01—Abstract
Summary
Summary of the 10-Q filed July 31, 2026. Cited figures are marked; the original filing is the authoritative source.
PTC Inc. reported third-quarter fiscal 2026 results (quarter ended June 30, 2026) with total revenue of $600.0 milliona, down from $643.9 million in the prior-year quarter, and net income of $118.8 million, or $1.03 diluted EPS, versus $141.3 million and $1.17 a year earlier.
The filing attributes the revenue decline to the Q2'26 divestiture of the Kepware and ThingWorx businesses and to lower license revenue from the shortened duration of a single large contract renewal and expansion. Operating income was $166.5 millionb, and the company reports ARR of $2.41 billion, flat with the prior year, with ARR excluding divested businesses growing 7% (9% constant currency). Management's non-GAAP diluted EPS for the quarter was $1.58.
For the nine months, net income was $876.0 millionc, or $7.43 diluted EPS, boosted by a $462.6 million gain on the Kepware and ThingWorx sale recorded in other income. Total revenue rose to $2.06 billion from $1.85 billion, and recurring revenue reached $1.98 billion. Cash provided by operating activities was $851.3 million and free cash flow was $835.0 million for the nine months.
The company returned substantial capital to shareholders, repurchasing $1,326.2 milliond of common stock in the nine months, including a $375 million accelerated share repurchase funded by divestiture proceeds, and it has repurchased a further $273.7 million in July 2026. Balance sheet leverage increased over the period. Total debt rose to $1.43 billion at June 30, 2026 from $1.20 billion at September 30, 2025, with the credit facility revolver balance at $475.0 million.
Shareholders' equity declined to $3.47 billion from $3.83 billion as buybacks exceeded earnings, and the company's cash balance increased to $351.5 million. Management states it was in compliance with all covenants and expects existing cash, operating cash flow and credit facility availability to meet requirements for at least the next twelve months.
02—Key points
Key Highlights
- Q3 FY26 total revenue was $600.0 million, down from $643.9 million, reflecting the Kepware and ThingWorx divestiture and lower license revenue.
- Q3 FY26 diluted EPS was $1.03 versus $1.17 a year earlier; non-GAAP diluted EPS was $1.58 versus $1.64.
- Nine-month net income was $876.0 million, including a $462.6 million gain on the Kepware and ThingWorx divestiture, versus $386.2 million a year earlier.
- ARR was $2.41 billion at Q3 FY26, flat year over year; ARR excluding divested businesses grew 7% (9% constant currency).
- The company repurchased $1,326.2 million of common stock in the first nine months of FY26, including a $375 million accelerated share repurchase, and an additional $273.7 million in July 2026.
- Total debt increased to $1.43 billion at June 30, 2026 from $1.20 billion at September 30, 2025, with $301.3 million of net credit facility borrowings after quarter end.
- Free cash flow for the nine months was $835.0 million, up from $756.2 million a year earlier.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, PTC kept $0.20.
- Revenue$600.0M100.0%
- Cost of revenue−$109.6M18.3%
- Gross profit$490.5M81.7%
- Operating costs−$324.0M54.0%
- Operating income$166.5M27.7%
- Interest, other & tax−$47.7M8.0%
- Net income$118.8M19.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed July 31, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $600.05M$643.94M | −6.8% |
| Cost of Revenue | $109.58M$110.03M | −0.4% |
| Gross Profit | $490.46M$533.91M | −8.1% |
| R&D Expenses | $115.71M$116.65M | −0.8% |
| Operating Expenses | $323.96M$324.08M | 0.0% |
| Operating Income | $166.51M$209.83M | −20.6% |
| Interest Expense | $15.77M$18.40M | −14.3% |
| Net Income | $118.78M$141.33M | −16.0% |
| EPS (Basic) | $1.04$1.18 | −11.9% |
| EPS (Diluted) | $1.03$1.17 | −12.0% |
| Shares Outstanding (Basic) | 114.68M119.91M | −4.4% |
| Shares Outstanding (Diluted) | 114.98M120.46M | −4.6% |
05—Questions
Frequently Asked Questions
Why did revenue decline in the third quarter?
The filing attributes the 7% decline in total revenue to the Q2'26 divestiture of the Kepware and ThingWorx businesses, which contributed $46 million of revenue in Q3'25, and to lower license revenue from the shortened duration of a single large contract renewal and expansion. Support and cloud services revenue was roughly flat.
What drove the large increase in nine-month net income?
The nine-month results include a $462.6 million gain on the sale of the Kepware and ThingWorx businesses, recorded in other income, net, partly offset by $95.6 million of related tax expense. Operating income also rose to $683.4 million from $548.8 million.
How is the company funding its share repurchases?
Repurchases were funded by a mix of divestiture proceeds of $523.3 million received in the second quarter and credit facility borrowings. Cash used in financing activities was $1,156.4 million for the nine months, and the company borrowed $301.3 million net under the credit facility in July 2026 to fund $273.7 million of repurchases that month.
What is the status of the company's debt and covenant compliance?
Total debt was $1.43 billion at June 30, 2026, including $500 million of 4.0% senior notes due 2028, a $475.0 million revolver balance and a $450.1 million term loan. The company reports it was in compliance with all financial and operating covenants, and the credit facility matures January 3, 2028.
What does the remaining performance obligation tell investors about future revenue?
Remaining performance obligations totaled $2,417.7 million at June 30, 2026, of which $712.5 million is recorded as deferred revenue and $1,705.2 million is not yet recorded on the balance sheet. The company expects to recognize approximately 54% over the next 12 months and 28% over the following 13 to 24 months.
06—Continue