Kristian Talvitie : Yes. I mean, again, I think we have a pretty good level of visibility. A lot of our contracts are multiyear contracts. So you don’t — they’re not actually even coming up for renewal in fiscal ’24. You have some portion that’s coming up for renewal. But again, our retention rates at this point are already quite high. And then also, as you point out, we do have deferred ARR, we’ve had obviously deferred ARR for many years. But we have that, which also provides more incremental visibility.
Operator: Our next question comes from Andrew Obin with BofA.
Andrew Obin : Neil, Jim. Just a question on PLM and specifically Windchill. You guys have been very successful with growing the business. And I guess the question I have as your customers digitize their operation and there’s this build-out of this digital value chain. What’s the opportunity to monetize beyond sort of existing users, right, as more people touch the digital thread? What are the revenue opportunities? Are there sort of opportunities to sort of charge people for different services? If you could expand on that?
Neil Barua : Yes. Let me take the front end and maybe Kristian and Jim could support here. As I mentioned, one of the drivers we’ve seen over many years right now is around Windchill’s adoption within our customers. And what we’ve also seen is that expanding not only within engineering, but as you mentioned, it’s now going to other groups that is tied closer to engineering, like supply chain, like quality as an example. And as Kristian said, we’re seeing this migration of Windchill becoming more of an enterprise-wide system of record, that will take some time, but we are seeing the trends moving towards that, particularly as we think about model base and the digital thread that is pushing on this lever. To be clear, some of the economic points that you’re asking about revenue potential outside of the already strong sustainable growth that we’ve been showing in Windchill, we’re working on more of a metrics-driven approach to that within ourselves internally to think about how do we sustain that over the periods over the next medium and long term, that will be an area that we’ll explain more in detail as we get into the Investor Day, hopefully, in early spring.
Jim, Kris, do you want to add?
Jim Heppelmann : Maybe I would add that our rule of thumb has long been that when a customer first adopts an engineering and then expands to a broader enterprise deployment. There’s generally 10x to 15x more users across the broader enterprise than there are in engineering. And so as companies digitize, they’re basically saying, we need to have everybody in the enterprise logging into the system and getting real-time data as opposed to working with data that’s been exported out of the system and passed on and maybe on a date may be wrong, et cetera, typically drawings and PDF files and so forth. So I think that there is a real opportunity. And yes, I think Neil is offering to quantify it a little bit more discretely at the Investor Day.
Operator: Our next question comes from Steve Tusa with JPMorgan.
Steve Tusa : Jim, congrats again. Great run for sure. Can you guys — I think you guys said you would update us kind of annually on the SaaS trajectory? I think you had put out an illustrative model or at least like some sense of where you’d be as a percentage of ARR by year-end ’23. Maybe if we could just get a little bit of color on how that turned out?
Kristian Talvitie : Yes. I mean — I think what we had said was we plan to be in the mid-20s in ’23, and that’s where we ended.
Steve Tusa : Okay. Great. And then just a question on the long-term cash targets. You’re kind of putting up some good numbers despite these other headwinds. I haven’t gone back to the old model. But — and anything incremental that moved around you on an operating basis because the numbers seem pretty strong despite the non-fundamental headwinds?
Kristian Talvitie : I’m not 100% sure I’m understanding the question, Steve. Like — no, there isn’t — when we talked about some of the puts and takes, meaning the interest payments are going to come down. Cash taxes are going to go up. But otherwise, it’s really just operating the business.
Operator: Thank you. Looks like our next question comes from Jay Vleeschhouwer with Griffin Securities.
Jay Vleeschhouwer : One thing that PTC does that I think is important and does rather well, for instance, at LiveWorx, is you share in some detail your product road map for CAD, PLM and the other 3-letter acronyms. So with that in mind, for Jim and Neil, when you look into ’24, what do you think are some of the principal product development or release executables that you’re working on, whether it’s developing Atlas further or new forms of packaging like DPM or anything else that you care to mention as far as the portfolio is concerned for ’24? And then for Kristian, a question that’s often come up in the past, which is about your our sales coverage, our customer account segmentation. Anything new that you’ve implemented for ’24 in terms of channel programs, channel margins, anything of that kind out in the field that we should be aware of?
Neil Barua : So Jay, thanks for the question. I’ll start off and Jim could support here, too. On roadmap. First, on SLM, I’ll take that since this was a question in the last call. We are working on a release in December that ties ServiceMax closer to Servigistics with a combined offering that we believe will have nice reception to the marketplace, as well as in the same release, a tie of ServiceMax to IoT for preventative maintenance use cases between the two capabilities. In terms of the broader portfolio, Windchill+, Creo+, Kepware+, as I said, this remains a strategic relevant area that will continue to grow and emphasize and we’ve got a number of leases for all the plus strategies that we have in ’24. That includes, by the way, things that we’re doing with Atlas in support of our Plus strategy.
And then third, in an order of priority, by the way, here, Codebeamer, right, the ALM to scale and continue to capture what we’re seeing is strong demand and pipeline we’re making sure that we’re taking Pure and Codebeamer and working through how that looks to the customer as well as augments to Codebeamer in general to make sure that it’s enterprise scalable in the regard that companies like Volkswagen are needing us to deliver for them on the end user experience piece. Jim, anything to add?
Jim Heppelmann : Well, just maybe to observe, listen, you talk here, you kind of called out projects that drive cross-selling is a top priority projects that drive SaaS is a second priority, not far behind. And then functionality, scalability, whatever of certain products, in particular, like Codebeamer, where we have a tiger by the tail and want to make sure we’re being responsive to it. I think that would be a way I could characterize it, just reflecting on what you said.
