PTC Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to PTC's 2025 second quarter conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. I would now like to turn the call over to Matt Schimel, PTC's head of investor relations. Please go ahead.

Good afternoon. Thank you, Kate, and welcome to PTC's 2025 second quarter conference call. On the call today are Neil Barua, Chief Executive Officer, Christian Talbatia, Chief Financial Officer, and Robert Dada, Chief Revenue Officer. Today's conference call is being broadcast live through an audio webcast, and a replay of the call will be available later today at www.ptc.com. During this call, PTC will make forward-looking statements, including guidance as to future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in PTC's annual report on Form 10-K, Form 10-Q, and other filings with the U.S. Securities and Exchange Commission, as well as in today's press release. The forward-looking statements, including guidance, provided during this call are valid only as of today's date, April 30, 2025, and PTC assumes no obligation to update these forward-looking statements. During the call, PTC will discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's press release made available on our website. With that, I'd like to turn the call over to PTC's Chief Executive Officer, Neil Favreau.

Thank you, Matt, and good afternoon, everyone. Q2 was a solid quarter of execution for PTC. We delivered 10% ARR growth and 13% free cash flow growth year over year. We also made progress de-levering our capital structure as we said we would in February. we paid down $500 million of senior notes that were due. With our leverage ratio now at 1.5 times and continued visibility to solid cash generation, we continue share buybacks in Q2 and expect to remain active under our $2 billion share repurchase authorization. Our Q2 results reflected solid execution across our five focus areas, PLM, ALM, SLM, CAD, and SAS. Across our geographic regions and verticals, our customers reinforce the importance of PTC software to accelerate time to market, produce higher quality products, and manage complexity across their businesses. Q2 customer wins included significant windshield PLM expansions at a med tech company and also at the aerospace division of a large European industrial conglomerate. A new CodeBeamer ALM multiple wins with global automotive OEMs in Japan, India, and Europe, a ServiceMax SLM cross-sell win at a global industrial company, and lastly, a game-changing Creo CAD and Windchill PLM expansion with a well-known aerospace and defense company. You could read more about these wins in our appendix slides. Our Q2 execution gives us confidence in the progress of our go-to-market transformation. We said on our last earnings call that the foundation was laid in Q1, and Q2 was the start of the team finding its new rhythm. This is playing out as expected, as we're seeing higher quality pipeline velocity, solid hiring and enablement of quota-bearing reps, and more consistent execution. I credit our go-to-market leadership team for their relentless focus in driving this transformation. I am more confident today than I was at the beginning of the year, given our progress. And be assured, we are continuing to press harder. We also advance our product portfolio and generative AI initiatives across all five focus areas, including in PLM, we publicly previewed Windchill AI at the Hanover Messe trade show in Germany. In ALM, CodeBeamer 3.0 is now GA. In SLM, we introduced ServiceMax AI, and in CAD, we launched Onshape AI Advisor and Onshape Government. In April, we bought a great company called Inquiry Labs that brings development and deep technical talent to accelerate our product roadmap in ALM, TLM, and critical integrations between the two. Overall, Q2 was a solid quarter of supporting our customers, making progress in initiatives like our go-to-market transformation and advancing our market-leading product portfolio and generative AI strategy. We're still in the early phases of digital transformation across our customer base, and there's no question about the critical role PTC will play in these transformations over the medium and long term. Now turning to the near term. As we discussed last quarter, we entered the second half with a strong pipeline. That pipeline remains intact, and we have not yet seen material changes in customer behavior. However, we recognize growing uncertainty related to global trade dynamics and macro pressures which affect our customers. While no broad trends have emerged yet since the beginning of April, Customer conversations as a result of these dynamics are progressing in a way that suggests our prior high end of 10% is now a stretch. These conversations indicate an increasing potential for deals in our second half to be smaller, done in phases, or potentially delayed. Accordingly, we have moderated the high end of our ARR guidance to 9% growth. Also, to allow for the potential that macro conditions significantly worsen and its impact to customer buying behaviors, we are introducing a new low end of 7% to our guidance range. To be clear, this adjustment is about the potential timing and sizing of projects, not about fundamental demand. The long-term need for digital transformation remains extremely important to our customers. Despite this AR guidance adjustment, Our financial discipline allows us to raise the low end of our free cash flow guidance for 2025, a reflection of strong execution and profitability focus. Christian will take you through our Q2 and updated guidance in more detail, but I'd like to make a few final points that I feel are important. This near-term uncertainty poses questions and makes things difficult to predict, but it ultimately reinforces the need for digital transformation and could serve as a tailwind over the medium term. The need to build a product data foundation, apply generative AI to that foundation, and transform only gets heightened because of this uncertainty. Customers, for their survival, need to develop products faster, build a more resilient supply chain, and optimize aftermarket service revenue streams. And that's why PPC is exceptionally well-positioned to be the leader in bringing these critical needs into reality. We will navigate this near-term uncertainty and stay focused on the right things, helping our customers transform, progressing our go-to-market transformation, and delivering enhanced products and generative AI capabilities across our five key focus areas. With that, I'll turn things over to Christian.