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Stock-based Compensation (Tables)

6 Months Ended

Mar. 31, 2021

Share Based Compensation Allocation And Classification In Financial Statements [Abstract]

The following table shows RSU activity for the six months ended March 31, 2021:

(in thousands, except grant date fair value data)	Number of RSUs			Weighted-Average Grant Date Fair Value Per RSU
Balance of outstanding restricted stock units, October 1, 2020		3,509		$	79.13
Granted⁽¹⁾		1,004		$	103.64
Vested		(861	)	$	79.86
Forfeited or not earned		(67	)	$	80.39
Balance of outstanding restricted stock units, March 31, 2021		3,585		$	85.91

(1)	Restricted stock granted includes 33,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2020.

Schedule of Number of RSU Awards Granted by Award Type

The following table presents the number of RSU awards granted by award type:

(in thousands)	Six months ended March 31, 2021
Performance-based RSUs⁽¹⁾		90
Service-based RSUs⁽²⁾		791
Total Shareholder Return RSUs⁽³⁾		90

(1)

The performance-based RSUs were granted to our executives and are eligible to vest based upon annual performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2021, 2022 and 2023, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned (a maximum aggregate of 179,000 RSUs).

(2)	The service-based RSUs were granted to employees, including our executive officers. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

(3)

The Total Shareholder Return RSUs (TSR RSUs) were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of three measurement periods ending on September 30, 2021, 2022 and 2023, respectively. The RSUs earned for each period will vest on November 15, 2021, 2022, and 2023. Up to a maximum of two times the number of TSR RSUs eligible to be earned for the period (up to a maximum aggregate of 179,000 RSUs) may vest. If the return to PTC shareholders is negative for a period but still meets or exceeds the peer group indexed return, a maximum of 100% of the eligible TSR RSUs may vest for the measurement period.

Schedule of Valuation Assumptions

The significant assumptions used in the Monte Carlo simulation model were as follows:

Average volatility of peer group	41.5	%
Risk free interest rate	0.21	%
Dividend yield	—	%

Schedule of Classification of Compensation Expense

Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows:

(in thousands)	Three months ended				Six months ended
	March 31, 2021		March 28, 2020		March 31, 2021		March 28, 2020
Cost of license revenue	$	20	$	11	$	40	$	11
Cost of support and cloud services revenue		2,309		1,524		4,611		3,010
Cost of professional services revenue		2,177		1,465		4,289		3,022
Sales and marketing		13,305		7,146		28,304		14,598
Research and development		7,921		4,765		16,364		11,697
General and administrative		19,008		5,573		37,220		16,082
Total stock-based compensation expense	$	44,740	$	20,484	$	90,828	$	48,420