PTC INC.

Previous wording

Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, and the anticipated benefits of the sale of the Kepware and ThingWorx businesses (the “divestiture”) 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 import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, including the recent military conflict in Iran, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, 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, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if those capabilities are not made available when or as we expect, if customers are slower to adopt those solutions than we expect, or if customers adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the proceeds we receive under the Transition Services Agreement entered into in connection with the divestiture may be lower than expected and/or may not offset our expenses and/or the cash flow impact of the divestiture to the extent expected; the divestiture and/or performance of the Transition Services Agreement 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 by way of 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…

Excerpt shortened here; the source contains the full paragraph.

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 import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, including the recent military conflict in Iran, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, 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, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if those capabilities are not made available when or as we expect, if customers are slower to adopt those solutions than we expect, or if customers adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the proceeds we receive under the Transition Services Agreement entered into in connection with the divestiture of the Kepware and ThingWorx businesses may be lower than expected and/or may not offset our expenses and/or the cash flow impact of the divestiture to the extent expected; the divestiture and/or performance of the Transition Services Agreement 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 by way of 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, …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

ARR grew 3% (1% constant currency) to $2.36 billion as of the end of Q2’26 compared to Q2’25, with growth impacted by the Q2'26 divestiture of Kepware and ThingWorx. Excluding the divested businesses from Q2'25 ARR, ARR growth would have been 11% (8.5% constant currency).

Current wording

ARR was $2.41 billion as of the end of Q3'26, flat with Q3'25, and grew 2% on a constant currency basis, with growth impacted by the Q2'26 divestiture of the Kepware and ThingWorx businesses. ARR growth excluding the divested businesses in Q3'26 compared to Q3'25 was 7% (9% constant currency).

Previous wording

Cash provided by operating activities grew 14% to $321 million in Q2'26 compared to Q2'25. Free cash flow grew 14% to $318 million in Q2'26 compared to Q2'25. In Q2'26, we made $5 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q2'26, we used $626 million to repurchase outstanding shares, including $375 million paid upon entry into an Accelerated Share Repurchase agreement (ASR).

Current wording

Cash provided by operating activities grew 7% to $261 million in Q3'26 compared to Q3'25. Free cash flow grew 3% to $249 million in Q3'26 compared to Q3'25, impacted by higher capital expenditures related to moving a major R&D center to a new office. In Q3'26, we made $9 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q3'26, we repurchased $525 million of outstanding shares, of which $500 million was paid in the quarter, partially funded by $225 million of net debt borrowings under our credit facility.

Previous wording

If reported results for the six months ended March 31, 2026 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $23 million, revenue would have been higher by $3 million, and expenses would have been materially consistent. 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, 2025, ARR would have been higher by $68 million, revenue would have been higher by $50 million, and expenses would have been higher by $17 million.

Current wording

If reported results for the nine months ended June 30, 2026 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $36 million, revenue would have been higher by $9 million, and expenses would have been materially consistent. If reported results for the nine months ended June 30, 2025 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been lower by $12 million, revenue would have been higher by $61 million, and expenses would have been higher by $21 million.

Previous wording

Under ASC 606, the value, mix, and duration of contract types (support, SaaS, on-premises subscription) commencing 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. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. Over time, as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS, a higher portion of our revenue would be recognized ratably. Given the different value, mix, and duration of contracts commencing in any period, year-over-year or sequential revenue can vary significantly.

Current wording

Under ASC 606, the value, mix, and duration of contract types (support, SaaS, on-premises subscription) commencing 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. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. Given the different value, mix, and duration of contracts commencing in any period, year-over-year or sequential revenue can vary significantly.

Previous wording

Software revenue growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was driven by license revenue growth, which was driven by the value and duration of contracts that commenced in the period.

Current wording

Software revenue growth in the first nine months of FY'26 was driven by license revenue growth, which reflects the value and duration of contracts that commenced in the period. Support and cloud services revenue growth in the first nine months of FY'26 compared to the corresponding FY'25 period was driven by growth in both CAD and PLM.

Previous wording

Professional services revenue decreased in Q2'26 and the first six months of FY'26 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 the first nine months of FY'26 as we continue to execute our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

Previous wording

PLMsoftware revenue growth in Q2'26 was driven by Windchill license revenue growth in the Americas. PLM software revenue growth in the first six months of FY'26 was driven by license revenue growth in Europe and the Americas, primarily in Windchill.

Current wording

PLM software revenue growth in the first nine months of FY'26 was driven by Windchill license revenue growth in the Americas and Europe, offset by the impact of the divestiture.

Previous wording

PLM ARR decreased 1% (3% constant currency) from Q2’25 to Q2'26, reflecting the impact of the Kepware and ThingWorx divestiture. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 11% (9% constant currency), primarily driven by Windchill and Codebeamer.

Current wording

PLM ARR decreased 4% (2% constant currency) from Q3’25 to Q3'26, reflecting the impact of the divestiture of the Kepware and ThingWorx businesses. PLM ARR excluding the divested businesses grew 8% (10% constant currency), primarily driven by Windchill and Codebeamer.

Previous wording

PLM ARR decreased 5% (5% constant currency) in the Americas and grew 4% (1% decrease in constant currency) in Europe and 3% (4% constant currency) in Asia Pacific. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 15% (9% constant currency) in Europe, 15% (16% constant currency) in Asia Pacific, and 7% (7% constant currency) in the Americas, primarily driven by Windchill in each region and Codebeamer in Europe and Asia Pacific.

Current wording

PLM ARR decreased 4% (4% constant currency) in the Americas, 4% (2% constant currency) in Europe and 2% (5% increase in constant currency) in Asia Pacific from Q3'25 to Q3'26. PLM ARR excluding the divested businesses grew 9% (9% constant currency) in the Americas, 9% (16% constant currency) in Asia Pacific, and 6% (9% constant currency) in Europe from Q3'25 to Q3'26, primarily driven by Windchill in all regions, with contribution from Codebeamer in Europe and Asia Pacific.

Previous wording

CAD ARR grew 10% (8% constant currency) from Q2’25 to Q2’26, primarily driven by Creo. CAD ARR grew 13% (7% constant currency) in Europe, 10% (11% constant currency) in Asia Pacific, and 8% (7% constant currency) in the Americas, primarily driven by Creo in each region.

Current wording

CAD ARR grew 6% (8% constant currency) from Q3’25 to Q3’26, primarily driven by Creo. CAD ARR grew 8% (8% constant currency) in the Americas, 5% (11% constant currency) in Asia Pacific, and 4% (7% constant currency) in Europe from Q3'25 to Q3'26, primarily driven by Creo in all regions.

Previous wording

License gross margin growth in Q2'26 and the first six months of FY'26 was in line with license revenue growth. Cost of license revenue was higher in the first six months of FY'26 compared to the first six months of FY'25, primarily due to higher royalty expenses.

Current wording

License gross margin changes in Q3'26 and the first nine months of FY'26 compared to the corresponding FY'25 periods were in line with changes in license revenue. Cost of license revenue was higher in the first nine months of FY'26 compared to the first nine months of FY'25, primarily due to higher royalty expenses.

Previous wording

Support and cloud services gross margin growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was in line with support and cloud services revenue growth. Cost of support and cloud services revenue increased 9% and 10% in Q2'26 and the first six months of FY'26, respectively, compared to the corresponding FY'25 periods, primarily due to higher cloud and software subscription-related costs and compensation-related costs.

Current wording

Support and cloud services gross margin growth in Q3'26 and the first nine months of FY'26 compared to the corresponding FY'25 periods was in line with support and cloud services revenue growth. Cost of support and cloud services revenue increased 7% in the first nine months of FY'26, primarily due to higher cloud and software subscription-related costs and compensation-related costs.

Previous wording

Professional services gross margin decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods, primarily due to a sharper decrease in professional services revenue than in professional services expense. The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

Current wording

Professional services gross margin increased in Q3'26 compared to Q3'25 due to an increase in professional services revenue. Professional services gross margin decreased in the first nine months of FY'26, primarily due to a sharper decrease in professional services revenue than in professional services expense. The decrease in professional services revenue and costs is due to our continued execution of our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

Previous wording

Operating expenses in Q2'26 increased compared to Q2'25, primarily due to the following:

Current wording

Operating expenses in Q3'26 decreased compared to Q3'25, primarily due to:

Previous wording

Operating expenses in the first six months of FY'26 increased compared to the first six months of FY'25, primarily due to the following:

Current wording

Operating expenses in the first nine months of FY'26 increased compared to the first nine months of FY'25, primarily due to the following:

Previous wording

$27 million in charges associated with the Kepware and ThingWorx divestiture (included in General and administrative);

Current wording

$40 million in charges associated with the divestiture of the Kepware and ThingWorx businesses (included in General and administrative);

Previous wording

a $25 million increase in compensation expense (excluding stock-based compensation expense and severance expense), driven by headcount growth prior to the Kepware and ThingWorx divestiture and annual merit increases;

Current wording

a $30 million increase in compensation expense (excluding stock-based compensation expense and severance expense), driven by headcount growth prior to the divestiture, annual merit increases, and expense related to accrued cash bonuses;

Previous wording

a $17 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants; and

Current wording

a $22 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants, offset by lower stock-based bonus expense; and

Previous wording

a $7 million increase in travel-related expenses;

Current wording

an $11 million increase in travel-related expenses;

Previous wording

a $14 million decrease in severance costs primarily related to our FY'25 go-to-market realignment (which was mainly included in Sales and marketing); and

Current wording

a $20 million decrease in severance costs primarily related to our FY'25 go-to-market realignment (which was mainly included in Sales and marketing); and

Previous wording

Interest expense in FY'26 and FY'25 includes interest on our revolving credit facility, term loan, and senior notes due in 2028. Interest expense in Q2'25 and the first six months of FY'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to lower debt balances and lower interest rates.

Current wording

Interest expense in FY'26 and FY'25 includes interest on our revolving credit facility, term loan, and senior notes due in 2028. Interest expense in the first nine months of FY'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q3'26 and the first nine months of FY'26 compared to the corresponding FY'25 periods due to lower debt balances during FY'26 and lower interest rates.

Previous wording

Other income, net increased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to the Q2'26 recognition of a $463 million gain on the Kepware and ThingWorx divestiture.

Current wording

Other income, net was higher in the first nine months of FY'26 compared to the first nine months of FY'25 due to the Q2'26 recognition of a $463 million gain on the divestiture of the Kepware and ThingWorx businesses.

Previous wording

The effective tax rate for the first six months of FY'26 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. For Q2'26 and the first six months of FY'26, the provision for income taxes includes tax expense of $102 million on the gain on sale of $463 million related to the Kepware and ThingWorx divestiture. The effective tax rate for the first six months of FY'26 also reflected a net income tax benefit of $7 million related to IRS procedural guidance, as described below. The first six months of FY'25 included a benefit of $10 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.

Current wording

The effective tax rate for the three months ended June 30, 2026 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. For the three and nine months ended June 30, 2026, the provision for income taxes included $14 million of tax expense related to the Varian Medical Systems, Inc. v. Commissioner tax court ruling and a $7 million tax benefit related to a strategic solar energy investment, each as discussed in Note 9. Income Taxes. For the first nine months of FY'26, the provision for income taxes also included a $96 million tax expense related to the Kepware and ThingWorx divestiture and a $7 million tax benefit related to the reversal of a prior-year tax charge associated with IRS procedural guidance, as described in Note 9. Income Taxes.

Previous wording

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations. Refer to Note 1. Basis of Presentationto the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for all recently issued accounting pronouncements. We are evaluating the impact of ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software and ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets and have not yet determined whether they will have a material impact.

Current wording

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations. Refer to Note 1. Basis of Presentationto the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for all recently issued accounting pronouncements. We are evaluating the impact of ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software and have not yet determined whether they will have a material impact.

Previous wording

We invest our cash with highly rated financial institutions. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Current wording

Our cash and cash equivalents are invested with highly rated financial institutions. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

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. Cash balances are higher as of Q2'26 compared to Q4'25, reflecting the timing of expected tax payments and payment of divestiture-related charges associated with the Kepware and ThingWorx divestiture. A significant portion of our cash is generated and held outside the U.S. As of March 31, 2026, we had cash and cash equivalents of $27 million in the U.S., $269 million in Europe, $122 million in Asia Pacific (including India) and $21 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 inflows, 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. Cash balances are higher as of the end of Q3'26 than as of the end of Q4'25, which primarily reflects the timing of expected tax payments associated with the Kepware and ThingWorx divestiture. A significant portion of our cash is generated and held outside the U.S. As of June 30, 2026, we had cash and cash equivalents of $33 million in the U.S., $158 million in Europe, $144 million in Asia Pacific (including India) and $16 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 inflows, 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 $71 million in the first six months of FY'26 compared to the same period in FY'25. Growth was driven by higher collections, partially offset by higher tax payments and higher payroll and related payments. Additionally, the first six months of FY'26 included $15 million of divestiture-related payments.

Current wording

Cash provided by operating activities increased $88 million in the first nine months of FY'26 compared to the same period in FY'25. Growth was driven by higher collections and lower interest payments, partially offset by higher tax payments, higher payroll and related payments, and $24 million of divestiture-related payments.

Previous wording

Cash provided by investing activities in the first six months of FY'26 was driven by $523 million in consideration received for the divestiture of the Kepware and ThingWorx businesses.

Current wording

Cash provided by investing activities in the first nine months of FY'26 was driven by $523 million in consideration received for the divestiture of the Kepware and ThingWorx businesses, partially offset by a $50 million strategic solar energy investment.

Previous wording

Cash used in financing activities in the first six months of FY'26 was driven by $826 million of repurchases of common stock, including $375 million associated with the ASR entered into in Q2'26. Cash used in financing activities in the first six months of FY'25 included net payments of $360 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and $150 million of repurchases of common stock.

Current wording

Cash used in financing activities in the first nine months of FY'26 was driven by $1,326 million of repurchases of common stock, partially offset by $225 million of net borrowings on our credit facility. Cash used in financing activities in the first nine months of FY'25 included net payments of $517 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and $225 million of repurchases of common stock.

Previous wording

As of March 31, 2026, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of March 31, 2026, the annual rate for borrowings outstanding under the credit facility was 5.1%.

Current wording

As of June 30, 2026, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of June 30, 2026, the annual rate for borrowings outstanding under the credit facility was 5.0%.

Previous wording

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2026, and $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. In Q2'26, we entered into an ASR to repurchase $375 million of our outstanding common stock as described in Note 4. Earnings per Share (EPS) and Common Stock. Final settlement of the ASR is expected to occur in Q3'26.

Current wording

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2026, and up to $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. In Q2'26, we entered into an ASR to repurchase $375 million of our outstanding common stock as described in Note 4. Earnings per Share (EPS) and Common Stock. Final settlement of the ASR occurred in Q3'26.

Previous wording

We believe that existing cash and cash equivalents, together with cash inflows 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.

Current wording

We believe that our existing cash and cash equivalents, together with cash generated from operations and amounts available under our credit facility, will be sufficient to meet our working capital, capital expenditure, and committed cash requirements for at least the next twelve months, as well as our known long-term capital requirements.

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 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, certain 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 the 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, 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, adjustments exclude a $10.4 million benefit related to the tax impact of tax reserves related to prior years in a foreign jurisdiction.

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 the first nine months of FY'25, adjustments exclude a $10.4 million benefit related to the tax impact of tax reserves related to prior years in foreign jurisdictions.