"In our third fiscal quarter, we again delivered strong ARR and cash flow results that exceeded our guidance ranges. On both a reported and constant currency basis, our ARR growth was 25% – with organic growth of 14% and our ServiceMax® business contributing an additional 11 points of growth. In Q3, our cash from operations was $169 million, up 45% year over year, and our free cash flow was $164 million, up 46% year over year," said James Heppelmann, CEO, PTC.
"Our strong product portfolio, now increasingly differentiated with the addition of ServiceMax, and our industry-leading SaaS capabilities align well to the manufacturing industry's push for digital transformation. Our strong market position and solid execution, coupled with a subscription model, position PTC to deliver ARR and cash flow growth at peer-leading levels," concluded Heppelmann.
Third Quarter 2023 Highlights
Key operating and financial highlights are set forth below. For additional details, please refer to the Q3'23 earnings presentation and financial data tables that have been posted to the Investor Relations section of our website at investor.ptc.com. The definitions of our operating and non-GAAP financial measures and reconciliations of non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.
$ in millions | Q3'23 | Q3'22 | YoY Change |
| Q3'23 Guidance |
ARR as reported | $1,929 | $1,544 | 25 % |
|
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ARR at constant currency | $1,868 | $1,496 | 25 % |
| $1,845 - $1,855 |
Organic ARR as reported | $1,762 | $1,544 | 14 % |
|
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Organic ARR at constant currency | $1,703 | $1,496 | 14 % |
|
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Cash from operations | $169 | $117 | 45 % |
| ~$160 |
Free cash flow | $164 | $112 | 46 % |
| ~$155 |
| Revenue 1 | $542 | $462 | 17 % |
|
|
| Operating margin 1 | 20 % | 17 % | ~300 bps |
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| Non-GAAP operating margin 1 | 34 % | 34 % | ~40 bps |
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| Earnings per share 1 | $0.51 2 | $0.60 2 | -14% 2 |
|
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| Non-GAAP earnings per share 1 | $0.99 2 | $0.97 2 | 2% 2 |
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| Total cash and cash equivalents | $282 | $322 | -13 % |
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| Gross debt | $2,365 3 | $1,434 | 65 % |
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| 1 | In Q3'23, revenue growth was 21% year over year on a constant currency basis. Revenue and, as a result, operating margin, operating profit, and earnings per share are impacted by revenue recognition under ASC 606. |
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| 2 | In Q3'23, both EPS and non-GAAP EPS benefitted from higher revenue, partially offset by higher cost of revenue, operating expenses, and interest expense. Q3'22 EPS included a $0.28 positive impact due to non-operational credits and a $0.13 positive impact due to a tax adjustment, both of which were primarily related to the sale of a portion of our PLM services business. |
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| 3 | Q3'23 gross debt includes a deferred acquisition payment related to ServiceMax of $620 million, which will be paid in October 2023. |
