I think we'll go ahead and get started. My name is Jason Celino. I am the vertical software analyst here at KeyBanc. I have the greatest of pleasure introducing with me Kristian Talvitie, the, the CFO of PTC. [crosstalk] Nobody has ever introduced me that way. I'm the first, then. Yeah. I think maybe the first question; we'll just get it out of the way. CEO transition. I know you can't speak for Neil or Jim, specifically, but I know you've had a lot of meetings over the last week. Maybe, maybe just speak to, you know, what the, a little bit about it, maybe some of the feedback and how you kind of are thinking about it. Yeah, sure. Obviously, also, just before we get started, my general counsel would be very upset with me if I didn't remind everybody about forward-looking statements and risk factors that are all outlined in our periodic SEC filings and on our website. I would encourage you all to go and look at those as well. Thanks for having us here at the conference, Jason, and yeah, it's an exciting time at PTC. For those who don't know, Jim Heppelmann, who's the current CEO, has been CEO for, I want to say, the past 13 years, and been with the company for, you know, twice that amount. Was the founder of Windchill, one of our largest product suites today. After a, you know, long run at PTC, has announced his intention to retire. That'll be happening, in whatever, February, in conjunction with our annual shareholder meeting. Jim will officially hand over the hand over the reins to our CEO-elect. That was just announced, a couple weeks ago on our earnings call, Neil Barua. Neil came to PTC with the ServiceMax acquisition. He's been, you know, with PTC now for about seven months. He was CEO of ServiceMax for four years prior to that, as well as CEO of another privately owned software company, as well. You know, the, the transition process has been underway for some time. You know, the board, it's one of their primary responsibilities, so that's been a process that's been underway for some time. They've also engaged outside, you know, help with, in terms of, you know, Korn Ferry CEO succession practice. And we have been looking at various internal and external candidates, and then as Neil came into the mix with the ServiceMax acquisition, he actually showed up really well and impressed the right people and kind of got put into the mix, and, you know, went through that whole the whole vetting process, which was quite comprehensive and, you know, came through with very high marks and, you know, ready to take the job and ready to take it. Almost now, we have this kind of six-month transition period which I think is, you know, good from an orderly transition perspective. It, it, you know, gives everybody time to process the news, gives Neil some time to spend a lot of time with Jim and even the rest of the management team, but with Jim, in particular, get out on the road, meet with customers, meet with partners, meet with employees around the world, and obviously, shareholders. We've been meeting with a lot of shareholders here over the past couple of weeks, giving them an introduction as well to Neil. Okay. You know, that was really the process. You know, I think it's, you know, it's... With PTC, and I guess, can you frame what you're seeing currently and, and maybe any interesting thoughts from your most recent quarter? Yeah, the macro continues to be, you know, it's a pretty murky environment. You see positive signs and negative signs kind of all over the place, and they don't always, you know, they don't necessarily always line up. You know, you look at PMIs are, are, you know, have been getting progressively worse. You know, our business has actually been holding up pretty well. Then there are pockets where it's been, you know, been softer. We've talked about before; this isn't a new incremental softness. This is just the softness we've been, been covering here for the past three or four quarters. You know, China continues to be soft. It's a relatively small part of the business, about 5% of the overall business, but you know, the environment there continues to be soft. There are pockets in Europe, particularly through our channel, which generally tends to concentrate more on kind of the SMB space, you know, has been softer, even in the US. Back to that kind of SMB space, we see it with assets like Arena, and even Onshape to a certain degree, that focus on, you know, that end of the market, and that seems to be soft. They're still selling software and so on, but it's just not as robust of an environment as it had been, you know, we'll call it a, you know, a year, 18 months ago. On the flip side, we also see pockets of strength. You know, we had, we had acquired a few months ago, a company called Intland, products called Codebeamer. That's what we call it, Codebeamer. It's a ALM, Application Lifecycle Management, which is really for software requirements management and, you know, for companies that are putting increasing amounts of software into their products. This is, this is, you know, increasingly important area for them to think about, and in particular, highly regulated industries like auto or med device, A&D. You know, and we've been seeing some, you know, some good pockets of, of actually strength with, you know, with Codebeamer, for example. You know, and then just generally speaking, you know, we'll call it fighting the headwinds. You also have tailwinds for some of the core parts of the business, like CAD, PLM, which is just general, you know, we'll call it digital transformation that's going on in the part of the enterprise that we serve, which is kind of the, the, you know, engineering through to manufacturing and service. Getting the engineering data more broadly leveraged throughout the organization, that's the kind of digital transformation that's happening. You're really leveraging, a company's leveraging a PLM system in order to do that. You know, it's still a little murky out there, but... [crosstalk] Yeah. I mean, all things considered, PTC had, had a pretty good quarter. You accelerated ARR organically to 14%. Even if it is murky, you guys are executing well. Where would you say that source of strength, or if you were to bucket it into a couple of places, where would you say you're seeing it? Yeah, I mean, probably the latter parts that I was just talking about, which is in, you know, PLM in particular, Codebeamer continues to, you know, execute well. You know, I would probably highlight those... [inaudible] Okay. Then, I don't want to get too technical. Apologies for everyone in the audience, but you've done a pretty good job of positioning investors to think about sequential ARR, that whole process. I think in the beginning of the year, people questioned the second half ramp, or the implied second half ramp, but you've gotten to flatten it. Maybe can you speak to why you've been able to flatten that ramp and maybe some of the strengths from that? Yeah, sure. To be honest, I think it's really just a function of math. You know, we started the year with a wide range on ARR guidance for the year, 10% to 14%, and you know, the full year ARR guidance, because it's a year-over-year metric, that's actually the fourth quarter year-over-year compare. Just, you know, where we started with kind of mid-point of guidance, you know, after first quarter, after second quarter, after third quarter, we've been raising the low end of guidance as, you know, the uncertainty around, you know, geez, how bad could it get, and what would that, what would that do to the top line, has just alleviated every quarter. You know, we've been raising the low end of guidance, left the high end where it was, frankly, it's just math then, that the implied ramp just gets smaller... Okay. Throughout. Then you mentioned the initial guide that you gave last year, the 10% to 14%. It sounds like you're thinking of the same framework heading in the next year. I know a lot of things and, you know, still need to happen, obviously, with visibility, but you're obviously confident enough to, to think of it that way. Maybe can you speak to what would need to happen to the business if you were to fall below 10%, and then what would need to happen if you were to see things at the high end, the 14%? Yeah. Sure. Thanks. Just to be super clear for everybody, we didn't actually provide official guidance. I said framework. I said framework. We, we said, "I wouldn't be surprised to see a framework like we used last year." I think those were my exact words. I would encourage everybody to read those from the conference call transcript. In any case, you know, I do think it's a reasonable framework, especially given the ongoing, we'll call it the ongoing uncertainty, you know, in the macro. You know, to get to the low end, or, you know, below the low end, it... Well, let me try it this way. At the beginning of last year, when we gave this 10% to 14% range, we kind of bookended it, and we were talking about bookings, you know, we'll call it new business, and said, for us to be at the bottom end of the range, new bookings would have to be down about 30%, and our churn would actually have to get worse by 200 basis points. You know, I think that framework generally holds. The reason that we picked those, those numbers, frankly, the down 30%, is because that's actually what we saw if you go back to 2009, although we were a perpetual business at the time, so it had a very different impact on, you know, revenue, and cash flow, but revenue in particular. You know, it's not unfathomable that something like that could happen. Could it get even worse? You know, who, who knows? Sure, I guess it always could get worse, but that seemed like a pretty good low, low watermark. In terms of the churn, you know, we, we actually get a lot of good questions from investors trying to understand, you know, what happens to churn in, in this kind of macro environment. You know, frankly, even if we went back and looked at some of the choppier periods historically, because the software is so sticky, we actually haven't really seen meaningful upticks in churn, but we thought we would build that in into that guidance scenario. That's what, what, what would have kind of gotten us to the low end of the range. Same, same kind of situation here. You know, to get to the, the higher end of the range or above the higher end of the range, I think we'd want to see more macro tailwinds, you know, macro tailwinds... Okay. To be honest. You also provided some commentary on the framework for free cash flow next year, but I thought it was impressive that you were kind of saying, regardless of what ARR we'll do, we feel pretty good of doing free cash flow. You know, you said prior targets, those prior targets were $700 to 750 million. What enables you to have be so confident that regardless of what you do on the top line, you can still hit whatever free cash flow number you say you might do? Yeah, it's another great question. It's a, it's a little bit how we actually a lot of it, how we actually operate the business and, and, and how, how we, how we run it. Meaning, in an environment like we're in now, where it, you know, we're not really seeing, we'll call it, new sales growth, we're much more judicious in the investments that we're, that we're making. Because most of our top-line inflows are all subscription-based inflows, and we're, you know, almost 98% of the software top line is all subscription, we have pretty good visibility into that. So, you know, we're cautious about, you know, how and when and where we invest. By the way, we said the same thing last year, or this fiscal year, at the beginning of the year, we said we were gonna do $560 in free cash flow, regardless of that 10% to 14% range. 'Cause if we're growing at the lower end, we're gonna be even more judicious on costs. Frankly, if we're at the higher end, means good things are happening, and we're probably gonna be investing, you know, investing more. Every quarter this year, we've actually ticked up the, the first three quarters, at least, we've ticked up that cash flow guidance throughout the year. Noted that we're actually even making some investments in certain parts of the business, despite it being murky out there. Certain parts of the business in the back half, namely, Codebeamer, some Windchill+ investment, you know, in particular, were two of the bigger areas that we're looking at. Okay. It's really about managing timing of spend... Sure. Is basically what it is. I mean, staying on this free cash flow topic, 'cause I think it's important, and then kind of tying this back to the CEO transition, should investors. Is it, well, is it unfair for me to ask if, if investors should think of any change in some of this free cash flow focus? 'Cause it, to me, it sounds like you've been kind of the architect on, on the free cash flow side. Yeah, no, these are the two primary metrics for, for PTC, for sure, which is ARR, which for us, again, is annual run rate, not revenue, and free cash flow. Okay. For the reason, just for the audience, I won't get into the, the, the meat of it, 'cause I have on numerous conference calls in the past. Really, the P&L is a very difficult tool for us to use, because of ASC 606 revenue recognition, and so it makes it not a very useful tool. We don't actually use it internally for decision-making purposes. So again, that, that kind of framework and model, I would not think is going anywhere anytime soon. Okay. I know you spoke to, you know, the confidence on next year's, and it sounds like it's just related to timing and certain tailwinds that you might see. In general, over the next two years, PTC should grow free cash flow faster than the top line, right? That means you have to drive leverage somewhere. I guess, how would you assign some of the non-obvious, you know, margin improvement, free cash flow improvement areas? I know you gave some layer cake picture in your deck in the corner, but maybe let's start there, and I've got some questions after. Yeah. You know, again, I think the, you know, the, the subscription business model is super powerful because, you know, again, we're kind of starting next year with the same, we'll call it, base level of, of free cash flow and building on that with incremental sales, right? So, you know, just looking out, you know, we, we do feel pretty comfortable with those targets, you know, with the level of investment that we, you know, that we think would be required. Again, if it was the lower end, that would mean... Sure I t's a turbulent macro, and if it was the higher end, that would mean that we're gonna be investing more. Again, a lot of our, a lot of our spend is really indexed more to bookings than to ARR growth. I think that's important to, to remember, and because that's also how we make the decisions... Okay Internal. I know there's different buckets within OpEx, but when we think about budget discipline, how do we know you're not underinvesting in important areas like R&D? Yeah, well, number one, you know, we don't, we don't think we are. We have a pretty disciplined approach to, you know, how, when, and where we're investing. You know, and I'll give you a good example, actually. At the end of fiscal 2022, as we were coming into fiscal 2023, and we were thinking about investments, what, what we ended up doing was actually reallocating resources internally. A lot of that was actually on the R&D side. Reallocating them out of, in this case, really the kind of IoT, AR business, and into other areas that had, we'll call it, more, more tailwinds, and still need, like Windchill+, you know, like some of the other parts of the business. The reason that we were doing that was because we had been investing in IoT and AR like they were gonna be growing, you know, top line in the, you know, 30% plus range. Well, we had done that for, you know, a number of years and, you know, ultimately, you know, I think we ended last year just short of 20% and kind of said: Okay. You know, we think 15% to 20% is probably right for that market for right now. They're still super important businesses for us. We think that the application of augmented reality and IoT technology in an industrial setting is a very exciting kind of long-term play. We also said, but we can't be investing in something like it's going to grow 30% when it's going to grow, you know, 15% to 20%. Gotcha. We you know, reallocated resources, what that ended up doing. You know, frankly, we closed, I think round about, you know, 500 open recs that we would have hired otherwise into the business. Frankly, I think we've seen, earlier this year in the tech space, some, some folks had been hiring and were then shedding. Okay. You know, that's kind of the discipline process that we go through. Again, it's not a one size fits all. We just talked about it earlier. Even in the back half of this year, we're investing more into Codebeamer, more into Windchill+, you know, some of that investment's selective. Again, we manage it pretty tightly. Okay. Then maybe last question on free cash flow. Obviously, different companies have, have, explored different tactics to hit certain free cash flow targets and growth frameworks. How do we know that PTC is not trying to pull things forward like others have done? We bill annually. Sure. Up, upfront. I don't know what else to say other than that. That's the model that we have. There are various tactics, but, yeah, I don't, I don't want the complications... Okay. To be honest with you, really. Honestly, we have customers sometimes that say, "Hey, like, we have the cash. We, we want to pay you the whole TCV right now." You know, the sales team's like: Oh, this is great! I say, "No, [inaudible], we don't want it. Thank you very much. Just, just this year's bill, please. So, it's just the operating philosophy that, that we have. Okay, perfect. When we think about some of your different growth opportunities, the one that's more longer term, but seems to be getting kind of interesting, is cloud. With Windchill+ and Creo+, these have been launched in the last year. Maybe can you speak to, you know, what you're seeing there in terms of early feedback, and then, what kind of, like, uplift we should see, if any? Yeah. Again, just for folks in the audience, you know, we started talking about Windchill Plus a little over about a year and a half ago, probably. Creo Plus, we actually just launched it at LiveWorx a couple of months ago. Those are really the SaaS versions of on-prem Windchill, which is the PLM product, and on-prem Creo, which is, you know, the CAD product. This particular part of the software industry, in general, has been a laggard in terms of moving to SaaS relative to CRM, HCM, you know, ERP. There are various reasons for that. I don't think we have enough time to get into it. No, we have two minutes. Yeah. Various reasons for that. However, you know, in the end, you know, we do believe that this part of the industry as well is by and large, going to move to SaaS. We've seen tailwinds over the years, with customers actually wanting us to do private cloud, implementations for them of Windchill, for example. You know, we see it in other assets that we've acquired, like Onshape, first, industry's first native SaaS-only CAD application, and we see it in, in discussions that we're having, having with our customers. You know, they, they want to move in that direction. The reasons for that, again, not enough time, but you know. Okay. The reasons for that, for SaaS, why they want to do that, it's just that, you know, I think in the end, it's a better model for the delivery of software and for the functionality that they can get, let alone, they don't have to manage infrastructure for it. It's a better and it allows better functionality and, and, and perhaps even security. You know, it is going to move. The question is, how long is that going to take? Enterprise apps, you know, it isn't just the software switch out. Now you've got processes... Sure That are embedded throughout, you know, throughout an organization. There's a matter of timing and, you know, when contracts are coming up for renewal, what version they're on, what industry they happen to be in. They need to be ready; the software needs to be ready. We're seeing, you know, we're seeing some momentum here. Okay. It's still early days. Yeah. We've got a few customers up and live. We've got a bunch more in the pipeline, and the dialogue continues to... Okay. Uh. Maybe since we only have a minute left, two closing, maybe three closing questions. Speed round. Yeah, speed round. Yes. Yes. We, we do a lot of informal survey work. We're trying to ask this to all of our presentations today, and, and we're not trying to make these hard questions, so yes or no. Exiting your quarter, July, versus exiting your previous quarter, would you say business has improved? The business environment. No. Oh, wow! See how easy that was? Yes and no. Second, second question, generative AI, do you think PTC can monetize it directly? Uh, so... Yes or no? Yes or no. It's a complicated question. Okay, fine. Yes, over time, but again... Sure. It's 3D modeling, not ChatGPT. Got it. And then last question, I know this is your first mail conference, first impressions, for everything you've done so far? Yeah, I think it's actually, it's a great environment. You know, I think what makes it great is actually the people and the quality of the questions. I'm, you know, I'm happy to have made the trip out here. We've got a good set of meetings and a good set of, good set of questions. Thanks very much for having us. Perfect. With that, I want to thank Kristian for making the trip out, and for everyone listening in today in person and online, and hope everyone has a good week. Thank you.