PTC ANNOUNCES THIRD FISCAL QUARTER 2024 RESULTS

Rhea-AI Summary

PTC reported solid Q3 2024 results with 10% year-over-year ARR growth to $2.126 billion and 29% free cash flow growth to $212 million. Revenue declined 4% to $519 million, while non-GAAP EPS was $0.98, down 1% year-over-year. For FY2024, PTC updated guidance to 11-12% constant currency ARR growth and maintained free cash flow guidance of ~$725 million.

Key highlights:

• Q3 constant currency ARR grew 12% year-over-year
• Operating cash flow increased 26% to $214 million
• Non-GAAP operating margin was 32%, down ~240 bps
• Gross debt reduced 23% year-over-year to $1.816 billion

PTC cited its differentiated product portfolio and subscription business model as drivers of growth despite a challenging selling environment. The company is focusing investments on five key areas to drive future expansion.

Positive

• 10% year-over-year ARR growth to $2.126 billion
• 29% free cash flow growth to $212 million
• 12% constant currency ARR growth year-over-year
• 26% increase in operating cash flow to $214 million
• 23% reduction in gross debt year-over-year to $1.816 billion
• Maintained FY2024 free cash flow guidance of ~$725 million

Negative

• 4% year-over-year revenue decline to $519 million
• 1% decrease in non-GAAP EPS to $0.98
• Non-GAAP operating margin declined ~240 bps to 32%
• Slightly lowered FY2024 constant currency ARR growth guidance to 11-12% from previous 11-13%

Insights

Financial Analyst

PTC's Q3 2024 results demonstrate resilience in a challenging environment, with solid ARR and cash flow growth. The company reported 10% year-over-year ARR growth (12% in constant currency) to $2.126 billion and 29% free cash flow growth to $212 million. These figures align with the company's strategic focus on subscription-based revenue and cash generation.

However, revenue declined 4% year-over-year to $519 million, slightly below guidance. This decline is likely due to the ongoing transition to a subscription model, which can impact short-term revenue recognition. The non-GAAP operating margin contracted by ~240 basis points to 32%, reflecting increased investments in growth initiatives and the ServiceMax acquisition.

Looking ahead, PTC has updated its FY2024 guidance, narrowing the constant currency ARR growth range to 11-12% while maintaining free cash flow guidance at $725 million. This suggests confidence in the company's ability to execute its strategy despite market headwinds.

The balance sheet remains solid, with gross debt reduced by 23% year-over-year to $1.816 billion. This deleveraging, combined with strong cash flow generation, provides financial flexibility for future investments or shareholder returns.

Tech Industry Analyst

PTC's Q3 results underscore the company's strategic positioning in the product lifecycle management (PLM) and Industrial Internet of Things (IIoT) markets. The company's focus on helping product companies accelerate time to market and manage increasing complexity is particularly relevant in today's rapidly evolving manufacturing landscape.

The 12% constant currency ARR growth indicates strong demand for PTC's software solutions, especially in areas like CAD, PLM and IIoT. This growth, despite a challenging selling environment, suggests that PTC's products are becoming increasingly critical for their customers' digital transformation initiatives.

PTC's acquisition of ServiceMax, while impacting short-term financials, strengthens its position in the growing field of service lifecycle management. This move aligns with the industry trend towards integrated product-service systems and could provide significant cross-selling opportunities.

The company's emphasis on five focus areas for resource allocation demonstrates a strategic approach to scaling the business. While not explicitly detailed, these likely include key growth drivers such as SaaS transition, IIoT expansion and AI integration – all important for maintaining PTC's competitive edge in the industrial software market.

However, the slight decline in revenue and margins warrants attention. It will be important to monitor whether this is purely a result of the subscription transition or if it indicates any competitive pressures in PTC's core markets.

Solid ARR and Cash Flow in Q3'24

Guiding to 11-12% Constant Currency ARR Growth and Maintaining Free Cash Flow Guidance for FY'24

BOSTON, July 31, 2024 /PRNewswire/ -- PTC (NASDAQ: PTC) today reported financial results for its third fiscal quarter ended June 30, 2024.

"In our third fiscal quarter, we again delivered solid ARR and cash flow, with year-over-year ARR growth in the low double-digits and cash flow growth above 20%. We have a differentiated strategy that leverages our unique product portfolio to help product companies accelerate time to market and manage increasing complexity. It's an exciting time because our products are at the epicenter of driving business transformation at our customers. We are strengthening our ability to scale our business by continuing to align our resources with our five focus areas," said Neil Barua, CEO, PTC.

Third Quarter 2024 Highlights

Key operating and financial highlights are set forth below. The definitions of our operating and non-GAAP financial measures and reconciliations of non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.

$ in millions	Q3'24	Q3'23	YoY Change		Q3'24 Guidance
ARR as reported	$2,126	$1,929	10 %
Constant currency ARR	$2,125	$1,904	12 %		$2,115 - $2,130
Operating cash flow	$214	$169	26 %		~$225
Free cash flow	$212	$164	29 %		~$220
Revenue1	$519	$542	(4%)2		$525 - $540
Operating margin1	18 %	20 %	(~180 bps)
Non-GAAP operating margin1	32 %	34 %	(~240 bps)
Earnings per share1	$0.573	$0.51	11 %		$0.41 - $0.54
Non-GAAP earnings per share1	$0.984	$0.99	(1 %)		$0.90 - $1.00
Total cash and cash equivalents	$248	$282	(12 %)
Gross debt5	$1,816	$2,3656	(23 %)

1	Revenue and, as a result, operating margin, operating profit, and earnings per share are impacted under ASC 606.
2	In Q3'24, revenue declined 3% year over year on a constant currency basis.
3	In Q3'24, GAAP EPS included a non-cash tax benefit of $14.2 million or $0.12, primarily associated with the effects of IRS procedural guidance issued in May 2024.
4	In Q3'24, non-GAAP EPS included a non-cash tax benefit of $9.8 million or $0.08, primarily associated with the effects of IRS procedural guidance issued in May 2024.
5	Gross debt excludes unamortized debt issuance costs.
6	Q3'23 gross debt included a deferred acquisition payment related to ServiceMax of $620 million, which was paid in October 2023.

Fiscal 2024 and Q4'24 Guidance

"In a selling environment that continued to be challenging, our Q3'24 ARR grew 10% year over year, and constant currency ARR grew 12% year over year, driven by our differentiated product portfolio, the resilience of our subscription business model, operational discipline, and the actions we have taken over time to align our investments with market opportunities. Our Q3'24 free cash flow growth of 29% was also solid, although slightly below our guidance due to timing. Reflecting our year-to-date performance and our outlook for the fourth quarter, we are updating our FY'24 constant currency ARR guidance range to 11 to 12 percent growth and maintaining our FY'24 free cash flow guidance. We believe we have set our guidance appropriately," said Kristian Talvitie, CFO.

$ in millions	FY'24 Previous Guidance	FY'24 Guidance	FY'24 YoY Growth Guidance	Q4'24 Guidance
Constant currency ARR	$2,200 - $2,240	$2,200 - $2,220	11% - 12%	$2,200 - $2,220
Operating cash flow	~$745	~$740	~21%	~$88
Free cash flow	~$725	~$725	~23%	~$83
Revenue	$2,270 - $2,340	$2,270 - $2,320	8% - 11%	$598 - $648
Earnings per share	$2.52 - $3.22	$2.78 - $3.35	35% - 63%	$0.72 - $1.29
Non-GAAP earnings per share	$4.60 - $5.10	$4.85 - $5.21	12% - 20%	$1.30 - $1.66

Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance

In millions	FY'24 Guidance	Q4'24 Guidance
Operating Cash Flow	~$740	~$88
Capital expenditures	(~$15)	(~$5)
Free Cash Flow	~$725	~$83

Reconciliation of EPS Guidance to Non-GAAP EPS Guidance

	FY'24 Guidance	Q4'24 Guidance
Earnings per share	$2.78 - $3.35	$0.72 - $1.29
Stock-based compensation expense	$1.90 - $1.74	$0.56 - $0.40
Intangible asset amortization expense	~$0.67	~$0.17
Acquisition and transaction-related expense	~$0.02	~$0.00
Other non-operating expenses, related to an impairment loss on an      available for sale debt security	~$0.02	~$0.00
Income tax adjustments related to the reconciling items	($0.59) – ($0.54)	($0.20) – ($0.15)
Non-GAAP Earnings per share	$4.85 - $5.21	$1.30 - $1.66

FY'24 and Q4'24 financial guidance includes the following assumptions:

• We provide ARR guidance on a constant currency basis, using our FY'24 Plan foreign exchange rates (rates as of September 30, 2023) for all periods.
• We expect churn to remain low.
• For cash flow, due to invoicing and payments seasonality, and consistent with the past 3 years, we expect the majority of our collections to occur in the first half of our fiscal year and for fiscal Q4 to be our lowest cash flow generation quarter.
• Compared to FY'23, at the midpoint of FY'24 ARR guidance, FY'24 GAAP operating expenses are expected to increase approximately 6%, and FY'24 non-GAAP operating expenses are expected to increase approximately 8%, primarily due to investments to drive future growth, the acquisition of ServiceMax, and foreign exchange rate fluctuations.
• FY'24 GAAP P&L results are expected to include the items below, totaling approximately $295 million to $315 million, as well as their related tax effects:
  • approximately $210 million to $230 million of stock-based compensation expense,
  • approximately $81 million of intangible asset amortization expense,
  • approximately $2 million, net, related to acquisition and transaction-related expense and a restructuring credit, and
  • approximately $2 million of other non-operating expenses, related to an impairment loss on an available-for-sale debt security.
• Our FY'24 GAAP tax rate is expected to be approximately 17% and our non-GAAP tax rate is expected to be approximately 19%.
• Cash tax payments are expected to be approximately $65 million in FY'24.
• Capital expenditures are expected to be approximately $15 million in FY'24.
• Cash interest payments are expected to be approximately $135 million in FY'24.
• Our long-term goal, assuming our Debt/EBITDA ratio is below 3x, is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic opportunities.
  • We expect to prioritize paying down our debt in FY'24.
  • We expect gross debt of approximately $1.7 billion at the end of FY'24.
  • We expect our fully diluted share count to be approximately 121 million in FY'24.

PTC's Fiscal Third Quarter Conference Call

The Company will host a conference call to discuss results at 5:00 pm ET on Wednesday, July 31, 2024. To participate in the live conference call, dial (888) 330-2508 or (240) 789-2735, provide the passcode 7328695, and press # or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.

Important Information About Our Operating and Non-GAAP Financial Measures

Non-GAAP Financial Measures

We provide supplemental non-GAAP financial measures to our financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. These non-GAAP financial measures should not be construed as an alternative to GAAP results as the items excluded from the non-GAAP financial measures often have a material impact on our operating results, certain of those items are recurring, and others often recur. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results.

Non-GAAP operating expense, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and non-GAAP EPS exclude the effect of the following items: stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges included in general and administrative expenses; restructuring and other charges and credits, net; non-operating charges and credits shown in the reconciliation provided; and income tax adjustments. Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in "Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Free Cash Flow: We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long-term goals and intent to return approximately 50% of our free cash flow to shareholders via stock repurchases. Free cash flow is cash provided by (used in) operations net of capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures.

Constant Currency (CC): We present CC information to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency exchange rate fluctuations. To present CC information, FY'24 and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the foreign exchange rate as of September 30, 2023, rather than the actual exchange rates in effect during that period.

Operating Measure

ARR: ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, cloud, SaaS, and support contracts as of the end of the reporting period. We calculate ARR as follows:

• We consider a contract to be active when the product or service contractual term commences (the "start date") until the right to use the product or service ends (the "expiration date"). Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced.
• For contracts that include annual values that increase over time as there are additional deliverables in subsequent periods, which we refer to as ramp contracts, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation.
• As ARR includes only contracts that are active at the end of the reporting period, ARR does not reflect assumptions or estimates regarding future customer renewals or non-renewals.
• Active contracts are annualized by dividing the total active contract value by the contract duration in days (expiration date minus start date), then multiplying that by 365 days (or 366 days for leap years).

We believe ARR is a valuable operating measure to assess the health of a subscription business because it is aligned with the amount that we invoice the customer on an annual basis. We invoice customers annually for the current year of the contract. A customer with a one-year contract will typically be invoiced for the total value of the contract at the beginning of the contractual term, while a customer with a multi-year contract will be invoiced for each annual period at the beginning of each year of the contract.

ARR increases by the annualized value of active contracts that commence in a reporting period and decreases by the annualized value of contracts that expire in the reporting period.

As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total value of the contract is recognized at a point in time upon the later of when the software is made available, or the subscription term commences.

ARR should be viewed independently of recognized and unearned revenue and is not intended to be combined with, or to replace, either of those items. Investors should consider our ARR operating measure only in conjunction with our GAAP financial results.

Organic ARR: We provide an organic ARR measure to help investors understand and assess the performance of our business without the distorting effects of ARR from acquisitions in the comparative period. We do not adjust for acquisitions that have an immaterial impact on our ARR results when providing organic ARR results.

Organic Constant Currency ARR: We provide an organic constant currency ARR measure to help investors understand and assess the performance of our business without the distorting effects of ARR from acquisitions in the comparative period and foreign exchange rate fluctuations. We do not adjust for acquisitions that have an immaterial impact on our ARR results when providing organic constant currency ARR results.

Deferred ARR: Deferred ARR is ARR attributable to our portfolio of subscription software, cloud, SaaS and support contracts that are not active as of the end of the reporting period but are contractually committed to commence in a future period.

Because ARR is independent of recognized and unearned revenue, deferred ARR should not be viewed as a measurement of revenue which will be recognized in future periods.

Forward-Looking Statements

Statements in this document that are not historic facts, including statements about our future financial and growth expectations and targets and potential stock repurchases, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, high interest rates or increases in interest rates and inflation, volatile foreign exchange rates and the relative strength of the U.S. dollar, tightening of credit standards and availability, the effects of the conflicts between Russia and Ukraine and in the Middle East, and growing tensions with China, any of which could cause customers to delay or reduce purchases of new software, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect ARR and/or our financial results and cash flow; our investments in our software solutions may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if customers are slower to adopt those solutions than we expect or if they adopt competing solutions; our strategic initiatives to improve organizational and operational efficiency may not do so when or as we expect; other uses of cash or our credit facility limits could limit or preclude the return of 50% of free cash flow to shareholders via share repurchases, or could change our expectations about 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 detailed from time to time in reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission.

About PTC (NASDAQ: PTC)

PTC (NASDAQ: PTC) is a global software company that enables industrial and manufacturing companies to digitally transform how they engineer, manufacture, and service the physical products that the world relies on. Headquartered in Boston, Massachusetts, PTC employs over 7,000 people and supports more than 25,000 customers globally. For more information, please visit www.ptc.com.

PTC.com     @PTC     Blogs

PTC Investor Relations Contact
Matt Shimao
SVP, Investor Relations
mshimao@ptc.com
investor@ptc.com

PTC Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Revenue:
Recurring revenue	$	481,559			$	498,410			$	1,551,600			$	1,407,662
Perpetual license		7,050				8,251				22,243				30,417
Professional services		30,030				35,681				98,082				112,354
Total revenue (1)		518,639				542,342				1,671,925				1,550,433
Cost of revenue (2)		111,916				115,854				331,991				325,150
Gross margin		406,723				426,488				1,339,934				1,225,283
Operating expenses:
Sales and marketing (2)		140,318				145,083				411,763				392,673
Research and development (2)		110,253				103,819				323,034				292,345
General and administrative (2)		49,659				57,055				180,391				173,949
Amortization of acquired intangible assets		10,672				10,670				31,459				29,352
Restructuring and other credits, net		-				(39)				(802)				(376)
Total operating expenses		310,902				316,588				945,845				887,943
Operating income		95,821				109,900				394,089				337,340
Other expense, net		(28,448)				(33,374)				(95,372)				(93,321)
Income before income taxes		67,373				76,526				298,717				244,019
Provision (benefit) for income taxes		(1,605)				15,128				48,907				44,082
Net income	$	68,978			$	61,398			$	249,810			$	199,937
Earnings per share:
Basic	$	0.58			$	0.52			$	2.09			$	1.69
Weighted average shares outstanding		119,893				118,483				119,533				118,186
Diluted	$	0.57			$	0.51			$	2.07			$	1.68
Weighted average shares outstanding		120,822				119,392				120,593				119,072

(1) See supplemental financial data for revenue by license, support and cloud services, and professional services.

(2) See supplemental financial data for additional information about stock-based compensation.

 

PTC Inc.
SUPPLEMENTAL FINANCIAL DATA FOR REVENUE AND STOCK-BASED COMPENSATION
(in thousands, except per share data)
Revenue by license, support and services is as follows:
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
License revenue (1)	$	149,104			$	192,940			$	567,423			$	562,631
Support and cloud services revenue		339,505				313,721				1,006,420				875,448
Professional services revenue		30,030				35,681				98,082				112,354
Total revenue	$	518,639			$	542,342			$	1,671,925			$	1,550,433
(1) License revenue includes the portion of subscription revenue allocated to license.
The amounts in the income statement include stock-based compensation as follows:
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Cost of revenue	$	5,856			$	5,847			$	15,979			$	15,668
Sales and marketing		15,167				14,513				46,023				39,554
Research and development		13,101				14,801				41,275				41,839
General and administrative		13,914				18,657				57,965				50,507
Total stock-based compensation	$	48,038			$	53,818			$	161,242			$	147,568

 

PTC Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
GAAP gross margin	$	406,723			$	426,488			$	1,339,934			$	1,225,283
Stock-based compensation		5,856				5,847				15,979				15,668
Amortization of acquired intangible assets included in cost of revenue		9,685				9,841				28,835				25,817
Non-GAAP gross margin	$	422,264			$	442,176			$	1,384,748			$	1,266,768
GAAP operating income	$	95,821			$	109,900			$	394,089			$	337,340
Stock-based compensation		48,038				53,818				161,242				147,568
Amortization of acquired intangible assets		20,357				20,511				60,294				55,169
Acquisition and transaction-related charges		154				795				2,962				18,484
Restructuring and other credits, net		-				(39)				(802)				(376)
Non-GAAP operating income (1)	$	164,370			$	184,985			$	617,785			$	558,185
GAAP net income	$	68,978			$	61,398			$	249,810			$	199,937
Stock-based compensation		48,038				53,818				161,242				147,568
Amortization of acquired intangible assets		20,357				20,511				60,294				55,169
Acquisition and transaction-related charges		154				795				2,962				18,484
Restructuring and other credits, net		-				(39)				(802)				(376)
Non-operating charges, net (2)		-				-				2,000				5,147
Income tax adjustments (3)		(19,538)				(18,830)				(48,162)				(52,506)
Non-GAAP net income	$	117,989			$	117,653			$	427,344			$	373,423
GAAP diluted earnings per share	$	0.57			$	0.51			$	2.07			$	1.68
Stock-based compensation		0.40				0.45				1.34				1.24
Amortization of acquired intangibles		0.17				0.17				0.50				0.46
Acquisition and transaction-related charges		0.00				0.01				0.02				0.16
Restructuring and other credits, net		-				(0.00)				(0.01)				(0.00)
Non-operating charges, net (2)		-				-				0.02				0.04
Income tax adjustments (3)		(0.16)				(0.16)				(0.40)				(0.44)
Non-GAAP diluted earnings per share	$	0.98			$	0.99			$	3.54			$	3.14
(1) Operating margin impact of non-GAAP adjustments:
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
GAAP operating margin		18.5	%			20.3	%			23.6	%			21.8	%
Stock-based compensation		9.3	%			9.9	%			9.6	%			9.5	%
Amortization of acquired intangibles		3.9	%			3.8	%			3.6	%			3.6	%
Acquisition and transaction-related charges		0.0	%			0.1	%			0.2	%			1.2	%
Restructuring and other credits, net		0.0	%			0.0	%			0.0	%			0.0	%
Non-GAAP operating margin		31.7	%			34.1	%			37.0	%			36.0	%

(2) In the first nine months of FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security. In the first nine months of FY'23, we recognized $4.2 million of financing charges for a debt commitment agreement associated with our acquisition of ServiceMax.

(3) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in the first nine months of FY'24, adjustments exclude a tax expense of $3.6 million for a tax reserve related to prior years in a foreign jurisdiction.

 

PTC Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
	June 30,				September 30,
	2024				2023
ASSETS
Cash and cash equivalents	$	247,749			$	288,103
Accounts receivable, net		674,959				811,398
Property and equipment, net		77,535				88,391
Goodwill and acquired intangible assets, net		4,352,750				4,299,760
Lease assets, net		131,297				143,028
Other assets		643,855				658,162
Total assets	$	6,128,145			$	6,288,842
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue	$	687,614			$	681,550
Debt, net of deferred issuance costs		1,811,154				1,695,785
Deferred acquisition payments (1)		-				620,040
Lease obligations		180,274				193,192
Other liabilities		434,424				420,985
Stockholders' equity		3,014,679				2,677,290
Total liabilities and stockholders' equity	$	6,128,145			$	6,288,842

(1) FY'23 Deferred acquisition payments represented the fair value of the $650 million payment associated with the ServiceMax, Inc. acquisition, which was paid in Q1'24.

 

PTC Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Cash flows from operating activities:
Net income	$	68,978			$	61,398			$	249,810			$	199,937
Stock-based compensation		48,038				53,818				161,242				147,568
Depreciation and amortization		27,128				27,906				81,272				76,943
Amortization of right-of-use lease assets		7,684				8,141				23,143				24,705
Operating lease liability		(3,145)				(6,345)				(13,438)				(1,360)
Accounts receivable		23,915				13,043				131,422				99,521
Accounts payable and accruals		64,831				18,726				35				11,368
Deferred revenue		(32,578)				(17,396)				8,393				18,696
Income taxes		(19,882)				2,259				(1,795)				(9,910)
Other		28,830				7,673				11,786				(6,376)
Net cash provided by operating activities		213,799				169,223				651,870				561,092
Capital expenditures		(1,639)				(5,085)				(9,841)				(18,035)
Acquisition of businesses, net of cash acquired(1)		-				-				(93,457)				(828,271)
Borrowings (payments) on debt, net(2)		(195,125)				(180,000)				109,049				386,000
Deferred acquisition payment(3)		-				-				(620,040)				-
Net proceeds associated with issuance of common stock		-				-				12,709				10,592
Payments of withholding taxes in connection with vesting of stock- based awards		(21,405)				(19,467)				(92,589)				(75,489)
Settlement of net investment hedges		6,050				(1,660)				3,826				(14,204)
Net proceeds from sale (purchases) of investments		-				349				-				(5,474)
Credit facility origination costs		-				-				-				(13,355)
Other financing & investing activities		-				-				-				(371)
Foreign exchange impact on cash		(2,832)				(2,346)				(2,003)				6,835
Net change in cash, cash equivalents, and restricted cash		(1,152)				(38,986)				(40,476)				9,320
Cash, cash equivalents, and restricted cash, beginning of period		249,474				321,194				288,798				272,888
Cash, cash equivalents, and restricted cash, end of period	$	248,322			$	282,208			$	248,322			$	282,208
Supplemental cash flow information:
Cash paid for interest(3)	$	18,375			$	22,576			$	112,394			$	51,946

(1) In Q1'24, we acquired pure-systems for $93 million, net of cash acquired. In Q2'23, we acquired ServiceMax Inc. for $1,448 million, net of cash acquired. We paid $828 million in Q2'23 and the remaining $620 million in Q1'24.

(2) In Q1'24, we borrowed $740 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition. Subsequently, we've made net payments of $631 million.

(3) In Q1'24, we made a payment of $650 million to settle the ServiceMax deferred acquisition payment liability, of which $620 million is a financing outflow and $30 million is an operating outflow and included in cash paid for interest.

 

PTC Inc.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands)
	Three Months Ended								Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Cash provided by operating activities	$	213,799			$	169,223			$	651,870			$	561,092
Capital expenditures		(1,639)				(5,085)				(9,841)				(18,035)
Free cash flow	$	212,160			$	164,138			$	642,029			$	543,057

 

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SOURCE PTC Inc.

FAQ

What was PTC's ARR growth in Q3 2024?

PTC reported 10% year-over-year ARR growth to $2.126 billion in Q3 2024. On a constant currency basis, ARR grew 12% year-over-year.

How did PTC's free cash flow perform in Q3 2024?

PTC's free cash flow grew 29% year-over-year to $212 million in Q3 2024.

What is PTC's updated guidance for FY2024 constant currency ARR growth?

PTC updated its FY2024 guidance for constant currency ARR growth to 11-12%, slightly lower than the previous guidance of 11-13%.

Did PTC's revenue increase in Q3 2024?

No, PTC's revenue declined 4% year-over-year to $519 million in Q3 2024.

What factors did PTC cite as driving its growth in Q3 2024?

PTC cited its differentiated product portfolio, resilient subscription business model, and focus on five key investment areas as drivers of growth despite a challenging selling environment.