Barua said PTC is in a “turning the corner” phase of a broader transformation, citing what he characterized as momentum across product, go-to-market, and customer engagement. He highlighted five indicators:Management also reiterated that the divestiture of Kepware and ThingWorx is progressing and remains on track to close on or before April 1, with no material changes to figures previously provided.On the company’s fiscal first-quarter earnings call, CEO Neil Barua said PTC grew constant-currency ARR 9% yea ...

PTC (NasdaqGS:PTC) Q1 2026 Earnings call February 04, 2026 05:00 PM ET Company ParticipantsJennifer DiRico - CFOMatt Shimao - Head of Investor RelationsNeil Barua - CEORobert Dahdah - Chief Revenue OfficerConference Call ParticipantsAdam Borg - AnalystBlair Abernethy - AnalystDaniel Jester - AnalystJason Celino - AnalystJay Vleeschhouwer - AnalystJoe Vruwink - AnalystJoshua Tilton - AnalystKen Wong - AnalystMatt Hedberg - AnalystNay Soe Naing - AnalystSiti Panigrahi - AnalystTyler Radke - AnalystYun Kim - A ...

PTC (NasdaqGS:PTC) Q1 2026 Earnings call February 04, 2026 05:00 PM ET Company ParticipantsJennifer DiRico - CFOMatt Shimao - Head of Investor RelationsNeil Barua - CEORobert Dahdah - Chief Revenue OfficerConference Call ParticipantsAdam Borg - AnalystBlair Abernethy - AnalystDaniel Jester - AnalystJason Celino - AnalystJay Vleeschhouwer - AnalystJoe Vruwink - AnalystJoshua Tilton - AnalystKen Wong - AnalystMatt Hedberg - AnalystNay Soe Naing - AnalystSiti Panigrahi - AnalystTyler Radke - AnalystYun Kim - A ...

Financial Data and Key Metrics Changes - The company reported a constant currency ARR of $2.341 billion, up 9% year-over-year excluding Kepware and ThingWorx, and $2.5 billion, up 8.4% including them [15][4] - Free cash flow grew 13% year-over-year, reaching $267 million, which included $10 million of divestiture costs related to Kepware and ThingWorx [15][4] - The company repurchased $200 million of common stock in Q1 under a $2 billion share repurchase authorization, with plans to repurchase approximately $250 million in Q2 [16][15] Business Line Data and Key Metrics Changes - The company is experiencing strong demand for its Intelligent Product Lifecycle vision, with record deferred ARR under contract and increased seller productivity [10][11] - The divestiture of Kepware and ThingWorx is progressing, with a target close date on or before April 1 [15][4] - The company is embedding AI across its product portfolio, with new functionalities introduced in Codebeamer and Windchill [8][9] Market Data and Key Metrics Changes - The company noted that customers are increasingly seeking AI embedded directly into their trusted systems of record, which is a key differentiator in the market [8][9] - The demand capture has been strong, with a record-setting Q1 for large deal volume and competitive displacements [10][11] Company Strategy and Development Direction - The company is focused on transforming its product lifecycle management through connected systems, enterprise-wide cloud access, and AI integration [6][7] - The strategy emphasizes the importance of leveraging product data to drive better decisions across engineering, manufacturing, and service [6][7] - The company aims to build a more durable, multi-year growth engine through its transformation initiatives [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformation and the demand being captured, highlighting the importance of modernizing product development environments [4][12] - The company anticipates a significant increase in deferred ARR starting in Q4 2026, which is expected to positively impact future growth [19][20] - Management acknowledged the challenges of the macroeconomic environment but noted strong demand across various verticals and regions [88][90] Other Important Information - The company raised its fiscal 2026 revenue guidance to a range of $2.675 billion to $2.940 billion and non-GAAP EPS guidance to $6.69 to $9.15 [21][20] - The company expects to return additional capital to shareholders following the divestiture, with net after-tax proceeds expected to be approximately $365 million [16][20] Q&A Session Summary Question: What level of visibility do you have on deferred ARR deals for Q4? - Management indicated that the deferred ARR is triple what was present last Q4, with strong demand capture contributing to this increase [25][62] Question: Are we starting to see more material AI capabilities that could impact demand decisions? - Management confirmed that AI capabilities are being embedded into core products, and while the immediate economic impact is immaterial, it is expected to grow as deployments scale [31][32] Question: Can you parse out the growth mix from expansion versus competitive displacement? - Management noted that the majority of growth is still from expansion, but competitive displacement is also increasing as customers consolidate their systems [39][41] Question: What is the outlook for SaaS demand and customer spending? - Management reported strong momentum for SaaS products, particularly Windchill Plus and Creo Plus, with customers increasingly opting for cloud solutions [50][52] Question: How is the company addressing churn in ServiceMax? - Management acknowledged residual churn but highlighted strong demand capture and cross-sell opportunities as positive indicators for ServiceMax's future [76][78]

Q1'26 FINANCIAL RESULTS Neil Barua CEO Jennifer DiRico CFO February 4, 2026 FORWARD LOOKING STATEMENTS This presentation includes forward looking statements regarding PTC's future financial performance, strategic outlook and expectations, anticipated future operations, expected effects of strategic investments and initiatives, and share repurchase expectations. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Inform ...

Core Insights - PTC Inc. has shown strong financial performance with a significant increase in revenue and earnings per share, indicating robust growth potential in the technology sector [3] - Institutional investors have been actively increasing their stakes in PTC, reflecting confidence in the company's future prospects [1][6] Financial Performance - PTC reported earnings per share of $3.47 for the latest quarter, surpassing the consensus estimate of $2.26 by $1.21 [3] - The company's revenue reached $893.80 million, exceeding analyst expectations of $752.05 million, marking a 42.7% increase compared to the same quarter last year [3] - PTC's net margin stands at 20.74% and return on equity at 17.09% [3] Stock Performance - PTC's stock opened at $179.61, with a 1-year low of $133.38 and a high of $219.69 [2] - The company has a market capitalization of $21.52 billion, a P/E ratio of 42.36, and a P/E/G ratio of 1.90 [2] Analyst Ratings and Price Targets - Analysts have varied price targets for PTC, with BMO Capital Markets lowering their target from $231.00 to $219.00, while Robert W. Baird set a target of $255.00 [4] - The average price target for PTC is currently $205.92, with a consensus rating of "Moderate Buy" [4] Institutional Ownership - Hedge funds and institutional investors own 95.14% of PTC's stock, indicating strong institutional support [1] - Notable increases in stakes include Allworth Financial LP, which boosted its holdings by 887.0% in the second quarter [6]

Financial Data and Key Metrics Changes - In Q4, the company achieved 8.5% constant currency ARR growth and 16% free cash flow growth year-over-year [7][24] - The company generated $100 million of free cash flow in Q4, with total free cash flow for Fiscal 2025 reaching $857 million, up 16% [23][24] - The operating efficiency percentage expanded by 310 basis points to 45% in Fiscal 2025 compared to 42% in Fiscal 2024 [24] Business Line Data and Key Metrics Changes - ARR attributable to Kepware and ThingWorx was approximately $160 million, with constant currency ARR growth of -1% [16] - The company closed its largest Codebeamer deal ever and the largest Onshape deal ever, indicating strong performance in the automotive and medtech verticals [8][9] Market Data and Key Metrics Changes - The company ended the year with record-deferred ARR under contract, providing strong visibility into Fiscal 2026 and beyond [9] - The average term length for contracts increased from approximately two years in Q4 of 2024 to approximately three years in Q4 of 2025 [21] Company Strategy and Development Direction - The company has reached a definitive agreement for TPG to acquire its Kepware and ThingWorx businesses, allowing it to focus on CAD, PLM, ALM, and SLM, with an emphasis on SaaS and AI [5][6] - The company is enhancing its offerings in CAD, PLM, ALM, and SLM to facilitate the building of product data foundations and embedding more AI capabilities [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Fiscal 2026, guiding for ARR growth of 7%-9% including Kepware and ThingWorx, and 7.5%-9.5% excluding them [11][26] - The company anticipates a strong pipeline and deferred ARR balance, which is heavily skewed to Q4, indicating a positive outlook for net new ARR growth [30] Other Important Information - The company plans to return excess cash to shareholders, expecting to buy back between $150 million and $250 million worth of shares per quarter during Fiscal 2026 [13] - The transaction for Kepware and ThingWorx is expected to close in the first half of calendar 2026, with potential cash consideration of up to $725 million [15] Q&A Session Summary Question: Context behind the decision to divest ThingWorx and Kepware - Management emphasized the focus on core priorities and the intelligent product lifecycle vision, stating that the divestiture allows for greater concentration on strategic areas [33][34] Question: OBBA benefit expected in free cash flow guidance - Management confirmed that the $1 billion free cash flow guidance includes some tailwind from the new Section 174 decision, but also noted the impact of increased CapEx related to transitioning an R&D facility [39][40] Question: Characterization of deal structures this quarter - Management clarified that ramp deals were contracted commitments, indicating strong customer demand and a focus on capturing that demand [43][44] Question: Impact of divestiture on CAM business - Management expressed confidence in the addressable market for the intelligent product lifecycle, stating that the divestiture allows for a stronger focus on existing strategies [49][50] Question: Plans for go-to-market changes in Q1 - Management highlighted the successful vertical alignment and the importance of consistent messaging, with plans to integrate AI into industry-specific communications [58][62] Question: Roadmap execution and RPO comments - Management discussed improvements in product execution and the importance of aligning teams to deliver customer value, with approximately 55% of total RPO expected to be recognized over the next 12 months [66][70] Question: Growth potential and key levers for the business - Management indicated that the foundation for sustainable growth is being established, with a focus on executing the intelligent product lifecycle vision and capturing customer demand [74][75]

Financial Data and Key Metrics Changes - In Q4 of Fiscal 2025, the company achieved 8.5% constant currency ARR growth and 16% free cash flow growth year over year [5][22] - The total constant currency ARR at the end of Q4 was $2.446 billion, reflecting an 8.5% increase year over year [19] - Free cash flow for the full fiscal year was $857 million, up 16% from the previous year [22][23] Business Line Data and Key Metrics Changes - ARR attributable to Kepware and ThingWorx was approximately $160 million, with constant currency ARR growth at negative 1% [16] - The revenue contribution from Kepware and ThingWorx, including perpetual licenses and professional services, was approximately $200 million [16] - The average term length for contracts increased from approximately two years in Q4 of 2024 to approximately three years in Q4 of 2025 [20] Market Data and Key Metrics Changes - The company closed its largest Codebeamer deal in the automotive vertical and a significant Windchill competitive displacement win in the medtech vertical [6] - The company reported a record increase in RPO, which was up more than $550 million both sequentially and year over year [21][68] Company Strategy and Development Direction - The company has reached a definitive agreement for TPG to acquire its Kepware and ThingWorx businesses, allowing it to focus on CAD, PLM, ALM, and SLM, with an emphasis on SaaS and AI [4][5] - The strategic decision to divest from Kepware and ThingWorx aligns with the company's focus on the intelligent product lifecycle vision [32][34] - The company plans to return excess cash to shareholders and expects to buy back between $150 million and $250 million worth of shares per quarter during Fiscal 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving $1 billion of free cash flow in Fiscal 2026, with ARR growth guidance of 7-9% including Kepware and ThingWorx [10][25] - The company anticipates that the divestiture will not significantly disrupt operations and expects to maintain momentum in its go-to-market strategy [10][53] - Management highlighted the importance of structured product data foundations and the role of AI in enhancing customer offerings [11][72] Other Important Information - The company appointed John Stevenson as Chief Product Officer to enhance product operating rhythm and improve roadmap execution [9] - The transaction for the divestiture is expected to close in the first half of calendar 2026, with potential cash consideration of up to $725 million [14][15] Q&A Session Summary Question: Context behind the decision to divest from ThingWorx and Kepware - Management emphasized the focus on core priorities and the intelligent product lifecycle vision, stating that the divestiture allows for greater concentration on these areas [32][33] Question: Impact of cash tax implications on free cash flow guidance - Management confirmed that the $1 billion free cash flow guidance includes some tailwind from the new Section 174 decision, but also factors in increased CapEx related to transitioning an R&D facility [38][39] Question: Characterization of deal structures in Q4 - Management clarified that the majority of large transactions were closed, with ramp deals being contracted commitments rather than uncertain spending [42][44] Question: Thoughts on the CAM business post-divestiture - Management expressed confidence in the addressable market for intelligent product lifecycle and the potential for AI to enhance product data foundations [47][49] Question: Guidance for net new ARR growth - Management indicated a disciplined approach to guidance, factoring in strong deferred ARR and the potential impact of the divestiture on future performance [50][53] Question: Future go-to-market changes - Management highlighted the importance of vertical alignment and the integration of AI into messaging to improve traction and win rates [56][60] Question: Improvements in roadmap execution - Management discussed the focus on aligning teams to execute on AI initiatives and the importance of delivering customer value through product enhancements [64][66][68] Question: Growth potential and key levers for the business - Management noted that building momentum and focusing on the intelligent product lifecycle vision are critical for achieving sustainable growth [71][74]

Core Insights - PTC has launched new AI offerings in its ServiceMax and Servigistics solutions to enhance service lifecycle management [1][2] - The advancements in AI aim to improve efficiency in field service management and service supply chain optimization [1][3] ServiceMax Enhancements - The latest ServiceMax AI features include orchestrated multi-agent execution, AI-driven process automation, and a new Knowledge API for document connectivity [2][3] - These enhancements are designed to streamline workflows for various roles within service organizations, improving work order execution and parts queries [2][6] Servigistics Advancements - Servigistics has strengthened its AI capabilities, focusing on troubleshooting, root-cause analysis, and continuous improvement in service parts planning [3][4] - A new AI Assistant will be available in October 2025, aimed at improving forecast accuracy and accelerating planning cycles [3][4] Industry Context - Organizations face pressure to maintain equipment functionality and customer satisfaction while managing costs [4] - AI-powered capabilities from Servigistics enable faster, smarter decision-making, leading to reduced manual effort and improved service performance [4][6] PTC's Broader AI Portfolio - The new SLM AI solutions are part of PTC's extensive AI offerings across the Intelligent Product Lifecycle, which includes various AI tools for product data management [4][5] - PTC supports manufacturers in leveraging product data to enhance efficiency, reduce costs, and improve product quality [4][5]

Industry Overview - The Zacks Computer Software industry is positioned to benefit from global digital transformation, with a shift to cloud and SaaS models providing recurring revenue visibility and flexibility for users [1] - The industry is experiencing growth driven by the integration of AI and ML technologies into various applications [1] Market Trends - The global software market is projected to grow at a CAGR of 11.3% from 2025 to 2030, reaching $1,397.31 billion [2] - Increased spending on AI and cloud technologies is expected to enhance the industry's prospects, with a focus on automation, personalization, and predictive analytics [4] - Cloud computing is becoming a dominant force, with businesses adopting hybrid and multi-cloud environments for flexibility and scalability [5] - The demand for cybersecurity software is rising due to increased cyberattacks, leading to a focus on performance management monitoring tools [6] Macroeconomic Factors - Global macroeconomic weakness and supply chain volatility are concerns for the industry, with inflation potentially affecting spending among small and medium-sized businesses [7] - Worldwide IT spending is projected to reach $5.43 trillion in 2025, reflecting a 7.9% increase from 2024, which is lower than previous forecasts [7] Industry Performance - The Zacks Computer Software industry has underperformed compared to the broader Zacks Computer and Technology sector and the S&P 500 Index over the past year, gaining 18.2% compared to 18.8% and 30% respectively [11] Valuation Metrics - The industry is currently trading at a forward 12-month P/E ratio of 33.11X, higher than the S&P 500's 23.24X and the sector's 28.69X [14] Company Highlights - **Manhattan Associates (MANH)**: Reported a 22% increase in cloud revenues for Q2 2025, with total revenues up 2.7% year over year. The Zacks Consensus Estimate for 2025 earnings is $4.81 per share, indicating 1.9% growth [18][20][19] - **PTC Inc (PTC)**: Focused on AI strategy with positive customer feedback and a Zacks Consensus Estimate for fiscal 2025 earnings at $6.69 per share, indicating 31.7% growth [23][26] - **Microsoft Corporation (MSFT)**: Achieved total revenue of $281.7 billion in fiscal 2025, with AI business revenue exceeding $13 billion, growing 175% year over year. The Zacks Consensus Estimate for fiscal 2026 earnings is $15.35 per share, indicating 12.5% growth [33][34]