Company: PTC
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0000950170-25-015530
Chunk: 40

Company: PTC INC.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 8
Chunk 40
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 return of 50% of free cash flow to shareholders via share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties 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