"In our second fiscal quarter, we again delivered strong ARR and cash flow results that exceeded our guidance ranges. We reported ARR growth of 23%, organic ARR growth of 11%, and organic constant currency ARR growth of 13%. Our ServiceMax® and Codebeamer™ businesses added 13 points of ARR growth, taking constant currency ARR growth to 26%. In Q2, our cash from operations was $211 million, up 48% year over year, and our free cash flow was $207 million, up 48% year over year," said James Heppelmann, CEO, PTC.
"Our diverse 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 subscription model and strong market position, coupled with solid execution, position PTC to deliver financial performance at peer-leading levels. We look forward to building on our momentum with customers and partners at our LiveWorx® conference in May in Boston, and invite investors to join us," concluded Heppelmann.
Second Quarter 2023 Highlights
Key operating and financial highlights are set forth below. For additional details, please refer to the Q2'23 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 | Q2'23 | Q2'22 | YoY Change |
| Q2'23
|
ARR as reported | $1,882 | $1,532 | 23 % |
|
|
ARR at constant currency | $1,814 | $1,440 | 26 % |
| $1,790 - $1,810 |
Organic ARR as reported | $1,696 | $1,532 | 11 % |
|
|
Organic ARR at constant currency | $1,631 | $1,440 | 13 % |
|
|
Cash from operations | $211 | $142 | 48 % |
| ~$205 |
Free cash flow | $207 | $140 | 48 % |
| ~$200 |
Revenue1 | $542 | $505 | 7 % |
|
|
| Operating margin 1 | 23 % | 32 % | -890 bps |
|
|
| Non-GAAP operating margin 1 | 38 % | 42 % | -410 bps |
|
|
| Earnings per share 1 | $0.53 2 | $0.76 3 | -30 % |
|
|
| Non-GAAP earnings per share 1 | $1.16 4 | $1.39 4 | -17% 4 |
|
|
| Total cash and cash equivalents | $320 | $307 | 5 % |
|
|
| Gross debt | $2,545 5 | $1,275 | 100 % |
|
|
|
|
|
| 1 | In Q2'23, revenue was up 13% 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. |
| 2 | In Q2'23, EPS included a $0.10 negative impact due to acquisition and transaction-related charges for the ServiceMax acquisition. |
| 3 | In Q2'22, EPS included a $0.38 negative impact due to a decline in value of a publicly traded equity investment. |
| 4 | In Q2'23, non-GAAP EPS was down 17% year over year, primarily due to higher interest expense and lower non-GAAP operating income, partially offset by lower provision for income taxes. |
| 5 | Q2'23 gross debt includes a deferred acquisition payment related to ServiceMax of $620 million, which will be paid in October 2023. |
