UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2025

     ☐

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_ to_

Commission File Number: 0-18059

PTC Inc.

(Exact name of registrant as specified in its charter)


Massachusetts		04-2866152
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

121 Seaport Boulevard, Boston, MA 02210

(Address of principal executive offices, including zip code)

(781) 370-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	PTC	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 119,~~947~~792,~~852~~704 shares of our common stock outstanding on ~~April~~July 29, 2025.

Table of Contents

PTC Inc.

INDEX TO FORM 10-Q

For the Quarter Ended ~~March~~June 3130, 2025

		PageNumber
Part I—FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements:	1
	Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024	1
	Consolidated Balance Sheets as of June 30, 2025 and September 30, 2024	1
	Consolidated Statements of Operations for the three and six months ended March 31, 2025 and March 31, 2024	2
	Consolidated Statements of Operations for the three and nine months ended June 30, 2025 and June 30, 2024	2
	Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2025 and March 31, 2024	3
	Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2025 and June 30, 2024	3
	Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and March 31, 2024	4
	Consolidated Statements of Cash Flows for the nine months ended June 30, 2025 and June 30, 2024	4
	Consolidated Statements of Stockholders' Equity for the three and six months ended March 31, 2025 and March 31, 2024	5
	Consolidated Statements of Stockholders' Equity for the three and nine months ended June 30, 2025 and June 30, 2024	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30
Part II—OTHER INFORMATION
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signature		33

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PTC Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	March 31, 2025			September 30, 2024
	June 30, 2025			September 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	~~235~~199,~~169~~321		$	265,808
Accounts receivable, net of allowance for doubtful accounts of $1,272 and $1,180 at March 31, 2025 and September 30, 2024, respectively		716,624			861,953
Accounts receivable, net of allowance for doubtful accounts of $1,404 and $1,180 at June 30, 2025 and September 30, 2024, respectively		712,710			861,953
Prepaid expenses		~~114~~109,~~624~~756			102,931
Other current assets		6667,~~392~~938			68,013
Total current assets		1,~~132~~089,~~809~~725			1,298,705
Property and equipment, net		6865,~~047~~102			75,187
Goodwill		3,~~444~~497,~~104~~012			3,461,891
Acquired intangible assets, net		~~855~~844,~~794~~819			897,476
Deferred tax assets		~~186~~209,~~401~~417			159,404
Operating right-of-use lease assets		~~127~~128,~~808~~854			133,317
Other assets		~~347~~394,~~468~~124			357,562
Total assets	$	6,~~162~~229,~~431~~053		$	6,383,542
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,~~500~~700		$	24,198
Accrued expenses and other current liabilities		~~101~~126,~~317~~421			129,528
Accrued compensation and benefits		~~129~~182,~~859~~580			173,797
Accrued income taxes		70101,~~725~~056			39,978
Current portion of long-term debt		25,000			521,467
Deferred revenue		~~786~~757,~~530~~881			754,039
Short-term lease obligations		2425,~~319~~112			24,186
Total current liabilities		1,~~146~~226,~~250~~750			1,667,193
Long-term debt		1,~~364~~208,~~393~~412			1,227,105
Deferred tax liabilities		3135,~~417~~653			32,216
Long-term deferred revenue		1519,~~317~~471			21,235
Long-term lease obligations		153,~~786~~195			157,568
Other liabilities		6472,~~805~~689			63,827
Total liabilities		2,~~775~~716,~~968~~170			3,169,144
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued		—			—
Common stock, $0.01 par value; 500,000 shares authorized; 119,926 and 120,155 shares issued and outstanding at March 31, 2025 and September 30, 2024, respectively		1,199			1,202
Common stock, $0.01 par value; 500,000 shares authorized; 119,790 and 120,155 shares issued and outstanding at June 30, 2025 and September 30, 2024, respectively		1,198			1,202
Additional paid-in capital		1,~~909~~847,~~537~~441			1,965,307
Retained earnings		1,~~594~~735,~~486~~814			1,349,610
Accumulated other comprehensive loss		(~~118~~71,~~759~~570	)		(101,721	)
Total stockholders’ equity		3,~~386~~512,~~463~~883			3,214,398
Total liabilities and stockholders’ equity	$	6,~~162~~229,~~431~~053		$	6,383,542

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

PTC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Revenue:

License

~~254~~251,~~395~~479

~~234~~149,~~321~~104

~~427~~678,~~149~~628

~~418~~567,~~319~~423

Support and cloud services

~~352~~369,~~990~~867

~~336~~339,~~446~~505

~~713~~1,~~952~~083,819

~~666~~1,~~915~~006,420

Total software revenue

~~607~~621,~~385~~346

~~570~~488,~~767~~609

1,~~141~~762,~~101~~447

1,~~085~~573,~~234~~843

Professional services

2822,~~981~~591

3230,~~305~~030

6082,~~393~~984

6898,~~052~~082

Total revenue

~~636~~643,~~366~~937

~~603~~518,~~072~~639

1,~~201~~845,~~494~~431

1,~~153~~671,~~286~~925

Cost of revenue:

Cost of license revenue

1012,~~939~~060

1012,~~602~~072

2133,~~162~~222

2033,~~931~~003

Cost of support and cloud services revenue

7073,~~303~~446

6769,~~414~~968

~~141~~215,~~655~~101

~~134~~204,~~437~~405

Total cost of software revenue

8185,~~242~~506

7882,~~016~~040

~~162~~248,~~817~~323

~~155~~237,~~368~~408

Cost of professional services revenue

2524,~~020~~519

3229,~~039~~876

5579,~~242~~761

6494,~~707~~583

Total cost of revenue

~~106~~110,~~262~~025

~~110~~111,~~055~~916

~~218~~328,~~059~~084

~~220~~331,~~075~~991

Gross margin

~~530~~533,~~104~~912

~~493~~406,~~017~~723

~~983~~1,~~435~~517,347

~~933~~1,~~211~~339,934

Operating expenses:

Sales and marketing

~~125~~141,~~031~~756

~~134~~140,~~521~~318

~~282~~424,~~563~~319

~~271~~411,~~445~~763

Research and development

~~111~~116,~~023~~647

~~106~~110,~~998~~253

~~226~~343,~~539~~186

~~212~~323,~~781~~034

General and administrative

54,~~993~~145

6149,~~526~~659

~~108~~162,~~312~~457

~~130~~180,~~732~~391

Amortization of acquired intangible assets

11,~~380~~536

10,~~424~~672

2234,~~820~~356

2031,~~787~~459

Impairment and other charges (credits), net

~~4,213~~—

(7—

)

4,213

(802

)

Total operating expenses

~~306~~324,~~640~~084

~~313~~310,~~462~~902

~~644~~968,~~447~~531

~~634~~945,~~943~~845

Operating income

~~223~~209,~~464~~828

~~179~~95,~~555~~821

~~338~~548,~~988~~816

~~298~~394,~~268~~089

Interest expense

(1918,~~606~~404

)

(3127,~~586~~785

)

(4160,~~654~~058

)

(6694,~~920~~705

)

Other income (expense), net

12,~~391~~252

(~~2,224~~663

)

13,~~069~~321

(4667

)

Income before income taxes

~~205~~193,~~249~~676

~~145~~67,~~745~~373

~~298~~492,~~403~~079

~~231~~298,~~344~~717

Provision for income taxes

42,605

31,300

53,527

50,512

Provision (benefit) for income taxes

52,348

(1,605

)

105,875

48,907

Net income

~~162~~141,~~644~~328

~~114~~68,~~445~~978

~~244~~386,~~876~~204

~~180~~249,~~832~~810

Earnings per share—Basic

1.3518

0.9658

23.0422

12.5209

Earnings per share—Diluted

1.3517

0.9557

23.0220

12.5007

Weighted-average shares outstanding—Basic

~~120~~119,~~177~~913

119,~~587~~893

120,~~210~~106

119,~~354~~533

Weighted-average shares outstanding—Diluted

120,~~854~~461

120,~~712~~822

~~121~~120,~~000~~815

120,~~480~~593

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

PTC Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three months ended						~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Net income	$	~~162~~141,~~644~~328		$	~~114~~68,~~445~~978		$	~~244~~386,~~876~~204		$	~~180~~249,~~832~~810
Other comprehensive income (loss), net of tax:
Hedge gain (loss) arising during the period, net of tax of $4.9 million and $(2.1) million in the second quarter of 2025 and 2024, respectively, and $(3.3) million and $1.7 million in the first six months of 2025 and 2024, respectively		(15,014	)		6,432			10,226			(5,079	)
Hedge gain (loss) arising during the period, net of tax of $9.7 million and $(0.8) million in the third quarter of 2025 and 2024, respectively, and $6.4 million and $0.9 million in the first nine months of 2025 and 2024, respectively		(29,904	)		2,292			(19,678	)		(2,787	)
Foreign currency translation adjustment, net of tax of $0 for each period		3677,~~202~~862			(249,~~792~~344	)		~~(27~~50,~~795~~067	)		~~9,882~~538
Change in pension benefit, net of tax of $0.0 million and $0.0 million in the second quarter of 2025 and 2024, respectively, and $(0.1) million and $0.0 million in the first six months of 2025 and 2024, respectively		(313	)		216			531			(6	)
Change in pension benefit, net of tax of $(0.1) million and $0.0 million in the third quarter of 2025 and 2024, respectively, and $(0.2) million and $(0.1) million in the first nine months of 2025 and 2024, respectively		(769	)		112			(238	)		106
Other comprehensive income (loss)		2047,~~875~~189			(186,~~144~~940	)		~~(17~~30,~~038~~151	)		4(2,~~797~~143	)
Comprehensive income	$	~~183~~188,~~519~~517		$	9662,~~301~~038		$	~~227~~416,~~838~~355		$	~~185~~247,~~629~~667

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

PTC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended
	Nine months ended
	March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024
Cash flows from operating activities:
Net income	$	~~244~~386,~~876~~204		$	~~180~~249,~~832~~810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5176,~~263~~803			5481,~~144~~272
Amortization of right-of-use lease assets		1624,~~165~~459			1523,~~459~~143
Stock-based compensation		~~107~~161,~~363~~395			~~113~~161,~~204~~242
Other non-cash items, net		~~1,903~~159			~~649~~(297	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable		~~127~~173,~~972~~557			~~107~~131,~~507~~422
Accounts payable and accrued expenses		(3521,~~405~~373	)		(488,~~345~~631	)
Accrued compensation and benefits		~~(15~~11,~~301~~044	)		~~(16~~8,~~451~~666	)
Deferred revenue		34(16,~~532~~472	)		408,~~971~~393
Accrued income taxes		522,~~565~~409			18(1,~~087~~795	)
Other current assets and prepaid expenses		(75,~~735~~525	)		(219,~~745~~962	)
Operating lease liabilities		(24,~~596~~869	)		(1013,~~293~~438	)
Other noncurrent assets and liabilities		(855,~~864~~175	)		422,~~052~~045
Net cash provided by operating activities		~~519~~763,~~738~~666			~~438~~651,~~071~~870
Cash flows from investing activities:
Additions to property and equipment		(57,~~575~~462	)		(89,~~202~~841	)
Acquisitions of businesses, net of cash acquired		—(6,532	)		(93,457	)
Settlement of net investment hedges		12(14,~~260~~560	)		(23,~~224~~826	)
Net cash provided by (used in) investing activities		6,685			(103,883	)
Net cash used in investing activities		(28,554	)		(99,472	)
Cash flows from financing activities:
Borrowings under credit facility		860,000			~~739~~944,845
Repayments of Senior Notes		(500,000	)		—
Repayments of borrowings under credit facility and acquired debt		(~~720~~876,~~125~~708	)		(~~435~~835,~~671~~796	)
Repurchases of common stock		(~~150~~224,~~000~~987	)		—
Proceeds from issuance of common stock		13,307			12,709
Payments of withholding taxes in connection with stock-based awards		(5271,~~871~~761	)		(7192,~~184~~589	)
Payment of deferred acquisition consideration		—			(620,040	)
Other financing activity		(1,410	)		—
Net cash used in financing activities		(~~551~~801,~~099~~559	)		(~~374~~590,~~341~~871	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(~~6,048~~125	)		~~829~~(2,003	)
Net change in cash, cash equivalents, and restricted cash		(3066,~~724~~572	)		(3940,~~324~~476	)
Cash, cash equivalents, and restricted cash, beginning of period		266,466			288,798
Cash, cash equivalents, and restricted cash, end of period	$	~~235~~199,~~742~~894		$	~~249~~248,~~474~~322
Supplemental disclosure of non-cash financing and investing activities:
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	11,294		$	2,847
Withholding taxes in connection with stock-based awards, accrued	$	6,061		$	7,674
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	15,700		$	4,941

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

PTC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Three months ended March 31, 2025
	Three months ended June 30, 2025
	Common Stock											Accumulated
	Shares			Amount			AdditionalPaid-InCapital			Retained Earnings		OtherComprehensiveLoss			TotalStockholders’Equity
Balance as of December 31, 2024		120,219		$	1,202		$	1,936,411		$	1,431,842	$	(139,634	)	$	3,229,821
Common stock issued for employee stock-based awards		115			1			(1	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(34	)		—			(6,128	)		—		—			(6,128	)
Common stock issued for employee stock purchase plan		89			1			13,306			—		—			13,307
Compensation expense from stock-based awards		—			—			41,278			—		—			41,278
Repurchases of common stock, including excise tax		(463	)		(5	)		(75,329	)		—		—			(75,334	)
Net income		—			—			—			162,644		—			162,644
Loss on net investment hedges, net of tax		—			—			—			—		(15,014	)		(15,014	)
Foreign currency translation adjustment		—			—			—			—		36,202			36,202
Change in defined benefit pension items, net of tax		—			—			—			—		(313	)		(313	)
Balance as of March 31, 2025		119,926		$	1,199		$	1,909,537		$	1,594,486	$	(118,759	)	$	3,386,463
Common stock issued for employee stock-based awards		451			4			(4	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(143	)		(1	)		(24,256	)		—		—			(24,257	)
Compensation expense from stock-based awards		—			—			37,373			—		—			37,373
Repurchases of common stock, including excise tax		(444	)		(4	)		(75,209	)		—		—			(75,213	)
Net income		—			—			—			141,328		—			141,328
Loss on net investment hedges, net of tax		—			—			—			—		(29,904	)		(29,904	)
Foreign currency translation adjustment		—			—			—			—		77,862			77,862
Change in defined benefit pension items, net of tax		—			—			—			—		(769	)		(769	)
Balance as of June 30, 2025		119,790		$	1,198		$	1,847,441		$	1,735,814	$	(71,570	)	$	3,512,883

	Six months ended March 31, 2025
	Nine months ended June 30, 2025
	Common Stock											Accumulated
	Shares			Amount			AdditionalPaid-InCapital			Retained Earnings		OtherComprehensiveLoss			TotalStockholders’Equity
Balance as of September 30, 2024		120,155		$	1,202		$	1,965,307		$	1,349,610	$	(101,721	)	$	3,214,398
Common stock issued for employee stock-based awards		~~810~~1,261			812			(812	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(~~282~~425	)		(34	)		(5377,~~318~~574	)		—		—			(5377,~~321~~578	)
Common stock issued for employee stock purchase plan		89			1			13,306			—		—			13,307
Compensation expense from stock-based awards		—			—			~~134~~171,~~575~~948			—		—			~~134~~171,~~575~~948
Repurchases of common stock, including excise tax		(~~846~~1,290	)		(913	)		(~~150~~225,~~325~~534	)		—		—			(~~150~~225,~~334~~547	)
Net income		—			—			—			~~244~~386,~~876~~204		—			~~244~~386,~~876~~204
Gain on net investment hedges, net of tax		—			—			—			—		10,226			10,226
Loss on net investment hedges, net of tax		—			—			—			—		(19,678	)		(19,678	)
Foreign currency translation adjustment		—			—			—			—		~~(27~~50,~~795~~067	)		~~(27~~50,~~795~~067	)
Change in defined benefit pension items, net of tax		—			—			—			—		~~531~~(238	)		~~531~~(238	)
Balance as of March 31, 2025		119,926		$	1,199		$	1,909,537		$	1,594,486	$	(118,759	)	$	3,386,463
Balance as of June 30, 2025		119,790		$	1,198		$	1,847,441		$	1,735,814	$	(71,570	)	$	3,512,883

Table of Contents

	Three months ended March 31, 2024
	Three months ended June 30, 2024
	Common Stock											Accumulated
	Shares			Amount			AdditionalPaid-InCapital			Retained Earnings		OtherComprehensiveLoss			TotalStockholders’Equity
Balance as of December 31, 2023		119,445		$	1,194		$	1,860,934		$	1,039,664	$	(95,139	)	$	2,806,653
Common stock issued for employee stock-based awards		266			3			(3	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(96	)		(1	)		(17,537	)		—		—			(17,538	)
Common stock issued for employee stock purchase plan		102			1			12,708			—		—			12,709
Compensation expense from stock-based awards		—			—			45,007			—		—			45,007
Net income		—			—			—			114,445		—			114,445
Gain on net investment hedges, net of tax		—			—			—			—		6,432			6,432
Foreign currency translation adjustment		—			—			—			—		(24,792	)		(24,792	)
Change in defined benefit pension items, net of tax		—			—			—			—		216			216
Balance as of March 31, 2024		119,717		$	1,197		$	1,901,109		$	1,154,109	$	(113,283	)	$	2,943,132
Common stock issued for employee stock-based awards		486			5			(5	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(154	)		(2	)		(28,069	)		—		—			(28,071	)
Compensation expense from stock-based awards		—			—			37,580			—		—			37,580
Net income		—			—			—			68,978		—			68,978
Gain on net investment hedges, net of tax		—			—			—			—		2,292			2,292
Foreign currency translation adjustment		—			—			—			—		(9,344	)		(9,344	)
Change in defined benefit pension items, net of tax		—			—			—			—		112			112
Balance as of June 30, 2024		120,049		$	1,200		$	1,910,615		$	1,223,087	$	(120,223	)	$	3,014,679

	Six months ended March 31, 2024
	Nine months ended June 30, 2024
	Common Stock											Accumulated
	Shares			Amount			AdditionalPaid-InCapital			Retained Earnings		OtherComprehensiveLoss			TotalStockholders’Equity
Balance as of September 30, 2023		118,846		$	1,188		$	1,820,905		$	973,277	$	(118,080	)	$	2,677,290
Common stock issued for employee stock-based awards		1,~~216~~702			1318			(1318	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(~~447~~601	)		(57	)		(7199,~~869~~938	)		—		—			(7199,~~874~~945	)
Common stock issued for employee stock purchase plan		102			1			12,708			—		—			12,709
Compensation expense from stock-based awards		—			—			~~139~~176,~~378~~958			—		—			~~139~~176,~~378~~958
Net income		—			—			—			~~180~~249,~~832~~810		—			~~180~~249,~~832~~810
Loss on net investment hedges, net of tax		—			—			—			—		(52,~~079~~787	)		(52,~~079~~787	)
Foreign currency translation adjustment		—			—			—			—		~~9,882~~538			~~9,882~~538
Change in defined benefit pension items, net of tax		—			—			—			—		(6106	)		(6106	)
Balance as of March 31, 2024		119,717		$	1,197		$	1,901,109		$	1,154,109	$	(113,283	)	$	2,943,132
Balance as of June 30, 2024		120,049		$	1,200		$	1,910,615		$	1,223,087	$	(120,223	)	$	3,014,679

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by ~~generally~~GAAP ~~accepted accounting principles~~ for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows as of the dates and for the periods indicated. The September 30, 2024 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30.

In the second quarter of 2025, 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. All charges and credits under the captioned line item remain the same.

Pending Accounting Pronouncements

Measurements of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The ASU will be effective for us in the first quarter of 2027, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

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Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. As clarified by ASU 2025-01, ASU 2024-03 will be effective for us in the fourth quarter of 2028. We expect the adoption to result in disclosure changes only.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU will be effective for us in the fourth quarter of 2026. We expect the adoption to result in disclosure changes only.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU will be effective for us in the fourth quarter of 2025. The ASU does not change the definition of a reportable segment or the method for determining reportable segments. We expect the adoption to result in ~~disclosure~~additional ~~changes~~disclosures only.

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2. Revenue from Contracts with Customers

Receivables, Contract Assets and Contract Liabilities

(in thousands)	~~March~~June 3130, 2025		September 30, 2024
Short-term and long-term receivables	$	~~920~~962,~~037~~810	$	1,062,052
Contract asset	$	108,~~225~~405	$	14,410
Deferred revenue	$	~~801~~777,~~847~~352	$	775,274

During the ~~six~~nine months ended ~~March~~June 3130, 2025, we recognized $~~553~~681.39 million of revenue that was included in Deferred revenue as of September 30, 2024. The remainder of the change in the Deferred revenue balance was driven by additional deferrals, primarily from new billings, as well as aan ~~reduction~~increase in the balance resulting from changes in foreign currency exchange rates.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of ~~March~~June 3130, 2025 and September 30, 2024, our total revenue liability was $2833.94 million and $26.0 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

Remaining Performance Obligations (RPO)

Our contracts with customers include amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as foreign currency exchange rate fluctuations. As of ~~March~~June 3130, 2025, RPO totaled $2,~~280~~309.02 million, of which $~~801~~777.84 million is recorded in Deferred revenue and $1,~~478~~531.28 million is not yet recorded in the Consolidated Balance Sheets. Of the total, we expect to recognize approximately 5958% over the next 12 months, 2425% over the next 13 to 24 months, and the remaining amount thereafter.

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Disaggregation of Revenue

(in thousands)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Recurring revenue(1)

~~601~~613,~~549~~583

~~564~~481,~~014~~559

1,~~125~~739,~~860~~443

1,~~070~~551,~~041~~600

Perpetual license

57,~~836~~763

67,~~753~~050

1523,~~241~~004

1522,~~193~~243

Professional services

2822,~~981~~591

3230,~~305~~030

6082,~~393~~984

6898,~~052~~082

Total revenue

~~636~~643,~~366~~937

~~603~~518,~~072~~639

1,~~201~~845,~~494~~431

1,~~153~~671,~~286~~925

(1)

Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

We report revenue by the following two product groups:

(in thousands)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Product lifecycle management (PLM)

~~396~~403,~~149~~722

~~373~~329,~~495~~529

~~749~~1,~~608~~153,331

~~722~~1,~~142~~051,671

Computer-aided design (CAD)

240,~~217~~215

~~229~~189,~~577~~110

~~451~~692,~~886~~100

~~431~~620,~~144~~254

Total revenue

~~636~~643,~~366~~937

~~603~~518,~~072~~639

1,~~201~~845,~~494~~431

1,~~153~~671,~~286~~925

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Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.

(in thousands)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Americas

~~292~~282,~~823~~560

~~260~~253,~~622~~592

~~570~~853,~~792~~352

~~527~~781,~~889~~480

Europe

~~251~~239,~~148~~286

~~257~~170,~~309~~617

~~447~~686,~~172~~458

~~454~~624,~~262~~884

Asia Pacific

92122,~~395~~091

8594,~~141~~430

~~183~~305,~~530~~621

~~171~~265,~~135~~561

Total revenue

~~636~~643,~~366~~937

~~603~~518,~~072~~639

1,~~201~~845,~~494~~431

1,~~153~~671,~~286~~925

3. Stock-based Compensation

Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows:

(in thousands)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Cost of license revenue

72176

2949

~~106~~282

67116

Cost of support and cloud services revenue

34,~~912~~122

34,~~345~~035

712,~~970~~092

610,~~727~~762

Cost of professional services revenue

~~1,523~~993

1,~~660~~772

34,~~344~~337

35,~~329~~101

Sales and marketing

1315,~~545~~059

1415,~~729~~167

3146,~~613~~672

3046,~~856~~023

Research and development

1417,~~391~~788

13,~~936~~101

3048,~~546~~334

2841,~~174~~275

General and administrative

1815,~~069~~894

2013,~~492~~914

3349,~~784~~678

4457,~~051~~965

Total stock-based compensation expense

5154,~~512~~032

5448,~~191~~038

~~107~~161,~~363~~395

~~113~~161,~~204~~242

As of ~~March~~June 3130, 2025 and September 30, 2024, we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $2037.54 million and $47.7 million, respectively. The liability as of September 30, 2024 was settled via the issuance of shares in the first quarter of 2025.

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4. Earnings per Share (EPS) and Common Stock

EPS

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Net income

~~162~~141,~~644~~328

~~114~~68,~~445~~978

~~244~~386,~~876~~204

~~180~~249,~~832~~810

Weighted-average shares outstanding—Basic

~~120~~119,~~177~~913

119,~~587~~893

120,~~210~~106

119,~~354~~533

Dilutive effect of restricted stock units

~~677~~548

~~1,125~~929

~~790~~709

1,~~126~~060

Weighted-average shares outstanding—Diluted

120,~~854~~461

120,~~712~~822

~~121~~120,~~000~~815

120,~~480~~593

Earnings per share—Basic

1.3518

0.9658

23.0422

12.5209

Earnings per share—Diluted

1.3517

0.9557

23.0220

12.5007

There were 0.34 million and 0.20 million anti-dilutive shares for the three and ~~six~~nine months ended ~~March~~June 3130, 2025, respectively. There were 0.2 million and 0.1 million anti-dilutive shares for the three and ~~six~~nine months ended ~~March~~June 3130, 2024, respectively.

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Common Stock Repurchases

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, 2027. In the ~~second~~third quarter and first ~~six~~nine months of 2025, we repurchased 0.54 million shares for $75 million and 01.83 million shares for $~~150~~225 million, respectively. We did not repurchase any shares in the ~~second~~third quarter and first ~~six~~nine months of 2024. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

5. Acquisitions

Acquisition and transaction-related costs in the ~~second~~third quarter and first ~~six~~nine months of 2025 totaled $01.6 million and $02.84 million, respectively, compared to $0.32 million and $23.80 million in the ~~second~~third quarter and first ~~six~~nine months of 2024, respectively. These costs are classified in General and administrative expense in the accompanying Consolidated Statements of Operations.

pure-systems

On October 4, 2023, we acquired pure-systems GmbH pursuant to a Share Purchase Agreement. The purchase price was $93.5 million, net of cash acquired, which we financed primarily with a draw on the revolving line of our credit facility. The purchase price allocation resulted in $77.1 million of goodwill, $28.2 million of intangible assets, $8.8 million of net tax liabilities, and $3.0 million of other net liabilities.

ServiceMax

On January 3, 2023, we acquired ServiceMax, Inc. pursuant to a Share Purchase Agreement dated November 17, 2022 for $1,448.2 million, net of cash acquired. PTC paid the first installment of $828.2 million on the acquisition date. The remaining installment of $650.0 million, of which $620.0 million represented the fair value as of the acquisition date and $30.0 million was imputed interest, was paid in October 2023.

Other Acquisitions

In the third quarter of 2025, we acquired IncQuery Group GmbH pursuant to a Share Purchase Agreement. The purchase price was $7.9 million, net of cash acquired, of which $6.5 million was paid in the period and $1.4 million is contingent consideration that may be paid in 2027 to the extent earned.

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6. Goodwill and Intangible Assets

During the third quarter of 2025, we completed our annual impairment test of goodwill, which was based on a qualitative assessment, and concluded that there was no impairment. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. A qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of each reporting unit at the last valuation date.

Goodwill and acquired intangible assets consisted of the following:

(in thousands)	~~March~~June 3130, 2025						September 30, 2024
	GrossCarryingAmount		AccumulatedAmortization		Net BookValue		GrossCarryingAmount		AccumulatedAmortization		Net BookValue
Goodwill					$	3,~~444~~497,~~104~~012					$	3,461,891
Intangible assets with finite lives:
Purchased software	$	~~631~~639,~~889~~597	$	~~451~~464,~~196~~507	$	~~180~~175,~~693~~090	$	634,439	$	436,471	$	197,968
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		1,~~135~~150,~~655~~597		~~475~~495,~~455~~329		~~660~~655,~~200~~268		1,141,086		457,718		683,368
Trademarks and trade names		3738,~~780~~233		2223,~~879~~772		14,~~901~~461		37,961		21,821		16,140
Other		34,~~900~~026		34,~~900~~026		—		3,941		3,941		—
Total intangible assets with finite lives	$	1,~~832~~855,~~101~~330	$	~~976~~1,~~307~~010,511	$	~~855~~844,~~794~~819	$	1,840,304	$	942,828	$	897,476
Total goodwill and acquired intangible assets					$	4,~~299~~341,~~898~~831					$	4,359,367

Changes in Goodwill were as follows:

(in thousands)
Balance, October 1, 2024	$	3,461,891
Foreign currency translation adjustment		(17,787	)
Acquisitions		5,977
Balance, March 31, 2025	$	3,444,104
Foreign currency translation adjustment		29,144
Balance, June 30, 2025	$	3,497,012

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The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows:

(in thousands)

Three months ended

~~Six~~Nine months ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Amortization of acquired intangible assets

11,~~380~~536

10,~~424~~672

2234,~~820~~356

2031,~~787~~459

Cost of revenue

8,~~131~~178

9,~~584~~685

1624,~~431~~609

1928,~~150~~835

Total amortization expense

19,~~511~~714

20,~~008~~357

3958,~~251~~965

3960,~~937~~294

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7. Fair Value Measurements

The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or

•

Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Money market funds, time deposits, and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

11Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and September 30, 2024 were as follows:

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(in thousands)	June 30, 2025
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	52,786	$	—	$	—	$	52,786
Forward contracts		—		6,198		—		6,198
	$	52,786	$	6,198	$	—	$	58,984
Financial liabilities:
Forward contracts		—		14,414		—		14,414
	$	—	$	14,414	$	—	$	14,414

Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and September 30, 2024 were as follows:

(in thousands)	March 31, 2025
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	73,936	$	—	$	—	$	73,936
Forward contracts		—		6,001		—		6,001
	$	73,936	$	6,001	$	—	$	79,937
Financial liabilities:
Forward contracts		—		4,286		—		4,286
	$	—	$	4,286	$	—	$	4,286


(in thousands)	September 30, 2024
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	48,509	$	—	$	—	$	48,509
Forward contracts		—		1,202		—		1,202
	$	48,509	$	1,202	$	—	$	49,711
Financial liabilities:
Forward contracts		—		4,166		—		4,166
	$	—	$	4,166	$	—	$	4,166

(1)

Money market funds and time deposits.

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Level 3 Investments

Convertible Note

In the fourth quarter of 2021, we invested $2.0 million in a non-marketable convertible note. This debt security was classified as available-for-sale and included in Other assets on the Consolidated Balance Sheet. During the ~~three~~nine months ended ~~March~~June 3130, 2024, we recorded a $2.0 million impairment loss related to this Level 3 investment. The impairment loss is included in Other income (expense), net on the Consolidated Statements of Operations.

8. Derivative Financial Instruments

We enter into foreign currency forward contracts to manage our exposure to foreign currency exchange risk to reduce earnings volatility. We do not enter into derivative transactions for trading or speculative purposes.

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	March 31, 2025		September 30, 2024		March 31, 2025		September 30, 2024
	June 30, 2025		September 30, 2024		June 30, 2025		September 30, 2024
Derivative assets(1):
Forward contracts	$	~~3,170~~—	$	181	$	26,~~831~~198	$	1,021
Derivative liabilities(2):
Forward contracts	$	—7,895	$	630	$	46,~~286~~519	$	3,536

(1)

As of ~~March~~June 3130, 2025 and September 30, 2024, current derivative assets are recorded in Other current assets in the Consolidated Balance Sheets.

(2)

As of ~~March~~June 3130, 2025 and September 30, 2024, current derivative liabilities are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

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Non-Designated Hedges

We hedge our net foreign currency monetary assets and liabilities ~~primarily resulting from foreign currency denominated receivables and payables~~ with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in Other income (expense), net.

As of ~~March~~June 3130, 2025 and September 30, 2024, we had outstanding forward contracts not designated as hedging instruments with notional amounts equivalent to the following:

Currency Hedged (in thousands)	~~March~~June 3130, 2025		September 30, 2024
Euro / U.S. Dollar	$	~~764~~768,~~722~~217	$	781,398
British Pound / U.S. Dollar		16,~~391~~152		24,810
Israeli Shekel / U.S. Dollar		1312,~~615~~119		12,535
Japanese Yen / U.S. Dollar		27,008		42,340
Indian Rupee / U.S. Dollar		54,321		—
Swiss Franc / U.S. Dollar		5,319		74,939
Japanese Yen / U.S. Dollar		—		42,340
Swedish Krona / U.S. Dollar		16,036		48,596
Swiss Franc / U.S. Dollar		20,632		74,939
Chinese Renminbi / U.S. Dollar		3,891		32,124
Swedish Krona / U.S. Dollar		13,639		48,596
New Taiwan Dollar / U.S. Dollar		6,501		16,368
Chinese Renminbi / U.S. Dollar		3,782		32,124
All other		19,551		25,368
New Taiwan Dollar / U.S. Dollar		1,364		16,368
Total	$	873,034	$	1,058,478
All other		11,690		25,368
Total	$	901,916	$	1,058,478

The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the three and six months ended March 31, 2025 and March 31, 2024:

(in thousands)		Three months ended						Six months ended
	Location of Gain (Loss)	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged	Other income (expense), net	$	(917	)	$	(1,286	)	$	(360	)	$	(5,022	)

In the three months ended March 31, 2025, total foreign currency gains, net were $0.1 million. In the three months ended March 31, 2024, total foreign currency losses, net were $1.1 million. In the six months ended March 31, 2025 and March 31, 2024, total foreign currency losses, net were $1.1 million and $0.1 million, respectively.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro and Japanese Yen functional subsidiaries. Net investment hedges partially offset the impact of Foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months.

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The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the three and nine months ended June 30, 2025 and June 30, 2024:


(in thousands)		Three months ended					Nine months ended
	Location of Gain (Loss)	June 30, 2025		June 30, 2024			June 30, 2025		June 30, 2024
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other income (expense), net	$	4,021	$	(1,590	)	$	3,661	$	(6,611	)

In the three and nine months ended June 30, 2025, total foreign currency gains, net were $1.1 million and $0.0 million, respectively. In the three and nine months ended June 30, 2024, total foreign currency losses, net were $1.7 million and $1.8 million, respectively.

Net Investment Hedges

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro and Japanese Yen functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in Accumulated other comprehensive loss. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

As of ~~March~~June 3130, 2025 and September 30, 2024, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

Currency Hedged (in thousands)	~~March~~June 3130, 2025		September 30, 2024
Euro / U.S. Dollar	$	~~443~~471,~~398~~940	$	462,894
Japanese Yen / U.S. Dollar		10,~~102~~412		10,739
Total	$	~~453~~482,~~500~~352	$	473,633

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~March~~June 3130, 2025 and ~~March~~June 3130, 2024:

(in thousands)

Three months ended

~~Six~~Nine months ended

Location of Gain (Loss)

~~March~~June 3130, 2025

~~March~~June 3130, 2024

~~March~~June 3130, 2025

~~March~~June 3130, 2024

Gain (loss) recognized in Other comprehensive income (loss) ("OCI")

OCI

(1939,~~898~~628

)

83,~~552~~047

13(26,~~550~~078

)

(63,~~752~~705

)

Gain (loss) reclassified from OCI to earnings

n/a

—

Gain recognized, excluded portion

Other income (expense), net

1,~~254~~743

~~1,079~~946

24,~~329~~072

23,~~215~~161

As of March 31, 2025, we estimate that all amounts reported in Accumulated other comprehensive loss will be applied against exposed balance sheet accounts upon translation within the next three months.

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements for our forward contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

The following table sets forth the offsetting of derivative assets as of March 31, 2025:

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 2025	GrossAmount ofRecognizedAssets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		FinancialInstruments			CashCollateralReceived		NetAmount
Forward contracts	$	6,001	$	—	$	6,001	$	(4,286	)	$	—	$	1,715

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~~The~~Offsetting ~~following~~Derivative ~~table~~Assets ~~sets~~and ~~forth the offsetting of derivative liabilities as of March 31, 2025:~~Liabilities

(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of March 31, 2025	GrossAmount ofRecognizedLiabilities		GrossAmountsOffset in theConsolidatedBalanceSheets		Net Amounts of LiabilitiesPresented intheConsolidatedBalance Sheets		FinancialInstruments			CashCollateralPledged		NetAmount
Forward contracts	$	4,286	$	—	$	4,286	$	(4,286	)	$	—	$	—

The following table sets forth the offsetting of derivative assets as of June 30, 2025:


(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2025	Gross Amount of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
Forward contracts	$	6,198	$	—	$	6,198	$	(6,198	)	$	—	$	—

The following table sets forth the offsetting of derivative liabilities as of June 30, 2025:


(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2025	Gross Amount of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
Forward contracts	$	14,414	$	—	$	14,414	$	(6,198	)	$	—	$	8,216

9. Income Taxes

(in thousands)	Three months ended						~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Income before income taxes	$	~~205~~193,~~249~~676		$	~~145~~67,~~745~~373		$	~~298~~492,~~403~~079		$	~~231~~298,~~344~~717
Provision for income taxes	$	42,605		$	31,300		$	53,527		$	50,512
Provision (benefit) for income taxes	$	52,348		$	(1,605	)	$	105,875		$	48,907
Effective income tax rate		2127	%		21(2	)%		1822	%		2216	%

The effective tax rate for the ~~six~~three and nine months ended ~~March~~June 3130, 2025 was ~~lower~~higher than the effective tax rate for the corresponding prior-year ~~period~~periods primarily due to changes in the geographic mix of income before taxes and the effects of Internal Revenue Service (IRS) procedural guidance issued in April 2024 requiring IRS consent for certain previously automatic changes of accounting method on our estimated taxable income for the year ended September 30, 2024. Additionally, for the ~~six~~nine months ended ~~March~~June 3130, 2025 and ~~March~~June 3130, 2024, 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.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the ~~Internal~~IRS ~~Revenue Service~~ in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits.

As of ~~March~~June 3130, 2025 and September 30, 2024, we had unrecognized tax benefits of $4245.57 million and $65.0 million, respectively. If all our unrecognized tax benefits as of ~~March~~June 3130, 2025 were to become recognizable in the future, we would record a benefit to the income tax provision of $4245.57 million, which would be partially offset by an increase in the U.S. valuation allowance of $6.56 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $1 million.

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On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that will be applicable to us beginning in 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. We are in the process of evaluating the impact of the Act to our consolidated financial statements and cash flow.

10. Debt

As of ~~March~~June 3130, 2025 and September 30, 2024, we had the following debt obligations:

(in thousands)	~~March~~June 3130, 2025			September 30, 2024
4.000% Senior notes due 2028	$	500,000		$	500,000
3.625% Senior notes due 2025		—			500,000
Credit facility revolver line(1)(2)		~~411~~261,250			262,000
Credit facility term loan(1)(2)		~~481~~475,~~250~~000			490,625
Total debt		1,~~392~~236,~~500~~250			1,752,625
Unamortized debt issuance costs for the senior notes(3)		(32,~~107~~838	)		(4,053	)
Total debt, net of issuance costs(4)	$	1,~~389~~233,~~393~~412		$	1,748,572

(1)

Unamortized debt issuance costs related to the credit facility were $2.7 million included in Other current assets and $4.70 million included in Other assets on the Consolidated Balance Sheet as of ~~March~~June 3130, 2025 and $2.3 million included in Other current assets and $5.2 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2024.

(2)

The stated maturity date under the credit facility on which both the revolver line and the term loan will mature and all amounts then outstanding will become due and payable is January 3, 2028. The term loan began amortizing in March 2024, with payments of $126.53 million remaining in 2025, $25.0 million in 2026 and 2027, and $418.7 million in 2028.

(3)

As of ~~March~~June 3130, 2025, all unamortized debt issuance costs for the senior notes were included in Long-term debt on the Consolidated Balance Sheet. As of September 30, 2024, $0.4 million of unamortized debt issuance costs for the senior notes was included in Current portion of long-term debt and $3.6 million was included in Long-term debt on the Consolidated Balance Sheet.

(4)

As of ~~March~~June 3130, 2025, $25.0 million of debt associated with the credit facility term loan was classified as short term. As of September 30, 2024, $521.5 million of debt was classified as short term, including $499.6 million associated with the 2025 senior notes and related debt issuance costs and $21.9 million associated with the credit facility term loan.

Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes) and $500 million in aggregate principal amount of 3.625% senior, unsecured long-term debt at par value, due in February 2025 (the 2025 notes). In the second quarter of 2025, we redeemed the 2025 notes using a draw on our revolving credit facility and cash on hand.

As of ~~March~~June 3130, 2025, the total estimated fair value of the 2028 notes was approximately $~~481~~488.3 million based on quoted prices for the notes on that date.

We were in compliance with all the covenants for our senior notes as of ~~March~~June 3130, 2025.

Credit Agreement

Our credit facility consists of (i) a $1.25 billion revolving credit facility, (ii) a $500 million term loan credit facility, and (iii) an incremental facility pursuant to which we may incur additional term loan tranches or increase the revolving credit facility. On October 1, 2024, we entered into an amendment to our credit facility which removed a repayment obligation as of November 16, 2024 in the event that the 2025 notes had not been redeemed or refinanced as of that date.

As of March 31, 2025, unused commitments under our credit facility were $838.8 million and amounts available for borrowing were $823.3 million.

As of March 31, 2025, the fair value of our credit facility approximates its book value.

PTC and certain eligible foreign subsidiaries are eligible borrowers under the credit facility. As of March 31, 2025, $241.3 million was borrowed by an eligible foreign subsidiary borrower.

Loans under the credit facility bear interest at variable rates. As of March 31, 2025, the annual rate for borrowings outstanding was 5.9%. A quarterly revolving commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.175% to 0.325% per annum, based upon our total leverage ratio.

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As of ~~March~~June 3130, 2025, weunused ~~were~~commitments inunder ~~compliance~~our ~~with~~credit ~~all~~facility ~~financial~~were $988.7 million and ~~operating~~amounts ~~covenants~~available offor ~~the~~borrowing ~~credit~~were ~~facility~~$971.8 million.

As of June 30, 2025, the fair value of our credit facility approximates its book value.

PTC and certain foreign subsidiaries are eligible borrowers under the credit facility. As of June 30, 2025, $116.3 million was borrowed by an eligible foreign subsidiary borrower.

Loans under the credit facility bear interest at variable rates. As of June 30, 2025, the annual rate for borrowings outstanding was 5.6%. A quarterly revolving commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.175% to 0.325% per annum, based upon our total leverage ratio.

As of June 30, 2025, we were in compliance with all financial and operating covenants of the credit facility.

Interest

We incurred interest expense on our debt of $1918.64 million and $4160.71 million in the ~~second~~third quarter and first ~~six~~nine months of 2025, respectively, and $3127.68 million and $6694.97 million in the ~~second~~third quarter and first ~~six~~nine months of 2024, respectively. The average interest rate on borrowings outstanding was approximately 45.90% and 4.89% during the ~~second~~third quarter and first ~~six~~nine months of 2025, respectively, and 5.53% and 5.65% during the ~~second~~third quarter and first ~~six~~nine months of 2024, respectively.

11. Commitments and Contingencies

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

PTC is a global software company that enables manufacturers and product companies to digitally transform how they design, 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 30,000 customers globally.

We primarily serve customers in the following industry verticals:

•

Industrials

•

Federal, Aerospace and Defense

•

Electronics and High Tech

•

Automotive

•

Medical Technology and Life Sciences

Our customers are focused on improving their competitiveness in the face of global competition and increasing product complexity, and our suite of software offerings is a strategic enabler of this and their digital transformation initiatives. We enable our customers to establish a strong product data foundation and leverage that foundation to drive cross-functional collaboration, accelerate new product introduction timelines and deliver higher product quality.

Our offerings include CAD (Computer-Aided Design) solutions for product data authoring and PLM (Product Lifecycle Management) solutions for product data management and process orchestration. Within the overall PLM category, our offerings also include ALM (Application Lifecycle Management) and SLM (Service Lifecycle Management).

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.

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.

Forward-Looking Statements

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

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~~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, 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 customers are slower to adopt those solutions than we expect or if they adopt competing solutions; ~~our~~customers ~~go-to-market~~may ~~realignment~~not ~~and~~build ~~other~~the ~~strategic~~product ~~initiatives~~data tofoundations ~~improve~~essential ~~organizational~~for ~~and~~the ~~operational~~AI-driven ~~efficiency~~transformation ~~may~~of ~~not~~their dobusiness so 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 disrupt our business to a greater extent than we expect or may not generate the ARR and/or financial results or cash flow when or as 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 Factors of this report.

Our Operating and Non-GAAP Financial Measures

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.

Executive Overview

Despite the overall selling environment, which has been challenging for a couple of years now and ~~has~~reflects ~~begun to reflect~~ heightened macroeconomic uncertainly related to global trade tensions and tariffs, ARR grew 1014% (109% constant currency) to $2.2942 billion as of the end of Q2Q3’25 compared to Q2Q3’24.

Cash provided by operating activities grew 1214% to $~~281~~244 million in Q2Q3'25 compared to Q2Q3'24. Free cash flow grew 1314% to $~~279~~242 million in Q2Q3'25 compared to Q2Q3'24. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q2Q3'25, we ~~made~~repaid ~~net~~$157 ~~repayments~~million onof ~~our~~ debt ~~of $155 million~~ and repurchased $75 million of our outstanding shares.

Revenue grew 624% (822% constant currency) to $~~636~~644 million in Q2Q3'25 compared to Q2Q3'24. 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~~1410 basis points in Q2Q3'25 compared to Q2Q3'24, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 42106% to $1.3517 in Q2Q3'25 compared to Q2Q3'24.

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Results of Operations

(Dollar amounts in millions, except per share data)	Three months ended						Percent Change
	March 31, 2025			March 31, 2024			Actual			ConstantCurrency(1)
	June 30, 2025			June 30, 2024			Actual			ConstantCurrency(1)
ARR	$	2,~~290~~415.16		$	2,~~088~~126.51			1014	%		109	%
Total recurring revenue(2)	$	~~601~~613.56		$	~~564~~481.06			727	%		1025	%
Perpetual license		57.8			67.81			~~(14~~10	)%		~~(12~~10	)%
Professional services		2922.06			3230.30			(1025	)%		(926	)%
Total revenue		~~636~~643.49			~~603~~518.16			624	%		822	%
Total cost of revenue		~~106~~110.30			~~110~~111.19			(32	)%		(2	)%
Gross margin		~~530~~533.19			~~493~~406.07			831	%		1129	%
Operating expenses		~~306~~324.61			~~313~~310.59			(24	)%		(13	)%
Operating income	$	~~223~~209.58		$	~~179~~95.68			24119	%		30107	%
Non-GAAP operating income(1)	$	~~299~~285.32		$	~~254~~164.04			1873	%		2368	%
Operating margin		3532.16	%		2918.85	%
Non-GAAP operating margin(1)		4744.03	%		4231.17	%
Diluted earnings per share	$	1.3517		$	0.9557
Non-GAAP diluted earnings per share(1)	$	1.7964		$	10.4698
Cash provided by operating activities	$	~~281~~243.39		$	~~250~~213.78
Capital expenditures		(21.89	)		(31.6	)
Free cash flow	$	~~278~~242.50		$	~~247~~212.12

(Dollar amounts in millions, except per share data)	~~Six~~Nine months ended						Percent Change
	March 31, 2025			March 31, 2024			Actual			ConstantCurrency(1)
	June 30, 2025			June 30, 2024			Actual			ConstantCurrency(1)
ARR	$	2,~~290~~415.16		$	2,~~088~~126.51			1014	%		109	%
Total recurring revenue(2)	$	1,~~125~~739.94		$	1,~~070~~551.06			512	%		612	%
Perpetual license		1523.20			1522.2			03	%		14	%
Professional services		6083.40			6898.1			(1115	)%		(1115	)%
Total revenue		1,~~201~~845.54			1,~~153~~671.39			410	%		511	%
Total cost of revenue		~~218~~328.1			~~220~~332.10			(1	)%		(1	)%
Gross margin		~~983~~1,517.43			~~933~~1,339.29			513	%		714	%
Operating expenses		~~644~~968.45			~~634~~945.98			12	%		2	%
Operating income	$	~~339~~548.08		$	~~298~~394.31			1439	%		1739	%
Non-GAAP operating income(1)	$	~~490~~775.68		$	~~453~~617.48			826	%		1026	%
Operating margin		2829.27	%		2523.96	%
Non-GAAP operating margin(1)		4042.80	%		3937.30	%
Diluted earnings per share	$	23.0220		$	12.5007
Non-GAAP diluted earnings per share(1)	$	24.8953		$	23.5754
Cash provided by operating activities	$	~~519~~763.7		$	~~438~~651.19
Capital expenditures		(57.65	)		(89.28	)
Free cash flow	$	~~514~~756.2		$	~~429~~642.90

(1)

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.

(2)

Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

Impact of Foreign Currency Exchange on Results of Operations

Approximately 50% of our revenue and 35% of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results. Our constant currency disclosures are calculated by multiplying the results in local currency for the quarterly periods for FY'25 and FY'24 by the exchange rates in effect on September 30, 2024.

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IfImpact ~~reported results for the six months ended March 31, 2025 were converted into U.S. Dollars using the rates in effect as~~ of ~~September~~Foreign ~~30,~~Currency ~~2024,~~Exchange ~~ARR~~on ~~would~~Results 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.~~Operations

Approximately 55% of our revenue and 35% of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results. Our constant currency disclosures are calculated by multiplying the results in local currency for the quarterly periods for FY'25 and FY'24 by the exchange rates in effect on September 30, 2024.

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, 2024, ARR would have been lower by $43 million, revenue would have been higher by $33 million, and expenses would have been higher by $11 million. If reported results for the nine months ended June 30, 2024 were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been higher by $44 million, revenue would have been higher by $26 million, and expenses would have been higher by $10 million.

Revenue

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.

Revenue by Line of Business

(Dollar amounts in millions)	Three months ended				Percent Change						~~Six~~Nine months ended				Percent Change
	March 31, 2025		March 31, 2024		Actual			ConstantCurrency			March 31, 2025		March 31, 2024		Actual			ConstantCurrency
	June 30, 2025		June 30, 2024		Actual			ConstantCurrency			June 30, 2025		June 30, 2024		Actual			ConstantCurrency
License	$	~~254~~251.45	$	~~234~~149.31		969	%		1266	%	$	~~427~~678.16	$	~~418~~567.34		220	%		420	%
Support and cloud services		~~353~~369.09		~~336~~339.45		59	%		7	%		~~714~~1,083.08		~~666~~1,006.94		78	%		8	%
Software revenue		~~607~~621.43		~~570~~488.86		627	%		925	%		1,~~141~~762.14		1,~~085~~573.28		512	%		612	%
Professional services		2922.06		3230.30		(1025	)%		(926	)%		6083.40		6898.1		(1115	)%		(1115	)%
Total revenue	$	~~636~~643.49	$	~~603~~518.16		624	%		822	%	$	1,~~201~~845.54	$	1,~~153~~671.39		410	%		511	%

Software revenue growth in Q2Q3'25 and the first ~~six~~nine months of FY'25 compared to the corresponding FY'24 periods was driven by ~~growth~~license inrevenue ~~our~~growth, ~~subscription~~which ~~offerings~~reflects inthe ~~both~~higher ~~CAD~~total value and ~~PLM~~longer average duration of contracts that renewed in the current-year periods.

~~License~~Support and cloud services revenue growth in Q2Q3'25 and the first ~~six~~nine months of FY'25 compared to the ~~prior-year~~corresponding FY'24 periods ~~reflects~~was ~~the~~mainly ~~higher~~driven ~~value~~by ~~and~~growth ~~longer duration of contracts that renewed~~ in ~~the current-year periods~~PLM.

~~Support~~Professional ~~and cloud~~ services revenue ~~growth~~decreased in Q2Q3'25 and the first ~~six~~nine months of FY'25 ~~compared~~as we continue to ~~the~~execute ~~corresponding~~on ~~FY'24~~our ~~periods~~strategy ~~was~~of ~~mainly~~leveraging ~~driven~~partners byto ~~growth~~deliver inservices ~~PLM~~rather than contracting to deliver services ourselves.

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.

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Software Revenue by Product Group

(Dollar amounts in millions)	Three months ended				Percent Change						~~Six~~Nine months ended				Percent Change
	March 31, 2025		March 31, 2024		Actual			ConstantCurrency			March 31, 2025		March 31, 2024		Actual			ConstantCurrency
	June 30, 2025		June 30, 2024		Actual			ConstantCurrency			June 30, 2025		June 30, 2024		Actual			ConstantCurrency
PLM	$	~~368~~382.41	$	~~343~~300.63		727	%		1025	%	$	~~692~~1,074.01	$	~~658~~958.36		512	%		612	%
CAD		239.02		~~227~~188.23		527	%		925	%		~~449~~688.13		~~426~~615.92		512	%		712	%
Software revenue	$	~~607~~621.43	$	~~570~~488.86		627	%		925	%	$	1,~~141~~762.14	$	1,~~085~~573.28		512	%		612	%

PLM software revenue growth in Q2Q3'25 ~~and~~was driven by the ~~first~~higher ~~six~~total ~~months~~value ofand ~~FY'25~~longer ~~was~~average ~~driven~~duration byof ~~revenue~~contracts ~~growth~~that renewed in the ~~Americas~~period. ~~and~~PLM ~~Asia~~software ~~Pacific,~~revenue ~~partially~~growth ~~offset~~in bythe afirst ~~decrease~~nine inmonths ~~Europe~~of ~~license~~FY'25 ~~revenue~~was ~~due~~driven toby ~~the~~revenue ~~lower~~growth ~~volume~~across ~~and~~all ~~value~~geographic ofregions, ~~large~~primarily ~~subscriptions renewing~~ in ~~the period~~Windchill.

PLM ARR grew 1114% (1110% constant currency) from Q2Q3’24 to Q2Q3'25, primarily driven by Windchill and Codebeamer.

CAD software revenue growth in Q2Q3'25 was driven by ~~revenue~~the ~~growth~~higher total value and longer average duration of contracts that renewed in ~~Europe~~the period. CAD software revenue growth in the first ~~six~~nine months of FY'25 was driven by revenue growth across all geographic regions, primarily in Creo.

CAD ARR grew 813% (8% constant currency) from Q2Q3’24 to Q2Q3’25., primarily driven by Creo.

Gross Margin

(Dollar amounts in millions)	Three months ended									~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			Percent Change			March 31, 2025			March 31, 2024			Percent Change
	June 30, 2025			June 30, 2024			Percent Change			June 30, 2025			June 30, 2024			Percent Change
License gross margin	$	~~243~~239.54		$	~~223~~137.70			975	%	$	~~406~~645.04		$	~~397~~534.4			221	%
License gross margin percentage		9695	%		9592	%					95	%		9594	%
Support and cloud services gross margin	$	~~282~~296.74		$	269.05			510	%	$	~~572~~868.37		$	~~532~~802.50			78	%
Support and cloud services gross margin percentage		80	%		8079	%					80	%		80	%
Professional services gross margin	$	4(1.09	)	$	0.32			(1,~~389~~352	)%	$	53.2		$	3.35			54(8	)%
Professional services gross margin percentage		14(9	)%		1	%					94	%		54	%
Total gross margin	$	~~530~~533.19		$	~~493~~406.07			831	%	$	~~983~~1,517.43		$	~~933~~1,339.29			513	%
Total gross margin percentage		83	%		8278	%					82	%		8180	%
Non-GAAP gross margin(1)	$	~~543~~547.74		$	~~507~~422.63			730	%	$	1,~~011~~558.37		$	~~962~~1,384.57			513	%
Non-GAAP gross margin percentage(1)		85	%		8481	%					84	%		83	%

(1)

Non-GAAP financial measures are reconciled to GAAP results under Non-GAAP Financial Measures below.

License gross margin growth in Q2Q3'25 and the first ~~six~~nine months of FY'25 compared to the corresponding FY'24 periods were in line with license revenue growth. Cost of license revenue in Q2Q3'25 and the first ~~six~~nine months of FY'25 remained consistent with the corresponding FY'24 periods.

Support and cloud services gross margin growth in Q2Q3'25 and the first ~~six~~nine 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 45% in Q2Q3'25 and ~~5% in~~ the first ~~six~~nine months of FY'25 compared to the corresponding FY'24 periods, primarily due to higher compensation-related costs.

Professional services gross margin ~~increased~~decreased in Q2Q3'25 ~~and~~compared to Q3'24, primarily driven by a sharper decrease in professional services revenue than in professional services expense. Professional services gross margin in the first ~~six~~nine months of FY'25 ~~compared~~was toconsistent with the corresponding FY'24 ~~periods~~period, ~~primarily~~with costs decreasing in line with professional services revenue. The decreases in professional services revenue and costs are due to ~~lower~~our ~~subcontractor~~continued ~~costs~~execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

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Operating Expenses

(Dollar amounts in millions)	Three months ended									~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			Percent Change			March 31, 2025			March 31, 2024			Percent Change
	June 30, 2025			June 30, 2024			Percent Change			June 30, 2025			June 30, 2024			Percent Change
Sales and marketing	$	~~125~~141.08		$	~~134~~140.53			(71	)%	$	~~282~~424.63		$	~~271~~411.48			43	%
% of total revenue		2022	%		2227	%					2423	%		2425	%
Research and development	$	~~111~~116.06		$	~~107~~110.03			46	%	$	~~226~~343.52		$	~~212~~323.80			6	%
% of total revenue		1718	%		1821	%					19	%		1819	%
General and administrative	$	5554.01		$	6149.57			~~(11~~9	)%	$	~~108~~162.35		$	~~130~~180.74			(1710	)%
% of total revenue		98	%		10	%					9	%		11	%
Amortization of acquired intangible assets	$	11.45		$	10.47			98	%	$	2234.84		$	2031.85			109	%
% of total revenue		2	%		2	%					2	%		2	%
Impairment and other charges (credits), net	$	~~4.2~~—		$	~~(0.0~~—	)		~~60,286~~0	%	$	4.2		$	(0.8	)		625	%
% of total revenue		10	%		(0	)%					0	%		(0	)%
Total operating expenses	$	~~306~~324.61		$	~~313~~310.59			(24	)%	$	~~644~~968.45		$	~~634~~945.98			12	%

Total headcount increased 13% between Q2Q3’24 and Q2Q3’25.

Operating expenses in Q2Q3'25 ~~decreased~~increased compared to Q2Q3'24, primarily due to the following:

•

a $9 million ~~decrease~~increase in total compensation expense (~~excluding~~including stock-based compensation expense), ~~mainly~~ driven by ~~the~~severance ~~temporary~~costs ~~impact~~and ofheadcount ~~cost reductions resulting from our go-to-market realignment;~~growth.

~~partially~~Operating ~~offset~~expenses byin the first nine months of FY'25 increased compared to the first nine months of FY'24, primarily due to the following:

•

a $412 million ~~impairment~~increase ~~charge~~in ~~recognized~~total compensation expense (including stock-based compensation expense), driven by a $19 million increase in ~~Q2'25~~severance costs primarily related to ~~the~~our ~~sublease~~go-to-market ofrealignment a(which ~~portion~~is ofmainly ~~our~~included ~~Boston~~in ~~office~~Sales and marketing), offset by lower compensation charges in Q2General and administrative driven by our FY'~~25.~~24 chief executive officer succession;

•

~~Operating~~a ~~expenses~~$6 inmillion ~~the~~increase ~~first~~in ~~six~~outside ~~months~~services, ofdriven ~~FY'25~~by ~~increased~~consulting ~~compared~~services related to ~~the~~our ~~first~~go-to-market ~~six~~realignment ~~months~~and ofother ~~FY'24,~~corporate ~~primarily~~initiatives; ~~due to the following:~~and

•

a $104 million ~~increase~~impairment incharge ~~compensation expense (excluding stock-based compensation expense), mainly driven by severance costs~~ recognized in Q1Q2'25 related to the ~~go-to-market~~lease ~~realignment~~asset ~~(which~~associated iswith ~~primarily~~the ~~included~~subleased inportion ~~Sales~~of ~~and marketing), offset by lower compensation charges in General and administrative driven by~~ our ~~FY'24~~Boston ~~chief executive officer succession;~~office.

a $4 million increase in outside services, driven by consulting services related to our go-to-market realignment and other corporate initiatives; and

a $4 million impairment charge recognized in Q2'25 related to the lease asset associated with the subleased portion of our Boston office;

partially offset by:

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).

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Interest Expense

(Dollar amounts in millions)	Three months ended									~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			Percent Change			March 31, 2025			March 31, 2024			Percent Change
	June 30, 2025			June 30, 2024			Percent Change			June 30, 2025			June 30, 2024			Percent Change
Interest expense	$	(1918.64	)	$	(3127.68	)		(3834	)%	$	(4160.71	)	$	(6694.97	)		(3837	)%

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 Q2Q3'25 and the first ~~six~~nine months of FY'25 compared to the corresponding FY'24 periods due to lower debt balances and lower interest rates.

Other Income (Expense)

(Dollar amounts in millions)	Three months ended								~~Six~~Nine months ended
	March 31, 2025		March 31, 2024			Percent Change			March 31, 2025			March 31, 2024			Percent Change
	June 30, 2025		June 30, 2024			Percent Change			June 30, 2025			June 30, 2024			Percent Change
Interest income	$	0.89	$	1.10			(3011	)%	$	12.76		$	23.4			(2923	)%
Other income (expense), net		01.63		(31.37	)		~~118~~178	%		(0.67	)		(2.4.1	)		73117	%
Other income (expense), net	$	12.43	$	(20.27	)		~~163~~440	%	$	13.13		$	(0.07	)		~~26,825~~598	%

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.23

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Other income (expense), net increased in Q3'25 compared to Q3'24, driven by foreign currency exchange gains in Q3'25. Other income (expense), net increased in the first nine months of FY'25 compared to the comparable FY'24 period due to a $2.0 million impairment charge recognized in Q2'24 related to an available-for-sale debt security and lower foreign currency exchange losses.

Income Taxes

(Dollar amounts in millions)	Three months ended									~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			Percent Change			March 31, 2025			March 31, 2024			Percent Change
	June 30, 2025			June 30, 2024			Percent Change			June 30, 2025			June 30, 2024			Percent Change
Income before income taxes	$	~~205~~193.27		$	~~145~~67.74			41187	%	$	~~298~~492.41		$	~~231~~298.37			2965	%
Provision for income taxes	$	42.6		$	31.3			36	%	$	53.5		$	50.5			6	%
Provision (benefit) for income taxes	$	52.3		$	(1.6	)		(3,362	)%	$	105.9		$	48.9			116	%
Effective income tax rate		2127	%		21(2	)%					1822	%		2216	%

The effective tax rate for Q3'25 and the first ~~six~~nine months of FY'25 was ~~lower~~higher than the effective tax rate for the corresponding prior-year ~~period~~periods primarily due to changes in the geographic mix of income before taxes and the effects of IRS procedural guidance issued in April 2024 requiring IRS consent for certain previously automatic changes of accounting method on our estimated taxable income for FY'24. Additionally, for the first ~~six~~nine 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.

In FY’24, we requested consent from the ~~U.S.~~IRS ~~Internal Revenue Service~~ to change the accounting method for the treatment of certain deductions. If we do not receive this consent, it would have a material adverse impact on cash flow for the year in which our request is denied and our future tax payments could be higher than currently estimated, which would also adversely impact our operating cash flow. In accordance with GAAP, our financial statements currently reflect the fact that we have not yet received the consent, including an accrual for the income tax payable in Accrued income taxes on the Consolidated Balance Sheets.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that will be applicable to us beginning in FY'26. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. We are in the process of evaluating the impact of the Act to our consolidated financial statements and cash flow, but currently expect such changes will have a material positive cash impact in FY'26 and FY'27. As our review is not yet complete, our expectations could change.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2024 Annual Report on Form 10-K.

Recent Accounting Pronouncements

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 Presentation to 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, none of which are expected to have a material effect.

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Liquidity and Capital Resources

(in millions)	~~March~~June 3130, 2025			September 30, 2024
Cash and cash equivalents	$	~~235~~199.23		$	265.8
Restricted cash		0.6			0.7
Total	$	~~235~~199.79		$	266.5
(in millions)	~~Six~~Nine months ended
	March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024
Net cash provided by operating activities	$	~~519~~763.7		$	~~438~~651.19
Net cash provided by (used in) investing activities	$	6.7		$	(103.9	)
Net cash used in investing activities	$	(28.6	)	$	(99.5	)
Net cash used in financing activities	$	(~~551~~801.16	)	$	(~~374~~590.39	)

Cash, Cash Equivalents and Restricted Cash

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.

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~~June 3130, 2025, we had cash and cash equivalents of $205.72 million in the U.S., $8273.36 million in Europe, $~~113~~103.40 million in Asia Pacific (including India) and $1817.85 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.

Cash Provided by Operating Activities

Cash provided by operating activities increased $81111.78 million in the first ~~six~~nine 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 $4853.83 million lower in the first ~~six~~nine months of FY'25 compared to the first ~~six~~nine 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.

Cash ~~Provided by (~~Used in) Investing Activities

Cash ~~provided~~used byin investing activities in the first ~~six~~nine months of FY'25 was driven by ~~inflows~~outflows from the settlement of net investment hedges. Cash used in investing activities in the first ~~six~~nine months of FY'24 was driven by the acquisition of pure-systems for $93.5 million.

Cash Used in Financing Activities

Cash used in financing activities in the first ~~six~~nine months of FY'25 included net payments of $~~360~~516.17 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and the repurchase of $~~150~~225.0 million of ~~repurchases~~our of common stock. Cash used in financing activities in the first ~~six~~nine months of FY'24 included $620.0 million paid to settle the ServiceMax deferred acquisition payment, partially offset by net borrowings of $~~304~~109.10 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition. Payments of withholding taxes in connection with vesting of stock-based awards were lower in the first nine months of FY'25 compared to the comparable prior-year period, primarily driven by vesting of certain awards in connection with the chief executive officer succession in Q2'24.

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Outstanding Debt

(in millions)	~~March~~June 3130, 2025			September 30, 2024
4.000% Senior notes due 2028	$	500.0		$	500.0
3.625% Senior notes due 2025		—			500.0
Credit facility revolver line		~~411~~261.3			262.0
Credit facility term loan		~~481~~475.30			490.6
Total debt	$	1,~~392~~236.53		$	1,752.6
Unamortized debt issuance costs for the senior notes		(32.18	)		(4.1	)
Total debt, net of issuance costs	$	1,~~389~~233.4		$	1,748.6
Undrawn under credit facility revolver	$	~~838~~988.87		$	988.0
Undrawn under credit facility revolver available to borrow	$	~~823~~971.38		$	972.1

As of ~~March~~June 3130, 2025, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of ~~March~~June 3130, 2025, the annual rate for borrowings outstanding under the credit facility was 5.96%.

Our credit facility and our senior notes are described in Note 10. Debt to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. As of ~~March~~June 3130, 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.

Future Expectations

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.

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.

Our expected uses and sources of cash could change, our cash position could be reduced, and we could incur additional debt obligations if we retire other debt, engage in strategic transactions, or repurchase shares, any of which could be commenced, suspended, or completed at any time. Any such repurchases or retirement of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material.

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Operating and Non-GAAP Financial Measures

Operating Measure

ARR

ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, SaaS, hosting, 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.

•

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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.

•

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 generally 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 as revenue 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.

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Non-GAAP Financial Measures

Our non-GAAP financial measures and the reasons we use them and exclude the items identified below are described in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2024.

The non-GAAP financial measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are:

•

non-GAAP gross margin—GAAP gross margin

•

non-GAAP operating income—GAAP operating income

•

non-GAAP operating margin—GAAP operating margin

•

non-GAAP net income—GAAP net income

•

non-GAAP diluted earnings per share—GAAP diluted earnings per share

•

free cash flow—cash flow from operations

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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.

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.

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.

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.

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(in millions, except per share amounts)	Three months ended						~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
GAAP gross margin	$	~~530~~533.19		$	~~493~~406.07		$	~~983~~1,517.43		$	~~933~~1,339.29
Stock-based compensation		5.53			5.09			1116.47			1016.10
Amortization of acquired intangible assets included in cost of revenue		8.12			9.67			1624.46			1928.28
Non-GAAP gross margin	$	~~543~~547.74		$	~~507~~422.63		$	1,~~011~~558.37		$	~~962~~1,384.57
GAAP operating income	$	~~223~~209.58		$	~~179~~95.68		$	~~339~~548.08		$	~~298~~394.31
Stock-based compensation		5154.50			5448.20			~~107~~161.4			~~113~~161.2
Amortization of acquired intangible assets		19.57			20.04			3959.30			3960.93
Acquisition and transaction-related charges		01.6			0.32			02.84			23.80
Impairment and other charges (credits), net		~~4.2~~—			~~(0.0~~—	)		4.2			(0.8	)
Non-GAAP operating income	$	~~299~~285.32		$	~~254~~164.04		$	~~490~~775.68		$	~~453~~617.48
GAAP net income	$	~~162~~141.63		$	~~114~~69.40		$	~~244~~386.92		$	~~180~~249.8
Stock-based compensation		5154.50			5448.20			~~107~~161.4			~~113~~161.2
Amortization of acquired intangible assets		19.57			20.04			3959.30			3960.93
Acquisition and transaction-related charges		01.6			0.32			02.84			23.80
Impairment and other charges (credits), net		~~4.2~~—			~~(0.0~~—	)		4.2			(0.8	)
Non-operating charges(1)		—			~~2.0~~—			—			2.0
Income tax adjustments(2)		(2119.73	)		(1419.65	)		(4665.47	)		(2848.62	)
Non-GAAP net income	$	~~216~~197.84		$	~~176~~118.40		$	~~350~~547.15		$	~~309~~427.43
GAAP diluted earnings per share	$	1.3517		$	0.9557		$	23.0220		$	12.5007
Stock-based compensation		0.4345			0.4540			01.8934			01.9434
Amortization of acquired intangible assets		0.16			0.17			0.3249			0.3350
Acquisition and transaction-related charges		0.01			0.00			0.0102			0.02
Impairment and other charges (credits), net		~~0.03~~—			~~(0.00~~—	)		0.03			(0.01	)
Non-operating charges(1)		—			~~0.02~~—			—			0.02
Income tax adjustments(2)		(0.1816	)		(0.1216	)		(0.3854	)		(0.2440	)
Non-GAAP diluted earnings per share	$	1.7964		$	10.4698		$	24.8953		$	23.5754
Cash provided by operating activities	$	~~281~~243.39		$	~~250~~213.78		$	~~519~~763.7		$	~~438~~651.19
Capital expenditures		(21.89	)		(31.6	)		(57.65	)		(89.28	)
Free cash flow	$	~~278~~242.50		$	~~247~~212.12		$	~~514~~756.2		$	~~429~~642.90

(1)

In Q2the first nine months of FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security.

(2)

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~~nine 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.

Operating margin impact of non-GAAP adjustments:

	Three months ended						~~Six~~Nine months ended
	March 31, 2025			March 31, 2024			March 31, 2025			March 31, 2024
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
GAAP operating margin		3532.16	%		2918.85	%		2829.27	%		2523.96	%
Stock-based compensation		8.14	%		9.03	%		8.97	%		9.86	%
Amortization of acquired intangible assets		3.1	%		3.39	%		3.32	%		3.56	%
Acquisition and transaction-related charges		0.12	%		0.10	%		0.1	%		0.2	%
Impairment and other charges (credits), net		0.70	%		0.0	%		0.42	%		(0.10	)%
Non-GAAP operating margin		4744.03	%		4231.17	%		4042.80	%		3937.30	%

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposure as described in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our 2024 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~March~~June 3130, 2025.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the period ended ~~March~~June 3130, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1A. RISK FACTORS

In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I. Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below shows the shares of our common stock we repurchased in the ~~second~~third quarter of 2025.

Period	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2025 - January 31, 2025		—	$	—		—	$	1,924,999,900
April 1, 2025 - April 30, 2025		—	$	—		—	$	1,849,999,766
February 1, 2025 - February 28, 2025		195,777	$	166.00		195,777	$	1,892,501,813
May 1, 2025 - May 31, 2025		267,282	$	168.36		267,282	$	1,805,001,497
March 1, 2025 - March 31, 2025		266,750	$	159.33		266,750	$	1,849,999,766
June 1, 2025 - June 30, 2025		176,823	$	169.60		176,823	$	1,775,012,684
Total		~~462~~444,~~527~~105	$	~~162~~168.1585		~~462~~444,~~527~~105	$	1,~~849~~775,~~999~~012,~~766~~684

(1)

As announced on November 6, 2024, 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, 2027.

ITEM 5. OTHER INFORMATION

Director and Executive Officer Adoption, Modification or Termination of 10b5-1 Plans in Q2Q3'25

None.

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ITEM 6. EXHIBITS

Incorporated by Reference

Exhibit Number

Description

Filed Herewith

Form

Filling Date

Exhibit

SEC File No.

3.1

Restated Articles of Organization of PTC Inc.

10-K

November 23, 2015

3.1

0-18059

3.2

Amended and Restated By-Laws of PTC Inc.

10-K

November 14, 2024

3.2

0-18059

4.1

Indenture dated as of February 13, 2020, between PTC Inc. and Wells Fargo Bank, National Association, as trustee

8-K

February 13, 2020

4.1

0-18059

4.2

Form of 4.000% senior unsecured notes due 2028

8-K

February 13, 2020

4.3

0-18059

31.1

Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)

31.2

Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)

32*

Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350

101.INS

Inline XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents

104

The cover page of the Q2Q3 Form 10-Q formatted in Inline XBRL (included in Exhibit 101)

* Indicates that the exhibit is being furnished, not filed, with this report.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	PTC Inc.

	By:		/s/ KRISTIAN TALVITIE
			Kristian Talvitie Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: ~~May~~July 131, 2025

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