PTC announced in a press release on October 23, 2019 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 design (CAD) with data management and collaboration tools. The acquisition price was reported as approximately $470 million, net of cash acquired.
The acquisition is expected to help PTC to attract new customers with a SaaS-based product offering and position the company to capitalize on the inevitable industry transition to SaaS, according to the press release. Pending regulatory approval and satisfaction of other closing conditions, the transaction is expected to be completed in November 2019.
Located in Cambridge, MA, Onshape was founded in 2012 by CAD pioneers, including Jon Hirschtick, John McEleney, and Dave Corcoran, inventors and former executives of SolidWorks. Onshape has secured more than $150 million in funding from leading venture capital firms and has more than 5,000 subscribers around the world, according to the press release. The company’s Onshape software offering is delivered in a SaaS model, making it accessible from any connected location or device, eliminating the need for costly hardware and administrative staff to maintain. Distributed and mobile teams of designers, engineers, and others can benefit from the product’s cloud nature, enabling them to improve collaboration and to dramatically reduce the time needed to bring new products to market – while simultaneously staying current with the latest software.
PTC touts this acquisition as the logical next step in PTC’s overall evolution to a recurring revenue business model, the first step of which was the company’s transition to subscription licensing, completed in January 2019. The SaaS model, while nascent in the CAD and PLM market, is rapidly becoming industry best practice across most other software domains.
“Today, we see small and medium-sized CAD customers in the high-growth part of the CAD market shifting their interest toward SaaS delivery models, and we expect interest from larger customers to grow over time,” continued Heppelmann. “The acquisition of Onshape complements our on-premises business with the industry’s only proven, scalable pure SaaS platform, which we expect will open new CAD and PLM growth opportunities while positioning PTC to be the leader as the market transitions toward the SaaS model.”
For customers, PTC believes the SaaS model enables faster work, improved collaboration and innovation, with lower up-front costs and with no IT infrastructure to administer and maintain. For software providers, the SaaS model has been proven to generate a more stable and predictable revenue stream, increase customer loyalty as customers benefit from earlier adoption of technology innovations, and enable expansions into new segments and geographies.
“At Onshape, we share PTC's vision for helping organizations transform the way they develop products,” said Jon Hirschtick, CEO and co-founder, Onshape. “We and PTC believe that the product development industry is nearing the ‘tipping point’ for SaaS adoption of CAD and data management tools. We look forward to empowering the customers we serve with the latest innovations to improve their competitive positions.”
Onshape will operate as a business unit within PTC, with current management reporting directly to PTC President and CEO Jim Heppelmann.
Barclays acted as exclusive financial advisor to PTC on the transaction.
For additional financial information pertaining to the Onshape acquisition, and for details on how to join the conference call PTC management will host to discuss its earnings for the fourth quarter and fiscal year ended September 30, 2019 and this acquisition, please review PTC’s Q4 2019 press release.