01—Abstract
Summary
Summary of the 10-K filed November 14, 2024. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported fiscal 2024 (year ended September 30, 2024) revenue of $2.30 billiona, up 10% (9% in constant currency) from $2.10 billion in fiscal 2023, with software revenue of $2.17 billion and professional services of $132.2 million.
Annual Run Rate (ARR), the company's key operating measure, grew 14% (12% constant currency) to $2.25 billionb. The company states that 93% of 2024 revenue was recurring in nature, reflecting its subscription model. Growth was helped by the ServiceMax acquisition in early fiscal Q2 2023, and the company also acquired pure-systems for $93.5 million in October 2023.
Profitability improved meaningfully. GAAP operating income rose 28% to $588.1 millionc, with operating margin of 25.6% versus 21.9% a year earlier. GAAP diluted EPS was $3.12, compared with $2.06, and non-GAAP diluted EPS was $5.08, compared with $4.34.
Cash provided by operating activities increased 23% to $750.0 milliond, and free cash flow reached $735.6 million. The effective tax rate fell to 20% from 26%, aided by a $14.4 million foreign tax credit benefit from a U.S. Tax Court ruling. The balance sheet carries significant leverage.
Gross debt was $1.75 billion at year-end, with a weighted average interest rate of 5.1%, against cash of $266 million. The company must redeem its $500 million 3.625% Senior Notes due February 2025, and it expects to repurchase approximately $300 million of stock in fiscal 2025 under a $2 billion authorization covering October 2024 through September 2027.
02—Key points
Key Highlights
- Total revenue of $2,298.5 million, up 10% (9% constant currency); recurring revenue of $2,134.0 million, up 12%.
- ARR of $2,254.7 million at fiscal year-end, up 14% (12% constant currency); PLM ARR grew 15% and CAD ARR grew 13%.
- GAAP operating income of $588.1 million (25.6% margin) versus $458.5 million (21.9%) in fiscal 2023; non-GAAP operating margin of 38.9%.
- GAAP diluted EPS of $3.12 (up from $2.06); non-GAAP diluted EPS of $5.08 (up from $4.34).
- Cash from operations of $750.0 million and free cash flow of $735.6 million, up from $587.0 million.
- Gross debt of $1.75 billion at a 5.1% weighted average rate; $500 million of 3.625% Senior Notes mature February 2025, and the filing describes an October 2024 credit agreement amendment tied to that maturity.
- Board authorized up to $2 billion in share repurchases for October 2024 through September 2027, with about $300 million intended for fiscal 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, PTC kept $0.16.
- Revenue$2.30B100.0%
- Cost of revenue−$444.8M19.4%
- Gross profit$1.85B80.6%
- Operating costs−$1.27B55.1%
- Operating income$588.1M25.6%
- Interest, other & tax−$211.7M9.2%
- Net income$376.3M16.4%
Where FY2024 revenue went
$2.30B- Other operating costs: $832.5M, 36% of revenue
- Cost of revenue: $444.8M, 19% of revenue
- R&D: $433.0M, 19% of revenue
- Net income: $376.3M, 16% of revenue
- Interest, other & tax: $211.7M, 9.2% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed November 14, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $2.30B$2.10B | +9.6% |
| Cost of Revenue | $444.82M$441.01M | +0.9% |
| Gross Profit | $1.85B$1.66B | +11.9% |
| R&D Expenses | $433.05M$394.37M | +9.8% |
| Operating Expenses | $1.27B$1.20B | +5.7% |
| Operating Income | $588.06M$458.47M | +28.3% |
| Interest Expense | $119.70M$129.42M | −7.5% |
| Net Income | $376.33M$245.54M | +53.3% |
| EPS (Basic) | $3.14$2.07 | +51.7% |
| EPS (Diluted) | $3.12$2.06 | +51.5% |
| Shares Outstanding (Basic) | 119.68M118.34M | +1.1% |
| Shares Outstanding (Diluted) | 120.74M119.33M | +1.2% |
05—Questions
Frequently Asked Questions
How much of PTC's revenue is recurring, and what drives growth?
The filing states that 93% of 2024 revenue was recurring in nature, reflecting the subscription model. Growth is primarily driven by existing customers expanding their footprint as they pursue digital transformation, with a smaller contribution from new customers and price increases. Software revenue grew 11%, led by PLM, which benefited from the ServiceMax acquisition.
Why did the effective tax rate decline?
The effective tax rate was 20% in fiscal 2024 versus 26% in fiscal 2023. The filing attributes the lower rate mainly to a $14.4 million benefit from additional foreign tax credits following an August 2024 U.S. Tax Court ruling, plus a net $4.4 million benefit from IRS procedural guidance. These benefits were partly offset by a $4.6 million foreign tax reserve charge. The filing notes the IRS-related benefit may reverse in a future period.
What are the company's near-term debt obligations?
Total debt was $1.75 billion at September 30, 2024, including $500 million of 4.000% Senior Notes due 2028, $500 million of 3.625% Senior Notes due February 2025, $262 million on the revolver and $490.6 million on the term loan. The filing says the company expects its cash, operating cash flow and credit facility availability to be sufficient through at least the next twelve months, including redemption of the 2025 notes in February 2025.
How is the company returning capital to shareholders?
The board authorized repurchases of up to $2 billion of common stock for October 1, 2024 through September 30, 2027. The long-term goal is to return about 50% of free cash flow through share repurchases, though this could be reduced, suspended or ceased depending on interest rates and strategic initiatives. The company intends to repurchase approximately $300 million of stock in fiscal 2025. No shares were repurchased in fiscal 2024 or 2023.
What are the main risks highlighted in the filing?
Key risks include intense competition from larger established rivals such as Autodesk, Dassault Systèmes and Siemens; the transition to SaaS delivery; sensitivity to discrete manufacturing demand; cybersecurity breaches and reliance on third-party cloud providers; compliance with anti-corruption and sanctions laws; and leverage, including covenant compliance and refinancing needs. The filing also flags foreign exchange exposure, with about 50% of revenue transacted in currencies other than the U.S. Dollar.
06—Continue