01—Abstract
Summary
Summary of the 10-K filed November 21, 2025. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported fiscal 2025 (year ended September 30, 2025) as a strong year on its subscription model, with 95%a of 2025 revenue recurring in nature.
ARR grew 10% (8.5% constant currency) to $2.48 billionb, total revenue grew 19% to $2.74 billion, and diluted earnings per share rose 95% to $6.08. Operating income was $982.4 million versus $588.1 million in fiscal 2024, and net income was $734.0 million. Cash provided by operating activities was $868 million and free cash flow was $857 million, both up 16%.
The filing notes that revenue and margins can swing under ASC 606 because on-premises subscription license revenue is recognized up front, so reported results may not track ARR or cash flow period to period. The company's balance sheet and capital allocation were active during the year. Total debt was $1.20 billionc at September 30, 2025, down from $1.75 billion, after the 2025 senior notes were redeemed and net debt repayments of $553 million were made.
PTC repurchased $300 milliond of stock in fiscal 2025 under a $2 billion authorization running through September 30, 2027, and expects to repurchase roughly $150 to $250 million per quarter in fiscal 2026. On November 5, 2025, PTC agreed to sell its Kepware and ThingWorx businesses to an affiliate of TPG for up to $725 million, including up to $600 million at closing, with the transaction expected to close in the first half of calendar 2026. The filing also discloses an unrecognized tax benefit of $109 million tied to an IRS consent received in October 2025, which will be released in the first quarter of fiscal 2026.
The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the financial statements and on internal control over financial reporting as of September 30, 2025. Legal proceedings are described as immaterial, and the filing reports no material weaknesses.
02—Key points
Key Highlights
- Total revenue of $2.74 billion, up 19% (18% constant currency), with software revenue of $2.63 billion and recurring revenue of $2.60 billion.
- ARR of $2.48 billion, up 10% (8.5% constant currency), with PLM ARR up 10% and CAD ARR up 10%.
- GAAP operating income of $982.4 million (36% operating margin) versus $588.1 million (26%) in fiscal 2024; non-GAAP operating margin of 48%.
- Diluted EPS of $6.08 (up 95%); non-GAAP diluted EPS of $7.94 versus $5.08.
- Cash from operations of $867.7 million and free cash flow of $856.7 million, both up 16%.
- Total debt reduced to $1.20 billion from $1.75 billion; $300 million of stock repurchased in fiscal 2025 with $1.70 billion remaining under the $2 billion authorization.
- Pending sale of Kepware and ThingWorx businesses to an affiliate of TPG for up to $725 million, expected to close in the first half of calendar 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, PTC kept $0.27.
- Revenue$2.74B100.0%
- Cost of revenue−$445.0M16.2%
- Gross profit$2.29B83.8%
- Operating costs−$1.31B47.9%
- Operating income$982.4M35.9%
- Interest, other & tax−$248.4M9.1%
- Net income$734.0M26.8%
Where FY2025 revenue went
$2.74B- Other operating costs: $854.2M, 31% of revenue
- Net income: $734.0M, 27% of revenue
- R&D: $457.7M, 17% of revenue
- Cost of revenue: $445.0M, 16% of revenue
- Interest, other & tax: $248.4M, 9.1% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed November 21, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $2.74B$2.30B | +19.2% |
| Cost of Revenue | $444.98M$444.82M | 0.0% |
| Gross Profit | $2.29B$1.85B | +23.8% |
| R&D Expenses | $457.69M$433.05M | +5.7% |
| Operating Expenses | $1.31B$1.27B | +3.7% |
| Operating Income | $982.38M$588.06M | +67.1% |
| Interest Expense | $77.02M$119.70M | −35.7% |
| Net Income | $734.00M$376.33M | +95.0% |
| EPS (Basic) | $6.12$3.14 | +94.9% |
| EPS (Diluted) | $6.08$3.12 | +94.9% |
| Shares Outstanding (Basic) | 120.00M119.68M | +0.3% |
| Shares Outstanding (Diluted) | 120.78M120.74M | 0.0% |
05—Questions
Frequently Asked Questions
How much of PTC's revenue is recurring, and what does the subscription model mean for predictability?
The filing states that 95% of 2025 revenue is recurring in nature. Management says the subscription model drives higher customer engagement and retention, provides better business predictability, and supports steady investment in customers and mid-to-long-term growth.
Why might reported revenue and margins differ from underlying business trends?
Under ASC 606, the license portion of on-premises subscription contracts is recognized up front when delivered, while support and cloud components are recognized ratably. As a result, the volume, mix, and duration of contracts starting in a period can significantly affect reported revenue, operating margin, and EPS. ARR is not affected by this timing and is presented as a separate operating measure to assess subscription health.
What is the Kepware and ThingWorx sale, and how will proceeds be used?
On November 5, 2025, PTC agreed to sell Kepware and ThingWorx to Parrot US Buyer, L.P., an entity controlled by funds affiliated with TPG, for $600 million in cash at closing (subject to adjustments), plus contingent consideration of up to $125 million. The total consideration could reach $725 million, reduced by $35 million if certain financial metrics are not met. PTC expects to use the net after-tax proceeds to repurchase shares, consistent with its goal of returning excess cash to shareholders.
How is PTC's debt position and liquidity?
Total debt was $1.20 billion at September 30, 2025, consisting of $500 million of 4.000% senior notes due 2028, $231.3 million on the revolver, and $468.8 million on the term loan. Cash and cash equivalents were $184 million. Unused credit facility commitments were $1,018.8 million at year end, and the filing reports compliance with all covenants. After year end, PTC borrowed $70 million on the revolver on November 20, 2025, and the filing notes an amendment to the credit agreement on November 18, 2025 that eases asset sale restrictions.
What is the outlook for share repurchases and the tax reserve release?
PTC expects to repurchase approximately $150 to $250 million of common stock per quarter in fiscal 2026, while noting that repurchases may be reduced, suspended, or stopped depending on conditions and other priorities. Through November 20, 2025, the company had repurchased $71 million of stock in the first quarter of fiscal 2026. Separately, the IRS consent received in October 2025 allows PTC to release a $109 million unrecognized tax benefit in the first quarter of fiscal 2026, primarily reducing deferred tax assets, which the filing says will also produce a net income tax benefit of $6.5 million.
06—Continue