10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 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(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	PTC	NASDAQ Global Select Market

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☑	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 116,975,944 shares of our common stock outstanding on May 4, 2022.

PTC Inc.

INDEX TO FORM 10-Q

For the Quarter Ended March 31, 2022

		Page Number
Part I—FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements:	1
	Consolidated Balance Sheets as of March 31, 2022 and September 30, 2021	1
	Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021	2
	Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2022 and March 31, 2021	3
	Consolidated Statements of Cash Flows for the six months ended March 31, 2022 and March 31, 2021	4
	Consolidated Statements of Stockholders' Equity for the three and six months ended March 31, 2022 and March 31, 2021	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	38
Part II—OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities	39
Item 6.	Exhibits	40
Signature		41

PART I—FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PTC Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	March 31, 2022			September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	306,701		$	326,532
Accounts receivable, net of allowance for doubtful accounts of $733 and $304 at March 31, 2022 and September 30, 2021, respectively		510,196			541,072
Prepaid expenses		88,918			69,991
Other current assets		61,147			135,415
Total current assets		966,962			1,073,010
Property and equipment, net		92,897			100,237
Goodwill		2,186,156			2,191,887
Acquired intangible assets, net		355,360			378,967
Deferred tax assets		299,381			297,789
Operating right-of-use lease assets		149,801			152,337
Other assets		327,966			313,333
Total assets	$	4,378,523		$	4,507,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,741		$	33,381
Accrued expenses and other current liabilities		102,116			113,067
Accrued compensation and benefits		99,162			117,784
Accrued income taxes		15,054			5,055
Deferred revenue		516,933			482,131
Short-term lease obligations		25,375			27,864
Total current liabilities		782,381			779,282
Long-term debt		1,265,546			1,439,471
Deferred tax liabilities		4,163			4,165
Deferred revenue		17,748			15,546
Long-term lease obligations		178,615			180,935
Other liabilities		46,093			49,693
Total liabilities		2,294,546			2,469,092
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued		—			—
Common stock, $0.01 par value; 500,000 shares authorized; 116,976 and 117,163 shares issued and outstanding at March 31, 2022 and September 30, 2021, respectively		1,170			1,172
Additional paid-in capital		1,637,631			1,718,504
Retained earnings		550,424			414,656
Accumulated other comprehensive loss		(105,248	)		(95,864	)
Total stockholders’ equity		2,083,977			2,038,468
Total liabilities and stockholders’ equity	$	4,378,523		$	4,507,560

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

1

PTC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Revenue:
License	$	218,375		$	198,011		$	387,483		$	375,186
Support and cloud services		243,875			223,756			488,360			440,002
Total software revenue		462,250			421,767			875,843			815,188
Professional services		42,977			40,018			87,105			75,648
Total revenue		505,227			461,785			962,948			890,836
Cost of revenue:
Cost of license revenue		11,936			14,160			21,730			27,416
Cost of support and cloud services revenue		44,768			39,972			90,653			78,314
Total cost of software revenue		56,704			54,132			112,383			105,730
Cost of professional services revenue		36,633			35,316			76,072			70,548
Total cost of revenue		93,337			89,448			188,455			176,278
Gross margin		411,890			372,337			774,493			714,558
Operating expenses:
Sales and marketing		116,408			129,178			241,884			253,903
Research and development		81,935			72,545			162,469			143,380
General and administrative		47,469			60,805			99,409			110,333
Amortization of acquired intangible assets		8,450			7,650			16,934			14,197
Restructuring and other charges, net		(1,562	)		469			32,429			716
Total operating expenses		252,700			270,647			553,125			522,529
Operating income		159,190			101,690			221,368			192,029
Interest and debt premium expense		(12,239	)		(12,925	)		(25,225	)		(24,444	)
Other expense, net		(43,385	)		(2,408	)		(37,201	)		(3,821	)
Income before income taxes		103,566			86,357			158,942			163,764
Provision(benefit) for income taxes		13,887			(22,905	)		23,174			30,987
Net income	$	89,679		$	109,262		$	135,768		$	132,777
Earnings per share—Basic	$	0.77		$	0.94		$	1.16		$	1.14
Earnings per share—Diluted	$	0.76		$	0.92		$	1.15		$	1.13
Weighted-average shares outstanding—Basic		117,008			116,777			117,135			116,587
Weighted-average shares outstanding—Diluted		117,811			118,331			118,162			117,966

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

2

PTC Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Net income	$	89,679		$	109,262		$	135,768		$	132,777
Other comprehensive income (loss), net of tax:
Hedge gain arising during the period, net of tax of $1.2 million and $0 million in the second quarter of 2022 and 2021, respectively, and $2 million and $0 million in the first six months of 2022 and 2021, respectively		3,697			7,017			6,192			238
Foreign currency translation adjustment, net of tax of $0 for each period		(11,356	)		(15,851	)		(17,024	)		4,124
Unrealized loss on marketable securities, net of tax of $0 for each period		—			—			—			(307	)
Amortization of net actuarial pension loss included in net income, net of tax of $0.1 million and $0.3 million in the second quarter of 2022 and 2021, respectively, and $0.2 million and $0.6 million in the first six months of 2022 and 2021, respectively		260			744			525			1,476
Change in unamortized pension gain (loss) during the period related to changes in foreign currency		538			1,018			923			(94	)
Other comprehensive income (loss)		(6,861	)		(7,072	)		(9,384	)		5,437
Comprehensive income	$	82,818		$	102,190		$	126,384		$	138,214

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

3

PTC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended
	March 31, 2022			March 31, 2021
Cash flows from operating activities:
Net income	$	135,768		$	132,777
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		43,468			40,169
Amortization of right-of-use lease assets		17,536			18,956
Stock-based compensation		83,863			90,828
Loss on investment		34,847			—
Other non-cash items, net		(110	)		(720	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable		12,310			(9,854	)
Accounts payable and accrued expenses		(23,388	)		6,142
Accrued compensation and benefits		(16,544	)		(7,038	)
Deferred revenue		47,012			52,210
Accrued income taxes		(6,279	)		(4,944	)
Other current assets and prepaid expenses		(20,569	)		(17,049	)
Operating lease liabilities		(3,360	)		(9,982	)
Other noncurrent assets and liabilities		(24,493	)		(56,041	)
Net cash provided by operating activities		280,061			235,454
Cash flows from investing activities:
Additions to property and equipment		(5,510	)		(8,242	)
Purchases of short- and long-term marketable securities		—			(7,562	)
Proceeds from sales of short- and long-term marketable securities		—			56,170
Proceeds from maturities of short- and long-term marketable securities		—			9,861
Acquisitions of businesses, net of cash acquired		—			(717,198	)
Proceeds from sale of investments		42,693			—
Purchases of investments		—			(1,000	)
Purchase of intangible assets		(4,454	)		(550	)
Settlement of net investment hedges		11,308			(1,803	)
Net cash provided by (used in) investing activities		44,037			(670,324	)
Cash flows from financing activities:
Borrowings under credit facility		—			600,000
Repayments of borrowings under credit facility		(175,000	)		(98,000	)
Repurchases of common stock		(125,000	)		—
Proceeds from issuance of common stock		10,857			10,484
Payments of withholding taxes in connection with stock-based awards		(50,595	)		(27,242	)
Payments of principal for financing leases		(239	)		(279	)
Net cash (used in) provided by financing activities		(339,977	)		484,963
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3,739	)		543
Net change in cash, cash equivalents, and restricted cash		(19,618	)		50,636
Cash, cash equivalents, and restricted cash, beginning of period		327,046			275,960
Cash, cash equivalents, and restricted cash, end of period	$	307,428		$	326,596

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

4

PTC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Three months ended March 31, 2022
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of December 31, 2021		116,870		$	1,169		$	1,590,285		$	460,745	$	(98,387	)	$	1,953,812
Common stock issued for employee stock-based awards		51			1			(1	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(12	)		—			(1,430	)		—		—			(1,430	)
Common stock issued for employee stock purchase plan		110			1			10,856			—		—			10,857
Compensation expense from stock-based awards		—			—			37,921			—		—			37,921
Repurchases of common stock		(43	)		(1	)		—			—		—			(1	)
Net income		—			—			—			89,679		—			89,679
Unrealized gain on net investment hedges, net of tax		—			—			—			—		3,697			3,697
Foreign currency translation adjustment		—			—			—			—		(11,356	)		(11,356	)
Change in pension benefits, net of tax		—			—			—			—		798			798
Balance as of March 31, 2022		116,976		$	1,170		$	1,637,631		$	550,424	$	(105,248	)	$	2,083,977

	Six months ended March 31, 2022
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
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		1,171			12			(12	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(422	)		(4	)		(50,591	)		—		—			(50,595	)
Common stock issued for employee stock purchase plan		110			1			10,856			—		—			10,857
Compensation expense from stock-based awards		—			—			83,863			—		—			83,863
Repurchases of common stock		(1,046	)		(11	)		(124,989	)		—		—			(125,000	)
Net income		—			—			—			135,768		—			135,768
Unrealized gain on net investment hedges, net of tax		—			—			—			—		6,192			6,192
Foreign currency translation adjustment		—			—			—			—		(17,024	)		(17,024	)
Change in pension benefits, net of tax		—			—			—			—		1,448			1,448
Balance as of March 31, 2022		116,976		$	1,170		$	1,637,631		$	550,424	$	(105,248	)	$	2,083,977

5

	Three months ended March 31, 2021
	Common Stock								Retained Earnings			Accumulated
	Shares			Amount		Additional Paid-In Capital			(Accumulated Deficit)			Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of December 31, 2020		116,664		$	1,167	$	1,623,379		$	(38,752	)	$	(90,865	)	$	1,494,929
Common stock issued for employee stock-based awards		60			1		(1	)		—			—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(13	)		—		(1,810	)		—			—			(1,810	)
Common stock issued for employee stock purchase plan		144			1		10,483			—			—			10,484
Compensation expense from stock-based awards		—			—		44,740			—			—			44,740
Net income		—			—		—			109,262			—			109,262
Unrealized gain on net investment hedges, net of tax		—			—		—			—			7,017			7,017
Foreign currency translation adjustment		—			—		—			—			(15,851	)		(15,851	)
Change in pension benefits, net of tax		—			—		—			—			1,762			1,762
Balance as of March 31, 2021		116,855		$	1,169	$	1,676,791		$	70,510		$	(97,937	)	$	1,650,533

	Six months ended March 31, 2021
	Common Stock									Retained Earnings			Accumulated
	Shares			Amount			Additional Paid-In Capital			(Accumulated Deficit)			Other Comprehensive Loss			Total Stockholders’ Equity
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		862			9			(9	)		—			—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(276	)		(2	)		(27,239	)		—			—			(27,241	)
Common stock issued for employee stock purchase plan		144			1			10,483			—			—			10,484
Compensation expense from stock-based awards		—			—			90,828			—			—			90,828
Net income		—			—			—			132,777			—			132,777
Unrealized gain on net investment hedges, net of tax		—			—			—			—			238			238
Foreign currency translation adjustment		—			—			—			—			4,124			4,124
Unrealized loss on available-for-sale securities, net of tax		—			—			—			—			(307	)		(307	)
Change in pension benefits, net of tax		—			—			—			—			1,382			1,382
Balance as of March 31, 2021		116,855		$	1,169		$	1,676,791		$	70,510		$	(97,937	)	$	1,650,533

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

6

PTC Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. The September 30, 2021 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

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

Risks and Uncertainties - COVID-19 Pandemic

The COVID-19 pandemic that began in early 2020 continues to significantly affect global economic activity and create macroeconomic uncertainty.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of the COVID-19 pandemic as of March 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for doubtful accounts, stock-based compensation, the carrying value of our goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While our assessment did not result in a material impact to our consolidated financial statements as of and for the quarter ended March 31, 2022, our future assessment could result in material impacts to our consolidated financial statements in future reporting periods.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued Accounting Standards Update 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 this first quarter of 2022 ending December 31, 2021 and did not have a material impact on our consolidated financial statements.

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.

7

Business Combinations

In October 2021, the FASB issued Accounting Standards Update 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.  ASU 2021-08 will be effective for us in the first quarter of 2024, though we anticipate adopting the standard during 2022. We are currently evaluating the impact the standard will have on our consolidated financial statements, but at this time we do not expect it to be material based on contract assets and liabilities expected to be acquired.

2. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

(in thousands)	March 31, 2022		September 30, 2021
Contract asset	$	16,162	$	12,934
Deferred revenue	$	534,681	$	497,677

As of March 31, 2022, $11.5 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 long-term assets and expected to be transferred within the next 24 months. Approximately $6.8 million of the September 30, 2021 contract asset balance was transferred to receivables during the six months ended March 31, 2022 as a result of the right to payment becoming unconditional. Additions to contract assets of approximately $10.1 million related to revenue recognized in the period, net of billings. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. There were no impairments of contract assets during the six months ended March 31, 2022.

During the six months ended March 31, 2022, we recognized $357.9 million of revenue that was included in deferred revenue as of September 30, 2021 and there were additional deferrals of $394.9 million, primarily related to new billings. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of March 31, 2022 was $726.9 million, compared to total short- and long-term receivables as of September 30, 2021 of $744.6 million.

Our multi-year, non-cancellable on-premise subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of March 31, 2022 and September 30, 2021, the total refund liability was $36.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premise subscription software.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. 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 $0.7 million as of March 31, 2022 and $0.3 million as of September 30, 2021. Uncollectible trade accounts receivable written-off and bad debt expense were immaterial in the three and six months ended March 31, 2022.

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 are primarily related to commissions. As of March 31, 2022 and September 30, 2021, deferred costs of $40.6 million and $40.2 million, respectively, are included in other current assets and $78.0 million and $81.1 million, respectively, are included in other assets (non-current). Amortization expense related to costs to obtain a contract with a customer was $12.7 million and $24.3 million in the three and six months ended March 31, 2022, respectively, and $11.0 million and $21.4 million in the three and six months ended March 31, 2021, respectively. There were no impairments of the contract cost asset in the three and six months ended March 31, 2022 and March 31, 2021.

Remaining Performance Obligations

Our contracts with customers include transaction price amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2022, the transaction price amounts include performance obligations of $534.7 million recorded in deferred revenue and $1,019.4 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 83% of the total $1,554.1 million over the next 24 months, with the remaining amount thereafter.

8

Disaggregation of Revenue

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Recurring revenue(1)	$	452,710	$	414,845	$	857,835	$	799,803
Perpetual license		9,540		6,922		18,008		15,385
Professional services		42,977		40,018		87,105		75,648
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

(1)   Recurring revenue is comprised of subscription, perpetual support, SaaS, and cloud revenue.

For further disaggregation of revenue by geographic region and product group see Note 11. Segment and Geographic Information.

3. Restructuring and Other Charges

Restructuring and other charges, net includes restructuring charges (credits) and impairment and accretion expense charges related to the lease assets of exited facilities. Refer to Note 14. Leases for additional information about exited facilities.

In the three months ended March 31, 2022, restructuring and other charges, net totaled a credit of $1.6 million, of which $1.1 million is attributable to restructuring credits, and $0.5 million is attributable to sublease income related to exited lease facilities. We made cash payments related to restructuring charges of $17.3 million ($16.5 million related to the 2022 restructuring described below, $0.1 million related to a prior period restructuring, and $0.7 million in payments for facilities restructured in prior period).

In the six months ended March 31, 2022, restructuring and other charges, net totaled $32.4 million of which $33.1 million is attributable to restructuring charges, offset by a $0.7 million credit attributable to sublease income related to exited lease facilities. We made cash payments related to restructuring charges of $27.1 million ($25.6 million related to the 2022 restructuring described below, $0.1 million related to a prior period restructuring, and $1.4 million in payments for facilities restructured in prior periods).

In the three and six months ended March 31, 2021, restructuring and other charges, net totaled $0.5 million and $0.7 million, respectively, of which $0.2 million and $0.4 million is attributable to restructuring charges, respectively, and $0.3 million and $0.3 million is attributable to impairment and accretion expense related to exited facilities, respectively.

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-premise customers to move to the cloud. The restructuring plan resulted in credits of $0.5 million and charges of $33.6 million in the second quarter and first six months of 2022, primarily associated with the termination benefits of approximately 330 employees, in addition to the $1.7 million of professional fees recorded in the fourth quarter of 2021 in connection with the re-organization.  We are anticipating total restructuring charges for this plan to be $35 to $40 million.

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. During the six months ended March 31, 2022 and March 31, 2021, we incurred credits of $0.1 million and charges of $0.2 million respectively, in connection with this restructuring plan.

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The following table summarizes restructuring accrual activity for the six months ended March 31, 2022:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2021	$	1,981		$	3,505		$	5,486
Charges to operations, net		33,428			(377	)		33,051
Cash disbursements		(25,744	)		(1,336	)		(27,080	)
Foreign exchange impact		(354	)		—			(354	)
Accrual, March 31, 2022	$	9,311		$	1,792		$	11,103

The following table summarizes restructuring accrual activity for the six months ended March 31, 2021:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2020	$	3,992		$	5,995		$	9,987
Charges to operations, net		163			199			362
Cash disbursements		(3,924	)		(1,497	)		(5,421	)
Foreign exchange impact		31			14			45
Accrual, March 31, 2021	$	262		$	4,711		$	4,973

The accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets.

The accrual for facility closures and related costs is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

4. Stock-based Compensation

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units (RSUs) and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as our principal equity incentive awards.

The following table shows RSU activity for the six months ended March 31, 2022:

(in thousands, except grant date fair value data)	Number of RSUs			Weighted-Average Grant Date Fair Value Per RSU
Balance of outstanding restricted stock units, October 1, 2021		3,216		$	92.83
Granted(1)		1,064		$	116.70
Vested		(1,170	)	$	92.97
Forfeited or not earned		(246	)	$	97.77
Balance of outstanding restricted stock units, March 31, 2022		2,864		$	101.21

(1) Restricted stock units granted includes 37 shares from prior period TSR 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)	Six months ended March 31, 2022
Performance-based RSUs(1)		89
Service-based RSUs(2)		775
Total Shareholder Return RSUs(3)		76

(1) The performance-based RSUs were 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 (a maximum aggregate of 165 thousand 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 Total Shareholder Return RSUs (TSR 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

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number of TSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 thousand 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 TSR RSUs may vest.

The weighted-average fair value of the TSR RSUs was 136.43 per target RSU on the grant date. The fair value of the TSR RSUs was determined using a Monte Carlo simulation model.

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	—	%

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cost of license revenue	$	37	$	20	$	75	$	40
Cost of support and cloud services revenue		2,161		2,309		5,639		4,611
Cost of professional services revenue		2,066		2,177		4,522		4,289
Sales and marketing		11,446		13,305		24,527		28,304
Research and development		9,504		7,921		19,680		16,364
General and administrative		12,707		19,008		29,420		37,220
Total stock-based compensation expense	$	37,921	$	44,740	$	83,863	$	90,828

Stock-based compensation expense includes $1.3 million and $3.2 million in the second quarter and first six months of 2022, respectively, and $1.8 million and $3.8 million in the second quarter and first six months of 2021, respectively, related to our employee stock purchase plan.

5. Earnings per Share (EPS) and Common Stock

EPS

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

(in thousands, except per share data)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Net income	$	89,679	$	109,262	$	135,768	$	132,777
Weighted-average shares outstanding—Basic		117,008		116,777		117,135		116,587
Dilutive effect of restricted stock units		803		1,554		1,027		1,379
Weighted-average shares outstanding—Diluted		117,811		118,331		118,162		117,966
Earnings per share—Basic	$	0.77	$	0.94	$	1.16	$	1.14
Earnings per share—Diluted	$	0.76	$	0.92	$	1.15	$	1.13

Anti-dilutive shares for the three and six months ended March 31, 2022 and for the three and six months ended March 31, 2021 were immaterial.

Common Stock Repurchases

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. In the second quarter and first six months of 2022 we repurchased 43 thousand shares for $5.3 million and 1,046 thousand shares for $125.0 million, respectively.  We did not repurchase any shares in the second quarter and first six months of 2021. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

6. Acquisitions

Acquisition and transaction-related costs in the second quarter and first six months of 2022 totaled $3.9 million and $5.0 million, respectively, compared to $10.3 million and $14.2 million, respectively, in the second quarter and first six months of 2021. These costs are classified in general and administrative expenses in the accompanying Consolidated Statements of Operations.

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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), expenses related to acquisition integration activities (e.g., professional fees and severance), and other transactional charges include third-party costs related to structuring unusual transactions. In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition-related charges.

Our results of operations include the results of acquired or sold businesses beginning on their respective acquisition or sale date. Our results of operations for the reported periods if presented on a pro forma basis would not differ materially from our reported results.

Arena

On January 15, 2021, we acquired Arena Holdings, Inc. (“Arena”) pursuant to the 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, the material terms of which are described in the Form 8-K filed by us on December 14, 2020 and which is filed as Exhibit 1.1 to that Form 8-K. 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 is net of approximately $9.1 million in fair value adjustments related to purchase accounting for the acquisition.

The acquisition of Arena 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 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.

Refer to Note 16. Subsequent Events for additional information regarding the acquisition of Intland Software in April 2022.

7. Goodwill and 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 March 31, 2022, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,496.7 million and attributable to our Professional Services segment was $44.8 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. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We evaluate goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. 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.

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We completed our annual goodwill impairment review as of June 30, 2021 based on a qualitative assessment. Our qualitative assessment 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 values of our reporting units exceed their carrying values and no further impairment testing is required. Through March 31, 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.

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	March 31, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,186,156					$	2,191,887
Intangible assets with finite lives (amortized):
Purchased software	$	487,399	$	348,736	$	138,663	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		570,920		363,623		207,297		574,516		350,648		223,868
Trademarks and trade names		26,772		17,372		9,400		26,906		17,036		9,870
Other		3,933		3,933		—		4,000		4,000		—
Total intangible assets with finite lives	$	1,111,901	$	756,541	$	355,360	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,541,516					$	2,570,854

Goodwill

Changes in goodwill presented by reportable segments were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, October 1, 2021	$	2,148,968		$	42,919		$	2,191,887
Acquisitions		691			—			691
Foreign currency translation adjustment		(6,296	)		(126	)		(6,422	)
Balance, March 31, 2022	$	2,143,363		$	42,793		$	2,186,156

Amortization of Intangible Assets

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Amortization of acquired intangible assets	$	8,450	$	7,650	$	16,934	$	14,197
Cost of license revenue		5,921		7,117		12,414		13,384
Total amortization expense	$	14,371	$	14,767	$	29,348	$	27,581

8. 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. GAAP prescribes 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. There are 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

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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.

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.

The principal market in which we execute our foreign currency derivatives 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 derivatives’ 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 March 31, 2022 and September 30, 2021 were as follows:

(in thousands)	March 31, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents (1)	$	108,064	$	—	$	—	$	108,064
Convertible note		—		—		2,000		2,000
Forward contracts		—		1,646		—		1,646
Options		—		2,322		—		2,322
	$	108,064	$	3,968	$	2,000	$	114,032
Financial liabilities:
Forward contracts		—		2,637		—		2,637
	$	—	$	2,637	$	—	$	2,637

(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 into 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 three and six months ended March 31, 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 $2.2 million for the periods ended March 31, 2022 and September 30, 2021, respectively.

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Equity Securities

During the quarter ended March 31, 2022, PTC sold all shares held in a publicly-traded company, Matterport. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the quarter based on contingent earn-outs achieved in January based on achievement of stock value milestones. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport, Inc. 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 additionally sold $3.6 million of shares at an average share price of $7.6 per share. Due to the decline in the price per share during fiscal 2022, for the three and six months ended March 31, 2022 we recognized a loss of $44.6 million and $34.8 million respectively, in other expense, net on the Consolidated Statements of Operations. The aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The following table provides a summary of changes in the fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to March 31, 2022:

(in thousands)	March 31, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment(1)		(39,072	)
Balance, March 31, 2022	$	—

(1) Equity securities sold upon expirations of the restriction in January 2022.  

9. Marketable Securities

We did not hold any marketable securities as of September 30, 2021 or March 31, 2022. In December 2020, we sold our remaining 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.

10. Derivative Financial Instruments

We enter into derivative transactions, specifically foreign currency forward contracts and options, to manage our exposure to foreign currency exchange risk in order to reduce earnings volatility. We do not enter into derivative transactions for trading or speculative purposes.

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
	March 31, 2022		September 30, 2021		March 31, 2022		September 30, 2021
Derivative assets(1):
Forward Contracts	$	—	$	1,641	$	1,646	$	3,722
Options	$	—	$	—	$	2,322	$	—
Derivative liabilities(2):
Forward Contracts	$	825	$	—	$	1,812	$	3,318

(1) As of March 31, 2022 and September 30, 2021, current derivative assets of $4.0 million and $5.4 million, respectively, are recorded in other current assets in the Consolidated Balance Sheets.

(2) As of March 31, 2022 and September 30, 2021, current derivative liabilities of $2.6 million and $3.3 million, respectively, are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Non-Designated Hedges

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

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We hedge our forecasted U.S. Dollar cash flows with foreign exchange options to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These contracts have maturities of up to approximately seven months. We do not designate these foreign currency options as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into options as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations as compared to the forecasted plan rate may be partially offset by the gain on the put option. Gain on put options are included in Other expense, net.

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts and options with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Canadian / U.S. Dollar	$	5,605	$	4,894
Euro / U.S. Dollar(1)		500,632		387,466
British Pound / U.S. Dollar		10,537		23,141
Israeli Shekel / U.S. Dollar		9,148		10,475
Japanese Yen / U.S. Dollar(2)		28,826		46,450
Swiss Franc / U.S. Dollar		17,299		18,039
Swedish Krona / U.S. Dollar		31,352		34,196
Chinese Renminbi / U.S. Dollar		37,735		23,297
New Taiwan Dollar / U.S. Dollar		5,410		3,369
Romanian Leu/ U.S. Dollar		4,651		778
Russian Ruble/ U.S. Dollar		—		2,614
Danish krone/ U.S. Dollar		8,891		2,380
Australian Dollar/ U.S. Dollar		5,052		2,086
All other		8,146		4,736
Total	$	673,284	$	563,921

(1) As of March 31, 2022, $472.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $28.2 million relates to options. As of September 30, 2021, all of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts

(2) As of March 31, 2022, $2.5 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $26.3 million relates to options. As of September 30, 2021, all of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended					Six months ended
	Location of Gain (Loss)	March 31, 2022		March 31, 2021			March 31, 2022		March 31, 2021
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other expense, net	$	3,797	$	(3,033	)	$	362	$	(4,620	)

In the three months ended March 31, 2022 and March 31, 2021, foreign currency gains, net were $0.4 million and foreign currency losses, net were $2.4 million, respectively. In the six months ended March 31, 2022 and March 31, 2021 foreign currency losses, net were $4.0 million and $4.2 million, respectively.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar 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 Sheets. 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 Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months.

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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 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.

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Euro / U.S. Dollar	$	153,470	$	128,103

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended						Six months ended
	Location of Gain (Loss)	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Gain (loss) recognized in OCI	OCI	$	81		$	1,462		$	(3,075	)	$	2,041
Loss reclassified from OCI	OCI		(1,415	)		(3,041	)		(7,150	)		(99	)
Gain recognized, excluded portion	Other expense, net		342			426			609			733

As of March 31, 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.

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements for our forward contracts 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 March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	1,646	$	—	$	1,646	$	(1,646	)	$	—	$	—

The following table sets forth the offsetting of derivative liabilities as of March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	2,637	$	—	$	2,637	$	(1,646	)	$	—	$	991

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11. 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 President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales 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 asset information by reportable segment; therefore, it is not reported.

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Software Products
Revenue	$	462,250		$	421,767		$	875,843		$	815,188
Operating costs(1)		121,016			109,310			237,044			214,711
Profit		341,234			312,457			638,799			600,477
Professional Services
Revenue		42,977			40,018			87,105			75,648
Operating costs(2)		34,567			33,139			71,550			66,259
Profit		8,410			6,879			15,555			9,389
Total segment revenue		505,227			461,785			962,948			890,836
Total segment costs		155,583			142,449			308,594			280,970
Total segment profit		349,644			319,336			654,354			609,866
Unallocated operating expenses:
Sales and marketing expenses		104,962			115,873			217,357			225,599
General and administrative expenses		30,859			31,487			65,036			58,887
Restructuring and other charges, net		(1,562	)		469			32,429			716
Intangibles amortization		14,371			14,767			29,348			27,581
Stock-based compensation		37,921			44,740			83,863			90,828
Other unallocated operating expenses(3)		3,903			10,310			4,953			14,226
Total operating income		159,190			101,690			221,368			192,029
Interest and debt premium expense		(12,239	)		(12,925	)		(25,225	)		(24,444	)
Other expense, net		(43,385	)		(2,408	)		(37,201	)		(3,821	)
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764

(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.

(2) Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation.

(3) Other unallocated operating expenses include acquisition-related and other transactional costs.

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)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Americas	$	202,999	$	180,329	$	415,880	$	382,609
Europe		79,265		202,477		161,797		364,796
Asia Pacific		222,963		78,979		385,271		143,431
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

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12. Income Taxes

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764
Provision(benefit) for income taxes	$	13,887		$	(22,905	)	$	23,174		$	30,987
Effective income tax rate		13	%		(27	)%		15	%		19	%

In the second quarter and first six months of 2022 and 2021, our effective tax rate differed from the statutory federal income tax rate of 21% due to 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 and 2021, the foreign rate differential predominantly relates to these earnings.

In 2022 and 2021, in addition to the foreign rate differential, the effective tax rate was impacted by the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes and the excess tax benefit related to stock-based compensation.

In the second quarter and first six months of 2021, our results also include the effects of the full valuation allowance which was maintained against our U.S. net deferred tax assets at that time. In the second quarter of 2021, we reduced our previously established U.S. valuation allowance by $42.3 million as a result of the Arena acquisition.  Additionally, in the first six months of 2021, our results also include a charge of $36.1 million related to the effects of an unrecognized tax benefit in the Republic of Korea (South Korea), primarily related to foreign withholding taxes.

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 it was more likely than not that our deferred tax assets related to United States federal and state income would be realizable, and therefore, the United States federal and the majority of the state valuation allowances were released in the fourth quarter of 2021. In the second quarter of 2022, we continue to maintain this conclusion.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits.

As of March 31, 2022 and September 30, 2021, we had unrecognized tax benefits of $24.1 million and $21.2 million, respectively. If all our unrecognized tax benefits as of March 31, 2022 were to become recognizable in the future, we would record a benefit to the income tax provision of $24.1 million, which would be partially offset by an increase in the U.S. valuation allowance of $4.8 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $3 million.

13. Debt

At March 31, 2022 and September 30, 2021, we had the following long-term debt obligations:

(in thousands)	March 31, 2022			September 30, 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)		275,000			450,000
Total debt		1,275,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(9,454	)		(10,529	)
Total debt, net of issuance costs	$	1,265,546		$	1,439,471

(1) Unamortized debt issuance costs related to the credit facility were $3.2 million and $3.8 million as of March 31, 2022 and September 30, 2021, respectively, and are included in other assets on the Consolidated Balance Sheets.

(2) Unamortized debt issuance costs are included in long-term debt on the Consolidated Balance Sheets.

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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 March 31, 2022, the total estimated fair value of the 2028 and 2025 notes was approximately $488.0 million and $495.6 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 March 31, 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 expect to use the new 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. 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 March 31, 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-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors. As of the filing of this Form 10-Q, 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 March 31, 2022, the annual rate for borrowings outstanding was 1.81%. 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

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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 March 31, 2022, our total leverage ratio was 1.84 to 1.00, our senior secured leverage ratio was 0.41 to 1.00 and our interest coverage ratio was 14.46 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 the second quarter and first six months of 2022, we paid $21.5 million and $23.8 million of interest on our debt, respectively, and $19.8 million and $20.5 million in the second quarter and first six months of 2021, respectively. The average interest rate on borrowings outstanding was approximately 3.2% and 3.2% during the second quarter and first six months of 2022, respectively, and 3.3% and 3.5% during the second quarter and first six months of 2021, respectively.

Refer to Note 16. Subsequent Events for additional information regarding additional borrowing in April 2022 under the existing credit facility for the purchase of Intland Software.

14. Leases

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

Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts. In February 2019, we subleased a portion of our headquarters through June 30, 2022. We will receive approximately $9.1 million in sublease income over the term of the sublease. In March 2022, we have extended the sublease through June 30, 2023, and we will receive additional sublease income over the term of the extension of approximately $2.9 million.

The components of lease cost reflected in the Consolidated Statement of Operations for the three and six months ended March 31, 2022 and March 31, 2021 were as follows:

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Operating lease cost	$	8,676		$	9,565		$	17,536		$	18,956
Short-term lease cost		582			610			1,123			1,158
Variable lease cost		2,596			2,476			5,086			4,863
Sublease income		(1,113	)		(1,131	)		(2,230	)		(2,215	)
Total lease cost	$	10,741		$	11,520		$	21,515		$	22,762

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Supplemental cash flow and right-of-use assets information for the three and six months ended March 31, 2022 was as follows:

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,248	$	14,016	$	25,113	$	28,076
Financing cash flows from financing leases	$	—	$	—	$	239	$	279
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	6,179	$	53	$	11,095	$	647
Financing leases	$	—	$	—	$	—	$	—

Supplemental balance sheet information related to the leases as of March 31, 2022 was as follows:

	As of March 31, 2022
Weighted-average remaining lease term - operating leases	11.7 years
Weighted-average remaining lease term - financing leases	2.4 years
Weighted-average discount rate - operating leases		5.3	%
Weighted-average discount rate - financing leases		3.0	%

Maturities of lease liabilities as of March 31, 2022 are as follows:

(in thousands)
Remainder of 2022	$	18,452
2023		31,054
2024		27,018
2025		24,090
2026		20,125
Thereafter		160,580
Total future lease payments	$	281,319
Less: imputed interest		(77,329	)
Total lease liability	$	203,990

Exited (Restructured) Facilities

As of March 31, 2022, we had net liabilities of $1.7 million related to excess facilities (compared to $3.6 million at September 30, 2021), representing $0.3 million of right-of-use assets and $2.0 million of lease obligations, all of which is classified as short term. Variable costs related to these exited facilities are included in our restructuring accrual. All expenses and income associated with exited facilities are included in restructuring and other charges, net (refer to Note 3. Restructuring and Other Charges).

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 March 31, 2022, the right-of-use assets for exited facilities reflects discounted committed sublease income of approximately $0.7 million.

In the three and six months ended March 31, 2022, we made payments of $0.6 million and $1.3 million, respectively, related to lease costs for exited facilities. In the three and six months ended March 31, 2021, we made payments of $2.5 million and $6.3 million, respectively.

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15. Commitments and Contingencies

As March 31, 2022 and March 31, 2021, we had letters of credit and bank guarantees outstanding of $15.2 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 (“Plan”), and the Board of Directors (collectively, the “PTC Defendants”) in the U.S. District Court for the District of Massachusetts alleging claims regarding the Plan. Plaintiffs allege that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") in the oversight of the Plan, principally by allegedly selecting and retaining certain investment options despite their higher fees and costs than other available investment options, causing participants in the Plan to pay excessive recordkeeping fees and suffer lower returns on their investments, and by allegedly failing to monitor other fiduciaries. The plaintiffs sought unspecified damages on behalf of a class of Plan participants from September 17, 2014 through the date of any judgment. The plaintiffs and the PTC Defendants reached an agreement in principle to settle the lawsuit on September 22, 2021 and filed a motion for preliminary approval on December 17, 2021. The ultimate outcome by judgment or settlement is not expected to be material to our financial position, results of operations or cash flows.

Other Legal Proceedings

In addition to the matters listed above, we are subject to legal proceedings and claims against us in the ordinary course of business. As of March 31, 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, the liability for which is uncapped, 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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16. Subsequent Events

Acquisition of 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 develops and markets the Codebeamer^® Application Lifecycle Management (ALM) family of software products. We paid approximately $280 million for Intland Software, net of cash acquired.

Borrowings under Credit Facility

In April 2022, we borrowed $264 million under our existing credit facility to acquire Intland Software, bringing our total outstanding indebtedness to approximately $1.5 billion.

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

Business Overview

PTC is a global software and services company that enables industrial companies to improve growth and profitability with a portfolio of innovative digital solutions that work together to transform how physical products are engineered, manufactured, and serviced. Our award-winning technology portfolio spans the computer-aided design (CAD), product lifecycle management (PLM), Industrial Internet of Things (IIoT), and Augmented Reality (AR) markets.  

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, oil and gas, retail and consumer products industries. Our solutions enable industrial companies to create a closed loop of information shared across their organization’s entire value chain. This “digital thread” can drive excellence in engineering, efficiency in manufacturing operations and service delivery, and innovation across product offerings and business models. With our solutions, digital transforms physical.

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

Forward-Looking Statements

Statements in this document that are not historic facts, including statements about our future financial and growth expectations and targets, and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve when or as we expect, or may deteriorate, due to, among other factors, the COVID-19 pandemic and the effects of the Russia/Ukraine conflict, which could cause customers to delay or reduce purchases of new software reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect ARR and/or our financial results, including cash flow; our businesses, including our SaaS businesses, may not expand and/or generate the revenue or ARR we expect if customers are slower to adopt our technologies than we expect or if they adopt competing technologies; the transaction with ITC Infotech may not close when or as we expect due to the failure to achieve the applicable closing conditions; the Intland Software and ITC Infotech transactions may not have expected effects on our business or results of operations; our strategic initiatives and investments, including our restructuring and our accelerated investments in our transition to SaaS, may not deliver the results when or as we expect; we may be unable to generate sufficient operating cash flow to repay amounts under our credit facility or to return 50% of free cash flow to shareholders, and other uses of cash or our credit facility limits or other matters could preclude such repayment and/or repurchases; we may be unable to attract and retain employees in the current competitive hiring environment, which could adversely impact our operations and our financial results; and foreign exchange rates may differ materially from those we expect.  In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including the geographic mix of our revenue, expenses and profits, as well as other risks and uncertainties described below throughout or referenced in Part II, Item 1A. Risk Factors of this report.

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.

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Executive Overview

We delivered another strong financial performance in Q2’22 despite macro and geopolitical concerns and currency headwinds, once again demonstrating the benefit of our recurring revenue model.  Q2’22 ARR increased to $1.53 billion, representing 11% growth (13% on a constant currency basis) compared to Q2’21, driven by strength in new bookings. ARR at the end of Q2’22 includes a $4 million reduction associated with discontinuing our business operations in Russia. Q2’22 revenue of $505 million was up 9% (13% constant currency) over Q2’21, driven by higher revenue from our recurring revenue business lines, particularly in Digital Thread where contract durations on on-premise subscriptions increased over Q2’21. Q2’22 operating margin was 32% compared to 22% in Q2’21, and Q2’22 non-GAAP operating margin was 42% compared to 37% in Q2’21.  Year-over-year operating margin improvements were primarily due to year-over-year revenue increases and expense reductions resulting from the restructuring we announced in Q1’22 in alignment with our SaaS-acceleration initiatives and operational discipline.  Q2’22 EPS decreased to $0.76 compared to $0.92 in Q2’21 primarily due to the effect of a non-cash reduction in value of a publicly-traded equity investment on non-operating expenses. Non-GAAP EPS in Q2’22 was $1.39 compared to $1.08 in Q2’21 and benefited from year-over-year revenue increases and expense reductions. Discontinuing our operations in Russia during Q2’22 had an immaterial effect on our on revenue, operating margins, EPS and cash flows.

We generated $142 million of cash from operations compared to $122 million in Q2’21, with the increase driven by strong operational execution.  Included in operating cash flow are payments related to restructuring, which were higher by $13 million year-over-year, and acquisition and transaction-related payments, which were $8 million lower.  In Q2’22, we had proceeds of $43 million from the sale of a publicly-traded equity investment and used those proceeds and cash from operations to repay $175 million of our revolving credit facility balance.  We completed stock repurchases of $5 million in Q2’22, reflecting the settlement of repurchases that were initiated in Q1’22, bringing year-to-date total share repurchases to $125 million.

Subsequent to the end of Q2’22, we entered into an agreement to acquire Intland Software, maker of the Codebeamer^® suite of application lifecycle management solutions, and completed the acquisition on April 29, 2022.  We paid approximately $280 million for Intland, net of cash acquired, using $264 million borrowed under our revolving credit facility and cash on hand.  We also entered into an agreement with ITC Infotech to transition a portion of our PLM services business to them to accelerate our SaaS initiatives, which transaction is expected to close in Q3’22.

Results of Operations

The following table shows the financial 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 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. These non-GAAP financial measures exclude the items described in Non-GAAP Financial Measures below. Investors should use these non-GAAP financial measures only in conjunction with our GAAP results.

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(Dollar amounts in millions, except per share data)	Three months ended						Percent Change
	March 31, 2022			March 31, 2021			Actual			Constant Currency(1)
ARR(1)	$	1,532.5		$	1,386.3			11	%		13	%
Total recurring revenue(2)	$	452.7		$	414.8			9	%		13	%
Perpetual license		9.5			6.9			38	%		21	%
Professional services		43.0			40.0			7	%		12	%
Total revenue		505.2			461.8			9	%		13	%
Total cost of revenue		93.3			89.4			4	%		7	%
Gross margin		411.9			372.3			11	%		15	%
Operating expenses		252.7			270.6			(7	)%		(5	)%
Total costs and expenses		346.0			360.1			(4	)%		(2	)%
Operating income	$	159.2		$	101.7			57	%		73	%
Non-GAAP operating income(3)	$	213.8		$	172.0			24	%		32	%
Operating margin		31.5	%		22.0	%
Non-GAAP operating margin(3)		42.3	%		37.2	%
Diluted earnings per share	$	0.76		$	0.92
Non-GAAP diluted earnings per share(3)(4)	$	1.39		$	1.08
Cash flow from operations(5)	$	142.3		$	121.7
Capital expenditures	$	(2.1	)	$	(5.4	)
Free cash flow	$	140.2		$	116.3

(Dollar amounts in millions, except per share data)	Six months ended						Percent Change
	March 31, 2022			March 31, 2021			Actual			Constant Currency(1)
ARR(1)	$	1,532.5		$	1,386.3			11	%		13	%
Total recurring revenue(2)	$	857.8		$	799.8			7	%		10	%
Perpetual license		18.0			15.4			17	%		17	%
Professional services		87.1			75.6			15	%		19	%
Total revenue		962.9			890.8			8	%		11	%
Total cost of revenue		188.5			176.3			7	%		8	%
Gross margin		774.5			714.6			8	%		11	%
Operating expenses		553.1			522.5			6	%		7	%
Total costs and expenses		741.6			698.8			6	%		7	%
Operating income	$	221.4		$	192.0			15	%		23	%
Non-GAAP operating income(3)	$	372.0		$	325.4			14	%		19	%
Operating margin		23.0	%		21.6	%
Non-GAAP operating margin(3)		38.6	%		36.5	%
Diluted earnings per share	$	1.15		$	1.13
Non-GAAP diluted earnings per share(3)(4)	$	2.34		$	2.05
Cash flow from operations(5)	$	280.1		$	235.5
Capital expenditures	$	(5.5	)	$	(8.2	)
Free cash flow	$	274.6		$	227.2

(1) For the March 31, 2021 period, to facilitate comparability, we removed $7 million of ARR associated with a Vuforia AR product that we ceased selling as of September 30, 2021.

(2) Recurring revenue is comprised of subscription, perpetual support, and SaaS, and cloud revenue.

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

(4) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. In 2021 we had recorded a full valuation allowance against our U.S. net deferred tax assets. As we were profitable on a non-GAAP basis, the 2021 tax provision was calculated assuming there was no valuation allowance.  Additionally, our non-GAAP results for the six months ended March 31, 2021 excluded tax expenses of $34.6 million related to a South Korean tax exposure, primarily related to prior period foreign withholding taxes.

(5) Cash flow from operations for the second quarter and first six months of FY’22 includes $17.8 million and $28.4 million of restructuring payments, respectively, and $0.4 million of acquisition and transaction-related payments. Cash flow from operations for the second quarter and first six months of FY’21 includes $4.5 million and $11.7 million of restructuring payments, respectively, $8.2 million and $11.1 million of transaction and acquisition-related payments, respectively, and $1.0 million of non-ordinary course tax payments related to a prior period tax exposure from a non-U.S. tax dispute.

Impact of Foreign Currency Exchange on Results of Operations

Approximately 60% 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. Our constant currency

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disclosures are calculated by multiplying the results in local currency for the quarterly and year-to-date periods for FY’22 and FY’21 by the exchange rates in effect on September 30, 2021. Changes in foreign currency exchange rates have been a headwind to results in the first half of FY’22, with reported revenue, total costs and expenses and operating margin lower than at constant currency based on plan rates.  We anticipate foreign currency exchange rates will continue to be a headwind for the remainder of FY’22.

The results of operations in the table above and revenue by line of business, product group, and geographic region in the tables that follow present both actual percentage changes year over year and percentage changes on a constant currency basis.

Revenue

Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, 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 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 subscription contracts and stand-alone support contracts ratably over the term. We continue to convert existing support contracts to subscriptions resulting in a shift to up-front recognition of subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract.  Revenue from our SaaS contracts is recognized ratably. We are expanding our SaaS offerings and are releasing additional cloud functionality into our products and customers are migrating from subscription to SaaS products.  As a result, 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)	Three months ended				Percent Change						Six months ended				Percent Change
	March 31, 2022		March 31, 2021		Actual			Constant Currency			March 31, 2022		March 31, 2021		Actual			Constant Currency
License	$	218.4	$	198.0		10	%		15	%	$	387.5	$	375.2		3	%		6	%
Support and cloud services		243.9		223.8		9	%		12	%		488.4		440.0		11	%		13	%
Software revenue		462.3		421.8		10	%		13	%		875.8		815.2		7	%		16	%
Professional services		43.0		40.0		7	%		12	%		87.1		75.6		15	%		19	%
Total revenue	$	505.2	$	461.8		9	%		13	%	$	962.9	$	890.8		8	%		11	%

Software revenue in the second quarter and first six months of FY’22 increased compared to the year-ago periods primarily due to contribution from Arena, as well as subscription support growth in Digital Thread – Core, offset by a decline in perpetual support revenue due to conversions of support contracts to subscriptions. On-premise subscription contract durations for Digital Thread – Core year over year were shorter in Q1’22, but higher in Q2’22, driving variability in the amount of up-front license revenue recognized. Under ASC 606, shorter duration contracts result in less up-front license revenue, even if the annual values are the same.

Professional services in the second quarter and first six months of FY’22 increased compared to the year-ago periods by 7% (12% constant currency) and 15% (19% constant currency), respectively, as revenue in the first half of 2021 was negatively impacted by services delivery challenges associated with the COVID-19 pandemic. In addition, in the three and six months ended Q2’22 there was an increase in revenue associated with large PLM consulting engagements, particularly with automotive, aerospace and defense customers.

We expect that professional services revenue will be higher in FY'22 than FY’21 or FY’20 as we expect demand for services will increase to a level that is more consistent with pre-pandemic levels.  Our longer-term expectation is that professional services revenue will trend down over time as we migrate more services engagements to our partners, including through our pending transaction with ITC Infotech, and as we deliver products that require less consulting and training services.  

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Software Revenue by Product Group

(Dollar amounts in millions)	Three months ended				Percent Change						Six months ended				Percent Change
	March 31, 2022		March 31, 2021		Actual			Constant Currency			March 31, 2022		March 31, 2021		Actual			Constant Currency
Digital Thread - Core	$	327.5	$	298.8		10	%		14	%	$	609.6	$	588.3		4	%		12	%
Digital Thread - Growth		62.5		60.7		3	%		6	%		124.5		116.0		7	%		10	%
Digital Thread - FSG		52.4		52.5		—			2	%		103.9		98.7		5	%		16	%
Digital Thread (Total)		442.4		412.0		7	%		11	%		838.0		803.0		4	%		12	%
Velocity		19.9		9.8		103	%		104	%		37.8		12.2		210	%		214	%
Software revenue	$	462.3	$	421.8		10	%		13	%	$	875.8	$	815.2		7	%		16	%

Digital Thread

Core Product software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was driven by subscription license revenue growth of 15% (20% constant currency) and 3% (5% constant currency), respectively, which is impacted by the duration and mix of contract types for new and renewal contracts started in the quarter.  On-premise subscription contract durations year over year were lower in Q1’22, but higher in Q2’22, driving variability in the amount of up-front revenue recognized.  For the second quarter and first six months of FY’22, subscription support revenues increased 17% (22% constant currency) and 18% (21% constant currency), respectively, and cloud revenues grew by 23% (25% constant currency) and 34% (35% constant currency, respectively.  Growth in subscription and cloud services revenues were offset by a decrease in perpetual support revenue as customers continue to convert from perpetual support to subscriptions.  

ARR increased 10% (13% constant currency) for Q2’22 compared to Q2’21, reflecting growth in both CAD and PLM.

Growth Product software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was driven by ratably recognized cloud revenue growth of 16% (18% constant currency) and 21% (23% constant currency), respectively.  This was offset by a year-over-year decrease in subscription license revenue of 16% (13% constant currency) and 6% (4% constant currency) for the three and six months ended Q2’22, respectively. The majority of the year-over-year decreases in Growth subscription license revenue was driven by the discontinuance at the beginning of FY’22 of certain AR products with up-front revenue recognition.  

Growth Product ARR increased 13% (15% constant currency) for Q2’22 compared to Q2’21, driven primarily by growth in IoT.

FSG Product software revenue fluctuations in the second quarter and first six months of FY’22 were driven by ratably recognized cloud revenue growth of 27% (29% constant currency) and 24% (25% constant currency), respectively. Subscription license revenue decreased by 9% (5% constant currency) and increased 7% (10% constant currency), for the three and six months ended Q2’22 due to the duration and mix of contract types for new and renewal contracts started in the quarter. Under ASC 606, shorter duration contracts result in less up-front license revenue, even if the annual values are the same.  

FSG product ARR increased by 6% (8% constant currency) for Q2’22 compared to Q2’21 driven primarily by strength in the Americas and Europe.

Velocity

Velocity Product software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was driven by the acquisition of the Arena business in January 2021. Additionally, Onshape revenue grew by 45% (actual and constant currency) and 48% (49% constant currency) during the three and six months ended Q2’22, respectively.

ARR grew in Q2’22 compared to Q2’21 by 27% (actual and constant currency) reflecting strong growth in both Arena and Onshape.

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Software Revenue by Geographic Region

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

(Dollar amounts in millions)	Three months ended				Percent Change						Six months ended				Percent Change
	March 31, 2022		March 31, 2021		Actual			Constant Currency			March 31, 2022		March 31, 2021		Actual			Constant Currency
Americas	$	187.1	$	166.3		13	%		12	%	$	383.9	$	357.3		7	%		12	%
Europe		201.6		182.7		10	%		18	%		342.4		327.5		5	%		18	%
Asia Pacific		73.6		72.8		1	%		5	%		149.5		130.4		15	%		25	%
Software revenue	$	462.3	$	421.8		10	%		13	%	$	875.8	$	815.2		7	%		16	%

Americas software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was driven by the acquisition of Arena business in January 2021.  Digital Thread revenue in the Americas increased 7% (actual and constant currency) and 1% (actual and constant currency) during the three and six months ended Q2’22, respectively.

Q2’22 Americas ARR was up 12% (actual and constant currency) over Q2’21, led by double digit percentage growth in Digital Thread – Core and mid-20s percentage growth in Velocity.

Europe software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was driven by growth in Digital Thread – Core of 13% (21% constant currency) and 4% (18% constant currency), respectively.

Q2’22 ARR in Europe was up 9% (15% constant currency) over Q2’21, led by approximately 30% growth in our Digital Thread – Growth products and strength in our Digital Thread – Core products.

Asia Pacific software revenue growth in the second quarter and first six months of FY’22 compared to the year-ago periods was primarily driven by growth in Digital Thread – Core by 4% (8% constant currency) and 17% (31% constant currency), respectively.  

Q2’22 ARR in Asia Pacific was up 9% (14% constant currency) over Q2’21, led by double-digit growth in Digital Thread – Core.

Gross Margin

(Dollar amounts in millions)	Three months ended									Six months ended
	March 31, 2022			March 31, 2021			Percent Change			March 31, 2022			March 31, 2021			Percent Change
License gross margin	$	206.4		$	183.8			12	%	$	365.8		$	347.8			5	%
License gross margin percentage		95	%		93	%					94	%		93	%
Support and cloud services gross margin	$	199.1		$	183.8			8	%	$	397.7		$	361.7			10	%
Support and cloud services gross margin percentage		82	%		82	%					81	%		82	%
Professional services gross margin	$	6.3		$	4.7			35	%	$	11.0		$	5.1			116	%
Professional services gross margin percentage		15	%		12	%					13	%		7	%
Total gross margin	$	411.9		$	372.3			11	%	$	774.5		$	714.6			8	%
Total gross margin percentage		82	%		81	%					80	%		80	%
Non-GAAP gross margin(1)	$	422.1		$	384.0			10	%	$	797.1		$	736.9			8	%
Non-GAAP gross margin percentage(1)		84	%		83	%					83	%		83	%

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

License gross margin increased in the second quarter and first six months of FY’22 compared to the year-ago periods due to increases in license revenue of $20.4 million and $12.3 million, respectively, along with decreases in cost of license revenue of $2.2 million and $5.7 million, respectively, which were driven by lower royalty and compensation costs.

Support and cloud services gross margin increased in the second quarter and first six months of FY’22 compared to the year-ago periods due to increases in subscription support and cloud revenue of $20.1 million and $48.4 million, respectively, partially offset by increases in cost of support and cloud services of $4.8 million and $12.3 million, respectively.

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Professional services gross margin increased in the second quarter and first six months of FY’22 compared to the year-ago periods primarily due to the impact of the COVID-19 pandemic on Q1’21 revenue, as professional services revenue increased by $3.0 million and $11.5 million over the year-ago periods, respectively. This was partially offset by increases in professional services cost of $1.3 million and $5.5 million, respectively.

Operating Expenses

(Dollar amounts in millions)	Three months ended									Six months ended
	March 31, 2022			March 31, 2021			Percent Change			March 31, 2022			March 31, 2021			Percent Change
Sales and marketing	$	116.4		$	129.2			(10	)%	$	241.9		$	253.9			(5	)%
% of total revenue		23	%		28	%					25	%		29	%
Research and development	$	81.9		$	72.5			13	%	$	162.5		$	143.4			13	%
% of total revenue		16	%		16	%					17	%		16	%
General and administrative	$	47.5		$	60.8			(22	)%	$	99.4		$	110.3			(10	)%
% of total revenue		9	%		13	%					10	%		12	%
Amortization of acquired intangible assets	$	8.5		$	7.6			10	%	$	16.9		$	14.2			19	%
% of total revenue		2	%		2	%					2	%		2	%
Restructuring and other charges, net	$	(1.6	)	$	0.5			(433	)%	$	32.4		$	0.7			4429	%
% of total revenue		(0	)%		0	%					3	%		0	%
Total operating expenses	$	252.7		$	270.6			(7	)%	$	553.1		$	522.5			6	%

Headcount decreased 4% between Q2’22 and Q2’21.

Operating expenses in Q2’22 compared to operating expenses in Q2’21 decreased primarily due to the following:

• a $13 million (7%) decrease in compensation expense (including benefit costs) due to lower headcount caused by attrition and restructuring actions, including:

• a $7 million (16%) decrease in stock-based compensation,

• a $5 million (5%) decrease in salaries,

• a $3 million (10%) decrease in benefits and pension expenses,

• partially offset by a $1 million increase in travel expenses;

• a $6 million decrease in transaction and acquisition-related costs included in general and administrative; and

• a $2 million decrease in restructuring costs;

partially offset by:

• a $1 million increase in software subscriptions; and

• a $1 million increase in internal hosting costs;

Operating expenses in the first six months of FY’22 compared to operating expenses in the first six months of FY’21 increased primarily due to the following:

• a $33 million increase in restructuring charges primarily due to the restructuring plan initiated in Q1’22;

• a $3 million increase in internal hosting costs;

partially offset by:

• a $3 million (1%) decrease in compensation expense (including benefit costs), primarily driven by:

• an $8 million (10%) decrease in stock-based compensation,

• partially offset by:

• a $3 million increase in travel expenses,

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• a $2 million (14%) increase in bonus expense due to higher attainment,

• a $1 million increase in benefits and pension expenses; and

• a $1 million increase in salaries;

• a $9 million decrease in transaction and acquisition-related costs, included in general and administrative expenses.

Interest Expense

(Dollar amounts in millions)	Three months ended									Six months ended
	March 31, 2022			March 31, 2021			Percent Change			March 31, 2022			March 31, 2021			Percent Change
Interest and debt premium expense	$	(12.2	)	$	(12.9	)		(5	)%	$	(25.2	)	$	(24.4	)		3	%

Interest expense includes interest on our credit facility and senior notes. We had $1.3 billion of total debt at March 31, 2022, compared to $1.5 billion at March 31, 2021. We repaid $175 million of our revolving credit facility in Q2’22. The average interest rate on borrowings outstanding was approximately 3.2% and 3.2% during the second quarter and first six months of FY’22, respectively, and 3.3% and 3.5% during the second quarter and first six months of FY’21, respectively. We expect the average interest rates will increase during the rest of the year, driven by our variable-rate revolving credit facility.

Other Income (Expense)

(Dollar amounts in millions)	Three months ended									Six months ended
	March 31, 2022			March 31, 2021			Percent Change			March 31, 2022			March 31, 2021			Percent Change
Interest income	$	0.5		$	0.3			64	%	$	1.0		$	0.9			13	%
Other expense, net		(43.9	)		(2.7	)		1518	%		(38.2	)		(4.7	)		712	%
Other expense, net	$	(43.4	)	$	(2.4	)		1703	%	$	(37.2	)	$	(3.8	)		874	%

The increase in other expense, net, in FY’22 over the FY’21 periods is driven by a recognized loss on our equity investment in a publicly-traded company of $44.6 million and $34.8 million in the three and six months ended March 31, 2022, respectively.  We sold our investment for $42.7 million in Q2’22.

Income Taxes

(Dollar amounts in millions)	Three months ended									Six months ended
	March 31, 2022			March 31, 2021			Percent Change			March 31, 2022			March 31, 2021			Percent Change
Income before income taxes	$	103.6		$	86.4			20	%	$	158.9		$	163.8			(3	)%
Provision(benefit) for income taxes	$	13.9		$	(22.9	)		(161	)%	$	23.2		$	31.0			(25	)%
Effective income tax rate		13	%		(27	)%					15	%		19	%

In the second quarter and first six months of FY’22 and FY’21, our effective tax rate differed from the statutory federal income tax rate of 21% due to 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 and 2021, the foreign rate differential predominantly relates to these earnings.

In FY’22 and FY’21, in addition to the foreign rate differential, the effective tax rate was impacted by the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes and the excess tax benefit related to stock-based compensation.

Our results for the second quarter and six months ended March 31, 2021, include the effects of the full valuation allowance, which was maintained against our U.S. net deferred tax assets at that time.  In the second quarter of FY’21 we reduced our previously established U.S. valuation allowance by $42.3 million as a result of the Arena acquisition.  Additionally, in the first six months of FY’21, our results included a charge of $36.1 million related to the effects of an unrecognized tax benefit in the Republic of Korea (South Korea), primarily related to foreign withholding taxes.

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Critical Accounting Policies and Estimates

The financial information included in Item 1 reflects no material changes in our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Annual Report on Form 10-K.

Recent Accounting Pronouncements

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations. Refer to Note 1. Basis of Presentation to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for all recently issued accounting pronouncements.

Liquidity and Capital Resources

(in millions)	March 31, 2022			September 30, 2021
Cash and cash equivalents	$	306.7		$	326.5
Restricted cash		0.7			0.5
Total	$	307.4		$	327.0
(in millions)	Six months ended
	March 31, 2022			March 31, 2021
Net cash provided by operating activities	$	280.1		$	235.5
Net cash provided by (used in) investing activities	$	44.0		$	(670.3	)
Net cash (used in) provided by financing activities	$	(340.0	)	$	485.0

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Cash, Cash Equivalents and Restricted Cash

We invest our cash with highly rated financial institutions. Cash and cash equivalents include highly liquid investments with original maturities of three months or less. At March 31, 2022, cash and cash equivalents totaled $307 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 March 31, 2022, we had cash and cash equivalents of $34.2 million in the U.S., $103.2 million in Europe, $138.8 million in Asia Pacific (including India) and $30.8 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, 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 $280.1 million in the first six months of FY’22, compared to $235.5 million in the first six months of FY’21. Cash from operations for the first six months of FY’22 includes $28.4 million of restructuring payments and $0.4 million of acquisition-related payments compared to $11.7 million of restructuring payments and $11.1 million of acquisition and transaction-related payments in the prior-year period. The increase in cash from operations in the first six months of FY’22 compared to the same period in FY’21 was primarily driven by increased collections of $134 million in collections, offset by a $51 million increase in salaries, primarily severance related to restructuring, bonus payments in FY’22, a $23 million increase in disbursements largely related to timing of subscription payments, and a $9 million increase in tax-related payments.

Cash Provided by (Used In) Investing Activities

(in millions)	Six months ended
	March 31, 2022			March 31, 2021
Additions to property and equipment	$	(5.5	)	$	(8.2	)
Proceeds from (purchases of) short- and long-term marketable securities, net		—			58.5
Acquisitions of businesses, net of cash acquired		—			(717.2	)
Proceeds from sale of investments		42.7			—
Other		6.8			(3.4	)
Net cash provided by (used in) investing activities	$	44.0		$	(670.3	)

Cash provided by investing activities in the first six months of FY’22 reflects proceeds from sale of investments of $42.7 million and proceeds from net investment hedges of $11.3 million, offset by fixed asset additions of $5.5 million and purchases of intangible assets of $4.5 million. Cash used in investing activities in the first six months of FY’21 reflects approximately $715 million used for the Arena acquisition and $56 million in proceeds from the sale of marketable securities.

Cash (Used In) Provided by Financing Activities

(in millions)	Six months ended
	March 31, 2022			March 31, 2021
Borrowings on debt, net	$	(175.0	)	$	502.0
Repurchases of common stock		(125.0	)		—
Proceeds from issuance of common stock		10.9			10.5
Payments of withholding taxes in connection with stock-based awards		(50.6	)		(27.2	)
Other		(0.3	)		(0.3	)
Net cash (used in) provided by financing activities	$	(340.0	)	$	485.0

Cash used in financing activities in the first six months of FY’22 reflects a $175 million repayment of the amounts outstanding under our revolving credit facility, repurchase of common stock of $125 million and payment of withholding taxes related to stock-based awards of $50 million. Cash provided by financing activities in the first six months of FY’21 reflects net borrowings of $502 million under our credit facility.

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Outstanding Debt

(in millions)	March 31, 2022
4.000% Senior notes due 2028	$	500.0
3.625% Senior notes due 2025		500.0
Credit facility revolver		275.0
Total debt	$	1,275.0
Unamortized debt issuance costs for the senior notes		(9.5	)
Total debt, net of issuance costs	$	1,265.5
Undrawn under credit facility revolver	$	725.0
Undrawn under credit facility revolver available to borrow	$	709.8

As of March 31, 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.

Our credit facility and our senior notes described in Note 13. Debt to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

We borrowed $264 million under the credit facility in April 2022 to complete the acquisition of Intland Software, leaving $461 million undrawn and $446 million available to borrow under the credit facility.

Future Expectations

We believe that existing cash and cash equivalents as of March 31, 2022, together with cash generated from operations and amounts available under the credit facility, will be sufficient to meet our payment obligations associated with the acquisition of Intland Software, working capital and capital expenditure requirements (which we expect to be approximately $25 million in FY’22) through at least the next twelve months and to meet our known long-term capital requirements.  

Related to restructuring, we expect to incur an additional approximately $5 million of charges and make approximately $15 million in payments for the remainder of fiscal 2022. Cost savings resulting from the 2022 restructuring action are expected to help align our customer facing and product-related functions with the SaaS industry best practices and accelerate the opportunity for our on-premise customers to move to the cloud.

Our expected uses and sources of cash could change, our cash position could be reduced, and we could incur additional debt obligations if we decide to retire debt, engage in additional strategic transactions, or repurchase shares, any of which could be commenced, suspended or completed at any time. Any such repurchases or retirement of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material.

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. ARR in FY21 includes orders placed under our Strategic Alliance Agreement with Rockwell Automation, including orders placed to satisfy contractual minimum commitments.

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.

35

Non-GAAP Financial Measures

Our non-GAAP financial measures and the reasons we use them and the reasons we exclude the items identified below are described in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2021.

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-related and other transactional charges included in general and administrative expenses; restructuring and other charges, net; non-operating charges (credits); and income tax adjustments as defined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. In Q1’21, we incurred tax expense related to a reserve for a South Korean tax exposure established in the quarter which is excluded from our non-GAAP financial measures as it was related to prior periods and not included in management’s view of Q1’21 results for comparative purposes.

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, certain of those items are recurring, and other such items often recur. Accordingly, the non-GAAP financial measures included in this Quarterly Report on Form 10-Q 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.

36

(in millions, except per share amounts)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
GAAP gross margin	$	411.9		$	372.3		$	774.5		$	714.6
Stock-based compensation		4.3			4.5			10.2			8.9
Amortization of acquired intangible assets included in cost of revenue		5.9			7.1			12.4			13.4
Non-GAAP gross margin	$	422.1		$	384.0		$	797.1		$	736.9
GAAP operating income	$	159.2		$	101.7		$	221.4		$	192.0
Stock-based compensation		37.9			44.7			83.9			90.8
Amortization of acquired intangible assets		14.4			14.8			29.3			27.5
Acquisition-related and other transactional charges included in general and administrative expenses		3.9			10.3			5.0			14.2
Restructuring and other charges, net		(1.6	)		0.5			32.4			0.7
Non-GAAP operating income	$	213.8		$	172.0		$	372.0		$	325.4
GAAP net income	$	89.7		$	109.3		$	135.8		$	132.8
Stock-based compensation		37.9			44.7			83.9			90.8
Amortization of acquired intangible assets		14.4			14.8			29.3			27.5
Acquisition-related and other transactional charges included in general and administrative expenses		3.9			10.3			5.0			14.2
Restructuring and other charges, net		(1.6	)		0.5			32.4			0.7
Non-operating charges(1)		44.6			0.0			34.8			0.0
Income tax adjustments(2)		(25.4	)		(51.7	)		(44.7	)		(24.6	)
Non-GAAP net income	$	163.5		$	127.8		$	276.5		$	241.6
GAAP diluted earnings per share	$	0.76		$	0.92		$	1.15		$	1.13
Stock-based compensation		0.32			0.38			0.71			0.77
Amortization of acquired intangible assets		0.12			0.12			0.25			0.23
Acquisition-related and other transactional charges included in general and administrative expenses		0.03			0.09			0.04			0.12
Restructuring and other charges, net		(0.01	)		0.00			0.27			0.01
Non-operating charges(1)		0.38			0.00			0.29			0.00
Income tax adjustments(2)		(0.22	)		(0.44	)		(0.38	)		(0.21	)
Non-GAAP diluted earnings per share	$	1.39		$	1.08		$	2.34		$	2.05

(1) We recorded charges related to losses on our equity investment in a publicly-traded company of $44.6 million and $34.8 million in the three and six months ended Q2’22.

(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 2021 we had recorded a full valuation allowance against our U.S. net deferred tax assets. As we were profitable on a non-GAAP basis, the 2021 tax provision was calculated assuming there was no valuation allowance.  Additionally, our non-GAAP results for the six months ended March 31, 2021 excluded tax expenses of $34.6 million related to a South Korean tax exposure, primarily related to foreign withholding taxes.

Operating margin impact of non-GAAP adjustments:

	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
GAAP operating margin		31.5	%		22.0	%		23.0	%		21.6	%
Stock-based compensation		7.5	%		9.7	%		8.7	%		10.2	%
Amortization of acquired intangible assets		2.8	%		3.2	%		3.0	%		3.1	%
Acquisition-related and other transactional charges included in general and administrative expenses		0.8	%		2.2	%		0.5	%		1.6	%
Restructuring and other charges, net		(0.3	)%		0.1	%		3.4	%		0.1	%
Non-GAAP operating margin		42.3	%		37.2	%		38.6	%		36.5	%

37

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposure as described in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our 2021 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

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

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a or 15(d) of the Exchange Act that occurred during the period ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

38

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information on legal proceedings can be found in Note 15. Commitments and Contingencies – Legal Proceedings – 401(k) Plan of Notes to Consolidated Financial Statements in this Form 10-Q, which information is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I. Item 1A. Risk Factors in our 2021 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

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

The table below shows the shares of our common stock we repurchased in the second quarter of 2022.

Period	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2022 - January 31, 2022		42,948	$	122.49		42,948	$	845,000,066
February 1, 2022 - February 28, 2022		—		—		—	$	845,000,066
March 1, 2022- March 31, 2022		—		—		—	$	845,000,066
Total		42,948	$	122.49		42,948	$	845,000,066

(1) Our Board of Directors has authorized us to repurchase up to $1 billion of our common stock in the period November 13, 2020 through September 30, 2023, which program we announced on December 15, 2020.

39

ITEM 6. EXHIBITS

2	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	By-Laws, as amended and restated, of PTC Inc. (filed as Exhibit 3.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by reference).
3.3	Amendment to PTC By-Laws dated June 24, 2021 (filed as Exhibit 3.1 to our Current Report on Form 8-K filed on June 25, 2021 (File No. 0-18059) and incorporated herein by reference).
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).
31.1	Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
32*	Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
101	The following materials from PTC Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 ("Q2 Form 10-Q") formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2022 and September 30, 2021; (ii) Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2022 and March 31, 2021; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2022 and March 31, 2021; (v) Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, 2022 and March 31, 2021; and (vi) Notes to Condensed Consolidated Financial Statements.
104	The cover page of the Q2 Form 10-Q formatted in Inline XBRL (included in Exhibit 101).

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

40

SIGNATURE

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

PTC Inc.
By:	/S/ KRISTIAN TALVITIE
	Kristian Talvitie Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: May 5, 2022

41

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James Heppelmann, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	May 5, 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 quarterly report on Form 10-Q of PTC Inc.;

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

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

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

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

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

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

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

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

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

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

Date:	May 5, 2022	/S/ KRISTIANTALVITIE
		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 Quarterly Report on Form 10-Q of the Company for the quarter ended  March 31, 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-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 5, 2022	/S/ JAMES HEPPELMANN
		James Heppelmann President and Chief Executive Officer
Date:	May 5, 2022	/S/ KRISTIAN TALVITIE
		Kristian Talvitie
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2022	May 04, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	0-18059
Entity Registrant Name	PTC Inc.
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2866152
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
Title of 12(b) Security	Common Stock, $.01 par value per share
Trading Symbol	PTC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		116,975,944
Amendment Flag	false
Entity Central Index Key	0000857005
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
ASSETS
Cash and cash equivalents	$ 306,701	$ 326,532
Accounts receivable, net of allowance for doubtful accounts of $733 and $304 at March 31, 2022 and September 30, 2021, respectively	510,196	541,072
Prepaid expenses	88,918	69,991
Other current assets	61,147	135,415
Total current assets	966,962	1,073,010
Property and equipment, net	92,897	100,237
Goodwill	2,186,156	2,191,887
Acquired intangible assets, net	355,360	378,967
Deferred tax assets	299,381	297,789
Operating right-of-use lease assets	149,801	152,337
Other assets	327,966	313,333
Total assets	4,378,523	4,507,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	23,741	33,381
Accrued expenses and other current liabilities	102,116	113,067
Accrued compensation and benefits	99,162	117,784
Accrued income taxes	15,054	5,055
Deferred revenue	516,933	482,131
Short-term lease obligations	25,375	27,864
Total current liabilities	782,381	779,282
Long-term debt	1,265,546	1,439,471
Deferred tax liabilities	4,163	4,165
Deferred revenue	17,748	15,546
Long-term lease obligations	178,615	180,935
Other liabilities	46,093	49,693
Total liabilities	2,294,546	2,469,092
Commitments and contingencies (Note 15)
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; 116,976 and 117,163 shares issued and outstanding at March 31, 2022 and September 30, 2021, respectively	1,170	1,172
Additional paid-in capital	1,637,631	1,718,504
Retained earnings	550,424	414,656
Accumulated other comprehensive loss	(105,248)	(95,864)
Total stockholders’ equity	2,083,977	2,038,468
Total liabilities and stockholders’ equity	$ 4,378,523	$ 4,507,560

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Current assets:
Allowance for doubtful accounts	$ 733	$ 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	116,976,000	117,163,000
Common stock, shares outstanding	116,976,000	117,163,000

XML

Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Revenue:
Revenue	$ 505,227	$ 461,785	$ 962,948	$ 890,836
Cost of revenue:
Cost of revenue	93,337	89,448	188,455	176,278
Gross margin	411,890	372,337	774,493	714,558
Operating expenses:
Sales and marketing	116,408	129,178	241,884	253,903
Research and development	81,935	72,545	162,469	143,380
General and administrative	47,469	60,805	99,409	110,333
Amortization of acquired intangible assets	8,450	7,650	16,934	14,197
Restructuring and other charges, net	(1,562)	469	32,429	716
Total operating expenses	252,700	270,647	553,125	522,529
Operating income	159,190	101,690	221,368	192,029
Interest and debt premium expense	(12,239)	(12,925)	(25,225)	(24,444)
Other expense, net	(43,385)	(2,408)	(37,201)	(3,821)
Income before income taxes	103,566	86,357	158,942	163,764
Provision(benefit) for income taxes	13,887	(22,905)	23,174	30,987
Net income	$ 89,679	$ 109,262	$ 135,768	$ 132,777
Earnings per share—Basic	$ 0.77	$ 0.94	$ 1.16	$ 1.14
Earnings per share—Diluted	$ 0.76	$ 0.92	$ 1.15	$ 1.13
Weighted-average shares outstanding—Basic	117,008	116,777	117,135	116,587
Weighted-average shares outstanding—Diluted	117,811	118,331	118,162	117,966
Software
Revenue:
Revenue	$ 462,250	$ 421,767	$ 875,843	$ 815,188
Cost of revenue:
Cost of revenue	56,704	54,132	112,383	105,730
License
Revenue:
Revenue	218,375	198,011	387,483	375,186
Cost of revenue:
Cost of revenue	11,936	14,160	21,730	27,416
Support and cloud services
Revenue:
Revenue	243,875	223,756	488,360	440,002
Cost of revenue:
Cost of revenue	44,768	39,972	90,653	78,314
Professional services
Revenue:
Revenue	42,977	40,018	87,105	75,648
Cost of revenue:
Cost of revenue	$ 36,633	$ 35,316	$ 76,072	$ 70,548

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 89,679	$ 109,262	$ 135,768	$ 132,777
Other comprehensive income (loss), net of tax:
Hedge gain arising during the period, net of tax of $1.2 million and $0 million in the second quarter of 2022 and 2021, respectively, and $2 million and $0 million in the first six months of 2022 and 2021, respectively	3,697	7,017	6,192	238
Foreign currency translation adjustment, net of tax of $0 for each period	(11,356)	(15,851)	(17,024)	4,124
Unrealized loss on marketable securities, net of tax of $0 for each period	0	0	0	(307)
Amortization of net actuarial pension loss included in net income, net of tax of $0.1 million and $0.3 million in the second quarter of 2022 and 2021, respectively, and $0.2 million and $0.6 million in the first six months of 2022 and 2021, respectively	260	744	525	1,476
Change in unamortized pension gain (loss) during the period related to changes in foreign currency	538	1,018	923	(94)
Other comprehensive income (loss)	(6,861)	(7,072)	(9,384)	5,437
Comprehensive income	$ 82,818	$ 102,190	$ 126,384	$ 138,214

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Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Statement Of Income And Comprehensive Income [Abstract]
Hedge gain arising during the period, tax	$ 1,200,000	$ 0	$ 2,000,000	$ 0
Foreign currency translation adjustment, tax	0	0	0	0
Unrealized loss on marketable securities, tax	0	0	0	0
Amortization of net actuarial pension gain included in net income, tax	$ 100,000	$ 300,000	$ 200,000	$ 600,000

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net income	$ 135,768	$ 132,777
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	43,468	40,169
Amortization of right-of-use lease assets	17,536	18,956
Stock-based compensation	83,863	90,828
Loss on investment	34,847	0
Other non-cash items, net	(110)	(720)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable	12,310	(9,854)
Accounts payable and accrued expenses	(23,388)	6,142
Accrued compensation and benefits	(16,544)	(7,038)
Deferred revenue	47,012	52,210
Accrued income taxes	(6,279)	(4,944)
Other current assets and prepaid expenses	(20,569)	(17,049)
Operating lease liabilities	(3,360)	(9,982)
Other noncurrent assets and liabilities	(24,493)	(56,041)
Net cash provided by operating activities	280,061	235,454
Cash flows from investing activities:
Additions to property and equipment	(5,510)	(8,242)
Purchases of short- and long-term marketable securities	0	(7,562)
Proceeds from sales of short- and long-term marketable securities	0	56,170
Proceeds from maturities of short- and long-term marketable securities	0	9,861
Acquisitions of businesses, net of cash acquired	0	(717,198)
Proceeds from sale of investments	42,693	0
Purchases of investments	0	(1,000)
Purchase of intangible assets	(4,454)	(550)
Settlement of net investment hedges	11,308	(1,803)
Net cash provided by (used in) investing activities	44,037	(670,324)
Cash flows from financing activities:
Borrowings under credit facility	0	600,000
Repayments of borrowings under credit facility	(175,000)	(98,000)
Repurchases of common stock	(125,000)	0
Proceeds from issuance of common stock	10,857	10,484
Payments of withholding taxes in connection with stock-based awards	(50,595)	(27,242)
Payments of principal for financing leases	(239)	(279)
Net cash (used in) provided by financing activities	(339,977)	484,963
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,739)	543
Net change in cash, cash equivalents, and restricted cash	(19,618)	50,636
Cash, cash equivalents, and restricted cash, beginning of period	327,046	275,960
Cash, cash equivalents, and restricted cash, end of period	$ 307,428	$ 326,596

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Consolidated Statements of Stockholder's Equity - USD ($) shares in Thousands, $ in Thousands	Total	Net Investment Hedging	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Net Investment Hedging
Beginning balance at Sep. 30, 2020	$ 1,438,248		$ 1,161	$ 1,602,728	$ (62,267)	$ (103,374)
Beginning balance (in shares) at Sep. 30, 2020			116,125
Common stock issued for employee stock-based awards			$ 9	(9)
Common stock issued for employee stock-based awards (in shares)			862
Shares surrendered by employees to pay taxes related to stock-based awards	(27,241)		$ (2)	(27,239)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)			(276)
Common stock issued for employee stock purchase plan	10,484		$ 1	10,483
Common stock issued for employee stock purchase plan (in shares)			144
Compensation expense from stock-based awards	90,828			90,828
Net income	132,777				132,777
Unrealized gain (loss) on net investment hedges, net of tax		$ 238					$ 238
Foreign currency translation adjustment	4,124					4,124
Unrealized loss on available-for-sale securities, net of tax	(307)					(307)
Change in pension benefits, net of tax	1,382					1,382
Ending balance at Mar. 31, 2021	1,650,533		$ 1,169	1,676,791	70,510	(97,937)
Ending balance (in shares) at Mar. 31, 2021			116,855
Beginning balance at Dec. 31, 2020	1,494,929		$ 1,167	1,623,379	(38,752)	(90,865)
Beginning balance (in shares) at Dec. 31, 2020			116,664
Common stock issued for employee stock-based awards			$ 1	(1)
Common stock issued for employee stock-based awards (in shares)			60
Shares surrendered by employees to pay taxes related to stock-based awards	(1,810)			(1,810)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)			(13)
Common stock issued for employee stock purchase plan	10,484		$ 1	10,483
Common stock issued for employee stock purchase plan (in shares)			144
Compensation expense from stock-based awards	44,740			44,740
Net income	109,262				109,262
Unrealized gain (loss) on net investment hedges, net of tax		7,017					7,017
Foreign currency translation adjustment	(15,851)					(15,851)
Unrealized loss on available-for-sale securities, net of tax	0
Change in pension benefits, net of tax	1,762					1,762
Ending balance at Mar. 31, 2021	1,650,533		$ 1,169	1,676,791	70,510	(97,937)
Ending balance (in shares) at Mar. 31, 2021			116,855
Beginning balance at Sep. 30, 2021	$ 2,038,468		$ 1,172	1,718,504	414,656	(95,864)
Beginning balance (in shares) at Sep. 30, 2021	117,163		117,163
Common stock issued for employee stock-based awards			$ 12	(12)
Common stock issued for employee stock-based awards (in shares)			1,171
Shares surrendered by employees to pay taxes related to stock-based awards	$ (50,595)		$ (4)	(50,591)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)			(422)
Common stock issued for employee stock purchase plan	10,857		$ 1	10,856
Common stock issued for employee stock purchase plan (in shares)			110
Compensation expense from stock-based awards	83,863			83,863
Repurchases of common stock	$ (125,000)		$ (11)	(124,989)
Repurchases of common stock (in shares)	1,046		(1,046)
Net income	$ 135,768				135,768
Unrealized gain (loss) on net investment hedges, net of tax		6,192					6,192
Foreign currency translation adjustment	(17,024)					(17,024)
Unrealized loss on available-for-sale securities, net of tax	0
Change in pension benefits, net of tax	1,448					1,448
Ending balance at Mar. 31, 2022	$ 2,083,977		$ 1,170	1,637,631	550,424	(105,248)
Ending balance (in shares) at Mar. 31, 2022	116,976		116,976
Beginning balance at Dec. 31, 2021	$ 1,953,812		$ 1,169	1,590,285	460,745	(98,387)
Beginning balance (in shares) at Dec. 31, 2021			116,870
Common stock issued for employee stock-based awards			$ 1	(1)
Common stock issued for employee stock-based awards (in shares)			51
Shares surrendered by employees to pay taxes related to stock-based awards	(1,430)			(1,430)
Shares surrendered by employees to pay taxes related to stock-based awards (in shares)			(12)
Common stock issued for employee stock purchase plan	10,857		$ 1	10,856
Common stock issued for employee stock purchase plan (in shares)			110
Compensation expense from stock-based awards	37,921			37,921
Repurchases of common stock	$ (1)		$ (1)
Repurchases of common stock (in shares)	43		(43)
Net income	$ 89,679				89,679
Unrealized gain (loss) on net investment hedges, net of tax		$ 3,697					$ 3,697
Foreign currency translation adjustment	(11,356)					(11,356)
Unrealized loss on available-for-sale securities, net of tax	0
Change in pension benefits, net of tax	798					798
Ending balance at Mar. 31, 2022	$ 2,083,977		$ 1,170	$ 1,637,631	$ 550,424	$ (105,248)
Ending balance (in shares) at Mar. 31, 2022	116,976		116,976

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Basis of Presentation

6 Months Ended

Mar. 31, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. The September 30, 2021 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

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

Risks and Uncertainties - COVID-19 Pandemic

The COVID-19 pandemic that began in early 2020 continues to significantly affect global economic activity and create macroeconomic uncertainty.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of the COVID-19 pandemic as of March 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for doubtful accounts, stock-based compensation, the carrying value of our goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While our assessment did not result in a material impact to our consolidated financial statements as of and for the quarter ended March 31, 2022, our future assessment could result in material impacts to our consolidated financial statements in future reporting periods.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued Accounting Standards Update 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 this first quarter of 2022 ending December 31, 2021 and did not have a material impact on our consolidated financial statements.

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.

Business Combinations

In October 2021, the FASB issued Accounting Standards Update 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.  ASU 2021-08 will be effective for us in the first quarter of 2024, though we anticipate adopting the standard during 2022. We are currently evaluating the impact the standard will have on our consolidated financial statements, but at this time we do not expect it to be material based on contract assets and liabilities expected to be acquired.

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Revenue from Contracts with Customers

6 Months Ended

Mar. 31, 2022

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

2. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

(in thousands)	March 31, 2022		September 30, 2021
Contract asset	$	16,162	$	12,934
Deferred revenue	$	534,681	$	497,677

As of March 31, 2022, $11.5 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 long-term assets and expected to be transferred within the next 24 months. Approximately $6.8 million of the September 30, 2021 contract asset balance was transferred to receivables during the six months ended March 31, 2022 as a result of the right to payment becoming unconditional. Additions to contract assets of approximately $10.1 million related to revenue recognized in the period, net of billings. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. There were no impairments of contract assets during the six months ended March 31, 2022.

During the six months ended March 31, 2022, we recognized $357.9 million of revenue that was included in deferred revenue as of September 30, 2021 and there were additional deferrals of $394.9 million, primarily related to new billings. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of March 31, 2022 was $726.9 million, compared to total short- and long-term receivables as of September 30, 2021 of $744.6 million.

Our multi-year, non-cancellable on-premise subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of March 31, 2022 and September 30, 2021, the total refund liability was $36.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premise subscription software.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. 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 $0.7 million as of March 31, 2022 and $0.3 million as of September 30, 2021. Uncollectible trade accounts receivable written-off and bad debt expense were immaterial in the three and six months ended March 31, 2022.

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 are primarily related to commissions. As of March 31, 2022 and September 30, 2021, deferred costs of $40.6 million and $40.2 million, respectively, are included in other current assets and $78.0 million and $81.1 million, respectively, are included in other assets (non-current). Amortization expense related to costs to obtain a contract with a customer was $12.7 million and $24.3 million in the three and six months ended March 31, 2022, respectively, and $11.0 million and $21.4 million in the three and six months ended March 31, 2021, respectively. There were no impairments of the contract cost asset in the three and six months ended March 31, 2022 and March 31, 2021.

Remaining Performance Obligations

Our contracts with customers include transaction price amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2022, the transaction price amounts include performance obligations of $534.7 million recorded in deferred revenue and $1,019.4 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 83% of the total $1,554.1 million over the next 24 months, with the remaining amount thereafter.

Disaggregation of Revenue

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Recurring revenue(1)	$	452,710	$	414,845	$	857,835	$	799,803
Perpetual license		9,540		6,922		18,008		15,385
Professional services		42,977		40,018		87,105		75,648
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

(1)   Recurring revenue is comprised of subscription, perpetual support, SaaS, and cloud revenue.

For further disaggregation of revenue by geographic region and product group see Note 11. Segment and Geographic Information.

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Restructuring and Other Charges

6 Months Ended

Mar. 31, 2022

Restructuring And Related Activities [Abstract]

Restructuring and Other Charges

3. Restructuring and Other Charges

Restructuring and other charges, net includes restructuring charges (credits) and impairment and accretion expense charges related to the lease assets of exited facilities. Refer to Note 14. Leases for additional information about exited facilities.

In the three months ended March 31, 2022, restructuring and other charges, net totaled a credit of $1.6 million, of which $1.1 million is attributable to restructuring credits, and $0.5 million is attributable to sublease income related to exited lease facilities. We made cash payments related to restructuring charges of $17.3 million ($16.5 million related to the 2022 restructuring described below, $0.1 million related to a prior period restructuring, and $0.7 million in payments for facilities restructured in prior period).

In the six months ended March 31, 2022, restructuring and other charges, net totaled $32.4 million of which $33.1 million is attributable to restructuring charges, offset by a $0.7 million credit attributable to sublease income related to exited lease facilities. We made cash payments related to restructuring charges of $27.1 million ($25.6 million related to the 2022 restructuring described below, $0.1 million related to a prior period restructuring, and $1.4 million in payments for facilities restructured in prior periods).

In the three and six months ended March 31, 2021, restructuring and other charges, net totaled $0.5 million and $0.7 million, respectively, of which $0.2 million and $0.4 million is attributable to restructuring charges, respectively, and $0.3 million and $0.3 million is attributable to impairment and accretion expense related to exited facilities, respectively.

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-premise customers to move to the cloud. The restructuring plan resulted in credits of $0.5 million and charges of $33.6 million in the second quarter and first six months of 2022, primarily associated with the termination benefits of approximately 330 employees, in addition to the $1.7 million of professional fees recorded in the fourth quarter of 2021 in connection with the re-organization.  We are anticipating total restructuring charges for this plan to be $35 to $40 million.

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. During the six months ended March 31, 2022 and March 31, 2021, we incurred credits of $0.1 million and charges of $0.2 million respectively, in connection with this restructuring plan.

The following table summarizes restructuring accrual activity for the six months ended March 31, 2022:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2021	$	1,981		$	3,505		$	5,486
Charges to operations, net		33,428			(377	)		33,051
Cash disbursements		(25,744	)		(1,336	)		(27,080	)
Foreign exchange impact		(354	)		—			(354	)
Accrual, March 31, 2022	$	9,311		$	1,792		$	11,103

The following table summarizes restructuring accrual activity for the six months ended March 31, 2021:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2020	$	3,992		$	5,995		$	9,987
Charges to operations, net		163			199			362
Cash disbursements		(3,924	)		(1,497	)		(5,421	)
Foreign exchange impact		31			14			45
Accrual, March 31, 2021	$	262		$	4,711		$	4,973

The accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets.

The accrual for facility closures and related costs is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

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Stock-based Compensation

6 Months Ended

Mar. 31, 2022

Share Based Compensation Allocation And Classification In Financial Statements [Abstract]

Stock-Based Compensation

4. Stock-based Compensation

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units (RSUs) and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as our principal equity incentive awards.

The following table shows RSU activity for the six months ended March 31, 2022:

(in thousands, except grant date fair value data)	Number of RSUs			Weighted-Average Grant Date Fair Value Per RSU
Balance of outstanding restricted stock units, October 1, 2021		3,216		$	92.83
Granted(1)		1,064		$	116.70
Vested		(1,170	)	$	92.97
Forfeited or not earned		(246	)	$	97.77
Balance of outstanding restricted stock units, March 31, 2022		2,864		$	101.21

(1) Restricted stock units granted includes 37 shares from prior period TSR 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)	Six months ended March 31, 2022
Performance-based RSUs(1)		89
Service-based RSUs(2)		775
Total Shareholder Return RSUs(3)		76

(1) The performance-based RSUs were 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 (a maximum aggregate of 165 thousand 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 Total Shareholder Return RSUs (TSR 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 TSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 thousand 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 TSR RSUs may vest.

The weighted-average fair value of the TSR RSUs was 136.43 per target RSU on the grant date. The fair value of the TSR RSUs was determined using a Monte Carlo simulation model.

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	—	%

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cost of license revenue	$	37	$	20	$	75	$	40
Cost of support and cloud services revenue		2,161		2,309		5,639		4,611
Cost of professional services revenue		2,066		2,177		4,522		4,289
Sales and marketing		11,446		13,305		24,527		28,304
Research and development		9,504		7,921		19,680		16,364
General and administrative		12,707		19,008		29,420		37,220
Total stock-based compensation expense	$	37,921	$	44,740	$	83,863	$	90,828

Stock-based compensation expense includes $1.3 million and $3.2 million in the second quarter and first six months of 2022, respectively, and $1.8 million and $3.8 million in the second quarter and first six months of 2021, respectively, related to our employee stock purchase plan.

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Earnings per Share (EPS) and Common Stock

6 Months Ended

Mar. 31, 2022

Earnings Per Share And Common Stock [Abstract]

Earnings per Share (EPS) and Common Stock

5. Earnings per Share (EPS) and Common Stock

EPS

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

(in thousands, except per share data)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Net income	$	89,679	$	109,262	$	135,768	$	132,777
Weighted-average shares outstanding—Basic		117,008		116,777		117,135		116,587
Dilutive effect of restricted stock units		803		1,554		1,027		1,379
Weighted-average shares outstanding—Diluted		117,811		118,331		118,162		117,966
Earnings per share—Basic	$	0.77	$	0.94	$	1.16	$	1.14
Earnings per share—Diluted	$	0.76	$	0.92	$	1.15	$	1.13

Anti-dilutive shares for the three and six months ended March 31, 2022 and for the three and six months ended March 31, 2021 were immaterial.

Common Stock Repurchases

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. In the second quarter and first six months of 2022 we repurchased 43 thousand shares for $5.3 million and 1,046 thousand shares for $125.0 million, respectively.  We did not repurchase any shares in the second quarter and first six months of 2021. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

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Acquisitions

6 Months Ended

Mar. 31, 2022

Business Combinations [Abstract]

Acquisitions

6. Acquisitions

Acquisition and transaction-related costs in the second quarter and first six months of 2022 totaled $3.9 million and $5.0 million, respectively, compared to $10.3 million and $14.2 million, respectively, in the second quarter and first six months of 2021. These costs are classified in general and administrative expenses in the accompanying Consolidated Statements of Operations.

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), expenses related to acquisition integration activities (e.g., professional fees and severance), and other transactional charges include third-party costs related to structuring unusual transactions. In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition-related charges.

Our results of operations include the results of acquired or sold businesses beginning on their respective acquisition or sale date. Our results of operations for the reported periods if presented on a pro forma basis would not differ materially from our reported results.

Arena

On January 15, 2021, we acquired Arena Holdings, Inc. (“Arena”) pursuant to the 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, the material terms of which are described in the Form 8-K filed by us on December 14, 2020 and which is filed as Exhibit 1.1 to that Form 8-K. 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 is net of approximately $9.1 million in fair value adjustments related to purchase accounting for the acquisition.

The acquisition of Arena 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 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.

Refer to Note 16. Subsequent Events for additional information regarding the acquisition of Intland Software in April 2022.

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Goodwill and Intangible Assets

6 Months Ended

Mar. 31, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

7. Goodwill and 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 March 31, 2022, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,496.7 million and attributable to our Professional Services segment was $44.8 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. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We evaluate goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. 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.

We completed our annual goodwill impairment review as of June 30, 2021 based on a qualitative assessment. Our qualitative assessment 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 values of our reporting units exceed their carrying values and no further impairment testing is required. Through March 31, 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.

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	March 31, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,186,156					$	2,191,887
Intangible assets with finite lives (amortized):
Purchased software	$	487,399	$	348,736	$	138,663	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		570,920		363,623		207,297		574,516		350,648		223,868
Trademarks and trade names		26,772		17,372		9,400		26,906		17,036		9,870
Other		3,933		3,933		—		4,000		4,000		—
Total intangible assets with finite lives	$	1,111,901	$	756,541	$	355,360	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,541,516					$	2,570,854

Goodwill

Changes in goodwill presented by reportable segments were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, October 1, 2021	$	2,148,968		$	42,919		$	2,191,887
Acquisitions		691			—			691
Foreign currency translation adjustment		(6,296	)		(126	)		(6,422	)
Balance, March 31, 2022	$	2,143,363		$	42,793		$	2,186,156

Amortization of Intangible Assets

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Amortization of acquired intangible assets	$	8,450	$	7,650	$	16,934	$	14,197
Cost of license revenue		5,921		7,117		12,414		13,384
Total amortization expense	$	14,371	$	14,767	$	29,348	$	27,581

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Fair Value Measurements

6 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

8. 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. GAAP prescribes 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. There are 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.

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.

The principal market in which we execute our foreign currency derivatives 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 derivatives’ 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 March 31, 2022 and September 30, 2021 were as follows:

(in thousands)	March 31, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents (1)	$	108,064	$	—	$	—	$	108,064
Convertible note		—		—		2,000		2,000
Forward contracts		—		1,646		—		1,646
Options		—		2,322		—		2,322
	$	108,064	$	3,968	$	2,000	$	114,032
Financial liabilities:
Forward contracts		—		2,637		—		2,637
	$	—	$	2,637	$	—	$	2,637

(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 into 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 three and six months ended March 31, 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 $2.2 million for the periods ended March 31, 2022 and September 30, 2021, respectively.

Equity Securities

During the quarter ended March 31, 2022, PTC sold all shares held in a publicly-traded company, Matterport. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the quarter based on contingent earn-outs achieved in January based on achievement of stock value milestones. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport, Inc. 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 additionally sold $3.6 million of shares at an average share price of $7.6 per share. Due to the decline in the price per share during fiscal 2022, for the three and six months ended March 31, 2022 we recognized a loss of $44.6 million and $34.8 million respectively, in other expense, net on the Consolidated Statements of Operations. The aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The following table provides a summary of changes in the fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to March 31, 2022:

(in thousands)	March 31, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment(1)		(39,072	)
Balance, March 31, 2022	$	—

(1) Equity securities sold upon expirations of the restriction in January 2022.  

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Marketable Securities

6 Months Ended

Mar. 31, 2022

Marketable Securities [Abstract]

Marketable Securities

9. Marketable Securities

We did not hold any marketable securities as of September 30, 2021 or March 31, 2022. In December 2020, we sold our remaining 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

6 Months Ended

Mar. 31, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

10. Derivative Financial Instruments

We enter into derivative transactions, specifically foreign currency forward contracts and options, to manage our exposure to foreign currency exchange risk in order to reduce earnings volatility. We do not enter into derivative transactions for trading or speculative purposes.

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
	March 31, 2022		September 30, 2021		March 31, 2022		September 30, 2021
Derivative assets(1):
Forward Contracts	$	—	$	1,641	$	1,646	$	3,722
Options	$	—	$	—	$	2,322	$	—
Derivative liabilities(2):
Forward Contracts	$	825	$	—	$	1,812	$	3,318

(1) As of March 31, 2022 and September 30, 2021, current derivative assets of $4.0 million and $5.4 million, respectively, are recorded in other current assets in the Consolidated Balance Sheets.

(2) As of March 31, 2022 and September 30, 2021, current derivative liabilities of $2.6 million and $3.3 million, respectively, are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Non-Designated Hedges

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

We hedge our forecasted U.S. Dollar cash flows with foreign exchange options to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These contracts have maturities of up to approximately seven months. We do not designate these foreign currency options as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into options as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations as compared to the forecasted plan rate may be partially offset by the gain on the put option. Gain on put options are included in Other expense, net.

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts and options with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Canadian / U.S. Dollar	$	5,605	$	4,894
Euro / U.S. Dollar(1)		500,632		387,466
British Pound / U.S. Dollar		10,537		23,141
Israeli Shekel / U.S. Dollar		9,148		10,475
Japanese Yen / U.S. Dollar(2)		28,826		46,450
Swiss Franc / U.S. Dollar		17,299		18,039
Swedish Krona / U.S. Dollar		31,352		34,196
Chinese Renminbi / U.S. Dollar		37,735		23,297
New Taiwan Dollar / U.S. Dollar		5,410		3,369
Romanian Leu/ U.S. Dollar		4,651		778
Russian Ruble/ U.S. Dollar		—		2,614
Danish krone/ U.S. Dollar		8,891		2,380
Australian Dollar/ U.S. Dollar		5,052		2,086
All other		8,146		4,736
Total	$	673,284	$	563,921

(1) As of March 31, 2022, $472.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $28.2 million relates to options. As of September 30, 2021, all of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts

(2) As of March 31, 2022, $2.5 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $26.3 million relates to options. As of September 30, 2021, all of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended					Six months ended
	Location of Gain (Loss)	March 31, 2022		March 31, 2021			March 31, 2022		March 31, 2021
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other expense, net	$	3,797	$	(3,033	)	$	362	$	(4,620	)

In the three months ended March 31, 2022 and March 31, 2021, foreign currency gains, net were $0.4 million and foreign currency losses, net were $2.4 million, respectively. In the six months ended March 31, 2022 and March 31, 2021 foreign currency losses, net were $4.0 million and $4.2 million, respectively.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar 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 Sheets. 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 Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge 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 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.

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Euro / U.S. Dollar	$	153,470	$	128,103

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended						Six months ended
	Location of Gain (Loss)	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Gain (loss) recognized in OCI	OCI	$	81		$	1,462		$	(3,075	)	$	2,041
Loss reclassified from OCI	OCI		(1,415	)		(3,041	)		(7,150	)		(99	)
Gain recognized, excluded portion	Other expense, net		342			426			609			733

As of March 31, 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.

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements for our forward contracts 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 March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	1,646	$	—	$	1,646	$	(1,646	)	$	—	$	—

The following table sets forth the offsetting of derivative liabilities as of March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	2,637	$	—	$	2,637	$	(1,646	)	$	—	$	991

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Segment and Geographic Information

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment and Geographic Information

11. 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 President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales 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 asset information by reportable segment; therefore, it is not reported.

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Software Products
Revenue	$	462,250		$	421,767		$	875,843		$	815,188
Operating costs(1)		121,016			109,310			237,044			214,711
Profit		341,234			312,457			638,799			600,477
Professional Services
Revenue		42,977			40,018			87,105			75,648
Operating costs(2)		34,567			33,139			71,550			66,259
Profit		8,410			6,879			15,555			9,389
Total segment revenue		505,227			461,785			962,948			890,836
Total segment costs		155,583			142,449			308,594			280,970
Total segment profit		349,644			319,336			654,354			609,866
Unallocated operating expenses:
Sales and marketing expenses		104,962			115,873			217,357			225,599
General and administrative expenses		30,859			31,487			65,036			58,887
Restructuring and other charges, net		(1,562	)		469			32,429			716
Intangibles amortization		14,371			14,767			29,348			27,581
Stock-based compensation		37,921			44,740			83,863			90,828
Other unallocated operating expenses(3)		3,903			10,310			4,953			14,226
Total operating income		159,190			101,690			221,368			192,029
Interest and debt premium expense		(12,239	)		(12,925	)		(25,225	)		(24,444	)
Other expense, net		(43,385	)		(2,408	)		(37,201	)		(3,821	)
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764

(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.

(2) Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation.

(3) Other unallocated operating expenses include acquisition-related and other transactional costs.

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)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Americas	$	202,999	$	180,329	$	415,880	$	382,609
Europe		79,265		202,477		161,797		364,796
Asia Pacific		222,963		78,979		385,271		143,431
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

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Income Taxes

6 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764
Provision(benefit) for income taxes	$	13,887		$	(22,905	)	$	23,174		$	30,987
Effective income tax rate		13	%		(27	)%		15	%		19	%

In the second quarter and first six months of 2022 and 2021, our effective tax rate differed from the statutory federal income tax rate of 21% due to 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 and 2021, the foreign rate differential predominantly relates to these earnings.

In 2022 and 2021, in addition to the foreign rate differential, the effective tax rate was impacted by the net effects of the Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes and the excess tax benefit related to stock-based compensation.

In the second quarter and first six months of 2021, our results also include the effects of the full valuation allowance which was maintained against our U.S. net deferred tax assets at that time. In the second quarter of 2021, we reduced our previously established U.S. valuation allowance by $42.3 million as a result of the Arena acquisition.  Additionally, in the first six months of 2021, our results also include a charge of $36.1 million related to the effects of an unrecognized tax benefit in the Republic of Korea (South Korea), primarily related to foreign withholding taxes.

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 it was more likely than not that our deferred tax assets related to United States federal and state income would be realizable, and therefore, the United States federal and the majority of the state valuation allowances were released in the fourth quarter of 2021. In the second quarter of 2022, we continue to maintain this conclusion.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits.

As of March 31, 2022 and September 30, 2021, we had unrecognized tax benefits of $24.1 million and $21.2 million, respectively. If all our unrecognized tax benefits as of March 31, 2022 were to become recognizable in the future, we would record a benefit to the income tax provision of $24.1 million, which would be partially offset by an increase in the U.S. valuation allowance of $4.8 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $3 million.

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Debt

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt

13. Debt

At March 31, 2022 and September 30, 2021, we had the following long-term debt obligations:

(in thousands)	March 31, 2022			September 30, 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)		275,000			450,000
Total debt		1,275,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(9,454	)		(10,529	)
Total debt, net of issuance costs	$	1,265,546		$	1,439,471

(1) Unamortized debt issuance costs related to the credit facility were $3.2 million and $3.8 million as of March 31, 2022 and September 30, 2021, respectively, and are included in other assets on the Consolidated Balance Sheets.

(2) Unamortized debt issuance costs are included in long-term debt on the Consolidated Balance Sheets.

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 March 31, 2022, the total estimated fair value of the 2028 and 2025 notes was approximately $488.0 million and $495.6 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 March 31, 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 expect to use the new 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. 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 March 31, 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-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors. As of the filing of this Form 10-Q, 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 March 31, 2022, the annual rate for borrowings outstanding was 1.81%. 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 March 31, 2022, our total leverage ratio was 1.84 to 1.00, our senior secured leverage ratio was 0.41 to 1.00 and our interest coverage ratio was 14.46 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 the second quarter and first six months of 2022, we paid $21.5 million and $23.8 million of interest on our debt, respectively, and $19.8 million and $20.5 million in the second quarter and first six months of 2021, respectively. The average interest rate on borrowings outstanding was approximately 3.2% and 3.2% during the second quarter and first six months of 2022, respectively, and 3.3% and 3.5% during the second quarter and first six months of 2021, respectively.

Refer to Note 16. Subsequent Events for additional information regarding additional borrowing in April 2022 under the existing credit facility for the purchase of Intland Software.

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Leases

6 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

14. Leases

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

Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts. In February 2019, we subleased a portion of our headquarters through June 30, 2022. We will receive approximately $9.1 million in sublease income over the term of the sublease. In March 2022, we have extended the sublease through June 30, 2023, and we will receive additional sublease income over the term of the extension of approximately $2.9 million.

The components of lease cost reflected in the Consolidated Statement of Operations for the three and six months ended March 31, 2022 and March 31, 2021 were as follows:

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Operating lease cost	$	8,676		$	9,565		$	17,536		$	18,956
Short-term lease cost		582			610			1,123			1,158
Variable lease cost		2,596			2,476			5,086			4,863
Sublease income		(1,113	)		(1,131	)		(2,230	)		(2,215	)
Total lease cost	$	10,741		$	11,520		$	21,515		$	22,762

Supplemental cash flow and right-of-use assets information for the three and six months ended March 31, 2022 was as follows:

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,248	$	14,016	$	25,113	$	28,076
Financing cash flows from financing leases	$	—	$	—	$	239	$	279
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	6,179	$	53	$	11,095	$	647
Financing leases	$	—	$	—	$	—	$	—

Supplemental balance sheet information related to the leases as of March 31, 2022 was as follows:

	As of March 31, 2022
Weighted-average remaining lease term - operating leases	11.7 years
Weighted-average remaining lease term - financing leases	2.4 years
Weighted-average discount rate - operating leases		5.3	%
Weighted-average discount rate - financing leases		3.0	%

Maturities of lease liabilities as of March 31, 2022 are as follows:

(in thousands)
Remainder of 2022	$	18,452
2023		31,054
2024		27,018
2025		24,090
2026		20,125
Thereafter		160,580
Total future lease payments	$	281,319
Less: imputed interest		(77,329	)
Total lease liability	$	203,990

Exited (Restructured) Facilities

As of March 31, 2022, we had net liabilities of $1.7 million related to excess facilities (compared to $3.6 million at September 30, 2021), representing $0.3 million of right-of-use assets and $2.0 million of lease obligations, all of which is classified as short term. Variable costs related to these exited facilities are included in our restructuring accrual. All expenses and income associated with exited facilities are included in restructuring and other charges, net (refer to Note 3. Restructuring and Other Charges).

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 March 31, 2022, the right-of-use assets for exited facilities reflects discounted committed sublease income of approximately $0.7 million.

In the three and six months ended March 31, 2022, we made payments of $0.6 million and $1.3 million, respectively, related to lease costs for exited facilities. In the three and six months ended March 31, 2021, we made payments of $2.5 million and $6.3 million, respectively.

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

As March 31, 2022 and March 31, 2021, we had letters of credit and bank guarantees outstanding of $15.2 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 (“Plan”), and the Board of Directors (collectively, the “PTC Defendants”) in the U.S. District Court for the District of Massachusetts alleging claims regarding the Plan. Plaintiffs allege that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") in the oversight of the Plan, principally by allegedly selecting and retaining certain investment options despite their higher fees and costs than other available investment options, causing participants in the Plan to pay excessive recordkeeping fees and suffer lower returns on their investments, and by allegedly failing to monitor other fiduciaries. The plaintiffs sought unspecified damages on behalf of a class of Plan participants from September 17, 2014 through the date of any judgment. The plaintiffs and the PTC Defendants reached an agreement in principle to settle the lawsuit on September 22, 2021 and filed a motion for preliminary approval on December 17, 2021. The ultimate outcome by judgment or settlement is not expected to be material to our financial position, results of operations or cash flows.

Other Legal Proceedings

In addition to the matters listed above, we are subject to legal proceedings and claims against us in the ordinary course of business. As of March 31, 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, the liability for which is uncapped, 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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Subsequent Events

6 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

Acquisition of 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 develops and markets the Codebeamer^® Application Lifecycle Management (ALM) family of software products. We paid approximately $280 million for Intland Software, net of cash acquired.

Borrowings under Credit Facility

In April 2022, we borrowed $264 million under our existing credit facility to acquire Intland Software, bringing our total outstanding indebtedness to approximately $1.5 billion.

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Mar. 31, 2022

Revenue From Contract With Customer [Abstract]

Schedule of Contract Assets and Liabilities

Contract Assets and Contract Liabilities

(in thousands)	March 31, 2022		September 30, 2021
Contract asset	$	16,162	$	12,934
Deferred revenue	$	534,681	$	497,677

Disaggregation of Revenue

Disaggregation of Revenue

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Recurring revenue(1)	$	452,710	$	414,845	$	857,835	$	799,803
Perpetual license		9,540		6,922		18,008		15,385
Professional services		42,977		40,018		87,105		75,648
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

(1)   Recurring revenue is comprised of subscription, perpetual support, SaaS, and cloud revenue.

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Restructuring and Other Charges (Tables)

6 Months Ended

Mar. 31, 2022

Restructuring And Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost

The following table summarizes restructuring accrual activity for the six months ended March 31, 2022:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2021	$	1,981		$	3,505		$	5,486
Charges to operations, net		33,428			(377	)		33,051
Cash disbursements		(25,744	)		(1,336	)		(27,080	)
Foreign exchange impact		(354	)		—			(354	)
Accrual, March 31, 2022	$	9,311		$	1,792		$	11,103

The following table summarizes restructuring accrual activity for the six months ended March 31, 2021:

(in thousands)	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
Accrual, October 1, 2020	$	3,992		$	5,995		$	9,987
Charges to operations, net		163			199			362
Cash disbursements		(3,924	)		(1,497	)		(5,421	)
Foreign exchange impact		31			14			45
Accrual, March 31, 2021	$	262		$	4,711		$	4,973

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Stock-based Compensation (Tables)

6 Months Ended

Mar. 31, 2022

Share Based Compensation Allocation And Classification In Financial Statements [Abstract]

Schedule of RSU Activity

The following table shows RSU activity for the six months ended March 31, 2022:

(in thousands, except grant date fair value data)	Number of RSUs			Weighted-Average Grant Date Fair Value Per RSU
Balance of outstanding restricted stock units, October 1, 2021		3,216		$	92.83
Granted(1)		1,064		$	116.70
Vested		(1,170	)	$	92.97
Forfeited or not earned		(246	)	$	97.77
Balance of outstanding restricted stock units, March 31, 2022		2,864		$	101.21

(1) Restricted stock units granted includes 37 shares from prior period TSR 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)	Six months ended March 31, 2022
Performance-based RSUs(1)		89
Service-based RSUs(2)		775
Total Shareholder Return RSUs(3)		76

(1) The performance-based RSUs were 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 (a maximum aggregate of 165 thousand 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 Total Shareholder Return RSUs (TSR 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 TSR RSUs eligible to be earned for the period (up to a maximum aggregate of 152 thousand 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 TSR 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 Classification of Compensation Expense

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cost of license revenue	$	37	$	20	$	75	$	40
Cost of support and cloud services revenue		2,161		2,309		5,639		4,611
Cost of professional services revenue		2,066		2,177		4,522		4,289
Sales and marketing		11,446		13,305		24,527		28,304
Research and development		9,504		7,921		19,680		16,364
General and administrative		12,707		19,008		29,420		37,220
Total stock-based compensation expense	$	37,921	$	44,740	$	83,863	$	90,828

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

6 Months Ended

Mar. 31, 2022

Earnings Per Share And Common Stock [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)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Net income	$	89,679	$	109,262	$	135,768	$	132,777
Weighted-average shares outstanding—Basic		117,008		116,777		117,135		116,587
Dilutive effect of restricted stock units		803		1,554		1,027		1,379
Weighted-average shares outstanding—Diluted		117,811		118,331		118,162		117,966
Earnings per share—Basic	$	0.77	$	0.94	$	1.16	$	1.14
Earnings per share—Diluted	$	0.76	$	0.92	$	1.15	$	1.13

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Mar. 31, 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)	March 31, 2022						September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	2,186,156					$	2,191,887
Intangible assets with finite lives (amortized):
Purchased software	$	487,399	$	348,736	$	138,663	$	483,771	$	338,542	$	145,229
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		570,920		363,623		207,297		574,516		350,648		223,868
Trademarks and trade names		26,772		17,372		9,400		26,906		17,036		9,870
Other		3,933		3,933		—		4,000		4,000		—
Total intangible assets with finite lives	$	1,111,901	$	756,541	$	355,360	$	1,112,070	$	733,103	$	378,967
Total goodwill and acquired intangible assets					$	2,541,516					$	2,570,854

Schedule of Changes in Goodwill by Reportable Segments

Changes in goodwill presented by reportable segments were as follows:

(in thousands)	Software Products			Professional Services			Total
Balance, October 1, 2021	$	2,148,968		$	42,919		$	2,191,887
Acquisitions		691			—			691
Foreign currency translation adjustment		(6,296	)		(126	)		(6,422	)
Balance, March 31, 2022	$	2,143,363		$	42,793		$	2,186,156

Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives

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

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Amortization of acquired intangible assets	$	8,450	$	7,650	$	16,934	$	14,197
Cost of license revenue		5,921		7,117		12,414		13,384
Total amortization expense	$	14,371	$	14,767	$	29,348	$	27,581

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 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 March 31, 2022 and September 30, 2021 were as follows:

(in thousands)	March 31, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents (1)	$	108,064	$	—	$	—	$	108,064
Convertible note		—		—		2,000		2,000
Forward contracts		—		1,646		—		1,646
Options		—		2,322		—		2,322
	$	108,064	$	3,968	$	2,000	$	114,032
Financial liabilities:
Forward contracts		—		2,637		—		2,637
	$	—	$	2,637	$	—	$	2,637

(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 provides a summary of changes in the fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to March 31, 2022:

(in thousands)	March 31, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment(1)		(39,072	)
Balance, March 31, 2022	$	—

(1) Equity securities sold upon expirations of the restriction in January 2022.  

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Derivative Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

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
	March 31, 2022		September 30, 2021		March 31, 2022		September 30, 2021
Derivative assets(1):
Forward Contracts	$	—	$	1,641	$	1,646	$	3,722
Options	$	—	$	—	$	2,322	$	—
Derivative liabilities(2):
Forward Contracts	$	825	$	—	$	1,812	$	3,318

(1) As of March 31, 2022 and September 30, 2021, current derivative assets of $4.0 million and $5.4 million, respectively, are recorded in other current assets in the Consolidated Balance Sheets.

(2) As of March 31, 2022 and September 30, 2021, current derivative liabilities of $2.6 million and $3.3 million, respectively, are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Schedule of Notional Amounts of Outstanding Forward Contracts and Options

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts and options with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Canadian / U.S. Dollar	$	5,605	$	4,894
Euro / U.S. Dollar(1)		500,632		387,466
British Pound / U.S. Dollar		10,537		23,141
Israeli Shekel / U.S. Dollar		9,148		10,475
Japanese Yen / U.S. Dollar(2)		28,826		46,450
Swiss Franc / U.S. Dollar		17,299		18,039
Swedish Krona / U.S. Dollar		31,352		34,196
Chinese Renminbi / U.S. Dollar		37,735		23,297
New Taiwan Dollar / U.S. Dollar		5,410		3,369
Romanian Leu/ U.S. Dollar		4,651		778
Russian Ruble/ U.S. Dollar		—		2,614
Danish krone/ U.S. Dollar		8,891		2,380
Australian Dollar/ U.S. Dollar		5,052		2,086
All other		8,146		4,736
Total	$	673,284	$	563,921

(1) As of March 31, 2022, $472.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $28.2 million relates to options. As of September 30, 2021, all of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts

(2) As of March 31, 2022, $2.5 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $26.3 million relates to options. As of September 30, 2021, all of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.

As of March 31, 2022 and September 30, 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

Currency Hedged (in thousands)	March 31, 2022		September 30, 2021
Euro / U.S. Dollar	$	153,470	$	128,103

Schedule of Net Gains and Losses on Foreign Currency Exposures

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended					Six months ended
	Location of Gain (Loss)	March 31, 2022		March 31, 2021			March 31, 2022		March 31, 2021
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other expense, net	$	3,797	$	(3,033	)	$	362	$	(4,620	)

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2022 and March 31, 2021:

(in thousands)		Three months ended						Six months ended
	Location of Gain (Loss)	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Gain (loss) recognized in OCI	OCI	$	81		$	1,462		$	(3,075	)	$	2,041
Loss reclassified from OCI	OCI		(1,415	)		(3,041	)		(7,150	)		(99	)
Gain recognized, excluded portion	Other expense, net		342			426			609			733

Schedule of Offsetting Assets

The following table sets forth the offsetting of derivative assets as of March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	1,646	$	—	$	1,646	$	(1,646	)	$	—	$	—

Schedule of Offsetting Liabilities

The following table sets forth the offsetting of derivative liabilities as of March 31, 2022:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 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	$	2,637	$	—	$	2,637	$	(1,646	)	$	—	$	991

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Segment and Geographic Information (Tables)

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

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 asset information by reportable segment; therefore, it is not reported.

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Software Products
Revenue	$	462,250		$	421,767		$	875,843		$	815,188
Operating costs(1)		121,016			109,310			237,044			214,711
Profit		341,234			312,457			638,799			600,477
Professional Services
Revenue		42,977			40,018			87,105			75,648
Operating costs(2)		34,567			33,139			71,550			66,259
Profit		8,410			6,879			15,555			9,389
Total segment revenue		505,227			461,785			962,948			890,836
Total segment costs		155,583			142,449			308,594			280,970
Total segment profit		349,644			319,336			654,354			609,866
Unallocated operating expenses:
Sales and marketing expenses		104,962			115,873			217,357			225,599
General and administrative expenses		30,859			31,487			65,036			58,887
Restructuring and other charges, net		(1,562	)		469			32,429			716
Intangibles amortization		14,371			14,767			29,348			27,581
Stock-based compensation		37,921			44,740			83,863			90,828
Other unallocated operating expenses(3)		3,903			10,310			4,953			14,226
Total operating income		159,190			101,690			221,368			192,029
Interest and debt premium expense		(12,239	)		(12,925	)		(25,225	)		(24,444	)
Other expense, net		(43,385	)		(2,408	)		(37,201	)		(3,821	)
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764

(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.

(2) Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation.

(3) Other unallocated operating expenses include acquisition-related and other transactional costs.

Summary of Revenue for Geographic Regions

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)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Americas	$	202,999	$	180,329	$	415,880	$	382,609
Europe		79,265		202,477		161,797		364,796
Asia Pacific		222,963		78,979		385,271		143,431
Total revenue	$	505,227	$	461,785	$	962,948	$	890,836

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Income Taxes (Tables)

6 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Summary of Income Taxes

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Income before income taxes	$	103,566		$	86,357		$	158,942		$	163,764
Provision(benefit) for income taxes	$	13,887		$	(22,905	)	$	23,174		$	30,987
Effective income tax rate		13	%		(27	)%		15	%		19	%

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Debt (Tables)

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt Obligations

At March 31, 2022 and September 30, 2021, we had the following long-term debt obligations:

(in thousands)	March 31, 2022			September 30, 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)		275,000			450,000
Total debt		1,275,000			1,450,000
Unamortized debt issuance costs for the senior notes(2)		(9,454	)		(10,529	)
Total debt, net of issuance costs	$	1,265,546		$	1,439,471

(1) Unamortized debt issuance costs related to the credit facility were $3.2 million and $3.8 million as of March 31, 2022 and September 30, 2021, respectively, and are included in other assets on the Consolidated Balance Sheets.

(2) Unamortized debt issuance costs are included in long-term debt on the Consolidated Balance Sheets.

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Leases (Tables)

6 Months Ended

Mar. 31, 2022

Leases [Abstract]

Components of Lease Cost

The components of lease cost reflected in the Consolidated Statement of Operations for the three and six months ended March 31, 2022 and March 31, 2021 were as follows:

(in thousands)	Three months ended						Six months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Operating lease cost	$	8,676		$	9,565		$	17,536		$	18,956
Short-term lease cost		582			610			1,123			1,158
Variable lease cost		2,596			2,476			5,086			4,863
Sublease income		(1,113	)		(1,131	)		(2,230	)		(2,215	)
Total lease cost	$	10,741		$	11,520		$	21,515		$	22,762

Supplemental cash flow and right-of-use assets information for the three and six months ended March 31, 2022 was as follows:

(in thousands)	Three months ended				Six months ended
	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,248	$	14,016	$	25,113	$	28,076
Financing cash flows from financing leases	$	—	$	—	$	239	$	279
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	6,179	$	53	$	11,095	$	647
Financing leases	$	—	$	—	$	—	$	—

Supplemental balance sheet information related to the leases as of March 31, 2022 was as follows:

	As of March 31, 2022
Weighted-average remaining lease term - operating leases	11.7 years
Weighted-average remaining lease term - financing leases	2.4 years
Weighted-average discount rate - operating leases		5.3	%
Weighted-average discount rate - financing leases		3.0	%

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of March 31, 2022 are as follows:

(in thousands)
Remainder of 2022	$	18,452
2023		31,054
2024		27,018
2025		24,090
2026		20,125
Thereafter		160,580
Total future lease payments	$	281,319
Less: imputed interest		(77,329	)
Total lease liability	$	203,990

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Revenue from Contracts with Customers - Schedule of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Revenue From Contract With Customer [Abstract]
Contract asset	$ 16,162	$ 12,934
Deferred revenue	$ 534,681	$ 497,677

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Revenue from Contracts with Customers - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	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	$ 11,500,000		$ 11,500,000
Contract with customer, asset, reclassified to receivable			6,800,000
Contract with customer, asset, increase in contract assets related to revenue recognized			10,100,000
Impairments of the contract cost asset	0	$ 0	0	$ 0
Deferred revenue, revenue recognized			357,900,000
Deferred revenue, additions			394,900,000
Short term and long term accounts receivable	726,900,000		726,900,000		$ 744,600,000
Refund liability	36,200,000		36,200,000		40,300,000
Allowance for doubtful accounts receivable	700,000		700,000		300,000
Amortization expense related to costs to obtain a contract with a customer	12,700,000	$ 11,000,000.0	24,300,000	$ 21,400,000
Deferred revenue	534,681,000		534,681,000		497,677,000
Revenue, remaining performance obligation, amount	1,554,100,000		1,554,100,000
Unrecorded
Revenue from External Customer [Line Items]
Revenue, remaining performance obligation, amount	1,019,400,000		1,019,400,000
Other Current Assets
Revenue from External Customer [Line Items]
Capitalized contract cost, net	40,600,000		40,600,000		40,200,000
Other Assets
Revenue from External Customer [Line Items]
Capitalized contract cost, net	$ 78,000,000.0		$ 78,000,000.0		$ 81,100,000

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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: 2022-04-01	Mar. 31, 2022
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, percentage	83.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	24 months

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Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Disaggregation Of Revenue [Line Items]
Revenue		$ 505,227	$ 461,785	$ 962,948	$ 890,836
Recurring revenue
Disaggregation Of Revenue [Line Items]
Revenue	[1]	452,710	414,845	857,835	799,803
Perpetual license
Disaggregation Of Revenue [Line Items]
Revenue		9,540	6,922	18,008	15,385
Professional services
Disaggregation Of Revenue [Line Items]
Revenue		$ 42,977	$ 40,018	$ 87,105	$ 75,648

[1] Recurring revenue is comprised of subscription, perpetual support, SaaS, and cloud revenue.

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Restructuring and Other Charges - Additional Information (Details) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2022 USD ($) Employee	Mar. 31, 2021 USD ($)	Sep. 30, 2020 USD ($) Employee
Restructuring Cost And Reserve [Line Items]
Restructuring and other charges, net	$ 1,562		$ (469)	$ (32,429)	$ (716)
Restructuring charges (credits)	1,100		(200)	(33,051)	(362)
Sublease income	1,113		1,131	2,230	2,215
Payments for restructuring	17,300			27,080	5,421
Professional fees		$ 1,700
Restructuring Plan 2022
Restructuring Cost And Reserve [Line Items]
Payments for restructuring	16,500			25,600
PTC Prior Restructuring
Restructuring Cost And Reserve [Line Items]
Payments for restructuring	100			100
Impairment and Accretion Exited Lease Facilities
Restructuring Cost And Reserve [Line Items]
Sublease income	500			700
Restructured Facilities | PTC Prior Restructuring
Restructuring Cost And Reserve [Line Items]
Payments for restructuring	700			1,400
Impairment and Accretion Expense Related to Exited Facilities
Restructuring Cost And Reserve [Line Items]
Restructuring and other charges, net			$ (300)		(300)
Employee Severance and Related Benefits
Restructuring Cost And Reserve [Line Items]
Restructuring charges (credits)				(33,428)	(163)
Payments for restructuring				25,744	3,924
Employee Severance and Related Benefits | Restructuring Plan 2022
Restructuring Cost And Reserve [Line Items]
Restructuring charges (credits)	$ 500			$ (33,600)
Number of employees | Employee				330
Employee Severance and Related Benefits | Restructuring Plan 2022 | Minimum
Restructuring Cost And Reserve [Line Items]
Restructuring charges (credits)				$ (35,000)
Employee Severance and Related Benefits | Restructuring Plan 2022 | Maximum
Restructuring Cost And Reserve [Line Items]
Restructuring charges (credits)				(40,000)
Employee Severance and Related Benefits | Restructuring Plan 2020
Restructuring Cost And Reserve [Line Items]
Restructuring charges (credits)				$ 100	$ (200)	$ (30,800)
Number of employees | Employee						250

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Restructuring and Other Charges - Schedule of Restructuring Reserve (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Restructuring Reserve [Roll Forward]
Accrual, beginning balance			$ 5,486	$ 9,987
Charges to operations, net	$ (1,100)	$ 200	33,051	362
Cash disbursements	(17,300)		(27,080)	(5,421)
Foreign exchange impact			(354)	45
Accrual, ending balance	11,103	4,973	11,103	4,973
Employee Severance and Related Benefits
Restructuring Reserve [Roll Forward]
Accrual, beginning balance			1,981	3,992
Charges to operations, net			33,428	163
Cash disbursements			(25,744)	(3,924)
Foreign exchange impact			(354)	31
Accrual, ending balance	9,311	262	9,311	262
Facility Closures and Related Costs
Restructuring Reserve [Roll Forward]
Accrual, beginning balance			3,505	5,995
Charges to operations, net			(377)	199
Cash disbursements			(1,336)	(1,497)
Foreign exchange impact			0	14
Accrual, ending balance	$ 1,792	$ 4,711	$ 1,792	$ 4,711

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Stock-based Compensation - Schedule of RSU Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Number of RSUs
Balance of outstanding restricted stock units, beginning, Shares | shares	3,216
Granted, shares | shares	1,064
Vested, Shares | shares	(1,170)
Forfeited or not earned, Shares | shares	(246)
Balance of outstanding restricted stock units, ending, Shares | shares	2,864
Weighted- Average Grant Date Fair Value Per RSU
Balance of outstanding restricted stock units, beginning (in USD per share) | $ / shares	$ 92.83
Granted (in USD per share) | $ / shares	116.70
Vested (in USD per share) | $ / shares	92.97
Forfeited or not earned (in USD per share) | $ / shares	97.77
Balance of outstanding restricted stock units, ending (in USD per share) | $ / shares	$ 101.21

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Stock-based Compensation - Schedule of RSU Activity (Parenthetical) (Details) shares in Thousands	1 Months Ended
	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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Stock-based Compensation - Schedule of Number of RSU Awards Granted by Award Type (Details) shares in Thousands	6 Months Ended
	Mar. 31, 2022 shares
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	89
Service-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	775
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	76

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Stock-based Compensation - Schedule of Number of RSU Awards Granted by Award Type (Parenthetical) (Details) shares in Thousands	6 Months Ended
	Mar. 31, 2022 Installment shares
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Granted, shares	89
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	165
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	775
Number of equal annual installments | Installment	3
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, shares	76
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

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Stock-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 37,921	$ 44,740	$ 83,863	$ 90,828
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 1,300	$ 1,800	$ 3,200	$ 3,800
TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per share			$ 136.43

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Stock-based Compensation - Schedule of Valuation Assumptions (Details)	6 Months Ended
	Mar. 31, 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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Stock-based Compensation - Schedule of Classification of Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 37,921	$ 44,740	$ 83,863	$ 90,828
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	11,446	13,305	24,527	28,304
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	9,504	7,921	19,680	16,364
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	12,707	19,008	29,420	37,220
License | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	37	20	75	40
Support and cloud services | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2,161	2,309	5,639	4,611
Professional services | Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 2,066	$ 2,177	$ 4,522	$ 4,289

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Earnings per Share (EPS) and Common Stock - Earnings per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share And Common Stock [Abstract]
Net income	$ 89,679	$ 109,262	$ 135,768	$ 132,777
Weighted-average shares outstanding—Basic	117,008	116,777	117,135	116,587
Dilutive effect of restricted stock units	803	1,554	1,027	1,379
Weighted-average shares outstanding—Diluted	117,811	118,331	118,162	117,966
Earnings per share—Basic	$ 0.77	$ 0.94	$ 1.16	$ 1.14
Earnings per share—Diluted	$ 0.76	$ 0.92	$ 1.15	$ 1.13

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Earnings per Share (EPS) and Common Stock - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Earnings Per Share And Common Stock [Abstract]
Common stock, shares authorized	500,000,000		500,000,000		500,000,000
Stock repurchase program, authorized amount	$ 1,000,000,000		$ 1,000,000,000
Repurchases of common stock (in shares)	43,000		1,046,000
Stock repurchased during period, value	$ 5,300,000	$ 0	$ 125,000,000.0	$ 0

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Acquisitions - Additional Information (Details) $ in Thousands		3 Months Ended			6 Months Ended
	Jan. 15, 2021 USD ($) Employee	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)
Business Acquisition [Line Items]
Business combination, acquisition and transaction related costs		$ 3,900		$ 10,300	$ 5,000	$ 14,200
Borrowings under credit facility					0	600,000
Revenue		505,227		$ 461,785	962,948	$ 890,836
Goodwill, acquired					691
Deferred tax liabilities		4,163			4,163		$ 4,165
Deferred revenue		516,933			516,933		482,131
Accounts receivable		$ 510,196			$ 510,196		$ 541,072
Arena Solutions
Business Acquisition [Line Items]
Payments to acquire business, net of cash	$ 715,000
Cash acquired from acquisition	$ 11,100
Entity number of employees | Employee	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

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Goodwill and Intangible Assets - Additional Information (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2022 USD ($) Segment	Sep. 30, 2021 USD ($)
Number of operating segments | Segment	2
Number of reportable segments | Segment	2
Intangible assets	$ 2,541,516	$ 2,570,854
Software Products
Intangible assets	2,496,700	2,525,700
Professional Services
Intangible assets	$ 44,800	$ 45,200

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Goodwill and Intangible Assets - Schedule of Goodwill and Acquired Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Goodwill (not amortized)	$ 2,186,156	$ 2,191,887
Intangible assets with finite lives (amortized), Gross Carrying Amount	1,111,901	1,112,070
Intangible assets with finite lives (amortized), Accumulated Amortization	756,541	733,103
Intangible assets with finite lives (amortized), Net Book Value	355,360	378,967
Intangible Assets, Net (Including Goodwill)	2,541,516	2,570,854
Purchased Software
Intangible assets with finite lives (amortized), Gross Carrying Amount	487,399	483,771
Intangible assets with finite lives (amortized), Accumulated Amortization	348,736	338,542
Intangible assets with finite lives (amortized), Net Book Value	138,663	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	570,920	574,516
Intangible assets with finite lives (amortized), Accumulated Amortization	363,623	350,648
Intangible assets with finite lives (amortized), Net Book Value	207,297	223,868
Trademarks and Trade Names
Intangible assets with finite lives (amortized), Gross Carrying Amount	26,772	26,906
Intangible assets with finite lives (amortized), Accumulated Amortization	17,372	17,036
Intangible assets with finite lives (amortized), Net Book Value	9,400	9,870
Other
Intangible assets with finite lives (amortized), Gross Carrying Amount	3,933	4,000
Intangible assets with finite lives (amortized), Accumulated Amortization	3,933	4,000
Intangible assets with finite lives (amortized), Net Book Value	$ 0	$ 0

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Goodwill and Intangible Assets - Schedule of Changes in Goodwill by Reportable Segments (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2022 USD ($)
Goodwill [Line Items]
Balance, October 1, 2021	$ 2,191,887
Acquisitions	691
Foreign currency translation adjustment	(6,422)
Balance, March 31, 2022	2,186,156
Software Products
Goodwill [Line Items]
Balance, October 1, 2021	2,148,968
Acquisitions	691
Foreign currency translation adjustment	(6,296)
Balance, March 31, 2022	2,143,363
Professional Services
Goodwill [Line Items]
Balance, October 1, 2021	42,919
Acquisitions	0
Foreign currency translation adjustment	(126)
Balance, March 31, 2022	$ 42,793

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Goodwill and Intangible Assets - Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of acquired intangible assets	$ 8,450	$ 7,650	$ 16,934	$ 14,197
Cost of license revenue	5,921	7,117	12,414	13,384
Total amortization expense	$ 14,371	$ 14,767	$ 29,348	$ 27,581

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Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Financial assets:
Cash equivalents	$ 108,064	$ 114,375
Convertible note	2,000	2,000
Forward contracts	1,646	5,363
Equity securities		77,540
Options	2,322
Financial assets, fair value	114,032	199,278
Financial liabilities:
Forward contracts	2,637	3,318
Financial liabilities, fair value	2,637	3,318
Level 1
Financial assets:
Cash equivalents	108,064	114,375
Convertible note	0	0
Forward contracts	0	0
Equity securities		0
Options	0
Financial assets, fair value	108,064	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
Forward contracts	1,646	5,363
Equity securities		0
Options	2,322
Financial assets, fair value	3,968	5,363
Financial liabilities:
Forward contracts	2,637	3,318
Financial liabilities, fair value	2,637	3,318
Level 3
Financial assets:
Cash equivalents	0	0
Convertible note	2,000	2,000
Forward contracts	0	0
Equity securities		77,540
Options	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		3 Months Ended		6 Months Ended
	Feb. 28, 2022	Jan. 31, 2022	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-marketable equity investments			$ 2,200,000		$ 2,200,000		$ 2,200,000
Share price per share			$ 0.01		$ 0.01		$ 0.01
Net income (loss)			$ (89,679,000)	$ (109,262,000)	$ (135,768,000)	$ (132,777,000)
Matterport, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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 shares sold	$ 3,600,000	$ 39,100,000
Share price per share	$ 7.6	$ 9.1
Original investment			8,700,000		8,700,000
Equity Securities | Matterport, Inc. | Other Expense, Net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income (loss)			(44,600,000)		(34,800,000)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount invested into non-marketable convertible note							$ 2,000,000.0
Changes in fair value			$ 0		$ 0

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Fair Value Measurements - Schedule of Changes in Fair Value of Level 3 Investment (Details) - Matterport, Inc. - Level 3 $ in Thousands	6 Months Ended
	Mar. 31, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance, October 1, 2021	$ 77,540
Realized loss	(38,468)
Sale of investment	(39,072)	[1]
Balance, March 31, 2022	$ 0

[1] Equity securities sold upon expirations of the restriction in January 2022.

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Marketable Securities - Additional Information (Details) - USD ($)	3 Months Ended	6 Months Ended
	Dec. 31, 2020	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Marketable Securities [Abstract]
Marketable securities held		$ 0		$ 0
Proceeds from sale of marketable securities	$ 56,200,000	$ 0	$ 56,170,000

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Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Derivative [Line Items]
Gross Amount of Recognized Assets	$ 2,322
Designated as Hedging Instrument | Forward Contracts
Derivative [Line Items]
Gross Amount of Recognized Assets	0	$ 1,641
Gross Amount of Recognized Liabilities	825	0
Designated as Hedging Instrument | Options
Derivative [Line Items]
Gross Amount of Recognized Assets	0	0
Not Designated as Hedging Instrument | Forward Contracts
Derivative [Line Items]
Fair Value of Derivatives Not Designated As Hedging Instruments	1,646	3,722
Fair Value of Derivatives Not Designated As Hedging Instruments	1,812	3,318
Not Designated as Hedging Instrument | Options
Derivative [Line Items]
Fair Value of Derivatives Not Designated As Hedging Instruments	$ 2,322	$ 0

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Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Parentheticals) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Derivative [Line Items]
Gross Amount of Recognized Assets	$ 2,322
Other Current Assets | Forward Contracts
Derivative [Line Items]
Gross Amount of Recognized Assets	4,000	$ 5,400
Other Current Liabilities | Forward Contracts
Derivative [Line Items]
Gross Amount of Recognized Liabilities	$ 2,600	$ 3,300

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Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Derivative [Line Items]
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments	$ 0.4	$ (2.4)	$ (4.0)	$ (4.2)
Maximum | Forward Contracts | Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative maturity			3 months
Maximum | Forward Contracts | Designated as Hedging Instrument | Net Investment Hedging
Derivative [Line Items]
Derivative maturity			3 months
Maximum | Foreign Exchange Options | Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative maturity			7 months

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Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts and Options (Details) - Not Designated as Hedging Instrument - Foreign Exchange Forward Contract and Options - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Derivative [Line Items]
Notional amount	$ 673,284	$ 563,921
Canadian / U.S. Dollar
Derivative [Line Items]
Notional amount	5,605	4,894
Euro / U.S. Dollar
Derivative [Line Items]
Notional amount	500,632	387,466
British Pound / U.S. Dollar
Derivative [Line Items]
Notional amount	10,537	23,141
Israeli Shekel / U.S. Dollar
Derivative [Line Items]
Notional amount	9,148	10,475
Japanese Yen / U.S. Dollar
Derivative [Line Items]
Notional amount	28,826	46,450
Swiss Franc / U.S. Dollar
Derivative [Line Items]
Notional amount	17,299	18,039
Swedish Krona / U.S. Dollar
Derivative [Line Items]
Notional amount	31,352	34,196
Chinese Renminbi / U.S. Dollar
Derivative [Line Items]
Notional amount	37,735	23,297
New Taiwan Dollar / U.S. Dollar
Derivative [Line Items]
Notional amount	5,410	3,369
Romanian Leu/ U.S. Dollar
Derivative [Line Items]
Notional amount	4,651	778
Russian Ruble/ U.S. Dollar
Derivative [Line Items]
Notional amount	0	2,614
Danish krone/ U.S. Dollar
Derivative [Line Items]
Notional amount	8,891	2,380
Australian Dollar/ U.S. Dollar
Derivative [Line Items]
Notional amount	5,052	2,086
All other
Derivative [Line Items]
Notional amount	$ 8,146	$ 4,736

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Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts and Options (Parenthetical) (Details) - Not Designated as Hedging Instrument $ in Millions	Mar. 31, 2022 USD ($)
Forward Contracts | Euro / U.S. Dollar
Derivative [Line Items]
Notional amount	$ 472.4
Forward Contracts | Japanese Yen / U.S. Dollar
Derivative [Line Items]
Notional amount	2.5
Options | Euro / U.S. Dollar
Derivative [Line Items]
Notional amount	28.2
Options | Japanese Yen / U.S. Dollar
Derivative [Line Items]
Notional amount	$ 26.3

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Derivative Financial Instruments - Schedule of Derivative Instruments and Hedging Activities Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Foreign Exchange Forward Contract and Options | Not Designated as Hedging Instrument | Other income (expense), net
Derivative Instruments Gain Loss [Line Items]
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	$ 3,797	$ (3,033)	$ 362	$ (4,620)
Forward Contracts | 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	81	1,462	(3,075)	2,041
Loss reclassified from OCI	(1,415)	(3,041)	(7,150)	(99)
Forward Contracts | Designated as Hedging Instrument | Other income (expense), net | Net Investment Hedging
Derivative Instruments Gain Loss [Line Items]
Gain recognized, excluded portion	$ 342	$ 426	$ 609	$ 733

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Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Euro / U.S. Dollar | Forward Contracts | Designated as Hedging Instrument | Net Investment Hedging
Derivative [Line Items]
Notional amount	$ 153,470	$ 128,103

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Derivative Financial Instruments - Schedule of Offsetting Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Derivative [Line Items]
Options	$ 2,322
Net Amounts of Assets Presented in the Consolidated Balance Sheets	1,646	$ 5,363
Foreign Currency Forwards
Derivative [Line Items]
Options	1,646
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Assets Presented in the Consolidated Balance Sheets	1,646
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	(1,646)
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received	0
Net Amount	$ 0

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Derivative Financial Instruments - Schedule of Offsetting Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Derivative [Line Items]
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	$ 2,637	$ 3,318
Foreign Currency Forwards
Derivative [Line Items]
Gross Amount of Recognized Liabilities	2,637
Gross Amounts Offset in the Consolidated Balance Sheets	0
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	2,637
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments	(1,646)
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Pledged	0
Net Amount	$ 991

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Segment and Geographic Information - Additional Information (Details)	6 Months Ended
	Mar. 31, 2022 Segment
Segment Reporting [Abstract]
Number of operating segments	2
Number of reportable segments	2

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Segment and Geographic Information - Summary of Revenue and Profit Attributable to Our Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	$ 505,227	$ 461,785	$ 962,948	$ 890,836
Operating costs	93,337	89,448	188,455	176,278
Gross margin	411,890	372,337	774,493	714,558
Sales and marketing	116,408	129,178	241,884	253,903
General and administrative	47,469	60,805	99,409	110,333
Restructuring and other charges, net	(1,562)	469	32,429	716
Intangibles amortization	14,371	14,767	29,348	27,581
Operating income	159,190	101,690	221,368	192,029
Interest and debt premium expense	(12,239)	(12,925)	(25,225)	(24,444)
Other expense, net	(43,385)	(2,408)	(37,201)	(3,821)
Income before income taxes	103,566	86,357	158,942	163,764
Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	505,227	461,785	962,948	890,836
Operating costs	155,583	142,449	308,594	280,970
Gross margin	349,644	319,336	654,354	609,866
Unallocated
Segment Reporting Revenue Reconciling Item [Line Items]
Sales and marketing	104,962	115,873	217,357	225,599
General and administrative	30,859	31,487	65,036	58,887
Restructuring and other charges, net	(1,562)	469	32,429	716
Intangibles amortization	14,371	14,767	29,348	27,581
Stock-based compensation	37,921	44,740	83,863	90,828
Other unallocated operating expenses	3,903	10,310	4,953	14,226
Software Products | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	462,250	421,767	875,843	815,188
Operating costs	121,016	109,310	237,044	214,711
Gross margin	341,234	312,457	638,799	600,477
Professional Services | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Revenue	42,977	40,018	87,105	75,648
Operating costs	34,567	33,139	71,550	66,259
Gross margin	$ 8,410	$ 6,879	$ 15,555	$ 9,389

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Segment and Geographic Information - Revenue By Geographic Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	$ 505,227	$ 461,785	$ 962,948	$ 890,836
Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	505,227	461,785	962,948	890,836
Americas | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	202,999	180,329	415,880	382,609
Europe | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	79,265	202,477	161,797	364,796
Asia-Pacific | Operating Segments
Segment Reporting Revenue Reconciling Item [Line Items]
Total revenue	$ 222,963	$ 78,979	$ 385,271	$ 143,431

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Income Taxes - Summary of Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income before income taxes	$ 103,566	$ 86,357	$ 158,942	$ 163,764
Provision(benefit) for income taxes	$ 13,887	$ (22,905)	$ 23,174	$ 30,987
Effective income tax rate	13.00%	(27.00%)	15.00%	19.00%

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Income Tax Disclosure [Line Items]
Federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%
Charge related to effects of Non US Jurisdiction unrecognized tax benefit				$ 36.1
Unrecognized tax benefits	$ 24.1		$ 24.1		$ 21.2
Income tax provision upon recognition of unrecognized tax benefit	24.1		24.1
Unrecognized tax benefits that would impact valuation allowance	4.8		4.8
Potential decrease in unrecognized tax benefits	$ 3.0		$ 3.0
Arena Solutions
Income Tax Disclosure [Line Items]
Reduction of valuation allowance		$ 42.3

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Debt - Schedule of Long-term Debt Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021	Feb. 13, 2020
Debt Instrument [Line Items]
Total debt	$ 1,275,000	$ 1,450,000
Unamortized debt issuance costs for the senior notes	(9,454)	(10,529)
Total debt, net of issuance costs	1,265,546	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	275,000	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 Debt Obligations (Parenthetical) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense	$ 9,454	$ 10,529
Other Noncurrent Assets | Line of Credit
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense	$ 3,200	$ 3,800

XML

Debt - Senior Notes - Additional Information (Details) - USD ($) $ in Millions	Feb. 13, 2020	Mar. 31, 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		$ 488.0
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		$ 495.6

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Debt - Credit Agreement - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	May 03, 2022	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	1.84		1.84
Senior debt leverage ratio, actual	0.41		0.41
Fixed charge coverage ratio, actual	14.46		14.46
Periodic interest payment	$ 21,500,000	$ 19,800,000	$ 23,800,000	$ 20,500,000
Interest rate during period	3.20%	3.30%	3.20%	3.50%
Foreign Subsidiary | Subsequent Event
Debt Instrument [Line Items]
Long-term portion of long term debt					$ 0
Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity expansion amount						$ 500,000,000
Credit facility maturity date			Feb. 13, 2025
Basis spread on Federal Reserve Bank of New York (FRBNY) rate	0.50%		0.50%
Basis spread on adjusted LIBOR			1.00%
Investment limit in foreign subsidiaries	$ 100,000,000		$ 100,000,000
Cash investment limit for acquisition of business	$ 200,000,000		$ 200,000,000
Total leverage ratio	4.50		4.50
Senior secured leverage ratio	3.00		3.00
Minimum fixed charge coverage ratio allowed under debt covenant	3.00		3.00
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]
Annual rate for borrowings outstanding	1.81%		1.81%

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021	Feb. 28, 2019
Lessee Lease Description [Line Items]
Lease expiration date			2037
Payments to be received as sublease income	$ 2,900		$ 2,900			$ 9,100
Operating right-of-use lease assets	149,801		149,801		$ 152,337
Operating lease, liability	203,990		203,990
Lease Cost	10,741	$ 11,520	21,515	$ 22,762
Operating cash flows from operating leases	9,248	14,016	25,113	28,076
Facility Closures and Related Costs
Lessee Lease Description [Line Items]
Operating lease liability, net restructured facilities	1,700		1,700		$ 3,600
Operating right-of-use lease assets	300		300
Operating lease, liability	2,000		2,000
Operating cash flows from operating leases	600	$ 2,500	1,300	$ 6,300
Sublease Income Committed
Lessee Lease Description [Line Items]
Sublease income assumed	$ 700		$ 700

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Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Lease Cost
Operating lease cost	$ 8,676	$ 9,565	$ 17,536	$ 18,956
Short-term lease cost	582	610	1,123	1,158
Variable lease cost	2,596	2,476	5,086	4,863
Sublease income	(1,113)	(1,131)	(2,230)	(2,215)
Total lease cost	$ 10,741	$ 11,520	$ 21,515	$ 22,762

XML

Leases - Schedule of Supplemental Cash Flow and Right of Use Assets Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 9,248	$ 14,016	$ 25,113	$ 28,076
Financing cash flows from financing leases	0	0	239	279
Right-of-use assets obtained in exchange for new lease obligations, operating leases	6,179	53	11,095	647
Right-of-use assets obtained in exchange for new lease obligations, financing leases	$ 0	$ 0	$ 0	$ 0

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Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details)	Mar. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term - operating leases	11 years 8 months 12 days
Weighted-average remaining lease term - financing leases	2 years 4 months 24 days
Weighted-average discount rate - operating leases	5.30%
Weighted-average discount rate - financing leases	3.00%

XML

Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Operating Lease (ASC 842)
Remainder of 2022	$ 18,452
2023	31,054
2024	27,018
2025	24,090
2026	20,125
Thereafter	160,580
Total future lease payments	281,319
Less: imputed interest	(77,329)
Total lease liability	$ 203,990

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Commitments and Contingencies - Additional Information (Details) $ in Millions	6 Months Ended
	Mar. 31, 2022 USD ($) Plantiff	Mar. 31, 2021 USD ($)
Loss Contingencies [Line Items]
Letters of credit and bank guarantees outstanding	$ 15.2	$ 16.3
Bank guarantees outstanding collateralized	$ 0.5	$ 0.5
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
Plaintiffs claim	The plaintiffs sought unspecified damages on behalf of a class of Plan participants from September 17, 2014 through the date of any judgment.

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Subsequent Events (Details) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
	Apr. 29, 2022	Apr. 30, 2022	Mar. 31, 2022	Mar. 31, 2021
Subsequent Event [Line Items]
Borrowings under credit facility			$ 0	$ 600,000
Intland Software | Subsequent Event
Subsequent Event [Line Items]
Cash paid	$ 280,000
Total outstanding indebtedness		$ 1,500,000
Intland Software | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Borrowings under credit facility		$ 264,000