Neil Barua: I’ll start, Kristian, you could add. I don’t see right now any change in the selling environment. It’s been tough going for at least six quarters now here at PTC, that didn’t change in Q2 despite having solid results. So, the team continues to deliver despite a challenging selling environment. We had — we look at every metric, GDP, PMIs, you name it. We have not seen a change yet given some maybe positivity, they have not turned into a trend. I will say from a broad base outside of industries, outside of specific industries, the point that I think we’re trying to articulate is the challenging selling environment really is punctuated in the larger deals. So, these are the large digital transformation deals that are seven-, eight-figure that I’m truly excited about seeing how the pipeline is building on that.
That continues to be challenged, the same by which it’s been for the last six-plus quarters around the large yield in getting those projects to be the key priority by which you could get the signed PO and begin implementation. That’s the area we continue to work through. To be clear, we continue to do well around securing those, but those are the areas by which the challenge in selling environment really impacts us the most. And I don’t see that changing right now in the current environment. Kristian, anything to add?
Kristian Talvitie: No, I think that’s right.
Andrew Obin: And any specific verticals that just stand out as being particularly weak within certain industries?
Neil Barua: From our perspective, we are — I feel good about the key industry verticals that you know we play in, Andrew, doing well. Some are doing better than others. I’d say all are going through digital transformation in a very serious manner. So we feel good about our positioning in those verticals. It’s a question of the largest deals in those verticals, how much can we actually execute and close within a certain quarter?
Andrew Obin: Got you. No, I really appreciate it. Thanks so much.
Operator: [Operator Instructions] Thank you. The next question comes from the line of Saket Kalia from Barclays. Please go ahead.
Saket Kalia: Okay, great. Hey, Neil. Hey, Kristian. Thanks for taking my question here. How are you?
Neil Barua: Hi, Saket. Good.
Saket Kalia: Hey, Neil, I’ll keep it to one just maybe for you. When you joined, I think one of the things that was really interesting that you talked to was just being more discerning about resource allocation. And maybe very specifically, putting more wood behind the arrow for PLM while maybe managing other areas like IoT and AR. And you correct me there if I’m wrong. But maybe the question is, what’s the next step in that evolution? And as you think about sort of that investment in PLM, what are the areas that you want to bolster the most inside that business? Does that make sense?
Neil Barua: Yeah. Great question, Saket. And just — I want to make sure I make this point again. We did say and I did say put wood behind more — wood behind the arrows that matter the most for customer value. We already have done that, started that process. This IoT, AR, all those two sentences I mentioned, is a very significant first move of executing across that point that I made to all of you for the last six months. And what that will allow us to do is make sure in the concept of PLM as you asked, Windchill, which is this wonderful system that I referenced the great customers now getting enterprise adoption, there is more we can do around making sure that there’s three components. Number one, Windchill and the ability for all the enterprise groups that I mentioned have really understanding and visibility and viewability of the data that is coursing through an engineering group as an example, right?
And so, the product development around making sure the user experience, the viewing of that data is best-in-class. We’re working through that with these dollars that we’re repositioning from IoT, AR. We’re working through stronger integration points by which Creo and the CAD design tools can more seamlessly move through the enterprise within Windchill. We’re working through Codebeamer and Windchill integration points, by which software configuration management with hardware configuration management can be even more clearly done for an enterprise. We’re working through a ServiceMax Windchill integration and we’re going to keep working through that by which product data can now be seen in the field and vice versa. So, those are the two big themes.
And the third other theme that we’re putting wood behind the arrow within PLM is using the foundation of Windchill and all the great things that AI could do and Copilots could do with a seamless data stack within Windchill. Over time, we’ll work through how does that creates value for our customers as well in a differentiated way for them as they use this as an enterprise system. So, a lot of great things that could happening on that. And again, a theme around focus on the priorities, focus on the core and let’s bring the calvary behind it because our customers are really needing it and requiring us for us to show up in this manner and the opportunity is there in front of us.
Saket Kalia: That’s very clear. Thanks, guys.
Operator: Your next question comes from the line of Jay Vleeschhouwer from Griffin Securities. Please go ahead.
Jay Vleeschhouwer: Thank you. Good evening. Neil, your comments just now an answer to Saket’s question, I think touched on an important point about the portfolio where cross-selling necessarily has the corollary of increasingly integrating products across the portfolio. So, more closely coupling the products rather than loosely coupling the products. So, over time, what do you think that might mean in terms of, let’s say, the regularity of the business? SLM historically was quite a variable lumpy business. The ALM business is on a good trajectory. But as you increasingly closely couple the various three-letter acronyms of the business, how do you think about retention, how do you think about the variability of the business?
Neil Barua: Yeah, great question. Thank you for asking, Jay. It is a journey. And as a reminder, we’ve done a really nice job and it will continue to have open integrations in the environment. We’re not a closed system. And when a customer looks at us, they can see best-of-breed PLM, best-of-breed CAD, best-of-breed SLM, best-of-breed ALM, and we believe we have all of them, right? But the customer can choose from that and feel okay for the interoperability with other systems that they may choose for ALM, SLM, PLM, or CAD. So that will be the philosophy we continue to have. That being said, our customers are really pushing on us because there’s real value given the credibility PTC has with them of creating even more distinct integration points, UI interfaces that are seamless between Codebeamer and Windchill.
