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1. Company Snapshot

1.a. Company Description

PTC Inc.operates as software and services company in the Americas, Europe, and the Asia Pacific.The company operates in two segments, Software Products and Professional Services.


It offers ThingWorx platform, which offers a set of capabilities that enable enterprises to digitally transform every aspect of their business with innovative solutions that are simple to create, easy to implement, scalable to meet future needs, and designed to enable customers to accelerate time to value; and Vuforia, which enables the visualization of digital information in a physical context and the creation of AR.The company also provides Onshape, a software-as-a-service product development platform unites computer-aided design with data management, collaboration tools, and real-time analytics; Arena, a PLM solution enables product teams to collaborate virtually anytime and anywhere; Creo, a 3D CAD technology enables the digital design, testing, and modification of product models; and Windchill, a product lifecycle management software.In addition, it offers Integrity, an application lifecycle management solution; Servigistics, service parts management solution; and consulting, implementation, training, cloud, and license and support services.


The company was formerly known as Parametric Technology Corporation and changed its name to PTC Inc.in January 2013.PTC Inc.


was incorporated in 1985 and is headquartered in Boston, Massachusetts.

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1.b. Last Insights on PTC

PTC Inc.'s recent performance was negatively impacted by a mixed bag of quarterly results and strategic divestitures. Despite a strong Q4 with EPS up 126% and revenue surging 43%, fueled by PLM and CAD growth, the company's decision to divest its Kepware industrial connectivity and ThingWorx IoT businesses may raise concerns about future growth. Additionally, the company's FY'26 guidance, which includes a constant currency ARR growth of 7-9%, may be viewed as conservative. PTC's $2 billion share repurchase authorization, including $200 million expected in Q1'26, could provide a boost to shareholder value.

1.c. Company Highlights

2. PTC's Strong Q4 Results and Strategic Divestiture

PTC reported a strong financial performance in Q4, with revenue beating the midpoint of guidance by $140 million. The company's EPS came out at $3.47, significantly higher than the estimated $2.26. The revenue growth was driven by a record amount of customer commitments, including large multi-year renewals and new contracts, with an average term length increasing to approximately 3 years. Free cash flow was $100 million in Q4, with full-year free cash flow of $857 million, up 16% year-over-year. Operating efficiency expanded by 310 basis points to 45% in fiscal 2025.

Publication Date: Nov -13

📋 Highlights
  • Divestiture Proceeds: PTC to receive up to $725 million from selling Kepware and ThingWorx, closing in H1 2026.
  • Free Cash Flow Growth: $857 million in FY2025 (+16% YoY), with $1 billion guidance for FY2026.
  • ARR Growth Resilience: 8.5% constant currency ARR growth in Q4 FY2025, guided to 7–9% in FY2026.
  • Share Buybacks: $150M–$250M quarterly share repurchases to return excess cash to shareholders.
  • Operating Efficiency: 45% operating margin in FY2025 (+310 bps), driven by disciplined budgeting and cash flow discipline.

Guidance and Outlook

For fiscal 2026, PTC is guiding to a constant currency ARR growth range of 7% to 9% with Kepware and ThingWorx, and 7.5% to 9.5% without them. The company expects to deliver $1 billion of free cash flow in fiscal 2026, driven by predictable cash collections and disciplined budgeting. Revenue guidance for fiscal '26 is expected to be up over 10% in the first half, mid-single digits in Q3, and decline in Q4. The company's guidance assumption for CapEx is increasing by $20 million, which is a one-time expense related to moving a major R&D center to a new office.

Strategic Divestiture and Capital Allocation

The divestiture of the IoT business, including ThingWorx and Kepware, was a strategic move, allowing PTC to focus on its core priorities and the Intelligent Product Lifecycle vision. The company expects to receive up to $725 million in proceeds from the sale, which will be used to return excess cash to shareholders through share buybacks. PTC plans to buy back between $150 million and $250 million worth of shares per quarter. As Neil stated, "the divestiture of the IoT business and buyback indicate a focus on the core CAD and PLM aspects of the business."

Valuation and Growth Prospects

Analysts estimate next year's revenue growth at 7.4%. The current valuation metrics, including a P/E Ratio of 28.78, P/B Ratio of 5.56, and EV/EBITDA of 21.15, suggest that the market has high expectations for PTC's growth prospects. The company's focus on executing its Intelligent Product Lifecycle vision, including CAD, PLM, ALM, and SLM, with a growing emphasis on SaaS and AI, is expected to drive further growth and improvements in operating efficiency.

3. NewsRoom

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PTC Announces CFO Transition

Dec -04

Source: prnewswire.com

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PTC Inc. $PTC Shares Sold by Fisher Asset Management LLC

Dec -04

Source: defenseworld.net

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Rare-Disease Biotech PTC Is Surging — And One Fund Just Raised Its Bet. Should You?

Dec -02

Source: fool.com

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PTC Therapeutics Reports Inducement Grants Under Nasdaq Listing Rule 5635(c)(4)

Dec -01

Source: prnewswire.com

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Artificial Intelligence (AI) Could Be the Catalyst That Lifts These Undervalued Tech Stocks

Nov -24

Source: fool.com

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Connor Clark & Lunn Investment Management Ltd. Takes Position in PTC Inc. $PTC

Nov -21

Source: defenseworld.net

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PTC Therapeutics to Host R&D Day

Nov -20

Source: prnewswire.com

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PTC Expands Relationship with Garrett Motion to Transform New Product Development

Nov -19

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.29%)

6. Segments

Support and Cloud Services

Expected Growth: 8.5%

PTC's Support and Cloud Services growth is driven by increasing adoption of IoT and AR technologies, expansion of ThingWorx and Vuforia platforms, and rising demand for digital transformation solutions. Additionally, strategic partnerships, such as the Microsoft Azure alliance, and a growing subscription-based model contribute to the 8.5% growth.

License

Expected Growth: 7.5%

Strong demand for Industrial Internet of Things (IIoT) and Augmented Reality (AR) solutions drives growth. PTC's ThingWorx and Vuforia platforms are well-positioned to capitalize on this trend. Additionally, increasing adoption of digital twins and servitization in industrial companies fuels license sales. The company's strategic partnerships and acquisitions also contribute to its growth momentum.

Professional Services

Expected Growth: 10.5%

PTC Inc.'s Professional Services segment growth of 10.5% is driven by increasing demand for Industrial Internet of Things (IIoT) solutions, digital transformation initiatives, and adoption of cloud-based product lifecycle management (PLM) solutions. Additionally, strategic partnerships, acquisitions, and expansion into new markets have contributed to the segment's growth.

7. Detailed Products

Creo

A 3D computer-aided design (CAD) software that enables users to create, analyze, and view product designs

Windchill

A product lifecycle management (PLM) software that helps manage product data and collaborate across the enterprise

ThingWorx

An industrial internet of things (IIoT) platform that enables the rapid development of IoT applications

Vuforia

An augmented reality (AR) platform that enables the creation of interactive, 3D experiences

Servigistics

A service parts management software that helps optimize spare parts inventory and logistics

Onshape

A cloud-based CAD software that enables real-time collaboration and data management

8. PTC Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PTC Inc. operates in the industrial automation and IoT software industry, where substitutes are limited. However, the increasing adoption of open-source alternatives and cloud-based services poses a moderate threat.

Bargaining Power Of Customers

PTC Inc. has a diverse customer base, and no single customer accounts for a significant portion of its revenue. This reduces the bargaining power of customers.

Bargaining Power Of Suppliers

PTC Inc. relies on a few key suppliers for its hardware and software components. While there are alternative suppliers available, the switching costs are moderate, giving suppliers some bargaining power.

Threat Of New Entrants

The industrial automation and IoT software industry has high barriers to entry, including significant R&D investments and established relationships with customers and suppliers. This makes it difficult for new entrants to gain traction.

Intensity Of Rivalry

The industrial automation and IoT software industry is highly competitive, with established players like Siemens, GE Digital, and Dassault Systemes. PTC Inc. faces intense competition in terms of product offerings, pricing, and innovation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.49%
Debt Cost 3.95%
Equity Weight 58.51%
Equity Cost 9.87%
WACC 7.41%
Leverage 70.91%

11. Quality Control: PTC Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Zoom Video

A-Score: 5.7/10

Value: 3.2

Growth: 8.1

Quality: 8.5

Yield: 0.0

Momentum: 7.5

Volatility: 6.7

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Growth: 8.3

Quality: 6.8

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PTC

A-Score: 5.0/10

Value: 1.5

Growth: 6.9

Quality: 8.3

Yield: 0.0

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A-Score: 4.2/10

Value: 2.5

Growth: 8.0

Quality: 4.9

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A-Score: 4.2/10

Value: 4.4

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A-Score: 3.4/10

Value: 4.4

Growth: 7.1

Quality: 3.8

Yield: 0.0

Momentum: 0.5

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

172.96$

Current Price

172.96$

Potential

-0.00%

Expected Cash-Flows