PTC

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at PTC (NASDAQ:PTC) and its peers. The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies. The 7 design software stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 2.8% above. Luckily, design software stocks have performed well with share prices up 16.6% on average since the latest earnings results. Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ:PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM. PTC reported revenues of $600 million, down 6.8% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a slower quarter for the company with a significant miss of analysts’ billings and annual recurring revenue estimates. "PTC delivered strong financial execution in Q3'26. Customers increasingly recognize the importance of our Intelligent Product Lifecycle vision. This coincides with the go-to-market and product strategy emphasis the company has undertaken over the past several quarters and results in a more durable business model that positions PTC for long-term success," said Neil Barua, President and CEO, PTC. PTC delivered the slowest revenue growth and weakest full-year guidance update in the group. Interestingly, the stock is up 18.2% since reporting and currently trades at $156.55. Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free. Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE:U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms. Unity reported revenues of $546.5 million, up 23.9% year on year, outperforming analysts’ expectations by 6.1%. The business had a stunning quarter with a solid beat of analysts’ billings estimates and EBITDA guidance for next quarter exceeding analysts’ expectations. Unity pulled off the biggest analyst estimate beat of the whole group. The market seems happy with the results as the stock is up 22.1% since reporting. It currently trades at $43.30. Is now the time to buy Unity? Access our full analysis of the earnings results here, it’s free. Known for its iconic "D" logo that appears before countless movies and TV shows, Dolby Laboratories (NYSE:DLB) designs and licenses audio and video technologies that enhance entertainment experiences in movies, TV shows, music, and other media. Dolby Laboratories reported revenues of $305 million, down 3.3% year on year, falling short of analysts’ expectations by 2%. It was a mixed quarter as it posted revenue guidance for next quarter exceeding analysts’ expectations. Dolby Laboratories delivered the highest guidance raise but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 18.8% since the results and currently trades at $61.51. Read our full analysis of Dolby Laboratories’s results here. With a mission to build software for the people that build the world, Procore Technologies (NYSE:PCOR) provides cloud-based software that enables owners, contractors, and other stakeholders to collaborate and manage construction projects from any device. Procore Technologies reported revenues of $375.2 million, up 15.8% year on year. This print beat analysts’ expectations by 2.6%. Overall, it was a very strong quarter as it also produced a solid beat of analysts’ billings and adjusted operating income estimates. Procore Technologies had the weakest guidance update among its peers. The stock is up 27.4% since reporting and currently trades at $63.93. Read our full, actionable report on Procore Technologies here, it’s free. Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ:CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors. Cadence Design Systems reported revenues of $1.58 billion, up 24.2% year on year. This result surpassed analysts’ expectations by 0.5%. It was a very strong quarter as it also put up a solid beat of analysts’ billings estimates and EPS guidance for next quarter exceeding analysts’ expectations. Cadence Design Systems scored the fastest revenue growth in the group. The stock is flat since reporting and currently trades at $340.40. Read our full, actionable report on Cadence Design Systems here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

It has been about a month since the last earnings report for PTC Inc. (PTC). Shares have added about 16.6% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is PTC Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts. PTC reported third-quarter fiscal 2026 non-GAAP earnings of $1.58 per share, a 4% decline year over year. It missed the Zacks Consensus Estimate of $1.60. Management had estimated non-GAAP EPS in the range of $1.24-$1.78. Revenues totaled $600 million, a 7% decline year over year (8% at constant currency or cc). The top line also missed the consensus estimate by 2.9%. Management projected revenues in the $580-$640 million range. According to management, historical financials were not restated after the Kepware and ThingWorx divestiture, as the sale did not qualify as discontinued operations. Consequently, fiscal 2026 includes their contribution only until March 13, 2026, the date of the divestiture, while fiscal 2025 reflects a full year, affecting year-over-year comparisons for revenue, EPS and cash flow. Quarterly revenue was below the guidance midpoint solely due to the shorter duration of a single large contract expansion, while deal durations across the broader business remained stable. Nonetheless, its Intelligent Product Lifecycle vision integrates AI across its major product portfolio, including Computer-Aided Design (CAD), Product Lifecycle Management (PLM), Application Lifecycle Management (ALM) and Service Lifecycle Management (SLM). PTC aims to build an intelligence layer across these platforms, allowing organizations to leverage trusted engineering and operational data more effectively. This strategy positions the company well as manufacturers increasingly seek AI-driven automation, predictive analytics and digital engineering capabilities. Recurring revenues of $576 million dipped 6% year over year. Perpetual licenses decreased 91% to $691,000. Professional services revenues were $23.3 million, up 3.3% year over year. License revenues were $205.8 million, down 18.2% from the year-ago quarter figure. Support and cloud services revenues of $370.9 million edged up 0.3% year over year. In the fiscal third quarter, PLM revenues (59% of net sales) were $357 million, slipping 12% year over year. CAD revenues (41%) were $243 million, up 1%. Annualized recurring revenues (ARR) were $2.4 billion, up 7% year over year. At cc, ARR was $2.5 billion, up 9.1%. PTC generated $60 million in net new ARR in the fiscal third quarter, led by solid demand across its go-to-market initiatives and encouraging early traction for its AI offerings. Backed by this momentum, PTC raised the midpoint of its full-year ARR growth guidance to 9.25%. PTC raised and narrowed its full-year ARR guidance, with the midpoint implying $214 million in net new ARR, reflecting strong go-to-market execution and improved pipeline visibility. The company expects a significant acceleration in the fiscal fourth quarter, supported by healthy demand generation and the conversion of deferred ARR, with net new ARR (excluding Kepware and ThingWorx) projected at $79-$92 million. In the fiscal third quarter, PLM and CAD ARR were $1,426 million and $986 million, rising 8% and 6% year over year, respectively. Total operating expenses came in at $324 million, almost on par with the prior-year quarter. Operating income on a non-GAAP basis was $248.5 million, down from $285.2 million in the prior-year quarter. Operating margin on a non-GAAP basis crashed 290 bps year over year to 41%. As of June 30, 2026, cash and cash equivalents were $351.5 million compared with $439 million as of March 31, 2026. Total debt, net of deferred issuance costs, was $1.4 billion as of June 30, 2026, compared with $1.2 billion as of March 31, 2026. Cash provided by operating activities was $261 million compared with the prior-year quarter figure of $244 million. The free cash flow was $249 million compared with $242 million reported in the year-ago quarter. PTC accelerated share repurchases in the fiscal third quarter, reflecting management's view that the stock was undervalued. After completing a $375 million accelerated share repurchase program and an additional $525 million of open-market buybacks, the company now expects to repurchase about $1.625 billion of shares in fiscal 2026. This is expected to reduce fully diluted shares outstanding from roughly 121 million to 116 million, supporting EPS growth and signaling confidence in PTC's long-term outlook. For the fourth quarter of fiscal 2026, PTC estimates revenues in the $630-$690 million band. Non-GAAP EPS is projected in the range of $1.63 to $2.21. Cash from operations is expected to be around $29 million. Free cash flow is forecasted to be roughly $15 million, with the year-over-year decline primarily reflecting capital gains tax outflows from the Kepware and ThingWorx sale. Driven by an encouraging fiscal fourth quarter outlook, PTC lifted the midpoint of its fiscal 2026 revenue and non-GAAP EPS guidance to $2.69-$2.75 billion and $7.87-$8.42, respectively. The prior view was $2.58 billion to $2.82 billion and between $6.65 and $8.90 per share. For fiscal 2026, PTC reiterated cash from operations projections to be around $880 million, indicating a rise of about 1% on a year-over-year basis. The free cash flow is still forecasted to be roughly $850 million, suggesting about a 1% fall. It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 12.8% due to these changes. Currently, PTC Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. PTC Inc. belongs to the Zacks Computer - Software industry. Another stock from the same industry, Cadence Design Systems (CDNS), has gained 4.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Cadence reported revenues of $1.58 billion in the last reported quarter, representing a year-over-year change of +24.2%. EPS of $2.11 for the same period compares with $1.65 a year ago. For the current quarter, Cadence is expected to post earnings of $2.04 per share, indicating a change of +5.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days. Cadence has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PTC Inc. (PTC) : Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 5:00 p.m. ET Chief Executive Officer - Neil Barua Chief Financial Officer - Jennifer DiRico Head of Investor Relations - Mike Maguire Need a quote from a Motley Fool analyst? Email [email protected] Operator: Good evening, ladies and gentlemen. Thank you for standing by, and welcome to PTC's 2026 Third Quarter Conference Call. I would now like to turn the call over to Mike Maguire, PTC's Head of Investor Relations. Please go ahead. Michael Maguire: Thank you, operator. And good afternoon, everyone. Welcome to PTC's Third Quarter 2026 Conference call. On the call today are Neil Barua, Chief Executive Officer; and Jen DiRico, Chief Financial Officer. Today's conference call is being broadcast live through an audio webcast, and a replay of the call will be available later today at www.ptc.com. During this call, PTC will make forward-looking statements, including guidance as to future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in PTC's annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission as well as in today's press release. The forward-looking statements, including guidance provided during this call are valid only as of today's date, July 29, 2026, and PTC assumes no obligation to update these forward-looking statements. During the call, PTC will discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most comparable GAAP measures can be found in today's press release made available on our website. With that, I'd like to turn the call over to PTC's Chief Executive Officer, Neil Barua. Neil? Neil Barua: Thank you, Mike. PTC delivered another strong quarter in Q3. In particular, I'd highlight the $60 million of net new ARR we generated. Year-over-year constant currency ARR and free cash flow growth, both exceeded the high end of our guidance range. There are a lot of positives from Q3. Our Intelligent Product Lifecycle solutions continued driving customer demand and business performance across verticals, geographies and products. Our customers face growing pressure to shorten development cycles, improve resilience and compete in an AI-driven world. They understand that their product data is a strategic enterprise asset to help drive better decisions and are turning to our CAD, PLM, ALM and FLM systems of record to build their product data foundations. From an execution standpoint, we have turned the corner with our go-to-market transformation. We are seeing the results of the transformation in our customer wins, including deeper vertical expertise, executive level engagement and better cross-team collaboration. We had several notable wins this quarter, some of which are referenced in the appendix. But as an example, these results played an important role in a Q3 competitive PLM win with a major defense contractor to help modernize engineering operations for one of its critical business segments. Q3 also reinforced that our product and AI innovation is taking hold with customers. AI will be a tailwind for our business because AI requires our systems of record and the product data stored in them to be effective. Our system structure product data in the context of engineering and service workflows, whether it's product design, a specific product configuration or a service work order. We then apply AI to the structured contextualized data so it can complete increasingly complex tasks. We also provide the governance and access controls that are essential for safe and trustworthy AI use. We are encouraged by our AI progress and the potential in front of us. We continue delivering on our road map with the recent releases of Creo AI, our AI-native PTC Orbit product and the launch of Onshape Labs. Onshape is strongly positioned for AI. It's cloud native architecture, highly scalable data model and built-in collaboration make it ideal for AI workflows with humans in the loop. More broadly, our customers tell us our embedded AI capabilities are the fastest path to adoption and value because AI is delivered in the context of trusted systems and governed workflows. In Q3, we won our largest AI deal ever, a near 7-figure ServiceMax AI deal with one of the world's largest industrial automation companies. This is a long-term customer that builds a strong product data foundation with ServiceMax. ServiceMax AI uses that foundation to deliver technicians relevant information via natural language interface, eliminating time spent searching documentation. The customer validated the approach through a pilot with service technicians showing that ServiceMax AI can reduce technician preparation time by 50% and deliver 4% net productivity improvement across the service workforce. As our customers embrace AI, one of their top priorities is protecting their intellectual property, their designs, configurations, bill of material, source code and more. They are hesitant to hand this data to the frontier model providers for security, regulatory and competitive reasons. Instead, they need this data to remain inside governed enterprise environments with appropriate permissions, process context and controls. They increasingly want frontier models to operate as infrastructure, while trusted systems like PTCs provide the data and workflow layer where critical product work is performed. From a commercial standpoint, AI is already increasing the strategic importance of our systems of record and the product data foundations they manage. We expect adoption to progress from focused workflows with clear customer ROI through broader deployments as customers connect more product data and teams across the life cycle. That creates value for customers today and over time, expands our share of customer spend through direct adoption of PTC's AI capabilities. We expect these stand-alone AI capabilities to become a more meaningful contributor to ARR over the next few years. Overall, Q3 was a great start to the second half of the year, and our performance reinforced the major themes and proof points of fiscal '26. We are entering Q4 with stronger execution, growing strategic relevance with customers with our intelligent product life cycle strategy and increasing confidence that AI will expand the value of our portfolio over time. With that, I'll turn the call over to Jen. Jennifer DiRico: Thanks, Neil, and good afternoon, everyone. Q3 was a quarter of strong and consistent execution, highlighted by $60 million of net new ARR and broad-based strength across our key financial metrics. We continue to see solid demand capture in our go-to-market motions and encouraging early traction across our AI offerings. Given the momentum we have built and the opportunities in front of us, we are entering Q4 from a place of strength and are well positioned for a strong finish to the year. This is why we have chosen to increase the midpoint of our annual ARR growth guidance to 9.25%. At the end of Q3, our constant currency ARR was $2.448 billion, up 9.1% year-over-year, excluding Kepware and ThingWorx, above the high end of our guidance range. In Q3, we generated operating cash flow of $261 million and free cash flow of $249 million, exceeding our guidance range for both metrics. Turning to capital return. In Q3, we repurchased $525 million of common stock, more than double our previously provided target, reflecting opportunistic open market share repurchase and what we viewed as a compressed stock price. This outsized repurchasing decreased fully diluted share count to 115 million shares in Q3. For the full year, we expect common stock repurchases to be approximately $1.625 billion, an increase to our previous guidance of $1.225 billion to $1.325 billion. We expect our fully diluted share count to decrease to approximately 116 million shares for the full year compared to 121 million shares in FY '25. With that, I'll take you through our guidance. In fiscal '26, our constant currency ARR excluding Kepware and ThingWorx, we have raised the low end of our guidance and now expect growth of approximately 9% to 9.5%. At the midpoint, we are guiding for a net new ARR of $214 million. This increase to the midpoint of our guide and the tightening of our guidance range reflects both our go-to-market execution as well as the pipeline visibility the team has prioritized over the past two quarters. Consistent with our commentary in prior quarters, we expect a considerable step-up in net new ARR in Q4 compared to Q3. Our confidence in Q4 stems from the combination of strong demand generation and a meaningful increase in deferred ARR that we expect to convert into ARR during the quarter. In Q4, for constant currency ARR excluding Kepware and ThingWorx, our expectations correspond to a net new ARR range of $79 million to $92 million. Moving to cash flow, revenue and EPS. As a reminder, the Kepware and ThingWorx divestiture did not meet the criteria for discontinued operations, and therefore, historical financial statement amounts have not been recast. This impacts the year-over-year growth calculations for revenue, EPS and cash flow as fiscal '26 includes Kepware and ThingWorx up until the divestiture on March 13, 2026, whereas fiscal '25 includes Kepware and ThingWorx for the full year. With that, we continue to expect to generate approximately $850 million in free cash flow in fiscal '26. For Q4 '26, we are guiding for free cash flow of approximately $15 million, lower year-over-year due to the capital gains outflows from the divestiture of Kepware and ThingWorx that are expected to occur in Q4. While the business remains focused on ARR and free cash flow, we're also providing revenue and EPS guidance to help you with your models. In Q3, revenue of $600 million was below the midpoint of our guide, reflecting only the shortened duration of a single large contract expansion. Deal durations across the broader business continue to hold. When coupling our Q3 performance with our current expectations for Q4, we feel comfortable raising the midpoint of our fiscal '26 revenue and non-GAAP EPS guidance. For fiscal '26, we are updating our revenue guidance to $2.69 billion to $2.75 billion, and we are updating our non-GAAP EPS guidance range to $7.87 to $8.42. In closing, I'm proud of Team PTC's execution and the progress we've made across the business. The Intelligent Product Lifecycle remains highly relevant to our customers, and we are increasingly optimistic about the role AI can play in accelerating value creation across our portfolio. I'd like to thank our employees for their continued dedication and focus. With that, I'll turn the call back to the operator for the Q&A session. Operator: And our first question comes from the line of Joe Vruwink with Baird. Joseph Vruwink: I want to ask, there's been a lot of coverage even since just the last earnings report on how open source models and commercial models are starting to engage more with CAD and PLM systems. I think there's also been a renewed focus on the importance of industrial data and there's been new ventures trying to take a stab at the engineering ecosystem with various data strategies, synthetic data strategies. I guess all of that leads me to ask, what does PTC make of all of this over recent months? And are you noticing any changes out of customers on thinking that maybe warrants changing your own approach? Neil Barua: Joe, thanks for the question. Let me say a few things on this one. So as you know, PTC has been in this space for over 40 years. We've seen new entrants come into this market multiple times over that time. What's really kept us and you're seeing it in the results this quarter and what we've been talking about the last number of quarters is that close relationship we have with our customers is resulting in what we're seeing as the value of PTC and which I'll talk about, the strength of our products, the critical products to our customer operations. And quite frankly, you're seeing a level of innovation to make sure we stay at the forefront with our customers. That obviously now includes AI. So if I comment specifically on your question around AI-focused startups, we see a lot of talk about new interfaces, but I want to be crystal clear, the structural advantage here at PTC is at the data and process level. If you think about making airplanes, cars, medical devices, you need strict governed workflows. And with all your product data in context in a manner that could be audited and traced for regulatory reasons, and it's super complex and sophisticated work, and that's why PTC systems of records are so valuable. So we've been doing that for 40 years, Joe, and have close relations with our customers, and we don't see this suddenly changing in any of our customer conversations. You could see the momentum that we've built here at PTC. That's the result of the innovation, the trust that our customers have in modernizing with us the product data foundation, building AI with that context. We're obviously -- in summary, I'll say we're obviously watching all that's happening in the ecosystem but we're really focused on what we are seeing the energy around and the actual results, which is driving more customer demand, enhancing our products, building new products and making more progress with AI. So we're really energized by the position we're here within the questions that you're asking, Joe. Operator: And our next question comes from the line of Matt Hedberg with RBC Capital Markets. Matthew Hedberg: I guess for either of you, given what seems like a stable selling environment, it was really good to see you take the low end of the constant currency ARR guide up this year. Neil, you spent a lot of time talking about new product innovation, and I think we have to be patient with AI, but it seems like it's coming. Jen, you talked about deferred ARR balance growing. I guess I'm wondering, I know it's still early for '27 -- fiscal '27, but can you outline a path to low double-digit ARR growth. I mean, I guess, what has to happen from your perspective? Because it feels like there's increasing tailwinds at your back. Jennifer DiRico: Yes. Thanks for the question. I laid out context on last quarter's call around this. And even with the increase in our guidance from 9% to 9.5%, that context still remains. And what I shared last quarter was that for us to accelerate growth, what you need to believe at a minimum is that we can, on a net new ARR business perform on a like-for-like basis next year as we did this year. And then you add in the deferred ARR that we already have on our books, you would see an acceleration. And I would say we're still -- we're double downing -- doubling down on that statement, even with the fact that the now midpoint of our guidance for this year is 9.25% versus 8.5% a quarter ago. Operator: And our next question comes from the line of Daniel Jester with BMO Capital Markets. Daniel Jester: Maybe we can just spend a moment hearing the feedback that your customers had on some of the new products that were announced. I know you spent a lot of time in Chicago in June. So I'd love to hear what they were sharing with you about them. Neil Barua: Yes. Thanks for the question. So what I -- the majority of the feedback we're getting is an energy and excitement from our customers around the innovation, that's super relevant to what the customers need, whether it be the release that we're making with the releases that we're going to do for PTC Jetstream or Orbit or all the AI releases that we're doing, it is accelerating our customers' appetite and requirement to use PTC to get the benefits of AI. And so that's shown up now in a number of these examples that we gave, but more broadly than the examples across what we've been seeing the last number of quarters, which is an energy and an urgency to go modernize their product data foundation because they want to take advantage of this new innovation, and they got to get their digital house in order using PTC in many cases, to displace other tools to standardize across our great products because to get the value of our AI capabilities, to get the value of the new innovation, they need to modernize with PTC, and that's showing up. And so I was very enthused by the feedback we got from Chicago, extremely enthused by the way, over the course of this year and starting in Q4 of last year, as we're saying, we've now turned the corner of customers really understanding the value proposition of PTC, how we're approaching them, the messaging, the innovation around it. So we're energized about the feedback that we've gotten since then and during the course of the last number of quarters. Operator: Our next question comes from the line of Jason Celino with KeyBanc Capital Markets. Jason Celino: This one is for Neil. We've seen some really cool things with AI and designing stuff with LLMs, and it kind of leads to better engineering efficiency. So my question is what -- how this might play in, like, the engineering market. Some industries are growing, some aren't. So how do you see AI affecting like underlying engineering headcount growth? Neil Barua: So let me start with -- we see AI as accelerating the utilization of what PTC has to deliver, first and foremost. How that happens is actually -- I'll give you an example, Onshape, which is an incredible born-in-the-cloud, scalable cloud native architecture, built-in collaboration, ideal for AI workflows, we're seeing that actually being utilized by AI foundational models, AI start-ups to actually complete the design process, to accelerate and enhance design processes that are done either by agents or human beings, but using Onshape as the central point to execute that. We see that as a massive lift. In fact, the API calls to Onshape by AI-related start-ups is tripling just in a few months, and it's just started to do that, which is indicative of that gaining momentum around using PTC's system of records, the product data foundation to use and get value of outcome of AI. And so we're seeing that happen. We gave you the example of ServiceMax back in the service world, how AI is now giving real outcomes and efficiencies and real hard dollars to our customers on deploying it. So our point of view right now is that AI is going to be an accelerant over time. In some cases, the examples like already is happening, but we believe this will be a mid- to long-term accelerated on AI individual monetization opportunities, while at the same time, doing what's happening with Onshape, which is I want best-in-class AI interface to a CAD tool. So let me actually give all the competitive tools that we're using for CAD and actually have Onshape, be the actual product data foundation for our CAD tool to leverage AI. We saw that in massive win. In fact, Onshape's largest win this -- ever was this quarter with a company called Winnebago, where that's actually what has inspired them to move to Onshape. So we're seeing that within Arena, ServiceMax, Onshape and now lastly, in some of the things that we're doing with Windchill, Codebeamer and Creo. So we feel good about that over time, having scaled outcomes for our customers using AI. Operator: And our next question comes from the line of Andrew DeGasperi with BNP Paribas. Andrew DeGasperi: I wanted to maybe follow up on your prepared remarks, you discussed this large Q3 Windchill deal that was a competitive win. Just wanted to maybe understand, like has something changed in the market that has led you to win that deal? Maybe can you just elaborate a little more like what went behind that? Neil Barua: Sure. Happy to talk about it. So just as a matter of fact, the number of displacements or the aggregate value of displacements year-over-year has doubled at PTC, which is indicative and shown in some of the customer slides that we said. But across the board, we're starting to win more customer displacement. And what's driving that. And [ in this ] example, is customers are realizing with the vertical expertise, with all the go-to-market transformation, the messaging, the product alignment are realizing to take advantage of great technology like AI, but also to remain relevant in a geopolitical [ fraud ] world supply chain risk, et cetera. They need to modernize their product data foundation, and they're choosing PTC. We have the most advanced products. We have the most advanced AI road map, and we've proven it across the verticals that we operate in with real depth. And our sales and marketing team are doing a much better job than 18 months ago, showing that consistently. And that's why our customers are choosing to come with us, expand the portfolio with us, in some cases, win new displacements across other products that are actually in their ecosystem that they want to consolidate on to PTC. And that's what we saw in this specific example, but it's happening at scale now across the board. Operator: And our next question comes from the line of Saket Kalia with Barclays. Saket Kalia: Nice quarter. Neil, maybe for you, I want to pick up on the thread a little bit because it's super interesting as a trend to talk about PLM as a sort of a system of record for AI for your customers. And maybe the question is, can you just talk about how urgent that conversation is [ becoming with ] customers? And as you think about sort of that multiyear opportunity, there's clearly opportunity to displace competitors, right, that's happening at an accelerated pace. But do you think you can also expand the TAM for PLM as well? Sorry, there's a lot there, but does that make sense? Neil Barua: Yes, Saket, thanks for the question. That's actually what we're starting to see, which is, again, go back to the strategy of the Intelligent Product Lifecycle, make sure our customers have the strongest product data foundation by which they can then layer on intelligence in some cases, and in aggregate, AI, which is what we're doing in parallel. Part of our intelligent Product Lifecycle strategy is to make sure we democratize product data across the enterprise, which, in effect, increases TAM. So as a case, an example, PTC Jetstream, the product that we announced at PTC Next, which is live in beta right now and is getting released in the beginning of Q1 in GA of '27, that actually takes the incredible things that are derived from design and configurations from Creo and Windchill and propagates that to the supply chain by which they could actually utilize that capability to have faster times by which companies that are deploying Jetstream could actually design, produce and manufacture and service products. So we're seeing that as one leverage point. The main thrust here in summary is that as we're getting the expansion of PLM, the modernization of PLM, the consolidation of PLM into the best-in-class PLM system in the world, which is Windchill, we're now being able to leverage things like Jetstream, leverage AI modules within Windchill to do more. Last point I'll make is Arena, which is our born in the cloud PLM solution is also doing the same thing. We have advanced our AI capabilities in Arena much faster, and what we're seeing there is that there's an -- we call it supply chain intelligence within Arena. What it's doing is it's embedded into PLM. It's increasing the number of eyeballs and seats by which are needing PLM, consolidating other systems onto our system, but allowing an expansion of our capabilities in other parts of the organization that PTC never played in. So to your point, our energy when we set forward with the strategy and summary of the Intelligent Product Lifecycle to make PLM the pinnacle, the nerve center of what we're doing is now allowed us to expand and create innovation, AI as well as core capabilities to expand to other personas. And we're starting to do that. We're starting to see it, and we're very enthused about what that looks like. Operator: And our next question comes from the line of Ken Wong with Oppenheimer. Hoi-Fung Wong: With the fiscal 3Q net new ARR at $60 million above prior 3Q levels and the upper half of fiscal Q4 also above historical levels. Neil, when looking at the sales operations now, are we where you envisioned when you initially started the go-to-market changes, or are there still, kind of, more benefits to come? Neil Barua: So Ken, thanks for the question. Just to rewind the tape, the baseline where we are right now, where we're taking things. We started this transition as many of you followed us 18 months ago. We've talked about the progress and improvements over that time. It's this sustained level of execution we've seen, quite frankly, over the last 4 quarters, since Q4 of last year that gave Jen and I the confidence to assertively tell all of you, we've turned the corner. Like our -- and we're very proud of our Q3 performance because it really, from what we are seeing, solidified our go-to-market team, having reached a new operating standard. Ken, we talked about the data points we've been watching over those 18 months. Rep productivity, renewal rates, pipeline quality and diversity, velocity displacements, they've all steadily improved. And then you take the qualitative elements, which are, in my opinion, just as important, the deeper vertical expertise, executive-level engagement. We are now in most of the deals talking to C-levels and CEOs. That didn't happen 18 months ago, that's happening now at scale, cross team collaboration, how we structure deals for doing the right deals for PTC and the customer and our enablement efforts are all making us and have made us stronger than they were at the start of the transformation. And these factors are influencing our deals as you're seeing now in the results. And so the summary of this is, we're not stopping there. We have turned the corner, and we now have a new operating standard. We are showing it with real results and we will continue to improve upon all those metrics that we talked about with the momentum now and the wind at our back. Operator: Our next question comes from the line of Blair Abernethy with Rosenblatt Securities. Blair Abernethy: Neil, I just want to take the question back to AI. You've been adding a lot of product features in the last year or so and obviously more coming. I just kind of wonder how are your thoughts right now around monetizing some of these new features? I mean a lot of it's going to be table stakes with competitors doing similar kinds of moves. But where do you see the biggest monetization opportunities for PTC? Neil Barua: Sure, Blair. Just as -- a two-part answer here. The first part, just a reiteration. The incredible thing about AI for PTC, the first element of success for us is the acceleration urgencies for our customers to actually get their house in order, meaning modernize their product data foundation with our core systems of record. So use more Windchill, use more Codebeamer, use more Onshape, ServiceMax, et cetera. So that is the tailwind that we're seeing already. You're seeing in the results. We see it in every single customer conversation, first and foremost around AI. Second is the embedded AI capability. So we've done that across, and we talked about this in the last call, we're doubling the number of AI embedded releases this year versus last year, many of which are already on the field. Some examples that we gave already in the script around last quarter, we saw a global HVAC company accelerate and expand to near 7-figure digits. And ServiceMax AI deal, we have templatized that. And in the next quarter, we won for a different company, a near 7-figure ServiceMax AI deal, and that pipeline is growing substantially. On Arena, we talked about the supply chain intelligence on every single one of the expansion opportunities. By the way, Arena has kicked in, gaining some real momentum. That has also included the AI capabilities. And then lastly, as I mentioned on Onshape, that is actually inspiring API usage, monetization of API, et cetera. I will say though, in temperament of all that, while we're super excited about what AI is doing in the conversation, leading to monetization of the product data foundation and some of these highlights that we're making, our customers are very methodical. They start with a pilot. They then move to, did the pilot actually create return on investment, did it get adopted and then they choose a scale. We've seen that happen in ServiceMax. We've seen that happen in Arena. Our view is that will happen across our environment. And so when we talk about the stand-alone AI monetization in summary to answer your question, Blair, we see that as medium- to longer-term stand-alone economic opportunity and in parallel, allowing us to accelerate displacements and expansion with our product data foundation because they want to get to the AI, end story with us in that medium to long-term time period. Operator: And our next question comes from the line of Jay Vleeschhouwer with Griffin Securities. Jay Vleeschhouwer: Neil, it's been very interesting to hear the repeated references this evening to displacement and modernization especially displacement since that was sort of something I wanted to ask about. But it does tie back to something else we've been hearing from your principal competitors. Siemens at their conference the week before yours, spoke about displacement and their modernization. Last week, Dassault on their calls spoke about their architecture, and what they think is going to prospectively be more displacement in churn over the next number of years. So at a time when all the principal vendors, including yourselves, are thinking in terms of engineering software musical chairs, how do you think about pipeline handicapping, pipeline management and not becoming perhaps overly dependent on displacement or decommissioning opportunities and perhaps further distinguishing yourself with your multi-solution sales and the various two-letter acronyms that you have on offer? Neil Barua: Yes, Jay, thanks for the question. Let me be really clear. Expansion and greater monetization of these amazing customer relations we built for the last 40 years is the predominance of how we're scaling the current business. What I'm telling you is that the acceleration of displacement is happening faster this year than it did last year, and we are enthused by it, and we are pushing on it. As an example, Onshape is really accelerating the curve against some of the names you mentioned, and they're taking share. And they're going to keep taking share, and we're going to fuel that engine. It is differentiated, and we're going to keep going. That doesn't take our eye off the ball, as you know, Jay, from building PTC Jetstream, which is an incremental TAM expansion for existing customers, not just getting new customers but actually delivering more value to our existing customers. So Jay, we have learned this, and that was a core part of my strategy when I came in. We're not taking our eye off the ball of the customers that have plenty of money to spend with a trusted adviser like us that need us to actually modernize their capabilities with PTC. And while we're doing that, Jay, in those environments, we're taking share from other organizations. As an example, in the example that we gave in the script, this was a multi-CAD environment. It was a multi-PLM environment. We were -- they did an RFP, and they found out that we had the stronger capabilities to put it all together, and we had a stronger AI road map that they believe that we could execute on versus marketing message. So they've now consolidated their CAD estate on PTC. They've consolidated their CAD estate on Windchill. We call that also a displacement because we're taking share from others in the existing account. We're not taking our eye off that ball. There's no way. Operator: And our next question comes from the line of Adam Borg with Stifel. Adam Borg: Maybe for Neil or Jen here. So just on capital allocation framework. Clearly, the organic focus and turning over all the stones and rocks from over a year ago is paying great dividends here. So organic investment continues. And we also see a lot of share buybacks, right, accelerating that as well. And of course, the 3 legs -- the third leg of the capital allocation stool is M&A, which you've been pretty quiet on. So as your organic flywheel continues. As the go-to-market machine matures, how are we thinking about M&A? Anything changed there? And just why not get back into some M&A here as everything seems to be firing? Neil Barua: Sure. Let me start, Jen, you could add to this. I would say on the M&A framework, we continue to look at M&A that can accelerate the current road map. And we've done several. They're extremely small in nature, so they probably don't even register on your news headline but they're enough for us to accelerate our capabilities in response to what we need to deliver as road map. In fact, like a smaller one that we just did recently allows a Windchill extension framework capability and technology that accelerates the ability for our customers to move from an on-premise situation with Windchill to Windchill+ arrangement. We continue to do those. We will continue to do those things in terms of what's important for our organic road map to accelerate that. I would say the big M&A that our capacity would allow us to do, we're very focused in -- on, there's enough things to do here organically with some of the smaller tuck-ins to really gain a lot of customer value. And that's how we see it currently. And if things change, we'll let you know, but that's our current position, and how we think about the business. Operator: And our next question comes from the line of Siti Panigrahi with Mizuho. Sitikantha Panigrahi: Most of my questions were asked, but one clarification, Jen, on your cash flow statement, there was a $50 million of outflow towards solar energy equity investment. Just could you explain what this is and whether it represents kind of a recurring commitment probably into '27? Jennifer DiRico: Yes. Thanks for the question. We did make an investment in solar as we think about extending our green footprint, and there will be, over time, impact of savings from a tax perspective over the medium term. Operator: And our next question comes from the line of Nay Soe Naing with Berenberg. Nay Soe Naing: I suppose by all accounts, everything points to the fact that the setup going into FY '27 will be much better than setup coming into FY '26. If we look at the deal pipeline, the large deals that you've signed, the fact that the deferred revenue levels Q4 next year will be higher than this year and of course, your AI product road map and features as well. I was wondering is there anything that maybe we should be mindful of that could prevent this from happening, prevent FY '27 to be as good as '26, if not better? Neil Barua: Let me start. Look, we still have a few months left here to close out Q4. And we've been, as a reminder, very focused on making sure, as I mentioned, in the go-to-market transition structuring deals appropriately, that's good for PTC, good for customers. That's been building this deferred ARR. We talked about in the last call around how we see that on 4 straight quarters of real demand capture, how that's affecting deferred ARR that give us a lot of energy as we think about subsequent years. But I'll tell you, in terms of what could be the risk there, we still have to execute. We have to close out this quarter. We have to continue to build on the momentum of the demand capture that we see for four straight quarters, making a fifth quarter deliver the ARR in the way in which we are expecting and inspired by. And then make sure that as an organization, we're aligned to how do we continue to push on the new innovation? How do we monetize that? How do we expand wallet share, what does that look like, all the enablement around it, and the inspiration that we need to do the team, we're underway of doing that, but all those things need to happen to make sure that next year, we are building on the accelerated momentum that we already know that we're heading into 2027 with. Operator: And our next question comes from the line of Josh Tilton with Wolfe Research. Joshua Tilton: Can you hear me? Neil Barua: Yes. Joshua Tilton: Awesome. I've been bouncing around with a ton of prints tonight, so I apologize if you guys already addressed this. I'm just going to knock both my questions out, kind of, in one long stream of consciousness. But for me, I think what I'm trying to understand is what changed from last quarter to this quarter that we saw such an amazing level of outperformance? Congrats on, by the way, on the ARR figure, not just necessarily switching from no net new ARR growth to ARR growth. But like what in the environment changed that let you guys outperform so much relative to the expectations that you set for us 90 days ago. And then my follow-up is just also a big congrats on the raise but you guys are now calling for net new ARR growth in Q4. Can you just talk to like the confidence level you have on that implied Q4 net new ARR number versus kind of the confidence level you had going into this quarter? that would be great. Jennifer DiRico: Yes, absolutely. So I'll start on the Q3 side of things. We're really pleased with two elements of the business performance. First, really strong demand capture. And then second, overall, our retention rates performed better than anticipated. And so both of those things really landed where we were able to outperform the high end of the guidance for Q3. On the Q4 side of things, in terms of our confidence, right, what has changed is, as we think about -- I shared last quarter, right, first of all [indiscernible] our guidance is 9% to 9.5% so 9.25% in itself should signal we have strong confidence in being able to get there. But the context I shared last quarter, was around our performance on net new ARR and deferred. And what I said was if we perform on a similar basis for net new ARR for the second half of this year versus last year, plus the deferred ARR, you'd feel comfortable getting to the midpoint. And now, of course, we've narrowed the guide, the low end of the guide is higher than the midpoint. And that points to our pipeline visibility, continued strength and execution and overall our ability to deliver on the guidance. Neil, I don't know if you want to add anything else? Neil Barua: I'd point three things on what we've seen, and we talked about this last quarter around, we see demand capture. You all just see it net new ARR. We said it's coming, it's comming now. And we also mentioned today about turn the corner, we've created now this go-to-market motion that's got this new operating standard. It's four quarters in a row of watching the progress of all the hard work we put in that transformation actually show up. And that's been happening across quarters before this quarter, it's now showing up. And as we've talked about, we believe it's sustainable, and we'll continue to improve upon that as we think about subsequent years. So that's on the internal side. Second is, we made a tough decision on divesting an asset. And having that behind us versus in front of us or dealing with it has now opened up our focus to make sure the Intelligent Product Lifecycle is 100% focused for the company, that makes a difference. And the last piece is the customer environment. I believe we're seeing now an understanding from an end market that is highly sophisticated, that doesn't just look and listen to marketing talk and deploy new solutions, it has to work because it's engineers. And the products have got to be manufactured, and there has to be quality and regulatory and safety concerns with that. They have now understood to really get the value of AI. You need to actually do things before just deploying an AI solution. You need to put together the strong product data foundation, consistently and homogeneously across your industries and your group. You have to then in parallel, do all the heavy lift of providing context and working with your AI partner to actually show value and adoption. And those things are actually different even in the last 90 days on a reversion back to PTC saying, "You're a trusted adviser, you understand the context of our data, it's flowing through your system of records, help us build this so that we have real ROI versus a random buy of an AI product that doesn't work a quarter later." So that's a theme that we're seeing and inflecting, coming back to us in terms of the conversations. Operator: And our next question comes from the line of Tyler Radke with Citi. Tyler Radke: Nice job on the results and guidance here. Jen, I appreciate the comments you made on sort of the early look at FY '27 and the deferred ARR dynamics. Can you just remind us, as we look at your net new ARR for Q4, obviously, a nice step up versus a year ago. How much are you assuming for the deferred ARR contribution there? And then as we look at FY '27, what is the expected deferred contribution versus the expected deferred contribution in FY '26? I know you've given some stats in the past, but obviously, I'm sure things may have moved around a little bit this quarter. Jennifer DiRico: Sure. So first what I'll say we continue to be really pleased with our ability to build deferred ARR both in Q4 and for FY '27 and the future. I'm not going to give too much detail around the impact on Q4. But what I can tell you is, like I said, it's a meaningful step up, and we feel really confident about our visibility there. And then as we think about '27, we have approximately 2x the amount of deferred ARR that we had at this point last year for 2026. So it's meaningful. Operator: Our next question comes from the line of Andrew Obin with Bank of America. Andrew Obin: Just a question on ARR by channel, it's 12.6% year-over-year, I think, versus direct 7.8%. And it's been like this every quarter this fiscal year. And just trying to understand, I think, the commentary you sort of really talked about reinvestment in the direct channel -- in the direct, but the channel is still growing faster. So when do we see a pickup? Does it flip next year? How should I think about this dynamic? Jennifer DiRico: Yes. I completely appreciate the question. As I said kind of in the last couple of quarters around the mix between channel and direct Oftentimes, the space is based on customer preference, and how they want to consume, and what channel they'll go through. And in our largest deals, we often see both the direct and a channel partner. And so that's all you're seeing there. We continue to see really strong growth in our direct team. Actually, Neil talked about the -- all the productivity and the continued strong metrics that we're seeing from our go-to-market transformation. I would add that overall, the productivity of our sales team has increased just based on the amount of reps continuing to hit quota at this point in the year versus last year. So we're seeing that transformation take effect, and we're really pleased with the performance. Operator: And our final question comes from the line of Alexei Gogolev with JPMorgan Chase. Eleanor Smith: This is Ella for Alexei. So we're curious, as organic product development becomes a greater focus for PTC, are you expecting to venture into completely new greenfield product areas? Or do you expect your new products to be closely connected to your existing product lines like with PLM, ALM, SLM and CAD? Neil Barua: Yes. Thanks for the question. We have so much to do within executing our Intelligent Product Lifecycle strategy that includes all those core systems that you're talking about, the expansion, the displacement, the layering of the AI capabilities, the [ layering our ] intelligence layer on it. And then ultimately also moving all that product data to other personas as we talked about the supply chain to manufacturing over time. Like those are all core, and we're experts at it. We have vertical expertise around it. We're now getting executive-level engagement on it. And there's plenty to do there, and we feel very good about the monetization across those vectors focusing on that strategy to result in really good results that we're proud of to show you here in Q3, but we're just getting started. Operator: And that concludes our question-and-answer session. I will now turn the conference back over to Mr. Neil Barua for closing remarks. Neil Barua: Thank you, everyone, for joining us and for your questions today. In the weeks ahead, we'll be participating in the Oppenheimer Technology Internet & Comms Conference as well as the Citi Global TMT Conference. We look forward to seeing you then. Thank you. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect. Before you buy stock in PTC, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PTC wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends PTC. The Motley Fool has a disclosure policy. PTC (PTC) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Product design software company PTC (NASDAQ:PTC) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 6.8% year on year to $600 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $660 million at the midpoint, or 1.3% above analysts’ estimates. Its non-GAAP profit of $1.58 per share was 1% above analysts’ consensus estimates. Is now the time to buy PTC? Find out in our full research report (it’s free). Revenue: $600 million vs analyst estimates of $608 million (6.8% year-on-year decline, 1.3% miss) Adjusted EPS: $1.58 vs analyst estimates of $1.56 (1% beat) Adjusted Operating Income: $248.5 million vs analyst estimates of $251.7 million (41.4% margin, 1.3% miss) Revenue Guidance for Q3 CY2026 is $660 million at the midpoint, above analyst estimates of $651.6 million Management raised its full-year Adjusted EPS guidance to $8.15 at the midpoint, a 4.8% increase Operating Margin: 27.7%, down from 32.6% in the same quarter last year Annual Recurring Revenue: $2.41 billion vs analyst estimates of $2.46 billion (6.9% year-on-year growth, miss) Billings: $544 million at quarter end, down 8.2% year on year Market Capitalization: $15.3 billion PTC’s second quarter results reflected a mixed performance as the company missed revenue expectations but delivered slightly higher-than-expected non-GAAP earnings. Management pointed to sustained customer interest in its Intelligent Product Lifecycle solutions and highlighted that AI-driven capabilities are becoming increasingly important for clients seeking to streamline engineering and service workflows. CEO Neil Barua emphasized that recent go-to-market transformation efforts have resulted in improved customer engagement and that new contract wins, particularly in verticals such as defense and industrial automation, supported recurring revenue growth. Looking ahead, PTC’s raised guidance is anchored by anticipated momentum from its AI-enabled portfolio and a growing backlog of deferred recurring revenue. Management believes the company’s cloud-native and AI-integrated products, such as Creo AI and Onshape Labs, will drive broader adoption and higher customer value. CFO Jennifer DiRico noted that the combination of strong demand generation and increased pipeline visibility positions PTC for a solid finish to the year, stating, “We feel comfortable raising the midpoint of our annual ARR growth guidance based on these trends.” Management attributed the quarter’s results to execution in AI-driven product innovation, improved go-to-market operations, and expansion in key verticals such as industrial automation and defense. AI product traction: PTC’s embedded AI capabilities gained notable traction, with the company closing its largest ServiceMax AI deal with a leading industrial automation company. Management reported that ServiceMax AI reduced technician preparation time by 50% and improved workforce productivity, signaling AI’s early value in service workflows. Go-to-market transformation: CEO Neil Barua described the company’s sales and customer engagement model as having “turned the corner.” Improved vertical expertise, executive-level engagement, and cross-team collaboration have enabled PTC to win more competitive bids, particularly in regulated sectors such as defense. Displacement momentum: The company reported a year-over-year doubling in the aggregate value of customer displacements, meaning more clients are switching from competitors to PTC’s platforms. Barua stated that this trend is accelerating due to PTC’s advanced product data management and AI capabilities. Onshape and cloud-native adoption: PTC’s Onshape, a cloud-native design platform, saw increased adoption, including its largest deal ever with Winnebago. The platform’s integration with AI workflows and scalability was cited as a key differentiator in customer wins. Capital allocation and share repurchases: PTC increased its share repurchase target, reflecting a focus on returning capital to shareholders while maintaining investment in organic growth and selective small-scale M&A to support its strategic roadmap. PTC’s outlook for the rest of the year is driven by expected acceleration in AI adoption, continued customer transition to cloud-native platforms, and a growing pipeline of deferred recurring revenue. AI monetization and adoption: Management expects AI capabilities to become a more meaningful contributor to recurring revenue as customers move from pilot projects to broader deployments. PTC’s strategy is to embed AI into core products, encouraging clients to upgrade their product data foundations and increasing wallet share over time. Deferred ARR conversion: CFO Jennifer DiRico highlighted a significant backlog of deferred annual recurring revenue (ARR) that is expected to convert in the next quarter, underpinning confidence in guidance. The company’s pipeline visibility is higher than previous periods, supporting the raised outlook for net new ARR. Risks and execution focus: Management cautioned that successful delivery will depend on continued execution in sales, innovation, and customer enablement. While AI and cloud-native momentum are strong, the company must maintain focus on closing large deals and ensuring customer satisfaction to realize its growth targets. In future quarters, the StockStory team will be watching (1) the pace of adoption and monetization for PTC’s AI-enabled products, (2) the conversion rate of deferred ARR into recognized revenue, and (3) ongoing progress in winning competitive displacements—particularly in regulated sectors. Additional focus will be on the success of cloud-native offerings and the impact of any further go-to-market improvements on sales productivity. PTC currently trades at $134.25, up from $132.46 just before the earnings. Is there an opportunity in the stock? 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PTC Inc. PTC now presents a more balanced investment debate after a sharp pullback reset expectations and valuation. The lower multiple improves the entry-point discussion, but the latest quarter did not remove execution questions. Investors are weighing buyback support and stronger annual run rate visibility against softer revenue trends, margin pressure and a fourth quarter that carries a heavier conversion burden. PTC trades at 5.54 times forward 12-month sales, below its five-year median of 7.35 times. The multiple is also slightly below the software subindustry’s 5.7 times, giving the stock a relative discount within its peer set. That discount is not unqualified. The S&P 500’s 4.87-times multiple remains lower, and PTC’s weaker recent share-price performance shows that investors are still applying a penalty for uneven operating momentum. PTC reported fiscal third-quarter non-GAAP earnings of $1.58 per share, below the $1.60 consensus. Revenues of $600 million missed estimates by 2.9% and declined 7% year over year. Margin trends also showed pressure. Non-GAAP operating margin fell 290 basis points to 41%, limiting the argument that lower valuation alone is enough to offset near-term softness. Autodesk, Inc. ADSK remains a relevant comparison because its design and make software also serves engineering and manufacturing users. Dassault Systèmes SE DASTY, with its 3DEXPERIENCE platform, is another reference point for investors comparing CAD, product lifecycle management and digital engineering software vendors. PTC’s fiscal 2026 outlook calls for revenues of $2.69 billion to $2.75 billion and non-GAAP earnings of $7.87 to $8.42 per share. The guidance range leaves room for a better finish, but it still depends on deal conversion. The annual run rate target is the key watch item. After generating $60 million of sequential net new annual run rate in the third quarter, PTC needs $79 million to $92 million in the fourth quarter to reach its annual growth outlook. PTC repurchased $525 million of common stock in the third quarter and expects full-year repurchases of about $1.625 billion. A smaller diluted share count can support earnings per share and signals management’s willingness to act when it sees the stock as compressed. The trade-off is balance-sheet flexibility. Cash declined to $351.5 million, while debt rose to about $1.4 billion, leaving less room for error if customer conversions or annual run rate timing slip. The $150 price target compares with a $136.30 reference price, implying positive but moderate upside. The target is based on 5.8 times forward sales, which is above the current valuation but still close to the software subindustry level. That upside is constructive rather than decisive. It does not fully offset concerns around competitive pressure, foreign exchange exposure and PTC’s reliance on a strong fourth quarter. The bottom line is that PTC’s reset valuation improves the stock’s risk-reward profile, but the case still requires cleaner execution. The pullback has created a more reasonable multiple, yet fiscal third-quarter misses and fourth-quarter annual run rate demands keep the investment debate open. PTC currently carries a Zacks Rank #3 (Hold), which aligns with a mixed near-term setup rather than a clear buying signal. Its Value Score of C recognizes the valuation reset, while Growth Score, Momentum Score and VGM Score of D suggest investors may need more evidence of earnings acceleration and stronger stock momentum before taking a more aggressive stance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PTC Inc. (PTC) : Free Stock Analysis Report Autodesk, Inc. (ADSK) : Free Stock Analysis Report Dassault Systemes SA (DASTY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

PTC Inc. PTC reported third-quarter fiscal 2026 non-GAAP earnings of $1.58 per share, a 4% decline year over year. It missed the Zacks Consensus Estimate of $1.60. Management had estimated non-GAAP EPS in the range of $1.24-$1.78. Revenues totaled $600 million, a 7% decline year over year (8% at constant currency or cc). The top line also missed the consensus estimate by 2.9%. Management projected revenues in the $580-$640 million range. According to management, historical financials were not restated after the Kepware and ThingWorx divestiture, as the sale did not qualify as discontinued operations. Consequently, fiscal 2026 includes their contribution only until March 13, 2026, the date of the divestiture, while fiscal 2025 reflects a full year, affecting year-over-year comparisons for revenue, EPS and cash flow. Quarterly revenue was below the guidance midpoint solely due to the shorter duration of a single large contract expansion, while deal durations across the broader business remained stable. PTC Inc. price-consensus-eps-surprise-chart | PTC Inc. Quote Nonetheless, its Intelligent Product Lifecycle vision integrates AI across its major product portfolio, including Computer-Aided Design (CAD), Product Lifecycle Management (PLM), Application Lifecycle Management (ALM) and Service Lifecycle Management (SLM). PTC aims to build an intelligence layer across these platforms, allowing organizations to leverage trusted engineering and operational data more effectively. This strategy positions the company well as manufacturers increasingly seek AI-driven automation, predictive analytics and digital engineering capabilities. Recurring revenues of $576 million dipped 6% year over year. Perpetual licenses decreased 91% to $691,000. Professional services revenues were $23.3 million, up 3.3% year over year. License revenues were $205.8 million, down 18.2% from the year-ago quarter figure. Support and cloud services revenues of $370.9 million edged up 0.3% year over year. In the fiscal third quarter, PLM revenues (59% of net sales) were $357 million, slipping 12% year over year. CAD revenues (41%) were $243 million, up 1%. Annualized recurring revenues (ARR) were $2.4 billion, up 7% year over year. At cc, ARR was $2.5 billion, up 9.1%. PTC generated $60 million in net new ARR in the fiscal third quarter, led by solid demand across its go-to-market initiatives and encouraging early traction for its AI offerings. Backed by this momentum, PTC raised the midpoint of its full-year ARR growth guidance to 9.25%. PTC raised and narrowed its full-year ARR guidance, with the midpoint implying $214 million in net new ARR, reflecting strong go-to-market execution and improved pipeline visibility. The company expects a significant acceleration in the fiscal fourth quarter, supported by healthy demand generation and the conversion of deferred ARR, with net new ARR (excluding Kepware and ThingWorx) projected at $79-$92 million. In the fiscal third quarter, PLM and CAD ARR were $1,426 million and $986 million, rising 8% and 6% year over year, respectively. Total operating expenses came in at $324 million, almost on par with the prior-year quarter. Operating income on a non-GAAP basis was $248.5 million, down from $285.2 million in the prior-year quarter. Operating margin on a non-GAAP basis crashed 290 bps year over year to 41%. As of June 30, 2026, cash and cash equivalents were $351.5 million compared with $439 million as of March 31, 2026. Total debt, net of deferred issuance costs, was $1.4 billion as of June 30, 2026, compared with $1.2 billion as of March 31, 2026. Cash provided by operating activities was $261 million compared with the prior-year quarter figure of $244 million. The free cash flow was $249 million compared with $242 million reported in the year-ago quarter. PTC accelerated share repurchases in the fiscal third quarter, reflecting management's view that the stock was undervalued. After completing a $375 million accelerated share repurchase program and an additional $525 million of open-market buybacks, the company now expects to repurchase about $1.625 billion of shares in fiscal 2026. This is expected to reduce fully diluted shares outstanding from roughly 121 million to 116 million, supporting EPS growth and signaling confidence in PTC's long-term outlook. For the fourth quarter of fiscal 2026, PTC estimates revenues in the $630-$690 million band. Non-GAAP EPS is projected in the range of $1.63 to $2.21. Cash from operations is expected to be around $29 million. Free cash flow is forecasted to be roughly $15 million, with the year-over-year decline primarily reflecting capital gains tax outflows from the Kepware and ThingWorx sale. Driven by an encouraging fiscal fourth quarter outlook, PTC lifted the midpoint of its fiscal 2026 revenue and non-GAAP EPS guidance to $2.69-$2.75 billion and $7.87-$8.42, respectively. The prior view was $2.58 billion to $2.82 billion and between $6.65 and $8.90 per share. For fiscal 2026, PTC reiterated cash from operations projections to be around $880 million, indicating a rise of about 1% on a year-over-year basis. The free cash flow is still forecasted to be roughly $850 million, suggesting about a 1% fall. Currently, PTC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Cadence Design Systems CDNS delivered strong second-quarter 2026 results, driven by broad-based demand for its AI-oriented portfolio amid robust design activity and new system architectures across hyperscaler infrastructure and physical AI. Non-GAAP earnings per share (EPS) of $2.11 beat the Zacks Consensus Estimate by 2.9%, increased 27.9% year over year and topped management’s guided range of $2.02 to $2.08. Revenues of $1.584 billion beat the Zacks Consensus Estimate by 0.5% and increased 24.2% year over year. The figure was within the management’s guided range of $1.555-$1.595 billion. Progress Software Corporation PRGS reported second-quarter fiscal 2026 results wherein revenues came in at $253 million, up 7% year over year and 6% on a constant currency (cc) basis. ARR of $868 million inched up 2% year over year on a cc basis. PRGS reported a 16% year-over-year increase in non-GAAP earnings per share, which stood at $1.62. SAP SE SAP reported second-quarter 2026 non-IFRS earnings per share (EPS) of €1.59 ($1.85), which increased 6% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $2. Despite macroeconomic uncertainty, SAP reported total revenues on a non-IFRS basis of €9.9 billion ($11.5 billion), which increased 9% year over year (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.4 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PTC Inc. (PTC) : Free Stock Analysis Report SAP SE (SAP) : Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report Progress Software Corporation (PRGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in PTC Inc.? Here are five stocks we like better. PTC exceeded Q3 guidance, generating $60 million in net new ARR, $261 million in operating cash flow and $249 million in free cash flow. Constant-currency ARR rose 9.1% year over year to $2.448 billion, excluding Kepware and ThingWorx. The company raised its fiscal 2026 outlook, targeting approximately 9%–9.5% ARR growth, $2.69 billion–$2.75 billion in revenue and non-GAAP EPS of $7.87–$8.42. It maintained its roughly $850 million free-cash-flow forecast. PTC highlighted growing AI demand, improved go-to-market execution and doubled year-over-year competitive displacement value. It also increased its fiscal 2026 stock-repurchase plan to approximately $1.625 billion after buying back $525 million of shares in Q3. AI Exposure Without the Hype: 3 ETFs That Offer Smarter AI Bets PTC (NASDAQ:PTC) reported third-quarter fiscal 2026 results that exceeded the high end of its guidance for constant-currency annual recurring revenue, as the engineering software company cited stronger demand capture, improved retention and progress in its go-to-market transformation. Chief Executive Officer Neil Barua said the company generated $60 million in net new ARR during the quarter. Constant-currency ARR, excluding Kepware and ThingWorx, reached $2.448 billion at quarter-end, up 9.1% from a year earlier, according to Chief Financial Officer Jen DiRico. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Massive Potential: 3 Tech Stocks Positioned for Breakout Success PTC also generated $261 million in operating cash flow and $249 million in free cash flow during the quarter, both above its guidance range. Revenue totaled $600 million, which DiRico said was below the midpoint of guidance because of the shortened duration of a single large contract expansion, while deal durations across the broader business held steady. The company raised the low end of its fiscal 2026 constant-currency ARR growth outlook, excluding Kepware and ThingWorx, and now expects growth of approximately 9% to 9.5%. At the midpoint, PTC is guiding for $214 million in net new ARR for the year. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Autodesk Stock Up 25%, Analysts Want More Double-Digit Gains For the fourth quarter, PTC expects net new ARR of $79 million to $92 million. DiRico said the company expects a “considerable step-up” in net new ARR from the third quarter, supported by demand generation and a meaningful increase in deferred ARR expected to convert during the period. PTC also updated its fiscal 2026 revenue forecast to a range of $2.69 billion to $2.75 billion and lifted its non-GAAP earnings-per-share outlook to $7.87 to $8.42. The company maintained its expectation of approximately $850 million in free cash flow for the year. → Innovative ETF Strategies That Are Paying Off This Summer Fourth-quarter free cash flow is expected to be about $15 million, reflecting anticipated capital-gains outflows related to the divestiture of Kepware and ThingWorx. DiRico noted that the divestiture did not meet the criteria for discontinued operations, meaning historical financial statements were not recast; fiscal 2026 includes those assets through their March 13, 2026, divestiture date, while fiscal 2025 included them for the full year. Barua emphasized PTC’s Intelligent Product Lifecycle strategy, which centers on its CAD, product lifecycle management, application lifecycle management and service lifecycle management systems. He said customers are seeking to modernize their product-data foundations as they pursue AI initiatives, citing pressure to shorten development cycles, improve resilience and manage product data securely. “AI will be a tailwind for our business because AI requires our systems of record and the product data stored in them to be effective,” Barua said. During the quarter, PTC launched or expanded several AI-related offerings, including Creo AI, its AI-native PTC Orbit product and Onshape Labs. Barua said the company’s cloud-native Onshape platform is positioned for AI workflows because of its scalable data model and built-in collaboration capabilities. The company also won what Barua described as its largest AI transaction to date: a near-seven-figure ServiceMax AI deal with a large industrial automation company. The customer had previously built a product-data foundation using ServiceMax and tested the AI offering with service technicians. According to Barua, the pilot showed the potential to reduce technician preparation time by 50% and deliver a 4% net productivity improvement across the service workforce. PTC expects standalone AI capabilities to become a more meaningful ARR contributor over the next several years. However, Barua said customers are taking a methodical approach, generally beginning with pilots, assessing adoption and return on investment, and then expanding deployments. Management said its go-to-market transformation has begun producing more consistent results. Barua pointed to improvements in sales-representative productivity, renewal rates, pipeline quality, pipeline diversity, sales velocity and displacement activity. He also cited deeper vertical expertise, greater executive-level engagement and better collaboration across teams. PTC said the aggregate value of competitive displacements doubled year over year. Among the quarter’s wins was a competitive PLM deal with a major defense contractor seeking to modernize engineering operations in a critical business segment. Barua said the company is seeing opportunities both to win new competitive accounts and to consolidate customer environments that use multiple CAD or PLM systems. He added that expansion within PTC’s existing customer base remains the primary source of growth, while displacement activity has accelerated. Regarding fiscal 2027, DiRico said PTC has approximately twice as much deferred ARR at this point as it had at the comparable point last year for fiscal 2026. She said that if the company can sustain comparable net new ARR performance next year while converting deferred ARR already on its books, growth could accelerate. PTC repurchased $525 million of common stock in the third quarter, more than double its previous target, as management viewed the stock price as compressed. The repurchases reduced fully diluted share count to 115 million shares in the quarter. The company now expects approximately $1.625 billion in stock repurchases for fiscal 2026, up from prior guidance of $1.225 billion to $1.325 billion. It expects fully diluted shares outstanding to decline to approximately 116 million for the full year, compared with 121 million in fiscal 2025. Barua said PTC remains focused on organic investment and smaller acquisitions that can accelerate its existing product roadmap. He cited a recent small acquisition intended to support Windchill extension capabilities and help customers move from on-premises Windchill deployments to Windchill+. PTC Inc (NASDAQ: PTC) is a global technology company that develops software and services to help manufacturers design, operate, and service physical products. Founded in 1985 as Parametric Technology Corporation, PTC pioneered parametric, feature-based CAD with its Pro/ENGINEER product (now marketed as Creo) and has since expanded its portfolio to address product lifecycle management, Internet of Things (IoT), augmented reality (AR) and industrial connectivity. Key product lines include Creo for 3D CAD; Windchill for product lifecycle management (PLM); ThingWorx, an IoT platform for connecting devices and building industrial applications; Vuforia, an AR platform for creating immersive service and training experiences; and Kepware, a suite for industrial connectivity and protocol translation. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "PTC Q3 Earnings Call Highlights" was originally published by MarketBeat. 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PTC Inc. (PTC) came out with quarterly earnings of $1.58 per share, missing the Zacks Consensus Estimate of $1.6 per share. This compares to earnings of $1.64 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.25%. A quarter ago, it was expected that this product development software maker would post earnings of $2.06 per share when it actually produced earnings of $2.69, delivering a surprise of +30.58%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. PTC Inc., which belongs to the Zacks Computer - Software industry, posted revenues of $600.05 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.9%. This compares to year-ago revenues of $643.94 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. PTC Inc. shares have lost about 26.8% since the beginning of the year versus the S&P 500's gain of 8.5%. While PTC Inc. has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for PTC Inc. was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.76 on $646.28 million in revenues for the coming quarter and $8.01 on $2.72 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer - Software is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, OptimizeRx Corp. (OPRX), is yet to report results for the quarter ended June 2026. This company is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of -54.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. OptimizeRx Corp.'s revenues are expected to be $20.48 million, down 29.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PTC Inc. (PTC) : Free Stock Analysis Report OptimizeRx Corp. (OPRX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Strategic focus on Intelligent Product Lifecycle vision Strong execution in Q3'26 across all key metrics Raising FY'26 guidance for ARR, Revenue and EPS, reaffirming Cash Flow guidance ~$525 million of shares repurchased in Q3'26, bringing FY'26 repurchases above the high-end of our target for the year BOSTON, July 29, 2026 /PRNewswire/ -- PTC (NASDAQ: PTC) today reported financial results for its third fiscal quarter ended June 30, 2026. "PTC delivered strong financial execution in Q3'26. Customers increasingly recognize the importance of our Intelligent Product Lifecycle vision. This coincides with the go-to-market and product strategy emphasis the company has undertaken over the past several quarters and results in a more durable business model that positions PTC for long-term success," said Neil Barua, President and CEO, PTC. "AI has become a key discussion point in customer conversations, and PTC is uniquely positioned to take advantage of this growing customer interest in AI. The need to modernize product data foundations in order to appropriately leverage AI is becoming clear to organizations, all while PTC establishes an intelligence layer to enable AI capabilities over our trusted solutions across CAD, PLM, ALM and SLM," concluded Barua. Third Fiscal Quarter 2026 Key Operating and Financial Metrics1 "Our Q3 results reflect a focused business model, as the company's execution resulted in improved demand capture and customer adoption. Our strong financial performance in Q3 highlights the consistent commitment to excellence we strive for, resulting in our key metrics landing above the high end of our guidance. This performance to date and the visibility we have into our Q4 pipeline gives us confidence in raising the midpoint of our ARR guidance for the full year," said Jen DiRico, CFO. "Further, we remain committed to our capital allocation priorities, reinvesting in the business while identifying tuck-in acquisitions and opportunities to repurchase PTC stock. Specific to Q3, we identified what we viewed as a compressed valuation of our stock and acted accordingly by repurchasing more than two times what we previously targeted for the quarter," concluded DiRico. Full Fiscal Year 2026 and Fourth Fiscal Quarter Guidance Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance Reconciliation of EPS Guidance to Non-GAAP EPS Guidance FY'26 financial guidance includes the following assumptions: We provide ARR guidance on a constant currency basis, using our FY'26 Plan foreign exchange rates (rates as of September 30, 2025) for all periods. We expect churn to remain low. Related to free cash flow, we expect three divestiture-related items in FY'26 that are not expected to recur in future years: Capital expenditures are expected to be approximately $30 million, with $9 million in Q3'26 and approximately $11 million in Q4'26 that is not expected to recur in future years, primarily related to moving a major R&D center to a new office. FY'26 GAAP operating expenses are expected to increase approximately 4%, primarily due to the divestiture-related expenses. Apart from the divestiture-related expenses, GAAP and non-GAAP operating expenses are expected to be relatively flat, as investments to drive future growth are offset by net proceeds from the divestiture-related Transition Services Agreement and lower operating expenses due to divested costs. Cash interest payments are expected to be approximately $60 million to $65 million. Cash tax payments are expected to be approximately $230 million to $240 million, of which approximately $100 million is related to the Kepware and ThingWorx divestiture and not expected to recur in future years. Q4'26 GAAP and non-GAAP tax rates are expected to be approximately 20% to 25%. GAAP P&L results are expected to include the items below, netting to credits of approximately $80 million to $110 million, as well as their related tax effects: On March 17, 2026, we entered into an accelerated share repurchase agreement, under which we used $375 million of cash and received 2.7 million shares during Q2'26 and Q3'26. In addition to the accelerated share repurchase agreement, during Q3'26 we repurchased 4.3 million additional shares of PTC stock in the open market for $525 million. In total, we expect to repurchase approximately $1.625 billion of our shares in FY'26 and expect a decrease in fully diluted shares to approximately 116 million shares for FY'26, compared to 121 million shares in FY'25. PTC's Third Fiscal Quarter Results Conference CallPTC will host a conference call to discuss results at 5:00 pm ET on Wednesday, July 29, 2026. To participate in the live conference call, dial (888) 596-4144 or (646) 968-2525, provide the passcode 6413921, and press # or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available. Important Information About Our Operating and Non-GAAP Financial Measures Non-GAAP Financial MeasuresWe provide supplemental non-GAAP financial measures to our financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. These non-GAAP financial measures should not be construed as an alternative to GAAP results as the items excluded from the non-GAAP financial measures often have a material impact on our operating results, certain of those items are recurring, and others often recur. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results. Non-GAAP operating expense, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and non-GAAP EPS exclude the effect of the following items: stock-based compensation; 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 shown in the reconciliation provided; and income tax adjustments. Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in "Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Free Cash Flow: We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long-term goals and intent to return excess cash to shareholders via stock repurchases. Free cash flow is cash provided by (used in) operations net of capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures. Constant Currency (CC): We present CC information to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency exchange rate fluctuations. To present CC information, FY'26 and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the foreign exchange rate as of September 30, 2025, rather than the actual exchange rates in effect during that period. Operating MeasureARR: 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: We consider a contract to be active when the product or service contractual term commences (the "start date") until the right to use the product or service ends (the "expiration date"). Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced. For contracts that include annual values that change over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include any future committed increases in the contract value as of the date of the ARR calculation. As ARR includes only contracts that are active at the end of the reporting period, ARR does not reflect assumptions or estimates regarding future contract renewals or non-renewals. Active contracts are annualized by dividing the total active contract value by the contract duration in days (expiration date minus start date), then multiplying that by 365 days (or 366 days for leap years). 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. Forward-Looking Statements Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, and potential stock repurchases 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, including the recent military conflict in Iran, 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 those capabilities are not made available when or as we expect, if customers are slower to adopt those solutions than we expect, or if customers adopt competing solutions; customers may not build the product data foundations 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 proceeds we receive under the Transition Services Agreement entered into in connection with the divestiture of the Kepware and ThingWorx businesses may be lower than expected and/or may not offset our expenses and/or the cash flow impact of the divestiture to the extent expected; the divestiture and/or performance of the Transition Services Agreement may disrupt our business to a greater extent than we expect; other uses of cash or our credit facility limits could limit or preclude the return of excess cash 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 from time to time in reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission. About PTC (NASDAQ: PTC) PTC (NASDAQ: PTC) is a global software company that enables industrial and manufacturing companies to digitally transform how they engineer, manufacture, and service the physical products that the world relies on. Headquartered in Boston, Massachusetts, PTC employs over 7,000 people and supports more than 30,000 customers globally. For more information, please visit www.ptc.com. PTC.com @PTC Blogs PTC Investor Relations Contact Michael Maguire, CFAVP, Investor [email protected] 4,213Non-GAAP operating income (1)$248,519$285,171$968,805$775,811GAAP net income$118,780$141,328$876,021$386,204Stock-based compensation59,38254,032185,848161,395Amortization of acquired intangible assets19,74419,71459,49658,965Acquisition and transaction-related charges2,8871,59740,0222,422Impairment and other charges, net---4,213Non-operating credits, net (2)--(463,852)-Income tax adjustments (3)(19,353)(19,260)33,924(65,650)Non-GAAP net income$181,440$197,411$731,459$547,549GAAP diluted earnings per share$1.03$1.17$7.43$3.20Stock-based compensation0.520.451.581.34Amortization of acquired intangibles0.170.160.500.49Acquisition and transaction-related charges0.030.010.340.02Impairment and other charges, net---0.03Non-operating credits, net (2)--(3.94)-Income tax adjustments (3)(0.17)(0.16)0.29(0.54)Non-GAAP diluted earnings per share$1.58$1.64$6.21$4.53(1) Operating margin impact of non-GAAP adjustments:Three Months EndedNine Months EndedJune 30,June 30,June 30,June 30,2026202520262025GAAP operating margin27.7%32.6%33.2%29.7%Stock-based compensation9.9%8.4%9.0%8.7%Amortization of acquired intangibles3.3%3.1%2.9%3.2%Acquisition and transaction-related charges0.5%0.2%1.9%0.1%Impairment and other charges, net0.0%0.0%0.0%0.2%Non-GAAP operating margin41.4%44.3%47.0%42.0%(2) In Q2'26, we recognized gains of $462.6 million on the sale of our Kepware and ThingWorx businesses and $2.0 millionrelated to the finalization of contingent consideration associated with the FY'22 sale of a portion of our PLM services business.In Q1'26, we recognized a $0.8 million financing charge related to a debt commitment agreement associated with ouranticipated divestiture of the Kepware and ThingWorx businesses.(3) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicabletax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in the first nine months of FY'25, adjustmentsexclude a $10.4 million benefit related to the tax impact of tax reserves related to prior years in foreign jurisdictions. View original content to download multimedia:https://www.prnewswire.com/news-releases/ptc-announces-third-fiscal-quarter-2026-results-302838236.html

Product design software company PTC (NASDAQ:PTC) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 6.8% year on year to $600 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $660 million at the midpoint, or 1.3% above analysts’ estimates. Its non-GAAP profit of $1.58 per share was 1% above analysts’ consensus estimates. Is now the time to buy PTC? Find out in our full research report. Revenue: $600 million vs analyst estimates of $608 million (6.8% year-on-year decline, 1.3% miss) Adjusted EPS: $1.58 vs analyst estimates of $1.56 (1% beat) Adjusted Operating Income: $248.5 million vs analyst estimates of $251.7 million (41.4% margin, 1.3% miss) Revenue Guidance for Q3 CY2026 is $660 million at the midpoint, above analyst estimates of $651.6 million Management raised its full-year Adjusted EPS guidance to $8.15 at the midpoint, a 4.8% increase Operating Margin: 27.7%, down from 32.6% in the same quarter last year Free Cash Flow Margin: 41.6%, similar to the previous quarter Annual Recurring Revenue: $2.41 billion vs analyst estimates of $2.46 billion (6.9% year-on-year growth, miss) Billings: $544 million at quarter end, down 8.2% year on year Market Capitalization: $14.73 billion "PTC delivered strong financial execution in Q3'26. Customers increasingly recognize the importance of our Intelligent Product Lifecycle vision. This coincides with the go-to-market and product strategy emphasis the company has undertaken over the past several quarters and results in a more durable business model that positions PTC for long-term success," said Neil Barua, President and CEO, PTC. Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ:PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM. Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, PTC grew its sales at a 11.5% compounded annual growth rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded. Luckily, there are other things to like about PTC. We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. PTC’s annualized revenue growth of 15.4% over the last two years is above its five-year trend, suggesting some bright spots. This quarter, PTC missed Wall Street’s estimates and reported a rather uninspiring 6.8% year-on-year revenue decline, generating $600 million of revenue. Company management is currently guiding for a 26.2% year-on-year decline in sales next quarter. Looking further ahead, sell-side analysts expect revenue to decline by 6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health. ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all. Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE. While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable. PTC’s ARR came in at $2.41 billion in Q2, and over the last four quarters, its growth was underwhelming as it averaged 8.6% year-on-year increases. This alternate topline metric grew slower than total sales, which likely means that the recurring portions of the business are growing slower than less predictable, choppier ones such as implementation fees. If this continues, the quality of its revenue base could decline. The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments. PTC is extremely efficient at acquiring new customers, and its CAC payback period checked in at 0.5 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments. We were impressed by PTC’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EPS guidance slightly exceeded Wall Street’s estimates. On the other hand, its revenue slightly missed and its billings fell short of Wall Street’s estimates. Overall, this quarter was quite mixed. The stock remained flat at $133.56 immediately following the results. Is PTC an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.