ARR (Annual Recurring Revenue): Achieved constant currency ARR of $2.075 billion in Q2, marking a 12% year-over-year increase.
Free Cash Flow: Reported operating cash flow of $251 million and free cash flow of $247 million for Q2, up 19% year-over-year.
Debt Repayment: Paid down $256 million in debt during the quarter, ending with a gross debt of $2.011 billion.
Diluted Share Count: Increased by approximately 1.5 million shares in fiscal ‘24 due to ASC 260 accounting rules.
Future Guidance
ARR Growth Forecast: Narrowed fiscal ‘24 constant currency ARR guidance range, aiming for 11% to 12% year-over-year growth.
Full-Year Revenue and EPS: Updated fiscal ‘24 revenue guidance due to contract renegotiations and FX impact, along with adjustments to EPS expectations.
Free Cash Flow: Reiterated the guidance of $725 million for fiscal ‘24 despite FX impacts.
Debt Management: Expects to end the year with approximately $1.7 billion in gross debt, with plans to revisit the share repurchase program in fiscal ‘25.
Trends, Market Conditions, Sentiment
Strategic Focus: Strong emphasis on focusing investments in high-value areas such as PLM, ALM, SLM, CAD, and SaaS to drive customer value and growth.
Market Resilience: Despite challenging market conditions, PTC’s portfolio and strategy continue to deliver solid financial performance.
Operational Efficiency: Ongoing efforts to drive operational improvements and efficiencies, including leveraging global R&D teams and managing spend effectively.
Capital Allocation: Disciplined approach toward capital allocation, prioritizing debt reduction while evaluating opportunities for shareholder returns and strategic acquisitions.
Notable Quotes
On Future Growth: “We are now targeting constant currency ARR growth in the low double digits over the midterm, consistent with the performance we have delivered over the past 5 years.” - Neil Barua, CEO.
On Strategic Focus: “You should expect to see a continued emphasis on focusing our resources in the areas that create the greatest customer value and where we have a right to win.” - Neil Barua, CEO.
On Operational Efficiency: “As you know, PTC has been on a multiyear journey to improve efficiencies… PTC will benefit from a fresh look at innovative ways to continue to drive operational improvements.” - Neil Barua, CEO.
On Capital Deployment: “After today’s comments by the Fed, it doesn’t look like those [interest rates] are going to get any better anytime soon… We’ll revisit the prioritization of debt paydown and share repurchases heading into fiscal ‘25.” - Kristian Talvitie, CFO.
