PTC Inc. (PTC) Earnings Call Transcript & Summary

Good morning, good afternoon, and thank you, everybody, for your continuous interest in Schneider Electric and joining us in a short notice. We are pleased to welcome you today to discuss the definitive agreement announced earlier today for Schneider Electric to acquire PTC. As a reminder, we are in a quiet period ahead of our Q3 earnings call, and we will, therefore, not be commenting on our current performance. Joining me today are Olivier Blum, our Chief Executive Officer; and Nathan Fast, our Chief Financial Officer. During this call, we will take you through a presentation outlining the strategic rationale for the transaction. As usual, the presentation materials, together with the press release issued earlier today, will be available on our website following the call. I will now hand over to you, Olivier and Nathan, who will discuss the transaction in more detail before you open for Q&A. Olivier, over to you.

Thank you, Antoine. So good morning to all of you, and thanks for being with us. Indeed, it's an important announcement we are making today. So I'll go straight really into why we are doing this acquisition with PTC. So first of all, what has been very obvious to us, the market has evolved in the past year. We've seen acceleration of energy everywhere, acceleration of digital. And we've seen our customers, and that's the most important, accelerating their transformation, their digital transformation, looking for more productivity, more efficiency, more resiliency, more sustainability and with a very strong conviction that technology, digital and AI will be the answer to achieve their business goals. So by combining the strengths of Schneider Electric and of course, AVEVA, Cognite and now PTC, we believe we create really a very, very strong powerhouse in software, AI and digital that can be scaled over the coming years. We believe we create a unique platform, which is open and interoperable for our customer, where we can deliver strong business outcomes. And at the end of the day, what is very important for us, and I'll come back on that, we create a unique digital system, which is based on design, control, data and intelligence. Our vision at Schneider Electric, and I will come back on that also again, has been always that the world will be more electrical, more digital in the future. And the only way to deliver efficiency to our customer will be really to bridge the physical and the digital world. And you've seen what we've been doing in the past 10 years. You've seen how technology has evolved. And we believe we are really at this time in our history, but in our industry as well, where you really can accelerate all the benefits to your customer if you are able to provide the digital system across the life cycle from design and build to operate and maintain. By doing that and together with also the acquisition of Cognite, which is still between signing and closing, we believe we create a unified digital thread that can really help our customers across products, machines and processes and energy system to accelerate the creation of energy and industrial intelligence. And we started. It's not that we are starting tomorrow, but we believe that everything can be accelerated. Of course, by combining those 2 companies, you create a lot of opportunity for cross-selling synergies. We broadened the end market exposure for the 2 companies by increasing our leadership in energy and industry, and we can help both companies to grow faster. Last but not the least, that combination help us to continue to bring high-quality recurring revenue, supporting the realization of our digital flywheel ambition, as we explained to you during our Capital Markets Day and contribute well to the financial profile of Schneider Electric, and we'll come back on that, both from a margin and cash generation standpoint with Nathan later on, which we believe at the end of the day is a compelling story for our shareholders from a value creation standpoint. Now we've not started today. As you know, it's a little bit of a story for all of you to keep in mind where we come from. PTC complements the unique portfolio Schneider Electric has built step by step. I've told you that our ambition, our vision has been always to connect the physical and the digital world to generate more efficiency and sustainability for our customers. This is our mission. And of course, the first milestone when we was -- we created EcoStruxure, which was really to make sure that every single product control system of Schneider Electric will be more digital in the future. We have accelerated big time when we've made the acquisition of Wonderware from Invensys in 2013, then AVEVA, which has been probably the biggest milestone in our industrial software journey, but also with ETAP, which has brought a lot of design and engineering capabilities in energy system. And of course, we realized together that if we want to benefit in the future more from data, more from AI, it was an absolute must to get closer and closer to the data. That's why the PI System, which was really the absolute reference in the market of the industrial world was a very critical brick in building our vision. And of course, I'm not going to come back to what we announced in July, in the world where AI is becoming extremely important, it was very, very important that we put Schneider Electric in the leading position at the contextualization layer. And what Cognite will bring to you is basically a lot of capability, knowledge graph to be able to contextualize data and to build the next really generation of industrial AI. And now, very logically, when we enter in this transaction with PTC, we bring the last brick in our portfolio, which is product and engineering intelligence through CAD, PLM, ALM and SLM. But let me explain to you a bit more in detail what it means for us. I'm going to introduce briefly PTC that you know probably well. Very, very large company, having leading position across all its end markets, very strong position in CAD, PLM with products like Creo, Windchill, which are among many others, but very, very strong leadership brand in the market. We'll come back a little bit more on the financial later, but PTC has demonstrated strong financial performance, growth, profitability, cash generation. They have a very strong position in the U.S., but also in other geographies covering different end markets. And they can benefit from 7,000-plus employees who are extremely capable in digital, AI across the world, mainly in the U.S. and India. So it's a very, very strong company that we have been observing in the market. We've seen how they've performed. We've seen how they have evolved in the market. We've seen how they have started to build their AI orchestration layer. And we believe that beyond everything that I'm going to talk about on the technology, on the strategic side, there is also a very strong cultural fit between the team of PTC, AVEVA and Schneider. I think we speak the same language with the same vision for innovation, for impacting the world, thanks to all our solutions. So now let's go a little bit more in the detail of the strategic rationale and what is our vision. Our vision, as I said, is really to connect the physical and the digital world. Everything starts from the assets. And you know what has been the EcoStruxure story of Schneider Electric, having really this absolute obsession to make sure that every single product, machine, processes, energy system is connected where we can extract data, building application on top of it that run to make those assets more efficient across the life cycle. And as we have all understood in the past year, data becoming a very, very critical layer, if eventually you want to benefit from AI technology to deliver more value at the enterprise level. And what we mean more value at the enterprise level is to be able to help enterprise to make decisions, to act to deliver business outcome and making sure that AI will help you basically to generate those business outcome from the enterprise level, but go back to the physical layer. So that's really our vision. And when we see the evolution of technology in energy, in process, from IoT, data and AI, we are really at a time where this vision is possible. Might not be -- was not probably the case 5 years ago, but now all the technology are making it possible. In order to be able to deliver that vision, we strongly believe that you need to provide to your customer a very, very structured set of digital system. What I mean a set of digital system means that on top of the asset, it's important that you help your customer to design, to control, to have a very strong data fabric and to build a very strong intelligence layer to act and make decisions. And that is basically the way we have seen really the construction of our portfolio over the past years and even today when we announced the acquisition of PTC. And if we go a little bit more in detail on those systems, we believe that at the design stage, it's super important that you can help your customer to design both product, machine processes and energy system. And this is where we see CAD engineering a very, very critical part of the portfolio. On the control layer, this is a place where we have been present Schneider Electric with leadership position in power and industrial SCADA with MES, with machine automation, and that's a place where Schneider Electric has been present, creating leadership position. When you go to the data fabric layer, as I mentioned, we understood that having a very strong historian with PI System was absolute must to succeed in the future. But we've also understood that if you want to create a very strong data fabric, it's also important that you can be present across the life cycle of the product with PLM, ALM and SLM. And last but not the least, and that's something that I presented in July when we made the acquisition of Cognite, when we announced the acquisition of Cognite, we understood that creating the next level of intelligence will be possible if you are able to have those capabilities that will contextualize those data that will be able to make those data AI native on top of which you can build knowledge graph foundational model that will deliver the value that you want to deliver to your customer, which is ultimately creating eventually autonomous agents for automation and energy system, and/or, I would say, orchestration layer, which we are starting to do both on the Schneider and the PTC side already. So in order to be able really to build this vision and to make it real for our customers, so a very strong system for design control, data fabric and intelligence, you understand very logically that there were 2 pieces which were critical seen by us for the future to have one of the most comprehensive portfolio, the CAD layer, the PLM, ALM and SLM, which are really the different pieces, which help us really to complete systems of design, control and data fabric to make sure we can deliver stronger outcome for our customer. As you can see on that slide, we position where Schneider Electric has been. It's very important on that slide to insist on the fact that we are not building a system which is a closed system. It's a very open system, which is interoperable for our customer. And starting from the physical layer, we want our customer to make the most of this connection of physical and digital, both with every single piece of our portfolio when it comes to EcoStruxure assets, but also third-party ecosystem. When we enter in a customer place, we are here to help them to deliver their business outcome, to deliver their objective, whether it is Schneider or non-Schneider product. You can see that on the design stage, we have already very advanced capability with AVEVA Unified Engineering, which has created a leadership position in the market, with ETAP in energy system. And here, and we said it many times, but important to remind to everyone that what makes also Schneider Electric very different is unique capabilities, both in energy and in process. And of course, on the control layer, as I said before, extremely strong leadership position, thanks to the portfolio we have both with Schneider EcoStruxure, AVEVA and ETAP. Now when we go to the next layer, we complete, of course, what we have done. I said it already with AVEVA and PI System. And when I go to the next level of intelligence, today, I want to also mention that we have already built capabilities with AVEVA even before Cognite. We have built -- we know that PTC has built strong AI capabilities as well. But our vision for the future is that what we call the data cube in the CMD, which will become really a reference in the market where our customer will be able to unify their data around the data cube could be powered and amplified by Cognite. So we believe that Cognite could accelerate what AVEVA has started to do at the AI layer, and we believe it could be the same for PTC. So when we complete all of that, we believe that together with PTC, we create one of the most comprehensive digital system of our industry. I insist really on one point, an open and interoperable ecosystem. It's very, very important for us and giving the choice to our customer to enter from any part of that ecosystem, but of course, benefiting from a company that could create a unique digital strength across all those different bricks. So you see clearly again on that slide, what PTC brings to us, product design and product life cycle management capabilities. So what is very, very important at the end is when we say all of that, if I try to oversimplify, what we want is we want really to deliver trusted energy and industrial intelligence at every level. So really helping our customers to make decision eventually to make sure that it can be autonomous agent that can make those decisions. But we are combining really the Schneider Electric strength, how it runs, how we use energy, how we run process with the capability of PTC on how it was designed and built. And when we are able really to deliver this system of design across the different layers of digital, we believe we can really help our customers to have this loop where they can verify and improve, they can act at the control layer, they can understand and they can decide at the enterprise level. But let's make it clear, it's not only deciding about at the enterprise level, it's to be able really to have also all this intelligence going back to the physical world to make sure that at the shop floor level, you can act also autonomously to improve efficiency, productivity, resiliency and sustainability for your customer. We have on the next slide, a couple of examples. We don't have time probably to describe all of them, but just a few of them. When we combine, for instance, we give the first example for an energy storage manufacturer, when you combine the capabilities of ETAP in electrical design and we embark that from the early stage of the mechanical design with PTC, we believe we can create unique value. For a machine builder, for instance, when we combine the capabilities we have with Automation Expert and PTC, we can inject open software-defined automation from the early stage and improve the efficiency and the same will be really with all our power automation capabilities. In data center here and even you can say for [ Ojensen ], we see very well that whether it's with EcoStruxure, AVEVA, when we combine with PTC, and I said it in my presentation, we can really enable autonomous operation, thanks to Cognite. So we have multiple examples like that, we believe, that are creating very strong case for complementaries and synergy, and at the end of the day, strong benefit for our customers. So when we make this acquisition and if you look at what is the addressable market from a software standpoint, we multiply by 3, the accessible market for Schneider Electric in the industrial software world, including, of course, the total accessible market coming from PTC, mainly CAD, PLM as well as ALM and SLM. So it's a very strong addition from a market accessibility standpoint. If we want really to summarize on that slide, what are the strong complementarity between Schneider Electric and PTC. So as you understand, we are closing our portfolio gap at the product life cycle level. That's very, very important. This is what helps really Schneider Electric to go to the next level. This is the place where PTC has a very, very strong leadership capabilities. When it comes to product asset data and AI, we believe this is a place where the 2 companies can help each other to go to the next level of AI contextualization and therefore, more benefit for the customer. And of course, when it means to the industry -- it goes to the industry coverage, this is where we complete our position from discrete to process with very, very strong position in the different market. When you look at the combination of Schneider and every time I say Schneider, of course, I mean Schneider, AVEVA and PTC, that make a total size of our software and services business, representing 24% of our group revenues, if you take '25 as a reference, which means 5 points more compared to what was Schneider Electric stand-alone. So on one side, of course, as you can understand, a very strong contribution to our digital flywheel, but even more important, showing that it creates a very, very strong software, digital and AI powerhouse in the market that can really scale and make the difference for our customers everywhere in the world. Very strong recurring revenues portfolio, 89% of that portfolio being recurring, which is extremely good from a business standpoint, of course, and a very large customer base supported by extremely competent people across the different parts of the world between Europe, between U.S. and also with a lot of engineering capabilities in India. So at the end of the day, one of your questions will be what really make us different? I do believe our major differentiation comes from the fact that we are open by design. It has been always a philosophy, I can say, since I've joined this company to be always open by design. Every time we develop system, we bring offer to our customers, we don't want to constrain them. We want to give them the capability to be agnostic, to be able to work across different vendors, both in software and hardware. But of course, because we have more capabilities than the average, we believe we can bring more value to our customers, then being open and interoperable by design is extremely important for us. We do believe the second major differentiation is we are really on the way to build the next generation of industrial AI. So it's not anymore a vision. We are not anymore only at the data layer. We are now in the world of AI with one of the most powerful contextualization layer of the industry. And this is really a strong testimony that we have from all the customer of Cognite that we can bring now, of course, across the different layer of our foundation from product, asset and energy. And last but not the least, we want to be able to help our customers on their biggest challenge on where they want Schneider Electric to help them as a technology partner, both on the energy side, which is definitely one of the biggest priority for all organizations on the planet, but of course, on the process side to make their operation more efficient. And last but not the least, of course, we are able to bring both energy and process capability across all end markets of Schneider Electric and PTC, which are building data center industry and infra market. So we summarized on that slide a lot that I've said already, a very strong complementarity when it comes to the geographical reach, a strong complementarity on the product offering from product design, engineering and service to operations, data, contextualization and installed base. And as I said, already a strong complementary on the end market where we both help each other to access new market everywhere in the world. So at the end of the day, of course, this strategic vision makes sense only if we deliver strong results. And I'm going to hand over to Nathan to share more with you first about the synergies and the financial of this transaction.

Thanks, Olivier, and good morning, good afternoon. The strong strategic intent that Olivier just spoke about makes us highly confident in achieving significant synergies. We expect EUR 250 million of cost synergies to be generated in the next 3 years with approximately EUR 250 million of onetime implementation costs. Just to give you a bit of flavor, we've identified areas, including U.S. public company costs, procurement savings by leveraging the whole Schneider Electric platform and select infrastructure savings such as IT costs. Additionally, we have EUR 800 million of revenue synergies clearly defined through 3 levers: cross-sell software offerings into complementary footprints, so having access to discrete and hybrid customers for Schneider's portfolio and process and hybrid customers for PTC; extend channels and market access by leveraging our large network of partners; and finally, AI-enabled digital threads such as agentic life cycle workflows as well as product, operations and energy intelligence. As presented at our last Capital Markets Day, Schneider Electric is on an exciting financial trajectory, combining superior growth, profitability and cash generation. PTC is immediately accretive to Schneider Electric across all 3 financial metrics. First, PTC approximate 10% organic ARR and revenue CAGR in the medium term with a high-quality and recurring profile that Olivier already mentioned. Second, it brings approximately 85% gross margin and 40% adjusted EBITA margin before synergies. And finally, PTC cash conversion is above 100%. The result is accretion across growth, profitability and cash generation before considering synergies. What we present to you today is a compelling transaction with significant value creation. We are acquiring 100% of PTC for $205 per share in cash, implying approximately EUR 21 billion of enterprise value. The transaction is valued at approximately 13x adjusted EBITDA, including full run rate synergies. The value creation base case includes, as I already mentioned, EUR 250 million of cost synergies and EUR 800 million of revenue synergies. And we are confident in delivering strong value creation for our shareholders across these metrics. Moving to financing. The acquisition financing is secured through a full committed bridge and will fund the transaction with a mix of EUR 5 billion to EUR 6 billion of equity and with new debt. We are expecting closing by Q3 2027. Of course, it will be subject to customary regulatory approvals and a shareholder vote at PTC, which will require a simple majority vote. The transaction will create substantial value for our shareholders. First, and as just presented, PTC will be accretive to our financial profile and our digital flywheel. The estimated 2027 adjusted EBITA multiple step down from approximately 21x before synergies to 17x with cost synergies and 13x with all synergies. We expect the transaction to be immediately accretive to adjusted EPS before PPA in year 1, that's low single digit with phased synergies and mid- to high single digit, including full run rate synergies. And finally, the transaction ROCE is expected to exceed the WACC by year 5, including full run rate synergies. The transaction financing is consistent with our 2025 CMD capital allocation framework. The total cash consideration of EUR 22 billion is guaranteed by a bridge that is fully underwritten by banks. We expect to finance the deal with EUR 5 billion to EUR 6 billion of equity that will be raised in the form of an ABO and EUR 16 billion to EUR 17 billion of senior debt that will be conducted across several currencies. In all of that, our 4 capital allocation policy pillars remain unchanged with a commitment to our category A credit rating, a commitment to our progressive dividend policy, a confirmation of our active portfolio management and a confirmation of the total quantum of our 2030 share buyback program with some pause over 2027 and 2028. So Olivier, with that, maybe I'll hand it back to you for some closing comments.

Thank you very much, Nathan. So as you understand through the presentation, this acquisition is a really logical next step that further enhance Schneider Electric strategically and financially. We believe we are really creating a unique digital thread to lead the future of energy and industrial intelligence. Of course, we believe all the value creation in front of us that can start immediately. As you understand, we'll go through definitely a period of regulatory review where all companies will continue to operate separately. But once it's done, I do believe we can really create a lot of value immediately for our customers. It's pretty much in line with what we told you during our CMD. So we are transforming our company strategically, operationally across 3 dimensions. Having a strong technology leadership is really what will help Schneider Electric to differentiate industrial intelligence, customer differentiation, which is really how we bring really all the value of that portfolio to our customer globally, regionally, locally. They have different type of go-to-market, and that's what Schneider Electric can deliver through this regional model, but also being able to engage at enterprise level. And last but not the least, of course, with a very strong focus on operational excellence, and you have seen that already in our H1 results, we believe we can continue to deliver strong value to our shareholders. And I would conclude at the end of the day that the conviction that we have made is also really based on the quality of the people, the quality of the people we have seen at PTC under the leadership of Neil Barua, who has really created a very strong company, not created, I should say, but we have delivered very strong performance in the past cycle. We had the opportunity to get to know them, to have a lot of feedback from customer. And when you combine that with the strength that we have created together with AVEVA under the leadership of Caspar, where we've transformed really the company from the time of acquisition and tomorrow also with a great capability that we have in Cognite, I do believe we have the right people really to deliver on the next value creation for both our customer and our employee and of course, our shareholders. So we are excited. It's a lot of work in front of us now, but it's an exciting time really for Schneider Electric to get prepared for this next level of industrial and energy intelligence. Antoine, over to you.

Thank you, Olivier. Thank you, Nathan. Look, we have covered a number of key aspects of the transaction and hopefully address many of the questions that you may have. Given the time, let's move straight to the Q&A. We have around 30 minutes remaining, and we would like to use that time to address as many of your questions as possible. So as usual, [Operator Instructions]. And with that, operator, please open the line for questions.

The first question is from James Moore of Rothschild & Co. The next question is from Martin Wilkie of Citi.

It's Martin from Citi. So a question just on the timing of the deal. I mean, obviously, the share price of many of the industrial software companies have derated over the last year or so. I mean you mentioned you've been looking at PTC for quite some time. I'd be intrigued to find out how you thought about this over time given the derating in the share price over the last year or so. And in particular, how we should read into that? How you see this whole debate about the SaaSpocalypse, the fear about the changing pricing models because of moving from potentially user-based software pricing towards task-based, outcome-based things like that. Just to see how you thought about that whole debate about how you get the value from the software in the future?

Look, thank you very much. I guess there are some sub-elements in your question. So first of all, for Schneider Electric, what was really, really important is to make sure that we are strategically on what are the bricks which are very, very important for the future success. As you know, last year, we've explained to you during our Capital Markets Day, how we want to bring the next level of industrial and energy intelligence. What was very important also for me because I hear also from you, there is a bit of a question on timing. Last year, the priority really for the company was really to make sure we are clear about where we want to go to make sure we turn around the company from an operational performance. And we really go in details to what will make Schneider Electric very, very different in the future. And we came really to the conclusion that definitely building a strong AI contextualization layer will be extremely important and complementing our capability in product design engineering will be also an important one. Now once you have said that, there are stuff you can do organically, stuff you cannot do organically. And it was very, very obvious that PTC came as a very, very strong candidate to complete this portfolio. And then maybe I'll let you complete a little bit more on the rest of the question.

Yes. And maybe Martin, I'll step through the next 2 because you asked about 3 questions inside there. I guess from a pricing perspective, the way we think about the software pricing model is more that the seat and flex credit models are probably complementary. Whereas on life cycle applications, the seat base remains the industry standard. And for the operational flex credit is working for the AVEVA team. So we would expect to keep and maintain both those models, and it provided us with some flexibility, in fact, on monetization of AI use cases going forward. Then you asked your very first question on value. And I think from a value creation perspective, as you mentioned, we've studied this business over some period of time. I'd say we've exhaustively assessed the value creation of the combined entity. I mentioned PTC has highly accretive financials, but I think it goes beyond that with the value creation that we can create with a fully integrated platform that includes revenue synergies and cost synergies, of course. And then furthermore, I guess, from a value creation, it's not just based on their trading value at an arbitrary point in time, but we're looking more at the long-term intrinsic value of the company, and that's what gets us comfortable there from a value creation perspective.

The next question is from Andre Kukhnin of UBS.

I just wanted to kind of go pretty much back to basics and just think about the convergence of process and discrete and what you've got there in process and you going entirely into discrete with this deal. Could you just help us to understand how exactly you're going to mesh these 2 together with the sort of not fully overlapping or likely overlapping customer bases? And how does that help with synergies creation here given that lack of overlap? And then maybe just as an additional point, with 2 large deals being done at the same time, Cognite and PTC, could you help us understand how this will be actually managed internally, who will be the key owners of these transactions within the Industrial Automation business?

Sure. Thank you for the questions. So maybe I'll start quickly by the second one. So you know that the way we've been managing really this business in the past year with the acquisition of AVEVA and PI, it was always to create a dedicated industrial software vehicle, which was led by Caspar. And we want to continue to have -- once, of course, we'll go over the period of closing for the company you've mentioned, so Cognite first and then definitely continue to have one vehicle. I just want to insist that it will take a couple of months, and we are saying probably Q2 next year for the closing that the company will continue to operate. But definitely during that time, we'll work together with the management team on how to create a very strong software vehicle, the software vehicle, which will have different capabilities because even if it's one software vehicle, you want the different piece of the portfolio, AVEVA, Cognite to continue to deliver strong value to the customer. As I said before, we want to be open and interoperable. So it's about giving the choice really also to our customer, but definitely building strong synergies. And last but not the least, we want definitely the software vehicle to be really the power -- software power of Schneider to take basically everything we do in energy management, in electrification to the next level when it comes to AI. So for instance, and something we've presented in July, and I presented in my slide today, Cognite will be definitely the AI foundation for everything we do in energy management in the rest of Schneider. So it will be an independent software company acting, working as a software company, very strong focus on digital and AI capability, but being also the strong vehicle that will transform the rest of Schneider Electric from a digital and AI standpoint. Coming back to your first question, I don't see exactly what -- if you have something specific in mind. But what is very important, if you just take the example of synergies that we have presented in the document, we see a certain number of cases where the design engineering capability for product is extremely important. Let's keep in mind also that we are moving into a new world where data will be extremely important, where product will be more and more software-defined. And the company tomorrow that can, at the early stage, really combine mechanical, digital capabilities and being able to manage that across the life cycle will make a lot of difference in the market. We see it, by the way, for us at Schneider in the way we develop our product, but we see also that for all the customer of PTC. So bring those capabilities together, we believe, will help us to go to the next level of intelligence. And what we mean by the next level of intelligence is being able to capture those data to manage them across the life cycle to deliver more value for a customer. And at the end of the day, it's also about all the cross-selling we can do in discrete between AVEVA and PTC, which will be also a strong value creation together with SCADA.

Yes. The next question is from Ben Uglow of Oxcap.

I'm interested in -- given that AVEVA and PTC are somewhat similar companies, could you say a little bit about the kind of practical aspects, whatever you can say now, of the integration? So in terms of any management retention or any employee retention that you're thinking of, does the headquarters stay the same? If we look at things like the sales channel and the customer channels, in order to get your synergies, you're going to have to put those together. So could you give us just a preliminary sense of how those 2 companies come together under the Schneider umbrella?

Thank you, Ben, for the question. So look, number one, you're absolutely right, we are operating in a highly competitive market. So retention of people is an absolute priority, and it's the case for the 3 companies that we have in the discussion today, which are, of course, PTC, Cognite and AVEVA. So I don't want to elaborate into the details, but definitely, retention of key people is something which is very high on the agenda, and we are already working on it. The second point, when you speak about sales channel, organization and so on and so forth, it's really too early to say. As I said in the previous question, what I can share today is definitely we'll continue to operate in post-closing with one software vehicle with one leadership. That's very important at the top. But as I said, what we want at the end of the day is while we maximize the synergies that you can have in function, in different parts, in engineering is to make sure that at the end of the day, also, we protect the specialization of every single of those business. We have, by the way, at Schneider Electric, a lot of learning. You know that Schneider Electric in the past 20 years have been through a lot of acquisitions. We know when it makes sense to be one Schneider, for instance, in data center and for very large customer and you bring all the capabilities of Schneider. But we know that there are some cases where we need to have highly specialized people to carry on one part of the portfolio. So the next step is, as you can imagine, and it has started already is really to imagine what will be the places where we need to be one versus the places where we want to stay highly specialized. But again, insist under one roof, which will be the roof of the one software organization.

Yes. The next question is from Gael de-Bray of Deutsche Bank.

The transaction will clearly broaden your software end market exposure, particularly in the automotive and aerospace segments, which are fairly new verticals for Schneider. So what's the rationale here? And how do you intend to deal with these new customer verticals from a strategic perspective?

Well, look, it's a very good point that you mentioned and it was in the presentation. Definitely, through the combination of Schneider and of course, AVEVA and tomorrow, PTC, we are increasing our scope, our access to market. We have a very simple approach at Schneider Electric, which is always to look at what are the targeted markets we want to operate in, but more important, how do we differentiate. So for instance, what I can share with you today at Schneider, I just said, for instance, data center, but I could mention about power grid. This is what we are doing today. We build a differentiated strategy, what I mean a unique value proposition. And that's where, for instance, my colleagues from AVEVA, Energy Management and Industry sit together to develop basically what will help Schneider Electric to differentiate in front of the customer in each of these verticals. And the second point, which is very important is the go-to-market. So for certain number of strategic accounts and today, they are around 100 for Schneider in those key verticals. We want to make sure we operate as one. So we give the possibility to the customer to have one interface that will bring the different capabilities of Schneider. So now with those new verticals that you mentioned coming from PTC, we have the same approach to say what is the unique value prop that we can bring to those verticals from a technology standpoint, making sure we develop eventually some extra [indiscernible] to differentiate even more and making sure after that, with Neil and his team, we identify who are the strategic accounts, the largest one they have in those verticals and to make sure they can have a very, very favorable treatment, special treatment from Schneider everywhere in the world because, of course, we do not speak too much about it today, but it's about the scale, it's about the geographical footprint. So it's about how we differentiate technology, speaking across the different parts of our portfolio is how we go in front of those targeted accounts in those targeted segments to deliver really the most of Schneider Electric in the different part of the world.

Yes. So the next question is from William Mackie of Kepler Cheuvreux.