IntrinsicIntrinsic
← All summaries

PTC INC.

PTC
Financials & Chart →

Business Summary

PTC Inc. is a global software company headquartered in Boston, Massachusetts, serving customers primarily in the Industrials, Federal Aerospace and Defense, Electronics and High Tech, Automotive, and Medical Technology and Life Sciences verticals. The company supports more than 30,000 customers globally and employs over 7,000 people. PTC enables the Intelligent Product Lifecycle, establishing a strong product data foundation in the engineering department and democratizing access to that data across the enterprise to drive cross-functional collaboration, accelerate new product introduction timelines, and deliver higher product quality. The company emphasizes AI-driven transformation across its customers' teams, operations, and processes, noting that a product data foundation is the backbone of AI-driven transformation.

PTC competes with a number of companies whose offerings address one or more specific functional areas covered by its solutions. For enterprise CAD and PLM solutions, PTC competes with large established companies including Autodesk, Dassault Systèmes SA, and Siemens AG. For its ALM products, PTC competes with IBM, Jama Software, Inc. and Siemens AG. For its SLM products, PTC competes with enterprise software companies such as Oracle, SAP, IFS AB, Microsoft, and Salesforce, and with companies that offer point solutions. The company's growth is primarily driven by existing customers that continue to upgrade and expand their PTC footprint, multi-product adoption by customers, commercial optimization initiatives, and new customers. Approximately 75% of sales are from products and services sold directly by the sales force to end-user customers, with the rest through third-party resellers.

PTC's business is based on a subscription model, and 95% of its 2025 revenue is recurring in nature. The company generates revenue from subscriptions (including term-based on-premises licenses and related support, SaaS, and hosting services), perpetual licenses, support for perpetual licenses, and professional services. Compared to a perpetual license model, the subscription model naturally drives higher customer engagement and retention and provides better business predictability, enabling steady and sustained investments to support customers and pursue mid-to-long-term growth opportunities. The company's growth is primarily driven by existing customers that continue to upgrade and expand their PTC footprint, multi-product adoption by customers, commercial optimization initiatives, and new customers.

PTC's principal products and services include PLM software products for product data management and process orchestration, such as the Windchill PLM application suite, Codebeamer and pure::variants application lifecycle management (ALM) solutions, ServiceMax service lifecycle management (SLM) solution, Servigistics service parts management solution, and Arena SaaS PLM solution. The company also offers CAD software products for product data authoring, including Creo 3D CAD technology and the Onshape SaaS product development platform. PLM software revenue was $1,639.0 million in fiscal 2025, growing 23% year-over-year, driven by the higher total value and longer average duration of contracts commencing in the period, with growth across all geographic regions primarily driven by Windchill. CAD software revenue was $992.9 million in fiscal 2025, growing 19% year-over-year, driven by the higher total value and longer average duration of contracts commencing in the period, with growth across all geographic regions primarily driven by Creo.

In fiscal 2025, PTC made net debt repayments of $553 million and repurchased $300 million of its outstanding shares. The company ended fiscal 2025 with cash and cash equivalents of $184 million and gross debt of $1.20 billion , which debt carried an aggregate weighted average interest rate of 4.9% . On November 5, 2025, PTC entered into a definitive agreement with an affiliate of TPG to sell its Kepware and ThingWorx businesses for total consideration of up to $725 million , with up to $600 million potentially received upon closing, which may be reduced by $35 million if certain growth targets are not achieved, and up to $125 million of contingent consideration upon sale by TPG. The transaction is expected to close in the first half of calendar 2026. In Q2'25, PTC redeemed its 2025 senior notes using a draw on its revolving credit facility and cash on hand. The company also recognized $16 million in impairment charges in Q2'25 and Q4'25 related to lease assets associated with the subleased portion of its Boston office.

Total revenue grew 19% (18% constant currency) in fiscal 2025 compared to fiscal 2024, reaching $2,739.2 million . ARR grew 10% (8.5% constant currency) to $2.48 billion as of the end of fiscal 2025 compared to fiscal 2024. Cash provided by operating activities grew 16% to $868 million in fiscal 2025 compared to fiscal 2024. Free cash flow grew 16% to $857 million in fiscal 2025 compared to fiscal 2024. Operating margin grew by approximately 1030 basis points in fiscal 2025 compared to fiscal 2024, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 95% to $6.08 in fiscal 2025 compared to fiscal 2024, driven by revenue growth.

Business Outlook

PTC expects to repurchase approximately $150 to $250 million of its common stock per quarter in fiscal 2026. The company expects to use the net after-tax proceeds of the Kepware and ThingWorx divestiture to repurchase shares, in line with its long-term goal of returning excess cash to shareholders. PTC also expects that the 'One Big Beautiful Bill Act' enacted on July 4, 2025, which includes changes to U.S. tax law allowing accelerated tax deductions for qualified property and research expenditures, will have a material positive cash impact in fiscal 2026 and fiscal 2027, which is reflected in the company's guidance.

PTC's growth is primarily driven by existing customers that continue to upgrade and expand their PTC footprint, multi-product adoption by customers, commercial optimization initiatives, and new customers. The company is increasingly incorporating AI capabilities into many of its products to enable customers to become more agile and productive. PTC also continues to focus on transforming its business to offer and support SaaS solutions, including Windchill+ and Creo+ SaaS solutions, though customers may not adopt them as expected. The company expects that over time a higher portion of its revenue will be recognized ratably as it expands its SaaS offerings, releases additional cloud functionality into its products, and migrates customers from on-premises subscriptions to SaaS.

Operating margin grew by approximately 1030 basis points in fiscal 2025 compared to fiscal 2024, reflecting higher revenue as well as continued operating discipline. The company's non-GAAP operating margin was 47.5% in fiscal 2025 compared to 38.9% in fiscal 2024. PTC's cash flow growth is attributable to resilient top-line growth due to its subscription business model and operational discipline.

PTC employs over 7,000 people and as of September 30, 2025, had 7,642 full-time employees. Total headcount increased by 2% between September 30, 2024 and September 30, 2025. The company has 61 office locations used in operations in the United States and internationally, totaling approximately 897,000 square feet of leased facilities, with approximately 281,000 square feet in the U.S. and approximately 267,000 square feet in India, where a significant amount of research and development is conducted. PTC uses a number of third-party service providers for key components of its infrastructure, particularly for development and delivery of cloud-based products.

In fiscal 2025, PTC repurchased 1.65 million shares for $300 million . The company's Board of Directors has authorized repurchases of up to $2 billion of common stock in the period October 1, 2024 through September 30, 2027. PTC expects to repurchase approximately $150 to $250 million of its common stock per quarter in fiscal 2026. Capital expenditures were $11.0 million in fiscal 2025 compared to $14.4 million in fiscal 2024. Research and development expenses were $457.7 million in fiscal 2025, representing 17% of total revenue.

PTC faces structural headwinds including intense competition in rapidly changing markets characterized by disruptive technology developments, evolving distribution models, and increasingly lower barriers to entry. Customer demand for SaaS solutions is increasing, and while PTC has introduced cloud-native SaaS solutions like Arena, ServiceMax, and Onshape, as well as Windchill+ and Creo+ SaaS solutions, customers may not adopt them as expected. A large amount of PTC's sales are to customers in the discrete manufacturing sector, which continues to face uncertainty due to factors including recently imposed import tariffs, threats of additional import tariffs, supply chain disruptions, high interest rates and inflation, volatile foreign exchange rates, and the U.S. government's focus on technology transactions with non-U.S. entities. Approximately 50% of PTC's revenue and 35% of its expenses are transacted in currencies other than the U.S. Dollar, exposing the company to foreign currency exchange rate fluctuations.

Risk Factors

PTC faces significant competition from large established companies including Autodesk, Dassault Systèmes SA, and Siemens AG for enterprise CAD and PLM solutions, and from IBM, Jama Software, Inc., and Siemens AG for ALM products, which could adversely affect its business if it is unable to successfully compete. The company has substantial indebtedness, with total debt outstanding of approximately $1,270 million as of November 21, 2025, including $500 million in 4.000% senior notes due 2028, $301 million borrowed under its credit facility revolving line, and $469 million borrowed under its credit facility term loan, and a failure to comply with financial and operating covenants could cause amounts borrowed to become immediately due and payable. A large amount of PTC's sales are to customers in the discrete manufacturing sector, which faces uncertainty from import tariffs, supply chain disruptions, high interest rates, and volatile foreign exchange rates, and customers may delay or forego purchases. The company's international operations expose it to foreign currency exchange rate risk, with approximately 50% of revenue and 35% of expenses transacted in currencies other than the U.S. Dollar, and a $0.10 change in the USD to EUR exchange rate would impact operating income by approximately $44 million .

Management Priorities

Management's message emphasizes that PTC's cash flow growth is attributable to resilient top-line growth due to its subscription business model and operational discipline. The company reported that ARR grew 10% (8.5% constant currency) to $2.48 billion as of the end of fiscal 2025 compared to fiscal 2024, and cash provided by operating activities grew 16% to $868 million in fiscal 2025 compared to fiscal 2024. Management highlighted that in fiscal 2025, PTC made net debt repayments of $553 million and repurchased $300 million of its outstanding shares. The strategic priorities emphasized include returning excess cash to shareholders via share repurchases, while allowing for potential tuck-in acquisitions, as evidenced by the expected use of net after-tax proceeds from the Kepware and ThingWorx divestiture. Management also noted that the company expects to repurchase approximately $150 to $250 million of its common stock per quarter in fiscal 2026.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Software Revenue by Product Group
  2. [2] Item 7, MD&A — Software Revenue by Product Group
  3. [3] Item 7, MD&A — Software Revenue by Product Group
  4. [4] Item 7, MD&A — Software Revenue by Product Group
  5. [5] Item 7, MD&A — Executive Overview
  6. [6] Item 7, MD&A — Executive Overview
  7. [7] Item 7, MD&A — Executive Overview
  8. [8] Item 7, MD&A — Executive Overview
  9. [9] Item 7, MD&A — Executive Overview
  10. [10] Item 7, MD&A — Executive Overview
  11. [11] Item 7, MD&A — Executive Overview
  12. [12] Item 7, MD&A — Executive Overview
  13. [13] Item 7, MD&A — Executive Overview
  14. [14] Item 7, MD&A — Operating Expenses
  15. [15] Item 7, MD&A — Executive Overview
  16. [16] Item 7, MD&A — Executive Overview
  17. [17] Item 7, MD&A — Results of Operations
  18. [18] Item 7, MD&A — Executive Overview
  19. [19] Item 7, MD&A — Executive Overview
  20. [20] Item 7, MD&A — Executive Overview
  21. [21] Item 7, MD&A — Executive Overview
  22. [22] Item 7, MD&A — Executive Overview
  23. [23] Item 7, MD&A — Executive Overview
  24. [24] Item 7, MD&A — Executive Overview
  25. [25] Item 7, MD&A — Executive Overview
  26. [26] Item 7, MD&A — Executive Overview
  27. [27] Item 7, MD&A — Executive Overview
  28. [28] Item 7, MD&A — Share Repurchase Authorization
  29. [29] Item 7, MD&A — Executive Overview
  30. [30] Item 7, MD&A — Non-GAAP Financial Measures
  31. [31] Item 7, MD&A — Non-GAAP Financial Measures
  32. [32] Item 1, Business — PTC at-a-Glance
  33. [33] Item 7, MD&A — Operating Expenses
  34. [34] Item 2, Properties
  35. [35] Item 2, Properties
  36. [36] Item 2, Properties
  37. [37] Item 7, MD&A — Share Repurchase Authorization
  38. [38] Item 7, MD&A — Share Repurchase Authorization
  39. [39] Item 5, Market for Registrant's Common Equity
  40. [40] Item 7, MD&A — Share Repurchase Authorization
  41. [41] Item 7, MD&A — Results of Operations
  42. [42] Item 7, MD&A — Results of Operations
  43. [43] Item 7, MD&A — Operating Expenses
  44. [44] Item 7, MD&A — Operating Expenses
  45. [45] Item 1A, Risk Factors — IV. Risks Related to Our Indebtedness
  46. [46] Item 1A, Risk Factors — IV. Risks Related to Our Indebtedness
  47. [47] Item 1A, Risk Factors — IV. Risks Related to Our Indebtedness
  48. [48] Item 1A, Risk Factors — IV. Risks Related to Our Indebtedness
  49. [49] Item 7A, Quantitative and Qualitative Disclosures about Market Risk
  50. [50] Item 7, MD&A — Executive Overview
  51. [51] Item 7, MD&A — Executive Overview
  52. [52] Item 7, MD&A — Executive Overview
  53. [53] Item 7, MD&A — Executive Overview
  54. [54] Item 7, MD&A — Executive Overview
  55. [55] Item 7, MD&A — Executive Overview
  56. [56] Item 7, MD&A — Executive Overview
  57. [57] Item 7, MD&A — Share Repurchase Authorization
  58. [58] Item 7, MD&A — Results of Operations
  59. [59] Item 7, MD&A — Results of Operations
  60. [60] Item 7, MD&A — Executive Overview
  61. [61] Item 7, MD&A — Non-GAAP Financial Measures
  62. [62] Item 7, MD&A — Non-GAAP Financial Measures
  63. [63] Item 7, MD&A — Executive Overview
  64. [64] Item 7, MD&A — Results of Operations
  65. [65] Item 7, MD&A — Results of Operations
  66. [66] Item 7, MD&A — Results of Operations
  67. [67] Item 7, MD&A — Non-GAAP Financial Measures
  68. [68] Item 7, MD&A — Non-GAAP Financial Measures
  69. [69] Item 7, MD&A — Non-GAAP Financial Measures
  70. [70] Item 7, MD&A — Non-GAAP Financial Measures
  71. [71] Item 7, MD&A — Non-GAAP Financial Measures
  72. [72] Item 7, MD&A — Non-GAAP Financial Measures
  73. [73] Item 7, MD&A — Liquidity and Capital Resources
  74. [74] Item 7, MD&A — Liquidity and Capital Resources
  75. [75] Item 7, MD&A — Non-GAAP Financial Measures
  76. [76] Item 7, MD&A — Non-GAAP Financial Measures
  77. [77] Item 7, MD&A — Liquidity and Capital Resources
  78. [78] Item 7, MD&A — Liquidity and Capital Resources
  79. [79] Item 7, MD&A — Outstanding Debt
  80. [80] Item 7, MD&A — Outstanding Debt
  81. [81] Item 7, MD&A — Software Revenue by Product Group
  82. [82] Item 7, MD&A — Software Revenue by Product Group
  83. [83] Item 7, MD&A — Software Revenue by Product Group
  84. [84] Item 7, MD&A — Software Revenue by Product Group
  85. [85] Item 7, MD&A — Operating Expenses
  86. [86] Item 7, MD&A — Other Income

Analysis on 6/21/2026