Boston, Massachusetts-based PTC Inc. (PTC) provides software solutions and services worldwide that help manufacturing companies design, operate, and manage products. The company has a market capitalization of $17.8 billion and provides Windchill, a suite that manages all aspects of the product development lifecycle; ThingWorx, an Industrial Internet of Things software platform; ServiceMax, a service lifecycle management solution; and more. Companies with a market capitalization of $10 billion or more are ...

Core Insights - Samsara Inc. (IOT) shares have decreased by 57.1% over the past year, significantly underperforming the Zacks Internet - Software industry's decline of 20.1% and the Zacks Computer and Technology sector's return of 18.1% [1] - Despite the decline in share price, Samsara is trading at a premium valuation with a forward price-to-sales ratio of 7.81, compared to the industry's 3.87, and holds a Zacks Value Score of F [4] Company Performance - Samsara has gained from the adoption of its Connected AI Platform, adding 133 new customers with annual recurring revenue (ARR) exceeding $100K, totaling 2,771 in Q2 FY26 [8] - The company ended Q2 FY26 with over 147 customers contributing $1 million in ARR [9] - Samsara is positioned to benefit from the global shift towards Industry 4.0, integrating digital technologies into manufacturing, industrial, and transport processes [9] Market Dynamics - The fleet management market, where Samsara operates, is projected to grow at a CAGR of 13.3% from 2025 to 2030 [10] - Samsara is enhancing its platform capabilities by integrating artificial intelligence, including features like Samsara Assistant and Samsara Intelligent Experiences [11] - The company processes over 20 trillion operational data points to improve its AI models, which helps in delivering accurate predictions and reducing customer churn [12] Competitive Landscape - Samsara faces strong competition in the vehicle telematics market from companies like Motive, Lytx, Verizon, Trimble, and Geotab, as well as in the industrial IoT space from PTC [13] - Despite a robust non-GAAP gross margin of 78% in Q2 FY26, the non-GAAP operating margin was only 19%, indicating pressure from rising competition [15] - The Zacks Consensus Estimate for Samsara's Q3 FY26 earnings suggests an 18.8% growth, with net margins expected to hover around breakeven [15] Strategic Outlook - The video telematics market remains underpenetrated, presenting an opportunity for Samsara to capture significant market share despite competition from Trimble and Verizon [16] - The company has recently turned profitable, validating its business strategy, and is recommended to be held as a Zacks Rank 3 (Hold) stock [17]

Core Insights - The software sector, valued at $450 billion, is facing potential disruption from AI technologies, as highlighted by Tom Lee from Fundstrat [2] - Despite current pressures, the global business software market is projected to grow significantly, reaching $737.3 billion by 2026 and $1.28 trillion by 2031, with a CAGR of 11.71% from 2026 to 2031 [3][4] Industry Growth Factors - Enterprises are increasingly adopting AI-enabled workflow automation, cloud-native deployment, and data-centric architectures, which are expected to drive growth in the software sector [4] - Additional growth drivers include rising demand for ESG reporting, the establishment of resilient regional supply chains, and the adoption of low-code development platforms [4] Investment Opportunities - A list of the 13 most profitable software stocks has been compiled, focusing on companies with market capitalizations over $2 billion and operating/net profit margins exceeding 20% [7] - The methodology for selecting these stocks included filtering for an upside potential of at least 5% and ranking them by trailing twelve-month net income [7] Company Highlights - F5, Inc. (NASDAQ:FFIV) reported a TTM net income of $705.99 million and has 40 hedge fund holdings. Analysts have raised price targets following a strong quarter, indicating an upside potential of 16.02% [9][10] - PTC Inc. (NASDAQ:PTC) has a TTM net income of $818.28 million and 51 hedge fund holdings. Despite a challenging macroeconomic backdrop, analysts remain optimistic about the company's long-term strategy and growth outlook [12][14]

Core Viewpoint - PTC is experiencing a transformative phase with positive momentum in product offerings, market strategies, and customer engagement, as indicated by several key performance indicators [1] Financial Performance - In the fiscal first quarter, PTC reported a constant-currency Annual Recurring Revenue (ARR) growth of 9% year-over-year excluding Kepware and ThingWorx, and 8.4% including these businesses [2][6] - Free cash flow increased by 13% year-over-year to $267 million, which included $10 million in divestiture-related costs [2][6] - Management raised fiscal 2026 revenue guidance to between $2.675 billion and $2.940 billion and increased non-GAAP EPS guidance to a range of $6.69 to $9.15 [19] Product and AI Strategy - PTC is integrating its product portfolio and has launched new AI initiatives, including Codebeamer AI and Windchill AI Parts Rationalization, aimed at enhancing product lifecycle management [4][8] - The company is building a common AI infrastructure to support consistent product data usage across its offerings, with an emphasis on governance and security [9] Deferred ARR and Demand Capture - PTC reported record deferred ARR, with expectations that much of this will convert to ARR in fiscal 2027-2028, indicating a timing issue rather than a lack of demand [5][11] - The deferred ARR entering Q4 of fiscal 2026 is expected to be about triple compared to the previous year, with deferred ARR for 2027 being double that of fiscal 2026 [12][13] Go-to-Market Execution - Management highlighted improvements in seller productivity and quota attainment, attributing these gains to territory rebalancing and enhanced vertical focus [10] - The company achieved a record first quarter for large deal volume and competitive displacements, with many contracts expected to convert to ARR in the upcoming fiscal periods [11][14] Capital Return Plans - PTC repurchased $200 million of common stock in Q1 and plans to repurchase approximately $250 million in Q2, with expectations of total buybacks reaching $1.1 billion to $1.3 billion after the divestiture [15][16] Guidance - For Q2, PTC expects constant-currency ARR growth of about 8% to 8.5% excluding Kepware and ThingWorx, and about 7.5% to 8% including them [17] - Free cash flow guidance for Q2 is projected to be between $310 million and $315 million, with expectations of about $1 billion in free cash flow for fiscal 2026 [18]

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 [17][5] - Free cash flow grew 13% year-over-year, reaching $267 million in Q1 2026 [17][5] - The company repurchased $200 million of common stock in Q1 under a $2 billion share repurchase authorization [18] Business Line Data and Key Metrics Changes - The company experienced record deferred ARR under contract, with a significant increase in large deal volume and competitive displacements [13][14] - The Intelligent Product Lifecycle vision is resonating with customers, leading to stronger demand capture across product lines [25][15] Market Data and Key Metrics Changes - The company noted that customer demand for AI capabilities is increasing, with a focus on embedding AI into existing systems rather than standalone solutions [10][36] - The company is seeing good traction in new customer acquisitions, particularly in the cloud environment, which is becoming the default for new logos [70] Company Strategy and Development Direction - The company is focused on transforming its go-to-market strategy to capture demand holistically across the product lifecycle [12][14] - The strategy emphasizes the integration of AI into core products, enhancing customer workflows and decision-making processes [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformation progress and the demand being captured, indicating a strong outlook for future growth [15][5] - The company anticipates a significant increase in deferred ARR starting in Q4 2026, driven by successful go-to-market initiatives [21][22] Other Important Information - The company is targeting to close the divestiture of Kepware and ThingWorx on or before April 1, with expected net after-tax proceeds of approximately $365 million [18][23] - The fiscal 2026 revenue guidance has been raised to a range of $2.675 billion to $2.940 billion, with non-GAAP EPS guidance also increased [24] Q&A Session Summary Question: What level of visibility do you have on deferred ARR deals for Q4? - Management indicated that there is triple the amount of deferred ARR on the books for Q4 2026 compared to the previous year, with strong demand capture contributing to this [29][65] 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, which is expected to drive future economic benefits as these solutions scale [36][35] Question: Can you provide insight into the growth mix from expansion versus competitive displacement? - Management noted that the majority of growth is still from expansion, but competitive displacements are also increasing, particularly as customers seek to consolidate their systems [42][44] Question: What is the outlook for SaaS demand and customer spending? - Management reported strong momentum for SaaS products, with customers increasingly opting for cloud solutions, leading to higher spending [54][53] 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 [81][82] Question: What are the trends observed in the macro environment? - Management noted that despite a challenging macro climate, demand capture remains strong across various regions and verticals, with customers prioritizing modernization [93][95]

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 [17] - Free cash flow grew 13% year-over-year, reaching $267 million in Q1 2026 [17] - The company repurchased $200 million of common stock in Q1 under a $2 billion share repurchase authorization [18] Business Line Data and Key Metrics Changes - The company experienced record deferred ARR under contract, with a significant increase in large deal volume and competitive displacements [13][14] - The transformation strategy is showing results with higher seller productivity and improved quota attainment [12] Market Data and Key Metrics Changes - The company is seeing strong demand across various verticals and geographies, with no significant depressed markets [95] - The demand capture is strong, with a notable increase in deferred ARR expected to impact future quarters positively [21][22] Company Strategy and Development Direction - The company is focused on the Intelligent Product Lifecycle, emphasizing the integration of AI into existing systems to enhance product data utilization [8][10] - The strategy includes expanding customer engagements from single lifecycle stages to a holistic approach centered on product data and AI [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformation progress and the demand being captured, indicating a strong outlook for future growth [15][24] - The company is confident in its ability to deliver durable, multi-year growth driven by strategic customer commitments [14][25] Other Important Information - The company is targeting to close the divestiture of Kepware and ThingWorx on or before April 1, with expected net after-tax proceeds of approximately $365 million [18][23] - The guidance for fiscal 2026 includes expected growth of approximately 7.5%-9.5% for constant currency ARR, excluding Kepware and ThingWorx [19] Q&A Session Summary Question: What level of visibility do you have on ARR contribution from deferred ARR deals in Q4? - Management indicated that the deferred ARR is triple what was present last Q4, with strong demand capture contributing to this increase [28][65] 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, with positive customer feedback expected to drive future demand [35][36] Question: Can you provide insight into the growth mix from expansion versus competitive displacement? - Management noted that the majority of growth is from expansion, but competitive displacement is also increasing as customers consolidate their systems [42][44] Question: What is the outlook for SaaS demand and customer spending? - Management reported strong momentum for SaaS products, with customers increasingly opting for cloud solutions, leading to higher spending [54][55] Question: How is the company addressing churn in ServiceMax? - Management acknowledged past churn but highlighted recent strong demand capture and integration of ServiceMax into the Intelligent Product Lifecycle as positive developments [81][82]

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]