PTC Inc. Q1 2026 10-Q Filing Summary
Business Context and Reporting Period
This filing covers the quarterly period ended December 31, 2025 (Q1 Fiscal 2026). PTC Inc. is a global software company providing product lifecycle management (PLM) and computer-aided design (CAD) solutions. The company operates as a single reportable segment and reported 118,996,116 shares of common stock outstanding as of February 3, 2026.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $685.8 million | $565.1 million |
| Net Income | $166.5 million | $82.2 million |
| Diluted EPS | $1.39 | $0.68 |
| Operating Income | $221.1 million | $115.5 million |
| Operating Margin | 32.2% | 20.4% |
| Free Cash Flow | $267.4 million | $235.7 million |
| Annual Run Rate (ARR) | $2.49 billion | $2.21 billion |
| Cash and Equivalents | $209.7 million | $184.4 million |
| Total Debt | $1.20 billion | $1.20 billion |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 21% year-over-year, driven primarily by a 56% increase in license revenue due to higher value and longer duration renewal contracts. Recurring revenue grew 25% to $657.3 million.
- Profitability: Net income more than doubled (102% increase) to $166.5 million. Operating margin expanded by 1,180 basis points to 32.2%.
- Divestiture: On November 5, 2025, PTC entered an agreement to sell its Kepware and ThingWorx businesses for up to $600 million in cash plus contingent consideration. Assets and liabilities related to this divestiture are classified as "held for sale" on the balance sheet.
- Stock Repurchases: The company repurchased 1.14 million shares for approximately $200 million during the quarter.
- Expense Management: Sales and marketing expenses decreased 11% to $140.9 million, while General and Administrative expenses increased 39% to $74.0 million, largely due to $10.7 million in acquisition and transaction-related costs associated with the divestiture.
Guidance, Outlook, and Risks
- Divestiture Closing: The sale of Kepware and ThingWorx is expected to close on or before April 1, 2026. Proceeds are expected to be used for share repurchases.
- Tax Rate: The effective tax rate was 18% for Q1 2026, up from 12% in the prior year, due to changes in the geographic mix of income and the release of a tax reserve related to IRS procedural guidance.
- Capital Allocation: Management intends to return excess cash to shareholders via share repurchases, utilizing both operating cash flow and proceeds from the divestiture.
- Risks: Key risks include the potential delay or failure of the divestiture closing, macroeconomic headwinds affecting customer spending, and foreign exchange rate volatility (approximately 55% of revenue is transacted in non-USD currencies).
Investor Verification Checklist
- Divestiture Terms: Verify the final purchase price adjustments and closing date for the Kepware and ThingWorx sale, as the $600 million figure is subject to working capital and performance adjustments.
- Recurring Revenue Quality: Confirm the sustainability of the 25% recurring revenue growth and the mix of on-premises versus SaaS contracts.
- Debt Covenants: Review compliance with financial covenants under the $1.25 billion credit facility and senior notes, particularly given the significant share repurchase activity.
- Tax Position: Assess the impact of the "One Big Beautiful Bill Act" enacted in July 2025 on future tax provisions and deductions.
- Non-GAAP Reconciliations: Review the reconciliation of Non-GAAP operating income ($309.6 million) and EPS ($1.92) to understand the impact of excluded stock-based compensation and amortization.