide these measures to help investors understand the progress of our subscription transition. These measures are not necessarily indicative of revenue for the period or any future period.

License and Subscription Bookings

License and subscription bookings for the third quarter of 2018 were $113 million, up 26% (23% on a constant currency basis) compared to the third quarter of 2017. On a year-to-date basis, license and subscription bookings were $316 million, up 15% (11% on a constant currency basis) over the first nine months of 2017. For the first nine months of 2018 we saw continued strength in license and subscription bookings across our product portfolio, particularly from PLM, CAD, and IoT (when adjusted for an eight-figure booking in the first quarter of 2017), which all grew at or above our estimated market growth rates. For the second quarter in a row, SLM posted solid license and subscription bookings. IoT license and subscription bookings also benefited from customer expansions, which accounted for over 50% of our ThingWorx bookings. Additionally, our global channel continues to exceed expectations, growing license and subscription bookings in double-digits for the tenth consecutive quarter.

Subscription bookings as a percentage of license and subscription bookings in the third quarter and first nine months of 2018 increased by 1400 basis points and 700 basis points, respectively, compared to the third quarter and first nine months of 2017. Subscription bookings as a percentage of license and subscription bookings continued to grow in the third quarter of 2018 despite foreign exchange headwinds and a geographic mix of sales slightly more weighted to Asia Pacific, where we still sell perpetual licenses. Subscription license bookings increased in part due to customers finding our subscription license offerings more attractive than our perpetual license and support offerings, our incentive plans that are designed to drive subscription sales and the fact that we began offering our software (other than Kepware) only by subscription in the Americas and Western Europe at the beginning of our second quarter of 2018. Subscription license bookings also increased due to support contract conversion and channel program incentives. We have further significant opportunities to convert support contracts to subscriptions.

Americas license and subscription bookings grew 9% and 8% in the third quarter and the first nine months of 2018 compared to the year-ago periods. European license and subscription bookings increased 16% (11% constant currency) and 11% (3% constant currency) in the third quarter and first nine months of 2018 compared to the year-ago periods; the year-over-year comparison is negatively impacted by a $7 million deal we closed in the fourth quarter of 2017 instead of the first quarter of 2018. Asia Pacific license and subscription bookings increased by more than 20% in the third quarter and the first nine months of 2018 compared to the year-ago periods, driven by solid performance in China, Taiwan and Korea and by an easier comparison due to weak performance in Japan in the third quarter of 2017. Japan performed above our expectations in the third quarter, and we believe the challenges there are behind us.

Subscription ACV

Subscription ACV increased 54% over the third quarter of 2017 to $44 million. The increase in subscription ACV is primarily due to strong subscription bookings in the quarter. The subscription mix increased year over year to 78% of total bookings. Both of these measures are tied to the increase in bookings discussed above.

Annualized Recurring Revenue (ARR)

ARR was approximately $994 million for the third quarter of 2018, which increased 15% ($129 million) year over year and grew 3% ($33 million) sequentially.

Deferred Revenue and Backlog (Unbilled Deferred Revenue)

Deferred revenue primarily relates to software agreements invoiced to customers for which the revenue has not yet been recognized. Unbilled deferred revenue is the aggregate of contractually committed orders for license, subscription and support for which the associated revenue has not been recognized and the customer has not been invoiced. We generally do not invoice prior to the contractual subscription start date and for multi-year contracts we generally invoice annually. We do not record unbilled deferred revenue on our Consolidated Balance Sheet. When we invoice the customer, we record it as deferred revenue (billed).

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	June 30, 2018		September 30, 2017		July 1, 2017
	(Dollar amounts in millions)
Deferred revenue (billed)	$	484	$	459	$	465
Unbilled deferred revenue	726		633		443
Total	$	1,210	$	1,092	$	909

Total billed and unbilled deferred revenue increased 33% year-over-year and declined 4% compared to the second quarter of 2018 (sequentially). Billed deferred revenue grew 4% year-over-year and declined 3% sequentially, due to the timing of billings in the year. Recurring revenue billings on July 1, which were included in the third quarter of 2017 but not in the third quarter of 2018, were approximately $39 million in 2018. Unbilled deferred revenue grew 64% year-over-year and declined 5% sequentially; the sequential decline was due to the timing of billings in the year and exchange rate headwinds. The average contract duration has remained approximately 2 years for new subscription contracts.

We expect that the amount of unbilled deferred revenue and billed deferred revenue will change from quarter to quarter due to the specific timing, duration and size of large customer subscription and support agreements, varying billing cycles of such agreements, the specific timing of customer renewals, the timing of our fiscal quarter ends, foreign currency fluctuations and the timing of when revenue is recognized.

Results of Operations

The following table shows the financial measures that we consider the most significant indicators of the performance of our business. Results include combined software revenue from direct sales and our reseller channel. In addition to operating income, operating margin, and diluted earnings per share as calculated under GAAP, the table also includes non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share for the reported periods. We discuss the non-GAAP measures in detail, including items excluded from the measures, and provide a reconciliation to the comparable GAAP measures under Non-GAAP Financial Measures below.

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	Three months ended						Percent Change 2017 to 2018				Nine months ended						Percent Change 2017 to 2018
	June 30, 2018			July 1, 2017			Actual		Constant Currency		June 30, 2018			July 1, 2017			Actual		Constant Currency
	(Dollar amounts in millions, except per share data)
Subscription	$	126.7		$	74.9		69	%	65	%	$	339.7		$	195.0		74	%	69	%
Support	121.1			140.4			(14	)%	(17	)%	379.0			433.6			(13	)%	(16	)%
Total recurring revenue	247.8			215.3			15	%	12	%	718.7			628.6			14	%	11	%
Perpetual license	25.8			32.3			(20	)%	(23	)%	82.6			94.1			(12	)%	(15	)%
Total subscription, support and license revenue	273.6			247.6			10	%	7	%	801.3			722.7			11	%	7	%
Professional services	41.2			43.7			(6	)%	(8	)%	128.0			134.9			(5	)%	(10	)%
Total revenue	314.8			291.3			8	%	5	%	929.3			857.7			8	%	5	%
Total cost of revenue	81.6			82.3			(1	)%			248.1			246.2			1	%
Gross margin	233.2			209.0			12	%			681.2			611.4			11	%
Operating expenses	211.5			197.8			7	%			619.6			588.1			5	%
Total costs and expenses	293.1			280.0			5	%	2	%	867.8			834.3			4	%	1	%
Operating income	21.7			11.3			93	%	45	%	$	61.5		$	23.3		164	%	6	%
Non-GAAP operating income (1)	$	56.4		$	44.9		26	%	13	%	$	161.4		$	134.2		20	%	3	%
Operating margin	6.9		%	3.9		%					6.6		%	2.7		%
Non-GAAP operating margin (1)	17.9		%	15.4		%					17.3		%	15.6		%
Diluted earnings (loss) per share	$	0.14		$	(0.01	)					$	0.33		$	(0.10	)
Non-GAAP diluted earnings per share (2)	$	0.36		$	0.28						$	1.00		$	0.84
Cash flow from operations (3)	$	49.0		$	73.7						$	185.3		$	102.5
(1) See Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP measures.
(2) We have a full valuation allowance against our U.S. net deferred tax assets and a valuation allowance against net deferred tax assets in certain foreign jurisdictions. As we are profitable on a non-GAAP basis, the 2018 and 2017 non-GAAP tax provisions are calculated assuming there is no valuation allowance. Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. We have recorded the impact of the Tax Cuts and Jobs Act in our first quarter 2018 GAAP earnings, resulting in a non-cash benefit of approximately $7 million. In the third quarter of 2018, we increased the non-cash benefit by approximately $5 million to reflect additional guidance on the state tax implications of the act. We have excluded this benefit from our non-GAAP results.
(3) Cash flow from operations for the nine months ended June 30, 2018 includes $2.5 million of restructuring payments. Cash flow from operations for the nine months ended July 1, 2017 includes $35.3 million of restructuring payments, a $12 million payment related to a Korea tax audit, and $3.3 million of legal settlement payments.

Impact of Foreign Currency Exchange on Results of Operations

Approximately two-thirds of our revenue and half of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results. If actual results for the third quarter and first nine months of 2018 had been converted into U.S. Dollars based on the foreign currency exchange rates in effect for the third quarter and first nine months of 2017, revenue would have been lower by $9.6 million and $35.8 million, respectively, costs and expenses would have been lower by $5.9 million and $22.4 million, respectively, and operating income would have been lower by $3.7 million and $13.4 million, respectively. Our constant currency disclosures are calculated by multiplying the actual results for the first nine months of 2018 by the exchange rates in effect for the comparable period of 2017 excluding the effect of any hedging.

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Revenue

We discuss our revenue results by line of business, by product group and by geographic region below.

Revenue by Line of Business

Software

Software revenue consists of subscription, support, and perpetual license revenue. Subscription revenue is comprised of time-based licenses whereby customers use our software and receive related support for a specified term, and for which revenue is recognized ratably over the term of the contract. Support revenue is comprised of contracts to maintain new and/or previously purchased perpetual licenses, for which revenue is recognized ratably over the term of the contract. Perpetual licenses are a perpetual right to use the software, for which revenue is generally recognized up front upon shipment to the customer. Our subscription revenue includes an immaterial amount of Software as a Service (SaaS) and cloud services for which revenue is generally recognized ratably over the term of the contract.

As our mix of subscription sales relative to perpetual license sales has increased, perpetual license revenue and support revenue have declined and are expected to continue to decline as customers purchase our solutions as subscriptions and convert existing perpetual licenses with support contracts to subscriptions. As our subscription business matures, recurring software revenue growth is expected to accelerate due to the compounding benefit of a subscription business model.

Professional Services

Consulting and training services engagements typically result from sales of new licenses; revenue is recognized over the term of the engagement. Professional services revenue was down 6% (8% constant currency) in the third quarter and down 5% (10% constant currency) for the first nine months of 2018 compared to the year-ago periods. These results are in line with our expectation that professional services revenue will trend flat-to-down over time due to our strategy to expand margins by migrating more services engagements to our partners and delivering products that require less consulting and training services.

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Revenue by Product Group

	Three months ended								Nine months ended
					Percent Change								Percent Change
	June 30, 2018		July 1, 2017		Actual		Constant Currency		June 30, 2018		July 1, 2017		Actual		Constant Currency
	(Dollar amounts in millions)
Solutions Products
Software revenue	241.8		222.4		9	%	5	%	714.1		654.3		9	%	5	%
Professional services	37.3		41.0		(9	)%	(11	)%	117.6		128.1		(8	)%	(13	)%
Total revenue	$	279.1	$	263.5	6	%	3	%	$	831.8	$	782.4	6	%	2	%
IoT Products
Software revenue	31.8		25.2		26	%	24	%	87.1		68.4		27	%	25	%
Professional services	3.9		2.6		49	%	46	%	10.4		6.9		52	%	47	%
Total revenue	$	35.7	$	27.8	28	%	26	%	$	97.5	$	75.3	30	%	27	%

Solutions Group

Software revenue for the third quarter and first nine months of 2018 increased over the third quarter and first nine months of 2017 as a result of strong CAD, PLM and global channel license and subscription bookings over the past two years, offset by a significant increase in the subscription mix in the current period. Subscription sales have increased in part due to our support conversion programs that we have been offering over the past few years whereby customers may convert existing perpetual licenses and support to a new subscription. Recurring software revenue grew 13% both in the third quarter and first nine months of 2018 over the third quarter and first nine months of 2017, and has grown double-digits for six consecutive quarters.

Professional services revenue for the third quarter and first nine months of 2018 declined compared to the third quarter and first nine months of 2017 due to our strategy to limit the amount of professional services we provide.

IoT Group

Software revenue for the third quarter and first nine months of 2018 increased compared to the third quarter and first nine months of 2017 due to increases in license and subscription bookings over the past two years, offset by a significant increase in the subscription mix. Software revenue for the third quarter of 2018 increased 10% sequentially over the second quarter of 2018. Recurring software revenue grew 33% both in the third quarter and first nine months of 2018 over the third quarter and first nine months of 2017. Recurring software revenue increased 7% sequentially over the second quarter of 2018.

Professional services revenue increased in the third quarter and first nine months of 2018 due in part to implementation and adoption services we provide to our IoT customers as part of our efforts to help their IoT initiatives be successful.

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Revenue by Geographic Region

Total revenue grew in all regions for the third quarter and first nine months of 2018 compared to the year-ago periods.

	Three months ended								Nine months ended
					Percent Change								Percent Change
	June 30, 2018		July 1, 2017		Actual		Constant Currency		June 30, 2018		July 1, 2017		Actual		Constant Currency
	(Dollar amounts in millions)
Americas
Software revenue	118.0		107.8		9	%	9	%	344.3		321.3		7	%	7	%
Professional services	15.4		16.1		(5	)%	(4	)%	44.6		51.7		(14	)%	(14	)%
Total revenue	$	133.4	$	124.0	8	%	8	%	$	388.9	$	373.0	4	%	4	%
Europe
Software revenue	100.9		91.1		11	%	3	%	299.8		256.4		17	%	9	%
Professional services	18.9		20.2		(6	)%	(10	)%	63.2		59.7		6	%	(3	)%
Total revenue	$	119.9	$	111.3	8	%	1	%	$	363.0	$	316.1	15	%	6	%
Asia Pacific
Software revenue	54.7		48.7		12	%	9	%	157.1		145.0		8	%	5	%
Professional services	6.8		7.3		(7	)%	(10	)%	20.3		23.6		(14	)%	(17	)%
Total revenue	$	61.5	$	56.0	10	%	7	%	$	177.4	$	168.6	5	%	2	%

Americas

Strong license and subscription bookings have been driving revenue growth in the Americas, with new license and subscriptions bookings up 9% and 8% for the third quarter and first nine months of 2018 compared to the year-ago periods, despite a significant increase in the subscription mix.

Europe

Europe revenue growth is the result of seven double-digit year-over-year license and subscription bookings growth quarters between the fourth quarter of 2016 and the third quarter of 2018, despite an increase in subscription mix in the third quarter of 2018 compared to the third quarter of 2017.

Asia Pacific

Asia Pacific revenue growth is due to improved license and subscription bookings performance of more than 20% in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017, driven by solid performance in China, Taiwan and Korea and by an easier

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comparison due to weak performance in Japan in the third quarter of 2017, despite a significant increase in the subscription mix.

Gross Margin

	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Gross margin	$	233.2		$	209.0		12	%	$	681.2		$	611.4		11	%
Non-GAAP gross margin (1)	242.6			219.1			11	%	710.0			641.7			11	%
Gross margin as a % of revenue:
License and subscription gross margin	84		%	80		%			83		%	78		%
Support gross margin	82		%	83		%			82		%	84		%
Professional services gross margin	14		%	15		%			15		%	15		%
Gross margin as a % of total revenue	74		%	72		%			73		%	71		%
Non-GAAP gross margin as a % of total revenue (1)	77		%	75		%			76		%	75		%
(1) Non-GAAP measures are reconciled to GAAP results under Non-GAAP Financial Measures below.

The increase in total gross margin in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 is in line with total revenue growth. Total revenue in both the third quarter and first nine months of 2018 grew 8% over the third quarter and first nine months of 2017. Margins for license and subscription are beginning to expand as the subscription model matures and revenue that has been deferred begins to contribute to each quarterly period. Support gross margins are down in the third quarter and first nine months of 2018 compared to the third quarter and first nine months 2017 primarily due to decreases in support revenue of 14% and 13%, respectively. The support revenue decreases are associated with an increase in our subscription mix and the conversion of existing customers from perpetual licenses with support contracts to subscription.

The professional services gross margin decreased slightly in the third quarter of 2018 compared to the third quarter of 2017 and remained flat in the first nine months of 2018 compared to the first nine months of 2017 due to the decline in revenue, offset by cost management. Professional services revenue declined 6% and 5% in the third quarter and first nine months of 2018, respectively, compared to the year ago periods. The decline in professional services revenue in the first nine months of 2018 is in line with our strategy to migrate more services engagements to our partners and to deliver products that require less consulting and training services.

Total Costs and Expenses

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	Three months ended						Nine months ended
	June 30, 2018		July 1, 2017		Percent Change		June 30, 2018		July 1, 2017		Percent Change
	(Dollar amounts in millions)
Costs and expenses:
Cost of license and subscription revenue	$	24.0	$	21.6	11	%	$	71.5	$	62.3	15	%
Cost of support revenue	22.2		23.6		(6	)%	67.5		69.0		(2	)%
Cost of professional services revenue	35.3		37.0		(4	)%	109.2		114.9		(5	)%
Sales and marketing	107.7		93.1		16	%	305.4		271.6		12	%
Research and development	61.2		59.9		2	%	187.4		175.5		7	%
General and administrative	33.1		35.3		(6	)%	101.4		108.8		(7	)%
Amortization of acquired intangible assets	7.9		8.0		(2	)%	23.6		24.0		(2	)%
Restructuring and other charges, net	1.6		1.6		5	%	1.8		8.3		(78	)%
Total costs and expenses	$	293.1	$	280.0	5	%	$	867.8	$	834.3	4	%
Total headcount at end of period	6,065		5,983		1	%

Costs and expenses in the third quarter of 2018 compared to the third quarter of 2017 increased primarily as a result of the following:

• a $10.7 million ($6.0 million constant currency) increase in compensation expense primarily due to salary and headcount increases and an increase in commission expenses,

• a $2.5 million increase in cloud services hosting costs; of which $1.3 million is included in cost of license and subscription revenue, and

• a $1.6 million increase in transactional charges related to structuring strategic agreements,

offset by:

• a $1.8 million decrease in restructuring charges.

Costs and expenses for the third quarter of 2018 compared to the year ago period include a $5.9 million increase due to changes in foreign currency exchange rates.

Costs and expenses for the first nine months of 2018 compared to the first nine months of 2017 increased primarily as a result of the following:

• a $33.4 million ($16.9 million constant currency) increase in compensation expense primarily due to salary and headcount increases and an increase in commission expenses,

• a $6.5 million increase in cloud services hosting costs, of which $3.1 million is included in cost of license and subscription revenue,

• a $1.9 million increase in facility costs (including depreciation), and

• a $1.1 million increase in acquisition-related and transactional charges related to structuring strategic agreements,

offset by:

• a $9.3 million decrease in restructuring charges, and

• a $3.8 million decrease in professional fees.

Costs and expenses for the first nine months of 2018 compared to the year ago period include a $22.4 million increase due to changes in foreign currency exchange rates.

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Cost of License, Subscription and Support Revenue

Cost of License and Subscription Revenue	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Cost of license and subscription revenue	$	24.0		$	21.6		11	%	$	71.5		$	62.3		15	%
% of total revenue	8		%	7		%			8		%	7		%
% of total license and subscription revenue	16		%	20		%			17		%	22		%

Our cost of license and subscription includes cost of license, which consists of fixed and variable costs associated with reproducing and distributing software and documentation, as well as royalties paid to third parties for technology embedded in or licensed with our software products, amortization of intangible assets associated with acquired products, and cost of subscription, which includes our cost of cloud services and our cost of software as a service revenue. Costs associated with providing post-contract support such as providing software updates and technical support for both our subscription offerings and our perpetual licenses are included in cost of support revenue. Cost of license and subscription revenue as a percent of license and subscription revenue can vary depending on the subscription mix percentage, the product mix sold, the effect of fixed and variable royalties, headcount and the level of amortization of acquired software intangible assets.

In the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017, total compensation increased 2% ($0.2 million) and 13% ($3.4 million), respectively, due to increases in salaries, benefit costs and higher travel expenses. Cloud services hosting costs increased by 42% ($1.3 million) and 38% ($3.1 million), respectively, in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017.

Cost of license and subscription revenue as a percentage of license and subscription revenue has decreased in the third quarter and first nine months of 2018 compared to the year-ago periods due to higher revenue as we realize the benefit of our maturing subscription model.

Cost of Support Revenue	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Cost of support revenue	$	22.2		$	23.6		(6	)%	$	67.5		$	69.0		(2	)%
% of total revenue	7		%	8		%			7		%	8		%
% of total support revenue	18		%	17		%			18		%	16		%

Cost of support revenue consists of costs such as salaries, benefits, and computer equipment and facilities associated with customer support and the release of support updates (including related royalty costs) associated with providing support for both our perpetual licenses and subscription licenses.

Cost of support revenue in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 decreased primarily due to lower headcount, decreases in royalty expense and decreases in professional fees.

Cost of Professional Services Revenue	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Cost of professional services revenue	$	35.3		$	37.0		(4	)%	$	109.2		$	114.9		(5	)%
% of total revenue	11		%	13		%			12		%	13		%
% of total professional services revenue	86		%	85		%			85		%	85		%

Our cost of professional services revenue includes costs such as salaries, benefits, and computer equipment and facilities for our training and consulting personnel, and third-party subcontractor fees. In

37

the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017, total compensation, benefit costs and travel expenses decreased by 11% ($3.1 million) and 6% ($5.2 million), respectively, due to lower headcount; partially offset by higher third-party subcontractor fees, which increased by 17% ($1.0 million) and 3% ($0.7 million), respectively.

Sales and Marketing	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Sales and marketing	$	107.7		$	93.1		16	%	$	305.4		$	271.6		12	%
% of total revenue	34		%	32		%			33		%	32		%

Our sales and marketing expenses primarily include salaries and benefits, sales commissions, advertising and marketing programs, travel and facility costs. In the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017, total compensation, benefit costs and travel expenses increased 20% ($13.9 million) and 14% ($29.5 million), respectively, due to higher commission costs, an increase in headcount, salary increases and stock-based compensation increases.

Research and Development	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Research and development	$	61.2		$	59.9		2	%	$	187.4		$	175.5		7	%
% of total revenue	19		%	21		%			20		%	20		%

Our research and development expenses consist principally of salaries and benefits, costs of computer equipment and facility expenses. Major research and development activities include developing new products and releases and updates of our software that enhance functionality and add features. In the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 total compensation, benefit costs and travel expenses increased 3% ($1.6 million) and 9% ($12.0 million), respectively, due to an increase in headcount, salary increases and stock-based compensation increases.

General and Administrative	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
General and administrative	$	33.1		$	35.3		(6	)%	$	101.4		$	108.8		(7	)%
% of total revenue	11		%	12		%			11		%	13		%

Our general and administrative expenses include the costs of our corporate, finance, information technology, human resources, legal and administrative functions, as well as acquisition-related charges, bad debt expense and outside professional services, including accounting and legal fees.

In the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 total compensation, benefit costs and travel expenses decreased 4% ($1.0 million) and 5% ($3.8 million), respectively, primarily due to lower stock-based compensation, offset by increases in headcount and salary increases. Professional fees also declined by $1.1 million and $2.8 million, respectively in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017.

Amortization of Acquired Intangible Assets	Three months ended								Nine months ended
	June 30, 2018			July 1, 2017			Percent Change		June 30, 2018			July 1, 2017			Percent Change
	(Dollar amounts in millions)
Amortization of acquired intangible assets	$	7.9		$	8.0		(2	)%	$	23.6		$	24.0		(2	)%
% of total revenue	2		%	3		%			3		%	3		%

Amortization of acquired intangible assets reflects the amortization of acquired non-product related intangible assets, primarily customer and trademark-related intangible assets, recorded in connection

38

with completed acquisitions. The decrease in amortization of acquired intangible assets in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 is due to certain assets being fully amortized as well as the impact of foreign currency exchange rates.

Restructuring and Other Charges, Net	Three months ended					Nine months ended
	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
	(in millions)
Restructuring charges (credits), net	$	(0.3	)	$	1.6	$	(1.0	)	$	8.3
Headquarters relocation charges	1.9			—		2.9			—
Restructuring and Other Charges, Net	$	1.6		$	1.6	$	1.8		$	8.3

In fiscal 2016, we committed to a plan to restructure our global workforce and consolidate select facilities to reduce our cost structure and to realign our investments with our identified growth opportunities. The actions have resulted in a total restructuring charge of $84.5 million and was substantially completed in 2017. We expect that the expense reductions will be offset by planned cost increases, investments in other areas of our business and the anticipated effects of foreign currency fluctuations, which effects are contemplated in our most recent financial targets for fiscal 2018. In the third quarter and first nine months of 2018, we recorded restructuring credits of $0.3 million and $1.0 million, respectively, primarily related to changes in estimated costs related to the closure of excess facilities. In the third quarter and first nine months of 2018, we made cash payments related to restructuring charges of $0.5 million and $2.5 million, respectively, compared to $6.4 million and $35.3 million in the third quarter and first nine months of 2017, respectively. At June 30, 2018, accrued restructuring totaled $2.7 million, of which we expect to pay $1.6 million within the next twelve months.

Headquarters relocation charges represent accelerated depreciation expense recorded in anticipation of exiting our current headquarters facility. In 2019, we will be moving into a new worldwide headquarters in the Boston Seaport District, and we will be vacating our current headquarters space. Because our current headquarters lease will not expire until November 2022, we are seeking to sublease that space. Further, if we are unable to sublease our current headquarters space for an amount at least equal to our rent obligations under the current headquarters lease, we will bear overlapping rent obligations for those premises and will be required to record additional headquarters relocation charges related to any rent shortfall. A charge for such shortfall will be recorded in the earlier of the period that we cease using the existing space (which will likely occur in the second quarter of our fiscal 2019) or the period we exit the lease contract. Additionally, we will incur other costs associated with the move which will be recorded as incurred.

Interest Expense	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018		July 1, 2017
	(in millions)
Interest expense	$	(10.6	)	$	(10.2	)	(31.1	)	(32.2	)

In March 2017 we modified our credit facility to decrease the loan commitment to $600 million from $900 million, which reduced interest expense in the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 by $0.1 million and $1.7 million, respectively, due to the write-off of deferred financing fees and reduction of the associated commitment fees. We had $698 million of total debt at June 30, 2018, compared to $718 million at July 1, 2017.

Interest Income and Other Expense, net	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(in millions)
Interest income	$	0.9		$	0.8		$	2.5		$	2.4
Other expense, net	(2.0		)	(1.2		)	(5.0		)	(0.4		)
Total interest income and other expense, net	$	(1.1	)	$	(0.4	)	$	(2.5	)	$	2.0

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Interest income and other expense, net includes interest income, foreign currency net losses and other non-operating gains and losses. Foreign currency net losses include costs of forward contracts, certain realized and unrealized foreign currency transaction gains or losses, and foreign exchange gains or losses resulting from the required period-end currency re-measurement of the assets and liabilities of our subsidiaries that use the U.S. Dollar as their functional currency. We use foreign currency forward contracts to reduce our exposure to fluctuations in foreign currency exchange rates.

Income Taxes	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(Dollar amounts in millions)
Pre-tax income (loss)	$	10.0		$	0.7		$	28.0		$	(6.9	)
Tax provision (benefit)	(7.0		)	1.7			(10.8		)	4.3
Effective income tax rate	(70		)%	236		%	(39		)%	(63		)%

In the first nine months of 2018 and 2017, our effective tax rate was lower than the statutory federal income tax rates (21% and 35%, respectively) due to U.S. tax reform, as described below, and our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland. In 2018 and 2017, the foreign rate differential predominantly relates to these Irish earnings. Our foreign rate differential in 2018 and 2017 includes the continuing rate benefit from a business realignment completed on September 30, 2014 in which intellectual property was transferred between two wholly-owned foreign subsidiaries. For the first nine months of 2018 and 2017, this realignment resulted in tax benefits of approximately $9 million and $21 million, respectively.

On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, (the "Tax Act"), which significantly changed existing U.S. tax laws, by a reduction of the corporate tax rate, the implementation of a new system of taxation for non-U.S. earnings, the imposition of a one-time tax on the deemed repatriation of undistributed earnings of non-U.S. subsidiaries, and by the expansion of the limitations on the deductibility of executive compensation and interest expense. As we have a September 30 fiscal year-end, the impact of the Tax Act results in a blended U.S. statutory federal rate of approximately 24.5% for our fiscal year ending September 30, 2018 and 21% for subsequent fiscal years. The Tax Act also provides that net operating losses generated in years ending after December 31, 2017 will be carried forward indefinitely and can no longer be carried back, and that net operating losses generated in years beginning after December 31, 2017 can only reduce taxable income by up to 80% when utilized in a future period.

We estimate no federal income taxes payable as a result of the deemed repatriation of undistributed earnings, as we estimate that the tax will be offset by a combination of current year losses and existing attributes which had a full valuation allowance recorded against the related deferred tax assets. In the third quarter we reduced our estimate for state income taxes payable by $5.4 million to reflect additional guidance on the state implications of the Tax Act. In the first nine months of 2018, we have recorded a reasonable estimate of state income taxes payable on the deemed repatriation of $1.7 million.  We also recorded a deferred tax benefit of $14.1 million as a reasonable estimate of the impact of the Tax Act on our net U.S. deferred income tax balances.  This was primarily attributable to the reduction of the federal tax rate on the net deferred tax liability in the U.S., and the ability to realize net operating losses from the reversal of existing deferred tax assets which can now be carried forward indefinitely, and can therefore be netted against deferred tax liabilities for indefinite lived intangible assets.

We are continuing to assess the effects of the Tax Act on our indefinite reinvestment assertion and the realizability of our U.S. deferred tax assets. We are not able to make reasonable estimates at this time of the effects of certain provisions of the Tax Act that will apply to us beginning in our fiscal year ending September 30, 2019, including the Global Intangible Low Tax Income tax (the "GILTI" tax).

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, actions taken by U.S. state governments and taxing authorities in response to the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or

40

any updates or changes to estimates we have utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign currency exchange rates of foreign subsidiaries. The U.S. Securities Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. We currently anticipate finalizing and recording any resulting adjustments by the end of our current fiscal year ending September 30, 2018.

We have concluded, based on the weight of available evidence, that a full valuation allowance continues to be required against our U.S. net deferred tax assets as they are not more likely than not to be realized in the future. We will continue to reassess our valuation allowance requirements each financial reporting period.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.

In the fourth quarter of 2016, we received an assessment of $12 million from the tax authorities in Korea.  The assessment relates to various tax issues but primarily to foreign withholding taxes. We have appealed and intend to vigorously defend our positions. We believe that upon completion of a multi-level appeal process it is more likely than not that our positions will be sustained. Accordingly, we have not recorded a tax reserve for this matter. We paid this assessment in the first quarter of 2017, pending resolution of the appeal process.

Operating Measures

Subscription Bookings and Subscription ACV

Given the difference in revenue recognition between the sale of a perpetual software license (revenue is recognized at the time of sale) and a subscription (revenue is recognized ratably over the subscription term), we use bookings for internal planning, forecasting and reporting of new license and subscription sales and cloud services transactions.

In order to normalize between perpetual and subscription licenses, we define subscription bookings as the subscription annualized contract value (subscription ACV) of new subscription bookings multiplied by a conversion factor of 2. We arrived at the conversion factor of 2 by considering many variables, including pricing, support, length of term, and renewal rates. In 2017 and for the third quarter and first nine months of 2018, the average subscription contract term was approximately two years.

We define subscription ACV as the total value of a new subscription booking divided by the term of the contract (in days), multiplied by 365. If the term of the subscription contract is less than a year, the ACV is equal to the total contract value. Beginning in the third quarter of 2018, minimum ACV commitments under our Strategic Alliance Agreement with Rockwell Automation are included in subscription ACV if the period-to-date minimum ACV commitment exceeds actual ACV sold under the Agreement.

We define license and subscription bookings as subscription bookings plus perpetual license bookings plus any monthly software rental bookings during the period.

Because subscription bookings is a metric we use to approximate the value of subscription sales if sold as perpetual licenses, it does not represent the actual revenue that will be recognized with respect to subscription sales or that would be recognized if the sales had been perpetual licenses.

Annualized Recurring Revenue (ARR)

Annualized Recurring Revenue (ARR) for a given quarter is calculated by dividing the non-GAAP subscription and support software revenue for the quarter by the number of days in the quarter and multiplying by 365. ARR should be viewed independently of revenue and deferred revenue as it is an operating measure and is not intended to be combined with or to replace either of those items. ARR is not a forecast and does not include perpetual license or professional services revenues.

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Non-GAAP Financial Measures

The non-GAAP financial measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are:

• non-GAAP revenue—GAAP revenue

• non-GAAP gross margin—GAAP gross margin

• non-GAAP operating income—GAAP operating income

• non-GAAP operating margin—GAAP operating margin

• non-GAAP net income—GAAP net income

• non-GAAP diluted earnings or loss per share—GAAP diluted earnings or loss per share

The non-GAAP measures exclude fair value adjustments related to acquired deferred revenue and deferred costs, stock-based compensation expense, amortization of acquired intangible assets expense, acquisition-related charges, restructuring and headquarters relocation charges, pension plan termination-related costs, non-operating credit facility refinancing costs, identified discrete charges included in non-operating other expense, net and the related tax effects of the preceding items, and any other identified tax items.

These items are normally included in the comparable measures calculated and presented in accordance with GAAP. Our management excludes these items when evaluating our ongoing performance and/or predicting our earnings trends, and therefore excludes them from our non-GAAP financial measures. Management uses, and investors should consider, non-GAAP measures in conjunction with our GAAP results.

Fair value of acquired deferred revenue is a purchase accounting adjustment recorded to reduce acquired deferred revenue to the fair value of the remaining obligation, so our GAAP revenue for the periods after an acquisition do not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. We believe excluding these adjustments to revenue from these contracts (and associated costs in fair value adjustment to deferred services cost) is useful to investors as an additional means to assess revenue trends of our business.

Stock-based compensation is a non-cash expense relating to stock-based awards issued to executive officers, employees and outside directors and to our employee stock purchase program. We exclude this expense as it is a non-cash expense and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies in our industry.

Amortization of acquired intangible assets is a non-cash expense that is impacted by the timing and magnitude of our acquisitions. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.

Acquisition-related and other transactional charges included in general and administrative costs aredirect costs of potential and completed acquisitions and expenses related to acquisition integration activities, including transaction fees, due diligence costs, severance and professional fees. Subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are also included within acquisition-related charges. Other transactional charges include third-party costs related to structuring unusual transactions. We do not include these costs when reviewing our operating results internally. The occurrence and amount of these costs will vary depending on the timing and size of acquisitions.

Restructuring charges include excess facility restructuring charges and severance costs resulting from reductions of personnel driven by modifications to our business strategy. We do not include these costs when reviewing our operating results internally. These costs may vary in size based on our restructuring plan.

Headquarters relocation charges include non-cash accelerated depreciation expense recorded in anticipation of exiting our current headquarters facility due to changes in the estimated useful lives of fixed assets. We do not include these costs when reviewing our operating results internally.

Income tax adjustments include the tax impact of the items above and assumes that we are profitable on a non-GAAP basis in the U.S. and one foreign jurisdiction. It also eliminates the effect of the valuation

42

allowance recorded against our net deferred tax assets in those jurisdictions.  Additionally, we exclude other material tax items that we do not include when reviewing our operating results internally.

We use these non-GAAP measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results. We believe that these non-GAAP measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) for managing our business and evaluating our performance. We believe that providing non-GAAP measures also affords investors a view of our operating results that may be more easily compared to the results of other companies in our industry that use similar financial measures to supplement their GAAP results.

The items excluded from the non-GAAP measures often have a material impact on our financial results and many of such items recur. Accordingly, the non-GAAP measures included in this Quarterly Report should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP. The following tables reconcile each of these non-GAAP measures to its most closely comparable GAAP measure on our financial statements.

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	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(in millions, except per share amounts)
GAAP revenue	$	314.8		$	291.3		$	929.3		$	857.7
Fair value of acquired deferred revenue	0.3			0.6			1.0			2.2
Non-GAAP revenue	$	315.1		$	291.9		$	930.3		$	859.9
GAAP gross margin	$	233.2		$	209.0		$	681.2		$	611.4
Fair value of acquired deferred revenue	0.3			0.6			1.0			2.2
Fair value of acquired deferred costs	(0.1		)	(0.1		)	(0.3		)	(0.3		)
Stock-based compensation	2.4			3.0			8.1			9.1
Amortization of acquired intangible assets included in cost of revenue	6.8			6.5			20.0			19.3
Non-GAAP gross margin	$	242.6		$	219.1		$	710.0		$	641.7
GAAP operating income	$	21.7		$	11.3		$	61.5		$	23.3
Fair value of acquired deferred revenue	0.3			0.6			1.0			2.2
Fair value of acquired deferred costs	(0.1		)	(0.1		)	(0.3		)	(0.3		)
Stock-based compensation	16.7			16.6			52.0			56.1
Amortization of acquired intangible assets included in cost of revenue	6.8			6.5			20.0			19.3
Amortization of acquired intangible assets	7.9			8.0			23.6			24.0
Acquisition-related and other transactional charges included in general and administrative expenses	1.6			0.3			1.7			1.0
U.S. pension plan termination-related costs	—			0.3			—			0.3
Headquarters relocation charges	1.9			—			2.9			—
Restructuring charges, net	(0.3		)	1.6			(1.0		)	8.3
Non-GAAP operating income	$	56.4		$	44.9		$	161.4		$	134.2
GAAP net income (loss)	$	17.0		$	(1.0	)	$	38.8		$	(11.2	)
Fair value of acquired deferred revenue	0.3			0.6			1.0			2.2
Fair value of acquired deferred costs	(0.1		)	(0.1		)	(0.3		)	(0.3		)
Stock-based compensation	16.7			16.6			52.0			56.1
Amortization of acquired intangible assets included in cost of revenue	6.8			6.5			20.0			19.3
Amortization of acquired intangible assets	7.9			8.0			23.6			24.0
Acquisition-related and other transactional charges included in general and administrative expenses	1.6			0.3			1.7			1.0
U.S. pension plan termination-related costs	—			0.3			—			0.3
Headquarters relocation charges	1.9			—			2.9			—
Restructuring charges, net	(0.3		)	1.6			(1.0		)	8.3
Non-operating credit facility refinancing costs	—			—			—			1.2
Income tax adjustments (1)	(9.7		)	(0.2		)	(20.7		)	(2.8		)
Non-GAAP net income	$	42.1		$	32.6		$	117.9		$	98.0
GAAP diluted earnings (loss) per share	$	0.14		$	(0.01	)	$	0.33		$	(0.10	)
Fair value of acquired deferred revenue	—			0.01			0.01			0.02
Stock-based compensation	0.14			0.14			0.44			0.48
Amortization of acquired intangible assets	0.12			0.12			0.37			0.37
Acquisition-related and other transactional charges included in general and administrative expenses	0.01			—			0.01			0.01
Headquarters relocation charges	0.02			—			0.02			—
Restructuring charges, net	—			0.01			(0.01		)	0.07
Non-operating credit facility refinancing costs	—			—			—			0.01
Income tax adjustments (1)	(0.08		)	—			(0.18		)	(0.02		)
Non-GAAP diluted earnings per share	$	0.36		$	0.28		$	1.00		$	0.84

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Operating margin impact of non-GAAP adjustments:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
GAAP operating margin	6.9	%	3.9	%	6.6	%	2.7	%
Fair value of acquired deferred revenue	0.1	%	0.2	%	0.1	%	0.3	%
Stock-based compensation	5.3	%	5.7	%	5.6	%	6.5	%
Amortization of acquired intangible assets	4.7	%	5.0	%	4.7	%	5.0	%
Acquisition-related and other transactional charges included in general and administrative expenses	0.5	%	0.1	%	0.2	%	0.1	%
U.S. pension plan termination-related costs	—	%	0.1	%	—	%	—	%
Headquarters relocation charges	0.6	%	—	%	0.3	%	—	%
Restructuring charges, net	(0.1	)%	0.5	%	(0.1	)%	1.0	%
Non-GAAP operating margin	17.9	%	15.4	%	17.3	%	15.6	%

(1) We have a full valuation allowance against our U.S. net deferred tax assets and a valuation allowance against net deferred tax assets in certain foreign jurisdictions. As we are profitable on a non-GAAP basis, the 2018 and 2017 non-GAAP tax provisions are calculated assuming there is no valuation allowance. Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. We recorded the impact of the Tax Cuts and Jobs Act in our first quarter 2018 GAAP earnings, resulting in a non-cash benefit of approximately $7 million. In the third quarter of 2018, we increased the non-cash benefit by approximately $5 million to reflect additional guidance on the state tax implications of the act. We have excluded these benefits from our non-GAAP results.

Critical Accounting Policies and Estimates

The financial information included in Item 1 reflects no material changes in our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2017 Annual Report on Form 10-K.

Recent Accounting Pronouncements

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations some of which are expected to have a material impact on our consolidated financial statements. Refer to Note 1. Basis of Presentation to the Condensed Consolidated Financial Statements in this Form 10-Q for all recently issued accounting pronouncements which is incorporated herein by reference.

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Liquidity and Capital Resources

	June 30, 2018			July 1, 2017
	(in thousands)
Cash and cash equivalents	$	266,552		$	260,695
Short- and long-term marketable securities	54,172			50,189
Total	$	320,724		$	310,884
	Nine months ended
	June 30, 2018			July 1, 2017
	(in thousands)
Cash provided by operating activities	$	185,322		$	102,463
Cash used by investing activities	(30,089		)	(9,808		)
Cash used by financing activities	(165,075		)	(108,498		)

Cash and cash equivalents

We invest our cash with highly rated financial institutions and in diversified domestic and international money market mutual funds. Cash and cash equivalents include highly liquid investments with original maturities of three months or less. In addition, we hold investments in marketable securities totaling approximately $54 million with an average maturity of 15 months. At June 30, 2018, cash and cash equivalents totaled $267 million, compared to $280 million at September 30, 2017, reflective of $185 million in operating cash flows and $7.5 million from the issuance of common stock under our Employee Stock Purchase Plan, offset by $100 million used to repurchase common stock, $45 million used to pay withholding taxes on stock-based awards that vested in the period, $20 million of net repayments made under our credit facility, $19 million used to acquire capital assets, $8 million used to pay contingent consideration, $6 million used to purchase businesses and intangible assets and $5 million used to purchase investments and marketable securities.

A significant portion of our cash is generated and held outside the U.S. At June 30, 2018, we had cash and cash equivalents of $17 million in the U.S., $97 million in Europe, $123 million in Asia Pacific (including India), and $29 million in other non-U.S. countries. All the marketable securities are held in Europe. We have substantial cash requirements in the United States, but we believe that the combination of our existing U.S. cash and cash equivalents, marketable securities, our ability to repatriate cash to the U.S. more cost effectively with the recent U.S. tax law changes, future U.S. operating cash flows and cash available under our credit facility, will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.

Cash provided by operating activities

Cash provided by operating activities was $185 million in the first nine months of 2018, compared to $102 million in the first nine months of 2017. The increase is primarily due to higher collections of accounts receivable, lower restructuring payments (down $33 million year over year), and the $12 million payment related to the Korean tax audit made in the first quarter of 2017.

Net income for the first nine months of 2018 was $39 million compared to a net loss for the first nine months of 2017 of $11 million.

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Cash used by investing activities

	Nine months ended
	June 30, 2018			July 1, 2017
	(in thousands)
Cash provided (used) by investing activities included the following:
Additions to property and equipment	$	(18,666	)	$	(19,333	)
Acquisitions of businesses, net of cash acquired	(3,000		)	(4,960		)
Purchase of intangible asset	(3,000		)	—
Purchases of short- and long-term marketable securities	(18,063		)	(14,173		)
Proceeds from maturities of short- and long-term marketable securities	13,640			13,440
Purchases of investments	(1,000		)	—
Proceeds from sales of investments	—			15,218
	$	(30,089	)	$	(9,808	)

Our expenditures for property and equipment consisted primarily of computer equipment, software, office equipment and facility improvements. In the first nine months of 2018 we also used net $4 million to purchase additional marketable securities, $3 million to acquire developed software, $3 million for a small business acquisition and $1 million for a small investment.

Cash used by financing activities

	Nine months ended
	June 30, 2018			July 1, 2017
	(in thousands)
Cash used by financing activities included the following:
Net borrowings (repayments) of debt	$	(20,000	)	$	(40,000	)
Repurchases of common stock	(100,000		)	(34,994		)
Payments of withholding taxes in connection with vesting of stock-based awards	(44,797		)	(26,244		)
Proceeds from issuance of common stock	7,472			3,978
Contingent consideration	(7,750		)	(11,054		)
Credit facility origination costs	—			(184		)
	$	(165,075	)	$	(108,498	)

The net repayments in the first nine months of 2018 reflect borrowings of $200 million under our credit facility to fund working capital requirements and stock repurchases, offset by repayments of $220 million. In the first nine months of 2018 we repurchased $100 million in common stock. We also paid $45 million in withholding taxes in connection with vesting of stock based awards, made $8 million in contingent consideration payments, and received $7 million from the sale of common stock under our ESPP plan.

Credit Agreement

We maintain a multi-currency credit facility with a syndicate of banks with a $600 million revolving loan commitment. The revolving loan commitment may be increased by an additional $500 million if the existing or additional lenders are willing to make such increased commitments. Outstanding revolving loan amounts may be repaid in whole or in part, without penalty or premium, prior to the September 15, 2019 maturity date, when all remaining amounts outstanding will be due and payable in full. As of June 30, 2018, the fair value of our credit facility approximates its book value.

We and certain of our foreign subsidiaries may borrow under the credit facility. Any amounts borrowed by us would be guaranteed by our material domestic subsidiaries that become parties to the subsidiary guaranty, if any. Any amounts borrowedby one of our foreign subsidiaries would be guaranteed by us and any subsidiary guarantors. The credit facility is secured by our assets and those of some of our U.S. subsidiaries (which include equity interests in some of our other subsidiaries).

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As of June 30, 2018, we had $198.1 million in revolving loans outstanding under the credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by us. As of June 30, 2018, the weighted average annual interest rate for amounts outstanding was 3.88%.  We also pay a quarterly commitment fee on the undrawn portion of the credit facility ranging from 0.175% to 0.30% per year based on our total leverage ratio.

The credit facility limits our and our subsidiaries’ ability to, among other things: incur liens or guarantee obligations; pay dividends and make other distributions; make investments and enter into joint ventures; dispose of assets; engage in transactions with foreign subsidiaries and engage in transactions with affiliates, except on an arms-length basis. In addition, the credit facility requires us to maintain the financial ratios set forth below.

	Required Ratio	Ratio as of June 30, 2018
Total Leverage Ratio Ratio of consolidated total indebtedness to the consolidated trailing four quarters EBITDA as of the last day of any fiscal quarter.	Not > 4.50:1.00	2.45 to 1.00
Fixed Charge Coverage Ratio Ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges as of the last day of any fiscal quarter.	> 3.50:1.00	6.82 to 1.00
Senior Secured Leverage Ratio Ratio of senior consolidated total indebtedness (which excludes unsecured indebtedness) to consolidated trailing four quarters EBITDA as of the last day of any fiscal quarter.	Not > 3.00:1.00	0.73 to 1.00

As of the end of the third quarter of 2018, we had approximately $384 million of borrowing capacity under the credit facility.

As of June 30, 2018, we were in compliance with all financial and operating covenants of the credit facility.

Any failure to comply with the financial or operating covenants of the credit facility would prevent us from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC Inc., as defined in the agreement, would also constitute an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility.

The terms and conditions of the credit facility are described in Note 12 to the Financial Statements.

Outstanding Notes

On May 12, 2016, we issued $500 million of 6.00% senior unsecured notes due 2024. Interest on the notes is payable twice per year in May and November.

We may redeem the notes, in whole or in part, subject to certain conditions, including in some cases a payment of premium, prior to their maturity date. In addition, if we undergo a change of control, we will be required to make an offer to purchase all the notes at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest.

The notes were issued under an indenture that contains customary covenants. Subject to certain exceptions, our ability to incur certain additional debt is limited unless, after giving pro forma effect to such incurrence and the application of the proceeds thereof, the ratio of our EBITDA to our Consolidated Fixed Charges is not greater than 2.00 to 1.00. The indenture also restricts our ability to incur liens, pay dividends or make certain other distributions, sell assets or engage in sale/leaseback transactions. Any failure to comply with these and other covenants included in the indenture could constitute an event of default that could result in the acceleration of the payment of the aggregate principal amount of the notes then outstanding and accrued interest. As of June 30, 2018, we were in compliance with all such covenants.

Share Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors periodically authorizes the repurchase of shares of our common stock. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

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On September 14, 2017, our Board of Directors authorized us to repurchase up to $500 million of our common stock in the period October 1, 2017 through September 30, 2020. In the third quarter of 2018, we repurchased $100 million of our common stock through an ASR agreement with a major financial institution at a purchase price determined by the average market price over a period of time, with final settlement in June 2018. In July 2018, our Board of Directors has authorized us to repurchase up to an additional $1,000 million of our common stock through September 30, 2020. We entered into a new, $1,000 million ASR as described in Note 14. Subsequent Events. Final settlement of this ASR is expected to occur in 7.5 to 10 months.

Future Expectations

Our transition to a subscription licensing model has had, and will continue to have, an adverse impact on revenue, operating margin and EPS relative to periods in which we primarily sold perpetual licenses until the expected transition of our customer base to subscription is completed and the model has matured.  This also affects consolidated EBITDA as calculated under our credit facility.  Notwithstanding the effect of the subscription transition and those limitations, we believe that existing cash and cash equivalents, together with cash generated from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements (which we expect to be $40 million in 2018) through at least the next twelve months and to meet our known long-term capital requirements.

Our expected uses of cash could change, our cash position could be reduced and we could incur additional debt obligations if we decided to purchase our outstanding shares or to retire debt or to engage in strategic transactions, any of which could be commenced, suspended or completed at any time.  Any such purchases or retirement of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.  We also evaluate possible strategic transactions on an ongoing basis and at any given time may be engaged in discussions or negotiations with respect to possible strategic transactions.  The amounts involved in any share or debt repurchases or strategic transactions may be material.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposure as described in Item 7A: Quantitative and Qualitative Disclosures about Market Risk of our 2017 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2018.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1A.    RISK FACTORS

In addition to other information set forth in this report, you should carefully consider the risk set forth below and the risk factors described in Part I. Item 1A. Risk Factors in our 2017 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risk described below and the risks described in our 2017 Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

On September 7, 2017, we entered into a lease for a new worldwide headquarters in the Boston Seaport District, beginning in January 2019. Because our current headquarters lease will not expire until November 2022, we are seeking to exit our current headquarters lease or sublease that space. If we are unable to do so, or unable to do so for an amount at least equal to our rent obligations under the current headquarters lease, we will bear overlapping rent obligations for those premises and will be required to record a charge related to any rent shortfall, which could adversely affect our financial condition.

Under our current headquarters lease, we pay approximately $7.4 million in annual base rent plus operating expenses (together "rent obligations," an aggregate annual total of approximately $12.0 million). We will begin paying rent under our new headquarters lease on July 1, 2020. Our rent under the new lease when we begin paying rent will be an annual base rent amount of $11.3 million plus our pro rata portions of building operating expenses and real estate taxes (approximately 63% of such amounts, estimated to be approximately $7.1 million in 2020). The base rent will increase by $0.3 million each year over the term of the lease. Accordingly, we will be required to pay rent for both locations from July 1, 2020 until November 30, 2022 unless we can successfully negotiate an exit to our current lease or sublease our current premises. We may be unable to negotiate a financially desirable termination of our current lease or to sublease our current premises for an amount at least equal to our rent obligations under the current lease, which would require us to bear the overlapping rent obligations and to record a charge related to such shortfall, and could adversely affect our cash flow and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below shows the shares of our common stock we repurchased in the third quarter of 2018.

Period (1)	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
April 1, 2018 - April 28, 2018	951,814	87.19	951,814	$420,000,000 (2)(3)
April 29, 2018 - May 26, 2018	—	—	—	$420,000,000 (2)(3)
May 27, 2018 - June 30, 2018	195,160	87.19	195,160	$400,000,000 (2)(3)
Total				$400,000,000 (2)

(1) Periods are our fiscal months within the fiscal quarter.

(2) On September 14, 2017, our Board authorized us to repurchase up to $500 million worth of our shares in the period October 1, 2017 through September 30, 2020, which repurchase program we announced on September 19, 2017. Our Board expanded this authorization to $1,500 million on July 19, 2018, upon closing of the $1,000 million investment by Rockwell Automation.

(3) In April 2018, we made a $100 million payment to repurchase shares pursuant to an ASR with a major financial institution, of which 951,814 shares were repurchased in April and an additional 195,160 shares were repurchased in June 2018. See Note 5. Earnings per Share (EPS) and Common Stock of "Notes to Consolidate Financial Statements" included in this Quarterly Report.

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ITEM 6. EXHIBITS

3.1	Restated Articles of Organization of PTC Inc. adopted August 4, 2015 (filed as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (File No. 0-18059) and incorporated herein by reference).
3.2	By-Laws, as amended and restated, of PTC Inc. (filed as Exhibit 3.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by reference).
4.1	Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
4.2	First Supplemental Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.2 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
4.3	6.000% Senior Notes due 2024 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1	Amended and Restated Strategic Alliance Agreement by and between PTC Inc. and Rockwell Automation, Inc. dated as of June 18, 2018.
10.2	Securities Purchase Agreement by and between PTC Inc. and Rockwell Automation, Inc., dated as of June 11, 2018 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on July 20, 2018 (File No. 0-18059) and incorporated herein by reference)
10.3	Registration Rights Agreement, by and between the Company and Rockwell Automation, Inc., dated July 19, 2018 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 11, 2018 (File No. 0-18059) and incorporated herein by reference).
31.1	Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
32*	Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
101	The following materials from PTC Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2018 and September 30, 2017; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2018 and July 1, 2017; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2018 and July 1, 2017; and (v) Notes to Condensed Consolidated Financial Statements.

_________________

* Indicates that the exhibit is being furnished, not filed, with this report.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PTC Inc.
By:	/S/ ANDREW MILLER
	Andrew Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: July 31, 2018

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EX-10.1

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AMENDED AND RESTATED STRATEGIC ALLIANCE AGREEMENT This Amended and Restated Strategic Alliance Agreement, including the attached Exhibits and Schedules (together, “Agreement”) is made as of June 19, 2018 (“Effective Date”) between Rockwell Automation, Inc., with its principal place of business located at 1201 South 2nd Street, Milwaukee, WI 53204 (“RA”), and PTC Inc., with its principal place of business located at 140 Kendrick Street, Needham, MA 02494 (“PTC”). RA and PTC may be referred to in this Agreement individually as a “Party” and together as the “Parties.” To the extent a provision set forth in the body of this Agreement conflict with a provision set forth in an attached Exhibit or Schedule, the provision set forth in the body of the Agreement shall prevail. RECITALS WHEREAS, the Parties originally entered into a Strategic Alliance Agreement, dated as of June 11, 2018 (such date, the “Original Effective Date” and such agreement, the “Original Agreement”); WHEREAS, the Parties wish to clarify that the Parties intended the Original Agreement to apply to their respective Affiliates in certain applicable situations; WHEREAS, PTC is engaged in the business of developing, marketing and selling software products and services, including the PTC Products; WHEREAS, RA is engaged in the business of developing, marketing and selling hardware, software and other products and services, including the RA Products; WHEREAS, RA and PTC are entering into a Securities Purchase Agreement dated the date hereof (“Securities Purchase Agreement”) pursuant to which, among other things, RA will acquire shares of PTC’s common stock; WHEREAS, the Parties desire to cooperate to facilitate interoperability of certain products of each Party that will be marketed and licensed as combined offerings to customers as a co- branded offering under a jointly-owned Combined Offering Brand; and WHEREAS, each Party desires to authorize the other Party and/or its resellers to resell certain products and services of licensor Party to end user customers. NOW, THEREFORE, in consideration of the foregoing, and in reliance on the mutual agreements contained herein, the Parties agree as follows: AGREEMENT 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Definitions. In addition to terms defined on first use in this Agreement and the terms defined in the OEM Agreement and the Reseller Agreement, the terms set forth in this Section 1 (Definitions) will have the meanings set forth below: “Affiliate” means any company or other business entity controlled by, controlling or under the common control of the applicable Party. For the purposes of the definition of “Affiliate,” “control” will mean the direct or indirect power to direct, or cause the direction of, the management and policies of a company or other business entity, whether through ownership of more than fifty percent (50%) of the voting interest, by contract, or otherwise (and “controlling” and “controlled” will be construed accordingly). “Change of Control” means, with respect to a Party: (a) any person, entity or “group” (as such term is used in Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Party representing 50% or more of the combined voting power of the Party’s then outstanding securities; (b) the consummation of any merger, consolidation or other business combination in which the holders of the Party’s outstanding voting power immediately prior to such transaction do not own (in substantially the same proportion as their ownership of such voting power immediately prior to the transaction, other than changes in proportionality as a result of any cash/stock election provided under the terms of the definitive agreement regarding such transaction) a majority of the outstanding voting power of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of the transaction; or (c) the sale, transfer, conveyance or other disposition of all or substantially all of the assets of the Party on a consolidated basis to an unrelated person, entity or group. “Combined Offering” is defined in the OEM Agreement. “Combined Offering Brand” is defined in Section 4.1. “Confidential Information” means any information or data, regardless of whether it is in tangible form, disclosed by either Party or its Affiliates (collectively, the “Disclosing Party”) to the other Party or its Affiliates (collectively, the “Receiving Party”) in the performance of this Agreement that the Disclosing Party has either marked as confidential or proprietary, or has identified in writing as confidential or proprietary within thirty (30) days of disclosure to the Receiving Party; provided, however, that reports and/or information related to or regarding a Disclosing Party’s business plans, strategies, technology, customers, prospective customers, billing records, and products or services will be deemed Confidential Information of the Disclosing Party even if not so marked or identified, unless such information is the subject of any of the exceptions set forth in the following sentence. Further, the terms of this Agreement will constitute the Confidential Information of both Parties. Information will not be deemed Confidential Information hereunder if such information: (a) is known to the Receiving Party prior to receipt from the Disclosing Party directly or indirectly from a source other than one having an obligation 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED of confidentiality to the Disclosing Party; (b) becomes known (independently of disclosure by the Disclosing Party) to the Receiving Party directly or indirectly from a source other than one having an obligation of confidentiality to the Disclosing Party; (c) becomes publicly known or otherwise ceases to be secret or confidential, except through a breach of this Agreement by the Receiving Party; or (d) is independently developed by the Receiving Party without reference to or use of the Disclosing Party’s Confidential Information. “Customers” means customers who acquire Products, including any Combined Offering, for their internal use and not for redistribution, remarketing, time-sharing, or service bureau use. “Customer License Agreement” is defined in the OEM Agreement. “Disclosing Party” is defined in the definition of Confidential Information. “Documentation” means the end user documentation that is part of or distributed with the applicable Products. “Error” means any failure, omission, or defect in a Product that prevents it from performing in material conformity to any applicable Documentation. “Factory SCO” means any connected operations use case related to increasing productivity, reducing operational risk, increasing system interoperability, and/or increasing efficiency by entities that are in the primary business of manufacturing and/or production output as well as vertical industries or sectors. Vertical industries or sectors include all companies that engage in discrete, hybrid or continuous manufacturing or production activities (including assembly), such as those activities by companies within the industries listed in Exhibit B, as well as government agencies where manufacturing or production occurs with the types of use cases described above (e.g., U.S. Armed Forces manufacturing sites). For the avoidance of doubt, “Factory SCO” will include supply chain, transportation and warehousing, utilities (e.g., water & wastewater treatment operations, power generation and gas distribution), industrial facilities, energy management and related activities, but will exclude (a) “smart cities” and (b) factory equipment manufacturers who build IoT or Augmented Reality into the machines that they sell to factories. “Factory SCP” means any connected product produced by machine builders or machine building divisions of end user customers, including factory equipment manufacturers who build IoT or Augmented Reality into the machines that they sell to factories, as well as vertical industries or sectors. Vertical industries or sectors include all companies that engage in discrete, hybrid or continuous manufacturing or production activities (including assembly), such as those activities by companies within the industries listed in Exhibit B, as well as government agencies where manufacturing or production occurs with the types of use cases described above (e.g., U.S. Armed Forces manufacturing sites). For the avoidance of doubt, “Factory SCP” will include 3 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED supply chain, transportation and warehousing, utilities (e.g., water & wastewater treatment operations, power generation and gas distribution), industrial facilities, energy management and related activities, but will exclude “smart cities.” “Financial Commitments” is defined in Section 8. “Governance Team” is defined in Section 2. “Marks” means, collectively, the PTC Marks and the RA Marks. “OEM Agreement” means the terms and conditions attached as Exhibit C. “Product(s)” means, collectively, the PTC Products and the RA Products. “PTC Marks” means the PTC trademarks on which the Governance Team agree from time to time. “PTC Product(s)” means the software (including Distributable Software and Development Tools) set forth on Exhibit A under the heading “PTC Products” and Updates thereto, in each case in object code form only. “PTC Restricted Companies” means the companies listed on Exhibit B under the heading “PTC Restricted Companies.” “RA Marks” means the RA trademarks on which the Governance Team agree from time to time. “RA Restricted Companies” means the companies listed on Exhibit B under the heading “RA Restricted Companies”. “RA Product(s)” means the software (including Distributable Software and Development Tools) set forth on Exhibit A under the heading “RA Products,” and Updates thereto, in each case in object code form only. “Receiving Party” is defined in the definition of Confidential Information. “Reseller Agreement” means the terms and conditions attached as Exhibit D. “Sales Enablement” means the use of a Product for purposes that do not directly produce licensing revenue for the applicable Party, including, but not limited to, demonstrations, non-production customer evaluation (which shall not exceed three (3) months in the aggregate), benchmarking, development, testing, copies and back up, maintenance (including the provision of updates and releases), customer support and training. 4 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED “Updates” means all new releases, Error corrections and hot fixes made generally available by a Party or its Affiliates to its customers and users pursuant to its standard support and maintenance services, and provided to the other Party for use under this Agreement, excluding any new product or feature that is separately priced and licensed. Governance. Within ten (10) business days after the Original Effective Date, the Parties will establish an executive steering committee for their collaboration under this Agreement (the “Governance Team”). Composition. The Governance Team will be made up of at least one executive from each Party, at least one business liaison from each Party and at least one technical representative from each Party (provided that the total number of representatives from each Party will be the same), and will work together to formalize such collaboration through appropriate procedures and communications and to manage the implementation and execution of such collaboration. The Governance Team will operate by consensus, and the members will attempt to reach agreement on all matters related to the Integration. As of the Original Effective Date, the Parties’ Governance Team members are identified on Exhibit B. Replacement. Replacement of a Party’s Governance Team member will be subject to unanimous agreement of the Governance Team, which will not be unreasonably withheld; provided, however, that either Party may unilaterally replace either of its Governance Team members with an individual who is also assuming or has assumed the replaced member’s executive position within PTC or RA, as the case may be. Meetings. The Governance Team will meet at least once each calendar quarter and after each meeting will publish a report for interested constituents within each Party. On at least an annual basis, such meeting will include a mutual review of Combined Offering sales and usage, and an assessment of then-current and anticipated market opportunities for the same. Disputes. The Governance Team will serve as the Parties’ primary forum for attempting to resolve disputes concerning this Agreement that cannot be resolved in the routine course of the Parties’ cooperation. Internal Communications. Each Party will be responsible for its internal communications as needed to stay apprised of the Governance Team’s decisions and actions. Interoperability. Cooperation. Each Party will work cooperatively with the other Party to achieve interoperability of the PTC Products with the RA Products (such products, collectively, 5 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED “OEM Products”) including making modifications to its own OEM Products as necessary to make such OEM Products interoperable with the other Party’s OEM Products. To that same end, each Party and its Affiliates will provide to the other Party beta and pre-release versions of the Updates and new versions of the its Products prior to or at least no later than its makes such beta and pre-release versions available to any of its other customers. Each Party will provide the other Party and its Affiliates with all Updates and new releases of its Products, no later than the first commercial release of such new release or functionality to ensure coordinated and correlated interoperability between the Products in any Combined Offering. Neither Party or its Affiliates will be obligated to adopt a new version or Update of the other Party’s Product on any particular time-frame, but where the new version or Update includes critical security fixes, each Party will notify the other Party of the same and the Parties will coordinate in good faith to determine how to drive adoption of the same as soon as is reasonably practical. Future Product Integrations. The Parties will collaborate on, and share information with respect to, future product integrations and/or roadmaps regarding information solutions for the products and services described in this Agreement. Notwithstanding the foregoing, upon receipt of a Competition Notice (as defined in Section 5.6(b)(ii)), neither Party or its Affiliates will be required to provide information with respect to future product integrations and/or roadmaps regarding such information solutions. Cross-Training. Each Party will train its appropriate employees on the other Party’s Products and related solutions offerings. Branding; Strategic Relationship Support. Combined Offering Brand; Branding. The Combined Offering Brand will be mutually agreed upon by the Parties. The Parties will jointly own the Combined Offering Brand, and any costs or expenses for trademark, domain and other protection, defense or enforcement activities associated with the Combined Offering Brand will be shared equally by the Parties. The Combined Offering will be co-branded with the PTC Marks, RA Marks and Combined Offering Brand, as mutually agreed upon in writing by the Parties. The Parties and their applicable Affiliates will advertise, market and promote the Combined Offering under the agreed-upon PTC Marks, RA Marks and the Combined Offering Brand. Each Party will bear its own costs for marketing the Combined Offering. Licenses for the PTC Product known as Kepware may only be sold by RA and its Affiliates under the “ThingWorx Industrial Connectivity” branding (and not the “Kepware” branding). Designations. PTC will identify RA and certain of its mutually agreed upon Affiliates as PTC’s premier IoT, analytics and industrial automation partner and as a preferred system 6 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED integrator for the Factory SCO use cases and will feature RA and its applicable Affiliates as such on PTC’s and its applicable Affiliates’ respective websites and appropriate marketing collateral, all as mutually agreed upon in writing by the Parties. RA will have the Systems Integrator rights set forth on Exhibit H. RA will identify PTC and certain of its mutually agreed upon Affiliates as RA and certain of its mutually agreed upon Affiliates’ premier IoT and AR technology partner for the Factory SCO use cases and will feature PTC as such on RA’s and its applicable Affiliates’ respective websites and appropriate marketing collateral, all as mutually agreed upon in writing by the Parties. Self Determination. Except as expressly set forth in this Agreement, each Party and its Affiliates may set and determine the manner in which it will promote, market, and advertise the Combined Offering and the prices that it charges therefor. Joint Marketing and Support. Sales and Marketing Plan. The Parties will collaborate and, within sixty (60) days after the Original Effective Date, will produce a sales and marketing plan that details the planned joint marketing activities of the Parties. The sales and marketing plan must be mutually agreed upon and signed by both Parties. Additional PTC Technologies. If RA or its Affiliates identifies a bona fide customer need for additional PTC technologies (such as CAD or PLM), the Parties will collaborate on a case-by-case basis to develop appropriate distribution or referral arrangements, including incentives for RA and its Affiliates; for example, when appropriate and mutually agreed, a credit toward New ACV (as defined in Exhibit E). Personnel. Each Party will designate appropriate engineering, sales and sales enablement, and marketing resources and/or spending to support the joint go-to- market initiatives, all as mutually agreed in the sales and marketing plan referred to in clause (a) above. Duties. Each Party and its applicable Affiliates will: employ a competent sales organization with respect to the Combined Offering and the other Party’s Products and will develop and maintain sufficient knowledge of the industry, the other Party’s Products, related support and maintenance services and competitive offerings to be able to demonstrate the Combined Offering and the other Party’s Products, use its reasonable efforts to maintain an appropriate level of customer satisfaction with respect to Combined Offerings and perform its activities hereunder in a professional and workmanlike manner; 7 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED notify the other Party immediately after becoming aware of any defect in any of the other Party’s Products or of any Customer problem, claim or threatened claim with respect to any of the other Party’s Products, and will promptly forward to the other Party all complaints with respect to any of the other Party’s Products; and be solely responsible for, and will use its commercially reasonable efforts in, the marketing and commercialization of the Combined Offering. Publicity. General. The Parties will publicize their relationship throughout the Term in accordance with this Section. Neither Party nor its Affiliates may issue any press releases and, without limiting the rights under this Section, other public announcements (collectively “Publicity”) without the prior written approval of the other Party, except as provided in this Agreement, provided that each Party and its Affiliates will have the right to cite such press release(s), publicly use and disclose excerpts from such press release(s) and otherwise publicly use and disclose information contained in such press release(s) in its sole discretion. The Parties agree to cooperate to develop a customer “win” story highlighting the product and data optimization anticipated from the transactions contemplated by this Agreement. Initial Publicity. After the Original Effective Date, RA and PTC will issue an initial mutually acceptable press release announcing the availability of the Combined Offering and identifying the PTC Products as bundled components of the Combined Offering (“Initial Press Release”). Each Party will provide supporting quotes from a C- level executive for the Initial Press Release if requested by the other Party. Pre-approved Description. The Parties will develop a description of their relationship under this Agreement that may be used, in whole or in part, without modification by either Party and its Affiliates in any pre-approved Publicity, without further approval, provided, however, that pre-approval is not required to utilize the pre- approved description in any sales or marketing collateral, such as the Web Site of a Party or its Affiliates, customer datasheets, presentations and proposals. General Conduct. Each Party and its Affiliates will conduct business under its own name and, except as expressly set forth in this Agreement, will not state or imply that any of its own products or services are endorsed or recommended by the other Party or its Affiliates. The Parties and their respective Affiliates will (a) conduct their respective business in a manner that reflects favorably at all times on each Party’s Products, Services, and the good name, goodwill, and reputation of such Party and its Affiliates; (b) make no representations or warranties to customers or to the trade with respect to the specifications, features, or capabilities of the other Party’s products or services other than those made by the Party who owns the products or services 8 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED or as otherwise contemplated by or set forth in this Agreement; and (c) not publish or use any misleading or deceptive advertising material. Security. Each Party agrees that it will follow secure development practices at least in accordance with industry standard practices. From time to time, a Party may require the other Party or its Affiliates to complete a security questionnaire and in connection with the same, the Party responding to such request will make available to the requesting Party such documents and access to such personnel as the requesting Party reasonably request for such purposes. In the event a Party discovers vulnerabilities in its or the other Party’s code and/or weaknesses in its or the other Party’s development practices, or if a Party otherwise learns of the same in its own code or development practices, each Party agrees to promptly take corrective actions to remedy the same as soon as reasonably practicable. Any vulnerabilities with CVSS (Common Vulnerability Scoring System) ratings higher than [***] will be promptly remediated and retested for verification at each Party’ sole cost and expense, and in the case of vulnerabilities with CVSS ratings higher than [***], the efforts to remediate and retest such vulnerabilities must be undertaken with the greatest urgency. From time to time, Customers may seek additional security requirements. The Governance Team will discuss in good faith the adoption of any such additional security requirements. In the event that the Governance Team agrees to adopt such requirements, the Governance Team will establish the time frame for implementing such requirements. Each Party will bear its own costs with regard to any security enhancements to its Products that may be agreed to by the Governance Team. Trademark License. License. Each Party (the “Trademark Licensor”) grants the other Party and its Affiliates (the “Trademark Licensee”) a non-exclusive license to use Trademark Licensor’s Marks in the exercise of Trademark Licensee’s rights and the performance of Trademark Licensee’s obligations under this Agreement; provided, that Trademark Licensee (i) does not create a unitary composite mark involving any Mark of Trademark Licensor without the prior written approval of Trademark Licensor and (ii) displays symbols and notices clearly and sufficiently indicating the trademark status and ownership of Trademark Licensor’s Marks in accordance with applicable trademark law and practice and Trademark Licensor’s then current trademark guidelines. The Parties may add, modify or remove their respective Marks under this Agreement at any time upon notice to the other Party. 9 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Trademark Guidelines. Trademark Licensor will promptly provide Trademark Licensee with copies of applicable trademark use guidelines. Trademark Licensee will not remove or alter any trademark, trade name, copyright or other proprietary notices, legends, symbols or labels appearing on or in any copies of the Trademark Licensor’s Products and associated documentation and materials. Reseller Agreement. In the exercise of its resale rights under the Reseller Agreement, Trademark Licensee may use and display Trademark Licensor’s Marks to identify and market the Trademark Licensor’s Products only on (i) business cards and stationery of Trademark Licensee indicating that it is an authorized independent reseller for Trademark Licensor; (ii) marketing materials prepared by Trademark Licensor and delivered to Trademark Licensee relating to the Trademark Licensor Products; and (iii) marketing materials prepared by Trademark Licensee and approved by Trademark Licensor in writing. Covenants. Trademark Licensee will not register any of Trademark Licensor’s Marks or register or use any mark or name closely resembling Trademark Licensor’s Marks. Trademark Licensee will not register any internet domain names that are, or that incorporate, any of Trademark Licensor’s Marks, and Trademark Licensee will relinquish to Trademark Licensor any such internet domain names it acquires or owns upon request of the Trademark Licensor. Goodwill. All use of a Party’s Marks, and the goodwill from the Marks and the use of the Marks, will inure solely to the benefit of, and be on behalf of, the Mark’s owner. Trademark Licensee agrees that its use of Trademark Licensor’s Marks will not create in it, nor will it represent it has, any right, title, or interest in or to Trademark Licensor’s Marks other than the limited license expressly granted in this Section 4.7. Reservation of Rights. Trademark Licensee will not use any of Trademark Licensor’s Marks in any way other than as specifically authorized in this Section 4.7, and without limitation may not incorporate any of Trademark Licensor’s Marks to identify Trademark Licensee’s business or products or services. No other use of Trademark Licensor’s Marks, or any part thereof, or any mark or name confusingly similar thereto, is authorized without the prior written consent of Trademark Licensor. Use Cases; Exclusivity; Restrictive Covenants. Exclusivity. Exclusivity. The licenses and resale rights of RA and its Affiliates under the OEM Agreement and Reseller Agreement are exclusive (vis a vis PTC direct sales) for Factory SCO use cases in the Territory, but limited to the territories, industries and accounts described under the heading “Exclusive Territory” on Exhibit B (the “Exclusive 10 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Territory”), provided that this Section 5.1 will not apply to stand-alone sales of the PTC Products known as Kepware/ThingWorx Industrial Connectivity and Vuforia. For clarity, this Section 5.1 will not restrict PTC from appointing third parties to resell or otherwise distribute Licenses for the PTC Products for the Factory SCO Market in the Territory. Process. Within sixty (60) days of the Original Effective Date, the Parties will establish a written governance process whereby, by mutual agreement, additional accounts or territories may be added to the Exclusive Territory based on the Parties or their respective Affiliates’ relative strength of capability and/or opportunity within a given territory or account. Such governance process will also provide for accounts or territories to be removed from the Exclusive Territory if either RA or an Affiliate of RA is not providing sufficient account coverage or if requested by the applicable account. Use Cases. RA. In addition to its exclusive rights for the Factory SCO Market in the Territory described in Section 5.1, the licenses and resale rights of RA and its Affiliates under the OEM Agreement and Reseller Agreement extend on a non-exclusive basis to (i) Factory SCO use cases for accounts outside of the Exclusive Territory and (ii) Factory SCP use cases. For the Factory SCP use cases, the licenses and resale rights of RA and its Affiliates under the OEM Agreement and Reseller Agreement are limited to the distribution of PTC Products on hardware distributed by RA or its Affiliates and do not extend to distributing PTC Product as standalone software or as software embedded in RA software products. The licenses and resale rights of RA and its Affiliates under the OEM Agreement and Reseller Agreement are limited by the restrictions set forth in agreements to which PTC is party as of the Original Effective Date, all of which are listed on Exhibit B under the heading “Restrictions on RA’s Distribution of PTC Products.” PTC. The licenses and resale rights of PTC and its Affiliates under the OEM Agreement and Reseller Agreement are non-exclusive. The licenses and resale rights of PTC and its Affiliates under the OEM Agreement and Reseller Agreement are limited by the restrictions set forth in agreements to which RA or its Affiliates are a party as of the Original Effective Date, all of which are listed on Exhibit B under the heading “Restrictions on PTC’s Distribution of RA Products.” Distribution Channels. Distribution Channels and Exceptions. The licenses and resale rights of each Party and its Affiliates under the OEM Agreement and Reseller Agreement will include the ability to sell licenses for the other Party’s Products through the standard distribution channels of the Party or its Affiliate distributing a Combined Offering or reselling the applicable licenses. Notwithstanding the foregoing to the contrary, (i) neither RA nor any of its Affiliates may engage an RA Restricted Company to distribute a 11 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Combined Offering or resell licenses for PTC Products and (ii) neither PTC nor any of its Affiliates may engage a PTC Restricted Company to distribute a Combined Offering or resell licenses for RA Products. New ACV. In RA’s case, (i) revenue resulting from distribution by RA or an Affiliate of RA of a Combined Offering or resale by RA or an Affiliate of RA of licenses for PTC Products will constitute New ACV (as defined in Exhibit E) provided that the revenue qualifies as New ACV. Subscription Licenses. The Parties’ mutual intent is that licenses for Products sold in exercise of the licenses and resale rights of each Party and its Affiliates under the OEM Agreement and Reseller Agreement will be subscription licenses (i.e., a license agreement that includes both a software license and related support over a stated term). Perpetual licenses may be sold only on an exception basis with the approval of the other Party. In the case of sales of perpetual licenses of PTC Products by RA or its Affiliates, such sales will result in New Perpetual Equalization Credit (as defined on Exhibit E) toward the ACV commitments described in Exhibit E. Reservation. Except as expressly set forth in this Agreement, each Party reserves all rights in its Products. Neither RA nor its Affiliates will promote, market, advertise, sell or distribute the PTC Products or licenses for the PTC Products except in the fields, territories and use cases expressly permitted by Section 5.1 and Section 5.2. Restrictive Covenants. PTC Covenants. Neither PTC nor any of its Affiliates will (A) [***] (B) [***] or (C) [***] will not violate this restriction [***]. For clarity, this Section 5.6(a) will not prevent [***]. Excluding PTC Permitted Products, in the event that PTC or any of its Affiliates (A) commences designing, developing marketing, selling or distributing, or engages a third party to design, develop, market, sell or distribute a product that would reasonably be expected to compete with the RA Products, or (B) acquires a product that would reasonably be expected to directly compete with the RA Products based on product scope and functionality, PTC will promptly provide written and reasonably detailed notice of such (a “PTC Competition Notice”) to RA. RA Covenants. 12 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Neither RA nor any of its Affiliates will (A) [***] (B) [***] or (C) [***] will not violate this restriction [***]. For clarity, this Section 5.6(b) will not prevent [***]. Excluding RA Permitted Products, in the event that RA or any of its Affiliates (A) commences designing, developing marketing, selling or distributing, or engages a third party to design, develop, market, sell or distribute a product that would reasonably be expected to compete with the PTC Products, or (B) acquires a product that would reasonably be expected to directly compete with the PTC Products based on product scope and functionality, RA will promptly provide written and reasonably detailed notice of such (a “RA Competition Notice” and, together with the PTC Competition Notice, each a “Competition Notice”) to PTC. No Governmental Entities. Neither Party nor its Affiliates or Sales Agents will solicit any orders for any Licenses of the other Party’s Products or Services from any governmental or quasi-governmental entities (including without limitation any state or federal departments, agencies, administrations, bureaus, branches, or any subdivisions of any of the foregoing but excluding companies owned by government entities or quasi- governmental entities outside of the United States (e.g., state-owned enterprises), without prior written consent of the other Party, which will not be unreasonably withheld. Opportunity Registration Process. With respect to sales outside the Exclusive Territory, the Parties agree to the deal registration process set forth on Exhibit B under the heading “Opportunity Registration Process.” OEM Relationship. The Parties agree to the mutual OEM terms and conditions set forth on Exhibit C, with pricing set forth on Exhibit F. Reseller Relationship. The Parties agree to the mutual software resale terms and conditions set forth on Exhibit D, with pricing set forth on Exhibit F. Internal Use. RA and each of its Affiliates may purchase licenses for PTC Products for its internal use, with pricing set forth on Exhibit F. Financial Commitment. The Parties agree to the financial commitments set forth on Exhibit E (the “Financial Commitments”). Orders. Orders for Internal Use. Orders by RA or its Affiliates for internal use will be placed in accordance with the existing agreement(s) between the Parties related to such orders. Orders for Resale/OEM Distribution. The Party or its Affiliate ordering licenses for resale or OEM distribution of the other Party’s Products (alone or as part of a Combined 13 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Offering) (the “Ordering Party”) will deliver each Order to the other Party (the “Selling Party”) within five (5) business days of Ordering Party’s receipt of the applicable purchase order from its distribution channel or the potential Customer. For each Order, Ordering Party will deliver (at a minimum) to Selling Party a binding, unconditional, non-cancellable purchase order duly executed by Ordering Party, which Ordering Party agrees will constitute Ordering Party’s binding commitment to pay for the Products so ordered. Ordering Party agrees that, (a) electronic order submissions by Ordering Party will be as binding on Ordering Party as if Ordering Party submitted a signed purchase order, (b) Selling Party will be entitled to rely on such electronic order submissions as being valid, legitimate and fully authorized by Ordering Party, and (c) Selling Party may from time to time require Ordering Party to include various language on Ordering Party’s or its Ordering Entity’s quotation to each applicable Customer (in which case, Ordering Party will be obliged to keep copies of such quotations for a minimum of three years and to provide copies to Selling Party upon request). Selling Party may reject an Order that does not comply, in all material respects, with the terms and conditions of this Agreement, including the Reseller Terms. No Inventory. Ordering Party will not submit any Orders unless and until Ordering Party or an Ordering Entity has received a binding, non-cancelable order for the applicable Products of Selling Party or Selling Party Services from an identified Customer. Ordering Party acknowledges and agrees that “inventory” Orders or Orders submitted based on the expectation of a future Customer order are strictly prohibited (except as set forth in Exhibit E). Ordering Party will obtain a purchase order from each potential Customer for each Order, will retain such purchase orders for a minimum of three years from receipt, and will provide copies thereof to Selling Party upon request. Licensing Affiliates. Each Party acknowledges that, when selling Licenses for Products to a Customer located outside of the United States, the other Party enters into contracts for such Licenses through Affiliates based on the location of the Customer. Accordingly, when a Party desires to place an order with the other Party with respect to a Customer located outside of the United States, the Party will direct such order to the corresponding Affiliate of the other Party. The Governance Team will coordinate the relevant sharing of information relative to each Party’s Affiliates. Selling Party’s Product Shipment; Installation. After Selling Party’s acceptance of an Order, Selling Party will ship the Selling Party’s Products ordered by Ordering Party to the Customer location specified in the Order documentation and/or make the Selling Party’s Products available for electronic download by such Customer. Selling Party will send to Ordering Party an invoice for such Selling Party’s Products or Selling Party Services. Shipment will be FCA (Incoterms 2000) the shipping point designated by Selling Party and risk of loss will pass to Ordering Party at the time the Selling Party’s Products are delivered to the carrier at such shipping point; provided, however, that Selling Party will, if possible, make electronic download of the Selling Party’s Products available to the Customer in order to minimize the risk of loss. Ordering Party will be responsible for payment of all insurance, duty and customs, sales, value added and excise taxes and any other taxes or charges associated with the shipment or import of the Selling 14 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Party’s Products (except for taxes on Selling Party’s net income). Ordering Party, Ordering Entity and/or the applicable Customer will be solely responsible for installation of the Selling Party’s Products. Subscriptions. The Parties acknowledge that Subscription licenses have auto- renewing terms. The initial term for Subscription licenses is typically one (1) year, but in any event, will not be longer than three (3) years. The term of the Subscription will automatically renew for renewal terms of one (1) year unless Selling Party, Ordering Party, Ordering Entity or Customer notifies the other Party of non-renewal sixty days prior to the renewal date. If Selling Party serves notice of non-renewal of any Subscription on Ordering Party, Ordering Party will ensure such notice is served on Customer prior to the notice date. SaaS Services and Cloud Services. Neither Party nor any of its Affiliates is entitled to sell or resell licenses or access rights for the other Party’s SaaS or Cloud Services offerings unless and until the Parties reach agreement on pricing therefor. Payment. Fees. Each Party will pay to the other Party the fees set forth in Exhibit F in accordance with the terms such exhibit. Taxes. Fees reflected in this Agreement do not include taxes. Neither Party is liable for any taxes the other Party or its Affiliates are legally obligated to pay (or for any penalties or interest thereon) and which relate to any transactions contemplated under this Agreement. Each Party will pay any sales, use or value added taxes (and any penalties or interest thereon) it and its Affiliates owe due to entering into this Agreement or otherwise arising from the transactions contemplated by this Agreement, and which the law requires be collected from or paid by such Party or Affiliate. The Parties will not collect taxes covered by a valid exemption certificate provided by the other or its Affiliates. If the law requires that taxes be withheld from any payments from one Party to the other, such amounts will be withheld and paid to the appropriate taxing authority. The Party that withholds such taxes will deliver to the other an official receipt for all taxes withheld. The Parties and their Affiliates will use reasonable efforts to minimize any taxes withheld to the extent allowed by law. Despite any other provision in this Agreement, this section governs the treatment of all taxes relating to this Agreement. Additional Terms Applicable to [***]. The additional terms and conditions set forth on Exhibit G apply to the exercise of rights by RA and its Affiliates in the PTC Product(s) known as [***]. 15 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Audit. Each Party and its Affiliates will maintain accurate books and records relating to (a) the distribution of the Combined Offering by it, its Affiliates and its and their permitted resellers under the OEM Agreement, (b) the resale of Resale Products by it, its Affiliates and its and their permitted resellers under the Reseller Agreement and (c) the performance by it and each of its Affiliates of its and their other obligations under this Agreement (the “Records”). Each Party will permit, and will cause its Affiliates to permit, review and auditing of (a) its and its Affiliates’ Records and (b) its and its Affiliates’ use of the other Party’s Products, during normal business hours to confirm compliance with terms of this Agreement, provided, if applicable, any third party firm performing the audit enters into a confidentiality agreement for the benefit of the Party or Affiliate(s) whose Records and Product use are being audited. Audits will not unreasonably interfere with the audited Party’s or Affiliate’s business activities, will be conducted at the auditing Party’s sole expense, and will not be made more frequently than [***] per calendar year. Fees and expenses incurred in connection with such audits will be borne by the auditing Party. The accounting firm will report to the Parties only whether the terms of this Agreement are being met, including whether payments have been properly reported and paid or, if not, the amount of any overpayment or underpayment. If an audit shows an underpayment by the Party who, or whose Affiliate, was audited of more than [***], the Party who, or whose Affiliate, was audited will bear the cost of such audit. Any and all results, analysis and reports resulting from such audit will be deemed the Confidential Information of the Party who, or whose Affiliate, was audited; provided that, in addition to the auditing Party’s rights with respect to such Confidential Information under Section 17, auditing Party may use such Confidential Information in connection with any dispute between the Parties regarding the results of the applicable audit. Warranties. General. Each Party represents and warrants to the other Party that (a) it is an entity organized and existing under the laws of its jurisdiction of organization with full power and authority to enter into and perform this Agreement; (b) this Agreement has been duly authorized by all necessary corporate action and constitutes the binding obligation of such Party enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy laws or other laws affecting the rights of creditors generally; (c) the person(s) executing this Agreement on its behalf has actual authority to bind it to this Agreement; and (d) its execution and performance of this Agreement does not and will not violate or conflict with any provision of its governing corporate instruments or of any commitment, agreement or understanding that it has or will have to or with any person or entity. DISCLAIMER. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE, NON- INFRINGEMENT, AND/OR ANY WARRANTY THAT PRODUCT THE OTHER PARTY WILL ACHIEVE ANY PARTICULAR RETURN ON INVESTMENT. EACH PARTY AND ITS AFFILIATES ARE SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM 16 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED USING THE PRODUCTS, INCLUDING THE ADEQUACY OF INDEPENDENT TESTING OF RELIABILITY, AND SECURITY AND ACCURACY OF ANY ITEM DESIGNED USING THE PRODUCTS. NEITHER PARTY WARRANTS THAT THE OPERATION OR OTHER USE OF THE PRODUCTS WILL BE UNINTERRUPTED OR ERROR FREE OR WILL NOT CAUSE DAMAGE OR DISRUPTION TO ANY CUSTOMER’S DATA, COMPUTERS, OR NETWORKS. WITHOUT LIMITING THE FOREGOING, NEITHER PARTY WILL HAVE ANY LIABILITY ARISING FROM ANY SECURITY INCIDENT OR DATA LOSS THAT WOULD HAVE BEEN PREVENTED IF THE OTHER PARTY OR ITS AFFILIATE HAD IMPLEMENTED A SECURITY SOLUTION, DEVICE OR FEATURE (INCLUDING “PATCHES,” FIXES AND UPDATES) PROVIDED BY A PARTY FOR THE PRODUCTS PROVIDED OR MADE AVAILABLE TO THE OTHER PARTY OR ITS AFFILIATES. Indemnification. Intellectual Property Infringement Claims. Indemnification Obligation. Each Party (the “Indemnifying Party”) will, at its expense, defend, indemnify and hold harmless the other Party (“Indemnified Party”), its Affiliates and its and their officers, directors, employees, shareholders, agents, and successors (Indemnified Party and each of the foregoing, collectively, an “Indemnified Related Party”) from and against any and all damages, costs, and expenses (including reasonable attorneys’ fees, all amounts that a court or arbitrator finally awards or that Indemnifying Party agrees to in settlement of any Claim (as defined below) and any and all reasonable expenses or charges as they are incurred by Indemnified Related Party in cooperating in the defense), incurred in connection with any third party claim, action, demand or complaint (a “Claim”) brought against the Indemnified Related Party by a third party which results or arises from an infringement or alleged infringement of intellectual property rights related to the Indemnifying Party’s Product. Indemnified Party will notify Indemnifying Party promptly of any such Claim action, demand or complaint and will give Indemnifying Party sole and exclusive authority (including settlement authority), and reasonable information and assistance for the defense. Additional Rights and Obligations. If Indemnifying Party’s Product that is the subject of an indemnification claim under this Section 15.1(a) (or any part of it), is held to infringe any third party intellectual property rights and the use of such Product, as contemplated by this Agreement, is enjoined or is threatened to be enjoined, Indemnifying Party at its own election and expense may either: (i) procure for Indemnified Party (or, if applicable, the Indemnified Related Party) the right to continue use of such Product as authorized under this Agreement; or (ii) replace or modify the applicable Product with a version of the Product that is non-infringing and that conforms to the applicable Documentation. If, despite Indemnifying Party’s commercially reasonable efforts, neither of the alternatives in this Section 15.1(b) is available on terms which are commercially feasible within one hundred eighty (180) days of notice of a Claim, (A) Indemnifying Party 17 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED will immediately notify Indemnified Party of its intent to terminate the applicable Product licenses or resale rights under this Agreement (the “Affected Products”), (B) Indemnified Party will return, cause all of its Customers to return, and cease selling or reselling any Affected Products, alone or as part of a Combined Offering and (C) Indemnifying Party will grant Indemnified Party a credit equal to the prepaid license or subscription fees for the remainder of the applicable Product license term. To the extent either Party is unable to meet any ACV or minimum fees under this Agreement as a result of a Claim, the ACV or minimum fees required under this Agreement will be adjusted or waived as necessary to reflect the non-performance of the Indemnifying Party. Combined Offering. Notwithstanding anything to the contrary in this Agreement, each Party will be responsible for all damages, costs, and expenses, including reasonable attorneys’ fees, incurred in connection with any Claim, action, demand or complaint brought against such Party by a third party to the extent resulting or arising from an infringement or alleged infringement of intellectual property rights as a result of only the interoperation of each Party’s Products with the other Party’s Products as part of a Combined Offering. Exceptions. The indemnification obligation in Section 15.1 will not apply to Claims to the extent that such Claims are based on or result from: (i) modifications made to the Selling Party’s Products by Reselling Party outside the scope of the results of the collaboration described in this Agreement without Selling Party’s direction or instruction, provided the infringement would have been avoided, but for such modification; or (ii) the combination of the Indemnifying Party’s Products with items not supplied or provided by Indemnifying Party and not contemplated by the results of the collaboration described in this Agreement, provided the infringement would have been avoided, but for combination and provided that there are substantial non-infringing uses for the Software apart from such combination. Breach of Agreement. The Indemnifying Party will, at its expense, defend, indemnify and hold harmless the Indemnified Party and each other Indemnified Related Party from and against any and all damages, costs, and expenses (including reasonable attorneys’ fees, all amounts that a court or arbitrator finally awards or that Indemnifying Party agrees to in settlement of any Claim (as defined below) and any and all reasonable expenses or charges as they are incurred by Indemnified Related Party in cooperating in the defense), incurred in connection with any Claim brought against an Indemnified Related Party by a third party which results or arises from (i) any representation or warranty made by Reselling Party or a Reseller that exceeds the representations and warranties made by Selling Party in its standard license, or (ii) any breach by it of any of the representations or warranties in Section 14. Process. The Indemnified Party will (a) give the Indemnifying Party prompt written notice of the applicable Claim and (b) allow the indemnifying Party to exclusively control the defense thereof and all related negotiations. The indemnified Party will reasonably cooperate 18 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED with the Indemnifying Party in the defense of the Claim and all related negotiations. The Indemnifying Party will not enter into any stipulated judgment or settlement that purports to bind the Indemnified Party (or any other indemnified person or entity) without the indemnified Party’s express written authorization, which will not be unreasonably withheld or delayed. Sole and Exclusive Remedy. The indemnity obligations and terms in Section 15 represent the sole and exclusive remedy of Indemnified Party and the entire liability and obligation of indemnifying Party with respect to infringement or claims of infringement of any intellectual property right by, as applicable, any PTC Product or Selling Party’s Product or by its distribution, operation, use or receipt. Limitation of Liability. TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT WILL EITHER PARTY OR ITS AFFILIATES BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR THAT RELATE IN ANY WAY TO THIS AGREEMENT OR ITS PERFORMANCE. THIS EXCLUSION WILL APPLY REGARDLESS OF THE LEGAL THEORY UPON WHICH ANY CLAIM FOR SUCH DAMAGES IS BASED, WHETHER THE PARTIES OR ANY AFFILIATE HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER SUCH DAMAGES WERE REASONABLY FORESEEABLE, OR WHETHER APPLICATION OF THE EXCLUSION CAUSES ANY REMEDY TO FAIL OF ITS ESSENTIAL PURPOSE. IN NO EVENT WILL EITHER PARTY’S MAXIMUM, CUMULATIVE LIABILITY FOR ALL DAMAGES UNDER THIS AGREEMENT EXCEED THE GREATER OF (A) THE AMOUNT EQUAL TO THE TOTAL AMOUNT OF FEES PAID OR PAYABLE BY RA TO PTC AND BY PTC TO RA HEREUNDER IN THE [***] PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO DAMAGES AND (B) [***]. THE EXCLUSIONS, DISCLAIMERS AND LIMITATIONS IN THIS SECTION 16.1 WILL NOT APPLY TO (A) EITHER PARTY’S LIABILITY TO THE EXTENT ARISING OUT OF A BREACH BY A PARTY OR ANY OF ITS AFFILIATES OF ITS CONFIDENTIALITY OBLIGATIONS IN SECTION 17.1, (B) A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 15.1(a) OR (C) USE OR DISTRIBUTION BY A PARTY OR ANY OF ITS AFFILIATES OF THE OTHER PARTY’S PRODUCTS OR SERVICES OTHER THAN AS EXPRESSLY PERMITTED BY THIS AGREEMENT. THE LIMITATIONS OF LIABILITY STATED IN THIS SECTION 16 ARE INDEPENDENT OF ANY REMEDIES AND, NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF SUCH REMEDIES, WILL REMAIN IN FULL FORCE AND EFFECT. Confidential Information; Feedback. 19 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Confidentiality. Each Party acknowledges that while performing its obligations under the Agreement it and its Affiliates may have access to the other Party’s or its Affiliates’ Confidential Information. With respect to all Confidential Information, the Parties agree as follows: The Receiving Party may use the Confidential Information only to exercise its rights and perform its obligations under the Agreement. The Receiving Party must use the same care to protect the Disclosing Party’s Confidential Information as it uses to protect its own Confidential Information. In no event will the Receiving Party fail to use reasonable care to avoid unauthorized use, including disclosure, loss, or alteration of the Disclosing Party’s Confidential Information. Copies the Receiving Party makes of Confidential Information must contain the same confidential or proprietary notices or legends as the original. Either Party may disclose the other Party’s Confidential Information to its respective employees, Affiliates, agents, contractors and legal representatives only to the extent they have a need to know and an obligation to protect the Confidential Information that is at least as restrictive as the Agreement. The Receiving Party is responsible for compliance with this Agreement by all persons or entities to which it grants access to Confidential Information, and will advise them of their obligations under this Agreement prior to disclosing the Confidential Information. Upon termination or expiration of this Agreement or upon cessation of work or written request, the Receiving Party will return or destroy or cause to be destroyed, at its option, all Confidential Information of the Disclosing Party, including Confidential Information disclosed under Section 17.1(b) to an Affiliate, agent, contractor and legal representative. The Receiving Party may retain only such copies as are reasonably required to comply with applicable law and document retention requirements and any such copies must be maintained consistent with the terms of this Agreement. Any destruction will be by shredding or secure erasure using current, commercially-reasonable methods. Upon request of the Disclosing Party, the Receiving Party will furnish an officer’s certificate certifying that the Disclosing Party’s Confidential Information has been returned or destroyed. Terms of Agreement. Neither Party nor any of its Affiliates will disclose any of the terms of this Agreement to any third party without the prior written consent of the other Party. Notwithstanding the foregoing, either Party and its Affiliates may disclose such terms to (i) its accountants, advisors and other professional representatives who have a “need-to- know” solely for the purpose of providing services to such Party or Affiliate and (ii) existing and potential investors, lenders and acquirers and the accountants, advisors and other professional representatives of any of the foregoing; provided, however, that in the 20 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED case of this clause (ii) any such recipient is bound by a written agreement (or in the case of attorneys or other professional advisors, formal ethical duties) requiring such recipients not to disclose the terms of this Agreement to any third party and to use such terms only for purposes of evaluating the applicable investment, loan or acquisition. In addition, the terms of this Agreement may be disclosed as otherwise required pursuant to applicable law, regulation, stock market or stock exchange rule or rule of a self-regulatory organization (e.g., rules or regulations of the United States Securities and Exchange Commission, the Nasdaq or the NYSE) or legal process (including, without limitation, by interrogatory, subpoena, request for documents, civil investigative demand, formal request from a regulatory examiner or other similar process); provided that a Party or Affiliate proposing to make such a disclosure as required by law, rule, regulation or legal process will, to the extent legally permissible and practical, (i) inform the other Party a reasonable time prior to such required disclosure, (ii) provide the other Party with a copy of the text of such proposed disclosure sufficiently in advance of the proposed disclosure to afford such other Party a reasonable opportunity to review and comment upon the proposed disclosure (including, if applicable, the redacted version of this Agreement) and (iii) if requested, reasonably cooperate in an effort by the other Party to seek confidential treatment or a protective order for such disclosure. In the event that confidential treatment or another remedy is not obtained, the Party proposing to make such disclosure may disclose only such information which such Party is required to be disclosed and to only those persons to whom such Party is required to receive such information. Exception for Legal Process. The Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, stock market or stock exchange rule or rule of a self-regulatory organization (e.g., rules or regulations of the United States Securities and Exchange Commission, the Nasdaq or the NYSE) or legal process (including, without limitation, by interrogatory, subpoena, request for documents, civil investigative demand, formal request from a regulatory examiner or other similar process), but, to the extent legally permissible and practical, the Receiving Party must give the Disclosing Party prompt notice of the required disclosure (prior to the required disclosure, if possible) and, if requested, reasonably cooperate with the Disclosing Party in obtaining a protective order. Injunctive Relief. Each Party agrees that the wrongful disclosure of Confidential Information may cause irreparable injury that is inadequately compensable in monetary damages. Accordingly, either Party may seek injunctive relief in any court of competent jurisdiction for the breach or threatened breach of this Section in addition to any other remedies in law or equity, and the other Party will not raise the defense of an adequate remedy at law. Feedback. Neither Party nor its Affiliates will have an obligation to provide the other Party or its Affiliates with suggestions, comments or other feedback relating to any product, technology or service of the other Party or its Affiliates (collectively, “Feedback”). In the event either Party or any of its Affiliates (collectively, the “Feedback Provider”) provides Feedback to 21 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED the other Party (collectively, the “Feedback Receiver”) regarding any Product of the Feedback Receiver, each of the Parties, as a Feedback Provider and on behalf of its Affiliates as Feedback Providers, hereby grants to the Feedback Receiver a worldwide, paid-up, royalty free, transferable, sublicenseable (directly and indirectly through multiple tiers), perpetual, irrevocable license to use, incorporate or otherwise commercialize such Feedback, including in the Feedback Receiver’s products and services for any purpose and without obligation of any kind. Notwithstanding the foregoing, the foregoing license rights shall not grant or provide a license (either express or implied) to any patent owned or controlled by a Feedback Provider. Except for the foregoing license right, Feedback Provider owns all rights, title, and interest in and to the Feedback it develops or provides to the Feedback Receiver. Feedback Receiver acknowledges and agrees that the Feedback is provided by Feedback Provider as-is, without warranties of any kind, and any Feedback used by Feedback Receiver will be used at Feedback Receiver’s sole risk and liability. Usage Data. Subject to applicable law, each Party acknowledges that the other Party and its Affiliates may collect and utilize usage data, in aggregated or other de-identified form, derived from use and performance of their respective Products and their related products and services under this Agreement for purposes of internal evaluation of trends, system usage, and other similar internal purposes and for purposes of improving its products and services. This provision does not and will not constitute a license of any intellectual property rights from either Party or its Affiliates to the other Party or its Affiliates. Data Privacy. With respect to Personal Data (as defined below) that one Party or its Affiliates may provide to the other Party or its Affiliates in connection with this Agreement, the Parties agree that it and each of its Affiliates will comply with applicable privacy laws, including, but not limited to ensuring that the Party or its Affiliate transferring Personal Data has legal grounds to share such data relating to the purpose for which the Personal Data is exchanged. “Personal Data” shall have the meaning as defined in the EU Regulation (EU) 2016/679 (General Data Protection Regulation). Neither Party considers itself or its Affiliates to process Personal Data as a “processor” on behalf of the other, however the Parties further agree to execute any further documentation as may be required to ensure continued compliance with the applicable law in the event that the nature of the data processing relationship between or among the Parties and their respective Affiliates changes. Term and Termination. Term and Renewal. Subject to earlier termination as provided below, this Agreement will be in effect from and after the Original Effective Date until September 30, 2021 (the “Term”). Thereafter, the Term may be renewed by mutual written agreement. Termination. Termination for Breach of this Agreement. In addition to any other termination rights provided for in this Agreement, either Party may terminate this 22 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Agreement immediately upon written notice to the other Party in the event of material breach of this Agreement by the other Party or its Affiliates (“Cause”) if the defaulting Party or Affiliate fails to cure such breach within sixty (60) days following notice of such breach from the non-defaulting Party. Without limitation, the failure to make any payment due under this Agreement will constitute a material breach of this Agreement (excluding payments that are the subject of a good faith dispute). Special Termination Rights Applicable to [***]. Notwithstanding anything else in this Agreement to the contrary, in the event of a breach by RA, any Affiliate of RA, a Sales Agent of RA, or a Customer of RA of any term or condition in Exhibit G or required by Exhibit G to be included in a Customer License Agreement or a Sales Agent Agreement with respect to the [***] Software, PTC may immediately terminate this Agreement without a cure period with notice to RA solely with respect to the PTC Product known as [***]. In such event, RA will immediately cease selling, reselling and otherwise distributing such PTC Product and terminate the Customer licenses for such PTC Product. PTC hereby agrees that it will make a reasonable effort to obtain a modification of the requirements described in this Section 18.2(b) from its licensor of certain code underlying the PTC Product known as [***]. Termination for Bankruptcy/Dissolution. Either Party may terminate this Agreement immediately upon written notice in the event the other Party (i) becomes insolvent, (ii) becomes the subject of proceedings under any law relating to bankruptcy or the relief of debtors and, in the case of involuntary proceedings, the petition is not dismissed, stayed, bonded or discharged within [***] of the commencement of the proceedings or (iii) admits in writing its inability to pay its debts as they become due (collectively, “Bankruptcy/Dissolution”). Termination for Change of Control. Either Party may terminate this Agreement in the event of a Change of Control of RA or PTC upon written notice to the other Party delivered prior to the consummation of the Change of Control, with such termination effective upon the later of (i) [***] following delivery of such written notice and (ii) [***]. Termination for Prohibited Assignment. RA may terminate this Agreement [***] upon written notice to PTC in the event of any attempted assignment of this Agreement by PTC in violation of this Agreement. PTC may terminate this Agreement [***] upon written notice to RA in the event of any attempted assignment of this Agreement by RA in violation of this Agreement. Termination for Breach of Securities Purchase Agreement. PTC may terminate this Agreement upon [***] prior written notice to RA in the event of a material breach by RA of Section 4.1 (Prohibition on Transfers), Section 4.3 (No Transfers to Company Competitors or Significant Shareholders) or Section 5.3 (Standstill) of the 23 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Securities Purchase Agreement if such breach is incapable of cure or RA otherwise fails to cure such breach within [***] following notice of such breach from PTC. Post-Termination Obligations. General. Upon expiration or termination of this Agreement, with or without Cause, each Party will, and will cause its Affiliates to, immediately, (i) subject to Section 18.3(b), discontinue advertising, marketing, distributing or transferring the Combined Offering and cease all use of the Combined Offering Brand, and (ii) subject to Section 18.3(c), cease all resale of the other Party’s Products and any materials identifying or referring to the other Party’s Products. All Customer License Agreements properly granted prior to the effective date of expiration or termination will survive expiration or termination and continue according to their terms. Within fifteen days after any such expiration or termination, each Party will, and will cause its Affiliates to, return to the other Party or, at such other Party’s request, destroy all Confidential Information of such other Party and its Affiliates, and at such other Party’s request, certify in writing such Party’s compliance with this Section. Combined Offering Continuation. Upon expiration or termination of this Agreement for any reason, each Party and its Affiliates may continue to distribute the Combined Offering, subject to all terms and conditions of this Agreement (including payment terms) for up to six (6) months after the termination/expiration date, after which existing Customers of the Combined Offering may be renewed for up to an additional four (4) years from the termination or expiration date. For avoidance of doubt, no subscription (as renewed) may extend beyond the fourth (4th) anniversary of the effective date of the expiration or termination of this Agreement. Notwithstanding the foregoing, if the Agreement is terminated under Section 18.2(a), Section 18.2(c), Section 18.2(e) or Section 18.2(f), only the terminating Party may exercise the rights set forth in this Section 18.3(b). Standard Reseller Agreement. Upon expiration or termination of this Agreement for any reason, each Party and its Affiliates may resell licenses for the other Party’s Products for up to three (3) years after the effective date of the expiration or termination of this Agreement, subject to the standard reseller terms of the Party that owns the applicable Products. Notwithstanding the foregoing, if the Agreement is terminated under Section 18.2(a), Section 18.2(c), Section 18.2(e) or Section 18.2(f), only the terminating Party may exercise the rights set forth in this Section 18.3(c). Support Obligations. Each Party’s and its Affiliates’ support obligations under the OEM Agreement with respect to its Products distributed in the Combined Offering will survive for the applicable remaining term of each subscription license (provided that the fees for such subscription licenses have been and continue to be paid). 24 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Financial Commitments. RA’s obligations upon expiration or termination of this Agreement with respect to the Financial Commitments are set forth on Exhibit E. Termination Damages. Without prejudice to any other remedies either Party may have in respect of any breach of this Agreement, neither Party will be liable to the other for damages by reason of the expiration or termination of this Agreement in accordance with the provisions set forth above. Acknowledgment and Waiver. The Parties acknowledge that the provisions of this Section are essential, fair, and reasonable, and that the occurrence of any of the events described herein will constitute good, just, and sufficient cause for the expiration or termination of this Agreement. The Parties further acknowledge that any amounts spent in the performance of this Agreement will be spent with the understanding that this Agreement may not be renewed. Accordingly, each Party hereby waives any claim against the other for loss or damage of any kind (including damages or other compensation for unjust enrichment, loss of prospective profits, reimbursement for expenditures or investments made, or commitments entered into or goodwill), due to failure of the Parties to renew this Agreement or, upon expiration or termination, to make a similar agreement. Continuing Obligations. The following will survive the expiration or termination hereof: the provisions of this Section 18.6 and Sections 4.5(a), 11, 13, 14, 15, 16, 17, 18.3, 18.4, and 20. Compliance With Laws. Each Party and its Affiliates will comply with all applicable laws and regulations of the United States and the territory in which the applicable products and services under this Agreement are licensed for use (“Territory”), including, without limitation, the following: the U.S. Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1, et seq.) as amended (“FCPA”) and other applicable anti-corruption laws, including the UK Bribery Act and those in the Territory; Data Protection Laws applicable in the Territory; and the U.S. Export Administration Regulations (15 C.F.R. Parts 730 - 774), and any other applicable export control laws, rules, regulations or orders. With respect to its performance under this Agreement, each Party hereby represents, warrants and covenants to the other Party that (a) neither it nor its employees, directors, officers, agents, or Affiliates (collectively, “Relevant Persons”) has caused nor will cause the other Party or its Affiliates to be in violation of the FCPA, or any other applicable law or regulation regarding corruption or bribery; (b) it and its Relevant Persons will not with a corrupt intent, 25 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED directly or indirectly, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value to any person for purposes of corruptly obtaining or retaining business for or with, or directing business to, any person; (c) no part of any payment, compensation, reimbursement or fee received by it pursuant to this Agreement or otherwise will be used directly or indirectly as a corrupt payment, gratuity, emolument, bribe, kickback, or other improper benefit to any person; and (d) neither it nor its Relevant Persons will directly or indirectly request, agree to receive, or accept a financial or other advantage from any person. Each Party represents, warrants and covenants to the other Party that neither it, nor any of its employees, directors, officers, agents, or affiliates are listed on, nor affiliated with, any entity or person that is listed on the U.S. Commerce Department’s Denied Persons List, Entity List, or Unverified List, the U.S. State Department’s Nonproliferation Sanctions List, or the U.S. Treasury Department’s List of Specially Designated Nationals and Blocked Persons (each a “List”, and collectively the “Restricted Party Lists”). Further, each Party hereby confirms that it does not have any business relationships with any person or entity identified on a Restricted Party List. The Restricted Party Lists can be found at: http://export.gov/ecr/eg_main_023148.asp. Neither Party nor its Affiliates will distribute Products to a third party where it is aware of or has a reason to believe that any Products will be used for Restricted Activities (defined below), or be re-exported, transferred or diverted to a person or entity engaged in Restricted Activities. In furtherance of its obligations, each Party represents, warrants and covenants to the other Party that, unless express written prior authorization is obtained from the other Party, it and its Affiliates will not: export, directly or indirectly, the other Party’s Products to a country embargoed under U.S. law, either separately or as part of a system; provide in any way the other Party’s Products to a party on a List; and/or provide in any way the other Party’s Products to a third party if it has reason to believe that they may be used in a Restricted Activity or reexported, transferred or diverted to a party on a List. Each Party also agrees that it will provide the other Party with full information, certifications and other documentation reasonably required by the other Party to ensure that it has complied with all export restrictions and requirements imposed by applicable law. “Restricted Activities” mean: (i) nuclear-related activities (including without limitation maritime nuclear propulsion projects); (ii) the design, development, production or stockpiling of missiles; and/or (iii) the design, development, production or stockpiling of biological or chemical weapons. General Provisions. 26 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Affiliate Performance Guarantee. A breach by a Party’s Affiliate of such Affiliate’s obligations under this Agreement will be deemed a breach of this Agreement by such Party. Each Party guarantees the performance of the obligations of its Affiliates under this Agreement. Independent Contractors. The relationship of PTC (and its Affiliates) and RA (and its Affiliates) will be that of independent contractors. There is no relationship of agency, partnership, joint venture, employment or franchise between or among the Parties and their respective Affiliates. Neither Party nor its Affiliates has the authority to bind the other Party or any of its Affiliates or to incur any obligation on behalf of the other Party or its Affiliates or to represent itself as the agent of the other Party or its Affiliates or in any way that might result in confusion as to the fact that the Parties are separate and distinct entities. Without limiting the generality of the foregoing, each Party will not, and will cause its Affiliates not to, make any representations, warranties or covenants of any kind on behalf of the other Party or its Affiliates. Assignment. Neither Party will assign or transfer this Agreement (or any of its rights or obligations hereunder) without the prior written consent of the other Party. Either Party may assign this Agreement without the other Party’s prior consent to any third party controlling, controlled by or under common control with the assigning Party. Any purported assignment in violation of this Section will be null and void and a breach of this Agreement. For purposes of clarity, a Change of Control of a Party will not constitute an assignment of this Agreement; however, in such event, each Party may elect to terminate this Agreement in accordance with Section 13.2(d) or (e), as applicable. Amendment. No waiver, alteration, modification, or cancellation of any of the provisions of this Agreement will be binding unless made in writing and signed by each of the Parties hereto. No Implied Waivers; Interpretation. A failure at any time to require performance of any provision hereof will in no manner affect a Party’s right at a later time to enforce such provision. No failure by either Party to take any action or assert any right hereunder will be deemed to be a waiver of such right in the event of the continuation or repetition of the circumstances giving rise to such right. For purposes hereof, “including” means “including without limitation”. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement will be construed against the drafting Party will not apply. Severability. If any provision of this Agreement is held to be invalid or unenforceable, the remainder of the provisions will remain in full force and effect. The invalid or unenforceable provision will be modified so as to render it enforceable while giving effect, as nearly as possible to the original intent of the Parties. Non-Exclusive Remedies. Except as expressly specified in this Agreement to the contrary, no remedy referred to in this Agreement is intended to be exclusive, but each will be 27 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED cumulative and in addition to any other remedy referred to herein or otherwise available at law, in equity or otherwise. Entire Agreement. This Agreement, including all Schedules and Exhibits attached hereto (which are each hereby incorporated herein), (a) constitutes the entire understanding and agreement between the Parties with respect to the subject matter hereof, (b) amends and restates the Original Agreement in its entirety, and (c) supersedes all other agreements, oral or written, between the Parties, including all proposals, oral or written, negotiations, conversations, and discussions between the Parties. Notices. Unless specifically set forth otherwise and until either Party gives notice to the other Party of a change in address, all notices or communications of any kind made or required to be given pursuant to this Agreement will be in writing and delivered to: If to PTC: PTC Inc. Attn: General Counsel Until 1 February, 2019 - 140 Kendrick Street, Needham MA 02494 USA After 1 February, 2019 - 121 Seaport Blvd, Boston MA 02210 With a copy (which will not constitute notice) to: Stephen G. Charkoudian Goodwin Procter LLP 100 Northern Avenue Boston, MA 02210 If to RA: Rockwell Automation, Inc. Attn: General Counsel 1201 South 2nd Street Milwaukee, WI 53204 With a copy (which will not constitute notice) to: Bryan S. Schultz Foley & Lardner LLP 777 East Wisconsin Avenue Milwaukee, WI 53202-5306 Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of New York, without regard to principles of conflicts of laws. 28 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Each of the Parties hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of the state and federal courts located in New York County in the State of New York for any litigation among the Parties hereto arising out of or relating to this Agreement. The provisions of the United Nations Convention on Contracts for the International Sale of Goods are hereby excluded and will not apply to this Agreement. Multiple Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each one of which will be deemed an original, but all of which will constitute one and the same instrument. [Remainder of page intentionally left blank] 29 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first set forth above. PTC INC. ROCKWELL AUTOMATIION, INC. [s] James E. Heppelmann /s/ Blake Moret Signature of Authorized Representative Signature of Authorized Representative James E. Heppelmann Blake Moret Name Name President and CEO President and CEO Title Title [Signature page to Amended and Restated Strategic Alliance Agreement] ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT A PRODUCT EXHIBIT PTC Products  ThingWorx, Vuforia, and ThingWorx Industrial Connectivity products For clarity, ThingWorx Industrial Connectivity products are sometimes also referred to as Kepware, but RA is not authorized to distribute products under that branding under this Agreement. ThingWorx and Vuforia are PTC Development Platform Products. RA Products  MES, FactoryTalk and FactoryTalkAnalytics platforms, applications, solutions and services Exhibit A; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT B ADDITIONAL TERMS AND COVENANTS 1. Restricted Companies. “PTC Restricted Companies” means all businesses and divisions of the following companies, to the extent those businesses and divisions compete with RA and its Affiliates:  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***]  [***] (provided that, at the time that its existing agreements concerning the license of [***] to [***] for internal use is subject to renewal, [***] may provide [***] with the right to resell the number of licenses to the [***] equal to (a) the number of licenses that remain unused by [***] at the time of the expiration of the existing agreement less (b) the number of licenses sold in connection with the renewal agreement with [***].)  the subsidiaries of each of the foregoing “RA Restricted Companies” means all businesses and divisions of the following companies, to the extent those businesses and divisions compete with PTC and its Affiliates:  [***]  [***]  [***]  [***]  [***]  [***] Exhibit B; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED  [***]  [***]  [***]  [***]  [***]  [***]  [***]  the subsidiaries of each of the foregoing 2. Restrictions on [***]’s Distribution of [***] Products. Technology Purchase Agreement, dated as of [***], between [***] and [***] Technology Purchase Agreement, dated as of [***], among [***],[***],[***] and [***] The restrictions set forth applicable to [***] in the agreements above are the same restrictions as applicable to [***]. To [***]’s knowledge, the restrictions set forth in the agreements do not substantially impact [***]’s rights under this Agreement, and if any substantial impact does arise, the Parties will work in good faith to resolve the substantial issue. 3. Restrictions on [***]’s Distribution of [***] Products. None 4. Opportunity Registration Process. In order to register an opportunity to sell or license the Combined Offering or PTC Products, RA must submit a specific sales opportunity (an “Opportunity”) to PTC for proposed registration status by email to the email address PTC provides to RA for opportunity registration purposes. Notifying PTC of an Opportunity through any other means will not constitute an effective attempt to register the Opportunity under the terms of this Agreement. PTC may, in its reasonable discretion, approve or deny the registration of any Opportunities using the following general principles. 1. The details of the Opportunity (i.e., anticipated deal size, products involved, division of the Customer, relevant geography, etc.) must be specified by RA in the request for registration. An Opportunity will likely be rejected if the registration form is not sufficiently detailed. Without limiting the foregoing, attempting to register customers/accounts generally is not permitted. 2. If PTC or PTC Affiliate or reseller or distributor has engaged with the customer on, and actively worked, the opportunity, then PTC is likely to reject it. Exhibit B; Page 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 3. If the Opportunity is not in the Factory SCO or Factory SCP setting, PTC will likely reject the proposed registration. 4. If PTC reasonably believes, after consultation with RA, that RA does not have adequate sales coverage or adequate relationships to successfully sell that Opportunity. 5. If PTC has other reasonable grounds for rejecting the Opportunity PTC will use reasonable efforts to respond to a request to register an Opportunity within five (5) business days of the date that RA submits it for registration and agrees it will consider each registration request in good faith. In communicating its decision in the event of a rejection, PTC will inform RA why PTC is rejecting the proposed registration. In the event an Opportunity is rejected, RA may appeal such rejection to the Governance Team. Every deal registration that is accepted by PTC will have an expiration date, which will be one hundred and eighty (180) days from the date that PTC communicates its acceptance of the registration to RA (or such other period as PTC specifies when it accepts the registration). Thereafter, unless PTC extends the registration, the applicable Opportunity will be deemed not to be registered any longer. During the term of each deal registration, RA and its Affiliates will have the exclusive right (visa- vis PTC direct sales) to the applicable Opportunity. 5. Initial Governance Team Members RA:  Executive: [***] and [***]  Business: [***]  Technology: [***] PTC:  Executive: [***] and [***]  Business: [***]  Technology: [***] 6. Exclusive Territory The following account selection process will be used to determine the Exclusive Territory of RA and its Affiliates. In all cases, exclusivity applies to Factory SCO use cases only and Exhibit B; Page 3 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED determinations will be made in good faith. Except as specified, all other accounts will not be exclusive. For purposes of this Section, a “Substantial Business Relationship” shall mean, in respect of the customer at hand, either (a) the applicable Party and its Affiliates have made sales of more than [***] to such customer in the previous 12-month period or (b) such customer already has standardized on an offering of such Party . List of [***] A. RA will provide PTC with a list of proposed companies whose primary use case is in the area of Factory SCO. The list will be reviewed by a joint steering committee comprised of an equal number of members from each Party. From this review, a final list of Factory SCO customers (not to exceed [***] accounts) will be selected. PTC may reject a company’s inclusion on the list because PTC already has a Substantial Business Relationship with that customer. B. Unless a significant opportunity requires a special intermittent review, the above- described process will be completed on a twice a year basis at which point accounts can be exchanged on the list (but in no event will the number exceed [***] unless the Parties mutually agree in writing). For the sake of clarity, each affiliate of a company that has different businesses will be treated as different companies in calculating the [***] companies. Industry-Specific Instances In addition to the companies to be identified and listed above, for companies that meet all of the following criteria set forth below, RA and its Affiliates will have exclusivity. RA will notify PTC of what companies meet these criteria so that PTC can notify its direct sales force not to sell the PTC Products to such companies. These accounts will not count against the [***] named accounts on the RA exclusive list referenced above. A. The company’s business(es) must be entirely in one or more of the following industries, or the company must have a business or division whose business is entirely in one or more of the following industries (in which case only that business/division will qualify):  Drug/pharmaceutical companies (but not including medical devices);  Metals, mining and cement;  Oil, gas and chemical ;  Consumer package goods, including food, beverage, home and personal care companies; and  North America automotive OEMs. Exhibit B; Page 4 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED B. The company must be an end user company. “End User Companies” will be defined as companies that operate in the end user environment or setting but does not include the factory where the equipment and/or tools for use in the end user environment/setting are manufactured. For example, without limitation,  In the drug setting, the drug manufacturer itself would be an End User Company, whereas a company making equipment for use in drug manufacturing would not be an End User Company;  In the mining setting, the operator of a mine would be an End User Company, whereas the manufacturer of equipment for use by a mine operator would not be an End User Company;  In the oil and gas setting, the operator of the oil platform would be an End User Company, whereas the manufacturer of drilling equipment would not be End User Company; and,  In the consumer product goods setting, the food manufacturer would be an End User Company, whereas the manufacturer of equipment for use in food manufacturing would not be an End User Company. C. The company must already have a Substantial Business Relationship with RA or its Affiliates related to RA hardware at that time. D. The company must also not already have a substantial ThingWorx footprint at such time. [***] In addition, all [***]-headquartered customers (not including [***]) will be exclusive to RA and its Affiliates for Factory SCO use cases for their [***]-based operations. For the sake of clarity, sales by PTC to such customers for use outside of such companies’ [***] operations will not be precluded. [***] In addition to the companies to be identified and listed above, for companies that are headquartered in [***] and that meet all of the following criteria in A and B (below), RA and its Affiliates will have exclusivity for Factory SCO use cases for their [***]-based operations. RA will notify PTC of what companies meet these criteria so that PTC can notify its direct sales force not to sell the PTC Products to such companies. These accounts will not count against the [***] named accounts on the RA exclusive list referenced above. A. The company must already have a Substantial Business Relationship with RA or its Affiliates related to RA hardware at that time. Exhibit B; Page 5 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED B. The company must also not already have a substantial ThingWorx footprint at such time. Exceptions to Exclusive Territory RA or its Affiliates will be the contracting party for companies in the Exclusive Territory unless the Governance Team agrees otherwise. Accordingly and in that regard, the Parties acknowledge that the following factors may be considered by the Governance Team: (i) RA or its Affiliates does not have sales capacity in a part of the applicable Exclusive Territory in order to effectively cover the account; or (ii) the Customer desires not to purchase the PTC Products from RA or its Affiliates but to purchase from PTC instead. If the Governance Team agrees that PTC will be the contracting party with respect to a specific opportunity, such sales made by PTC under subsection (ii) above will be deemed made by RA and computed as if RA made the sale for purposes of calculating New ACV under this Agreement. Exhibit B; Page 6 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT C OEM TERMS EXHIBIT These Mutual OEM Terms and the attached Schedules are collectively referred to as the “OEM Agreement”. RECITALS WHEREAS, the Parties are entering into that certain Strategic Alliance Agreement (the “Strategic Alliance Agreement”) to which this OEM Agreement is attached as Exhibit C; WHEREAS, to facilitate the business objectives of the Strategic Alliance Agreement, the Parties wish to enter into this OEM Agreement to provide each Party with certain resale rights with respect to the other Party’s Products for distribution under its own license conditions (as set forth herein). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. OEM AGREEMENT Definitions. In addition to terms defined in the Strategic Alliance Agreement and on first use in this OEM Agreement, the terms set forth in this Section 1 (Definitions) will have the meanings set forth below: “Application(s)” means the executable version of a computer program and user interface that are created using the Development Tools of PTC Products and completed to deliver (a) a Customer-specific use case, or (b) a vertical market-specific use case, or (c) a specific internal use case of a Party or an Affiliate of a Party. Applications typically include Distributable Software. “Asset” means a sensor, device, machine, system, web service, thing, etc. that is modeled (represented) and/or registered as an asset (or “device” or “thing” within the software) or any separately defined part of the foregoing if it is being treated as a separate asset within the applicable Product. For example, without limitation, an asset could be a medical analyzer, a car, a toothbrush, another computer system, weather service, a helicopter (and/or a helicopter engine, if that engine is modeled or registered as a separate asset in the applicable PTC Product). “Combined Offering” means one or more products, marketed and licensed under the Combined Offering Brand, each of which is comprised of one or more RA Product(s) that is distributed with one or more PTC Product(s), including all Updates. “Customer License Agreement” means a Customer license agreement created by the Product Selling Party for use by Product Selling Party or Sales Agent in the distribution of the Exhibit C; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Combined Offering, which license agreement may be accepted in either “shrink-wrapped” form or an electronic equivalent which permits the Customer to view and indicate agreement with the license terms prior to paying for the license. To the extent any proposed modified terms for an individual Customer’s License differ from then the standard, current form of the Customer License Agreement, the Product Originating Party will cooperate with the Product Selling Party and will reasonably approve of all such modified terms. “Development Tools” means PTC’s development tools and related software, that are made generally available by PTC to its direct customers of the PTC Products, and Updates thereto, for use in connection with development of agents and Applications for use with the PTC Products, and which are provided or made available to RA and its Affiliates under this OEM Agreement, and Updates thereto. “Originating Party Product(s)” means the PTC Product(s) or the RA Product(s), as the context requires. “Product Originating Party” means the Party whose Originating Party Product(s) are sold by the other Party as part of the Combined Offering under this OEM Agreement. “Product Selling Party” means the Party and/or its Affiliate(s) that sells the other Party’s Product(s) as part of the Combined Offering under this OEM Agreement. “PTC Distributable Software” means the PTC Product Agents and components and files included in Applications or otherwise generated by use of the Development Tools that are designed to be distributed on or with Assets for use at the location of Registered Assets in accordance with the applicable Documentation, and Updates thereto. “PTC Product Agents” means the agent software components and Updates thereto that PTC makes generally available to its customers and users, and which are provided or made available to RA under this OEM Agreement and intended to be delivered to Customers or Users for installation and use on Registered Assets or at the location of Registered Assets. “RA Components” means RA’s hardware, software, or hosting services that are part of a Combined Offering. “RA Distributable Software” means the software components and Updates thereto that RA or its Affiliates makes generally available to its customers and users, and which are provided or made available to PTC under this OEM Agreement and intended to be delivered to Customers or Users for installation and use on RA products or at the location of RA products. “Registered Asset” means the total quantity of assets represented by a unique ID and registered within the PTC Product known as the ThingWorx Platform that are associated with Assets. Registered assets reflected in the PTC Product known as the ThingWorx Platform that are Exhibit C; Page 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED associated only with communication devices (such as SIMs and wireless edge devices used solely for enabling communication with a Customer’s Assets) are not counted towards the total permissible number of Registered Assets. Registered Assets are measured monthly and usage is based on the peak number of Registered Assets during the month. “Sales Agent” means a member of Product Selling Party’s standard distribution channels that (a) is appointed by Product Selling Party to exercise the rights granted to Product Selling Party by Product Originating Party pursuant to Section 2 and (b) with respect to which the requirements of Section 2.3 have been met. “Sales Agent Agreement” means a reseller agreement for use by Product Selling Party in the redistribution of a Combined Offering by a Sales Agent, which agreement must be in written form and signed by the Sales Agent. “Specifications” means the functional specifications of the Originating Party Products set forth in the Documentation. “Sublicensees” means Customers and/or Sales Agents, as applicable. “Support” means the provision of support services and technical support with respect to the Products, as the case may be, with responsibility for first line and second tier support. “User” means any individual authorized by a Customer (including such Customer’s employees, customers and/or subcontractors) to utilize the Combined Offering for its internal business purposes, and not for further resale or distribution. License and Restrictions. Grant of License. Subject to the terms and conditions of the Strategic Alliance Agreement and this OEM Agreement, each Product Originating Party hereby grants to each Product Selling Party, and each Product Selling Party hereby accepts (in the case of each of PTC and RA as a Product Selling Party, on its behalf and on behalf of its Affiliates), a non-exclusive (except as set forth in the Strategic Alliance Agreement), non-transferable (except as set forth herein), non-assignable (except as set forth in the Strategic Alliance Agreement), non- sublicensable (except as set forth in this Section 2.1 and Section 2.3), fee-bearing license as follows: Distribution License for Originating Party Products - solely pursuant to the sublicensing terms described in Section 2.1(c) and/or Section 2.1(d) below, to market install, configure, implement, service, support and distribute the Originating Party Products only as part of a Combined Offering and, in the case of RA and its Affiliates, only for Factory SCO and Factory SCP use cases; Exhibit C; Page 3 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Modify and Distribute Documentation - to reproduce, modify, and use for purposes of training and support, the Documentation supplied by Product Originating Party, and distribute the modified Documentation as an embedded or bundled component of the applicable Combined Offering, solely for use with the Combined Offering or Application of Product Selling Party, and in the case of RA and its Affiliates, solely in the Factory SCO and Factory SCP settings; Customer Sublicenses - to grant to Customers sublicenses for use of the Originating Party Products as part of a Combined Offering, in the case of RA and its Affiliates solely in the Factory SCO and Factory SCP settings; Sales Agent Sublicenses - to grant to Sales Agents sublicenses for redistribution of the Originating Party Products to Customers as part of a Combined Offering, in the case of RA and its Affiliates solely in the Factory SCO and Factory SCP settings; and Sales Enablement License - to use the Originating Party Products for purposes of Sales Enablement. Additional Licenses by PTC to RA. Subject to the terms and conditions of the Strategic Alliance Agreement and this OEM Agreement, PTC hereby grants to RA and its Affiliates, and RA hereby accepts on its behalf and on behalf of its Affiliates, a non-exclusive (except as set forth in the Strategic Alliance Agreement), non-transferable (except as set forth herein), non-assignable (except as set forth in the Strategic Alliance Agreement), non- sublicensable (except as set forth in this Section 2.2 and Section 2.3), fee-bearing license as follows: Use License - to internally install and use the PTC Products designated on Exhibit A to the Strategic Alliance Agreement as a “PTC Development Platform Product”, solely for the purpose of (i) internally developing, testing and supporting Applications of RA and RA Components, and (ii) training Sales Agents of RA and its Affiliates; and License for Distributable Software - to (i) reproduce, install, and distribute copies of the Distributable Software solely in the Factory SCO and Factory SCP settings, for use only with a Combined Offering or Application of RA, through multiple tiers of distribution to Asset end users, in each case solely for installation and use by a Customer and/or Asset end user in connection with the applicable Combined Offering or Application of RA or its Affiliate; (ii) grant to Sales Agents sublicenses for redistribution of the Distributable Software, solely for internal business purposes, only in the Factory SCO and Factory SCP settings, and in the form of a Sales Agent Agreement in accordance with Section 2.3; and (iii) grant to Customers sublicenses for use of the Distributable Software, solely for internal business purposes, only in the Factory SCO and Factory SCP, in the form of a Customer License Agreement in accordance with Section 2.3. Exhibit C; Page 4 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Customer License Agreements and Sales Agent Agreements. Product Selling Party agrees that Customers will be permitted to use Originating Party Products only as part of a Combined Offering under a Customer License Agreement, and Sales Agents will only be permitted to redistribute Originating Party Products under a Sales Agent Agreement, such agreements to be preapproved by Product Originating Party, and in each case that, at a minimum and unless otherwise agreed to by the Parties, include contractual provisions that: with respect to Customers, grant the Customer the non-transferable, non- sublicenseable right to use the applicable Originating Party Product according to the terms set forth in this Section 2.3, solely for the Customer’s internal business purposes and only as distributed with the Combined Offering; or with respect to Sales Agents, (i) grant the Sales Agent the non-transferable right to (A) market and distribute the applicable Originating Party Product according to the terms set forth in this Section 2.3 and only as distributed with the Combined Offering, and (B) grant sublicenses to Customers only for their use of the Combined Offering consistent with the terms of this Section 2.3 as applicable to Customers and (ii) require strict compliance with all applicable laws and regulations, including without limitation the FCPA; and with respect to Sublicensees, (i) prohibit the removal of any copyright or other proprietary notices; (ii) prohibit causing or permitting the reverse engineering, disassembly or decompilation of the applicable Originating Party Product portion of the Combined Offering (or the Combined Offering as a whole); (iii) prohibit title to the applicable Originating Party Product portion of the Combined Offering (or the Combined Offering as a whole) from passing to the Sublicensee; (iv) disclaim Product Originating Party’s liability to the Sublicensee for damages, whether direct or indirect, incidental or consequential or for loss of profits, arising in connection with the Customer License Agreement or Sales Agent Agreement, as applicable; and (v) state that Product Originating Party disclaims any warranty of any kind directly to the Sublicensee with respect to the applicable Originating Party Product, including any warranty of performance, title, merchantability, fitness for a particular purpose and non-infringement. As between Product Selling Party and Product Originating Party, Product Selling Party is responsible for enforcing Customer License Agreements and Sales Agent Agreements and for any failure to enforce the Customer License Agreements and Sales Agent Agreements. If either Party chooses not to enforce the terms of the Customer License Agreement, and if requested by the other Party, the Product Selling Party will use reasonable efforts to assign to the Product Originating Party its, or the applicable Sales Agent, rights under the applicable Customer License Agreements and Sales Agent Agreements to the extent necessary to permit the Product Originating Party to enforce the terms and conditions under the Customer License Agreements and Sales Agent Exhibit C; Page 5 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Agreements applicable to the applicable Product, and to take corrective action on its own behalf to remedy such breach and to seek such equitable relief on its own behalf. Reservations; Restrictions. Retained Rights. As between the Parties and subject to the licenses in this OEM Agreement, PTC owns all rights in the PTC Products, including all PTC Distributable Software, and RA owns all rights in the RA Products, including all RA Distributable Software, provided to PTC, including in either case all Updates, upgrades, modules, add- ons, modifications or improvements to or derivative works. Each Party retains all rights, titles, and interests in and to its respective technology and intellectual property, including the intellectual property rights in its trademarks, products, services, and documentation, and hereby reserves all rights not expressly granted in this OEM Agreement or the Strategic Alliance Agreement. Except as set forth herein, neither Party will attempt to or knowingly permit or encourage others to, and each Party will cause its Affiliates not to, attempt to alter, reverse engineer, decompile, disassemble or otherwise attempt to derive the source code of the other Party’s materials, except to the extent that the restrictions in this sentence are expressly precluded by applicable laws. Taking any of these actions is a material breach of this OEM Agreement. Ownership of Applications and Distributable Software. Subject to the terms and conditions of the Strategic Alliance Agreement, each Party and its Affiliates will own all rights, title and interest to any Applications developed by such Party or Affiliate, including all Updates, upgrades, modules, add-ons, modifications or improvements to or derivative works thereof. Notwithstanding the foregoing, PTC will own all of the PTC Distributable Software incorporated into such Application. Similarly, to the extent PTC or its Affiliates develops any applications based on RA software, RA will own all of the RA Distributable Software incorporated into such application. License Restrictions. Without limitation, Product Selling Party will not, directly or indirectly: (i) use any Originating Party Product for Product Selling Party’s internal business operations as part of a hosted service or otherwise outside the scope of the license granted in Section 2.1; (ii) modify, translate, copy, reproduce, reverse engineer, decompile, disassemble or otherwise attempt to derive the source code of any Originating Party Product, or remove any copyright or other proprietary notices of any Originating Party Product or related Documentation; or (iii) solicit sales of, sell, distribute, sublicense or otherwise transfer any Originating Party Product (A) to any person or entity that is not a Customer or Sales Agent, or (B) other than pursuant to a Customer License or Sales Agent Agreement. Product Selling Party will be fully responsible to Product Originating Party and its licensors for compliance by Product Selling Party’s employees, agents and consultants with the foregoing restrictions and all other terms and conditions hereof. Notwithstanding anything contained herein, all transfers, including all transfers by Product Selling Party to Customers, of any Originating Party Product are by way of license only, Exhibit C; Page 6 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED and not sale. Nothing herein will affect any sale or transfer of title to such Originating Party Products to Product Selling Party or any third party. Open Source Restrictions. Product Selling Party will not incorporate, link, distribute or use any third party software or code in conjunction with any Originating Party Product in such a way that: (i) creates, purports to create or has the potential to create, obligations with respect to any Originating Party Product or other software owned by or licensed to Product Originating Party, including without limitation the distribution or disclosure of any source code; or (ii) grants, purports to grant, or has the potential to grant to any third party any rights to or immunities under any intellectual property rights or proprietary rights of Product Originating Party or its Affiliates, including without limitation as such rights exist in or relate to any Originating Party Product. Without limiting the generality of the foregoing, Product Selling Party will not incorporate, link, distribute or use (i) any Originating Party Product or any other software provided by Product Originating Party, nor (ii) any software, products, documentation, content or other materials developed using any Originating Party Product, with any code or software licensed under any version of the GNU General Public License (“GPL”), Affero General Public License (“AGPL”), Lesser General Public License (“LGPL”), European Union Public License (“EUPL”), Apple Public Source License (“APSL”), Common Development and Distribution License (“CDDL”), IBM Public License (“IPL”), Eclipse Public License (“EPL”), Mozilla Public License (“MPL”), or any other open source license, in any manner that could cause or could be interpreted or asserted to cause any Originating Party Product or other software provided by Product Originating Party (or any modifications thereto) to become subject to the terms of the GPL, AGPL, LGPL, EUPL, APSL, CDDL, IPL, EPL, MPL, or such other open source license. Quality Control Requirements. Each Party acknowledges the other Party’s exclusive ownership of the other Party’s Trademarks and that use by either Party or its Affiliates of any of the other Party’s Trademarks, including any resulting goodwill, will inure to the sole benefit of the Party that owns such Trademarks. Neither Party will knowingly do or permit to be done, and will cause its Affiliates not to do or cause to be done, any act or thing inconsistent with such ownership and will not acquire or claim or assist third parties in acquiring or claiming any title in or to any of the other Party’s Trademarks, including by virtue of the Strategic Alliance Agreement, this OEM Agreement, or through either Party’s use of the other Party’s Trademarks. Neither Party will directly or indirectly, and will cause its Affiliates not to directly or indirectly, undertake any action that in any manner might question, contest, challenge, infringe or impair the validity, enforceability, scope of rights or title of the other Party in any of the other Party’s Trademarks at any time during the term of the Strategic Alliance Agreement. Each Party agrees that (a) all Combined Offerings identified by any of the other Party’s Trademarks will be at least equal in quality to the mutually agreed specifications therefore (the “Quality Standard”) and (b) it will maintain, and will cause its Affiliates maintain, Exhibit C; Page 7 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED procedures to assure the consistent quality of all Combined Offerings bearing or containing the other Party’s Trademarks. Each Party will have the right to audit and inspect, upon advance written notice, at the inspecting Party’s sole expense, and during regular business hours, the use by the other Party and its Affiliates of its Trademarks licensed hereunder and all Combined Offerings identified by any of its Trademarks Registered Asset Requirements. Where RA or an Affiliate of RA is Product Selling Party, RA will, and will cause its Affiliates to, require that any Asset used with the Combined Offering that includes the PTC Product known as ThingWorx be a Registered Asset, and will prohibit Customers and Users from using Assets with such Combined Offering in a manner that intends to mask the unique identifier for any Asset or otherwise to circumvent the per Asset payment obligations, in each case, by including such requirement and restriction in each Customer License Agreement. Term of Licenses. Product Selling Party and its Sales Agents may sell Subscription Licenses to the Combined Offering, with a maximum license term of three (3) years unless otherwise agreed to the Parties. Licensing Basis. Unless otherwise agreed to by the Parties, the PTC Products licensed as part of the Combined Offering will be licensed using the licensing basis (e.g., per user, per asset) as specified at https://www.ptc.com/en/documents/legal-agreements; provided that, after the reasonable request of PTC due to a change in such documentation, RA will license the PTC Products to Customers on terms that provide that the Customers cannot effect an early termination of the license without cause. Maintenance Services. The Parties agree that, notwithstanding anything in this OEM Agreement, Product Selling Party will provide first line Support to all Customers of the Combined Offering, and Product Originating Party will provide second tier Support to Product Selling Party. Generally, first line Support means that Product Selling Party will interface with the Customers and before escalating an issue, will have a technical Support personnel who is properly trained in providing Support for the Originating Party Product(s) to trouble-shoot the issue and attempt to achieve a workaround. If a workaround is not possible after diligent efforts, Product Selling Party may contact Product Originating Party for second line Support, which typically will involve Product Originating Party development personnel using diligence efforts to create a bug fix or other solution to the Customer’s problem. The Product Originating Party’s Support obligations will include providing the Product Selling Party with Updates as Product Originating Party makes such Updates generally available, and the additional maintenance obligations set forth on Schedule A. OEM Warranties. Warranty. Exhibit C; Page 8 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Warranty. Each Product Originating Party warrants to Product Selling Party that Product Originating Party is authorized to grant the license(s) granted by it under this OEM Agreement and that, subject to the remainder of this Section 4.1, the Originating Party Products will be free from Errors during the Warranty Period. “Warranty Period” means: (a) for Perpetual Licenses, the ninety day period commencing on the date Product Originating Party makes the Originating Party Product available to Product Selling Party or Sublicensee, and (b) for Subscription Licenses, the term of the subscription. Product Originating Party will have no warranty obligations hereunder with respect to any (i) Errors attributable to the use of an Originating Party Product in an application or environment for which it was not designed or contemplated, or (ii) Errors attributable to any modifications or customizations of an Originating Party Product not made by or on behalf of Product Originating Party. Product Originating Party’s issuance of an Update will not re-start a Warranty Period that has expired. Remedy. Product Originating Party’s and its licensors’ entire liability and Product Selling Party’s exclusive remedy for any breach by Product Originating Party of the warranty given in this Section 4.1 will be, at Product Originating Party’s sole discretion, either to (a) replace the Originating Party Product or (b) use diligent efforts to repair the Error. Product Originating Party’s obligations set forth in the preceding sentence will apply only if notice of the Error is received by Product Originating Party within the Warranty Period and Product Selling Party supplies such additional information regarding the Error as Product Originating Party may reasonably request. If Product Originating Party does not replace the applicable Originating Party Product and/or does not repair the Error (either by providing a bug fix, a workaround or otherwise) within a reasonable time after notice of the Error and associated information from Product Selling Party is received by Product Originating Party, Product Originating Party will provide a refund of the prepaid unused license fees paid by Product Selling Party for the applicable Originating Party Product containing the Error, upon return of such Originating Party Product and any copies thereof. Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS OEM AGREEMENT AND THE STRATEGIC ALLIANCE AGREEMENT, PRODUCT ORIGINATING PARTY DISCLAIMS (AND PRODUCT SELLING PARTY WAIVES) ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND/OR ANY WARRANTY THAT PRODUCT SELLING PARTY WILL ACHIEVE ANY PARTICULAR RETURN ON INVESTMENT. PRODUCT RESELLING PARTY IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM USING THE ORIGINATING PARTY PRODUCTS, INCLUDING THE ADEQUACY OF INDEPENDENT TESTING OF RELIABILITY, SECURITY AND ACCURACY OF ANY ITEM DESIGNED USING LICENSED PRODUCTS. PRODUCT ORIGINATING Exhibit C; Page 9 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED PARTY DOES NOT WARRANT THAT THE OPERATION OR OTHER USE OF THE ORIGINATING PARTY PRODUCTS WILL BE UNINTERRUPTED OR ERROR FREE OR WILL NOT CAUSE DAMAGE OR DISRUPTION TO ANY SUBLICENSEE’S DATA, COMPUTERS OR NETWORKS. WITHOUT LIMITING THE FOREGOING, PRODUCT ORIGINATING PARTY WILL HAVE NO LIABILITY ARISING FROM ANY SECURITY INCIDENT OR DATA LOSS THAT WOULD HAVE BEEN PREVENTED IF PRODUCT SELLING PARTY HAD IMPLEMENTED A SECURITY SOLUTIONS, DEVICES OR FEATURES (INCLUDING “PATCHES,” FIXES AND UPDATES) FOR THE ORIGINATING PARTY PRODUCTS PROVIDED OR MADE AVAILABLE BY PRODUCT ORIGINATING PARTY TO PRODUCT SELLING PARTY. Performance Warranty. Product Selling Party is free to offer separate and additional warranty terms regarding the Originating Party Products or third party product(s) component of the Combined Offering as well as the entire Combined Offering in Product Selling Party’s name only, but Product Selling Party will not bind Product Originating Party to such additional terms, and Product Selling Party will be solely responsible for, and will indemnify and hold Product Originating Party harmless from, any claims based upon such warranty terms made by Product Selling Party that are additional to or are otherwise inconsistent with those made by Product Originating Party hereunder. [Remainder of page intentionally left blank] Exhibit C; Page 10 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Schedule A Support Commitments 1. GO-TO-MARKET SUPPORT 1.1 Technical and Sales Support. Each Party and its Affiliates will cooperate with the other Party and its Affiliates as may be reasonably requested by the other Party to assist in the sale of the Combined Offering to a prospective Customer. 1.2 Support Documentation. Each Party will make available to the other Party and its Affiliates its electronic support and training materials (in all the languages available) for its Products to assist the other Party and its Affiliates in handling its Level 1 Support (as defined below) obligations. 1.3 Collateral. Each Party will provide collateral (in all the languages available) for the other Party and its Affiliates’ marketing and sales to present Products overview and competitive positioning. This will be used to help sell the “why” customers should use the Party’s Products. Each Party will update materials to the other Party as positioning changes and major software updates are released. 1.4 Data Sets. Each Party hereby agrees that, for data sets that it uses to demonstrate its product (PTC Products in the case of PTC, and the RA Products in the case of RA) it will, if allowed under its agreement with the provider(s) of the data set, provide such data sets to the other Party solely for purposes of the other Party demonstrating the Combined Offering. 2. SUPPORT SERVICES DEFINITIONS 2.1 “Level 1 Support” means the resolution of Customer inquiries relating to the Combined Offerings in real time or off-line without assistance from the other Party except as otherwise agreed. 2.2 “Level 2 Support” means the technical expertise the one Party provides to the other’s technical support case managers concerning inquiries regarding the Combined Offering by phone, web-based support interface or other agreed-upon means (“Official Means”) that is necessary to resolve off-line a Customer inquiry, when Level 1 Support does not resolve the customer inquiry and when the applicable technical support representative who takes the call generating such inquiry finds it necessary to elevate the inquiry to the applicable Party’s technical support case manager for resolution off-line, who in turn finds it necessary to contact the applicable other Party to obtain from such other Party the technical expertise necessary to resolve such Customer inquiries. Exhibit C; Page 11 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 2.3 “Error” is defined in the Strategic Alliance Agreement. 2.4 Error Severity Class Criteria P0, Fatal Impact Error that results in system hangs or crashes, or production is not possible without use of RA Products or PTC Products, as applicable. P1, Severe Impact Error causes severe production impact, and/or workaround (if available) is not acceptable. P2, Degraded Operations Errors disabling only certain functions that are not severe, but cause Customer dissatisfaction and for which an acceptable workaround exists. P3, Minimal Impact All other Errors. 3. SUPPORT SERVICES 3.1 The Party or Affiliate thereof who sells licenses for the Combined Offering will provide Level 1 Support to its Customers for the Combined Offerings. 3.2 RA will provide Level 2 Support to PTC and its Affiliates for its Products included in the Combined Offerings. PTC will provide Level 2 Support to RA and its Affiliates for its Products included in the Combined Offerings. Each Party will provide Level 2 Support to the other Party and its Affiliates 24x5 days per week (i.e. weekends and holidays excluded) for most incident severities, with provision for 24x7 elevation of P0 issues for immediate response (e.g. call list). 3.3 RA will provide in a commercially reasonable timely manner product support and corrective maintenance (bug fixes, hotfix or patch release) for RA Products in coordination with the PTC team where required. PTC will provide in a commercially reasonable timely manner product support and corrective maintenance (bug fixes, hotfix or patch release) for the PTC Products in coordination with the RA team where required. The specific timelines will be as agreed by the Governance Team. 3.4 In the event that PTC has determined that there is an issue with an RA Product as part of the Combined Offering that is not operating as indicated in the documentation and that PTC cannot resolve on its own, PTC shall contact RA support. In the event that RA has determined that there is an issue with a PTC Product as part of the Combined Offering that is not operating as indicated in the Exhibit C; Page 12 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED documentation and that RA cannot resolve on its own, RA shall contact PTC support. 3.5 Once the information has been received, the Level 2 Support Party will use reasonable commercial efforts to provide a response to the support request from Level 1 Support Party. 3.6 Each Party will, in providing Level 2 Support hereunder, endeavor to meet the following targets: Remedy Levels (defined below) Error 1st Level 2nd Level Final Level Class [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] The required action for each Error class at each remedy level specified above is as follows: 1st Level: Acknowledgment of receipt of Error report with written confirmation delivered to the Level 1 Support Party. 2nd Level: Temporary fix - a modification or workaround which allows the Customer to bypass the error, but may not be in a form suitable for general distribution to all of the Level 1 Support Party’s Customers. Final Level: Official fix - a new update which resolves the Error and is in a form suitable for general distribution to all of Level 1 Support Party’s Customers. 3.7 The Parties understand that RA Products or PTC Products, as applicable, issues attributable to third party technology contained within the RA Products or PTC Products, as applicable, may require additional time to resolve. The Level 2 Support Party will take the appropriate steps in working with the third party vendors to provide a solution or workaround to the issues within a time that the Parties can agree to. 3.8 In certain select circumstances, the Level 2 Support Party will work with Level 1 Support Party and Customer to help address critical issues for which it is unclear if Exhibit C; Page 13 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED the issue is caused by an Error, if the Level 1 Support Party has been unable to determine if an Error is involved from the information already provided by Customer. The Governance Team will establish procedures for these types of engagements. Exhibit C; Page 14 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT D RESELLER TERMS EXHIBIT These Mutual Reseller Terms and the attached Schedules are collectively referred to as the “Reseller Agreement”. RECITALS WHEREAS, the Parties are entering into that certain Strategic Alliance Agreement (the “Strategic Alliance Agreement”) to which this Reseller Agreement is attached as Exhibit D; WHEREAS, to facilitate the business objectives of the Strategic Alliance Agreement, the Parties wish to enter into this Reseller Agreement to provide each Party with certain resale rights with respect to the other Party’s Products for distribution under the other Party’s license conditions (as set forth herein). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. RESELLER AGREEMENT Definitions. In addition to terms defined in the Strategic Alliance Agreement and on first use in this Reseller Agreement, the terms set forth in this Section 1 will have the meanings set forth below. “License” means the then-current version of Selling Party’s standard form customer license agreement. The current forms of each Selling Party’s standard forms customer license agreements are attached as Schedule A. “Marks” means trade names, trademarks, service marks, and logos associated with the Parties or their products or services. “Online Terms” means shrink-wrap, click-wrap, click-through, click-accept, online, or website terms. “Order” means any order for Licenses of Selling Party Products or Selling Party Services placed with Selling Party by Reselling Party. “Sales Agent” means a member of Reselling Party’s standard distribution channels that (a) is appointed by Reselling Party to exercise the rights granted to Reselling Party by Selling Party pursuant to Section 3 and (b) with respect to which the requirements of Section 4.1 have been met. Exhibit D; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED “Reselling Party” means the Party and/or its Affiliate(s) that resells the other Party’s Selling Party Products under this Reseller Agreement. “Selling Party” means the Party whose Selling Party Products are resold by the other Party under this Reseller Agreement. “Selling Party Products” means the PTC Products or the RA Products, as the context requires. Selling Party Products includes all Updates. “Selling Party Services” means Support. “Subscription” means term Licenses that include (for the same fee) Support for such Licenses for the same period as the applicable License. “Support” means the provision of maintenance services and technical support by Selling Party with respect to the Selling Party Products that are made available pursuant to the terms and conditions of a License. Overview. Subject to the terms and conditions of this Reseller Agreement, this Reseller Agreement authorizes Reselling Party to distribute or resell Licenses for the Selling Party Products and the Selling Party Services to Customers directly and indirectly through Sales Agents. Appointment. Appointment. Subject to the terms and conditions of the Strategic Alliance Agreement and this Reseller Agreement, Selling Party hereby appoints Reselling Party, and each Reselling Party hereby accepts such appointment (in the case of each of PTC and RA as a Reselling Party, on its behalf and on behalf of its Affiliates), as a non-exclusive reseller of Licenses for the Selling Party Products and the Selling Party Services during the Term and, in the case of RA and its Affiliates as Reselling Party, solely in the Factory SCO and Factory SCP settings. License; Restrictions. Subject to the terms and conditions of the Strategic Alliance Agreement and this Reseller Agreement, Selling Party hereby grants Reselling Party a non- exclusive, non-transferable (except as set forth herein), royalty free license during the Term and, in the case of RA as Reselling Party, solely in the Factory SCO and Factory SCP settings, to use the Selling Party Products provided to demonstrate the applicable Selling Party Products to potential Customers, to install, configure, implement, service, or support the applicable Selling Party Products, and for purposes of promoting the licensing of such Selling Party Products to such Customers. Reselling Party will not market, promote, provide, or demonstrate any Selling Party Products to any third party other than a bona fide potential Customer, including to any competitors of Selling Party. Sales Agents. The foregoing rights and licenses may be exercised by Sales Agents, provided that Reselling Party will be fully responsible and liable for the actions, errors and Exhibit D; Page 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED omissions of such Sales Agents. Such Sales Agents will execute an agreement containing license terms consistent with this Reseller Agreement. Restrictions. Unless otherwise expressly agreed in advance in writing by an authorized representative of Selling Party, neither Reselling Party nor its Sales Agents will solicit or accept orders for Licenses of Selling Party Products or Selling Party Services from resellers or distributors who are not Sales Agents. Agreements with Sales Agents and Customers. 4.1 Agreements with Sales Agents. In order for any agreement under which Reselling Party engages a Sales Agent to exercise any of the rights and licenses granted under Section 3.1 or Section 3.2 (each, a “Sales Agent Agreement”) to be valid and effective, such Sales Agent Agreement must: (a) be in writing and entered into prior to the engagement of the applicable Sales Agent; (b) terminate upon expiration or termination of this Reseller Agreement; (c) contain terms and conditions that are at least as protective of the Selling Party Products and Selling Party Services as the terms and conditions of this Reseller Agreement, including contractual terms that: (i) grant the Sales Agent a non-transferable right to exercise the rights and/or licenses under Section 3.1 or Section 3.2 that Reselling Party or Sales Agent wishes to pass-through during the Term, subject to all applicable terms of this Reseller Agreement; (ii) require strict compliance with all Applicable Laws, including in connection with distribution of Selling Party Product(s) outside the United States; (iii) prohibit the removal of any copyright or other proprietary notices; (iv) prohibit causing or permitting the reverse engineering, disassembly or decompilation of the Selling Party Product(s); (v) prohibit title to the Selling Party Products or Selling Party Services from passing to the Sales Agent; (vi) disclaim Selling Party’s liability to the Sales Agent for damages, whether direct or indirect, incidental or consequential or for loss of profits, arising in connection with the Sales Agent Agreement, (vii) state that Selling Party disclaims any warranty of any kind directly to the Sales Agent with respect to the Selling Party Product(s) except as expressly set forth in this Strategic Alliance Agreement, including any warranty of performance, title, merchantability, fitness for a particular purpose and non-infringement; and (viii) designate Selling Party as a third party beneficiary under the applicable agreement. In such Sales Agent Agreements, the foregoing references to “Selling Party” may be made by referencing “[Reselling Party’s] licensor[s]”. Customer Licenses. Reselling Party will require each Customer that purchases a License for a Selling Party Product to enter into a License in a click-wrap or click-through online format, in the then-current form of Selling Party’s License, unless Selling Party agrees to accept the applicable Order under a preexisting License with Selling Party. To the extent any proposed modified terms for an individual Customer’s License differ from then the standard, current form of the License, the Selling Party will cooperate with the Reselling Party and will reasonably approve of such modified terms. Selling Party agrees that the Customers are not employees or agents of Reselling Party and that Reselling Party is not responsible for any failure of the Customers to comply with the License. Selling Party’s sole remedy for any failure of the Exhibit D; Page 3 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Customers to comply with the Customer License Agreement will be against the Customer; provided, however, that Reselling Party will reasonably cooperate at the Selling Party’s sole expense to enforce the terms of the applicable agreement with the Customer. Each Party bears all responsibility and liability for the enforceability of any Online Terms a Party seeks to be binding on the Customers or Sales Agents, and any damages or liabilities resulting from the lack of enforceability for such Online Terms. Support and Professional Services. Support. Each Party and its Affiliates will provide support to Customers for its Products in accordance with its standard support terms, regardless of which Party or Affiliate sold the applicable License. The Parties agree that the costs associated with providing support, whether at standard support levels or otherwise, will be borne by the Party providing the support. Professional Services. The Parties agree that (a) Reselling Party will bear all costs associated with any professional services that it offers to Customers and (b) such professional services revenue will not be shared with or owed to the Selling Party. Limited Warranty. Except as set forth otherwise in the Strategic Alliance Agreement, Selling Party’s limited warranty for each Selling Party Product and Selling Party Service is made solely to the applicable Customer who has obtained the applicable Selling Party Product or Selling Party Service and is as stated in the License. Reselling Party covenants and agrees that it will not attempt to make or pass on to Customers any warranty or representation on behalf of Selling Party or Selling Party’s licensors, other than the limited warranty contained in the License. [Remainder of page intentionally left blank.] Exhibit D; Page 4 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Schedule A Customer License Agreements PTC Licenses for PTC Products are available at https://www.ptc.com/en/documents/legal-agreements RA Licenses for RA Products are available at https://www.rockwellautomation.com/global/detail.page?pagetitle=End-User-License- Agreement&ontent type=legal&docid=610342306d3230fdefacbae6a19a0c7a Exhibit D; Page 5 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT E FINANCIAL COMMITMENT EXHIBIT 1. Commitment. RA commits to pay the following aggregate New ACV (as defined in Schedule 1 to this Exhibit E) to PTC from licenses for PTC Products (a) sold in exercise of the license and resale rights of RA and its Affiliates under the OEM Agreement and Reseller Agreement and (b) purchased by RA and its Affiliates for internal use pursuant to Section 8 of this Agreement: All Amounts New ACV Commit to PTC $USD Year 1 [***] Year 2 [***] Year 3 [***] “Year 1” will commence on the Original Effective Date and end on September 30, 2019. Year 2 and Year 3 are twelve-month periods ending on September 30, 2020 and September 30, 2021, respectively. 2. [***] and [***]. (a) If [***], RA will pay to PTC an amount equal to [***]. (b) [***]. (c) [***]. (d) After [***]. (e) [***]. 3. Kepware. For any sales of Kepware (whether as ThingWorx Industrial Connectivity under this Agreement or as Kepware products under the existing RA/PTC agreement), the New ACV from such sales will only be counted towards the New ACV Commits to the extent such New ACV, taken together in the aggregate on an annual basis, exceeds the New AVC to PTC during the period of April 1, 2017 through March 31, 2018. 4. Adjustment due to Adverse Issue. To the extent New ACV Commit for a particular year is not, or cannot reasonably be expected to be met, due to a significant defect, interruption or other issue in or affecting PTC’s business or the PTC Products that causes the PTC Products to Exhibit E; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED substantially not be able to be sold during a significant part of such year, the Parties will discuss in good faith and implement a fair and equitable adjustment to the provisions of this Exhibit E. For illustration purposes only, (a) such issues would include an inability of PTC and/or its Affiliates to timely deliver PTC Products due to a material cybersecurity or similar attack adversely affecting the performance of PTC’s business, products or services and (b) such issues would not include warranty or similar claims made by customers in the ordinary course of business consistent with past practices. 5. Adjustment due to Breach. If PTC or an Affiliate of PTC breaches its obligations under subclause (C) of Section 5.6(a)(i), RA may provide PTC with notice of the breach. During the 15- day period after RA’s delivery of such notice, the Parties will discuss the breach. If the Parties do not reach written agreement concerning the breach prior to the expiration of such 15-day period, PTC may remove, or cause the applicable Affiliate to remove, the breaching product from the market within 45 days and, if PTC elects not to do so, RA will have the right to (a) terminate this Agreement pursuant to Section 18.2(a), without giving effect to the cure provisions referenced therein, or (b) require that all sales made in breach of subclause (C) of Section 5.6(a)(i) shall be deemed made by RA for purposes of calculating New ACV at a price of [***] of the then current product list price. The foregoing provisions shall be in addition to any and all other remedies available to RA. 6. Treatment of New ACV Commit Upon Termination of Agreement or Removal of [***]. (a) [***]. (b) [***]. (c) [***] (d) [***]. (e) [***]. Exhibit E; Page 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Schedule 1 to Exhibit E Definition New ACV New ACV means the annual contract value of a New Subscription order booked during the applicable period, calculated by dividing the total committed contract value of the New Subscription by the term of the New Subscription in days, and then multiplying the quotient by 365; if the committed New Subscription term is less than one year, then the total contract value is New ACV. New ACV will also include the New Perpetual Equalization Credit. Supporting Definitions Subscription is a product that includes both a software license and related support over a stated term. New Subscription is an order for a Subscription that is not a Renewal Subscription or a Subscription Pricing Increase or a Perpetual License Conversion. New Subscription includes Incremental Subscription. Renewal Subscription means an order for a Subscription that occurs within the one-year period after expiration of a prior Subscription for the same Customer if the value of the Subscription is the same or lower than the prior Subscription. A term license that is converted to a Subscription for the same value is considered a Renewal Subscription. Renewal Subscriptions will be counted only to the extent that they are an Incremental Subscription. Incremental Subscription means the incremental amount of Subscription fees on a Subscription order that either increases the annual value of a pre-existing Subscription or renews a preexisting Subscription in an amount that exceeds the annual value of the pre-existing Subscription, other than an increase that is attributable solely to a Subscription Pricing Increase. If an existing Perpetual License is converted to a Subscription, only the portion that is incremental to the existing run rate for Support (calculated at the highest annualized run rate in effect in the preceding twelve months) will be considered an Incremental Subscription. Subscription Pricing Increase means the incremental amount of Subscription fees on a Subscription order over the previous run rate that is attributable solely to an increase in Subscription pricing or to foreign exchange rate conversion. Perpetual License means a software license that is not for a defined term (i.e., the license will continue indefinitely until terminated). Perpetual License Conversion means a conversion of an existing Perpetual License and related Support contract to a Subscription at the same annual Subscription value as the existing annual Support value (calculated at the highest annualized run rate in effect in the preceding twelve months). Exhibit E; Page 3 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Support is a product that includes maintenance and technical support for a Perpetual License over a stated term. Support Pricing Increase means the incremental amount of Support fees on a Support order over the previous run rate that is attributable solely to an increase in Support pricing or to foreign exchange rate conversion. Support Renewal means an order for Support that occurs within the one-year period after expiration of a prior Support contract for the same Perpetual Licenses. New Perpetual Equalization Credit means the value to be credited for a new Perpetual License by converting each $1.00 of a new Perpetual License to its deemed subscription equivalent ACV, which initially is [***], then applying the [***] reseller discount, for a resulting credit to New ACV of [***]. Associated new Support is not counted as New ACV. Exhibit E; Page 4 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT F FEES EXHIBIT 1. PTC Products. (a) Discount. (i) The discount rate to be applied to sales of licenses of PTC Products distributed by RA or its Affiliates (either as part of the Combined Offering or on a standalone basis) is [***] off PTC’s then-current local list price. (ii) The discount rate to be applied to purchases of licenses of PTC Products for its internal use at RA or its Affiliates is [***] off PTC’s then-current local List Price. (b) Maximum Term of Subscription. The maximum term of a subscription license for a PTC Product is three (3) years. (c) Renewal Pricing. Renewals will be at [***] off PTC’s then current local list price at the time of renewal. (d) [***]. 2. RA Products. (a) Discount. The discount rate to be applied to sales of licenses of RA Products distributed by PTC or its Affiliates (either as part of the Combined Offering or on a standalone basis) is [***] off RA’s then-current local list price. (b) [***]. 3. Payment Terms. (a) The payment terms for PTC Products purchased by RA or its Affiliates for its internal use shall be in accordance with the payment terms established between the Parties under their applicable existing agreements. (b) The payment terms for OEM distributions under Exhibit C and resale transactions under Exhibit D shall be net [***] from the date of invoice. The selling Party will invoice the purchasing Party for each transaction on or about the start date of the license and, in the event of multi-year licenses, annually (in equal installments) in advance at the beginning of each year of the license. Exhibit F; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT G Restrictions Specific to [***] The following additional terms will apply to [***]: 1. [***]. 1.1 [***]. 1.2 [***]. 1.3 [***]. (a) [***]. (b) [***]. (c) [***]. (d) [***]. 2. [***]: 2.1 [***]. (a) [***]; (b) [***]; 2.2 [***]. (a) [***]; (b) [***]; 2.3 [***]. (a) [***]: (i) [***]. (ii) [***]: (A) [***]. Exhibit G; Page 1 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (B) [***] (C) [***] (b) [***]. Exhibit G; Page 2 ACTIVE/96105181.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT H RA’S SYSTEMS INTEGRATOR RIGHTS Capitalized terms not defined in this Exhibit H will have the meaning set forth elsewhere in the Agreement. 1. General Terms 1.1 RA and its Affiliates will be the preferred systems integrators of all product and service offerings under this Agreement as set forth herein. Accordingly, in addition to the license grants and rights set forth in the Agreement, in furtherance of RA and its Affiliates’ preferred integrator status, RA will be provided access to PTC and its Affiliates’ systems integrator training and other programs. To the extent commercially reasonable and viable, the Parties will represent RA and its Affiliates as PTC’s preferred systems integrators. 1.2 For purpose of this Exhibit H only, “Services” includes all business consulting, training and implementation services in the Territories for the products and services set forth in this Agreement. “Services” does not, purpose of this Exhibit H only, include product or service support services, pre-sales services, success management, or account management (“Other Professional Services”). 2. PTC Obligations 2.1 PTC and its Affiliates will reasonably support RA and its Affiliates in its marketing and offering its Services, including collaborating with RA Solutions on pilot programs/proof of concept engagements, and including RA and its Affiliates in co-innovation opportunities. When RA or its Affiliates engages a PTC service organization for billable services beyond sales support as contemplated in the Agreement, PTC reserves the right to charge RA for these services. 2.2 PTC and its Affiliates will provide RA and its Affiliates with information of other, active partners that could assist in the provisioning of Services. 3. RA Obligations RA and its Affiliates will use commercially reasonable efforts to: (i) provide the Services in a professional and competent manner; (ii) offer competitive rates to customers (as reasonably and solely determined by RA and its Affiliates); (iii) engage service partners and contractors as necessary to complete the Services; (iv) collaborate on pre-sales engagements; and, (v) provide Product Feedback (subject to the terms set forth in Section 17 (Confidential Information; Feedback). Exhibit H; Page 1 ACTIVE/96105181.2

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James Heppelmann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PTC Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 31, 2018	/S/ JAMES HEPPELMANN
		James Heppelmann
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Andrew Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PTC Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 31, 2018	/S/ ANDREW MILLER
		Andrew Miller
		Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of PTC Inc. (the “Company”) certifies that, to his knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 31, 2018	/S/ JAMES HEPPELMANN
		James Heppelmann President and Chief Executive Officer
Date:	July 31, 2018	/S/ ANDREW MILLER
		Andrew Miller
		Executive Vice President and Chief Financial Officer

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Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2018	Jul. 27, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Entity Registrant Name	PTC Inc.
Entity Central Index Key	0000857005
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		117,829,713

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
ASSETS
Cash and cash equivalents	$ 266,552	$ 280,003
Short-term marketable securities	22,356	18,408
Accounts receivable, net of allowance for doubtful accounts of $591 and $1,062 at June 30, 2018 and September 30, 2017, respectively	130,079	152,299
Prepaid expenses	46,600	49,913
Other current assets	122,625	165,933
Total current assets	588,212	666,556
Property and equipment, net	64,456	63,600
Goodwill	1,182,462	1,182,772
Acquired intangible assets, net	214,657	257,908
Long-term marketable securities	31,816	31,907
Deferred tax assets	138,958	123,166
Other assets	35,070	34,475
Total assets	2,255,631	2,360,384
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	37,773	35,160
Accrued expenses and other current liabilities	58,296	80,761
Accrued compensation and benefits	87,401	110,957
Accrued income taxes	6,683	5,735
Deferred revenue	474,957	446,296
Total current liabilities	665,110	678,909
Long-term debt	693,053	712,406
Deferred tax liabilities	5,862	17,880
Deferred revenue	8,994	12,611
Other liabilities	48,227	53,142
Total liabilities	1,421,246	1,474,948
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued	0	0
Common stock, $0.01 par value; 500,000 shares authorized; 115,491 and 115,333 shares issued and outstanding at June 30, 2018 and September 30, 2017, respectively	1,155	1,153
Additional paid-in capital	1,524,399	1,609,030
Accumulated deficit	(612,600)	(650,840)
Accumulated other comprehensive loss	(78,569)	(73,907)
Total stockholders’ equity	834,385	885,436
Total liabilities and stockholders’ equity	$ 2,255,631	$ 2,360,384

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Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Current assets:
Allowance for doubtful accounts	$ 591	$ 1,062
Stockholders’ equity:
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	115,491,000	115,333,000
Common stock, shares outstanding	115,491,000	115,333,000

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Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Revenues [Abstract]
Subscription	$ 126,712	$ 74,859	$ 339,651	$ 195,001
Support	121,127	140,428	379,007	433,624
Total recurring revenue	247,839	215,287	718,658	628,625
Perpetual license	25,780	32,348	82,604	94,099
Total subscription, support and license revenue	273,619	247,635	801,262	722,724
Professional services	41,158	43,658	128,041	134,936
Total revenue	314,777	291,293	929,303	857,660
Cost of revenue:
Cost of license and subscription revenue	24,010	21,648	71,505	62,333
Cost of support revenue	22,223	23,635	67,453	69,028
Total cost of software revenue	46,233	45,283	138,958	131,361
Cost of professional services revenue	35,323	36,985	109,187	114,852
Total cost of revenue	81,556	82,268	248,145	246,213
Gross margin	233,221	209,025	681,158	611,447
Operating expenses:
Sales and marketing	107,741	93,101	305,386	271,568
Research and development	61,218	59,850	187,381	175,474
General and administrative	33,082	35,294	101,439	108,789
Amortization of acquired intangible assets	7,850	7,973	23,566	23,986
Restructuring and other charges, net	1,627	1,551	1,846	8,300
Total operating expenses	211,518	197,769	619,618	588,117
Operating income	21,703	11,256	61,540	23,330
Interest expense	(10,646)	(10,200)	(31,072)	(32,239)
Interest income and other expense, net	(1,086)	(357)	(2,481)	2,049
Income (loss) before income taxes	9,971	699	27,987	(6,860)
Provision (benefit) for income taxes	(7,026)	1,650	(10,809)	4,336
Net income (loss)	$ 16,997	$ (951)	$ 38,796	$ (11,196)
Earnings(loss) per share—Basic (in USD per share)	$ 0.15	$ (0.01)	$ 0.33	$ (0.10)
Earnings(loss) per share—Diluted (in USD per share)	$ 0.14	$ (0.01)	$ 0.33	$ (0.10)
Weighted average shares outstanding—Basic (in shares)	115,774	115,615	115,915	115,511
Weighted average shares outstanding—Diluted (in shares)	117,500	115,615	117,687	115,511

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Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 16,997	$ (951)	$ 38,796	$ (11,196)
Other comprehensive income (loss), net of tax:
Unrealized hedge gain (loss) arising during the period, net of tax of $0.6 million and $0.3 million in the third quarter of 2018 and 2017, respectively, and $0.1 million and $0 million in the first nine months of 2018 and 2017, respectively	3,910	(2,298)	950	224
Net hedge (gain) loss reclassified into earnings, net of tax of $0 million in both the third quarter of 2018 and 2017, respectively, and $0.3 million and $0.1 million in the first nine months of 2018 and 2017, respectively	242	75	2,327	(777)
Unrealized gain (loss) on hedging instruments	4,152	(2,223)	3,277	(553)
Foreign currency translation adjustment, net of tax of $0 for each period	(21,628)	17,553	(8,859)	3,893
Unrealized gain (loss) on marketable securities, net of tax of $0 for each period	67	21	(379)	(50)
Amortization of net actuarial pension loss included in net income, net of tax of $0.1 million and $0.2 million in the third quarter of 2018 and 2017, respectively, and $0.5 million and $0.7 million in the first nine months of 2018 and 2017, respectively	386	597	1,143	1,687
Change in unamortized pension loss during the period related to changes in foreign currency	884	(1,721)	156	(343)
Other comprehensive income (loss)	(16,139)	14,227	(4,662)	4,634
Comprehensive income (loss)	$ 858	$ 13,276	$ 34,134	$ (6,562)

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Consolidated Statements Of Comprehensive Income (Loss) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Statement of Comprehensive Income [Abstract]
Unrealized hedge gain (loss) arising during the period, tax	$ 600,000	$ 300,000	$ 100,000	$ 0
Net hedge loss reclassified into earnings, tax	0	0	300,000	100,000
Foreign currency translation adjustment, tax	0	0	0	0
Unrealized gain (loss) marketable securities tax	0	0	0	0
Amortization of net actuarial pension loss included in net income, tax	$ 100,000	$ 200,000	$ 500,000	$ 700,000

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Cash flows from operating activities:
Net income (loss)	$ 38,796	$ (11,196)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization	65,303	64,187
Stock-based compensation	52,015	56,139
Other non-cash items, net	304	1,536
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	21,195	34,913
Accounts payable and accrued expenses	(16,539)	2,594
Accrued compensation and benefits	(22,348)	(50,518)
Deferred revenue	82,794	45,985
Accrued income taxes	(30,005)	(17,832)
Other current assets and prepaid expenses	(5,434)	(7,317)
Other noncurrent assets and liabilities	(759)	(16,028)
Net cash provided by operating activities	185,322	102,463
Cash flows from investing activities:
Additions to property and equipment	(18,666)	(19,333)
Purchase of intangible asset	(3,000)	0
Purchases of short- and long-term marketable securities	(18,063)	(14,173)
Proceeds from maturities of short- and long-term marketable securities	13,640	13,440
Acquisitions of businesses, net of cash acquired	(3,000)	(4,960)
Purchases of investments	(1,000)	0
Proceeds from sales of investments	0	15,218
Net cash used by investing activities	(30,089)	(9,808)
Cash flows from financing activities:
Borrowings under credit facility	200,000	150,000
Repayments of borrowings under credit facility	(220,000)	(190,000)
Repurchases of common stock	(100,000)	(34,994)
Proceeds from issuance of common stock	7,472	3,978
Credit facility origination costs	0	(184)
Contingent consideration	(7,750)	(11,054)
Payments of withholding taxes in connection with vesting of stock-based awards	(44,797)	(26,244)
Net cash used in financing activities	(165,075)	(108,498)
Effect of exchange rate changes on cash and cash equivalents	(3,609)	(1,397)
Net increase (decrease) in cash and cash equivalents	(13,451)	(17,240)
Cash and cash equivalents, beginning of period	280,003	277,935
Cash and cash equivalents, end of period	$ 266,552	$ 260,695

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Basis of Presentation

9 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. The September 30, 2017 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30. Our fiscal quarters end on a Saturday following a thirteen-week calendar, and may result in different quarter end dates year to year. The third quarter of 2018 ended on June 30, 2018 and the third quarter of 2017 ended on July 1, 2017. The results of operations for the nine months ended June 30, 2018 are not necessarily indicative of the results expected for the remainder of the fiscal year.

Reclassifications

Effective at the beginning of fiscal 2018, in accordance with the adoption of ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, excess tax benefits are now classified as an operating activity on the statement of cash flows rather than as a financing activity. The prior period excess tax benefits have been reclassified for comparability.

Segments

In fiscal 2017, we had three operating and reportable segments: (1) the Solutions Group, which included license, subscription, support and cloud services revenue for our core CAD, SLM and PLM products; (2) the IoT Group, which included license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions; and (3) Professional Services, which included consulting, implementation and training revenue.

With a change in our organizational structure to streamline our operations, we merged our Solution Group segment with our IoT Group segment and revised the information that our chief executive officer, who is also our chief operating decision maker ("CODM"), regularly reviews for purposes of allocating resources and assessing performance. As a result, effective with the beginning of the first quarter of fiscal 2018, we changed our operating and reportable segments from three to two: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services.

Revenue and operating income in Note 10. Segment Information have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Stock Compensation

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We adopted ASU No. 2016-09 in the first quarter of 2018.

Effective with the adoption, stock-based compensation excess tax benefits or deficiencies are reflected in the Consolidated Statements of Operations as a component of the provision for income taxes when the awards vest or are settled. Previously they were recognized in equity. Upon adoption, under the modified retrospective transition method, we recognized the previously unrecognized excess tax benefits of $37.0 million as increases in deferred tax assets for tax loss carryovers and tax credits, $36.9 million of which were offset by an increase in our U.S. valuation allowance.

Additionally, on our Consolidated Statements of Cash Flows excess tax benefits from stock-based awards will no longer be separately classified as a financing activity apart from other income tax, and will be presented as an operating activity. As a result of the adoption of ASU 2016-09, the Consolidated Statement of Cash Flows for the nine months ended July 1, 2017 was adjusted as follows: a $0.4 million increase to net cash provided by operating activities and a $0.4 million decrease to net cash used in financing activities.

Finally, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which resulted in a cumulative effect adjustment of $0.7 million to reduce retained earnings as of October 1, 2017.

Pending Accounting Pronouncements

Derivative Financial Instruments

In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-12, "Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities", which amends and simplifies existing guidance to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2018 (our fiscal 2020) including interim reporting periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Income Taxes

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). The purpose of ASU 2016-16 is to simplify the income tax accounting of an intra-entity transfer of an asset other than inventory and to record its effect when the transfer occurs. The guidance is effective for annual reporting periods beginning after December 15, 2017 (our fiscal 2019) including interim reporting periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. We expect to record a net deferred tax asset of approximately $77 million upon adoption, primarily relating to deductible amortization of intangible assets in Ireland.  Post adoption, our effective tax rate will no longer include the benefit of this amortization, which is reflected in our effective tax rate reconciliation under the current guidance. 

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will replace the existing guidance in ASC 840, Leases. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and to disclose important information about leasing arrangements. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 (our fiscal 2020) and interim periods within those annual periods. Early adoption is permitted and modified retrospective application is required. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The FASB has also issued additional standards to provide clarification and implementation guidance on ASU 2014-09.

The core principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration that is expected to be received for those goods or services. Under the new guidance, an entity is required to evaluate revenue recognition through a five-step process: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when (or as) the entity satisfies a performance obligation. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In applying the principles of ASU 2014-09, it is possible more judgment and estimates may be required within the revenue recognition process than is required under existing U.S. GAAP, including identifying performance obligations, estimating the amount of variable consideration to include in the transaction price, and estimating the value of each performance obligation to allocate the total transaction price to each separate performance obligation.

ASU 2014-09 is effective for us in our first quarter of fiscal 2019. Companies may adopt ASU 2014-09 using either the retrospective method, under which each prior reporting period is presented under ASU 2014-09, with the option to elect certain permitted practical expedients, or the modified retrospective method, under which a company adopts ASU 2014-09 from the beginning of the year of initial application with no restatement of comparative periods, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application, with certain additional required disclosures. We currently expect to adopt ASU 2014-09 using the modified retrospective method.

While we are continuing to assess the impact of the new standard, we currently believe the most significant impact relates to accounting for our subscription arrangements that include term-based on-premise software licenses bundled with support. Under current GAAP, revenue attributable to these subscription licenses is recognized ratably over the term of the arrangement because VSOE does not exist for the undelivered support element as it is not sold separately. Under the new standard, the requirement to have VSOE for undelivered elements to enable the separation of revenue for the delivered software licenses is eliminated. Accordingly, under the new standard we will be required to recognize as revenue a portion of the subscription fee upon delivery of the software license. We currently expect revenue related to our perpetual licenses and related support contracts, professional services and cloud offerings to remain substantially unchanged. Due to the complexity of certain of our contracts, the actual revenue recognition treatment required under the new standard may be dependent on contract-specific terms and, therefore, may vary in some instances.

Upon implementation of the new standard in fiscal 2019, we expect to make prospective revisions to contract terms with our customers that will result in shortening the initial, non-cancellable term of our multi-year subscriptions to one year for contract periods that begin on or after October 1, 2018. This change will result in annual contractual periods for most of our software subscriptions, the license portion of which will be recognized at the beginning of each annual contract period upon delivery of the licenses and the support portion of which will be recognized ratably over the one-year contractual period. As a result, we anticipate one year of subscription revenue will be recognized for each contract each year; however, more of the revenue will be recognized in the quarter that the contract period begins and less will be recognized in the subsequent three quarters of the contract than under the current accounting rules.

Under the modified retrospective method, we will evaluate each contract that is ongoing on the adoption date as if that contract had been accounted for under ASU 2014-09 from contract inception. Some license revenue related to subscription arrangements that would have been recognized in future periods under current GAAP will be recast under ASU 2014-09 as if the revenue had been recognized in prior periods. Under this transition method, we will not adjust historical reported revenue amounts. Instead, the revenue that would have been recognized under this method prior to the adoption date will be an adjustment to retained earnings and will not be recognized as revenue in future periods as previously expected. Because we expect that license revenue associated with subscription contracts will be recognized up front instead of over time under ASU 2014-09, we expect a material portion of our deferred revenue will be adjusted to retained earnings upon adoption. During the first year of adoption, we will record and disclose the amount of this retained earnings adjustment and intend to provide supplemental disclosure of how this revenue would have been recognized under the current rules.

Another significant provision under ASU 2014-09 includes the capitalization and amortization of costs associated with obtaining a contract, such as sales commissions. Currently, we expense sales commissions in the period incurred. Under ASU 2014-09, direct and incremental costs to acquire a contract are capitalized and amortized using a systematic basis over the pattern of transfer of the goods and services to which the asset relates. While we are continuing to assess the impact of this provision of ASU 2014-09, we likely will be required to capitalize incremental costs such as commissions and amortize those costs over the period the capitalized assets are expected to contribute to future cash flows.

Furthermore, we have made and will continue to make investments in systems and processes to enable timely and accurate reporting under the new standard. We currently expect that necessary operational and internal control structural changes will be implemented prior to the adoption date.

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Deferred Revenue and Related Customer Receivables

9 Months Ended

Jun. 30, 2018

Deferred Revenue And Financing Receivables [Abstract]

Deferred Revenue and Related Customer Receivables

Deferred Revenue and Related Customer Receivables

Deferred Revenue

Deferred revenue primarily relates to software agreements billed to customers for which the subscription and support services have not yet been provided. The liability associated with performing these subscription and support services is included in deferred revenue and, if not yet paid, the related customer receivable is included in prepaid expenses and other current assets. Billed but uncollected support and subscription-related amounts included in other current assets at June 30, 2018 and September 30, 2017 were $108.7 million and $160.9 million, respectively.

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Restructuring and Other Charges

9 Months Ended

Jun. 30, 2018

Restructuring [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

Restructuring Charges (Credits)

In fiscal 2016, we initiated a plan to restructure our workforce and consolidate select facilities to reduce our cost structure and to realign our investments with what we believe to be our higher growth opportunities. The actions have resulted in total restructuring charges of $84.5 million, primarily associated with termination benefits associated with approximately 800 employees. This restructuring plan was substantially completed in 2017.

The following table summarizes restructuring accrual activity for the nine months ended June 30, 2018:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2017	$	1,736		$	4,508		$	6,244
Credit to operations, net	(509		)	(505		)	(1,014		)
Cash disbursements	(1,247		)	(1,207		)	(2,454		)
Foreign exchange impact	20			(80		)	(60		)
Accrual, June 30, 2018	$	—		$	2,716		$	2,716

The following table summarizes restructuring accrual activity for the nine months ended July 1, 2017:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2016	$	35,177		$	1,431		$	36,608
Charges to operations, net	2,582			5,718			8,300
Cash disbursements	(33,979		)	(1,351		)	(35,330		)
Other non-cash charges	—			(704		)	(704		)
Foreign exchange impact	(800		)	98			(702		)
Accrual, July 1, 2017	$	2,980		$	5,192		$	8,172

Of the accrual for facility closures and related costs, as of June 30, 2018, $1.6 million is included in accrued expenses and other current liabilities and $1.1 million is included in other liabilities in the Consolidated Balance Sheets. The accrual for facility closures is net of assumed sublease income of $3.1 million. The accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets.

Other - Headquarters relocation charges

Headquarters relocation charges represent accelerated depreciation expense recorded in anticipation of exiting our current headquarters facility. In 2019, we will be moving into a new worldwide headquarters in the Boston Seaport District, and we will be vacating our current headquarters space. Because our current headquarters lease will not expire until November 2022, we are seeking to sublease that space. Further, if we are unable to sublease our current headquarters space for an amount at least equal to our rent obligations under the current headquarters lease, we will bear overlapping rent obligations for those premises and will be required to record additional headquarters relocation charges related to any rent shortfall. A charge for such shortfall will be recorded in the earlier of the period that we cease using the space (which will likely occur in the second quarter of our fiscal 2019) or the period we exit the lease contract. Additionally, we will incur other costs associated with the move which will be recorded as incurred. In the third quarter and first nine months of 2018, we recorded $1.9 million and $2.9 million, respectively, of accelerated depreciation expense related to shortening the estimated useful lives of leasehold improvements in our current facility.

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Stock-based Compensation

9 Months Ended

Jun. 30, 2018

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Stock-Based Compensation

Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock unit (RSU) awards based on the fair value of RSU awards on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as the principal equity incentive awards, including performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Beginning in the first quarter of 2018, we account for forfeitures as they occur, rather than estimate expected forfeitures.

Our employee stock purchase plan (ESPP), initiated in the fourth quarter of 2016, allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period. 

Restricted stock unit activity for the nine months ended June 30, 2018	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units October 1, 2017	3,487		$	45.57
Granted (1)	2,167		$	75.99
Vested	(1,804	)	$	43.94
Forfeited or not earned	(531	)	$	50.95
Balance of outstanding restricted stock units June 30, 2018	3,319		$	65.48

_________________

(1) Restricted stock granted includes 184,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2018.

	Restricted Stock Units
Grant Period	Performance-based RSUs (1)	Service-based RSUs (2)
	(Number of Units in thousands)
First nine months of 2018	961	1,022

_________________

(1) Substantially all the performance-based RSUs were granted to our executive officers. Approximately 189,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period. RSUs not earned for a period may be earned in the third period. An additional 250,000 shares are eligible to vest based upon a 2018 performance measure. To the extent earned, those performance-based RSUs will vest inthree substantially equal installments on November 15, 2018, November 15, 2019 and November 15, 2020, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. An additional 500,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period in fiscal years 2021, 2022 and 2023. RSUs not earned for a period may be earned in the third period.

(2) The service-based RSUs were granted to employees, our executive officers and our directors. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

Compensation expense recorded for our stock-based awards was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Cost of license and subscription revenue	$	421	$	347	$	1,242	$	954
Cost of support revenue	527		1,139		2,025		3,638
Cost of professional services revenue	1,471		1,505		4,846		4,500
Sales and marketing	4,910		3,296		14,827		11,047
Research and development	3,283		2,805		9,626		9,753
General and administrative	6,046		7,482		19,449		26,247
Total stock-based compensation expense	$	16,658	$	16,574	$	52,015	$	56,139

Stock-based compensation expense includes $1.1 million and $3.2 million in the third quarter and first nine months of 2018, respectively, and $0.9 million and $2.2 million in the third quarter and first nine months of 2017, respectively, related to the ESPP.

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Earnings per Share (EPS) and Common Stock

9 Months Ended

Jun. 30, 2018

Earnings Per Share and Common Stock

Earnings(loss) per Share (EPS) and Common Stock

Earnings per Share (EPS) and Common Stock

EPS

Basic EPS is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding RSUs using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of unrecognized compensation expense as additional proceeds.

	Three months ended					Nine months ended
Calculation of Basic and Diluted EPS	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
	(in thousands, except per share data)
Net income (loss)	$	16,997	$	(951	)	$	38,796	$	(11,196	)
Weighted average shares outstanding—Basic	115,774		115,615			115,915		115,511
Dilutive effect of restricted stock units	1,726		—			1,772		—
Weighted average shares outstanding—Diluted	117,500		115,615			117,687		115,511
Earnings (loss) per share—Basic	$	0.15	$	(0.01	)	$	0.33	$	(0.10	)
Earnings (loss) per share—Diluted	$	0.14	$	(0.01	)	$	0.33	$	(0.10	)

There were 0.1 million antidilutive shares for the nine months ended June 30, 2018. Total antidilutive shares were 2.0 million for the nine months ended July 1, 2017. For the nine months endedJuly 1, 2017 the diluted net loss per share is the same as the basic net loss per share as the effects of all our potential common stock equivalents are antidilutive, because we reported a loss for the period.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors periodically authorizes the repurchase of shares of our common stock. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

On September 14, 2017, our Board of Directors authorized us to repurchase up to $500 million of our common stock in the period October 1, 2017 through September 30, 2020. In the first nine months of 2018 and 2017, we repurchased $100 million and $35 million, respectively, of our common stock. The 2018 repurchase was accomplished through an accelerated share repurchase ("ASR") agreement with a major financial institution that we entered into in April 2018. Under this ASR, we repurchased our common stock at a purchase price determined by the average market price over a period of time, with final settlement in June 2018.

In July 2018, our Board of Directors has authorized us to repurchase up to an additional $1,000 million of our common stock through September 30, 2020. We entered into a new $1,000 million ASR as described in Note 14. Subsequent Events. Final settlement of this ASR is expected to occur in 7.5 to 10 months.

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Goodwill and Intangible Assets

9 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

In 2017, we had three operating and reportable segments: (1) Solutions Group, (2) IoT Group and (3) Professional Services. Effective with the beginning of the first quarter of 2018, we changed our operating and reportable segments from three to two: (1) Software Products and (2) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments.

As of June 30, 2018, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,366.8 million and our Professional Services segment was $30.3 million. As of September 30, 2017, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,410.0 million and our Professional Services segment was $30.6 million. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

We completed our annual goodwill impairment review as of June 30, 2018 based on a qualitative assessment. Our qualitative assessment included company specific (financial performance and long-range plans), industry, and macroeconomic factors, and consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date. Based on our qualitative assessment, we believe it is more likely than not that the fair values of our reporting units exceed their carrying values and no further impairment testing is required.

Goodwill and acquired intangible assets consisted of the following:

	June 30, 2018						September 30, 2017
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	1,182,462					$	1,182,772
Intangible assets with finite lives (amortized) (1):
Purchased software	$	362,992	$	247,694	$	115,298	$	362,955	$	228,377	$	134,578
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	357,904		262,982		94,922		359,932		241,554		118,378
Trademarks and trade names	19,080		14,643		4,437		19,138		14,186		4,952
Other	4,013		4,013		—		4,030		4,030		—
	$	766,866	$	552,209	$	214,657	$	768,932	$	511,024	$	257,908
Total goodwill and acquired intangible assets					$	1,397,119					$	1,440,680

(1) The weighted-average useful lives of purchased software, customer lists and relationships, and trademarks and trade names with a remaining net book value are 9 years, 10 years, and 10 years, respectively.

Goodwill

Changes in goodwill presented by reportable segments were as follows:

	Software Products			Professional Services			Total
	(in thousands)
Balance, October 1, 2017	$	1,152,917		$	29,855		$	1,182,772
Acquisition	4,350			—			4,350
Foreign currency translation adjustment	(4,542		)	(118		)	(4,660		)
Balance, June 30, 2018	$	1,152,725		$	29,737		$	1,182,462

Amortization of Intangible Assets

The aggregate amortization expense for intangible assets with finite lives was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Amortization of acquired intangible assets	$	7,850	$	7,973	$	23,566	$	23,986
Cost of license and subscription revenue	6,798		6,517		20,029		19,294
Total amortization expense	$	14,648	$	14,490	$	43,595	$	43,280

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Fair Value Measurements

9 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Money market funds, time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

Certificates of deposit, commercial paper and certain U.S. government agency securities are classified within Level 2 of the fair value hierarchy. These instruments are valued based on quoted prices in markets that are not active or based on other observable inputs consisting of market yields, reported trades and broker/dealer quotes.

The principal market in which we execute our foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. Our foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The fair value of our contingent consideration arrangements is determined based on our evaluation of the probability and amount of any earn-out that will be achieved based on expected future performances by the acquired entities. These arrangements are classified within Level 3 of the fair value hierarchy.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	85,382	$	—	$	—	$	85,382
Marketable securities
Certificates of deposit	—		219		—		219
Corporate notes/bonds	52,962		—		—		52,962
U.S. government agency securities	—		991		—		991
Forward contracts	—		4,956		—		4,956
	$	138,344	$	6,166	$	—	$	144,510
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	2,100	$	2,100
Forward contracts	—		1,190		—		1,190
	$	—	$	1,190	$	2,100	$	3,290

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	49,845	$	—	$	—	$	49,845
Marketable securities
Certificates of deposit	—		240		—		240
Corporate notes/bonds	47,673		—		—		47,673
U.S. government agency securities	—		2,402		—		2,402
Forward contracts	—		1,163		—		1,163
	$	97,518	$	3,805	$	—	$	101,323
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	8,400	$	8,400
Forward contracts	—		4,347		—		4,347
	$	—	$	4,347	$	8,400	$	12,747

Changes in the fair value of Level 3 contingent consideration liability associated with our acquisitions were as follows:

	Contingent Consideration
	(in thousands)
	Kepware			Other		Total
Balance, October 1, 2017	$	8,400		$	—	$	8,400
Addition to contingent consideration	—			2,100		2,100
Payment of contingent consideration	(8,400		)	—		(8,400		)
Balance, June 30, 2018	$	—		$	2,100	$	2,100

	Contingent Consideration
	(in thousands)
	ColdLight			Kepware			Total
Balance, October 1, 2016	$	2,500		$	17,070		$	19,570
Change in present value of contingent consideration	—			392			392
Payment of contingent consideration	(2,500		)	(9,600		)	(12,100		)
Balance, July 1, 2017	$	—		$	7,862		$	7,862

 In the Consolidated Balance Sheet as of June 30, 2018, $1.1 million of the contingent consideration liability is included in accrued expenses and other current liabilities with the remaining $1.0 million in other liabilities.

Of the $8.4 million payments in the first nine months of 2018, $7.8 million represents the fair value of the liabilities recorded at the acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows. Of the $12.1 million payments in the first nine months of 2017, $11.1 million represents the fair value of the liabilities recorded at the acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows.

In connection with our acquisition of Kepware, the former shareholders were eligible to receive additional consideration of up to $18.0 million, which was contingent on the achievement of certain Financial Performance, Product Integration and Business Integration targets (as defined in the Stock Purchase Agreement) within 24 months from April 1, 2016. The estimated undiscounted range of outcomes for the contingent consideration was $16.9 million to $18.0 million at the acquisition date. As of June 30, 2018, we had made $18.0 million in payments and had no liability remaining.

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Marketable Securities

9 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Marketable Securities

Marketable Securities

The amortized cost and fair value of marketable securities as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	221	$	—	$	(2	)	$	219
Corporate notes/bonds	53,474		—		(512		)	52,962
U.S. government agency securities	1,000		—		(9		)	991
	$	54,695	$	—	$	(523	)	$	54,172

	September 30, 2017
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate notes/bonds	47,811		2		(140		)	47,673
U.S. government agency securities	2,407		—		(5		)	2,402
	$	50,458	$	2	$	(145	)	$	50,315

Our investment portfolio consists of certificates of deposit, commercial paper, corporate notes/bonds and government securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. All unrealized losses are due to changes in market interest rates, bond yields and/or credit ratings.

We review our investments to identify and evaluate investments that have an indication of possible impairment. We concluded that, at June 30, 2018, the unrealized losses were temporary. The following tables summarize the fair value and gross unrealized losses aggregated by category and the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2018 and September 30, 2017.

	June 30, 2018
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	219	$	(2	)	$	—	$	—		$	219	$	(2	)
Corporate notes/bonds	31,516		(358		)	21,446		(154		)	52,962		(512		)
U.S. government agency securities	—		—			991		(9		)	991		(9		)
	$	31,735	$	(360	)	$	22,437	$	(163	)	$	54,172	$	(523	)

	September 30, 2017
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	240	$	—		$	—	$	—		$	240	$	—
Corporate notes/bonds	15,254		(43		)	28,885		(97		)	44,139		(140		)
U.S. government agency securities	—		—			2,402		(5		)	2,402		(5		)
	$	15,494	$	(43	)	$	31,287	$	(102	)	$	46,781	$	(145	)

The following table presents our available-for-sale marketable securities by contractual maturity date as of June 30, 2018 and September 30, 2017.

	June 30, 2018				September 30, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(in thousands)				(in thousands)
Due in one year or less	$	22,300	$	22,170	$	18,274	$	18,244
Due after one year through three years	32,395		32,002		32,184		32,071
	$	54,695	$	54,172	$	50,458	$	50,315

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Derivative Financial Instruments

9 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our most significant foreign currency exposures relate to Western European countries, Japan, China and Canada. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the U.S. Dollar value of anticipated transactions and balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts, to manage the exposures to foreign currency exchange risk to reduce earnings volatility. We do not enter into derivatives transactions for trading or speculative purposes.

Non-Designated Hedges

We hedge our net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in interest income and other expense, net.

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Australian / U.S. Dollar	$	3,226	$	1,585
Canadian / U.S. Dollar	7,421		12,809
Swiss Franc / Euro	—		7,157
Chinese Yuan offshore / Euro	—		10,423
Euro / U.S. Dollar	309,733		244,000
Japanese Yen / Euro	—		17,694
Israeli Shekel / U.S. Dollar	7,677		8,820
Japanese Yen / U.S. Dollar	18,152		3,198
Swedish Krona / U.S. Dollar	8,568		4,627
Danish Krona / U.S. Dollar	2,645		1,743
Hong Kong / U.S. Dollar	2,628		915
All other	8,151		5,548
Total	$	368,201	$	318,519

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017:

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income	Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)
		Three months ended					Nine months ended
		June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
		(in thousands)
Forward Contracts	Interest income and other expense, net	$	(9,392	)	$	6,669	$	(6,370	)	$	(1,422	)

In the three and nine months ended June 30, 2018, foreign currency losses, net were $2.2 million and $5.4 million, respectively. In the three and nine months ended July 1, 2017, foreign currency losses, net were $0.7 million and $3.2 million, respectively.

Cash Flow Hedges

Our foreign exchange risk management program objective is to identify foreign exchange exposures and implement appropriate hedging strategies to minimize earnings fluctuations resulting from foreign exchange rate movements. We designate certain foreign exchange forward contracts as cash flow hedges of Euro, Yen and SEK denominated intercompany forecasted revenue transactions (supported by third party sales). All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of foreign exchange forward contracts is 15 months.

Cash flow hedge relationships are designated at inception, and effectiveness is assessed prospectively and retrospectively using regression analysis monthly. As the forward contracts are highly effective in offsetting changes to future cash flows on the hedged transactions, we record the effective portion of changes in these cash flow hedges in accumulated other comprehensive income and subsequently reclassify it into earnings in the period during which the hedged transactions are recognized in earnings. Changes in the fair value of foreign exchange forward contracts due to changes in time value are included in the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts designated as cash flow hedges with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Euro / U.S. Dollar	$	44,699	$	64,831
Japanese Yen / U.S. Dollar	11,830		22,675
SEK / U.S. Dollar	10,521		14,091
Total	$	67,050	$	101,597

The following table shows the effect of our derivative instruments designated as cash flow hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017 (in thousands):

Derivatives Designated as Hedging Instruments	Gain or (Loss) Recognized in OCI-Effective Portion					Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion	Gain or (Loss) Reclassified from OCI into Income-Effective Portion						Location of Gain or (Loss) Recognized-Ineffective Portion	Gain or (Loss) Recognized-Ineffective Portion
	Three months ended						Three months ended							Three months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	4,468	$	(2,627	)	Subscription, support and license revenue	$	(277	)	$	(86	)	Interest income and other expense, net	$	52	$	(29	)
	Nine months ended						Nine months ended							Nine months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	1,086	$	256		Subscription, support and license revenue	$	(2,659	)	$	888		Interest income and other expense, net	$	17	$	(23	)

As of June 30, 2018, we estimated that all amounts reported in accumulated other comprehensive income will be reclassified to income within the next twelve months.

If an underlying forecast transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to interest income and other expense, net on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2018 and July 1, 2017, there were no such gains or losses.

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	June 30, 2018		September 30, 2017		June 30, 2018		September 30, 2017
	(in thousands)				(in thousands)
Derivative assets (1):
Forward Contracts	$	1,994	$	540	$	2,962	$	623
Derivative liabilities (2):
Forward Contracts	$	16	$	2,352	$	1,174	$	1,995
(1) As of June 30, 2018, $4,956 thousand current derivative assets are recorded in other current assets, in the Consolidated Balance Sheets. As of September 30, 2017, $1,128 thousand current derivative assets are recorded in other current assets, and $35 thousand long-term derivative assets are recorded in other assets in the Consolidated Balance Sheets.
(2) As of June 30, 2018, $1,190 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets. As of September 30, 2017, $4,329 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities, and $18 thousand long term derivative liabilities are recorded in other liabilities in the Consolidated Balance Sheets.

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

The following table sets forth the offsetting of derivative assets as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
	(in thousands)
Forward Contracts	$	4,956	$	—	$	4,956	$	(1,190	)	$	—	$	3,766

The following table sets forth the offsetting of derivative liabilities as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(in thousands)
Forward Contracts	$	1,190	$	—	$	1,190	$	(1,190	)	$	—	$	—

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Segment Information

9 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

Effective with the beginning of fiscal 2018, we changed our segments, see Note 1. Basis of Presentation for additional information. We operate within a single industry segment -- computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales & marketing or general and administrative expense to our operating segments as these activities are managed on a consolidated basis. Additionally, segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance.

The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.

	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(in thousands)
Software Products
Revenue	$	273,619		$	247,635		$	801,262		$	722,724
Operating Costs (1)	96,422			94,325			293,417			273,196
Profit	177,197			153,310			507,845			449,528
Professional Services
Revenue	41,158			43,658			128,041			134,936
Operating Costs (2)	33,945			35,588			104,634			110,681
Profit	7,213			8,070			23,407			24,255
Total segment revenue	314,777			291,293			929,303			857,660
Total segment costs	130,367			129,913			398,051			383,877
Total segment profit	184,410			161,380			531,252			473,783
Unallocated operating expenses:
Sales and marketing expenses	102,831			89,805			290,559			260,521
General and administrative expenses	25,458			27,263			80,272			81,270
Restructuring and headquarters relocation charges, net	1,627			1,551			1,846			8,300
Intangibles amortization	14,648			14,490			43,595			43,280
Stock-based compensation	16,658			16,574			52,015			56,139
Other unallocated operating expenses (3)	1,485			441			1,425			943
Total operating income	21,703			11,256			61,540			23,330
Interest expense	(10,646		)	(10,200		)	(31,072		)	(32,239		)
Interest income and other expense, net	(1,086		)	(357		)	(2,481		)	2,049
Income (loss) before income taxes	$	9,971		$	699		$	27,987		$	(6,860	)
(1) Operating costs for the Software Products segment includes all cost of software revenue and research and development costs, excluding stock-based compensation and intangible amortization.
(2) Operating costs for the Professional Services segment includes all cost of professional services revenue, excluding stock-based compensation, intangible amortization, and fair value adjustments for deferred services costs.
(3) Other unallocated operating expenses include acquisition-related and other transactional costs, pension plan termination-related costs and fair value adjustments for deferred services costs.

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Income Taxes

9 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In the third quarter and first nine months of 2018, our effective tax rate was (70)% on pre-tax income of $10.0 million, and (39)% on pre-tax income of $28.0 million, respectively, compared to 236% on pre-tax income of $0.7 million, and (63)% on a pre-tax loss of $6.9 million in the third quarter and first nine months of 2017, respectively. In the first nine months of 2018 and 2017, our effective tax rate was lower than the statutory federal income tax rates (21% and 35%, respectively) due to U.S. tax reform, as described below, and our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland. In 2018 and 2017, the foreign rate differential predominantly relates to these Irish earnings. Our foreign rate differential in 2018 and 2017 includes the continuing rate benefit from a business realignment completed on September 30, 2014 in which intellectual property was transferred between two wholly-owned foreign subsidiaries. For the first nine months of 2018 and 2017, this realignment resulted in tax benefits of approximately $9 million and $21 million, respectively.

On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, (the "Tax Act"), which significantly changed existing U.S. tax laws by a reduction of the corporate tax rate, the implementation of a new system of taxation for non-U.S. earnings, the imposition of a one-time tax on the deemed repatriation of undistributed earnings of non-U.S. subsidiaries, and by the expansion of the limitations on the deductibility of executive compensation and interest expense. As we have a September 30 fiscal year-end, there is a blended U.S. statutory federal rate of approximately 24.5% for our fiscal year ending September 30, 2018 and 21% for subsequent fiscal years. The Tax Act also provides that net operating losses generated in years ending after December 31, 2017 will be carried forward indefinitely and can no longer be carried back, and that net operating losses generated in years beginning after December 31, 2017 can only reduce taxable income by up to 80% when utilized in a future period.

We estimate no federal income taxes payable as a result of the deemed repatriation of undistributed earnings as we estimate that the tax will be offset by a combination of current year losses and existing attributes which had a full valuation allowance recorded against the related deferred tax assets. In the third quarter we reduced our estimate for state income taxes payable by $5.4 million to reflect additional guidance on the state implications of the Tax Act. In the first nine months of 2018, we recorded a reasonable estimate of state income taxes payable on the deemed repatriation of $1.7 million.  We also recorded a deferred tax benefit of $14.1 million as a reasonable estimate of the impact of the Tax Act on our net U.S. deferred income tax balances. This was primarily attributable to the reduction of the federal tax rate on the net deferred tax liability in the U.S., and the ability to realize net operating losses from the reversal of existing deferred tax assets which can now be carried forward indefinitely and can therefore be netted against deferred tax liabilities for indefinite lived intangible assets.

We are continuing to assess the effects of the Tax Act on our indefinite reinvestment assertion and the realizability of our U.S. deferred tax assets. We are not able to make reasonable estimates at this time of the effects of certain provisions of the Tax Act that will apply to us beginning in our fiscal year ending September 30, 2019, including the Global Intangible Low Tax Income tax (the "GILTI" tax).

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, actions taken by U.S. state governments and taxing authorities in response to the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign currency exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. We currently anticipate finalizing and recording any resulting adjustments by the end of our current fiscal year ending September 30, 2018.

We have concluded, based on the weight of available evidence, that a full valuation allowance continues to be required against our U.S. net deferred tax assets as they are not more likely than not to be realized in the future. We will continue to reassess our valuation allowance requirements each financial reporting period.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.

As of June 30, 2018 and September 30, 2017, we had unrecognized tax benefits of $9.7 million and $14.8 million, respectively. If all our unrecognized tax benefits as of June 30, 2018 were to become recognizable in the future, we would record a benefit to the income tax provision of $9.7 million, which would be partially offset by an increase in the U.S. valuation allowance of $3.8 million. 

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $2 million as audits close and statutes of limitations expire.

In the fourth quarter of 2016, we received an assessment of approximately $12 million from the tax authorities in Korea.  The assessment relates to various tax issues, primarily foreign withholding taxes. We have appealed and intend to vigorously defend our positions. We believe that upon completion of a multi-level appeal process it is more likely than not that our positions will be sustained.  Accordingly, we have not recorded a tax reserve for this matter. We paid this assessment in the first quarter of 2017 and have recorded the amount in other assets, pending resolution of the appeal process.

In the first quarter of 2018, as a result of the adoption of ASU 2016-09, we recognized previously unrecognized tax benefits of $37.0 million as increases in deferred tax assets for tax loss carryovers and tax credits, primarily in the U.S. A corresponding increase to the valuation allowance of $36.9 million was recorded to the extent that it was not more likely than not that these benefits would be realized.

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Debt

9 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

At June 30, 2018 and September 30, 2017, we had the following long-term debt obligations:

	June 30, 2018			September 30, 2017
	(in thousands)
6.000% Senior notes due 2024	$	500,000		$	500,000
Credit facility revolver	198,125			218,125
Total debt	698,125			718,125
Unamortized debt issuance costs for the Senior notes (1)	(5,072		)	(5,719		)
Total debt, net of issuance costs (2)	$	693,053		$	712,406
(1) Unamortized debt issuance costs related to the credit facility were $1.3 million and $2.0 million as of June 30, 2018 and September 30, 2017, respectively, and were included in other assets.
(2) As of June 30, 2018 and September 30, 2017, all debt was included in long-term debt.

Senior Notes

In May 2016, we issued $500 million in aggregate principal amount of 6.0% senior, unsecured long-term debt at par value, due in 2024. We used the net proceeds from the sale of the notes to repay a portion of our outstanding revolving loan under our current credit facility. Interest is payable semi-annually on November 15 and May 15. The debt indenture includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions. We were in compliance with all the covenants as of June 30, 2018.

On or after May 15, 2019, we may redeem the senior notes at any time in whole or from time to time in part at specified redemption prices. In certain circumstances constituting a change of control, we would be required to make an offer to repurchase the senior notes at a purchase price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the senior notes in such event may be limited by law, by the indenture associated with the senior notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the senior notes as required by the indenture, it would constitute an event of default under the indenture governing the senior notes which, in turn, may also constitute an event of default under other obligations.

As of June 30, 2018, the total estimated fair value of the Notes was approximately $520 million, based on quoted prices for the notes on that date.

Credit Agreement

In November 2015, we entered into a multi-currency credit facility with a syndicate of sixteen banks for which JPMorgan Chase Bank, N.A. acts as Administrative Agent. We use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements. As of June 30, 2018, the fair value of our credit facility approximates its book value.

The credit facility consists of a $600 million revolving loan commitment. The loan commitment may be increased by an additional $500 million (in the form of revolving loans or term loans, or a combination thereof) if the existing or additional lenders are willing to make such increased commitments. The revolving loan commitment does not require amortization of principal and may be repaid in whole or in part prior to the scheduled maturity date at our option without penalty or premium. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full.

PTC and certain eligible foreign subsidiaries may borrow under the credit facility. Any borrowings by PTC Inc. under the credit facility would be guaranteed by PTC Inc.’s material domestic subsidiaries that become parties to the subsidiary guaranty, if any. As of the filing of this Form 10-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors.  In addition, PTC's and certain of its material domestic subsidiaries' owned property (including equity interests) is subject to first priority perfected liens in favor of the lenders of this credit facility. 100% of the voting equity interests of certain of PTC’s domestic subsidiaries and 65% of its material first-tier foreign subsidiaries are pledged as collateral for the obligations under the credit facility.

As of June 30, 2018, we had $198.1 million in loans outstanding under the credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by PTC as described below. As of June 30, 2018, the annual interest rate for borrowings outstanding was 3.88%. Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.75% above an adjusted LIBO rate for Euro currency borrowings or would range from 0.25% to 0.75% above the defined base rate (the greater of the Prime Rate, the FRBNY rate plus 0.5%, or an adjusted LIBO rate plus 1%) for base rate borrowings, in each case based upon PTC’s total leverage ratio. Additionally, PTC may borrow certain foreign currencies at rates set in the same range above the respective London interbank offered interest rates for those currencies, based on PTC’s total leverage ratio. A quarterly commitment fee on the undrawn portion of the credit facility is required, ranging from 0.175% to 0.30% per annum based upon PTC’s total leverage ratio.

The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $75.0 million for any purpose and an additional $200.0 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

• a total leverage ratio, defined as consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed 4.50 to 1.00 as of the last day of any fiscal quarter;

• a senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter; and

• a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of not less than 3.50 to 1.00 as of the last day of any fiscal quarter.

As of June 30, 2018, our total leverage ratio was 2.45 to 1.00, our senior secured leverage ratio was 0.73 to 1.00 and our fixed charge coverage ratio was 6.82 to 1.00 and we were in compliance with all financial and operating covenants of the credit facility.

Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal and Regulatory Matters

Korean Tax Audit

In July 2016, we received an assessment of approximately $12 million from the tax authorities in Korea related to an ongoing tax audit. See Note 11. Income Taxes for additional information.

Legal Proceedings

We are subject to various other legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a reporting period could be adversely affected.

Accruals

With respect to legal proceedings and claims, we record an accrual for a contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For legal proceedings and claims for which the likelihood that a liability has been incurred is more than remote but less than probable, we estimate the range of possible outcomes. As of June 30, 2018, we estimate approximately $1.1 million to $3.1 million in legal proceedings and claims, of which we had accrued $1.0 million.

Accounts Receivable

Accounts receivable as of June 30, 2018 includes an amount invoiced under a multi-year contract for which the period of performance, and related revenue recognized, has spanned a number of years (with no revenue recognized since the first quarter of 2017). The invoiced amount is being disputed by the customer. If we are unable to reach a mutual business resolution, we intend to vigorously pursue collection of the full invoiced amount. If we are unsuccessful in collecting the full invoiced amount, there could be a write-down of accounts receivable and professional services revenue, which could range from $0 to $17.3 million.

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements in the ordinary course of our business. Under such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.

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Subsequent Events Subsequent Events

9 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Investment in PTC

As part of a strategic partnership, on July 19, 2018, Rockwell Automation made a $1,000 million equity investment in PTC, by acquiring 10,582,010 shares at a price of $94.50 per share, which represented a premium over our closing share price on June 11, 2018, the date upon which we entered into a securities purchase agreement. The Chairman and CEO of Rockwell Automation has joined PTC's board of directors.

Share Repurchases

We entered into a $1,000 million accelerated share repurchase ("ASR") agreement with a major financial institution ("Bank") on July 20, 2018. We used cash proceeds from the Rockwell Automation investment to fund the repurchase.

On July 20, 2018, 8,244,873 shares repurchased at the market price of $97.03 per share were delivered to us (totaling $800 million). The remaining $200 million represents the amount held back by the Bank pending final settlement of the ASR. Upon settlement of the ASR, the total shares repurchased by us will equal up to $1,000 million divided by a share price equal to the average daily volume weighted-average price of our common stock during the term of the ASR program less a fixed per share discount. Final settlement of the ASR will occur between 7.5-months and 10-months after execution, at the Bank's discretion. All shares repurchased are automatically restored to the status of authorized and unissued.

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Restructuring and Other Charges (Tables)

9 Months Ended

Jun. 30, 2018

Restructuring [Abstract]

Restructuring Accrual Activity

The following table summarizes restructuring accrual activity for the nine months ended June 30, 2018:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2017	$	1,736		$	4,508		$	6,244
Credit to operations, net	(509		)	(505		)	(1,014		)
Cash disbursements	(1,247		)	(1,207		)	(2,454		)
Foreign exchange impact	20			(80		)	(60		)
Accrual, June 30, 2018	$	—		$	2,716		$	2,716

The following table summarizes restructuring accrual activity for the nine months ended July 1, 2017:

	Employee severance and related benefits			Facility closures and related costs			Total
	(in thousands)
October 1, 2016	$	35,177		$	1,431		$	36,608
Charges to operations, net	2,582			5,718			8,300
Cash disbursements	(33,979		)	(1,351		)	(35,330		)
Other non-cash charges	—			(704		)	(704		)
Foreign exchange impact	(800		)	98			(702		)
Accrual, July 1, 2017	$	2,980		$	5,192		$	8,172

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Stock-based Compensation (Tables)

9 Months Ended

Jun. 30, 2018

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Schedule of Restricted Stock and Restricted Stock Unit Activity

Restricted stock unit activity for the nine months ended June 30, 2018	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units October 1, 2017	3,487		$	45.57
Granted (1)	2,167		$	75.99
Vested	(1,804	)	$	43.94
Forfeited or not earned	(531	)	$	50.95
Balance of outstanding restricted stock units June 30, 2018	3,319		$	65.48

_________________

(1) Restricted stock granted includes 184,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2018.

Schedule of Restricted Stock Unit Grants for the Period

	Restricted Stock Units
Grant Period	Performance-based RSUs (1)	Service-based RSUs (2)
	(Number of Units in thousands)
First nine months of 2018	961	1,022

_________________

(1) Substantially all the performance-based RSUs were granted to our executive officers. Approximately 189,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period. RSUs not earned for a period may be earned in the third period. An additional 250,000 shares are eligible to vest based upon a 2018 performance measure. To the extent earned, those performance-based RSUs will vest inthree substantially equal installments on November 15, 2018, November 15, 2019 and November 15, 2020, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. An additional 500,000 shares are eligible to vest based upon annual performance measures, measured over a three-year period in fiscal years 2021, 2022 and 2023. RSUs not earned for a period may be earned in the third period.

(2) The service-based RSUs were granted to employees, our executive officers and our directors. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

Schedule of Classification of Compensation Expense

Compensation expense recorded for our stock-based awards was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Cost of license and subscription revenue	$	421	$	347	$	1,242	$	954
Cost of support revenue	527		1,139		2,025		3,638
Cost of professional services revenue	1,471		1,505		4,846		4,500
Sales and marketing	4,910		3,296		14,827		11,047
Research and development	3,283		2,805		9,626		9,753
General and administrative	6,046		7,482		19,449		26,247
Total stock-based compensation expense	$	16,658	$	16,574	$	52,015	$	56,139

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Earnings per Share (EPS) and Common Stock (Tables)

9 Months Ended

Jun. 30, 2018

Earnings Per Share and Common Stock

Earnings(loss) per Share Basic and Diluted

	Three months ended					Nine months ended
Calculation of Basic and Diluted EPS	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
	(in thousands, except per share data)
Net income (loss)	$	16,997	$	(951	)	$	38,796	$	(11,196	)
Weighted average shares outstanding—Basic	115,774		115,615			115,915		115,511
Dilutive effect of restricted stock units	1,726		—			1,772		—
Weighted average shares outstanding—Diluted	117,500		115,615			117,687		115,511
Earnings (loss) per share—Basic	$	0.15	$	(0.01	)	$	0.33	$	(0.10	)
Earnings (loss) per share—Diluted	$	0.14	$	(0.01	)	$	0.33	$	(0.10	)

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

Goodwill and acquired intangible assets consisted of the following:

	June 30, 2018						September 30, 2017
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	1,182,462					$	1,182,772
Intangible assets with finite lives (amortized) (1):
Purchased software	$	362,992	$	247,694	$	115,298	$	362,955	$	228,377	$	134,578
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	357,904		262,982		94,922		359,932		241,554		118,378
Trademarks and trade names	19,080		14,643		4,437		19,138		14,186		4,952
Other	4,013		4,013		—		4,030		4,030		—
	$	766,866	$	552,209	$	214,657	$	768,932	$	511,024	$	257,908
Total goodwill and acquired intangible assets					$	1,397,119					$	1,440,680

(1) The weighted-average useful lives of purchased software, customer lists and relationships, and trademarks and trade names with a remaining net book value are 9 years, 10 years, and 10 years, respectively.

Schedule of Goodwill

Changes in goodwill presented by reportable segments were as follows:

	Software Products			Professional Services			Total
	(in thousands)
Balance, October 1, 2017	$	1,152,917		$	29,855		$	1,182,772
Acquisition	4,350			—			4,350
Foreign currency translation adjustment	(4,542		)	(118		)	(4,660		)
Balance, June 30, 2018	$	1,152,725		$	29,737		$	1,182,462

Amortization of Intangible Assets

The aggregate amortization expense for intangible assets with finite lives was classified in our Consolidated Statements of Operations as follows:

	Three months ended				Nine months ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
	(in thousands)
Amortization of acquired intangible assets	$	7,850	$	7,973	$	23,566	$	23,986
Cost of license and subscription revenue	6,798		6,517		20,029		19,294
Total amortization expense	$	14,648	$	14,490	$	43,595	$	43,280

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	85,382	$	—	$	—	$	85,382
Marketable securities
Certificates of deposit	—		219		—		219
Corporate notes/bonds	52,962		—		—		52,962
U.S. government agency securities	—		991		—		991
Forward contracts	—		4,956		—		4,956
	$	138,344	$	6,166	$	—	$	144,510
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	2,100	$	2,100
Forward contracts	—		1,190		—		1,190
	$	—	$	1,190	$	2,100	$	3,290

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Cash equivalents	$	49,845	$	—	$	—	$	49,845
Marketable securities
Certificates of deposit	—		240		—		240
Corporate notes/bonds	47,673		—		—		47,673
U.S. government agency securities	—		2,402		—		2,402
Forward contracts	—		1,163		—		1,163
	$	97,518	$	3,805	$	—	$	101,323
Financial liabilities:
Contingent consideration related to acquisitions	$	—	$	—	$	8,400	$	8,400
Forward contracts	—		4,347		—		4,347
	$	—	$	4,347	$	8,400	$	12,747

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Changes in the fair value of Level 3 contingent consideration liability associated with our acquisitions were as follows:

	Contingent Consideration
	(in thousands)
	Kepware			Other		Total
Balance, October 1, 2017	$	8,400		$	—	$	8,400
Addition to contingent consideration	—			2,100		2,100
Payment of contingent consideration	(8,400		)	—		(8,400		)
Balance, June 30, 2018	$	—		$	2,100	$	2,100

	Contingent Consideration
	(in thousands)
	ColdLight			Kepware			Total
Balance, October 1, 2016	$	2,500		$	17,070		$	19,570
Change in present value of contingent consideration	—			392			392
Payment of contingent consideration	(2,500		)	(9,600		)	(12,100		)
Balance, July 1, 2017	$	—		$	7,862		$	7,862

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Marketable Securities (Tables)

9 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Marketable Securities

The amortized cost and fair value of marketable securities as of June 30, 2018 and September 30, 2017 were as follows:

	June 30, 2018
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	221	$	—	$	(2	)	$	219
Corporate notes/bonds	53,474		—		(512		)	52,962
U.S. government agency securities	1,000		—		(9		)	991
	$	54,695	$	—	$	(523	)	$	54,172

	September 30, 2017
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(in thousands)
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate notes/bonds	47,811		2		(140		)	47,673
U.S. government agency securities	2,407		—		(5		)	2,402
	$	50,458	$	2	$	(145	)	$	50,315

Unrealized Gain (Loss) on Investments

The following tables summarize the fair value and gross unrealized losses aggregated by category and the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2018 and September 30, 2017.

	June 30, 2018
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	219	$	(2	)	$	—	$	—		$	219	$	(2	)
Corporate notes/bonds	31,516		(358		)	21,446		(154		)	52,962		(512		)
U.S. government agency securities	—		—			991		(9		)	991		(9		)
	$	31,735	$	(360	)	$	22,437	$	(163	)	$	54,172	$	(523	)

	September 30, 2017
	Less than twelve months					Greater than twelve months					Total
	Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss			Fair Value		Gross unrealized loss
	(in thousands)
Certificates of deposit	$	240	$	—		$	—	$	—		$	240	$	—
Corporate notes/bonds	15,254		(43		)	28,885		(97		)	44,139		(140		)
U.S. government agency securities	—		—			2,402		(5		)	2,402		(5		)
	$	15,494	$	(43	)	$	31,287	$	(102	)	$	46,781	$	(145	)

Investments Classified by Contractual Maturity Date

The following table presents our available-for-sale marketable securities by contractual maturity date as of June 30, 2018 and September 30, 2017.

	June 30, 2018				September 30, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(in thousands)				(in thousands)
Due in one year or less	$	22,300	$	22,170	$	18,274	$	18,244
Due after one year through three years	32,395		32,002		32,184		32,071
	$	54,695	$	54,172	$	50,458	$	50,315

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Derivative Financial Instruments (Tables)

9 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional Amounts of Outstanding Forward Contracts

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Australian / U.S. Dollar	$	3,226	$	1,585
Canadian / U.S. Dollar	7,421		12,809
Swiss Franc / Euro	—		7,157
Chinese Yuan offshore / Euro	—		10,423
Euro / U.S. Dollar	309,733		244,000
Japanese Yen / Euro	—		17,694
Israeli Shekel / U.S. Dollar	7,677		8,820
Japanese Yen / U.S. Dollar	18,152		3,198
Swedish Krona / U.S. Dollar	8,568		4,627
Danish Krona / U.S. Dollar	2,645		1,743
Hong Kong / U.S. Dollar	2,628		915
All other	8,151		5,548
Total	$	368,201	$	318,519

As of June 30, 2018 and September 30, 2017, we had outstanding forward contracts designated as cash flow hedges with notional amounts equivalent to the following:

Currency Hedged	June 30, 2018		September 30, 2017
	(in thousands)
Euro / U.S. Dollar	$	44,699	$	64,831
Japanese Yen / U.S. Dollar	11,830		22,675
SEK / U.S. Dollar	10,521		14,091
Total	$	67,050	$	101,597

Net Gains and Losses on Foreign Currency Exposures

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017:

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income	Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)
		Three months ended					Nine months ended
		June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
		(in thousands)
Forward Contracts	Interest income and other expense, net	$	(9,392	)	$	6,669	$	(6,370	)	$	(1,422	)

The following table shows the effect of our derivative instruments designated as cash flow hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2018 and July 1, 2017 (in thousands):

Derivatives Designated as Hedging Instruments	Gain or (Loss) Recognized in OCI-Effective Portion					Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion	Gain or (Loss) Reclassified from OCI into Income-Effective Portion						Location of Gain or (Loss) Recognized-Ineffective Portion	Gain or (Loss) Recognized-Ineffective Portion
	Three months ended						Three months ended							Three months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	4,468	$	(2,627	)	Subscription, support and license revenue	$	(277	)	$	(86	)	Interest income and other expense, net	$	52	$	(29	)
	Nine months ended						Nine months ended							Nine months ended
	June 30, 2018		July 1, 2017				June 30, 2018			July 1, 2017				June 30, 2018		July 1, 2017
Forward Contracts	$	1,086	$	256		Subscription, support and license revenue	$	(2,659	)	$	888		Interest income and other expense, net	$	17	$	(23	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	June 30, 2018		September 30, 2017		June 30, 2018		September 30, 2017
	(in thousands)				(in thousands)
Derivative assets (1):
Forward Contracts	$	1,994	$	540	$	2,962	$	623
Derivative liabilities (2):
Forward Contracts	$	16	$	2,352	$	1,174	$	1,995
(1) As of June 30, 2018, $4,956 thousand current derivative assets are recorded in other current assets, in the Consolidated Balance Sheets. As of September 30, 2017, $1,128 thousand current derivative assets are recorded in other current assets, and $35 thousand long-term derivative assets are recorded in other assets in the Consolidated Balance Sheets.
(2) As of June 30, 2018, $1,190 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets. As of September 30, 2017, $4,329 thousand current derivative liabilities are recorded in accrued expenses and other current liabilities, and $18 thousand long term derivative liabilities are recorded in other liabilities in the Consolidated Balance Sheets.

Offsetting Assets

The following table sets forth the offsetting of derivative assets as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
	(in thousands)
Forward Contracts	$	4,956	$	—	$	4,956	$	(1,190	)	$	—	$	3,766

Offsetting Liabilities

The following table sets forth the offsetting of derivative liabilities as of June 30, 2018:

	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2018	Gross Amount of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(in thousands)
Forward Contracts	$	1,190	$	—	$	1,190	$	(1,190	)	$	—	$	—

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Segment Information (Tables)

9 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Revenue and Operating Income

The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.

	Three months ended						Nine months ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
	(in thousands)
Software Products
Revenue	$	273,619		$	247,635		$	801,262		$	722,724
Operating Costs (1)	96,422			94,325			293,417			273,196
Profit	177,197			153,310			507,845			449,528
Professional Services
Revenue	41,158			43,658			128,041			134,936
Operating Costs (2)	33,945			35,588			104,634			110,681
Profit	7,213			8,070			23,407			24,255
Total segment revenue	314,777			291,293			929,303			857,660
Total segment costs	130,367			129,913			398,051			383,877
Total segment profit	184,410			161,380			531,252			473,783
Unallocated operating expenses:
Sales and marketing expenses	102,831			89,805			290,559			260,521
General and administrative expenses	25,458			27,263			80,272			81,270
Restructuring and headquarters relocation charges, net	1,627			1,551			1,846			8,300
Intangibles amortization	14,648			14,490			43,595			43,280
Stock-based compensation	16,658			16,574			52,015			56,139
Other unallocated operating expenses (3)	1,485			441			1,425			943
Total operating income	21,703			11,256			61,540			23,330
Interest expense	(10,646		)	(10,200		)	(31,072		)	(32,239		)
Interest income and other expense, net	(1,086		)	(357		)	(2,481		)	2,049
Income (loss) before income taxes	$	9,971		$	699		$	27,987		$	(6,860	)
(1) Operating costs for the Software Products segment includes all cost of software revenue and research and development costs, excluding stock-based compensation and intangible amortization.
(2) Operating costs for the Professional Services segment includes all cost of professional services revenue, excluding stock-based compensation, intangible amortization, and fair value adjustments for deferred services costs.
(3) Other unallocated operating expenses include acquisition-related and other transactional costs, pension plan termination-related costs and fair value adjustments for deferred services costs.

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Debt Debt (Tables)

9 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Debt

At June 30, 2018 and September 30, 2017, we had the following long-term debt obligations:

	June 30, 2018			September 30, 2017
	(in thousands)
6.000% Senior notes due 2024	$	500,000		$	500,000
Credit facility revolver	198,125			218,125
Total debt	698,125			718,125
Unamortized debt issuance costs for the Senior notes (1)	(5,072		)	(5,719		)
Total debt, net of issuance costs (2)	$	693,053		$	712,406
(1) Unamortized debt issuance costs related to the credit facility were $1.3 million and $2.0 million as of June 30, 2018 and September 30, 2017, respectively, and were included in other assets.
(2) As of June 30, 2018 and September 30, 2017, all debt was included in long-term debt.

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Basis of Presentation (Details) $ in Millions	9 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($) Segment	Jul. 01, 2017 USD ($)	Sep. 30, 2017 Segment	Oct. 01, 2017 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments | Segment	2		3
Accounting Standards Update 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Windfall Tax Deductions Not Yet Recognized				$ 37.0
Windfall Tax Deductions Not Yet Recognized Offset Valuation Allowance				36.9
Excess Tax Benefit from Share-based Compensation, Operating Activities		$ 0.4
Excess tax benefits realized from stock-based awards		$ 0.4
forfeiture adjustment				$ 0.7
Accounting Standards Update 2016-16 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred Tax Assets, Other	$ 77.0

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Deferred Revenue and Related Customer Receivables (Details) - USD ($) $ in Millions	Jun. 30, 2018	Sep. 30, 2017
Other Assets
Deferred Revenue and Financing Receivables [Line Items]
Billed but uncollected support and subscription related receivable	$ 108.7	$ 160.9

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Restructuring and Other Charges - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended		32 Months Ended
	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($) employee
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges, net	$ 1,627	$ 1,551	$ 1,846	$ 8,300	$ 84,500
Restructuring and Related Cost, Number of Positions Eliminated | employee					800
Headquarters relocation charges	1,900		2,900
Facility closures and related costs
Restructuring Cost and Reserve [Line Items]
Assumed Sublease Income	3,100		3,100		$ 3,100
Accrued Expenses and Other Current Liabilities [Member] | Facility closures and related costs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	1,600		1,600		1,600
Other Noncurrent Liabilities [Member] | Facility closures and related costs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	$ 1,100		$ 1,100		$ 1,100

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Restructuring and Other Charges - Schedule of Restructuring Reserve (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		32 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018
Restructuring Reserve [Roll Forward]
Credit to operations, net	$ 1,627	$ 1,551	$ 1,846	$ 8,300	$ 84,500
Restructuring Plan 2016 [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			6,244	36,608
Credit to operations, net			(1,014)	8,300
Cash disbursements			(2,454)	(35,330)
Other non-cash charges				(704)
Foreign exchange impact			(60)	(702)
Restructuring reserve, ending balance	2,716	8,172	2,716	8,172	2,716
Restructuring Plan 2016 [Member] | Employee severance and related benefits
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			1,736	35,177
Credit to operations, net			(509)	2,582
Cash disbursements			(1,247)	(33,979)
Other non-cash charges				0
Foreign exchange impact			20	(800)
Restructuring reserve, ending balance	0	2,980	0	2,980	0
Restructuring Plan 2016 [Member] | Facility closures and related costs
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			4,508	1,431
Credit to operations, net			(505)	5,718
Cash disbursements			(1,207)	(1,351)
Other non-cash charges				(704)
Foreign exchange impact			(80)	98
Restructuring reserve, ending balance	$ 2,716	$ 5,192	$ 2,716	$ 5,192	$ 2,716

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Stock-based Compensation (Narrative) (Details)	3 Months Ended		9 Months Ended
	Jun. 30, 2018 USD ($) shares / unit	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($) shares / unit	Jul. 01, 2017 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Common Stock Issuable per Restricted Stock Unit | shares / unit	1		1
ESPP maximum contribution percentage	10.00%		10.00%
ESPP maximum contribution amount by employee			$ 25,000
ESPP purchase price as a % of stock price	85.00%		85.00%
Stock-based compensation	$ 16,658,000	$ 16,574,000	$ 52,015,000	$ 56,139,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 1,100,000	$ 900,000	$ 3,200,000	$ 2,200,000

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Stock-based Compensation (Schedule of Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) shares in Thousands	9 Months Ended
	Jun. 30, 2018 $ / shares shares
Shares
Balance of outstanding restricted stock units, beginning, Shares | shares	3,487
Granted, shares | shares	2,167
Vested, Shares | shares	(1,804)
Forfeited or not earned, Shares | shares	(531)
Balance of outstanding restricted stock units, ending, Shares | shares	3,319
Weighted Average Grant Date Fair Value (Per Share)
Balance of outstanding restricted stock units, beginning (in USD per share) | $ / shares	$ 45.57
Granted (in USD per share) | $ / shares	75.99
Vested (in USD per share) | $ / shares	43.94
Forfeited or not earned (in USD per share) | $ / shares	50.95
Balance of outstanding restricted stock units, ending (in USD per share) | $ / shares	$ 65.48

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Stock-based Compensation (Schedule of Restricted Stock Unit Grants For The Period) (Details) shares in Thousands	9 Months Ended
	Jun. 30, 2018 installment shares
TSR Units [Member]
Granted, shares	184
Performance-Based Restricted Stock Units [Member]
Granted, shares	961
Award vesting period	3 years
Number of equal annual installments | installment	3
Service-Based Restricted Stock Units [Member]
Granted, shares	1,022
Number of equal annual installments | installment	3
Maximum | Performance-Based Restricted Stock Units [Member]
Granted, shares	500
Catch-Up Provision [Member] | Maximum | Performance-Based Restricted Stock Units [Member]
Granted, shares	189
No Catch-Up Provision [Member] | Maximum | Performance-Based Restricted Stock Units [Member]
Granted, shares	250

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Stock-based Compensation (Schedule of Classification of Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Total stock-based compensation expense	$ 16,658	$ 16,574	$ 52,015	$ 56,139
Cost of license and subscription revenue
Total stock-based compensation expense	421	347	1,242	954
Cost of support revenue
Total stock-based compensation expense	527	1,139	2,025	3,638
Cost of professional services revenue
Total stock-based compensation expense	1,471	1,505	4,846	4,500
Sales and marketing
Total stock-based compensation expense	4,910	3,296	14,827	11,047
Research and development
Total stock-based compensation expense	3,283	2,805	9,626	9,753
General and administrative
Total stock-based compensation expense	$ 6,046	$ 7,482	$ 19,449	$ 26,247

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Earnings per Share (EPS) and Common Stock (Earnings per Share Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Earnings Per Share and Common Stock
Net income (loss)	$ 16,997	$ (951)	$ 38,796	$ (11,196)
Weighted average shares outstanding—Basic (in shares)	115,774	115,615	115,915	115,511
Dilutive effect of employee stock options, restricted shares and restricted stock units (in shares)	1,726	0	1,772	0
Weighted average shares outstanding—Diluted (in shares)	117,500	115,615	117,687	115,511
Earnings(loss) per share—Basic (in USD per share)	$ 0.15	$ (0.01)	$ 0.33	$ (0.10)
Earnings(loss) per share—Diluted (in USD per share)	$ 0.14	$ (0.01)	$ 0.33	$ (0.10)

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Earnings per Share (EPS) and Common Stock (Narrative) (Details) - USD ($) shares in Millions		9 Months Ended
	Jul. 20, 2018	Jun. 30, 2018	Jul. 01, 2017
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Stock option restricted shares and restricted stock units excluded from computation of EPS, shares		0.1	2.0
Stock Repurchase Program, Authorized Amount		$ 500,000,000
Payments for Repurchase of Common Stock		$ 100,000,000	$ 34,994,000
Subsequent Event [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Stock Repurchase Program, Authorized Amount	$ 1,000,000,000
Accelerated Share Repurchases, Settlement (Payment) or Receipt	$ 1,000,000,000
Minimum [Member] | Subsequent Event [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Accelerated Share Repurchase Settlement Period	7 months 15 days
Maximum [Member] | Subsequent Event [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Accelerated Share Repurchase Settlement Period	10 months

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Goodwill and Intangible Assets (Narrative) (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2018 USD ($) Segment	Jun. 30, 2018 USD ($) Segment	Sep. 30, 2017 USD ($) Segment
Number of operating segments | Segment		2	3
Number of reportable segments | Segment	2		3
Intangible Assets, Net (Including Goodwill)	$ 1,397,119	$ 1,397,119	$ 1,440,680
Foreign currency translation adjustment		(4,660)
Goodwill	1,182,462	1,182,462	1,182,772
Professional Services
Intangible Assets, Net (Including Goodwill)	30,300	30,300	30,600
Foreign currency translation adjustment		(118)
Goodwill	29,737	29,737	29,855
Software Products
Intangible Assets, Net (Including Goodwill)	1,366,800	1,366,800	1,410,000
Foreign currency translation adjustment		(4,542)
Goodwill	$ 1,152,725	$ 1,152,725	$ 1,152,917

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Goodwill and Intangible Assets (Goodwill and Acquired Intangible Assets) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2017
Goodwill (not amortized), Net Book Value	$ 1,182,462	$ 1,182,772
Intangible assets with finite lives (amortized), Gross Carrying Amount	766,866	768,932
Intangible assets with finite lives (amortized), Accumulated Amortization	552,209	511,024
Intangible assets with finite lives (amortized), Net Book Value	214,657	257,908
Intangible Assets, Net (Including Goodwill)	1,397,119	1,440,680
Purchased software
Intangible assets with finite lives (amortized), Gross Carrying Amount	362,992	362,955
Intangible assets with finite lives (amortized), Accumulated Amortization	247,694	228,377
Intangible assets with finite lives (amortized), Net Book Value	$ 115,298	134,578
Acquired finite-lived intangible asset, weighted average useful life	9 years
Capitalized software
Intangible assets with finite lives (amortized), Gross Carrying Amount	$ 22,877	22,877
Intangible assets with finite lives (amortized), Accumulated Amortization	22,877	22,877
Intangible assets with finite lives (amortized), Net Book Value	0	0
Customer lists and relationships
Intangible assets with finite lives (amortized), Gross Carrying Amount	357,904	359,932
Intangible assets with finite lives (amortized), Accumulated Amortization	262,982	241,554
Intangible assets with finite lives (amortized), Net Book Value	$ 94,922	118,378
Acquired finite-lived intangible asset, weighted average useful life	10 years
Trademarks and trade names
Intangible assets with finite lives (amortized), Gross Carrying Amount	$ 19,080	19,138
Intangible assets with finite lives (amortized), Accumulated Amortization	14,643	14,186
Intangible assets with finite lives (amortized), Net Book Value	$ 4,437	4,952
Acquired finite-lived intangible asset, weighted average useful life	10 years
Other
Intangible assets with finite lives (amortized), Gross Carrying Amount	$ 4,013	4,030
Intangible assets with finite lives (amortized), Accumulated Amortization	4,013	4,030
Intangible assets with finite lives (amortized), Net Book Value	$ 0	$ 0

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Goodwill and Intangible Assets (Schedule of Goodwill) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2018 USD ($)
Goodwill [Line Items]
Balance, October 1, 2017	$ 1,182,772
Acquisition	4,350
Foreign currency translation adjustment	(4,660)
Balance, June 30, 2018	1,182,462
Software Products
Goodwill [Line Items]
Balance, October 1, 2017	1,152,917
Acquisition	4,350
Foreign currency translation adjustment	(4,542)
Balance, June 30, 2018	1,152,725
Professional Services
Goodwill [Line Items]
Balance, October 1, 2017	29,855
Acquisition	0
Foreign currency translation adjustment	(118)
Balance, June 30, 2018	$ 29,737

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Goodwill and Intangible Assets (Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of acquired intangible assets	$ 7,850	$ 7,973	$ 23,566	$ 23,986
Cost of license and subscription revenue	6,798	6,517	20,029	19,294
Total amortization expense	$ 14,648	$ 14,490	$ 43,595	$ 43,280

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Fair Value Measurements (Schedule of Financial Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017	Jul. 01, 2017	Sep. 30, 2016
Financial assets:
Cash equivalents	$ 85,382	$ 49,845
Marketable securities	54,172	50,315
Forward contracts	4,956	1,163
Financial assets, fair value	144,510	101,323
Financial liabilities:
Contingent consideration related to acquisitions	2,100	8,400
Forward contracts	1,190	4,347
Liabilities, Fair Value Disclosure, Recurring	3,290	12,747
Level 1
Financial assets:
Cash equivalents	85,382	49,845
Financial assets, fair value	138,344	97,518
Level 2
Financial assets:
Forward contracts	4,956	1,163
Financial assets, fair value	6,166	3,805
Financial liabilities:
Forward contracts	1,190	4,347
Liabilities, Fair Value Disclosure, Recurring	1,190	4,347
Level 3
Financial liabilities:
Contingent consideration related to acquisitions	2,100	8,400	$ 7,862	$ 19,570
Liabilities, Fair Value Disclosure, Recurring	2,100	8,400
Certificates of deposit
Financial assets:
Marketable securities	219	240
Certificates of deposit | Level 2
Financial assets:
Marketable securities	219	240
Corporate notes/bonds
Financial assets:
Marketable securities	52,962	47,673
Corporate notes/bonds | Level 1
Financial assets:
Marketable securities	52,962	47,673
U.S. government agency securities
Financial assets:
Marketable securities	991	2,402
U.S. government agency securities | Level 2
Financial assets:
Marketable securities	$ 991	$ 2,402

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Fair Value Measurements (Changes in Fair Value of Level 3 Contingent Consideration Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Business Combination. Contingent Consideration [Roll Forward]
Beginning balance	$ 8,400
Payment of contingent consideration	(8,400)	$ (12,100)
Ending balance	2,100
Level 3
Business Combination. Contingent Consideration [Roll Forward]
Beginning balance	8,400	19,570
Addition to contingent consideration	2,100
Change in present value of contingent consideration		392
Payment of contingent consideration	(8,400)	(12,100)
Ending balance	2,100	7,862
Kepware
Business Combination. Contingent Consideration [Roll Forward]
Ending balance	0
Kepware | Level 3
Business Combination. Contingent Consideration [Roll Forward]
Beginning balance	8,400	17,070
Addition to contingent consideration	0
Change in present value of contingent consideration		392
Payment of contingent consideration	(8,400)	(9,600)
Ending balance	0	7,862
Other | Level 3
Business Combination. Contingent Consideration [Roll Forward]
Beginning balance	0
Addition to contingent consideration	2,100
Payment of contingent consideration	0
Ending balance	$ 2,100
ColdLight | Level 3
Business Combination. Contingent Consideration [Roll Forward]
Beginning balance		2,500
Change in present value of contingent consideration		0
Payment of contingent consideration		(2,500)
Ending balance		$ 0

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended		30 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	$ 2,100		$ 2,100	$ 8,400
Payment of contingent consideration	8,400	$ 12,100
Business Combination, Consideration Transferred, Liabilities Incurred	7,800	11,100
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	2,100	7,862	2,100	8,400	$ 19,570
Payment of contingent consideration	8,400	12,100
Level 3 | Accrued Expenses and Other Current Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	1,100		1,100
Level 3 | Other Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	1,000		1,000
Kepware
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	0		0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	18,000		18,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	16,900		16,900
Payment of contingent consideration			18,000
Kepware | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration related to acquisitions	0	7,862	$ 0	$ 8,400	$ 17,070
Payment of contingent consideration	$ 8,400	$ 9,600

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Marketable Securities (Amortized Cost and Fair Value of Marketable Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 54,695	$ 50,458
Gross unrealized gains	0	2
Gross unrealized losses	(523)	(145)
Fair value	54,172	50,315
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	221	240
Gross unrealized gains	0	0
Gross unrealized losses	(2)	0
Fair value	219	240
Corporate notes/bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	53,474	47,811
Gross unrealized gains	0	2
Gross unrealized losses	(512)	(140)
Fair value	52,962	47,673
U.S. government agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,000	2,407
Gross unrealized gains	0	0
Gross unrealized losses	(9)	(5)
Fair value	$ 991	$ 2,402

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Marketable Securities (Schedule of Fair Value and Gross Unrealized Losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 31,735	$ 15,494
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(360)	(43)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	22,437	31,287
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(163)	(102)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	54,172	46,781
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(523)	(145)
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	219	240
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(2)	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	219	240
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(2)	0
Corporate notes/bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	31,516	15,254
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(358)	(43)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	21,446	28,885
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(154)	(97)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	52,962	44,139
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(512)	(140)
U.S. government agency securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	991	2,402
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(9)	(5)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	991	2,402
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ (9)	$ (5)

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Marketable Securities (Schedule of Available-for-sale Marketable Securities by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Due in one year or less, amortized cost	$ 22,300	$ 18,274
Due in one year or less, fair value	22,170	18,244
Due after one year through three years, amortized cost	32,395	32,184
Due after one year through three years, fair value	32,002	32,071
Amortized cost	54,695	50,458
Fair value	$ 54,172	$ 50,315

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Derivative Financial Instruments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments	$ 2.2	$ 0.7	$ 5.4	$ 3.2
Forward Contracts | Not Designated as Hedging Instrument
Derivative, Remaining Maturity	3 months
Forward Contracts | Designated as Hedging Instrument
Derivative, Remaining Maturity	15 months

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Derivative Financial Instruments (Notional Amounts Of Outstanding Forward Contracts) (Details) - Forward Contracts - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Designated as Hedging Instrument
Notional amounts	$ 67,050	$ 101,597
Designated as Hedging Instrument | Euro / U.S. Dollar
Notional amounts	44,699	64,831
Designated as Hedging Instrument | Japanese Yen / U.S. Dollar
Notional amounts	11,830	22,675
Designated as Hedging Instrument | Swedish Krona / U.S. Dollar
Notional amounts	10,521	14,091
Not Designated as Hedging Instrument
Notional amounts	368,201	318,519
Not Designated as Hedging Instrument | Australia, Dollars
Notional amounts	3,226	1,585
Not Designated as Hedging Instrument | Canadian / U.S. Dollar
Notional amounts	7,421	12,809
Not Designated as Hedging Instrument | Swiss Franc / Euro
Notional amounts	0	7,157
Not Designated as Hedging Instrument | Chinese Yuan offshore / Euro
Notional amounts	0	10,423
Not Designated as Hedging Instrument | Euro / U.S. Dollar
Notional amounts	309,733	244,000
Not Designated as Hedging Instrument | Japanese Yen / Euro
Notional amounts	0	17,694
Not Designated as Hedging Instrument | Israeli Shekel / U.S. Dollar
Notional amounts	7,677	8,820
Not Designated as Hedging Instrument | Japanese Yen / U.S. Dollar
Notional amounts	18,152	3,198
Not Designated as Hedging Instrument | Swedish Krona / U.S. Dollar
Notional amounts	8,568	4,627
Not Designated as Hedging Instrument | Danish Krona / U.S. Dollar
Notional amounts	2,645	1,743
Not Designated as Hedging Instrument | Hong Kong, Dollars
Notional amounts	2,628	915
Not Designated as Hedging Instrument | All other
Notional amounts	$ 8,151	$ 5,548

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Derivative Financial Instruments (Derivative Instruments and Hedging Activities Disclosures) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized in OCI-Effective Portion	$ 3,910	$ (2,298)	$ 950	$ 224
Forward Contracts | Designated as Hedging Instrument | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized in OCI-Effective Portion	4,468	(2,627)	1,086	256
Forward Contracts | Subscription, support and license revenue | Designated as Hedging Instrument | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Reclassified from OCI into Income-Effective Portion	(277)	(86)	(2,659)	888
Forward Contracts | Interest income and other expense, net | Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)	9,392	(6,669)	6,370	1,422
Forward Contracts | Interest income and other expense, net | Designated as Hedging Instrument | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized-Ineffective Portion	$ 52	$ (29)	$ 17	$ (23)

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Derivative Financial Instruments Derivative Financial Instruments (Gross Fair Value) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Derivative [Line Items]
Forward contracts	$ 4,956	$ 1,163
Forward contracts	1,190	4,347
Not Designated as Hedging Instrument | Forward Contracts
Derivative [Line Items]
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Asset at Fair Value	2,962	623
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value	1,174	1,995
Designated as Hedging Instrument | Forward Contracts
Derivative [Line Items]
Foreign Currency Cash Flow Hedge Asset at Fair Value	1,994	540
Foreign Currency Cash Flow Hedge Liability at Fair Value	16	2,352
Other Current Assets [Member] | Forward Contracts
Derivative [Line Items]
Forward contracts	4,956	1,128
Other Noncurrent Assets | Forward Contracts
Derivative [Line Items]
Forward contracts	0	35
Other Current Liabilities [Member] | Forward Contracts
Derivative [Line Items]
Forward contracts	1,190	4,329
Other Noncurrent Liabilities [Member] | Forward Contracts
Derivative [Line Items]
Forward contracts	$ 0	$ 18

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Derivative Financial Instruments (Offsetting Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amount of Recognized Assets	$ 4,956
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Assets Presented in the Consolidated Balance Sheets	4,956	$ 1,163
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	(1,190)
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received	0
Net Amount	$ 3,766

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Derivative Financial Instruments (Offsetting Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amount of Recognized Liabilities	$ 1,190
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	1,190	$ 4,347
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	(1,190)
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Pledged	0
Net Amount	$ 0

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Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended	32 Months Ended
	Jun. 30, 2018 USD ($) Segment	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($) Segment	Jul. 01, 2017 USD ($)	Sep. 30, 2017 Segment	Jun. 30, 2018 USD ($)
Number of operating segments | Segment			2		3
Number of reportable segments | Segment	2				3
Revenue	$ 314,777	$ 291,293	$ 929,303	$ 857,660
Operating Costs	81,556	82,268	248,145	246,213
Gross margin	233,221	209,025	681,158	611,447
Sales and marketing	107,741	93,101	305,386	271,568
General and administrative	33,082	35,294	101,439	108,789
Restructuring and other charges, net	1,627	1,551	1,846	8,300		$ 84,500
Amortization of acquired intangible assets	7,850	7,973	23,566	23,986
Operating income	21,703	11,256	61,540	23,330
Interest expense	(10,646)	(10,200)	(31,072)	(32,239)
Interest income and other expense, net	1,086	357	2,481	(2,049)
Income (loss) before income taxes	9,971	699	27,987	(6,860)
Operating Segments
Revenue	314,777	291,293	929,303	857,660
Operating Costs	130,367	129,913	398,051	383,877
Gross margin	184,410	161,380	531,252	473,783
Operating Segments | Software Products
Revenue	273,619	247,635	801,262	722,724
Operating Costs	96,422	94,325	293,417	273,196
Gross margin	177,197	153,310	507,845	449,528
Operating Segments | Professional Services
Revenue	41,158	43,658	128,041	134,936
Operating Costs	33,945	35,588	104,634	110,681
Gross margin	7,213	8,070	23,407	24,255
Unallocated
Sales and marketing	102,831	89,805	290,559	260,521
General and administrative	25,458	27,263	80,272	81,270
Restructuring and other charges, net	1,627	1,551	1,846	8,300
Amortization of acquired intangible assets	14,648	14,490	43,595	43,280
Stock-based compensation	16,658	16,574	52,015	56,139
Other unallocated operating expenses	$ 1,485	$ 441	$ 1,425	$ 943

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2016	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Oct. 01, 2017	Sep. 30, 2017
Income Tax Disclosure [Line Items]
Effective income tax rate		(70.00%)	236.00%	(39.00%)	(63.00%)
Income before income taxes		$ 9,971	$ 699	$ 27,987	$ (6,860)
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent				21.00%	35.00%
Operating Loss Carryforwards, Limitations on Use				0.8
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount			$ (9,000)		$ (21,000)
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Percent				24.50%
Unrecognized tax benefits		9,700		$ 9,700			$ 14,800
Income tax provision upon recognition of unrecognized tax benefit		9,700		9,700
Unrecognized tax benefits that would impact valuation allowance		3,800		3,800
Potentail reduction in unrecognized tax benefits and accrued interest over next 12 months		$ (2,000)		(2,000)
Korea
Income Tax Disclosure [Line Items]
Income tax examination, estimate of possible loss	$ 12,000
US Tax on Undistributed Foreign Earnings [Member]
Income Tax Disclosure [Line Items]
Tax Adjustments, Settlements, and Unusual Provisions				5,400
Current Federal, State and Local, Tax Expense (Benefit)				1,700
Net Decrease in Deferred Tax Liability [Member]
Income Tax Disclosure [Line Items]
Deferred Income Tax Expense (Benefit)				$ 14,100
Accounting Standards Update 2016-09 [Member]
Income Tax Disclosure [Line Items]
Windfall Tax Deductions Not Yet Recognized						$ 37,000
Windfall Tax Deductions Not Yet Recognized Offset Valuation Allowance						$ 36,900

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Debt (Details)		9 Months Ended
	May 15, 2019	Jun. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	May 31, 2016 USD ($)	Sep. 30, 2015 bank
Debt Instrument [Line Items]
Senior Notes		$ 500,000,000	$ 500,000,000	$ 500,000,000
Long-term Debt, Gross		698,125,000	718,125,000
debt net of unamortized debt issuance cost		$ 693,053,000	$ 712,406,000
Debt Instrument, Interest Rate, Stated Percentage		6.00%	6.00%	6.00%
Voting interest in domestic subsidiaries pledged against credit facility		100.00%
Voting interest in foreign subsidiaries pledged against credit facility		65.00%
Leverage Ratio, Actual		2.45
Debt Instrument, Covenant Compliance, Senior Debt Leverage Ratio, actual		0.73
Fixed charge coverage ratio, actual		6.82
Line of Credit [Member]
Debt Instrument [Line Items]
Long-term portion of long term debt		$ 198,125,000	$ 218,125,000
Credit facility amount		600,000,000
Additional borrowing capacity on credit facility if agreed to by lenders		$ 500,000,000
Line of Credit Facility, Interest Rate at Period End		3.88%
Component of Base Rate, Basis Spread on Federal Reserve Bank of New York (FRBNY) rate		0.50%
Component of Base Rate, Basis Spread on Adjusted LIBOR		1.00%
Investment limit in foreign subsidiaries		$ 75,000,000
Cash investment limit for acquisition of business		$ 200,000,000
Debt Instrument, Covenant Compliance, Leverage Ratio Four		4.50
Minimum fixed charge coverage ratio allowed under debt covenant		3.50
Debt Instrument, Covenant Compliance, maximum Senior Debt Leverage Ratio after covenant modification trigger event		3.0
Line of Credit [Member] | Minimum
Debt Instrument [Line Items]
Line of Credit Facility, Variable Interest Rate, Length of Time Between Updates		30 days
Credit facility commitment fees percentage		0.175%
Line of Credit [Member] | Maximum
Debt Instrument [Line Items]
Line of Credit Facility, Variable Interest Rate, Length of Time Between Updates		180 days
Credit facility commitment fees percentage		0.30%
Secured Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Number of Banks in Credit Facility | bank					16
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | Minimum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.25%
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | Maximum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.75%
Base Rate [Member] | Line of Credit [Member] | Minimum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		0.25%
Base Rate [Member] | Line of Credit [Member] | Maximum
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		0.75%
Scenario, Forecast [Member]
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage	101.00%
Other Noncurrent Assets | Line of Credit [Member]
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense		$ (1,300,000)	(2,000,000)
Senior Notes [Member]
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense		(5,072,000)	$ (5,719,000)
Debt Instrument, Fair Value Disclosure		$ 520,000,000

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	1 Months Ended
	Jul. 31, 2016	Jun. 30, 2018	Sep. 30, 2017
Loss Contingencies [Line Items]
Accounts receivable, net of allowance for doubtful accounts of $591 and $1,062 at June 30, 2018 and September 30, 2017, respectively		$ 130,079	$ 152,299
Pending Litigation
Loss Contingencies [Line Items]
Loss contingency accrual		1,000
Korea
Loss Contingencies [Line Items]
Income tax examination, estimate of possible loss	$ 12,000
Minimum | Pending Litigation
Loss Contingencies [Line Items]
Loss Contingency, Estimate of Possible Loss		1,100
Minimum | Customer Contracts
Loss Contingencies [Line Items]
Accounts receivable, net of allowance for doubtful accounts of $591 and $1,062 at June 30, 2018 and September 30, 2017, respectively		0
Maximum | Pending Litigation
Loss Contingencies [Line Items]
Loss Contingency, Estimate of Possible Loss		3,100
Maximum | Customer Contracts
Loss Contingencies [Line Items]
Accounts receivable, net of allowance for doubtful accounts of $591 and $1,062 at June 30, 2018 and September 30, 2017, respectively		$ 17,300

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Subsequent Events Subsequent Events (Details) - Subsequent Event [Member] - USD ($)			10 Months Ended
	Jul. 20, 2018	Jul. 19, 2018	May 20, 2019
Subsequent Event [Line Items]
Sale of stock, consideration received		$ 1,000,000,000
Sale of stock, number of shares issued		10,582,010
Sale of stock, price (in USD per share)		$ 94.50
Accelerated Share Repurchases, Settlement (Payment) or Receipt	$ 1,000,000,000
Accelerated Share Repurchases, Initial Number of Shares	8,244,873
Accelerated Share Repurchases, Initial Price Paid Per Share	$ 97.03
Stock Repurchased and Retired During Period, Value			$ 200,000,000
Minimum [Member]
Subsequent Event [Line Items]
Accelerated Share Repurchase Settlement Period	7 months 15 days
Maximum [Member]
Subsequent Event [Line Items]
Accelerated Share Repurchase Settlement Period	10 months
Initial
Subsequent Event [Line Items]
Stock Repurchased and Retired During Period, Value	$ 800,000,000