PTC(PTC) - 2024 Q4 - Annual Report

Revenue Growth - ARR increased by 14% to $2,254.7 million in FY'24 compared to$1,978.6 million in FY'23[126] - Total recurring revenue grew by 12% to $2,134.0 million in FY'24[126] - PLM software revenue grew by 12$1,333.4 million in FY'24, driven by growth in Europe and the contribution from ServiceMax[134] - CAD software revenue increased by 9% to $832.8 million in FY'24, primarily driven by growth in Europe and Asia Pacific[134] Operating Performance - Operating income increased by 28$588.1 million in FY'24[126] - Non-GAAP operating income for FY'24 is $894.3 million, compared to$758.9 million in FY'23[181] - Non-GAAP operating margin for FY'24 is 38.9%, compared to 36.2% in FY'23[182] - Income before income taxes increased by 41% to $469.0 million in FY'24 compared to$332.6 million in FY'23[145] - Effective income tax rate decreased to 20% in FY'24 from 26% in FY'23, impacted by a $14.4 million tax benefit[145] Cash Flow and Liquidity - Free cash flow increased to$735.6 million in FY'24 from $587.0 million in FY'23[126] - Net cash provided by operating activities increased by$139.1 million to $750.0 million in FY'24[147] - Cash used in investing activities decreased to$124.8 million in FY'24, driven by the acquisition of pure-systems for $93.5 million[151] - Cash and cash equivalents decreased to$265.8 million in FY'24 from $288.1 million in FY'23[147] Expenses and Compensation - Operating expenses increased by 6$1,265.6 million in FY'24, driven by higher compensation and benefits expense[142] - Stock-based compensation expense for FY'24 is $223.5 million, compared to$206.5 million in FY'23[181] - Amortization of acquired intangible assets for FY'24 is $80.5 million, up from$75.7 million in FY'23[181] Debt and Interest - Total debt increased to $1,752.6 million in FY'24 from$1,702.0 million in FY'23[153] - Interest expense decreased by 8% to $119.7 million in FY'24, due to lower aggregate average of debt and deferred acquisition payment liability balances[143] - The company had$753 million outstanding under its credit facility as of September 30, 2024, with a weighted average annual interest rate of 6.9%[218] - A 100 basis point per annum change in interest rate would have an $8 million impact on annual earnings and cash flows based on the borrowings outstanding as of September 30, 2024[218] Foreign Currency and Hedging - Approximately 50$0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $38 million and$6 million, respectively[212] - The company's foreign currency hedging program primarily uses forward contracts denominated in the Euro, Swiss Franc, and Swedish Krona, with maturities of less than four months[214] - The total value of currency hedged as of September 2024 was $1,058,478 thousand, with the Euro/U.S. Dollar accounting for$781,398 thousand of the total[217] - Changes in foreign currencies relative to the U.S. Dollar had a favorable impact of $3.2 million on the company's consolidated cash balances in FY'24, driven by changes in the Brazilian Real, Swedish Krona, Chinese Renminbi, and New Taiwan Dollar[220] Tax and Valuation Allowances - Unrecognized tax benefits as of September 30, 2024, are$65.0 million[195] - Valuation allowance against net deferred tax assets in the U.S. is $17.4 million as of September 30, 2024[196] - Valuation allowance against net deferred tax assets in certain foreign jurisdictions is$4.4 million as of September 30, 2024[197] Stock Repurchase and Obligations - The company plans to repurchase approximately $300 million of common stock in FY'25[157] - Purchase obligations as of September 30, 2024, were$163.2 million, with $88.2 million expected to be paid in FY'25[161] Non-GAAP Financials - Non-GAAP net income for FY'24 is$613.4 million, up from $517.6 million in FY'23[181] - Non-GAAP diluted earnings per share for FY'24 is$5.08, compared to $4.34 in FY'23[181] Internal Controls and Audits - The company's internal control over financial reporting was assessed as effective as of September 30, 2024, based on COSO criteria[226] - The effectiveness of the company's internal control over financial reporting as of September 30, 2024, was audited by PricewaterhouseCoopers LLP[227] Geographic Cash Holdings - The company held$36 million in cash and cash equivalents in the United States, $127 million in Europe,$86 million in Asia Pacific (including India), and $17 million in other non-U.S. countries as of September 30, 2024[219] Professional Services - Professional services revenue decreased by 12$132.2 million in FY'24 as the company leveraged partners for service delivery[132] Other Income and Expenses - Interest income decreased by 19% to $4.4 million in FY'24 compared to$5.4 million in FY'23[144] - Other income, net decreased by 84% to $0.6 million in FY'24 due to a$2.0 million impairment loss[144] Intangible Assets - The company's identifiable intangible assets acquired include purchased software, trademarks, customer lists, and contracts, valued using discounted cash flow models[201] Headcount - Total headcount increased by 4% between September 30, 2023 and September 30, 2024[141]