PTC · PTC Inc.

PTC Inc. reported robust Q2 FY2026 results, with revenue of $774.3 million, up 21.7% from $636.4 million in the prior year quarter. This growth reflects strength in CAD software, particularly Creo license revenue in the Americas, alongside overall license and subscription expansion. Gross profit rose 24.6% to $660.7 million, yielding an 85.3% margin, even as cost of license revenue increased due to higher royalty expenses in the first half of FY2026. The sharper decline in professional services revenue compared to expenses, aligned with the strategy of leveraging partners for service delivery, contributed to a decrease in professional services gross margin.

Net income dramatically increased 263.2% to $590.7 million, with diluted EPS at $4.98 versus $1.35 last year, primarily driven by the divestiture gain. This non-recurring boost transformed profitability, underscoring the value unlocked from non-core assets while core operations showed underlying strength.

Cash generation remained strong, with net cash from operating activities at $590.7 million, enabling free cash flow of $585.7 million after minimal $5.0 million capital expenditures—down from $5.6 million prior year. This liquidity supports strategic flexibility, including potential shareholder returns, as cash balances grew from year-end due to tax timing and divestiture payments. ARR serves as a key measure of subscription health, aligning with annual invoicing and indicating stable recurring revenue streams.

Overall, these results demonstrate PTC's execution on revenue growth, margin discipline, and portfolio optimization, positioning the company for sustained performance in its software-centric model.