PTC (PTC) Q1 2025 earnings summary

Executive summary

• Q1'25 results exceeded or met guidance, with 11% constant currency ARR growth to $2.277B and free cash flow up 29% to $236M, despite a challenging macro environment and ongoing go-to-market realignment.

• Significant progress in verticalizing the go-to-market organization, energizing teams with new leadership, including a new CRO, and focusing on five core product areas: PLM, ALM, SLM, CAD, and SaaS.

• AI initiatives are being embedded across the portfolio, with ServiceMax AI launched and Codebeamer AI in beta with major customers, driving digital transformation and competitive displacement.

• Customer examples highlight cross-selling success and enterprise-wide PLM expansion, especially in regulated industries such as med tech and defense.

• Resumed share repurchases, buying back $75M of stock in Q1'25 as part of a $2B authorization.

Financial highlights

• Q1'25 constant currency ARR reached $2.277B, up 11% year-over-year; as reported ARR was $2.205B, up 7%.

• Free cash flow in Q1'25 was $236M, up 29% year-over-year, with operating cash flow at $238M, up 27%.

• Q1'25 revenue was $565M, up 3% year-over-year, with recurring revenue comprising 93% of total.

• Q1'25 GAAP diluted EPS was $0.68 (up 23% YoY); non-GAAP EPS was $1.10.

• Ended Q1'25 with $196M in cash and $1.548B in gross debt; debt/EBITDA ratio at 1.7x.

Outlook and guidance

• FY'25 constant currency ARR growth guidance is 9%-10%; Q2'25 guidance at ~9.5%.

• FY'25 free cash flow guidance is $835M-$850M, with about 60% expected in the first half; Q2'25 free cash flow guidance is ~$270M.

• FY'25 revenue guidance: $2,430M-$2,605M; non-GAAP EPS: $5.30-$6.30.

• FY'25 guidance includes ~$20M outflows for go-to-market realignment and $15M in capital expenditures.

• Plan to repurchase ~$300M in stock and retire $500M senior notes in FY'25.