Contact: Scott Denne
With its manufacturing and industrial customers early adopters of the Internet of Things (IoT) trend, PTC is making a big bet to stay ahead of the market by acquiring ThingWorx for $112m.
IoT pioneers envision a day when everything, from fork to forklift, is connected to the Internet. Even if that never comes to pass, the industrial equipment makers that compose PTC’s core audience are already early adopters, and account for most sales of ThingWorx’s software, which enables developers to build apps into connected devices.
Integrating that technology creates an opportunity for PTC to increase sales of its own service-lifecycle and product-lifecycle management offerings, and to get in front of the IoT trend that its manufacturing and industrial customers are starting to use. PTC has previously said it expects IoT to change how products in those industries are designed and serviced.
The acquisition is a lofty bet on a nascent market. Excluding earnout, PTC is valuing ThingWorx at 11.2x projected sales. The final valuation could be even higher, since PTC is on the hook for an $18m earnout, which could raise the final price to $130m. As a side note on the market’s infancy, a text search for ‘Internet of Things’ in our M&A KnowledgeBase returns just 28 merger records, with the earliest coming from January 2010.
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