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    PTC
    Earnings call· Mar 2026(Q2 FY26)

    PTC Q2 FY26 earnings call PTC

    May 6, 2026 Source

    Executive summary

    PTC Q2 FY26 — Strong ARR Growth and AI-Driven Modernization Demand

    PTC delivered a strong quarter, driven by robust constant currency ARR growth and exceeding free cash flow guidance. The company is now fully focused on its intelligent product life cycle vision following a recent divestiture, with AI serving as a key catalyst for customer modernization demand. Go-to-market transformation efforts are gaining traction, leading to improved rep productivity and a high-quality pipeline, positioning PTC for continued momentum in the second half of the fiscal year.

    Highlights

    5

    • Constant currency ARR grew 8.5% year-over-year, reaching $2.388 billion, at the high end of guidance.

    • Free cash flow grew 14% year-over-year, exceeding guidance.

    • Repurchased $250 million of common stock in Q2, with an additional $375 million deployed via ASR from divestiture proceeds.

    • Board authorized a new $2 billion share repurchase program effective October 1, 2026, through FY28.

    • Raised fiscal '26 revenue guidance to $2.580 billion-$2.820 billion and non-GAAP EPS guidance to $6.65-$8.90.

    Concerns

    2

    • Macro uncertainty persists, though management is confident in controllable factors.

    • Kepware and ThingWorx divestiture impacts year-over-year growth calculations for cash flow, revenue, and EPS due to non-recast historicals.

    Guidance & targets

    12
    CategoryTargetConfidence
    Constant currency ARR growth (excluding Kepware and ThingWorx)
    7.5% to 9.5%
    high materiality
    High
    Net new ARR (midpoint)
    $195 million
    high materiality
    High
    Constant currency ARR growth (excluding Kepware and ThingWorx)
    8% to 9%
    medium materiality
    High
    Net new ARR
    $40 million to $55 million
    medium materiality
    High
    Free cash flow
    $850 million
    high materiality
    High
    Free cash flow (baseline for FY27 growth)
    $950 million
    high materiality
    High
    Free cash flow
    $240 million to $245 million
    medium materiality
    High
    Revenue
    $2.580 billion to $2.820 billion
    high materiality
    High
    Non-GAAP EPS
    $6.65 to $8.90
    high materiality
    High
    Share repurchase program
    $2 billion
    high materiality
    High
    Share repurchase
    $1.225 billion to $1.325 billion
    high materiality
    High
    Fully diluted share count
    115 million to 116 million shares
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    PLM
    Forward-looking indicators (demand capture, renewal rates, pipeline growth) are very positive, driven by customer incentives to modernize with Windchill and Codebeamer. Expected to see growth accelerate as deferred ARR flows into P&L.
    		—expected to accelerate——
    Europe
    Strong performance noted despite macro uncertainty.
    		—8% constant currency——

    Operational metrics

    11
    Non-GAAP operating margin
    —
    Q2 FY26

    Not explicitly quantified, but implied to be strong given overall performance.

    Share repurchase
    $250 million
    Q2 FY26

    Executed as planned.

    Share repurchase (ASR from divestiture proceeds)
    $375 million
    Q2 FY26

    Deployed entire net after-tax proceeds from divestiture into an accelerated share repurchase program.

    AI releases
    nearly doublevs 2025
    2026

    Aggressively scaling AI capabilities, including first AI native products.

    AI releases (completed)
    8
    last year

    Already done and used for POCs and refining with customers.

    AI releases (planned)
    14
    2026

    Planned for release in 2026, including an AI native first product.

    Rep productivity
    continue to improve
    Q2 FY26

    Go-to-market transformation gaining traction.

    Renewal rates
    continue to improve
    Q2 FY26

    Go-to-market transformation gaining traction.

    Pipeline quality
    large, high-quality
    H2 FY26

    Well-balanced across geographies, verticals, and products.

    Deferred ARR
    increased
    FY27 and beyond

    Structuring deals for long-term benefit, building deferred ARR balance.

    ServiceMax AI SKU expansion
    7-figure
    current

    Expansion of an AI SKU on top of the ServiceMax SKU, with global potential being larger.

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth$2.388 billionUSD
    Arr net new arr$2.388 billionUSD
    Rpo current rpoincreased
    Bookings billings$195 millionUSD
    Pricing model mixlargely seat-based
    Gross retention renewal ratecontinue to improve
    Operating FCF margin rule of 4014%%
    Ai product adoption monetization7-figureUSD

    Orderbook & backlog

    2
    Deferred ARRsignificant step-upQ4 FY26

    Clear visibility into a significant step-up in deferred ARR starting in Q4.

    Deferred ARR balancemaking very good progressFY27 and beyond

    Building the deferred ARR balance, especially for '27 and beyond.

    Product announcements

    6
    ProductTypeDetails
    Creoupdate
    AI Native Productslaunch
    Windchill+update
    Onshape AIupdate
    ServiceMax AIupdate
    Codebeamerupdate

    Deals & partnerships

    4
    Kepware and ThingWorxSale of non-core assets

    Divestiture completed on March 13, Q2 is the first quarter reporting as a more focused business.

    Leading automotive supplierDisplacement of a competitor with Windchill+

    Won because Windchill manages authoritative product data and offers a clear roadmap for AI agents to drive productivity across PLM workflows. Customer recognized the need to modernize product data foundation for AI.

    U.S. ArmyAdoption of Windchill as standard for PLM systems

    U.S. Army put a stamp of approval that Windchill is the standard for PLM systems, serving as a calling card for other agencies.

    Hamilton MedicalCustomer win for Codebeamer (ALM)

    Another displacement win for Codebeamer, indicating strength in the ALM segment.

    Risks & headwinds

    2
    Macro uncertaintyongoing

    not quantified

    Mitigation: Focusing on controllable factors: execution, discipline, and serving customers.

    Global economic strainsongoing

    war going on and energy prices have escalated to levels no one's seen before in the long time

    Mitigation: Acknowledged as factors requiring navigating approval processes, but internal improvements and AI thrust are strong tailwinds.

    What to watch in Q3 FY26

    4

    Net new ARR step-up

    Q4 FY26
    Current$40M-$55M in Q3 FY26
    Targetmore significant step-up in Q4 FY26

    Why it matters

    Indicates the effectiveness of go-to-market execution and conversion of deferred ARR into recognized revenue, crucial for future growth.

    Looking at the second half of the year, consistent with what we said last quarter, our intent is to grow net new ARR in Q3 on a year-over-year basis and then deliver a more significant step-up in Q4.

    Q&A highlights

    10

    How confident is management in achieving double-digit ARR growth in the mid-term, given current trends and macro uncertainty?

    Management is confident due to continued customer demand for AI modernization, strong go-to-market execution, and progress in building deferred ARR. They expect growth to increase next year even with no incremental performance from the go-to-market team, supported by current visibility.

    “if we see no more incremental performance from what we saw this year from our go-to-market team, coupling that with the deferred ARR balance that we have visibility to, we'll see growth increase.”

    asked by Saket Kalia · answered by Jennifer DiRico

    2 min read6 chapters

    Detailed Narrative

    01

    AI as a Catalyst for Modernization Demand

    PTC is experiencing significant momentum driven by AI, primarily by accelerating customer demand for modernizing product data foundations. Customers recognize that a strong product data foundation is crucial for leveraging AI effectively, leading them to upgrade to the latest versions of Windchill, Creo, and Codebeamer. This modernization is seen as foundational infrastructure for AI, as general-purpose AI models cannot access the specialized product data managed by PTC's systems.

    02

    Product Innovation and Accelerated Releases

    PTC is aggressively scaling its AI capabilities, nearly doubling AI releases in 2026 compared to 2025, including its first AI-native products. The company is embedding specialized AI agents across its portfolio, such as Creo and Onshape agents, which can access underlying mathematical and geometric parameters for complex 3D product design. This focus on highly relevant product releases, coupled with the necessity for customers to consolidate their PLM estate, is driving increased adoption and displacement wins.

    03

    Go-to-Market Transformation Gaining Traction

    The go-to-market organization, which underwent a major transformation 15-16 months ago to become more vertical-focused, is now showing positive results. Rep productivity and renewal rates are improving, and the company has built a large, high-quality pipeline. This transformation, combined with a clear messaging strategy and vertical expertise, is contributing to increased demand capture and overall business momentum.

    04

    Vertical Strength and Displacement Wins

    PTC is seeing particular strength in the electronics and high-tech vertical, driven by data center modernization, and in federal, aerospace, and defense (FA&D), exemplified by the U.S. Army adopting Windchill as its PLM standard. The automotive sector is also showing differentiation with Codebeamer, Windchill, and Onshape, especially as software-defined vehicles accelerate. These trends are leading to significant displacement wins against competitors, with customers consolidating onto PTC's solutions.

    05

    Windchill+ and SaaS Adoption

    Windchill+, PTC's SaaS version of its PLM solution, is gaining significant traction, primarily driving net new customer acquisitions and displacements. While many customers still prioritize modernizing their on-premise solutions, the simplified and cleaner tech stack offered by Windchill+ is appealing. PTC's AI releases are available for both on-premise and SaaS solutions, ensuring flexibility for diverse customer needs.

    06

    Capital Allocation and Shareholder Returns

    PTC repurchased $250 million of common stock in Q2 and deployed $375 million from divestiture proceeds into an accelerated share repurchase program. The Board authorized a new $2 billion share repurchase program through FY28, replacing the current one. Management views share buybacks as a good use of capital given the current stock valuation and the long-term durability of the company, alongside organic and inorganic investments.

    AI-generated summary of the company’s earnings call. Not investment advice.