PTC reported financial results for its third fiscal quarter ended June 30, 2025.
"Q3 was another solid quarter of execution for PTC. Our strategy of enabling product data foundations and extending the value of that data across the enterprise is resonating with customers across our verticals and geographies," said Neil Barua, President and CEO, PTC.
"In Q3, we continued to advance our go-to-market transformation, and I can say with confidence that we are structurally stronger. We also progressed our five focus areas of CAD, PLM, ALM, SLM, and SaaS with new product offerings and enhancements and key customer wins. While the macroeconomic picture still poses some uncertainty for our customers, we sense that we are past the point of maximum disruption, and look forward to productive customer engagements throughout Q4," concluded Barua.
Third Fiscal Quarter 2025 Key Operating and Financial Metrics1
|
$ in millions, except per share amounts |
Q3'25 |
Q3'24 |
YoY Change |
Q3'25 |
|
ARR as reported |
$2,416 |
$2,126 |
14 % |
|
|
Constant currency ARR (FY'25 Plan FX rates2) |
$2,372 |
$2,170 |
9.3 % |
8.5% to 9.5% |
|
Operating cash flow |
$244 |
$214 |
14 % |
$234 to $239 |
|
Free cash flow |
$242 |
$212 |
14 % |
$230 to $235 |
|
Revenue3 |
$644 |
$519 |
24%4 |
$560 to $600 |
|
Operating margin3 |
33 % |
18 % |
1,410 bps |
|
|
Non-GAAP operating margin3 |
44 % |
32 % |
1,260 bps |
|
|
Earnings per share3 |
$1.17 |
$0.575 |
106 % |
$0.56 to $0.88 |
|
Non-GAAP earnings per share3 |
$1.64 |
$0.985 |
68 % |
$1.05 to $1.30 |
|
Total cash and cash equivalents |
$199 |
$248 |
(20 %) |
|
|
Debt, net of deferred issuance costs |
$1,233 |
$1,811 |
(32 %) |
|
1 |
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. |
|
2 |
On a constant currency basis, using our FY'25 Plan foreign exchange rates (rates as of September 30, 2024) for all periods. |
|
3 |
Revenue and, as a result, operating margin and earnings per share are impacted under ASC 606. |
|
4 |
In Q3'25, revenue grew 22% year over year on a constant currency basis. |
|
5 |
In Q3'24, GAAP EPS included a non-cash tax benefit of $14.2 million or $0.12, and non-GAAP EPS included a non-cash tax benefit of $9.8 million or $0.08, primarily associated with the effects of IRS procedural guidance issued in May 2024. |
"In Q3'25, the selling environment remained challenging. Against this backdrop, our constant currency ARR was solid, growing 9.3% year over year. Our Q3'25 cash flow was also solid, with operating cash flow and free cash flow both growing 14% year over year, driven by our ARR growth, subscription business model, and diligent financial management. Additionally, as planned, we repurchased $75 million worth of our stock in Q3'25," said Kristian Talvitie, CFO.
"We have updated our FY'25 guidance ranges to reflect our year-to-date results and our expectations for Q4'25. Supported by our updated guidance of 8% 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 approximately $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 Q4'25. This will complete the $300 million repurchase we communicated at the beginning of the year, and our debt paydown throughout the year is expected to bring our leverage ratio down to approximately 1x," Talvitie concluded.
Full Fiscal Year 2025 and Fourth Fiscal Quarter Guidance
|
$ in millions except per share amounts % rounded to the nearest half |
FY'25 Previous |
FY'25 |
FY'25 YoY |
Q4'25 |
|
Constant currency ARR (FY'25 Plan FX rates1) |
7% to 9% |
8% to 9% |
8% to 9% |
8% to 9% |
|
Operating cash flow |
$855 to $865 |
~$860 |
~15% |
$93 to $98 |
|
Free cash flow |
$840 to $850 |
~$850 |
~16% |
$90 to $95 |
|
Revenue |
$2,445 to $2,565 |
$2,570 to $2,630 |
12% to 14% |
$725 to $785 |
|
Earnings per share |
$3.78 to $4.73 |
$4.77 to $5.23 |
53% to 68% |
$1.57 to $2.03 |
|
Non-GAAP earnings per share |
$5.80 to $6.55 |
$6.63 to $7.03 |
31% to 38% |
$2.10 to $2.50 |
|
1 On a constant currency basis, using our FY'25 Plan foreign exchange rates (rates as of September 30, 2024) for all periods. |
Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance
|
$ in millions |
FY'25 |
Q4'25 |
|
Operating cash flow |
~$860 |
$93 to $98 |
|
Capital expenditures |
~$10 |
~$3 |
|
Free cash flow |
~$850 |
$90 to $95 |
Reconciliation of EPS Guidance to Non-GAAP EPS Guidance
|
FY'25 |
Q4'25 |
|
|
Earnings per share |
$4.77 to $5.23 |
$1.57 to $2.03 |
|
Stock-based compensation |
$1.82 to $1.74 |
$0.49 to $0.41 |
|
Amortization of acquired intangibles |
~$0.65 |
~$0.16 |
|
Impairment and other charges (credits), net |
~$0.07 |
~$0.03 |
|
Acquisition and transaction-related charges |
~$0.02 |
~$0.00 |
|
Income tax adjustments |
($0.70) to ($0.68) |
($0.15) to ($0.13) |
|
Non-GAAP Earnings per share |
$6.63 to $7.03 |
$2.10 to $2.50 |
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 3%, primarily due to investments to drive future growth.
- FY'25 cash flow guidance includes approximately $18 million of outflows related to go-to-market realignment, of which $17 million was paid out during the first three quarters of FY'25, and approximately $1 million is expected to be paid out in Q4'25.
- Capital expenditures are expected to be approximately $10 million.
- Cash interest payments are expected to be approximately $80 million.
- Cash tax payments are expected to be approximately $110 million to $120 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 $299 million to $309 million, as well as their related tax effects:
- approximately $210 million to $220 million of stock-based compensation expense,
- approximately $79 million of intangible asset amortization expense,
- approximately $8 million of impairment charges to right-of-use lease assets related to facilities subleasing activities, and
- approximately $2 million related to acquisition and transaction-related expenses.
- We intend to repurchase approximately $300 million of our common stock in FY'25, of which $225 million was repurchased during the first three quarters of FY'25, and approximately $75 million is expected to be repurchased in Q4'25.
- We expect our fully diluted share count to be approximately flat in FY'25.
PTC's Third Fiscal Quarter Results Conference Call
The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, July 30, 2025. To participate in the live conference call, dial (888) 596-4144 or (646) 968-2525, provide the passcode 3475783, and press # or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.
