Key Takeaways PTC unveiled Arena SCI, embedding AI-driven risk tools into its cloud-native PLM and QMS systems. SCI flags supply risks in real time and offers alternative parts, improving early-stage design decisions. PTC's acquisitions boost innovation but raise its debt-to-capital ratio to 0.29, above the 0.19 industry norm.PTC Inc. (PTC) recently introduced a transformative advancement for its Arena PLM (Product Lifecycle Management) and QMS (Quality Management System) solutions — the Arena Supply Chai ...

Core Insights - PTC has launched the Arena Supply Chain Intelligence (SCI) offering, which integrates real-time, AI-driven component monitoring and risk mitigation into product development workflows [1][4][9] - Arena SCI continuously monitors electronic components to identify emerging risks from supply chain changes, providing visibility and suggesting alternative components to prevent sourcing interruptions [3][4][9] Company Overview - PTC is a global software company headquartered in Boston, employing over 7,000 people and supporting more than 30,000 customers worldwide [8] - Arena's cloud-native PLM and QMS solutions are utilized by nearly 1,500 global manufacturers, including notable companies like Nutanix, Insulet, and Enphase Energy [6] Product Features - Arena SCI enhances collaboration between design teams and suppliers, enabling proactive sourcing decisions to mitigate supply chain disruptions [4][9] - The offering leverages data from Accuris to provide detailed electronic risk information and suggest alternative parts, aiming to reduce time-to-market and costs associated with disruptions [4][9] Market Position - Since its acquisition by PTC, Arena has expanded into new international markets, released over 16 products, and formed numerous partnerships to enhance product development and quality management [6]

Financial Data and Key Metrics Changes - PTC reported a 10% year-over-year growth in Annual Recurring Revenue (ARR) and a 13% increase in free cash flow for Q2 [4][5][13] - The constant currency ARR at the end of Q2 was $2,326 million, reflecting a 10% increase year-over-year [13] - Free cash flow for Q2 was $279 million, which absorbed $3 million related to go-to-market realignment [14][16] Business Line Data and Key Metrics Changes - ARR growth was 8% in CAD, primarily driven by CREO, and 11% in PLM, driven by Windchill, CodeBeamer, and IoT [15] - The Americas saw a 9% ARR growth, Europe 11%, and Asia Pacific 10% year-over-year [15] Market Data and Key Metrics Changes - PTC's gross debt was $1,393 million, with a leverage ratio of 1.5 times [16] - The company paid down $500 million of senior notes due in February and reduced gross debt by $155 million in Q2 [16] Company Strategy and Development Direction - PTC's strategy focuses on deepening customer value through PLM, ALM, SLM, CAD, and SaaS, while leading innovation through applied generative AI [29] - The company is actively pursuing a go-to-market transformation to enhance execution and customer engagement [6][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged growing uncertainty related to global trade dynamics and macro pressures, which may affect customer buying behavior [9][10] - Despite the uncertainty, the long-term need for digital transformation remains strong, and PTC is well-positioned to support customers in this transition [12][30] Other Important Information - PTC continues to execute share buybacks under a $2 billion repurchase authorization, with $75 million used to repurchase shares in Q2 [5][16] - The company introduced several AI initiatives across its product lines, including Windchill AI and ServiceMax AI [8][53] Q&A Session Summary Question: Can you elaborate on the downside scenario for the 7% ARR growth? - Management explained that the 7% scenario considers potential delays and smaller deal sizes due to macroeconomic conditions, with a bottoms-up and tops-down assessment conducted [33][36][38] Question: What indicators show that the go-to-market changes are working? - The team reported low churn and successful execution of the vertical approach, which has improved customer engagement and pipeline quality [40][43] Question: How should investors think about the $1 billion free cash flow target next year? - Management indicated that it is premature to provide specifics, as various macroeconomic factors will influence the target [46][49] Question: How are customer discussions regarding AI adoption progressing? - Management noted increased customer engagement with AI products, emphasizing the importance of a solid product data foundation for effective AI utilization [52][54] Question: Are the conversations with customers indicating widespread deal postponements? - Management clarified that conversations vary by customer and vertical, with some customers moving forward while others may delay decisions [76][78] Question: What assumptions are behind the new ARR guidance range? - The guidance reflects a cautious outlook due to recent macroeconomic uncertainties, with the potential for improvement if trade issues are resolved [80][81]

PTC (PTC) Q2 2025 Earnings Call April 30, 2025 05:00 PM ET Company Participants Matt Shimao - Head, Investor RelationsNeil Barua - President & CEOKristian Talvitie - EVP & CFOAdam Borg - Managing Director - Equity ResearchRobert Dahdah - Executive Vice President, Chief Revenue OfficerSaket Kalia - Managing DirectorSiti Panigrahi - Managing DirectorJay Vleeschhouwer - Managing DirectorJoshua Tilton - Director Conference Call Participants Daniel Jester - Director & Equity Research AnalystKen Wong - Managing D ...