PTC(PTC) - 2025 Q1 - Quarterly Results

PTC First Fiscal Quarter 2025 Results This section outlines PTC's Q1 FY2025 financial performance and strategic initiatives Q1 FY2025 Performance Highlights PTC reported solid Q1 FY2025 results, meeting guidance with 11% constant currency ARR growth and over 25% cash flow growth, alongside strategic realignment and share repurchases Q1 FY2025 Key Financial Metrics | Metric | Q1'25 | Q1'24 | YoY Change | Q1'25 Guidance | | :--- | :--- | :--- | :--- | :--- | | Constant Currency ARR | $2,277M | $2,059M | 11% | ~10.5% growth | | Operating Cash Flow | $238M | $187M | 27% | ~$234M | | Free Cash Flow | $236M | $183M | 29% | ~$230M | | Revenue | $565M | $550M | 3% | $540M to $570M | | GAAP EPS | $0.68 | $0.55 | 23% | $0.28 to $0.52 | | Non-GAAP EPS | $1.10 | $1.11 | (0%) | $0.75 to $0.95 | - Management highlighted solid performance with 11% constant currency ARR growth and over 25% cash flow growth, which was in line with guidance[3] - The company initiated a go-to-market organization realignment to better serve vertical industries and drive consistent growth[4] - PTC resumed its share repurchase program, repurchasing $75 million of its stock in Q1 FY2025[8] Fiscal Year 2025 and Second Quarter Guidance PTC reaffirmed FY2025 constant currency ARR and free cash flow guidance, lowered EPS, and provided Q2 FY2025 projections including continued share repurchases FY2025 and Q2'25 Guidance | Metric | FY'25 Guidance | FY'25 YoY Growth | Q2'25 Guidance | | :--- | :--- | :--- | :--- | | Constant Currency ARR Growth | 9% to 10% | 9% to 10% | ~9.5% | | Operating Cash Flow | $850M to $865M | 13% to 15% | ~$274M | | Free Cash Flow | $835M to $850M | 14% to 16% | ~$270M | | Revenue | $2,430M to $2,530M | 6% to 10% | $590M to $620M | | GAAP EPS | $3.36 to $4.24 | 8% to 36% | $0.79 to $1.05 | | Non-GAAP EPS | $5.30 to $6.00 | 4% to 18% | $1.30 to $1.50 | - FY2025 cash flow guidance includes approximately $20 million in outflows for go-to-market realignment, with $11 million paid in Q1 and $4 million expected in Q2[11] - The company plans to repurchase approximately $300 million of common stock and retire $500 million in senior notes in FY2025[15] - Q2 FY2025 guidance includes approximately 9.5% constant currency ARR growth and $75 million in share buybacks[9] Key Metrics and Non-GAAP Measures PTC utilizes key operating metrics like ARR and non-GAAP financial measures to evaluate performance and facilitate period-to-period comparisons - ARR is a key operating measure representing the annualized value of active subscription software, SaaS, hosting, and support contracts[20] - Free Cash Flow is defined as cash provided by operations net of capital expenditures, assessing the ability to generate cash without external financing[18] - Constant Currency (CC) information excludes foreign currency exchange rate fluctuations to assess underlying business performance, using rates as of September 30, 2024[19] - Non-GAAP financial measures exclude items such as stock-based compensation and amortization of acquired intangible assets to facilitate period-to-period comparisons of operating performance[17] Financial Statements Q1 FY2025 unaudited financial statements reveal a 3% revenue increase, significant net income growth, reduced cash and debt, and a 27% increase in operating cash flow Consolidated Statements of Income Q1 FY2025 Consolidated Statements of Income show a 2.7% increase in total revenue and a 23.9% increase in net income year-over-year Q1 FY2025 Income Statement Highlights (in thousands) | Line Item | Q1 2025 (Dec 31, 2024) | Q1 2024 (Dec 31, 2023) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $565,128 | $550,214 | +2.7% | | Recurring Revenue | $524,311 | $506,027 | +3.6% | | Gross Margin | $453,331 | $440,194 | +3.0% | | Operating Income | $115,524 | $118,713 | -2.7% | | Net Income | $82,232 | $66,387 | +23.9% | | Diluted EPS | $0.68 | $0.55 | +23.6% | Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets indicate decreased cash and total assets, reduced net debt, and increased stockholders' equity Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Sep 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $196,338 | $265,808 | -$69,470 | | Total assets | $6,075,364 | $6,383,542 | -$308,178 | | Debt, net | $1,543,991 | $1,748,572 | -$204,581 | | Stockholders' equity | $3,229,821 | $3,214,398 | +$15,423 | Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows show a 27.3% increase in operating cash flow, with significant outflows for debt repayment and stock repurchases Q1 FY2025 Cash Flow Highlights (in thousands) | Line Item | Q1 2025 (Dec 31, 2024) | Q1 2024 (Dec 31, 2023) | YoY Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $238,429 | $187,341 | +27.3% | | Capital expenditures | ($2,767) | ($4,563) | -39.4% | | Free cash flow | $235,662 | $182,778 | +28.9% | | Borrowings (payments) on debt, net | ($205,125) | $558,404 | N/A | | Repurchases of common stock | ($75,000) | $0 | N/A | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to Non-GAAP financial measures, primarily adjusting for stock-based compensation and amortization of acquired intangible assets Q1 FY2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Income | $115,524 | +$75,806 | $191,330 | | Operating Margin | 20.4% | +13.5% | 33.9% | | Net Income | $82,232 | +$51,115 | $133,347 | | Diluted EPS | $0.68 | +$0.42 | $1.10 | - Primary adjustments for Non-GAAP operating income include $55.9 million in stock-based compensation and $19.7 million in amortization of acquired intangible assets[34]