Company: PTC
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0000950170-25-015530
Chunk: 82

Company: PTC INC.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 1
Chunk 82
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 that could cause actual results to differ materially from those projected are described below throughout or referenced in Part II, Item 1A. Risk Factors of this report.

Operating and Non-GAAP Financial Measures

Our discussion of results includes discussion of our ARR (Annual Run Rate) operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis. ARR and our non-GAAP financial measures are described below in Results of Operations - Operating Measure and Results of Operations - Non-GAAP Financial Measures, respectively. The methodology used to calculate constant currency disclosures is described in Results of Operations - Impact of Foreign Currency Exchange on Results of Operations. You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures.

Executive Overview

Despite the overall demand environment, which has been challenging for a couple of years now and continues to adversely affect close rates, ARR grew 7% (11% constant currency) to $2.21 billion as of the end of Q1’25 compared to Q1’24.

Cash provided by operating activities grew 27% to $238 million in Q1'25 compared to Q1'24. Free cash flow grew 29% to $236 million in Q1'25 compared to Q1'24. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. Interest payments were $29 million lower in Q1'25 compared to Q1'24, mainly due to a Q1'24 payment of $30 million of imputed interest on a deferred acquisition payment associated with our 2023 acquisition of ServiceMax. In Q1'25, we made payments of $11 million, primarily for severance and consulting fees, associated with realigning our go-to-market organization.

Revenue grew 3% (2% constant currency) to $565 million in Q1'25 compared to Q1'24, driven by growth in support and cloud services revenue, offset by lower on-premises license revenue due to the timing and value of new and renewal contracts. Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue and growth rates. Operating income was down 3% compared to Q1'24, mainly due to costs related to our go-to-market realignment. Diluted earnings per share grew 23% to $0.68 in Q1'25 compared to Q1'24, primarily driven by lower interest expense and