PTC(US:PTC)2025-11-21 21:02Financial Performance - ARR increased by 10% to $2.48 billion in FY'25 compared to FY'24, with an 8.5% growth on a constant currency basis[149] - Revenue grew by 19% to $2.74 billion in FY'25, reflecting an 18% increase on a constant currency basis[151] - Operating income rose by 67% to $982.4 million in FY'25, with a non-GAAP operating income increase of 46% to $1.30 billion[157] - Diluted earnings per share surged by 95% to $6.08 in FY'25, with non-GAAP diluted earnings per share increasing by 56% to $7.94[157] - Total recurring revenue increased by 22% to $2.60 billion in FY'25, with a 21% increase on a constant currency basis[157] - License revenue grew by 44% to $1.16 billion, while support and cloud services revenue increased by 8% to $1.47 billion[164] - Income before income taxes surged by 96% to $920.2 million in FY'25 compared to $469.0 million in FY'24[184] - Non-GAAP net income for FY'25 was $958.8 million, up from $613.4 million in FY'24, which is an increase of approximately 56.2%[226] Cash Flow and Expenses - Cash provided by operating activities grew by 16% to $868 million in FY'25, with free cash flow also increasing by 16% to $857 million[150] - Total operating expenses increased by 4% to $1,311.9 million in FY'25 from $1,265.6 million in FY'24[177] - Research and development expenses rose by 6% to $457.7 million, accounting for 17% of total revenue in FY'25, down from 19% in FY'24[177] - Cash provided by operating activities increased by $118 million to $867.7 million in FY'25, attributed to higher collections and lower interest payments[195] - Free cash flow for FY'25 was reported at $856.7 million, compared to $735.6 million in FY'24, reflecting an increase of approximately 16.5%[226] Debt and Shareholder Returns - Total debt decreased to $1,200.0 million in FY'25 from $1,752.6 million in FY'24, reflecting a reduction in outstanding debt[198] - The company repurchased 1.65 million shares for $300 million in FY'25, with plans to repurchase approximately $150 to $250 million per quarter in FY'26[201] Tax and Future Obligations - Future contractual obligations include approximately $188.8 million, with $91.9 million expected to be paid in FY'26[205] - The company expects material positive cash impact from changes in U.S. tax law starting in FY'26 and FY'27[190] - As of September 30, 2025, the company has unrecognized tax benefits amounting to $157.7 million, with a reduction of $109.2 million expected within the next 12 months[242] Interest and Currency Exposure - Interest expense decreased by 36% to $77.0 million in FY'25, driven by lower debt balances and interest rates[179] - A 100 basis point change in interest rates would impact annual earnings and cash flows by approximately $7 million[268] - Approximately 50% of the company's revenue and 35% of its expenses were transacted in currencies other than the U.S. Dollar[261] - A $0.10 change in the USD to EUR exchange rate would impact operating income by approximately $44 million[261] - The company uses foreign currency forward contracts primarily denominated in Euro, Japanese Yen, and Indian Rupee to manage foreign currency exposure[263] Other Financial Metrics - Gross margin improved by 24% to $2.29 billion, with total gross margin percentage rising to 84% in FY'25[172] - The GAAP operating margin improved to 35.9% in FY'25 from 25.6% in FY'24, showing a notable increase of 10.3 percentage points[228] - Non-GAAP operating margin for FY'25 was 47.5%, compared to 38.9% in FY'24, indicating a rise of 8.6 percentage points[228] - Stock-based compensation expense for FY'25 was $216.2 million, slightly down from $223.5 million in FY'24[226] - The company recognized a $13.1 million gain related to contingent consideration in FY'25, associated with the sale of a portion of its PLM services business[226] Foreign Currency Impact - The company experienced an unfavorable impact of $2.4 million from foreign currency exchange rates on consolidated cash balances in FY'25[270] - In FY'24, the company had a favorable impact of $3.2 million from foreign currency exchange rates on consolidated cash balances[270] - Changes in foreign currencies, particularly the Japanese Yen, Indian Rupee, and Swedish Krona, significantly influenced cash balances[270] - Interest income is subject to fluctuations based on market interest rates and levels of cash available for investment[270] - The company noted that interest income would decrease in a declining interest rate environment and increase in a rising interest rate environment[270] - The U.S. Federal Reserve Board, European Central Bank, and Bank of England have altered benchmark interest rates, affecting market interest rates[270] - Fluctuations in interest income earned on cash and cash equivalents are expected to continue[270]