PTC Inc.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)

(in thousands, except per share data)

Three Months Ended

Six Months Ended

March 31,

March 31,

March 31,

March 31,

2022

2021

2022

2021

GAAP gross margin

$

411,890

$

372,337

$

774,493

$

714,558

     Stock-based compensation

4,264

4,506

10,236

8,940

     Amortization of acquired intangible assets included in cost of revenue

5,921

7,117

12,414

13,384

Non-GAAP gross margin

$

422,075

$

383,960

$

797,143

$

736,882

GAAP operating income

$

159,190

$

101,690

$

221,368

$

192,029

     Stock-based compensation

37,921

44,740

83,863

90,828

     Amortization of acquired intangible assets

14,371

14,767

29,348

27,581

     Acquisition-related and other transactional charges

3,903

10,310

4,953

14,226

     Restructuring and other charges, net

(1,562)

469

32,429

716

Non-GAAP operating income ⁽¹⁾

$

213,823

$

171,976

$

371,961

$

325,380

GAAP net income

$

89,679

$

109,262

$

135,768

$

132,777

     Stock-based compensation

37,921

44,740

83,863

90,828

     Amortization of acquired intangible assets

14,371

14,767

29,348

27,581

     Acquisition-related and other transactional charges

3,903

10,310

4,953

14,226

     Restructuring and other charges, net

(1,562)

469

32,429

716

     Non-operating charges ⁽²⁾

44,613

-

34,847

-

     Income tax adjustments ⁽³⁾

(25,444)

(51,703)

(44,669)

(24,552)

Non-GAAP net income

$

163,481

$

127,845

$

276,539

$

241,576

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 intangibles

0.12

0.12

0.25

0.23

     Acquisition-related and other transactional charges

0.03

0.09

0.04

0.12

     Restructuring and other charges, net

(0.01)

-

0.27

0.01

     Non-operating charges

0.38

-

0.29

-

     Income tax adjustments

(0.22)

(0.44)

(0.38)

(0.21)

Non-GAAP diluted earnings per share

$

1.39

$

1.08

$

2.34

$

2.05

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

Three Months Ended

Six Months Ended

March 31,

March 31,

March 31,

March 31,

2022

2021

2022

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 intangibles

2.8

%

3.2

%

3.0

%

3.1

%

     Acquisition-related and other transactional charges

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

%

(2) Expense recognized due to the reduction in value of an equity investment in a publicly-traded company.

(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 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.