PTC Inc. (PTC) Earnings & Analysis

Latest quarter

PTC reported Q3 FY2026 revenue of $600.0 million, down −6.82% from Q3 FY2025. Revenue, as the consensus counts it, was $600.1 million, below the consensus revenue estimate of $618.0 million. Adjusted EPS, as the consensus counts it, was $1.58, below the consensus adjusted EPS estimate of $1.60.

The filing said revenue declined because of the Q2 FY2026 divestiture of the Kepware and ThingWorx businesses and lower license revenue tied primarily to the shortened duration of one large contract renewal and expansion. The filing said support and cloud-services revenue grew, partially offsetting lower license revenue, while CAD software revenue was flat because of lower license revenue. It also said PLM software revenue declined, reflecting the divestiture and lower license revenue in Europe.

PTC reported diluted EPS of $1.03, down −12.0% year over year, as lower revenue reduced earnings. Gross margin was 81.7%, versus 82.9% a year earlier, and operating margin was 27.7%, versus 32.6%. Free cash flow was $249.3 million, up 3.02%, with the filing citing higher capital expenditures associated with moving a major R&D center.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Neil Barua said customer demand for intelligent product-lifecycle systems was being driven by pressure to shorten development cycles, improve resilience and compete in an AI-driven environment. He said customers were using PTC’s systems of record to build product-data foundations and that the company’s go-to-market transformation had improved vertical expertise, executive engagement and collaboration across teams.

Barua said AI adoption starts with focused workflows and customer return on investment before customers decide whether to scale deployments. He described embedded AI capabilities as a way for customers to use AI within governed workflows, while standalone AI capabilities were expected to become a more meaningful ARR contributor over the next few years. He also said customers’ security, regulatory and competitive concerns made them hesitant to provide critical product data to frontier-model providers.

Asked about AI-focused startups, Barua said PTC’s position rested on governed, auditable workflows and product data held in context. He said the company was monitoring the ecosystem but remained focused on customer demand, product development and AI progress. In response to questions about customer modernization and competitive displacement, Barua said customers were consolidating product-data foundations with PTC as they sought AI capabilities and modernization.

Chief Financial Officer Jen DiRico said the company’s Q3 revenue of $600.0 million was below the midpoint of its guidance because of the shortened duration of a single large contract expansion, while broader deal durations continued to hold. She said PTC expected a considerable increase in net new ARR in Q4, supported by demand generation and deferred ARR expected to convert during the quarter. DiRico also said the company increased its annual ARR-growth guidance because of go-to-market execution and pipeline visibility.

Barua said PTC continued to pursue small acquisitions that could accelerate its product roadmap, including technology intended to help customers move from on-premise Windchill to Windchill Plus.

Guidance

PTC raised its FY2026 constant-currency ARR growth outlook excluding divested businesses to 9.00% to 9.50%. The company updated FY2026 non-GAAP EPS guidance to $7.87 to $8.42 and expects common-stock repurchases of approximately $1.6 billion. PTC also expects Q4 FY2026 non-GAAP EPS of $1.63 to $2.21.