A month has gone by since the last earnings report for PTC Inc. (PTC). Shares have added about 6.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PTC Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
PTC's Q1 Earnings Beat Estimates
PTC reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of $1.92, up 75% year over year. The figure beat the Zacks Consensus Estimate of $1.59 as well as management’s guidance of $1.26-$1.82.
Revenues came in at $686 million, up 21% year over year (up 19% at constant currency or cc). The top line beat the consensus estimate by 7.4%. Management projected revenues in the $600-$660 million band. A strong fiscal first quarter underpins the progress of its go-to-market transformation and the growing relevance of its Intelligent Product Lifecycle (IPL) strategy. Driven by large deal momentum, competitive displacements and disciplined capital allocation, PTC’s results reinforce management’s confidence in building a more durable, multi-year growth engine.
As product development becomes more complex and AI-driven, customers increasingly recognize the value of unified, high-quality product data across design, manufacturing, service and operations. PTC’s core offerings — spanning CAD, PLM, ALM and IoT — serve as trusted systems of record, enabling AI-driven insights across the full lifecycle. Customers and partners are actively aligning with the company’s vision, creating a strategic tailwind that extends well beyond a single fiscal year.
In addition, PTC continues to progress toward the divestiture of Kepware and ThingWorx, a move aimed at sharpening its focus on core product lifecycle software.
Q1 Top-Line Details
Recurring revenues of $657.3 million rose 25.4% year over year.
Perpetual licenses decreased 40% to $5.6 million.
Revenues by License, Support and Services
License revenues (39.4% of total revenues) were $269.7 million, up 56% from the year-ago quarter figure.
Support and cloud services revenues (57.3%) of $393.3 million increased 8.9% year over year.
Professional services revenues (3.3%) were $22.9 million, down 27% year over year.
Revenues by Product Group
PLM and CAD businesses continue to experience solid growth momentum.
In the fiscal first quarter, PLM revenues were $432 million, up 22% year over year.
CAD revenues were $254 million, up 20% year over year.
ARR Performance
By the end of the fiscal first quarter, PTC’s constant-currency Annualized recurring revenues (ARR), excluding Kepware and ThingWorx, reached $2.3 billion, reflecting a 9% year-over-year increase. Including Kepware and ThingWorx, constant-currency ARR totaled $2.5 billion, up 8.4% from last year. The uptick was driven by strong performance across all divisions and geographies.
PLM and CAD ARR were $1,533 million and $961 million, respectively, each rising 13% year over year.
Operating Details
Total operating expenses were $346.9 million compared with $337.8 million in the prior-year quarter.
Operating income on a non-GAAP basis was $309.6 million, up from $191.3 million in the prior-year quarter.
Operating margin on a non-GAAP basis increased 1,130 basis points on a year-over-year basis to 45%.
PTC’s Balance Sheet & Cash Flow
As of Dec. 31, 2025, cash and cash equivalents were $209.7 million compared with $184.4 million as of Sept. 30, 2025.
Total debt, net of deferred issuance costs, was $1.2 billion as of Dec. 31, 2025.
Cash provided by operating activities was $270 million compared with the prior-year quarter’s figure of $238 million. The free cash flow was $267 million compared with $236 million reported in the year-ago quarter. Free cash flow in the quarter included $10 million of outflows related to the Kepware and ThingWorx transaction, which management emphasized are not expected to recur in future years. Excluding these items, underlying cash generation remained consistent with PTC’s historical seasonality patterns.
The company repurchased $200 million of common stock under its existing $2 billion authorization during the quarter. Looking ahead, PTC plans to repurchase approximately $250 million of shares in the fiscal second quarter. In the second half of fiscal 2026, repurchases are expected to range between $150 million and $250 million per quarter. Including the incremental repurchases funded by divestiture proceeds, PTC expects total fiscal 2026 share repurchases of approximately $1.115 billion to $1.315 billion, a significant tailwind for EPS and per-share value creation.
Q2 & FY26 Outlook: Durable Growth With Improving Visibility
For the second quarter of fiscal 2026, PTC estimates revenues in the $710-$770 million band. Non-GAAP EPS is projected in the range of $1.93-$2.54. Cash from operations is expected to be $315-$320 million, and free cash flow is forecasted to be $310-$315 million.
Revenues for fiscal 2026 are now projected in the range of $2,675 to $2,940 million, indicating a rise of (2)-7% year over year. The prior view was $2,650 to $2,915 million. Non-GAAP EPS is now estimated in the $6.69-$9.15 band, suggesting a rise of (16)-15%. Earlier, PTC predicted the metric to be $6.49 to $8.95.
For fiscal 2026, cash from operations is projected at around $1.03 billion, indicating a rise of 19% on a year-over-year basis. The free cash flow is forecasted at around the $1 billion band, suggesting a 17% increase.
PTC projects 7.5% to 9.5% growth in ARR on a constant currency basis for fiscal 2026 (excluding Kepware and ThingWorx).
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 7.32% due to these changes.
VGM Scores
Currently, PTC Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PTC Inc. belongs to the Zacks Computer - Software industry. Another stock from the same industry, Microsoft (MSFT), has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.
Microsoft reported revenues of $81.27 billion in the last reported quarter, representing a year-over-year change of +16.7%. EPS of $4.14 for the same period compares with $3.23 a year ago.
For the current quarter, Microsoft is expected to post earnings of $4.05 per share, indicating a change of +17.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
Microsoft has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
