PTC to buy Cambridge design software startup Onshape for $470M in 'biggest acquisition ever' - Boston Business Journal
By Lucia Maffei Technology Reporter, Boston Business Journal
Boston-based PTC Inc. is making what its CEO says is its "biggest acquisition ever" in a move that's critical to the company's transition to a cloud-based, software-as-a-service model.
Industrial software company PTC (Nasdaq: PTC) is paying $470 million, net of cash acquired, to acquire Cambridge-based Onshape, a computer-aided design software startup delivered in a software-as-a-service model. The transaction is expected to be completed in November 2019.
In an exclusive interview, PTC P resident and CEO license model Jim Heppelmann explained that PTC has already switched from perpetual to a subscription license, and buying Onshape will help it further evolve from on-premise to cloud-based software as a service.
"Onshape is a pure cloud-based software-as-a-service company, and so they will play a key role in really guiding PTC as a whole under that model over a lengthy period of time," Heppelmann said.
Onshape was founded in 2012 by six co-founders including Jon Hirschtick, John McEleney and Dave Corcoran, inventors and former executives of SolidWorks. Onshape will operate as a business unit within PTC, with current management reporting directly to Heppelmann. Heppelmann added that all the six co-founders of Onshape will stay on board, and that he doesn't anticipate any layoffs related to the acquisition.
All of the approximately 95 Cambridge-based Onshape employees will move to PTC's office in the Seaport over the course of the next year, according to Heppelmann, as Onshape's office in Cambridge is phased out.
Heppelmann declined to share Onshape's revenue, but said the acquisition will add approximately $10 million of recurring software revenue for PTC in fiscal 2020.
"We will keep the name Onshape, but it might end up having a tagline that says, 'A PTC business,'" Heppelmann said.
Heppelmann said that PTC executives and board members decided this summer that the only way to win in the cloud business was to build a new system from scratch.
"At that point, I said, 'Well, if we need something new, I really need to go check with the Onshape guys and see where they are, because acquiring them would save many years and hundreds of millions of dollars," Heppelmann said.
PTC announced the acquisition on Wednesday night in conjunction with its earnings report that closed the fiscal year. The company posted revenue of $335 million for its fourth quarter 2019, beating Wall Street estimates.
The transition to a subscription-based business model hasn't been without "meaningful headwinds," as Heppelmann acknowledged in July, citing how software bookings in China and Russia "have declined materially" following the end of perpetual license sale there.
"We had a good year but, frankly, I would have liked to do even better," Heppelmann said on Wednesday. "One of the contributors to the strength of the fourth quarter was the rebound in these geographies that had dropped off after the initial change."
Onshape has secured more than $150 million in funding from investors including California venture capital powerhouse Andreessen Horowitz, an early investor in social media giants Facebook (Nasdaq: FB) and Twitter (Nasdaq: TWTR). Other investors include New Enterprise Associates, North Bridge Venture Partners and Commonwealth Capital.
In April, PTC moved from Needham to a 250,000-square-foot headquarters in Boston's Seaport District, which is currently home to 1,200 employees.
"Our own aspiration is to be one of the biggest and best technology companies in Boston," Heppelmann. "We want a vibrant community around us for many reasons, including the ability to supply us with acquisitions of critical new technology like Onshape did."
PTC said double-digit growth from its IoT and augmented reality businesses helped the industrial software vendor exceed its guidance for fourth-quarter bookings by $5 million while promising investors that it will open up a new
BOSTON--(BUSINESS WIRE)--Oct 23, 2019-- PTC (NASDAQ: PTC) today announced that it has signed a definitive agreement to acquire Onshape, creators of the first Software as a Service (SaaS) product development platform that unites robust computer aided
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