PTC Inc.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

June 30,

June 30,

June 30,

June 30,

2023

2022

2023

2022

GAAP gross margin

$

426,488

$

360,479

$

1,225,283

$

1,134,972

Stock-based compensation

5,847

8,429

15,668

18,665

Amortization of acquired intangible assets included in cost of revenue

9,841

6,596

25,817

19,010

Non-GAAP gross margin

$

442,176

$

375,504

$

1,266,768

$

1,172,647

GAAP operating income

$

109,900

$

79,977

$

337,340

$

301,345

Stock-based compensation

53,818

49,420

147,568

133,283

Amortization of acquired intangible assets

20,511

15,527

55,169

44,875

Acquisition and transaction-related charges

795

6,355

18,484

11,308

Restructuring and other charges (credits), net

(39)

4,458

(376)

36,887

Non-GAAP operating income ⁽¹⁾

$

184,985

$

155,737

$

558,185

$

527,698

GAAP net income

$

61,398

$

70,476

$

199,937

$

206,244

Stock-based compensation

53,818

49,420

147,568

133,283

Amortization of acquired intangible assets

20,511

15,527

55,169

44,875

Acquisition and transaction-related charges

795

6,355

18,484

11,308

Restructuring and other charges (credits), net

(39)

4,458

(376)

36,887

Non-operating charges (credits), net ⁽²⁾

-

(32,801)

5,147

2,046

Income tax adjustments ⁽³⁾

(18,830)

1,052

(52,506)

(43,617)

Non-GAAP net income

$

117,653

$

114,487

$

373,423

$

391,026

GAAP diluted earnings per share

$

0.51

$

0.60

$

1.68

$

1.75

Stock-based compensation

0.45

0.42

1.24

1.13

Amortization of acquired intangibles

0.17

0.13

0.46

0.38

Acquisition and transaction-related charges

0.01

0.05

0.16

0.10

Restructuring and other charges (credits), net

(0.00)

0.04

(0.00)

0.31

Non-operating charges (credits), net ⁽²⁾

-

(0.28)

0.04

0.02

Income tax adjustments ⁽³⁾

(0.16)

0.01

(0.44)

(0.37)

Non-GAAP diluted earnings per share

$

0.99

$

0.97

$

3.14

$

3.31

(1) Operating margin impact of non-GAAP adjustments:

Three Months Ended

Nine Months Ended

June 30,

June 30,

June 30,

June 30,

2023

2022

2023

2022

GAAP operating margin

20.3

%

17.3

%

21.8

%

21.1

Stock-based compensation

9.9

%

10.7

%

9.5

%

9.4

Amortization of acquired intangibles

3.8

%

3.4

%

3.6

%

3.1

Acquisition and transaction-related charges

0.1

%

1.4

%

1.2

%

0.8

Restructuring and other charges (credits), net

0.0

%

1.0

%

0.0

%

2.6

Non-GAAP operating margin

34.1

%

33.7

%

36.0

%

37.0

(2) In the nine months ended June 30, 2023, we recognized $4.2 million of financing charges for a debt commitment agreement associated with our acquisition of ServiceMax. Credits for Q3'22 include a $29.8 million gain on the sale of a portion of our PLM services business, and a $3.0 million gain on sale of an investment. Net charges for the nine months ended June 30, 2022 include a $34.8 million expense recognized due to the reduction in value of an equity investment in a publicly-traded company, offset by a $29.8 million gain on the sale of a portion of our PLM services business, and a $3.0 million gain on sale of an investment.

(3) 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 Q3'22, adjustments include tax expense of $15.5 million related to the sale of a portion of our PLM service business, of which $8.1 million pertains to the basis difference on goodwill.