PTC(US:PTC)2025-05-01 20:01Financial Performance - ARR grew 10% to $2.29 billion as of the end of Q2'25 compared to Q2'24[90] - Revenue increased by 6% to $636 million in Q2'25 compared to Q2'24, with 8% growth on a constant currency basis[92] - Operating income rose by 24% to $223.5 million in Q2'25 compared to Q2'24[92] - Diluted earnings per share increased by 42% to $1.35 in Q2'25 compared to Q2'24[92] - Total recurring revenue grew 7% to $601.5 million in Q2'25 compared to Q2'24[94] - PLM software revenue for Q2'25 was $368.4 million, a 7% increase from Q2'24, while CAD software revenue was $239.0 million, a 5% increase[105] - Total software revenue for the first six months of FY'25 reached $1,141.1 million, reflecting a 5% growth compared to the same period in FY'24[105] - PLM ARR grew by 11% in Q2'25 compared to Q2'24, while CAD ARR increased by 8% in the same period[106] - GAAP net income for the three months ended March 31, 2025, was $162.6 million, compared to $114.4 million in the same period of FY'24, reflecting a year-over-year increase of 42.1%[151] - Non-GAAP diluted earnings per share for the six months ended March 31, 2025, was $2.89, up from $2.57 in FY'24, indicating a growth of 12.4%[151] - The company reported a GAAP operating margin of 35.1% for the three months ended March 31, 2025, compared to 29.8% in the same period of FY'24[153] Cash Flow and Investments - Cash provided by operating activities grew 12% to $281 million in Q2'25 compared to Q2'24[91] - Free cash flow increased by 13% to $279 million in Q2'25 compared to Q2'24[91] - Cash provided by operating activities for the six months ended March 31, 2025, was $519.7 million, resulting in free cash flow of $514.2 million[151] - Cash provided by investing activities in the first six months of FY'25 was driven by inflows from the settlement of net investment hedges, while cash used in FY'24 was primarily for the acquisition of pure-systems for $93.5 million[132] - In the first six months of FY'25, cash used in financing activities included net payments of $360.1 million on outstanding debt and $150.0 million for common stock repurchases, compared to $620.0 million for ServiceMax acquisition payments in FY'24[133] Shareholder Returns - The company repurchased $75 million of its outstanding shares in Q2'25[91] - The company intends to repurchase approximately $300 million of common stock in FY'25 as part of its long-term goal to return excess cash to shareholders[137] Expenses and Margins - Total gross margin for Q2'25 was $530.1 million, an 8% increase from Q2'24, with a gross margin percentage of 83%[107] - Operating expenses decreased by 2% in Q2'25 compared to Q2'24, primarily due to a $9 million decrease in compensation expenses[113] - Professional services gross margin increased by 1,389% in Q2'25 compared to Q2'24, primarily due to lower subcontractor costs[111] Debt and Financing - Total debt as of March 31, 2025, was $1,392.5 million, down from $1,752.6 million as of September 30, 2024, with a significant reduction in the 3.625% Senior notes due 2025[134] - As of March 31, 2025, the annual rate for borrowings outstanding under the credit facility was 5.9%, with compliance maintained for all financial and operating covenants[134] Tax and Currency Impact - The effective income tax rate for the first six months of FY'25 was 21%, consistent with the prior year, but impacted by changes in the geographic mix of income[121] - Approximately 50% of revenue is transacted in currencies other than the U.S. Dollar, impacting reported results[98]