Ptc Inc 10-Q for FY2026 Q1
Ptc Inc. (PTC)
About this 10-Q
Ptc Inc filed this 10-Q on February 5, 2026, covering the quarter ended December 31, 2025 (FY2026 Q1).
Headline figures
Quarter ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $685.83M
- up 21.4% from $565.13M a year earlier
- Net income
- $166.52M
- up 102.5% from net income of $82.23M a year earlier
- Diluted EPS
- $1.39
- up 104.4% from $0.68 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from_ to_
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were
PTC Inc.
INDEX TO FORM 10-Q
For the Quarter Ended December 31, 2025
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Page Number |
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Item 1. |
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1 |
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Consolidated Balance Sheets as of December 31, 2025 and September 30, 2025 |
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1 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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29 |
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Item 4. |
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Item 1A. |
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30 |
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Item 2. |
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30 |
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Item 5. |
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Item 6. |
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PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PTC Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
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December 31, 2025 |
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September 30, 2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses |
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Other current assets |
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Assets held for sale |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Acquired intangible assets, net |
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Deferred tax assets |
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Operating right-of-use lease assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Accrued compensation and benefits |
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Accrued income taxes |
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Current portion of long-term debt |
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Deferred revenue |
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Short-term lease obligations |
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Liabilities held for sale |
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Total current liabilities |
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Long-term debt |
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Deferred tax liabilities |
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Long-term deferred revenue |
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Long-term lease obligations |
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Other liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
1
PTC Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Three months ended |
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December 31, 2025 |
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December 31, 2024 |
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Revenue: |
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License |
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$ |
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$ |
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Support and cloud services |
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Total software revenue |
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Professional services |
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Total revenue |
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Cost of revenue: |
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Cost of license revenue |
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Cost of support and cloud services revenue |
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Total cost of software revenue |
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Cost of professional services revenue |
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Total cost of revenue |
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Gross margin |
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Operating expenses: |
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Sales and marketing |
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Research and development |
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General and administrative |
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Amortization of acquired intangible assets |
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Total operating expenses |
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Operating income |
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Interest expense |
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Other expense, net |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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Earnings per share—Basic |
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$ |
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$ |
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Earnings per share—Diluted |
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$ |
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$ |
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Weighted-average shares outstanding—Basic |
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Weighted-average shares outstanding—Diluted |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
PTC Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
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Three months ended |
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December 31, 2025 |
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December 31, 2024 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Hedge gain (loss) arising during the period, net of tax of $ |
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Foreign currency translation adjustment, net of tax of $ |
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Change in pension benefit, net of tax of $( |
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Other comprehensive income (loss) |
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Comprehensive income |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
3
PTC Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Three months ended |
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December 31, 2025 |
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December 31, 2024 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of right-of-use lease assets |
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Stock-based compensation |
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Other non-cash items, net |
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Changes in operating assets and liabilities, excluding the effects of acquisitions: |
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Accounts receivable |
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Accounts payable and accrued expenses |
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Accrued compensation and benefits |
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Deferred revenue |
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Accrued income taxes |
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Other current assets and prepaid expenses |
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Operating lease liabilities |
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Other noncurrent assets and liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Additions to property and equipment |
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Settlement of net investment hedges |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Borrowings under credit facility |
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Repayments of borrowings under credit facility |
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Repurchases of common stock |
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Payments of withholding taxes in connection with stock-based awards |
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Other financing activity |
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Net cash used in financing activities |
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Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
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Net change in cash, cash equivalents, and restricted cash |
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Cash, cash equivalents, and restricted cash, beginning of period |
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Cash, cash equivalents, and restricted cash, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash financing and investing activities: |
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Withholding taxes in connection with stock-based awards, accrued |
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$ |
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$ |
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Operating right-of-use assets obtained in exchange for operating lease liabilities |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
4
PTC Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
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Three months ended December 31, 2025 |
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Common Stock |
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Accumulated |
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Shares |
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Amount |
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Additional |
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Retained Earnings |
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Other |
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Total |
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Balance as of September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common stock issued for employee stock-based awards |
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— |
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— |
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Shares surrendered by employees to pay taxes related to stock-based awards |
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— |
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— |
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Compensation expense from stock-based awards |
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— |
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— |
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— |
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— |
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Repurchases of common stock, including excise tax |
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— |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Loss on net investment hedges, net of tax |
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— |
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— |
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— |
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— |
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( |
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( |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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Change in defined benefit pension items, net of tax |
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— |
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— |
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— |
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— |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Three months ended December 31, 2024 |
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Common Stock |
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Accumulated |
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Shares |
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Amount |
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Additional |
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Retained Earnings |
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Other |
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Total |
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Balance as of September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common stock issued for employee stock-based awards |
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— |
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— |
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Shares surrendered by employees to pay taxes related to stock-based awards |
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( |
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— |
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— |
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Compensation expense from stock-based awards |
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— |
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— |
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— |
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— |
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Repurchases of common stock, including excise tax |
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( |
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( |
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( |
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— |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Gain on net investment hedges, net of tax |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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( |
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( |
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Change in defined benefit pension items, net of tax |
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— |
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— |
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— |
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— |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
5
PTC Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
General
The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows as of the dates and for the periods indicated. The September 30, 2025 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.
Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30.
Pending Accounting Pronouncements
Narrow-Scope Improvements for Interim Reporting
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. We expect the adoption to result in disclosure changes only.
Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software by eliminating project stage-based capitalization and clarifying the probable-to-complete threshold to commence the capitalization of software costs. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. The standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
Measurements of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The ASU will be effective for us in the first quarter of 2027, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
6
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. As clarified by ASU 2025-01, ASU 2024-03 will be effective for us in the fourth quarter of 2028. We expect the adoption to result in disclosure changes only.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU will be effective for us in the fourth quarter of 2026. We expect the adoption to result in disclosure changes only.
2. Revenue from Contracts with Customers
Receivables, Contract Assets and Contract Liabilities
(in thousands) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
Short-term receivables |
|
$ |
|
|
$ |
|
||
Long-term receivables |
|
$ |
|
|
$ |
|
||
Contract asset |
|
$ |
|
|
$ |
|
||
Deferred revenue |
|
$ |
|
|
$ |
|
||
During the three months ended December 31, 2025, we recognized $
Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of December 31, 2025 and September 30, 2025, our total revenue liability was $
Remaining Performance Obligations (RPO)
Our contracts with customers include amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as foreign currency exchange rate fluctuations. As of December 31, 2025, RPO totaled $
7
Disaggregation of Revenue
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Recurring revenue(1) |
|
$ |
|
|
$ |
|
||
Perpetual license |
|
|
|
|
|
|
||
Professional services |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
We report revenue by the following two product groups:
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Product lifecycle management (PLM) |
|
$ |
|
|
$ |
|
||
Computer-aided design (CAD) |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Americas |
|
$ |
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
||
Asia Pacific |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
3. Stock-based Compensation
Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows:
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Cost of license revenue |
|
$ |
|
|
$ |
|
||
Cost of support and cloud services revenue |
|
|
|
|
|
|
||
Cost of professional services revenue |
|
|
|
|
|
|
||
Sales and marketing |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
As of December 31, 2025 and September 30, 2025, we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $
8
4. Earnings per Share (EPS) and Common Stock
EPS
The following table presents the calculation for both basic and diluted EPS:
(in thousands, except per share data) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Net income |
|
$ |
|
|
$ |
|
||
Weighted-average shares outstanding—Basic |
|
|
|
|
|
|
||
Dilutive effect of restricted stock units |
|
|
|
|
|
|
||
Weighted-average shares outstanding—Diluted |
|
|
|
|
|
|
||
Earnings per share—Basic |
|
$ |
|
|
$ |
|
||
Earnings per share—Diluted |
|
$ |
|
|
$ |
|
||
Anti-dilutive shares were immaterial for the three months ended December 31, 2025 and December 31, 2024.
Common Stock Repurchases
Our Articles of Organization authorize us to issue up to
5. Acquisitions and Divestitures
Acquisition and transaction-related costs in the three months ended December 31, 2025 totaled $
Kepware and ThingWorx Divestiture
On November 5, 2025, we entered into an Asset Purchase Agreement with Parrot US Buyer, L.P., a Delaware limited partnership (“Purchaser”), an entity controlled by investment funds affiliated with TPG Global, LLC. Pursuant to the Asset Purchase Agreement, on the terms and subject to the conditions therein, PTC has agreed to sell, and Purchaser has agreed to acquire, PTC’s Kepware and ThingWorx businesses (collectively, the “Business”), in exchange for total consideration consisting of $
9
As described in greater detail in the Asset Purchase Agreement, the Purchase Price will be (i) increased or decreased to the extent the Working Capital (as defined in the Asset Purchase Agreement) of the Business as of the Closing is higher or lower than a specified target amount, (ii) decreased by the amount of any Indebtedness (as defined in the Asset Purchase Agreement) of the Business as of the Closing, (iii) decreased by $
The assets and liabilities of the Kepware and ThingWorx business were classified as held for sale in the first quarter of 2026. We expect that the sales proceeds less costs to sell will exceed the carrying value of the net assets. This divestiture did not qualify for discontinued operations and therefore, its results will be included in our Consolidated Statements of Operations in continuing operations through the date of sale.
The following table presents the major classes of assets and liabilities classified as held for sale as of December 31, 2025.
(in thousands) |
|
December 31, 2025 |
|
|
Accounts receivable, net |
|
$ |
|
|
Other current assets |
|
|
|
|
Goodwill |
|
|
|
|
Long-term receivables |
|
|
|
|
Other assets |
|
|
|
|
Total Assets held for sale |
|
$ |
|
|
|
|
|
|
|
Accrued compensation and benefits |
|
$ |
|
|
Deferred revenue, current |
|
|
|
|
Other current liabilities |
|
|
|
|
Other liabilities |
|
|
|
|
Total Liabilities held for sale |
|
$ |
|
|
Other Acquisitions
In the third quarter of 2025, we acquired IncQuery Group GmbH pursuant to a Share Purchase Agreement. The purchase price was $
6. Goodwill and Intangible Assets
Goodwill and acquired intangible assets consisted of the following:
(in thousands) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
||||||
Goodwill |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||
Intangible assets with finite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased software |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Capitalized software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer lists and relationships |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trademarks and trade names |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets with finite lives |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total goodwill and acquired intangible assets |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||
10
Changes in Goodwill were as follows:
(in thousands) |
|
|
|
|
Balance, October 1, 2025 |
|
$ |
|
|
Reclassification to Assets held for sale |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
|
|
Balance, December 31, 2025 |
|
$ |
|
|
The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows:
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Amortization of acquired intangible assets |
|
$ |
|
|
$ |
|
||
Cost of revenue |
|
|
|
|
|
|
||
Total amortization expense |
|
$ |
|
|
$ |
|
||
7. Fair Value Measurements
The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:
A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
Money market funds, time deposits, and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.
The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.
11
Our significant financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and September 30, 2025 were as follows:
(in thousands) |
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Option contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(in thousands) |
|
September 30, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Option contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
8. Derivative Financial Instruments
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. We do not enter into derivative transactions for trading or speculative purposes.
The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:
(in thousands) |
|
Fair Value of Derivatives Designated As Hedging Instruments |
|
|
Fair Value of Derivatives Not Designated As Hedging Instruments |
|
||||||||||
|
|
December 31, 2025 |
|
|
September 30, 2025 |
|
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||||
Derivative assets(1): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Option contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivative liabilities(2): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12
Non-Designated Hedges
We hedge our net foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately
We hedge our forecasted U.S. Dollar cash flows with foreign exchange option contracts to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These options have maturities of up to approximately
As of December 31, 2025 and September 30, 2025, we had outstanding forward and option contracts not designated as hedging instruments with notional amounts equivalent to the following:
Currency Hedged (in thousands) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
Euro / U.S. Dollar(1) |
|
$ |
|
|
$ |
|
||
British Pound / U.S. Dollar |
|
|
|
|
|
|
||
Israeli Shekel / U.S. Dollar |
|
|
|
|
|
|
||
Indian Rupee / U.S. Dollar |
|
|
|
|
|
|
||
Japanese Yen / U.S. Dollar(2) |
|
|
|
|
|
|
||
Swiss Franc / U.S. Dollar |
|
|
|
|
|
|
||
Swedish Krona / U.S. Dollar |
|
|
|
|
|
|
||
New Taiwan Dollar / U.S. Dollar |
|
|
|
|
|
|
||
Danish Krone / U.S. Dollar |
|
|
|
|
|
|
||
All other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the three months ended December 31, 2025 and December 31, 2024:
(in thousands) |
|
|
|
Three months ended |
|
|||||
|
|
Location of Gain (Loss) |
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Net realized and unrealized gain, excluding the underlying foreign currency exposure being hedged |
|
Other expense, net |
|
$ |
|
|
$ |
|
||
In the three months ended December 31, 2025 and December 31, 2024, total foreign currency losses, net were $
13
Net Investment Hedges
We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro and Japanese Yen functional subsidiaries. Net investment hedges partially offset the impact of Foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately
Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro and Japanese Yen functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in Accumulated other comprehensive loss. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.
As of December 31, 2025 and September 30, 2025, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:
Currency Hedged (in thousands) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
Euro / U.S. Dollar |
|
$ |
|
|
$ |
|
||
Japanese Yen / U.S. Dollar |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three months ended December 31, 2025 and December 31, 2024:
(in thousands) |
|
|
|
Three months ended |
|
|||||
|
|
Location of Gain (Loss) |
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Gain (loss) recognized in Other comprehensive income (loss) ("OCI") |
|
OCI |
|
$ |
( |
) |
|
$ |
|
|
Gain (loss) reclassified from OCI to earnings |
|
n/a |
|
$ |
|
|
$ |
|
||
Gain recognized, excluded portion |
|
Other expense, net |
|
$ |
|
|
$ |
|
||
Offsetting Derivative Assets and Liabilities
We have entered into master netting arrangements for our foreign exchange contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.
14
The following table sets forth the offsetting of derivative assets as of December 31, 2025:
(in thousands) |
|
Gross Amounts Offset in the Consolidated Balance Sheets |
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets |
|
|
|
|
||||||||||||
As of December 31, 2025 |
|
Gross |
|
|
Gross |
|
|
Net Amounts of |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
The following table sets forth the offsetting of derivative liabilities as of December 31, 2025:
(in thousands) |
|
Gross Amounts Offset in the Consolidated Balance Sheets |
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets |
|
|
|
|
||||||||||||
As of December 31, 2025 |
|
Gross |
|
|
Gross |
|
|
Net Amounts of |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
9. Income Taxes
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Income before income taxes |
|
$ |
|
|
$ |
|
||
Provision for income taxes |
|
$ |
|
|
$ |
|
||
Effective income tax rate |
|
|
% |
|
|
% |
||
The effective tax rate for the quarter ended December 31, 2025 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. The effective tax rate for the quarter ended December 31, 2025 also reflected a net income tax benefit of $
In the quarter ended December 31, 2025, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In the quarter ended December 31, 2025, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $
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. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits.
As of December 31, 2025 and September 30, 2025, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $
15
As of December 31, 2025 and September 30, 2025, we had unrecognized tax benefits of $
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. 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 $
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that are applicable to us beginning in 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning 2026.
10. Debt
As of December 31, 2025 and September 30, 2025, we had the following debt obligations:
(in thousands) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
4.000% Senior notes due 2028 |
|
$ |
|
|
$ |
|
||
Credit facility revolver line(1)(2) |
|
|
|
|
|
|
||
Credit facility term loan(1)(2) |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Unamortized debt issuance costs for the senior notes(3) |
|
|
( |
) |
|
|
( |
) |
Total debt, net of issuance costs(4) |
|
$ |
|
|
$ |
|
||
Senior Unsecured Notes
In February 2020, we issued $
As of December 31, 2025, the total estimated fair value of the 2028 notes was approximately $
We were in compliance with all the covenants for our senior notes as of December 31, 2025.
Credit Agreement
Our credit facility consists of (i) a $
16
As of December 31, 2025, unused commitments under our revolving credit facility were $
As of December 31, 2025, the fair value of our credit facility approximates its book value.
PTC and certain foreign subsidiaries are eligible borrowers under the credit facility. As of December 31, 2025, $
Loans under the credit facility bear interest at variable rates. As of December 31, 2025, the annual rate for borrowings outstanding was
As of December 31, 2025, we were in compliance with all financial and operating covenants of the credit facility.
Interest
In the three months ended December 31, 2025 and December 31, 2024, we incurred interest expense on our debt of $
11. Commitments and Contingencies
Guarantees and Indemnification Obligations
We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.
We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.
17
12. Segments
We operate as a operating and reportable segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. .
The following table presents revenue, significant expenses, and consolidated net income for our reportable segment:
(in thousands) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Costs and expenses: |
|
|
|
|
|
|
||
Cost of revenue, adjusted(1) |
|
|
|
|
|
|
||
Operating expenses, adjusted(2) |
|
|
|
|
|
|
||
Other segment items(3) |
|
|
|
|
|
|
||
Consolidated net income |
|
$ |
|
|
$ |
|
||
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Overview
PTC is a global software company headquartered in Boston, Massachusetts. We employ over 7,000 people and support more than 30,000 customers globally.
We primarily serve customers in the following industry verticals:
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. 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. 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. 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 was 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 support our customers and pursue mid-to-long-term growth opportunities.
Forward-Looking Statements
Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, and the expected timing of closing the sale of the Kepware and ThingWorx businesses (the "divestiture"), are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, the effects of import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; our investments in our software solutions, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if customers are slower to adopt those solutions than we expect or if they adopt competing solutions; customers may not build the product data foundations
19
essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the divestiture may not be consummated when or as we expect if, among other factors, regulatory approvals under applicable laws and regulations are not received when or as we expect, or if other closing conditions are not satisfied when or as we expect or are waived; the future thresholds upon which the additional contingent consideration of up to $125 million related to the divestiture would become payable may not be achieved; other uses of cash or our credit facility limits could limit or preclude the return of excess cash and the net proceeds of the divestiture to shareholders by way of share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected are described below throughout or referenced in Part II, Item 1A. Risk Factors of this report.
Our Operating and Non-GAAP Financial Measures
Our discussion of results includes discussion of our ARR operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis. ARR and our non-GAAP financial 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. You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures.
Executive Overview
ARR grew 13% (8% constant currency) to $2.49 billion as of the end of Q1’26 compared to Q1’25.
Cash provided by operating activities grew 13% to $270 million in Q1'26 compared to Q1'25. Free cash flow grew 13% to $267 million in Q1'26 compared to Q1'25. In Q1'26, we made $10 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q1'26, we repurchased $200 million of our outstanding shares.
Revenue grew 21% (19% constant currency) to $686 million in Q1'26 compared to Q1'25, driven by growth in license revenue due to the higher total value and longer average duration of renewal contracts that commenced in the period. Operating margin grew by approximately 1180 basis points in Q1'26 compared to Q1'25, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 104% to $1.39 in Q1'26 compared to Q1'25, driven by revenue growth.
In Q1'26, we entered into an agreement to sell our Kepware and ThingWorx businesses and classified related assets and liabilities as held for sale. We may receive up to $600 million upon closing of the transaction, subject to adjustments as set forth in the purchase agreement. For further detail, refer to Note 5. Acquisitions and Divestitures to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. The transaction is expected to close on or before April 1, 2026. 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.
20
Results of Operations
(Dollar amounts in millions, except per share data) |
|
Three months ended |
|
|
Percent Change |
|
||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Actual |
|
|
Constant Currency(1) |
|
||||
ARR |
|
$ |
2,494.2 |
|
|
$ |
2,205.3 |
|
|
|
13 |
% |
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total recurring revenue(2) |
|
$ |
657.3 |
|
|
$ |
524.3 |
|
|
|
25 |
% |
|
|
23 |
% |
Perpetual license |
|
|
5.6 |
|
|
|
9.4 |
|
|
|
(40 |
)% |
|
|
(41 |
)% |
Professional services |
|
|
22.9 |
|
|
|
31.4 |
|
|
|
(27 |
)% |
|
|
(27 |
)% |
Total revenue |
|
|
685.8 |
|
|
|
565.1 |
|
|
|
21 |
% |
|
|
19 |
% |
Total cost of revenue |
|
|
117.7 |
|
|
|
111.8 |
|
|
|
5 |
% |
|
|
4 |
% |
Gross margin |
|
|
568.1 |
|
|
|
453.3 |
|
|
|
25 |
% |
|
|
22 |
% |
Operating expenses |
|
|
346.9 |
|
|
|
337.8 |
|
|
|
3 |
% |
|
|
2 |
% |
Operating income |
|
$ |
221.1 |
|
|
$ |
115.5 |
|
|
|
91 |
% |
|
|
79 |
% |
Non-GAAP operating income(1) |
|
$ |
309.6 |
|
|
$ |
191.3 |
|
|
|
62 |
% |
|
|
55 |
% |
Operating margin |
|
|
32.2 |
% |
|
|
20.4 |
% |
|
|
|
|
|
|
||
Non-GAAP operating margin(1) |
|
|
45.1 |
% |
|
|
33.9 |
% |
|
|
|
|
|
|
||
Diluted earnings per share |
|
$ |
1.39 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
||
Non-GAAP diluted earnings per share(1) |
|
$ |
1.92 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash provided by operating activities |
|
$ |
269.7 |
|
|
$ |
238.4 |
|
|
|
|
|
|
|
||
Capital expenditures |
|
|
(2.3 |
) |
|
|
(2.8 |
) |
|
|
|
|
|
|
||
Free cash flow |
|
$ |
267.4 |
|
|
$ |
235.7 |
|
|
|
|
|
|
|
||
Impact of Foreign Currency Exchange on Results of Operations
Approximately 55% of our revenue and 30% 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. Our constant currency disclosures are calculated by multiplying the results in local currency for the quarterly periods for FY'26 and FY'25 by the exchange rates in effect on September 30, 2025.
If Q1'26 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $6 million, revenue would have been higher by $4 million, and expenses would have been higher by $1 million. If Q1'25 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $102 million, revenue would have been higher by $16 million, and expenses would have been higher by $6 million.
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. We recognize revenue for the license portion of on-premises subscription contracts when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. We expect that over time a higher portion of our revenue will be recognized ratably as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue can vary significantly.
21
Revenue by Line of Business
(Dollar amounts in millions) |
|
Three months ended |
|
|
Percent Change |
|
||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Actual |
|
|
Constant Currency |
|
||||
License |
|
$ |
269.7 |
|
|
$ |
172.8 |
|
|
|
56 |
% |
|
|
52 |
% |
Support and cloud services |
|
|
393.3 |
|
|
|
361.0 |
|
|
|
9 |
% |
|
|
7 |
% |
Software revenue |
|
|
662.9 |
|
|
|
533.7 |
|
|
|
24 |
% |
|
|
21 |
% |
Professional services |
|
|
22.9 |
|
|
|
31.4 |
|
|
|
(27 |
)% |
|
|
(27 |
)% |
Total revenue |
|
$ |
685.8 |
|
|
$ |
565.1 |
|
|
|
21 |
% |
|
|
19 |
% |
Software revenue growth in Q1'26 was driven by license revenue growth, which reflects the higher total value and longer average duration of contracts that renewed in the current-year period.
Support and cloud services revenue growth in Q1'26 was driven by growth in both PLM and CAD.
Professional services revenue decreased in Q1'26 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Software Revenue by Product Group
(Dollar amounts in millions) |
|
Three months ended |
|
|
Percent Change |
|
||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Actual |
|
|
Constant Currency |
|
||||
PLM |
|
$ |
409.9 |
|
|
$ |
323.6 |
|
|
|
27 |
% |
|
|
24 |
% |
CAD |
|
|
253.0 |
|
|
|
210.1 |
|
|
|
20 |
% |
|
|
17 |
% |
Software revenue |
|
$ |
662.9 |
|
|
$ |
533.7 |
|
|
|
24 |
% |
|
|
21 |
% |
PLM software revenue growth in Q1'26 was primarily driven by Windchill revenue growth in Europe.
PLM ARR grew 13% (9% constant currency) from Q1'25 to Q1'26, primarily driven by Windchill and Codebeamer. PLM ARR grew 24% (12% constant currency) in Europe, 15% (13% constant currency) in Asia Pacific, and 6% (6% constant currency) in the Americas.
CAD software revenue growth in Q1'26 was driven by Creo revenue growth in the Americas and Europe.
CAD ARR grew 13% (8% constant currency) from Q1'25 to Q1'26, primarily driven by Creo. CAD ARR grew 20% (7% constant currency) in Europe, 12% (10% constant currency) in Asia Pacific, and 7% (7% constant currency) in the Americas.
22
Gross Margin
(Dollar amounts in millions) |
|
Three months ended |
|
|
|
|
||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Percent Change |
|
|||
License gross margin |
|
$ |
256.3 |
|
|
$ |
162.5 |
|
|
|
58 |
% |
License gross margin percentage |
|
|
95 |
% |
|
|
94 |
% |
|
|
|
|
Support and cloud services gross margin |
|
$ |
314.0 |
|
|
$ |
289.6 |
|
|
|
8 |
% |
Support and cloud services gross margin percentage |
|
|
80 |
% |
|
|
80 |
% |
|
|
|
|
Professional services gross margin |
|
$ |
(2.3 |
) |
|
$ |
1.2 |
|
|
|
(290 |
)% |
Professional services gross margin percentage |
|
|
(10 |
)% |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total gross margin |
|
$ |
568.1 |
|
|
$ |
453.3 |
|
|
|
25 |
% |
Total gross margin percentage |
|
|
83 |
% |
|
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP gross margin(1) |
|
$ |
582.0 |
|
|
$ |
467.5 |
|
|
|
24 |
% |
Non-GAAP gross margin percentage(1) |
|
|
85 |
% |
|
|
83 |
% |
|
|
|
|
License gross margin growth in Q1'26 was in line with license revenue growth. Cost of license revenue grew in Q1'26 compared to Q1'25, primarily due to higher royalty expenses.
Support and cloud services gross margin growth in Q1'26 was in line with support and cloud services revenue growth. Cost of support and cloud services revenue grew 11% in Q1'26 compared to Q1'25, primarily due to increasing compensation-related costs and cloud and software subscription-related costs as the business grows.
Professional services gross margin decreased in Q1'26 compared to Q1'25, primarily driven by a sharper decrease in professional services revenue than in professional services expense. 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.
Operating Expenses
(Dollar amounts in millions) |
|
Three months ended |
|
|
|
|
||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Percent Change |
|
|||
Sales and marketing |
|
$ |
140.9 |
|
|
$ |
157.5 |
|
|
|
(11 |
)% |
% of total revenue |
|
|
21 |
% |
|
|
28 |
% |
|
|
|
|
Research and development |
|
$ |
120.0 |
|
|
$ |
115.5 |
|
|
|
4 |
% |
% of total revenue |
|
|
17 |
% |
|
|
20 |
% |
|
|
|
|
General and administrative |
|
$ |
74.0 |
|
|
$ |
53.3 |
|
|
|
39 |
% |
% of total revenue |
|
|
11 |
% |
|
|
9 |
% |
|
|
|
|
Amortization of acquired intangible assets |
|
$ |
12.1 |
|
|
$ |
11.4 |
|
|
|
6 |
% |
% of total revenue |
|
|
2 |
% |
|
|
2 |
% |
|
|
|
|
Total operating expenses |
|
$ |
346.9 |
|
|
$ |
337.8 |
|
|
|
3 |
% |
Total headcount increased 4% between Q1’25 and Q1’26.
Operating expenses in Q1'26 increased compared to Q1'25, primarily due to the following:
23
partially offset by:
Interest Expense
(Dollar amounts in millions) |
|
Three months ended |
|
|
|
|
||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Percent Change |
|
|||
Interest expense |
|
$ |
(17.3 |
) |
|
$ |
(22.0 |
) |
|
|
(22 |
)% |
Interest expense in both Q1'26 and Q1'25 includes interest on our revolving credit facility, term loan, and our senior notes due in 2028. Interest expense in Q1'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q1'26 compared to Q1'25 due to lower debt balances.
Income Taxes
(Dollar amounts in millions) |
|
Three months ended |
|
|
|
|
||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Percent Change |
|
|||
Income before income taxes |
|
$ |
203.0 |
|
|
$ |
93.2 |
|
|
|
118 |
% |
Provision for income taxes |
|
$ |
36.5 |
|
|
$ |
10.9 |
|
|
|
234 |
% |
Effective income tax rate |
|
|
18 |
% |
|
|
12 |
% |
|
|
|
|
The effective tax rate for Q1'26 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. The effective tax rate for Q1’26 also reflected a net income tax benefit of $7 million related to IRS procedural guidance, as described below. Q1’25 included a benefit of $5 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.
In Q1’26, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In Q1’26, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024.
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that are applicable to us beginning in FY'26. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning FY'26.
Critical Accounting Policies and Estimates
There were no material changes to our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 Annual Report on Form 10-K.
24
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 1. Basis of Presentation to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for all recently issued accounting pronouncements. We are evaluating the impact of ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software and ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets and have not yet determined whether they will have a material impact.
Liquidity and Capital Resources
(in millions) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
Cash and cash equivalents |
|
$ |
209.7 |
|
|
$ |
184.4 |
|
Restricted cash |
|
|
0.6 |
|
|
|
0.6 |
|
Total |
|
$ |
210.3 |
|
|
$ |
185.0 |
|
|
|
|
|
|
|
|
||
(in millions) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Net cash provided by operating activities |
|
$ |
269.7 |
|
|
$ |
238.4 |
|
Net cash provided by investing activities |
|
$ |
0.9 |
|
|
$ |
25.5 |
|
Net cash used in financing activities |
|
$ |
(244.1 |
) |
|
$ |
(324.3 |
) |
Cash, Cash Equivalents and Restricted Cash
We invest our cash with highly rated financial institutions. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. A significant portion of our cash is generated and held outside the U.S. As of December 31, 2025, we had cash and cash equivalents of $23 million in the U.S., $101 million in Europe, $69 million in Asia Pacific (including India) and $17 million in other countries. 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.
Cash Provided by Operating Activities
Cash provided by operating activities increased $31 million in Q1'26 compared to Q1'25. Growth was driven by higher collections and lower vendor disbursements, partially offset by higher tax payments and higher salary and related payments. Additionally, Q1'26 included $10 million of divestiture-related payments.
Cash Provided by Investing Activities
Cash provided by investing activities in Q1'26 and Q1'25 was driven by inflows from the settlement of net investment hedges.
Cash Used in Financing Activities
Cash used in financing activities in Q1'26 included $200 million of repurchases of common stock. Cash used in financing activities in Q1'25 included net payments of $205 million on our credit facility and $75 million of repurchases of common stock.
25
Outstanding Debt
(in millions) |
|
December 31, 2025 |
|
|
September 30, 2025 |
|
||
4.000% Senior notes due 2028 |
|
$ |
500.0 |
|
|
$ |
500.0 |
|
Credit facility revolver line |
|
|
237.5 |
|
|
|
231.3 |
|
Credit facility term loan |
|
|
462.5 |
|
|
|
468.8 |
|
Total debt |
|
$ |
1,200.0 |
|
|
$ |
1,200.0 |
|
Unamortized debt issuance costs for the senior notes |
|
|
(2.3 |
) |
|
|
(2.6 |
) |
Total debt, net of issuance costs |
|
$ |
1,197.7 |
|
|
$ |
1,197.4 |
|
|
|
|
|
|
|
|
||
Undrawn under credit facility revolver |
|
$ |
1,012.5 |
|
|
$ |
1,018.8 |
|
Undrawn under credit facility revolver available to borrow |
|
$ |
995.4 |
|
|
$ |
1,001.7 |
|
As of December 31, 2025, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of December 31, 2025, the annual rate for borrowings outstanding under the credit facility was 5.2%.
Our credit facility and our senior notes are described in Note 10. Debt to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. As of December 31, 2025, $25 million of our debt associated with the credit facility term loan was classified as current.
Future Expectations
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.
We expect to use the net after-tax proceeds of the Kepware and ThingWorx divestiture to repurchase shares, in line with our long-term goal of returning excess cash to shareholders.
Our expected uses and sources of cash could change, our cash position could be reduced, and we could incur additional debt obligations if we retire other debt, engage in strategic transactions, or repurchase shares, any of which could be commenced, suspended, or completed at any time. Any such repurchases or retirement of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material.
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. We calculate ARR as follows:
26
We believe ARR is a valuable operating measure to assess the health of a subscription business because it is aligned with the amount that we invoice the customer on an annual basis. We generally invoice customers annually for the current year of the contract. A customer with a one-year contract will typically be invoiced for the total value of the contract at the beginning of the contractual term, while a customer with a multi-year contract will be invoiced for each annual period at the beginning of each year of the contract.
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.
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 should be viewed independently of recognized and unearned revenue and is not intended to be combined with, or to replace, either of those items. Investors should consider our ARR operating measure only in conjunction with our GAAP financial results.
Non-GAAP Financial Measures
Our non-GAAP financial measures and the reasons we use them and exclude the items identified below are described in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2025.
The non-GAAP financial measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are:
27
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 defined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 and as reflected in the reconciliation tables.
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. Accordingly, the non-GAAP financial measures included in this Quarterly Report on Form 10-Q 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.
(in millions, except per share amounts) |
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
GAAP gross margin |
|
$ |
568.1 |
|
|
$ |
453.3 |
|
Stock-based compensation |
|
|
6.0 |
|
|
|
5.9 |
|
Amortization of acquired intangible assets included in cost of revenue |
|
|
7.9 |
|
|
|
8.3 |
|
Non-GAAP gross margin |
|
$ |
582.0 |
|
|
$ |
467.5 |
|
GAAP operating income |
|
$ |
221.1 |
|
|
$ |
115.5 |
|
Stock-based compensation |
|
|
57.9 |
|
|
|
55.9 |
|
Amortization of acquired intangible assets |
|
|
20.0 |
|
|
|
19.7 |
|
Acquisition and transaction-related charges |
|
|
10.7 |
|
|
|
0.2 |
|
Non-GAAP operating income |
|
$ |
309.6 |
|
|
$ |
191.3 |
|
GAAP net income |
|
$ |
166.5 |
|
|
$ |
82.2 |
|
Stock-based compensation |
|
|
57.9 |
|
|
|
55.9 |
|
Amortization of acquired intangible assets |
|
|
20.0 |
|
|
|
19.7 |
|
Acquisition and transaction-related charges |
|
|
10.7 |
|
|
|
0.2 |
|
Non-operating charges, net(1) |
|
|
0.8 |
|
|
|
— |
|
Income tax adjustments(2) |
|
|
(25.1 |
) |
|
|
(24.7 |
) |
Non-GAAP net income |
|
$ |
230.7 |
|
|
$ |
133.3 |
|
GAAP diluted earnings per share |
|
$ |
1.39 |
|
|
$ |
0.68 |
|
Stock-based compensation |
|
|
0.48 |
|
|
|
0.46 |
|
Amortization of acquired intangible assets |
|
|
0.17 |
|
|
|
0.16 |
|
Acquisition and transaction-related charges |
|
|
0.09 |
|
|
|
0.00 |
|
Non-operating charges, net(1) |
|
|
0.01 |
|
|
|
— |
|
Income tax adjustments(2) |
|
|
(0.21 |
) |
|
|
(0.20 |
) |
Non-GAAP diluted earnings per share |
|
$ |
1.92 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
||
Cash provided by operating activities |
|
$ |
269.7 |
|
|
$ |
238.4 |
|
Capital expenditures |
|
|
(2.3 |
) |
|
|
(2.8 |
) |
Free cash flow |
|
$ |
267.4 |
|
|
$ |
235.7 |
|
Operating margin impact of non-GAAP adjustments:
|
|
Three months ended |
|
|||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
GAAP operating margin |
|
|
32.2 |
% |
|
|
20.4 |
% |
Stock-based compensation |
|
|
8.4 |
% |
|
|
9.9 |
% |
Amortization of acquired intangible assets |
|
|
2.9 |
% |
|
|
3.5 |
% |
Acquisition and transaction-related charges |
|
|
1.6 |
% |
|
|
0.0 |
% |
Non-GAAP operating margin |
|
|
45.1 |
% |
|
|
33.9 |
% |
28
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in our market risk exposure as described in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Effectiveness of Disclosure Controls and Procedures
Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.
We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the period ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
29
PART II—OTHER INFORMATION
ITEM 1A. RISK FACTORS
In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I. Item 1A. Risk Factors in our 2025 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below shows the shares of our common stock we repurchased in Q1'26.
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) |
|
||||
October 1, 2025 - October 31, 2025 |
|
— |
|
$ |
— |
|
|
— |
|
$ |
1,700,012,666 |
|
November 1, 2025 - November 30, 2025 |
|
644,000 |
|
$ |
174.77 |
|
|
644,000 |
|
$ |
1,587,459,787 |
|
December 1, 2025 - December 31, 2025 |
|
497,657 |
|
$ |
175.72 |
|
|
497,657 |
|
$ |
1,500,012,797 |
|
Total |
|
1,141,657 |
|
$ |
175.18 |
|
|
1,141,657 |
|
$ |
1,500,012,797 |
|
ITEM 5. OTHER INFORMATION
Director and Executive Officer Adoption, Modification or Termination of 10b5-1 Plans in Q1'26
Our section 16 officers and directors may enter into plans or arrangements for the purchase or sale of our securities that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. Such plans and arrangements must comply in all respects with our insider trading policies, including our policy governing entry into and operation of 10b5-1 plans and arrangements.
During the quarter ended December 31, 2025, the below director adopted a Rule-10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K of the Securities Exchange Act of 1934, as amended). The plan adopted contemplates only sales of PTC common stock. No plans of Section 16 officers or directors were
Name and Title of Director or Section 16 Officer |
|
Date of Adoption, Modification, or Termination |
|
Duration of the Plan |
|
Aggregate Number of Shares of Common Stock that may be Sold under the Plan |
|
|
Ends |
|
30
ITEM 6. EXHIBITS
|
|
|
|
|
|
Incorporated by Reference |
||||||
Exhibit Number |
|
Description |
|
Filed Herewith |
|
Form |
|
Filling Date |
|
Exhibit |
|
SEC File No. |
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
Asset Purchase Agreement dated November 5, 2025 by and between PTC Inc. and Parrot US Buyer, L.P. |
|
|
|
8-K |
|
November 5, 2025 |
|
10.1 |
|
0-18059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
|
|
10-K |
|
November 23, 2015 |
|
3.1 |
|
0-18059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
|
|
|
10-K |
|
November 14, 2024 |
|
3.2 |
|
0-18059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
|
|
|
8-K |
|
February 13, 2020 |
|
4.1 |
|
0-18059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2 |
|
|
|
|
8-K |
|
February 13, 2020 |
|
4.3 |
|
0-18059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1* |
|
Executive Agreement dated November 17, 2025 by and between Jon Stevenson and PTC Inc. |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32** |
|
Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
The cover page of the Q1 Form 10-Q formatted in Inline XBRL (included in Exhibit 101) |
|
|
|
|
|
|
|
|
|
|
* Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of PTC participates.
** Indicates that the exhibit is being furnished, not filed, with this report.
31
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
PTC Inc. |
|||
|
|
|
|
|
|
By: |
|
/S/ JENNIFER DIRICO |
|
|
|
|
Jennifer DiRico Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|
Date: February 5, 2026
32
EXHIBIT 10.1
EXECUTIVE AGREEMENT
This Executive Agreement (“Agreement”) is by and between PTC Inc., a Massachusetts corporation (the “Company”), and Jon Stevenson (the “Executive”).
WHEREAS, the Executive is the Chief Product Officer of the Company;
WHEREAS, the Executive has executed a Restrictive Covenant Agreement with the Company;
WHEREAS, the Company wishes to make the following arrangements with the Executive concerning certain payments and benefits to be provided to the Executive in the event of a Change in Control of the Company or if the Executive’s employment with the Company is terminated in certain circumstances specified herein;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Definitions
For the purposes of this Agreement:
For purposes of this definition, no act or failure to act on the Executive’s part shall be deemed “willful” unless done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company.
2
(ii) any material reduction in the aggregate benefits for which the Executive is eligible under the Company’s benefit plans, including medical, dental, vision, basic life insurance, retirement, paid time off, long-term disability and short-term disability plans; provided that any such reduction or other action that is consistent with similar actions taken with respect to comparable benefits of the Company employees generally shall not constitute Good Reason;
(iii) a material diminution in the substantive responsibilities or the scope of the Executive’s position, taking into consideration, without limitation, the dollar amount of the budget and the number of employees for which the Executive has responsibility (and a reduction of more than ten percent (10%) in such dollar amount or such number from that which was applicable at the date of the Change in Control shall be deemed a “material diminution” unless it is comparable to similar reductions then applicable to the Company’s executive officers generally);
(iv) any breach by the Company of its material obligations under this Agreement;
(v) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or
(vi) any requirement that the Executive relocate to a primary work site that would increase the Executive’s one-way commute distance by more than fifty (50) miles from the Executive’s then principal residence.
3
2. Termination of Employment by the Company without Cause
If the Company terminates the Executive’s employment without Cause (other than a termination constituting a Change in Control Termination or a termination due to the Executive’s death or Disability), effective upon the later of the Termination Date or the effectiveness of the Release executed in connection with such termination and subject to the Executive satisfying all the conditions to Payment of Severance (as set forth in Section 11 below), the Executive shall be entitled to the following:
3. Change in Control
4
The Company shall pay this lump sum payment within sixty (60) days following the date the Conditions to Payment of Severance (as set forth in Section 11 below), are met.
5
4. Death or Disability
Effective upon a termination of the Executive’s employment due to Executive’s death or by the Company due to the Executive’s Disability, except as provided in any Equity Award documentation that explicitly or implicitly excludes such Equity Award from the effects of this section, all performance measures applicable to any Equity Awards held by the Executive shall be deemed to have been met at the Target Level and all Equity Awards held by the Executive shall immediately become vested, unrestricted and exercisable or distributable at the Target Level.
5. Certain Payments to Specified Employees
6
6. Taxes
7
The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6(b). The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6(b).
7. Recovery of Incentive Compensation Received upon Subsequent Restatement
8
Executive understands that Executive is or may become subject to the Company’s Executive Compensation Recoupment Policy adopted pursuant to Rule 10D-1 promulgated under the Exchange Act and Nasdaq Rule 5608, or any successor rule (the “Clawback Policy”). Executive understands that if Executive is or becomes subject to the Clawback Policy, the Company and/or the Board shall be entitled to recover all Recoverable Compensation (as defined in the Clawback Policy) from Executive pursuant to such means as the Company and/or the Board may elect. Executive understands that such recovery may be sought and occur after Executive’s employment with the Company terminates. Executive further agrees that the Executive is not entitled to indemnification for any Recoverable Compensation or for any claim or losses arising out of or in any way related to Recoverable Compensation recovered pursuant to the Clawback Policy and, to the extent any agreement or organizational document purports to provide otherwise, the Executive hereby irrevocably agrees to forego such indemnification. The Executive acknowledges and agrees that the Executive has received and has had an opportunity to review the Clawback Policy. This Section 7 is a material term of this Agreement.
8. Term
Unless the Executive’s employment is earlier terminated for any reason, this Agreement shall continue in effect until 11:59 p.m. on September 30, 2026 and shall automatically renew thereafter on an annual basis for additional twelve-month terms unless either party provides written notice to the other party of non-renewal at least ninety (90) days prior to the expiration of the then current term. If a Change in Control occurs while this Agreement is in effect, the term of this Agreement shall automatically be extended to the second anniversary of the Change in Control. Upon the termination of this Agreement, the respective rights and obligations of the parties shall survive to the extent necessary to carry out the intentions of the parties as embodied herein.
9. Successors and Assigns
10. No Duty to Mitigate
In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as contemplated by Sections 2(b) and 3(c)(iii)(B) hereof, any benefits payable to the Executive hereunder shall not be subject to reduction for any compensation received from other employment.
11. Conditions to Payment of Severance
Notwithstanding any other provision of this Agreement, the Executive’s entitlement to receive any of the payments and other benefits contemplated by Sections 2, 3 or 4 (with respect to Disability) hereof shall be contingent upon:
9
12. Miscellaneous
(g) Notices. All notices and other communications hereunder shall be in writing and shall be delivered by hand delivery, by a reputable overnight courier service, or by registered or certified mail, return receipt requested, postage prepaid. Notice to the Executive shall be addressed to the Executive at the Executive’s last address contained in the records of the Company, and notice to the Company shall be addressed to:
PTC Inc.
121 Seaport Boulevard
Boston, MA 02210
Attention: General Counsel
Notice shall be addressed to such other address as either party shall have furnished to the other in writing in accordance herewith. Any notice or communication shall be deemed to be delivered upon the date of hand delivery, one day following delivery to an overnight courier service, or three days following mailing by registered or certified mail.
10
EXECUTED as of the date set forth below.
PTC INC.
By: /s/Lisa Reilly Print Name: Lisa Reilly Title: Chief People Officer Date: 17 November 2025
|
EXECUTIVE
Signed: /s/Jon Stevenson Print Name: Jon Stevenson Date: 17 November 2025 |
11
EXHIBIT 31.1
CERTIFICATION
I, Neil Barua, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PTC Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: |
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February 5, 2026 |
/S/ NEIL BARUA |
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Neil Barua |
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President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Jennifer DiRico, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PTC Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: |
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February 5, 2026 |
/S/ JENNIFER DIRICO |
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Jennifer DiRico |
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Executive Vice President and Chief Financial Officer |
EXHIBIT 32
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of PTC Inc. (the “Company”) certifies that, to his knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2025 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: |
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February 5, 2026 |
/S/ NEIL BARUA |
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Neil Barua President and Chief Executive Officer |
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Date: |
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February 5, 2026 |
/S/ JENNIFER DIRICO |
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Jennifer DiRico |
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Executive Vice President and Chief Financial Officer |