PTC to acquire Onshape for its SaaS product development platform

The $470 million deal should help PTC, a major industrial IOT player, accelerate its transition to a SaaS-based business model.

The industrial IOT company PTC on Wednesday announced its plans to acquire Onshape, the makers of a SaaS product development platform that combines computer aided design (CAD) with powerful data management and collaboration tools. The $470 million deal, expected to close next month, is aimed at accelerating PTC's transition to a SaaS-based business model. 

Onshape will operate as a business unit within PTC, with it current management reporting directly to PTC President and CEO Jim Heppelmann.

Founded in 2012 and based in Cambridge, Mass., Onshape has secured more than $150 million in venture capital funding and has more than 5,000 global subscribers.

In January of this year, PTC transitioned to subscription licensing, the first step in its move to a recurring revenue business model. The SaaS model is still in its nascent stages in the CAD and Product Lifecycle Management (PLM) market, the company pointed out. 

"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," Heppelmann said in a statement. "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."

PTC also reported its fourth quarter financial results on Wednesday. The company posted non-GAAP earnings per share of 64 cents on total revenue of $335 million. 

For the full year, PTC reported a non-GAAP EPS of $1.64 on revenue of $1.26 billion. 

Recurring software revenue in Q4 was $284 million, an increase of 9 percent year-over-year. FY 2019 recurring software revenue was $1.1 billion, an increase of 10 percent year-over-year.