US$2.508 billion ARR highlights PTC’s fiscal 2026 shift

PTC Inc. (NASDAQ:PTC) finished fiscal 2026 with a stronger recurring-revenue engine but little top-line growth, leaving its final results as a standalone company unusually difficult to read. Annual recurring revenue excluding the divested Kepware and ThingWorx businesses rose 8% to US$2.508 billion, or 9.7% at constant currency, while revenue remained essentially flat at US$2.733 billion.

ARR grows while reported revenue stays flat

The underlying mix tells the more constructive part of the story. Support and cloud services revenue increased to US$1.534 billion from US$1.469 billion, while license revenue fell to US$1.105 billion from US$1.163 billion. In the fourth quarter, however, revenue dropped 25% to US$673.3 million, with PTC attributing the decline to the timing and accounting treatment of contracts under ASC 606. On a constant-currency basis, quarterly revenue declined 24%.

Profitability also weakened on the reported quarterly numbers. Fourth-quarter GAAP operating margin fell to 31.6% from 48.5%, while non-GAAP operating margin declined to 45.6% from 58.9%. Diluted GAAP earnings per share fell to US$1.44 from US$2.88, and non-GAAP diluted EPS fell to US$2.03 from US$3.41. For the full year, by contrast, GAAP diluted EPS rose 47% to US$8.93, but that comparison includes gains from the divestiture of Kepware and ThingWorx.

Divestiture gains lift full-year earnings

PTC recognised US$463.9 million in gains from selling those businesses during fiscal 2026. That helped lift GAAP net income to US$1.033 billion from US$734.0 million, even as operating income fell to US$896.1 million from US$982.4 million. Non-GAAP net income was US$953.7 million, down slightly from US$958.8 million, while non-GAAP EPS increased to US$8.24 from US$7.94 after the company’s reduced share count.

Cash generation was broadly steady for the full year: operating cash flow reached US$898.6 million, up from US$867.7 million, and free cash flow rose to US$872.7 million from US$856.7 million. PTC also repurchased US$1.625 billion of stock, compared with US$300.0 million in fiscal 2025. The detailed cash-flow statement reports fourth-quarter operating cash flow of US$47.3 million and free cash flow of US$37.7 million; those figures differ materially from the US$475 million and US$385 million shown in the headline quarterly metrics table, an inconsistency that investors should treat cautiously until clarified.

Schneider transaction removes the usual forecast framework

The reporting change is as important as the numbers. Following the definitive agreement announced on October 5, PTC said it is suspending quarterly earnings conference calls and will no longer provide quarterly or annual guidance while its acquisition by Schneider Electric remains pending. That removes the company’s normal forward-looking framework just as investors are trying to separate recurring operating performance from divestiture effects, transaction costs and acquisition-related uncertainty.