PTC INC
For the period ended Mar 31, 2025. Filed May 1, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
PTC$195.07+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0000950170-25-015530
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0000950170-25-061801
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 112 current paragraphs.
62 unchanged; 36 reworded; 14 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Our Operating and Non-GAAP Financial Measures
Current report
Software revenue growth in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods was driven by growth in our subscription offerings in both CAD and PLM.
Current report
License revenue growth in Q2'25 and the first six months of FY'25 compared to the prior-year periods reflects the higher value and longer duration of contracts that renewed in the current-year periods.
Current report
Professional services gross margin increased in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods, primarily due to lower subcontractor costs.
Current report
a $9 million decrease in compensation expense (excluding stock-based compensation expense), mainly driven by the temporary impact of cost reductions resulting from our go-to-market realignment;
Current report
a $4 million impairment charge recognized in Q2'25 related to the sublease of a portion of our Boston office in Q2'25.
Current report
Operating expenses in the first six months of FY'25 increased compared to the first six months of FY'24, primarily due to the following:
Current report
a $4 million impairment charge recognized in Q2'25 related to the lease asset associated with the subleased portion of our Boston office;
Current report
partially offset by:
Current report
Other income (expense), net increased in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods driven by a $2.0 million impairment charge recognized in Q2'24 related to an available-for-sale debt security.
Current report
Our long-term goal is to return excess cash to shareholders via share repurchases. We currently intend to repurchase approximately $300 million of our common stock in FY'25.
Current report
In Q2'25, we changed the income statement caption of Restructuring and other charges (credits), net to Impairment and other charges (credits), net to reflect that the amounts presented are mainly impairment charges rather than restructuring charges. We correspondingly revised the caption with respect to the list of items excluded from our non-GAAP financial measures and, as reflected below, the list of items covered under that caption to reflect the primary charges and credits included in the adjustment. All charges and credits under the captioned line item remain the same.
Current report
Impairment and other charges (credits), net are charges associated with disposal or exit activities, including lease impairment and abandonment charges, net charges or income related to impaired or exited facilities, restructuring severance charges resulting from substantial employee reduction actions, and other related costs.
Current report
In Q2'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security.
Removed paragraphs (4)
Previous report
Software revenue growth in Q1'25 compared to Q1'24 was driven by growth in CAD in the Americas.
Previous report
PLMsoftware revenue growth in Q1'25 was driven by revenue growth in Asia Pacific and the Americas.
Previous report
Professional services gross margin decreased in Q1'25 compared to Q1'24, primarily due to higher compensation costs, driven by severance related to our go-to-market realignment.
Previous report
Other income (expense), net was lower in Q1'25 compared to Q1'24, driven by foreign currency exchange losses.
Reworded paragraphs (36)
Previous wording
Given the breadth and openness of our portfolio, we can enable end-to-end digital thread initiatives, which leverage a connected flow of product data across design, manufacturing, service, and, ultimately, reuse. A digital thread enables product companies to break down silos, streamline workflows, and achieve interoperability across departments, functions and systems with a single version of truth. It also secures the quality, consistency and traceability of product-related data, ensuring that the data is up-to-date, accessible, reliable and actionable. With a digital thread, the right data is delivered to the right people at the right time and in the right context across the value chain.
Current wording
Our product portfolio enables end-to-end digital thread initiatives that leverage a connected flow of product data across design, manufacturing, service, and, ultimately, reuse. A digital thread enables product companies to break down silos, streamline workflows, and achieve interoperability across departments, functions and systems with a single version of truth. It also secures the quality, consistency and traceability of product-related data, ensuring that the data is up-to-date, accessible, reliable and actionable. With a digital thread, the right data is delivered to the right people at the right time and in the right context across the value chain.
Previous wording
Our business is based on a subscription model, with 93% of our 2024 revenue being recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to pursue mid-to-long-term growth opportunities.
Current wording
Our business is based on a subscription model, with 93% of our 2024 revenue recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to support our customers and pursue mid-to-long-term growth opportunities.
Previous wording
Statements in this document that are not historic facts, including statements about our future financial and growth expectations, potential stock repurchases, and the expected effect of our go-to-market realignment, 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, the effects of recently imposed import tariffs and threats of additional import tariffs, volatile foreign exchange rates, high interest rates or increases in interest rates and inflation, tightening of credit standards and availability, geopolitical uncertainty, including the effects of the conflicts between Russia and Ukraine and in the Middle East, and 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 go-to-market realignment and other strategic initiatives to improve organizational and operational efficiency may not do so when or as we expect and may disrupt our business to a greater extent than 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 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 Factorsof this report.
Current wording
Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, 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, the effects of recently imposed import tariffs, threats of additional and reciprocal import tariffs, and global trade tensions and uncertainty, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, tightening of credit standards and availability, geopolitical uncertainty, including the effects of the conflicts between Russia and Ukraine and in the Middle East, and tensions between the U.S. and China, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; 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 go-to-market realignment and other strategic initiatives to improve organizational and operational efficiency may not do so when or as we expect and may disrupt our business to a greater extent than we expect; other uses of cash or our credit facility limits could limit or preclude the return of excess cash 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 Factorsof this report.
Previous wording
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.
Current wording
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 Operating and Non-GAAP Financial Measures. 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.
Previous wording
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.
Current wording
Despite the overall selling environment, which has been challenging for a couple of years now and has begun to reflect heightened macroeconomic uncertainly related to global trade tensions and tariffs, ARR grew 10% (10% constant currency) to $2.29 billion as of the end of Q2’25 compared to Q2’24.
Previous wording
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.
Current wording
Cash provided by operating activities grew 12% to $281 million in Q2'25 compared to Q2'24. Free cash flow grew 13% to $279 million in Q2'25 compared to Q2'24. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q2'25, we made net repayments on our debt of $155 million and repurchased $75 million of our outstanding shares.
Previous wording
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 due to the timing and value of new and renewal contracts. Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue and growth rates. Operating income was down 3% compared to Q1'24, mainly due to costs related to our go-to-market realignment. Diluted earnings per share grew 23% to $0.68 in Q1'25 compared to Q1'24, primarily driven by lower interest expense and a non-cash tax benefit associated with the release of a tax reserve related to prior years in a foreign jurisdiction.
Current wording
Revenue grew 6% (8% constant currency) to $636 million in Q2'25 compared to Q2'24. Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue and growth rates. Operating margin grew by 530 basis points in Q2'25 compared to Q2'24, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 42% to $1.35 in Q2'25 compared to Q2'24.
Previous wording
See Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP financial measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.
Current wording
See Operating and Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP financial measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.
Previous wording
If Q1'25 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been higher by $71 million, revenue would have been higher by $7 million, and expenses would have been higher by $3 million. If Q1'24 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been higher by $2 million, revenue would have been higher by $10 million, and expenses would have been higher by $4 million.
Current wording
If reported results for the six months ended March 31, 2025 were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been higher by $36 million, revenue would have been higher by $30 million, and expenses would have been higher by $10 million. If reported results for the six months ended March 31, 2024 were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been higher by $31 million, revenue would have been higher by $15 million, and expenses would have been higher by $6 million.
Previous wording
Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period. We recognize revenue for the license portion of on-premises subscription contracts up front when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. We continue to convert existing support contracts to on-premises subscriptions, resulting in a shift to up-front recognition of on-premises subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. We expect that over time a higher portion of our revenue will be recognized ratably as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue can vary significantly.
Current wording
Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period. We recognize revenue for the license portion of on-premises subscription contracts when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. We continue to convert existing support contracts to on-premises subscriptions, resulting in a shift to up-front recognition of on-premises subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. We expect that over time a higher portion of our revenue will be recognized ratably as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue can vary significantly.
Previous wording
Support and cloud services revenue growth in Q1'25 was mainly driven by growth in PLM, particularly in the Americas and Europe.
Current wording
Support and cloud services revenue growth in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods was mainly driven by growth in PLM.
Previous wording
Professional services revenue decreased in Q1'25 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Current wording
Professional services revenue decreased in Q2'25 and the first six months of FY'25 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Previous wording
License revenue decreased in Q1'25, reflecting lower PLM revenue in the Americas and Europe, partially offset by growth in CAD in the Americas. License revenue was impacted primarily by a lower volume and value of large contracts renewing in Q1'25 compared to Q1'24.
Current wording
PLMsoftware revenue growth in Q2'25 and the first six months of FY'25 was driven by revenue growth in the Americas and Asia Pacific, partially offset by a decrease in Europe license revenue due to the lower volume and value of large subscriptions renewing in the period.
Previous wording
PLM ARR grew 8% (11% constant currency) from Q1’24 to Q1'25.
Current wording
PLM ARR grew 11% (11% constant currency) from Q2’24 to Q2'25.
Previous wording
CADsoftware revenue growth in Q1'25 was driven by revenue growth in the Americas.
Current wording
CADsoftware revenue growth in Q2'25 was driven by revenue growth in Europe. CAD software revenue growth in the first six months of FY'25 was driven by revenue growth across geographic regions.
Previous wording
CAD ARR grew 5% (9% constant currency) from Q1’24 to Q1’25.
Current wording
CAD ARR grew 8% (8% constant currency) from Q2’24 to Q2’25.
Previous wording
License gross margin changes in Q1'25 were in line with changes in license revenue. Cost of license revenue in Q1'25 remained consistent with Q1'24.
Current wording
License gross margin growth in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods were in line with license revenue growth. Cost of license revenue in Q2'25 and the first six months of FY'25 remained consistent with the corresponding FY'24 periods.
Previous wording
Support and cloud services gross margin growth in Q1'25 was in line with support and cloud services revenue growth. Cost of support and cloud services revenue grew 6% in Q1'25 compared to Q1'24, with the main driver of increased costs being compensation.
Current wording
Support and cloud services gross margin growth in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods was in line with support and cloud services revenue growth. Cost of support and cloud services revenue grew 4% in Q2'25 and 5% in the first six months of FY'25 compared to the corresponding FY'24 periods, primarily due to higher compensation-related costs.
Previous wording
Total headcount increased 2% between Q1’24 and Q1’25.
Current wording
Total headcount increased 1% between Q2’24 and Q2’25.
Previous wording
Operating expenses in Q1'25 increased compared to Q1'24, primarily due to the following:
Current wording
Operating expenses in Q2'25 decreased compared to Q2'24, primarily due to the following:
Previous wording
a $20 million increase in compensation expense (excluding stock-based compensation expense), mainly driven by Q1'25 severance related to the go-to-market realignment (which is primarily included in Sales and marketing); and
Current wording
a $10 million increase in compensation expense (excluding stock-based compensation expense), mainly driven by severance costs recognized in Q1'25 related to the go-to-market realignment (which is primarily included in Sales and marketing), offset by lower compensation charges in General and administrative driven by our FY'24 chief executive officer succession;
Previous wording
a $5 million increase in outside services, driven by consulting services related to our go-to-market realignment and other corporate initiatives;
Current wording
a $4 million increase in outside services, driven by consulting services related to our go-to-market realignment and other corporate initiatives; and
Previous wording
a $4 million decrease in stock-based compensation, driven in part by the Q1'24 acceleration of expense on equity grants held by our former chief executive officer (which is included in General and administrative).
Current wording
a $7 million decrease in stock-based compensation, driven in part by the FY'24 acceleration of expense on equity grants held by our former chief executive officer (which is included in General and administrative).
Previous wording
Interest expense in both Q1'25 and Q1'24 includes interest on our revolving credit facility, term loan, and our senior notes due 2025 and 2028. Interest expense decreased in Q1'25 compared to Q1'24 due to lower aggregate debt.
Current wording
Interest expense in both FY'25 and FY'24 includes interest on our revolving credit facility, term loan, our senior notes that were redeemed in Q2'25, and our senior notes due in 2028. Interest expense decreased in Q2'25 and the first six months of FY'25 compared to the corresponding FY'24 periods due to lower debt balances and lower interest rates.
Previous wording
The effective tax rate for Q1'25 was lower than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. Additionally, for the three months ended December 31, 2024 and December 31, 2023, rates were impacted by a benefit of $5.4 million and an expense of $3.6 million, respectively, associated with the impact of tax reserves related to prior years in foreign jurisdictions.
Current wording
The effective tax rate for the first six months of FY'25 was lower than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. Additionally, for the first six months of FY'25 and FY'24, rates were impacted by a benefit of $10.4 million and an expense of $3.6 million, respectively, associated with the impact of changes in tax reserves related to prior years in foreign jurisdictions.
Previous wording
In FY’24, we requested IRS consent for an accounting method change in the treatment of certain deductions. If we do not receive this consent, our future tax payments could be higher than currently estimated.
Current wording
In FY’24, we requested consent from the U.S. Internal Revenue Service to change the accounting method for the treatment of certain deductions. If we do not receive this consent, our future tax payments could be higher than currently estimated, which would also adversely impact our operating cash flow.
Previous wording
Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. A significant portion of our cash is generated and held outside the U.S. As of December 31, 2024, we had cash and cash equivalents of $12.7 million in the U.S., $78.7 million in Europe, $88.2 million in Asia Pacific (including India) and $16.7 million in other countries. We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash flows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
Current wording
Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. A significant portion of our cash is generated and held outside the U.S. As of March 31, 2025, we had cash and cash equivalents of $20.7 million in the U.S., $82.3 million in Europe, $113.4 million in Asia Pacific (including India) and $18.8 million in other countries. We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash flows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
Previous wording
Cash provided by operating activities increased $51.1 million in Q1'25 compared to Q1'24. Growth was driven by higher collections as well as lower vendor disbursements and interest payments, partially offset by higher tax payments and payments related to our go-to-market realignment. Interest payments were $29.4 million lower in Q1'25 compared to Q1'24 due to the Q1'24 payment of $30.0 million of imputed interest on a deferred acquisition payment associated with our FY'23 acquisition of ServiceMax.
Current wording
Cash provided by operating activities increased $81.7 million in the first six months of FY'25 compared to the same period in FY'24. Growth was driven by higher collections as well as lower interest payments and vendor disbursements, partially offset by higher tax payments and payments related to our go-to-market realignment. Interest payments were $48.8 million lower in the first six months of FY'25 compared to the first six months of FY'24, driven by a Q1'24 payment of $30.0 million of imputed interest on a deferred acquisition payment associated with our FY'23 acquisition of ServiceMax as well as lower interest payments in FY'25 due mainly to lower debt balances.
Previous wording
Cash provided by investing activities in Q1'25 was driven by inflows from the settlement of net investment hedges. Cash used in investing activities in Q1'24 was driven by the acquisition of pure-systems for $93.5 million.
Current wording
Cash provided by investing activities in the first six months of FY'25 was driven by inflows from the settlement of net investment hedges. Cash used in investing activities in the first six months of FY'24 was driven by the acquisition of pure-systems for $93.5 million.
Previous wording
Cash used in financing activities in Q1'25 included net payments of $205.1 million on our credit facility and $75.0 million of repurchases of common stock. Cash used in financing activities in Q1'24 included $620.0 million paid to settle the ServiceMax deferred acquisition payment, partially offset by net borrowings of $558.4 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition.
Current wording
Cash used in financing activities in the first six months of FY'25 included net payments of $360.1 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and $150.0 million of repurchases of common stock. Cash used in financing activities in the first six months of FY'24 included $620.0 million paid to settle the ServiceMax deferred acquisition payment, partially offset by net borrowings of $304.1 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition.
Previous wording
Our credit facility and our senior notes are described in Note 10. Debtto the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. As of December 31, 2024, $524.9 million of our debt was classified as current, including $499.9 million associated with the 2025 senior notes and related debt issuance costs which will become due in February 2025. We intend to redeem the notes using cash on hand and a draw on our revolving credit facility.
Current wording
Our credit facility and our senior notes are described in Note 10. Debtto the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. As of March 31, 2025, $25.0 million of our debt associated with the credit facility term loan was classified as current. In Q2'25, we redeemed the 2025 senior notes using a draw on our revolving credit facility and cash on hand.
Previous wording
We believe that existing cash and cash equivalents, together with cash generated from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements through at least the next twelve months, including redemption of the 3.625% Senior Notes in February 2025, and to meet our known long-term capital requirements.
Current wording
We believe that existing cash and cash equivalents, together with cash generated from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements through at least the next twelve months and to meet our known long-term capital requirements.
Previous wording
For contracts that include annual values that increase over time, 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 any future committed increases in the contract value as of the date of the ARR calculation.
Current wording
For contracts that include annual values that change over time, 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 any future committed increases in the contract value as of the date of the ARR calculation.
Previous wording
The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in General and administrative expenses; Restructuring and other charges (credits), net; non-operating charges (credits), net; and income tax adjustments as defined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and as reflected in the reconciliation tables.
Current wording
The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in General and administrative expenses; Impairment and other charges (credits), net; non-operating charges (credits), net; and income tax adjustments as defined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and as reflected in the reconciliation tables.
Previous wording
The items excluded from the non-GAAP financial measures often have a material impact on our financial results, certain of those items are recurring, and other such items often recur. Accordingly, the non-GAAP financial measures included in this Quarterly Report on Form 10-Q should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP. The following tables reconcile each of these non-GAAP financial measures to its most closely comparable GAAP measure on our financial statements.
Current wording
The items excluded from the non-GAAP financial measures often have a material impact on our financial results, some of those items are recurring, and other items often recur. Accordingly, the non-GAAP financial measures included in this Quarterly Report on Form 10-Q should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP. The following tables reconcile each of these non-GAAP financial measures to its most closely comparable GAAP measure on our financial statements.
Previous wording
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, adjustments exclude a $5.4 million benefit in Q1’25 and $3.6 million charge in Q1’24 related to the non-cash tax impact of tax reserves related to prior years in foreign jurisdictions.
Current wording
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 Q2'25, adjustments exclude a $4.9 million benefit related to the tax impact of tax reserves related to prior years in foreign jurisdictions, of which $4.2 million was a non-cash benefit. In the first six months of FY'25 and FY’24, adjustments exclude a $10.4 million benefit and a $3.6 million charge, respectively, related to the tax impact of tax reserves related to prior years in foreign jurisdictions.