PTC(US:PTC)2025-04-30 21:00Financial 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 2025 [5][15] - The constant currency ARR at the end of Q2 was $2,326 million, reflecting a 10% increase year-over-year [15] - Free cash flow for Q2 was $279 million, which absorbed $3 million related to go-to-market realignment [16][17] 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 [16] - The Americas saw a 9% growth in constant currency ARR, Europe 11%, and Asia Pacific 10% [16] Market Data and Key Metrics Changes - PTC's gross debt was $1,393 million, with a leverage ratio of 1.5 times [17] - The company paid down $500 million of senior notes due in February and reduced gross debt by $155 million in Q2 [17] 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 [30] - The company is actively pursuing a go-to-market transformation to enhance execution and customer engagement [8][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged growing uncertainty related to global trade dynamics and macro pressures, which could affect customer buying behavior [10][11] - Despite the uncertainty, the long-term need for digital transformation remains strong, and PTC is well-positioned to support customers through this transition [12][13] Other Important Information - PTC continues to execute share buybacks under a $2 billion repurchase authorization, with $75 million used to repurchase shares in Q2 [17][18] - The company has raised the low end of its free cash flow guidance for 2025 to $840 million, reflecting strong execution and profitability focus [19] Q&A Session Summary Question: Could you dive deeper into the downside scenario for the 7% ARR? - Management explained that the 7% scenario assumes significant macro deterioration, with potential delays or downsizing of projects based on customer conversations [34][39] Question: What steps have been taken in the go-to-market strategy? - Management expressed confidence in the go-to-market transformation, highlighting low churn and successful retention of top talent [42][44] Question: How should we think about the $1 billion free cash flow target next year? - Management indicated that it is premature to provide specifics, as they need to assess various factors including interest rates and foreign exchange rates [46][48] Question: How are customer discussions regarding AI adoption progressing? - Management reported increased customer engagement regarding AI capabilities, with a belief that generative AI will drive future growth [52][54] Question: Is the macro uncertainty affecting specific products or verticals? - Management clarified that the uncertainty is not product-specific but relates to how customers are making investment decisions amid macroeconomic conditions [90][91]