10q10k10q10k.net

What changed in PTC Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of PTC Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+218 added−200 removedSource: 10-K (2025-11-21) vs 10-K (2024-11-14)

Top changes in PTC Inc.'s 2025 10-K

218 paragraphs added · 200 removed · 169 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

20 edited+6 added−9 removed16 unchanged
Biggest changeEnvironmental Sustainability At PTC, we’re working to contribute to the decarbonization and circularity of global manufacturing. While we have a climate action plan committed to reducing our company’s “footprint,” we believe far larger benefits will flow from our “handprint” stemming from our software offerings. Our software solutions enable manufacturers to design, build, and service their products more sustainably.
Biggest changeWhile we have a climate action plan committed to reducing our company’s “footprint,” we believe far larger benefits will flow from our “handprint” stemming from our software offerings, which enable manufacturers to design, build, and service their products more sustainably. Footprint Our emission reduction plan is validated by the Science Based Targets initiative (SBTi).
Talent Development & Employee Engagement As we focus on enhancing the employee experience, we are increasing our efforts to invest in our people and create meaningful opportunities to learn, grow, develop, and advance their careers. We have specific development programs and coaching programs, as well as numerous other self-led learning paths.
Talent Development & Employee Engagement As we focus on enhancing the employee experience, we are increasing our efforts to invest in our people and create meaningful opportunities to learn, grow, develop, and advance their careers. We have development programs and coaching programs, as well as numerous other self-led learning paths.
Our Codebeamer ® and pure::variants TM application lifecycle management (ALM) solutions enable companies to accelerate the development of products that contain software, including software-defined products which require multiple software variants to be created and updated over the life of the product.
Our Codebeamer ® and pure::variants TM application lifecycle management (ALM) solutions enable companies to accelerate the development of products that contain software, including software-defined products that require multiple software variants to be created and updated over the life of the product.
Our sales force focuses on large accounts, while our reseller channel provides a cost-effective means of covering the small- and medium-size business markets. Our strategic reseller and software partners enable us to increase our market reach, offer broader solutions, and add compelling technology to our offerings.
In general, our sales force focuses on large accounts, while our reseller channel provides a cost-effective means of covering the small- and medium-size business markets. Our strategic reseller and software partners enable us to increase our market reach, offer broader solutions, and add compelling technology to our offerings.
Our Proxy Statements for our Annual Meetings and Section 16 trading reports on SEC Forms 3, 4 and 5 also are available on our website. Corporate Information PTC was incorporated in Massachusetts in 1985 and is headquartered in Boston, Massachusetts. 7 Table of Contents
Our Proxy Statements for our Annual Meetings and Section 16 trading reports on SEC Forms 3, 4 and 5 also are available on our website. Corporate Information PTC was incorporated in Massachusetts in 1985 and is headquartered in Boston, Massachusetts. 6 Table of Contents
We primarily serve customers in the following industry verticals: • Industrials • Federal, Aerospace and Defense • Electronics and High Tech • Automotive • Medical Technology and Life Sciences Our customers are focused on improving their competitiveness in the face of global competition and increasing product complexity, and our suite of software offerings is a strategic enabler of this and their digital transformation initiatives.
We primarily serve customers in the following industry verticals: • Industrials • Federal, Aerospace and Defense • Electronics and High Tech • Automotive • Medical Technology and Life Sciences 1 Table of Contents Our customers are focused on improving their competitiveness in the face of global competition and increasing product complexity, and our suite of software offerings is a strategic enabler of this and their digital transformation initiatives.
Employees also have the opportunity to purchase PTC stock at a discount through our Employee Stock Purchase Plan. Our benefit offerings are designed to meet the needs of our employees and their families around the world.
Employees also have the opportunity to purchase PTC stock at a discount through our Employee Stock Purchase Plan in eligible jurisdictions. Our benefit offerings are designed to meet the needs of our employees and their families around the world.
For our SLM products, we compete with enterprise software companies such as Oracle, SAP and IFS AB, and with companies that offer point solutions. 3 Table of Contents Proprietary Rights Our software products and related technical know-how, along with our trademarks, including our company names, product names and logos, are proprietary.
For our SLM products, we compete with enterprise software companies such as Oracle, SAP, IFS AB, Microsoft, and Salesforce, and with companies that offer point solutions. Proprietary Rights Our software products and related technical know-how, along with our trademarks, including our company names, product names and logos, are proprietary.
We also use license management and other anti-piracy technology measures, as well as contractual restrictions, to curtail the unauthorized use and distribution of our products. Our proprietary rights are subject to the risks and uncertainties described under Item 1A. Risk Factors below, which is incorporated into this section by reference.
We also use license management and other anti-piracy technology measures, as well as contractual restrictions, to curtail the unauthorized use and distribution of our products. Our proprietary rights are subject to the risks and uncertainties described under Item 1A. Risk Factors, II.
We have already begun to implement programs and pursue initiatives to reduce our emissions and carbon footprint, including: • entering into a Virtual Power Purchase Agreement (VPPA) to reduce our future carbon footprint; • prioritizing energy efficiency and accessibility to public transportation when selecting office space; • providing a subsidy for employee’s public transportation commute costs; and • selecting suppliers with decarbonization targets.
We have already begun to implement programs and pursue initiatives to reduce our emissions and carbon footprint, including: • entering into a Virtual Power Purchase Agreement (VPPA); • prioritizing energy efficiency and accessibility to public transportation when selecting office space; and • providing a subsidy for employees' public transportation commute costs. Handprint Environmental sustainability is integral to our product offerings.
Our business is based on a subscription model, with 93% of our 2024 revenue being recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to pursue mid-to-long-term growth opportunities.
Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to support our customers and pursue mid-to-long-term growth opportunities.
This is a key aspect of our talent strategy. Our approach is focused on promoting an agile culture, an increased sense of belonging, engaged work environments, and high-performing teams. 5 Table of Contents PTC at-a-Glance As of September 30, 2024, PTC had 7,501 full-time employees. Our employee population is geographically diverse and serves a geographically diverse customer and partner network.
This is a key aspect of our talent strategy. Our approach is focused on promoting an agile culture, an increased sense of belonging, engaged work environments, and high-performing teams. PTC at-a-Glance As of September 30, 2025, PTC had 7,642 full-time employees.
Footprint Our emission reduction plan was validated by the Science Based Targets initiative (SBTi) in September 2024. Our near-term commitment is to reduce by 2030 combined Scope 1 (direct emissions from owned/controlled operations) and Scope 2 (indirect energy use) emissions by 50% and reduce Scope 3 - Category 1 (Purchased Goods and Services) by 25% compared to our 2022 baseline.
Our near-term commitment is to reduce by 2030 combined Scope 1 (direct emissions from owned/controlled operations) and Scope 2 (indirect energy use) emissions by 50% and reduce Scope 3 - Category 1 (Purchased Goods and Services) by 25% compared to our 2022 baseline.
Worldwide Employee Representation United States Employee Representation 6 Table of Contents Compensation and Benefits PTC provides a comprehensive and competitive compensation and benefits package designed to attract, retain, motivate, and engage talent around the world, including base salaries, and, for eligible roles, incentive and equity compensation.
Our employee population is geographically diverse and serves a geographically diverse customer and partner network. 5 Table of Contents Compensation and Benefits PTC provides a comprehensive and competitive compensation and benefits package designed to attract, retain, motivate, and engage talent around the world, including base salaries, and, for eligible roles, incentive and equity compensation.
Our Markets and How We Address Them Our strategy aims to create value for our customers, increase our Annual Run Rate (ARR) and cash flow, and deliver long-term value for shareholders.
Our Markets and How We Address Them We aim to create value for our customers, increase our Annual Run Rate (ARR) and cash flow, and deliver long-term value for shareholders. We focus our resources and attention on the solutions described above, where we believe we can create the greatest customer value.
We enable our customers to establish a strong product data foundation and leverage that foundation to drive cross-functional collaboration, accelerate new product introduction timelines and deliver higher product quality.
Given the breadth and openness of our portfolio, we enable the Intelligent Product Lifecycle: establishing a strong product data foundation in the engineering department and democratizing the access and use of that data across the enterprise to drive cross-functional collaboration, accelerate new product introduction timelines, and deliver higher product quality.
ITEM 1. Bu siness Our Business PTC is a global software company that enables manufacturers and product companies to digitally transform how they design, manufacture, and service the physical products that the world relies on. Headquartered in Boston, Massachusetts, PTC employs over 7,000 people and supports more than 30,000 customers globally.
ITEM 1. Bu siness Our Business PTC is a global software company headquartered in Boston, Massachusetts. We employ over 7,000 people and support more than 30,000 customers globally.
To a lesser extent, our growth is also supported by new customers and price increases. We derive approximately 75% of our sales from products and services sold directly by our sales force to end-user customers. The rest of our sales of products and services are through third-party resellers.
Our growth is primarily driven by existing customers that continue to upgrade and expand their PTC footprint, multi-product adoption by customers, our commercial optimization initiatives, and new customers. Approximately 75% of our sales are from products and services sold directly by our sales force to end-user customers. The rest of our sales of products and services are through third-party resellers.
With our software, manufacturers can support their sustainability and compliance initiatives, including by designing with less material, enhancing product repairability and circularity, improving factory efficiency, and enabling remote service. 4 Table of Contents People and Culture Within our work environment we seek to create an equitable and inclusive culture in which all employees can thrive.
With our software, manufacturers can support their sustainability and compliance initiatives, including by designing with less material, enhancing product repairability and circularity, improving factory efficiency, and enabling remote service. In preparation for our sustainability reporting obligations, we conducted an enterprise-wide double materiality assessment to assess our sustainability risks and opportunities.
Finally, to cultivate a community of belonging, our 11 Employee Resource Groups foster an inclusive culture and facilitate safe spaces for employees to navigate social issues and challenges. Additional Information About Our Employee Initiatives You can find more information about our employee initiatives in our 2024 Impact Report, which we expect to release in early 2025.
We also integrate inclusive and thoughtful practices into the planning and execution of how we attract, select, develop, and retain talent. Additional Information About Our Employee Initiatives You can find more information about our employee initiatives in our 2025 Impact Report, which we expect to release in December 2025.
Removed
Our offerings include CAD (Computer Aided Design) solutions for product data authoring and PLM (Product Lifecycle Management) solutions for product data management and process orchestration. 1 Table of Contents Within the overall PLM category, our offerings also include ALM (Application Lifecycle Management) and SLM (Service Lifecyle Management).
Added
By embracing the Intelligent Product Lifecycle, our customers establish the quality, consistency, and traceability of product data, ensuring the data is up-to-date, accessible, reliable, and actionable. Our customers can then go on to use this data to break down silos, streamline workflows, and achieve interoperability across departments, functions, and systems.
Removed
Given the breadth and openness of our portfolio, we can enable end-to-end digital thread initiatives, which leverage a connected flow of product data across design, manufacturing, service, and, ultimately, reuse. A digital thread enables product companies to break down silos, streamline workflows, and achieve interoperability across departments, functions and systems with a single version of truth.
Added
This includes the growing emphasis on AI-driven transformation across our customers’ teams, operations, and processes. A product data foundation is the backbone of AI-driven transformation. Our business is based on a subscription model and 95% of our 2025 revenue is recurring in nature.
Removed
It also secures the quality, consistency and traceability of product-related data, ensuring that the data is up-to-date, accessible, reliable and actionable. With a digital thread, the right data is delivered to the right people at the right time and in the right context across the value chain.
Added
Risks Related to Our Intellectual Property below, which is incorporated into this section by reference. 3 Table of Contents Environmental Sustainability At PTC, we’re working to contribute to the decarbonization and circularity of global manufacturing.
Removed
Enabling technologies Our principal products and services are enhanced by a collection of enabling technologies, including SaaS versions of our Creo ® CAD and Windchill ® PLM software, artificial intelligence software, our ThingWorx ® Internet of Things software, and our Vuforia ® augmented reality software.
Added
As part of our assessment, we identified financially material opportunities related to consumer demand for software solutions that enable the mitigation of climate change and support the transition to a circular economy.
Removed
The primary focus of these technologies is to deliver value-added capabilities to our principal products and services, such as the improved security and collaboration environment of a SaaS platform; unlocking productivity with artificial intelligence; moving product data more quickly across engineering, manufacturing, and service using IoT; or automatically analyzing the quality of a manufactured product with augmented reality.
Added
While these opportunities cannot yet be quantified to a reasonable degree of certainty, additional qualitative information about these opportunities can be found in our 2025 Impact Report, which we expect to release in December 2025 in compliance with California’s Climate-Related Financial Risk Act. 4 Table of Contents People and Culture Within our work environment, we seek to create an inclusive culture in which all employees can thrive.
Removed
We focus our resources on the following five solutions, where we believe we can create the greatest customer value: • PLM • ALM • SLM • CAD • SaaS or Software as a Service Our growth is primarily driven by existing customers that continue to expand their PTC footprint, largely relating to their focus on improving their competitiveness through digital transformation.
Added
The variety of options means that employees have the ability to focus on the development path most meaningful to them. Our Culture We are committed to building a strong and inclusive workforce. We review and revise our practices and processes based on feedback and engagement scores from employee pulse surveys.
Removed
Handprint Environmental sustainability is integral to our product offerings.
Removed
The variety of options means that employees have the ability to focus on the development path most meaningful to them. Diversity, Equity, and Inclusion (DEI) Commitment to our values and diversity in our workforce is supported by various ongoing efforts. We mitigate bias by coaching managers and leaders in fostering psychologically safe environments.
Removed
We also review and revise our processes based on feedback and engagement scores from employee pulse surveys. We embed equitable practices into the planning and execution of how we attract, select, develop, and retain talent. Meanwhile, our DEI ambassadors are aligned with business functions to amplify and enhance our efforts in these areas.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+12 added−5 removed57 unchanged
Biggest changeIntellectual property infringement claims could be asserted against us, which could be expensive to defend, could result in limitations on our use of the claimed intellectual property, and could adversely affect our business and prospects. The software industry is characterized by frequent litigation regarding copyright, patent and other intellectual property rights. We have faced such lawsuits from time to time.
Biggest changeIf we inadvertently use open source software in a manner that triggers such disclosure obligations, we could be required to publicly disclose portions of our proprietary code, which could result in a loss of competitive advantage and intellectual property rights, which could adversely affect our business, financial condition, operating results, and prospects. 11 Table of Contents Intellectual property infringement claims could be asserted against us, which could be expensive to defend, could result in limitations on our use of the claimed intellectual property, and could adversely affect our business and prospects.
Lack of availability of this infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud or security attacks that we cannot predict or prevent. Such outages could adversely impact our business, financial condition, results of operations, and prospects.
Lack of availability of this infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud, and/or security attacks that we cannot predict or prevent. Such outages could adversely impact our business, financial condition, results of operations, and prospects.
Whether we will be successful and will accomplish our business and financial objectives is subject to risks and uncertainties, including but not limited to: our ability to further develop and scale infrastructure, our ability to include functionality and usability in such offerings that address customer requirements, our ability and the ability of our partners to transition existing customer implementations to SaaS, customer demand, attach and renewal rates, channel adoption, and our costs.
Whether we will be successful and will accomplish our business and financial objectives is subject to risks and uncertainties, including but not limited to: our ability to include functionality and usability in such offerings that address customer requirements, our ability to further develop and scale infrastructure, our ability and the ability of our partners to transition existing customer implementations to SaaS, customer demand, attach and renewal rates, channel adoption, and our costs.
We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents and common law safeguards, including trade secret protection, as well as restrictions on disclosures and transferability contained in our agreements with other parties. Despite these measures, the laws of all relevant jurisdictions may not afford adequate protection to our products and other intellectual property.
We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents, and common law safeguards, including trade secret protection, as well as restrictions on disclosures and transferability contained in our agreements with other parties. Despite these measures, the laws of all relevant jurisdictions may not afford adequate protection to our software products and other intellectual property.
If these companies fail to perform as we expect, or if a company terminates or substantially alters the terms of the relationship, we could experience delays in product development, reduced or delayed sales, customer dissatisfaction, and additional expenses, and our business, financial condition, results of operations, and prospects could be materially adversely affected.
If these companies fail to perform as we expect, or if a company terminates or substantially alters the terms of the relationship, we could experience delays in product development, reduced or delayed sales, customer dissatisfaction, incur additional expenses, and our business, financial condition, results of operations, and prospects could be materially adversely affected.
A significant breach of the security and/or integrity of our products or systems, or those of our third-party service providers, whether intentional or by human error by our employees or others, could disrupt our business operations or those of our customers, could prevent our products from functioning properly, could enable access to sensitive, proprietary or confidential information of our customers, or could enable access to our sensitive, proprietary or confidential information.
A significant breach of the security and/or integrity of our products or systems, or those of our third-party service providers, whether intentional or by human error by our employees or others, could disrupt our business operations or those of our customers, could prevent our products from functioning properly, could enable access to our sensitive, proprietary or confidential information or that of our customers.
Some of our competitors and potential competitors have greater name recognition in the markets we serve and greater financial, technical, sales and marketing, and other resources, which could limit our ability to gain customer recognition and confidence in our products and solutions and successfully sell our products and solutions, which could adversely affect our ability to grow our business.
Some of our competitors and potential competitors have greater name recognition in the markets we serve and more financial, technical, sales and marketing, and other resources, which could limit our ability to gain customer recognition and confidence in our products and solutions and successfully sell our products and solutions, which could adversely affect our ability to grow our business.
Our compliance risks are heightened due to the go-to-market approach for our business that relies heavily on a partner ecosystem, the fact that some of the countries we operate in have a higher incidence of corruption and fraudulent business practices, the fact that we sell to governments and state-owned business enterprises, and the fact that global enforcement of laws has significantly increased. 10 Table of Contents Accordingly, while we strive to maintain a comprehensive compliance program, an employee, agent or business partner may violate our policies or U.S. or other applicable laws, as has occurred in the past, or we may inadvertently violate such laws.
Our compliance risks are heightened due to the go-to-market approach for our business that relies heavily on a partner ecosystem, the fact that some of the countries we operate in have a higher incidence of corruption and fraudulent business practices, the fact that we sell to governments and state-owned business enterprises, and the fact that global enforcement of laws has significantly increased. 9 Table of Contents Accordingly, while we strive to maintain a comprehensive compliance program, an employee, agent or business partner may violate our policies or U.S. or other applicable laws, as has occurred in the past, or we may inadvertently violate such laws.
The additional indebtedness incurred in compliance with these restrictions could be substantial. In addition, the credit agreement and the indenture governing our Senior Notes due 2025 and 2028, will not prevent us from incurring obligations that do not constitute indebtedness.
The additional indebtedness incurred in compliance with these restrictions could be substantial. In addition, the credit agreement and the indenture governing our senior notes due 2028, will not prevent us from incurring obligations that do not constitute indebtedness.
For example, customer demand for SaaS solutions is increasing. While our Arena, ServiceMax, and Onshape solutions are cloud-native SaaS solutions, and we have introduced our Windchill+, Creo+, and Kepware+ SaaS solutions, customers may not adopt them as we expect.
For example, customer demand for SaaS solutions is increasing. While our Arena, ServiceMax, and Onshape solutions are cloud-native SaaS solutions, and we have introduced our Windchill+ and Creo+ SaaS solutions, customers may not adopt them as we expect.
Risks Related to Acquisitions Businesses we acquire may not generate the sales and earnings we anticipate and may otherwise adversely affect our business and prospects. We have acquired, and intend to continue to acquire, new businesses and technologies.
Risks Related to Acquisitions and Divestitures Businesses we acquire may not generate the sales and earnings we anticipate and may otherwise adversely affect our business and prospects. We have acquired, and intend to continue to acquire, new businesses and technologies.
If we cannot make scheduled payments on our debt, we will be in default and the lenders under our credit facility could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings, the holders of our Senior Notes could declare all outstanding principal, premium, if any, and interest to be due and payable, and we could be forced into bankruptcy or liquidation.
If we cannot make scheduled payments on our debt, we will be in default and the lenders under our credit facility could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings, the holders of our 2028 Notes could declare all outstanding principal, premium, if any, and interest to be due and payable, and we could be forced into bankruptcy or liquidation.
Any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platforms and impair our ability to attract new users, any of which could adversely affect our business, financial condition, results of operations, and prospects. 9 Table of Contents We may be unable to hire or retain employees with the necessary skills to operate and grow our business, which could adversely affect our ability to compete and adversely affect our business, financial condition, results of operations, and prospects.
Any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platforms and impair our ability to attract new users, any of which could adversely affect our business, financial condition, results of operations, and prospects. 8 Table of Contents We may be unable to hire or retain employees with the necessary skills to operate and grow our business, which could adversely affect our ability to compete and adversely affect our business, financial condition, results of operations, and prospects.
Malicious code, viruses or vulnerabilities that are undetected by us or our service providers may disrupt our business operations generally and may have a disproportionate effect on those of our products that are developed and delivered in the cloud environment. 8 Table of Contents While we devote resources to maintaining the security and integrity of our products and systems, as well as performing due diligence of our third-party service providers, security breaches that have not had a material effect on our business or that of our customers have occurred, and we will continue to face cybersecurity threats and exposure.
Malicious code, viruses or vulnerabilities that are undetected by us or our service providers may disrupt our business operations generally and may have a disproportionate effect on our products that are developed and delivered in the cloud environment. 7 Table of Contents While we devote resources to maintaining the security and integrity of our products and systems, as well as performing due diligence of our third-party service providers, security breaches that have not had a material effect on our business or that of our customers have occurred, and we will continue to face cybersecurity threats and exposure.
If we were to issue a significant amount of equity securities in connection with an acquisition, existing stockholders would be diluted and our stock price could decline. 13 Table of Contents IV.
If we were to issue a significant amount of equity securities in connection with an acquisition, existing shareholders would be diluted and our stock price could decline. 13 Table of Contents IV.
These events could result in a loss of your investment. We are required to comply with certain financial and operating covenants under our debt agreements. Any failure to comply with those covenants could cause amounts borrowed to become immediately due and payable and/or prevent us from borrowing under the credit facility.
These events could result in a loss of your investment. 15 Table of Contents We are required to comply with certain financial and operating covenants under our debt agreements. Any failure to comply with those covenants could cause amounts borrowed to become immediately due and payable and/or prevent us from borrowing under the credit facility.
Any of the above-listed factors could have an adverse effect on our business, financial condition, results of operations, and prospects, and our ability to meet our payment obligations under our debt agreements. Despite our current level of indebtedness, we and our subsidiaries might incur substantially more debt and other obligations.
Any of the above-listed factors could have an adverse effect on our business, financial condition, results of operations, and prospects, and our ability to meet our payment obligations under our debt agreements. 14 Table of Contents Despite our current level of indebtedness, we and our subsidiaries might incur substantially more debt and other obligations.
In addition to possible claims with respect to our proprietary products, some of our products contain technology developed by and licensed from third parties and we may likewise be susceptible to infringement claims with respect to these third-party technologies. 12 Table of Contents III.
In addition to possible claims with respect to our proprietary products, some of our products contain technology developed by and licensed from third parties and we may likewise be susceptible to infringement claims with respect to these third-party technologies. III.
In addition, if we are not in compliance with the financial and operating covenants under the credit facility when we wish to borrow funds, we will be unable to borrow funds to pursue certain corporate initiatives, including strategic acquisitions, which could adversely affect our business and prospects. 15 Table of Contents V.
In addition, if we are not in compliance with the financial and operating covenants under the credit facility when we wish to borrow funds, we will be unable to borrow funds to pursue certain corporate initiatives, including strategic acquisitions, which could adversely affect our business and prospects. V.
Risks Related to Our Intellectual Property We may be unable to adequately protect our proprietary rights, which could adversely affect our business and our prospects. Our software products are proprietary.
II. Risks Related to Our Intellectual Property We may be unable to adequately protect our proprietary rights, which could adversely affect our competitive position, business and prospects. Our software products are proprietary.
If new 14 Table of Contents debt is added to our current debt levels, or we incur other obligations, the related risks that we now face could increase.
If new debt is added to our current debt levels, or we incur other obligations, the related risks that we now face could increase.
Our effective tax rate and tax payment obligations can be adversely affected by several factors, many of which are outside of our control, including: • changes in tax laws (for example, the introduction of an amendment to Section 174 of the U.S. tax legislation), regulations, and interpretations in multiple jurisdictions in which we operate; • assessments, and any related tax interest or penalties, by taxing authorities; • changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes to the financial accounting rules for income taxes; • unanticipated changes in tax rates; and • changes to a valuation allowance on net deferred tax assets, if any. 17 Table of Contents ITEM 1B.
Our effective tax rate and tax payment obligations can be adversely affected by several factors, many of which are outside of our control, including: • changes in tax laws regulations, and interpretations in multiple jurisdictions in which we operate; • assessments, and any related tax interest or penalties, by taxing authorities; • changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes to the financial accounting rules for income taxes; • unanticipated changes in tax rates; and • changes to a valuation allowance on net deferred tax assets, if any.
We are subject to an increasing number of laws and regulations promulgated by multiple countries and jurisdictions that require new and expansive disclosure on sustainability topics and, in some cases, remediation of adverse effects, that will increase our compliance costs and expose us to risks associated with regulatory compliance.
We and our customers are subject to an increasing number of laws and regulations enacted by multiple countries and jurisdictions that require new and extensive disclosures on sustainability topics, and, in some cases, remediation of adverse effects. This evolving regulatory environment will increase our compliance costs and expose us to risks associated with regulatory compliance.
All amounts outstanding under the credit facility and the Senior Notes will be due and payable in full on their respective maturity dates. As of November 14, 2024, we had unused commitments under our credit facility of approximately $1,073 million.
All amounts outstanding under the credit facility and the 2028 Notes will be due and payable in full on their respective maturity dates. As of November 21, 2025, we had unused commitments under our credit facility of approximately $949 million.
In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our tax returns are subject to review by various taxing authorities.
Significant judgment is required in determining our worldwide income tax provision and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our tax returns are subject to review by various taxing authorities.
Other risks inherent in our international operations include, but are not limited to, the following: • difficulties in staffing and managing foreign sales and development operations; • exposure of our operations and employees to political instability and armed conflict in the countries and regions in which we operate, including Israel; • increased financial accounting and reporting burdens and complexities; • increased regulatory and compliance risks; • inadequate local infrastructure; and • greater difficulty in protecting our intellectual property. 16 Table of Contents We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense, reduce our net income, and increase our tax payment obligations.
Other risks inherent in our international operations include, but are not limited to, the following: • difficulties in staffing and managing foreign sales and development operations; • exposure of our operations and employees to political instability and armed conflict in the countries and regions in which we operate, including Israel; • increased financial accounting and reporting burdens and complexities; 16 Table of Contents • increased regulatory and compliance risks; • inadequate local infrastructure; and • greater difficulty in protecting our intellectual property.
In addition, any legal action to protect our intellectual property rights that we may bring or be engaged in could be costly, may distract management from day-to-day operations and may lead to additional claims against us, and we may not succeed, all of which could adversely affect our business, financial condition, operating results, and prospects.
Any legal action to protect our intellectual property rights that we may bring or be engaged in could be expensive, divert management’s attention from regular operations, and lead to additional claims against us, and we may not prevail, any of which could adversely affect our business, financial condition, operating results, and prospects.
As of November 14, 2024, our total debt outstanding was approximately $1,668 million, $1 billion of which was associated with the 3.625% Senior Notes and 4.000% Senior Notes (together, “Senior Notes”) issued in February 2020, which mature in February 2025 and 2028, respectively, and are unsecured; $177 million of which was borrowed under our credit facility revolving line, which matures in January 2028; and $491 million of which was borrowed under our credit facility term loan [which began amortizing in March 2024].
As of November 21, 2025, our total debt outstanding was approximately $1,270 million, $500 million of which was associated with the 4.000% senior notes issued in February 2020, which mature in February 2028 and are unsecured ("2028 Notes"); $301 million of which was borrowed under our credit facility revolving line, which matures in January 2028; and $469 million of which was borrowed under our credit facility term loan (which began amortizing in March 2024).
Manufacturers worldwide continue to face uncertainty about the global macroeconomic environment due to, among other factors, the effects of earlier and ongoing supply chain disruptions, high interest rates and inflation, volatile foreign exchange rates and the current relative strength of the U.S. Dollar, and the U.S. government’s focus on technology transactions with non-U.S. entities.
Manufacturers worldwide continue to face uncertainty about the global macroeconomic environment due to, among other factors, the effects of recently imposed import tariffs and threats of additional import tariffs, the effects of earlier and ongoing supply chain disruptions, high interest rates and inflation, volatile foreign exchange rates and the current relative strength of the U.S.
Further, if we do not achieve the expected return on our investments, it could impair the intangible assets and goodwill that we recorded as part of an acquisition, which could require us to record a reduction to the value of those assets.
Further, if we do not achieve the expected return on our investments, it could impair the intangible assets and goodwill that we recorded as part of an acquisition, which could require us to record a reduction in the value of those assets. 12 Table of Contents Divestitures of businesses or assets may not achieve the intended strategic or financial benefits and may otherwise adversely affect our business and prospects.
CSDDD will require us to conduct due diligence to identify, prevent, mitigate, and account for actual and potential adverse impacts on human rights and the environment arising from our own operations and our value chains and to remediate any such adverse impacts.
These frameworks require extensive disclosures related to sustainability risks and opportunities. Additionally, the CSDDD will require us to conduct due diligence to identify, prevent, mitigate, and account for actual and potential adverse impacts on human rights and the environment arising from our operations and those of our customers and suppliers, and to remediate such impacts.
Any such claim could result in significant expense to us and divert the efforts of our technical and management personnel. We cannot be sure that we would prevail against any such asserted claims.
The software industry is characterized by frequent litigation regarding copyright, patent and other intellectual property rights. We have faced such lawsuits from time to time. Any such claim could result in significant expense to us and divert the efforts of our technical and management personnel. We cannot be sure that we would prevail against any such asserted claims.
The regulatory landscape for sustainability continues to evolve and expand and the introduction of additional laws or regulatory requirements may impose further compliance burdens and further increase our compliance costs.
The regulatory landscape for sustainability disclosures and obligations continues to evolve and expand, and additional laws or regulatory requirements may impose further compliance burdens on us and further increase our compliance and operating costs. We are subject to increasing, evolving, and conflicting expectations and scrutiny with respect to our sustainability disclosures and initiatives.
Customers may delay, reduce, or forego purchases of our solutions due to these challenges and concerns, which could adversely affect our business, financial condition, results of operations, and prospects. If we fail to successfully transform our operations to support the sale of SaaS solutions and to develop competitive SaaS solutions, our business and prospects could be adversely affected.
Dollar, and the U.S. government’s focus on technology transactions with non-U.S. entities. Customers may delay, reduce, or forego purchases of our solutions due to these challenges and concerns, which could adversely affect our business, financial condition, results of operations, and prospects.
As a multinational organization, we are subject to income taxes as well as non-income based taxes in the U.S. and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision and other tax liabilities.
We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense, reduce our net income, and increase our tax payment obligations. As a multinational organization, we are subject to income taxes as well as non-income based taxes in the U.S. and in various foreign jurisdictions.
Compliance with these directives requires significant investment in resources, including the implementation of new reporting systems, data collection processes, and due diligence procedures.
Compliance with these laws and regulations requires significant investment in resources, including the implementation of new reporting systems, enhanced data collection processes, and robust due diligence procedures. Many of our customers and potential customers are also subject to these laws and directives. As a result, those companies will be required to assess our sustainability efforts and impacts.
Transforming our business to offer and support SaaS solutions requires considerable additional investment in our organization.
If we fail to successfully develop competitive SaaS solutions and to transform our operations to support the sale of SaaS solutions, our business and prospects could be adversely affected. Transforming our business to offer and support SaaS solutions requires considerable additional investment in our organization.
As many of our customers and potential customers, particularly those in Germany and elsewhere in the European Union, are also subject to such laws and directives, those companies will increasingly be required to assess our sustainability efforts and impacts; if we are unable to satisfactorily address their requests for information or other sustainability related requests, contracting periods with those companies may be extended or those companies may elect to use other suppliers or switch suppliers, which could adversely affect our business, financial condition, results of operations, and prospects.
If we are unable to satisfactorily address their requests for information or other sustainability-related requirements or expectations, customers may reduce or terminate their contracts with us and customers and potential customers may choose alternative software solutions, which could adversely affect our business, financial condition, results of operations, and prospects.
These laws and regulations include those promulgated pursuant to the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) and its Corporate Sustainability Due Diligence Directive (“CSDDD”). CSRD requires new and expansive disclosures related to sustainability risks and opportunities.
The regulatory landscape for sustainability disclosures continues to evolve and expand and impose greater disclosure obligations on us. These laws and regulations include the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) and Corporate Sustainability Due Diligence Directive (“CSDDD”), and California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Disclosure Act.
If our related data, processing and reporting are incomplete or otherwise inaccurate, or if we fail to achieve progress on our stated targets or initiatives when or as expected, our business, financial condition, operating results, and prospects could be adversely affected. 11 Table of Contents II.
If we fail, or are perceived to have failed, to make progress on our stated sustainability targets or initiatives, or if our sustainability initiatives or disclosures are or are perceived to be inadequate, inaccurate, misleading, or unlawful, our reputation could be harmed, and we could face regulatory investigations, enforcement actions, fines, penalties, and litigation, any of which could adversely affect our business, financial condition, results of operations, and prospects.
Removed
We and our customers are subject to an increasing number of laws and regulations related to sustainability matters, compliance with which could adversely affect our business, financial condition, results of operations, and prospects.
Added
Failure to meet stakeholder expectations or actual or perceived inconsistencies or inaccuracies in our sustainability disclosures could result in reputational harm, regulatory investigations, or litigation. Expectations around environmental, social, governance and other sustainability matters continue to evolve rapidly, and stakeholders – including investors, customers, employees, and regulators – are increasingly focused on our sustainability disclosures and performance against targets.
Removed
We are committed to meeting existing and future regulatory requirements; however, the financial and operational impact of current and future laws and regulations remains uncertain and could materially adversely affect our business, financial condition, results of operations and prospects.
Added
Additionally, differing stakeholder views on sustainability priorities may create tension or conflict, which could adversely affect our reputation, employee morale, or investor relations. 10 Table of Contents Our use of artificial intelligence (“AI”) technology and the incorporation of AI technology into our products carries risks and challenges that could adversely affect our business, financial condition, results of operations, and prospects.
Removed
Increased scrutiny and expectations around environmental, social, and governance (“ESG”) matters may require us to incur additional costs or otherwise adversely impact our reputation, business, and prospects. Our stakeholders, including investors, customers, suppliers, and employees, are placing greater emphasis on our ESG performance and transparency.
Added
We are increasingly incorporating AI capabilities into many of our products to enable our customers to become more agile and productive.
Removed
This increasing stakeholder attention to and expectations around ESG matters, particularly sustainability matters, and our response to the same, may result in higher costs (including higher costs related to compliance, stakeholder engagement, and contracting), adversely impact our reputation, or otherwise negatively affect our business performance and prospects.
Added
The integration of AI into our products presents risks and challenges, including that we may be unable to integrate AI technologies into our products when or as we expect, that our customers do not appreciate or realize the anticipated benefits of such technologies, that competitors may incorporate AI into their products more quickly or effectively, that our AI-based solutions could produce inaccurate results or have other unintended consequences, or that our AI-based solutions may expose us to lawsuits, regulatory investigations, or other proceedings, and subject us to legal liability as well as brand and reputational harm, all of which could negatively affect our business, financial condition, results of operations, and prospects.
Removed
Our statements about our sustainability, environmental and human capital initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change.
Added
We also use AI tools internally to make certain business processes more efficient. While these technologies offer significant benefits, they also create risks and challenges. Although we implement measures to address the accuracy and appropriate use of AI tools, including internal AI policies and training, these efforts may not always be successful.
Added
Inadvertent selection of AI tools that introduce bias, errors, or hallucinations, as well as any failure by our employees, contractors, or partners to adhere to our AI policies, or inappropriate use of AI, could result in violations of confidentiality obligations, laws, or regulations, jeopardize our intellectual property rights, or expose our products or business systems to defects and malware, any of which could adversely affect our business, financial condition, results of operations, and prospects.
Added
Many of our products and services incorporate or depend on open source software components, which are governed by various open source licenses. Some of these licenses may require, as a condition of use, modification, or distribution, that we make available the source code of our proprietary software or derivative works.
Added
While we maintain policies and procedures designed to monitor and control the use of open source software in our products and in any third-party software that is incorporated into our products, and ensure compliance with applicable licenses, these controls may not be effective in all cases.
Added
We have divested, and may in the future divest, businesses, product lines, or other assets as part of our ongoing business strategy.
Added
If we fail to successfully execute and manage these divestitures, if a divestiture does not yield the anticipated financial or operational benefits, or if the businesses or assets we divest have unexpected legal, financial, or operational liabilities, our business, financial condition, results of operations, and prospects could be adversely affected.
Added
The types of issues that we may face in connection with divestitures include: • difficulties separating the operations, technologies, or personnel of the business to be divested from our ongoing operations; • disruption to our remaining business, including loss of revenue or customers associated with the divested business or asset; • unanticipated costs or liabilities, including indemnification obligations, retained liabilities, or disputes with purchasers; • diversion of management and employee attention from ongoing operations; • challenges in reallocating resources and personnel following the divestiture; • potential loss of key personnel who may leave as a result of the transaction; • adverse impacts on our relationships with customers, partners, or suppliers; • potential incompatibility of business cultures or systems during transition; and • litigation arising from the transaction, including disputes over purchase price adjustments, indemnities, or other contractual terms.
Added
Further, if investors or analysts do not like or understand the divestiture or if they believe we did not receive a fair price for the business or assets, they may sell their shares or alter their view of our prospects, which could cause our share price to decline.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

19 edited+2 added−3 removed3 unchanged
Biggest changeOngoing program assessments are performed to monitor progress and identify opportunities for growth. Risk Assessment PTC conducts an annual cybersecurity maturity assessment. Periodically, we engage a third-party security consulting firm to conduct an Enterprise Security Maturity Assessment. This independent assessment provides a mechanism to benchmark our current risk profile and enables us to measure progress as we make program improvements.
Biggest changeThis independent assessment provides a mechanism to benchmark our current risk profile and enables us to measure progress as we make program improvements. Identified cybersecurity risks are reviewed by the Cybersecurity Strategy Council, which ensures that risk tolerances are established and used to appropriately manage risks and address the risks identified.
Management’s Role in Assessing and Managing Our Risks from Cybersecurity Threats Our Cybersecurity Program is overseen by executives on our Executive Leadership Team and managed by our Cybersecurity Strategy Council, including our Senior Vice President, Chief Information Security Officer (CISO), who reports to our Executive Vice President, Chief Digital Officer (CDO).
Management’s Role in Assessing and Managing Our Risks from Cybersecurity Threats Our Cybersecurity Program is overseen by executives on our Executive Leadership Team and managed by our Cybersecurity Strategy Council, including our Senior Vice President, Chief Information Security Officer (CISO), who reports to our Executive Vice President, Chief Digital and Information Officer (CDO) .
Our CDO joined PTC as Chief Digital Officer in January 2022 and is responsible for PTC’s global information technology (IT) team, overseeing PTC’s digital infrastructure and working with business leaders to guide PTC’s digital process optimization strategy. He has more than two decades of IT and operations leadership.
Our CDO joined PTC as Chief Digital and Information Officer in January 2022 and is responsible for PTC’s global information technology (IT) team, overseeing PTC’s digital infrastructure and working with business leaders to guide PTC’s digital process optimization strategy. He has more than two decades of IT and operations leadership.
The overall operational program is led by the Cybersecurity Strategy Council, a cross-functional team of executives and subject matter experts, including our Chief Product Security Officer, Chief Information Security Officer and Chief Compliance Officer. The Cybersecurity Strategy Council oversees a “Three Lines Model” of Operations, Risk Monitoring and Oversight, and Audit, to effectively address cybersecurity, risk management and control.
The overall operational program is led by the Cybersecurity Strategy Council, a cross-functional team of executives and subject matter experts, led by our Chief Product Security Officer, Chief Information Security Officer and Chief Compliance Officer. The Cybersecurity Strategy Council oversees a “Three Lines Model” of Operations, Risk Monitoring and Oversight, and Audit, to effectively address cybersecurity, risk management, and control.
Our CDO is responsible for our broader IT program, which includes PTC’s ability to remediate and recover from a cybersecurity incident while reducing impacts to the business and operations. Our CDO and CISO regularly report directly to the Cybersecurity Committee of the Board of Directors on our Cybersecurity Program and efforts to prevent, detect, mitigate, and remediate issues.
Our CDO is responsible for our broader IT program, which includes our ability to remediate and recover from a cybersecurity incident while reducing impacts to the business and operations . Our CDO and CISO regularly report directly to the Cybersecurity Committee of the Board of Directors on our Cybersecurity Program and efforts to prevent, detect, mitigate, and remediate issues.
Prior to outsourcing or allowing third-party access to PTC or customer systems, IP, or data; risks associated with such activity are clearly identified and documented. The process of selecting a third-party vendor includes due diligence of the vendor service or product in question.
Prior to outsourcing or allowing third-party access to PTC or customer systems, IP, or data; risks associated with such activity are identified and documented. The process of selecting a third-party vendor includes due diligence of the vendor service or product in question.
Third-party companies using PTC facilities or accessing PTC’s IT Systems are subject to PTC’s VRM review and are required to demonstrate that proper security measures are in place before they have access to any PTC IT systems or data.
Third-party companies using PTC facilities or accessing PTC’s IT Systems are subject to PTC’s VRM review and must demonstrate that proper security measures are in place before they have access to any PTC IT systems or data.
The Policy is tested on a regular basis, including a continuous improvement program involving periodic tabletop exercises. Cybersecurity incident handling is managed by individual organizations with cybersecurity responsibility and monitored/guided by applicable corporate functions. All Cybersecurity Incident Response Plans under the Policy are based on industry standards, such as the NIST Computer Security Incident Handling Guide – Special Publication 800-61.
The Policy is tested on a periodic basis, including an ongoing improvement program involving periodic tabletop exercises. Cybersecurity incident handling is managed by individual organizations with cybersecurity responsibility and monitored/guided by applicable corporate functions. All Cybersecurity Incident Response Plans under the Policy are based on industry standards, such as the NIST Computer Security Incident Handling Guide – Special Publication 800-61.
In addition, we have an escalation process in place to inform senior management and the Cybersecurity Committee and the Board of Directors of material issues. 19 Table of Contents Management Experience Our CDO and CISO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
In addition, we have an escalation process in place to inform senior management and the Cybersecurity Committee and the Board of Directors of material issues. Management Experience Our CDO and CISO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
These three key elements of people, process, and technology are tightly interwoven to support our aim to secure our environments and data. Governance Cybersecurity is a risk area with oversight at the highest levels of the organization, including the Executive and Board Level.
These three key elements of people, process, and technology are tightly interwoven to support our aim to secure our environments and the data for which we are a custodian . Governance Cybersecurity is a risk area with oversight at the highest levels of the organization, including the Executive and Board Level.
PTC seeks to automate these processes and remove the potential for human error to the extent feasible by implementing technology solutions. From fundamental IT security to development of our software products and keeping our customers’ data safe in the cloud, PTC aims to maintain a secure infrastructure that is continuously monitored for possible threats.
We seek to automate processes and remove the potential for human error to the extent feasible by implementing technology solutions. From fundamental IT security to development of our software products and keeping our customers’ data safe, we aim to maintain a secure infrastructure that is appropriately monitored for possible threats.
Item 1C. Cybersecurity We are subject to various cybersecurity risks in connection with our business. For more information on our cybersecurity related risks, see the section entitled “Risks Related to Our Business Operations and Industry” in Item 1A of this Annual Report.
Item 1C. Cybersecurity We are subject to various cybersecurity risks in connection with our business. For more information on our cybersecurity related risks, see Item 1A. Risk Factors, I. Risks Related to Our Business Operations and Industry of this Annual Report.
All such vendors are to be approved by PTC’s VRM process and contractually bound to maintain appropriate cybersecurity technical and organization measures and to protect PTC’s data to which they may have access. Incident Response PTC maintains a formal Cybersecurity Incident Response Policy to address cybersecurity incidents.
All such vendors are to be approved by PTC’s VRM process and contractually bound to maintain appropriate cybersecurity technical and organization measures and to protect PTC’s data to which they may have access. 18 Table of Contents Incident Response We maintain an Enterprise Cybersecurity Incident Response Policy to address cybersecurity incidents.
PTC has processes and policies in place to try to anticipate security risks and facilitate compliance with applicable contractual obligations, regulations and standards, as well as address any incidents or violations. PTC focuses on continuous improvement and is constantly maturing its processes to keep pace with the rapidly evolving cybersecurity threat landscape. Technology .
We maintain processes and policies to try to anticipate security risks and facilitate compliance with applicable contractual obligations, regulations, and standards, as well as address any incidents or violations. We focus on continuous improvement and constantly mature our processes to keep pace with the rapidly evolving cybersecurity threat landscape. Technology .
PTC’s corporate cybersecurity awareness activities are combined with enterprise-wide and department-specific tools and mandatory employee training, providing everyone employed by PTC with the knowledge and resources to support our efforts to mitigate security threats. Process . An educated workforce needs a governance framework to guide and monitor its activities.
Our corporate cybersecurity awareness activities are combined with enterprise-wide and department-specific tools and mandatory employee training, providing our employees with knowledge and resources to support our efforts to mitigate security threats. 17 Table of Contents Process .
Identified cybersecurity risks are reviewed by the Cybersecurity Strategy Council, which ensures that risk tolerances are established and used to appropriately manage risks. Third-Party Vendor Risk Management Our Vendor Risk Management (VRM) program supports PTC in meeting its cybersecurity, privacy, regulatory and compliance obligations and managing risk associated with third-party vendors who have access to PTC IT systems and data.
Third-Party Vendor Risk Management Our Vendor Risk Management (VRM) program is designed to meet cybersecurity, privacy, regulatory and compliance obligations, by managing risk associated with third-party vendors who have access to PTC IT systems and data .
Our Approach PTC takes a holistic, multi-layered approach to cybersecurity and privacy that combines traditional Defense-in-Depth methods with next-generation Zero Trust principles. In today’s globally interconnected world, we consider every entry point on the attack surface critical, and we aim to secure the points under our control.
Our Approach We take a holistic, multi-layered approach to cybersecurity and privacy that combines traditional Defense-in-Depth methods with next-generation Zero Trust principles.
We provide regular updates on our cybersecurity strategic plans, programs, and initiatives, and vulnerabilities and any applicable remediation efforts to the Cybersecurity Committee of the Board of Directors at its four regularly scheduled meetings per year. Our Incident Response Plans provide for notice, and continued updates, to the Cybersecurity Committee of applicable incidents on a timely basis.
All Cybersecurity, Risk, and Internal Audit functions report to the PTC Executive Leadership Team. We provide regular updates on our cybersecurity strategic plans, programs, and initiatives to the Cybersecurity Committee of the Board of Directors at its four regularly scheduled meetings per year.
In developing our cybersecurity risk management program, we are informed by industry benchmarks and standards, including the cybersecurity framework created by the National Institute of Standards and Technology (“NIST”). We also have various security-related certifications and authorizations, including ISO 27001, SOC 2 Type II and FedRAMP, for certain of our products and services. People .
We also have various security-related certifications and authorizations, including ISO 27001, SOC 2 Type II and FedRAMP, for certain of our products and services. People . Recognizing that technology alone cannot mitigate all security threats, we focus on developing our most critical resource: our people.
Removed
PTC recognizes that technology alone cannot mitigate all security threats, so we focus on developing our most critical resource: our people. Security is the responsibility of everyone employed by PTC and is independent of departmental affiliation.
Added
In developing our cybersecurity risk management program, we are informed by industry benchmarks and standards, including the cybersecurity framework created by the National Institute of Standards and Technology (“NIST”) and the Software Assurance Maturity Model developed by the OWASP (the “OWASP SAMM”).
Removed
All Cybersecurity, Risk and Internal Audit functions report to the PTC Executive Leadership Team. 18 Table of Contents PTC’s Cybersecurity Program is supported by robust processes and procedures at all levels.
Added
Our Incident Response Plans provide for notice, and continued updates, to the Cybersecurity Committee of applicable incidents on a timely basis . Risk Assessment We conduct an annual cybersecurity maturity assessment. Periodically, we engage a third-party security consulting firm to conduct an Enterprise Security Maturity Assessment.
Removed
Our matrixed cybersecurity organization is governed by industry-standard frameworks, and to ensure that they are executed, we involve the Executive Leadership Team, the Cybersecurity Strategy Council, and business unit security leads and cybersecurity analysts across the enterprise.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeOf our total of approximately 1,060,000 square feet of leased facilities used in operations, approximately 401,000 square feet are located in the U.S., including approximately 250,000 square feet at our headquarters facility located in Boston, Massachusetts, and approximately 268,000 square feet are located in India, where a significant amount of our research and development is conducted. ITEM 3.
Biggest changeOf our total of approximately 897,000 square feet of leased facilities used in operations, approximately 281,000 square feet are located in the U.S., including approximately 169,000 square feet at our headquarters facility located in Boston, Massachusetts, and approximately 267,000 square feet are located in India, where a significant amount of our research and development is conducted. ITEM 3.
ITEM 2. Prope rties We currently have 75 office locations used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work.
ITEM 2. Prope rties We currently have 61 office locations used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work.
Legal Pro ceedings None. ITEM 4. Mine Safety Disclosures Not applicable. PART II
Legal Pro ceedings None. ITEM 4. Mine Safety Disclosures Not applicable. 19 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 20 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. Reserved 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37
Biggest changeItem 4. Mine Safety Disclosures 19 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. Reserved 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+2 added−0 removed0 unchanged
Biggest changeITEM 5. Market for Registrant’s Common Equity, Related Stockho lder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the symbol "PTC." On September 30, 2024, the close of our fiscal year, and on November 12, 2024, our common stock was held by 884 and 877 shareholders of record, respectively.
Biggest changeITEM 5. Market for Registrant’s Common Equity, Related Stockho lder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the symbol "PTC." On September 30, 2025, the close of our fiscal year, and on November 19, 2025, our common stock was held by 821 and 815 shareholders of record, respectively.
Added
The table below shows the shares of our common stock we repurchased in the fourth quarter of 2025.
Added
Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) July 1, 2025 - July 31, 2025 — $ — — $ 1,775,012,684 August 1, 2025 - August 31, 2025 236,795 $ 211.14 236,795 $ 1,725,015,150 September 1, 2025 - September 30, 2025 119,627 $ 209.00 119,627 $ 1,700,012,666 Total 356,422 $ 210.42 356,422 $ 1,700,012,666 (1) As announced on November 6, 2024, our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2027.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+24 added−13 removed58 unchanged
Biggest change(in millions, except per share amounts) Year ended September 30, 2024 2023 GAAP gross margin $ 1,853.7 $ 1,656.0 Stock-based compensation 21.4 20.9 Amortization of acquired intangible assets included in cost of revenue 38.5 35.7 Non-GAAP gross margin $ 1,913.6 $ 1,712.6 GAAP operating income $ 588.1 $ 458.5 Stock-based compensation 223.5 206.5 Amortization of acquired intangible assets 80.5 75.7 Acquisition and transaction-related charges 3.1 18.7 Restructuring and other credits, net (0.8 ) (0.5 ) Non-GAAP operating income $ 894.3 $ 758.9 GAAP net income $ 376.3 $ 245.5 Stock-based compensation 223.5 206.5 Amortization of acquired intangible assets 80.5 75.7 Acquisition and transaction-related charges 3.1 18.7 Restructuring and other credits, net (0.8 ) (0.5 ) Non-operating charges, net (1) 2.0 5.1 Income tax adjustments (2) (71.2 ) (33.5 ) Non-GAAP net income $ 613.4 $ 517.6 GAAP diluted earnings per share $ 3.12 $ 2.06 Stock-based compensation 1.85 1.73 Amortization of acquired intangible assets 0.67 0.63 Acquisition and transaction-related charges 0.03 0.16 Restructuring and other credits, net (0.01 ) — Non-operating charges, net (1) 0.02 0.04 Income tax adjustments (2) (0.59 ) (0.28 ) Non-GAAP diluted earnings per share $ 5.08 $ 4.34 Cash provided by operating activities $ 750.0 $ 610.9 Capital expenditures (14.4 ) (23.8 ) Free cash flow $ 735.6 $ 587.0 (1) In FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security.
Biggest changeThe following tables reconcile each of these non-GAAP financial measures to its most closely comparable GAAP measure on our financial statements. 31 Table of Contents (in millions, except per share amounts) Year ended September 30, 2025 2024 GAAP gross margin $ 2,294.2 $ 1,853.7 Stock-based compensation 22.7 21.4 Amortization of acquired intangible assets included in cost of revenue 32.8 38.5 Non-GAAP gross margin $ 2,349.8 $ 1,913.6 GAAP operating income $ 982.4 $ 588.1 Stock-based compensation 216.2 223.5 Amortization of acquired intangible assets 78.8 80.5 Acquisition and transaction-related charges 9.1 3.1 Impairment and other charges (credits), net 15.6 (0.8 ) Non-GAAP operating income $ 1,302.1 $ 894.3 GAAP net income $ 734.0 $ 376.3 Stock-based compensation 216.2 223.5 Amortization of acquired intangible assets 78.8 80.5 Acquisition and transaction-related charges 9.1 3.1 Impairment and other charges (credits), net 15.6 (0.8 ) Non-operating charges (credits), net (1) (13.1 ) 2.0 Income tax adjustments (2) (81.8 ) (71.2 ) Non-GAAP net income $ 958.8 $ 613.4 GAAP diluted earnings per share $ 6.08 $ 3.12 Stock-based compensation 1.79 1.85 Amortization of acquired intangible assets 0.65 0.67 Acquisition and transaction-related charges 0.08 0.03 Impairment and other charges (credits), net 0.13 (0.01 ) Non-operating charges (credits), net (1) (0.11 ) 0.02 Income tax adjustments (2) (0.68 ) (0.59 ) Non-GAAP diluted earnings per share $ 7.94 $ 5.08 Cash provided by operating activities $ 867.7 $ 750.0 Capital expenditures (11.0 ) (14.4 ) Free cash flow $ 856.7 $ 735.6 (1) In FY'25, we recognized a $13.1 million gain related to contingent consideration earned upon the achievement of performance milestones associated with the FY'22 sale of a portion of our PLM services business.
ITEM 7. Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations Operating and Non-GAAP Financial Measures Our discussion of results includes discussion of our ARR (Annual Run Rate) operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis.
ITEM 7. Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations Our Operating and Non-GAAP Financial Measures Our discussion of results includes discussion of our ARR (Annual Run Rate) operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis.
We do not include any future committed increases in the contract value as of the date of the ARR calculation . • As ARR includes only contracts that are active at the end of the reporting period, ARR does not reflect assumptions or estimates regarding future customer renewals or non-renewals. • Active contracts are annualized by dividing the total active contract value by the contract duration in days (expiration date minus start date), then multiplying that by 365 days (or 366 days for leap years).
We do not include any future committed increases in the contract value as of the date of the ARR calculation . • As ARR includes only contracts that are active at the end of the reporting period, ARR does not reflect assumptions or estimates regarding future contract renewals or non-renewals. • Active contracts are annualized by dividing the total active contract value by the contract duration in days (expiration date minus start date), then multiplying that by 365 days (or 366 days for leap years).
This assessment could have a significant impact on the timing of revenue recognition and may change as our product offerings evolve. Allocation of transaction price. We estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations.
This assessment could have a significant impact on the timing of revenue recognition and may change as our product offerings evolve. Allocation of transaction price. We estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among the performance obligations.
The items excluded from the non-GAAP financial measures often have a material impact on our financial results, certain of those items are recurring, and other such items often recur.
The items excluded from the non-GAAP financial measures often have a material impact on our financial results, certain of those items are recurring, and other items often recur.
Contracts for which our commitment is variable or based on volumes with no fixed minimum quantities and contracts that can be canceled without payment penalties are not included in the purchase obligation amounts above. The purchase obligations included above are in addition to amounts included in Current liabilities and Prepaid expenses recorded on our September 30, 2024 Consolidated Balance Sheet.
Contracts for which our commitment is variable or based on volumes with no fixed minimum quantities and contracts that can be canceled without payment penalties are not included in the purchase obligation amounts above. The purchase obligations included above are in addition to amounts included in Current liabilities and Prepaid expenses recorded on our September 30, 2025 Consolidated Balance Sheet.
We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash flows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash inflows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
ARR and our non-GAAP financial measures, including the reasons we use those measures, are described below in Results of Operations - Operating Measure and Results of Operations - Non-GAAP Financial Measures, respectively. The methodology used to calculate constant currency disclosures is described in Results of Operations - Impact of Foreign Currency Exchange on Results of Operations.
ARR and our non-GAAP financial measures, including the reasons we use those measures, are described below in Operating and Non-GAAP Financial Measures . The methodology used to calculate constant currency disclosures is described in Results of Operations - Impact of Foreign Currency Exchange on Results of Operations.
The amount of unrecognized deferred tax liability on the undistributed earnings would not be material. In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service (IRS) in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate.
The amount of unrecognized deferred tax liability on the undistributed earnings would not be material. In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate.
Investors should use our non-GAAP financial measures only in conjunction with our GAAP results. 21 Table of Contents For discussion of our FY'23 results and comparison to our FY'22 results, refer to Management's Discussion and Analysis of Financial Conditions and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2023.
Investors should use our non-GAAP financial measures only in conjunction with our GAAP results. 21 Table of Contents For discussion of our FY'24 results and comparison to our FY'23 results, refer to Management's Discussion and Analysis of Financial Conditions and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2024.
Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced. • For contracts that include annual values that increase over time, which we refer to as ramp contracts, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation.
Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced. • For contracts that include annual values that change over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation.
We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of our deferred tax assets will not be realized, we must establish a valuation allowance as a charge to income tax expense. 34 Table of Contents We have unrecognized tax benefits as of September 30, 2024 of $65.0 million.
We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of our deferred tax assets will not be realized, we must establish a valuation allowance as a charge to income tax expense. 34 Table of Contents We have unrecognized tax benefits as of September 30, 2025 of $157.7 million.
We believe that these non-GAAP financial measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) 31 Table of Contents for managing our business and evaluating our performance.
We believe that these non-GAAP financial measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) for managing our business and evaluating our performance.
Our constant currency disclosures are calculated by multiplying the results in local currency for FY'24 and FY'23 by the exchange rates in effect on September 30, 2023. If FY'24 reported results were converted into U.S.
Our constant currency disclosures are calculated by multiplying the results in local currency for FY'25 and FY'24 by the exchange rates in effect on September 30, 2024. If FY'25 reported results were converted into U.S.
Operating margin impact of non-GAAP adjustments: Year ended September 30, 2024 2023 GAAP operating margin 25.6 % 21.9 % Stock-based compensation 9.7 % 9.8 % Amortization of acquired intangible assets 3.5 % 3.6 % Acquisition and transaction-related charges 0.1 % 0.9 % Restructuring and other credits, net (— )% (— )% Non-GAAP operating margin 38.9 % 36.2 % 32 Table of Contents Critical Accounting Policies and Estimates We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Operating margin impact of non-GAAP adjustments: Year ended September 30, 2025 2024 GAAP operating margin 35.9 % 25.6 % Stock-based compensation 7.9 % 9.7 % Amortization of acquired intangible assets 2.9 % 3.5 % Acquisition and transaction-related charges 0.3 % 0.1 % Impairment and other charges (credits), net 0.6 % (— )% Non-GAAP operating margin 47.5 % 38.9 % 32 Table of Contents Critical Accounting Policies and Estimates We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Dollars using the rates in effect as of September 30, 2023, ARR would have been the same, revenue would have been lower by $17 million, and expenses would have been lower by $12 million. 22 Table of Contents Revenue Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period.
Dollars using the rates in effect as of September 30, 2024, ARR would have been the same, revenue would have been higher by $34 million, and expenses would have been higher by $14 million. 22 Table of Contents Revenue Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period.
The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material. 28 Table of Contents Contractual Obligations At September 30, 2024, our future contractual obligations were related to debt, leases, pension liabilities, unrecognized tax benefits, and purchase obligations. See Note 9. Debt, Note 17. Leases, Note 14. Pension Plans, and Note 8.
The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material. 28 Table of Contents Contractual Obligations At September 30, 2025, our future contractual obligations were related to debt, leases, pension liabilities, unrecognized tax benefits, and purchase obligations. See Note 8. Debt, Note 16. Leases, Note 13. Pension Plans, and Note 7.
As of September 30, 2024, we had letters of credit and bank guarantees outstanding of approximately $15.6 million (of which $0.6 million was collateralized). 29 Table of Contents Operating Measure ARR ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, SaaS, hosting, and support contracts as of the end of the reporting period.
As of September 30, 2025, we had letters of credit and bank guarantees outstanding of approximately $15.6 million (of which $0.6 million was collateralized). Operating and Non-GAAP Financial Measures Operating Measure ARR ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, SaaS, hosting, and support contracts as of the end of the reporting period.
Debt of Notes to the Consolidated Financial Statements in this Annual Report. Share Repurchase Authorization Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2027.
Share Repurchase Authorization Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2027.
As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total value of the contract is recognized as revenue at a point in time upon the later of when the software is made available, or the subscription term commences.
ARR increases by the annualized value of active contracts that commence in a reporting period and decreases by the annualized value of contracts that expire in the reporting period. 29 Table of Contents As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total value of the contract is recognized as revenue at a point in time upon the later of when the software is made available, or the subscription term commences.
As of September 30, 2024, we have a valuation allowance of $17.4 million against net deferred tax assets in the U.S. and a valuation allowance of $4.4 million against net deferred tax assets in certain foreign jurisdictions.
As of September 30, 2025, we have a valuation allowance of $3.4 million against net deferred tax assets in the U.S. and a valuation allowance of $5.1 million against net deferred tax assets in certain foreign jurisdictions.
We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results.
Free cash flow is not a measure of cash available for discretionary expenditures. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results.
These costs may vary in size based on our restructuring plan. Non-operating charges (credits), net are gains or losses associated with sales or changes in value of assets or liabilities that are generally investing or financing in nature and are not indicative of our ongoing ordinary operating activities.
Non-operating charges (credits), net are gains or losses associated with sales or changes in value of assets or liabilities that are generally investing or financing in nature and are not indicative of our ongoing ordinary operating activities.
Dollar exchange rate, as of September 30, 2024 compared to September 30, 2023. The results of operations in the table above, and the tables and discussions below about revenue by line of business and product group present both actual percentage changes year over year and percentage changes on a constant currency basis.
The results of operations in the table above, and the tables and discussions below about revenue by line of business and product group present both actual percentage changes year over year and percentage changes on a constant currency basis.
Our long-term goal is to return approximately 50% of our free cash flow to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic initiatives and acquisitions, which could cause us to reduce, suspend, or cease repurchases. We currently intend to repurchase approximately $300 million of our common stock in FY'25.
Our long-term goal is to return excess cash to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic initiatives and acquisitions, which could cause us to reduce, suspend, or cease repurchases. We expect to repurchase approximately $150 to $250 million of our common stock per quarter in FY'26.
Expectations for 2025 We believe that existing cash and cash equivalents, together with cash generated from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements through at least the next twelve months, including redemption of the 3.625% Senior Notes in February 2025, and to meet our known long-term capital requirements.
Expectations for 2026 We believe that existing cash and cash equivalents, together with cash inflows from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements through at least the next twelve months and to meet our known long-term capital requirements.
Income Taxes of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $163.2 million, with $88.2 million expected to be paid in FY'25 and $75.0 million thereafter.
Income Taxes of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $188.8 million, with $91.9 million expected to be paid in FY'26 and $96.9 million thereafter.
The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves. 24 Table of Contents Operating Expenses (Dollar amounts in millions) Year ended September 30, 2024 2023 Percent Change Sales and marketing $ 559.0 $ 530.1 5 % % of total revenue 24 % 25 % Research and development 433.0 394.4 10 % % of total revenue 19 % 19 % General and administrative 232.4 233.5 (0 )% % of total revenue 10 % 11 % Amortization of acquired intangible assets 42.0 40.0 5 % % of total revenue 2 % 2 % Restructuring and other credits, net (0.8 ) (0.5 ) 74 % % of total revenue 0 % 0 % Total operating expenses $ 1,265.6 $ 1,197.6 6 % Total headcount increased by 4% between September 30, 2023 and September 30, 2024.
The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves. 24 Table of Contents Operating Expenses (Dollar amounts in millions) Year ended September 30, 2025 2024 Percent Change Sales and marketing $ 566.5 $ 559.0 1 % % of total revenue 21 % 24 % Research and development 457.7 433.0 6 % % of total revenue 17 % 19 % General and administrative 226.1 232.4 (3 )% % of total revenue 8 % 10 % Amortization of acquired intangible assets 45.9 42.0 9 % % of total revenue 2 % 2 % Impairment and other charges (credits), net 15.6 (0.8 ) 2,050 % % of total revenue 1 % 0 % Total operating expenses $ 1,311.9 $ 1,265.6 4 % Total headcount increased by 2% between September 30, 2024 and September 30, 2025.
We may use cash from operations and borrowings under our credit facility to make any such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.
We may use cash from operations and borrowings under our credit facility to make any such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. In FY'25, we repurchased 1.65 million shares for $300 million. We did not repurchase any shares in FY'24.
Dollars using the rates in effect as of September 30, 2023, ARR would have been lower by $47 million, revenue would have been lower by $22 million, and expenses would have been lower by $10 million. If FY'23 reported results were converted into U.S.
Dollars using the rates in effect as of September 30, 2024, ARR would have been lower by $33 million, revenue would have been higher by $21 million, and expenses would have been higher by $9 million. If FY'24 reported results were converted into U.S.
License gross margin grew at a higher rate than license revenue in FY'24 due mainly to lower intangible amortization expense. Excluding intangible amortization expense, license gross margin percentage was consistent year over year. Support and cloud services gross margin growth in FY'24 was in line with support and cloud services revenue growth.
License gross margin grew at a higher rate than license revenue in FY'25 due mainly to license revenue growth. Total cost of license revenue in FY'25 remained consistent with FY'24, with lower intangible amortization expense offsetting growth in other areas. Support and cloud services gross margin growth in FY'25 was in line with support and cloud services revenue growth.
Accordingly, the non-GAAP financial measures included in this Annual Report should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP. The following tables reconcile each of these non-GAAP financial measures to its most closely comparable GAAP measure on our financial statements.
Accordingly, the non-GAAP financial measures included in this Annual Report should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP.
(Dollar amounts in millions, except per share data) Year ended September 30, Percent Change 2024 2023 Actual Constant Currency (1) ARR $ 2,254.7 $ 1,978.6 14 % 12 % Total recurring revenue (2) $ 2,134.0 $ 1,907.9 12 % 12 % Perpetual license 32.2 38.6 (17 )% (16 )% Professional services 132.2 150.5 (12 )% (12 )% Total revenue 2,298.5 2,097.1 10 % 9 % Total cost of revenue 444.8 441.0 1 % 1 % Gross margin 1,853.7 1,656.0 12 % 12 % Operating expenses 1,265.6 1,197.6 6 % 6 % Operating income $ 588.1 $ 458.5 28 % 27 % Non-GAAP operating income (1) $ 894.3 $ 758.9 18 % 17 % Operating margin 25.6 % 21.9 % Non-GAAP operating margin (1) 38.9 % 36.2 % Diluted earnings per share $ 3.12 $ 2.06 Non-GAAP diluted earnings per share (1) $ 5.08 $ 4.34 Cash provided by operating activities $ 750.0 $ 610.9 Capital expenditures (14.4 ) (23.8 ) Free cash flow $ 735.6 $ 587.0 (1) See Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP financial measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.
(Dollar amounts in millions, except per share data) Year ended September 30, Percent Change 2025 2024 Actual Constant Currency (1) ARR $ 2,478.5 $ 2,254.7 10 % 8 % Total recurring revenue (2) $ 2,600.5 $ 2,134.0 22 % 21 % Perpetual license 31.4 32.2 (3 )% (3 )% Professional services 107.3 132.2 (19 )% (19 )% Total revenue 2,739.2 2,298.5 19 % 18 % Total cost of revenue 445.0 444.8 0 % 0 % Gross margin 2,294.2 1,853.7 24 % 23 % Operating expenses 1,311.9 1,265.6 4 % 3 % Operating income $ 982.4 $ 588.1 67 % 64 % Non-GAAP operating income (1) $ 1,302.1 $ 894.3 46 % 44 % Operating margin 36 % 26 % Non-GAAP operating margin (1) 48 % 39 % Diluted earnings per share (3) $ 6.08 $ 3.12 Non-GAAP diluted earnings per share (1)(3) $ 7.94 $ 5.08 Cash provided by operating activities $ 867.7 $ 750.0 Capital expenditures (11.0 ) (14.4 ) Free cash flow $ 856.7 $ 735.6 (1) See Operating and Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP financial measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.
The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in General and administrative expenses; Restructuring and other charges (credits), net; non-operating charges (credits), net; and income tax adjustments.
Non-GAAP Financial Measures The non-GAAP financial measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are: • non-GAAP gross margin—GAAP gross margin • non-GAAP operating income—GAAP operating income • non-GAAP operating margin—GAAP operating margin • non-GAAP net income—GAAP net income • non-GAAP diluted earnings per share—GAAP diluted earnings per share • free cash flow—cash flow from operations The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in General and administrative expenses; Impairment and other charges (credits), net; non-operating charges (credits), net; and income tax adjustments.
As of September 30, 2024, we had cash and cash equivalents of $36 million in the U.S., $127 million in Europe, $86 million in Asia Pacific (including India), and $17 million in other non-U.S. countries.
As of September 30, 2025, we had cash and cash equivalents of $18 million in the U.S., $87 million in Europe, $63 million in Asia Pacific (including India), and $16 million in other countries.
Revenue by Line of Business (Dollar amounts in millions) Year ended September 30, Percent Change 2024 2023 Actual Constant Currency License (1) $ 806.9 $ 747.0 8 % 8 % Support and cloud services (2) 1,359.4 1,199.5 13 % 13 % Software revenue 2,166.2 1,946.6 11 % 11 % Professional services 132.2 150.5 (12 )% (12 )% Total revenue $ 2,298.5 $ 2,097.1 10 % 9 % (1) Includes perpetual licenses and the license portion of on-premises subscription sales.
Revenue by Line of Business (Dollar amounts in millions) Year ended September 30, Percent Change 2025 2024 Actual Constant Currency License (1) $ 1,162.7 $ 806.9 44 % 43 % Support and cloud services (2) 1,469.2 1,359.4 8 % 7 % Software revenue 2,631.9 2,166.2 21 % 21 % Professional services 107.3 132.2 (19 )% (19 )% Total revenue $ 2,739.2 $ 2,298.5 19 % 18 % (1) Includes perpetual licenses and the license portion of on-premises subscription sales.
Professional services revenue decreased in FY'24 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves. 23 Table of Contents Software Revenue by Product Group (Dollar amounts in millions) Year ended September 30, Percent Change 2024 2023 Actual Constant Currency PLM $ 1,333.4 $ 1,186.0 12 % 12 % CAD 832.8 760.6 9 % 10 % Software revenue $ 2,166.2 $ 1,946.6 11 % 11 % PLM software revenue growth in FY'24 was driven by growth in Europe and the contribution from ServiceMax (acquired in early Q2'23).
Professional services revenue decreased in FY'25 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves. 23 Table of Contents Software Revenue by Product Group (Dollar amounts in millions) Year ended September 30, Percent Change 2025 2024 Actual Constant Currency PLM $ 1,639.0 $ 1,333.4 23 % 22 % CAD 992.9 832.8 19 % 19 % Software revenue $ 2,631.9 $ 2,166.2 21 % 21 % PLM software revenue growth in FY'25 was driven by the higher total value and longer average duration of contracts commencing in the period.
Gross Margin (Dollar amounts in millions) Year ended September 30, 2024 2023 Percent Change License gross margin $ 760.0 $ 693.8 10 % License gross margin percentage 94 % 93 % Support and cloud services gross margin $ 1,084.8 $ 954.5 14 % Support and cloud services gross margin percentage 80 % 80 % Professional services gross margin $ 8.9 $ 7.7 15 % Professional services gross margin percentage 7 % 5 % Total gross margin $ 1,853.7 $ 1,656.0 12 % Total gross margin percentage 81 % 79 % Non-GAAP gross margin (1) $ 1,913.6 $ 1,712.6 12 % Non-GAAP gross margin percentage (1) 83 % 82 % (1) Non-GAAP financial measures are reconciled to GAAP results under Non-GAAP Financial Measures below.
Gross Margin (Dollar amounts in millions) Year ended September 30, 2025 2024 Percent Change License gross margin $ 1,115.8 $ 760.0 47 % License gross margin percentage 96 % 94 % Support and cloud services gross margin $ 1,177.4 $ 1,084.8 9 % Support and cloud services gross margin percentage 80 % 80 % Professional services gross margin $ 1.1 $ 8.9 (88 )% Professional services gross margin percentage 1 % 7 % Total gross margin $ 2,294.2 $ 1,853.7 24 % Total gross margin percentage 84 % 81 % Non-GAAP gross margin (1) $ 2,349.8 $ 1,913.6 23 % Non-GAAP gross margin percentage (1) 86 % 83 % (1) Non-GAAP financial measures are reconciled to GAAP results under Non-GAAP Financial Measures below.
We believe that free cash flow, in conjunction with cash from operations, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations. Free cash flow is not a measure of cash available for discretionary expenditures.
Free cash flow is cash flow from operations net of capital expenditures, which are expenditures for property and equipment and consist primarily of facility improvements, office equipment, computer equipment, and software. We believe that free cash flow, in conjunction with cash from operations, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations.
In FY'24, adjustments exclude a tax expense of $4.4 million or $0.04 per share for a tax reserve related to prior years in a foreign jurisdiction. In FY'23, non-GAAP expense excludes $21.8 million or $0.18 per share related to uncertain tax positions in a foreign jurisdiction.
Additionally, in FY'25, adjustments exclude a $10.4 million tax benefit or $0.09 per share for a tax reserve related to prior years in a foreign jurisdiction. In FY'24, adjustments exclude a tax expense of $4.4 million or $0.04 per share for a tax reserve related to prior years in a foreign jurisdiction.
We ended FY’24 with cash and cash equivalents of $266 million and gross debt of $1.75 billion, which debt carried an aggregate weighted average interest rate of 5.1%. Revenue grew 10% (9% constant currency) in FY'24 compared to FY'23. Our acquisition of ServiceMax in early Q2'23 contributed to FY'24 revenue growth.
We ended FY’25 with cash and cash equivalents of $184 million and gross debt of $1.20 billion, which debt carried an aggregate weighted average interest rate of 4.9%. Revenue grew 19% (18% constant currency) in FY'25 compared to FY'24.
In FY'24, the rate was impacted by a U.S. Tax Court ruling in Varian Medical Systems, Inc. v. Commissioner, issued on August 26, 2024. The ruling related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Act (our fiscal 2018).
Additionally, in FY'25, we recorded tax benefits of $11 million related to tax reserves in foreign jurisdictions. In FY'24, the rate was impacted by a U.S. Tax Court ruling in Varian Medical Systems, Inc. v. Commissioner, issued on August 26, 2024.
Cash Provided by (Used in) Financing Activities Cash used in financing activities in FY'24 included $620.0 million paid to settle a deferred acquisition payment associated with our acquisition of ServiceMax, Q1'24 borrowings of $739.8 million to fund that payment and the pure-systems acquisition, and subsequent net payments on debt of $693.9 million.
Cash used in financing activities in FY'24 included $620 million paid to settle the ServiceMax deferred acquisition payment, partially offset by net borrowings of $46 million to fund that payment and the pure-systems acquisition.
The benefit from this IRS procedural guidance change will reverse in a future fiscal period if we receive IRS consent for a change in the treatment of these deductions. These benefits were offset by a tax expense of $4.6 million related to a tax reserve in a foreign jurisdiction.
These benefits were offset by a tax expense of $5 million related to a tax reserve in a foreign jurisdiction. In FY'24, we requested consent from the IRS to change the accounting method for the treatment of certain deductions.
In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions including Germany, Ireland, and Italy.
Consequently, in Q1'26 we will release the reserve, primarily resulting in a decrease to Deferred tax assets. In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate.
In FY'23, we recognized $4.2 million of financing charges for a debt commitment agreement associated with our acquisition of ServiceMax. (2) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above.
In FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security. (2) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above.
Cash Provided by Operating Activities Cash provided by operating activities increased by $139.1 million in FY'24 compared to FY'23. This increase was driven by higher collections (including contribution from ServiceMax), which were partially offset by higher salary-related and interest payments.
Cash Provided by Operating Activities Cash provided by operating activities increased by $118 million in FY'25 compared to FY'24. This increase was driven by higher collections, lower interest payments, and lower vendor disbursements, partially offset by higher tax payments and higher severance payments.
(2) Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue. Impact of Foreign Currency Exchange on Results of Operations Approximately 50% of our revenue and 35% of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S.
Impact of Foreign Currency Exchange on Results of Operations Approximately 50% of our revenue and 35% of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results.
Interest payments were $47 million higher in FY'24 compared to FY'23, mainly due to the payment of $30 million of imputed interest on a deferred acquisition payment associated with our 2023 acquisition of ServiceMax and incremental interest expense associated with borrowings in FY'23 and FY'24.
Interest payments were $59 million lower in FY'25 than in FY'24, driven by the Q1'24 payment of $30 million of imputed interest on a deferred acquisition payment associated with our FY'23 acquisition of ServiceMax, as well as lower interest payments in FY'25 due mainly to lower debt balances.
Summary of Significant Accounting Policies , included in the Notes to Consolidated Financial Statements of this Annual Report, which is incorporated herein by reference, for all recently issued accounting pronouncements, none of which are expected to have a material effect.
Recent Accounting Pronouncements In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations. Refer to Note 2. Summary of Significant Accounting Policies , included in the Notes to Consolidated Financial Statements of this Annual Report, which is incorporated herein by reference, for all recently issued accounting pronouncements.
Cash provided by financing activities in FY’23 was primarily related to net new borrowings of $771.0 million (a $500.0 million term loan and a $271.0 million incremental revolving line) to fund the ServiceMax acquisition and net repayments of $428.0 million on the new revolving facility. 27 Table of Contents Outstanding Debt (in millions) September 30, 2024 2023 4.000% Senior Notes due 2028 $ 500.0 $ 500.0 3.625% Senior Notes due 2025 500.0 500.0 Credit facility revolver line 262.0 202.0 Credit facility term loan 490.6 500.0 Total debt 1,752.6 1,702.0 Unamortized debt issuance costs for the Senior Notes (4.1 ) (6.2 ) Total debt, net of issuance costs $ 1,748.6 $ 1,695.8 Undrawn under credit facility revolver $ 988.0 $ 1,048.0 Undrawn under credit facility revolver available to borrow $ 972.1 $ 384.6 As of September 30, 2024, we were in compliance with all financial and operating covenants of the credit facility and the Senior Note indentures.
Payments of withholding taxes in connection with vesting of stock-based awards were lower in FY'25 compared to FY'24, primarily driven by the vesting of certain awards in connection with the chief executive officer succession in Q2'24. 27 Table of Contents Outstanding Debt (in millions) September 30, 2025 2024 4.000% Senior notes due 2028 $ 500.0 $ 500.0 3.625% Senior notes due 2025 — 500.0 Credit facility revolver line 231.3 262.0 Credit facility term loan 468.8 490.6 Total debt 1,200.0 1,752.6 Unamortized debt issuance costs for the senior notes (2.6 ) (4.1 ) Total debt, net of issuance costs $ 1,197.4 $ 1,748.6 Undrawn under credit facility revolver $ 1,018.8 $ 988.0 Undrawn under credit facility revolver available to borrow $ 1,001.7 $ 972.1 As of September 30, 2025, we were in compliance with all financial and operating covenants of the credit facility and the senior note indenture.
Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results. Changes in foreign currency exchange rates were a slight tailwind to reported income statement results in FY’24. ARR was positively impacted by improvements in currency exchange rates, particularly the Euro to U.S.
Changes in foreign currency exchange rates were a slight tailwind to reported income statement results compared to constant currency results in FY’25. ARR was positively impacted by more favorable currency exchange rates, particularly the Euro to U.S. Dollar exchange rate, as of September 30, 2025 compared to September 30, 2024.
Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses, and tax credits. 26 Table of Contents Liquidity and Capital Resources (in millions) September 30, 2024 2023 Cash and cash equivalents $ 265.8 $ 288.1 Restricted cash 0.7 0.7 Total $ 266.5 $ 288.8 (in millions) Year ended September 30, 2024 2023 Net cash provided by operating activities $ 750.0 $ 610.9 Net cash used in investing activities $ (124.8 ) $ (866.1 ) Net cash provided by (used in) financing activities $ (650.7 ) $ 268.3 Cash, Cash Equivalents and Restricted Cash We invest our cash with highly rated financial institutions.
As our review is not yet complete, our expectations could change. 26 Table of Contents Liquidity and Capital Resources (in millions) September 30, 2025 2024 Cash and cash equivalents $ 184.4 $ 265.8 Restricted cash 0.6 0.7 Total $ 185.0 $ 266.5 (in millions) Year ended September 30, 2025 2024 Net cash provided by operating activities $ 867.7 $ 750.0 Net cash used in investing activities $ (38.3 ) $ (124.8 ) Net cash used in financing activities $ (908.5 ) $ (650.7 ) Cash, Cash Equivalents and Restricted Cash We invest our cash with highly rated financial institutions.
Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates.
Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. As described in Note 7. Income Taxes , within the next 12 months the amount of unrecognized tax benefits related to the IRS consent will be reduced by $109.2 million.
You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures. Executive Overview Despite the overall demand environment, which has been challenging for many quarters now, ARR grew 14% (12% constant currency) to $2.25 billion as of the end of FY'24 compared to FY’23.
You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures. Executive Overview ARR grew 10% (8.5% constant currency) to $2.48 billion as of the end of FY'25 compared to FY’24. Cash provided by operating activities grew 16% to $868 million in FY'25 compared to FY'24.
(2) Includes support on perpetual licenses, the support portion of on-premises subscription sales, SaaS, and hosting services. Software revenue growth in FY'24 was driven by PLM, which included the contribution from ServiceMax (acquired in early Q2'23), and CAD.
(2) Includes support on perpetual licenses, the support portion of on-premises subscription sales, SaaS, and hosting services. Software revenue growth in FY'25 was driven by license revenue growth, which reflects the higher total value and notably longer average duration of contracts commencing in the current year.
In FY'24, we recognized an impairment charge related to an available-for-sale debt security. In FY'23, we recognized a financing charge for a debt commitment agreement associated with our acquisition of ServiceMax. Income tax adjustments include the tax impact of the items above. Additionally, we exclude other material tax items that we do not include when reviewing our operating results internally.
Additionally, we exclude other material tax items that we do not include when reviewing our operating results internally. For example, in FY'25, adjustments include a benefit for a tax reserve related to prior years in a foreign jurisdiction. Adjustments in FY'24 include a charge for a tax reserve related to prior years in a foreign jurisdiction.
Cash provided by operating activities grew 23% to $750 million in FY'24 compared to FY'23. Free cash flow grew 25% to $736 million in FY'24 compared to FY'23. Our cash flow growth is attributable to solid top-line growth due to our subscription business model and operational discipline.
Free cash flow grew 16% to $857 million in FY'25 compared to FY'24. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In FY'25, we made net debt repayments of $553 million and repurchased $300 million of our outstanding shares.
We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $27.0 million as audits close and statutes of limitations expire.
Apart from that, we do not believe it is reasonably possible that there could be additional reductions to the amount of unrecognized tax benefits within the next 12 months.
Cost of support and cloud services in FY'24 grew at a similar rate to revenue, driven by higher intangible amortization expense, compensation expense, and royalty expense. Professional services gross margin increased in FY’24 compared to FY’23, primarily due to lower outside service costs, partially offset by decreases in professional services revenue.
Cost of support and cloud services grew 6% in FY'25, primarily due to increasing compensation-related costs and cloud and software subscription-related costs as the business grows. Professional services gross margin decreased in FY’25 compared to FY’24, primarily driven by a sharper decrease in professional services revenue than in professional services expense.
CAD ARR grew 13% (10% constant currency) from September 30, 2023 to September 30, 2024.
CAD software revenue grew across all geographic regions, primarily driven by Creo. CAD ARR grew 10% (9% constant currency) from September 30, 2024 to September 30, 2025, primarily driven by Creo.
Of the $650 million paid, $620 million was recorded as a financing outflow and the $30 million of imputed interest was recorded as an operating cash outflow. Our credit facility and our Senior Notes, including the financial and operating covenants and limitations on the payment of dividends, are described in Note 9.
As of September 30, 2025, the annual rate for borrowings outstanding under the credit facility was 5.6%. Our credit facility and our senior notes, including the financial and operating covenants and limitations on the payment of dividends, are described in Note 8. Debt of Notes to the Consolidated Financial Statements in this Annual Report.
As a result, we recorded a $14.4 million benefit for additional foreign tax credits that have become available to us. Additionally, our rate included a net benefit of $4.4 million for the effects of Internal Revenue Service (IRS) procedural guidance requiring consent for previously automatic changes of accounting method.
In FY'25 and FY'24, our income tax rate included the effects of Internal Revenue Service (IRS) procedural guidance requiring consent for previously automatic changes of accounting method. The IRS procedural guidance change significantly increased our estimated taxable income in FY'24, with a lesser impact to taxable income in FY'25.
The IRS procedural guidance change significantly increased our estimated taxable income in the year ended September 30, 2024, resulting in an increase to the estimated tax benefit for the deductions associated with Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income.
In FY'25, we recorded tax expense of $11 million primarily related to accrued interest stemming from the effects of the procedural guidance. In FY'24, we recorded a benefit of $4 million primarily related to an increase to the estimated tax benefit for the deductions associated with Global Intangible Low-Taxed Income ("GILTI") and Foreign-Derived Intangible Income ("FDII").
Other Income (Dollar amounts in millions) Year ended September 30, 2024 2023 Percent Change Interest income $ 4.4 $ 5.4 (19 )% Other expense, net (3.8 ) (1.9 ) (103 )% Other income, net $ 0.6 $ 3.5 (84 )% Other income, net was lower in FY'24 compared to FY'23 due to a $2.0 million impairment loss related to an available-for-sale debt security.
Other Income (Dollar amounts in millions) Year ended September 30, 2025 2024 Percent Change Interest income $ 3.4 $ 4.4 (22 )% Other income (expense), net 11.4 (3.8 ) 398 % Other income, net $ 14.8 $ 0.6 2,578 % Other income, net increased in FY'25 compared to FY'24, primarily driven by a $13 million contingent consideration earnout recognized in Q4'25 related to the sale of a portion of our PLM services business in FY'22.
Interest payments in FY'24 were approximately $47.2 million higher than in FY'23 and include the payment of $30.0 million of imputed interest on the ServiceMax deferred acquisition payment. Cash Used in Investing Activities Cash used in investing activities in FY'24 was driven by the acquisition of pure-systems for $93.5 million in Q1'24.
Cash Used in Investing Activities Cash used in investing activities in FY'25 was driven by outflows from the settlement of net investment hedges. Cash used in investing activities in FY'24 was driven by the acquisition of pure-systems for $93 million.
Restructuring and other charges (credits), net includes excess facility restructuring charges (credits); impairment and accretion expense charges related to the lease assets of exited facilities; sublease income from previously impaired facilities; severance charges resulting from substantial employee reduction actions; and third-party professional consulting fees related to modifications of our business strategy.
All charges and credits under the captioned line item remain the same. 30 Table of Contents Impairment and other charges (credits), net are charges associated with disposal or exit activities, including lease impairment and abandonment charges, net charges or income related to impaired or exited facilities, restructuring severance charges resulting from substantial employee reduction actions, and other related costs.
Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue and growth rates. Results of Operations The following table shows the measures that we consider the most significant indicators of our business performance.
Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue, operating margin, and earnings per share. FY'25 revenue growth reflects the higher total value and longer average duration of contracts that commenced in the current year.
Interest expense in FY'23 also included $30 million of interest on a deferred acquisition payment associated with the ServiceMax acquisition. The decrease in interest expense was driven by the lower aggregate average of debt and deferred acquisition payment liability balances outstanding in FY'24 compared to FY'23.
The decrease in interest expense was driven by lower debt balances and lower interest rates.
Removed
License revenue growth in FY'24 was mainly driven by CAD and PLM growth in Europe and Asia Pacific, offset by lower license revenue in the Americas, particularly in PLM. A higher proportion of sales in FY'24 were SaaS, which adversely affected license revenue growth in the Americas and Europe.
Added
Operating margin grew by approximately 1030 basis points in FY'25 compared to FY'24, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 95% to $6.08 in FY'25 compared to FY'24, driven by revenue growth.
Removed
Support and cloud services revenue growth in FY'24 was mainly driven by PLM (which included contribution from ServiceMax) in the Americas and Europe.
Added
On November 5, 2025, we entered into a definitive agreement with an affiliate of TPG, under which we agreed to sell our Kepware and ThingWorx businesses for total consideration of up to $725 million, if certain targets are achieved.
Removed
Year-over-year PLM software revenue growth for FY'24 excluding Q1'24 ServiceMax revenue would have been 9% (9% constant currency). PLM ARR grew 15% (13% constant currency) from September 30, 2023 to September 30, 2024. CAD software revenue growth in FY'24 was primarily driven by revenue growth in Europe and Asia Pacific.
Added
We may receive up to $600 million upon closing of the transaction, which may be reduced by $35 million if certain growth targets are not achieved for a period between signing and closing, and further adjusted as set forth in the purchase agreement.
Removed
Operating expenses in FY'24 compared to FY'23 increased primarily due to the following: • a $47 million increase in compensation and benefits expense (excluding stock-based compensation), driven by higher headcount and our Q2'23 acquisition of ServiceMax, as well as higher health insurance costs in the U.S.; • a $16 million increase in stock-based compensation expense, driven in part by acceleration of expense on equity grants held by our former chief executive and chief operating officers (which expense is included in General and administrative and Sales and marketing), as well as the impact of an FY'24 change in eligibility for continued vesting upon retirement for a subset of prospective equity grants; • a $14 million increase in outside services, driven by consulting services related to corporate initiatives; and • a $10 million increase in software subscription related costs; partially offset by: • a $16 million decrease in acquisition and transaction-related costs, largely driven by costs associated with our Q2'23 acquisition of ServiceMax; and • a $12 million decrease in marketing expense, primarily due to not holding our LiveWorx event in FY'24. 25 Table of Contents Interest Expense (Dollar amounts in millions) Year ended September 30, 2024 2023 Percent Change Interest expense $ (119.7 ) $ (129.4 ) (8 )% Interest expense includes interest on our credit facility loans and our Senior Notes due 2025 and 2028.
Added
We may receive up to $125 million of contingent consideration upon the sale of the business by TPG. The transaction is expected to close in the first half of calendar 2026.
Removed
Income Taxes (Dollar amounts in millions) Year ended September 30, 2024 2023 Percent Change Income before income taxes $ 469.0 $ 332.6 41 % Provision for income taxes 92.6 87.0 6 % Effective income tax rate 20 % 26 % The effective tax rate for FY’24 was lower than the effective rate for FY’23.
Added
Our expected use of the net after-tax proceeds will follow our overall capital allocation strategy of returning excess cash to shareholders via share repurchases, while allowing for potential tuck-in acquisitions. Results of Operations The following table shows the measures that we consider the most significant indicators of our business performance.
Removed
FY'23 included tax expense of $21.8 million related to an uncertain tax position regarding transfer pricing in a foreign jurisdiction where we are currently under audit. Our FY'23 rate was also impacted by tax expense of $6.3 million related to non-deductible imputed interest related to the deferred payment on the acquisition of ServiceMax.

… 26 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

16 edited+3 added−1 removed7 unchanged
Biggest changeDollar 16,368 11,855 All other 25,368 21,363 Total $ 1,058,478 $ 523,636 Debt In addition to the $1 billion due under our 2025 and 2028 Senior Notes, as of September 30, 2024, we had $753 million outstanding under our credit facility.
Biggest changeDebt In addition to the $500 million due under our 2028 Notes, as of September 30, 2025, we had $700 million outstanding under our credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by us.
The majority of our foreign currency forward contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings.
The majority of our foreign currency forward and option contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings.
Given the short maturities and investment grade quality of the portfolio holdings at September 30, 2024, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents. Our invested cash is subject to interest rate fluctuations and, for non-U.S. operations, foreign currency exchange rate risk.
Given the short maturities and investment grade quality of the portfolio holdings at September 30, 2025, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents. Our invested cash is subject to interest rate fluctuations and, for non-U.S. operations, foreign currency exchange rate risk.
Cash and cash equivalents As of September 30, 2024, cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased. We invest our cash with highly rated financial institutions in North America, Europe and Asia Pacific and in diversified domestic and international money market mutual funds.
Cash and cash equivalents As of September 30, 2025, cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased. We invest our cash with highly rated financial institutions in North America, Europe and Asia Pacific and in diversified domestic and international money market mutual funds.
Based on current revenue and expense levels (excluding restructuring charges and stock-based compensation), a $0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $38 million and $6 million, respectively.
Based on current revenue and expense levels (excluding stock-based compensation), a $0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $44 million and $10 million, respectively.
Gains and losses on these derivatives and foreign currency denominated receivables and payables are included in Other income, net. 37 Table of Contents As of September 30, 2024 and 2023, we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following: September 30, Currency Hedged (in thousands) 2024 2023 Euro / U.S.
Gains and losses on these derivatives and foreign currency denominated monetary assets and liabilities are included in Other income, net. 37 Table of Contents As of September 30, 2025 and 2024, we had outstanding forward and option contracts not designated as hedging instruments with notional amounts equivalent to the following: September 30, Currency Hedged (in thousands) 2025 2024 Euro / U.S.
Our foreign currency hedging program uses forward contracts to manage the foreign currency exposures that exist as part of our ongoing business operations. The contracts are primarily denominated in the Euro, Swiss Franc, and Swedish Krona currencies, and have maturities of less than four months.
Our foreign currency hedging program uses forward contracts to manage the foreign currency exposures that exist as part of our ongoing business operations. Foreign currency forward contracts are primarily denominated in the Euro, Japanese Yen, and Indian Rupee currencies, and have maturities of less than four months.
Currency translation affects our reported results because we report our results of operations in U.S. Dollars. Historically, our most significant currency risk has been changes in the Euro and Japanese Yen relative to the U.S. Dollar.
Approximately 50% of our revenue and 35% of our expenses were transacted in currencies other than the U.S. Dollar. Currency translation affects our reported results because we report our results of operations in U.S. Dollars. Historically, our most significant currency risk has been changes in the Euro and Japanese Yen relative to the U.S. Dollar.
As of September 30, 2024, the weighted average annual rate on the credit facility loans was 6.9%. Based on the borrowings outstanding and interest rates in effect as of September 30, 2024, a 100 basis point per annum change in interest rate applied over a one-year period would have an $8 million impact on annual earnings and cash flows.
Based on the borrowings outstanding and interest rates in effect as of September 30, 2025, a 100 basis point per annum change in interest rate applied over a one-year period would have a $7 million impact on annual earnings and cash flows.
Because we enter into these derivative contracts only as an economic hedge, any gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the derivative contract.
Because we enter into these derivative contracts only as an economic hedge, gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the forward contracts and currency impacts on the Euro or Japanese Yen-denominated operations may be partially offset by gains on the option contracts.
Dollar had a favorable impact of $3.2 million and $2.9 million on our consolidated cash balances in FY'24 and FY'23, respectively. The impact in FY'24 was due in particular to changes in the Brazilian Real, Swedish Krona, Chinese Renminbi, and New Taiwan Dollar. 38 Table of Contents ITEM 8.
Dollar had an unfavorable impact of $2.4 million and a favorable impact of $3.2 million on our consolidated cash balances in FY'25 and FY'24, respectively. The impact in FY'25 was due in particular to changes in the Japanese Yen, Indian Rupee, and Swedish Krona. 38 Table of Contents
At September 30, 2024, we had cash and cash equivalents of $36 million in the United States, $127 million in Europe, $86 million in Asia Pacific (including India), and $17 million in other non-U.S. countries.
As of September 30, 2025, we had cash and cash equivalents of $18 million in the United States, $87 million in Europe, $63 million in Asia Pacific (including India), and $16 million in other countries.
Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by us. These loans are subject to interest rate risk as interest rates will be adjusted at each rollover date to the extent such amounts are not repaid.
These loans are subject to interest rate risk as interest rates will be adjusted at each rollover date to the extent such amounts are not repaid. As of September 30, 2025, the weighted average annual rate on the credit facility loans was 5.6%.
Our non-U.S. revenues are generally transacted through our non-U.S. subsidiaries and typically are denominated in their local currency. In addition, expenses that are incurred by our non-U.S. subsidiaries typically are denominated in their local currency. Approximately 50% of our revenue and 35% of our expenses were transacted in currencies other than the U.S. Dollar.
We do not enter into or hold foreign currency derivative financial instruments for trading or speculative purposes. Our non-U.S. revenues are generally transacted through our non-U.S. subsidiaries and typically are denominated in their local currency. In addition, expenses that are incurred by our non-U.S. subsidiaries typically are denominated in their local currency.
Dollar $ 781,398 $ 383,227 British Pound / U.S. Dollar 24,810 6,058 Israeli Shekel / U.S. Dollar 12,535 11,852 Japanese Yen / U.S. Dollar 42,340 4,770 Swiss Franc / U.S. Dollar 74,939 32,766 Swedish Krona / U.S. Dollar 48,596 35,085 Chinese Renminbi / U.S. Dollar 32,124 16,660 New Taiwan Dollar / U.S.
Dollar (1) $ 1,202,830 $ 781,398 British Pound / U.S. Dollar 22,974 24,810 Israeli Shekel / U.S. Dollar 20,094 12,535 Indian Rupee / U.S. Dollar 53,465 — Japanese Yen / U.S. Dollar (2) 131,284 42,340 Swiss Franc / U.S. Dollar 8,960 74,939 Swedish Krona / U.S. Dollar 21,568 48,596 Chinese Renminbi / U.S.
We enter into foreign currency forward contracts to manage our exposure to fluctuations in foreign exchange rates that arise from receivables and payables denominated in foreign currencies. We do not enter into or hold foreign currency derivative financial instruments for trading or speculative purposes.
We enter into derivative transactions to manage our exposure to fluctuations in foreign exchange rates, specifically foreign currency forward contracts to manage our exposure related to monetary assets and liabilities denominated in foreign currencies and foreign exchange option contracts to manage our exposure related to forecasted cash flows.
Removed
Financial Statements and Supplementary Data The consolidated financial statements and notes to the consolidated financial statements are attached as APPENDIX A. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Added
Additionally, we use foreign currency option contracts to reduce the risk that forecast U.S. Dollar cash flows will be adversely affected by changes in Euro or Japanese Yen exchange rates. Foreign currency option contracts are denominated in the Euro and Japanese Yen currencies, and have maturities of less than fourteen months.
Added
Dollar 7,134 32,124 New Taiwan Dollar / U.S. Dollar 23,098 16,368 All other 26,679 25,368 Total $ 1,518,086 $ 1,058,478 (1) As of September 30, 2025, $835.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $367.4 million relates to option contracts. As of September 30, 2024, all the Euro to U.S.
Added
Dollar outstanding notional amount relates to forward contracts. (2) As of September 30, 2025, $41.9 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $89.4 million relates to option contracts. As of September 30, 2024, all the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.

Other PTC 10-K year-over-year comparisons