PTC Inc. (PTC) Earnings Call Transcript & Summary

We interrupt our prescheduled program with this important message. Recent events, including the tragic death of George Floyd and many others, are too important for us to not pause, reflect and reinforce Black Lives Matter. We must end systemic racism and fight for racial justice. LiveWorx will always be an event that welcomes and elevates Black voices.

Good morning, good afternoon and good evening. My name is Andia Winslow. And today, I will be your host for the definitive digital transformation event for the enterprise, LiveWorx 2020. We have over 15,000 attendees from around the world joining today's live stream. Welcome, and thank you all so much for being a part of today's event. We really are glad that you could make it. Before we begin and on behalf of the entire LiveWorx team, I wanted to take a moment to recognize all of the essential workers, the doctors, nurses, EMTs, police officers, firefighters, truckers, grocery staff, delivery drivers and the countless others who have selflessly put themselves on the line to keep us safe and healthy during this unprecedented time. You all are heroes and deserve our deepest gratitude. Thank you. Now throughout the course of the day, you will hear from some remarkable thought leaders at the forefront of technology who will share with you their insights and perspectives of digital transformation. In addition, beginning today through June 19, we have over 100 additional sessions of amazing content ready for you to consume at your leisure in our on-demand catalog. Be sure to check it out. Also, keep an eye out for an upcoming e-mail to gain access to our content archive for an entire year. So without further ado, let's jump right into our first session of the day from our presenting sponsor, PTC. PTC doesn't just imagine a better world. They help create it. Through a combination of their CAD, PLM, industrial IoT and augmented reality solutions, PTC technology helps industrial companies generate value for themselves, their customers and the world. Their innovative CAD solutions improve collaboration and efficiency with 3D product designs that get products to market faster and keep companies one step ahead of their competition. Their web-based PLM solutions enable a digital thread of all the parts, materials and configuration information required to connect teams and bring great products to life. PTC's award-winning industrial IoT solutions harvest data from products in the field and machines in the factory to deliver insights that drive better business outcomes. And their market-leading augmented reality solutions blend the digital and physical worlds to accelerate learning, enhance collaboration and improve worker productivity, especially for those on the front line. This morning, PTC's President and CEO will share his perspective on disruption by exploring some key lessons learned in this unprecedented time and delving into the technology and business strategies companies must adopt to survive and thrive in this new normal. Ladies and gentlemen, it is my pleasure to introduce the President and CEO of PTC, Jim Heppelmann.

Thank you, Andia. I'm happy to be with you all today in the work-from-home edition of my annual LiveWorx keynote. Given the dramatic stage setups that LiveWorx has become known for in recent years, it seems crazy that I'm talking to you from my home office, but the past few months have been crazy across so many different dimensions. None of us has ever confronted a pandemic like the one which we are facing now. The human toll of this crisis has been terrible and the economic toll is setting up to be equally bad, but the crisis has brought out some of the best in us, too. We pulled together to collectively reconfigure our daily lives for the greater good. We've seen incredible demonstrations of commitment and compassion in our frontline workers. And we've seen incredible demonstrations of innovation and flexibility everywhere around us. The lockdowns and travel bans that are necessary to fight the pandemic have forced us into a massive work-from-home experiment. This experiment has been done at a global scale and with little advance planning and preparation. I know many of you are amazed at how effective work-from-home has been, and we're pleased to see the efficiency advantages it brings. Digital has become the big hero. It's amazing how much you can get done each day working virtually without the dead time of daily commuting and business travel. Everybody I talk to thinks we need to adopt more of this style of working going forward even after the pandemic fades. But frankly, we all know that digital isn't working equally well for everybody. We definitely want to fix the problematic areas going forward. The COVID-19 pandemic is really just the latest in a series of global disruptions that's impacted all of our lives in the last decade. From terrorism to Brexit to trade wars and now COVID, we need to accept that we've entered a less stable and predictable era and we need to find new ways to cope and thrive in the new normal. We've seen during this disruption tremendous examples of innovation and ingenuity, of grit and determination and how companies have accomplished amazing things during the lockdown period. Here at PTC, we managed to close the quarter, shipped 2 big software releases and figure out ways to continue most aspects of our global business without interruption. One of our biggest accomplishments, one that involved many hundreds of PTC people, was our recent release of Creo 7. Creo 7 is one of PTC's most ambitious and innovative releases ever, and it was completed from home in the midst of this disruption. CAD journalist Al Dean captured it well when he said, "Creo 7 is one of the most impressive releases of a 3D design and engineering system that I've seen in a good few years." Creo 7 is full of amazing new capabilities, from generative design; multi-body design; realtime simulation, including CFD, using ANSYS technology; additive manufacturing; CAM; and hundreds of enhancements to core functionality throughout. This is our largest release since we introduced Creo to you a decade ago, and I'm both impressed by and thankful to the PTC team that adapted in stride and delivered this result. I mentioned that while digital work-from-home results were surprisingly positive in many areas, it's clear they were not consistent across all industries, functions and workers. Thanks to the traction of cloud and SaaS across most software sectors, a majority of desk or knowledge workers in finance, sales, marketing and product management departments had a relatively seamless transition to remote work, but all those engineers who have their software and data parked on a big workstation back at the office aren't so happy. We'll want to fix that. During this time, an OECD study showed that traffic through Internet exchange points has increased by up to 60% and Microsoft Teams and Zoom daily active user counts increased exponentially because of remote collaboration. But what about all the people who work out in the real world rather than behind a computer? They're not working from home and digital is not doing much to make their lives better. The vast majority, approximately 75% of the global workforce, consists of frontline workers whose job must be done in the real world because it involves physical work. These people simply can't work from home. It's not an option. For frontline workers engaged in manufacturing, installation, field service and the like, the disruption has been much more challenging. Digital wasn't really a hero. For most, it never even showed up. Companies have been forced to make the best of it, and are celebrating what worked and making plans to fix what didn't as they think about life in the new normal. By observing how PTC's customers around the world have reacted to the crisis over the past few months, I've realized that many are not just surviving, but indeed, some are thriving. I've summarized what I see as the 4 key thriving skills of companies who have found ways to embrace agility, flexibility and mobility in reaction to the new normal. Long after we've forgotten about coronavirus, industrial companies will continue to use these skills to differentiate from their peers. Let's start with mobility and resiliency required for your product development workforce. While cloud and SaaS tools have already transformed CRM, ERP and most other enterprise software categories, the product development world has been lagging. Our world is one of the few remaining categories of business software that remains largely on-premise. I've heard from numerous CIOs at global manufacturers that while the bulk of their knowledge workers transitioned to work from home seamlessly, many said their engineering organization struggled. The big workstations sitting on the desk at the office contain the data and applications, and switching to a different home device is not easily done. Many have been forced to use virtual desktop infrastructure, which is far from ideal. Put this on the list of things that really needs to change. The world of engineering software simply has to go to the cloud. PTC reached this conclusion well before this latest crisis and it's why we completed the $470 million acquisition of Onshape last November before we heard of coronavirus. Onshape not only gives PTC a next-generation pure SaaS CAD and PLM offering, it gives us the underlying multiuser, multi-tenant SaaS platform to use across our portfolio. We've named that platform Atlas because it will ultimately carry the entire PTC SaaS world on its shoulders. Using Atlas, we expect to deliver SaaS versions of all our main software products over time. PTC is not alone in our belief that the cloud is the future. IDC predicts that by 2022, 70% of manufacturers will use cloud-based innovation platforms and marketplaces for cross-industry and customer co-development. IDC believes the tipping point for product development has arrived. So do I, as COVID removed any lingering doubts that I had. Frankly, our timing for the Onshape acquisition could not have been better. Educators have been amongst the first to recognize the power of SaaS tools. Just in the past few months, we've been seeing a rapid transition to SaaS CAD and PLM across universities and high schools, who've been forced to rethink engineering and STEM programs in order to accommodate a mobile and work-from-home student body. Not only can your CAD class use Onshape from school or from home, but you can also run it on a MacBook or a Chromebook or your favorite iOS or Android phone or tablet, finally, plus you can move between these devices easily because the latest version of the data you were working on is always in the cloud. Schools and students alike are happy to see the on-campus PC computer room being shut down, along with all of the upgrades and administrative work required to keep it operating. It's great that tomorrow's engineers are adopting Onshape, but let me share a few examples of the power of cloud and SaaS tools in use by enterprises today. The first stories are related to Windchill. Let me remind you that, unlike its competitors, Windchill has always been a thin client browser application. Windchill has a well-known reputation as being the first fully web-based PLM system. Perhaps as a consequence, Windchill has the largest PLM cloud footprint in the market. Because of its cloud nature, Windchill helped to save the day for customers when their workforce went into lockdown. Let's look at an example. In the current crisis, an autonomous mobile robot that allows for touchless interactions and minimized person-to-person contact in distribution centers is critical. Compound that with the Amazon effect where consumers now expect next or even same-day delivery. This is where GreyOrange comes in, an exciting warehouse automation and robotics provider, which relies on Windchill cloud technology for their product life cycle management needs. Senior Program Manager Mayank Verma noted that during COVID-19 lockdown, in which the design teams were all working from home, Windchill enabled GreyOrange to remotely access designs for digital review and release processes. Product information has been available to everyone for effective collaboration and contribution. He went on to say that, "Windchill has helped us to remain productive during this lockdown situation." Similarly, Fresenius, one of the world's largest provider of dialysis services and equipment, has also been on the front lines of the COVID battle. Fresenius joined the dialysis provider coalition, aiming to maintain continuity of care for dialysis patients by creating isolation capacity that can be shared. This eliminates the need for patients to enter a hospital environment and put themselves at risk. Fresenius has long turned to PTC to manage and improve product quality and to connect to critical medical equipment, using IoT, to maximize uptime for their customers. Because they use Windchill, they didn't have any PLM disruption during the crisis. As Bill D'Innocenzo, Executive Vice President for Manufacturing, Quality and Supply at Fresenius noted, "Windchill has made the challenges of working remotely much easier. From product development activities to sustaining engineering efforts, the Windchill platform has allowed us to continue our work even as so many employees are now collaborating remotely from home instead of our 37 facilities around the world." Windchill has long had a powerful cloud story, but Onshape takes cloud and SaaS to yet another level. Onshape is a key element of the digital transformation strategy at Garrett Motion. Garrett is a global automotive supplier with a portfolio of turbocharging, electric boosting and automotive software solutions that empower the transportation industry to further advance motion. Like most of us prior to the pandemic, Garrett's design team normally works and collaborates in a few large offices around the world. However, due to the crisis, those offices were closed and the workforce of engineers suddenly became distributed as they began working from home. Now thanks to the use of Onshape, Garrett engineers were able to easily pick up their latest work from any device they had at home or wherever they were. Onshape enabled Garrett's product development process to be highly resilient. From this video showing Onshape analytics over time, you can see the distribution of Garrett's engineering organization as it was before the crisis, during the crisis, and today as the crisis begins to subside. Regardless of their location, productivity of Garrett's product development organization was unfazed. I trust you'll agree that to embrace a new normal that accommodates a highly distributed mobile workforce, we're going to need to take this part of the software industry to the cloud and to SaaS. And that's why PTC has taken a leadership position in driving this change. The second thriving skill so important in the new normal is flexible and innovative supply chains. By that, I mean the ability for impromptu partners to easily join forces to blend their ideas as they work together to design and manufacture new products. This is a powerful capability to have, given the level of disruption of typical supply chains, first from trade wars and now from the coronavirus pandemic. It represents a very different approach than what is common today. Today's supply chains have to install and deploy the same version of the same software tools at each company in order to facilitate exchange of data. This means that upgrades have to be coordinated simultaneously up and down the entire supply chain to keep everybody interoperable. Ask an automotive supplier how much they like having to maintain specific versions of Siemens NX to work with General Motors while maintaining different specific versions of CATIA to work with Ford. It's a real pain. Onshape is a very different story. There's no setup or maintenance required. You just use it. And there's no exchanging of files in the supply chain. Everybody is always on the latest version and always using the latest data. Let me share a few examples of how Onshape's SaaS technology lubricates supply chain flexibility. The first example is one of impromptu innovation or flexible engineering. When COVID-19 hit, the need for more ventilators came with it. The Francisco Gavidia University in El Salvador, in collaboration with multiple local companies, wanted to help. They knew that any ventilator would need to be produced with standard materials that are locally accessible. In March, they started a project called [indiscernible], designing an artificial respirator. They quickly realized that Onshape was the best way forward, saying that "Onshape behaves like Google Docs, but for CAD. We're able to design and build prototypes in a matter of days versus weeks or months." The initial prototype started inside the university facilities and evolved collaboratively as they brought on more industrial partners. This is the first design concept. Through testing, they iterated and changed form factors. Upon obtaining increased support from local industrial partners, the design evolved further, with many parts changing from 3D printing to metal construction. From there, the program found PTC's Onshape COVID-19 Response Support Program, which has been providing many similar emergency response projects with free professional level subscriptions and support to better enable remote collaboration and iteration against medical standards. To present to the government, they added a chassis, plus a 1- and 2-patient version, and then a name, VEMPU, which means "Ventilador Mecanico Pulmonar." Throughout the process, the Onshape platform has been of vital importance to allow collaboration across the supply chain in real time. The intuitive interface of Onshape is credited with allowing new collaborators to quickly come up to speed and provide their contributions. There's never been a CAD system like Onshape. And some of you are probably wondering if it's really that easy, to which I say, try it yourself right now. Just click on the link on your screen or else open a web browser and type in ptc.com/respirator. In about 15 seconds, you'll find yourself in a professional CAD system, interacting with the VEMPU design. That's it, you're part of the team, in production in 15 seconds. Nothing has to be setup in advance and nothing is left behind when you're done. I've been in and around CAD for more than 3 decades, and I'm still impressed by that. Now the assembly you're looking at is the actual VEMPU team design. So you've been invited to join in a read-only mode, but feel free to click on the rotate button to see the model from any angle. Unclick the rotate button and click the sectioning button to try the sectioning capabilities. Unclick sectioning mode and click on BOM to explore the bill of material and then its interaction with the assembly model. PLM is there in Onshape, it's just in the background. As you experience Onshape, I trust you'll agree this is an entirely different approach and one that will transform product development. There's nothing else like it out there. Jon Hirschtick and John McEleney, both creators and former CEOs of SolidWorks, founded Onshape with several other colleagues that they've worked with for years. These guys know what they're doing, and I'm very pleased to have them on the PTC team. The next example is about flexible production, the ability to quickly and efficiently manufacture new products based on dynamic demands. Urban mobility is facing major challenges because our inner cities are suffering from traffic and its emissions, and e.GO has a solution. e.GO is developing battery-operated electric cars together with partners from research, industry and urban planning. e.GO has made a very innovative design that allows them to be profitable at low price points and relatively low production volumes. But as their innovation goes further, to ramp up global production, they plan to implement a franchise model. Franchises in China and Mexico and around the world will take the design of the vehicle from e.GO, localize it to their market as necessary, and produce it. So e.GO is really an intellectual property company rather than a traditional manufacturing company. They need ways to share IP data with franchises, yet they must protect their precious IP from any party that might pass it on to competitors. e.GO realized that Onshape might be the perfect answer as a franchise portal because they can provide franchises with access to data without giving them copies of it, plus they can collaborate on localization changes and monitor ongoing data access. Here is an example of a typical design collaboration scenario. The design from e.GO is done in Creo and Windchill. A styling change to the front bumper needs to be shared with the franchise so that they can adjust the surrounding local parts. The changed parts are published from Windchill to the Onshape portal to allow franchise access. Incidentally, this is done automatically using ThingWorx Flow, the new BPM workflow engine in ThingWorx. The franchise gets a notification from Onshape that gives them direct access to the modified model. The franchise sees in Onshape the change incorporated in a separate design branch, thanks to an integrated comparison tool. It shows that the fog light and the bumper needs adjustment by the supplier that produces it. So we need to get another party involved. Let's see how Onshape can support us in this situation. With one mouse click, the franchise can share the design and their thoughts with the supplier so jointly they can define what needs to be done, all very intuitively and inside the tool. We have 3 companies working together in real time, and nobody has done any setup. Because there are no massive file sets to download, any of these collaborators can be on a phone or a tablet, too. Onshape is the only CAD system that has full functionality on mobile devices. When the suppliers implemented the change and released it, the activity thread gives e.GO full visibility to what has transpired. e.GO is an amazing story. Creo and Windchill and ThingWorx and Vuforia, now with help from Onshape, are helping e.GO to create an amazing automotive company, one that got to market in half the time it took Tesla and with production start-up costs that are about 10% of what a traditional OEM would need. e.GO is certainly using digital to the fullest advantage. Another example of flexible or impromptu production comes from our partner, Rockwell Automation. By collaborating with Rockwell, we're finding new opportunities, for example, in manufacturing engineering, where we can help factories to leverage a digital twin to reduce risk and downtime related to bringing up new production lines or making line changes, and then to accelerate line optimization so lines can achieve higher performance levels. We've seen we can reduce line commissioning and validation times by at least 50% and reduce operator training and validation times by up to 75%. Given the amount of capital involved, it's a very strong value proposition. This use case starts as a concurrent engineering problem that involves CAD and PLM, but morphs into a digital twin for manufacturing that uses IoT and AR. Usually, deploying or modifying a production line involves collaborating with many different partners across geographies to coordinate all the needed changes. Partners can include OEM machine builders, system integrators and component or technology providers. It's necessary to bring their design contributions together to create a design for the whole line. Traditionally, designs are delivered as zip files representing a snapshot in time and using a file sharing solution like SharePoint or Dropbox. But what if you could gather each party and their data together from around the world in the cloud with everybody collaborating early and often in the design process? In this scenario you're seeing right now, 2 engineers in Boston and Tokyo are collaborating in real time, incorporating their respective changes in a multiuser session like you'd do in Google Docs. It is clear in real time to each engineer what the other is doing. To help the automation engineers, we can capture all of the critical stop and start points in the assembly without having to go back and make changes or create extra copies of your standard automation designs. Changes can be quickly reincorporated across other assemblies. There's no notion of moving files and waiting for the next update. This allows your teams to leverage the same agile principles they get in software development right in their engineering designs. In Onshape, PLM is part of the process, but it's never in the way, and it can extend the real time single source of truth to the entire supply chain. Now that our machine design is beginning to take shape, we can start collaborating with the automation engineers in real time as well. Typically, automation testing can't start until the machine is built, which increases risk, but using Rockwell's Emulate3D factory simulation technology, we can virtually test the functionality of the machine that we capture in the design. This allows the automation engineers to test and optimize their control code in the digital world versus having to wait until the machine and, subsequently, the entire production line is built. And using this digital twin, teams can get a jump on achieving those high overall equipment efficiency, or OEE, goals much sooner by pre-integrating with IoT using ThingWorx. I'd like to thank Rockwell for the terrific partnership that's creating so much new value, like this example shows, for our joint customers. I trust these stories will help you see how important Onshape and Atlas will be to the way we think of supply chain and collaboration going forward. The third thriving skill necessary to succeed in the new normal is to bring digital to the 75% of workers, 2.7 billion of them globally, who are part of the frontline workforce. Knowledge workers have Microsoft Office and YouTube and Zoom. These all work great on computer screens. None of them work at all in the real world. What we need for frontline workers is a way to bring digital data into the real world where they work. That's the very definition of augmented reality. AR is essentially the frontline equivalent of the tools that knowledge workers rely so heavily on. Just as Zoom allows us to collaborate with content on the screen, Vuforia Chalk allows us to collaborate with content mapped onto the real world. Just as Microsoft Word allows us to publish content on paper, Vuforia Studio publishes content on real world objects and in real world places. And just as YouTube allows us to share movies that capture how-to information, Vuforia Expert Capture allows us to capture how-to information that's mapped back onto the real world. Like a growing number of you, I'm a big believer that augmented reality is going to bring massive productivity advantages to those enormous ranks of frontline workers. Let me show you a few great examples where Vuforia AR tools are empowering frontline productivity. Toyota Motor Company is renowned as one of the world's leading automotive manufacturers. As with all of us, it can be difficult for Toyota employees and subcontractors to communicate effectively from a remote distance. For example, contractors carry out construction and maintenance of factory assets during planned downtime over holidays and weekends. If they experience unexpected or unsafe site conditions, a TMC employee, who is the expert, may not be available to assist them on site. Like videoconferencing, Vuforia Chalk allows expertise to be digitized and shared remotely. But unlike video conferencing, Chalk has one foot in the digital world and the other foot in the physical world, effectively serving as a bridge between these worlds. TMC uses Vuforia Chalk to enable experts to help employees and subcontractors tackle complex or unfamiliar challenges. Since implementing a remote assistance solution with Vuforia Chalk, Toyota has been able to eliminate 4 on-site visits per month per section manager, minimizing downtime costs and increasing employee safety and compliance. Back in Europe, the U.K. Ventilator Challenge was established to solve a very different problem, but AR again proved to be a key part of the solution for frontline workers. A consortium of U.K. industrial, technology and engineering businesses from across the aerospace, automotive and medical sectors came together to jointly produce medical ventilators for the U.K. Smiths Medical is one of the many companies that stepped up during this crisis, and they participated in the U.K. consortium in an effort to increase the production of their top-tier life-saving ventilator, the paraPAC plus. The program is on target to increase production of these portable and lightweight ventilators by roughly 2 orders of magnitude, to 10,000 units per month. PTC provided Vuforia software to help Smiths scale knowledge transfer between frontline workers using smartphones, tablets, computers and the Microsoft HoloLens 2. Smiths used Vuforia Expert Capture to capture its frontline manufacturing process knowledge, including procedures for ventilator production, and deliver those guided step-by-step instructions to production workers at GKN, who's an automotive and aerospace manufacturer. By capturing and distributing Smiths' expert knowledge, the company has been able to digitally guide workers from companies having no prior medical device expertise in the making of the very same ventilators. As these examples show, the opportunity that AR represents in the new normal is profound. PTC has worked hard and invested aggressively to ensure that our Vuforia suite is the best-in-class solution for industrial companies who want to bring digital transformation to their frontline workforce. The fourth thriving skill necessary to thrive in the new normal is remote monitoring of products and factories, which allow companies to continue operation despite work-from-home orders, travel bans, quarantine areas and limited staff. IoT-enabled remote monitoring and remote service improves uptime in critical environments. It saves massive technician labor and travel costs, and it provides new ways to transform the relationship with your customers. Another leader in medical equipment is Elekta, a Swedish company that provides radiation therapy, radiosurgery and clinical management for the treatment of cancer and brain disorders. Elekta's customers are private and public hospitals, both of whom need to ensure that the equipment needed to care for their patients is available when required in order to deliver the best patient care possible. Remote connectivity is the answer, but getting hospitals to enable connectivity was initially very challenging until they saw the compelling benefits that came from it. The first and most important metric in Elekta's customers is the avoidance of clinical downtime, which is the amount of time that they're not able to provide care for their patients. Unexpected downtime creates health risks on one hand and scheduling nightmares on the other. One specific example that contributes significantly to the amount of downtime is part change, which previously created an average of 60 hours of downtime. But now with better planning, thanks to IoT and AI, that could be completed in an average of 15 hours. Plus, their connectivity solution has enabled Elekta to remotely resolve about 50% of service issues without a service technician needing to visit. Of course, in normal times, a technician visit involves cost and delay, but during the COVID crisis, it was sometimes not even possible. So thanks to IoT, service is far more effective now. Now let's switch gears and take that same concept of remote connectivity of medical equipment in hospitals to manufacturing equipment and assets on the factory floor. I'd like to talk about Autoliv, who's the worldwide leader in automotive safety, supplying all major car manufacturers globally. Autoliv's 65,000 employees operate in 27 countries. And each year, their airbags, seatbelts and steering wheels save more than 30,000 lives and prevent 10x as many injuries. PTC and Autoliv created an IoT solution to enable real time detection of out-of-control variation and processes related to product quality and reliability. The solution gathers data from many sources and it uses configurable statistical calculations and rules to flag variance in process controls. This IoT and AI solution eliminates paper-based manual processes, bringing real time visibility into operations through improvements in OEE, and enables the implementation of analytics-based workforce planning. The solution uses a hybrid deployment model with on-premise analytics of machine and site-specific data and uses cloud for cross-site analytics and visibility. The result is improved OEE and on-time delivery, reduced cost of scrap and rework, while identifying indicators of quality risk and logging detailed contextual data around rule violations for subsequent analysis. I trust you can see that IoT, too, will play a profound role in the new normal that lies ahead. If you'd like to hear more about inspiring stories about IoT and situations like these, please join Rockwell's Chairman and CEO, Blake Moret, later today as he talks about Rockwell's vision for expanding human possibility, talks about the FactoryTalk InnovationSuite and the PTC partnership. Blake will share insights on Roche, who's also using IoT to monitor and remotely service diagnostics testing equipment used in laboratories worldwide. We want to thank Rockwell, by the way, for their support of virtual LiveWorx. As you can see, these 4 skills have enabled industrial companies to not only survive, but to thrive, thanks to increased levels of agility, flexibility and mobility across their business and workforce. When the pandemic began to disrupt business, we knew this was a time to lean into our customers. The PTC executive team brainstormed, what can we do to help our customers get through this? We came up with a lot of good ideas. We agreed that we should show ultimate licensing flexibilities for companies who are trying to get their workers back online from home. We agreed that we'd offer white-glove service to so many of our health tech customers on the front lines of this pandemic. We decided to make our Vuforia Chalk offering free during the crisis. And we've now extended that program through August. The uptake on free Chalk was amazing. And more than 10,000 industrial companies tried using AR for the first time to enable remote support of their frontline workers. The usage spike with Chalk mirrored that of Zoom or Teams. We also provided Onshape free for schools and educators to enable the future generation of engineers to continue to develop skills even though their schools were closed. The adoption of Onshape in education has been truly amazing, and we estimate that Onshape has gained 5 to 10 percentage points of educational market share in the past 3 months alone. While the coronavirus crisis is a terrible health and economic problem, it's definitely accelerating the movement toward digital technologies like IoT and AR and SaaS, the type of technologies that PTC has been prioritizing and that make our company so unique. Plus, it's created new opportunities for us to get closer to our customers, to reimagine our customer success programs and to work more collaboratively with customers to identify and solve their biggest challenges. Unfortunately, the bad guys don't like to let a crisis go to waste either. And as many of you have seen, the number of malware and phishing attacks has increased dramatically. In particular, nation-state hackers are going after organizations such as health care institutions and research facilities, who are actually working on treatments for COVID-19. This is a good reminder for all of us that cyber safety and security are everyone's responsibility. We at PTC are committed to doing our part and to helping you understand and do yours. Now before I close, I want to share with you some of our latest thinking regarding our vision and our path forward. Today, I've shared a dozen examples of how our customers and partners have leveraged digital technology like SaaS to enable resiliency and mobility across you knowledge workers and flexibility across design, supply chain and manufacturing. We saw how AR is being used to enable frontline workers to collaborate in new ways to improve their productivity. And we saw how IoT, combined with AI, enables factories and product fleets to achieve double-digit improvements in their operations, at times saving both money and lives. Now I want to close with our vision for how all of these technologies, IoT, AI, AR, come together with our heritage in 3D. Our vision is called spatial computing. Spatial computing is the ultimate example of physical and digital convergence. And once again, PTC is out front defining the vision for how industrial companies can capitalize on this amazing emerging technology. It's more than just a vision, because our recent release of Vuforia Spatial Toolbox represents a big down payment. Let me start with some definitions. You can probably agree that Microsoft Word is a way to virtualize documents and Zoom is a way to virtualize knowledge workers. Then, CAD and PLM are a way to virtualize products. IoT is a way to virtualize every unique instance of that product, including the ability to monitor, control and optimize that product instance throughout its full life cycle. AR is a way to virtualize a frontline worker, including the ability to monitor, control and optimize their work. I like to say that AR is IoT for people. Now many of you have seen how depth-sensing cameras can capture a space such as you might experience in an online virtual tour of a home that's for sale. The same technology works great to capture 3D models of factories and plants. Spatial computing allows us to combine and integrate what we know from IoT and AR and CAD and PLM, together with what cameras see happening in that same workspace, so that we can create an amazingly powerful 3D digital twin that understands all the dimensions of people, product, process and place. And we can use VR to go there virtually anytime we want. Of course, we can apply AI within IoT and within AR, and we can apply AR across -- or AI across the combined dimensions. Spatial computing is the ultimate way to monitor and optimize entire worksites, including coordinating the work of every asset and every worker involved in the process. Let me show you some simple examples using Vuforia Spatial Toolbox to help bring this big idea to life. This video, which was created by Anna, one of our engineers, shows the use of Vuforia Spatial Toolbox as a way for her to program a robot in the space of her apartment. Vuforia Spatial Toolbox understands the space of the apartment and is talking to Anna with AR and to the robot with IoT. Being human, Anna must get data through her senses. So as I like to say, AR converts bits and bytes to sounds and sights so that Ana can understand and process the data in her human way. But a robot, in this case a LEGO robot, can neither see nor hear, but we can talk to it wirelessly through an IoT connection using a protocol essentially made of X, Y and Z coordinates. Vuforia Spatial Toolbox is the bridge between these 2 worlds of man and machine and the space that they share. After mapping out the desired path on the floor, Anna places a virtual on/off switch in space and connects it to the start point on the path. When she hits the on button, the robot proceeds to the start point and follows the path that Anna requested. This is a great example of reducing cognitive distance as compared to the traditional programming model. Anna and the robot both have a shared understanding of the physical space and what is supposed to happen there. Naturally, the same concept applies to programming an industrial robot in 3 dimensions. Now spatial computing introduces the topic of spatial analytics. In addition to getting data from machines and from workers, cameras using computer vision can watch and perform analytics against what they see is happening. In this work-from-home example that uses a typical smartphone, our Vuforia computer vision engine can see and track the box of sugar and the box of tomato juice. In the upper left, Vuforia Spatial Toolbox can show you where the sugar is and how to navigate there. In the upper right, it can show you where the sugar has been, because it's moving around. In the lower right, it can show you the velocity of the sugar box as it moves around. And in the lower left, it can show you how close the tomato juice is to the sugar at any point in time, sort of a social distancing concept, I guess. Now let's dive a bit deeper to understand how industrial companies can use these spatial computing techniques to create strong business value. Let's look at our Reality Lab on the 17th floor of our Seaport headquarters in Boston. It's a physical room, but using depth-sensing cameras from Microsoft, this room is digitized many times per second, including all the machines and people that are present there. Because it's a 3D model, we can go into god mode and use this digitized version of the space as a real time virtual reality model that allows us to navigate and observe and monitor and optimize the work of both man and machine. Using spatial analytics, we can analyze the entire process, understand the performance for each work step and analyze the way that the space is utilized. How does the worker and the AGV move in space? And where and why do they seem to stop and linger? We can quickly get to a time line and a process waterfall showing where time is spent at each step in a process. With this knowledge, we can optimize the work process and, if necessary, rearrange the physical space. We can now think about the performance of a process, what it means on a per step basis, an average basis or an ideal basis. And with this data, we can also assess where performance bottlenecks are coming from. For example, whether it's starving from material, queuing or wasting time in motion. With the powerful insights you can derive from spatial computing, there's a tremendous opportunity to improve performance across all the dimensions of assets, workers, process and space. Spatial computing can be an interface for machines and humans, and that changes our perspective of what's possible there. No need to go to the worksite to interact with workers or machines. Now you can walk the floors from your home office. These examples may look like sci-fi, but they're based on Vuforia Spatial Toolbox, an open source offering we've created to allow developers, innovators and researchers to begin experimenting with spatial computing within their own companies. We chose the open source model because this is clearly a field with nearly unlimited possibilities in a situation where a whole ecosystem of innovation will be needed to fully capture the possibilities. Vuforia Spatial Toolbox is available on our website today, and we believe this incredible innovation represents the first spatial computing offering available in the industrial market. Let me wrap up. When uncertainty and disruption becomes the expectation, then accelerating digital transformation is the ideal response. The level of digital innovation has never been faster than it is right now. And some people have noted that 5 years of IT innovation have happened in the past 5 months simply because of necessity, but now it's time to take stock of what's working and what's not and to think beyond necessity to business advantage going forward. And with that, I want to thank you for joining me from my home office in Boston. I hope these ideas help you and your company to make it through these challenging times and then to be better positioned to thrive in the new normal that is to follow. Thanks again, and please enjoy the rest of virtual LiveWorx 2020.

Thank you, Jim. Well that concludes our first session of the day. Coming up next at the top of the hour, we will take a deeper dive into digital transformation and the technology and support you need to succeed. We'll be right back after a short break.