PTC Announces $112M Takeover Of ThingWorx In M2M Push

By Iain Morris

Technology player PTC has announced a $112M takeover of M2M specialist ThingWorx as it looks to capitalize on growing demand for M2M services.

PTC (Needham, MA, USA) serves manufacturers across a variety of vertical markets and says the takeover of ThingWorx (Exton, PA, USA) – which has developed a platform for the creation and management of M2M applications – will allow it to support customer needs for “smart, connected products”.

The takeover is to include a possible earn-out of up to $18M, says PTC, which is to finance the transaction through its credit facility.

PTC expects ThingWorx to contribute more than $10M of revenues over the next 12 months, but is still guiding for earnings per share of between $2 and $2.10 for the 2014 financial year.

The company expects to generate revenues of between $310M and $320M in 2013.

“For manufacturers today, it is clear to us that improved service strategies and service delivery is the near-term ‘killer app’ for the Internet of Things [IoT] and this opportunity has guided our strategy for some time,” said PTC president and chief executive Jim Heppelmann. “With this acquisition, PTC now possesses an innovation platform that will allow us to accelerate how we help our customers capitalize on the market opportunity that the IoT presents.”

According to research from the McKinsey Global Institute, the IoT market has the potential to create an economic impact of between $2.7T and $6.2T annually by 2025, when more than 80% of all manufacturers are expected to be using IoT applications.

Productivity gains alone are forecast to amount to between $900B and $2.3T by that date, as M2M helps companies to manage the performance of individual machines and systems in a way that was not previously possible.

PTC says it will use the ThingWorx platform to speed up the creation of high-value IoT applications that support manufacturers’ service strategies, such as predictive maintenance and system monitoring.

The company also says that a growing ecosystem of ThingWorx partners is forming to capitalize on IoT growth.

“At ThingWorx, we share PTC's vision for helping organizations fundamentally leverage the connected world,” said Russell Fadel, ThingWorx’s chief executive and co-founder. “We believe all industries, but especially manufacturing, will be transformed in the Internet of Things era.”