PTC’s SaaS Acquisitions Continue with the Purchase of Arena Solutions

PTC announced on December 14th that it had reached a definitive agreement to acquire Arena Solutions, a provider of Software-as-a-Service” (SaaS) Product Lifecycle Management (PLM) software, for US$715 million. The acquisition is expected to be completed in January or February 2021.

While enterprise customers remain, for the time being, wedded to on-premise CAD and PLM solutions, SMB customers have gravitated to SaaS-based solutions from the likes of Siemens and Autodesk. For PTC, the acquisition of Arena Solutions will enable the firm to address SMB’s PLM requirements and complements the previous record acquisition of CAD software supplier Onshape, which was purchased in October 2019 for US$470 million (see ABI Research Insight PTC’s Acquisition of Onshape Highlights the Need for SaaS-Ready Solutions as Manufacturers Prepare to Move Away from On-Premise Applications (IN-5645)).

Arena Solutions was founded in 2000 with headquarters in Foster City, California. The company positions itself as a “product realization platform” rather than simply a PLM platform. Arena’s PLM solution combines PLM, quality management, and requirements management.

Engineering and operations teams can keep track of, manage, and share all the applicable product information, especially important the highly complex Bills of Materials (BOMs) and information relating to compliance with quality standards and regulatory requirements. The installed base covers some 1,200 customers across the electronics, high tech, and medical device industries and includes some notable challenger firms such as Nutanix, Peloton, Sonos, and Square.

In terms of employee numbers, Arena is of a similar size to Onshape, with approximately 160 employees worldwide. Arena Solutions is expected to end calendar year 2020 with approximately US$50 million in annualized recurring revenue. Both Arena and PTC are profiled in the forthcoming ABI Research Industrial Product Lifecycle Management (PLM) Software Competitive Ranking (CA-1307).

While SMB manufacturers have long been receptive to the benefits of SaaS-based software (especially the opportunities for improved collaboration and lower total cost of ownership), the pandemic has necessitated a move to remote working and meant that enterprise customers too are recognizing the benefits of SaaS platforms. The Arena acquisition will ready PTC for the shift to SaaS-based PLM platforms by enterprise customers. PTC’s CAD + PLM proposition will offer customers a choice of deployment options: on-premise CAD (Creo), SaaS-based CAD (Onshape), on-premise PLM (Windchill), and SaaS-based PLM (Arena). 

The acquisition is mutually beneficial. PTC gains more expertise in developing SaaS platforms and reach into SMBs. Arena will benefit from the scale and reach of PTC’s sales channels both from a geographic perspective and providing access to enterprise customers considering SaaS PLM solutions.

PTC’s FY21 Investor Day on December 15th provided clues for how PTC can benefit Arena with the company sharing an update of Onshape’s performance and the company’s broader impact on PTC. During 2020, Onshape has displaced competitors on 700 occasions, grown ACV by 82%, and launched 16 major releases. By being part of PTC, the company has expanded its simulation and generative design capabilities. Furthermore, during the last 12 months, Onshape has furthered its global reach as a result of cross-selling opportunities with other PTC solutions.

Onshape underpins the PTC Atlas SaaS platform that enables other PTC solutions (Vuforia, Creo, ThingWorx) to be offered on a SaaS basis. PTC reports that the acquisition of Onshape has meant that the company has been able to launch SaaS-based solutions 2 years sooner than developing them in-house. ABI Research expects PTC will further enhance the Atlas platform with Arena’s IP.

The focus on SaaS was a key theme for the investor day, and PTC will clearly gain more expertise by onboarding Arena’s staff. In addition, another key takeaway was the success that PTC has made of integrating Onshape both commercially and from a technology perspective; this bodes well for the firm to stay on track and not be distracted by its latest acquisition.