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PTC Set to Acquire ServiceMax to Boost PLM Portfolio for $1.46B

Zacks Equity Research
·4-min read

PTC Inc PTC has announced an agreement to acquire cloud-based field service management (FSM) software company - ServiceMax - for $1.46 billion. The transaction is subject to regulatory and customary approvals, is expected to close in January 2023.

ServiceMax provides FSM services built on the Salesforce platform which includes all information pertaining to serviced products like description, serial number, service history and scheduling and dispatching technicians etc.

The deal will be financed utilizing cash in hand and the amount borrowed under the company’s existing credit facility, along with a new $500 million term loan. Subject to regulatory and customary conditions, the transaction is expected to close in early January 2023.

PTC Inc. Price and Consensus

PTC Inc. Price and Consensus
PTC Inc. Price and Consensus

PTC Inc. price-consensus-chart | PTC Inc. Quote

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The acquisition price will be broken in two instalments, where $808 million will be paid in January 2023 and $650 million in October 2023.

Since 2015, PTC and ServiceMax have collaborated numerous times to offer field service to producers of complicated, highly customized goods for the aerospace, industrial products, medical device and related sectors.

The integration of ServiceMax is expected to strengthen PTC’s closed loop product lifecycle management (PLM) solutions by providing enterprise asset management and FSM companies with monitoring and servicing product record after the product moves into customer use, added the company.

The complete service history provided by ServiceMax, along with detailed usage information from PTC’s Internet of things solutions will complement the full digital product definition from PTC’s computer-aided design and PLM solutions.

The acquisition is expected to improve PTC's second-quarter ARR results by approximately $160 million. For fiscal 2023, the company expects ARR to be $1.730-$1.790 billion, which indicates a rise of 10-14% year over year at constant currency.

Strategic acquisitions have played a pivotal part in developing the company’s business in the last few years.

In May 2022, the company completed the acquisition of Germany-based Intland Software for $280 million. Intland Software’s product portfolio is an essential component of the company’s Digital Thread Strategy and complement PTC’s portfolio of PLM and model-based systems engineering solutions.

Prior to that, PTC completed the acquisition of Arena Solutions, Inc for $715 million. Arena Solutions provides cloud-based SaaS PLM applications solutions and product-centric quality management system solutions. Arena Solutions’ buyout complements PTC’s earlier acquisition of Onshape.

In October 2019, PTC acquired Onshape for $470 million (net of cash acquired) to augment its Creo and Windchill products with improved SaaS capabilities.

At present, PTC carries a Zacks Rank #3 (Hold). Shares of PTC have gained 5.6% against the industry’s decline of 32.2% in the past year.

Zacks Investment Research
Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks from the broader technology space are Arista Networks ANET, Pure Storage PSTG and Jabil JBL. Jabil and Arista Networks currently sport a Zacks Rank #1 (Strong Buy), whereas Pure Storage currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks.

The Zacks Consensus Estimate for Arista Networks 2022 earnings is pegged at $4.35 per share, up 7.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.

Arista Networks earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have decreased 1% in the past year.

The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.

Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 10% in the past year.

The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8 in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.

Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have increased 4% in the past year.


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