PTCโs QQ1 2025 results illustrate a resilient software subscription business with a solid ARR base and improving free cash flow, even as the macro selling environment remains subdued. Reported GAAP metrics in Q1 2025 show revenue of $565.1 million, gross margin of 80.2%, and operating margin of 20.4%, with net income of $82.2 million and EPS of $0.68. Management emphasized the durability of ARR and free cash flow as the primary performance indicators, given the complexities of on-premise subscription revenue recognition under ASC 606. At quarter-end, constant-currency ARR stood at $2.277 billion, up 11% YoY, underscoring the companyโs ability to monetize its diversified software portfolio (PLM Windchill, ALM Codebeamer, SLM ServiceMax, CAD Creo/Onshape, and related SaaS offerings). Free cash flow for the quarter was $235.7 million, up 29% YoY, with approximately $11 million of that in Q1 attributable to go-to-market realignment costs. PTะก reaffirmed guidance for fiscal 2025: ARR growth of about 9-10% in constant currency and free cash flow of $835-850 million, with Q2 free cash flow around $270 million. The company intends to return roughly 50% of free cash flow to shareholders over time, supported by a target debt-to-EBITDA below 3x. The quarter also showcased a strategic acceleration in AI investments across the portfolio, including ServiceMax AI, Codebeamer AI (with pilot programs with Volkswagen Group and Microsoft), and ongoing Windchill/ Creo/ Onshape AI enhancements.