10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_ to_

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)

121 Seaport Boulevard, Boston, MA 02210

(Address of principal executive offices, including zip code)

(781) 370-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value per share	PTC	NASDAQ Global Select Market

Securities registered pursuant

to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

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

Large Accelerated Filer	☑	Accelerated Filer	☐	Non-accelerated Filer	☐	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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

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

The aggregate market value of our voting stock held by non-affiliates was approximately $11,336,087,091 on March 31, 2022 based on the last reported sale price of our common stock on the Nasdaq Global Select Market on that date. There were 116,975,644 shares of our common stock outstanding on that day and 117,471,969 shares of our common stock outstanding on November 14, 2022.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement in connection with the 2023 Annual Meeting of Stockholders (2023 Proxy Statement) are incorporated by reference into Part III.

PTC Inc.

ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 2022

Table of Contents

		Page
PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Mine Safety Disclosures	19
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6.	Reserved	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 8.	Financial Statements and Supplementary Data	39
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	39
Item 9A.	Controls and Procedures	39
Item 9B.	Other Information	40
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	40
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	41
Item 11.	Executive Compensation	41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	41
Item 13.	Certain Relationships and Related Transactions, and Director Independence	41
Item 14.	Principal Accounting Fees and Services	41
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	42
Item 16.	Form 10-K Summary	42
Exhibit Index		43
Signatures		45
APPENDIX A
	Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238)	F-1
	Consolidated Financial Statements	F-4
	Notes to Consolidated Financial Statements	F-9

Cautionary Note About Forward-Looking Statements

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In particular, statements that are not historical facts, including but not limited to, statements about our anticipated financial results, capital development and growth, as well as about the development of our products, markets and workforce, are forward-looking statements. These forward-looking statements are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, whether in the negative or affirmative. Forward-looking statements are based on our current plans, expectations and assumptions and are not guarantees of future performance. Factors that may cause our actual results to differ materially from these statements include, but are not limited to, the risks and uncertainties discussed in Item 1A. “Risk Factors” and elsewhere throughout this Annual Report. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We caution readers not to place undue reliance on any forward-looking statements, which only speak as of the date made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

Unless otherwise indicated, all references to a year reflect our fiscal year that ends on September 30.

PART I

ITEM 1. Business

Our Business

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

Our software portfolio includes award-winning offerings in the computer-aided design (CAD) and product lifecycle management (PLM) markets. CAD is utilized for product data authoring and PLM is for product data management and process orchestration. Our software can be delivered on premises, in the cloud, or in a hybrid model.

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

We generate revenue through the sale of software subscriptions, which include license access and support (technical support and software updates); support for perpetual licenses; cloud services (hosting for our software and software-as-a-service (SaaS)); perpetual licenses; and professional services (consulting, implementation, and training).

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Our Strategy

There are three key elements to our strategy to deliver long-term shareholder value.

Accelerate Digital Thread Solutions

With our solutions, we enable companies to adopt a “digital thread” strategy to drive innovation and productivity. A digital thread manages product data and makes it accessible and useful to the right people, at the right time, and in the right context. This is particularly relevant for larger businesses pursuing a vertically integrated manufacturing strategy in which the reuse and repurposing of earlier innovations drives next generation product offerings.

Accelerate Product Innovation

We enable companies to upend the product development process with solutions that apply agile concepts, originally focused on software development, to the entire product innovation process, from software to hardware and electronics. By applying agile product development processes across all three disciplines, companies can increase innovation velocity and bring new products to market faster to meet rapidly changing market demand. This is particularly relevant for start-up and upstart businesses focused on technology-centered innovations that commonly leverage contract manufacturers for production of their designs.

Accelerate SaaS Transformation

Manufacturers today face a myriad of business challenges. Macroeconomic forces, such as an ever-evolving workforce, supply chain disruptions, the rise of smart, connected products, and the need to prove sustainability, are all driving the need for change. We enable companies to respond to these challenges with technology that leverages the cloud to transform how, where, and when work gets done. Software-as-a-service (SaaS), which has already reshaped nearly all aspects of business, is poised to transform management of the entire product lifecycle. Anticipating this need, PTC acquired the Onshape and Arena cloud-native product development solutions. In parallel, we are heavily investing to transform our technology portfolio to SaaS.

Strategic Transactions

During FY'22, we completed two strategic transactions. In Q3'22, we acquired the CodebeamerTM application lifecycle management business to broaden and deepen our ALM footprint across safety-critical and regulated industries. In Q3'22, we also sold a portion of our PLM services business to ITC Infotech. The transaction is designed to accelerate customer digital transformation initiatives and adoption of our Windchill+ SaaS solution. Refer to Note 6. Acquisitions and Disposition of Business of Notes to Consolidated Financial Statements in this Annual Report for additional discussion regarding these transactions.

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Our Principal Products and Services

In 2022, we reported our business in two product groups: Digital Thread and Velocity. Digital Thread included products focused on customers that are embracing enterprise-wide digital transformation and Velocity included products focused on customers that prioritize agile product development. Beginning in fiscal year 2023, we are reporting our businesses in two new product groups: CAD (Computer-Aided Design) and PLM (Product Lifecycle Management). Products designated as CAD refer to software used for product data authoring. Products designated as PLM refer to software used for product data management and process orchestration.

The new reporting structure aligns better to our strategy, product offerings and industry segments.

 

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  Our Windchill® PLM application suite manages all aspects of the product development lifecycle - from concept through service and retirement - by enabling a digital thread of product parts, materials, and configuration information. Windchill provides real-time information sharing, dynamic data visualization, and the ability to collaborate across geographically-distributed teams, enabling manufacturers to elevate their product development process. With its open architecture that integrates with other enterprise systems, Windchill provides a solid foundation for a product-driven digital thread.   Our Arena® SaaS PLM solution enables product teams to collaborate virtually anytime and anywhere, making it easier to share the latest product and quality information with internal teams and supply chain partners and help deliver innovative products to customers faster. Our Arena quality management system software connects quality and product designs into a single system to simplify regulatory compliance.   Our ThingWorx® platform is flexible and purpose-built for Industrial Internet of Things (IIoT). It offers a rich set of capabilities that enable enterprises to digitally transform every aspect of their business with innovative solutions that are simple to create, easy to implement, scalable to meet future needs, and designed to enable customers to accelerate time to value. Our ThingWorx Digital Performance Management solution enables manufacturers to identify, prioritize, and overcome their most significant production bottlenecks.   Our CodebeamerTM and IntegrityTM application lifecycle management (ALM) and model-based systems engineering capabilities enable users to accelerate the development of software-intensive products through system modeling, software configuration, and requirements, risk, and test management.   Our Servigistics® service parts management solution enables customers to effectively manage their service parts inventory, enabling them to optimize equipment availability and uptime, and increase customer satisfaction.   Our FlexPLM® solution provides retailers with a single platform for merchandising and line planning, materials management, sampling, and more. Our Creo® 3D CAD technology enables the digital design, testing, and modification of product models. With its design simulation, additive manufacturing, and generative design innovations, we enable our customers to be first to market with differentiated products. From initial concept to design, simulation, and analysis, Creo provides designers with innovative tools to efficiently create better products, faster. Our Onshape® SaaS product development platform unites computer-aided design with data management, collaboration tools, and real-time analytics. A cloud-native multi-tenant solution that can be instantly deployed on virtually any computer or mobile device, Onshape enables teams to work together from just about anywhere. Real-time design reviews, commenting, and simultaneous editing enable a collaborative workflow where multiple design iterations can be completed in parallel and merged into the final design.   Our Vuforia® augmented reality (AR) technology enables the visualization of digital information in a physical context and the creation of AR and mixed reality experiences to deliver workforce productivity and business results in manufacturing, service, engineering, and operations. Vuforia solutions equip frontline workers with focused and effective step-by-step instructions, procedural guidance, skill development and remote assistance that enable enterprises to reduce errors, increase asset utilization and drive higher profitability.   Our Arbortext® dynamic publishing solution streamlines how organizations create, manage, and publish technical documentation.  

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To meet the increasing demand for SaaS delivered solutions, we expect to introduce a number of new SaaS offerings over time. These service offerings will provide an alternative to our traditional on-premises software products and provide our customers with the benefits of SaaS including accelerated time to value, reduced complexity, lower costs to implement, upgrade and administer, improved user collaboration and mobility, and scalability. We are giving this new generation of offerings a “plus” brand. We launched Windchill+ in the second quarter of 2022.

Our Markets and How We Address Them

The markets we serve present different growth opportunities for us. We see opportunity for further market growth for all our solutions with a new generation of SaaS solutions we are developing to bring to market over the next few years.

We derive most of our sales from products and services sold directly by our sales force to end-user customers. Approximately 25% to 30% of our sales of products and services are through third-party resellers. Our sales force focuses on large accounts, while our reseller channel provides a cost-effective means of covering the small- and medium-size business market. Our strategic alliance partners enable us to increase our market reach, offer broader solutions, and add compelling technology to our offerings. Our strategic services partners provide service offerings to help customers implement our product offerings and transition to SaaS.

Additional financial information about our segments and international and domestic operations may be found in Note 18. Segment and Geographic Information of Notes to Consolidated Financial Statements in this Annual Report, which information is incorporated herein by reference.

Competition

We compete with a number of companies whose offerings address one or more specific functional areas covered by our solutions. For enterprise Creo and Windchill solutions, we compete with large established companies including Autodesk, Dassault Systèmes SA, and Siemens AG. In our IIoT business, we compete with large established companies such as Amazon, IBM, Oracle, SAP, Siemens AG, and Software AG as well as customers’ homegrown solutions. There are also a number of smaller companies that compete in the market for IIoT products. For our AR products, our primary competitors include Microsoft, TeamViewer, and ScopeAR. For our ALM products, we compete with IBM and Siemens AG. For our SLM products, we compete with companies that offer point solutions and with customers’ homegrown solutions.

Proprietary Rights

Our software products and related technical know-how, along with our trademarks, including our company names, product names and logos, are proprietary. We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents and common law safeguards, including trade secret protection. The nature and extent of such legal protection depends in part on the type of intellectual property right and the relevant jurisdiction. In the U.S., we are generally able to maintain our trademark registrations for as long as the trademarks are in use and to maintain our patents for up to 20 years from the earliest effective filing date. We also use license management and other anti-piracy technology measures, as well as contractual restrictions, to curtail the unauthorized use and distribution of our products.

Our proprietary rights are subject to the risks and uncertainties described under Item 1A. “Risk Factors” below, which is incorporated into this section by reference.

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People and Culture

PTC’s commitment to building a diverse, equitable, and inclusive culture is fundamental to our purpose – the Power to Create – and critical to every aspect of our talent strategy. Our approach is focused on sustainable talent practices and core values that promote an agile culture, an increased sense of belonging, engaged work environments, and high-performing teams.

 

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PTC at-a-Glance

As of September 30, 2022, PTC had 6,503 full-time employees. Our employee population is geographically diverse and serves a geographically diverse customer and partner network.

Worldwide Employee Representation

 

United States Employee Representation

 

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Compensation and Benefits

PTC provides a comprehensive and competitive compensation and benefits package designed to attract, retain, motivate, and engage talent around the world that will drive success and innovation in meeting the goals of our business.

We provide employees with competitive base salaries, incentive compensation and, in many cases, equity compensation.

Our benefits offerings are designed to meet the unique needs of our employees. We believe we provide competitive benefits in each local market we operate in to help our employees care for themselves and their families. Common offerings are health benefits, retirement benefits, life insurance and disability protection, employee assistance, vacation time, holidays and leave benefits. To ensure our employees and families have the support they need as the COVID-19 pandemic begins to ease, PTC has continued its global emergency leave policy, which provides for ten days of paid time off over and above regular sick or other time off to recuperate from or care for a family member recovering from COVID-19.

Employee Development

We invest in our employees, creating meaningful opportunities to learn, grow, develop and advance their careers. We have specific development programs, including our Rotational Leadership Development, Managing at PTC, Leading at PTC, and 360-degree development programs.

Commitment to Diversity, Equity, and Inclusion (DEI)

We are improving our systems and processes to enable us to better track, manage and develop our employees. With these improvements, we are gaining a better understanding of our current demographic population and developing demographic goals, as we strive to create a more demographically diverse, inclusive, and equitable organization.

Starting in FY’22, our Self-Identification program invited U.S. employees to volunteer their personal information across categories such as race/ethnicity, sexual orientation, gender identity, pronouns, disability, veteran and military status, and more. By analyzing this information in aggregate, we can determine what we should adjust in terms of DEI programming, policies, and hiring practices.

Commitment to our values and diversity in our workforce has inspired our top-line company goals. Key milestones include launching leadership development experiences for underrepresented minority and underrepresented group populations, offering learning programs in psychological safety, requiring unconscious bias training for hiring managers, and enhancing our Employee Resource Group (ERG) program and Global DEI Champions Network. PTC currently supports 12 ERGs that span a broad spectrum of identities, experiences, and interests: Asian, Black, Early Career, Energize (Health & Wellness), Family, Green (Sustainability), Hola (Hispanic & Latine), Prism (LGBTQ+), SMART (Neurodiversity), Veterans, Virtual, and Women. In 2021, we introduced a CEO Rotation program that allows our CEO to spend three months with each ERG as a rotational sponsor.

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Additional Information About Our Employee Initiatives

You can find more information about our employee initiatives, including our DEI, Training and Career Development, Compensation & Benefits, Employee Engagement, and Employee Health & Safety initiatives, in our Corporate Social Responsibility Report available on PTC.com. The references to our Corporate Social Responsibility Report and our website are not intended to incorporate information in that report or on our website into this Annual Report by reference.

Available Information

We make available free of charge on our website at www.ptc.com the following reports as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC: our Annual Reports on Form 10-K; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934. Our Proxy Statements for our Annual Meetings and Section 16 trading reports on SEC Forms 3, 4 and 5 also are available on our website. The reference to our website is not intended to incorporate information on our website into this Annual Report by reference.

Corporate Information

PTC was incorporated in Massachusetts in 1985 and is headquartered in Boston, Massachusetts.

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ITEM 1A. Risk Factors

The following are important factors we have identified that could affect an investment in our securities. You should consider them carefully when evaluating an investment in PTC securities, because these factors could cause actual results to differ materially from historical results or any forward-looking statements. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results.

I. Risks Related to Our Business Operations and Industry

We face significant competition, which may reduce our profitability and limit or reduce our market share.

The markets for our products and solutions are rapidly changing and characterized by intense competition, disruptive technology developments, evolving distribution models and increasingly lower barriers to entry. If we are unable to provide products and solutions that address customers’ needs as well as our competitors’ products and solutions do, or to align our pricing, licensing and delivery models with customer preferences, we could lose customers and/or fail to attract new customers, which could cause us to lose revenue and market share.

For example, the COVID-19 pandemic caused companies worldwide to close their offices and their employees to have to work remotely from their homes, and there remains uncertainty about the extent to which employees will return to the office in the long term. This has focused companies on the need for solutions that empower and support remote work by employees. We believe customers and potential customers will increasingly seek software solutions that support remote work by employees. Although many of our solutions support remote work, others are less efficient at doing so. We have embarked on an effort to make our solutions available on a SaaS platform; however, this will require significant effort and investment and we cannot be sure that we will be able to make our solutions available as SaaS solutions as quickly as we expect or that customers will adopt them as we expect. If we are unable to compete successfully with competitors offering SaaS solutions, we could lose customers and/or fail to attract new customers, which could cause us to lose revenue and market share, which would adversely affect our business and financial results.

In addition, competitive pressures could cause us to reduce our prices, which could reduce our revenue and margins.

Our current and potential competitors range from large and well-established companies to emerging start-ups. Some of our competitors and potential competitors have greater name recognition in the markets we serve and greater financial, technical, sales and marketing, and other resources, which could limit our ability to gain customer recognition and confidence in our products and solutions and successfully sell our products and solutions, which could adversely affect our ability to grow our business.

A breach of security in our products or computer systems, or those of our third-party service providers, could compromise the integrity of our products, cause loss of data, harm our reputation, create additional liability and adversely impact our financial results.

We have implemented and continue to implement measures intended to maintain the security and integrity of our products, source code and IT systems. The potential for a security breach or system disruption has significantly increased over time as the scope, number, intensity and sophistication of attempted cyberattacks and cyber intrusions have increased – particularly cyberattacks and intrusions designed to access and exfiltrate information and to disrupt and lock-up access to systems for the purpose of demanding a ransom payment. It is impossible for us to eliminate the risk of a successful cyberattack or intrusion, and, in fact, we deal with security issues on a regular basis and have experienced security incidents from time to time. Accordingly, there is a risk that a cyberattack or intrusion will be successful and that such event will be material.

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In addition, we offer cloud services to our customers and some of our products, including our SaaS products, are hosted by third-party service providers, which expose us to additional risks as those repositories of our customers’ proprietary data may be targeted and a cyberattack or intrusion may be successful and material. Interception of data transmission, misappropriation or modification of data, corruption of data and attacks against our service providers may adversely affect our products or product and service delivery. Malicious code, viruses or vulnerabilities that are undetected by our service providers may disrupt our business operations generally and may have a disproportionate effect on those of our products that are developed and delivered in the cloud environment.

While we devote resources to maintaining the security and integrity of our products and systems, as well as performing due diligence of our third-party service providers, security breaches that have not had a material effect on our business or that of our customers have occurred, and we will continue to face cybersecurity threats and exposure. A significant breach of the security and/or integrity of our products or systems, or those of our third-party service providers, whether or intentional or by human error by our employees or others, could disrupt our business operations or those of our customers, could prevent our products from functioning properly, could enable access to sensitive, proprietary or confidential information of our customers, or could enable access to our sensitive, proprietary or confidential information. This could require us to incur significant costs of investigation, remediation and/or payment of a ransom; harm our reputation; cause customers to stop buying our products; and cause us to face lawsuits and potential liability, any of which could have a material adverse effect on our business, financial condition and results of operations.

We increasingly rely on third-party providers of cloud infrastructure services to deliver our offerings to users on our platform, and any disruption of or interference with our use of these services could adversely affect our business.

Our continued growth depends in part on the ability of our existing and potential customers to use and access our cloud services or our website in order to download our software or encrypted access keys for our software within an acceptable amount of time. We use a number of third-party service providers that we do not control for key components of our infrastructure, particularly with respect to development and delivery of our cloud-based products. The use of these service providers gives us greater flexibility in efficiently delivering a more tailored, scalable customer experience, but also exposes us to additional risks and vulnerabilities. Third-party service providers operate their own platforms that we access, and we are, therefore, vulnerable to their service interruptions. We may experience interruptions, delays and outages in service and availability from time to time as a result of problems with our third-party service providers’ infrastructure. Lack of availability of this infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud or security attacks that we cannot predict or prevent. Such outages could trigger our service level agreements with customers and require us to issue the issuance of credits to our cloud-based product customers, which could adversely impact our business, financial condition and results of operations.

If we are unable to renew our agreements with our cloud service providers on commercially reasonable terms, or any of our agreements are prematurely terminated, or we need to add new cloud services providers to increase capacity and uptime, we could experience interruptions, downtime, delays, and additional expenses related to transferring to and providing support for these new platforms. Any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platforms and impair our ability to attract new users, any of which could adversely affect our business, financial condition and results of operations.

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We may be unable to hire or retain personnel with the necessary skills to operate and grow our business, which could adversely affect our ability to compete.

Our success depends upon our ability to attract and retain highly skilled managerial, sales and marketing, technical, financial and administrative personnel to operate and grow our business. Competition for such personnel in our industry is intense, particularly in the Boston, Massachusetts area where our global headquarters is located.

The technical personnel required to develop our products and solutions are in high demand. If we are unable to attract and retain technical personnel with the requisite skills, our product and solution development efforts could be delayed, which could adversely affect our ability to compete and thereby adversely affect our revenues and profitability.

The managerial, sales and marketing, financial and administrative personnel necessary to guide our operations, market and sell our solutions and support our business operations are also in high demand due to intense competition in our industry.

If we are unable to attract and retain the personnel we need to develop compelling products and solutions, and guide, operate and support our business, we may be unable to successfully compete, which would adversely affect our business, financial condition and results of operations.

We depend on sales within the discrete manufacturing sector and our business could be adversely affected if manufacturing activity does not grow, or if it contracts, or if manufacturers are adversely affected by other macroeconomic factors.

A large amount of our sales are to customers in the discrete manufacturing sector. Manufacturers worldwide continue to face uncertainty about the global macroeconomic environment due to, among other factors, the effects of earlier and ongoing supply chain disruptions, rising interest rates and inflation, volatile foreign exchange rates and the current relative strength of the U.S. dollar, the effects of the Russia—Ukraine conflict, including on the supply of energy resources in Europe, and the U.S. Government’s focus on technology transactions with non-U.S. entities. In light of these challenges and concerns, customers may delay, reduce, or forego purchases of our solutions, which would adversely affect our business and financial results.

If we fail to successfully manage our transition to a SaaS company, our business and financial results could be adversely affected.

Becoming a SaaS company requires considerable additional investment in our organization. Whether our transition will be successful and will accomplish our business and financial objectives is subject to uncertainties, including but not limited to: customer demand, attach and renewal rates, channel adoption, our ability to further develop and scale infrastructure, our ability to include functionality and usability in such offerings that address customer requirements, and our costs. If we are unable to successfully establish these new offerings and navigate our business transition due to these risks and uncertainties, our business and financial results could be adversely impacted.

Because our sales and operations are globally dispersed, we face additional compliance risks and any compliance failure could adversely affect our business and financial results.

We sell and deliver software and services, and maintain support operations, in many countries whose laws and practices differ from one another and are subject to unexpected changes. Managing these geographically dispersed operations requires significant attention and resources to ensure compliance with laws of those countries and those of the U.S. governing our activities in non-U.S. countries.

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Those laws include, but are not limited to, anti-corruption laws and regulations (including the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010), data privacy laws and regulations (including the European Union's General Data Privacy Regulation), and trade and economic sanctions laws and regulations (including laws administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. State Department, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities). Our compliance risks are heightened due to the go-to-market approach for our business that relies heavily on a partner ecosystem, the fact that we operate in countries with a higher incidence of corruption and fraudulent business practices than others, the fact that we deal with governments and state-owned business enterprises, and the fact that global enforcement of laws has significantly increased.

Accordingly, while we strive to maintain a comprehensive compliance program, an employee, agent or business partner may violate our policies or U.S. or other applicable laws or we may inadvertently violate such laws. Investigations of alleged violations of those laws can be expensive and disruptive. Violations of such laws can lead to civil and/or criminal prosecutions, substantial fines and other sanctions, including the revocation of our rights to continue certain operations, and also cause business loss and reputational harm, which could adversely affect our financial results and/or stock price.

II. Risks Related to Acquisitions and Strategic Relationships

Businesses we acquire may not generate the revenue and earnings we anticipate and may otherwise adversely affect our business.

We have acquired, and intend to continue to acquire, new businesses and technologies. If we fail to successfully integrate and manage the businesses and technologies we acquire, if an acquisition does not further our business strategy as we expect, or if a business we acquire has unexpected legal or financial liabilities, our operating results will be adversely affected.

The types of issues that we may face in integrating and operating the acquired business include:

•difficulties managing an acquired company’s technologies or lines of business or entering new markets where we have limited or no prior experience or where competitors may have stronger market positions;

•unanticipated operating difficulties in connection with the acquired entities, including potential declines in revenue of the acquired entity;

•complications relating to the assumption of pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business;

•issuing equity awards to, or assuming existing equity awards of, acquired employees, which may more rapidly deplete share reserves available under our shareholder-approved equity incentive plans;

•litigation arising from the transaction, including potential intellectual property claims or disputes following our acquisition;

•diversion of management and employee attention;

•challenges with implementing adequate and appropriate controls, procedures and policies in an acquired business;

•potential loss of key personnel in connection with an acquisition; and

•potential incompatibility of business cultures.

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Further, if we do not achieve the expected return on our investments, it could impair the intangible assets and goodwill that we recorded as part of an acquisition, which could require us to record a reduction to the value of those assets.

We may incur significant debt or issue a material amount of debt or equity securities to finance an acquisition, which could adversely affect our operating flexibility and financial statements.

If we were to incur a significant amount of debt—whether by borrowing funds under our credit facility or otherwise or issuing new debt securities—to finance an acquisition, our interest expense, debt service requirements and leverage would increase significantly. The increases in these expenses and in our leverage could constrain our ability to operate as we might otherwise or to borrow additional amounts.

If we were to issue a significant amount of equity securities in connection with an acquisition, existing stockholders would be diluted and earnings per share could decrease.

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

We have many strategic and technology relationships with other companies with which we work to offer complementary solutions and services, that market and sell our solutions and that provide technologies that we embed in our solutions. We may not realize the expected benefits from these relationships and such relationships may be terminated by the other party. If these companies fail to perform or if a company terminates or substantially alters the terms of the relationship, we could suffer delays in product development, reduced sales or other operational difficulties and our business, results of operations and financial condition could be materially adversely affected.

III. Risks Related to Our Intellectual Property

We may be unable to adequately protect our proprietary rights, which could adversely affect our business and our ability to compete effectively.

Our software products are proprietary. We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents and common law safeguards, including trade secret protection, as well as restrictions on disclosures and transferability contained in our agreements with other parties. Despite these measures, the laws of all relevant jurisdictions may not afford adequate protection to our products and other intellectual property. In addition, we frequently encounter attempts by individuals and companies to pirate our software. If our measures to protect our intellectual property rights fail, others may be able to use those rights, which could reduce our competitiveness and revenues.

In addition, any legal action to protect our intellectual property rights that we may bring or be engaged in could be costly, may distract management from day-to-day operations and may lead to additional claims against us, and we may not succeed, all of which would materially adversely affect our operating results.

Intellectual property infringement claims could be asserted against us, which could be expensive to defend and could result in limitations on our use of the claimed intellectual property.

The software industry is characterized by frequent litigation regarding copyright, patent and other intellectual property rights. If a lawsuit of this type is filed, it could result in significant expense to us and divert the efforts of our technical and management personnel. We cannot be sure that we would prevail against any such asserted claims. If we did not prevail, we could be prevented from using the claimed intellectual property or be required to enter into royalty or licensing agreements, which might not be available on terms acceptable to us. In addition to possible claims with respect to our proprietary products, some of our products contain technology developed by and licensed from third parties and we may likewise be susceptible to infringement claims with respect to these third-party technologies.

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IV. Risks Related to Our Indebtedness

Our substantial indebtedness could adversely affect our business, financial condition and results of operations, as well as our ability to meet our payment obligations under our debt.

We have a significant amount of indebtedness. As of November 15, 2022, our total debt outstanding was approximately $1,359 billion, $1 billion of which was associated with the 3.625% Senior Notes and 4.000% Senior Notes (together, “Senior Notes”) issued in February 2020, which mature in February 2025 and 2028, respectively, and are unsecured, and $359 million of which was borrowed under our credit facility, which matures in February 2025. All amounts outstanding under the credit facility and the Senior Notes will be due and payable in full on their respective maturity dates. As of November 15, 2022, we had unused commitments under our credit facility of $641 million. PTC Inc. and one of our foreign subsidiaries are eligible borrowers under the credit facility and certain other foreign subsidiaries may become borrowers under our credit facility in the future, subject to certain conditions.

Specifically, our level of debt could:

•make it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults;

•result in an event of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses;

•limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

•reduce the availability of our cash to fund working capital, capital expenditures, acquisitions and other general corporate purposes and limit our ability to obtain additional financing for these purposes;

•increase our vulnerability to adverse economic and industry conditions;

•amplify the risk of increased interest rates as certain of our borrowings, including borrowings under our credit facility, are at variable rates of interest;

•limit our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; and

•place us at a competitive disadvantage compared to other, less leveraged competitors.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under our debt agreements.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt and other obligations. This could further exacerbate the risks to our financial condition described above.

We and our subsidiaries may be able to incur significant additional indebtedness and other obligations in the future, including secured debt. Although the credit agreement governing our credit facility contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions. The additional indebtedness incurred in compliance with these restrictions could be substantial. In addition, the credit agreement and the indenture governing our Senior Notes due 2025 and 2028, will not prevent us from incurring obligations that do not constitute indebtedness. If new debt is added to our current debt levels, or we incur other obligations, the related risks that we now face could intensify.

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We may not be able to generate enough cash to service all our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors, some of which are beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our debt agreements restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our debt obligations.

If we cannot make scheduled payments on our debt, we will be in default and the lenders under our credit facility could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings, the holders of our Senior Notes could declare all outstanding principal, premium, if any, and interest to be due and payable, and we could be forced into bankruptcy or liquidation. These events could result in a loss of your investment.

We are required to comply with certain financial and operating covenants under our debt agreements. Any failure to comply with those covenants could cause amounts borrowed to become immediately due and payable and/or prevent us from borrowing under the credit facility.

We are required to comply with specified financial and operating covenants under our debt agreements and to make payments under our debt, which limit our ability to operate our business as we otherwise might operate it. Our failure to comply with any of these covenants or to meet any debt payment obligations could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and/or unpaid fees, becoming immediately due and payable. We might not have enough working capital or liquidity to satisfy any repayment obligations if those obligations were accelerated. In addition, if we are not in compliance with the financial and operating covenants under the credit facility when we wish to borrow funds, we will be unable to borrow funds.

In addition, the financial and operating covenants under the credit facility may limit our ability to borrow funds, including for strategic acquisitions and share repurchases.

Our credit facility has variable interest tied to LIBOR and we could become subject to higher interest rates if the replacement rate we agree on with our banks is higher.

Borrowings under our revolving credit facility use the London Interbank Offering Rate (LIBOR) as a benchmark for establishing the interest rate. On March 5, 2021, the Intercontinental Exchange Benchmark Administration, the U.K. Financial Conduct Authority (FCA) regulated and authorized administrator of LIBOR, announced, and the FCA confirmed, that one week and two-month USD LIBOR settings will cease on December 31, 2021, and that the USD LIBOR panel for all other tenors will cease on June 30, 2023.

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The credit facility provides a mechanism pursuant to which we and the administrative agent may agree, under certain circumstances, to transition to an alternate base rate borrowing or amend the credit facility to establish an alternate interest rate to LIBOR that includes consideration of the then-prevailing market convention for determining interest rates for syndicated loans in the United States at that time.

Although we believe the alternative rates will not materially increase the rates on our credit facility, the final agreed rate may increase the cost of our variable rate indebtedness.

V. Risks Related to Our Common Stock

Our operating results fluctuate from quarter to quarter, making future operating results difficult to predict; failure to meet market expectations could cause the price of our securities to decline.

Our quarterly operating results historically have fluctuated and are likely to continue to fluctuate depending on many factors, including:

•our adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers: Topic 606 in 2019 creates significant revenue volatility;

•variability in our contracts, including timing of start dates, length of contracts, and mix of on-premises and cloud-based purchases, which would impact our revenue and earnings;

•the rate at which our existing contracts renew or churn;

•a significant percentage of our orders comes from transactions with large customers, which tend to have long lead times that are less predictable;

•because our operating expenses are largely fixed in the short term and are based on expected bookings, any failure to achieve our bookings targets could cause us to miss our near term earnings and cash flow targets;

•because a significant portion of our revenue and expenses are generated from outside the U.S., shifts in foreign currency exchange rates have had and could continue to have an adverse effect on our reported results; and

•we may incur significant expenses in a quarter in connection with corporate development initiatives, restructuring efforts or the investigation, defense or settlement of legal actions that would increase our operating expenses and reduce our earnings for the quarter in which those expenses are incurred.

Accordingly, our quarterly results are difficult to predict prior to the end of the quarter and we may be unable to confirm or adjust expectations with respect to our operating results for a quarter until that quarter has closed. Any failure to meet our quarterly revenue or earnings expectations could adversely impact the market price of our securities.

Our stock price has been volatile, which may make it harder to resell shares at a favorable time and price.

Market prices for securities of software companies are generally volatile and are subject to significant fluctuations that may be unrelated or disproportionate to the operating performance of these companies. Further, our stock price has been more volatile than that of other software companies. Accordingly, the trading prices and valuations of software companies’ stocks, and of ours, may not be predictable. Negative changes in the public’s perception of the prospects of software companies, or of PTC or the markets we serve, could depress our stock price regardless of our operating results.

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Also, a large percentage of our common stock is held by institutional investors and by Rockwell Automation. Purchases and sales of our common stock by these investors could have a significant impact on the market price of the stock.

VI. General Risk Factors

Our international businesses present economic and operating risks, which could adversely affect our business and financial results.

We expect that our international operations will continue to expand and to account for a significant portion of our total revenue. Because we transact business in various foreign currencies, the volatility of foreign exchange rates has had and may in the future have a material adverse effect on our revenue, expenses and operating results.

Other risks inherent in our international operations include, but are not limited to, the following:

•difficulties in staffing and managing foreign sales and development operations;

•increased financial accounting and reporting burdens and complexities;

•increased regulatory and compliance risks;

•inadequate local infrastructure; and

•greater difficulty in protecting our intellectual property.

We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense, reduce our net income, and increase our tax payment obligations.

As a multinational organization, we are subject to income taxes as well as non-income based taxes in the U.S. and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our tax returns are subject to review by various taxing authorities. Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes could be different from what is reflected in our historical income tax provisions and accruals.

Our effective tax rate and tax payment obligations can be adversely affected by several factors, many of which are outside of our control, including:

•changes in tax laws (for example, the introduction of an amendment to Section 174 of the U.S. tax legislation), regulations, and interpretations in multiple jurisdictions in which we operate;

•assessments, and any related tax interest or penalties, by taxing authorities;

•changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;

•changes to the financial accounting rules for income taxes;

•unanticipated changes in tax rates; and

•changes to a valuation allowance on net deferred tax assets, if any.

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ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

We currently have 98 office locations used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work. Of our total of approximately 1,209,000 square feet of leased facilities used in operations, approximately 484,000 square feet are located in the U.S., including 250,000 square feet at our headquarters facility located in Boston, Massachusetts, and approximately 250,000 square feet are located in India, where a significant amount of our research and development is conducted.

ITEM 3. Legal Proceedings

Information on legal proceedings can be found in Note 10. Commitments and Contingencies -- Legal Proceedings of Notes to Consolidated Financial Statements in this Annual Report, which information is incorporated herein by reference.

ITEM 4. Mine Safety Disclosures

Not applicable.

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the Nasdaq Global Select Market under the symbol "PTC."

On September 30, 2022, the close of our fiscal year, and on November 14, 2022, our common stock was held by 1,003 and 1,000 shareholders of record, respectively.

ITEM 6. [Reserved]

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Statements in this Annual Report about anticipated financial results, capital developments and growth, as well as about the development of our products, markets and workforce, are forward-looking statements that are based on our current plans and assumptions. Important information about the bases for these plans and assumptions and factors that may cause our actual results to differ materially from these statements is contained below and in Item 1A. “Risk Factors” of this Annual Report.

Unless otherwise indicated, all references to a year reflect our fiscal year that ends on September 30.

Operating and Non-GAAP Financial Measures

Our discussion of results includes discussion of our ARR (Annual Run Rate) operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis. ARR and our non-GAAP financial measures, including the reasons we use those measures, are described below in Results of Operations - Operating Measure and Results of Operations - Non-GAAP Financial Measures, respectively. The methodology used to calculate constant currency disclosures is described in Results of Operations - Impact of Foreign Currency Exchange on Results of Operations. You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures.

Executive Overview

ARR increased 7% (16% constant currency) to $1,572 million in FY’22 compared to the end of FY’21. Excluding the impact of Codebeamer, which we acquired in the third quarter of FY’22, organic ARR growth was 6% (15% constant currency) in FY’22 compared to FY’21.

FY’22 revenue of $1.93 billion increased 7% over FY’21 (11% in constant currency). FY’22 operating margin of 23% increased approximately 200 basis points over FY’21 and non-GAAP operating margin of 38% increased approximately 300 basis points. Operating margin improvements are due to higher revenue and continued operating expense discipline. FY’22 diluted EPS was $2.65 compared to $4.03 in FY'21. Diluted EPS in FY'22 included a $35 million non-operating charge associated with the decrease in value of an equity investment in a publicly-traded company, offset by a non-operating $30 million credit associated with the sale of a portion of our PLM services business. Diluted EPS in FY'21 benefited from gains associated with an equity investment in a publicly-traded company, and income tax credits related to a release of a previously held valuation allowance. FY'22 non-GAAP diluted EPS was $4.58, representing a 15% increase over non-GAAP diluted EPS of $3.97 in FY'21.

FY’22 operating cash flow of $435 million grew 18% over FY’21; FY’22 free cash flow of $416 million grew 21% over FY’21. FY'22 operating cash flow and free cash flow included an $11.8 million outflow related to acquisition and transaction-related costs and $40.8 million of restructuring payments. We ended FY’22 with cash and cash equivalents of $272 million and gross debt of $1.36 billion, with an aggregate interest rate of 3.9%.

Results of Operations

The following table shows the measures that we consider the most significant indicators of our business performance. In addition to providing operating income, operating margin, diluted earnings per share and cash from operations as calculated under GAAP, we provide our ARR operating measure and non-GAAP operating income, non-GAAP operating margin, non-GAAP diluted earnings per share, and free cash flow for the reported periods. We also provide a view of our actual results on a constant currency basis. Our non-GAAP financial measures exclude the items described in Non-GAAP Financial Measures below. Investors should use our non-GAAP financial measures only in conjunction with our GAAP results.

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For discussion of our FY'21 results and comparison to our FY'20 results, refer to Management's Discussion and Analysis of Financial Conditions and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.

(Dollar amounts in millions, except per share data)	Year ended September 30,						Percent Change
	2022			2021			Actual			Constant Currency(1)
ARR as of September 30(2)	$	1,572.0		$	1,468.5			7	%		16	%
Total recurring revenue(3)	$	1,736.2		$	1,616.3			7	%		12	%
Perpetual license		34.1			33.0			3	%		6	%
Professional services		163.1			157.8			3	%		9	%
Total revenue		1,933.3			1,807.2			7	%		11	%
Total cost of revenue		386.0			371.1			4	%		7	%
Gross margin		1,547.4			1,436.1			8	%		12	%
Operating expenses		1,100.0			1,055.3			4	%		6	%
Operating income	$	447.4		$	380.7			17	%		30	%
Non-GAAP operating income(1)	$	732.2		$	634.4			15	%		23	%
Operating margin		23.1	%		21.1	%
Non-GAAP operating margin(1)		37.9	%		35.1	%
Diluted earnings per share	$	2.65		$	4.03
Non-GAAP diluted earnings per share(1)	$	4.58		$	3.97
Cash flow from operations(4)	$	435.3		$	368.8
Capital expenditure		(19.5	)		(24.7	)
Free cash flow	$	415.8		$	344.1

(1)See Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.

(2)For the September 30, 2021 period, to facilitate comparability, we removed $6.2 million of ARR associated with a Vuforia AR product that we ceased selling as of September 30, 2021 from our ARR operating measure.

(3)Recurring revenue is comprised of on-premises subscription, perpetual support, and SaaS, and cloud revenue.

(4)Cash flow from operations for FY’22 and FY’21 includes $40.8 million and $14.5 million of restructuring payments, respectively. Cash from operations for FY’22 and FY’21 includes $11.8 million and $15.0 million of acquisition and transaction-related payments, respectively. Cash from operations for FY'21 includes $17.9 million in un-forecasted payments related to the prior period tax exposure from a non-U.S. tax dispute.

Impact of Foreign Currency Exchange on Results of Operations

Approximately 55% of our revenue and 40% 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. Changes in foreign currency exchange rates have been a headwind to reported results in FY’22.

The results of operations in the table above, and the tables and discussions below about revenue by line of business, product group, and geographic region present both actual percentage changes year over year and percentage changes on a constant currency basis. Our constant currency disclosures are calculated by multiplying the results in local currency for FY'22 and FY'21 by the exchange rates in effect on September 30, 2021. If FY'22 reported results were converted into U.S. dollars using the rates in effect as of September 30, 2021, ARR as of September 30, 2022 would have been higher by $134 million and operating income in FY'22 would have been $27 million higher.

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Revenue

Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period may have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period-over-period. We recognize revenue for the license portion of on-premises subscription contracts up front when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support element of on-premises subscription contracts and stand-alone support contracts ratably over the term. We continue to convert existing support contracts to on-premises subscriptions, resulting in a shift to up-front recognition of on-premises subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. As we continue to expand our SaaS offerings and release additional cloud functionality into our products, and customers begin to migrate from on-premises subscriptions to SaaS products, we expect that over time a higher portion of our revenue will be recognized ratably. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue comparisons can vary significantly.

Revenue by Line of Business

(Dollar amounts in millions)	Year ended September 30,				Percent Change
	2022		2021		Actual			Constant Currency
License (1)	$	782.7	$	738.1		6	%		10	%
Support (2) and cloud services		987.6		911.3		8	%		13	%
Total software revenue		1,770.3		1,649.3		7	%		12	%
Professional services		163.1		157.8		3	%		9	%
Total revenue	$	1,933.3	$	1,807.2		7	%		11	%

(1)Includes perpetual licenses and the license portion of subscription sales.

(2)Includes support on perpetual licenses and the support portion of subscription sales.

The strengthening of the U.S. dollar compared to foreign currencies had a substantial impact on our revenue growth in FY'22. On an actual currency basis, FY'22 revenue increased $126 million (7%), compared to an increase of $202 million (11%) on a constant currency basis.

Software revenue increased in FY’22 compared to FY’21 due to growth of Windchill and Arena revenue in the Americas and contribution from the recently acquired Codebeamer business in Europe, offset by a decline in Creo revenue primarily driven by foreign currency fluctuations in Europe and changes in contract durations. In FY'22, our average durations for on-premises subscriptions starting in the year decreased slightly, resulting in a reduced revenue benefit compared to FY'21, which benefited from significant increases in average contractual durations due to business rule changes.

Professional services revenue in FY’22 compared to FY'21 reflects an increase in revenue associated with large PLM consulting engagements, particularly with automotive, aerospace and defense and consumer electronics customers. Professional services revenue in the first half of FY’21 was negatively impacted by services delivery challenges associated with the COVID-19 pandemic.

Our long-term expectation is that professional services revenue will trend down over time as we migrate more services engagements to our partners and deliver products that require less consulting and training services. As described in Part I, Item 1. Business above, in the second half of FY'22, we accelerated this strategy through the sale of a portion of our PLM services business to ITC Infotech.

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Revenue and ARR by Product Group

Software Revenue by Product Group(1)
(Dollar amounts in millions)	Year ended September 30,				Percent Change
	2022		2021		Actual			Constant Currency
Digital Thread - Core	$	1,212.1	$	1,161.7		4	%		9	%
Digital Thread - Growth		249.6		236.7		5	%		9	%
Digital Thread - FSG		227.0		210.2		8	%		12	%
Digital Thread (Total)		1,688.7		1,608.6		5	%		9	%
Velocity		81.6		40.7		101	%		101	%
Software revenue	$	1,770.3	$	1,649.3		7	%		12	%
Product lifecycle management (PLM)	$	980.5	$	862.9		14	%		18	%
Computer-aided design (CAD)		789.8		786.4		0	%		5	%
Software revenue	$	1,770.3	$	1,649.3		7	%		12	%

(1)We describe our Product Groups for FY'22 and FY'21 and the change for FY'23, including the products in each group, in Part I, Item 1. Business above.

Windchill software revenue increased by 12% (16% constant currency), driven by a significant increase in on-premises subscription license revenue and an increase in cloud services revenue. Windchill ARR increased 10% (19% constant currency) in FY'22 compared to FY'21.

Arena software revenue increased by 122% (actual and constant currency), driven by an increase in cloud services revenue and an increase in on-premises subscription license revenue. Arena was acquired in January 2021, so it did not contribute to FY'21 revenue for the full year and purchase accounting adjustments to acquired deferred revenue had a greater impact on FY'21 revenue than FY'22. Arena ARR increased by 27% (actual and constant currency) in FY'22 compared to FY'21.

IIoT software revenue increased by 7% (10% constant currency) driven by an increase in cloud services revenue. IIoT ARR increased 14% (21% constant currency) in FY'22 compared to FY'21.

The Codebeamer business, which we acquired in the third quarter, performed well and added a point of ARR growth, taking constant currency ARR growth to 16% for the fourth quarter and full year. Codebeamer generated $9 million of revenue in FY'22, with $6 million of on-premises subscription revenue and $2 million of perpetual support revenue. Codebeamer ARR as of September 30, 2022 was $16 million ($18 million on a constant currency basis).

Creo software revenue decreased by 1% primarily driven by the effect of foreign currency headwinds in Europe. Creo software revenue increased 4% on a constant currency basis. Creo ARR was flat (increased 11% in constant currency) in FY'22 compared to FY'21.

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Software Revenue & ARR by Geographic Region

A significant portion of our software revenue is generated outside the U.S. In both FY’22 and FY’21, approximately 40% to 45% of software revenue was generated in the Americas, 35% to 40% in Europe, and 15% to 20% in Asia Pacific.

(Dollar amounts in millions)	Year ended September 30,				Percent Change
	2022		2021		Actual			Constant Currency
Americas	$	835.9	$	710.7		18	%		18	%
Europe		633.4		645.8		(2	)%		6	%
Asia Pacific		301.0		292.8		3	%		9	%
Total Software revenue	$	1,770.3	$	1,649.3		7	%		12	%

Americas software revenue growth in FY’22 was driven by Windchill revenue growth of 23%, Arena revenue growth of 133%, and IIoT revenue growth of 10%. The increase in revenue from Arena includes the effect of purchase accounting adjustments to reduce acquired deferred revenue. Americas ARR was up 17%.

Europe software revenue declined in FY’22, driven by a $48 million foreign currency impact associated with the strengthening of the U.S. Dollar compared to foreign currencies. Creo revenue decreased 5% (2% increase in constant currency), partially offset by Windchill revenue growth of 4% (12% constant currency) and the addition of Codebeamer revenue. ARR in Europe was up 16% constant currency.

Asia Pacific software revenue growth in FY’22 included a $19 million foreign currency impact associated with the strengthening of the US Dollar compared to foreign currencies. Creo revenue grew 4% (11% constant currency) and Windchill revenue grew 3% (9% constant currency). ARR in Asia Pacific was up 13% constant currency.

Gross Margin

(Dollar amounts in millions)	Year ended September 30,
	2022			2021			Percent Change
Gross margin:
License gross margin	$	733.4		$	676.3			8	%
License gross margin percentage		94	%		92	%
Support and cloud services gross margin	$	802.8		$	747.2			7	%
Support and cloud services gross margin percentage		81	%		82	%
Professional services gross margin	$	11.1		$	12.6			(11	)%
Professional services gross margin percentage		7	%		8	%
Total gross margin	$	1,547.4		$	1,436.1			8	%
Total gross margin percentage		80	%		79	%
Non-GAAP gross margin(1)	$	1,595.7		$	1,485.1			7	%
Non-GAAP gross margin percentage(1)		83	%		82	%

(1) Non-GAAP financial measures are reconciled to GAAP results under Non-GAAP Financial Measures below.

The strengthening of the U.S. dollar compared to foreign currencies had a substantial impact on our gross margin increase in FY'22. On an actual currency basis, FY'22 gross margin increased $111 million (8%), compared to an increase of $176 million (12%) on a constant currency basis.

License gross margin increased in FY’22 compared to FY’21 due to an increase in license revenue of $44.6 million and a decrease in cost of license of $12.5 million, which was driven by lower amortization expense, royalty expense and compensation costs.

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Support and cloud services gross margin increased in FY’22 compared to FY’21 due to increases in support and cloud services revenue of $76.3 million, partially offset by increases in cost of support and cloud services of $20.7 million, which were driven by higher compensation, maintenance and hosting costs.

Professional services gross margin decreased in FY’22 compared to FY’21 due to increases in professional services costs of $6.7 million, including $5.1 million of stock-based compensation expense recognized in FY'22 related to the sale of a portion of our PLM services business in Q3'22, partially offset by a $5.3 million increase in revenue.

Operating Expenses

(Dollar amounts in millions)	Year ended September 30,
	2022			2021			Percent Change
Sales and marketing	$	485.2		$	517.8			(6	)%
% of total revenue		25	%		29	%
Research and development		338.8			299.9			13	%
% of total revenue		18	%		17	%
General and administrative		204.7			206.0			(1	)%
% of total revenue		11	%		11	%
Amortization of acquired intangible assets		35.0			29.4			19	%
% of total revenue		2	%		2	%
Restructuring and other charges, net		36.2			2.2			1545	%
% of total revenue		2	%		0	%
Total operating expenses	$	1,100.0		$	1,055.3			4	%

The strengthening of the U.S. dollar compared to foreign currencies had a substantial reduction to our operating expense increase in FY'22. On an actual currency basis, FY'22 operating expenses increased $45 million (4%), compared to an increase of $67 million (6%) on a constant currency basis.

Total headcount decreased by 3% in FY'22 to 6,503 from 6,709 at the end of FY'21.

Operating expenses in FY'22 compared to FY'21 increased primarily due to the following:

•a $34 million increase in restructuring charges primarily due to the restructuring plan initiated in Q1’22;

•a $9 million increase in travel expenses;

•a $6 million increase in intangible amortization expense;

•a $6 million increase in software subscriptions; and

•a $5 million increase in internal hosting costs;

partially offset by:

•a $12 million decrease in compensation expense (including benefit costs) due to lower headcount caused by attrition and restructuring actions; and

•a $6 million decrease in stock-based compensation.

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Interest Expense

(Dollar amounts in millions)	Year ended September 30,
	2022			2021			Percent Change
Interest and debt premium expense	$	(54.3	)	$	(50.5	)		8	%

Interest expense includes interest under our credit facility and senior notes. Interest expense was higher in FY'22 than FY'21. We had $1,359 million of total debt at September 30, 2022, compared to $1,450 million at September 30, 2021. We repaid $355 million of our revolving credit facility in FY'22, offset by $264 million borrowed at the end of April to fund the acquisition of the Codebeamer business. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days. As of September 30, 2022, the annual rate for borrowings under the credit facility was 4.1%, which has subsequently increased to 5.7%. For additional detail on the changes in our debt structure, see Note 9. Debt, included in the Notes to Consolidated Financial Statements in this Annual Report.

The average interest rate on our total borrowings was 3.4% in FY'22 and 3.3% in FY'21.

Other Income (Expense)

(Dollar amounts in millions)	Year ended September 30,
	2022		2021		Percent Change
Interest income	$	2.5	$	1.8		39	%
Other income (expense), net		1.5		59.7		(97	)%
Other income, net	$	4.0	$	61.5		(93	)%

Interest income represents earnings on the investment of our available cash and marketable securities.

The decrease in Other income, net, in FY’22 over FY’21 was driven by a FY'21 credit of $69 million associated with unrealized gains related to an equity investment in a publicly-traded company. In FY'22, the value of that equity investment decreased, resulting in a $35 million charge. That FY'22 charge was offset by a gain on the sale of a portion of our PLM services business of $30 million and $6 million of gains on the sale of other assets and investments.

Income Taxes

(Dollar amounts in millions)	Year ended September 30,
	2022			2021			Percent Change
Income before income taxes	$	397.1		$	391.8			1	%
Provision (benefit) for income taxes		84.0			(85.2	)		(199	)%
Effective income tax rate		21	%		(22	)%

In FY’22 and FY’21, our effective tax rate is impacted by 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 and the Cayman Islands. In FY’22 and FY’21 the foreign rate differential predominantly relates to those earnings. In addition to the foreign rate differential, our tax rate differed from the statutory federal income tax rate due to the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes (together referred to as U.S. Tax reform), and the excess tax benefit related to stock-based compensation.

Additionally in FY’22, our results include tax expense relating to the book over tax basis difference on goodwill disposed of as part of the sale of a portion of our PLM service business. As a result of the net effect of these items in 2022, our effective tax rate did not differ significantly from the U.S. federal income tax rate.

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In FY’21, our tax rate includes a benefit due to the release of the valuation allowance on the majority of our U.S. net deferred tax assets.

Our results for the twelve months ended September 30, 2021, include a charge of $37.3 million related to the effects of a tax matter in the Republic of Korea (South Korea) of $34.4 million, and the resulting impact on U.S. income taxes of $2.9 million. The charge related to an assessment with respect to various tax issues, primarily foreign withholding taxes, in South Korea. We made additional payments of approximately $20 million to the tax authorities in South Korea in FY’21 for the years 2016 to 2021.

Liquidity and Capital Resources

(in millions)	September 30,
	2022			2021
Cash and cash equivalents	$	272.2		$	326.5
Restricted cash		0.7			0.5
Total	$	272.9		$	327.0
Activity for the year included the following:
Net cash provided by operating activities	$	435.3		$	368.8
Net cash used in investing activities	$	(201.2	)	$	(687.9	)
Net cash (used in) provided by financing activities	$	(264.1	)	$	370.3

Cash, cash equivalents and restricted cash

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. At September 30, 2022, cash and cash equivalents totaled $272 million, compared to $327 million at September 30, 2021.

A significant portion of our cash is generated and held outside the U.S. As of September 30, 2022, we had cash and cash equivalents of $11 million in the U.S., $105 million in Europe, $128 million in Asia Pacific (including India) and $28 million in other non-U.S. countries. We have substantial cash requirements in the U.S., 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., 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 $435 million in FY'22 compared to $369 million in FY'21. The year-over-year increase is primarily due to approximately $170 million of higher cash collections, offset by $30 million more in salary and salary-related payments, a $57 million increase in disbursements largely related to prepayments made in FY'22, and a $12 million increase in tax-related payments.

Restructuring payments totaled $41 million in FY'22, compared to $15 million in FY'21. Cash paid for income taxes was $55 million in FY'22 compared to $58 million in FY'21.

Cash used in investing activities

(in millions)	Year ended September 30,
	2022			2021
Additions to property and equipment	$	(19.5	)	$	(24.7	)
Proceeds from short- and long-term marketable securities, net		—			58.4
Acquisitions of businesses, net of cash acquired		(282.9	)		(718.0	)
Proceeds from sales of investments		46.9			—
Purchases of investments		—			(4.0	)
Purchase of intangible assets		(6.5	)		(0.6	)
Settlement of net investment hedges		24.9			1.0
Divestiture of business, net		32.5			—
Other investing activities		3.4			—
Net cash used in investing activities	$	(201.2	)	$	(687.9	)

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Cash used in investing activities in FY'22 reflects $278 million ($264 million of which we borrowed under our credit facility) used to acquire the Codebeamer business in FY'22, compared to $718 million used in FY’21 for the Arena acquisition, offset by FY'22 proceeds from the sale of a portion of our PLM services business of $33 million and proceeds from the sale of investments of $47 million. For additional detail on our acquisitions, see Note 6. Acquisitions and Disposition of Business of Notes to Consolidated Financial Statements in this Annual Report.

Cash (used in) provided by financing activities

(in millions)	Year ended September 30,
	2022			2021
Borrowings (repayments) on debt, net	$	(91.0	)	$	432.0
Repurchases of common stock		(125.0	)		(30.0	)
Proceeds from issuance of common stock		21.2			21.6
Payments of withholding taxes in connection with stock-based awards		(69.0	)		(53.0	)
Payments of principal for financing leases		(0.3	)		(0.4	)
Net cash (used in) provided by financing activities	$	(264.1	)	$	370.3

Cash used in financing activities in FY’22 reflects borrowings of $264 million, offset by repayments of $355 million under our credit facility, repurchases of common stock of $125 million, payments of withholding taxes related to stock-based awards of $69 million and proceeds from the issuance of common stock of $21 million. In FY'21, net borrowings of $600 million were offset by $168 million of repayments under our credit facility, repurchases of common stock of $30 million, and payments of withholding taxes related to stock-based awards of $53 million.

Outstanding Debt

As of September 30, 2022, we had:

(in millions)	September 30, 2022
4.000% Senior notes due 2028	$	500.0
3.625% Senior notes due 2025		500.0
Credit facility revolver		359.0
Total debt		1,359.0
Unamortized debt issuance costs for the Senior notes		(8.4	)
Total debt, net of issuance costs	$	1,350.6
Undrawn under credit facility revolver	$	641.0
Undrawn under credit facility revolver available for borrowing	$	625.1

As of September 30, 2022, we were in compliance with all financial and operating covenants of the credit facility and the note indentures. Any failure to comply with such covenants under the credit facility would prevent us from being able to borrow additional funds under the credit facility, and, as with any failure to comply with such covenants under the note indentures, could constitute a default that could cause all amounts outstanding to become due and payable immediately. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days. As of September 30, 2022, the annual rate for borrowings outstanding was 4.1%, which has subsequently increased to 5.7%.

Our credit facility and our Senior Notes are described in Note 9. Debt of Notes to the Consolidated Financial Statements in this Annual Report.

Share Repurchase Authorization

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $1 billion of our common stock through September 30, 2023. We may use cash from operations and borrowings under our credit facility to make any such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

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In FY'22 and in FY'21 we repurchased 1.05 million shares for $125 million and approximately 0.23 million shares in the open market for $30 million, respectively.

Our long-term goal is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic initiatives and acquisitions, which could cause us to reduce, suspend, or cease repurchases.

Expectations for Fiscal 2023

We believe that existing cash and cash equivalents, together with cash generated from operations and amounts available under the credit facility and otherwise, will be sufficient to meet our working capital and capital expenditure requirements (which we expect to be approximately $20 million in FY’23) through at least the next twelve months and to meet our known long-term capital requirements.

Our expected uses and sources of cash could change, our cash position could be reduced, and we could incur additional debt obligations if we engage in strategic transactions, retire debt, or repurchase shares, any of which could be commenced, suspended, or completed at any time. Any share repurchases or debt retirement will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Such debt retirement or issuance, share repurchases, or strategic transactions may be material. We regularly borrow under our credit facility to make strategic acquisitions and expect to continue to do so, and may substantially increase our indebtedness to pursue strategic acquisitions, which would increase our debt repayment obligations, including related interest obligations.

Contractual Obligations

At September 30, 2022, our future contractual obligations were related to debt, leases, pension liabilities, unrecognized tax benefits, and purchase obligations. See Note 9. Debt, Note 19. Leases, Note 14. Pension Plans, and Note 8. Income Taxes of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $161.4 million, with $64.2 million expected to be paid in FY'23 and $97.2 million thereafter. Purchase obligations represent minimum commitments due to third parties, including royalty contracts, research and development contracts, telecommunication contracts, information technology maintenance contracts in support of internal-use software and hardware, financing leases, operating leases with original terms of less than 12 months, and other marketing and consulting contracts. Contracts for which our commitment is variable, based on volumes, with no fixed minimum quantities, and contracts that can be canceled without payment penalties are not included in the purchase obligation amounts above. The purchase obligations included above are in addition to amounts included in Current liabilities and Prepaid expenses recorded on our September 30, 2022 Consolidated Balance Sheet.

As of September 30, 2022, we had letters of credit and bank guarantees outstanding of approximately $15 million (of which $0.5 million was collateralized).

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Operating Measure

ARR

ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, cloud, SaaS, and support contracts as of the end of the reporting period.

We believe ARR is a valuable operating metric to measure the health of a subscription business because it captures expected subscription and support cash generation from customers. Because this measure represents the annualized value of customer contracts as of a point in time, it does not represent revenue for any particular period or remaining revenue that will be recognized in future periods.

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:

•free cash flow—cash flow from operations

•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

Free cash flow is cash flow from operations net of capital expenditures, which are expenditures for property and equipment and consist primarily of facility improvements, office equipment, computer equipment, and software. We believe that free cash flow, in conjunction with cash from operations, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations.

The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in general and administrative expenses; restructuring and other charges, net; non-operating charges; and income tax adjustments.

The items excluded from these non-GAAP financial measures 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 when presenting non-GAAP financial measures. Management uses non-GAAP financial measures in conjunction with our GAAP results, as should investors.

Stock-based compensation is a non-cash expense relating to stock-based awards issued to executive officers, employees and outside directors, consisting of restricted stock units. 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.

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Acquisition and transaction-related charges included in General and administrative expenses are direct 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 and transaction-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 and transactions.

Restructuring and other charges, net includes excess facility restructuring charges (credits); impairment and accretion expense charges related to the lease assets of exited facilities; sublease income from previously impaired facilities; and severance costs resulting from reductions of personnel and third-party professional consulting fees related to modifications of our business strategy. These costs may vary in size based on our restructuring plan.

Non-operating charges (credits) includes gains or losses associated with sales or changes in value of assets or liabilities which are generally investing or financing in nature, and are inconsistent with our ordinary operating activities. In FY'22, we recorded gains associated with the sale of assets, including the sale of a portion of our PLM services business. Additionally in FY'22, we recorded a loss associated with the reduction in value of an equity investment in a publicly-traded company. In FY'21, we recorded a gain related to the change in value of an equity investment in a publicly-traded company.

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 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 financial 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 financial 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 financial 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 financial measures often have a material impact on our financial results and such items often recur. Accordingly, the non-GAAP financial measures included in this Annual 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 financial measures to its most closely comparable GAAP measure on our financial statements.

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(in millions, except per share amounts)	Year ended September 30,
	2022			2021
GAAP gross margin	$	1,547.4		$	1,436.1
Stock-based compensation		22.8			19.3
Amortization of acquired intangible assets included in cost of revenue		25.6			29.8
Non-GAAP gross margin	$	1,595.7		$	1,485.1
GAAP operating income	$	447.4		$	380.7
Stock-based compensation		174.9			177.3
Amortization of acquired intangible assets		60.5			59.2
Acquisition and transaction-related charges		13.2			15.0
Restructuring and other charges, net		36.2			2.2
Non-GAAP operating income	$	732.2		$	634.4
GAAP net income	$	313.1		$	476.9
Stock-based compensation		174.9			177.3
Amortization of acquired intangible assets		60.5			59.2
Acquisition and transaction-related charges		13.2			15.0
Restructuring and other charges, net		36.2			2.2
Non-operating charges(credits), net(1)		(1.4	)		(68.8	)
Income tax adjustments(2)		(55.1	)		(191.6	)
Non-GAAP net income	$	541.5		$	470.2
GAAP diluted earnings per share	$	2.65		$	4.03
Stock-based compensation		1.48			1.50
Total amortization of acquired intangible assets		0.51			0.50
Acquisition and transaction-related charges		0.11			0.13
Restructuring and other charges, net		0.31			0.02
Non-operating charges(credits), net(1)		(0.01	)		(0.58	)
Income tax adjustments(2)		(0.47	)		(1.62	)
Non-GAAP diluted earnings per share	$	4.58		$	3.97
Cash flow from operations	$	435.3		$	368.8
Capital expenditure		(19.5	)		(24.7	)
Free cash flow	$	415.8		$	344.1

(1)Non-operating net credits for FY'22 include a $29.8 million gain on the sale of a portion of our PLM services business, a $3.4 million gain on sale of an asset, and a $3.0 million gain on sale of an investment, offset by a $34.8 million expense recognized due to the reduction in value of an equity investment in a publicly-traded company. Non-operating credits for FY'21 include a $68.8 million gain associated with an increase in value of an equity investment in a publicly-traded company.

(2)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. In FY'22, adjustments include tax expense of $15.5 million related to the sale of a portion of our PLM services business, of which $8.1 million pertains to the basis difference in goodwill. Our FY'21 GAAP results included benefits of $179.7 million related to the release of the valuation allowance on the majority of our U.S. net deferred tax assets. As we were profitable on a non-GAAP basis, the FY'21 tax provision was calculated assuming there was no valuation allowance. Additionally, our non-GAAP results for FY'21 excluded tax expenses of $34.8 million related to a non-U.S. prior period tax exposure, primarily related to foreign withholding taxes.

Operating margin impact of non-GAAP adjustments:

	Year ended September 30,
	2022			2021
GAAP operating margin		23.1	%		21.1	%
Stock-based compensation		9.0	%		9.8	%
Total amortization of acquired intangible assets		3.1	%		3.3	%
Acquisition and transaction-related charges		0.7	%		0.8	%
Restructuring and other charges, net		1.9	%		0.1	%
Non-GAAP operating margin		37.9	%		35.1	%

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Critical Accounting Policies and Estimates

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our reported revenues, results of operations, and net income, as well as on the value of certain assets and liabilities on our balance sheet. These estimates, assumptions and judgments are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time.

The accounting policies, methods and estimates used to prepare our financial statements are described generally in Note 2. Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements in this Annual Report. The most important accounting judgments and estimates that we made in preparing the financial statements involved:

•revenue recognition;

•accounting for income taxes; and

•valuation of assets and liabilities acquired in business combinations.

A critical accounting policy is one that is both material to the presentation of our financial statements and requires us to make subjective or complex judgments that could have a material effect on our financial condition and results of operations. Critical accounting policies require us to make assumptions about matters that are uncertain at the time of the estimate, and different estimates that we could have used, or changes in the estimates that are reasonably likely to occur, may have a material impact on our financial condition or results of operations. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.

Accounting policies, guidelines and interpretations related to our critical accounting policies and estimates are generally subject to numerous sources of authoritative guidance and are often reexamined by accounting standards rule makers and regulators. These rule makers and/or regulators may promulgate interpretations, guidance or regulations that may result in changes to our accounting policies, which could have a material impact on our financial position and results of operations.

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Revenue Recognition

We record revenues in accordance with the guidance provided by ASC 606, Revenue from Contracts with Customers. For a full description of our revenue accounting policy, refer to Note 2. Summary of Significant Accounting Policies, included in the Notes to Consolidated Financial Statements in this Annual Report.

Our sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Subscriptions include term-based on-premises licenses, Software-as-a-Service (SaaS), and hosting services.

Judgments and Estimates

Determination of performance obligations. Our subscriptions are frequently sold as a bundle of products and services, typically pairing on-premises term software licenses with support and/or cloud services over the same term. On-premises software is typically determined to be a distinct performance obligation and is thus recognized separately from the support and/or cloud components. On-premises license software revenue is generally recognized at the point in time that the software is made available to the customer, while the support and cloud software revenue components are recognized over the term of the contract. In cases where subscriptions include cloud functionality and on-premises software, an assessment has been performed to determine whether the cloud services are distinct from the on-premises software. In the substantial majority of instances, cloud services provide incremental functionality to customers and have been considered distinct and recognized separately from the on-premises software. This assessment could have a significant impact on the timing of revenue recognition and may change as our product offerings evolve.

Allocation of transaction price. We estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. Significant judgment is used in determining the standalone selling prices of the on-premises license, support, and cloud components of our subscription products. These estimates are subject to change as our product offerings change and could have a significant impact due to the difference in the timing of revenue recognition for on-premises licenses and support and/or cloud.

Right to exchange. Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the original subscription with other software. We account for this right as a liability. For most contracts, we use the expected value method to determine the liability associated with this right across a portfolio of contracts. Where contracts are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the liability for each individual contract. In both circumstances, the transaction price is constrained based on our estimates, which impacts the amount of revenue recognized. Changes in these estimates could significantly impact revenue for any given period.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to calculate our income tax expense based on taxable income by jurisdiction. There are many transactions and calculations about which the ultimate tax outcome is uncertain; as a result, our calculations involve estimates by management. Some of these uncertainties arise as a consequence of revenue-sharing, cost-reimbursement and transfer pricing arrangements among related entities and the differing tax treatment of revenue and cost items across various jurisdictions. If we were compelled to revise or to account differently for our arrangements, that revision could affect our recorded tax liabilities.

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The income tax accounting process also involves estimating our actual current tax liability, together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of our deferred tax assets will not be realized, we must establish a valuation allowance as a charge to income tax expense.

As of September 30, 2022, we have a valuation allowance of $17.8 million against net deferred tax assets in the U.S. and a valuation allowance of $4.5 million against net deferred tax assets in certain foreign jurisdictions. We have concluded, based on the weight of available evidence, that a full valuation allowance is not required against our U.S. net deferred tax assets as they are more likely than not to be realized in the future. We will continue to reassess our valuation allowance requirements each financial reporting period.

The valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards, the majority of which do not expire. However, there are limitations imposed on the utilization of such capital losses that could further restrict the recognition of any tax benefits.

Prior to the passage of the U.S. Tax Act, the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely invested and accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to a one-time transition tax and there is therefore no longer a material cumulative basis difference associated with the undistributed earnings. We maintain our assertion to permanently reinvest these earnings outside the U.S. unless repatriation can be done substantially tax-free, with the exception of a foreign holding company formed in 2018 and our Taiwan subsidiary. If we decide to repatriate any additional non-U.S. earnings in the future, we may be required to establish a deferred tax liability on such earnings. The amount of unrecognized deferred tax liability on the undistributed earnings would not be material.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service (IRS) 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, transfer pricing, 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.

Valuation of Assets and Liabilities Acquired in Business Combinations

In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Determining these fair values requires management to make significant estimates and assumptions, especially with respect to intangible assets.

Our identifiable intangible assets acquired consist of developed technology, core technology, tradenames, customer lists and contracts, and software support agreements and related relationships. Developed technology consists of products that have reached technological feasibility. Core technology represents a combination of processes, inventions and trade secrets related to the design and development of acquired products. Customer lists and contracts and software support agreements and related relationships represent the underlying relationships and agreements with customers of the acquired company’s installed base. We have generally valued intangible assets using a discounted cash flow model. Critical estimates in valuing certain of the intangible assets include but are not limited to:

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•future expected cash flows from software license sales, customer support agreements, customer contracts and related customer relationships and acquired developed technologies and trademarks and trade names and

•discount rates used to determine the present value of estimated future cash flows.

In addition, we estimate the useful lives of our intangible assets based upon the expected period over which we anticipate generating economic benefits from the related intangible asset.

Net tangible assets consist of the fair values of tangible assets less the fair values of assumed liabilities and obligations. Except for deferred revenues, net tangible assets were generally valued by us at the respective carrying amounts recorded by the acquired company, if we believed that their carrying values approximated their fair values at the acquisition date. For acquisitions completed prior to FY'22, the values assigned to deferred revenue reflect an amount equivalent to the estimated cost plus an appropriate profit margin to perform the services related to the acquired company’s software support contracts. During FY'22, we adopted ASU 2021-08, whereby deferred revenue for acquisitions completed in FY'22 reflect the amounts that would have been deferred as of the acquisition date in accordance with ASC 606.

In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date and we reevaluate these items quarterly with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period (up to one year from the acquisition date) and we continue to collect information in order to determine their estimated values. Subsequent to the measurement period or our final determination of the estimated value of uncertain tax positions or tax-related valuation allowances, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect our provision for income taxes in our Consolidated Statements of Operations.

Our estimates of fair value are based upon assumptions believed to be reasonable at that time, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results.

When events or changes in circumstances indicate that the carrying value of a finite-lived intangible asset may not be recoverable, we perform an assessment of the asset for potential impairment. This assessment is based on projected undiscounted future cash flows over the asset’s remaining life. If the carrying value of the asset exceeds its undiscounted cash flows, we record an impairment loss equal to the excess of the carrying value over the fair value of the asset, determined using projected discounted future cash flows of the asset.

Recent Accounting Pronouncements

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations, none of which are expected to have a material impact on our consolidated financial statements. Refer to Note 2. Summary of Significant Accounting Policies of Notes to the Consolidated Financial Statements in this Annual Report for all recently issued accounting pronouncements, which is incorporated herein by reference.

Off-Balance Sheet Arrangements

We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not consolidated (to the extent of our ownership interest therein) into our financial statements. We have not entered into any transactions with unconsolidated entities whereby we have subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.

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ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

We face exposure to financial market risks, including adverse movements in foreign currency exchange rates and changes in interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results.

Foreign currency exchange risk

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, Israel, China and Canada. We enter into foreign currency forward contracts to manage our exposure to fluctuations in foreign exchange rates that arise from receivables and payables denominated in foreign currencies. We do not enter into or hold foreign currency derivative financial instruments for trading or speculative purposes, nor do we enter into derivative financial instruments to hedge future cash flows or forecast transactions.

Our non-U.S. revenues generally are transacted through our non-U.S. subsidiaries and typically are denominated in their local currency. In addition, expenses that are incurred by our non-U.S. subsidiaries typically are denominated in their local currency. Approximately 55% of our revenue and 40% of our expenses were transacted in currencies other than the U.S. dollar. Currency translation affects our reported results because we report our results of operations in U.S. Dollars. Historically, our most significant currency risk has been changes in the Euro and Japanese Yen relative to the U.S. Dollar. Based on current revenue and expense levels (excluding restructuring charges and stock-based compensation), a $0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $32 million and $12 million, respectively.

Our exposure to foreign currency exchange rate fluctuations arises in part from intercompany transactions, with most intercompany transactions occurring between a U.S. dollar functional currency entity and a foreign currency denominated entity. Intercompany transactions typically are denominated in the local currency of the non-U.S. dollar functional currency subsidiary in order to centralize foreign currency risk. Also, both PTC (the parent company) and our non-U.S. subsidiaries may transact business with our customers and vendors in a currency other than their functional currency (transaction risk). In addition, we are exposed to foreign exchange rate fluctuations as the financial results and balances of our non-U.S. subsidiaries are translated into U.S. dollars (translation risk). If sales to customers outside the United States increase, our exposure to fluctuations in foreign currency exchange rates will increase.

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 balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. Our foreign currency hedging program uses forward contracts to manage the foreign currency exposures that exist as part of our ongoing business operations. The contracts are primarily denominated in Japanese Yen and European currencies, and have maturities of less than four months.

The majority of our foreign currency forward contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into 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 currency denominated receivables and payables are included in foreign currency net losses.

37

As of September 30, 2022 and 2021, we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Canadian / U.S. Dollar	$	2,731	$	4,894
Euro / U.S. Dollar		316,869		387,466
British Pound / U.S. Dollar		7,368		23,141
Israeli Shekel / U.S. Dollar		12,052		10,475
Japanese Yen / U.S. Dollar		25,566		46,450
Swiss Franc / U.S. Dollar		25,559		18,039
Swedish Krona / U.S. Dollar		35,713		34,196
Singapore Dollar / U.S. Dollar		3,637		3,498
Chinese Renminbi / U.S. Dollar		23,965		23,297
New Taiwan Dollar / U.S. Dollar		13,906		3,369
Russian Ruble/ U.S. Dollar		—		2,614
Korean Won/ U.S. Dollar		4,919		—
Danish Krone/ U.S. Dollar		3,192		2,380
Australian Dollar/ U.S. Dollar		3,269		2,086
All other		4,432		2,016
Total	$	483,178	$	563,921

Debt

In addition to the $1 billion due under our 2025 and 2028 Senior Notes, as of September 30, 2022, we had $359 million outstanding under our 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. These loans are subject to interest rate risk as interest rates will be adjusted at each rollover date to the extent such amounts are not repaid. As of September 30, 2022, the annual rate on the credit facility loans was 4.14%. If there were a 100 basis point change in interest rates, the annual net impact to earnings and cash flows would be $3.6 million. This change in cash flows and earnings has been calculated based on the borrowings outstanding at September 30, 2022 and a 100 basis point per annum change in interest rate applied over a one-year period.

Cash and cash equivalents

As of September 30, 2022, cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased. We invest our cash with highly rated financial institutions in North America, Europe and Asia Pacific and in diversified domestic and international money market mutual funds. At September 30, 2022, we had cash and cash equivalents of $11 million in the United States, $105 million in Europe, $128 million in Asia Pacific (including India), and $28 million in other non-U.S. countries. Given the short maturities and investment grade quality of the portfolio holdings at September 30, 2022, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents.

Our invested cash is subject to interest rate fluctuations and, for non-U.S. operations, foreign currency exchange rate risk. In a declining interest rate environment, we would experience a decrease in interest income. The opposite holds true in a rising interest rate environment. Over the past several years, the U.S. Federal Reserve Board, European Central Bank and Bank of England have changed certain benchmark interest rates, which has led to declines and increases in market interest rates. These changes in market interest rates have resulted in fluctuations in interest income earned on our cash and cash equivalents. Interest income will continue to fluctuate based on changes in market interest rates and levels of cash available for investment. Changes in foreign currencies relative to the U.S. dollar had an unfavorable impact of $24.2 million and $0.1 million on our consolidated cash balances in 2022 and 2021, respectively, in particular due to changes in the Euro and the Japanese Yen.

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ITEM 8. Financial Statements and Supplementary Data

The consolidated financial statements and notes to the consolidated financial statements are attached as APPENDIX A.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Controls and Procedures

Evaluation 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.

As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on this evaluation, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, 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 and includes those policies and procedures that:

•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2022 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment and those criteria, our management concluded that, as of September 30, 2022, our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of September 30, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears under Item 8.

Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information

None.

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

The information required by this item with respect to our directors and executive officers may be found under the headings “Proposal 1: Election of Directors,” “Corporate Governance,” "Information About Our Executive Officers," and “Transactions with Related Persons” appearing in our 2023 Proxy Statement. Such information is incorporated herein by reference.

Code of Ethics for Senior Executive Officers

We have adopted a Code of Ethics for Senior Executive Officers that applies to our Chief Executive Officer, President, Chief Financial Officer, and Controller, as well as others. The Code is embedded in our Code of Business Conduct and Ethics applicable to all employees. A copy of the Code of Business Conduct and Ethics is publicly available on our website at www.ptc.com. If we make any substantive amendments to, or grant any waiver from, including any implicit waiver, the Code of Ethics for Senior Executive Officers to or for our Chief Executive Officer, President, Chief Financial Officer or Controller, we will disclose the nature of such amendment or waiver in a current report on Form 8-K.

ITEM 11. Executive Compensation

Information with respect to director and executive compensation may be found under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation,” and “Compensation Committee Report” appearing in our 2023 Proxy Statement. Such information is incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item may be found under the headings “Proposal 2: Approve an Increase in the Number of Shares Available under the 2000 Equity Incentive Plan,” ”Equity Compensation Plan Information,” and “Information about PTC Common Stock Ownership” appearing in our 2023 Proxy Statement. Such information is incorporated herein by reference.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

Information with respect to this item may be found under the headings “Independence of Our Directors,” “Review of Transactions with Related Persons” and “Transactions with Related Persons” appearing in our 2023 Proxy Statement. Such information is incorporated herein by reference.

ITEM 14. Principal Accounting Fees and Services

Information with respect to this item may be found under the headings “Engagement of Independent Auditor and Approval of Professional Services and Fees” and “PricewaterhouseCoopers LLP Professional Services and Fees” in our 2023 Proxy Statement. Such information is incorporated herein by reference.

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PART IV

ITEM15. Exhibits and Financial Statement Schedules

(a) Documents Filed as Part of Form 10-K

1.	Financial Statements
	Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238)	F-1
	Consolidated Balance Sheets as of September 30, 2022 and 2021	F-4
	Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020	F-5
	Consolidated Statements of Comprehensive Income for the years ended September 30, 2022, 2021 and 2020	F-6
	Consolidated Statements of Cash Flows for the years ended September 30, 2022, 2021 and 2020	F-7
	Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2022, 2021 and 2020	F-8
	Notes to Consolidated Financial Statements	F-9
2.	Financial Statement Schedules
	Schedules have been omitted since they are either not required, not applicable, or the information is otherwise included in the Financial Statements per Item 15(a)1 above.
3.	Exhibits
	The list of exhibits in the Exhibit Index is incorporated herein by reference.

(b) Exhibits

We hereby file the exhibits listed in the attached Exhibit Index.

(c) Financial Statement Schedules

None.

ITEM16. Form 10-K Summary

None.

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EXHIBIT INDEX

Exhibit Number		Exhibit
2.1	—	Share Sale and Purchase Agreement dated as of April 19, 2022, by and among PTC (SSI), Intland Software GmbH, Eger Invest GmbH, Janos Rezso Koppány, Zsolt Koppány, Szabolcs Koppány and Eger Software Holding UG (haftungsbeschränkt) & Co. KG. (filed as Exhibit 1.1 to our Current Report on Form 8-K filed on April 20, 2022 (File No. 0-18059) and incorporated herein by reference).
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	—	Amended and Restated By-Laws of PTC Inc., as amended through June 24, 2021.
4.1	—	Indenture, dated as of February 13, 2020, between PTC Inc. and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on February 13, 2020 (File No. 0-18059) and incorporated herein by reference).
4.2	—	Form of 3.625% senior unsecured notes due 2025 (filed as Exhibit 4.2 to our Current Report on Form 8-K filed on February 13, 2020 (File No. 0-18059) and incorporated herein by reference).
4.3	—	Form of 4.000% senior unsecured notes due 2028 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on February 13, 2020 (File No. 0-18059) and incorporated herein by reference).
4.4	—	Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 4.4 to our Annual Report on Form 10-K for the year ended September 30, 2019 (File No. 0-18059) and incorporated herein by reference).
10.1.1*	—	2000 Equity Incentive Plan (filed as Exhibit 10 to our Current Report on Form 8-K filed on March 8, 2019 (File No. 0-18059) and incorporated herein by reference.
10.1.2	—	Form of Restricted Stock Unit Certificate (Non-U.S.) (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by reference).
10.1.3*	—	Form of Restricted Stock Unit Certificate (Non-Employee Director) (filed as Exhibit 10.1.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2013 (File No. 0-18059) and incorporated herein by reference).
10.1.4	—	Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.9 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.5	—	Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.10 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.6	—	Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.11 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.7	—	Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.12 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.8*	—	Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.13 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.9	—	Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.14 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.10	—	Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.15 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.11*	—	Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.16 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).
10.1.12*	—	Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.17 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (File No. 0-18059) and incorporated herein by reference).
10.2*	—	2016 Employee Stock Purchase Plan (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2019 (File No. 0-18059) and incorporated herein by reference).
10.3*	—	Executive Agreement by and between the Company and James Heppelmann, President and Chief Executive Officer, dated September 30, 2020 (filed as Exhibit 10.1 to our Current Report on Form 8-K dated September 30, 2020 (File No. 0-18059) and incorporated herein by reference).

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10.4*	—	Form of Amended and Restated Executive Agreement between the Company and each of Kristian Talvitie and Aaron von Staats (filed as Exhibit 10.3 to PTC’s Quarterly Report on Form 10-Q for the period ended December 28, 2019 (File. 0-18059) and incorporated herein by reference).
10.5*	—	Form of Executive Agreement between the Company and Michael DiTullio (filed as Exhibit 10.1 to PTC’s Quarterly Report on Form 10-Q for the period ended March 28, 2020 (File. No. 0-18059) and incorporated herein by reference).
10.6*	—	Executive Agreement between the Company and Catherine Kniker dated September 23, 2021.
10.7	—	Lease dated December 14, 1999 by and between PTC Inc. and Boston Properties Limited Partnership (filed as Exhibit 10.21 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 (File No. 0-18059) and incorporated herein by reference).
10.8	—	Third Amendment to Lease Agreement dated as of October 27, 2010 by and between Boston Properties Limited Partnership and PTC Inc. (filed as Exhibit 10.1 to our Current Report on Form 8-K dated November 8, 2010 (File No. 0-18059) and incorporated herein by reference).
10.9	—	Fifth Amendment dated April 10, 2020 to Lease dated December 14, 1999 by and between PTC Inc. and Boston Properties Limited Partnership (filed as Exhibit 10.2 to PTC’s Quarterly Report on Form 10-Q for the period ended March 28, 2020 (File. No. 0-18059) and incorporated herein by reference).
10.10	—	Office Lease Agreement dated as of September 7, 2017 by and between PTC Inc. and SCD L2 Seaport Square LLC (filed as Exhibit 10 to our Current Report on Form 8-K filed on September 7, 2017 (File No. 0-18059) and incorporated herein by reference).
10.11	—	First Amendment to Lease dated as of October 5, 2017 by and between PTC Inc. and SCD L2 Seaport Square LLC (filed as Exhibit 10.23 to our Annual Report on Form 10-K for the period ended September 30, 2017 (File No. 0-18059) and incorporated herein by reference).
10.12***	—	Third Amended and Restated Strategic Alliance Agreement by and between PTC Inc. and Rockwell Automation, Inc. dated as of October 28, 2020 (filed as Exhibit 10.1 to our Current Report on Form 8-K dated October 28, 2020 (File No. 0-18059) and incorporated herein by reference).
10.13	—	Registration Rights Agreement by and between the Company and Rockwell Automation, Inc., dated July 19, 2018 (filed as Exhibit 10.1 in our Current Report on Form 8-K filed on July 19, 2018 (File No. 0-18059) and incorporated herein by reference).
10.14	—	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 June 11, 2018 (File No. 0-18059) and incorporated herein by reference).
10.15	—	Amendment No. 1 to Securities Purchase Agreement dated as of May 11, 2021 between PTC Inc. and Rockwell Automation, Inc. filed as Exhibit 10.1 to our Current Report on Form 8-K filed on May 13, 2021 (File No. 0-18059) and incorporated herein by reference).
10.16	—	Third Amended and Restated Credit Agreement, by and among the Company, PTC (IFSC) Limited, the lenders listed thereto and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 4.4 to our Current Report on Form 8-K filed on February 13, 2020 (File No. 0-18059) and incorporated herein by reference).
21.1	—	Subsidiaries of PTC Inc.
23.1	—	Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm.
31.1	—	Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a).
31.2	—	Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13(a)-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 Annual Report on Form 10-K for the year ended September 30, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2022 and 2021; (ii) Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020; (iii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2022, 2021 and 2020; (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2022, 2021 and 2020; (v) Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2022, 2021 and 2020; and (vi) Notes to Consolidated Financial Statements.
104	—	The cover page of the Annual Report on Form 10-K formatted in Inline XBRL (included in Exhibit 101).

* Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of PTC participates.

** Indicates that the exhibit is being furnished with this report and is not filed as a part of it.

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 15th day of November, 2022.

PTC Inc.
By:	/s/ JAMES HEPPELMANN
	James Heppelmann President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below, on the 15th day of November, 2022.

Signature	Title
(i) Principal Executive Officer:
/s/ JAMES HEPPELMANN	President and Chief Executive Officer
James Heppelmann
(ii) Principal Financial and Accounting Officer:
/s/ KRISTIAN TALVITIE	Executive Vice President and Chief Financial Officer
Kristian Talvitie
(iii) Board of Directors:
/s/ ROBERT SCHECHTER	Chairman of the Board of Directors
Robert Schechter
/s/ MARK BENJAMIN	Director
Mark Benjamin
/s/ JANICE CHAFFIN	Director
Janice Chaffin
/s/ AMAR HANSPAL	Director
Amar Hanspal
/s/ JAMES HEPPELMANN	Director
James Heppelmann
/s/ KLAUS HOEHN	Director
Klaus Hoehn
/s/ MICHAL KATZ	Director
Michal Katz
/s/ PAUL LACY	Director
Paul Lacy
/s/ CORINNA LATHAN	Director
Corinna Lathan
/s/ BLAKE MORET	Director
Blake Moret

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APPENDIX A

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of PTC Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of PTC Inc. and its subsidiaries (the “Company”) as of September 30, 2022 and 2021, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended September 30, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

F-1

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue from Contracts with Customers - Identification of Distinct Performance Obligations

As described in Note 2 to the consolidated financial statements, the Company’s sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Revenue is derived from the licensing of computer software products and from related support and/or professional services contracts. During the year ended September 30, 2022, the Company recognized revenue from contracts with customers of $1,933.3 million. The Company’s contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. On-premises software is determined to be a distinct performance obligation from support. The corresponding revenues are recognized as the related performance obligations are satisfied.

F-2

The principal considerations for our determination that performing procedures relating to revenue recognition, specifically related to management’s identification of distinct performance obligations, is a critical audit matter are the significant judgment by management in the identification of distinct performance obligations, specifically the determination that the on-premises software is determined to be a distinct performance obligation from support, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s identification of distinct performance obligations within contracts with customers.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including the identification of distinct performance obligations. These procedures also included, among others (i) evaluating the Company’s revenue recognition accounting policy and (ii) testing management’s identification of distinct performance obligations in its contracts with customers by examining revenue contracts on a sample basis and evaluating whether these performance obligations are satisfied at a point in time or satisfied over time.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

November 15, 2022

We have served as the Company’s auditor since 1992.

F-3

PTC Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	September 30,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	272,182		$	326,532
Accounts receivable, net of allowance for doubtful accounts of $362 and $304 at September 30, 2022 and September 30, 2021, respectively		636,556			541,072
Prepaid expenses		88,854			69,991
Other current assets		71,065			135,415
Total current assets		1,068,657			1,073,010
Property and equipment, net		98,101			100,237
Goodwill		2,353,654			2,191,887
Acquired intangible assets, net		382,718			378,967
Deferred tax assets		256,091			297,789
Operating right-of-use lease assets		137,780			152,337
Other assets		390,267			313,333
Total assets	$	4,687,268		$	4,507,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	40,153		$	33,381
Accrued expenses and other current liabilities		117,158			113,067
Accrued compensation and benefits		104,022			117,784
Accrued income taxes		5,142			5,055
Deferred revenue		503,781			482,131
Short-term lease obligations		22,002			27,864
Total current liabilities		792,258			779,282
Long-term debt		1,350,628			1,439,471
Deferred tax liabilities		28,396			4,165
Deferred revenue		16,552			15,546
Long-term lease obligations		167,573			180,935
Other liabilities		35,827			49,693
Total liabilities		2,391,234			2,469,092
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued		—			—
Common stock, $0.01 par value; 500,000 shares authorized; 117,472 and 117,163 shares issued and outstanding at September 30, 2022 and September 30, 2021, respectively		1,175			1,172
Additional paid-in capital		1,720,580			1,718,504
Retained earnings		727,737			414,656
Accumulated other comprehensive loss		(153,458	)		(95,864	)
Total stockholders’ equity		2,296,034			2,038,468
Total liabilities and stockholders’ equity	$	4,687,268		$	4,507,560

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

F-4

PTC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Year ended September 30,
	2022			2021			2020
Revenue:
License	$	782,680		$	738,053		$	509,792
Support and cloud services		987,573			911,288			804,825
Total software revenue		1,770,253			1,649,341			1,314,617
Professional services		163,094			157,818			143,798
Total revenue		1,933,347			1,807,159			1,458,415
Cost of revenue:
Cost of license revenue		49,240			61,750			53,195
Cost of support and cloud services revenue		184,789			164,108			145,386
Total cost of software revenue		234,029			225,858			198,581
Cost of professional services revenue		151,951			145,244			135,690
Total cost of revenue		385,980			371,102			334,271
Gross margin		1,547,367			1,436,057			1,124,144
Operating expenses:
Sales and marketing		485,247			517,779			435,451
Research and development		338,822			299,917			256,575
General and administrative		204,732			206,006			159,826
Amortization of acquired intangible assets		34,970			29,396			28,713
Restructuring and other charges, net		36,234			2,211			32,716
Total operating expenses		1,100,005			1,055,309			913,281
Operating income		447,362			380,748			210,863
Interest and debt premium expense		(54,268	)		(50,478	)		(76,428	)
Other income, net		4,004			61,485			271
Income before income taxes		397,098			391,755			134,706
Provision (benefit) for income taxes		84,017			(85,168	)		4,011
Net income	$	313,081		$	476,923		$	130,695
Earnings per share—Basic	$	2.67		$	4.08		$	1.13
Earnings per share—Diluted	$	2.65		$	4.03		$	1.12
Weighted-average shares outstanding—Basic		117,194			116,836			115,663
Weighted-average shares outstanding—Diluted		118,233			118,367			116,267

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

F-5

PTC Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Year ended September 30,
	2022			2021			2020
Net income	$	313,081		$	476,923		$	130,695
Other comprehensive income (loss), net of tax:
Hedge gain (loss) arising during the period, net of tax of $5.8 million, $0.4 million, and $1.7 million in 2022, 2021, and 2020, respectively		17,556			1,248			(13,242	)
Foreign currency translation adjustment, net of tax of $0 for each period		(92,768	)		1,613			22,076
Unrealized gain (loss) on marketable securities, net of tax of $0 for each period		—			(307	)		188
Amortization of net actuarial pension gain included in net income, net of tax of $0.4 million, $1.2 million, and $0.9 million in 2022, 2021, and 2020, respectively		1,010			2,930			2,983
Pension net gain (loss) arising during the period net of tax of $6.1 million, $0.7 million, and $0.7 million in 2022, 2021, and 2020, respectively		15,027			1,891			(2,791	)
Change in unamortized pension gain (loss) related to changes in foreign currency, net of tax of $0.6 million, $0.0 million, and $0.7 million in 2022, 2021, and 2020, respectively		1,581			135			(1,878	)
Other comprehensive income (loss)		(57,594	)		7,510			7,336
Comprehensive income	$	255,487		$	484,433		$	138,031

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

F-6

PTC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year ended September 30,
	2022			2021			2020
Cash flows from operating activities:
Net income	$	313,081		$	476,923		$	130,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		87,694			85,239			80,817
Amortization of right-of-use lease assets		34,346			37,295			38,687
Stock-based compensation		174,863			177,289			115,149
Loss (gain) on investment		31,854			(68,829	)		—
Gain on divestiture of business		(29,808	)		—			—
Other non-cash items, net		(4,560	)		(1,381	)		(3,167	)
Provision (benefit) from deferred income taxes		42,963			(158,105	)		(24,641	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable		(165,006	)		(119,418	)		(32,365	)
Accounts payable and accrued expenses		6,957			25,096			(5,135	)
Accrued compensation and benefits		(6,645	)		16,775			10,282
Deferred revenue		57,586			58,702			17,046
Income taxes		(15,329	)		13,979			(26,616	)
Other current assets and prepaid expenses		(40,643	)		(14,206	)		36,189
Operating lease liabilities		(13,610	)		(7,129	)		(11,110	)
Other noncurrent assets and liabilities		(38,417	)		(153,421	)		(92,023	)
Net cash provided by operating activities		435,326			368,809			233,808
Cash flows from investing activities:
Additions to property and equipment		(19,496	)		(24,713	)		(20,196	)
Purchases of short- and long-term marketable securities		—			(7,562	)		(33,869	)
Proceeds from sales of short- and long-term marketable securities		—			56,170			1,521
Proceeds from maturities of short- and long-term marketable securities		—			9,861			30,521
Acquisitions of businesses, net of cash acquired		(282,943	)		(718,030	)		(483,478	)
Proceeds from sales of investments		46,906			—			—
Purchases of investments		—			(4,000	)		—
Purchase of intangible assets		(6,451	)		(550	)		(11,050	)
Settlement of net investment hedges		24,857			965			(9,421	)
Divestiture of business, net		32,518			—			—
Other investing activities		3,408			—			—
Net cash used in investing activities		(201,201	)		(687,859	)		(525,972	)
Cash flows from financing activities:
Proceeds from issuance of Senior Notes		—			—			1,000,000
Borrowings under credit facility		264,000			600,000			455,000
Repayments of Senior Notes		—			—			(500,000	)
Repayments of borrowings under credit facility		(355,000	)		(168,000	)		(610,125	)
Repurchases of common stock		(125,000	)		(30,000	)		—
Proceeds from issuance of common stock		21,207			21,575			18,382
Debt issuance costs		—			—			(17,107	)
Debt early redemption premium		—			—			(15,000	)
Payments of withholding taxes in connection with stock-based awards		(68,991	)		(52,957	)		(33,740	)
Payments of principal for financing leases		(297	)		(354	)		—
Net cash (used in) provided by financing activities		(264,081	)		370,264			297,410
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(24,203	)		(127	)		25
Net change in cash, cash equivalents, and restricted cash		(54,159	)		51,087			5,271
Cash, cash equivalents, and restricted cash, beginning of period		327,047			275,960			270,689
Cash, cash equivalents, and restricted cash, end of period	$	272,888		$	327,047		$	275,960
Supplemental disclosure of non-cash financing activities:
Withholding taxes in connection with stock-based awards, accrued	$	—		$	120		$	—

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

F-7

PTC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Common Stock						Additional			Retained Earnings			Accumulated Other			Total
	Shares			Amount			Paid-In Capital			(Accumulated Deficit)			Comprehensive Loss			Stockholders’ Equity
Balance as of September 30, 2019		114,899		$	1,149		$	1,502,949		$	(191,390	)	$	(110,710	)	$	1,201,998
ASU 2016-02 (ASC 842) adoption		—			—			—			(1,572	)		—			(1,572	)
Common stock issued for employee stock-based awards		1,392			14			(14	)		—			—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(455	)		(4	)		(33,736	)		—			—			(33,740	)
Common stock issued for employee stock purchase plan		289			2			18,380			—			—			18,382
Compensation expense from stock-based awards		—			—			115,149			—			—			115,149
Net income		—			—			—			130,695			—			130,695
Unrealized loss on net investment hedges, net of tax		—			—			—			—			(13,242	)		(13,242	)
Foreign currency translation adjustment		—			—			—			—			22,076			22,076
Unrealized gain on available-for-sale securities, net of tax		—			—			—			—			188			188
Change in pension benefits, net of tax		—			—			—			—			(1,686	)		(1,686	)
Balance as of September 30, 2020		116,125		$	1,161		$	1,602,728		$	(62,267	)	$	(103,374	)	$	1,438,248
Common stock issued for employee stock-based awards		1,490			15			(15	)		—			—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(466	)		(4	)		(53,073	)		—			—			(53,077	)
Common stock issued for employee stock purchase plan		240			2			21,573			—			—			21,575
Compensation expense from stock-based awards		—			—			177,289			—			—			177,289
Net income		—			—			—			476,923			—			476,923
Repurchases of common stock		(226	)		(2	)		(29,998	)		—			—			(30,000	)
Unrealized gain on net investment hedges, net of tax		—			—			—			—			1,248			1,248
Foreign currency translation adjustment		—			—			—			—			1,613			1,613
Unrealized loss on available-for-sale securities, net of tax		—			—			—			—			(307	)		(307	)
Change in pension benefits, net of tax		—			—			—			—			4,956			4,956
Balance as of September 30, 2021		117,163		$	1,172		$	1,718,504		$	414,656		$	(95,864	)	$	2,038,468
Common stock issued for employee stock-based awards		1,737			18			(18	)		—			—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(597	)		(6	)		(68,985	)		—			—			(68,991	)
Common stock issued for employee stock purchase plan		215			2			21,205			—			—			21,207
Compensation expense from stock-based awards		—			—			174,863			—			—			174,863
Net income		—			—			—			313,081			—			313,081
Repurchases of common stock		(1,046	)		(11	)		(124,989	)		—			—			(125,000	)
Unrealized gain on net investment hedges, net of tax		—			—			—			—			17,556			17,556
Foreign currency translation adjustment		—			—			—			—			(92,768	)		(92,768	)
Change in pension benefits, net of tax		—			—			—			—			17,618			17,618
Balance as of September 30, 2022		117,472		$	1,175		$	1,720,580		$	727,737		$	(153,458	)	$	2,296,034

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

F-8

PTC Inc

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Basis of Presentation

Business

PTC Inc. was incorporated in 1985 and is headquartered in Boston, Massachusetts. PTC is a global software company that provides a portfolio of innovative digital solutions that work together to transform how physical products are engineered, manufactured, and serviced.

Basis of Presentation

Our fiscal year-end is September 30. The consolidated financial statements include PTC Inc. (the parent company) and its wholly-owned subsidiaries, including those operating outside the United States. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

We prepare our financial statements under generally accepted accounting principles in the United States. that require management to make estimates and assumptions that affect the amounts reported and the related disclosures. Actual results could differ from these estimates.

2. Summary of Significant Accounting Policies

Foreign Currency Translation

For our non-U.S. operations where the functional currency is the local currency, we translate assets and liabilities at exchange rates in effect at the balance sheet date and record translation adjustments in stockholders’ equity. For our non-U.S. operations where the U.S. dollar is the functional currency, we remeasure monetary assets and liabilities using exchange rates in effect at the balance sheet date and non-monetary assets and liabilities at historical rates and record resulting exchange gains or losses in foreign currency net losses in the Consolidated Statements of Operations. We translate income statement amounts at average rates for the period. Transaction gains and losses are recorded in Other income, net in the Consolidated Statements of Operations.

Revenue Recognition

Nature of Products and Services

Our sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Revenue is derived from the licensing of computer software products and from related support and/or professional services contracts. In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these products or services. To achieve the core principle of this standard, we apply the following five steps:

(1)identify the contract with the customer,

(2)identify the performance obligations in the contract,

(3)determine the transaction price,

(4)allocate the transaction price to performance obligations in the contract, and

(5)recognize revenue when or as we satisfy a performance obligation.

F-9

We enter into contracts that include combinations of licenses, support and professional services, each of which are accounted for as separate performance obligations with differing revenue recognition patterns referenced below.

Performance Obligation	When Performance Obligation is Typically Satisfied
Term-based subscriptions
On-premises software licenses	Point in Time: Upon the later of when the software is made available or the subscription term commences
Support and cloud-based offerings (including SaaS)	Over Time: Ratably over the contractual term; commencing upon the later of when the software is made available or the subscription term commences
Perpetual software licenses	Point in Time: when the software is made available
Support for perpetual software licenses	Over Time: Ratably over the contractual term
Professional services	Over Time: As services are provided

Judgments and Estimates

Our contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. On-premises software is determined to be a distinct performance obligation from support which is sold for the same term of the subscription. For subscription arrangements which include cloud services and on-premises licenses, we assess whether the cloud component is highly interrelated with the on-premises term-based software licenses. Other than a limited population of subscriptions, the cloud component is not currently deemed to be interrelated with the on-premises term software and, as a result, cloud services are accounted for as a distinct performance obligation from the software and support components of the subscription.

Judgment is required to allocate the transaction price to each performance obligation. We use the estimated standalone selling price method to allocate the transaction price for items that are not sold separately. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance obligations are satisfied. Where subscriptions include on-premises software and support only, we determined that approximately 55% of the estimated standalone selling price for subscriptions is attributable to software licenses and approximately 45% is attributable to support for those licenses. Some of our subscription offerings include a combination of on-premises and cloud-based technology. In such cases, the cloud-based technology is considered distinct and receives an allocation of approximately 5% to 50% of the estimated standalone selling price of the subscription. The amounts allocated to cloud are based on assessment of the relative value of the cloud functionality in the subscription, with the remaining amounts allocated between software and support.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the original subscription with other software. Although the exchange right is limited to software products within a similar product grouping, the exchange right is not limited to products with substantially similar features and functionality as those originally delivered. We determined that this right to exchange previously delivered software for different software represents variable consideration to be accounted for as a liability. We have identified a standard portfolio of contracts with common characteristics and applied the expected value method of determining variable consideration associated with this right. Additionally, where there are isolated situations that are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the amount of variable consideration. In both circumstances, the variable consideration included in the transaction price is constrained to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of September 30, 2022 and 2021, the total liability was $34.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

F-10

Practical Expedients

We have elected certain practical expedients associated with our revenue recognition policy. We do not account for significant financing components if the period between revenue recognition and when the customer pays for the products or services is one year or less. Additionally, we recognize revenue equal to the amount we have a right to invoice when the amount corresponds directly with the value to the customer of our performance to date.

Cash Equivalents

Our cash equivalents are invested in money market accounts and time deposits of financial institutions. We have established guidelines relative to credit ratings, diversification and maturities that are intended to maintain safety and liquidity. Cash equivalents include highly liquid investments with maturity periods of three months or less when purchased.

Marketable Securities

As of September 30, 2022, our investment portfolio consisted of certificates of deposit, commercial paper, corporate notes/bonds and government securities that had a maximum maturity of three years. In December 2020, we sold all our marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material.

Equity Securities

On July 22, 2021, a company in which we were a preferred equity investor, Matterport, Inc., completed a business combination with a public company. The carrying value of our investment, which was classified as a non-marketable equity investment, was approximately $8.7 million prior to the business combination. Our preferred shares were converted into common shares of Matterport. As of September 30, 2022, PTC held no shares in Matterport, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY'22 based on contingent earn-outs achieved in January 2022. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold all remaining shares for $3.6 million at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a net loss of $34.8 million in Other income, net on the Consolidated Statements of Operations. No additional gains or losses have been recognized for 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The fair value of the Matterport shares as of September 30, 2021 was $77.5 million and was determined using the closing price of Matterport's common stock as of September 30, 2021, less a temporary discount for lack of marketability. For the year ended September 30, 2021, we recorded an unrealized gain of $68.8 million on the appreciation of the value of the shares in Other income, net on the Consolidated Statement of Operations.

We also have non-marketable equity investments that we account for at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments off the same issuer. We monitor non-marketable equity investments for events that could indicate that the investments are impaired, such as deterioration in the issuer's financial condition and business forecasts and lower valuation in recent or proposed financings. Changes in fair value of non-marketable equity investments are recorded in Other income, net on the Consolidated Statements of Operations. In the years ended September 30, 2022 and 2021, we did not record any impairment charges for our investments. The carrying value of our non-marketable equity investments is recorded in Other assets on the Consolidated Balance Sheets and totaled $1.0 million and $2.2 million as of September 30, 2022 and 2021, respectively.

F-11

Concentration of Credit Risk and Fair Value of Financial Instruments

The amounts reflected in the Consolidated Balance Sheets for Cash and cash equivalents, Accounts receivable and Accounts payable approximate their fair value due to their short maturities. Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and foreign currency derivative instruments. Our Cash, cash equivalents, and foreign currency derivatives are placed with financial institutions with high credit standings. Our credit risk for derivatives is also mitigated due to the short-term nature of the contracts. Our customer base consists of many geographically diverse customers dispersed across many industries. No individual customer comprised more than 10% of our trade accounts receivable as of September 30, 2022 or 2021 or more than 10% of our revenue for the years ended September 30, 2022, 2021 or 2020.

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.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Effective October 1, 2020, we adopted ASC 326, Financial Instruments—Credit Losses, which replaced the incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. In determining the adequacy of the allowance for doubtful accounts, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends. Our allowance for doubtful accounts on trade accounts receivable was $0.4 million, $0.3 million and $0.5 million as of September 30, 2022, 2021 and 2020, respectively. Uncollectible trade accounts receivable written-off, net of recoveries, were $0.4 million, $0.1 million and $0.2 million in 2022, 2021 and 2020, respectively. Net bad debt expense was $0.5 million in 2022, net bad debt recovery was $0.2 million in 2021 and net bad debt expense was $0.0 million in 2020, and is included in General and administrative expenses in the accompanying Consolidated Statements of Operations.

F-12

Derivatives

Generally accepted accounting principles require all derivatives, whether designated in a hedging relationship or not, to be recorded on the balance sheet at fair value. 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 India. 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 currencies resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts and options, 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. For a description of our non-designated hedge and net investment hedge activity see Note 17. Derivative Financial Instruments.

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 four months. The majority of our foreign currency forward contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into 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 or losses on the underlying foreign-denominated balance are offset by the loss or gain on the forward contract and are included in Other income, net.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into U.S. Dollars using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheet. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro functional subsidiaries. Net investment hedges partially offset the impact of foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheet. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheet and the maximum duration of foreign exchange forward contracts is approximately three months.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these Unrealized gain (loss) on net investment hedges in Accumulated other comprehensive loss and subsequently reclassify them to Foreign currency translation adjustment in Accumulated other comprehensive loss at the time of forward contract maturity. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from 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.

Leases

We adopted ASC 842, Leases effective October 1, 2019. ASC 842 requires a modified retrospective transition method that could either be applied at the earliest comparative period in the financial statements or in the period of adoption. We elected to use the period of adoption (October 1, 2019) transition method and therefore did not recast prior periods.

F-13

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets and Operating lease obligations on our Consolidated Balance Sheets. Our operating leases are primarily for office space, cars, servers, and office equipment. We made an election not to separate lease components from non-lease components for office space, servers and office equipment. We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Finance leases are included in Property and equipment, Accrued expenses and Other current liabilities, and Other liabilities on our Consolidated Balance Sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term as that of the lease payments at the commencement date. The right-of-use assets include any lease payments made and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base non-cancellable lease term when determining the lease assets and liabilities.

Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities. These variable payments include insurance, taxes, consumer price index payments, and payments for maintenance and utilities.

Our operating leases expire at various dates through 2037.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Computer hardware and software are typically amortized over three to five years, and furniture and fixtures over three to twelve years. Leasehold improvements are amortized over the shorter of their useful lives or the remaining terms of the related leases. Property and equipment under capital leases are amortized over the lesser of the lease term or their estimated useful lives. Maintenance and repairs are charged to expense when incurred; additions and improvements are capitalized. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in income.

Software Development Costs

We incur costs to develop computer software to be licensed or otherwise marketed to customers. Our research and development expenses consist principally of salaries and benefits, costs of computer equipment, and facility expenses. Research and development costs are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Development costs for software to be sold externally incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and, upon general release, are amortized using the greater of either the straight-line method over the expected life of the related products or based upon the pattern in which economic benefits related to such assets are realized. The straight-line method is used if it approximates the same amount of expense as that calculated using the ratio that current period gross product revenues bear to total anticipated gross product revenues. No development costs for software to be sold externally were capitalized in 2022, 2021 or 2020. We purchased software of $6.0 million and $0.6 million in 2022 and 2021, respectively. Additionally, we acquired capitalized software through business combinations (for further detail, see Note 6. Acquisitions and Disposition of Business). These assets are included in Intangible assets in the accompanying Consolidated Balance Sheets.

F-14

Business Combinations

We allocate the purchase price of acquisitions to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. Goodwill is measured as the excess of the purchase price over the value of net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. Any adjustments to estimated fair value are recorded to goodwill, provided that we are within the measurement period (up to one year from the acquisition date) and that we continue to collect information to determine estimated fair value. Subsequent to the measurement period or our final determination of estimated fair value, whichever comes first, adjustments are recorded in the Consolidated Statements of Operations.

Goodwill, Acquired Intangible Assets and Long-lived Assets

Goodwill is the amount by which the purchase price in a business acquisition exceeds the fair value of net identifiable assets on the date of purchase.

Goodwill is evaluated for impairment annually as of the end of the third quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value.

Our annual goodwill impairment test is based on either a quantitative or qualitative assessment. A quantitative assessment compares the fair value of the reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. We estimate the fair values of our reporting units using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for each reporting unit. We estimate these amounts by evaluating historical trends; current budgets and operating plans; and industry data. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. Qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of each reporting unit at the last valuation date.

We completed our annual goodwill impairment review as of June 30, 2022, which consisted of a qualitative assessment of our Software Products segment and a quantitative assessment of our Professional Services segment in conjunction with the sale of a portion of that business to ITC Infotech. Our qualitative assessment for Software Products included company-specific (e.g., financial performance and long-range plans), industry, and macroeconomic factors, as well as consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date (June 27, 2020). Based on our qualitative assessment, we believe it is more likely than not that the fair value of our Software Products reporting unit exceeds its carrying value and no further impairment testing is required. Our quantitative assessment for the Professional Services segment compared the fair value of the reporting unit to its carrying value. We estimated the fair value of the reporting unit using a discounted cash flow valuation model. This model requires estimates of future revenues, profits, capital expenditures, working capital, and a terminal value based on a residual cash flow valuation model. We estimated this amount by evaluating historical trends, current budgets and operating plans, including consideration of the completed transaction with ITC Infotech. Based on a comparison of the estimated fair value to the carrying value of the Professional Services reporting unit as of June 30, 2022, no impairment was required. Through September 30, 2022, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable.

F-15

Long-lived assets primarily include property and equipment and acquired intangible assets with finite lives (including purchased software, customer lists and trademarks). Purchased software is amortized over periods up to 16 years, customer lists are amortized over periods up to 13 years and trademarks are amortized over periods up to 12 years. We review long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. An impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset or asset group. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses incurred were $8.6 million, $7.1 million and $3.8 million in 2022, 2021 and 2020, respectively and are included in sales and marketing expenses in the accompanying Consolidated Statements of Operations.

Income Taxes

Our income tax expense includes U.S. and international income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effects of these differences are reported as deferred tax assets and liabilities. Deferred tax assets are recognized for the estimated future tax effects of deductible temporary differences and tax operating loss and credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of deferred tax assets will not be realized, we establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we include an expense within the Tax provision (benefit) for income taxes in the Consolidated Statements of Operations.

Comprehensive Income

Comprehensive income consists of Net income and Other comprehensive income (loss), which includes foreign currency translation adjustments, changes in unrecognized actuarial gains and losses (net of tax) related to pension benefits, unrealized gains and losses on hedging instruments and unrealized gains and losses on marketable securities. We do not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as we intend to reinvest permanently undistributed earnings of our foreign subsidiaries. Accumulated other comprehensive loss is reported as a component of Stockholders’ Equity and, as of September 30, 2022, was comprised of the following: cumulative translation adjustment losses of $160.2 million, unrecognized actuarial losses related to pension benefits of $5.4 million ($3.9 million net of tax), and accumulated net gains from net investment hedges of $16.9 million ($10.6 million net of tax). As of September 30, 2021, Accumulated other comprehensive loss was comprised of the following: cumulative translation adjustment losses of $67.5 million, unrecognized actuarial losses related to pension benefits of $30.2 million ($21.5 million net of tax), and accumulated net losses from net investment hedges of $6.5 million ($6.5 million net of tax).

Earnings per Share (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 stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds. Anti-dilutive shares excluded from the calculations of diluted EPS were immaterial in the years ended September 30, 2022 and 2021.

F-16

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data)	Year ended September 30,
	2022		2021		2020
Net income	$	313,081	$	476,923	$	130,695
Weighted average shares outstanding		117,194		116,836		115,663
Dilutive effect of employee stock options, restricted shares and restricted stock units		1,039		1,531		604
Diluted weighted average shares outstanding		118,233		118,367		116,267
Earnings per share—Basic	$	2.67	$	4.08	$	1.13
Earnings per share—Diluted	$	2.65	$	4.03	$	1.12

Stock-Based Compensation

We measure the compensation cost of employee services received in exchange for an award of equity based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. See Note 12. Equity Incentive Plans for a description of the types of equity awards granted, the compensation expense related to such awards and detail of such awards outstanding. See Note 8. Income Taxes for detail of the tax benefit related to stock-based compensation recognized in the Consolidated Statements of Operations.

Recently Adopted Accounting Pronouncements

Intangibles—Goodwill and Other—Internal-Use Software

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted the new standard prospectively effective October 1, 2020. As a result, we are required to capitalize certain costs related to the implementation of cloud computing arrangements. Capitalized costs related to cloud computing arrangements, which are included in Other assets on the Consolidated Balance Sheets, were $14.3 million and $2.8 million as of September 30, 2022 and September 30, 2021, respectively,

Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), which, along with subsequent amendments, replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when recording credit loss estimates. We adopted the new standard effective October 1, 2020, with no impact on our consolidated financial statements.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) on Simplifying the Accounting for Income Taxes. The decisions reflected in ASU 2019-12 update specific areas of ASC 740, Income Taxes, to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. The new standard became effective for us in the first quarter of 2022 ending December 31, 2021 and did not have a material impact on our consolidated financial statements.

F-17

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) on Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to 1) recognition of an acquired contract asset and liability, and 2) payment terms and their effect on subsequent revenue recognized by the acquirer. We adopted ASU 2021-08 early as of the third quarter of 2022 and applied it to our acquisition of Intland Software, which was completed in the quarter. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements. Refer to Note 6. Acquisitions and Disposition of Business for additional discussion regarding the accounting for the acquisition of Intland Software.

Pending Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We are still evaluating the impact, but do not expect the standard to have a material impact on our consolidated financial statements.

F-18

3. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

(in thousands)	September 30,
	2022		2021
Contract asset	$	21,096	$	12,934
Deferred revenue	$	520,333	$	497,677

As of September 30, 2022, $16.9 million of our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in Other current assets. The remainder is included in Other assets and expected to be transferred within the next 24 months. As of September 30, 2021, $8.2 million of our contract asset balance was included in Other current assets.

Approximately $7.0 million of the September 30, 2021 contract asset balance was transferred to receivables during the year ended September 30, 2022 as a result of the right to payment becoming unconditional. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. The net increase in contract assets of $8.2 million includes an increase of approximately $15.2 million related to revenue recognized in the period, net of billings.

During the year ended September 30, 2022, we recognized $491.6 million of revenue that was included in Deferred revenue as of September 30, 2021 and there were additional deferrals of $507.3 million, primarily related to new billings. In addition, deferred revenue increased by $6.9 million as a result of the acquisition of Intland Software. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of September 30, 2022 was $871.0 million, compared to $744.6 million as of September 30, 2021.

Costs to Obtain or Fulfill a Contract

We recognize an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred costs (primarily commissions) are amortized proportionately related to revenue over 5 years, which is generally longer than the term of the initial contract because of anticipated renewals as commissions for renewals are not commensurate with commissions related to our initial contracts. As of September 30, 2022 and September 30, 2021, deferred costs of $40.7 million and $40.2 million, respectively, were included in Other current assets and $77.0 million and $81.1 million, respectively, were included in Other assets. Amortization expense related to costs to obtain a contract with a customer was $50.9 million and $46.7 million in the years ended September 30, 2022 and 2021, respectively. There were no impairments of the contract cost asset in the years ended September 30, 2022 and 2021.

Remaining Performance Obligations

Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of September 30, 2022, the amounts include additional performance obligations of $520.3 million recorded in deferred revenue and $1,092.7 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 57% of the total $1,613.0 million over the next 12 months, with the remaining amount thereafter.

Disaggregation of Revenue

(in thousands)	Year ended September 30,
	2022		2021		2020
Total recurring revenue	$	1,736,188	$	1,616,328	$	1,281,949
Perpetual license		34,065		33,013		32,668
Professional services		163,094		157,818		143,798
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

F-19

For further disaggregation of revenue by geographic region and product group see Note 18. Segment and Geographic Information.

4. Restructuring and Other Charges

Restructuring and other charges, net includes restructuring charges (credits), headquarters relocation charges, and impairment and accretion expense charges related to the lease assets of exited facilities. Refer to Note 19. Leases for additional information about exited facilities.

In 2022, Restructuring and other charges, net totaled $36.2 million, of which $32.4 million is attributable to restructuring charges, $5.1 million is attributable to other charges for professional fees included in restructuring related to our SaaS transformation, offset by a $1.3 million credit attributable to sublease income and the reversal of lease liabilities related to exited lease facilities. We made cash payments related to restructuring charges of $40.8 million ($34.0 million related to employee charges, $2.5 million in payments for other professional fees included in restructuring related to our SaaS transformation, and $4.3 million in net payments for variable costs related to restructured facilities).

In 2021, Restructuring and other charges, net totaled $2.2 million, of which $2.1 million was attributable to restructuring charges and $0.1 million was attributable to impairment and accretion expense related to exited lease facilities. We made cash payments related to restructuring charges of $6.7 million ($3.9 million related to the 2020 restructuring and $2.8 million in rent payments for the restructured facilities).

In 2020, Restructuring and other charges, net totaled $32.7 million, of which $26.4 million was attributable to restructuring charges, $5.6 million was attributable to impairment and accretion expense related to exited lease facilities, and $0.7 million was attributable to accelerated depreciation related to the planned exit of a facility. We made cash payments related to restructuring charges of $31.5 million ($27.3 million related to the 2020 restructuring, $3.9 million related to the 2019 restructuring, and $0.3 million related to a prior restructuring).

Restructuring Charges

In the first quarter of 2022, we committed to a plan to restructure our workforce and consolidate select facilities to align our customer facing and product-related functions with the SaaS industry best practices and accelerate the opportunity for our on-premises customers to move to the cloud. The restructuring plan resulted in charges of $33.1 million in 2022, primarily associated with the termination of benefits for approximately 330 employees.

In the first quarter of 2020, we initiated a restructuring program as part of a realignment associated with expected synergies and operational efficiencies related to the Onshape acquisition. The restructuring plan resulted in charges of $30.8 million through fiscal year 2020 for termination benefits associated with approximately 250 employees. In the year ended September 30, 2022 and 2021, we recorded a credit of $0.1 million and a charge of $0.2 million, respectively, related to this restructuring plan.

F-20

The following table summarizes restructuring accrual activity for the three years ended September 30, 2022:

(in thousands)	Employee severance and related benefits			Facility closures and other costs			Consolidated total
Balance, September 30, 2019	$	298		$	30,788		$	31,086
ASC 842 adoption		—			(16,462	)		(16,462	)
Charges (credits) to operations, net		30,690			(4,263	)		26,427
Cash disbursements		(27,256	)		(4,246	)		(31,502	)
Other non-cash		—			164			164
Foreign exchange impact		260			14			274
Balance, September 30, 2020		3,992			5,995			9,987
Charges to operations, net		1,887			249			2,136
Cash disbursements		(3,925	)		(2,756	)		(6,681	)
Foreign exchange impact		27			17			44
Balance, September 30, 2021		1,981			3,505			5,486
Charges (credits) to operations, net		32,971			(561	)		32,410
Cash disbursements		(34,023	)		(2,355	)		(36,378	)
Foreign exchange impact		(583	)		—			(583	)
Balance, September 30, 2022	$	346		$	589		$	935

As of September 30, 2022 and 2021, the accrual for employee severance and related benefits was included in Accrued compensation and benefits in the Consolidated Balance Sheets.

As of September 30, 2022, the accrual for facility closures and related costs was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets and as of September 30, 2021, $2.6 million was included in Accrued expenses and other current liabilities and $0.9 million was included in Other liabilities in the Consolidated Balance Sheets.

5. Property and Equipment

Property and equipment consisted of the following:

(in thousands)	September 30,
	2022			2021
Computer hardware and software	$	364,762		$	352,704
Furniture and fixtures		29,744			30,568
Leasehold improvements		95,383			94,959
Gross property and equipment		489,889			478,231
Accumulated depreciation and amortization		(391,788	)		(377,994	)
Net property and equipment	$	98,101		$	100,237

Depreciation expense was $27.1 million, $26.1 million and $24.7 million in 2022, 2021 and 2020, respectively.

6. Acquisitions and Disposition of Business

Acquisition and transaction-related costs were $13.2 million, $15.0 million and $8.6 million in 2022, 2021 and 2020, respectively. Acquisition and transaction-related costs include direct costs of potential and completed acquisitions (e.g., investment banker fees and professional fees, including legal and valuation services) and expenses related to acquisition integration activities (e.g., professional fees and severance). In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition and transaction-related charges. Other transactional charges include third-party costs related to structuring unusual transactions, such as the divestiture of a portion of our business. These costs are classified in General and administrative expenses in the accompanying Consolidated Statements of Operations.

Our results of operations include the results of acquired businesses beginning on their respective acquisition date. For all acquisitions made in 2022, our results of operations, if presented on a pro forma basis, would not differ materially from our reported results.

F-21

Intland Software

On April 29, 2022, we acquired Intland Software, GmbH, and Eger Invest GmbH (together, “Intland Software”) pursuant to a Share Sale and Purchase Agreement. Intland Software developed and marketed the Codebeamer™ Application Lifecycle Management (ALM) family of software products. The purchase price of the acquisition was $278.1 million, net of cash acquired, which was financed with cash on hand and $264 million borrowed under our existing credit facility. Intland Software had approximately 150 employees on the close date.

The acquisition of Intland Software has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a discounted cash flow model which requires the use of significant estimates and assumptions, including estimating future revenues and costs. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The purchase price allocation is considered preliminary, and additional adjustments may be recorded during the measurement period as the company receives additional information relevant to the acquisition related to the finalization of working capital adjustments to the purchase price and deferred tax assets and liabilities.

The purchase price allocation resulted in $240.9 million of goodwill, $38.8 million of customer relationships, $19.1 million of purchased software, $1.3 million of trademarks, $20.1 million of deferred tax liabilities, $0.7 million of income tax payables, $6.9 million of deferred revenue, $6.5 million of accounts receivable, and $0.8 million of other net liabilities. The purchase price allocation includes the finalization of measurement period adjustments, which resulted in a $0.9 million increase in goodwill from $240.0 million as of Q3'22, driven by completion of working capital adjustments.

The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 11 years, 10 years, and 10 years, respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill was allocated to our software products segment and will not be deductible for income tax purposes. The resulting amount of goodwill reflects the expected value that will be created by expanding our ALM offerings, which are complementary to our PLM offerings

Arena

On January 15, 2021, we acquired Arena Holdings, Inc. (“Arena”) pursuant to an Agreement and Plan of Merger dated as of December 12, 2020 by and among PTC, Arena, Astronauts Merger Sub, Inc., and the Representative named therein. We paid approximately $715 million, net of cash acquired of $11.1 million, for Arena, which amount was financed with cash on hand and $600 million borrowed under our existing credit facility. Arena had approximately 170 employees on the close date. The acquisition of Arena added revenue of approximately $29.8 million in FY'21, which was net of approximately $9.1 million in fair value adjustments related to purchase accounting for the acquisition.

The acquisition of Arena was accounted for as a business combination. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a discounted cash flow model which requires the use of significant estimates and assumptions, including estimating future revenues and costs. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

F-22

The purchase price allocation resulted in $562.8 million of goodwill, $155.0 million of customer relationships, $38.3 million of purchased software, $4.2 million of trademarks, $41.3 million of deferred tax liabilities, $15.5 million of deferred revenue, $11.4 million of accounts receivable, and $0.4 million of other net liabilities. The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 13 years, 9 years, and 12 years, respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill was allocated to our software products segment and will not be deductible for income tax purposes. The resulting amount of goodwill reflects the expected value that will be created by participation in expected future growth of the PLM SaaS market and expansion into the mid-market for PLM, where SaaS solutions are becoming the standard.

PLM Services Business Disposition

On June 1, 2022, we sold a portion of our PLM services business to ITC Infotech India Limited pursuant to a Strategic Partner Agreement dated as of April 20, 2022 by and between PTC and ITC Infotech. Consideration received from ITC Infotech for the sale was approximately $60.4 million, consisting of $32.5 million cash paid on closing and $28.0 million of services to be provided by ITC Infotech to PTC for no additional charge.

We recognized a gain on the sale of $29.8 million, which is included within Other income, net. The recognized gain consists of $60.4 million of consideration received, less net assets of the business of $30.6 million. Net assets include $33.0 million of goodwill allocated to the business, less $2.4 million of liabilities associated with approximately 160 employees who transferred to ITC Infotech. Goodwill was allocated to the sold business based on a relative fair value allocation of total goodwill of the Professional Services segment.

Additional future contingent consideration of up to $20 million may be received by PTC based on certain performance milestones. We have elected to defer the recognition of gains associated with contingent consideration until they become realizable.

7. Goodwill and Acquired Intangible Assets

We have two operating and reportable segments: (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 September 30, 2022, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,725.2 million and attributable to our Professional Services segment was $11.2 million. As of September 30, 2021, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,525.7 million and attributable to our Professional Services segment was $45.2 million.

F-23

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	September 30, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,353,654					$	2,191,887
Intangible assets with finite lives (amortized)(1):
Purchased software	$	502,859	$	355,857	$	147,002	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		594,970		369,390		225,580		574,516		350,648		223,868
Trademarks and trade names		27,546		17,410		10,136		26,906		17,036		9,870
Other		3,766		3,766		—		4,000		4,000		—
	$	1,152,018	$	769,300	$	382,718	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,736,372					$	2,570,854

(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 11 years, 11 years, and 12 years, respectively.

The changes in the carrying amounts of goodwill from September 30, 2021 to September 30, 2022 are due to the impact of acquisitions and to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill presented by reportable segment were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, September 30, 2020	$	1,583,316		$	42,470		$	1,625,786
Arena acquisition		563,620			—			563,620
Other acquisitions		181			400			581
Foreign currency translation adjustments		1,851			49			1,900
Balance, September 30, 2021	$	2,148,968		$	42,919		$	2,191,887
Intland Software acquisition		240,971			—			240,971
Other acquisitions		691			—			691
Divestiture of business		—			(32,992	)		(32,992	)
Foreign currency translation adjustments		(46,611	)		(292	)		(46,903	)
Balance, September 30, 2022	$	2,344,019		$	9,635		$	2,353,654

The aggregate amortization expense for intangible assets with finite lives recorded for the years ended September 30, 2022, 2021 and 2020 was reflected in our Consolidated Statements of Operations as follows:

(in thousands)	Year ended September 30,
	2022		2021		2020
Amortization of acquired intangible assets	$	34,970	$	29,396	$	28,713
Cost of software revenue		25,578		29,769		27,391
Total amortization expense	$	60,548	$	59,165	$	56,104

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of September 30, 2022 is $56.4 million for 2023, $48.3 million for 2024, $42.1 million for 2025, $38.7 million for 2026, $36.2 million for 2027 and $161.0 million thereafter.

8. Income Taxes

Our income before income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022		2021		2020
Domestic	$	97,460	$	41,199	$	(73,865	)
Foreign		299,638		350,556		208,571
Total income before income taxes	$	397,098	$	391,755	$	134,706

F-24

Our provision (benefit) for income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Current:
Federal	$	767		$	4,774		$	2,187
State		6,675			1,609			1,266
Foreign		33,612			66,554			25,199
		41,054			72,937			28,652
Deferred:
Federal		25,730			(152,311	)		(26,811	)
State		(3,177	)		(27,228	)		(4,063	)
Foreign		20,410			21,434			6,233
		42,963			(158,105	)		(24,641	)
Provision (benefit) for income taxes	$	84,017		$	(85,168	)	$	4,011

Taxes computed at the statutory federal income tax rates are reconciled to the provision (benefit) for income taxes as follows:

(in thousands)	Year ended September 30,
	2022					2021					2020
Statutory federal income tax rate	$	83,391		21	%	$	82,268		21	%	$	28,288		21	%
Change in valuation allowance		—		—			(134,695	)	(34	)%		(16,489	)	(12	)%
State income taxes, net of federal tax benefit		6,518		2	%		(28,768	)	(8	)%		(2,998	)	(2	)%
Federal research and development credits		(7,477	)	(2	)%		(5,764	)	(2	)%		(5,483	)	(4	)%
Uncertain tax positions		2,418		1	%		3,398		1	%		3,072		2	%
Foreign tax credit		(9,078	)	(2	)%		(35,368	)	(9	)%		—		—
Foreign rate differences		(8,982	)	(2	)%		(34,584	)	(9	)%		(22,074	)	(16	)%
Foreign tax on U.S. provision		9,078		2	%		5,931		2	%		4,523		3	%
Excess tax benefits from restricted stock		(8,278	)	(2	)%		(6,141	)	(2	)%		(1,743	)	(1	)%
Audits and settlements		—		—			33,370		9	%		—		—
U.S. permanent items		15,304		3	%		18,389		5	%		6,590		5	%
Base Erosion Anti-Abuse Tax (BEAT)		—		—			2,936		1	%		(1,759	)	(1	)%
GILTI, net of foreign tax credits		2,705		1	%		18,217		4	%		14,899		11	%
Foreign-Derived Intangible Income (FDII)		(6,848	)	(2	)%		(4,428	)	(1	)%		(2,461	)	(2	)%
Sale of a portion of the PLM services business		6,844		2	%		—		—			—		—
Other, net		(1,578	)	(1	)%		71		—			(354	)	(1	)%
Provision (benefit) for income taxes	$	84,017		21	%	$	(85,168	)	(22	)%	$	4,011		3	%

In 2022, 2021, and 2020, our effective tax rate is impacted by 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 and the Cayman Islands. In 2022, 2021, and 2020, the foreign rate differential predominantly relates to these earnings. In addition to the foreign rate differential, our tax rate differed from the U.S. statutory federal income tax due to the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes (together referred to as U.S. Tax reform), and the excess tax benefit related to stock-based compensation.

Additionally in 2022, our results include tax expense relating to the book over tax basis difference in goodwill disposed of as part of the sale of a portion of the PLM services business. As a result of the net effect of these items in 2022, our effective tax rate did not differ significantly from the U.S. federal income tax rate.

In 2021, our tax rate includes a benefit due to the release of the valuation allowance on the majority of our U.S. net deferred tax assets.

In 2020, we recorded benefits for the reduction of the U.S. valuation allowance as a result of the Onshape acquisition. A further reduction to the valuation allowance was also recorded to reflect the impact from the scheduling of the reversal of existing temporary differences resulting in deferred tax liabilities that cannot be offset against deferred tax assets.

F-25

At September 30, 2022 and 2021, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $17.3 million ($5.1 million in Accrued income taxes, $5.6 million in Other current liabilities and $6.6 million in Other liabilities) and $15.7 million ($5.0 million in Accrued income taxes, $0.8 million in Other current liabilities and $9.9 million in Other liabilities), respectively. At September 30, 2022 and 2021, prepaid taxes recorded in Prepaid expenses on the accompanying Consolidated Balance Sheets were $25.8 million and $15.4 million, respectively. We made net income tax payments of $55.0 million, $56.0 million and $52.6 million in 2022, 2021 and 2020, respectively.

The significant temporary differences that created deferred tax assets and liabilities are shown below:

(in thousands)	September 30,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	40,419		$	65,383
Foreign tax credits		14,527			36,287
Capitalized research and development		23,274			27,546
Pension benefits		7,639			14,097
Prepaid expenses		15,886			12,540
Deferred revenue		2,146			2,274
Stock-based compensation		19,486			15,822
Other reserves not currently deductible		14,689			16,796
Amortization of intangible assets		130,825			147,385
Research and development and other tax credits		78,862			74,846
Lease liabilities		46,672			51,471
Fixed assets		78,249			53,025
Capital loss carryforward		3,955			35,156
Other		1,256			2,269
Gross deferred tax assets		477,885			554,897
Valuation allowance	$	(22,283	)		(52,085	)
Total deferred tax assets		455,602			502,812
Deferred tax liabilities:
Acquired intangible assets not deductible	$	(118,360	)		(108,746	)
Lease assets		(36,940	)		(37,273	)
Pension prepayments		(2,622	)		(2,834	)
Deferred revenue		(35,193	)		(2,662	)
Depreciation		(6,937	)		(7,121	)
Unbilled accounts receivable		-			(6,391	)
Deferred income		(5,991	)		(21,744	)
Prepaid commissions		(13,356	)		(16,990	)
Other		(8,508	)		(5,427	)
Total deferred tax liabilities		(227,907	)		(209,188	)
Net deferred tax assets	$	227,695		$	293,624

We reassess our valuation allowance requirements each financial reporting period. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to use our existing deferred tax assets. In the assessment for the period ended September 30, 2021, we concluded that it was more likely than not that our deferred tax assets related to U.S. federal and state income would be realizable, and therefore, the U.S. federal and the majority of the state valuation allowances were released, which resulted in non-cash federal and state tax benefits of $109.4 million and $24.8 million, respectively, to earnings in 2021. That determination was based, in part, on the Company’s cumulative profits before tax and permanent differences from the past three years, which became profitable during 2021, and projections of profits before tax and permanent differences in future years. In 2022, we continue to maintain this conclusion.

For U.S. tax return purposes, net operating loss (NOL) carryforwards and tax credits are generally available to be carried forward to future years, subject to certain limitations. At September 30, 2022, we had U.S. federal tax effected NOL carryforwards from acquisitions of $22.5 million, of which $1.6 million expire in 2023 to 2034. The remaining carryforwards of $20.9 million do not expire. The use of these NOL carryforwards is limited as a result of the change in ownership rules under Internal Revenue Code Section 382.

F-26

As of September 30, 2022, we had federal R&D credit carryforwards of $60.9 million, which expire beginning in 2025 and ending in 2042, and Massachusetts R&D credit carryforwards of $26.1 million, which expire beginning in 2023 and ending in 2037. We also had foreign tax credits of $14.5 million, which expire beginning in 2027 and ending in 2032.

We also have tax effected NOL carryforwards in non-U.S. jurisdictions totaling $7.2 million, the majority of which do not expire, and non-U.S. tax credit carryforwards of $4.0 million that expire beginning in 2030 and ending in 2041. Additionally, we have tax effected amortization carryforwards of $118.5 million in a foreign jurisdiction. There are limitations imposed on the use of such attributes that could restrict the recognition of any tax benefits.

As of September 30, 2022, we have a valuation allowance of $17.8 million against net deferred tax assets in the United States and a valuation allowance of $4.5 million against net deferred tax assets in certain foreign jurisdictions. The $17.8 million U.S. valuation allowance relates to Massachusetts tax credit carryforwards which we do not expect to realize a benefit from prior to expiration. The valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards, the majority of which do not expire. However, there are limitations imposed on the utilization of such capital losses that could restrict the recognition of any tax benefits.

The changes to the valuation allowance were primarily due to the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Valuation allowance, beginning of year	$	52,085		$	205,423		$	177,663
Net release of valuation allowance(1)		—			(134,235	)		—
Net increase (decrease) in deferred tax assets with a full valuation allowance(2)		(29,802	)		(19,103	)		27,760
Valuation allowance, end of year	$	22,283		$	52,085		$	205,423

(1)In 2021, this is attributable to the release in the United States.

(2)In 2022, this change included the loss of foreign attributes upon liquidation of a foreign subsidiary. In 2021, this change includes the loss of state attributes upon merger of two wholly-owned subsidiaries. In 2020, this change is largely attributed to the Onshape acquisition, the adoption of ASC 842 and the impact to the change in scheduling of the reversal of existing temporary differences.

Our policy is to record estimated interest and penalties related to the underpayment of income taxes as a component of our income tax provision. In 2022, 2021 and 2020 we recorded interest expense of $0.2 million, $2.2 million and $0.3 million, respectively. In 2022 and 2020 we had no penalty expenses in our income tax provision. In 2021 we had $2.0 million tax penalty expense in our income tax provision. As of September 30, 2022 and 2021, we had accrued $0.9 million and $0.7 million of net estimated interest expense, respectively. We had no accrued tax penalties as of September 30, 2022, 2021 or 2020.

	Year ended September 30,
Unrecognized tax benefits (in thousands)	2022			2021			2020
Unrecognized tax benefit, beginning of year	$	21,166		$	16,107		$	11,484
Tax positions related to current year:
Additions		3,144			4,844			2,173
Tax positions related to prior years:
Additions		785			30,130			2,452
Reductions		(1,172	)		(478	)		(2	)
Settlements		—			(29,437	)		—
Unrecognized tax benefit, end of year	$	23,923		$	21,166		$	16,107

If all of our unrecognized tax benefits as of September 30, 2022 were to become recognizable in the future, we would record a benefit to the income tax provision of $23.9 million (which would be partially offset by an increase in the U.S. valuation allowance of $5.2 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 $5 million as audits close and statutes of limitations expire.

F-27

Our results for the year ended September 30, 2021 include a charge of $37.3 million related to the effects of a tax matter in the Republic of Korea (South Korea) of $34.4 million, and the resulting impact on U.S. income taxes of $2.9 million, and additional payments of approximately $20 million to South Korea in settlement of the amounts previously accrued.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. 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, transfer pricing, 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 September 30, 2022, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2018 through 2022
Germany	2015 through 2022
France	2019 through 2022
Japan	2017 through 2022
Ireland	2018 through 2022

Additionally, net operating loss and tax credit carryforwards from certain earlier periods in these jurisdictions may be subject to examination to the extent they are used in later periods.

We incurred expenses related to stock-based compensation in 2022, 2021 and 2020 of $174.9 million, $177.3 million and $115.1 million, respectively. Accounting for the tax effects of stock-based awards requires that we establish a deferred tax asset as the compensation is recognized for financial reporting prior to recognizing the tax deductions. The tax benefit recognized in the Consolidated Statements of Operations related to stock-based compensation totaled $27.1 million, $39.9 million and $13.4 million in 2022, 2021 and 2020, respectively. Upon vesting of the stock-based awards, the actual tax deduction is compared with the cumulative financial reporting compensation cost and any excess tax deduction is considered a windfall tax benefit and is recorded to the tax provision. In 2022, 2021 and 2020, net windfall tax benefits of $5.2 million, $9.9 million and $1.3 million were recorded to the tax provision.

Prior to the passage of the U.S. Tax Cuts and Jobs Act in December of 2017 (the Tax Act), we asserted that substantially all of the undistributed earnings of our foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to U.S. federal taxation via a one-time transition tax, and there is therefore no longer a material cumulative basis difference associated with the undistributed earnings. We maintain our assertion of our intention to permanently reinvest these earnings outside the United States unless repatriation can be done substantially tax-free, with the exception of a foreign holding company formed in 2018 and our Taiwan subsidiary. If we decide to repatriate any additional non-U.S. earnings in the future, we may be required to establish a deferred tax liability on such earnings. The amount of unrecognized deferred tax liability on the undistributed earnings would not be material.

F-28

9. Debt

As of September 30, 2022 and 2021, we had the following long-term debt obligations:

(in thousands)	September 30,
	2022			2021
4.000% Senior notes due 2028	$	500,000		$	500,000
3.625% Senior notes due 2025		500,000			500,000
Credit facility revolver(1)		359,000			450,000
Total debt		1,359,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(8,372	)		(10,529	)
Total debt, net of issuance costs(3)	$	1,350,628		$	1,439,471

(1)Unamortized debt issuance costs related to the credit facility were $2.7 million and $3.8 million as of September 30, 2022 and 2021, respectively, and were included in Other assets on the Consolidated Balance Sheets.

(2)Of the $14.1 million in financing costs incurred in connection with the issuance of the 2028 and 2025 notes, unamortized debt issuance costs were $8.4 million and $10.5 million as of September 30, 2022 and 2021, respectively, and were included in Long-term debt on the Consolidated Balance Sheet.

(3)As of September 30, 2022 and 2021 all debt was classified as long term.

Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes) and $500 million in aggregate principal amount of 3.625% senior, unsecured long-term debt at par value, due in 2025 (the 2025 notes).

As of September 30, 2022, the total estimated fair value of the 2028 and 2025 senior notes was approximately $436.3 million and $468.7 million respectively, based on quoted prices for the notes on that date.

We were in compliance with all the covenants for all of our senior notes as of September 30, 2022.

Terms of the 2028 and 2025 Notes

Interest on the 2028 and 2025 notes is payable semi-annually on February 15 and August 15. The debt indenture for the 2028 and 2025 notes 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 may, on one or more occasions, redeem the 2028 and 2025 notes in whole or in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the 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 notes upon such event may be limited by law, by the indenture associated with the 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 notes as required by the indenture, it would constitute an event of default under the indenture which, in turn, may also constitute an event of default under other obligations.

Credit Agreement

In February 2020, we entered into a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, for a new secured multi-currency bank credit facility with a syndicate of banks. We use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements.

F-29

The credit facility consists of a $1 billion revolving credit facility, which may be increased by up to an additional $500 million in the aggregate if the existing or additional lenders are willing to make such increased commitments. As of September 30, 2022, unused commitments under our credit facility were approximately $641.0 million. The maturity date of the credit facility is February 13, 2025, when all remaining amounts outstanding will be due and payable. 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. As of September 30, 2022, the fair value of our credit facility approximates its book value.

PTC and certain eligible foreign subsidiaries are eligible borrowers 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-K, 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. As of the filing of this Form 10-K, no funds were borrowed by an eligible foreign subsidiary borrower. In addition, owned property (including equity interests) of PTC and certain of its material domestic subsidiaries' owned property is subject to first priority perfected liens in favor of the lenders under 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.

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 September 30, 2022, the annual rate for borrowings outstanding was 4.14%. Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.75% above an adjusted LIBO rate (or an agreed successor rate) for Euro currency borrowings or range from 0.25% to 0.75% above the defined base rate (the greater of the Prime Rate, the NYFRB 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. 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 additional indebtedness; 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 $100 million for any purpose and an additional $200 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

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

• 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

• Interest coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA to consolidated trailing four quarters of cash basis interest expense, of not less than 3.00 to 1.00 as of the last day of any fiscal quarter.

As of September 30, 2022, our total leverage ratio was 1.79 to 1.00, our senior secured leverage ratio was 0.49 to 1.00, our interest coverage ratio was 14.21 to 1.00 and we were in compliance with all financial and operating covenants of the credit facility.

F-30

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.

In 2020, we incurred $2.0 million in financing costs in connection with the February 2020 credit facility and $1.0 million in connection with a November 2019 amendment to our prior credit facility. These origination costs are recorded as deferred debt issuance costs and are included in Other assets. Financing costs are expensed over the remaining term of the obligations.

In 2022, 2021 and 2020, we incurred interest expense of $54.3 million, $50.5 million, and $76.4 million, respectively, and paid $48.5 million, $45.2 million and $60.6 million, respectively, of interest on our debt. Additionally, in the third quarter of 2020, we paid $15.0 million in penalties for the early redemption of the 2024 notes. The average interest rate on borrowings outstanding during 2022, 2021 and 2020 was approximately 3.4%, 3.3% and 4.3%, respectively.

10. Commitments and Contingencies

As of September 30, 2022 and 2021, we had letters of credit and bank guarantees outstanding of $15.0 million (of which $0.5 million was collateralized) and $16.3 million (of which $0.5 million was collateralized), respectively, primarily related to our corporate headquarters lease.

Legal and Regulatory Matters

Legal Proceedings

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.

401(k) Plan

On September 17, 2020, three individual plaintiffs filed a putative class action lawsuit against PTC, the Investment Committee for the PTC Inc. 401(k) Plan (the “Plan”), and the PTC Board of Directors (collectively, the “PTC Defendants”) in the U.S. District Court for the District of Massachusetts alleging that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 in the oversight of the Plan. On September 22, 2021, the plaintiffs and the PTC Defendants reached an agreement in principle to settle the lawsuit for a gross settlement amount of $1.725 million. The Court issued an Order of final approval of the settlement on October 18, 2022. The settlement amount will be funded by PTC’s insurer and paid into the Qualified Settlement Fund for the benefit of the class members.

Other Legal Proceedings

In addition to the matter listed above, we are subject to legal proceedings and claims against us in the ordinary course of business. As of September 30, 2022, we estimate that the range of possible outcomes for such matters is immaterial and we do not believe that resolving them 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.

F-31

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. Except for intellectual property infringement indemnification, these agreements typically limit our liability with respect to other indemnification claims. 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 during the term of the license/subscription. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. 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.

11. Stockholders’ Equity

Preferred Stock

We may issue up to 5.0 million shares of our preferred stock in one or more series. 0.5 million of these shares are designated as Series A Junior Participating Preferred Stock. Our Board of Directors is authorized to fix the rights and terms for any series of preferred stock without additional shareholder approval.

Common Stock

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $1 billion of our common stock in the period October 1, 2020 through September 30, 2023. We use cash from operations and borrowings under our credit facility to make such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

In 2022 and 2021 we repurchased 1.05 million shares for $125 million and 0.23 million shares for $30 million, respectively. We did not repurchase any shares in 2020.

12. Equity Incentive Plans

We have two equity incentive plans – our 2000 Equity Incentive Plan and our 2016 Employee Stock Purchase Plan (ESPP).

Our 2000 Equity Incentive Plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock units (RSUs) as the principal equity incentive awards, including certain performance-based awards that are earned based on achieving performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Each RSU represents the contingent right to receive one share of our common stock.

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Our ESPP allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to any 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.

The following table shows total stock-based compensation expense recorded in our Consolidated Statements of Operations:

(in thousands)	Year ended September 30,
	2022		2021		2020
Cost of license revenue	$	272	$	100	$	47
Cost of support and cloud services revenue		11,022		9,900		6,910
Cost of professional services revenue		11,481		9,263		7,012
Sales and marketing		49,467		53,712		37,351
Research and development		41,944		34,272		27,005
General and administrative		60,677		70,042		36,824
Total stock-based compensation expense	$	174,863	$	177,289	$	115,149

Stock-based compensation expense in 2022, 2021 and 2020 includes $6.4 million, $7.3 million, and $5.8 million respectively, related to our ESPP.

2000 Equity Incentive Plan Accounting and Stock-Based Compensation Expense

The fair value of RSUs granted in 2022, 2021 and 2020 was based on the fair market value of our stock on the date of grant for service- and certain performance- based RSUs and based on a Monte Carlo simulation model for relative total shareholder return (rTSR) performance RSUs. The weighted average fair value per share of RSUs granted in 2022, 2021 and 2020 was $114.31, $111.48 and $77.57, respectively.

We account for forfeitures as they occur, rather than estimate expected forfeitures.

As of September 30, 2022, total unrecognized compensation cost related to unvested RSUs expected to vest was approximately $201.5 million and the weighted average remaining recognition period for unvested RSUs was 17 months.

As of September 30, 2022, 2.8 million shares of common stock were available for grant under the equity incentive plan and 2.8 million shares of common stock were reserved for issuance upon vesting of RSUs granted and outstanding.

Restricted stock unit activity for the year ended September 30, 2022 (in thousands, except grant date fair value data)	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance of outstanding RSUs at October 1, 2021		3,217		$	92.46
Granted(1)		1,659		$	114.31
Vested		(1,736	)	$	92.70
Forfeited or not earned		(386	)	$	100.05
Balance of outstanding RSUs at September 30, 2022		2,754		$	105.07	$	288,068

(1)RSUs granted includes 37 shares from prior period rTSR awards that were earned upon achievement of the performance criteria and vested in November 2021 and 87 shares from prior period performance-based awards that were earned upon achievement of the performance criteria and vested in November 2021.

F-33

The following table presents the number of RSU awards granted by award type:

(in thousands)	Twelve months ended September 30, 2022
Performance-based RSUs(1)		106
Service-based RSUs(2)		1,353
Relative Total Shareholder Return RSUs(3)		76

(1)The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2022, November 15, 2023, and November 15, 2024, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (up to a maximum aggregate of 152 RSUs).

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

(3)The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the measurement period ending on September 30, 2024. The RSUs earned will vest on November 15, 2024. Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 RSUs) may vest. If the return to PTC shareholders is negative for the period but still meets or exceeds the peer group indexed return, a maximum of 100% of the rTSR RSUs may vest.

As of September 30, 2022, weighted average remaining vesting term for outstanding awards is 1.0 year.

The weighted-average fair value of the rTSR RSUs was $136.43 per target RSU on the grant date. The fair value of the rTSR RSUs was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The method uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the historical volatility of each entity, and the pairwise correlations of each entity being modeled. The fair value for each simulation is the product of the payout percentage determined by PTC’s rTSR rank against the peer group, the projected price of PTC stock, and a discount factor based on the risk-free rate.

The significant assumptions used in the Monte Carlo simulation model were as follows:

Average volatility of peer group	34.67	%
Risk-free interest rate	0.81	%
Dividend yield	—	%

Total value on vest date of RSUs vested are as follows:

(in thousands)	Year ended September 30,
Value of stock option and stock-based award activity	2022		2021		2020
Total value of restricted stock unit awards at vest	$	199,738	$	171,316	$	103,265

In 2022, shares issued upon vesting of restricted stock units were net of 0.6 million shares retained by us to cover employee tax withholdings of $69.0 million. In 2021, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $53.1 million. In 2020, shares issued upon vesting of restricted stock and restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $33.7 million.

13. Employee Benefit Plan

We offer a savings plan to eligible U.S. employees. The plan is qualified under Section 401(k) of the Internal Revenue Code. Participating employees may defer a portion of their pre-tax compensation, as defined, but not more than statutory limits. We contribute 50% of the amount contributed by the employee, up to a maximum of 3% of the employee’s earnings. Our matching contributions vest immediately. We made matching contributions of $7.8 million, $7.8 million and $6.7 million in 2022, 2021 and 2020, respectively.

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14. Pension Plans

We maintain several international defined benefit pension plans primarily covering certain employees of Computervision, which we acquired in 1998, and CoCreate, which we acquired in 2008, and covering employees in Japan. Benefits are based upon length of service and average compensation with vesting after one to five years of service. The pension cost was actuarially computed using assumptions applicable to each subsidiary plan and economic environment. We adjust our pension liability related to our plans due to changes in actuarial assumptions and performance of plan investments, as shown below. Effective in 1998, benefits under one of the international plans were frozen indefinitely.

The following table presents the actuarial assumptions used in accounting for the pension plans:

	2022			2021			2020
Weighted average assumptions used to determine benefit obligations at September 30 measurement date:
Discount rate		3.7	%		1.0	%		1.1	%
Rate of increase in future compensation		3.6	%		2.8	%		2.8	%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30:
Discount rate		1.0	%		1.1	%		0.9	%
Rate of increase in future compensation		2.8	%		2.8	%		2.8	%
Rate of return on plan assets		5.0	%		5.0	%		5.4	%

In selecting the expected long-term rate of return on assets, we considered the current investment portfolio, and the investment return goals in the plans’ investment policy statements. We, with input from the plans’ professional investment managers and actuaries, also considered the average rate of earnings expected on the funds invested or to be invested to provide plan benefits. This process included determining expected returns for the various asset classes that comprise the plans’ target asset allocation. This basis for selecting the long-term asset return assumptions is consistent with the prior year. Using generally accepted diversification techniques, the plans’ assets, in aggregate and at the individual portfolio level, are invested so that the total portfolio risk exposure and risk-adjusted returns best meet the plans’ long-term liabilities to employees. Plan asset allocations are reviewed periodically and rebalanced to achieve target allocation among the asset categories when necessary. The discount rate is based on yield curves for highly rated corporate fixed income securities matched against cash flows for each future year.

The weighted long-term rate of return assumption, together with the assumptions used to determine the benefit obligations as of September 30, 2022 in the table above, will be used to determine our 2023 net periodic pension income, which we expect to be approximately $0.4 million.

As of September 30, 2022, the weighted average interest crediting rate used in our only cash balance pension plan is 4.1%.

All non-service net periodic pension costs are presented in Other income, net on the Consolidated Statement of Operations. The actuarially computed components of net periodic pension cost recognized in our Consolidated Statements of Operations for each year are shown below:

(in thousands)	Year ended September 30,
	2022			2021			2020
Interest cost of projected benefit obligation	$	550		$	692		$	527
Service cost		1,016			1,127			1,426
Expected return on plan assets		(3,712	)		(3,643	)		(3,878	)
Amortization of prior service cost		(4	)		(5	)		(5	)
Recognized actuarial loss		1,425			4,139			3,854
Settlement gain		(82	)		—			—
Net periodic pension (benefit) cost	$	(807	)	$	2,310		$	1,924

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The following tables display the change in benefit obligation and the change in the plan assets and funded status of the plans as well as the amounts recognized in our Consolidated Balance Sheets:

(in thousands)	Year ended September 30,
	2022			2021
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	96,512		$	97,832
Service cost		1,016			1,127
Interest cost		550			692
Actuarial loss (gain)		(22,616	)		1,100
Foreign exchange impact		(12,949	)		(1,562	)
Participant contributions		96			109
Benefits paid		(2,343	)		(2,786	)
Divestiture of business		(1,184	)		—
Settlements		(953	)		—
Projected benefit obligation, end of year	$	58,129		$	96,512
Change in plan assets and funded status:
Plan assets at fair value, beginning of year	$	78,385		$	72,063
Actual return on plan assets		2,348			7,383
Employer contributions		3,007			3,049
Participant contributions		96			109
Foreign exchange impact		(12,959	)		(1,433	)
Settlements		(953	)		—
Benefits paid		(2,343	)		(2,786	)
Plan assets at fair value—end of year		67,581			78,385
Projected benefit obligation, end of year		58,129			96,512
Underfunded status	$	(9,782	)	$	(18,982	)
Overfunded status	$	19,234		$	855
Accumulated benefit obligation, end of year	$	57,310		$	95,090
Amounts recognized in the balance sheet:
Non-current asset	$	19,234		$	855
Non-current liability	$	(9,434	)	$	(18,615	)
Current liability	$	(348	)	$	(367	)
Amounts in accumulated other comprehensive loss:
Unrecognized actuarial loss	$	5,408		$	30,213

As of September 30, 2022 and 2021, two of our pension plans had project benefit obligations and accumulated benefit obligations in excess of plan assets. Three international plans were overfunded.

The following table shows the change in accumulated other comprehensive loss:

(in thousands)	Year ended September 30,
	2022			2021
Accumulated other comprehensive loss, beginning of year	$	30,213		$	37,175
Recognized during year - net actuarial losses		(1,421	)		(4,135	)
Occurring during year - settlement gain		82			—
Occurring during year - net actuarial gains		(21,253	)		(2,640	)
Foreign exchange impact		(2,213	)		(187	)
Accumulated other comprehensive loss, end of year	$	5,408		$	30,213

In 2022 our actuarial gains were impacted by the change in discount rate from 1.0% in 2021 to 3.7% in 2022. In 2021, our net actuarial gains were driven by the asset performance.

The following table shows the percentage of total plan assets for each major category of plan assets:

	September 30,
Asset category	2022			2021
Equity securities		33	%		35	%
Fixed income securities		33	%		34	%
Commodities		1	%		11	%
Insurance company funds		10	%		12	%
Options		2	%		1	%
Cash		21	%		7	%
		100	%		100	%

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We periodically review the pension plans’ investments in the various asset classes. For the CoCreate plan in Germany, assets are actively allocated between equity and fixed income securities to achieve target return. For the other international plans, assets are allocated 100% to fixed income securities. The fixed income securities for the other international plans primarily include investments held with insurance companies with fixed returns. The plans’ investment managers are provided specific guidelines under which they are to invest the assets assigned to them. In general, investment managers are expected to remain fully invested in their asset class with further limitations on risk as related to investments in a single security, portfolio turnover and credit quality.

The German CoCreate plan's investment policy prohibits the use of derivatives associated with leverage and speculation or investments in securities issued by PTC, except through index-related strategies and/or commingled funds. An investment committee oversees management of the pension plans’ assets. Plan assets consist primarily of investments in equity and fixed income securities.

In 2022, 2021 and 2020 our actual return on plan assets was $2.3 million, $7.4 million and $(3.0) million, respectively.

Based on actuarial valuations and additional voluntary contributions, we contributed $3.0 million, $3.0 million and $2.6 million in 2022, 2021 and 2020, respectively, to the plans. We expect to pay $3.1 million in contributions in 2023, of which $0.6 million will be paid directly to the plans.

As of September 30, 2022, benefit payments expected to be paid over the next ten years are as follows:

(in thousands)	Future Benefit Payments
2023	$	3,410
2024		4,068
2025		3,793
2026		3,830
2027		4,216
2028 to 2032		20,680

Fair Value of Plan Assets

The international plan assets are comprised primarily of investments in a trust and an insurance company. The underlying investments in the trust are primarily publicly-traded equities and governmental fixed income securities. They are classified as Level 1 because the underlying units of the trust are traded in open public markets. The fair value of the underlying investments in equity securities and fixed income are based upon publicly-traded exchange prices.

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	20,430	$	—	$	—	$	20,430
Corporate investment grade		2,038		—		—		2,038
Large capitalization stocks		22,379		—		—		22,379
Commodities		599		—		—		599
Insurance company funds(1)		—		6,823		—		6,823
Options		1,430		—		—		1,430
Cash		13,882		—		—		13,882
Total plan assets	$	60,758	$	6,823	$	—	$	67,581

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(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	24,013	$	—	$	—	$	24,013
Corporate investment grade		2,924		—		—		2,924
Large capitalization stocks		27,078		—		—		27,078
Commodities		8,558		—		—		8,558
Insurance company funds(1)		—		9,105		—		9,105
Options		1,122		—		—		1,122
Cash		5,585		—		—		5,585
Total plan assets	$	69,280	$	9,105	$	—	$	78,385

(1) These investments are comprised primarily of funds invested with an insurance company in Japan with a guaranteed rate of return. The insurance company invests these assets primarily in government and corporate bonds.

15. Fair Value Measurements

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 forward 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 forward 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.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and 2021 were as follows:

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	102,313	$	—	$	—	$	102,313
Convertible note		—		—		2,000		2,000
Forward contracts		—		9,058		—		9,058
	$	102,313	$	9,058	$	2,000	$	113,371
Financial liabilities:
Forward contracts		—		2,908		—		2,908
	$	—	$	2,908	$	—	$	2,908

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	114,375	$	—	$	—	$	114,375
Convertible note		—		—		2,000		2,000
Equity securities		—		—		77,540		77,540
Forward contracts		—		5,363		—		5,363
	$	114,375	$	5,363	$	79,540	$	199,278
Financial liabilities:
Forward contracts		—		3,318		—		3,318
	$	—	$	3,318	$	—	$	3,318

(1)Money market funds and time deposits.

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Level 3 Investments

Convertible Note

In the fourth quarter of 2021, we invested $2.0 million in a non-marketable convertible note. This debt security is classified as available-for-sale and is included in Other assets on the Consolidated Balance Sheet. There were no changes in the fair value of this level 3 investment in the twelve months ended September 30, 2022.

Non-Marketable Equity Investments

The carrying value of our non-marketable equity investments is recorded in Other assets on the Consolidated Balance Sheets and totaled $1.0 million as of September 30, 2022 and $2.2 million as of September 30, 2021. In 2022, PTC sold a non-marketable equity investment for $4.2 million, which had been held at a cost of $1.2 million. The $3.0 million gain recognized on the sale is included in Other income, net for the twelve months ended September 30, 2022

Equity Securities

As of September 30, 2022, PTC held no remaining shares in Matterport, Inc., a publicly traded company, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY'22 based on contingent earn-outs achieved in January 2022. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold all remaining shares held for $3.6 million at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a loss of $34.8 million in Other income, net on the Consolidated Statements of Operations. No additional gains or losses were recognized in 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The following table presents changes in fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to September 30, 2022:

(in thousands)	September 30, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment		(39,072	)
Balance, September 30, 2022	$	—

16. Marketable Securities

We did not hold any marketable securities as of September 30, 2022 or 2021. In December 2020, we sold all our marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material.

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17. Derivative Financial Instruments

Non-Designated Hedges

As of September 30, 2022 and 2021, we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Canadian / U.S. Dollar	$	2,731	$	4,894
Euro / U.S. Dollar		316,869		387,466
British Pound / U.S. Dollar		7,368		23,141
Israeli Shekel / U.S. Dollar		12,052		10,475
Japanese Yen / U.S. Dollar		25,566		46,450
Swiss Franc / U.S. Dollar		25,559		18,039
Swedish Krona / U.S. Dollar		35,713		34,196
Singapore Dollar / U.S. Dollar		3,637		3,498
Chinese Renminbi / U.S. Dollar		23,965		23,297
New Taiwan Dollar / U.S. Dollar		13,906		3,369
Russian Ruble/ U.S. Dollar		—		2,614
Korean Won/ U.S. Dollar		4,919		—
Danish Krone/ U.S. Dollar		3,192		2,380
Australian Dollar/ U.S. Dollar		3,269		2,086
All other		4,432		2,016
Total	$	483,178	$	563,921

The following table shows the effect of our non-designated hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022		2021			2020
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other income, net	$	11,950	$	(3,758	)	$	3,518

Net Investment Hedges

As of September 30, 2022 and 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Euro / U.S. Dollar	$	110,466	$	128,103

The following table shows the effect of our derivative instruments designated as net investment hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021, and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022			2021		2020
Gain (loss) recognized in OCI—effective portion	OCI	$	(1,478	)	$	695	$	(5,483	)
Gain (loss) reclassified from OCI—effective portion	OCI	$	(17,466	)	$	2,723	$	109
Gain recognized—portion excluded from effectiveness testing	Other income, net	$	1,862		$	1,249	$	3,506

As of September 30, 2022, we estimate that all amounts reported in Accumulated other comprehensive loss will be applied against exposed balance sheet accounts upon translation within the next three months.

F-40

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

(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	September 30,
	2022		2021		2022		2021
Derivative assets:(1)
Forward contracts	$	1,960	$	1,641	$	7,098	$	3,722
Derivative liabilities:(2)
Forward contracts	$	—	$	—	$	2,908	$	3,318

(1)As of September 30, 2022 and 2021, current derivative assets of $9.1 million and $5.4 million, respectively, are recorded in Other current assets on the Consolidated Balance Sheets.

(2)As of September 30, 2022 and 2021, current derivative liabilities of $2.9 million and $3.3 million, respectively, are recorded in Accrued expenses and other current liabilities on 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 September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	9,058	$	—	$	9,058	$	(2,908	)	$	—	$	6,150

The following table sets forth the offsetting of derivative liabilities as of September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	2,908	$	—	$	2,908	$	(2,908	)	$	—	$	—

Net gains and losses on foreign currency exposures, including realized and unrealized gains and losses on forward contracts, included in Other income, net, were net losses of $0.9 million, $8.0 million and $1.7 million in 2022, 2021 and 2020, respectively. Net realized and unrealized gains and losses on forward contracts included in Other income, net were a net gain of $16.4 million and $7.0 million in 2022 and 2020, and net loss of $4.9 million in 2021.

F-41

18. Segment and Geographic 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 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 and 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 or report asset information by reportable segment.

(in thousands)	Year ended September 30,
	2022			2021			2020
Software Products
Revenue	$	1,770,253		$	1,649,341		$	1,314,617
Operating costs(1)		494,035			451,734			393,803
Profit		1,276,218			1,197,607			920,814
Professional Services
Revenue		163,094			157,818			143,798
Operating costs(2)		140,470			135,981			128,678
Profit		22,624			21,837			15,120
Total segment revenue		1,933,347			1,807,159			1,458,415
Total segment costs		634,505			587,715			522,481
Total segment profit		1,298,842			1,219,444			935,934
Unallocated operating expenses:(3)
Sales and marketing expenses		435,780			464,067			398,100
General and administrative expenses		130,870			120,954			114,386
Intangibles amortization		60,548			59,165			56,104
Restructuring and other charges, net		36,234			2,211			32,716
Stock-based compensation		174,863			177,289			115,149
Other unallocated operating expenses(4)		13,185			15,010			8,616
Total operating income		447,362			380,748			210,863
Interest expense		(54,268	)		(50,478	)		(76,428	)
Other income, net		4,004			61,485			271
Income before income taxes	$	397,098		$	391,755		$	134,706

(1)Operating costs for the Software Products segment include all costs of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. Operating costs for the Software Products segment include depreciation of $4.9 million, $4.0 million and $4.2 million in 2022, 2021 and 2020, respectively.

(2)Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation, and intangible amortization. The Professional Services segment includes depreciation of $0.9 million, $1.1 million and $1.1 million in 2022, 2021 and 2020, respectively.

(3)Unallocated departments include depreciation of $21.4 million, $21.0 million and $19.4 million in 2022, 2021 and 2020, respectively.

(4)Other unallocated operating expenses include acquisition and transaction-related costs.

F-42

For 2022, 2021 and 2020, we reported revenue by the following three product groups:

(in thousands)	Year ended September 30,
	2022		2021		2020
Digital Thread - Core	$	1,318,857	$	1,257,817	$	1,025,709
Digital Thread - Growth		279,566		273,949		215,353
Digital Thread - FSG		251,621		233,268		210,101
Digital Thread (Total)		1,850,044		1,765,034		1,451,163
Velocity		83,303		42,125		7,252
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415
Product lifecycle management (PLM)		1,137,016		1,012,120		807,016
Computer-aided design (CAD)		796,331		795,039		651,399
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia Pacific region. Intercompany sales and transfers between geographic areas are accounted for at prices that are designed to be representative of unaffiliated party transactions. Our material long-lived assets primarily reside in the United States in 2022, 2021 and 2020. Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.

(in thousands)	Year ended September 30,
	2022		2021		2020
Revenue:
Americas(1)	$	895,095	$	766,021	$	649,383
Europe(2)		714,216		722,977		543,779
Asia Pacific		324,036		318,161		265,253
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

(1)Includes revenue in the United States totaling $864.7 million, $741.3 million, and $621.8 million for 2022, 2021 and 2020, respectively.

(2)Includes revenue in Germany totaling $318.5 million, $290.7 million, and $198.7 million for 2022, 2021 and 2020, respectively.

F-43

19. Leases

Our operating leases expire at various dates through 2037 and are primarily for office space, automobiles, servers, and office equipment.

Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts (the Boston lease). The Boston lease is for approximately 250,000 square feet and runs through June 30, 2037. Base rent for the first year of the lease was $11.0 million and increases by $1 per square foot per year thereafter ($0.3 million per year). Base rent first became payable on July 1, 2020. In addition to the base rent, we are required to pay our pro rata portions of building operating costs and real estate taxes (together, “Additional Rent”). Annual Additional Rent is estimated to be approximately $7.1 million. The lease provides for $25 million in landlord funding for leasehold improvements ($100 per square foot). The leasehold improvement funding provision was fully utilized by us and was reflected as a derecognition adjustment to the right-of-use asset.

In February 2019, we subleased a portion of the Boston location through June 30, 2022, and received approximately $9.1 million in sublease income over the term of the sublease. In March 2022, we extended the sublease through June 30, 2023 and we will receive $2.9 million in sublease income over the term of the extension.

The components of lease cost reflected in the Consolidated Statement of Operations for the year ended September 30, 2022 were as follows:

(in thousands)	Year ended September 30, 2022
Operating lease cost	$	34,346
Short-term lease cost		2,653
Variable lease cost		10,095
Sublease income		(4,600	)
Total lease cost	$	42,494

Supplemental cash flow and right-of use assets information for the year ended September 30, 2022 was as follows:

(in thousands)	Year ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,709
Financing cash flows from operating leases	$	297
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	15,431
Financing leases	$	—

Supplemental balance sheet information related to the leases as of September 30, 2022 was as follows:

	As of September 30, 2022
Weighted-average remaining lease term - operating leases	11.8 years
Weighted-average remaining lease term - financing leases	2 years
Weighted-average discount rate - operating leases		5.4	%
Weighted-average discount rate - financing leases		3.0	%

Maturities of lease liabilities as of September 30, 2022 are as follows:

(in thousands)	Operating Leases
2022	$	31,612
2023		26,907
2024		23,495
2025		19,487
2026		16,662
Thereafter		143,236
Total future lease payments		261,399
Less: imputed interest		(71,824	)
Total	$	189,575

F-44

As of September 30, 2022 we had operating leases that had not yet commenced. The leases will commence in FY'23 with a lease term of 10 years and we will make future lease payments of approximately $11.6 million.

Exited (Restructured) Facilities

As of September 30, 2022, we have net liabilities of $0.3 million related to excess facilities (compared to $3.6 million at September 30, 2021), representing lease obligations classified as short term.

In determining the amount of right-of-use assets for restructured facilities, we are required to estimate such factors as future vacancy rates, the time required to sublet properties, and sublease rates. Updates to these estimates may result in revisions to the value of right-of-use assets recorded. The amounts recorded are based on the net present value of estimated sublease income. As of September 30, 2022, There was no committed sublease income included in the right-of-use assets for exited facilities and there was no uncommitted sublease income. As a result of changes in our sublease income assumptions and an incremental obligation to exit a portion of our former headquarters facility early in the year ended September 30, 2022, we recorded a facility impairment charge of $1.3 million.

In the year ended September 30, 2022, we made payments of $2.0 million related to lease costs for exited facilities.

F-45

EX-3.2

Exhibit 3.2

PTC INC.

AMENDED AND RESTATED BY - LAWS

Article 1- Stockholders

1.1Place of Meetings; Participation by Remote Communications. Meetings of stockholders shall be held at the principal office of the corporation or such different place as is fixed by the Board of Directors or the Chief Executive Officer and stated in the notice of the meeting. The corporation may permit stockholders and proxyholders not physically present at a meeting of stockholders to participate in and be deemed present in person and vote at the meeting by means of remote communications, provided that (a) the corporation shall have implemented reasonable measures (i) to provide such stockholders and proxyholders a reasonable opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings and (ii) to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder and (b) the corporation shall maintain a record of each vote cast or other action taken at the meeting by means of remote communication.

1.2Annual Meeting. The annual meeting of stockholders shall be held on the date (which shall not be a legal holiday in the place where the meeting is to be held) and at the time fixed by the Board of Directors or the Chief Executive Officer and stated in the notice of the meeting. The annual meeting shall be held for the purpose of electing directors and such other purposes as are specified in the notice of meeting. To the extent a stockholder is entitled as a matter of law independent of these By-Laws to propose nominations or other business to be considered at an annual meeting, such stockholder may do so only in compliance with these By-Laws and any other applicable requirements. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-Laws to the annual meeting of stockholders shall be deemed to refer to such special meeting.

1.3Special Meetings. Special meetings of stockholders may be called by the Chief Executive Officer or by the Board of Directors. Upon written application, in accordance with these By-Laws and any other applicable requirements, of one or more stockholders who are entitled to vote and who hold at least 10% (or 40% in the event the corporation has a class of voting stock registered under the Securities Exchange Act of 1934, as amended) of the capital stock entitled to vote at the meeting, special meetings shall be called by the Secretary, or in the case of the death, absence, incapacity or refusal of the Secretary, by any other officer.

1.4Notice of Meetings; Waiver. A written notice of each meeting of stockholders, stating the place, date and hour thereof, and the purposes for which the meeting is to be held, shall be given by the Secretary, Assistant Secretary or other person calling the meeting at least seven, and no more than sixty, days before the meeting to each stockholder entitled to vote at the meeting and to each stockholder who by law, by the Articles of Organization or by these By-Laws is entitled to such notice, by leaving such notice with him or at his residence or usual place of business, by mailing it postage prepaid and addressed to him at his address as it appears in the records of the corporation, or by electronic transmission. Whenever any notice is required to be given to a stockholder by law, by the Articles of Organization or by these By-Laws, no such notice need be given if a written (including electronically transmitted) waiver of notice,

executed before or after the meeting by the stockholder or his authorized attorney, is filed with the records of the meeting. A stockholder’s attendance at a meeting (i) waives objection to lack of notice or defective notice of the meeting, unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter when it is presented.

1.5Quorum. Unless the Articles of Organization otherwise provide, the holders of a majority of the shares of stock issued, outstanding and entitled to vote on any matter shall constitute a quorum with respect to that matter, except that if two or more voting groups are entitled to vote separately then, in the case of each such voting group, a quorum shall consist of the holders of a majority of the votes entitled to be cast on the matter by the voting group. Shares owned directly or indirectly by the corporation shall not be counted in determining the total number of shares outstanding for this purpose. Shares once represented for any purpose at a meeting are deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless (i) the stockholder attends solely to object to lack of notice, defective notice or the conduct of the meeting on other grounds and does not vote the shares or otherwise consent that such shares are to be deemed present, or (ii) in the case of an adjournment, a new record date is or shall be set for that adjourned meeting.

1.6Postponements; Adjournments. Any meeting of stockholders may, before it is called to order, be postponed for any reason by the Board of Directors or Chief Executive Officer to any other date, time and place at which a meeting of stockholders may be held under these By-Laws. Any meeting of stockholders may be adjourned to any other date, time and place at which a meeting of stockholders may be held under these By-Laws by the stockholders present or represented at the meeting, although less than a quorum, or by any officer entitled to preside or to act as clerk of such meeting, if no stockholder is present. It shall not be necessary to notify any stockholder of any adjournment. Any business that could have been transacted at any meeting of the stockholders as originally called may be transacted at any postponement or adjournment of the meeting.

1.7Voting and Proxies. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by the Articles of Organization. Stockholders may vote either in person or by written proxy dated not more than eleven months before the meeting named in the proxy. Proxies shall be filed with the clerk of the meeting, or of any adjourned meeting, before being voted. Except as otherwise limited by their terms, a proxy shall entitle the persons named in the proxy to vote at any adjournment of such meeting. A stockholder may give a proxy by electronic transmission under procedures approved by the Board of Directors or the Chief Executive Officer designed to permit determination that such transmission was authorized by the stockholder. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by any one of them, unless at or prior to exercise of the proxy the corporation receives a specific written notice to the contrary from any one of them. A proxy purported to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise.

1.8Action at Meeting. When a quorum is present at any meeting, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more voting groups entitled to vote separately, then, in the case of each such voting group, the holders of a majority of the votes present or represented and voting on a matter), shall decide any matter to be voted on by the stockholders, except when a larger vote is required by law,

the Articles of Organization or these By-Laws. Any election by stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election. No ballot shall be necessary for such election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election or required by the chairman of the meeting. The corporation shall not directly or indirectly vote any share of its own stock.

1.9Action without Meeting. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Each such consent shall be treated for all purposes as a vote at a meeting.

1.10Advance Notice of Business at Meetings of Stockholders.

(a)To the extent a stockholder is entitled as a matter of law or another provision of these By-Laws to propose a matter to be considered at any meeting of the stockholders (other than the nomination of directors, which is addressed in Section 2.3), such matter may be proposed only by a person who is a stockholder of record of the corporation at the time of giving the notice provided for in this Section 1.10, who is entitled to vote at the applicable meeting, and who (in addition to complying with any other applicable requirements) has given timely written notice thereof in accordance with this Section 1.10 to the Secretary at the principal executive offices of the corporation.

(b)To be timely with respect to an annual meeting, a stockholder’s notice must be received by the Secretary not less than ninety (90) days nor more than one hundred twenty (120) days before the anniversary of the date on which the corporation first transmitted to stockholders its proxy materials for the immediately preceding annual meeting of stockholders; provided that, if the annual meeting is not held within thirty (30) days before or after the anniversary of such preceding annual meeting, such stockholder’s notice to be timely must be so received not later than the close of business on the later of (i) the one hundred twentieth (120th) day before the date of such annual meeting or (ii) the tenth (10th) day after the day on which notice of the date of the annual meeting was transmitted to stockholders or other public disclosure of the date of the annual meeting was made, whichever occurs first. Notwithstanding the foregoing, the postponement or adjournment of any annual meeting for which notice has been provided to stockholders shall not commence a new time period for giving the stockholder’s notice.

(c)To be timely with respect to a special meeting, a stockholder’s notice must be received by the Secretary not less than ninety (90) days nor more than one hundred twenty (120) days before the date of the special meeting; provided that, if the first day on which notice of the special meeting is transmitted to stockholders or on which public disclosure of the date of the special meeting is made is less than one hundred (100) days before the date of the special meeting, such stockholder’s notice to be timely must be so received not later than the close of business on the tenth (10th) day after the day on which notice of the date of the special meeting was transmitted to stockholders or other public disclosure of the date of the special meeting was made, whichever occurs first. Notwithstanding the foregoing, the postponement or adjournment of any special meeting for which notice has been transmitted to stockholders shall not commence a new time period for giving the stockholder’s notice.

(d)A stockholder’s notice shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name

and record address of the stockholder proposing such business and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) details of all the following that are held and/or beneficially owned, directly or indirectly, including through any entity, by such stockholder and by such beneficial owner, if any: (A) the class and number of shares of the corporation, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part form the value of any class or series of shares of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a "Derivative Instrument") and any other direct or indirect opportunity of any such person to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or such other beneficial owner, if any, has a right to vote any shares of any security of the corporation, (D) any short interest in any security of the corporation (for purposes of this By-Law a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the corporation that are separated or separable from the underlying shares of the corporation, and (F) any performance-related fees (other than an asset-based fee) that such stockholder or such beneficial owner, if any, is entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interest held by members of such stockholder's immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record date), (iv) a description of any material interest of the stockholder and of such beneficial owner, if any, in such business, (v) a description of any agreement, arrangement or understanding such stockholder or such beneficial owner, if any, has with any other person(s) relating to the subject matter of such business, and (vi) the basis upon which the stockholder is entitled to make the proposal.

(e)Notwithstanding anything in these By-Laws to the contrary, no business proposed by a stockholder shall be conducted at any meeting of stockholders except in accordance with the procedures set forth in this Section, whether or not the stockholder (if otherwise permitted by applicable law) seeks inclusion of such proposal in the corporation’s proxy statement for the meeting; provided that any stockholder proposal that complies with Rule 14a-8 (or any successor provision) of the proxy rules promulgated under the Securities Exchange Act of 1934, as amended, and is included in the corporation’s proxy statement for the applicable stockholders meeting shall be deemed to comply with the requirements for the timing and content of notices hereunder.

(f)The chairman of the respective stockholders meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.10, and, if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

Article 2 - Directors

2.1Powers. The business of the corporation shall be managed by a Board of Directors, who may exercise all the powers of the corporation except as otherwise provided by law, by the Articles of Organization or by these By-Laws. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

2.2Number, Election and Qualification. The number of Directors which shall constitute the whole Board of Directors shall be determined by vote of the stockholders or the Board of Directors, but shall consist of not less than three Directors (except that whenever there shall be only two stockholders the number of Directors shall be not less than two and whenever there shall be only one stockholder, there shall be at least one Director). The number of Directors may be decreased at any time and from time to time either by the stockholders or by a majority of the Directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more Directors. Directors need not be stockholders of the corporation. Notwithstanding the foregoing provisions, if the corporation is a “public corporation” within the meaning of Section 8.06 of the Massachusetts Business Corporation Act and has not elected, pursuant to paragraph (c) of such Section 8.06, to be exempt from the provisions of paragraph (b) of such Section 8.06, then:

(i)In accordance with paragraph (e), clause (4) of such Section 8.06, the number of directors shall be fixed only by vote of the Board of Directors.

(ii)In accordance with paragraph (b) of such Section 8.06, the Directors of the corporation shall be classified with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible; the term of office of those of the first class (“Class I Directors”) to continue until the first annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified; the term of office of those of the second class (“Class II Directors”) to continue until the second annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified; and the term of office of those of the third class ( “Class III Directors”) to continue until the third annual meeting following the date the corporation becomes subject to such paragraph (a) and until their successors are duly elected and qualified. At each annual meeting of the corporation, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term continuing until the annual meeting held in the third year following the year of their election and until their successors are duly elected and qualified.

2.3Nomination of Directors.

(a)Only persons who are nominated in accordance with this Section 2.3 shall be eligible for election as directors at any annual or special meeting of stockholders. Nominations of persons for election as directors may be made only (i) by or at the direction of the Board of Directors or (ii) by any person who is a stockholder of record of the corporation at the time of giving the notice provided for in this Section 2.3, who is entitled to vote for the election of directors at the applicable meeting, and who (in addition to any other applicable requirements) has given timely written notice thereof in accordance with this Section 2.3 to the Secretary at the principal executive offices of the corporation.

(b)To be timely with respect to an annual meeting, a stockholder’s notice must be received by the Secretary not less than ninety (90) days nor more than one hundred twenty

(120) days before the anniversary of the date on which the corporation first transmitted to stockholders its proxy materials for the immediately preceding annual meeting of stockholders; provided that, if the annual meeting is not held within thirty (30) days before or after the anniversary of such preceding annual meeting, such stockholder’s notice to be timely must be so received not later than the close of business on the later of (i) the one hundred twentieth (120th) day before the date of such annual meeting or (ii) the tenth (10th) day after the day on which notice of the date of the annual meeting was transmitted to stockholders or other public disclosure of the date of the annual meeting was made, whichever occurs first. Notwithstanding the foregoing, the postponement or adjournment of any annual meeting for which notice has been provided to stockholders shall not commence a new time period for giving the stockholder’s notice.

(c)To be timely with respect to a special meeting, a stockholder’s notice must be received by the Secretary not less than ninety (90) days nor more than one hundred twenty (120) days before the date of the special meeting; provided that, if the first day on which notice of the special meeting is transmitted to stockholders or on which public disclosure of the date of the special meeting is made is less than one hundred (100) days before the date of the special meeting, such stockholder’s notice to be timely must be so received not later than the close of business on the tenth (10th) day after the day on which notice of the date of the special meeting was transmitted to stockholders or other public disclosure of the date of the special meeting was made, whichever occurs first. Notwithstanding the foregoing, the postponement or adjournment of any special meeting for which notice has been provided to stockholders shall not commence a new time period for giving the stockholder’s notice.

(d)Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director: (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the person, (iv) whether or not the person is currently “independent” from the corporation under the independence standards of the principal national securities exchange on which the corporation’s shares are then traded and all facts that currently prevent the person from being independent under such standards, if applicable, and (v) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; (b) as to the stockholder giving the notice: (i) the name and record address of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the proposal is made and (ii) the information described in Section 1.10(d)(iii); and (c) a description of all familial, compensatory, financial and/or other relationships, arrangements and transactions, existing at any time within the preceding three years or currently proposed, between the person proposed to be nominated as a director and such stockholder or such beneficial owner, if any, or any of their respective affiliates and associates. The corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the proposed nominee’s eligibility, or lack thereof, to serve as an independent director of the corporation.

(e)The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with this Section 2.3, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

2.4Enlargement of the Board. Subject to Section 2.2 above, the number of Directors may be increased at any time and from time to time by the stockholders or by a majority of the Directors then in office.

2.5Tenure. Subject to Section 2.2 above, each Director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified or until his earlier death, resignation or removal.

2.6Vacancies.

(a)Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the Directors present at any meeting of Directors at which a quorum is present. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is chosen and qualified or until his earlier death, resignation or removal.

(b)Notwithstanding the foregoing provisions, if the corporation is a “public corporation” within the meaning of Section 8.06 of the Massachusetts Business Corporation Act and has not elected, pursuant to paragraph (c) of such Section 8.06, to be exempt from the provisions of paragraph (b) of such Section 8.06, then (i) vacancies and newly created directorships, whether resulting from an increase in the size of the Board of Directors, from the death, resignation, disqualification or removal of a director or otherwise, shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors, and (ii) any Director elected in accordance with clause (i) shall hold office for the remainder of the full term of the class of Directors in which the vacancy occurred or the new directorship was created and until such Director’s successor shall have been elected and qualified or until his earlier death, resignation or removal.

2.7Resignation. Any Director may resign by delivering his written resignation to the corporation at its principal office or to the Chairman of the Board, the Chief Executive Officer or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

2.8Removal.

(a)A Director may be removed from office with or without cause by vote of the holders of a majority of the shares entitled to vote in the election of Directors. However, the Directors elected by the holders of a particular class or series of stock may be removed from office with or without cause only by vote of the holders of a majority of the outstanding shares of such class or series. In addition, a Director may be removed from office for cause by vote of a majority of the Directors then in office. A Director may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him.

(b)Notwithstanding the foregoing provisions, if the corporation is a “public corporation” within the meaning of Section 8.06 of the Massachusetts Business Corporation Act and has not elected, pursuant to paragraph (c) of such Section 8.06, to be exempt from the provisions of paragraph (b) of such Section 8.06, then stockholders may effect, by the affirmative vote of a majority of the shares outstanding and entitled to vote in the election of Directors, the removal of any Director or Directors or the entire Board of Directors only for cause, as defined in paragraph (f) of such Section 8.06.

2.9Regular Meetings. Regular meetings of the Directors may be held without call or notice at such places, within or without Massachusetts, and at such times as the Directors may from time to time determine, provided that any Director who is absent when such determination is made shall be given notice of the determination. A regular meeting of the Directors may be held without a call or notice immediately after and at the same place as the annual meeting of stockholders.

2.10Special Meetings. Special meetings of the Directors may be held at any time and place, within or without Massachusetts, designated in a call by the Chairman of the Board, Chief Executive Officer, Treasurer, two or more Directors or by one Director in the event that there is only a single Director in office.

2.11Meetings by Telephone Conference Calls or Other Electronic Communication. Directors or members of any committee designated by the Directors may participate in a meeting of the Directors or such committee by means of a conference telephone or other electronic communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting.

2.12Notice of Special Meetings. Notice of any special meeting of the Directors shall be given to each Director by the Secretary or by the officer or one of the Directors calling the meeting. Notice shall be duly given to each Director (i) by notice given to such Director in person or by telephone at least 48 hours in advance of the meeting, (ii) by sending an electronic communication, or by delivering written notice by hand, to his last known business or home address at least 48 hours in advance of the meeting, or (iii) by mailing written notice to his last known business or home address at least 72 hours in advance of the meeting. Notice need not be given to any Director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior to the meeting or at its commencement the lack of notice to him. A notice or waiver of notice of a Directors’ meeting need not specify the purposes of the meeting. If notice is given in person or by telephone, an affidavit of the Secretary, officer or Director who gives such notice that the notice has been duly given shall, in the absence of fraud, be conclusive evidence that such notice was duly given.

2.13Quorum. At any meeting of the Board of Directors, a majority of the Directors then in office shall constitute a quorum. Less than a quorum may adjourn any meeting from time to time without further notice.

2.14Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, by the Articles of Organization or by these By-Laws.

2.15Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the Directors consent to the action in writing, signed by each director or delivered to the corporation by electronic transmission, and the written consents are filed with the records of the Directors’ meetings. Each such consent shall be treated for all purposes as a vote at a meeting.

2.16Committees. The Board of Directors may, by vote of a majority of the Directors then in office, elect from their number an executive committee or other committees and may by like vote delegate to committees so elected some or all of their powers to the extent permitted by law. Except as the Board of Directors may otherwise determine, any such

committee may make rules for the conduct of its business, but unless otherwise provided by the Directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided by these By-Laws for the Directors. The Board of Directors shall have the power at any time to fill vacancies in any such committee, to change its membership or to discharge the committee.

2.17Chairman of the Board and Vice-Chairman of the Board. The Board of Directors may appoint a Chairman of the Board. If the Board of Directors appoints a Chairman of the Board, he shall preside at meetings of the Directors and the stockholders and shall perform such other duties and possess such powers as are assigned to him by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors.

2.18Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any Director from serving the corporation in any other capacity and receiving compensation therefor.

Article 3 - Officers

3.1Enumeration. The officers of the corporation shall consist of a Chief Executive Officer, a President, a Treasurer, a Secretary and such other officers with such other titles as the Board of Directors or the Chief Executive Officer may determine, including, but not limited to one or more Vice Presidents, Assistant Treasurers, and Assistant Secretaries.

3.2Election. The Chief Executive Officer, President, Treasurer and Secretary shall be elected annually by the Board of Directors at their first meeting following the annual meeting of stockholders. Other officers may be chosen or appointed by or under the authority of the Board of Directors.

3.3Qualification. No officer need be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the Directors to give bond for the faithful performance of his duties to the corporation in such amount and with such sureties as the Directors may determine. The premiums for such bonds may be paid by the corporation.

3.4Tenure. Except as otherwise provided by law, by the Articles of Organization or by these By-Laws, the Chief Executive Officer, President, Treasurer and Secretary shall hold office until the first meeting of the Directors following the next annual meeting of stockholders and until their respective successors are chosen and qualified, or until their earlier death, resignation or removal; and all other officers shall serve at the pleasure of the Directors.

3.5Resignation and Removal.

(a)Any officer may resign by delivering his written resignation to the corporation at its principal office or to the Chief Executive Officer or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

(b)An officer may be removed at any time, with or without cause, by or under the authority of the Board of Directors.

(c)Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation.

3.6Vacancies. Any vacancy occurring in any office for any reason may be filled by or under the authority of the Board of Directors, which may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is chosen and qualified, or until he sooner dies, resigns or is removed.

3.7Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the corporation. Unless a separate Chairman of the Board has been appointed, or except as otherwise provided by the Board of Directors, he shall preside at all meetings of the stockholders and, if he is a Director, at all meetings of the Board of Directors.

3.8President. The President shall, subject to the direction of the Chief Executive Officer, have general charge and supervision of the business of the corporation and shall perform such other duties and shall possess such other powers as the Chief Executive Officer may from time to time prescribe. If no other Chief Executive Officer has been appointed, or in the event of the absence, inability or refusal to act of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer and when so performing shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.

3.9Vice Presidents. Any Vice President shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the President may from time to time prescribe. The Board of Directors or the Chief Executive Officer may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title.

3.10Treasurer and Assistant Treasurers.

(a)The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned to him by the Board of Directors or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation.

(b)The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.

3.11Secretary and Assistant Secretaries.

(a)The Secretary shall perform such duties and shall possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the

clerk, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

(b)Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.

(c)In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or Directors, the person presiding at meeting shall designate a temporary Secretary to keep a record of the meeting.

3.12Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.

Article 4 - Capital Stock

4.1Issue of Capital Stock. Unless otherwise voted by the stockholders, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of the capital stock of the corporation held in its treasury may be issued or disposed of by vote of the Board of Directors, in such manner, for such consideration and on such terms as the Directors may determine.

4.2Certificate of Stock; Uncertificated Shares.

(a)Shares of the corporation’s capital stock may be represented by certificates or may be uncertificated as prescribed from time to time by or under the authority of the Directors. Certificates for shares shall be signed by the Chief Executive Officer, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, but when a certificate is countersigned by a transfer agent or a registrar, other than a Director, officer or employee of the corporation, such signature may be a facsimile. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the time of its issue.

(b)Every certificate for shares of stock which are subject to any restriction on transfer pursuant to the Articles of Organization, the By-Laws, applicable securities laws or any agreement to which the corporation is a party, shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restrictions and a statement that the corporation will furnish a copy of the restrictions to the holder of such certificate upon written request and without charge. Every certificate issued when the corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series authorized to be issued or a statement of the existence of such preferences, powers, qualifications and rights and a statement that the corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Holders of uncertificated shares shall be provided with a

statement of the information set forth above as applicable and as required by the Massachusetts Business Corporation Act.

4.3Transfers. Subject to the restrictions, if any, stated or noted on the stock certificates or provided to the holder of uncertificated shares, shares of stock may be transferred on the books of the corporation by (a) the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed or (b) proper transfer instructions from the registered owner of uncertificated shares, in each case with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Articles of Organization or by these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-Laws. It shall be the duty of each stockholder to notify the corporation of his post office address and of his taxpayer identification number.

4.4Record Date.

(a)The Board of Directors may fix in advance a time not more than 70 days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting, and any adjournment, or the right to receive such dividend or distribution or the right to give such consent or dissent. In such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the corporation after the record date. Without fixing such record date the Directors may for any of such purposes close the transfer books for all or any part of such period.

(b)If no record date is fixed and the transfer books are not closed, the record date for determining the stockholders having the right to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, and the record date for determining the stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors acts with respect to such purpose.

(c)A determination of stockholders entitled to notice of or to vote at a meeting of stockholders is effective for any postponement or adjournment of the meeting unless the meeting is postponed or adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, in which case the Board of Directors shall fix a new record date.

4.5Replacement of Certificates. In case of the alleged loss or destruction or the mutilation of a certificate of stock, a duplicate certificate or uncertificated shares may be issued in place of the lost, destroyed or mutilated certificate, upon such terms as the Directors may prescribe, including the presentation of reasonable evidence of such loss, destruction or mutilation and the giving of such indemnity as the Directors may require for the protection of the corporation or any transfer agent or registrar.

Article 5 - Miscellaneous Provisions

5.1Fiscal Year. Except as otherwise set forth in the Articles of Organization or as otherwise determined from time to time by the Board of Directors, the fiscal year of the corporation shall in each year end on September 30.

5.2Seal. The seal of the corporation shall, subject to alteration by the Directors, bear its name, the word “Massachusetts” and the year of its incorporation.

5.3Voting of Securities. The Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, the Secretary or any other person the Board of Directors may designate may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of or other action by stockholders, shareholders or members of any other corporation or organization, the securities of which may be held by this corporation.

5.4Corporate Records. The corporation shall keep, in Massachusetts at the principal office of the corporation, or at an office of its transfer agent or of the Secretary, such records as are required by the Massachusetts Business Corporation Act. These copies and records need not all be kept in the same office. They shall be available for inspection by stockholders for any proper purpose and in conformity with said Act.

5.5Evidence of Authority. A certificate by the Secretary or an Assistant or temporary Secretary as to any action taken by the stockholders, Directors, any committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

5.6Articles of Organization. All references in these By-Laws to the Articles of Organization shall be deemed to refer to the Articles of Organization of the corporation, as amended and in effect from time to time.

5.7Severability. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws.

5.8Pronouns. All pronouns used in these By-Laws shall be deemed refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

5.9 Forum for Adjudication of Disputes. Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim against the corporation or any director or officer or other employee of the corporation arising pursuant to any provision of the Massachusetts Business Corporation Act or the corporation’s Articles of Organization or By-Laws (as either may be amended from time to time), or (iv) any action asserting a claim against the corporation or any director or officer or other employee of the corporation governed by the internal affairs doctrine shall, in all cases subject to such court’s having personal jurisdiction over the indispensable parties named as defendants, be either the Business Litigation Session of the Superior Court of Suffolk County, Massachusetts or, if such venue is not permissible, another Massachusetts state court located in Suffolk or Norfolk County, or a federal court located in Massachusetts. Unless the corporation consents in writing to the

selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 5.9.

Article 6 - Amendments

These By-Laws may be amended by vote of the holders of a majority of the shares of each class of the capital stock at the time outstanding and entitled to vote at any annual or special meeting of stockholders, if notice of the substance of the proposed amendment is stated in the notice of such meeting. If authorized by the Articles of Organization, the Directors, by a majority of their number then in office, may also make, amend or repeal these By-Laws, in whole or in part, except with respect to (a) the provisions of these By- Laws governing (i) the removal of directors and (ii) the amendment of these By-Laws and (b) any provision of these By-Laws which by law, the Articles of Organization or these By-Laws requires action by the stockholders.

Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the Directors of any By-Law, notice stating the substance of such change shall be given to all stockholders entitled to vote on amending the By-Laws.

Any By-Law adopted by the Directors may be amended or repealed by the stockholders entitled to vote on amending the By-Laws.

As amended through June 24, 2021

EX-10.6

Exhibit 10.6

EXECUTIVE AGREEMENT

This Executive Agreement (“Agreement”) dated as of September 23, 2021 is by and between PTC Inc., a Massachusetts corporation (the “Company”), and Catherine Kniker (the “Executive”).

WHEREAS, the Executive is the Executive Vice President, Chief Strategy Officer; and

WHEREAS, the Company wishes to make the following arrangements with the Executive concerning certain payments and benefits to be provided to the Executive if the Executive’s employment with the Company is terminated without Cause or if certain other events specified herein occur;

NOW, THEREFORE, the Company and the Executive hereby agree as follows:

1. Definitions.

For the purposes of this Agreement:

(a) “Board” means the Company’s board of directors.

(b) “Code” means the U.S. Internal Revenue Code of 1986, as amended.

(c) “Cause” means

(i)the Executive’s willful and continued failure to substantially perform the Executive’s duties to the Company (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness), provided that the Company has delivered a written demand for performance to the Executive specifically identifying the manner in which the Company believes that the Executive has not substantially performed the Executive’s duties and the Executive does not cure such failure within thirty (30) days after such demand;

(ii)willful conduct by the Executive which is demonstrably and materially injurious to the Company;

(iii)the Executive’s conviction of, or pleading of guilty or nolo contendere to, a felony;

(iv)the Executive’s entry in the Executive’s personal capacity into a consent decree relating to the business of the Company with any government body; or

(v)the Executive’s willful violation of any material provision of the Executive’s Non-Disclosure, Non-Competition and Invention Agreement with the Company; provided that, if such violation can be cured, the Executive has not, within thirty (30) days after written demand by the Company, cured such violation.

For purposes of this definition, no act or failure to act on the Executive’s part shall be deemed “willful” unless done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company.

(d) “Change in Control” means the occurrence of any of the following events:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock in the Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities (other than as a result of acquisitions of such securities from the Company);

(ii)individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company) shall be, for purposes of this Agreement, considered to be a member of the Incumbent Board;

(iii)the consummation of a merger, share exchange or consolidation of the Company or any subsidiary of the Company with any other entity (each a “Business Combination”), other than (A) a Business Combination that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of another entity) beneficial ownership, directly or indirectly, of a majority of the combined voting power of the Company or the surviving entity (including any person that, as a result of such transaction, owns all or substantially all of the Company’s assets either directly or through one or more subsidiaries) outstanding immediately after such Business Combination or (B) a merger, share exchange or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) is or becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; or

(iv)the stockholders of the Company approve (A) a plan of complete liquidation of the Company; or (B) an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets but excluding a sale or spin-off of a product line, business unit or line of business of the Company if the remaining business is significant as determined by the Company’s board of directors in its sole discretion.

(e) “Change in Control Termination” means any of the following terminations of the Executive’s

employment:

(i)termination of the Executive’s employment by the Company during the period from the date of a Change in Control through the second anniversary thereof, other than for Cause or as a result of the Executive’s Disability;

(ii)resignation by the Executive for Good Reason during the period from the date of a Change in Control through the second anniversary thereof; or

(iii)termination of the Executive’s employment by the Company within one hundred eighty (180) days prior to a Change in Control, other than for Cause or as a result of the Executive’s Disability, if it is reasonably demonstrated by the Executive that such termination of employment (A) was at the request of a third party that has taken steps reasonably calculated to effect the Change in Control or (B) was otherwise related to or in anticipation of the Change in Control. A Change in Control Termination under this Section 1(e)(iii) shall be deemed to have occurred when the Change in Control occurs.

(f) “Disability” means such physical or mental incapacity as to make the Executive unable to perform

the essential functions of the Executive’s employment duties for a period of at least sixty (60) consecutive days with or without reasonable accommodation. If any question shall arise as to whether during any period the Executive is so disabled as to be unable to perform the essential functions of the Executive’s employment duties with or without reasonable accommodation, the Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification, the Company’s determination of such issue shall be binding on the Executive.

(g) “Equity Award” means any stock option, stock appreciation right, restricted stock unit, restricted

stock or other equity award issued under any Stock Plan, but excludes any Target Annual Incentive Bonus that may be payable in the form of equity.

(h) “Good Reason” means the occurrence, without the Executive’s consent and without Cause, of any

of the following events after or in connection with a Change in Control (provided that the Executive shall have given the Company written notice describing such event within ninety (90) days of its initial existence and the matter shall not have been fully remedied by the Company within thirty (30) days after receipt of such notice):

(i)any reduction of the Executive’s annual base salary or target bonus as in effect at the date of the Change in Control; provided that any such reduction (not exceeding fifteen percent (15%) of either (A) such base salary or (B) the sum of such base salary and such target bonus) that is consistent with similar actions taken with respect to the base salaries and/or target bonuses of the other senior executives of the Company shall not constitute Good Reason;

(ii)any material reduction in the aggregate benefits for which the Executive is eligible under the Company’s benefit plans, including medical, dental, vision, basic life insurance, retirement, paid time off, longterm disability and short-term disability plans; provided that any such reduction or other action that is consistent with similar actions taken with respect to comparable benefits of the Company employees generally shall not constitute Good Reason;

(iii)a material diminution in the substantive responsibilities or the scope of the Executive’s position, taking into consideration, without limitation, the dollar amount of the budget and the number of employees for which the Executive has responsibility (and a reduction of more than ten percent (10%) in such dollar amount or such number from that which was applicable at the date of the Change in Control shall be deemed a “material diminution” unless it is comparable to similar reductions then applicable to the Company’s executive officers generally);

(iv)any breach by the Company of its material obligations under this Agreement;

(v)any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or

(vi)any requirement that the Executive relocate to a primary work site that would increase the Executive’s one-way commute distance by more than fifty (50) miles from the Executive’s then principal residence.

(i) “Stock Plan” means any stock option or equity compensation plan of the Company in effect at any

time, including without limitation the 2000 Equity Incentive Plan.

(j) “Target Annual Incentive Bonus” means an Annual Incentive Bonus (stated as a cash amount even

if it may be payable in the form of equity) payable under a Corporate Incentive Plan of the Company for achievement of performance measure(s) at the Target Level. “Corporate Incentive Plan” means any incentive program of the Company in effect at the respective time to the extent it provides for compensation upon achievement of one or more performance measures with a performance period of one year or less and service-based vesting with a vesting term of less than fifteen (15) months (“Annual Incentive Bonus”). “Target Level” means the level at which 100% of a Target Annual Incentive Bonus becomes payable. Any upside bonus or other amounts that may be earned for achievement of performance measures beyond the Target Level under the Corporate Incentive Plan and any discretionary or other bonus are not considered part of the Target Annual Incentive Bonus. “Bonus Equity” means any Equity Award granted to the Executive under the Corporate Incentive Plan that may be earned upon achievement of one or more performance measures.

2. Termination of Employment without Cause.

If the Company terminates the Executive’s employment without Cause, other than a termination constituting a Change in Control Termination or a termination due to the Executive’s Disability, the Executive shall be entitled to the following:

(a)a lump sum payment in an amount equal to one times the highest annual base salary in effect with respect to the Executive during the six-month period immediately preceding the termination date, payable within forty-five (45) days after the termination date;

(b)a lump sum payment in an amount equal to one times the Target Annual Incentive Bonus, if any, for which the Executive is eligible for the fiscal year in which the termination date occurs, payable within forty-five (45) days after the termination date; and

(c)continued participation in the Company’s medical, dental, vision and basic life insurance benefit plans (the “Benefit Plans”), subject to the terms and conditions of the respective plans and applicable law, for a period of one year following the termination date; provided that, to the extent that any of the Benefit Plans does not permit such continuation of the Executive’s participation following the Executive’s termination or any such plan is terminated, the Company shall pay the Executive an amount which is sufficient for the Executive to purchase equivalent benefits, such amount to be paid quarterly in advance; provided further, however, that to the extent the Executive becomes eligible to receive medical, dental, vision and/or basic life insurance benefits under a plan provided by another employer, the Executive’s entitlement to participate in the corresponding Benefit Plans or to receive such corresponding alternate payments shall cease as of the date the Executive is eligible to participate in such other plan, and the Executive shall promptly notify the Company of the Executive’s eligibility under such plan.

3. Change in Control.

(a) Equity Awards. Effective upon a Change in Control that occurs during the Executive’s

employment, and except as provided in any Equity Award documentation that explicitly or implicitly excludes such Equity Award from the effects of this Section 3, the following shall occur:

(i)any performance measure(s) applicable to any outstanding Equity Award held by the Executive shall be deemed to have been met at the Target Level (which deemed performance will not affect any service-based vesting schedule for such Equity Award); and

(ii)each outstanding Equity Award held by the Executive shall be deemed amended automatically to provide that, notwithstanding any provision of any Stock Plan, such Equity Award may not be terminated or forfeited without the Executive’s written consent (provided that this shall not prevent termination of (A) any unvested portion thereof that is terminated or forfeited upon termination of the Executive’s employment as provided in the respective Stock Plan or in any agreement or certificate executed in connection with such Equity Award, (B) a stock option the termination of which is covered by Section 8(i) of the Company’s 2000 Equity Incentive Plan, or (C) an Equity Award upon payment of a cash payment with a Fair Market Value (as defined in the applicable Stock Plan) equal to the amount that would have been received upon the exercise or payment of the Equity Award had the Equity Award been exercised or paid upon the Change in Control).

The foregoing notwithstanding, this Section 3(a) shall not apply to any Bonus Equity held by the Executive, which shall be treated as provided in Section 3(b)(ii).

(b) Annual Incentive Bonus. Effective upon (x) a Change in Control that occurs during the

Executive’s employment or (y) a Change in Control Termination under Section 1(e)(iii):

(i)the Executive shall be entitled to payment of a pro-rata portion of the Target Annual Incentive Bonus, if any, for which the Executive is eligible for the fiscal year in which the Change in Control occurs, based on the percentage of the performance period completed through the date of the Change in Control, for the purposes of which any performance measure(s) applicable to such Target Annual Incentive Bonus shall be deemed to have been met at the Target Level, which payment shall be made in one lump sum within forty-five (45) days of the date of the Change in Control; provided, however, that this Section 3(b)(i) shall not apply if the Executive holds Bonus Equity for the applicable fiscal year performance period and Section 3(b)(ii) shall apply instead; or

(ii)a pro-rata portion of any Bonus Equity held by the Executive, having performance measures applicable to the fiscal year, or any portion thereof, in which the Change in Control occurs, that could be earned at the Target Level, based on the percentage of the applicable fiscal year or applicable portion completed through the date of the Change in Control, shall thereupon be vested and subject to no further restrictions,

exercisable or distributable, as the case may be, and the portion not so vested shall thereupon automatically be cancelled and forfeited to the Company.

(c) Change in Control Termination Benefits.

(i) Equity Awards. Effective upon a Change in Control Termination, the following shall

occur:

(A)all outstanding Equity Awards held by the Executive (other than any Bonus Equity) shall immediately become vested and exercisable or distributable in full; and

(B)all restrictions applicable to restricted stock issued under any Stock Plan and held by the Executive (other than any Bonus Equity) shall immediately lapse.

(ii) Make-Up Payment. Effective upon a Change in Control Termination under

Section 1(e)(iii), the Company shall pay the Executive in a lump sum the amount equal to the sum of:

(x)the excess, if any, of (A) the product of (1) the number of additional shares of the Company’s Common Stock that were subject to Equity Awards that would have become vested and exercisable and/or as to which the restrictions would have lapsed, in each case solely as a result of Section 3(c)(i), and for which the Executive would have been entitled to receive consideration in the Change in Control (on the same basis as other holders of Common Stock), had the Executive remained employed on the date of the Change in Control and was deemed to have exercised all the stock options that would then have become exercisable under Section 3(c)(i)(A) times (2) the amount per share of the Company’s Common Stock (if any) received by the Company’s stockholders generally pursuant to the Change in Control (the “Shareholder Price”) over (B) the aggregate exercise price of all such additional stock options that the Executive would then have become able to exercise upon the Change in Control as a result of Section 3(c)(i)(A) (whereupon all such Equity Awards shall terminate and shall no longer be exercisable); and

(y)the excess, if any, of (A) the product of (1) the number of shares of the Company’s Common Stock that the Executive (a) held on the date of termination of the Executive’s employment or acquired upon exercise of stock options held on such date and (b) sold before the consummation of the Change in Control (the “Pre-Sold Shares”) times (2) the Shareholder Price over (B) the aggregate amount received by the Executive in the sale(s) of the Pre-Sold Shares.

The Company shall pay this lump sum payment within forty-five (45) days following the Executive’s termination date.

(iii) Salary, Annual Incentive Bonus and Benefits. Effective upon a Change in Control

Termination, the Executive shall be entitled to the following:

(A)a lump sum payment in an amount equal to one times the Executive’s base salary plus the Executive’s Target Annual Incentive Bonus, such base salary to be the highest annual base salary in effect with respect to the Executive during the six-month period immediately preceding the Executive’s termination and such Target Annual Incentive Bonus to be the highest Target Annual Incentive Bonus in effect with respect to the Executive for (1) the fiscal year in which the Change in Control occurs, (2) the fiscal year following the year in which the Change in Control occurs, or (3) the fiscal year in which the Change in Control Termination occurs, whichever is highest, payable within forty-five (45) days after the termination date; and

(B)continued participation in the Benefit Plans, subject to the terms and conditions of the respective plans and applicable law, for a period of one year following the termination date; provided that, to the extent that any of the Benefit Plans does not permit such continuation of the Executive’s participation following the Executive’s termination or any such plan is terminated, the Company shall pay the Executive an amount which is

sufficient for the Executive to purchase equivalent benefits, such amount to be paid quarterly in advance; provided, further, however, that to the extent the Executive becomes eligible to receive medical, dental, vision and/or basic life insurance benefits under a plan provided by another employer, the Executive’s entitlement to participate in the corresponding Benefit Plans or to receive such corresponding alternate payments shall cease as of the date the Executive is eligible to participate in such other plan, and the Executive shall promptly notify the Company of the Executive’s eligibility under such plan.

(iv) No Duplication. Payments and benefits under this Section 3(c) shall be in lieu and

without duplication of any amounts or benefits under Section 2, and the Executive shall be entitled to any such payments and benefits for no more than one year even if both such sections apply. If, in the event of a Change in Control Termination under Section 1(e)(iii), the Executive becomes entitled to payments under this Section 3(c) after the Executive has begun to receive payments under Section 2, the Executive shall be entitled to a make-up payment to ensure that the Executive receives the higher amount payable hereunder, with such make-up payment being made within forty-five (45) days following the Change in Control Termination.

(d) Deemed Amendment of Equity Awards. The Company and the Executive hereby agree that the

agreements evidencing any (i) Equity Awards to the Executive are hereby and will be deemed amended to give effect to the provisions of Sections 3 and 4 of this Agreement, and (ii) Bonus Equity are hereby and will be deemed amended to give effect to the provisions of Section 3(b)(ii) of this Agreement.

4.Death or Disability.

Effective upon a termination of the Executive’s employment due to Executive’s death or by the Company due to the Executive’s Disability, except as provided in any Equity Award documentation that explicitly or implicitly excludes such Equity Award from the effects of this section, all performance measures applicable to any Equity Awards held by the Executive shall be deemed to have been met at the Target Level and all Equity Awards held by the Executive shall immediately become vested, unrestricted and exercisable or distributable at the Target Level; provided that this Section 4 shall not apply to any Bonus Equity.

5.Certain Payments to Specified Employees.

Notwithstanding anything to the contrary in this Agreement, if the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) at the time of the Executive’s separation from service with the Company (in connection with a Change in Control Termination or otherwise), no payment or benefit payable or provided to the Executive pursuant to this Agreement that constitutes an item of deferred compensation under Code Section 409A and becomes payable by reason of the Executive’s termination of employment with the Company will be paid or provided to the Executive prior to the earlier of (i) the expiration of the six (6) month period following the date of the Executive’s “separation from service” (as such term is defined by Code Section 409A and the regulations promulgated thereunder), or (ii) the date of the Executive’s death, but only to the extent such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). The payments and benefits to which the Executive would otherwise be entitled during the first six (6) months following the Executive’s separation from service shall be accumulated and paid or provided, as applicable, in a lump sum, on the date that is six (6) months and one day following the Executive’s separation from service (or if such date does not fall on a business day of the Company, the next following business day) and any remaining payments or benefits will be paid in accordance with the normal payment dates specified for them herein.

6.Taxes.

(a) Withholding. All payments to be made to the Executive under this Agreement will be subject to

any required withholding of federal, state and local income and employment taxes. In addition, the Company may withhold from any payments hereunder any amounts attributable to withholding taxes applicable to the vesting of or lapse of restrictions on restricted stock or restricted stock units held by the Executive or the exercise of any nonqualified stock options held by the Executive, including, in its discretion withholding from any shares deliverable to the Executive such number of shares as the Company determines is necessary to satisfy such tax obligations, valued at their fair market value (determined pursuant to the respective Company equity compensation plan) as of the date of such vesting or lapse of restrictions.

(b) Limitations on Payments.

(i) If it is determined that any payment, benefit or distribution provided for in this

Agreement or otherwise (for the purposes of this Section 6(b), each, a “Payment” and collectively, the “Payments”) from the Company to or for the benefit of the Executive (x) constitutes a “parachute payment” within the meaning of Section 280G of the Code and (y) but for this subsection (b), would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), such Payments shall be either:

(A)delivered in full, or

(B)delivered to such lesser extent that would result in no portion of the Payments being subject to the Excise Tax,

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Executive on an after-tax basis, of the greatest amount of Payments, notwithstanding that all or some portion of the Payments may be taxable under Section 4999 of the Code. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 6(b)(i) shall be made in writing in good faith by an independent accounting firm selected by the Company, whose determinations shall be binding upon the Company and the Executive (the “Accountants”), in good faith consultation with the Executive.

(ii) In the event a reduction in the Payments is required hereunder, the Company shall

promptly give the Executive notice to that effect and the Executive may then determine, in the Executive’s sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as, after such election, none of the Payments are subject to the Excise Tax), and shall advise the Company in writing of the Executive’s election within ten (10) days of the Executive’s receipt of the Company’s notice. If no such election is made by the Executive within such period, the Company may determine which and how much of the Payments shall be eliminated or reduced (as long as, after such determination, none of the Payments are subject to the Excise Tax) and shall notify the Executive promptly of such determination.

(iii) For purposes of making the determinations and calculations required by this Section 6(b),

the Accountants:

(A)shall take into account the value of any reasonable compensation for services to be rendered by the Executive before or after the Change in Control within the meaning of Section 280G(b)(2) of the Code and the regulations thereunder, including without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, whether set forth in this Agreement or otherwise (a “Noncompete Covenant”), and the Company shall cooperate in good faith in connection with any such valuations and reasonable compensation positions. Without limiting the generality of the foregoing, for purposes of this provision, the Company agrees to allocate as consideration for any Noncompete Covenant the maximum amount of compensation and benefits payable under this Agreement reasonably allocable thereto so as to avoid, to the extent possible, subjecting any Payments to tax under Section 4999 of the Code; and

(B)may make reasonable assumptions and approximations concerning the application of taxes and may rely on reasonable good faith interpretations concerning the application of Sections 280G and 4999 of the Code.

The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6(b). The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6(b).

(iv) If the Payments are reduced to avoid the Excise Tax pursuant to Section 6(b)(i) hereof and

notwithstanding such reduction, the IRS determines that the Executive is liable for the Excise Tax as a result of the receipt of Payments from the Company, then the Executive shall be obligated to pay to the Company (the “Repayment Obligation”) an amount of money equal to the “Repayment Amount.” The Repayment Amount shall be the smallest such amount, if any, as shall be required to be paid to the Company so that the Executive’s net proceeds with respect to the Payments (after taking into account the payment of the Excise Tax imposed on such benefits) shall be maximized. Notwithstanding the foregoing, the Repayment Amount shall be zero if a Repayment Amount of more than zero would not eliminate the Excise Tax in accordance with the principles of Section 6(b)(i). If the Excise Tax is not eliminated through the performance of the Repayment Obligation, the Executive shall pay the Excise Tax. The Repayment Obligation shall be discharged within 30 days of either (A) the Executive’s entering into a binding agreement with the

IRS as to the amount of Excise Tax liability, or (B) a final determination by the IRS or a court decision requiring the Executive to pay the Excise Tax from which no appeal is available or is timely taken.

7. Term.

Unless the Executive’s employment is earlier terminated, this Agreement shall continue in effect until 11:59 p.m. on September 30, 2022 and shall automatically renew thereafter on an annual basis for additional twelvemonth terms unless either party provides written notice to the other party of non-renewal at least ninety (90) days prior to the expiration of the then current term. If a Change in Control occurs while this Agreement is in effect, the term of this Agreement shall automatically be extended to the second anniversary of the Change in Control. Upon the termination of this Agreement, the respective rights and obligations of the parties shall survive to the extent necessary to carry out the intentions of the parties as embodied herein.

8. Successors and Assigns.

(a)This Agreement is personal to the Executive and is not assignable by the Executive, other than by will or the laws of descent and distribution, without the prior written consent of the Company.

(b)This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c)The Company will require any successor or acquirer (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to or acquirer of its business and/or assets that assumes and agrees to perform this Agreement.

9. No Duty to Mitigate.

In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as contemplated by Sections 2(b) and 3(c)(iii)(B)hereof, any benefits payable to the Executive hereunder shall not be subject to reduction for any compensation received from other employment.

10. Conditions to Payment of Severance.

Notwithstanding any other provision of this Agreement, the Executive’s entitlement to receive any of the payments and other benefits contemplated by Sections 2, 3 or 4 (with respect to Disability) hereof shall be contingent upon:

(a) execution by the Executive within forty-five (45) days of the termination of a general release in

substantially the form of Appendix A hereto (such applicable form depending on my age at the time of termination, the “Release”), which has not subsequently been revoked, and the Executive hereby acknowledges and agrees that the Company’s entering into this Agreement and agreement to make such payments are and shall be good and sufficient consideration for such Release; and

(b) the Executive’s continued compliance with the material terms of this Agreement, as applicable,

and those of the Executive’s Non-Disclosure, Non-Competition and Invention Agreement with the Company.

11. Miscellaneous.

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, except any such laws that would render such choice of law ineffective.

(b)Compliance with Section 409A. This Agreement is intended, to the extent applicable, to constitute good faith compliance with the requirements of Section 409A of the Code. The Company and the Executive agree that they shall cooperate in good faith to amend any provision hereof to the extent required to maintain compliance with the provisions of Section 409A of the Code as they may be modified hereafter (including by subsequent regulations or other guidance of the Internal Revenue Service).

(c)Amendment. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(d)Partial Invalidity. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way.

(e)Entire Agreement; Effect of Current Agreement. This Agreement constitutes the entire understanding and agreement between the parties hereto regarding the compensation and benefits payable to the Executive in the respective circumstances described herein, superseding all prior understandings and agreements, whether oral or written.

(f)Expenses. The Company agrees to pay as incurred and within twenty (20) days after submission of supporting documentation, to the full extent permitted by law, all legal fees and expenses the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement) with respect to which the Executive is successful on the merits, plus, in each case, interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. The Company’s payment of any eligible expenses must be made no later than December 31 of the year after the year in which the expense was incurred.

(g)Notices. All notices and other communications hereunder shall be in writing and shall be delivered by hand delivery, by a reputable overnight courier service, or by registered or certified mail, return receipt requested, postage prepaid. Notice to the Executive shall be addressed to the Executive at the Executive’s last address contained in the records of the Company, and notice to the Company shall be addressed to:

PTC Inc.

121 Seaport Boulevard Boston, MA 02210

Attention: General Counsel

Notice shall be addressed to such other address as either party shall have furnished to the other in writing in accordance herewith. Any notice or communication shall be deemed to be delivered upon the date of hand delivery, one day following delivery to an overnight courier service, or three days following mailing by registered or certified mail.

EXECUTED as of the date first written above.

PTC INC.			[EXECUTIVE NAME]
By:	/s/Jim Heppelmann		/s/ Catherine Kniker
		[Name]	Catherine Kniker
		[Title] President & CEO, PTC

EX-21.1

Exhibit 21.1

PTC Inc.
Subsidiaries
Jurisdiction	Name
Delaware	Parametric Technology International, Inc.
Massachusetts	PTC Foundation Inc.
Massachusetts	PTC International, Inc.
Massachusetts	PTC Seaport Holdings Inc.
Australia	Parametric Technology Australia Pty. Limited
Australia	Migenius Pty Ltd.
Austria	Parametric Technology Gesellschaft, m.b.H.
Belgium	Parametric Technology (Belgium) b.v.b.a.
Brazil	Parametric Technology Brasil Ltda.
Canada	PTC (Canada) Inc.
Cayman Islands	PTC Seaport (Cayman) Ltd.
Cayman Islands	Parametric Technology (Cayman) Ltd.
Cayman Islands	Seaport Holdings (Cayman) Ltd.
China	Parametric Technology (Shanghai) Software Co. Ltd.
Denmark	Parametric Technology (Denmark) A/S
France	Parametric Technology S.A.
Germany	Intland Software GmbH
Germany	Eger Invest GmbH
Germany	Parametric Technology GmbH
Germany	Parametric Technology Holding Germany GmbH
Hong Kong	Parametric Technology (Hong Kong) Ltd.
Hungary	Intland Software KFT
Hungary	Intland Cloud Services BT
Hungary	Intland Professional Services BT
Hungary	Intland Retina BT
Hungary	Intland Softwate Development BT
Hungary	Intland Solutions BT
India	OnShape India Private Limited
India	Parametric Technology (India) Private Limited
India	Parametric Technology (India) Private Ltd.
Ireland	PTC (IFSC) Limited
Ireland	PTC (SSI) dac
Israel	Parametric Technology Israel Ltd.
Italy	Parametric Technology Italia S.r.l.
Japan	PTC Japan KK
Korea	PTC Korea Co., Ltd.
Malaysia	Parametric Technology Corporation (Malaysia) Sdn. Bhd.
Malta	PTC (Malta) Ltd.
Mauritius	CV Holding (Mauritius) Ltd.
Mexico	Parametric Technology Mexico, S.A. de C.V.
Netherlands	Parametric Technology Europe B.V.
Netherlands	Parametric Technology Nederland B.V.

Romania	PTC Eastern Europe S.R.L.
Russia	PTC International Limited Liability Company
Serbia	Plugin76 d.o.o. R&D za razvoj softvera Subotica
Singapore	Parametric Technology Singapore Pte. Ltd.
Spain	Parametric Technology España, S.A.
Sweden	PTC Sweden AB
Switzerland	Parametric Technology (Schweiz) AG
Taiwan	Parametric Technology Taiwan Ltd.
United Kingdom	Parametric Holdings (UK) Limited
United Kingdom	Parametric Technology (UK) Limited
United Kingdom	CloudMilling Ltd

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-211751 and 333-231992) and on Form S-3 (No. 333-261270) of PTC Inc. of our report dated November 15, 2022 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

November 15, 2022

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James Heppelmann, certify that:

1. I have reviewed this annual report on Form 10-K 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:	November 15, 2022	/S/ JAMES HEPPELMANN
		James Heppelmann
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kristian Talvitie, certify that:

1. I have reviewed this annual report on Form 10-K 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:	November 15, 2022	/S/ KRISTIAN TALVITIE
		Kristian Talvitie
		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 Annual Report on Form 10-K of the Company for the year ended September 30, 2022 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-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 15, 2022	/S/ JAMES HEPPELMANN
		James Heppelmann President and Chief Executive Officer
Date:	November 15, 2022	/S/ KRISTIAN TALVITIE
		Kristian Talvitie
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - USD ($)

12 Months Ended

Sep. 30, 2022

Nov. 14, 2022

Mar. 31, 2022

Cover [Abstract]

Entity Registrant Name

PTC Inc.

Document Type

10-K

Document Annual Report

true

Document Transition Report

false

Document Period End Date

Sep. 30, 2022

Current Fiscal Year End Date

--09-30

Document Fiscal Year Focus

2022

Document Fiscal Period Focus

FY

Entity Incorporation, State or Country Code

MA

Entity Tax Identification Number

04-2866152

Title of 12(b) Security

Common Stock, $.01 par value per share

Trading Symbol

PTC

Security Exchange Name

NASDAQ

Entity File Number

0-18059

Amendment Flag

false

Entity Central Index Key

0000857005

Entity Filer Category

Large Accelerated Filer

ICFR Auditor Attestation Flag

true

Entity Small Business

false

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Shell Company

false

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Address, Address Line One

121 Seaport Boulevard

Entity Address, City or Town

Boston

Entity Address, State or Province

MA

Entity Address, Postal Zip Code

02210

City Area Code

781

Local Phone Number

370-5000

Entity Public Float

$ 11,336,087,091

Entity Common Stock, Shares Outstanding

117,471,969

Entity Emerging Growth Company

false

Documents Incorporated by Reference

Portions of the definitive Proxy Statement in connection with the 2023 Annual Meeting of Stockholders (2023 Proxy Statement) are incorporated by reference into Part III.

Auditor Name

PricewaterhouseCoopers LLP

Auditor Firm ID

238

Auditor Location

Boston, Massachusetts

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
ASSETS
Cash and cash equivalents	$ 272,182	$ 326,532
Accounts receivable, net of allowance for doubtful accounts of $362 and $304 at September 30, 2022 and September 30, 2021, respectively	636,556	541,072
Prepaid expenses	88,854	69,991
Other current assets	71,065	135,415
Total current assets	1,068,657	1,073,010
Property and equipment, net	98,101	100,237
Goodwill	2,353,654	2,191,887
Acquired intangible assets, net	382,718	378,967
Deferred tax assets	256,091	297,789
Operating right-of-use lease assets	137,780	152,337
Other assets	390,267	313,333
Total assets	4,687,268	4,507,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	40,153	33,381
Accrued expenses and other current liabilities	117,158	113,067
Accrued compensation and benefits	104,022	117,784
Accrued income taxes	5,142	5,055
Deferred revenue	503,781	482,131
Short-term lease obligations	22,002	27,864
Total current liabilities	792,258	779,282
Long-term debt	1,350,628	1,439,471
Deferred tax liabilities	28,396	4,165
Deferred revenue	16,552	15,546
Long-term lease obligations	167,573	180,935
Other liabilities	35,827	49,693
Total liabilities	2,391,234	2,469,092
Commitments and contingencies (Note 10)
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; 117,472 and 117,163 shares issued and outstanding at September 30, 2022 and September 30, 2021, respectively	1,175	1,172
Additional paid-in capital	1,720,580	1,718,504
Retained earnings	727,737	414,656
Accumulated other comprehensive loss	(153,458)	(95,864)
Total stockholders’ equity	2,296,034	2,038,468
Total liabilities and stockholders’ equity	$ 4,687,268	$ 4,507,560

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Current assets:
Allowance for doubtful accounts	$ 362	$ 304
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	117,472,000	117,163,000
Common stock, shares outstanding	117,472,000	117,163,000

XML

Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Revenue:
Total revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
Cost of revenue:
Total cost of revenue	385,980	371,102	334,271
Gross margin	1,547,367	1,436,057	1,124,144
Operating expenses:
Sales and marketing	485,247	517,779	435,451
Research and development	338,822	299,917	256,575
General and administrative	204,732	206,006	159,826
Amortization of acquired intangible assets	34,970	29,396	28,713
Restructuring and other charges, net	36,234	2,211	32,716
Total operating expenses	1,100,005	1,055,309	913,281
Operating income	447,362	380,748	210,863
Interest and debt premium expense	(54,268)	(50,478)	(76,428)
Other income, net	4,004	61,485	271
Income before income taxes	397,098	391,755	134,706
Provision (benefit) for income taxes	84,017	(85,168)	4,011
Net income (loss)	$ 313,081	$ 476,923	$ 130,695
Earnings (loss) per share—Basic	$ 2.67	$ 4.08	$ 1.13
Earnings (loss) per share—Diluted	$ 2.65	$ 4.03	$ 1.12
Weighted-average shares outstanding—Basic	117,194	116,836	115,663
Weighted-average shares outstanding—Diluted	118,233	118,367	116,267
License
Revenue:
License Revenue	$ 782,680	$ 738,053	$ 509,792
Cost of revenue:
Cost Of License Revenue	49,240	61,750	53,195
Support and cloud services
Revenue:
Support and cloud services	987,573	911,288	804,825
Cost of revenue:
Cost Of support and cloud services revenue	184,789	164,108	145,386
Software
Revenue:
Total software revenue	1,770,253	1,649,341	1,314,617
Cost of revenue:
Total cost of software revenue	234,029	225,858	198,581
Professional services
Revenue:
Professional services	163,094	157,818	143,798
Cost of revenue:
Cost of professional services revenue	$ 151,951	$ 145,244	$ 135,690

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 313,081	$ 476,923	$ 130,695
Other comprehensive income (loss), net of tax:
Hedge gain (loss) arising during the period, net of tax of $5.8 million, $0.4 million, and $1.7 million in 2022, 2021, and 2020, respectively	17,556	1,248	(13,242)
Foreign currency translation adjustment, net of tax of $0 for each period	(92,768)	1,613	22,076
Unrealized gain (loss) on marketable securities, net of tax of $0 for each period	0	(307)	188
Amortization of net actuarial pension gain included in net income, net of tax of $0.4 million, $1.2 million, and $0.9 million in 2022, 2021, and 2020, respectively	1,010	2,930	2,983
Pension net gain (loss) arising during the period net of tax of $6.1 million, $0.7 million, and $0.7 million in 2022, 2021, and 2020, respectively	15,027	1,891	(2,791)
Change in unamortized pension gain (loss) related to changes in foreign currency, net of tax of $0.6 million, $0.0 million, and $0.7 million in 2022, 2021, and 2020, respectively	1,581	135	(1,878)
Other comprehensive income (loss)	(57,594)	7,510	7,336
Comprehensive income	$ 255,487	$ 484,433	$ 138,031

XML

Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Hedge gain (loss) arising during the period, tax	$ (5,800)	$ 400	$ 1,700
Foreign currency translation adjustment, tax	0	0	0
Unrealized gain (loss) on marketable securities, tax	0	0	0
Amortization of net actuarial pension gain included in net income, tax	400	1,200	900
Tax provision (benefit) related to pension net gain (loss) occurring during the year	6,100	700	700
Change in unamortized pension gain (loss) related to changes in foreign currency, tax	$ 600	$ 0	$ 700

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 313,081	$ 476,923	$ 130,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	87,694	85,239	80,817
Amortization of right-of-use lease assets	34,346	37,295	38,687
Stock-based compensation	174,863	177,289	115,149
Loss (gain) on investment	31,854	(68,829)	0
Gain on divestiture of business	(29,808)	0	0
Other non-cash items, net	(4,560)	(1,381)	(3,167)
Provision (benefit) from deferred income taxes	42,963	(158,105)	(24,641)
Accounts receivable	(165,006)	(119,418)	(32,365)
Accounts payable and accrued expenses	6,957	25,096	(5,135)
Accrued compensation and benefits	(6,645)	16,775	10,282
Deferred revenue	57,586	58,702	17,046
Income taxes	(15,329)	13,979	(26,616)
Other current assets and prepaid expenses	(40,643)	(14,206)	36,189
Operating lease liabilities	(13,610)	(7,129)	(11,110)
Other noncurrent assets and liabilities	(38,417)	(153,421)	(92,023)
Net cash provided by operating activities	435,326	368,809	233,808
Cash flows from investing activities:
Additions to property and equipment	(19,496)	(24,713)	(20,196)
Purchases of short- and long-term marketable securities	0	(7,562)	(33,869)
Proceeds from sales of short- and long-term marketable securities	0	56,170	1,521
Proceeds from maturities of short- and long-term marketable securities	0	9,861	30,521
Acquisitions of businesses, net of cash acquired	(282,943)	(718,030)	(483,478)
Proceeds from sales of investments	46,906	0	0
Purchases of investments	0	(4,000)	0
Purchase of intangible assets	(6,451)	(550)	(11,050)
Settlement of net investment hedges	24,857	965	(9,421)
Divestiture of business, net	32,518	0	0
Other investing activities	3,408	0	0
Net cash used in investing activities	(201,201)	(687,859)	(525,972)
Cash flows from financing activities:
Proceeds from issuance of Senior Notes	0	0	1,000,000
Borrowings under credit facility	264,000	600,000	455,000
Repayments of Senior Notes	0	0	(500,000)
Repayments of borrowings under credit facility	(355,000)	(168,000)	(610,125)
Repurchases of common stock	(125,000)	(30,000)	0
Proceeds from issuance of common stock	21,207	21,575	18,382
Debt issuance costs	0	0	(17,107)
Debt early redemption premium	0	0	(15,000)
Payments of withholding taxes in connection with stock-based awards	(68,991)	(52,957)	(33,740)
Payments of principal for financing leases	(297)	(354)	0
Net cash (used in) provided by financing activities	(264,081)	370,264	297,410
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(24,203)	(127)	25
Net change in cash, cash equivalents, and restricted cash	(54,159)	51,087	5,271
Cash, cash equivalents, and restricted cash, beginning of period	327,047	275,960	270,689
Cash, cash equivalents, and restricted cash, end of period	272,888	327,047	275,960
Supplemental disclosure of non-cash financing activities:
Withholding taxes in connection with stock-based awards, accrued	$ 0	$ 120	$ 0

XML

Consolidated Statements of Stockholder's Equity - USD ($) $ in Thousands	Total	Previously Reported	Net Investment Hedging	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Retained Earnings (Accumulated Deficit) Previously Reported	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Net Investment Hedging
Beginning balance at Sep. 30, 2019	$ 1,201,998			$ 1,149	$ 1,502,949	$ (191,390)		$ (110,710)
Beginning balance (Accounting Standards Update 2016-02) at Sep. 30, 2019		$ (1,572)					$ (1,572)
Beginning balance (in shares) at Sep. 30, 2019				114,899,000
Common stock issued for employee stock-based awards				$ 14	(14)
Common stock issued for employee stock-based awards (in shares)				1,392,000
Shares surrendered by employees to pay taxes related to stock-based awards	(33,740)			$ (4)	(33,736)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)				(455,000)
Common stock issued for employee stock purchase plan	18,382			$ 2	18,380
Common stock issued for employee stock purchase plan (in shares)				289,000
Compensation expense from stock-based awards	115,149				115,149
Net income	$ 130,695					130,695
Unrealized gain (loss) on net investment hedges, net of tax			$ (13,242)						$ (13,242)
Repurchases of common stock (in shares)	0
Foreign currency translation adjustment	$ 22,076							22,076
Unrealized gain (loss) on available-for-sale securities, net of tax	188							188
Change in pension benefits, net of tax	(1,686)							(1,686)
Ending balance at Sep. 30, 2020	1,438,248			$ 1,161	1,602,728	(62,267)		(103,374)
Ending balance (in shares) at Sep. 30, 2020				116,125,000
Common stock issued for employee stock-based awards				$ 15	(15)
Common stock issued for employee stock-based awards (in shares)				1,490,000
Shares surrendered by employees to pay taxes related to stock-based awards	(53,077)			$ (4)	(53,073)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)				(466,000)
Common stock issued for employee stock purchase plan	21,575			$ 2	21,573
Common stock issued for employee stock purchase plan (in shares)				240,000
Compensation expense from stock-based awards	177,289				177,289
Net income	476,923					476,923
Unrealized gain (loss) on net investment hedges, net of tax	1,248								1,248
Repurchases of common stock	$ (30,000)			$ (2)	(29,998)
Repurchases of common stock (in shares)	(230,000)			(226,000)
Foreign currency translation adjustment	$ 1,613							1,613
Unrealized gain (loss) on available-for-sale securities, net of tax	(307)							(307)
Change in pension benefits, net of tax	4,956							4,956
Ending balance at Sep. 30, 2021	$ 2,038,468			$ 1,172	1,718,504	414,656		(95,864)
Ending balance (in shares) at Sep. 30, 2021	117,163,000			117,163,000
Common stock issued for employee stock-based awards				$ 18	(18)
Common stock issued for employee stock-based awards (in shares)				1,737,000
Shares surrendered by employees to pay taxes related to stock-based awards	$ (68,991)			$ (6)	(68,985)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)				(597,000)
Common stock issued for employee stock purchase plan	21,207			$ 2	21,205
Common stock issued for employee stock purchase plan (in shares)				215,000
Compensation expense from stock-based awards	174,863				174,863
Net income	313,081					313,081
Unrealized gain (loss) on net investment hedges, net of tax	17,556								$ 17,556
Repurchases of common stock	$ (125,000)			$ (11)	(124,989)
Repurchases of common stock (in shares)	(1,050,000.00)			(1,046,000)
Foreign currency translation adjustment	$ (92,768)							(92,768)
Unrealized gain (loss) on available-for-sale securities, net of tax	0
Change in pension benefits, net of tax	17,618							17,618
Ending balance at Sep. 30, 2022	$ 2,296,034			$ 1,175	$ 1,720,580	$ 727,737		$ (153,458)
Ending balance (in shares) at Sep. 30, 2022	117,472,000			117,472

XML

Description of Business and Basis of Presentation

12 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

Business

PTC Inc. was incorporated in 1985 and is headquartered in Boston, Massachusetts. PTC is a global software company that provides a portfolio of innovative digital solutions that work together to transform how physical products are engineered, manufactured, and serviced.

Basis of Presentation

Our fiscal year-end is September 30. The consolidated financial statements include PTC Inc. (the parent company) and its wholly-owned subsidiaries, including those operating outside the United States. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

We prepare our financial statements under generally accepted accounting principles in the United States. that require management to make estimates and assumptions that affect the amounts reported and the related disclosures. Actual results could differ from these estimates.

XML

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Foreign Currency Translation

For our non-U.S. operations where the functional currency is the local currency, we translate assets and liabilities at exchange rates in effect at the balance sheet date and record translation adjustments in stockholders’ equity. For our non-U.S. operations where the U.S. dollar is the functional currency, we remeasure monetary assets and liabilities using exchange rates in effect at the balance sheet date and non-monetary assets and liabilities at historical rates and record resulting exchange gains or losses in foreign currency net losses in the Consolidated Statements of Operations. We translate income statement amounts at average rates for the period. Transaction gains and losses are recorded in Other income, net in the Consolidated Statements of Operations.

Revenue Recognition

Nature of Products and Services

Our sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Revenue is derived from the licensing of computer software products and from related support and/or professional services contracts. In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these products or services. To achieve the core principle of this standard, we apply the following five steps:

(1)identify the contract with the customer,

(2)identify the performance obligations in the contract,

(3)determine the transaction price,

(4)allocate the transaction price to performance obligations in the contract, and

(5)recognize revenue when or as we satisfy a performance obligation.

We enter into contracts that include combinations of licenses, support and professional services, each of which are accounted for as separate performance obligations with differing revenue recognition patterns referenced below.

Performance Obligation	When Performance Obligation is Typically Satisfied
Term-based subscriptions
On-premises software licenses	Point in Time: Upon the later of when the software is made available or the subscription term commences
Support and cloud-based offerings (including SaaS)	Over Time: Ratably over the contractual term; commencing upon the later of when the software is made available or the subscription term commences
Perpetual software licenses	Point in Time: when the software is made available
Support for perpetual software licenses	Over Time: Ratably over the contractual term
Professional services	Over Time: As services are provided

Judgments and Estimates

Our contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. On-premises software is determined to be a distinct performance obligation from support which is sold for the same term of the subscription. For subscription arrangements which include cloud services and on-premises licenses, we assess whether the cloud component is highly interrelated with the on-premises term-based software licenses. Other than a limited population of subscriptions, the cloud component is not currently deemed to be interrelated with the on-premises term software and, as a result, cloud services are accounted for as a distinct performance obligation from the software and support components of the subscription.

Judgment is required to allocate the transaction price to each performance obligation. We use the estimated standalone selling price method to allocate the transaction price for items that are not sold separately. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance obligations are satisfied. Where subscriptions include on-premises software and support only, we determined that approximately 55% of the estimated standalone selling price for subscriptions is attributable to software licenses and approximately 45% is attributable to support for those licenses. Some of our subscription offerings include a combination of on-premises and cloud-based technology. In such cases, the cloud-based technology is considered distinct and receives an allocation of approximately 5% to 50% of the estimated standalone selling price of the subscription. The amounts allocated to cloud are based on assessment of the relative value of the cloud functionality in the subscription, with the remaining amounts allocated between software and support.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the original subscription with other software. Although the exchange right is limited to software products within a similar product grouping, the exchange right is not limited to products with substantially similar features and functionality as those originally delivered. We determined that this right to exchange previously delivered software for different software represents variable consideration to be accounted for as a liability. We have identified a standard portfolio of contracts with common characteristics and applied the expected value method of determining variable consideration associated with this right. Additionally, where there are isolated situations that are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the amount of variable consideration. In both circumstances, the variable consideration included in the transaction price is constrained to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of September 30, 2022 and 2021, the total liability was $34.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

Practical Expedients

We have elected certain practical expedients associated with our revenue recognition policy. We do not account for significant financing components if the period between revenue recognition and when the customer pays for the products or services is one year or less. Additionally, we recognize revenue equal to the amount we have a right to invoice when the amount corresponds directly with the value to the customer of our performance to date.

Cash Equivalents

Our cash equivalents are invested in money market accounts and time deposits of financial institutions. We have established guidelines relative to credit ratings, diversification and maturities that are intended to maintain safety and liquidity. Cash equivalents include highly liquid investments with maturity periods of three months or less when purchased.

Marketable Securities

As of September 30, 2022, our investment portfolio consisted of certificates of deposit, commercial paper, corporate notes/bonds and government securities that had a maximum maturity of three years. In December 2020, we sold all our marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material.

Equity Securities

On July 22, 2021, a company in which we were a preferred equity investor, Matterport, Inc., completed a business combination with a public company. The carrying value of our investment, which was classified as a non-marketable equity investment, was approximately $8.7 million prior to the business combination. Our preferred shares were converted into common shares of Matterport. As of September 30, 2022, PTC held no shares in Matterport, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY'22 based on contingent earn-outs achieved in January 2022. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold all remaining shares for $3.6 million at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a net loss of $34.8 million in Other income, net on the Consolidated Statements of Operations. No additional gains or losses have been recognized for 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The fair value of the Matterport shares as of September 30, 2021 was $77.5 million and was determined using the closing price of Matterport's common stock as of September 30, 2021, less a temporary discount for lack of marketability. For the year ended September 30, 2021, we recorded an unrealized gain of $68.8 million on the appreciation of the value of the shares in Other income, net on the Consolidated Statement of Operations.

We also have non-marketable equity investments that we account for at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments off the same issuer. We monitor non-marketable equity investments for events that could indicate that the investments are impaired, such as deterioration in the issuer's financial condition and business forecasts and lower valuation in recent or proposed financings. Changes in fair value of non-marketable equity investments are recorded in Other income, net on the Consolidated Statements of Operations. In the years ended September 30, 2022 and 2021, we did not record any impairment charges for our investments. The carrying value of our non-marketable equity investments is recorded in Other assets on the Consolidated Balance Sheets and totaled $1.0 million and $2.2 million as of September 30, 2022 and 2021, respectively.

Concentration of Credit Risk and Fair Value of Financial Instruments

The amounts reflected in the Consolidated Balance Sheets for Cash and cash equivalents, Accounts receivable and Accounts payable approximate their fair value due to their short maturities. Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and foreign currency derivative instruments. Our Cash, cash equivalents, and foreign currency derivatives are placed with financial institutions with high credit standings. Our credit risk for derivatives is also mitigated due to the short-term nature of the contracts. Our customer base consists of many geographically diverse customers dispersed across many industries. No individual customer comprised more than 10% of our trade accounts receivable as of September 30, 2022 or 2021 or more than 10% of our revenue for the years ended September 30, 2022, 2021 or 2020.

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.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Effective October 1, 2020, we adopted ASC 326, Financial Instruments—Credit Losses, which replaced the incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. In determining the adequacy of the allowance for doubtful accounts, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends. Our allowance for doubtful accounts on trade accounts receivable was $0.4 million, $0.3 million and $0.5 million as of September 30, 2022, 2021 and 2020, respectively. Uncollectible trade accounts receivable written-off, net of recoveries, were $0.4 million, $0.1 million and $0.2 million in 2022, 2021 and 2020, respectively. Net bad debt expense was $0.5 million in 2022, net bad debt recovery was $0.2 million in 2021 and net bad debt expense was $0.0 million in 2020, and is included in General and administrative expenses in the accompanying Consolidated Statements of Operations.

Derivatives

Generally accepted accounting principles require all derivatives, whether designated in a hedging relationship or not, to be recorded on the balance sheet at fair value. 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 India. 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 currencies resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts and options, 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. For a description of our non-designated hedge and net investment hedge activity see Note 17. Derivative Financial Instruments.

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 four months. The majority of our foreign currency forward contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into 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 or losses on the underlying foreign-denominated balance are offset by the loss or gain on the forward contract and are included in Other income, net.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into U.S. Dollars using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheet. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro functional subsidiaries. Net investment hedges partially offset the impact of foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheet. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheet and the maximum duration of foreign exchange forward contracts is approximately three months.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these Unrealized gain (loss) on net investment hedges in Accumulated other comprehensive loss and subsequently reclassify them to Foreign currency translation adjustment in Accumulated other comprehensive loss at the time of forward contract maturity. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from 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.

Leases

We adopted ASC 842, Leases effective October 1, 2019. ASC 842 requires a modified retrospective transition method that could either be applied at the earliest comparative period in the financial statements or in the period of adoption. We elected to use the period of adoption (October 1, 2019) transition method and therefore did not recast prior periods.

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets and Operating lease obligations on our Consolidated Balance Sheets. Our operating leases are primarily for office space, cars, servers, and office equipment. We made an election not to separate lease components from non-lease components for office space, servers and office equipment. We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Finance leases are included in Property and equipment, Accrued expenses and Other current liabilities, and Other liabilities on our Consolidated Balance Sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term as that of the lease payments at the commencement date. The right-of-use assets include any lease payments made and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base non-cancellable lease term when determining the lease assets and liabilities.

Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities. These variable payments include insurance, taxes, consumer price index payments, and payments for maintenance and utilities.

Our operating leases expire at various dates through 2037.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Computer hardware and software are typically amortized over three to five years, and furniture and fixtures over three to twelve years. Leasehold improvements are amortized over the shorter of their useful lives or the remaining terms of the related leases. Property and equipment under capital leases are amortized over the lesser of the lease term or their estimated useful lives. Maintenance and repairs are charged to expense when incurred; additions and improvements are capitalized. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in income.

Software Development Costs

We incur costs to develop computer software to be licensed or otherwise marketed to customers. Our research and development expenses consist principally of salaries and benefits, costs of computer equipment, and facility expenses. Research and development costs are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Development costs for software to be sold externally incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and, upon general release, are amortized using the greater of either the straight-line method over the expected life of the related products or based upon the pattern in which economic benefits related to such assets are realized. The straight-line method is used if it approximates the same amount of expense as that calculated using the ratio that current period gross product revenues bear to total anticipated gross product revenues. No development costs for software to be sold externally were capitalized in 2022, 2021 or 2020. We purchased software of $6.0 million and $0.6 million in 2022 and 2021, respectively. Additionally, we acquired capitalized software through business combinations (for further detail, see Note 6. Acquisitions and Disposition of Business). These assets are included in Intangible assets in the accompanying Consolidated Balance Sheets.

Business Combinations

We allocate the purchase price of acquisitions to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. Goodwill is measured as the excess of the purchase price over the value of net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. Any adjustments to estimated fair value are recorded to goodwill, provided that we are within the measurement period (up to one year from the acquisition date) and that we continue to collect information to determine estimated fair value. Subsequent to the measurement period or our final determination of estimated fair value, whichever comes first, adjustments are recorded in the Consolidated Statements of Operations.

Goodwill, Acquired Intangible Assets and Long-lived Assets

Goodwill is the amount by which the purchase price in a business acquisition exceeds the fair value of net identifiable assets on the date of purchase.

Goodwill is evaluated for impairment annually as of the end of the third quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value.

Our annual goodwill impairment test is based on either a quantitative or qualitative assessment. A quantitative assessment compares the fair value of the reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. We estimate the fair values of our reporting units using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for each reporting unit. We estimate these amounts by evaluating historical trends; current budgets and operating plans; and industry data. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. Qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of each reporting unit at the last valuation date.

We completed our annual goodwill impairment review as of June 30, 2022, which consisted of a qualitative assessment of our Software Products segment and a quantitative assessment of our Professional Services segment in conjunction with the sale of a portion of that business to ITC Infotech. Our qualitative assessment for Software Products included company-specific (e.g., financial performance and long-range plans), industry, and macroeconomic factors, as well as consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date (June 27, 2020). Based on our qualitative assessment, we believe it is more likely than not that the fair value of our Software Products reporting unit exceeds its carrying value and no further impairment testing is required. Our quantitative assessment for the Professional Services segment compared the fair value of the reporting unit to its carrying value. We estimated the fair value of the reporting unit using a discounted cash flow valuation model. This model requires estimates of future revenues, profits, capital expenditures, working capital, and a terminal value based on a residual cash flow valuation model. We estimated this amount by evaluating historical trends, current budgets and operating plans, including consideration of the completed transaction with ITC Infotech. Based on a comparison of the estimated fair value to the carrying value of the Professional Services reporting unit as of June 30, 2022, no impairment was required. Through September 30, 2022, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable.

Long-lived assets primarily include property and equipment and acquired intangible assets with finite lives (including purchased software, customer lists and trademarks). Purchased software is amortized over periods up to 16 years, customer lists are amortized over periods up to 13 years and trademarks are amortized over periods up to 12 years. We review long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. An impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset or asset group. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses incurred were $8.6 million, $7.1 million and $3.8 million in 2022, 2021 and 2020, respectively and are included in sales and marketing expenses in the accompanying Consolidated Statements of Operations.

Income Taxes

Our income tax expense includes U.S. and international income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effects of these differences are reported as deferred tax assets and liabilities. Deferred tax assets are recognized for the estimated future tax effects of deductible temporary differences and tax operating loss and credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of deferred tax assets will not be realized, we establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we include an expense within the Tax provision (benefit) for income taxes in the Consolidated Statements of Operations.

Comprehensive Income

Comprehensive income consists of Net income and Other comprehensive income (loss), which includes foreign currency translation adjustments, changes in unrecognized actuarial gains and losses (net of tax) related to pension benefits, unrealized gains and losses on hedging instruments and unrealized gains and losses on marketable securities. We do not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as we intend to reinvest permanently undistributed earnings of our foreign subsidiaries. Accumulated other comprehensive loss is reported as a component of Stockholders’ Equity and, as of September 30, 2022, was comprised of the following: cumulative translation adjustment losses of $160.2 million, unrecognized actuarial losses related to pension benefits of $5.4 million ($3.9 million net of tax), and accumulated net gains from net investment hedges of $16.9 million ($10.6 million net of tax). As of September 30, 2021, Accumulated other comprehensive loss was comprised of the following: cumulative translation adjustment losses of $67.5 million, unrecognized actuarial losses related to pension benefits of $30.2 million ($21.5 million net of tax), and accumulated net losses from net investment hedges of $6.5 million ($6.5 million net of tax).

Earnings per Share (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 stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds. Anti-dilutive shares excluded from the calculations of diluted EPS were immaterial in the years ended September 30, 2022 and 2021.

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data)	Year ended September 30,
	2022		2021		2020
Net income	$	313,081	$	476,923	$	130,695
Weighted average shares outstanding		117,194		116,836		115,663
Dilutive effect of employee stock options, restricted shares and restricted stock units		1,039		1,531		604
Diluted weighted average shares outstanding		118,233		118,367		116,267
Earnings per share—Basic	$	2.67	$	4.08	$	1.13
Earnings per share—Diluted	$	2.65	$	4.03	$	1.12

Stock-Based Compensation

We measure the compensation cost of employee services received in exchange for an award of equity based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. See Note 12. Equity Incentive Plans for a description of the types of equity awards granted, the compensation expense related to such awards and detail of such awards outstanding. See Note 8. Income Taxes for detail of the tax benefit related to stock-based compensation recognized in the Consolidated Statements of Operations.

Recently Adopted Accounting Pronouncements

Intangibles—Goodwill and Other—Internal-Use Software

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted the new standard prospectively effective October 1, 2020. As a result, we are required to capitalize certain costs related to the implementation of cloud computing arrangements. Capitalized costs related to cloud computing arrangements, which are included in Other assets on the Consolidated Balance Sheets, were $14.3 million and $2.8 million as of September 30, 2022 and September 30, 2021, respectively,

Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), which, along with subsequent amendments, replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when recording credit loss estimates. We adopted the new standard effective October 1, 2020, with no impact on our consolidated financial statements.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) on Simplifying the Accounting for Income Taxes. The decisions reflected in ASU 2019-12 update specific areas of ASC 740, Income Taxes, to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. The new standard became effective for us in the first quarter of 2022 ending December 31, 2021 and did not have a material impact on our consolidated financial statements.

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) on Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to 1) recognition of an acquired contract asset and liability, and 2) payment terms and their effect on subsequent revenue recognized by the acquirer. We adopted ASU 2021-08 early as of the third quarter of 2022 and applied it to our acquisition of Intland Software, which was completed in the quarter. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements. Refer to Note 6. Acquisitions and Disposition of Business for additional discussion regarding the accounting for the acquisition of Intland Software.

Pending Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We are still evaluating the impact, but do not expect the standard to have a material impact on our consolidated financial statements.

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Revenue from Contracts with Customers

12 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

3. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

(in thousands)	September 30,
	2022		2021
Contract asset	$	21,096	$	12,934
Deferred revenue	$	520,333	$	497,677

As of September 30, 2022, $16.9 million of our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in Other current assets. The remainder is included in Other assets and expected to be transferred within the next 24 months. As of September 30, 2021, $8.2 million of our contract asset balance was included in Other current assets.

Approximately $7.0 million of the September 30, 2021 contract asset balance was transferred to receivables during the year ended September 30, 2022 as a result of the right to payment becoming unconditional. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. The net increase in contract assets of $8.2 million includes an increase of approximately $15.2 million related to revenue recognized in the period, net of billings.

During the year ended September 30, 2022, we recognized $491.6 million of revenue that was included in Deferred revenue as of September 30, 2021 and there were additional deferrals of $507.3 million, primarily related to new billings. In addition, deferred revenue increased by $6.9 million as a result of the acquisition of Intland Software. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of September 30, 2022 was $871.0 million, compared to $744.6 million as of September 30, 2021.

Costs to Obtain or Fulfill a Contract

We recognize an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred costs (primarily commissions) are amortized proportionately related to revenue over 5 years, which is generally longer than the term of the initial contract because of anticipated renewals as commissions for renewals are not commensurate with commissions related to our initial contracts. As of September 30, 2022 and September 30, 2021, deferred costs of $40.7 million and $40.2 million, respectively, were included in Other current assets and $77.0 million and $81.1 million, respectively, were included in Other assets. Amortization expense related to costs to obtain a contract with a customer was $50.9 million and $46.7 million in the years ended September 30, 2022 and 2021, respectively. There were no impairments of the contract cost asset in the years ended September 30, 2022 and 2021.

Remaining Performance Obligations

Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of September 30, 2022, the amounts include additional performance obligations of $520.3 million recorded in deferred revenue and $1,092.7 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 57% of the total $1,613.0 million over the next 12 months, with the remaining amount thereafter.

Disaggregation of Revenue

(in thousands)	Year ended September 30,
	2022		2021		2020
Total recurring revenue	$	1,736,188	$	1,616,328	$	1,281,949
Perpetual license		34,065		33,013		32,668
Professional services		163,094		157,818		143,798
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

For further disaggregation of revenue by geographic region and product group see Note 18. Segment and Geographic Information.

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Restructuring and Other Charges

12 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

4. Restructuring and Other Charges

Restructuring and other charges, net includes restructuring charges (credits), headquarters relocation charges, and impairment and accretion expense charges related to the lease assets of exited facilities. Refer to Note 19. Leases for additional information about exited facilities.

In 2022, Restructuring and other charges, net totaled $36.2 million, of which $32.4 million is attributable to restructuring charges, $5.1 million is attributable to other charges for professional fees included in restructuring related to our SaaS transformation, offset by a $1.3 million credit attributable to sublease income and the reversal of lease liabilities related to exited lease facilities. We made cash payments related to restructuring charges of $40.8 million ($34.0 million related to employee charges, $2.5 million in payments for other professional fees included in restructuring related to our SaaS transformation, and $4.3 million in net payments for variable costs related to restructured facilities).

In 2021, Restructuring and other charges, net totaled $2.2 million, of which $2.1 million was attributable to restructuring charges and $0.1 million was attributable to impairment and accretion expense related to exited lease facilities. We made cash payments related to restructuring charges of $6.7 million ($3.9 million related to the 2020 restructuring and $2.8 million in rent payments for the restructured facilities).

In 2020, Restructuring and other charges, net totaled $32.7 million, of which $26.4 million was attributable to restructuring charges, $5.6 million was attributable to impairment and accretion expense related to exited lease facilities, and $0.7 million was attributable to accelerated depreciation related to the planned exit of a facility. We made cash payments related to restructuring charges of $31.5 million ($27.3 million related to the 2020 restructuring, $3.9 million related to the 2019 restructuring, and $0.3 million related to a prior restructuring).

Restructuring Charges

In the first quarter of 2022, we committed to a plan to restructure our workforce and consolidate select facilities to align our customer facing and product-related functions with the SaaS industry best practices and accelerate the opportunity for our on-premises customers to move to the cloud. The restructuring plan resulted in charges of $33.1 million in 2022, primarily associated with the termination of benefits for approximately 330 employees.

In the first quarter of 2020, we initiated a restructuring program as part of a realignment associated with expected synergies and operational efficiencies related to the Onshape acquisition. The restructuring plan resulted in charges of $30.8 million through fiscal year 2020 for termination benefits associated with approximately 250 employees. In the year ended September 30, 2022 and 2021, we recorded a credit of $0.1 million and a charge of $0.2 million, respectively, related to this restructuring plan.

The following table summarizes restructuring accrual activity for the three years ended September 30, 2022:

(in thousands)	Employee severance and related benefits			Facility closures and other costs			Consolidated total
Balance, September 30, 2019	$	298		$	30,788		$	31,086
ASC 842 adoption		—			(16,462	)		(16,462	)
Charges (credits) to operations, net		30,690			(4,263	)		26,427
Cash disbursements		(27,256	)		(4,246	)		(31,502	)
Other non-cash		—			164			164
Foreign exchange impact		260			14			274
Balance, September 30, 2020		3,992			5,995			9,987
Charges to operations, net		1,887			249			2,136
Cash disbursements		(3,925	)		(2,756	)		(6,681	)
Foreign exchange impact		27			17			44
Balance, September 30, 2021		1,981			3,505			5,486
Charges (credits) to operations, net		32,971			(561	)		32,410
Cash disbursements		(34,023	)		(2,355	)		(36,378	)
Foreign exchange impact		(583	)		—			(583	)
Balance, September 30, 2022	$	346		$	589		$	935

As of September 30, 2022 and 2021, the accrual for employee severance and related benefits was included in Accrued compensation and benefits in the Consolidated Balance Sheets.

As of September 30, 2022, the accrual for facility closures and related costs was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets and as of September 30, 2021, $2.6 million was included in Accrued expenses and other current liabilities and $0.9 million was included in Other liabilities in the Consolidated Balance Sheets.

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Property and Equipment

12 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

5. Property and Equipment

Property and equipment consisted of the following:

(in thousands)	September 30,
	2022			2021
Computer hardware and software	$	364,762		$	352,704
Furniture and fixtures		29,744			30,568
Leasehold improvements		95,383			94,959
Gross property and equipment		489,889			478,231
Accumulated depreciation and amortization		(391,788	)		(377,994	)
Net property and equipment	$	98,101		$	100,237

Depreciation expense was $27.1 million, $26.1 million and $24.7 million in 2022, 2021 and 2020, respectively.

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Acquisitions and Disposition of Business

12 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Acquisitions and Disposition of Business

6. Acquisitions and Disposition of Business

Acquisition and transaction-related costs were $13.2 million, $15.0 million and $8.6 million in 2022, 2021 and 2020, respectively. Acquisition and transaction-related costs include direct costs of potential and completed acquisitions (e.g., investment banker fees and professional fees, including legal and valuation services) and expenses related to acquisition integration activities (e.g., professional fees and severance). In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition and transaction-related charges. Other transactional charges include third-party costs related to structuring unusual transactions, such as the divestiture of a portion of our business. These costs are classified in General and administrative expenses in the accompanying Consolidated Statements of Operations.

Our results of operations include the results of acquired businesses beginning on their respective acquisition date. For all acquisitions made in 2022, our results of operations, if presented on a pro forma basis, would not differ materially from our reported results.

Intland Software

On April 29, 2022, we acquired Intland Software, GmbH, and Eger Invest GmbH (together, “Intland Software”) pursuant to a Share Sale and Purchase Agreement. Intland Software developed and marketed the Codebeamer™ Application Lifecycle Management (ALM) family of software products. The purchase price of the acquisition was $278.1 million, net of cash acquired, which was financed with cash on hand and $264 million borrowed under our existing credit facility. Intland Software had approximately 150 employees on the close date.

The acquisition of Intland Software has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a discounted cash flow model which requires the use of significant estimates and assumptions, including estimating future revenues and costs. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The purchase price allocation is considered preliminary, and additional adjustments may be recorded during the measurement period as the company receives additional information relevant to the acquisition related to the finalization of working capital adjustments to the purchase price and deferred tax assets and liabilities.

The purchase price allocation resulted in $240.9 million of goodwill, $38.8 million of customer relationships, $19.1 million of purchased software, $1.3 million of trademarks, $20.1 million of deferred tax liabilities, $0.7 million of income tax payables, $6.9 million of deferred revenue, $6.5 million of accounts receivable, and $0.8 million of other net liabilities. The purchase price allocation includes the finalization of measurement period adjustments, which resulted in a $0.9 million increase in goodwill from $240.0 million as of Q3'22, driven by completion of working capital adjustments.

The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 11 years, 10 years, and 10 years, respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill was allocated to our software products segment and will not be deductible for income tax purposes. The resulting amount of goodwill reflects the expected value that will be created by expanding our ALM offerings, which are complementary to our PLM offerings

Arena

On January 15, 2021, we acquired Arena Holdings, Inc. (“Arena”) pursuant to an Agreement and Plan of Merger dated as of December 12, 2020 by and among PTC, Arena, Astronauts Merger Sub, Inc., and the Representative named therein. We paid approximately $715 million, net of cash acquired of $11.1 million, for Arena, which amount was financed with cash on hand and $600 million borrowed under our existing credit facility. Arena had approximately 170 employees on the close date. The acquisition of Arena added revenue of approximately $29.8 million in FY'21, which was net of approximately $9.1 million in fair value adjustments related to purchase accounting for the acquisition.

The acquisition of Arena was accounted for as a business combination. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a discounted cash flow model which requires the use of significant estimates and assumptions, including estimating future revenues and costs. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

The purchase price allocation resulted in $562.8 million of goodwill, $155.0 million of customer relationships, $38.3 million of purchased software, $4.2 million of trademarks, $41.3 million of deferred tax liabilities, $15.5 million of deferred revenue, $11.4 million of accounts receivable, and $0.4 million of other net liabilities. The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 13 years, 9 years, and 12 years, respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill was allocated to our software products segment and will not be deductible for income tax purposes. The resulting amount of goodwill reflects the expected value that will be created by participation in expected future growth of the PLM SaaS market and expansion into the mid-market for PLM, where SaaS solutions are becoming the standard.

PLM Services Business Disposition

On June 1, 2022, we sold a portion of our PLM services business to ITC Infotech India Limited pursuant to a Strategic Partner Agreement dated as of April 20, 2022 by and between PTC and ITC Infotech. Consideration received from ITC Infotech for the sale was approximately $60.4 million, consisting of $32.5 million cash paid on closing and $28.0 million of services to be provided by ITC Infotech to PTC for no additional charge.

We recognized a gain on the sale of $29.8 million, which is included within Other income, net. The recognized gain consists of $60.4 million of consideration received, less net assets of the business of $30.6 million. Net assets include $33.0 million of goodwill allocated to the business, less $2.4 million of liabilities associated with approximately 160 employees who transferred to ITC Infotech. Goodwill was allocated to the sold business based on a relative fair value allocation of total goodwill of the Professional Services segment.

Additional future contingent consideration of up to $20 million may be received by PTC based on certain performance milestones. We have elected to defer the recognition of gains associated with contingent consideration until they become realizable.

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Goodwill and Acquired Intangible Assets

12 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

7. Goodwill and Acquired Intangible Assets

We have two operating and reportable segments: (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 September 30, 2022, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,725.2 million and attributable to our Professional Services segment was $11.2 million. As of September 30, 2021, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,525.7 million and attributable to our Professional Services segment was $45.2 million.

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	September 30, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,353,654					$	2,191,887
Intangible assets with finite lives (amortized)(1):
Purchased software	$	502,859	$	355,857	$	147,002	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		594,970		369,390		225,580		574,516		350,648		223,868
Trademarks and trade names		27,546		17,410		10,136		26,906		17,036		9,870
Other		3,766		3,766		—		4,000		4,000		—
	$	1,152,018	$	769,300	$	382,718	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,736,372					$	2,570,854

(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 11 years, 11 years, and 12 years, respectively.

The changes in the carrying amounts of goodwill from September 30, 2021 to September 30, 2022 are due to the impact of acquisitions and to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill presented by reportable segment were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, September 30, 2020	$	1,583,316		$	42,470		$	1,625,786
Arena acquisition		563,620			—			563,620
Other acquisitions		181			400			581
Foreign currency translation adjustments		1,851			49			1,900
Balance, September 30, 2021	$	2,148,968		$	42,919		$	2,191,887
Intland Software acquisition		240,971			—			240,971
Other acquisitions		691			—			691
Divestiture of business		—			(32,992	)		(32,992	)
Foreign currency translation adjustments		(46,611	)		(292	)		(46,903	)
Balance, September 30, 2022	$	2,344,019		$	9,635		$	2,353,654

The aggregate amortization expense for intangible assets with finite lives recorded for the years ended September 30, 2022, 2021 and 2020 was reflected in our Consolidated Statements of Operations as follows:

(in thousands)	Year ended September 30,
	2022		2021		2020
Amortization of acquired intangible assets	$	34,970	$	29,396	$	28,713
Cost of software revenue		25,578		29,769		27,391
Total amortization expense	$	60,548	$	59,165	$	56,104

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of September 30, 2022 is $56.4 million for 2023, $48.3 million for 2024, $42.1 million for 2025, $38.7 million for 2026, $36.2 million for 2027 and $161.0 million thereafter.

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Income Taxes

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

Our income before income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022		2021		2020
Domestic	$	97,460	$	41,199	$	(73,865	)
Foreign		299,638		350,556		208,571
Total income before income taxes	$	397,098	$	391,755	$	134,706

Our provision (benefit) for income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Current:
Federal	$	767		$	4,774		$	2,187
State		6,675			1,609			1,266
Foreign		33,612			66,554			25,199
		41,054			72,937			28,652
Deferred:
Federal		25,730			(152,311	)		(26,811	)
State		(3,177	)		(27,228	)		(4,063	)
Foreign		20,410			21,434			6,233
		42,963			(158,105	)		(24,641	)
Provision (benefit) for income taxes	$	84,017		$	(85,168	)	$	4,011

Taxes computed at the statutory federal income tax rates are reconciled to the provision (benefit) for income taxes as follows:

(in thousands)	Year ended September 30,
	2022					2021					2020
Statutory federal income tax rate	$	83,391		21	%	$	82,268		21	%	$	28,288		21	%
Change in valuation allowance		—		—			(134,695	)	(34	)%		(16,489	)	(12	)%
State income taxes, net of federal tax benefit		6,518		2	%		(28,768	)	(8	)%		(2,998	)	(2	)%
Federal research and development credits		(7,477	)	(2	)%		(5,764	)	(2	)%		(5,483	)	(4	)%
Uncertain tax positions		2,418		1	%		3,398		1	%		3,072		2	%
Foreign tax credit		(9,078	)	(2	)%		(35,368	)	(9	)%		—		—
Foreign rate differences		(8,982	)	(2	)%		(34,584	)	(9	)%		(22,074	)	(16	)%
Foreign tax on U.S. provision		9,078		2	%		5,931		2	%		4,523		3	%
Excess tax benefits from restricted stock		(8,278	)	(2	)%		(6,141	)	(2	)%		(1,743	)	(1	)%
Audits and settlements		—		—			33,370		9	%		—		—
U.S. permanent items		15,304		3	%		18,389		5	%		6,590		5	%
Base Erosion Anti-Abuse Tax (BEAT)		—		—			2,936		1	%		(1,759	)	(1	)%
GILTI, net of foreign tax credits		2,705		1	%		18,217		4	%		14,899		11	%
Foreign-Derived Intangible Income (FDII)		(6,848	)	(2	)%		(4,428	)	(1	)%		(2,461	)	(2	)%
Sale of a portion of the PLM services business		6,844		2	%		—		—			—		—
Other, net		(1,578	)	(1	)%		71		—			(354	)	(1	)%
Provision (benefit) for income taxes	$	84,017		21	%	$	(85,168	)	(22	)%	$	4,011		3	%

In 2022, 2021, and 2020, our effective tax rate is impacted by 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 and the Cayman Islands. In 2022, 2021, and 2020, the foreign rate differential predominantly relates to these earnings. In addition to the foreign rate differential, our tax rate differed from the U.S. statutory federal income tax due to the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes (together referred to as U.S. Tax reform), and the excess tax benefit related to stock-based compensation.

Additionally in 2022, our results include tax expense relating to the book over tax basis difference in goodwill disposed of as part of the sale of a portion of the PLM services business. As a result of the net effect of these items in 2022, our effective tax rate did not differ significantly from the U.S. federal income tax rate.

In 2021, our tax rate includes a benefit due to the release of the valuation allowance on the majority of our U.S. net deferred tax assets.

In 2020, we recorded benefits for the reduction of the U.S. valuation allowance as a result of the Onshape acquisition. A further reduction to the valuation allowance was also recorded to reflect the impact from the scheduling of the reversal of existing temporary differences resulting in deferred tax liabilities that cannot be offset against deferred tax assets.

At September 30, 2022 and 2021, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $17.3 million ($5.1 million in Accrued income taxes, $5.6 million in Other current liabilities and $6.6 million in Other liabilities) and $15.7 million ($5.0 million in Accrued income taxes, $0.8 million in Other current liabilities and $9.9 million in Other liabilities), respectively. At September 30, 2022 and 2021, prepaid taxes recorded in Prepaid expenses on the accompanying Consolidated Balance Sheets were $25.8 million and $15.4 million, respectively. We made net income tax payments of $55.0 million, $56.0 million and $52.6 million in 2022, 2021 and 2020, respectively.

The significant temporary differences that created deferred tax assets and liabilities are shown below:

(in thousands)	September 30,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	40,419		$	65,383
Foreign tax credits		14,527			36,287
Capitalized research and development		23,274			27,546
Pension benefits		7,639			14,097
Prepaid expenses		15,886			12,540
Deferred revenue		2,146			2,274
Stock-based compensation		19,486			15,822
Other reserves not currently deductible		14,689			16,796
Amortization of intangible assets		130,825			147,385
Research and development and other tax credits		78,862			74,846
Lease liabilities		46,672			51,471
Fixed assets		78,249			53,025
Capital loss carryforward		3,955			35,156
Other		1,256			2,269
Gross deferred tax assets		477,885			554,897
Valuation allowance	$	(22,283	)		(52,085	)
Total deferred tax assets		455,602			502,812
Deferred tax liabilities:
Acquired intangible assets not deductible	$	(118,360	)		(108,746	)
Lease assets		(36,940	)		(37,273	)
Pension prepayments		(2,622	)		(2,834	)
Deferred revenue		(35,193	)		(2,662	)
Depreciation		(6,937	)		(7,121	)
Unbilled accounts receivable		-			(6,391	)
Deferred income		(5,991	)		(21,744	)
Prepaid commissions		(13,356	)		(16,990	)
Other		(8,508	)		(5,427	)
Total deferred tax liabilities		(227,907	)		(209,188	)
Net deferred tax assets	$	227,695		$	293,624

We reassess our valuation allowance requirements each financial reporting period. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to use our existing deferred tax assets. In the assessment for the period ended September 30, 2021, we concluded that it was more likely than not that our deferred tax assets related to U.S. federal and state income would be realizable, and therefore, the U.S. federal and the majority of the state valuation allowances were released, which resulted in non-cash federal and state tax benefits of $109.4 million and $24.8 million, respectively, to earnings in 2021. That determination was based, in part, on the Company’s cumulative profits before tax and permanent differences from the past three years, which became profitable during 2021, and projections of profits before tax and permanent differences in future years. In 2022, we continue to maintain this conclusion.

For U.S. tax return purposes, net operating loss (NOL) carryforwards and tax credits are generally available to be carried forward to future years, subject to certain limitations. At September 30, 2022, we had U.S. federal tax effected NOL carryforwards from acquisitions of $22.5 million, of which $1.6 million expire in 2023 to 2034. The remaining carryforwards of $20.9 million do not expire. The use of these NOL carryforwards is limited as a result of the change in ownership rules under Internal Revenue Code Section 382.

As of September 30, 2022, we had federal R&D credit carryforwards of $60.9 million, which expire beginning in 2025 and ending in 2042, and Massachusetts R&D credit carryforwards of $26.1 million, which expire beginning in 2023 and ending in 2037. We also had foreign tax credits of $14.5 million, which expire beginning in 2027 and ending in 2032.

We also have tax effected NOL carryforwards in non-U.S. jurisdictions totaling $7.2 million, the majority of which do not expire, and non-U.S. tax credit carryforwards of $4.0 million that expire beginning in 2030 and ending in 2041. Additionally, we have tax effected amortization carryforwards of $118.5 million in a foreign jurisdiction. There are limitations imposed on the use of such attributes that could restrict the recognition of any tax benefits.

As of September 30, 2022, we have a valuation allowance of $17.8 million against net deferred tax assets in the United States and a valuation allowance of $4.5 million against net deferred tax assets in certain foreign jurisdictions. The $17.8 million U.S. valuation allowance relates to Massachusetts tax credit carryforwards which we do not expect to realize a benefit from prior to expiration. The valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards, the majority of which do not expire. However, there are limitations imposed on the utilization of such capital losses that could restrict the recognition of any tax benefits.

The changes to the valuation allowance were primarily due to the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Valuation allowance, beginning of year	$	52,085		$	205,423		$	177,663
Net release of valuation allowance(1)		—			(134,235	)		—
Net increase (decrease) in deferred tax assets with a full valuation allowance(2)		(29,802	)		(19,103	)		27,760
Valuation allowance, end of year	$	22,283		$	52,085		$	205,423

(1)In 2021, this is attributable to the release in the United States.

(2)In 2022, this change included the loss of foreign attributes upon liquidation of a foreign subsidiary. In 2021, this change includes the loss of state attributes upon merger of two wholly-owned subsidiaries. In 2020, this change is largely attributed to the Onshape acquisition, the adoption of ASC 842 and the impact to the change in scheduling of the reversal of existing temporary differences.

Our policy is to record estimated interest and penalties related to the underpayment of income taxes as a component of our income tax provision. In 2022, 2021 and 2020 we recorded interest expense of $0.2 million, $2.2 million and $0.3 million, respectively. In 2022 and 2020 we had no penalty expenses in our income tax provision. In 2021 we had $2.0 million tax penalty expense in our income tax provision. As of September 30, 2022 and 2021, we had accrued $0.9 million and $0.7 million of net estimated interest expense, respectively. We had no accrued tax penalties as of September 30, 2022, 2021 or 2020.

	Year ended September 30,
Unrecognized tax benefits (in thousands)	2022			2021			2020
Unrecognized tax benefit, beginning of year	$	21,166		$	16,107		$	11,484
Tax positions related to current year:
Additions		3,144			4,844			2,173
Tax positions related to prior years:
Additions		785			30,130			2,452
Reductions		(1,172	)		(478	)		(2	)
Settlements		—			(29,437	)		—
Unrecognized tax benefit, end of year	$	23,923		$	21,166		$	16,107

If all of our unrecognized tax benefits as of September 30, 2022 were to become recognizable in the future, we would record a benefit to the income tax provision of $23.9 million (which would be partially offset by an increase in the U.S. valuation allowance of $5.2 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 $5 million as audits close and statutes of limitations expire.

Our results for the year ended September 30, 2021 include a charge of $37.3 million related to the effects of a tax matter in the Republic of Korea (South Korea) of $34.4 million, and the resulting impact on U.S. income taxes of $2.9 million, and additional payments of approximately $20 million to South Korea in settlement of the amounts previously accrued.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. 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, transfer pricing, 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 September 30, 2022, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2018 through 2022
Germany	2015 through 2022
France	2019 through 2022
Japan	2017 through 2022
Ireland	2018 through 2022

Additionally, net operating loss and tax credit carryforwards from certain earlier periods in these jurisdictions may be subject to examination to the extent they are used in later periods.

We incurred expenses related to stock-based compensation in 2022, 2021 and 2020 of $174.9 million, $177.3 million and $115.1 million, respectively. Accounting for the tax effects of stock-based awards requires that we establish a deferred tax asset as the compensation is recognized for financial reporting prior to recognizing the tax deductions. The tax benefit recognized in the Consolidated Statements of Operations related to stock-based compensation totaled $27.1 million, $39.9 million and $13.4 million in 2022, 2021 and 2020, respectively. Upon vesting of the stock-based awards, the actual tax deduction is compared with the cumulative financial reporting compensation cost and any excess tax deduction is considered a windfall tax benefit and is recorded to the tax provision. In 2022, 2021 and 2020, net windfall tax benefits of $5.2 million, $9.9 million and $1.3 million were recorded to the tax provision.

Prior to the passage of the U.S. Tax Cuts and Jobs Act in December of 2017 (the Tax Act), we asserted that substantially all of the undistributed earnings of our foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to U.S. federal taxation via a one-time transition tax, and there is therefore no longer a material cumulative basis difference associated with the undistributed earnings. We maintain our assertion of our intention to permanently reinvest these earnings outside the United States unless repatriation can be done substantially tax-free, with the exception of a foreign holding company formed in 2018 and our Taiwan subsidiary. If we decide to repatriate any additional non-U.S. earnings in the future, we may be required to establish a deferred tax liability on such earnings. The amount of unrecognized deferred tax liability on the undistributed earnings would not be material.

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Debt

12 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

9. Debt

As of September 30, 2022 and 2021, we had the following long-term debt obligations:

(in thousands)	September 30,
	2022			2021
4.000% Senior notes due 2028	$	500,000		$	500,000
3.625% Senior notes due 2025		500,000			500,000
Credit facility revolver(1)		359,000			450,000
Total debt		1,359,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(8,372	)		(10,529	)
Total debt, net of issuance costs(3)	$	1,350,628		$	1,439,471

(1)Unamortized debt issuance costs related to the credit facility were $2.7 million and $3.8 million as of September 30, 2022 and 2021, respectively, and were included in Other assets on the Consolidated Balance Sheets.

(2)Of the $14.1 million in financing costs incurred in connection with the issuance of the 2028 and 2025 notes, unamortized debt issuance costs were $8.4 million and $10.5 million as of September 30, 2022 and 2021, respectively, and were included in Long-term debt on the Consolidated Balance Sheet.

(3)As of September 30, 2022 and 2021 all debt was classified as long term.

Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes) and $500 million in aggregate principal amount of 3.625% senior, unsecured long-term debt at par value, due in 2025 (the 2025 notes).

As of September 30, 2022, the total estimated fair value of the 2028 and 2025 senior notes was approximately $436.3 million and $468.7 million respectively, based on quoted prices for the notes on that date.

We were in compliance with all the covenants for all of our senior notes as of September 30, 2022.

Terms of the 2028 and 2025 Notes

Interest on the 2028 and 2025 notes is payable semi-annually on February 15 and August 15. The debt indenture for the 2028 and 2025 notes 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 may, on one or more occasions, redeem the 2028 and 2025 notes in whole or in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the 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 notes upon such event may be limited by law, by the indenture associated with the 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 notes as required by the indenture, it would constitute an event of default under the indenture which, in turn, may also constitute an event of default under other obligations.

Credit Agreement

In February 2020, we entered into a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, for a new secured multi-currency bank credit facility with a syndicate of banks. We use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements.

The credit facility consists of a $1 billion revolving credit facility, which may be increased by up to an additional $500 million in the aggregate if the existing or additional lenders are willing to make such increased commitments. As of September 30, 2022, unused commitments under our credit facility were approximately $641.0 million. The maturity date of the credit facility is February 13, 2025, when all remaining amounts outstanding will be due and payable. 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. As of September 30, 2022, the fair value of our credit facility approximates its book value.

PTC and certain eligible foreign subsidiaries are eligible borrowers 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-K, 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. As of the filing of this Form 10-K, no funds were borrowed by an eligible foreign subsidiary borrower. In addition, owned property (including equity interests) of PTC and certain of its material domestic subsidiaries' owned property is subject to first priority perfected liens in favor of the lenders under 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.

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 September 30, 2022, the annual rate for borrowings outstanding was 4.14%. Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.75% above an adjusted LIBO rate (or an agreed successor rate) for Euro currency borrowings or range from 0.25% to 0.75% above the defined base rate (the greater of the Prime Rate, the NYFRB 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. 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 additional indebtedness; 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 $100 million for any purpose and an additional $200 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

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

• 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

• Interest coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA to consolidated trailing four quarters of cash basis interest expense, of not less than 3.00 to 1.00 as of the last day of any fiscal quarter.

As of September 30, 2022, our total leverage ratio was 1.79 to 1.00, our senior secured leverage ratio was 0.49 to 1.00, our interest coverage ratio was 14.21 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.

In 2020, we incurred $2.0 million in financing costs in connection with the February 2020 credit facility and $1.0 million in connection with a November 2019 amendment to our prior credit facility. These origination costs are recorded as deferred debt issuance costs and are included in Other assets. Financing costs are expensed over the remaining term of the obligations.

In 2022, 2021 and 2020, we incurred interest expense of $54.3 million, $50.5 million, and $76.4 million, respectively, and paid $48.5 million, $45.2 million and $60.6 million, respectively, of interest on our debt. Additionally, in the third quarter of 2020, we paid $15.0 million in penalties for the early redemption of the 2024 notes. The average interest rate on borrowings outstanding during 2022, 2021 and 2020 was approximately 3.4%, 3.3% and 4.3%, respectively.

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Commitments and Contingencies

12 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

As of September 30, 2022 and 2021, we had letters of credit and bank guarantees outstanding of $15.0 million (of which $0.5 million was collateralized) and $16.3 million (of which $0.5 million was collateralized), respectively, primarily related to our corporate headquarters lease.

Legal and Regulatory Matters

Legal Proceedings

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.

401(k) Plan

On September 17, 2020, three individual plaintiffs filed a putative class action lawsuit against PTC, the Investment Committee for the PTC Inc. 401(k) Plan (the “Plan”), and the PTC Board of Directors (collectively, the “PTC Defendants”) in the U.S. District Court for the District of Massachusetts alleging that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 in the oversight of the Plan. On September 22, 2021, the plaintiffs and the PTC Defendants reached an agreement in principle to settle the lawsuit for a gross settlement amount of $1.725 million. The Court issued an Order of final approval of the settlement on October 18, 2022. The settlement amount will be funded by PTC’s insurer and paid into the Qualified Settlement Fund for the benefit of the class members.

Other Legal Proceedings

In addition to the matter listed above, we are subject to legal proceedings and claims against us in the ordinary course of business. As of September 30, 2022, we estimate that the range of possible outcomes for such matters is immaterial and we do not believe that resolving them 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.

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. Except for intellectual property infringement indemnification, these agreements typically limit our liability with respect to other indemnification claims. 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 during the term of the license/subscription. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. 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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Stockholders' Equity

12 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity

11. Stockholders’ Equity

Preferred Stock

We may issue up to 5.0 million shares of our preferred stock in one or more series. 0.5 million of these shares are designated as Series A Junior Participating Preferred Stock. Our Board of Directors is authorized to fix the rights and terms for any series of preferred stock without additional shareholder approval.

Common Stock

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $1 billion of our common stock in the period October 1, 2020 through September 30, 2023. We use cash from operations and borrowings under our credit facility to make such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

In 2022 and 2021 we repurchased 1.05 million shares for $125 million and 0.23 million shares for $30 million, respectively. We did not repurchase any shares in 2020.

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Equity Incentive Plans

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement, Recognized Amount [Abstract]

Equity Incentive Plans

12. Equity Incentive Plans

We have two equity incentive plans – our 2000 Equity Incentive Plan and our 2016 Employee Stock Purchase Plan (ESPP).

Our 2000 Equity Incentive Plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock units (RSUs) as the principal equity incentive awards, including certain performance-based awards that are earned based on achieving performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Each RSU represents the contingent right to receive one share of our common stock.

Our ESPP allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to any 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.

The following table shows total stock-based compensation expense recorded in our Consolidated Statements of Operations:

(in thousands)	Year ended September 30,
	2022		2021		2020
Cost of license revenue	$	272	$	100	$	47
Cost of support and cloud services revenue		11,022		9,900		6,910
Cost of professional services revenue		11,481		9,263		7,012
Sales and marketing		49,467		53,712		37,351
Research and development		41,944		34,272		27,005
General and administrative		60,677		70,042		36,824
Total stock-based compensation expense	$	174,863	$	177,289	$	115,149

Stock-based compensation expense in 2022, 2021 and 2020 includes $6.4 million, $7.3 million, and $5.8 million respectively, related to our ESPP.

2000 Equity Incentive Plan Accounting and Stock-Based Compensation Expense

The fair value of RSUs granted in 2022, 2021 and 2020 was based on the fair market value of our stock on the date of grant for service- and certain performance- based RSUs and based on a Monte Carlo simulation model for relative total shareholder return (rTSR) performance RSUs. The weighted average fair value per share of RSUs granted in 2022, 2021 and 2020 was $114.31, $111.48 and $77.57, respectively.

We account for forfeitures as they occur, rather than estimate expected forfeitures.

As of September 30, 2022, total unrecognized compensation cost related to unvested RSUs expected to vest was approximately $201.5 million and the weighted average remaining recognition period for unvested RSUs was 17 months.

As of September 30, 2022, 2.8 million shares of common stock were available for grant under the equity incentive plan and 2.8 million shares of common stock were reserved for issuance upon vesting of RSUs granted and outstanding.

Restricted stock unit activity for the year ended September 30, 2022 (in thousands, except grant date fair value data)	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance of outstanding RSUs at October 1, 2021		3,217		$	92.46
Granted(1)		1,659		$	114.31
Vested		(1,736	)	$	92.70
Forfeited or not earned		(386	)	$	100.05
Balance of outstanding RSUs at September 30, 2022		2,754		$	105.07	$	288,068

(1)RSUs granted includes 37 shares from prior period rTSR awards that were earned upon achievement of the performance criteria and vested in November 2021 and 87 shares from prior period performance-based awards that were earned upon achievement of the performance criteria and vested in November 2021.

The following table presents the number of RSU awards granted by award type:

(in thousands)	Twelve months ended September 30, 2022
Performance-based RSUs(1)		106
Service-based RSUs(2)		1,353
Relative Total Shareholder Return RSUs(3)		76

(1)The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2022, November 15, 2023, and November 15, 2024, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (up to a maximum aggregate of 152 RSUs).

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

(3)The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the measurement period ending on September 30, 2024. The RSUs earned will vest on November 15, 2024. Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 RSUs) may vest. If the return to PTC shareholders is negative for the period but still meets or exceeds the peer group indexed return, a maximum of 100% of the rTSR RSUs may vest.

As of September 30, 2022, weighted average remaining vesting term for outstanding awards is 1.0 year.

The weighted-average fair value of the rTSR RSUs was $136.43 per target RSU on the grant date. The fair value of the rTSR RSUs was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The method uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the historical volatility of each entity, and the pairwise correlations of each entity being modeled. The fair value for each simulation is the product of the payout percentage determined by PTC’s rTSR rank against the peer group, the projected price of PTC stock, and a discount factor based on the risk-free rate.

The significant assumptions used in the Monte Carlo simulation model were as follows:

Average volatility of peer group	34.67	%
Risk-free interest rate	0.81	%
Dividend yield	—	%

Total value on vest date of RSUs vested are as follows:

(in thousands)	Year ended September 30,
Value of stock option and stock-based award activity	2022		2021		2020
Total value of restricted stock unit awards at vest	$	199,738	$	171,316	$	103,265

In 2022, shares issued upon vesting of restricted stock units were net of 0.6 million shares retained by us to cover employee tax withholdings of $69.0 million. In 2021, shares issued upon vesting of restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $53.1 million. In 2020, shares issued upon vesting of restricted stock and restricted stock units were net of 0.5 million shares retained by us to cover employee tax withholdings of $33.7 million.

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Employee Benefit Plan

12 Months Ended

Sep. 30, 2022

Deferred Compensation Arrangements [Abstract]

Employee Benefit Plan

13. Employee Benefit Plan

We offer a savings plan to eligible U.S. employees. The plan is qualified under Section 401(k) of the Internal Revenue Code. Participating employees may defer a portion of their pre-tax compensation, as defined, but not more than statutory limits. We contribute 50% of the amount contributed by the employee, up to a maximum of 3% of the employee’s earnings. Our matching contributions vest immediately. We made matching contributions of $7.8 million, $7.8 million and $6.7 million in 2022, 2021 and 2020, respectively.

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Pension Plans

12 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Pension Plans

14. Pension Plans

We maintain several international defined benefit pension plans primarily covering certain employees of Computervision, which we acquired in 1998, and CoCreate, which we acquired in 2008, and covering employees in Japan. Benefits are based upon length of service and average compensation with vesting after one to five years of service. The pension cost was actuarially computed using assumptions applicable to each subsidiary plan and economic environment. We adjust our pension liability related to our plans due to changes in actuarial assumptions and performance of plan investments, as shown below. Effective in 1998, benefits under one of the international plans were frozen indefinitely.

The following table presents the actuarial assumptions used in accounting for the pension plans:

	2022			2021			2020
Weighted average assumptions used to determine benefit obligations at September 30 measurement date:
Discount rate		3.7	%		1.0	%		1.1	%
Rate of increase in future compensation		3.6	%		2.8	%		2.8	%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30:
Discount rate		1.0	%		1.1	%		0.9	%
Rate of increase in future compensation		2.8	%		2.8	%		2.8	%
Rate of return on plan assets		5.0	%		5.0	%		5.4	%

In selecting the expected long-term rate of return on assets, we considered the current investment portfolio, and the investment return goals in the plans’ investment policy statements. We, with input from the plans’ professional investment managers and actuaries, also considered the average rate of earnings expected on the funds invested or to be invested to provide plan benefits. This process included determining expected returns for the various asset classes that comprise the plans’ target asset allocation. This basis for selecting the long-term asset return assumptions is consistent with the prior year. Using generally accepted diversification techniques, the plans’ assets, in aggregate and at the individual portfolio level, are invested so that the total portfolio risk exposure and risk-adjusted returns best meet the plans’ long-term liabilities to employees. Plan asset allocations are reviewed periodically and rebalanced to achieve target allocation among the asset categories when necessary. The discount rate is based on yield curves for highly rated corporate fixed income securities matched against cash flows for each future year.

The weighted long-term rate of return assumption, together with the assumptions used to determine the benefit obligations as of September 30, 2022 in the table above, will be used to determine our 2023 net periodic pension income, which we expect to be approximately $0.4 million.

As of September 30, 2022, the weighted average interest crediting rate used in our only cash balance pension plan is 4.1%.

All non-service net periodic pension costs are presented in Other income, net on the Consolidated Statement of Operations. The actuarially computed components of net periodic pension cost recognized in our Consolidated Statements of Operations for each year are shown below:

(in thousands)	Year ended September 30,
	2022			2021			2020
Interest cost of projected benefit obligation	$	550		$	692		$	527
Service cost		1,016			1,127			1,426
Expected return on plan assets		(3,712	)		(3,643	)		(3,878	)
Amortization of prior service cost		(4	)		(5	)		(5	)
Recognized actuarial loss		1,425			4,139			3,854
Settlement gain		(82	)		—			—
Net periodic pension (benefit) cost	$	(807	)	$	2,310		$	1,924

The following tables display the change in benefit obligation and the change in the plan assets and funded status of the plans as well as the amounts recognized in our Consolidated Balance Sheets:

(in thousands)	Year ended September 30,
	2022			2021
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	96,512		$	97,832
Service cost		1,016			1,127
Interest cost		550			692
Actuarial loss (gain)		(22,616	)		1,100
Foreign exchange impact		(12,949	)		(1,562	)
Participant contributions		96			109
Benefits paid		(2,343	)		(2,786	)
Divestiture of business		(1,184	)		—
Settlements		(953	)		—
Projected benefit obligation, end of year	$	58,129		$	96,512
Change in plan assets and funded status:
Plan assets at fair value, beginning of year	$	78,385		$	72,063
Actual return on plan assets		2,348			7,383
Employer contributions		3,007			3,049
Participant contributions		96			109
Foreign exchange impact		(12,959	)		(1,433	)
Settlements		(953	)		—
Benefits paid		(2,343	)		(2,786	)
Plan assets at fair value—end of year		67,581			78,385
Projected benefit obligation, end of year		58,129			96,512
Underfunded status	$	(9,782	)	$	(18,982	)
Overfunded status	$	19,234		$	855
Accumulated benefit obligation, end of year	$	57,310		$	95,090
Amounts recognized in the balance sheet:
Non-current asset	$	19,234		$	855
Non-current liability	$	(9,434	)	$	(18,615	)
Current liability	$	(348	)	$	(367	)
Amounts in accumulated other comprehensive loss:
Unrecognized actuarial loss	$	5,408		$	30,213

As of September 30, 2022 and 2021, two of our pension plans had project benefit obligations and accumulated benefit obligations in excess of plan assets. Three international plans were overfunded.

The following table shows the change in accumulated other comprehensive loss:

(in thousands)	Year ended September 30,
	2022			2021
Accumulated other comprehensive loss, beginning of year	$	30,213		$	37,175
Recognized during year - net actuarial losses		(1,421	)		(4,135	)
Occurring during year - settlement gain		82			—
Occurring during year - net actuarial gains		(21,253	)		(2,640	)
Foreign exchange impact		(2,213	)		(187	)
Accumulated other comprehensive loss, end of year	$	5,408		$	30,213

In 2022 our actuarial gains were impacted by the change in discount rate from 1.0% in 2021 to 3.7% in 2022. In 2021, our net actuarial gains were driven by the asset performance.

The following table shows the percentage of total plan assets for each major category of plan assets:

	September 30,
Asset category	2022			2021
Equity securities		33	%		35	%
Fixed income securities		33	%		34	%
Commodities		1	%		11	%
Insurance company funds		10	%		12	%
Options		2	%		1	%
Cash		21	%		7	%
		100	%		100	%

We periodically review the pension plans’ investments in the various asset classes. For the CoCreate plan in Germany, assets are actively allocated between equity and fixed income securities to achieve target return. For the other international plans, assets are allocated 100% to fixed income securities. The fixed income securities for the other international plans primarily include investments held with insurance companies with fixed returns. The plans’ investment managers are provided specific guidelines under which they are to invest the assets assigned to them. In general, investment managers are expected to remain fully invested in their asset class with further limitations on risk as related to investments in a single security, portfolio turnover and credit quality.

The German CoCreate plan's investment policy prohibits the use of derivatives associated with leverage and speculation or investments in securities issued by PTC, except through index-related strategies and/or commingled funds. An investment committee oversees management of the pension plans’ assets. Plan assets consist primarily of investments in equity and fixed income securities.

In 2022, 2021 and 2020 our actual return on plan assets was $2.3 million, $7.4 million and $(3.0) million, respectively.

Based on actuarial valuations and additional voluntary contributions, we contributed $3.0 million, $3.0 million and $2.6 million in 2022, 2021 and 2020, respectively, to the plans. We expect to pay $3.1 million in contributions in 2023, of which $0.6 million will be paid directly to the plans.

As of September 30, 2022, benefit payments expected to be paid over the next ten years are as follows:

(in thousands)	Future Benefit Payments
2023	$	3,410
2024		4,068
2025		3,793
2026		3,830
2027		4,216
2028 to 2032		20,680

Fair Value of Plan Assets

The international plan assets are comprised primarily of investments in a trust and an insurance company. The underlying investments in the trust are primarily publicly-traded equities and governmental fixed income securities. They are classified as Level 1 because the underlying units of the trust are traded in open public markets. The fair value of the underlying investments in equity securities and fixed income are based upon publicly-traded exchange prices.

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	20,430	$	—	$	—	$	20,430
Corporate investment grade		2,038		—		—		2,038
Large capitalization stocks		22,379		—		—		22,379
Commodities		599		—		—		599
Insurance company funds(1)		—		6,823		—		6,823
Options		1,430		—		—		1,430
Cash		13,882		—		—		13,882
Total plan assets	$	60,758	$	6,823	$	—	$	67,581

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	24,013	$	—	$	—	$	24,013
Corporate investment grade		2,924		—		—		2,924
Large capitalization stocks		27,078		—		—		27,078
Commodities		8,558		—		—		8,558
Insurance company funds(1)		—		9,105		—		9,105
Options		1,122		—		—		1,122
Cash		5,585		—		—		5,585
Total plan assets	$	69,280	$	9,105	$	—	$	78,385

(1) These investments are comprised primarily of funds invested with an insurance company in Japan with a guaranteed rate of return. The insurance company invests these assets primarily in government and corporate bonds.

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Fair Value Measurements

12 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

15. Fair Value Measurements

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 forward 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 forward 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.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and 2021 were as follows:

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	102,313	$	—	$	—	$	102,313
Convertible note		—		—		2,000		2,000
Forward contracts		—		9,058		—		9,058
	$	102,313	$	9,058	$	2,000	$	113,371
Financial liabilities:
Forward contracts		—		2,908		—		2,908
	$	—	$	2,908	$	—	$	2,908

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	114,375	$	—	$	—	$	114,375
Convertible note		—		—		2,000		2,000
Equity securities		—		—		77,540		77,540
Forward contracts		—		5,363		—		5,363
	$	114,375	$	5,363	$	79,540	$	199,278
Financial liabilities:
Forward contracts		—		3,318		—		3,318
	$	—	$	3,318	$	—	$	3,318

(1)Money market funds and time deposits.

Level 3 Investments

Convertible Note

In the fourth quarter of 2021, we invested $2.0 million in a non-marketable convertible note. This debt security is classified as available-for-sale and is included in Other assets on the Consolidated Balance Sheet. There were no changes in the fair value of this level 3 investment in the twelve months ended September 30, 2022.

Non-Marketable Equity Investments

The carrying value of our non-marketable equity investments is recorded in Other assets on the Consolidated Balance Sheets and totaled $1.0 million as of September 30, 2022 and $2.2 million as of September 30, 2021. In 2022, PTC sold a non-marketable equity investment for $4.2 million, which had been held at a cost of $1.2 million. The $3.0 million gain recognized on the sale is included in Other income, net for the twelve months ended September 30, 2022

Equity Securities

As of September 30, 2022, PTC held no remaining shares in Matterport, Inc., a publicly traded company, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY'22 based on contingent earn-outs achieved in January 2022. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold all remaining shares held for $3.6 million at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a loss of $34.8 million in Other income, net on the Consolidated Statements of Operations. No additional gains or losses were recognized in 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The following table presents changes in fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to September 30, 2022:

(in thousands)	September 30, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment		(39,072	)
Balance, September 30, 2022	$	—

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Marketable Securities

12 Months Ended

Sep. 30, 2022

Marketable Securities [Abstract]

Marketable Securities

16. Marketable Securities

We did not hold any marketable securities as of September 30, 2022 or 2021. In December 2020, we sold all our marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material.

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Derivative Financial Instruments

12 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

17. Derivative Financial Instruments

Non-Designated Hedges

As of September 30, 2022 and 2021, we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Canadian / U.S. Dollar	$	2,731	$	4,894
Euro / U.S. Dollar		316,869		387,466
British Pound / U.S. Dollar		7,368		23,141
Israeli Shekel / U.S. Dollar		12,052		10,475
Japanese Yen / U.S. Dollar		25,566		46,450
Swiss Franc / U.S. Dollar		25,559		18,039
Swedish Krona / U.S. Dollar		35,713		34,196
Singapore Dollar / U.S. Dollar		3,637		3,498
Chinese Renminbi / U.S. Dollar		23,965		23,297
New Taiwan Dollar / U.S. Dollar		13,906		3,369
Russian Ruble/ U.S. Dollar		—		2,614
Korean Won/ U.S. Dollar		4,919		—
Danish Krone/ U.S. Dollar		3,192		2,380
Australian Dollar/ U.S. Dollar		3,269		2,086
All other		4,432		2,016
Total	$	483,178	$	563,921

The following table shows the effect of our non-designated hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022		2021			2020
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other income, net	$	11,950	$	(3,758	)	$	3,518

Net Investment Hedges

As of September 30, 2022 and 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Euro / U.S. Dollar	$	110,466	$	128,103

The following table shows the effect of our derivative instruments designated as net investment hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021, and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022			2021		2020
Gain (loss) recognized in OCI—effective portion	OCI	$	(1,478	)	$	695	$	(5,483	)
Gain (loss) reclassified from OCI—effective portion	OCI	$	(17,466	)	$	2,723	$	109
Gain recognized—portion excluded from effectiveness testing	Other income, net	$	1,862		$	1,249	$	3,506

As of September 30, 2022, we estimate that all amounts reported in Accumulated other comprehensive loss will be applied against exposed balance sheet accounts upon translation within the next three months.

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

(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	September 30,
	2022		2021		2022		2021
Derivative assets:(1)
Forward contracts	$	1,960	$	1,641	$	7,098	$	3,722
Derivative liabilities:(2)
Forward contracts	$	—	$	—	$	2,908	$	3,318

(1)As of September 30, 2022 and 2021, current derivative assets of $9.1 million and $5.4 million, respectively, are recorded in Other current assets on the Consolidated Balance Sheets.

(2)As of September 30, 2022 and 2021, current derivative liabilities of $2.9 million and $3.3 million, respectively, are recorded in Accrued expenses and other current liabilities on 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 September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	9,058	$	—	$	9,058	$	(2,908	)	$	—	$	6,150

The following table sets forth the offsetting of derivative liabilities as of September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	2,908	$	—	$	2,908	$	(2,908	)	$	—	$	—

Net gains and losses on foreign currency exposures, including realized and unrealized gains and losses on forward contracts, included in Other income, net, were net losses of $0.9 million, $8.0 million and $1.7 million in 2022, 2021 and 2020, respectively. Net realized and unrealized gains and losses on forward contracts included in Other income, net were a net gain of $16.4 million and $7.0 million in 2022 and 2020, and net loss of $4.9 million in 2021.

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Segment and Geographic Information

12 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment and Geographic Information

18. Segment and Geographic 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 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 and 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 or report asset information by reportable segment.

(in thousands)	Year ended September 30,
	2022			2021			2020
Software Products
Revenue	$	1,770,253		$	1,649,341		$	1,314,617
Operating costs(1)		494,035			451,734			393,803
Profit		1,276,218			1,197,607			920,814
Professional Services
Revenue		163,094			157,818			143,798
Operating costs(2)		140,470			135,981			128,678
Profit		22,624			21,837			15,120
Total segment revenue		1,933,347			1,807,159			1,458,415
Total segment costs		634,505			587,715			522,481
Total segment profit		1,298,842			1,219,444			935,934
Unallocated operating expenses:(3)
Sales and marketing expenses		435,780			464,067			398,100
General and administrative expenses		130,870			120,954			114,386
Intangibles amortization		60,548			59,165			56,104
Restructuring and other charges, net		36,234			2,211			32,716
Stock-based compensation		174,863			177,289			115,149
Other unallocated operating expenses(4)		13,185			15,010			8,616
Total operating income		447,362			380,748			210,863
Interest expense		(54,268	)		(50,478	)		(76,428	)
Other income, net		4,004			61,485			271
Income before income taxes	$	397,098		$	391,755		$	134,706

(1)Operating costs for the Software Products segment include all costs of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. Operating costs for the Software Products segment include depreciation of $4.9 million, $4.0 million and $4.2 million in 2022, 2021 and 2020, respectively.

(2)Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation, and intangible amortization. The Professional Services segment includes depreciation of $0.9 million, $1.1 million and $1.1 million in 2022, 2021 and 2020, respectively.

(3)Unallocated departments include depreciation of $21.4 million, $21.0 million and $19.4 million in 2022, 2021 and 2020, respectively.

(4)Other unallocated operating expenses include acquisition and transaction-related costs.

For 2022, 2021 and 2020, we reported revenue by the following three product groups:

(in thousands)	Year ended September 30,
	2022		2021		2020
Digital Thread - Core	$	1,318,857	$	1,257,817	$	1,025,709
Digital Thread - Growth		279,566		273,949		215,353
Digital Thread - FSG		251,621		233,268		210,101
Digital Thread (Total)		1,850,044		1,765,034		1,451,163
Velocity		83,303		42,125		7,252
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415
Product lifecycle management (PLM)		1,137,016		1,012,120		807,016
Computer-aided design (CAD)		796,331		795,039		651,399
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia Pacific region. Intercompany sales and transfers between geographic areas are accounted for at prices that are designed to be representative of unaffiliated party transactions. Our material long-lived assets primarily reside in the United States in 2022, 2021 and 2020. Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.

(in thousands)	Year ended September 30,
	2022		2021		2020
Revenue:
Americas(1)	$	895,095	$	766,021	$	649,383
Europe(2)		714,216		722,977		543,779
Asia Pacific		324,036		318,161		265,253
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

(1)Includes revenue in the United States totaling $864.7 million, $741.3 million, and $621.8 million for 2022, 2021 and 2020, respectively.

(2)Includes revenue in Germany totaling $318.5 million, $290.7 million, and $198.7 million for 2022, 2021 and 2020, respectively.

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Leases

12 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

19. Leases

Our operating leases expire at various dates through 2037 and are primarily for office space, automobiles, servers, and office equipment.

Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts (the Boston lease). The Boston lease is for approximately 250,000 square feet and runs through June 30, 2037. Base rent for the first year of the lease was $11.0 million and increases by $1 per square foot per year thereafter ($0.3 million per year). Base rent first became payable on July 1, 2020. In addition to the base rent, we are required to pay our pro rata portions of building operating costs and real estate taxes (together, “Additional Rent”). Annual Additional Rent is estimated to be approximately $7.1 million. The lease provides for $25 million in landlord funding for leasehold improvements ($100 per square foot). The leasehold improvement funding provision was fully utilized by us and was reflected as a derecognition adjustment to the right-of-use asset.

In February 2019, we subleased a portion of the Boston location through June 30, 2022, and received approximately $9.1 million in sublease income over the term of the sublease. In March 2022, we extended the sublease through June 30, 2023 and we will receive $2.9 million in sublease income over the term of the extension.

The components of lease cost reflected in the Consolidated Statement of Operations for the year ended September 30, 2022 were as follows:

(in thousands)	Year ended September 30, 2022
Operating lease cost	$	34,346
Short-term lease cost		2,653
Variable lease cost		10,095
Sublease income		(4,600	)
Total lease cost	$	42,494

Supplemental cash flow and right-of use assets information for the year ended September 30, 2022 was as follows:

(in thousands)	Year ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,709
Financing cash flows from operating leases	$	297
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	15,431
Financing leases	$	—

Supplemental balance sheet information related to the leases as of September 30, 2022 was as follows:

	As of September 30, 2022
Weighted-average remaining lease term - operating leases	11.8 years
Weighted-average remaining lease term - financing leases	2 years
Weighted-average discount rate - operating leases		5.4	%
Weighted-average discount rate - financing leases		3.0	%

Maturities of lease liabilities as of September 30, 2022 are as follows:

(in thousands)	Operating Leases
2022	$	31,612
2023		26,907
2024		23,495
2025		19,487
2026		16,662
Thereafter		143,236
Total future lease payments		261,399
Less: imputed interest		(71,824	)
Total	$	189,575

As of September 30, 2022 we had operating leases that had not yet commenced. The leases will commence in FY'23 with a lease term of 10 years and we will make future lease payments of approximately $11.6 million.

Exited (Restructured) Facilities

As of September 30, 2022, we have net liabilities of $0.3 million related to excess facilities (compared to $3.6 million at September 30, 2021), representing lease obligations classified as short term.

In determining the amount of right-of-use assets for restructured facilities, we are required to estimate such factors as future vacancy rates, the time required to sublet properties, and sublease rates. Updates to these estimates may result in revisions to the value of right-of-use assets recorded. The amounts recorded are based on the net present value of estimated sublease income. As of September 30, 2022, There was no committed sublease income included in the right-of-use assets for exited facilities and there was no uncommitted sublease income. As a result of changes in our sublease income assumptions and an incremental obligation to exit a portion of our former headquarters facility early in the year ended September 30, 2022, we recorded a facility impairment charge of $1.3 million.

In the year ended September 30, 2022, we made payments of $2.0 million related to lease costs for exited facilities.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Foreign Currency Translation

Foreign Currency Translation

For our non-U.S. operations where the functional currency is the local currency, we translate assets and liabilities at exchange rates in effect at the balance sheet date and record translation adjustments in stockholders’ equity. For our non-U.S. operations where the U.S. dollar is the functional currency, we remeasure monetary assets and liabilities using exchange rates in effect at the balance sheet date and non-monetary assets and liabilities at historical rates and record resulting exchange gains or losses in foreign currency net losses in the Consolidated Statements of Operations. We translate income statement amounts at average rates for the period. Transaction gains and losses are recorded in Other income, net in the Consolidated Statements of Operations.

Revenue Recognition

Revenue Recognition

Nature of Products and Services

Our sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Revenue is derived from the licensing of computer software products and from related support and/or professional services contracts. In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these products or services. To achieve the core principle of this standard, we apply the following five steps:

(1)identify the contract with the customer,

(2)identify the performance obligations in the contract,

(3)determine the transaction price,

(4)allocate the transaction price to performance obligations in the contract, and

(5)recognize revenue when or as we satisfy a performance obligation.

We enter into contracts that include combinations of licenses, support and professional services, each of which are accounted for as separate performance obligations with differing revenue recognition patterns referenced below.

Performance Obligation	When Performance Obligation is Typically Satisfied
Term-based subscriptions
On-premises software licenses	Point in Time: Upon the later of when the software is made available or the subscription term commences
Support and cloud-based offerings (including SaaS)	Over Time: Ratably over the contractual term; commencing upon the later of when the software is made available or the subscription term commences
Perpetual software licenses	Point in Time: when the software is made available
Support for perpetual software licenses	Over Time: Ratably over the contractual term
Professional services	Over Time: As services are provided

Judgments and Estimates

Our contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. On-premises software is determined to be a distinct performance obligation from support which is sold for the same term of the subscription. For subscription arrangements which include cloud services and on-premises licenses, we assess whether the cloud component is highly interrelated with the on-premises term-based software licenses. Other than a limited population of subscriptions, the cloud component is not currently deemed to be interrelated with the on-premises term software and, as a result, cloud services are accounted for as a distinct performance obligation from the software and support components of the subscription.

Judgment is required to allocate the transaction price to each performance obligation. We use the estimated standalone selling price method to allocate the transaction price for items that are not sold separately. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance obligations are satisfied. Where subscriptions include on-premises software and support only, we determined that approximately 55% of the estimated standalone selling price for subscriptions is attributable to software licenses and approximately 45% is attributable to support for those licenses. Some of our subscription offerings include a combination of on-premises and cloud-based technology. In such cases, the cloud-based technology is considered distinct and receives an allocation of approximately 5% to 50% of the estimated standalone selling price of the subscription. The amounts allocated to cloud are based on assessment of the relative value of the cloud functionality in the subscription, with the remaining amounts allocated between software and support.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the original subscription with other software. Although the exchange right is limited to software products within a similar product grouping, the exchange right is not limited to products with substantially similar features and functionality as those originally delivered. We determined that this right to exchange previously delivered software for different software represents variable consideration to be accounted for as a liability. We have identified a standard portfolio of contracts with common characteristics and applied the expected value method of determining variable consideration associated with this right. Additionally, where there are isolated situations that are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the amount of variable consideration. In both circumstances, the variable consideration included in the transaction price is constrained to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of September 30, 2022 and 2021, the total liability was $34.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

Practical Expedients

We have elected certain practical expedients associated with our revenue recognition policy. We do not account for significant financing components if the period between revenue recognition and when the customer pays for the products or services is one year or less. Additionally, we recognize revenue equal to the amount we have a right to invoice when the amount corresponds directly with the value to the customer of our performance to date.

Cash Equivalents

Cash Equivalents

Our cash equivalents are invested in money market accounts and time deposits of financial institutions. We have established guidelines relative to credit ratings, diversification and maturities that are intended to maintain safety and liquidity. Cash equivalents include highly liquid investments with maturity periods of three months or less when purchased.

Marketable Securities

Marketable Securities

As of September 30, 2022, our investment portfolio consisted of certificates of deposit, commercial paper, corporate notes/bonds and government securities that had a maximum maturity of three years. In December 2020, we sold all our marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material.

Equity Securities

Equity Securities

On July 22, 2021, a company in which we were a preferred equity investor, Matterport, Inc., completed a business combination with a public company. The carrying value of our investment, which was classified as a non-marketable equity investment, was approximately $8.7 million prior to the business combination. Our preferred shares were converted into common shares of Matterport. As of September 30, 2022, PTC held no shares in Matterport, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY'22 based on contingent earn-outs achieved in January 2022. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold all remaining shares for $3.6 million at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a net loss of $34.8 million in Other income, net on the Consolidated Statements of Operations. No additional gains or losses have been recognized for 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The fair value of the Matterport shares as of September 30, 2021 was $77.5 million and was determined using the closing price of Matterport's common stock as of September 30, 2021, less a temporary discount for lack of marketability. For the year ended September 30, 2021, we recorded an unrealized gain of $68.8 million on the appreciation of the value of the shares in Other income, net on the Consolidated Statement of Operations.

We also have non-marketable equity investments that we account for at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments off the same issuer. We monitor non-marketable equity investments for events that could indicate that the investments are impaired, such as deterioration in the issuer's financial condition and business forecasts and lower valuation in recent or proposed financings. Changes in fair value of non-marketable equity investments are recorded in Other income, net on the Consolidated Statements of Operations. In the years ended September 30, 2022 and 2021, we did not record any impairment charges for our investments. The carrying value of our non-marketable equity investments is recorded in Other assets on the Consolidated Balance Sheets and totaled $1.0 million and $2.2 million as of September 30, 2022 and 2021, respectively.

Concentration of Credit Risk and Fair Value of Financial Instruments

Concentration of Credit Risk and Fair Value of Financial Instruments

The amounts reflected in the Consolidated Balance Sheets for Cash and cash equivalents, Accounts receivable and Accounts payable approximate their fair value due to their short maturities. Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and foreign currency derivative instruments. Our Cash, cash equivalents, and foreign currency derivatives are placed with financial institutions with high credit standings. Our credit risk for derivatives is also mitigated due to the short-term nature of the contracts. Our customer base consists of many geographically diverse customers dispersed across many industries. No individual customer comprised more than 10% of our trade accounts receivable as of September 30, 2022 or 2021 or more than 10% of our revenue for the years ended September 30, 2022, 2021 or 2020.

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.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Effective October 1, 2020, we adopted ASC 326, Financial Instruments—Credit Losses, which replaced the incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. In determining the adequacy of the allowance for doubtful accounts, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends. Our allowance for doubtful accounts on trade accounts receivable was $0.4 million, $0.3 million and $0.5 million as of September 30, 2022, 2021 and 2020, respectively. Uncollectible trade accounts receivable written-off, net of recoveries, were $0.4 million, $0.1 million and $0.2 million in 2022, 2021 and 2020, respectively. Net bad debt expense was $0.5 million in 2022, net bad debt recovery was $0.2 million in 2021 and net bad debt expense was $0.0 million in 2020, and is included in General and administrative expenses in the accompanying Consolidated Statements of Operations.

Derivatives

Derivatives

Generally accepted accounting principles require all derivatives, whether designated in a hedging relationship or not, to be recorded on the balance sheet at fair value. 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 India. 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 currencies resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts and options, 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. For a description of our non-designated hedge and net investment hedge activity see Note 17. Derivative Financial Instruments.

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 four months. The majority of our foreign currency forward contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into 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 or losses on the underlying foreign-denominated balance are offset by the loss or gain on the forward contract and are included in Other income, net.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into U.S. Dollars using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheet. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro functional subsidiaries. Net investment hedges partially offset the impact of foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheet. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheet and the maximum duration of foreign exchange forward contracts is approximately three months.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these Unrealized gain (loss) on net investment hedges in Accumulated other comprehensive loss and subsequently reclassify them to Foreign currency translation adjustment in Accumulated other comprehensive loss at the time of forward contract maturity. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from 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.

Leases

Leases

We adopted ASC 842, Leases effective October 1, 2019. ASC 842 requires a modified retrospective transition method that could either be applied at the earliest comparative period in the financial statements or in the period of adoption. We elected to use the period of adoption (October 1, 2019) transition method and therefore did not recast prior periods.

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets and Operating lease obligations on our Consolidated Balance Sheets. Our operating leases are primarily for office space, cars, servers, and office equipment. We made an election not to separate lease components from non-lease components for office space, servers and office equipment. We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Finance leases are included in Property and equipment, Accrued expenses and Other current liabilities, and Other liabilities on our Consolidated Balance Sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term as that of the lease payments at the commencement date. The right-of-use assets include any lease payments made and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base non-cancellable lease term when determining the lease assets and liabilities.

Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities. These variable payments include insurance, taxes, consumer price index payments, and payments for maintenance and utilities.

Our operating leases expire at various dates through 2037.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Computer hardware and software are typically amortized over three to five years, and furniture and fixtures over three to twelve years. Leasehold improvements are amortized over the shorter of their useful lives or the remaining terms of the related leases. Property and equipment under capital leases are amortized over the lesser of the lease term or their estimated useful lives. Maintenance and repairs are charged to expense when incurred; additions and improvements are capitalized. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in income.

Software Development Costs

Software Development Costs

We incur costs to develop computer software to be licensed or otherwise marketed to customers. Our research and development expenses consist principally of salaries and benefits, costs of computer equipment, and facility expenses. Research and development costs are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Development costs for software to be sold externally incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and, upon general release, are amortized using the greater of either the straight-line method over the expected life of the related products or based upon the pattern in which economic benefits related to such assets are realized. The straight-line method is used if it approximates the same amount of expense as that calculated using the ratio that current period gross product revenues bear to total anticipated gross product revenues. No development costs for software to be sold externally were capitalized in 2022, 2021 or 2020. We purchased software of $6.0 million and $0.6 million in 2022 and 2021, respectively. Additionally, we acquired capitalized software through business combinations (for further detail, see Note 6. Acquisitions and Disposition of Business). These assets are included in Intangible assets in the accompanying Consolidated Balance Sheets.

Business Combinations

Business Combinations

We allocate the purchase price of acquisitions to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. Goodwill is measured as the excess of the purchase price over the value of net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. Any adjustments to estimated fair value are recorded to goodwill, provided that we are within the measurement period (up to one year from the acquisition date) and that we continue to collect information to determine estimated fair value. Subsequent to the measurement period or our final determination of estimated fair value, whichever comes first, adjustments are recorded in the Consolidated Statements of Operations.

Goodwill, Acquired Intangible Assets And Long-lived Assets

Goodwill, Acquired Intangible Assets and Long-lived Assets

Goodwill is the amount by which the purchase price in a business acquisition exceeds the fair value of net identifiable assets on the date of purchase.

Goodwill is evaluated for impairment annually as of the end of the third quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value.

Our annual goodwill impairment test is based on either a quantitative or qualitative assessment. A quantitative assessment compares the fair value of the reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. We estimate the fair values of our reporting units using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for each reporting unit. We estimate these amounts by evaluating historical trends; current budgets and operating plans; and industry data. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. Qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of each reporting unit at the last valuation date.

We completed our annual goodwill impairment review as of June 30, 2022, which consisted of a qualitative assessment of our Software Products segment and a quantitative assessment of our Professional Services segment in conjunction with the sale of a portion of that business to ITC Infotech. Our qualitative assessment for Software Products included company-specific (e.g., financial performance and long-range plans), industry, and macroeconomic factors, as well as consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date (June 27, 2020). Based on our qualitative assessment, we believe it is more likely than not that the fair value of our Software Products reporting unit exceeds its carrying value and no further impairment testing is required. Our quantitative assessment for the Professional Services segment compared the fair value of the reporting unit to its carrying value. We estimated the fair value of the reporting unit using a discounted cash flow valuation model. This model requires estimates of future revenues, profits, capital expenditures, working capital, and a terminal value based on a residual cash flow valuation model. We estimated this amount by evaluating historical trends, current budgets and operating plans, including consideration of the completed transaction with ITC Infotech. Based on a comparison of the estimated fair value to the carrying value of the Professional Services reporting unit as of June 30, 2022, no impairment was required. Through September 30, 2022, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable.

Long-lived assets primarily include property and equipment and acquired intangible assets with finite lives (including purchased software, customer lists and trademarks). Purchased software is amortized over periods up to 16 years, customer lists are amortized over periods up to 13 years and trademarks are amortized over periods up to 12 years. We review long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. An impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset or asset group. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

Advertising Expenses

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses incurred were $8.6 million, $7.1 million and $3.8 million in 2022, 2021 and 2020, respectively and are included in sales and marketing expenses in the accompanying Consolidated Statements of Operations.

Income Taxes

Income Taxes

Our income tax expense includes U.S. and international income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effects of these differences are reported as deferred tax assets and liabilities. Deferred tax assets are recognized for the estimated future tax effects of deductible temporary differences and tax operating loss and credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of deferred tax assets will not be realized, we establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we include an expense within the Tax provision (benefit) for income taxes in the Consolidated Statements of Operations.

Comprehensive Income

Comprehensive Income

Comprehensive income consists of Net income and Other comprehensive income (loss), which includes foreign currency translation adjustments, changes in unrecognized actuarial gains and losses (net of tax) related to pension benefits, unrealized gains and losses on hedging instruments and unrealized gains and losses on marketable securities. We do not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as we intend to reinvest permanently undistributed earnings of our foreign subsidiaries. Accumulated other comprehensive loss is reported as a component of Stockholders’ Equity and, as of September 30, 2022, was comprised of the following: cumulative translation adjustment losses of $160.2 million, unrecognized actuarial losses related to pension benefits of $5.4 million ($3.9 million net of tax), and accumulated net gains from net investment hedges of $16.9 million ($10.6 million net of tax). As of September 30, 2021, Accumulated other comprehensive loss was comprised of the following: cumulative translation adjustment losses of $67.5 million, unrecognized actuarial losses related to pension benefits of $30.2 million ($21.5 million net of tax), and accumulated net losses from net investment hedges of $6.5 million ($6.5 million net of tax).

Earnings per Share (EPS)

Earnings per Share (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 stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds. Anti-dilutive shares excluded from the calculations of diluted EPS were immaterial in the years ended September 30, 2022 and 2021.

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data)	Year ended September 30,
	2022		2021		2020
Net income	$	313,081	$	476,923	$	130,695
Weighted average shares outstanding		117,194		116,836		115,663
Dilutive effect of employee stock options, restricted shares and restricted stock units		1,039		1,531		604
Diluted weighted average shares outstanding		118,233		118,367		116,267
Earnings per share—Basic	$	2.67	$	4.08	$	1.13
Earnings per share—Diluted	$	2.65	$	4.03	$	1.12

Stock-Based Compensation

Stock-Based Compensation

We measure the compensation cost of employee services received in exchange for an award of equity based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. See Note 12. Equity Incentive Plans for a description of the types of equity awards granted, the compensation expense related to such awards and detail of such awards outstanding. See Note 8. Income Taxes for detail of the tax benefit related to stock-based compensation recognized in the Consolidated Statements of Operations.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Intangibles—Goodwill and Other—Internal-Use Software

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted the new standard prospectively effective October 1, 2020. As a result, we are required to capitalize certain costs related to the implementation of cloud computing arrangements. Capitalized costs related to cloud computing arrangements, which are included in Other assets on the Consolidated Balance Sheets, were $14.3 million and $2.8 million as of September 30, 2022 and September 30, 2021, respectively,

Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), which, along with subsequent amendments, replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when recording credit loss estimates. We adopted the new standard effective October 1, 2020, with no impact on our consolidated financial statements.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) on Simplifying the Accounting for Income Taxes. The decisions reflected in ASU 2019-12 update specific areas of ASC 740, Income Taxes, to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. The new standard became effective for us in the first quarter of 2022 ending December 31, 2021 and did not have a material impact on our consolidated financial statements.

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) on Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to 1) recognition of an acquired contract asset and liability, and 2) payment terms and their effect on subsequent revenue recognized by the acquirer. We adopted ASU 2021-08 early as of the third quarter of 2022 and applied it to our acquisition of Intland Software, which was completed in the quarter. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements. Refer to Note 6. Acquisitions and Disposition of Business for additional discussion regarding the accounting for the acquisition of Intland Software.

Pending Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We are still evaluating the impact, but do not expect the standard to have a material impact on our consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Earnings Per Share Basic And Diluted

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data)	Year ended September 30,
	2022		2021		2020
Net income	$	313,081	$	476,923	$	130,695
Weighted average shares outstanding		117,194		116,836		115,663
Dilutive effect of employee stock options, restricted shares and restricted stock units		1,039		1,531		604
Diluted weighted average shares outstanding		118,233		118,367		116,267
Earnings per share—Basic	$	2.67	$	4.08	$	1.13
Earnings per share—Diluted	$	2.65	$	4.03	$	1.12

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Revenue from Contracts with Customers (Tables)

12 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Contract Assets and Liabilities

Contract Assets and Contract Liabilities

(in thousands)	September 30,
	2022		2021
Contract asset	$	21,096	$	12,934
Deferred revenue	$	520,333	$	497,677

Disaggregation of Revenue

Disaggregation of Revenue

(in thousands)	Year ended September 30,
	2022		2021		2020
Total recurring revenue	$	1,736,188	$	1,616,328	$	1,281,949
Perpetual license		34,065		33,013		32,668
Professional services		163,094		157,818		143,798
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

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Restructuring and Other Charges (Tables)

12 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost

The following table summarizes restructuring accrual activity for the three years ended September 30, 2022:

(in thousands)	Employee severance and related benefits			Facility closures and other costs			Consolidated total
Balance, September 30, 2019	$	298		$	30,788		$	31,086
ASC 842 adoption		—			(16,462	)		(16,462	)
Charges (credits) to operations, net		30,690			(4,263	)		26,427
Cash disbursements		(27,256	)		(4,246	)		(31,502	)
Other non-cash		—			164			164
Foreign exchange impact		260			14			274
Balance, September 30, 2020		3,992			5,995			9,987
Charges to operations, net		1,887			249			2,136
Cash disbursements		(3,925	)		(2,756	)		(6,681	)
Foreign exchange impact		27			17			44
Balance, September 30, 2021		1,981			3,505			5,486
Charges (credits) to operations, net		32,971			(561	)		32,410
Cash disbursements		(34,023	)		(2,355	)		(36,378	)
Foreign exchange impact		(583	)		—			(583	)
Balance, September 30, 2022	$	346		$	589		$	935

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Property and Equipment (Tables)

12 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Components of Property and Equipment

Property and equipment consisted of the following:

(in thousands)	September 30,
	2022			2021
Computer hardware and software	$	364,762		$	352,704
Furniture and fixtures		29,744			30,568
Leasehold improvements		95,383			94,959
Gross property and equipment		489,889			478,231
Accumulated depreciation and amortization		(391,788	)		(377,994	)
Net property and equipment	$	98,101		$	100,237

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Goodwill and Acquired Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Acquired Intangible Assets

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	September 30, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,353,654					$	2,191,887
Intangible assets with finite lives (amortized)(1):
Purchased software	$	502,859	$	355,857	$	147,002	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		594,970		369,390		225,580		574,516		350,648		223,868
Trademarks and trade names		27,546		17,410		10,136		26,906		17,036		9,870
Other		3,766		3,766		—		4,000		4,000		—
	$	1,152,018	$	769,300	$	382,718	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,736,372					$	2,570,854

(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 11 years, 11 years, and 12 years, respectively.

Schedule of Changes in Goodwill by Reportable Segment

Changes in goodwill presented by reportable segment were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, September 30, 2020	$	1,583,316		$	42,470		$	1,625,786
Arena acquisition		563,620			—			563,620
Other acquisitions		181			400			581
Foreign currency translation adjustments		1,851			49			1,900
Balance, September 30, 2021	$	2,148,968		$	42,919		$	2,191,887
Intland Software acquisition		240,971			—			240,971
Other acquisitions		691			—			691
Divestiture of business		—			(32,992	)		(32,992	)
Foreign currency translation adjustments		(46,611	)		(292	)		(46,903	)
Balance, September 30, 2022	$	2,344,019		$	9,635		$	2,353,654

Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives

The aggregate amortization expense for intangible assets with finite lives recorded for the years ended September 30, 2022, 2021 and 2020 was reflected in our Consolidated Statements of Operations as follows:

(in thousands)	Year ended September 30,
	2022		2021		2020
Amortization of acquired intangible assets	$	34,970	$	29,396	$	28,713
Cost of software revenue		25,578		29,769		27,391
Total amortization expense	$	60,548	$	59,165	$	56,104

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Income Taxes (Tables)

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Summary Of Income Before Income Taxes

Our income before income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022		2021		2020
Domestic	$	97,460	$	41,199	$	(73,865	)
Foreign		299,638		350,556		208,571
Total income before income taxes	$	397,098	$	391,755	$	134,706

Schedule Of Provision For (Benefit From) Income Taxes

Our provision (benefit) for income taxes consisted of the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Current:
Federal	$	767		$	4,774		$	2,187
State		6,675			1,609			1,266
Foreign		33,612			66,554			25,199
		41,054			72,937			28,652
Deferred:
Federal		25,730			(152,311	)		(26,811	)
State		(3,177	)		(27,228	)		(4,063	)
Foreign		20,410			21,434			6,233
		42,963			(158,105	)		(24,641	)
Provision (benefit) for income taxes	$	84,017		$	(85,168	)	$	4,011

Summary Of Federal Income Tax Rate And Effective Income Tax Rate

Taxes computed at the statutory federal income tax rates are reconciled to the provision (benefit) for income taxes as follows:

(in thousands)	Year ended September 30,
	2022					2021					2020
Statutory federal income tax rate	$	83,391		21	%	$	82,268		21	%	$	28,288		21	%
Change in valuation allowance		—		—			(134,695	)	(34	)%		(16,489	)	(12	)%
State income taxes, net of federal tax benefit		6,518		2	%		(28,768	)	(8	)%		(2,998	)	(2	)%
Federal research and development credits		(7,477	)	(2	)%		(5,764	)	(2	)%		(5,483	)	(4	)%
Uncertain tax positions		2,418		1	%		3,398		1	%		3,072		2	%
Foreign tax credit		(9,078	)	(2	)%		(35,368	)	(9	)%		—		—
Foreign rate differences		(8,982	)	(2	)%		(34,584	)	(9	)%		(22,074	)	(16	)%
Foreign tax on U.S. provision		9,078		2	%		5,931		2	%		4,523		3	%
Excess tax benefits from restricted stock		(8,278	)	(2	)%		(6,141	)	(2	)%		(1,743	)	(1	)%
Audits and settlements		—		—			33,370		9	%		—		—
U.S. permanent items		15,304		3	%		18,389		5	%		6,590		5	%
Base Erosion Anti-Abuse Tax (BEAT)		—		—			2,936		1	%		(1,759	)	(1	)%
GILTI, net of foreign tax credits		2,705		1	%		18,217		4	%		14,899		11	%
Foreign-Derived Intangible Income (FDII)		(6,848	)	(2	)%		(4,428	)	(1	)%		(2,461	)	(2	)%
Sale of a portion of the PLM services business		6,844		2	%		—		—			—		—
Other, net		(1,578	)	(1	)%		71		—			(354	)	(1	)%
Provision (benefit) for income taxes	$	84,017		21	%	$	(85,168	)	(22	)%	$	4,011		3	%

Schedule Of Deferred Tax Assets And Liabilities

The significant temporary differences that created deferred tax assets and liabilities are shown below:

(in thousands)	September 30,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	40,419		$	65,383
Foreign tax credits		14,527			36,287
Capitalized research and development		23,274			27,546
Pension benefits		7,639			14,097
Prepaid expenses		15,886			12,540
Deferred revenue		2,146			2,274
Stock-based compensation		19,486			15,822
Other reserves not currently deductible		14,689			16,796
Amortization of intangible assets		130,825			147,385
Research and development and other tax credits		78,862			74,846
Lease liabilities		46,672			51,471
Fixed assets		78,249			53,025
Capital loss carryforward		3,955			35,156
Other		1,256			2,269
Gross deferred tax assets		477,885			554,897
Valuation allowance	$	(22,283	)		(52,085	)
Total deferred tax assets		455,602			502,812
Deferred tax liabilities:
Acquired intangible assets not deductible	$	(118,360	)		(108,746	)
Lease assets		(36,940	)		(37,273	)
Pension prepayments		(2,622	)		(2,834	)
Deferred revenue		(35,193	)		(2,662	)
Depreciation		(6,937	)		(7,121	)
Unbilled accounts receivable		-			(6,391	)
Deferred income		(5,991	)		(21,744	)
Prepaid commissions		(13,356	)		(16,990	)
Other		(8,508	)		(5,427	)
Total deferred tax liabilities		(227,907	)		(209,188	)
Net deferred tax assets	$	227,695		$	293,624

Summary Of Valuation Allowance

The changes to the valuation allowance were primarily due to the following:

(in thousands)	Year ended September 30,
	2022			2021			2020
Valuation allowance, beginning of year	$	52,085		$	205,423		$	177,663
Net release of valuation allowance(1)		—			(134,235	)		—
Net increase (decrease) in deferred tax assets with a full valuation allowance(2)		(29,802	)		(19,103	)		27,760
Valuation allowance, end of year	$	22,283		$	52,085		$	205,423

(1)In 2021, this is attributable to the release in the United States.

(2)In 2022, this change included the loss of foreign attributes upon liquidation of a foreign subsidiary. In 2021, this change includes the loss of state attributes upon merger of two wholly-owned subsidiaries. In 2020, this change is largely attributed to the Onshape acquisition, the adoption of ASC 842 and the impact to the change in scheduling of the reversal of existing temporary differences.

Schedule Of Unrecognized Tax Benefit

	Year ended September 30,
Unrecognized tax benefits (in thousands)	2022			2021			2020
Unrecognized tax benefit, beginning of year	$	21,166		$	16,107		$	11,484
Tax positions related to current year:
Additions		3,144			4,844			2,173
Tax positions related to prior years:
Additions		785			30,130			2,452
Reductions		(1,172	)		(478	)		(2	)
Settlements		—			(29,437	)		—
Unrecognized tax benefit, end of year	$	23,923		$	21,166		$	16,107

Summary Of Income Tax Examinations Years

As of September 30, 2022, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2018 through 2022
Germany	2015 through 2022
France	2019 through 2022
Japan	2017 through 2022
Ireland	2018 through 2022

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Debt (Tables)

12 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Borrowing Obligations

As of September 30, 2022 and 2021, we had the following long-term debt obligations:

(in thousands)	September 30,
	2022			2021
4.000% Senior notes due 2028	$	500,000		$	500,000
3.625% Senior notes due 2025		500,000			500,000
Credit facility revolver(1)		359,000			450,000
Total debt		1,359,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(8,372	)		(10,529	)
Total debt, net of issuance costs(3)	$	1,350,628		$	1,439,471

(1)Unamortized debt issuance costs related to the credit facility were $2.7 million and $3.8 million as of September 30, 2022 and 2021, respectively, and were included in Other assets on the Consolidated Balance Sheets.

(2)Of the $14.1 million in financing costs incurred in connection with the issuance of the 2028 and 2025 notes, unamortized debt issuance costs were $8.4 million and $10.5 million as of September 30, 2022 and 2021, respectively, and were included in Long-term debt on the Consolidated Balance Sheet.

(3)As of September 30, 2022 and 2021 all debt was classified as long term.

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Equity Incentive Plans (Tables)

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement, Recognized Amount [Abstract]

Schedule of Classification of Compensation Expense

The following table shows total stock-based compensation expense recorded in our Consolidated Statements of Operations:

(in thousands)	Year ended September 30,
	2022		2021		2020
Cost of license revenue	$	272	$	100	$	47
Cost of support and cloud services revenue		11,022		9,900		6,910
Cost of professional services revenue		11,481		9,263		7,012
Sales and marketing		49,467		53,712		37,351
Research and development		41,944		34,272		27,005
General and administrative		60,677		70,042		36,824
Total stock-based compensation expense	$	174,863	$	177,289	$	115,149

Schedule of Restricted Stock Unit Activity

Restricted stock unit activity for the year ended September 30, 2022 (in thousands, except grant date fair value data)	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance of outstanding RSUs at October 1, 2021		3,217		$	92.46
Granted(1)		1,659		$	114.31
Vested		(1,736	)	$	92.70
Forfeited or not earned		(386	)	$	100.05
Balance of outstanding RSUs at September 30, 2022		2,754		$	105.07	$	288,068

(1)RSUs granted includes 37 shares from prior period rTSR awards that were earned upon achievement of the performance criteria and vested in November 2021 and 87 shares from prior period performance-based awards that were earned upon achievement of the performance criteria and vested in November 2021.

Schedule of Number of RSU Awards Granted by Award Type

The following table presents the number of RSU awards granted by award type:

(in thousands)	Twelve months ended September 30, 2022
Performance-based RSUs(1)		106
Service-based RSUs(2)		1,353
Relative Total Shareholder Return RSUs(3)		76

(1)The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2022, November 15, 2023, and November 15, 2024, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (up to a maximum aggregate of 152 RSUs).

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

(3)The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the measurement period ending on September 30, 2024. The RSUs earned will vest on November 15, 2024. Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 RSUs) may vest. If the return to PTC shareholders is negative for the period but still meets or exceeds the peer group indexed return, a maximum of 100% of the rTSR RSUs may vest.

Schedule of Valuation Assumptions

The significant assumptions used in the Monte Carlo simulation model were as follows:

Average volatility of peer group	34.67	%
Risk-free interest rate	0.81	%
Dividend yield	—	%

Schedule of Total Fair Value of RSUs Vested

:

(in thousands)	Year ended September 30,
Value of stock option and stock-based award activity	2022		2021		2020
Total value of restricted stock unit awards at vest	$	199,738	$	171,316	$	103,265

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Pension Plans (Tables)

12 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Accounting For The Pension Plans

The following table presents the actuarial assumptions used in accounting for the pension plans:

	2022			2021			2020
Weighted average assumptions used to determine benefit obligations at September 30 measurement date:
Discount rate		3.7	%		1.0	%		1.1	%
Rate of increase in future compensation		3.6	%		2.8	%		2.8	%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30:
Discount rate		1.0	%		1.1	%		0.9	%
Rate of increase in future compensation		2.8	%		2.8	%		2.8	%
Rate of return on plan assets		5.0	%		5.0	%		5.4	%

Components of Net Periodic Pension Cost

All non-service net periodic pension costs are presented in Other income, net on the Consolidated Statement of Operations. The actuarially computed components of net periodic pension cost recognized in our Consolidated Statements of Operations for each year are shown below:

(in thousands)	Year ended September 30,
	2022			2021			2020
Interest cost of projected benefit obligation	$	550		$	692		$	527
Service cost		1,016			1,127			1,426
Expected return on plan assets		(3,712	)		(3,643	)		(3,878	)
Amortization of prior service cost		(4	)		(5	)		(5	)
Recognized actuarial loss		1,425			4,139			3,854
Settlement gain		(82	)		—			—
Net periodic pension (benefit) cost	$	(807	)	$	2,310		$	1,924

Change in Benefit Obligation and Plan Assets

The following tables display the change in benefit obligation and the change in the plan assets and funded status of the plans as well as the amounts recognized in our Consolidated Balance Sheets:

(in thousands)	Year ended September 30,
	2022			2021
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	96,512		$	97,832
Service cost		1,016			1,127
Interest cost		550			692
Actuarial loss (gain)		(22,616	)		1,100
Foreign exchange impact		(12,949	)		(1,562	)
Participant contributions		96			109
Benefits paid		(2,343	)		(2,786	)
Divestiture of business		(1,184	)		—
Settlements		(953	)		—
Projected benefit obligation, end of year	$	58,129		$	96,512
Change in plan assets and funded status:
Plan assets at fair value, beginning of year	$	78,385		$	72,063
Actual return on plan assets		2,348			7,383
Employer contributions		3,007			3,049
Participant contributions		96			109
Foreign exchange impact		(12,959	)		(1,433	)
Settlements		(953	)		—
Benefits paid		(2,343	)		(2,786	)
Plan assets at fair value—end of year		67,581			78,385
Projected benefit obligation, end of year		58,129			96,512
Underfunded status	$	(9,782	)	$	(18,982	)
Overfunded status	$	19,234		$	855
Accumulated benefit obligation, end of year	$	57,310		$	95,090
Amounts recognized in the balance sheet:
Non-current asset	$	19,234		$	855
Non-current liability	$	(9,434	)	$	(18,615	)
Current liability	$	(348	)	$	(367	)
Amounts in accumulated other comprehensive loss:
Unrecognized actuarial loss	$	5,408		$	30,213

Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year

The following table shows the change in accumulated other comprehensive loss:

(in thousands)	Year ended September 30,
	2022			2021
Accumulated other comprehensive loss, beginning of year	$	30,213		$	37,175
Recognized during year - net actuarial losses		(1,421	)		(4,135	)
Occurring during year - settlement gain		82			—
Occurring during year - net actuarial gains		(21,253	)		(2,640	)
Foreign exchange impact		(2,213	)		(187	)
Accumulated other comprehensive loss, end of year	$	5,408		$	30,213

Percentage of Total Plan Assets

The following table shows the percentage of total plan assets for each major category of plan assets:

	September 30,
Asset category	2022			2021
Equity securities		33	%		35	%
Fixed income securities		33	%		34	%
Commodities		1	%		11	%
Insurance company funds		10	%		12	%
Options		2	%		1	%
Cash		21	%		7	%
		100	%		100	%

Expected Future Benefit Payments

As of September 30, 2022, benefit payments expected to be paid over the next ten years are as follows:

(in thousands)	Future Benefit Payments
2023	$	3,410
2024		4,068
2025		3,793
2026		3,830
2027		4,216
2028 to 2032		20,680

Fair Value of Plan Assets

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	20,430	$	—	$	—	$	20,430
Corporate investment grade		2,038		—		—		2,038
Large capitalization stocks		22,379		—		—		22,379
Commodities		599		—		—		599
Insurance company funds(1)		—		6,823		—		6,823
Options		1,430		—		—		1,430
Cash		13,882		—		—		13,882
Total plan assets	$	60,758	$	6,823	$	—	$	67,581

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Government	$	24,013	$	—	$	—	$	24,013
Corporate investment grade		2,924		—		—		2,924
Large capitalization stocks		27,078		—		—		27,078
Commodities		8,558		—		—		8,558
Insurance company funds(1)		—		9,105		—		9,105
Options		1,122		—		—		1,122
Cash		5,585		—		—		5,585
Total plan assets	$	69,280	$	9,105	$	—	$	78,385

(1) These investments are comprised primarily of funds invested with an insurance company in Japan with a guaranteed rate of return. The insurance company invests these assets primarily in government and corporate bonds.

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Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2022

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 September 30, 2022 and 2021 were as follows:

(in thousands)	September 30, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	102,313	$	—	$	—	$	102,313
Convertible note		—		—		2,000		2,000
Forward contracts		—		9,058		—		9,058
	$	102,313	$	9,058	$	2,000	$	113,371
Financial liabilities:
Forward contracts		—		2,908		—		2,908
	$	—	$	2,908	$	—	$	2,908

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	114,375	$	—	$	—	$	114,375
Convertible note		—		—		2,000		2,000
Equity securities		—		—		77,540		77,540
Forward contracts		—		5,363		—		5,363
	$	114,375	$	5,363	$	79,540	$	199,278
Financial liabilities:
Forward contracts		—		3,318		—		3,318
	$	—	$	3,318	$	—	$	3,318

(1)Money market funds and time deposits.

Schedule of Changes in Fair Value of Level 3 Investment

The following table presents changes in fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to September 30, 2022:

(in thousands)	September 30, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment		(39,072	)
Balance, September 30, 2022	$	—

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Derivative Financial Instruments (Tables)

12 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Forward Contracts and Options

As of September 30, 2022 and 2021, we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Canadian / U.S. Dollar	$	2,731	$	4,894
Euro / U.S. Dollar		316,869		387,466
British Pound / U.S. Dollar		7,368		23,141
Israeli Shekel / U.S. Dollar		12,052		10,475
Japanese Yen / U.S. Dollar		25,566		46,450
Swiss Franc / U.S. Dollar		25,559		18,039
Swedish Krona / U.S. Dollar		35,713		34,196
Singapore Dollar / U.S. Dollar		3,637		3,498
Chinese Renminbi / U.S. Dollar		23,965		23,297
New Taiwan Dollar / U.S. Dollar		13,906		3,369
Russian Ruble/ U.S. Dollar		—		2,614
Korean Won/ U.S. Dollar		4,919		—
Danish Krone/ U.S. Dollar		3,192		2,380
Australian Dollar/ U.S. Dollar		3,269		2,086
All other		4,432		2,016
Total	$	483,178	$	563,921

As of September 30, 2022 and 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

	September 30,
Currency Hedged (in thousands)	2022		2021
Euro / U.S. Dollar	$	110,466	$	128,103

Schedule of Net Gains and Losses on Foreign Currency Exposures

The following table shows the effect of our non-designated hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022		2021			2020
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other income, net	$	11,950	$	(3,758	)	$	3,518

The following table shows the effect of our derivative instruments designated as net investment hedges, all of which were forward contracts, on the Consolidated Statements of Operations for the years ended September 30, 2022, 2021, and 2020:

(in thousands)		Year ended September 30,
	Location of gain (loss)	2022			2021		2020
Gain (loss) recognized in OCI—effective portion	OCI	$	(1,478	)	$	695	$	(5,483	)
Gain (loss) reclassified from OCI—effective portion	OCI	$	(17,466	)	$	2,723	$	109
Gain recognized—portion excluded from effectiveness testing	Other income, net	$	1,862		$	1,249	$	3,506

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:

(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	September 30,
	2022		2021		2022		2021
Derivative assets:(1)
Forward contracts	$	1,960	$	1,641	$	7,098	$	3,722
Derivative liabilities:(2)
Forward contracts	$	—	$	—	$	2,908	$	3,318

(1)As of September 30, 2022 and 2021, current derivative assets of $9.1 million and $5.4 million, respectively, are recorded in Other current assets on the Consolidated Balance Sheets.

As of September 30, 2022 and 2021, current derivative liabilities of $2.9 million and $3.3 million, respectively, are recorded in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Schedule of Offsetting Assets

The following table sets forth the offsetting of derivative assets as of September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	9,058	$	—	$	9,058	$	(2,908	)	$	—	$	6,150

Schedule of Offsetting Liabilities

The following table sets forth the offsetting of derivative liabilities as of September 30, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2022	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
Forward Contracts	$	2,908	$	—	$	2,908	$	(2,908	)	$	—	$	—

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Segment and Geographic Information (Tables)

12 Months Ended

Sep. 30, 2022

Segment Reporting Information [Line Items]

Summary of Revenue and Profit Attributable to Our Operating Segments

The revenue and profit attributable to our operating segments are summarized below. We do not produce or report asset information by reportable segment.

(in thousands)	Year ended September 30,
	2022			2021			2020
Software Products
Revenue	$	1,770,253		$	1,649,341		$	1,314,617
Operating costs(1)		494,035			451,734			393,803
Profit		1,276,218			1,197,607			920,814
Professional Services
Revenue		163,094			157,818			143,798
Operating costs(2)		140,470			135,981			128,678
Profit		22,624			21,837			15,120
Total segment revenue		1,933,347			1,807,159			1,458,415
Total segment costs		634,505			587,715			522,481
Total segment profit		1,298,842			1,219,444			935,934
Unallocated operating expenses:(3)
Sales and marketing expenses		435,780			464,067			398,100
General and administrative expenses		130,870			120,954			114,386
Intangibles amortization		60,548			59,165			56,104
Restructuring and other charges, net		36,234			2,211			32,716
Stock-based compensation		174,863			177,289			115,149
Other unallocated operating expenses(4)		13,185			15,010			8,616
Total operating income		447,362			380,748			210,863
Interest expense		(54,268	)		(50,478	)		(76,428	)
Other income, net		4,004			61,485			271
Income before income taxes	$	397,098		$	391,755		$	134,706

(1)Operating costs for the Software Products segment include all costs of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. Operating costs for the Software Products segment include depreciation of $4.9 million, $4.0 million and $4.2 million in 2022, 2021 and 2020, respectively.

(2)Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation, and intangible amortization. The Professional Services segment includes depreciation of $0.9 million, $1.1 million and $1.1 million in 2022, 2021 and 2020, respectively.

(3)Unallocated departments include depreciation of $21.4 million, $21.0 million and $19.4 million in 2022, 2021 and 2020, respectively.

(4)Other unallocated operating expenses include acquisition and transaction-related costs.

Summary of Revenue for Geographic Regions

Revenue for the geographic regions in which we operate is presented below.

(in thousands)	Year ended September 30,
	2022		2021		2020
Revenue:
Americas(1)	$	895,095	$	766,021	$	649,383
Europe(2)		714,216		722,977		543,779
Asia Pacific		324,036		318,161		265,253
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

(1)Includes revenue in the United States totaling $864.7 million, $741.3 million, and $621.8 million for 2022, 2021 and 2020, respectively.

(2)Includes revenue in Germany totaling $318.5 million, $290.7 million, and $198.7 million for 2022, 2021 and 2020, respectively.

Products and Services Segments [Member]

Segment Reporting Information [Line Items]

Summary of Revenue and Profit Attributable to Our Operating Segments

e reported revenue by the following three product groups:

(in thousands)	Year ended September 30,
	2022		2021		2020
Digital Thread - Core	$	1,318,857	$	1,257,817	$	1,025,709
Digital Thread - Growth		279,566		273,949		215,353
Digital Thread - FSG		251,621		233,268		210,101
Digital Thread (Total)		1,850,044		1,765,034		1,451,163
Velocity		83,303		42,125		7,252
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415
Product lifecycle management (PLM)		1,137,016		1,012,120		807,016
Computer-aided design (CAD)		796,331		795,039		651,399
Total revenue	$	1,933,347	$	1,807,159	$	1,458,415

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Leases (Tables)

12 Months Ended

Sep. 30, 2022

Leases [Abstract]

Components of Lease Cost

The components of lease cost reflected in the Consolidated Statement of Operations for the year ended September 30, 2022 were as follows:

(in thousands)	Year ended September 30, 2022
Operating lease cost	$	34,346
Short-term lease cost		2,653
Variable lease cost		10,095
Sublease income		(4,600	)
Total lease cost	$	42,494

Supplemental cash flow and right-of use assets information for the year ended September 30, 2022 was as follows:

(in thousands)	Year ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,709
Financing cash flows from operating leases	$	297
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	15,431
Financing leases	$	—

Supplemental balance sheet information related to the leases as of September 30, 2022 was as follows:

	As of September 30, 2022
Weighted-average remaining lease term - operating leases	11.8 years
Weighted-average remaining lease term - financing leases	2 years
Weighted-average discount rate - operating leases		5.4	%
Weighted-average discount rate - financing leases		3.0	%

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2022 are as follows:

(in thousands)	Operating Leases
2022	$	31,612
2023		26,907
2024		23,495
2025		19,487
2026		16,662
Thereafter		143,236
Total future lease payments		261,399
Less: imputed interest		(71,824	)
Total	$	189,575

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($)	1 Months Ended			3 Months Ended	12 Months Ended
	Feb. 28, 2022	Jan. 31, 2022	Dec. 31, 2020	Dec. 31, 2020	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2020
Summary Of Significant Accounting Policies [Line Items]
Percent of standalone selling price for subscriptions that contains software license					55.00%
Percent of standalone selling price for subscriptions that contains support					45.00%
Contract with customer, total liability					$ 34,200,000		$ 40,300,000
Proceeds from sales of short- and long-term marketable securities			$ 56,200,000	$ 56,200,000	0		56,170,000	$ 1,521,000
Allowance for doubtful accounts receivable					400,000		300,000	500,000
Allowance for credit loss, writeoff					400,000		100,000	200,000
Bad debt expense (recoveries) including general and administrative expense, net					500,000		200,000	0.0
Lease expiration date						2037
Development costs for software					0		0	0
Advertising expense					8,600,000		7,100,000	3,800,000
Cumulative translation adjustment gains (loss)					160,200,000		(67,500,000)
Pension benefits, before tax					5,400,000		(30,200,000)
Accumulated other comprehensive (income) loss, defined benefit plan, after tax					3,900,000		21,500,000
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Net Investment Hedges, Before Tax					16,900,000		6,500,000
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Net Investment Hedges, Effect Net of Tax					$ 10,600,000		$ 6,500,000
Share price per share					$ 0.01		$ 0.01
Net income (loss)					$ (313,081,000)		$ (476,923,000)	$ (130,695,000)
Impairment charges					0		0
Non-marketable equity investments					1,000,000.0		2,200,000
Purchased Software
Summary Of Significant Accounting Policies [Line Items]
Finite-lived intangible assets acquired					6,000,000.0		600,000
Matterport, Inc.
Summary Of Significant Accounting Policies [Line Items]
Cost method investments							8,700,000
Original investment							8,700,000
Aggregate realized gain					34,000,000.0
Fair value of shares							77,500,000
Unrealized gain on value of shares							68,800,000
Matterport, Inc. | Equity Securities [Member]
Summary Of Significant Accounting Policies [Line Items]
Cost method investments					8,700,000
Value of remaining shares held for sale	$ 3,600,000	$ 39,100,000
Share price per share	$ 7.6	$ 9.1
Net income (loss)					(34,800,000)
Original investment					$ 8,700,000
Minimum
Summary Of Significant Accounting Policies [Line Items]
Percent of standalone selling price for subscriptions					5.00%
Minimum | Computer Hardware And Software
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					3 years
Minimum | Furniture And Fixtures
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Percent of standalone selling price for subscriptions					50.00%
Maximum | Purchased Software
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					16 years
Maximum | Customer Lists
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					13 years
Maximum | Trademarks
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					12 years
Maximum | Computer Hardware And Software
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					5 years
Maximum | Furniture And Fixtures
Summary Of Significant Accounting Policies [Line Items]
Amortization period (in years)					12 years
ASU 2018-15 | Other Assets
Summary Of Significant Accounting Policies [Line Items]
Capitalized costs					$ 14,300,000		$ 2,800,000
Not Designated as Hedging Instrument | Foreign Exchange Forward
Summary Of Significant Accounting Policies [Line Items]
Derivative maturity					4 months
Net Investment Hedging | Designated as Hedging Instrument | Foreign Exchange Forward
Summary Of Significant Accounting Policies [Line Items]
Derivative maturity					3 months

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Summary of Significant Accounting Policies (Earnings Per Share Basic And Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Accounting Policies [Abstract]
Net income	$ 313,081	$ 476,923	$ 130,695
Weighted average shares outstanding	117,194	116,836	115,663
Dilutive effect of employee stock options, restricted shares and restricted stock units	1,039	1,531	604
Diluted weighted average shares outstanding	118,233	118,367	116,267
Earnings per share-Basic	$ 2.67	$ 4.08	$ 1.13
Earnings per share-Diluted	$ 2.65	$ 4.03	$ 1.12

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Revenue from Contracts with Customers - Schedule of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Revenue from Contract with Customer [Abstract]
Contract asset	$ 21,096	$ 12,934
Deferred revenue	$ 520,333	$ 497,677

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Revenue from Contracts with Customers - Additional Information (Details) - USD ($)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Revenue from External Customer [Line Items]
Contract with customer, asset, expected to be transferred to receivables within the next 12 months and therefore	$ 16,900,000
Contract with customer other current asset		$ 8,200,000
Contract with customer, asset, reclassified to receivable	7,000,000.0
Contract with customer, asset, increase in contract assets	8,200,000
Contract with customer, asset, increase in contract assets related to revenue recognized	15,200,000
Deferred revenue, revenue recognized	491,600,000
Deferred revenue, additions	507,300,000
Short term and long term accounts receivable	$ 871,000,000.0	744,600,000
Capitalized contract cost, amortization period	5 years
Amortization expense related to costs to obtain a contract with a customer	$ 50,900,000	46,700,000
Impairments of the contract cost asset	0	0
Deferred revenue	520,333,000	497,677,000
Revenue, remaining performance obligation, amount	1,613,000,000.0
Unrecorded
Revenue from External Customer [Line Items]
Revenue, remaining performance obligation, amount	1,092,700,000
Other Current Assets
Revenue from External Customer [Line Items]
Capitalized contract cost, net	40,700,000	40,200,000
Other Assets
Revenue from External Customer [Line Items]
Capitalized contract cost, net	77,000,000.0	$ 81,100,000
Intland Software
Revenue from External Customer [Line Items]
Deferred revenue increased	$ 6,900,000

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Revenue from Contracts with Customers - Remaining Performance Obligations - Additional Information (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-11-01	Sep. 30, 2022
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, percentage	57.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

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Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
Total recurring revenue
Disaggregation Of Revenue [Line Items]
Revenue	1,736,188	1,616,328	1,281,949
Perpetual license
Disaggregation Of Revenue [Line Items]
Revenue	34,065	33,013	32,668
Professional services
Disaggregation Of Revenue [Line Items]
Professional services	$ 163,094	$ 157,818	$ 143,798

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Restructuring and Other Charges - Additional Information (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($) Employee	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($) Employee	Sep. 30, 2019 USD ($)
Restructuring Cost And Reserve [Line Items]
Restructuring Charges	$ (32,410)	$ (2,136)	$ (26,427)
Sublease Income	4,600
Payments for restructuring	40,800	6,681	31,502
Restructuring and other charges, net	(36,234)	(2,211)	(32,716)
Restructuring Reserve	935	5,486	9,987	$ 31,086
Depreciation	27,100	26,100	24,700
Other Noncurrent Liabilities
Restructuring Cost And Reserve [Line Items]
Restructuring Reserve		900
Accounting Standards Update 2016-02
Restructuring Cost And Reserve [Line Items]
ASC 842 adoption			(16,462)
Saas Transformation
Restructuring Cost And Reserve [Line Items]
Other charges for professional fees	5,100
Impairment and Accretion Expense Related to Exited Facilities
Restructuring Cost And Reserve [Line Items]
Restructuring and other charges, net		(100)	(5,600)
Impairment and Accretion Exited Lease Facilities
Restructuring Cost And Reserve [Line Items]
Sublease Income	1,300
Employee Severance and Related Benefits
Restructuring Cost And Reserve [Line Items]
Restructuring Charges	(32,971)	(1,887)	(30,690)
Payments for restructuring	34,023	3,925	27,256
Restructuring Reserve	346	1,981	3,992	298
Employee Severance and Related Benefits | Accounting Standards Update 2016-02
Restructuring Cost And Reserve [Line Items]
ASC 842 adoption			0
Restructured Facilities
Restructuring Cost And Reserve [Line Items]
Payments for restructuring	4,300
Accelerated Depreciation Planned Facility Exit
Restructuring Cost And Reserve [Line Items]
Restructuring and other charges, net			(700)
Facility Closures
Restructuring Cost And Reserve [Line Items]
Restructuring Charges	561	(249)	4,263
Payments for restructuring	2,355	2,756	4,246
Restructuring Reserve	589	3,505	5,995	$ 30,788
Facility Closures | Accrued Expenses and Other Current Liabilities
Restructuring Cost And Reserve [Line Items]
Restructuring Reserve		2,600
Facility Closures | Accounting Standards Update 2016-02
Restructuring Cost And Reserve [Line Items]
ASC 842 adoption			(16,462)
Restructuring Plan 2022 | Saas Transformation
Restructuring Cost And Reserve [Line Items]
Other charges for professional fees	2,500
Restructuring Plan 2022 | Employee Severance and Related Benefits
Restructuring Cost And Reserve [Line Items]
Restructuring Charges	$ (33,100)
Number of employees | Employee	330
Restructuring Plan 2020
Restructuring Cost And Reserve [Line Items]
Payments for restructuring			27,300
Restructuring Plan 2020 | Employee Severance and Related Benefits
Restructuring Cost And Reserve [Line Items]
Restructuring Charges			$ (30,800)
Number of employees | Employee			2,500
Restructuring Plan 2020 | Restructured Facilities
Restructuring Cost And Reserve [Line Items]
Payments for restructuring		2,800
Restructuring Plan 2019
Restructuring Cost And Reserve [Line Items]
Payments for restructuring			$ 3,900
Prior Restructuring
Restructuring Cost And Reserve [Line Items]
Payments for restructuring			$ 300
Current Restructuring Plan
Restructuring Cost And Reserve [Line Items]
Restructuring Charges	$ (100)	$ (200)

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Restructuring and Other Charges - Schedule of Restructuring Accrual Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	$ 5,486	$ 9,987	$ 31,086
Charges (credits) to operations, net	32,410	2,136	26,427
Cash disbursements	(40,800)	(6,681)	(31,502)
Other non-cash			164
Foreign exchange impact	(583)	44	274
Restructuring reserve, ending balance	935	5,486	9,987
Accounting Standards Update 2016-02
Restructuring Reserve [Roll Forward]
ASC 842 adoption			(16,462)
Employee Severance and Related Benefits
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	1,981	3,992	298
Charges (credits) to operations, net	32,971	1,887	30,690
Cash disbursements	(34,023)	(3,925)	(27,256)
Other non-cash			0
Foreign exchange impact	(583)	27	260
Restructuring reserve, ending balance	346	1,981	3,992
Employee Severance and Related Benefits | Accounting Standards Update 2016-02
Restructuring Reserve [Roll Forward]
ASC 842 adoption			0
Facility Closures
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	3,505	5,995	30,788
Charges (credits) to operations, net	(561)	249	(4,263)
Cash disbursements	(2,355)	(2,756)	(4,246)
Other non-cash			164
Foreign exchange impact	0	17	14
Restructuring reserve, ending balance	589	$ 3,505	5,995
Facility Closures | Accounting Standards Update 2016-02
Restructuring Reserve [Roll Forward]
ASC 842 adoption			$ (16,462)
PTC Restructuring Plan 2022
Restructuring Reserve [Roll Forward]
Cash disbursements	$ (36,378)

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Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Abstract]
Computer hardware and software	$ 364,762	$ 352,704
Furniture and fixtures	29,744	30,568
Leasehold improvements	95,383	94,959
Gross property and equipment	489,889	478,231
Accumulated depreciation and amortization	(391,788)	(377,994)
Net property and equipment	$ 98,101	$ 100,237

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Property and Equipment - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation	$ 27.1	$ 26.1	$ 24.7

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Acquisitions and Disposition of Business - Additional Information (Details) $ in Thousands				3 Months Ended	12 Months Ended
	Jun. 01, 2022 USD ($) Employees	Apr. 29, 2022 USD ($) Employees	Jan. 15, 2021 USD ($) Employees	Dec. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Business Acquisition [Line Items]
Business combination, acquisition and transaction related costs					$ 13,200	$ 15,000	$ 8,600
Borrowings under credit facility					264,000	600,000	455,000
Revenue					1,933,347	1,807,159	1,458,415
Deferred tax liabilities					28,396	4,165
Deferred revenue					503,781	482,131
Income taxes payable					17,300	15,700
Accounts receivable					636,556	541,072
Payments to acquire business, net of cash acquired					282,943	718,030	483,478
Goodwill					$ 2,353,654	$ 2,191,887	1,625,786
Customer Lists
Business Acquisition [Line Items]
Acquired finite-lived intangible asset, weighted average useful life					11 years	11 years
Purchased Software
Business Acquisition [Line Items]
Acquired finite-lived intangible asset, weighted average useful life					11 years	11 years
Trademarks
Business Acquisition [Line Items]
Acquired finite-lived intangible asset, weighted average useful life					12 years	12 years
Arena Solutions
Business Acquisition [Line Items]
Payments to acquire business			$ 715,000
Cash acquired from acquisition			$ 11,100
Number Of Employees | Employees			170
Revenue				$ 29,800
Fair value adjustments related to purchase accounting for acquisition				$ 9,100
Goodwill, acquired			$ 562,800
Deferred tax liabilities			41,300
Deferred revenue			15,500
Accounts receivable			11,400
Liabilities			400
Arena Solutions | Customer Lists
Business Acquisition [Line Items]
Finite-lived intangible assets acquired			$ 155,000
Acquired finite-lived intangible asset, weighted average useful life			13 years
Arena Solutions | Purchased Software
Business Acquisition [Line Items]
Finite-lived intangible assets acquired			$ 38,300
Acquired finite-lived intangible asset, weighted average useful life			9 years
Arena Solutions | Trademarks
Business Acquisition [Line Items]
Finite-lived intangible assets acquired			$ 4,200
Acquired finite-lived intangible asset, weighted average useful life			12 years
Arena Solutions | Line of Credit
Business Acquisition [Line Items]
Borrowings under credit facility			$ 600,000
PLM Services Business Disposition
Business Acquisition [Line Items]
Number Of Employees | Employees	160
Liabilities	$ 2,400
Total consideration	60,400				$ 6,844	$ 0	$ 0
Cash Consideration	32,500
Gain On Sale	29,800
Net Assets	30,600
Goodwill	33,000
Contingent Consideration	20,000
PLM Services Business Disposition | Service To Be Performed [Member]
Business Acquisition [Line Items]
Non Cash Consideration	$ 28,000
Other Acquisitions
Business Acquisition [Line Items]
Goodwill, acquired					691	$ 581
Intland Software
Business Acquisition [Line Items]
Payments to acquire business		$ 278,100
Borrowings under credit facility		$ 264,000
Number Of Employees | Employees		150
Goodwill, acquired		$ 240,900			240,971
Deferred tax liabilities		20,100
Deferred revenue		6,900
Income taxes payable		700
Accounts receivable		6,500
Liabilities		800
Increase in Goodwill					900
Increase in goodwill by Working capital adjustments					$ 240,000
Intland Software | Customer Lists
Business Acquisition [Line Items]
Finite-lived intangible assets acquired		$ 38,800
Acquired finite-lived intangible asset, weighted average useful life		11 years
Intland Software | Purchased Software
Business Acquisition [Line Items]
Finite-lived intangible assets acquired		$ 19,100
Acquired finite-lived intangible asset, weighted average useful life		10 years
Intland Software | Trademarks
Business Acquisition [Line Items]
Finite-lived intangible assets acquired		$ 1,300
Acquired finite-lived intangible asset, weighted average useful life		10 years

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Goodwill and Acquired Intangible Assets - Additional Information (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($) Segment	Sep. 30, 2021 USD ($)
Number of operating segments | Segment	2
Number of reportable segments | Segment	2
Intangible assets	$ 2,736,372	$ 2,570,854
Estimated aggregate future amortization expense for intangible assets, 2023	56,400
Estimated aggregate future amortization expense for intangible assets, 2024	48,300
Estimated aggregate future amortization expense for intangible assets, 2025	42,100
Estimated aggregate future amortization expense for intangible assets, 2026	38,700
Estimated aggregate future amortization expense for intangible assets, 2027	36,200
Estimated aggregate future amortization expense for intangible assets, thereafter	161,000
Software Products
Intangible assets	2,725,200	2,525,700
Professional Services
Intangible assets	$ 11,200	$ 45,200

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Goodwill and Acquired Intangible Assets - Schedule of Goodwill and Acquired Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Goodwill (not amortized)	$ 2,353,654	$ 2,191,887	$ 1,625,786
Intangible assets with finite lives (amortized), Gross Carrying Amount	1,152,018	1,112,070
Intangible assets with finite lives (amortized), Accumulated Amortization	769,300	733,103
Intangible assets with finite lives (amortized), Net Book Value	382,718	378,967
Intangible Assets, Net (Including Goodwill)	2,736,372	2,570,854
Purchased Software
Intangible assets with finite lives (amortized), Gross Carrying Amount	502,859	483,771
Intangible assets with finite lives (amortized), Accumulated Amortization	355,857	338,542
Intangible assets with finite lives (amortized), Net Book Value	147,002	145,229
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	594,970	574,516
Intangible assets with finite lives (amortized), Accumulated Amortization	369,390	350,648
Intangible assets with finite lives (amortized), Net Book Value	225,580	223,868
Trademarks and Trade Names
Intangible assets with finite lives (amortized), Gross Carrying Amount	27,546	26,906
Intangible assets with finite lives (amortized), Accumulated Amortization	17,410	17,036
Intangible assets with finite lives (amortized), Net Book Value	10,136	9,870
Other
Intangible assets with finite lives (amortized), Gross Carrying Amount	3,766	4,000
Intangible assets with finite lives (amortized), Accumulated Amortization	3,766	4,000
Intangible assets with finite lives (amortized), Net Book Value	$ 0	$ 0

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Goodwill and Acquired Intangible Assets - Schedule of Goodwill and Acquired Intangible Assets (Parenthetical) (Details)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Purchased Software
Weighted average useful lives (in years)	11 years	11 years
Customer Lists and Relationships
Weighted average useful lives (in years)	11 years	11 years
Trademarks and Trade Names
Weighted average useful lives (in years)	12 years	12 years

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Goodwill and Acquired Intangible Assets - Schedule of Changes in Goodwill by Reportable Segment (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 29, 2022	Sep. 30, 2022	Sep. 30, 2021
Goodwill [Line Items]
Balance, beginning of period		$ 2,191,887	$ 1,625,786
Foreign currency translation adjustments		(46,903)	1,900
Balance, end of period		2,353,654	2,191,887
Divestiture of business
Goodwill [Line Items]
Goodwill, acquired		32,992
Intland Software
Goodwill [Line Items]
Goodwill, acquired	$ 240,900	240,971
Other Acquisitions
Goodwill [Line Items]
Goodwill, acquired		691	581
Arena Acquisition
Goodwill [Line Items]
Goodwill, acquired			563,620
Software Products
Goodwill [Line Items]
Balance, beginning of period		2,148,968	1,583,316
Foreign currency translation adjustments		(46,611)	1,851
Balance, end of period		2,344,019	2,148,968
Software Products | Divestiture of business
Goodwill [Line Items]
Goodwill, acquired		0
Software Products | Intland Software
Goodwill [Line Items]
Goodwill, acquired		240,971
Software Products | Other Acquisitions
Goodwill [Line Items]
Goodwill, acquired		691	181
Software Products | Arena Acquisition
Goodwill [Line Items]
Goodwill, acquired			563,620
Professional Services
Goodwill [Line Items]
Balance, beginning of period		42,919	42,470
Foreign currency translation adjustments		(292)	49
Balance, end of period		9,635	42,919
Professional Services | Divestiture of business
Goodwill [Line Items]
Goodwill, acquired		(32,992)
Professional Services | Intland Software
Goodwill [Line Items]
Goodwill, acquired		0
Professional Services | Other Acquisitions
Goodwill [Line Items]
Goodwill, acquired		$ 0	400
Professional Services | Arena Acquisition
Goodwill [Line Items]
Goodwill, acquired			$ 0

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Goodwill and Acquired Intangible Assets - Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of acquired intangible assets	$ 34,970	$ 29,396	$ 28,713
Cost of software revenue	25,578	29,769	27,391
Total amortization expense	$ 60,548	$ 59,165	$ 56,104

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Income Taxes - Summary of Income Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Domestic	$ 97,460	$ 41,199	$ (73,865)
Foreign	299,638	350,556	208,571
Income before income taxes	$ 397,098	$ 391,755	$ 134,706

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Income Taxes - Schedule of Provision For (Benefit From) Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Federal	$ 767	$ 4,774	$ 2,187
State	6,675	1,609	1,266
Foreign	33,612	66,554	25,199
Current provision for income taxes	41,054	72,937	28,652
Federal	25,730	(152,311)	(26,811)
State	(3,177)	(27,228)	(4,063)
Foreign	20,410	21,434	6,233
Deferred provision for (benefit from) income taxes	42,963	(158,105)	(24,641)
Provision (benefit) for income taxes	$ 84,017	$ (85,168)	$ 4,011

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Income Taxes - Summary of Federal Income Tax Rate and Effective Income Tax Rate (Details) - USD ($) $ in Thousands		12 Months Ended
	Jun. 01, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Reconciliation, Amount
Statutory federal income tax rate		$ 83,391	$ 82,268	$ 28,288
Change in valuation allowance		(0)	(134,695)	(16,489)
State income taxes, net of federal tax benefit		6,518	(28,768)	(2,998)
Federal research and development credits		(7,477)	(5,764)	(5,483)
Uncertain tax positions		2,418	3,398	3,072
Foreign tax credit		(9,078)	(35,368)	0
Foreign rate differences		(8,982)	(34,584)	(22,074)
Foreign tax on U.S. provision		9,078	5,931	4,523
Excess tax benefits from restricted stock		(8,278)	(6,141)	(1,743)
Audits and settlements		0	33,370	0
U.S. permanent items		15,304	18,389	6,590
Base Erosion Anti-Abuse Tax (BEAT)		0	2,936	(1,759)
GILTI, net of foreign tax credits		2,705	18,217	14,899
Foreign-Derived Intangible Income (FDII)		(6,848)	(4,428)	(2,461)
Other, net		1,578	71	(354)
Provision (benefit) for income taxes		$ 84,017	$ (85,168)	$ 4,011
Reconciliation, Percent
Statutory federal income tax rate		21.00%	21.00%	21.00%
Change in valuation allowance		0.00%	(34.00%)	(12.00%)
State income taxes, net of federal tax benefit		2.00%	(8.00%)	(2.00%)
Federal research and development credits		(2.00%)	(2.00%)	(4.00%)
Uncertain tax positions		1.00%	1.00%	2.00%
Foreign tax credit		(2.00%)	(9.00%)	0.00%
Foreign rate differences		(2.00%)	(9.00%)	(16.00%)
Foreign tax on U.S. provision		2.00%	2.00%	3.00%
Excess tax benefits from restricted stock		(2.00%)	(2.00%)	(1.00%)
Audits and settlements		0.00%	9.00%	0.00%
U.S. permanent items		3.00%	5.00%	5.00%
Base Erosion Anti-Abuse Tax (BEAT)		0.00%	1.00%	(1.00%)
GILTI, net of foreign tax credits		1.00%	4.00%	11.00%
Foreign-Derived Intangible Income (FDII)		(2.00%)	(1.00%)	(2.00%)
Other, net		(1.00%)	0.00%	(1.00%)
Provision (benefit) for income taxes		21.00%	(22.00%)	3.00%
PLM Services Business Disposition
Reconciliation, Amount
Sale of a portion of the PLM services business	$ 60,400	$ 6,844	$ 0	$ 0
Reconciliation, Percent
Sale of a portion of the PLM services business		2.00%	0.00%	0.00%

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Line Items]
Income taxes payable	$ 17,300	$ 15,700
Accrued income taxes	5,100	5,000
Prepaid income taxes	25,800	15,400
Income tax payments	55,000	56,000	$ 52,600
Non-cash federal		109,400
State tax benefits		24,800
Foreign tax credits	14,527	36,287
Gross deferred amortization carryforward	118,500
Valuation allowance	22,283	52,085	205,423	$ 177,663
Interest Expense	54,268	50,478	76,428
Penalty expense	0	2,000	0
Interest expense related to income tax accruals	900	700
Accrued tax penalties	0	0	0
Income tax provision upon recognition of unrecognized tax benefit	23,900
Unrecognized tax benefits, increase in valuation allowance upon recognition	5,200
Potential decrease in unrecognized tax benefits	5,000
Charge related to effects of Non US Jurisdiction Tax Matter		37,300
US Income taxes on repatriated foreign earnings		2,900
Stock-based compensation	174,863	177,289	115,149
Tax benefit recognition related to stock based compensation	27,100	39,900	13,400
Provision (benefit) for income taxes	84,017	(85,168)	4,011
Income Tax Expense
Income Tax Disclosure [Line Items]
Interest Expense	200	2,200	300
Domestic Country
Income Tax Disclosure [Line Items]
Net operating loss carryforwards	22,500
Valuation allowance	17,800
Domestic Country | Expire in 2023 to 2036
Income Tax Disclosure [Line Items]
Net operating loss carryforwards	1,600
Credit carryforwards	60,900
Domestic Country | Not Expire
Income Tax Disclosure [Line Items]
Net operating loss carryforwards	20,900
State - Massachusetts
Income Tax Disclosure [Line Items]
Valuation allowance		17,800
State - Massachusetts | Research Tax Credit Carryforward
Income Tax Disclosure [Line Items]
Credit carryforwards	26,100
Foreign Country
Income Tax Disclosure [Line Items]
Net operating loss carryforwards	7,200
Credit carryforwards	$ 14,500
Credit carryforwards expiration	2027
Foreign tax credits	$ 4,000
Valuation allowance	$ 4,500
Foreign Country | Minimum
Income Tax Disclosure [Line Items]
Non-U.S. tax credit carryforwards expiration	2030
Foreign Country | Maximum
Income Tax Disclosure [Line Items]
Non-U.S. tax credit carryforwards expiration	2041
REPUBLIC OF KOREA
Income Tax Disclosure [Line Items]
Charge related to effects of Non US Jurisdiction Tax Matter		34,400
Payment related to effects of Non US jurisdiction tax matter		20,000
Windfall Tax Benefit
Income Tax Disclosure [Line Items]
Provision (benefit) for income taxes	$ 5,200	9,900	$ 1,300
Other Current Liabilities
Income Tax Disclosure [Line Items]
Accrued income taxes	5,600	800
Other Liabilities [Member]
Income Tax Disclosure [Line Items]
Accrued income taxes	$ 6,600	$ 9,900

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Income Taxes - Schedule Of Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Deferred tax assets:
Net operating loss carryforwards	$ 40,419	$ 65,383
Foreign tax credits	14,527	36,287
Capitalized research and development	23,274	27,546
Pension benefits	7,639	14,097
Prepaid expenses	15,886	12,540
Deferred revenue	2,146	2,274
Stock-based compensation	19,486	15,822
Other reserves not currently deductible	14,689	16,796
Amortization of intangible assets	130,825	147,385
Research and development and other tax credits	78,862	74,846
Lease liabilities	46,672	51,471
Fixed assets	78,249	53,025
Capital loss carryforward	3,955	35,156
Other	1,256	2,269
Gross deferred tax assets	477,885	554,897
Valuation allowance	(22,283)	(52,085)	$ (205,423)	$ (177,663)
Total deferred tax assets	455,602	502,812
Deferred tax liabilities:
Acquired intangible assets not deductible	(118,360)	(108,746)
Lease assets	(36,940)	(37,273)
Pension prepayments	(2,622)	(2,834)
Deferred revenue	(35,193)	(2,662)
Depreciation	(6,937)	(7,121)
Unbilled accounts receivable	0	(6,391)
Deferred income	(5,991)	(21,744)
Prepaid commissions	(13,356)	(16,990)
Other	(8,508)	(5,427)
Total deferred tax liabilities	(227,907)	(209,188)
Net deferred tax assets	$ 227,695	$ 293,624

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Income Taxes - Summary of Valuation Allowance (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Valuation allowance, beginning of year	$ 52,085	$ 205,423	$ 177,663
Net release of valuation allowance	0	(134,235)	0
Net increase (decrease) in deferred tax assets with a full valuation allowance	(29,802)	(19,103)	27,760
Valuation allowance, end of year	$ 22,283	$ 52,085	$ 205,423

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Income Taxes - Schedule of Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefit, beginning of year	$ 21,166	$ 16,107	$ 11,484
Tax positions related to current year:
Additions	3,144	4,844	2,173
Tax positions related to prior years:
Additions	785	30,130	2,452
Reductions	(1,172)	(478)	(2)
Settlements		(29,437)	0
Unrecognized tax benefit, end of year	$ 23,923	$ 21,166	$ 16,107

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Income Taxes - Summary of Major Tax Jurisdiction (Details)	12 Months Ended
	Sep. 30, 2022
United States
Income Tax Examination [Line Items]
Open Years	2018 2019 2020 2021 2022
Germany
Income Tax Examination [Line Items]
Open Years	2015 2016 2017 2018 2019 2020 2021 2022
France
Income Tax Examination [Line Items]
Open Years	2019 2020 2021 2022
Japan
Income Tax Examination [Line Items]
Open Years	2017 2018 2019 2020 2021 2022
Ireland
Income Tax Examination [Line Items]
Open Years	2018 2019 2020 2021 2022

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Debt - Schedule of Long-term Borrowing Obligations (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Feb. 13, 2020
Debt Instrument [Line Items]
Total debt	$ 1,359,000	$ 1,450,000
Unamortized debt issuance costs for the Senior notes	(8,372)	(10,529)
Total debt, net of issuance costs	1,350,628	1,439,471
4.000% Senior Notes Due 2028
Debt Instrument [Line Items]
Senior Notes			$ 500,000
3.625% Senior Notes Due 2025
Debt Instrument [Line Items]
Senior Notes			$ 500,000
Long-term Debt [Member] | Line of Credit
Debt Instrument [Line Items]
Credit facility revolver	359,000	450,000
Long-term Debt [Member] | 4.000% Senior Notes Due 2028
Debt Instrument [Line Items]
Senior Notes	500,000	500,000
Long-term Debt [Member] | 3.625% Senior Notes Due 2025
Debt Instrument [Line Items]
Senior Notes	$ 500,000	$ 500,000

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Debt - Schedule of Long-term Borrowing Obligations (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Mar. 28, 2020
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense	$ 8,372	$ 10,529
Long-term Debt [Member] | Senior Notes
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense	8,400	10,500	$ 14,100
Other Noncurrent Assets | Line of Credit
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense	$ 2,700	$ 3,800

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Debt - Senior Notes - Additional Information (Details) - USD ($) $ in Millions	Feb. 13, 2020	Sep. 30, 2022
Senior Notes
Debt Instrument [Line Items]
Redemption price, percentage	101.00%
4.000% Senior Notes Due 2028
Debt Instrument [Line Items]
Senior Notes	$ 500.0
Interest rate	4.00%
4.000% Senior Notes Due 2028 | Senior Notes
Debt Instrument [Line Items]
Fair value amount		$ 436.3
3.625% Senior Notes Due 2025
Debt Instrument [Line Items]
Senior Notes	$ 500.0
Interest rate	3.625%
3.625% Senior Notes Due 2025 | Senior Notes
Debt Instrument [Line Items]
Fair value amount		$ 468.7

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Debt - Credit Agreement - Additional Information (Details) - USD ($)	3 Months Ended			12 Months Ended
	Jun. 27, 2020	Mar. 28, 2020	Dec. 28, 2019	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Feb. 13, 2020
Debt Instrument [Line Items]
Credit facility amount							$ 1,000,000,000
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				1.79
Senior debt leverage ratio, actual				0.49
Fixed charge coverage ratio, actual				14.21
Financing costs				$ 0	$ 0	$ 17,107,000
Interest expense				54,300,000	50,500,000	76,400,000
Periodic interest payment				$ 48,500,000	$ 45,200,000	$ 60,600,000
Amount paid in penalties for the early redemption of the 2024 notes	$ 15,000,000.0
Interest rate during period				3.40%	3.30%	4.30%
Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity expansion amount							$ 500,000,000
Unused commitments under credit facility				$ 641,000,000.0
Credit facility maturity date				Feb. 13, 2025
Basis spread on Federal Reserve Bank of New York (FRBNY) rate				0.50%
Basis spread on adjusted LIBOR				1.00%
Investment limit in foreign subsidiaries				$ 100,000,000
Cash investment limit for acquisition of business				$ 200,000,000
Total leverage ratio				4.50
Senior secured leverage ratio				3.00
Minimum fixed charge coverage ratio allowed under debt covenant				3.00
Financing costs		$ 2,000,000.0	$ 1,000,000.0
Line of Credit | Minimum
Debt Instrument [Line Items]
Variable interest rate, length of time between updates				30 days
Credit facility commitment fees percentage				0.175%
Line of Credit | Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				1.25%
Line of Credit | Minimum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate				0.25%
Line of Credit | Maximum
Debt Instrument [Line Items]
Variable interest rate, length of time between updates				180 days
Credit facility commitment fees percentage				0.30%
Line of Credit | Maximum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				1.75%
Line of Credit | Maximum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate				0.75%
Secured Debt | Revolving Loan, Reset Period One
Debt Instrument [Line Items]
Interest rate at period end				4.14%

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Commitments and Contingencies - Additional Information (Details) $ in Thousands		12 Months Ended
	Sep. 22, 2022 USD ($)	Sep. 30, 2022 USD ($) Plantiff	Sep. 30, 2021 USD ($)
Loss Contingencies [Line Items]
Letters of credit and bank guarantees outstanding		$ 15,000	$ 16,300
Bank guarantees outstanding collateralized		$ 500	$ 500
Putative Class Action
Loss Contingencies [Line Items]
Lawsuit filing date		September 17, 2020
Number of plaintiffs | Plantiff		3
Lawsuit action domicile		U.S. District Court for the District of Massachusetts
Gross settlement amount	$ 1,725

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Stockholders' Equity - Additional Information (Details) - USD ($)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Class of Stock [Line Items]
Preferred stock, shares authorized	5,000,000	5,000,000
Common stock, shares authorized	500,000,000	500,000,000
Stock repurchased during period (in shares)	1,050,000.00	230,000	0
Stock repurchased during period, value	$ 125,000,000	$ 30,000,000
Maximum
Class of Stock [Line Items]
Common stock, shares authorized	500,000,000
Stock authorized to repurchase	$ 1,000,000,000
Series A Junior Participating Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized	500,000

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Equity Incentive Plans - Additional Information (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($) shares $ / shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock Issuable per Restricted Stock Unit | shares	1
Stock-based compensation	$ 174,863	$ 177,289	$ 115,149
Total unrecognized compensation cost	$ 201,500
Weighted average remaining recognition period, in months	17 months
Common stock were available for grant under the 2000 plan | shares	2,800,000
Common stock were reserved for issuance | shares	2,800,000
ESPP maximum contribution percentage	10.00%
ESPP maximum contribution amount by employee	$ 25,000
ESPP purchase price as a % of stock price	85.00%
Vesting period	1 year
Shares withheld for tax withholding obligation | shares	600,000	500,000	500,000
Payments of withholding taxes in connection with vesting of stock-based awards	$ 68,991	$ 52,957	$ 33,740
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 6,400	$ 7,300	$ 5,800
Restricted Shares and Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per share | $ / shares	$ 114.31	$ 111.48	$ 77.57
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per share | $ / shares	136.43
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per share | $ / shares	$ 114.31
Payments of withholding taxes in connection with vesting of stock-based awards	$ 69,000	$ 53,100	$ 33,700

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Equity Incentive Plans - Schedule of Classification of Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 174,863	$ 177,289	$ 115,149
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	49,467	53,712	37,351
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	41,944	34,272	27,005
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	60,677	70,042	36,824
License | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	272	100	47
Support and cloud services | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	11,022	9,900	6,910
Professional services | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 11,481	$ 9,263	$ 7,012

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Equity Incentive Plans - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Shares
Balance of outstanding restricted stock units, beginning, Shares | shares	3,217
Granted, shares | shares	1,659
Vested, Shares | shares	(1,736)
Forfeited or not earned, Shares | shares	(386)
Balance of outstanding restricted stock units, ending, Shares | shares	2,754
Weighted- Average Grant Date Fair Value
Balance of outstanding restricted stock units, beginning (in USD per share) | $ / shares	$ 92.46
Granted (in USD per share) | $ / shares	114.31
Vested (in USD per share) | $ / shares	92.70
Forfeited or not earned (in USD per share) | $ / shares	100.05
Balance of outstanding restricted stock units, ending (in USD per share) | $ / shares	$ 105.07
Intrinsic value [Abstract]
Aggregate Intrinsic Value, Ending Balance of outstanding restricted stock | $	$ 288,068

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Equity Incentive Plans - Schedule of Restricted Stock Unit Activity (Parenthetical) (Details)	Nov. 30, 2021 shares
Prior Period TSR Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	37
Prior Period Performance-based Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	87

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Equity Incentive Plans - Schedule of Number of RSU Awards Granted by Award Type (Details) shares in Thousands	12 Months Ended
	Sep. 30, 2022 shares
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	106	[1]
Service-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	1,353	[2]
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	76	[3]

[1] The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2022, November 15, 2023, and November 15, 2024, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (up to a maximum aggregate of 152 RSUs).

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

[3] The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the measurement period ending on September 30, 2024. The RSUs earned will vest on November 15, 2024. Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 RSUs) may vest. If the return to PTC shareholders is negative for the period but still meets or exceeds the peer group indexed return, a maximum of 100% of the rTSR RSUs may vest.

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Equity Incentive Plans - Schedule of Restricted Stock Unit Grants for the Period (Parenthetical) (Details) shares in Thousands	12 Months Ended
	Sep. 30, 2022 Installment shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Granted, shares	106	[1]
Number of equal annual installments | Installment	3
Performance-Based Restricted Stock Units | Maximum | Catch-Up Provision
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	152
Performance-Based Restricted Stock Units | Maximum Two Times | Maximum | Catch-Up Provision
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of RSUs	two times
Service-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	1,353	[2]
Number of equal annual installments | Installment	3
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	76	[3]
TSR Units | Maximum | Catch-Up Provision
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	152
Percentage of number of RSUs	100.00%
TSR Units | Maximum Two Times | Maximum | Catch-Up Provision
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of RSUs	two times

[1] The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2022, November 15, 2023, and November 15, 2024, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (up to a maximum aggregate of 152 RSUs).

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

[3] The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the measurement period ending on September 30, 2024. The RSUs earned will vest on November 15, 2024. Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 RSUs) may vest. If the return to PTC shareholders is negative for the period but still meets or exceeds the peer group indexed return, a maximum of 100% of the rTSR RSUs may vest.

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Equity Incentive Plans - Schedule of Valuation Assumptions (Details)	12 Months Ended
	Sep. 30, 2022
Volatility Assumptions [Abstract]
Average volatility of peer group	34.67%
Risk-free interest rate	0.81%
Dividend yield	0.00%

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Equity Incentive Plans - Schedule of Total Fair Value of RSUs Vested (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Share-Based Payment Arrangement, Recognized Amount [Abstract]
Total fair value of restricted stock unit awards at vest	$ 199,738	$ 171,316	$ 103,265

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Employee Benefit Plan - Additional Information (Details) - Savings Plan - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined contribution plan, percentage of employee's contributions matched by employer	50.00%
Defined contribution plan, percentage of employer contribution on employee's earnings	3.00%
Matching contributions by employer	$ 7.8	$ 7.8	$ 6.7

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Pension Plans - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Weighted average interest crediting rate used in only cash balance pension plan		4.10%
Defined benefit plan, plan assets, increase (decrease) for actual return (loss)		$ 2,300	$ 7,400	$ (3,000)
Defined benefit plan, plan assets, contributions by employer		$ 3,000	$ 3,000	$ 2,600
Minimum
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plans, vesting period		1 year
Maximum
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plans, vesting period		5 years
Forecast
Defined Benefit Plan Disclosure [Line Items]
Net periodic pension income	$ 400
Defined benefit plan, plan assets, contributions by employer	3,100
Defined benefit plan, plan assets, contributions by employer, directly to plans	$ 600
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30, Rate of return on plan assets		5.00%	5.00%	5.40%
Net periodic pension income		$ (807)	$ 2,310	$ 1,924
Defined benefit plan, plan assets, increase (decrease) for actual return (loss)		2,348	7,383
Defined benefit plan, plan assets, contributions by employer		$ 3,007	$ 3,049
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate		3.70%	1.00%	1.10%
Pension Plan | Minimum
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate			1.00%
Pension Plan | Maximum
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate		3.70%
Pension Plan | Foreign Plan
Defined Benefit Plan Disclosure [Line Items]
Current asset allocation target for fixed income securities		100.00%

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Pension Plans - Accounting For The Pension Plans (Details) - Pension Plan	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Weighted average assumptions used to determine benefit obligations at September 30 measurement date, Discount rate	3.70%	1.00%	1.10%
Weighted average assumptions used to determine benefit obligations at September 30 measurement date, Rate of increase in future compensation	3.60%	2.80%	2.80%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30, Discount rate	1.00%	1.10%	0.90%
Weighted average assumptions used to determine net periodic pension costs for fiscals years ended September 30, Rate of increase of future compensation	2.80%	2.80%	2.80%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30, Rate of return on plan assets	5.00%	5.00%	5.40%

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Pension Plans - Components of Net Periodic Pension Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Amortization Of Acquired Intangible Assets Excluding Purchased Software	Amortization Of Acquired Intangible Assets Excluding Purchased Software	Amortization Of Acquired Intangible Assets Excluding Purchased Software
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring Costs and Asset Impairment Charges	Restructuring Costs and Asset Impairment Charges	Restructuring Costs and Asset Impairment Charges
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Interest cost of projected benefit obligation	$ 550	$ 692	$ 527
Service cost	1,016	1,127	1,426
Expected return on plan assets	(3,712)	(3,643)	(3,878)
Amortization of prior service cost	(4)	(5)	(5)
Recognized actuarial loss	1,425	4,139	3,854
Settlement gain	(82)	0	0
Net periodic pension (benefit) cost	$ (807)	$ 2,310	$ 1,924

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Pension Plans - Change in Benefit Obligation And Plan Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Plan assets at fair value, beginning of year	$ 78,385
Actual return on plan assets	2,300	$ 7,400	$ (3,000)
Employer contributions	3,000	3,000	2,600
Plan assets at fair value—end of year	67,581	78,385
Unrecognized actuarial loss	5,400	(30,200)
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation, beginning of year	96,512	97,832
Service cost	1,016	1,127	1,426
Interest cost	550	692	527
Actuarial loss (gain)	(22,616)	1,100
Foreign exchange impact	(12,949)	(1,562)
Participant contributions	96	109
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Benefits paid	(2,343)	(2,786)
Divestiture of business	1,184	0
Settlements	(953)	0
Projected benefit obligation, end of year	58,129	96,512	97,832
Plan assets at fair value, beginning of year	78,385	72,063
Actual return on plan assets	2,348	7,383
Employer contributions	3,007	3,049
Participant contributions	96	109
Foreign exchange impact	(12,959)	(1,433)
Settlements	(953)	0
Benefits paid	(2,343)	(2,786)
Plan assets at fair value—end of year	67,581	78,385	$ 72,063
Accumulated benefit obligation, end of year	57,310	95,090
Non-current asset	19,234	855
Non-current liability	(9,434)	(18,615)
Current liability	(348)	(367)
Unrecognized actuarial loss	5,408	30,213
Pension Plan | Underfunded Plan
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Defined Benefit Plan, Underfunded or Overfunded Status	(9,782)	(18,982)
Pension Plan | Overfunded Plan
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Defined Benefit Plan, Underfunded or Overfunded Status	$ 19,234	$ 855

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Pension Plans - Change in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
AOCI Attributable to Parent, Before Tax [Roll Forward]
Beginning balance	$ 2,038,468	$ 1,438,248
Ending balance	2,296,034	2,038,468
Pension Plan
AOCI Attributable to Parent, Before Tax [Roll Forward]
Beginning balance	30,213	37,175
Recognized during year - net actuarial losses	(1,421)	(4,135)
Occurring during year - settlement gain	82	0
Occurring during year - net actuarial losses	(21,253)	(2,640)
Foreign exchange impact	(2,213)	(187)
Ending balance	$ 5,408	$ 30,213

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Pension Plans - Percentage of Total Plan Assets (Details) - Pension Plan	Sep. 30, 2022	Sep. 30, 2021
Defined Benefit Plan Disclosure [Line Items]
Asset Category	100.00%	100.00%
Equity Securities
Defined Benefit Plan Disclosure [Line Items]
Asset Category	33.00%	35.00%
Fixed Income Securities
Defined Benefit Plan Disclosure [Line Items]
Asset Category	33.00%	34.00%
Commodity Option
Defined Benefit Plan Disclosure [Line Items]
Asset Category	1.00%	11.00%
Insurance Company
Defined Benefit Plan Disclosure [Line Items]
Asset Category	10.00%	12.00%
Options
Defined Benefit Plan Disclosure [Line Items]
Asset Category	2.00%	1.00%
Cash
Defined Benefit Plan Disclosure [Line Items]
Asset Category	21.00%	7.00%

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Pension Plans - Expected Future Benefit Payments (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Retirement Benefits [Abstract]
2023	$ 3,410
2024	4,068
2025	3,793
2026	3,830
2027	4,216
2028 to 2032	$ 20,680

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Pension Plans - Fair Value of Plan Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	$ 67,581	$ 78,385
Government
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	20,430	24,013
Corporate Investment Grade
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	2,038	2,924
Large Capitalization Stocks
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	22,379	27,078
Commodity Option
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	599	8,558
Insurance Company Funds
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	6,823	9,105
Options
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	1,430	1,122
Cash
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	13,882	5,585
Level 1
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	60,758	69,280
Level 1 | Government
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	20,430	24,013
Level 1 | Corporate Investment Grade
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	2,038	2,924
Level 1 | Large Capitalization Stocks
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	22,379	27,078
Level 1 | Commodity Option
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	599	8,558
Level 1 | Options
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	1,430	1,122
Level 1 | Cash
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	13,882	5,585
Level 2
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	6,823	9,105
Level 2 | Insurance Company Funds
Fair Value of Plan Assets [Line Items]
Fair value of plan assets	$ 6,823	$ 9,105

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Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Financial assets:
Cash equivalents	$ 102,313	$ 114,375
Convertible note	2,000	2,000
Equity securities		77,540
Forward contracts	$ 9,058	$ 5,363
Derivative Asset Statement of Financial Position Extensible Enumeration	Other assets	Other assets
Financial assets, fair value	$ 113,371	$ 199,278
Financial liabilities:
Forward contracts	2,908	3,318
Financial liabilities, fair value	$ 2,908	$ 3,318
Derivative Liability Statement Of Financial Position Extensible Enumeration	Other liabilities	Other liabilities
Level 1
Financial assets:
Cash equivalents	$ 102,313	$ 114,375
Convertible note	0	0
Equity securities		0
Forward contracts	0	0
Financial assets, fair value	102,313	114,375
Financial liabilities:
Forward contracts	0	0
Financial liabilities, fair value	0	0
Level 2
Financial assets:
Cash equivalents	0	0
Convertible note	0	0
Equity securities		0
Forward contracts	9,058	5,363
Financial assets, fair value	9,058	5,363
Financial liabilities:
Forward contracts	2,908	3,318
Financial liabilities, fair value	2,908	3,318
Level 3
Financial assets:
Cash equivalents	0	0
Convertible note	2,000	2,000
Equity securities		77,540
Forward contracts	0	0
Financial assets, fair value	2,000	79,540
Financial liabilities:
Forward contracts	0	0
Financial liabilities, fair value	$ 0	$ 0

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Fair Value Measurements - Additional Information (Details) - USD ($)	1 Months Ended		12 Months Ended
	Feb. 28, 2022	Jan. 31, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-marketable equity investments			$ 1,000,000.0	$ 2,200,000
Cash received from sale of non-marketable equity investments			$ 4,200,000
Share price per share			$ 0.01	$ 0.01
Net income (loss)			$ (313,081,000)	$ (476,923,000)	$ (130,695,000)
Aggregate realized gain			3,000,000.0
Non Marketable Equity Investment Member
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Original investment			1,200,000
Matterport, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Original investment				8,700,000
Aggregate realized gain			34,000,000.0
Equity Securities | Matterport, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value of remaining shares held for sale	$ 3,600,000	$ 39,100,000
Share price per share	$ 7.6	$ 9.1
Net income (loss)			(34,800,000)
Original investment			8,700,000
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount invested in non-marketable convertible note				$ 2,000,000.0
Changes in fair value			$ 0

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Fair Value Measurements - Schedule of Changes in Fair Value of Level 3 Investment (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized loss	$ (38,468)
Matterport, Inc. | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance, October 1, 2021	77,540
Sale of investment	(39,072)
Balance, September 30, 2022	$ 0

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Marketable Securities - Additional Information (Details) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2020	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Marketable Securities [Abstract]
Marketable securities held			$ 0
Proceeds from sale of marketable securities	$ 56,200,000	$ 56,200,000	$ 0	$ 56,170,000	$ 1,521,000

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Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	$ 483,178	$ 563,921
Canadian / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	2,731	4,894
Euro / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	316,869	387,466
Euro / U.S. Dollar | Designated as Hedging Instrument | Foreign Exchange Forward | Net Investment Hedging
Derivative [Line Items]
Notional amount	110,466	128,103
British Pound / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	7,368	23,141
Israeli Shekel / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	12,052	10,475
Japanese Yen / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	25,566	46,450
Swiss Franc / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	25,559	18,039
Swedish Krona / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	35,713	34,196
Singapore Dollar / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	3,637	3,498
Chinese Renminbi / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	23,965	23,297
New Taiwan Dollar / U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	13,906	3,369
Russian Ruble/ U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	0	2,614
Korean Won/ U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	4,919	0
Danish Krone/ U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	3,192	2,380
Australian Dollar/ U.S. Dollar | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	3,269	2,086
All other | Not Designated as Hedging Instrument | Foreign Exchange Forward Contract and Options
Derivative [Line Items]
Notional amount	$ 4,432	$ 2,016

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Derivative Financial Instruments - Schedule of Derivative Instruments and Hedging Activities Disclosures (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Derivative Instruments Gain Loss [Line Items]
Derivative, Excluded Component, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Nonoperating Income (Expense)	Nonoperating Income (Expense)	Nonoperating Income (Expense)
Foreign Exchange Forward Contract and Options | Not Designated as Hedging Instrument | Other income, net
Derivative Instruments Gain Loss [Line Items]
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	$ 11,950	$ (3,758)	$ 3,518
Foreign Exchange Forward | Designated as Hedging Instrument | Net Investment Hedging
Derivative Instruments Gain Loss [Line Items]
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	(1,478)	695	(5,483)
Gain (loss) reclassified from OCI—effective portion	(17,466)	2,723	109
Gain recognized—portion excluded from effectiveness testing	$ 1,862	$ 1,249	$ 3,506

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Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Derivative [Line Items]
Net losses on foreign currency exposures	$ 0.9	$ 8.0	$ 1.7
Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)	$ (16.4)	$ 4.9	$ 7.0
Forward Contracts | Maximum | Designated as Hedging Instrument | Net Investment Hedging
Derivative [Line Items]
Derivative, remaining maturity	3 months

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Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Details) - Foreign Exchange Forward - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Designated as Hedging Instrument
Derivative [Line Items]
Gross Amount of Recognized Assets	$ 0	$ 0
Gross Amount of Recognized Liabilities	1,960	1,641
Not Designated as Hedging Instrument
Derivative [Line Items]
Fair Value of Derivatives Not Designated As Hedging Instruments	2,908	3,318
Fair Value of Derivatives Not Designated As Hedging Instruments	$ 7,098	$ 3,722

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Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Parentheticals) (Details) - Forward Contracts - USD ($) $ in Millions	Sep. 30, 2022	Sep. 30, 2021
Other Current Assets
Derivative [Line Items]
Gross Amount of Recognized Assets	$ 9.1	$ 5.4
Other Current Liabilities
Derivative [Line Items]
Gross Amount of Recognized Liabilities	$ 2.9	$ 3.3

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Derivative Financial Instruments - Schedule of Offsetting Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Derivative [Line Items]
Net Amounts of Assets Presented in the Consolidated Balance Sheets	$ 9,058	$ 5,363
Foreign Currency Forwards
Derivative [Line Items]
Gross Amount of Recognized Assets	9,058
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Assets Presented in the Consolidated Balance Sheets	9,058
Gross Amounts Not Offset in the Consolidated Balance Sheets	(2,908)
Gross Amounts Not Offset in the Consolidated Balance Sheets	0
Net Amount	$ 6,150

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Derivative Financial Instruments - Schedule of Offsetting Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Derivative [Line Items]
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	$ 2,908	$ 3,318
Foreign Currency Forwards
Derivative [Line Items]
Gross Amount of Recognized Liabilities	2,908
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	2,908
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	(2,908)
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Pledged	0
Net Amount	$ 0

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Segment and Geographic Information - Additional Information (Details)	12 Months Ended
	Sep. 30, 2022 Segment Product_area
Segment Reporting [Abstract]
Number of operating segments	2
Number of reportable segments	2
Number of product areas | Product_area	3

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Segment and Geographic Information - Summary of Revenue and Profit Attributable to Our Operating Segments (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
Operating costs	385,980	371,102	334,271
Gross margin	1,547,367	1,436,057	1,124,144
Sales and marketing	485,247	517,779	435,451
General and administrative	204,732	206,006	159,826
Intangibles amortization	60,548	59,165	56,104
Restructuring and other charges, net	36,234	2,211	32,716
Total operating income	447,362	380,748	210,863
Interest expense	(54,268)	(50,478)	(76,428)
Other income, net	4,004	61,485	271
Income before income taxes	397,098	391,755	134,706
Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	1,933,347	1,807,159	1,458,415
Operating costs	634,505	587,715	522,481
Gross margin	1,298,842	1,219,444	935,934
Operating Segments | Software Products
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	1,770,253	1,649,341	1,314,617
Operating costs	494,035	451,734	393,803
Gross margin	1,276,218	1,197,607	920,814
Operating Segments | Professional Services
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	163,094	157,818	143,798
Operating costs	140,470	135,981	128,678
Gross margin	22,624	21,837	15,120
Unallocated
Segment Reporting Revenue Reconciling Item [Line Items]
Sales and marketing	435,780	464,067	398,100
General and administrative	130,870	120,954	114,386
Intangibles amortization	60,548	59,165	56,104
Restructuring and other charges, net	36,234	2,211	32,716
Stock-based compensation	174,863	177,289	115,149
Other unallocated operating expenses	$ 13,185	$ 15,010	$ 8,616

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Segment and Geographic Information - Summary of Revenue and Profit Attributable to Our Operating Segments (Parenthetical) (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Revenue Reconciling Item [Line Items]
Depreciation and amortization	$ 87,694	$ 85,239	$ 80,817
Unallocated
Segment Reporting Revenue Reconciling Item [Line Items]
Depreciation and amortization	21,400	21,000	19,400
Software Products | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Depreciation and amortization	4,900	4,000	4,200
Professional Services | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Depreciation and amortization	$ 900	$ 1,100	$ 1,100

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Segment and Geographic Information - Revenue By Product Segment (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Total revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
Operating Segments
Total revenue	1,933,347	1,807,159	1,458,415
Digital Thread Core Group | Operating Segments
Total revenue	1,318,857	1,257,817	1,025,709
Digital Thread Growth Group | Operating Segments
Total revenue	279,566	273,949	215,353
Digital Thread FSG Group | Operating Segments
Total revenue	251,621	233,268	210,101
Digital Thread Group | Operating Segments
Total revenue	1,850,044	1,765,034	1,451,163
Velocity Group | Operating Segments
Total revenue	83,303	42,125	7,252
Product lifecycle management (PLM) | Operating Segments
Total revenue	1,137,016	1,012,120	807,016
Computer-aided design (CAD) | Operating Segments
Total revenue	$ 796,331	$ 795,039	$ 651,399

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Segment and Geographic Information - Revenue By Geographic Segment (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	1,933,347	1,807,159	1,458,415
Americas | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	895,095	766,021	649,383
Europe | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	714,216	722,977	543,779
Asia Pacific | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	$ 324,036	$ 318,161	$ 265,253

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Segment and Geographic Information - Revenue By Geographic Segment (Parenthetical) (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Total revenue	$ 1,933,347	$ 1,807,159	$ 1,458,415
United States
Total revenue	864,700	741,300	621,800
Germany
Total revenue	$ 318,500	$ 290,700	$ 198,700

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Leases - Additional Information (Details)	12 Months Ended
	Sep. 30, 2022 USD ($) ft²	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Feb. 28, 2019 USD ($)
Lessee Lease Description [Line Items]
Boston Lease Square Feet | ft²	250,000
Boston lease year one payments	$ 11,000,000.0
Boston lease per square foot annual increase	1
Boston lease annual increase	300,000
Boston lease building operating cost amount estimate year one	7,100,000
Boston lease leasehold improvement allowance	25,000,000
Boston lease leasehold improvement allowance per square foot	100
Future lease payments	11,600,000
Operating right-of-use lease assets	137,780,000		$ 152,337,000
Operating lease, liability	189,575,000
Payments to be received as sublease income		$ 2,900,000		$ 9,100,000
Lease Cost
Operating cash flows from operating leases	$ 38,709,000
Minimum
Lessee Lease Description [Line Items]
Leases not yet commenced, Term of contract	10 years
Facility Closures and Related Costs
Lessee Lease Description [Line Items]
Operating lease liability, net. restructured facilities	$ 300,000		$ 3,600,000
Lease Cost
Operating cash flows from operating leases	2,000,000.0
Facility Closures and Related Costs | Prior Headquarters
Lessee Lease Description [Line Items]
Operating lease, impairment loss	1,300,000
Sublease Income Committed
Lessee Lease Description [Line Items]
Sublease income assumed	0
Sublease Income Estimated Uncommitted
Lessee Lease Description [Line Items]
Sublease income assumed	$ 0

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Leases - Components of Lease Cost (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($)
Lease Cost
Operating lease cost	$ 34,346
Short-term lease cost	2,653
Variable lease cost	10,095
Sublease income	(4,600)
Total lease cost	$ 42,494

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Leases - Schedule of Supplemental Cash Flow and Right of Use Assets Information (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($)
Leases [Abstract]
Operating cash flows from operating leases	$ 38,709
Financing cash flows from operating leases	297
Operating leases	15,431
Financing leases	$ 0

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Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details)	Sep. 30, 2022
Leases [Abstract]
Weighted-average remaining lease term - operating leases	11 years 9 months 18 days
Weighted-average remaining lease term - financing leases	2 years
Weighted-average discount rate - operating leases	5.40%
Weighted-average discount rate - financing leases	3.00%

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Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
2022	$ 31,612
2023	26,907
2024	23,495
2025	19,487
2026	16,662
Thereafter	143,236
Total future lease payments	261,399
Less: imputed interest	(71,824)
Total	$ 189,575

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Subsequent Events (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2022 USD ($) Installment	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Subsequent Event [Line Items]
Vesting period	1 year
Restructuring Charges | $	$ (32,410)	$ (2,136)	$ (26,427)
Payments for restructuring | $	$ 40,800	$ 6,681	$ 31,502
Service-Based Restricted Stock Units
Subsequent Event [Line Items]
Number of equal annual installments | Installment	3
Performance-Based Restricted Stock Units
Subsequent Event [Line Items]
Number of equal annual installments | Installment	3
Vesting period	3 years