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    PTC
    Earnings call· Jun 2026(Q3 FY26)

    PTC Q3 FY26 earnings call PTC

    Jul 29, 2026 Source

    Executive summary

    PTC Q3 FY26 — Strong Net New ARR and Raised Guidance

    PTC delivered a strong Q3 FY26, marked by robust net new ARR and constant currency ARR growth exceeding expectations. The company raised its full-year ARR and share repurchase guidance, reflecting improved go-to-market execution and pipeline visibility. While AI innovation is gaining traction, a large contract's shortened duration impacted Q3 revenue, and divestiture-related outflows will affect Q4 free cash flow.

    Highlights

    5

    • Generated $60 million of net new ARR in Q3 FY26.

    • Constant currency ARR grew 9.1% year-over-year, exceeding the high end of guidance.

    • Operating cash flow reached $261 million and free cash flow $249 million, both exceeding guidance ranges.

    • Increased the midpoint of annual ARR growth guidance to 9.25%.

    • Repurchased $525 million of common stock in Q3, more than double the previously provided target.

    Concerns

    2

    • Q3 revenue of $600 million was below the midpoint of guidance, reflecting the shortened duration of a single large contract expansion.

    • Q4 FY26 free cash flow is guided lower year-over-year to approximately $15 million due to capital gains outflows from the Kepware and ThingWorx divestiture.

    Guidance & targets

    9
    CategoryTargetConfidence
    Constant currency ARR growth (excluding Kepware and ThingWorx)
    9% to 9.5%
    high materiality
    High
    Net new ARR
    $214 million
    high materiality
    High
    Net new ARR (excluding Kepware and ThingWorx)
    $79 million to $92 million
    high materiality
    High
    Common stock repurchases
    approximately $1.625 billion
    high materiality
    High
    Fully diluted share count
    approximately 116 million shares
    medium materiality
    High
    Free cash flow
    approximately $850 million
    high materiality
    High
    Free cash flow
    approximately $15 million
    medium materiality
    High
    Revenue
    $2.69 billion to $2.75 billion
    high materiality
    High
    Non-GAAP EPS
    $7.87 to $8.42
    high materiality
    High

    Operational metrics

    13
    Net new ARR
    $60 million
    Q3 FY26

    Generated in Q3 FY26.

    Constant currency ARR
    $2.448 billionup 9.1% year-over-year
    Q3 FY26

    Exceeded the high end of guidance range.

    Common stock repurchases
    $525 millionmore than double our previously provided target
    Q3 FY26

    Reflecting opportunistic open market share repurchase.

    Fully diluted share count
    115 million shares
    Q3 FY26

    Decreased due to outsized repurchasing.

    API calls to Onshape by AI-related startups
    triplingin a few months
    Q3 FY26

    Indicative of gaining momentum around using PTC's system of records for AI.

    ServiceMax AI technician preparation time reduction
    50%
    Q3 FY26

    Validated through a pilot with service technicians.

    ServiceMax AI net productivity improvement
    4%
    Q3 FY26

    Delivered across the service workforce, validated through a pilot.

    Displacements (number or aggregate value)
    doubledyear-over-year
    YoY

    Indicative of go-to-market transformation success.

    Deferred ARR
    approximately 2xvs. this point last year for FY26
    FY27

    Meaningful increase providing confidence for future growth.

    Revenue
    $600 millionbelow the midpoint of our guide
    Q3 FY26

    Reflecting only the shortened duration of a single large contract expansion.

    Constant currency ARR growth
    12.6%year-over-year
    YoY

    Growth by channel.

    Constant currency ARR growth
    7.8%year-over-year
    YoY

    Growth by direct sales.

    Solar energy equity investment
    $50 million
    Q3 FY26

    Investment made to extend green footprint, with expected tax savings over the medium term.

    Industry KPIs

    6
    MetricValueDetails
    Revenue growth$600 millionUSD
    Arr net new arr$2.448 billionUSD
    Bookings billings$60 millionUSD
    Large deal new logo metrics—
    Ai product adoption monetization—
    Net revenue net dollar retention—

    Product announcements

    4
    ProductTypeDetails
    Creo AIlaunch
    PTC Orbitlaunch
    Onshape Labslaunch
    PTC Jetstreamlaunch

    Deals & partnerships

    4
    Kepware and ThingWorxDivestiture of non-core assets.

    Divestiture occurred on March 13, 2026.

    One of the world's largest industrial automation companiesLargest AI deal ever for ServiceMax.near 7-figure

    Long-term customer leveraging ServiceMax AI to deliver relevant information to technicians via natural language interface, eliminating search time.

    WinnebagoLargest Onshape win ever.

    Inspired to move to Onshape due to its best-in-class AI interface to a CAD tool, consolidating their CAD estate on PTC.

    Major defense contractorCompetitive PLM win.

    To help modernize engineering operations for one of its critical business segments, consolidating multi-CAD and multi-PLM environments onto PTC's Windchill.

    Risks & headwinds

    4
    Revenue impact from shortened contract durationQ3 FY26

    Q3 revenue of $600 million was below the midpoint of guidance

    Mitigation: Deal durations across the broader business continue to hold; management is confident in raising full-year revenue guidance midpoint.

    Free cash flow impact from divestiture-related outflowsQ4 FY26

    Q4 FY26 free cash flow of approximately $15 million, lower year-over-year

    Mitigation: Outflow is due to capital gains from the Kepware and ThingWorx divestiture, a one-time event; full-year FCF guidance remains at approximately $850 million.

    Methodical customer adoption of AIMedium- to longer-term

    Customers are very methodical. They start with a pilot. They then move to, did the pilot actually create return on investment, did it get adopted and then they choose a scale.

    Mitigation: PTC is focusing on demonstrating clear ROI through pilots (e.g., ServiceMax AI) and embedding AI capabilities within trusted systems to drive adoption and monetization over time.

    Need for continued execution to sustain momentumQ4 FY26 and beyond

    We still have to execute. We have to close out this quarter. We have to continue to build on the momentum of the demand capture that we see for four straight quarters, making a fifth quarter deliver the ARR in the way in which we are expecting and inspired by.

    Mitigation: Management is focused on maintaining the new operating standard of the go-to-market motion, pushing innovation, and expanding wallet share, with confidence in pipeline visibility.

    What to watch in Q4 FY26

    4

    Net new ARR in Q4 FY26

    Q4 FY26
    Current$60 million (Q3 FY26)
    Target$79 million to $92 million

    Why it matters

    This is a key indicator of continued go-to-market execution and demand capture, crucial for achieving full-year ARR guidance and setting the stage for FY27.

    In Q4, for constant currency ARR excluding Kepware and ThingWorx, our expectations correspond to a net new ARR range of $79 million to $92 million.

    Q&A highlights

    5

    How does PTC view the increased engagement of open-source/commercial AI models with CAD/PLM systems and new ventures in the engineering ecosystem, and are customer perspectives changing?

    Neil Barua emphasized PTC's 40-year history and structural advantage at the data and process level for governed workflows in complex industries. He noted that while new AI interfaces are emerging, the critical need for auditable, traceable product data in systems like PTC's remains paramount for customers, driving momentum and trust in PTC's innovation.

    “the structural advantage here at PTC is at the data and process level. If you think about making airplanes, cars, medical devices, you need strict governed workflows. And with all your product data in context in a manner that could be audited and traced for regulatory reasons, and it's super complex and sophisticated work, and that's why PTC systems of records are so valuable.”

    asked by Joe Vruwink (Baird) · answered by Neil Barua

    2 min read6 chapters

    Detailed Narrative

    01

    Go-to-Market Transformation Success

    Management highlighted the successful go-to-market transformation, leading to improved customer wins, deeper vertical expertise, executive-level engagement, and better cross-team collaboration. This has resulted in increased displacement wins and a new operating standard for the sales team, with sustained execution over the last four quarters, contributing to the strong Q3 performance.

    02

    AI as a Business Accelerant

    PTC views AI as a significant tailwind, increasing the strategic importance of its systems of record and product data foundations. The company is delivering on its AI roadmap with products like Creo AI, PTC Orbit, and Onshape Labs, and secured its largest AI deal ever with ServiceMax, demonstrating tangible ROI in reducing technician preparation time by 50% and improving productivity by 4%.

    03

    Product Data Foundation for AI

    Customers are increasingly recognizing the need for structured, contextualized, and governed product data within enterprise environments to effectively leverage AI, rather than relying on frontier models alone. PTC's systems provide the necessary governance and access controls for safe and trustworthy AI use, positioning the company as a critical partner for AI adoption and ensuring real ROI.

    04

    Deferred ARR and Future Growth Visibility

    The company has seen a significant build-up in deferred ARR, with approximately 2x the amount compared to the prior year for FY27. This, combined with strong demand capture and improved retention rates, provides confidence in future growth acceleration, with management indicating a path to low double-digit ARR growth in FY27 by performing on a like-for-like basis for net new ARR.

    05

    Capital Allocation and Share Repurchases

    PTC demonstrated aggressive capital return, repurchasing $525 million of common stock in Q3, more than double its target, and increasing its full-year repurchase guidance to $1.625 billion. This reflects an opportunistic approach to share buybacks and a focus on accelerating shareholder returns, leading to a projected decrease in fully diluted share count to 116 million for FY26.

    06

    M&A Strategy and Organic Focus

    While focused on organic growth and smaller tuck-in acquisitions to accelerate the roadmap (e.g., a Windchill extension framework capability), PTC is not currently pursuing large-scale M&A. The current strategy prioritizes leveraging existing customer relationships and expanding wallet share through core product innovation and AI capabilities, driving customer value and strong results.

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