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PTC reported financial results for its second fiscal quarter ended March 31, 2025.

"Q2 was a solid quarter for us, and I remain extremely optimistic about our position as an enabler of the digital economy – particularly our position as a supplier of software tools that make our customers more efficient as they design, manufacture, and service their products," said Neil Barua, President and CEO, PTC.

"While the current macroeconomic uncertainty makes it challenging for us to predict precisely how our customers will react, PTC is in a better position today to meet our customers' demand than ever before. I am confident that PTC can help our customers navigate this period by accelerating their continued transition into the digital age," concluded Barua.

Second Fiscal Quarter 2025 Highlights

Key operating and financial highlights are set forth below. The definitions of our operating and non-GAAP financial measures and reconciliations of non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.

"In Q2'25, the selling environment remained challenging. Given this backdrop, our ARR was solid, growing 10% year over year. Our Q2'25 cash flow was also solid, with operating cash flow growing 12% year over year and free cash flow growing 13% year over year, driven by our ARR growth, subscription business model, and diligent financial management. Additionally, we continued to execute our capital allocation strategy in a disciplined and consistent manner, repurchasing $75 million worth of our stock in Q2'25," said Kristian Talvitie, CFO.

"We have updated our FY'25 guidance ranges to reflect our first half results and the potential for elevated macroeconomic uncertainty in the second half of FY'25. Supported by our guidance for 7% to 9% constant currency ARR growth, the predictability of our cash collections, the disciplined budgeting structure we have in place, and being mindful of foreign exchange rate fluctuations, we expect $840 million to $850 million of free cash flow in FY'25. We also remain focused on the disciplined and consistent execution of our capital allocation strategy, and we intend to proceed with approximately $75 million of share repurchases in Q3'25," Talvitie concluded.

Full Fiscal Year 2025 and Third Fiscal Quarter Guidance

Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance

Reconciliation of EPS Guidance to Non-GAAP EPS Guidance

FY'25 financial guidance includes the following assumptions:

• We provide ARR guidance on a constant currency basis, using our FY'25 Plan foreign exchange rates (rates as of September 30, 2024) for all periods.
• We expect churn to remain low.
• For cash flow, due to largely similar invoicing seasonality, and consistent with the past 4 years, we expect the majority of our collections to occur in the first half of our fiscal year and for fiscal Q4 to be our lowest cash flow generation quarter.
• Compared to FY'24, given our FY'25 ARR guidance range, FY'25 GAAP operating expenses are expected to increase approximately 3% and FY'25 non-GAAP operating expenses are expected to increase approximately 4%, primarily due to investments to drive future growth.
• Cash flow guidance includes approximately $19 million of outflows related to go-to-market realignment, of which $14 million was paid out in the first half of FY'25, approximately $4 million is expected to be paid out in Q3'25, and approximately $1 million is expected to be paid out in Q4'25.
• Capital expenditures are expected to be approximately $15 million.
• Cash interest payments are expected to be approximately $90 million.
• Cash tax payments are expected to be approximately $110 million.
• GAAP and non-GAAP tax rates are expected to be approximately 20% to 25%.
• GAAP P&L results are expected to include the items below, totaling approximately $284 million to $314 million, as well as their related tax effects:
• approximately $200 million to $230 million of stock-based compensation expense,
• approximately $79 million of intangible asset amortization expense,
• approximately $4 million of impairment charges to right-of-use lease assets related to facilities subleasing activities, and
• approximately $1 million, net, related to acquisition and transaction-related expenses.
• As expected, we retired $500 million of senior notes that were due in Q2'25.
• We currently intend to repurchase approximately $300 million of our common stock in FY'25, of which $150 million was repurchased in the first half of FY'25, and approximately $75 million is expected to be repurchased in each of the two remaining quarters of FY'25.
• We currently expect our fully diluted share count to be approximately flat in FY'25.

PTC's Second Fiscal Quarter Results Conference Call

The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, April 30, 2025. To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735, provide the passcode 7328695, and press # or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.

To view the original press release, please click here.

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