01—Abstract
Summary
Summary of the 10-Q filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported fiscal second-quarter 2026 (quarter ended March 31, 2026) total revenue of $774.3 milliona, up 22% (15% in constant currency) from $636.4 million a year earlier.
License revenue rose to $362.7 millionb from $254.4 million, while support and cloud services revenue reached $387.6 million. Recurring revenue was $743.4 million, and the filing states that approximately 95% of 2025 and 2026 year-to-date revenue was recurring. Annual Run Rate (ARR) was $2.36 billion, up 3% (1% in constant currency).
Excluding the divested Kepware and ThingWorx businesses from the prior-year period, ARR growth was 11% (8.5% in constant currency). Operating income was $295.8 millionc, and GAAP diluted earnings per share were $4.98, compared with $1.35 a year earlier. The results include a $462.6 million gain on the sale of Kepware and ThingWorx, which closed on March 13, 2026, and the related $102.4 million tax expense.
For the six months ended March 31, 2026, net income was $757.2 milliond and diluted EPS was $6.35. Net cash provided by operating activities was $590.7 million, and free cash flow was $585.7 million. The divestiture generated $523.3 million of cash proceeds in the quarter, and total consideration was $530.8 million.
Management reported non-GAAP operating margin of 53.0% for the quarter, compared with 47.0% a year earlier. Operating expenses rose 19% in the quarter, driven in part by $27 million of divestiture charges within General and administrative expense. Capital returns were significant.
The company repurchased $826.2 million of common stock in the first half of fiscal 2026, including a $375 million accelerated share repurchase agreement entered into in March 2026. Of that amount, $75 million is held back pending final settlement, expected in the third quarter of 2026.
Total debt was unchanged at $1.20 billion, and the company was in compliance with its credit facility and senior notes covenants. Cash and cash equivalents rose to $439.1 million from $184.4 million at September 30, 2025.
02—Key points
Key Highlights
- Total revenue rose 22% (15% constant currency) to $774.3 million in Q2 FY2026, with license revenue up to $362.7 million from $254.4 million.
- ARR was $2.36 billion, up 3% (1% constant currency); excluding divested businesses from the prior-year period, ARR grew 11% (8.5% constant currency).
- GAAP diluted EPS was $4.98 versus $1.35, driven by a $462.6 million gain on the sale of the Kepware and ThingWorx businesses, which closed March 13, 2026 for total consideration of $530.8 million.
- Operating margin was 38.2% versus 35.1%, and non-GAAP operating margin was 53.0% versus 47.0%, with divestiture-related charges of $27 million included in G&A.
- Free cash flow grew 14% to $318.2 million in Q2 FY2026, and first-half operating cash flow was $590.7 million.
- The company repurchased $826.2 million of stock in the first half of FY2026, including a $375 million accelerated share repurchase, with $75 million held back pending settlement expected in Q3 2026.
- Recurring revenue was $743.4 million in the quarter, and the filing states approximately 95% of 2025 and 2026 year-to-date revenue was recurring.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, PTC kept $0.76.
- Revenue$774.3M100.0%
- Cost of revenue−$113.6M14.7%
- Gross profit$660.7M85.3%
- Operating costs−$364.9M47.1%
- Operating income$295.8M38.2%
- Interest, other & tax$294.9M38.1%
- Net income$590.7M76.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed May 7, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $774.30M$636.37M | +21.7% |
| Cost of Revenue | $113.62M$106.26M | +6.9% |
| Gross Profit | $660.68M$530.10M | +24.6% |
| R&D Expenses | $124.13M$111.02M | +11.8% |
| Operating Expenses | $364.88M$306.64M | +19.0% |
| Operating Income | $295.80M$223.46M | +32.4% |
| Interest Expense | $15.33M$19.61M | −21.8% |
| Net Income | $590.72M$162.64M | +263.2% |
| EPS (Basic) | $5.00$1.35 | +270.4% |
| EPS (Diluted) | $4.98$1.35 | +268.9% |
| Shares Outstanding (Basic) | 118.19M120.18M | −1.7% |
| Shares Outstanding (Diluted) | 118.55M120.85M | −1.9% |
05—Questions
Frequently Asked Questions
What drove the large increase in net income and EPS this quarter?
Net income of $590.7 million and diluted EPS of $4.98 were primarily driven by a $462.6 million gain on the sale of the Kepware and ThingWorx businesses, recorded in Other income, net. The gain was partly offset by $102.4 million of tax expense related to the sale. Excluding these items, non-GAAP diluted EPS was $2.69 in the quarter, compared with $1.79 a year earlier.
How did the divestiture affect ARR and reported growth?
Reported ARR grew 3% (1% constant currency) to $2.36 billion, reflecting the removal of the divested businesses. Excluding Kepware and ThingWorx from the prior-year period, ARR growth was 11% (8.5% constant currency). The company stated that Kepware and ThingWorx contributed to the difference in reported growth.
How much did PTC return to shareholders, and what remains under the buyback authorization?
The company repurchased $826.2 million of common stock in the first six months of FY2026, including a $375 million accelerated share repurchase in March 2026, of which $300 million was paid upfront and $75 million is held back until final settlement, expected in Q3 2026. As of March 31, 2026, approximately $950.0 million remained available under the current authorization, which the company stated ends September 30, 2026.
What is the company's debt position and liquidity?
Total debt was $1.20 billion at March 31, 2026, unchanged from September 30, 2025, and consisted of $500 million of 4.0% senior notes due 2028 and $700 million of credit facility borrowings. The company had $439.1 million of cash and cash equivalents and $989.2 million available to borrow under its revolving credit facility. The company stated it was in compliance with all financial and operating covenants.
06—Continue