Monday, Jan 21st 2019

Building "The Alexa of Business"


A small but rapidly-growing segment within PTC could power the future of industry.

PTC, the computer aided design (CAD) and product lifecycle management (PLM) software giant, reports earnings later this week - but don't go yet - we promise this gets better.

In light of the upcoming report, we just wanted to quickly flag a portion of the business that is small, but growing quite rapidly.

Embedded within PTC is a segment that focuses on the Internet of Things (IoT) market. While it's currently only ~11% of sales, it's growing 5 times faster than any other part of the business, based on company filings.


Well, if you're unfamiliar, the "Internet of Things" refers to a trend whereby connectivity expands beyond computers and mobile devices, to hundreds of other traditionally unconnected devices.

Consumers have seen this occur in their homes already, with the advent of smart TVs, smart lighting, smart toasters (yes, you definitely do need one), and so forth.

While these are very helpful technological developments for consumers, businesses can arguably benefit even further from this trend - just imagine the productivity improvements that can be driven by valves and sensors that can check and diagnose themselves, or warehouses that can organize inventory themselves.

In fact, several other Titan portfolio companies (like Amazon and Boeing) are already leading the way in deploying Industrial IoT networks in their operations ("IIoT" for short - don't blame us, we didn't come up with this).

PTC is building out the platform that enables these initiatives to occur - the Alexa or Google Home of business, if you will.

While the white space is large, and there is still no clear winner in the market, PTC has already carved out a name for itself, having received industry-leading rankings in industrial devices, smart manufacturing, and a number of other important verticals.

We think it's unlikely that this will be an area of focus for analysts on Wednesday, so we just wanted to call this out for those of you who can afford to look out beyond just the next quarter.

As of this writing, PTC was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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