So, we’ve got some work to do as an industry around it. I actually think it will happen, but there’s no way in which causing anything different than the selling environment because now we have AI coming on the top of ERP, CRM, or PLM migrations. We still are at the top of the heap in terms of the large systems, because lastly, and I’ll summarize this, I think most of our customers have realized that a digital foundation is necessary before you do anything practical on AI at scale. And that’s why you need a system like what we have to offer a PLM, ALM, CAD, SLM. And I think the customer base is prime for that. So we feel good about that dynamic, Steve.
Stephen Tusa: Great. Love the conviction. Thanks a lot.
Operator: [Operator Instructions] Thank you. Your first — your next question comes from the line of Blair Abernethy from Rosenblatt Securities. Please go ahead.
Blair Abernethy: Thanks very much. Neil, just one more on the product side, Onshape CAD, Arena PLM, that’s SaaS part of the business. How is adoption going there and growth rates in those business? How are they faring this year? And then, secondly, as you look to deemphasize some of the other areas, AR and IoT as an example, would that be something you would consider spinning off at some point?
Neil Barua: So, on Onshape and Arena, I want to be clear, those are very important parts of our business. I’m not talking to them on a call like this up until a question is asked because the five focus areas drive the greatest amount of customer value and ultimately economic value for us currently. Now, the Onshape and Arena team are tasked with getting on those five priority lists sooner rather than later, and they are working hard at that. And what I will give you color on is, I’m very enthused about what’s happening in Onshape right now. I think the dynamic of a great product at a time when we have the openness, the customer friendliness of that tool in a SaaS platform is of huge differentiator versus the others that are out there, right, outside of PTC.
So, we feel good about the strategic positioning. I feel good about what I’m seeing so far in terms of Onshape momentum and we’re keeping a close eye as that evolves around the momentum and by which that becomes part of the top five priorities of the company. Arena, similarly, we’re seeing good trends there. PLM, they have a very strong set of capabilities, particularly with supply chain. And the module there is catching some really interesting themes. I feel good about the progress we’re seeing in Arena for the last couple of quarters. We’re staying close to them and making sure that, that momentum builds. But in summary, those two businesses, I’m actually really rooting for them with the resources they have, with the attention that they’ve got from great leader in Dave Katzman to make sure that they make it on the high priority list.
They’re not being ignored, they got the momentum and we’re making sure that we take advantage of that scale. And so, that just answers your last question. I’m more focused on making sure Onshape creates a disruptive force in the competitive market right now and build on the momentum versus anything else outside the business. So, I’m looking forward to their continued recognition and their support as well as productivity within PTC.
Blair Abernethy: Great. Thank you.
Neil Barua: And then, one thing, sorry to interrupt, because I think it is important to make this point to the team here. We’re not abandoning IoT and AR. We are absolutely not abandoning those two areas. And I’ll take AR first. AR, we’re not doing standalone applications, new product roadmap, expending resources for things that are discrete markets that have very little tie to our core systems. So that — those cost items, and more importantly, the focus will be built upon AR tools that actually make sense within our core systems like Windchill, ServiceMax, et cetera, versus standalone applications, which has been the case for the last few years. So, we’re stopping that. We’re still going to support the current customers because that’s important since they’re part of the entire ecosystem.
And similarly in IoT, we’ll make sure that we support what we’ve done in SCO, SCP, but position that IoT strength, that ThingWorx capability to enable this Windchill expansion within the enterprise. And so, we’re positioning that to be the emphasis and where we allocate the cost, not an abandonment whatsoever. It’s a repositioning the focus of where IoT and AR technologies actually make sense for us.
Blair Abernethy: Makes sense. Thanks, Neil.
Operator: The next question comes from the line of Matt Hedberg from RBC Capital Markets. Please go ahead.
Matt Hedberg: Great. Thanks for taking my question, guys. We’ve spent a lot of time in the past, it feels like several years talking about above-average PLM growth, but seeing CAD continue to grow double digits is really impressive. I guess when you think about — obviously, macros remain still a bit uneven, but like what are the core drivers there beyond just SaaS, which Creo Plus is still early? I guess what I’m trying to get is like this above-pure growth rate, how do we explain it? Because it’s a question that we often get from folks, and it feels like you guys continue to outperform on that line item?
Neil Barua: So, I’ll start and Kris, if you want to add anything. You’re right. We are happy with what we’re seeing in terms of our CAD growth rate. And I believe given my work on this and talking to customers, it’s because we have a really great product in Creo and subsequent to that, we have a growing very small business in Onshape, right? That’s, as I mentioned, doing well and we expect to do even better as the years come by, given the competitive dynamic. So, I believe we have a really strong product. I also believe tying this into, as I mentioned, the customer example of the medtech company that’s deploying Windchill. What I didn’t mention is they had disparate CAD systems as well. And when they went through the Windchill consolidation to make sure Windchill seats expanded within the enterprise, they actually did the same thing with their CAD systems, right, which helped the business for PTC on that area.
So, there’s a level of customers seeing the digital thread and having PTC be part of that, that’s helping I think the CAD piece. And so that’s one theme. And then two is, around the world, there has been more interest and movement from 2D to 3D. In Japan that I was in just a couple a month ago, the world is still in 2D. They are now moving to digitize and that’s moving to 3D models, which allows for potentially Creo and Onshape to be competitive with some of the offerings out there. So, there’s a bit of the competitive positioning occurring. I don’t think it’s the majority of the growth, but it helps us as we display some of the seats in other competitors with some of the dynamics that we have with the full portfolio.
