Core Insights - PTC reported solid financial results for Q2 FY2025, with a focus on enabling the digital economy through software tools that enhance customer efficiency in design, manufacturing, and service [1][2] - The company expressed confidence in its ability to meet customer demand despite macroeconomic uncertainties, emphasizing its role in facilitating the digital transition for clients [2] Financial Performance Highlights - Annual Recurring Revenue (ARR) increased to $2,290 million, up 10% year-over-year; constant currency ARR also grew to $2,326 million, reflecting a 10% increase [4] - Operating cash flow reached $281 million, a 12% increase from the previous year, while free cash flow was $279 million, up 13% [4][6] - Revenue for Q2 FY2025 was reported at $636 million, a 6% increase year-over-year, with constant currency revenue growth of 8% [4][5] - The operating margin improved to 35%, up 530 basis points from the previous year, while non-GAAP operating margin rose to 47%, an increase of 490 basis points [4] Earnings and Guidance - Earnings per share (EPS) for Q2 FY2025 was $1.35, a 42% increase compared to $0.95 in Q2 FY2024; non-GAAP EPS was $1.79, up 23% from $1.46 [4][5] - The company updated its FY2025 guidance, projecting constant currency ARR growth of 7% to 9% and free cash flow of $840 million to $850 million [7][9] - For Q3 FY2025, guidance includes revenue expectations of $560 million to $600 million and EPS of $0.56 to $0.88 [10] Capital Allocation and Strategic Initiatives - PTC executed a disciplined capital allocation strategy, repurchasing $75 million worth of stock in Q2 FY2025, with plans for an additional $75 million in Q3 [6][9] - The company remains focused on building a strong foundation for AI-driven and verticalized growth, while proactively managing macroeconomic risks [9]