01—Abstract
Summary
Summary of the 10-Q filed February 5, 2026. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported its first-quarter fiscal 2026 results (three months ended December 31, 2025) in this Form 10-Q.
Total revenue rose to $685.8 milliona from $565.1 million a year earlier, with license revenue of $269.7 million versus $172.8 million, and recurring revenue of $657.3 million versus $524.3 million. Operating income was $221.1 million compared with $115.5 million, and net income was $166.5 million, or $1.39 per diluted share, compared with $82.2 million, or $0.68 per diluted share. ARR was $2.49 billion, up 13% (8% in constant currency) from a year earlier.
The filing states the company grew Non-GAAP operating margin to 45.1% from 33.9%. During the quarter PTC repurchased 1.1 million shares for $200 millionb and generated operating cash flow of $269.7 million and free cash flow of $267.4 million. Total debt was unchanged at $1.20 billion, and the company had $209.7 million of cash and cash equivalents at quarter end.
Remaining repurchase authorization under the $2 billionc program was $1.50 billion as of December 31, 2025. PTC entered into an agreement on November 5, 2025 to sell its Kepware and ThingWorx businesses to a TPG-affiliated buyer for $600 million in cash, subject to adjustments, plus contingent consideration of up to $125 million.
The transaction is expected to close on or before April 1, 2026, and the company expects to use the after-tax proceeds to repurchase shares. Both businesses' assets and liabilities are classified as held for sale.
02—Key points
Key Highlights
- Total revenue of $685.8 million, up from $565.1 million in the prior-year quarter; license revenue rose to $269.7 million from $172.8 million.
- Net income of $166.5 million ($1.39 diluted EPS) versus $82.2 million ($0.68 diluted EPS) a year earlier; the effective tax rate was 18% versus 12%.
- ARR of $2.49 billion, up 13% (8% constant currency); recurring revenue was 95% of 2025 revenue per the filing.
- Operating income of $221.1 million versus $115.5 million; Non-GAAP operating margin of 45.1% versus 33.9%.
- Agreement to sell Kepware and ThingWorx for $600 million in cash plus up to $125 million in contingent consideration, expected to close on or before April 1, 2026.
- Repurchased 1.1 million shares for $200 million during the quarter; $1.50 billion remained under the repurchase authorization at December 31, 2025.
- Operating cash flow of $269.7 million and free cash flow of $267.4 million; total debt remained at $1.20 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, PTC kept $0.24.
- Revenue$685.8M100.0%
- Cost of revenue−$117.7M17.2%
- Gross profit$568.1M82.8%
- Operating costs−$346.9M50.6%
- Operating income$221.1M32.2%
- Interest, other & tax−$54.6M8.0%
- Net income$166.5M24.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed February 5, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $685.83M$565.13M | +21.4% |
| Cost of Revenue | $117.75M$111.80M | +5.3% |
| Gross Profit | $568.08M$453.33M | +25.3% |
| R&D Expenses | $119.98M$115.52M | +3.9% |
| Operating Expenses | $346.95M$337.81M | +2.7% |
| Operating Income | $221.13M$115.52M | +91.4% |
| Interest Expense | $17.26M$22.05M | −21.7% |
| Net Income | $166.52M$82.23M | +102.5% |
| EPS (Basic) | $1.40$0.68 | +105.9% |
| EPS (Diluted) | $1.39$0.68 | +104.4% |
| Shares Outstanding (Basic) | 119.33M120.24M | −0.8% |
| Shares Outstanding (Diluted) | 119.99M121.14M | −1.0% |
05—Questions
Frequently Asked Questions
How did PTC's revenue and profitability change in the first quarter of fiscal 2026?
Total revenue increased to $685.8 million from $565.1 million, and operating income rose to $221.1 million from $115.5 million. Diluted EPS was $1.39 compared with $0.68. The filing attributes the revenue growth to higher license revenue from renewal contracts with greater total value and longer average duration.
What is the Kepware and ThingWorx divestiture?
On November 5, 2025, PTC agreed to sell its Kepware and ThingWorx businesses to Parrot US Buyer, L.P., an entity controlled by funds affiliated with TPG Global, for $600 million in cash, subject to adjustments, plus contingent consideration of up to $125 million. The transaction is expected to close on or before April 1, 2026, and the business is not treated as discontinued operations.
How is PTC using its cash and share repurchases?
PTC repurchased $200 million of common stock in the quarter, buying 1.1 million shares at an average price of $175.18. The company said it expects to use the net after-tax proceeds from the divestiture to repurchase shares, in line with its goal of returning excess cash to shareholders.
What is PTC's debt position and liquidity?
Total debt was $1.20 billion at December 31, 2025, including $500 million of 4.000% senior notes due 2028 and credit facility borrowings of $700 million. Cash and cash equivalents were $209.7 million, and the revolver had $995.4 million available to borrow. The company stated it was in compliance with its covenants.
Did anything unusual affect the quarter's tax rate?
The effective tax rate was 18% versus 12% a year earlier, mainly due to changes in the geographic mix of income. The quarter also included a net income tax benefit of $7.1 million tied to IRS procedural guidance on a change in accounting method.
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