PTC's Q2 Earnings & Revenues Top, Improve Y/Y, 2025 Outlook Tweaked

PTC Inc. PTC reported second-quarter fiscal 2025 non-GAAP earnings per share (EPS) of $1.79, beating the Zacks Consensus Estimate by 29.7%. The company reported non-GAAP EPS of $1.46 in the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues came in at $636 million, rising 6% year over year (up 8% at constant currency or cc). The top line beat the consensus estimate by 4.6%. Management projected revenues in the $590-$620 million band. Despite a challenging selling environment, strong performance across its five key areas: PLM, ALM, SLM, CAD and SaaS, drove the upside. The quarter is marked by customer support, progress in go-to-market transformation and continued advancement of its leading product portfolio and generative AI strategy.

However, the company remains wary of growing global trade and macro volatility. While interest in digital transformation stays strong, customer decisions may slow down, so the ARR range was adjusted to reflect possible delays in deal timing and size.

Top-Line Details

Recurring revenues of $601.5 million rose 6.6% year over year. 

Perpetual licenses decreased 13.6% to $5.8 million.

Revenues by License, Support and Services

License revenues (40% of total revenues) were $254.4 million, up 8.6% from the year-ago quarter figure.

Support and cloud services revenues (55.5%) of $353 million increased 4.9% year over year.

Professional services revenues (4.5%) were $29 million, down 10.3% year over year.

Revenues by Product Group

PLM and CAD businesses continue to experience healthy demand momentum. In the fiscal second quarter, PLM revenues were $396 million, up 6% year over year. CAD revenues were $240 million, up 5% year over year.

ARR Performance

Annualized recurring revenues (ARR) were $2.29 billion, up 10% year over year. At constant currency, ARR was $2.326 billion, up 10% year over year. The uptick was driven by strong performance across all divisions and geographies.

In the fiscal second quarter, PLM and CAD ARR were $1,429 million and $897 million, rising 11% and 8% year over year, respectively.

Operating Details

Total operating expenses decreased 2.2% year over year to $306.6 million.

Operating income on a non-GAAP basis rose 17.8% year over year to $299.3 million.

Operating margin on a non-GAAP basis increased 490 basis points year over year to 47%.

Balance Sheet & Cash Flow

As of March 31, 2025, cash and cash equivalents were $235 million compared with $196 million as of Dec. 31, 2024.

Total debt, net of deferred issuance costs, was $1.39 billion as of March 31, 2025, compared with $1.544 billion as of Dec. 31, 2024.

Cash provided by operating activities was $281 million compared with the prior-year quarter figure of $251 million.

The free cash flow was $279 million compared with $247 million reported in the year-ago quarter.

View Updated

For the third quarter fiscal 2025, PTC estimates revenues in the $560-$600 million band. Non-GAAP EPS is projected in the range of $1.05 to $1.30. Cash from operations is expected to be in the range of $234-$239 million, and free cash flow is forecasted to be between $230 million and $235 million.

Revenues for fiscal 2025 are now projected in the range of $2,445 to $2,565 million, indicating a rise of 6-12% year over year. The prior view was $2,430 million to $2,530 million. Non-GAAP EPS is now estimated in the $5.80-$6.55 band, suggesting a rise of 14-29%. Earlier, PTC predicted the metric to be $5.30 to $6.0.

For fiscal 2025, cash from operations is projected between $855 million and $865 million, indicating a rise of 14% to 15% on a year-over-year basis. The free cash flow is forecasted in the $840-$850 million band, suggesting a 14% to 16% increase. Previously, PTC viewed operating cash flow and free cash flow in the $850-$865 million and $835-$850 million bands, respectively. 

PTC now projects 7% to 9% growth in ARR on a constant currency basis for fiscal 2025, narrowed from the earlier view of 9% to 10%.

PTC’s Zacks Rank

Currently, PTC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

Badger Meter, Inc. BMI reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.

In the past year, shares of BMI have gained 18.8%.

Cadence Design Systems CDNS reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.

Shares of Cadence have gained 9.6% in the past year.

Woodward, Inc. WWD reported second-quarter fiscal 2025 adjusted net EPS of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.

In the past six months, shares of WWD have gained 13.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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