Posts record annual cash flow; Strategic focus positions company for durable growth
BOSTON, Nov. 5, 2025 /PRNewswire/ -- PTC (NASDAQ: PTC) today reported financial results for its fourth fiscal quarter and full fiscal year ended September 30, 2025.
"Q4 capped a year of solid execution and focus. The divestiture of Kepware and ThingWorx will sharpen our portfolio around CAD, PLM, ALM, and SLM – the foundation of our Intelligent Product Lifecycle vision," said Neil Barua, President and CEO, PTC.
"In FY'26 we will have a simpler portfolio, record deferred ARR, and the financial flexibility to accelerate both innovation and capital returns," concluded Barua.
Fourth Fiscal Quarter and Full Fiscal Year 2025 Key Operating and Financial Metrics1
$ in millions, except per share amounts
Q4'25
Q4'24
YoY Change
Q4'25Guidance
ARR as reported
$2,478
$2,255
10 %
Constant currency ARR (FY'25 Plan FXrates2)
$2,446
8.5 %
8% to 9%growth
Operating cash flow
$104
$98
6 %
$93 to $98
Free cash flow
$100
$94
7 %
$90 to $95
Revenue3
$894
$627
43%4
$725 to $785
Operating margin3
49 %
31 %
1,750 bps
Non-GAAP operating margin3
59 %
44 %
1,470 bps
Earnings per share3
$2.94
$1.045
182 %
$1.57 to $2.03
Non-GAAP earnings per share3
$3.47
$1.545
126 %
$2.10 to $2.50
Total cash and cash equivalents
$184
$266
(31 %)
Debt, net of deferred issuance costs
$1,197
$1,749
(32 %)
1
The definitions of our operating and non-GAAP financial measures and reconciliations of non-GAAP financial measures to comparable GAAP measures are included below and in the reconciliation tables at the end of this press release.
2
On a constant currency basis, using our FY'25 Plan foreign exchange rates (rates as of September 30, 2024) for all periods.
3
Revenue and, as a result, operating margin and earnings per share are impacted under ASC 606.
4
In Q4'25, revenue grew 39% year over year on a constant currency basis.
5
Q4'24 GAAP EPS and non-GAAP EPS included non-cash tax charges of $9.8 million or $0.08, and $5.3 million or $0.04, respectively, primarily associated with a reduction of a previously recorded tax benefit associated with the effects of IRS procedural guidance issued in May 2024.
FY'25
FY'24
FY'25 Guidance
$8682
$750
16 %
~$860
$8572
$736
~$850
Revenue1
$2,739
$2,298
19%3
$2,570 to$2,630
Operating margin1
36 %
26 %
1,030 bps
Non-GAAP operating margin1
48 %
39 %
860 bps
Earnings per share1
$6.14
$3.124
97 %
$4.77 to $5.23
Non-GAAP earnings per share1
$8.00
$5.084
57 %
$6.63 to $7.03
FY'25 cash flow absorbed approximately $20 million of outflows related to our go-to-market realignment.
In FY'25, revenue grew 18% year over year on a constant currency basis.
FY'24 GAAP EPS and non-GAAP EPS included a non-cash tax benefit of $4.4 million or $0.04, primarily associated with the effects of IRS procedural guidance issued in May 2024.
"FY'25 demonstrated the strength of PTC's operating model. We delivered 8.5% ARR growth and 16% cash flow growth while continuing to invest in executing our Intelligent Product Lifecycle vision. Our FY'26 ARR guidance reflects that same balance of growth and discipline, including the expected timing impact from ramp deals and the pending divestiture," said Kristian Talvitie, CFO.
"With leverage below 1x and approximately $1 billion of cash flow expected in FY'26, we have substantial capacity to invest for growth and return capital to shareholders. Our $2 billion authorization and planned $200 million share repurchase in Q1 underscore that confidence," concluded Talvitie.
At the midpoint, FY'26 guidance implies continued double-digit cash flow expansion and solid visibility as multi-year ramp contracts activate
Full Fiscal Year 2026 and First Fiscal Quarter Guidance
% rounded to the nearest half
FY'25 Actual
FY'26Guidance
FY'26 YoYGrowthGuidance
Q1'26 Guidance
Constant currency ARR excluding Kepware and ThingWorx for the full year(FY'26 Plan FX rates1)
$2,319
7.5% to 9.5%growth
7.5% to 9.5%
8.5% to 9% growth
Constant currency ARR including Kepware and ThingWorx for the full year (FY'26 Plan FX rates1)
7% to 9% growth
7% to 9%
8% to 8.5% growth
~$1,0303
~19%3
$270 to $2753
~$1,0003
~17%3
$265 to $2703
Revenue
$2,650 to $2,9153
(3%) to 6%3
$600 to $6603
Earnings per share
$4.37 to $6.873
(29%) to 12%3
$0.73 to $1.313
Non-GAAP earnings per share
$6.49 to $8.953
(19%) to 12%3
$1.26 to $1.823
On a constant currency basis, using our FY'26 Plan foreign exchange rates (rates as of September 30, 2025) for all periods.
Guidance for cash flow, revenue, and EPS includes Kepware and ThingWorx for the full year. We will update our FY'26 guidance in conjunction with the closing of the Kepware and ThingWorx transaction.
Reconciliation of Operating Cash Flow Guidance to Free Cash Flow Guidance1
$ in millions
FY'26 Guidance
Q1'26Guidance
~$1,030
$270 to $275
Capital expenditures
~$302
~$5
~$1,000
$265 to $270
Guidance for cash flow includes Kepware and ThingWorx for the full year. We will update our FY'26 guidance in conjunction with the closing of the Kepware and ThingWorx transaction.
Includes approximately $20 million of one-time capital expenditures related to moving a major R&D center to a new office.
Reconciliation of EPS Guidance to Non-GAAP EPS Guidance1
$4.37 to $6.87
$0.73 to $1.31
Stock-based compensation
$2.18 to $1.93
$0.54 to $0.46
Amortization of acquired intangibles
~$0.67
~$0.17
Income tax adjustments
($0.73) to ($0.52)
($0.18) to ($0.12)
Non-GAAP Earnings per share
$6.49 to $8.95
$1.26 to $1.82
Guidance for EPS includes Kepware and ThingWorx for the full year. We will update our FY'26 guidance in conjunction with the closing of the Kepware and ThingWorx transaction.
FY'26 financial guidance includes the following assumptions:
PTC's Fourth Fiscal Quarter Results Conference Call
PTC will host a conference call to discuss results at 5:00 pm ET on Wednesday, November 5, 2025. To participate in the live conference call, dial (888) 596-4144 or (646) 968-2525, provide the passcode 3475783, and press # or log in to the webcast, available on PTC's Investor Relations website. A replay will also be available.
Important Information About Our Operating and Non-GAAP Financial Measures
Non-GAAP Financial Measures
We provide supplemental non-GAAP financial measures to our financial results. We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operating performance because they provide a view of our operating results without items that are not, in our view, indicative of our operating results. These non-GAAP financial measures should not be construed as an alternative to GAAP results as the items excluded from the non-GAAP financial measures often have a material impact on our operating results, certain of those items are recurring, and others often recur. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results.
Non-GAAP operating expense, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and non-GAAP EPS exclude the effect of the following items: stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges included in general and administrative expenses; impairment and other charges (credits), net; non-operating charges (credits), net shown in the reconciliation provided; and income tax adjustments. Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in "Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
In Q2'25, we changed the income statement caption of Restructuring and other charges (credits), net to Impairment and other charges (credits), net to reflect that the amounts presented are mainly impairment charges rather than restructuring charges. We correspondingly revised the caption with respect to the list of items excluded from our non-GAAP financial measures and, as reflected below, the list of items covered under that caption to reflect the primary charges and credits included in the adjustment. All charges and credits under the captioned line item remain the same.
Impairment and other charges (credits), net are charges associated with disposal or exit activities, including lease impairment and abandonment charges, net charges or income related to impaired or exited facilities, restructuring severance charges resulting from substantial employee reduction actions, and other related costs.
Free Cash Flow: We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings and to evaluate our performance against our announced long-term goals and intent to return excess cash to shareholders via stock repurchases. Free cash flow is cash provided by (used in) operations net of capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures.
Constant Currency (CC): We present CC information to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency exchange rate fluctuations. To present CC information, FY'25 and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the foreign exchange rate as of September 30, 2024, rather than the actual exchange rates in effect during that period. All discussion of FY'26 and comparative prior period ARR results (including FY'25 baseline amounts) are reflected using the foreign exchange rates as of September 30, 2025.
Operating Measure
ARR: ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, SaaS, hosting, and support contracts as of the end of the reporting period. We calculate ARR as follows:
We believe ARR is a valuable operating measure to assess the health of a subscription business because it is aligned with the amount that we invoice the customer on an annual basis. We generally invoice customers annually for the current year of the contract. A customer with a one-year contract will typically be invoiced for the total value of the contract at the beginning of the contractual term, while a customer with a multi-year contract will be invoiced for each annual period at the beginning of each year of the contract.
ARR increases by the annualized value of active contracts that commence in a reporting period and decreases by the annualized value of contracts that expire in the reporting period.
As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total value of the contract is recognized as revenue at a point in time upon the later of when the software is made available, or the subscription term commences.
ARR should be viewed independently of recognized and unearned revenue and is not intended to be combined with, or to replace, either of those items. Investors should consider our ARR operating measure only in conjunction with our GAAP financial results.
Forward-Looking Statements
Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, the expected timing of closing the sale of the Kepware and ThingWorx businesses (the "divestiture"), and the anticipated benefits of the divestiture, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, the effects of recently imposed import tariffs, threats of additional and reciprocal import tariffs, global trade tensions and uncertainty, a prolonged U.S. federal government shutdown, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, tightening of credit standards and availability, geopolitical uncertainty, including the effects of the conflicts between Russia and Ukraine and in the Middle East, and tensions between the U.S. and China, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; our investments in our software solutions, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if customers are slower to adopt those solutions than we expect or if they adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may disrupt our business to a greater extent than we expect or may not generate the ARR and/or financial results or cash flow when or as we expect; the divestiture may not be consummated when or as we expect if, among other factors, regulatory approvals under the Hart-Scott-Rodino Act and other applicable laws and regulations are not received when or as we expect, or if other closing conditions are not satisfied when or as we expect or are waived; the future thresholds upon which the additional contingent consideration of up to $125 million related to the divestiture would become payable may not be achieved; the anticipated benefits of the divestiture may not be realized when or as we expect; the divestiture may disrupt our business; other uses of cash or our credit facility limits could limit or preclude the return of excess cash and the net proceeds of the divestiture to shareholders by way of share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected are described from time to time in reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission.
About PTC (NASDAQ: PTC)
PTC (NASDAQ: PTC) is a global software company that enables industrial and manufacturing companies to digitally transform how they engineer, manufacture, and service the physical products that the world relies on. Headquartered in Boston, Massachusetts, PTC employs over 7,000 people and supports more than 30,000 customers globally. For more information, please visit www.ptc.com.
PTC.com @PTC Blogs
PTC Investor Relations Contact Matt ShimaoSVP, Investor Relationsmshimao@ptc.cominvestor@ptc.com
PTC Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
Twelve Months Ended
September 30,
2025
2024
Revenue:
Recurring revenue
$
861,071
582,430
2,600,514
2,134,030
Perpetual license
8,371
9,953
31,375
32,196
Professional services
24,353
34,164
107,337
132,246
Total revenue(1)
893,795
626,547
2,739,226
2,298,472
Cost of revenue(2)
116,899
112,825
444,983
444,816
Gross margin
776,896
513,722
2,294,243
1,853,656
Operating expenses:
Sales and marketing(2)
142,197
147,191
566,516
558,954
Research and development(2)
114,507
110,013
457,693
433,047
General and administrative(2)
63,601
51,986
226,058
232,377
Amortization of acquired intangible assets
11,592
10,559
45,948
42,018
Impairment and other charges (credits), net(3)
11,430
-
15,643
(802)
Total operating expenses
343,327
319,749
1,311,858
1,265,594
Operating income
433,569
193,973
982,385
588,062
Other income (expense), net
3,854
(23,728)
(52,883)
(119,100)
Income before income taxes
437,423
170,245
929,502
468,962
Provision for income taxes
82,595
43,722
188,470
92,629
Net income
354,828
126,523
741,032
376,333
Earnings per share:
Basic
2.96
1.05
6.18
3.14
Weighted average shares outstanding
119,714
120,113
120,005
119,679
Diluted
2.94
1.04
6.14
3.12
120,674
121,181
120,777
120,742
(1) See supplemental financial data for revenue by license, support and cloud services, and professional services.
(2) See supplemental financial data for additional information about stock-based compensation.
(3) Caption has been changed from "Restructuring and other charges (credits), net" to reflect that impairment is now the primary component of the charge. Additional information about this change can be found in the "Non-GAAP Financial Measures" section of this document.
SUPPLEMENTAL FINANCIAL DATA FOR REVENUE AND STOCK-BASED COMPENSATION
Revenue by license, support and services is as follows:
License revenue(1)
484,081
239,448
1,162,709
806,871
Support and cloud services revenue
385,361
352,935
1,469,180
1,359,355
Professional services revenue
Total revenue
(1) License revenue includes the portion of subscription revenue allocated to license.
The amounts in the income statement include stock-based compensation as follows:
Cost of revenue
5,979
5,460
22,690
21,439
Sales and marketing
15,078
22,518
61,750
68,541
Research and development
16,785
18,991
65,119
60,266
General and administrative
16,968
15,250
66,646
73,215
Total stock-based compensation
54,810
62,219
216,205
223,461
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
GAAP gross margin
Amortization of acquired intangible assets included incost of revenue
8,219
9,660
32,828
38,495
Non-GAAP gross margin
791,094
528,842
2,349,761
1,913,590
GAAP operating income
19,811
20,219
78,776
80,513
Acquisition and transaction-related charges
6,694
144
9,116
3,106
Impairment and other charges (credits), net(2)
Non-GAAP operating income(1)
526,314
276,555
1,302,125
894,340
GAAP net income
Non-operating charges (credits), net(3)
(13,100)
2,000
Income tax adjustments(4)
(16,183)
(23,043)
(81,833)
(71,205)
Non-GAAP net income
418,290
186,062
965,839
613,406
GAAP diluted earnings per share
0.45
0.51
1.79
1.85
0.16
0.17
0.65
0.67
0.06
0.00
0.08
0.03
0.09
0.13
(0.01)
(0.11)
0.02
(0.13)
(0.19)
(0.68)
(0.59)
Non-GAAP diluted earnings per share
3.47
1.54
8.00
5.08
(1) Operating margin impact of non-GAAP adjustments:
GAAP operating margin
48.5
%
31.0
35.9
25.6
6.1
9.9
7.9
9.7
2.2
3.2
2.9
3.5
0.7
0.0
0.3
0.1
1.3
0.6
Non-GAAP operating margin
58.9
44.1
47.5
38.9
(2) Caption has been changed from "Restructuring and other charges (credits), net" to reflect that impairment is now the primary component of the charge. Additional information about this change can be found in the "Non-GAAP Financial Measures" section of this document.
(3) In FY'25, we recognized a $13.1 million gain related to contingent consideration earned upon the achievement of performance milestones associated with the FY'22 sale of a portion of our PLM services business. In FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security.
(4) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in FY'25 and FY'24, adjustments exclude a $10.4 million benefit and a $4.4 million charge, respectively, related to the tax impact of tax reserves related to prior years in foreign jurisdictions.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
Cash and cash equivalents
184,415
265,808
Accounts receivable, net
1,001,085
861,953
Property and equipment, net
60,843
75,187
Goodwill and acquired intangible assets, net
4,317,979
4,359,367
Lease assets, net
114,974
133,317
Other assets
944,911
687,910
Total assets
6,624,207
6,383,542
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue
827,065
775,274
1,197,434
1,748,572
Lease obligations
172,433
181,754
Other liabilities
594,011
463,544
Stockholders' equity
3,833,264
3,214,398
Total liabilities and stockholders' equity
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Depreciation and amortization
25,701
26,847
102,504
108,119
Amortization of right-of-use lease assets
8,453
10,145
32,912
33,288
Operating lease liability
(5,476)
193
(10,345)
(13,245)
Accounts receivable
(294,609)
(166,051)
(121,052)
(34,629)
Accounts payable and accruals
30,219
(15,999)
19,890
(15,964)
54,225
73,006
37,753
81,399
Income taxes
43,454
27,761
65,863
25,966
Other
(167,575)
(46,530)
(217,066)
(34,744)
Net cash provided by operating activities
104,030
98,114
867,696
749,984
(3,546)
(4,537)
(11,008)
(14,378)
Acquisition of businesses, net of cash acquired(1)
(6,532)
(93,457)
Borrowings (payments) on debt, net(2)
(36,250)
(63,125)
(552,958)
45,924
Repurchases of common stock
(75,011)
(299,998)
Deferred acquisition payment(3)
(620,040)
Net proceeds associated with issuance of common stock
12,755
12,965
26,062
25,674
Payments of withholding taxes in connection with vesting of stock-based awards
(8,444)
(9,412)
(80,205)
(102,001)
Settlement of net investment hedges
(6,193)
(16,904)
(20,753)
(13,078)
Other financing & investing activities
(4,183)
(1,410)
Foreign exchange impact on cash
(2,247)
5,226
(2,372)
3,223
Net change in cash, cash equivalents, and restricted cash
(14,906)
18,144
(81,478)
(22,332)
Cash, cash equivalents, and restricted cash, beginning of period
199,894
248,322
266,466
288,798
Cash, cash equivalents, and restricted cash, end of period
184,988
Supplemental cash flow information:
Cash paid for interest(3)
18,767
24,641
77,828
137,036
(1) In FY'24, we acquired pure-systems for $93 million, net of cash acquired.
(2) In FY'25, net repayments include borrowings on our credit facility revolver to fund the $500 million bond repayment in February. In FY'24, we borrowed $740 million to fund the ServiceMax deferred acquisition payment and the pure-systems acquisition.
(3) In FY'24, we made a payment of $650 million to settle the ServiceMax deferred acquisition payment liability, of which $620 million was a financing outflow and $30 million was an operating outflow and included in cash paid for interest.
Cash provided by operating activities
100,484
93,577
856,688
735,606
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SOURCE PTC Inc.