PTC (PTC)·Q1 2026 Earnings Summary

PTC Beats on Revenue and EPS as ARR Growth Hits High End of Guidance

February 4, 2026 · by Fintool AI Agent

PTC (NASDAQ: PTC) delivered a strong Q1 FY2026, beating consensus estimates on both revenue and earnings while achieving constant currency ARR growth at the high end of guidance. Revenue of $686M exceeded expectations by 8.1%, and Non-GAAP EPS of $1.92 topped consensus by 22.8%. The quarter also marked the debut of new CFO Jen D'Errico, who emphasized financial discipline and the company's strong positioning to help customers leverage AI. The stock closed up 1.4% following the release, trading at $151.34.

Did PTC Beat Earnings?

PTC delivered meaningful beats across all key metrics in Q1 FY2026:

The quarter marked the second consecutive period of strong strategic deal contracting. Revenue growth of 21% YoY (19% constant currency) was driven by large deal volume and competitive displacements.

Non-GAAP operating margin expanded 1,130 basis points YoY to 45.1%, reflecting operating leverage as revenue scaled faster than expenses.

What Is the ARR Story?

ARR (Annual Run Rate) is PTC's key operating metric, representing the annualized value of active subscription, SaaS, and support contracts.

Constant Currency ARR Performance (excluding Kepware and ThingWorx):

The sequential ARR growth of $22M in Q1 reflects typical seasonality — Q1 is historically PTC's lowest growth quarter, with Q4 being the strongest. Management noted the improved demand capture will start flowing into ARR later in the fiscal year.

Including Kepware and ThingWorx (which are being divested), constant currency ARR grew 8.4% YoY.

What Did Management Guide?

PTC maintained its full-year FY2026 guidance across all key metrics:

Q2 FY2026 Guidance:

• CC ARR Growth (ex-K&T): 8% to 8.5%
• Free Cash Flow: $310M to $315M
• Revenue: $710M to $770M
• Non-GAAP EPS: $1.93 to $2.54

The guidance excludes the impact of the Kepware and ThingWorx divestiture (expected ~$365M net after-tax proceeds), which will be reflected upon closing.

What Changed From Last Quarter?

Positive developments:

1. Go-to-market momentum accelerating. CEO Neil Barua highlighted "strong and strategic demand capture" from the go-to-market transformation, building confidence in a "durable, multi-year growth engine."

2. Large deal volume stepped up. For a second consecutive quarter, PTC significantly increased contracting of strategic customer deals.

3. Competitive displacements driving growth. Multiple wins cited displacing legacy PLM vendors, including at an industrial company standardizing on Windchill+ SaaS.

4. AI positioning. Management emphasized PTC's role in enabling the "Intelligent Product Lifecycle," with product data serving as the foundation for AI-driven transformation.

5. Deferred ARR at record levels. Management disclosed that Q4 FY2026 deferred ARR is now triple the level entering last Q4, and FY2027 deferred ARR is double last year's level for FY2026. This contracted backlog provides visibility to an acceleration in H2.

Watch items:

1. Kepware/ThingWorx divestiture progressing. The sale remains on track with ~$160M of divestiture-related expenses expected in FY26. Assets are now classified as held-for-sale.

2. FX headwinds persisting. At current FX rates, reported ARR would be ~$6-7M lower than constant currency results.

Q&A Highlights

Deferred ARR Visibility: CFO Jen D'Errico confirmed that the higher Q4 deferred ARR is attributable to both go-to-market and commercial initiatives. CEO Barua emphasized that deals are contractually committed — even if implementation timelines slip, the ARR is locked in. "This is contracted capture... they'll hit in these quarters."

AI Product Roadmap:

• Codebeamer AI (December 2025): Improves requirements quality, accelerates test case development, supports compliance
• Windchill AI Parts Rationalization (January 2026): Identifies duplicate parts, improves part data consistency, accelerates searches
• AI In Focus video series launching in February to share AI strategy and product roadmaps

Management noted AI is "immaterial" to the P&L today but expects it to become "a real economic driver" as POCs scale over the next few years.

ServiceMax Turnaround: After several quarters of churn headwinds, management cited "green shoots" with strong demand capture in Q4 and Q1. The cross-sell opportunity is improving as ServiceMax integrates into the Intelligent Product Lifecycle vision. "Not out of the woods, but making progress."

SaaS Momentum (Windchill+ and Creo+): CEO Barua reported a "bang-up" and possibly record-breaking quarter for Windchill+ demand capture. On-prem to SaaS migrations are seeing 1.5-2.5x lift in ARR. "The dam has not broken... but we have been building momentum."

CES 2026 Presence: PTC attended CES for the first time, receiving strong reception from industrial manufacturers and automotive companies. Management described it as a "puff your chest moment" validating PTC's strategic positioning. Lamborghini was featured as a marquee customer deploying ServiceMax connected to Windchill.

Channel vs. Direct Mix: The channel drove over 80% of net new ARR in Q1, influenced by one large deal with customer-preferred fulfillment. Management emphasized this reflects customer choice, not direct sales weakness. "We worked very closely together on that deal."

Macro Resilience: Despite policy uncertainty and volatility, management sees demand across all major verticals and geographies. "If you look across the verticals, they're all, our big 5 are all performing fairly well."

How Did the Stock React?

PTC shares rose modestly following the earnings beat:

The muted reaction despite strong beats suggests the market may have already priced in a solid quarter following last quarter's momentum. PTC shares remain ~31% below their 52-week high.

What Is the Capital Allocation Plan?

PTC is aggressively returning capital to shareholders:

• Q1 FY26 repurchases: $200M of stock bought back
• Q2 FY26 plan: ~$250M of repurchases expected
• H2 FY26 plan: $150M to $250M per quarter
• Divestiture proceeds: ~$365M net after-tax from Kepware/ThingWorx sale to fund incremental buybacks
• FY26 total: $1.115B to $1.315B of share repurchases expected

The company has a $2 billion repurchase authorization through FY27.

Balance Sheet Highlights (Q1 FY26):

• Cash: $210M
• Total Debt: $1.2B (weighted average rate 4.7%)
• Debt/EBITDA: 0.9x
• Share count expected to decline to ~119M in Q2 vs 121M in Q2'25

Segment Performance

PTC reports ARR by product group and geography (constant currency, excluding Kepware/ThingWorx):

By Product:

By Geography:

Note: These constant currency figures use FY26 Plan FX rates for comparability. The sequential ARR growth will accelerate in later quarters as contracted deals flow through.

Customer Wins Highlighted

Management cited several competitive wins and expansions:

1. Garrett Motion — Deploying Windchill+ and Codebeamer+ SaaS to unify product development on an "AI-ready" architecture

2. Global Energy Management Company (100K+ employees) — Standardizing on Creo, Windchill, and ServiceMax across engineering, manufacturing, and services

3. Electrical Solutions Provider — Displacing legacy vendor with Windchill+ SaaS for integrated BOM management

4. Medical Device Manufacturer (30K+ employees) — Standardizing on Windchill PLM, displacing legacy PLM and QMS vendors

5. Industrial Testing Company — ServiceMax cross-sell alongside expanded Creo and Windchill deployment

Key Risks and Considerations

From the forward-looking statements:

1. Macro/manufacturing climate — Tariffs, trade tensions, FX volatility, and interest rates could slow customer spending
2. AI adoption uncertainty — Customers may not build product data foundations as quickly as expected
3. Divestiture execution — Kepware/ThingWorx sale requires regulatory approvals and could disrupt operations
4. Go-to-market transition — The realignment may not generate expected ARR growth

The Bottom Line

PTC delivered a clean beat in Q1 FY2026 with revenue and EPS exceeding expectations, constant currency ARR at the high end of guidance, and strong cash flow generation. The go-to-market transformation is gaining traction with large strategic deals, and competitive displacements are accelerating. Management maintained full-year guidance while signaling confidence in durable multi-year growth.

The stock's modest reaction (+1.4%) despite the strong results suggests elevated expectations following last quarter's momentum. With shares still 31% below their 52-week high and aggressive buybacks planned (~$1.2B in FY26), the setup remains constructive for shareholders.

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View PTC Company Profile | Read Q1 2026 Transcript