PTC Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Daniel Jester - BMO Capital Markets - Analyst : I guess this is for Kristian. Maybe could you dive in a little bit deeper about how you constructed the downside scenario for the 7% ARR? Any additional color about what that assumes from a macro perspective or deal size delay, etc, would be very helpful.

Question: Adam Borg - Stifel - Analyst : Awesome, thanks so much for taking the question. I appreciate it. Maybe for Rob on the go-to-market. I'd love to talk a little bit more about just on the steps that have been taken, the confidence that you have, the internal indicators you're looking at to see that the go-to-market changes are indeed working. And, of course, Neil, chime in as well. Thanks so much.

Question: Saket Kalia - Barclays Capital - Analyst : Okay, great. Hey, guys, thanks for taking my question here. Kristian, maybe for you -- first off, good to see this year's free cash flow midpoint go up. Maybe as we think about the $1 billion in free cash flow next year, just appreciating that it's a very different macro, what are some of the puts and takes that you want us to think about with that target as we just think about kind of the more prudent ARR outlook for this year? Does that make sense? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 9:00PM, PTC.OQ - Q2 2025 PTC Inc Earnings Call

Question: Siti Panigrahi - Mizuho Securities - Analyst : Thank you. And Neil, thanks for that clear explanation about what you're seeing with customer. I wanted to ask you, in this kind of environment, how is your discussion going on with your customer in terms of AI adopts, and you guys introduced some of those AI products, both in Windchill and even ServiceMax and other areas as well. So how is the discussion going in terms of them adopting AI in this kind of environment?

Question: Ken Wong - Oppenheimer & Co. Inc - Analyst : Great. Thanks for taking my question. This one's for you, Kristian, somewhat building on Dan's question earlier. As you think about that 7% range and that requiring significant erosion in macro, any way to frame some of the moving pieces financially in terms of churn? And I think in the past, during COVID, you guys had talked about net new ARR down a certain amount. Like how should we think about what are some of the components that would go into getting to that 7%?

Question: Jason Celino - KeyBanc Capital Markets - Analyst : Perfect. Yeah, thank you for taking my questions. I've just one question, that is -- so one of your competitors talked about seeing some positives in deal activity at the end of March, but then things kind of normalized in April. It doesn't sound like a dynamic that you're kind of talking about today. But is this something that you saw? Just curious on how some of that demand activity might have changed. Neil, I know you talked about some of the convos you've been in but curious on this specifically. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 9:00PM, PTC.OQ - Q2 2025 PTC Inc Earnings Call

Question: Jay Vleeschhouwer - Griffin Securities - Analyst : Thank you. Good evening. Neil, Kristian, Rob, perhaps almost irrespective of the tariffs morass, maybe we can talk about the underlying growth dynamics of the business organically. For instance, when we think about your two largest pillars, CAD and PLM, it would seem that the active base growth there for each is in the mid-single digits, and that seems likely to continue if churn remains low. So over and above that mid-single digit for your two largest businesses, how are you thinking about perhaps pricing or pricing power? Dassault is going to be raising prices 2% to 5% in July. Does that give you some cover for pricing for yourselves? How are you thinking about ongoing cross-sell opportunities with ALM, SLM and so forth? Or on the other hand, does the new environment mean that customers will begin to disaggregate the deals and do maybe one three-letter acronym at a time? Thank you.

Question: Nay Soe Naing - Berenberg - Analyst : Hi. Thank you for taking my question. If I could start with some of the customer conversations that you mentioned that suggests that you might have some of the deals postponed or the deal sizes come in smaller than what you'd expected. You called out an example on the MedTech end market. I was wondering, are these conversations happening across the board or are these conversations happening more so in some of the verticals than others? If you could also comment from a geo perspective between CAD and PLM, that would be super helpful. And then my second part of the question is the top end of the guide now, 9%, can I ask what is assumed in that, please? Is it that the current macro uncertainty continues for H2? Or what would happen if we have meaningful global trade agreements in this quarter and next quarter, please?

Question: Joshua Tilton - Wolfe Research - Analyst : Hey, guys. Can you hear me?

Question: Joshua Tilton - Wolfe Research - Analyst : Also two parts and sorry to keep pounding on the guidance. But I guess hypothetically, if you guys have 10 customers and three customers or you're having these conversations with where it suggests things can get rightsized or delayed, does the midpoint of that 7% to 9% range, does that assume that just those three customers push out? Or is there a cushion within the midpoint of the guidance for those conversations that you're having today to kind of be more broader based? And then the second part of my question is I go back to kind of a follow-up to the last one. These conversations that you're having to customers, are they really so scary that what was previously the low end of the guidance last quarter has now become the high end of the guidance?