01—Abstract
Summary
Summary of the 10-Q filed July 31, 2025. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported third-quarter fiscal 2025 total revenue of $643.9 milliona, up from $518.6 million a year earlier, and net income of $141.3 million, compared with $69.0 million.
Diluted earnings per share were $1.17b, versus $0.57. Gross margin rose to $533.9 million from $406.7 million, and operating income increased to $209.8 million from $95.8 million. Recurring revenue reached $613.6 million, and ARR grew 14% (9% in constant currency) to $2.42 billion.
Management attributed software revenue growth to higher total value and longer average duration of contracts that renewed in the period, and noted that under ASC 606 revenue timing can vary significantly. For the nine months ended June 30, 2025, net cash provided by operating activities was $763.7 millionc, and free cash flow was $756.2 million. During the quarter, PTC repaid $157 million of debt and repurchased $75 million of common stock.
In the second quarter it redeemed its $500 milliond 3.625% senior notes due 2025 using a draw on its revolving credit facility and cash on hand. Total debt stood at $1,236.3 million at June 30, 2025, down from $1,752.6 million at September 30, 2024. Management intends to repurchase approximately $300 million of common stock in fiscal 2025.
The filing also flags risks, including a pending IRS consent request for an accounting method change. If consent is not received, the filing states this would have a material adverse impact on cash flow in the year of denial.
The company was in compliance with its debt covenants at June 30, 2025. The One Big Beautiful Bill Act, enacted July 4, 2025, is expected to provide material positive cash impact in fiscal 2026 and 2027, although the company's review is not yet complete.
02—Key points
Key Highlights
- Total revenue rose to $643.9 million in Q3'25 from $518.6 million in Q3'24, with total software revenue of $621.3 million versus $488.6 million.
- Net income was $141.3 million, or $1.17 diluted EPS, compared with $69.0 million and $0.57 in the prior-year quarter.
- Operating income increased to $209.8 million from $95.8 million; operating margin was 32.6% versus 18.5%, and non-GAAP operating margin was 44.3% versus 31.7%.
- ARR grew 14% (9% constant currency) to $2.42 billion as of Q3'25, with PLM ARR up 14% and CAD ARR up 13%.
- Remaining performance obligations totaled $2,309.2 million, with approximately 58% expected to be recognized over the next 12 months.
- Total debt fell to $1,236.3 million from $1,752.6 million, after redeeming the $500 million 2025 senior notes and repaying $157 million of debt in Q3'25.
- Share repurchases totaled $225 million in the first nine months of fiscal 2025, with approximately $300 million intended for the full year and $1.78 billion remaining under the $2 billion authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, PTC kept $0.22.
- Revenue$643.9M100.0%
- Cost of revenue−$110.0M17.1%
- Gross profit$533.9M82.9%
- Operating costs−$324.1M50.3%
- Operating income$209.8M32.6%
- Interest, other & tax−$68.5M10.6%
- Net income$141.3M21.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed July 31, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $643.94M$518.64M | +24.2% |
| Cost of Revenue | $110.03M$111.92M | −1.7% |
| Gross Profit | $533.91M$406.72M | +31.3% |
| R&D Expenses | $116.65M$110.25M | +5.8% |
| Operating Expenses | $324.08M$310.90M | +4.2% |
| Operating Income | $209.83M$95.82M | +119.0% |
| Interest Expense | $18.40M$27.80M | −33.8% |
| Net Income | $141.33M$68.98M | +104.9% |
| EPS (Basic) | $1.18$0.58 | +103.4% |
| EPS (Diluted) | $1.17$0.57 | +105.3% |
| Shares Outstanding (Basic) | 119.91M119.89M | 0.0% |
| Shares Outstanding (Diluted) | 120.46M120.82M | −0.3% |
05—Questions
Frequently Asked Questions
How did PTC's profitability change in the third quarter of fiscal 2025?
Net income increased to $141.3 million from $69.0 million, and diluted EPS rose to $1.17 from $0.57. Operating income grew to $209.8 million from $95.8 million, and the filing attributes the higher revenue to contracts renewed in the period with higher total value and longer average duration.
What is PTC's annual recurring revenue (ARR) and how fast is it growing?
ARR was $2.42 billion as of the end of Q3'25, up 14% on an actual basis and 9% in constant currency compared with Q3'24. The filing describes ARR as the annualized value of active subscription software, SaaS, hosting, and support contracts.
How much debt did PTC repay, and what is its current debt position?
Total debt was $1,236.3 million at June 30, 2025, compared with $1,752.6 million at September 30, 2024. In Q2'25 PTC redeemed its $500 million 2025 senior notes using a revolver draw and cash on hand, and in Q3'25 it repaid $157 million of debt. Unused commitments under the credit facility were $988.7 million.
What risks does the filing highlight related to taxes?
PTC requested IRS consent in FY'24 to change the accounting method for certain deductions. The filing states that if consent is not received, it would have a material adverse impact on cash flow in the year of denial and could raise future tax payments. The company has accrued the related income tax payable in the meantime.
What are PTC's capital return plans?
PTC repurchased $75 million of stock in Q3'25 and $225 million in the first nine months of fiscal 2025. It currently intends to repurchase approximately $300 million of common stock in fiscal 2025, and $1,775.0 million remained available under its $2 billion authorization as of June 30, 2025.
06—Continue