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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_ to_

Commission File Number: 0-18059

PTC Inc.

(Exact name of registrant as specified in its charter)

Massachusetts |  | 04-2866152
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

121 Seaport Boulevard, Boston, MA 02210

(Address of principal executive offices, including zip code)

(781) 370-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading symbol(s) | Name of each exchange on which registered
Common Stock, $.01 par value per share | PTC | NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer | ☑ |  | Accelerated filer | ☐ |  | Non-accelerated filer | ☐ |  | Smaller reporting company | ☐ |
|  |  |  |  |  |  |  |  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 115,505,791 shares of our common stock outstanding on May 4, 2026.

Table of Contents

INDEX TO FORM 10-Q

For the Quarter Ended March 31, 2026

|  |  |  | Page Number
Part I—FINANCIAL INFORMATION |  |
Item 1. |  | Unaudited Condensed Consolidated Financial Statements: |  | 1
|  | Consolidated Balance Sheets as of March 31, 2026 and September 30, 2025 |  | 1
|  | Consolidated Statements of Operations for the three and six months ended March 31, 2026 and March 31, 2025 |  | 2
|  | Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2026 and March 31, 2025 |  | 3
|  | Consolidated Statements of Cash Flows for the six months ended March 31, 2026 and March 31, 2025 |  | 4
|  | Consolidated Statements of Stockholders' Equity for the three and six months ended March 31, 2026 and March 31, 2025 |  | 5
|  | Notes to Condensed Consolidated Financial Statements |  | 7
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 20
Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk |  | 32
Item 4. |  | Controls and Procedures |  | 32
Part II—OTHER INFORMATION |  |
Item 1A. |  | Risk Factors |  | 33
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 33
Item 5. |  | Other Information |  | 33
Item 6. |  | Exhibits |  | 35
Signature |  | 36

Table of Contents

PART I—FINANCI AL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONS OLIDATED FINANCIAL STATEMENTS

PTC Inc.

CONSOLIDATED B ALANCE SHEETS

(in thousands, except per share data)

(unaudited)

|  | March 31, 2026 |  |  | September 30, 2025 |
ASSETS |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 439,112 |  |  | $ | 184,415 |
Accounts receivable, net of allowance for doubtful accounts of $1,890 and $1,487 at March 31, 2026 and September 30, 2025, respectively |  |  | 852,643 |  |  |  | 1,001,085 |
Prepaid expenses |  |  | 134,077 |  |  |  | 119,107 |
Other current assets |  |  | 78,307 |  |  |  | 78,760 |
Total current assets |  |  | 1,504,139 |  |  |  | 1,383,367 |
Property and equipment, net |  |  | 54,747 |  |  |  | 60,843 |
Goodwill |  |  | 3,403,009 |  |  |  | 3,493,316 |
Acquired intangible assets, net |  |  | 783,236 |  |  |  | 824,663 |
Deferred tax assets |  |  | 66,634 |  |  |  | 194,070 |
Operating right-of-use lease assets |  |  | 125,274 |  |  |  | 114,974 |
Other assets |  |  | 600,221 |  |  |  | 545,939 |
Total assets |  | $ | 6,537,260 |  |  | $ | 6,617,172 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 14,455 |  |  | $ | 11,504 |
Accrued expenses and other current liabilities |  |  | 154,270 |  |  |  | 136,140 |
Accrued compensation and benefits |  |  | 127,219 |  |  |  | 199,561 |
Accrued income taxes |  |  | 118,318 |  |  |  | 28,749 |
Current portion of long-term debt |  |  | 25,000 |  |  |  | 25,000 |
Deferred revenue |  |  | 756,687 |  |  |  | 812,271 |
Short-term lease obligations |  |  | 22,802 |  |  |  | 24,179 |
Total current liabilities |  |  | 1,218,751 |  |  |  | 1,237,404 |
Long-term debt |  |  | 1,172,972 |  |  |  | 1,172,434 |
Deferred tax liabilities |  |  | 29,786 |  |  |  | 30,151 |
Long-term deferred revenue |  |  | 14,363 |  |  |  | 14,794 |
Long-term lease obligations |  |  | 160,278 |  |  |  | 148,254 |
Other liabilities |  |  | 81,237 |  |  |  | 187,906 |
Total liabilities |  |  | 2,677,387 |  |  |  | 2,790,943 |
Commitments and contingencies (Note 11) |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued |  |  | — |  |  |  | — |
Common stock, $0.01 par value; 500,000 shares authorized; 115,498 and 119,536 shares issued and outstanding at March 31, 2026 and September 30, 2025, respectively |  |  | 1,155 |  |  |  | 1,195 |
Additional paid-in capital |  |  | 1,110,430 |  |  |  | 1,822,590 |
Retained earnings |  |  | 2,840,848 |  |  |  | 2,083,607 |
Accumulated other comprehensive loss |  |  | (92,560 | ) |  |  | (81,163 | )
Total stockholders’ equity |  |  | 3,859,873 |  |  |  | 3,826,229 |
Total liabilities and stockholders’ equity |  | $ | 6,537,260 |  |  | $ | 6,617,172 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEM ENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

|  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |
License |  | $ | 362,732 |  |  | $ | 254,395 |  |  | $ | 632,386 |  |  | $ | 427,149 |
Support and cloud services |  |  | 387,586 |  |  |  | 352,990 |  |  |  | 780,842 |  |  |  | 713,952 |
Total software revenue |  |  | 750,318 |  |  |  | 607,385 |  |  |  | 1,413,228 |  |  |  | 1,141,101 |
Professional services |  |  | 23,985 |  |  |  | 28,981 |  |  |  | 46,900 |  |  |  | 60,393 |
Total revenue |  |  | 774,303 |  |  |  | 636,366 |  |  |  | 1,460,128 |  |  |  | 1,201,494 |
Cost of revenue: |  |  |  |  |  |  |  |  |  |  |  |
Cost of license revenue |  |  | 12,021 |  |  |  | 10,939 |  |  |  | 25,363 |  |  |  | 21,162 |
Cost of support and cloud services revenue |  |  | 76,907 |  |  |  | 70,303 |  |  |  | 156,136 |  |  |  | 141,655 |
Total cost of software revenue |  |  | 88,928 |  |  |  | 81,242 |  |  |  | 181,499 |  |  |  | 162,817 |
Cost of professional services revenue |  |  | 24,690 |  |  |  | 25,020 |  |  |  | 49,865 |  |  |  | 55,242 |
Total cost of revenue |  |  | 113,618 |  |  |  | 106,262 |  |  |  | 231,364 |  |  |  | 218,059 |
Gross margin |  |  | 660,685 |  |  |  | 530,104 |  |  |  | 1,228,764 |  |  |  | 983,435 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  | 140,093 |  |  |  | 125,031 |  |  |  | 280,984 |  |  |  | 282,563 |
Research and development |  |  | 124,132 |  |  |  | 111,023 |  |  |  | 244,116 |  |  |  | 226,539 |
General and administrative |  |  | 88,646 |  |  |  | 54,993 |  |  |  | 162,647 |  |  |  | 108,312 |
Amortization of acquired intangible assets |  |  | 12,012 |  |  |  | 11,380 |  |  |  | 24,084 |  |  |  | 22,820 |
Impairment and other charges, net |  |  | — |  |  |  | 4,213 |  |  |  | — |  |  |  | 4,213 |
Total operating expenses |  |  | 364,883 |  |  |  | 306,640 |  |  |  | 711,831 |  |  |  | 644,447 |
Operating income |  |  | 295,802 |  |  |  | 223,464 |  |  |  | 516,933 |  |  |  | 338,988 |
Interest expense |  |  | (15,328 | ) |  |  | (19,606 | ) |  |  | (32,588 | ) |  |  | (41,654 | )
Other income, net |  |  | 466,325 |  |  |  | 1,391 |  |  |  | 465,429 |  |  |  | 1,069 |
Income before income taxes |  |  | 746,799 |  |  |  | 205,249 |  |  |  | 949,774 |  |  |  | 298,403 |
Provision for income taxes |  |  | 156,076 |  |  |  | 42,605 |  |  |  | 192,533 |  |  |  | 53,527 |
Net income |  | $ | 590,723 |  |  | $ | 162,644 |  |  | $ | 757,241 |  |  | $ | 244,876 |
Earnings per share—Basic |  | $ | 5.00 |  |  | $ | 1.35 |  |  | $ | 6.38 |  |  | $ | 2.04 |
Earnings per share—Diluted |  | $ | 4.98 |  |  | $ | 1.35 |  |  | $ | 6.35 |  |  | $ | 2.02 |
Weighted-average shares outstanding—Basic |  |  | 118,185 |  |  |  | 120,177 |  |  |  | 118,764 |  |  |  | 120,210 |
Weighted-average shares outstanding—Diluted |  |  | 118,553 |  |  |  | 120,854 |  |  |  | 119,277 |  |  |  | 121,000 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF C OMPREHENSIVE INCOME

(in thousands)

(unaudited)

|  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Net income |  | $ | 590,723 |  |  | $ | 162,644 |  |  | $ | 757,241 |  |  | $ | 244,876 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |
Hedge gain (loss) arising during the period, net of tax of $(2.2) million and $4.9 million in the second quarter of 2026 and 2025, respectively, and $(2.0) million and $(3.3) million in the first six months of 2026 and 2025, respectively |  |  | 6,745 |  |  |  | (15,014 | ) |  |  | 6,156 |  |  |  | 10,226 |
Foreign currency translation adjustment, net of tax of $0 for each period |  |  | (18,414 | ) |  |  | 36,202 |  |  |  | (17,885 | ) |  |  | (27,795 | )
Change in pension benefit, net of tax of $(0.1) million and $0.0 million in the second quarter of 2026 and 2025, respectively, and $(0.1) million and $(0.1) million in the first six months of 2026 and 2025, respectively |  |  | 256 |  |  |  | (313 | ) |  |  | 332 |  |  |  | 531 |
Other comprehensive income (loss) |  |  | (11,413 | ) |  |  | 20,875 |  |  |  | (11,397 | ) |  |  | (17,038 | )
Comprehensive income |  | $ | 579,310 |  |  | $ | 183,519 |  |  | $ | 745,844 |  |  | $ | 227,838 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEM ENTS OF CASH FLOWS

(in thousands)

(unaudited)

|  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 757,241 |  |  | $ | 244,876 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 49,990 |  |  |  | 51,263 |
Amortization of right-of-use lease assets |  |  | 17,728 |  |  |  | 16,165 |
Stock-based compensation |  |  | 126,466 |  |  |  | 107,363 |
Gain on divestiture of businesses |  |  | (464,602 | ) |  |  | — |
Other non-cash items, net |  |  | (2,052 | ) |  |  | 1,903 |
Changes in operating assets and liabilities, excluding the effects of acquisitions: |  |  |  |  |  |
Accounts receivable |  |  | 135,414 |  |  |  | 127,972 |
Accounts payable and accrued expenses |  |  | 81,706 |  |  |  | (35,405 | )
Accrued compensation and benefits |  |  | (37,897 | ) |  |  | (15,301 | )
Deferred revenue |  |  | (48,648 | ) |  |  | 34,532 |
Accrued income taxes |  |  | 108,888 |  |  |  | 5,565 |
Other current assets and prepaid expenses |  |  | (145,805 | ) |  |  | (7,735 | )
Operating lease liabilities |  |  | 12,414 |  |  |  | (2,596 | )
Other noncurrent assets and liabilities |  |  | (181 | ) |  |  | (8,864 | )
Net cash provided by operating activities |  |  | 590,662 |  |  |  | 519,738 |
Cash flows from investing activities: |  |  |  |  |  |
Additions to property and equipment |  |  | (5,011 | ) |  |  | (5,575 | )
Settlement of net investment hedges |  |  | 16,706 |  |  |  | 12,260 |
Divestiture of businesses |  |  | 523,306 |  |  |  | — |
Net cash provided by investing activities |  |  | 535,001 |  |  |  | 6,685 |
Cash flows from financing activities: |  |  |  |  |  |
Borrowings under credit facility |  |  | 76,250 |  |  |  | 860,000 |
Repayments of Senior Notes |  |  | — |  |  |  | (500,000 | )
Repayments of borrowings under credit facility |  |  | (76,250 | ) |  |  | (720,125 | )
Repurchases of common stock |  |  | (826,159 | ) |  |  | (150,000 | )
Proceeds from issuance of common stock |  |  | 13,162 |  |  |  | 13,307 |
Payments of withholding taxes in connection with stock-based awards |  |  | (52,816 | ) |  |  | (52,871 | )
Other financing activity |  |  | (1,007 | ) |  |  | (1,410 | )
Net cash used in financing activities |  |  | (866,820 | ) |  |  | (551,099 | )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |  |  | (4,146 | ) |  |  | (6,048 | )
Net change in cash, cash equivalents, and restricted cash |  |  | 254,697 |  |  |  | (30,724 | )
Cash, cash equivalents, and restricted cash, beginning of period |  |  | 184,988 |  |  |  | 266,466 |
Cash, cash equivalents, and restricted cash, end of period |  | $ | 439,685 |  |  | $ | 235,742 |
Supplemental disclosure of non-cash financing and investing activities: |  |  |  |  |  |
Operating right-of-use assets obtained in exchange for operating lease liabilities |  | $ | 25,770 |  |  | $ | 11,294 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

|  | Three months ended March 31, 2026 |
|  | Common Stock |  |  |  |  |  |  |  |  | Accumulated |  |  |  |
|  | Shares |  |  | Amount |  |  | Additional Paid-In Capital |  |  | Retained Earnings |  |  | Other Comprehensive Loss |  |  | Total Stockholders’ Equity |
Balance as of December 31, 2025 |  |  | 118,892 |  |  | $ | 1,189 |  |  | $ | 1,672,252 |  |  | $ | 2,250,125 |  |  | $ | (81,147 | ) |  | $ | 3,842,419 |
Common stock issued for employee stock-based awards |  |  | 64 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares surrendered by employees to pay taxes related to stock-based awards |  |  | (17 | ) |  |  | (1 | ) |  |  | (2,796 | ) |  |  | — |  |  |  | — |  |  |  | (2,797 | )
Common stock issued for employee stock purchase plan |  |  | 99 |  |  |  | 1 |  |  |  | 13,161 |  |  |  | — |  |  |  | — |  |  |  | 13,162 |
Compensation expense from stock-based awards |  |  | — |  |  |  | — |  |  |  | 58,105 |  |  |  | — |  |  |  | — |  |  |  | 58,105 |
Repurchases of common stock, including excise tax |  |  | (3,540 | ) |  |  | (35 | ) |  |  | (630,291 | ) |  |  | — |  |  |  | — |  |  |  | (630,326 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 590,723 |  |  |  | — |  |  |  | 590,723 |
Gain on net investment hedges, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,745 |  |  |  | 6,745 |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (18,414 | ) |  |  | (18,414 | )
Change in defined benefit pension items, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 256 |  |  |  | 256 |
Balance as of March 31, 2026 |  |  | 115,498 |  |  | $ | 1,155 |  |  | $ | 1,110,430 |  |  | $ | 2,840,848 |  |  | $ | (92,560 | ) |  | $ | 3,859,873 |

|  | Six months ended March 31, 2026 |
|  | Common Stock |  |  |  |  |  |  |  |  | Accumulated |  |  |  |
|  | Shares |  |  | Amount |  |  | Additional Paid-In Capital |  |  | Retained Earnings |  |  | Other Comprehensive Loss |  |  | Total Stockholders’ Equity |
Balance as of September 30, 2025 |  |  | 119,536 |  |  | $ | 1,195 |  |  | $ | 1,822,590 |  |  | $ | 2,083,607 |  |  | $ | (81,163 | ) |  | $ | 3,826,229 |
Common stock issued for employee stock-based awards |  |  | 845 |  |  |  | 9 |  |  |  | (9 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares surrendered by employees to pay taxes related to stock-based awards |  |  | (300 | ) |  |  | (4 | ) |  |  | (52,624 | ) |  |  | — |  |  |  | — |  |  |  | (52,628 | )
Common stock issued for employee stock purchase plan |  |  | 99 |  |  |  | 1 |  |  |  | 13,161 |  |  |  | — |  |  |  | — |  |  |  | 13,162 |
Compensation expense from stock-based awards |  |  | — |  |  |  | — |  |  |  | 158,753 |  |  |  | — |  |  |  | — |  |  |  | 158,753 |
Repurchases of common stock, including excise tax |  |  | (4,682 | ) |  |  | (46 | ) |  |  | (831,441 | ) |  |  | — |  |  |  | — |  |  |  | (831,487 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 757,241 |  |  |  | — |  |  |  | 757,241 |
Gain on net investment hedges, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,156 |  |  |  | 6,156 |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (17,885 | ) |  |  | (17,885 | )
Change in defined benefit pension items, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 332 |  |  |  | 332 |
Balance as of March 31, 2026 |  |  | 115,498 |  |  | $ | 1,155 |  |  | $ | 1,110,430 |  |  | $ | 2,840,848 |  |  | $ | (92,560 | ) |  | $ | 3,859,873 |

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|  | Three months ended March 31, 2025 |
|  | Common Stock |  |  |  |  |  |  |  |  | Accumulated |  |  |  |
|  | Shares |  |  | Amount |  |  | Additional Paid-In Capital |  |  | Retained Earnings |  |  | Other Comprehensive Loss |  |  | Total Stockholders’ Equity |
Balance as of December 31, 2024 |  |  | 120,219 |  |  | $ | 1,202 |  |  | $ | 1,936,411 |  |  | $ | 1,431,842 |  |  | $ | (139,634 | ) |  | $ | 3,229,821 |
Common stock issued for employee stock-based awards |  |  | 115 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares surrendered by employees to pay taxes related to stock-based awards |  |  | (34 | ) |  |  | — |  |  |  | (6,128 | ) |  |  | — |  |  |  | — |  |  |  | (6,128 | )
Common stock issued for employee stock purchase plan |  |  | 89 |  |  |  | 1 |  |  |  | 13,306 |  |  |  | — |  |  |  | — |  |  |  | 13,307 |
Compensation expense from stock-based awards |  |  | — |  |  |  | — |  |  |  | 41,278 |  |  |  | — |  |  |  | — |  |  |  | 41,278 |
Repurchases of common stock, including excise tax |  |  | (463 | ) |  |  | (5 | ) |  |  | (75,329 | ) |  |  | — |  |  |  | — |  |  |  | (75,334 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 162,644 |  |  |  | — |  |  |  | 162,644 |
Loss on net investment hedges, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (15,014 | ) |  |  | (15,014 | )
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 36,202 |  |  |  | 36,202 |
Change in defined benefit pension items, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (313 | ) |  |  | (313 | )
Balance as of March 31, 2025 |  |  | 119,926 |  |  | $ | 1,199 |  |  | $ | 1,909,537 |  |  | $ | 1,594,486 |  |  | $ | (118,759 | ) |  | $ | 3,386,463 |

|  | Six months ended March 31, 2025 |
|  | Common Stock |  |  |  |  |  |  |  |  | Accumulated |  |  |  |
|  | Shares |  |  | Amount |  |  | Additional Paid-In Capital |  |  | Retained Earnings |  |  | Other Comprehensive Loss |  |  | Total Stockholders’ Equity |
Balance as of September 30, 2024 |  |  | 120,155 |  |  | $ | 1,202 |  |  | $ | 1,965,307 |  |  | $ | 1,349,610 |  |  | $ | (101,721 | ) |  | $ | 3,214,398 |
Common stock issued for employee stock-based awards |  |  | 810 |  |  |  | 8 |  |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares surrendered by employees to pay taxes related to stock-based awards |  |  | (282 | ) |  |  | (3 | ) |  |  | (53,318 | ) |  |  | — |  |  |  | — |  |  |  | (53,321 | )
Common stock issued for employee stock purchase plan |  |  | 89 |  |  |  | 1 |  |  |  | 13,306 |  |  |  | — |  |  |  | — |  |  |  | 13,307 |
Compensation expense from stock-based awards |  |  | — |  |  |  | — |  |  |  | 134,575 |  |  |  | — |  |  |  | — |  |  |  | 134,575 |
Repurchases of common stock, including excise tax |  |  | (846 | ) |  |  | (9 | ) |  |  | (150,325 | ) |  |  | — |  |  |  | — |  |  |  | (150,334 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 244,876 |  |  |  | — |  |  |  | 244,876 |
Gain on net investment hedges, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,226 |  |  |  | 10,226 |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (27,795 | ) |  |  | (27,795 | )
Change in defined benefit pension items, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 531 |  |  |  | 531 |
Balance as of March 31, 2025 |  |  | 119,926 |  |  | $ | 1,199 |  |  | $ | 1,909,537 |  |  | $ | 1,594,486 |  |  | $ | (118,759 | ) |  | $ | 3,386,463 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

NOTES TO CON DENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows as of the dates and for the periods indicated. The September 30, 2025 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30.

Recently Adopted Accounting Pronouncements

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which expands the scope exceptions of the derivatives guidance and clarifies the guidance on share-based payments from a customer. Specifically, the ASU introduces a scope exception for contracts that are not exchange-traded and that have variables based on operations or activities specific to one of the parties of the contract. The ASU is effective for us in the first quarter of 2028, with early adoption permitted. We early adopted this standard prospectively in the second quarter of 2026. The adoption of this ASU did not have an impact on our consolidated financial statements and related disclosures.

Pending Accounting Pronouncements

Narrow-Scope Improvements for Interim Reporting

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. We expect the adoption to result in disclosure changes only.

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Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software by eliminating project stage-based capitalization and clarifying the probable-to-complete threshold to commence the capitalization of software costs. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. The standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Measurements of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The ASU will be effective for us in the first quarter of 2027, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. As clarified by ASU 2025-01, ASU 2024-03 will be effective for us in the fourth quarter of 2028. We expect the adoption to result in disclosure changes only.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU will be effective for us in the fourth quarter of 2026. We expect the adoption to result in disclosure changes only.

2. Revenue from Contracts with Customers

Receivables, Co ntract Assets and Contract Liabilities

(in thousands) |  | March 31, 2026 |  |  | September 30, 2025 |
Short-term receivables |  | $ | 852,643 |  |  | $ | 1,001,085 |
Long-term receivables |  | $ | 446,508 |  |  | $ | 378,941 |
Contract asset |  | $ | 12,070 |  |  | $ | 11,044 |
Deferred revenue |  | $ | 771,050 |  |  | $ | 827,065 |

During the six months ended March 31, 2026, we recognized $551.1 million of revenue that was included in Deferred revenue as of September 30, 2025. The remainder of the change in the Deferred revenue balance was driven by additional deferrals, primarily from new bil lings, offset by a decrease of approximately $56 million related to the Kepware and ThingWorx divestiture and a decrease resulting from changes in foreign currency exchange rates.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of March 31, 2026 and September 30, 2025, our total revenue liability was $44.4 million and $39.7 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

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Remaining Performance Obligations (RPO)

Our contracts with customers include amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as foreign currency exchange rate fluctuations. As of March 31, 2026, RPO totaled $2,514.5 million, of which $771.1 million is recorded in Deferred revenue and $1,743.4 million is not yet recorded in the Consolidated Balance Sheets. Of the total, we expect to recognize approximately 53% over the next 12 months, 27% over the next 13 to 24 months, and the remaining amount thereafter.

Disaggregation of Revenue

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Recurring revenue(1) |  | $ | 743,376 |  |  | $ | 601,549 |  |  | $ | 1,400,656 |  |  | $ | 1,125,860 |
Perpetual license |  |  | 6,942 |  |  |  | 5,836 |  |  |  | 12,572 |  |  |  | 15,241 |
Professional services |  |  | 23,985 |  |  |  | 28,981 |  |  |  | 46,900 |  |  |  | 60,393 |
Total revenue |  | $ | 774,303 |  |  | $ | 636,366 |  |  | $ | 1,460,128 |  |  | $ | 1,201,494 |

(1)
Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

We report revenue by the following two product groups:

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Product lifecycle management (PLM) |  | $ | 492,128 |  |  | $ | 396,149 |  |  | $ | 923,670 |  |  | $ | 749,608 |
Computer-aided design (CAD) |  |  | 282,175 |  |  |  | 240,217 |  |  |  | 536,458 |  |  |  | 451,886 |
Total revenue |  | $ | 774,303 |  |  | $ | 636,366 |  |  | $ | 1,460,128 |  |  | $ | 1,201,494 |

Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Americas |  | $ | 375,589 |  |  | $ | 292,823 |  |  | $ | 696,524 |  |  | $ | 570,792 |
Europe |  |  | 299,404 |  |  |  | 251,148 |  |  |  | 570,931 |  |  |  | 447,172 |
Asia Pacific |  |  | 99,310 |  |  |  | 92,395 |  |  |  | 192,673 |  |  |  | 183,530 |
Total revenue |  | $ | 774,303 |  |  | $ | 636,366 |  |  | $ | 1,460,128 |  |  | $ | 1,201,494 |

3. Stock-based Compensation

Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows:

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Cost of license revenue |  | $ | 107 |  |  | $ | 72 |  |  | $ | 206 |  |  | $ | 106 |
Cost of support and cloud services revenue |  |  | 5,216 |  |  |  | 3,912 |  |  |  | 9,462 |  |  |  | 7,970 |
Cost of professional services revenue |  |  | 1,816 |  |  |  | 1,523 |  |  |  | 3,465 |  |  |  | 3,344 |
Sales and marketing |  |  | 20,032 |  |  |  | 13,545 |  |  |  | 35,230 |  |  |  | 31,613 |
Research and development |  |  | 18,157 |  |  |  | 14,391 |  |  |  | 34,072 |  |  |  | 30,546 |
General and administrative |  |  | 23,271 |  |  |  | 18,069 |  |  |  | 44,031 |  |  |  | 33,784 |
Total stock-based compensation expense |  | $ | 68,599 |  |  | $ | 51,512 |  |  | $ | 126,466 |  |  | $ | 107,363 |

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As of March 31, 2026 and September 30, 2025, we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $18.9 million and $51.3 million, respectively. The liability as of September 30, 2025 was settled via the issuance of shares in the first quarter of 2026.

4. Earnings per Share (EPS) and Common Stock

EPS

The following table presents the calculation for both basic and diluted EPS:

(in thousands, except per share data) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Net income |  | $ | 590,723 |  |  | $ | 162,644 |  |  | $ | 757,241 |  |  | $ | 244,876 |
Weighted-average shares outstanding—Basic |  |  | 118,185 |  |  |  | 120,177 |  |  |  | 118,764 |  |  |  | 120,210 |
Dilutive effect of restricted stock units |  |  | 368 |  |  |  | 677 |  |  |  | 513 |  |  |  | 790 |
Weighted-average shares outstanding—Diluted |  |  | 118,553 |  |  |  | 120,854 |  |  |  | 119,277 |  |  |  | 121,000 |
Earnings per share—Basic |  | $ | 5.00 |  |  | $ | 1.35 |  |  | $ | 6.38 |  |  | $ | 2.04 |
Earnings per share—Diluted |  | $ | 4.98 |  |  | $ | 1.35 |  |  | $ | 6.35 |  |  | $ | 2.02 |

T here were 0.3 million and 0.1 million anti-dilutive shares for the three and six months ended March 31, 2026, respectively. There were 0.3 million and 0.2 million anti-dilutive shares for the three and six months ended March 31, 2025, respectively.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2026 (the “current authorization”), and $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. The amount remaining under the current authorization for repurchases as of March 31, 2026 is set forth in Part II, Item 2 Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report.

On March 17, 2026, we entered into an accelerated share repurchase agreement ("ASR") with a major financial institution ("Bank") to repurchase $375 million of our outstanding common stock as a part of our existing share repurchase pr ogram. The ASR was funded with proceeds from the Kepware and ThingWorx divestiture. Upon execution of the ASR, we paid the Bank $375 million and received an initial delivery of 1.9 million shares, which represented 80% ($300 million) of the value of the ASR contract.

The remaining $75 million represents the amount held back by the Bank pending final settlement of the ASR, which is expected to occur in the third quarter of 2026. Upon settlement of the ASR, the total shares repurchased will equal $375 million divided by the average daily volume weighted-average price of our common stock during the term of the ASR less a fixed per-share discount. Settlement may occur in cash or shares at our election. We accounted for the ASR as an equity transaction; accordingly, this $75 million was recorded as a reduction to Additional paid-in capital in the second quarter of 2026.

In addition to the ASR repurchases described above, in the second quarter and first six months of 2026, we repurchased 1.6 million sha res for $250 million and 2.8 million shares for $450 million, respectively, through open market transactions. In the second quarter and first six months of 2026, we also paid $1.1 million in excise taxes related to share repurchases. In the second quarter and first six months of 2025, we repurchased 0.5 million shares for $75 million and 0.8 million shares for $150 million, respectively, through open market transactions.

All shares repurchased are automatically restored to the status of authorized and unissued.

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5. Acquisitions and Divestitures

Acquisition and transaction-related costs in the second quarter and first six months of 2026 totaled $26.5 million and $37.1 million, respectively, compared to $0.6 million and $0.8 million in the second quarter and first six months of 2025, respectively. These costs are classified in General and administrative expense in the accompanying Consolidated Statements of Operations.

Kepware and ThingWorx Divestiture

On March 13, 2026, we sold our Kepware and ThingWorx businesses pursuant to an Asset Purchase Agreement dated November 5, 2025 with Parrot US Buyer, L.P., a Delaware limited partnership (“Purchaser”), an entity controlled by investment funds affiliated with TPG Global, LLC. Total consideration for the transaction was $530.8 million, of which $523.3 million was received as cash proceeds in the second quarter of 2026 and $7.5 million is expected to be received in 2026. Consideration is subject to final working capital and indebtedness adjustments.

Additional future contingent consideration of up to $125 million may be received by PTC in certain circumstances following a sale of the Business by Purchaser. We have elected to defer the recognition of gains associated with contingent consideration unless and until they become realizable.

Goodwill was allocated to the sold businesses based on a relative fair value allocation of total goodwill. The assets and liabilities of the Kepware and ThingWorx businesses were classified as held for sale in the first quarter of 2026. Upon closing the transaction, we sold $68.2 million of net assets and recognized a gain on the sale of $462.6 million, which is included in Other income, net. This resulted in tax expense of $102.4 million included in our income tax provision.

In connection with this divestiture, we entered into a transition services agreement ("TSA") with Purchaser, whereby we agreed to provide certain transition services for up to 12 months from the date of sale. Income related to the TSA offsets the operating costs to provide these services and is recognized as a reduction of the related operating expenses. TSA income was not material in the three months ended March 31, 2026.

6. Goodwill and Intangible Assets

Goodwill and acquired intangible assets consisted of the following:

(in thousands) |  | March 31, 2026 |  |  | September 30, 2025 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Book Value |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Book Value |
Goodwill |  |  |  |  |  |  |  | $ | 3,403,009 |  |  |  |  |  |  |  |  | $ | 3,493,316 |
Intangible assets with finite lives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased software |  | $ | 545,687 |  |  | $ | 394,974 |  |  | $ | 150,713 |  |  | $ | 639,104 |  |  | $ | 472,357 |  |  | $ | 166,747 |
Capitalized software |  |  | 22,877 |  |  |  | 22,877 |  |  |  | — |  |  |  | 22,877 |  |  |  | 22,877 |  |  |  | — |
Customer lists and relationships |  |  | 1,090,276 |  |  |  | 470,332 |  |  |  | 619,944 |  |  |  | 1,149,262 |  |  |  | 505,202 |  |  |  | 644,060 |
Trademarks and trade names |  |  | 31,882 |  |  |  | 19,303 |  |  |  | 12,579 |  |  |  | 38,179 |  |  |  | 24,323 |  |  |  | 13,856 |
Other |  |  | 3,486 |  |  |  | 3,486 |  |  |  | — |  |  |  | 4,019 |  |  |  | 4,019 |  |  |  | — |
Total intangible assets with finite lives |  | $ | 1,694,208 |  |  | $ | 910,972 |  |  | $ | 783,236 |  |  | $ | 1,853,441 |  |  | $ | 1,028,778 |  |  | $ | 824,663 |
Total goodwill and acquired intangible assets |  |  |  |  |  |  |  | $ | 4,186,245 |  |  |  |  |  |  |  |  | $ | 4,317,979 |

Changes in Goodwill were as follows:

(in thousands) |  |  |
Balance, October 1, 2025 |  | $ | 3,493,316 |
Divestiture of businesses |  |  | (82,204 | )
Foreign currency translation adjustment |  |  | (8,103 | )
Balance, March 31, 2026 |  | $ | 3,403,009 |

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The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows:

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Amortization of acquired intangible assets |  | $ | 12,012 |  |  | $ | 11,380 |  |  | $ | 24,084 |  |  | $ | 22,820 |
Cost of revenue |  |  | 7,768 |  |  |  | 8,131 |  |  |  | 15,668 |  |  |  | 16,431 |
Total amortization expense |  | $ | 19,780 |  |  | $ | 19,511 |  |  | $ | 39,752 |  |  | $ | 39,251 |

7. Fair Value Measurements

The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:

•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or
•
Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Money market funds, time deposits, and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

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Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and September 30, 2025 were as follows:

(in thousands) |  | March 31, 2026 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents(1) |  | $ | 268,635 |  |  | $ | — |  |  | $ | — |  |  | $ | 268,635 |
Forward contracts |  |  | — |  |  |  | 735 |  |  |  | — |  |  |  | 735 |
Option contracts |  |  | — |  |  |  | 6,882 |  |  |  | — |  |  |  | 6,882 |
|  | $ | 268,635 |  |  | $ | 7,617 |  |  | $ | — |  |  | $ | 276,252 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  |  | — |  |  |  | 5,274 |  |  |  | — |  |  |  | 5,274 |
|  | $ | — |  |  | $ | 5,274 |  |  | $ | — |  |  | $ | 5,274 |

(in thousands) |  | September 30, 2025 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents(1) |  | $ | 38,031 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,031 |
Forward contracts |  |  | — |  |  |  | 6,007 |  |  |  | — |  |  |  | 6,007 |
Option contracts |  |  | — |  |  |  | 6,228 |  |  |  | — |  |  |  | 6,228 |
|  | $ | 38,031 |  |  | $ | 12,235 |  |  | $ | — |  |  | $ | 50,266 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  |  | — |  |  |  | 4,773 |  |  |  | — |  |  |  | 4,773 |
|  | $ | — |  |  | $ | 4,773 |  |  | $ | — |  |  | $ | 4,773 |

(1)
Money market funds and time deposits.

8. Derivative Financial Instruments

We enter into derivative transactions to manage our exposure to fluctuations in foreign exchange rates, specifically foreign currency forward contracts to manage our exposure related to monetary assets and liabilities denominated in foreign currencies and foreign exchange option contracts to manage our exposure related to forecasted cash flows. We do not enter into derivative transactions for trading or speculative purposes.

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

(in thousands) |  | Fair Value of Derivatives Designated As Hedging Instruments |  |  | Fair Value of Derivatives Not Designated As Hedging Instruments |
|  | March 31, 2026 |  |  | September 30, 2025 |  |  | March 31, 2026 |  |  | September 30, 2025 |
Derivative assets(1): |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  | $ | — |  |  | $ | 2,871 |  |  | $ | 735 |  |  | $ | 3,136 |
Option contracts |  | $ | — |  |  | $ | — |  |  | $ | 6,882 |  |  | $ | 6,228 |
Derivative liabilities(2): |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  | $ | 2,149 |  |  | $ | — |  |  | $ | 3,125 |  |  | $ | 4,773 |

(1)
As of March 31, 2026 and September 30, 2025, current derivative assets are recorded in Other current assets in the Consolidated Balance Sheets.
(2)
As of March 31, 2026 and September 30, 2025, current derivative liabilities are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

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Non-Designated Hedges

We hedge our net foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in Other income, net.

We hedge our forecasted U.S. Dollar cash flows with foreign exchange option contrac ts to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These options have maturities of up to approximately fourteen months. We do not designate these foreign currency option contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into option contracts as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations may be partially offset by gains on the option contracts. Gains and losses on foreign exchange option contracts are included in Other income, net.

As of March 31, 2026 and September 30, 2025, we had outstanding forward and option contracts not designated as hedging instruments with notional amounts equivalent to the following:

Currency Hedged (in thousands) |  | March 31, 2026 |  |  | September 30, 2025 |
Euro / U.S. Dollar(1) |  | $ | 820,821 |  |  | $ | 1,202,830 |
British Pound / U.S. Dollar |  |  | 16,776 |  |  |  | 22,974 |
Israeli Shekel / U.S. Dollar |  |  | 18,493 |  |  |  | 20,094 |
Indian Rupee / U.S. Dollar |  |  | 54,756 |  |  |  | 53,465 |
Japanese Yen / U.S. Dollar(2) |  |  | 98,390 |  |  |  | 131,284 |
Swedish Krona / U.S. Dollar |  |  | 12,392 |  |  |  | 21,568 |
New Taiwan Dollar / U.S. Dollar |  |  | 8,074 |  |  |  | 23,098 |
All other |  |  | 29,456 |  |  |  | 42,773 |
Total |  | $ | 1,059,158 |  |  | $ | 1,518,086 |

(1)
As of March 31, 2026, $677.5 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $143.3 million relates to option contracts. As of September 30, 2025, $835.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $367.4 million relates to option contracts.
(2)
As of March 31, 2026, $40.4 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $58.0 million relate s to option contracts. As of September 30, 2025, $41.9 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $89.4 million relates to option contracts.

The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the three and six months ended March 31, 2026 and March 31, 2025:

(in thousands) |  |  |  | Three months ended |  |  | Six months ended |
|  | Location of Gain (Loss) |  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged |  | Other income, net |  | $ | 931 |  |  | $ | (917 | ) |  | $ | 1,143 |  |  | $ | (360 | )

In the three months ended March 31, 2026 and March 31, 2025, total foreign currency gains, net were immaterial. In the six months ended March 31, 2026 and March 31, 2025, total foreign currency losses, net were $1.9 million and $1.1 million, respectively.

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Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro and Japanese Yen functional subsidiaries. Net investment hedges partially offset the impact of Foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three mo nths.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro and Japanese Yen functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in Accumulated other comprehensive loss. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

As of March 31, 2026 and September 30, 2025, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

Currency Hedged (in thousands) |  | March 31, 2026 |  |  | September 30, 2025 |
Euro / U.S. Dollar |  | $ | 516,854 |  |  | $ | 480,198 |
Japanese Yen / U.S. Dollar |  |  | 18,957 |  |  |  | 10,260 |
Total |  | $ | 535,811 |  |  | $ | 490,458 |

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and six months ended March 31, 2026 and March 31, 2025:

(in thousands) |  |  |  | Three months ended |  |  | Six months ended |
|  | Location of Gain (Loss) |  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Gain (loss) recognized in Other comprehensive income (loss) ("OCI") |  | OCI |  | $ | 8,942 |  |  | $ | (19,898 | ) |  | $ | 8,160 |  |  | $ | 13,550 |
Gain (loss) reclassified from OCI to earnings |  | n/a |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Gain recognized, excluded portion |  | Other income, net |  | $ | 1,595 |  |  | $ | 1,254 |  |  | $ | 3,526 |  |  | $ | 2,329 |

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements for our foreign exchange contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

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The following table sets forth the offsetting of derivative assets as of March 31, 2026:

(in thousands) |  | Gross Amounts Offset in the Consolidated Balance Sheets |  |  |  |  |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |  |  |
As of March 31, 2026 |  | Gross Amount of Recognized Assets |  |  | Gross Amounts Offset in the Consolidated Balance Sheets |  |  | Net Amounts of Assets Presented in the Consolidated Balance Sheets |  |  | Financial Instruments |  |  | Cash Collateral Received |  |  | Net Amount |
Foreign exchange contracts |  | $ | 7,617 |  |  | $ | — |  |  | $ | 7,617 |  |  | $ | (5,274 | ) |  | $ | — |  |  | $ | 2,343 |

The following table sets forth the offsetting of derivative liabilities as of March 31, 2026:

(in thousands) |  | Gross Amounts Offset in the Consolidated Balance Sheets |  |  |  |  |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |  |  |
As of March 31, 2026 |  | Gross Amount of Recognized Liabilities |  |  | Gross Amounts Offset in the Consolidated Balance Sheets |  |  | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets |  |  | Financial Instruments |  |  | Cash Collateral Pledged |  |  | Net Amount |
Foreign exchange contracts |  | $ | 5,274 |  |  | $ | — |  |  | $ | 5,274 |  |  | $ | (5,274 | ) |  | $ | — |  |  | $ | — |

9. Income Taxes

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Income before income taxes |  | $ | 746,799 |  |  | $ | 205,249 |  |  | $ | 949,774 |  |  | $ | 298,403 |
Provision for income taxes |  | $ | 156,076 |  |  | $ | 42,605 |  |  | $ | 192,533 |  |  | $ | 53,527 |
Effective income tax rate |  |  | 21 | % |  |  | 21 | % |  |  | 20 | % |  |  | 18 | %

The effective tax rate for the six months ended March 31, 2026 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. For the three and six months ended March 31, 2026, the provision for income taxes includes tax expense of $102.4 million on the gain on sale of $462.6 million related to the Kepware and ThingWorx divestiture. The effective tax rate for the six months ended March 31, 2026 also reflected a net income tax benefit of $7.1 million related to Internal Revenue Service (IRS) procedural guidance, as described below. The six months ended March 31, 2025 included a benefit of $10.4 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.

In the six months ended March 31, 2026, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In the quarter ended December 31, 2025, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7.1 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits.

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As of March 31, 2026 and September 30, 2025, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $161.3 million (118.3 million in Accrued income taxes and $43.0 million recorded in Other Liabilities) and $179.1 million ($28.7 million in Accrued income taxes and $150.4 million in Other liabilities), respectively.

As of March 31, 2026 and September 30, 2025, we had unrecognized tax benefits of $50.5 million and $157.7 million, respectively. This decrease predominantly relates to the release of the reserve established in 2025 related to the IRS procedural guidance, primarily resulting in corresponding decreases to Deferred tax assets and the reserve for unrecognized tax benefits within Other liabilities. Additionally, this resulted in a $7.1 million net income tax benefit as described above. If all our unrecognized tax benefits as of March 31, 2026 were to become recognizable in the future, we would record a benefit to the income tax provision of $50.5 million, which would be partially offset by an increase in the U.S. valuation allowance of $5.6 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $1 million.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that are applicable to us beginning in 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning 2026.

10. Debt

As of March 31, 2026 and September 30, 2025, we had the following debt obligations:

(in thousands) |  | March 31, 2026 |  |  | September 30, 2025 |
4.000% Senior notes due 2028 |  | $ | 500,000 |  |  | $ | 500,000 |
Credit facility revolver line(1)(2) |  |  | 243,750 |  |  |  | 231,250 |
Credit facility term loan(1)(2) |  |  | 456,250 |  |  |  | 468,750 |
Total debt |  |  | 1,200,000 |  |  |  | 1,200,000 |
Unamortized debt issuance costs for the senior notes(3) |  |  | (2,028 | ) |  |  | (2,566 | )
Total debt, net of issuance costs(4) |  | $ | 1,197,972 |  |  | $ | 1,197,434 |

(1)
Unamortized debt issuance costs related to the credit facility were $2.7 million included in Other current assets and $2.9 million included in Other assets on the Consolidated Balance Sheet as of March 31, 2026 and $2.7 million included in Other current assets and $3.3 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2025.
(2)
The stated maturity date under the credit facility on which both the revolver line and the term loan will mature and all amounts then outstanding will become due and payable is January 3, 2028. The term loan began amortizing in March 2024, with payments remaining of $12.5 mi llion in 2026, $25.0 million in 2027, and $418.7 million in 2028.
(3)
As of March 31, 2026 and September 30, 2025, all unamortized debt issuance costs for the senior notes were included in Long-term debt on the Consolidated Balance Sheets.
(4)
As of March 31, 2026 and September 30, 2025, $25.0 million of debt associated with the credit facility term loan was classified as short term.

Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes). As of March 31, 2026, the total estimated fair value of the 2028 notes was approximately $488.8 million based on quoted prices for the notes on that date. We were in compliance with all the covenants for our senior notes as of March 31, 2026.

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Credit Agreement

Our credit facility consists of (i) a $1.25 billion revolving credit facility, (ii) a $500 million term loan credit facility, and (iii) an incremental facility pursuant to which we may incur additional term loan tranches or increase the revolving credit facility. As of March 31, 2026, unused commitments under our revolving credit facility were $1,006.3 million and the amount available to borrow was $989.2 million. As of March 31, 2026, the fair value of our credit facility approximates its book value. PTC and certain foreign subsidiaries are eligible borrowers under the credit facility. As of March 31, 2026, $46.3 million was borrowed by an eligible foreign subsidiary borrower. We were in compliance with all financial and operating covenants of the credit facility as of March 31, 2026.

Loans under the credit facility bear interest at variable rates. As of March 31, 2026, the annual rate for borrowings outstanding was 5.1%. A quarterly revolving commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.175% to 0.325% per annum, based upon our total leverage ratio.

Interest

We incurred interest expense on our debt of $15.3 million and $32.6 million in the second quarter and first six months of 2026, respectively, and $19.6 million and $41.7 million in the second quarter and first six months of 2025, respectively. The average interest rate on borrowings outstanding was approximately 4.7% during the second quarter and first six months of 2026, and 4.9% and 4.8% during the second quarter and first six months of 2025, respectively.

11. Commitments and Contingencies

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.

12. Segments

We operate as a single operating and reportable segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. The CODM evaluates financial performance and allocates resources based on consolidated results, including consolidated net income. The total assets of the segment are reported on the Consolidated Balance Sheets.

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The following table presents revenue, significant expenses, and consolidated net income for our reportable segment:

(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Revenue |  | $ | 774,303 |  |  | $ | 636,366 |  |  | $ | 1,460,128 |  |  | $ | 1,201,494 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue, adjusted(1) |  |  | 98,711 |  |  |  | 92,624 |  |  |  | 202,563 |  |  |  | 190,208 |
Operating expenses, adjusted(2) |  |  | 264,939 |  |  |  | 244,432 |  |  |  | 537,279 |  |  |  | 520,646 |
Other segment items(3) |  |  | (180,070 | ) |  |  | 136,666 |  |  |  | (36,955 | ) |  |  | 245,764 |
Consolidated net income |  | $ | 590,723 |  |  | $ | 162,644 |  |  | $ | 757,241 |  |  | $ | 244,876 |

(1)
Cost of revenue, adjusted excludes stock-based compensation and amortization of acquired intangible assets.
(2)
Operating expenses, adjusted excludes stock-based compensation, amortization of acquired intangible assets, acquisition and transaction-related charges, and Impairment and other charges, net.
(3)
Other segment items include stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges; Impairment and other charges, net; Other income, net; and Provision for income taxes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

PTC is a global software company headquartered in Boston, Massachusetts. We employ over 7,000 people and support more than 30,000 customers globally.

We primarily serve customers in the following industry verticals:

•
Industrials
•
Federal, Aerospace and Defense
•
Electronics and High Tech
•
Automotive
•
Medical Technology and Life Sciences

Our customers are focused on improving their competitiveness in the face of global competition and increasing product complexity, and our suite of software offerings is a strategic enabler of this and their digital transformation initiatives. Given the breadth and openness of our portfolio, we enable the Intelligent Product Lifecycle: establishing a strong product data foundation in the engineering department and democratizing the access and use of that data across the enterprise to drive cross-functional collaboration, accelerate new product introduction timelines, and deliver higher product quality. By embracing the Intelligent Product Lifecycle, our customers establish the quality, consistency, and traceability of product data, ensuring the data is up-to-date, accessible, reliable, and actionable. Our customers can then go on to use this data to break down silos, streamline workflows, and achieve interoperability across departments, functions, and systems. This includes the growing emphasis on AI-driven transformation across our customers’ teams, operations, and processes. A product data foundation is the backbone of AI-driven transformation.

Our business is based on a subscription model and approximately 95% of our 2025 and 2026 year-to-date revenue was recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to support our customers and pursue mid-to-long-term growth opportunities.

Forward-Looking Statements

Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, and the anticipated benefits of the sale of the Kepware and ThingWorx businesses (the “divestiture”) are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, the effects of import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, including the recent military conflict in Iran, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; our investments in our software solutions, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if those capabilities are not made available when or as we expect, if customers are slower to adopt those solutions than we

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expect, or if customers adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the proceeds we receive under the Transition Services Agreement entered into in connection with the divestiture may be lower than expected and/or may not offset our expenses and/or the cash flow impact of the divestiture to the extent expected; the divestiture and/or performance of the Transition Services Agreement may disrupt our business to a greater extent than we expect; other uses of cash or our credit facility limits could limit or preclude the return of excess cash to shareholders by way of share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected are described below throughout or referenced in Part II, Item 1A. Risk Factors of this report.

Our Operating and Non-GAAP Financial Measures

Our discussion of results includes discussion of our ARR operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis. ARR and our non-GAAP financial measures are described below in Operating and Non-GAAP Financial Measures. The methodology used to calculate constant currency disclosures is described in Results of Operations - Impact of Foreign Currency Exchange on Results of Operations. You should read those sections to understand our operating measure, non-GAAP financial measures, and constant currency disclosures.

Given the divestiture of our Kepware and ThingWorx businesses in Q2’26, we are also providing ARR excluding those divested businesses, which removes ARR attributable to those businesses from the applicable prior periods to facilitate meaningful period-to-period comparisons of our continuing business.

Executive Overview

We completed the divestiture of our Kepware and ThingWorx businesses on March 13, 2026. We received $523 million upon closing of the transaction and recognized a $463 million gain on the sale. Refer to Note 5. Acquisitions and Divestitures for additional detail.

ARR grew 3% (1% constant currency) to $2.36 billion as of the end of Q2’26 compared to Q2’25, with growth impacted by the Q2'26 divestiture of Kepware and ThingWorx. Excluding the divested businesses from Q2'25 ARR, ARR growth would have been 11% (8.5% constant currency).

Cash provided by operating activities grew 14% to $321 million in Q2'26 compared to Q2'25. Free cash flow grew 14% to $318 million in Q2'26 compared to Q2'25. In Q2'26, we made $5 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q2'26, we used $626 million to repurchase outstanding shares, including $375 million paid upon entry into an Accelerated Share Repurchase agreement (ASR).

Revenue grew 22% (15% constant currency) to $774 million in Q2'26 compared to Q2'25, reflecting the value and duration of contracts that commenced in the period. Operating margin grew by approximately 310 basis points in Q2'26 compared to Q2'25, reflecting higher revenue and continued operating discipline, offset by the impact of divestiture-related charges of $27 million. Diluted earnings per share grew 270% to $4.98 in Q2'26 compared to Q2'25, primarily driven by the Q2'26 recognition of a $360 million gain, net of tax on the Kepware and ThingWorx divestiture.

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Results of Operations

(Dollar amounts in millions, except per share data) |  | Three months ended |  |  | Percent Change |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency(1) |
ARR |  | $ | 2,364.7 |  |  | $ | 2,290.1 |  |  |  | 3 | % |  |  | 1 | %
ARR excluding divested businesses(2) |  | $ | 2,364.7 |  |  | $ | 2,136.0 |  |  |  | 11 | % |  |  | 8.5 | %
Total recurring revenue(3) |  | $ | 743.4 |  |  | $ | 601.5 |  |  |  | 24 | % |  |  | 17 | %
Perpetual license |  |  | 6.9 |  |  |  | 5.8 |  |  |  | 19 | % |  |  | 14 | %
Professional services |  |  | 24.0 |  |  |  | 29.0 |  |  |  | (17 | )% |  |  | (21 | )%
Total revenue |  |  | 774.3 |  |  |  | 636.4 |  |  |  | 22 | % |  |  | 15 | %
Total cost of revenue |  |  | 113.6 |  |  |  | 106.3 |  |  |  | 7 | % |  |  | 5 | %
Gross margin |  |  | 660.7 |  |  |  | 530.1 |  |  |  | 25 | % |  |  | 17 | %
Operating expenses |  |  | 364.9 |  |  |  | 306.6 |  |  |  | 19 | % |  |  | 15 | %
Operating income |  | $ | 295.8 |  |  | $ | 223.5 |  |  |  | 32 | % |  |  | 20 | %
Non-GAAP operating income(1) |  | $ | 410.7 |  |  | $ | 299.3 |  |  |  | 37 | % |  |  | 27 | %
Operating margin |  |  | 38.2 | % |  |  | 35.1 | % |  |  |  |  |  |
Non-GAAP operating margin(1) |  |  | 53.0 | % |  |  | 47.0 | % |  |  |  |  |  |
Diluted earnings per share |  | $ | 4.98 |  |  | $ | 1.35 |  |  |  |  |  |  |
Non-GAAP diluted earnings per share(1) |  | $ | 2.69 |  |  | $ | 1.79 |  |  |  |  |  |  |
Cash provided by operating activities |  | $ | 320.9 |  |  | $ | 281.3 |  |  |  |  |  |  |
Capital expenditures |  |  | (2.7 | ) |  |  | (2.8 | ) |  |  |  |  |  |
Free cash flow |  | $ | 318.2 |  |  | $ | 278.5 |  |  |  |  |  |  |

(Dollar amounts in millions, except per share data) |  | Six months ended |  |  | Percent Change |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency(1) |
ARR |  | $ | 2,364.7 |  |  | $ | 2,290.1 |  |  |  | 3 | % |  |  | 1 | %
ARR excluding divested businesses(2) |  | $ | 2,364.7 |  |  | $ | 2,136.0 |  |  |  | 11 | % |  |  | 8.5 | %
Total recurring revenue(3) |  | $ | 1,400.7 |  |  | $ | 1,125.9 |  |  |  | 24 | % |  |  | 20 | %
Perpetual license |  |  | 12.6 |  |  |  | 15.2 |  |  |  | (18 | )% |  |  | (19 | )%
Professional services |  |  | 46.9 |  |  |  | 60.4 |  |  |  | (22 | )% |  |  | (24 | )%
Total revenue |  |  | 1,460.1 |  |  |  | 1,201.5 |  |  |  | 22 | % |  |  | 17 | %
Total cost of revenue |  |  | 231.4 |  |  |  | 218.1 |  |  |  | 6 | % |  |  | 5 | %
Gross margin |  |  | 1,228.8 |  |  |  | 983.4 |  |  |  | 25 | % |  |  | 20 | %
Operating expenses |  |  | 711.8 |  |  |  | 644.4 |  |  |  | 10 | % |  |  | 8 | %
Operating income |  | $ | 516.9 |  |  | $ | 339.0 |  |  |  | 52 | % |  |  | 40 | %
Non-GAAP operating income(1) |  | $ | 720.3 |  |  | $ | 490.6 |  |  |  | 47 | % |  |  | 38 | %
Operating margin |  |  | 35.4 | % |  |  | 28.2 | % |  |  |  |  |  |
Non-GAAP operating margin(1) |  |  | 49.3 | % |  |  | 40.8 | % |  |  |  |  |  |
Diluted earnings per share |  | $ | 6.35 |  |  | $ | 2.02 |  |  |  |  |  |  |
Non-GAAP diluted earnings per share(1) |  | $ | 4.61 |  |  | $ | 2.89 |  |  |  |  |  |  |
Cash provided by operating activities |  | $ | 590.7 |  |  | $ | 519.7 |  |  |  |  |  |  |
Capital expenditures |  |  | (5.0 | ) |  |  | (5.6 | ) |  |  |  |  |  |
Free cash flow |  | $ | 585.7 |  |  | $ | 514.2 |  |  |  |  |  |  |

(1)
See Operating and Non-GAAP Financial Measures below for a reconciliation of our GAAP results to our non-GAAP financial measures and Impact of Foreign Currency Exchange on Results of Operations below for a description of how we calculate our results on a constant currency basis.
(2)
ARR excluding divested businesses excludes ARR attributable to the Kepware and ThingWorx businesses from the prior‑year period to facilitate period‑to‑period comparison following the Q2'26 divestiture of those businesses.
(3)
Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

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Impact of Foreign Currency Exchange on Results of Operations

Approximately 55% of our revenue and 30% of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro, Yen, Shekel, and Rupee relative to the U.S. Dollar, affects our reported results. Our constant currency disclosures are calculated by multiplying the results in local currency for the quarterly periods for FY'26 and FY'25 by the exchange rates in effect on September 30, 2025.

If reported results for the six months ended March 31, 2026 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $23 million, revenue would have been higher by $3 million, and expenses would have been materially consistent. If reported results for the six months ended March 31, 2025 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $68 million, revenue would have been higher by $50 million, and expenses would have been higher by $17 million.

Revenue

Under ASC 606, the value, mix, and duration of contract types (support, SaaS, on-premises subscription) commencing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period. We recognize revenue for the license portion of on-premises subscription contracts when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. Over time, as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS, a higher portion of our revenue would be recognized ratably. Given the different value, mix, and duration of contracts commencing in any period, year-over-year or sequential revenue can vary significantly.

Revenue by Line of Business

(Dollar amounts in millions) |  | Three months ended |  |  | Percent Change |  |  | Six months ended |  |  | Percent Change |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency |
License |  | $ | 362.7 |  |  | $ | 254.4 |  |  |  | 43 | % |  |  | 34 | % |  | $ | 632.4 |  |  | $ | 427.1 |  |  |  | 48 | % |  |  | 41 | %
Support and cloud services |  |  | 387.6 |  |  |  | 353.0 |  |  |  | 10 | % |  |  | 5 | % |  |  | 780.8 |  |  |  | 714.0 |  |  |  | 9 | % |  |  | 6 | %
Software revenue |  |  | 750.3 |  |  |  | 607.4 |  |  |  | 24 | % |  |  | 17 | % |  |  | 1,413.2 |  |  |  | 1,141.1 |  |  |  | 24 | % |  |  | 19 | %
Professional services |  |  | 24.0 |  |  |  | 29.0 |  |  |  | (17 | )% |  |  | (21 | )% |  |  | 46.9 |  |  |  | 60.4 |  |  |  | (22 | )% |  |  | (24 | )%
Total revenue |  | $ | 774.3 |  |  | $ | 636.4 |  |  |  | 22 | % |  |  | 15 | % |  | $ | 1,460.1 |  |  | $ | 1,201.5 |  |  |  | 22 | % |  |  | 17 | %

Software revenue growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was driven by license revenue growth, which was driven by the value and duration of contracts that commenced in the period.

Support and cloud services revenue growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was mainly driven by growth in both CAD and PLM.

Professional services revenue decreased in Q2'26 and the first six months of FY'26 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

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Software Revenue by Product Group

(Dollar amounts in millions) |  | Three months ended |  |  | Percent Change |  |  | Six months ended |  |  | Percent Change |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Actual |  |  | Constant Currency |
PLM |  | $ | 470.0 |  |  | $ | 368.4 |  |  |  | 28 | % |  |  | 21 | % |  | $ | 879.9 |  |  | $ | 692.0 |  |  |  | 27 | % |  |  | 23 | %
CAD |  |  | 280.3 |  |  |  | 239.0 |  |  |  | 17 | % |  |  | 10 | % |  |  | 533.3 |  |  |  | 449.1 |  |  |  | 19 | % |  |  | 14 | %
Software revenue |  | $ | 750.3 |  |  | $ | 607.4 |  |  |  | 24 | % |  |  | 17 | % |  | $ | 1,413.2 |  |  | $ | 1,141.1 |  |  |  | 24 | % |  |  | 19 | %

PLM software revenue growth in Q2'26 was driven by Windchill license revenue growth in the Americas. PLM software revenue growth in the first six months of FY'26 was driven by license revenue growth in Europe and the Americas, primarily in Windchill.

PLM ARR decreased 1% (3% constant currency) from Q2’25 to Q2'26, reflecting the impact of the Kepware and ThingWorx divestiture. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 11% (9% constant currency), primarily driven by Windchill and Codebeamer.

PLM ARR decreased 5% (5% constant currency) in the Americas and grew 4% (1% decrease in constant currency) in Europe and 3% (4% constant currency) in Asia Pacific. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 15% (9% constant currency) in Europe, 15% (16% constant currency) in Asia Pacific, and 7% (7% constant currency) in the Americas, primarily driven by Windchill in each region and Codebeamer in Europe and Asia Pacific.

CAD software revenue growth in Q2'26 and the first six months of FY'26 was driven by Creo license revenue growth in the Americas.

CAD ARR grew 10% (8% constant currency) from Q2’25 to Q2’26, primarily driven by Creo. CAD ARR grew 13% (7% constant currency) in Europe, 10% (11% constant currency) in Asia Pacific, and 8% (7% constant currency) in the Americas, primarily driven by Creo in each region.

Gross Margin

(Dollar amounts in millions) |  | Three months ended |  |  |  |  |  | Six months ended |  |  |  |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |
License gross margin |  | $ | 350.7 |  |  | $ | 243.5 |  |  |  | 44 | % |  | $ | 607.0 |  |  | $ | 406.0 |  |  |  | 50 | %
License gross margin percentage |  |  | 97 | % |  |  | 96 | % |  |  |  |  |  | 96 | % |  |  | 95 | % |  |  |
Support and cloud services gross margin |  | $ | 310.7 |  |  | $ | 282.7 |  |  |  | 10 | % |  | $ | 624.7 |  |  | $ | 572.3 |  |  |  | 9 | %
Support and cloud services gross margin percentage |  |  | 80 | % |  |  | 80 | % |  |  |  |  |  | 80 | % |  |  | 80 | % |  |  |
Professional services gross margin |  | $ | (0.7 | ) |  | $ | 4.0 |  |  |  | (118 | )% |  | $ | (3.0 | ) |  | $ | 5.2 |  |  |  | (158 | )%
Professional services gross margin percentage |  |  | (3 | )% |  |  | 14 | % |  |  |  |  |  | (6 | )% |  |  | 9 | % |  |  |
Total gross margin |  | $ | 660.7 |  |  | $ | 530.1 |  |  |  | 25 | % |  | $ | 1,228.8 |  |  | $ | 983.4 |  |  |  | 25 | %
Total gross margin percentage |  |  | 85 | % |  |  | 83 | % |  |  |  |  |  | 84 | % |  |  | 82 | % |  |  |
Non-GAAP gross margin(1) |  | $ | 675.6 |  |  | $ | 543.7 |  |  |  | 24 | % |  | $ | 1,257.6 |  |  | $ | 1,011.3 |  |  |  | 24 | %
Non-GAAP gross margin percentage(1) |  |  | 87 | % |  |  | 85 | % |  |  |  |  |  | 86 | % |  |  | 84 | % |  |  |

(1)
Non-GAAP financial measures are reconciled to GAAP results under Non-GAAP Financial Measures below.

License gross margin growth in Q2'26 and the first six months of FY'26 was in line with license revenue growth. Cost of license revenue was higher in the first six months of FY'26 compared to the first six months of FY'25, primarily due to higher royalty expenses.

Support and cloud services gross margin growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was in line with support and cloud services revenue growth. Cost of support and cloud services revenue increased 9% and 10% in Q2'26 and the first six months of FY'26,

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respectively, compared to the corresponding FY'25 periods, primarily due to higher cloud and software subscription-related costs and compensation-related costs.

Professional services gross margin decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods, primarily due to a sharper decrease in professional services revenue than in professional services expense. The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.

Operating Expenses

(Dollar amounts in millions) |  | Three months ended |  |  |  |  |  | Six months ended |  |  |  |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |
Sales and marketing |  | $ | 140.1 |  |  | $ | 125.0 |  |  |  | 12 | % |  | $ | 281.0 |  |  | $ | 282.6 |  |  |  | (1 | )%
% of total revenue |  |  | 18 | % |  |  | 20 | % |  |  |  |  |  | 19 | % |  |  | 24 | % |  |  |
Research and development |  | $ | 124.1 |  |  | $ | 111.0 |  |  |  | 12 | % |  | $ | 244.1 |  |  | $ | 226.5 |  |  |  | 8 | %
% of total revenue |  |  | 16 | % |  |  | 17 | % |  |  |  |  |  | 17 | % |  |  | 19 | % |  |  |
General and administrative |  | $ | 88.6 |  |  | $ | 55.0 |  |  |  | 61 | % |  | $ | 162.6 |  |  | $ | 108.3 |  |  |  | 50 | %
% of total revenue |  |  | 11 | % |  |  | 9 | % |  |  |  |  |  | 11 | % |  |  | 9 | % |  |  |
Amortization of acquired intangible assets |  | $ | 12.0 |  |  | $ | 11.4 |  |  |  | 6 | % |  | $ | 24.1 |  |  | $ | 22.8 |  |  |  | 6 | %
% of total revenue |  |  | 2 | % |  |  | 2 | % |  |  |  |  |  | 2 | % |  |  | 2 | % |  |  |
Impairment and other charges, net |  | $ | — |  |  | $ | 4.2 |  |  |  | (100 | )% |  | $ | — |  |  | $ | 4.2 |  |  |  | (100 | )%
% of total revenue |  |  | 0 | % |  |  | 1 | % |  |  |  |  |  | 0 | % |  |  | 0 | % |  |  |
Total operating expenses |  | $ | 364.9 |  |  | $ | 306.6 |  |  |  | 19 | % |  | $ | 711.8 |  |  | $ | 644.4 |  |  |  | 10 | %

Total headcount decreased 4% between Q2’25 and Q2’26 due to the Kepware and ThingWorx divestiture.

Operating expenses in Q2'26 increased compared to Q2'25, primarily due to the following:

•
$27 million in charges associated with the Kepware and ThingWorx divestiture (included in General and administrative);
•
a $19 million increase in compensation expense (excluding stock-based compensation expense), driven by headcount growth prior to the Kepware and ThingWorx divestiture, annual merit increases and severance costs; and
•
a $15 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants.

Operating expenses in the first six months of FY'26 increased compared to the first six months of FY'25, primarily due to the following:

•
$37 million in charges associated with the Kepware and ThingWorx divestiture (included in General and administrative);
•
a $25 million increase in compensation expense (excluding stock-based compensation expense and severance expense), driven by headcount growth prior to the Kepware and ThingWorx divestiture and annual merit increases;
•
a $17 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants; and
•
a $7 million increase in travel-related expenses;

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partially offset by:

•
a $14 million decrease in severance costs primarily related to our FY'25 go-to-market realignment (which was mainly included in Sales and marketing); and
•
a $7 million decrease in outside services, driven by FY'25 consulting services related to our go-to-market realignment and other corporate initiatives.

Interest Expense

(Dollar amounts in millions) |  | Three months ended |  |  |  |  |  | Six months ended |  |  |  |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |
Interest expense |  | $ | 15.3 |  |  | $ | 19.6 |  |  |  | (22 | )% |  | $ | 32.6 |  |  | $ | 41.7 |  |  |  | (22 | )%

Interest expense in FY'26 and FY'25 includes interest on our revolving credit facility, term loan, and senior notes due in 2028. Interest expense in Q2'25 and the first six months of FY'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to lower debt balances and lower interest rates.

Other Income

(Dollar amounts in millions) |  | Three months ended |  |  |  |  |  | Six months ended |  |  |  |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |
Interest income |  | $ | 1.2 |  |  | $ | 0.8 |  |  |  | 55 | % |  | $ | 2.0 |  |  | $ | 1.7 |  |  |  | 17 | %
Other income (expense), net |  |  | 465.1 |  |  |  | 0.6 |  |  |  | 75,529 | % |  |  | 463.4 |  |  |  | (0.6 | ) |  |  | 73,199 | %
Other income, net |  | $ | 466.3 |  |  | $ | 1.4 |  |  |  | 33,424 | % |  | $ | 465.4 |  |  | $ | 1.1 |  |  |  | 43,439 | %

Other income, net increased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to the Q2'26 recognition of a $463 million gain on the Kepware and ThingWorx divestiture.

Income Taxes

(Dollar amounts in millions) |  | Three months ended |  |  |  |  |  | Six months ended |  |  |  |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |  |  | March 31, 2026 |  |  | March 31, 2025 |  |  | Percent Change |
Income before income taxes |  | $ | 746.8 |  |  | $ | 205.2 |  |  |  | 264 | % |  | $ | 949.8 |  |  | $ | 298.4 |  |  |  | 218 | %
Provision for income taxes |  | $ | 156.1 |  |  | $ | 42.6 |  |  |  | 266 | % |  | $ | 192.5 |  |  | $ | 53.5 |  |  |  | 260 | %
Effective income tax rate |  |  | 21 | % |  |  | 21 | % |  |  |  |  |  | 20 | % |  |  | 18 | % |  |  |

The effective tax rate for the first six months of FY'26 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. For Q2'26 and the first six months of FY'26, the provision for income taxes includes tax expense of $102 million on the gain on sale of $463 million related to the Kepware and ThingWorx divestiture. The effective tax rate for the first six months of FY'26 also reflected a net income tax benefit of $7 million related to IRS procedural guidance, as described below. The first six months of FY'25 included a benefit of $10 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.

In the first six months of FY'26, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In Q1'26, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024.

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On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that are applicable to us beginning in FY'26. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning FY'26.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 Annual Report on Form 10-K.

Recent Accounting Pronouncements

In accordance with recently issued accounting pronouncements, we will be required to comply with certain changes in accounting rules and regulations. Refer to Note 1. Basis of Presentation to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for all recently issued accounting pronouncements. We are evaluating the impact of ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software and ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets and have not yet determined whether they will have a material impact.

Liquidity and Capital Resources

(in millions) |  | March 31, 2026 |  |  | September 30, 2025 |
Cash and cash equivalents |  | $ | 439.1 |  |  | $ | 184.4 |
Restricted cash |  |  | 0.6 |  |  |  | 0.6 |
Total |  | $ | 439.7 |  |  | $ | 185.0 |
(in millions) |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |
Net cash provided by operating activities |  | $ | 590.7 |  |  | $ | 519.7 |
Net cash provided by investing activities |  | $ | 535.0 |  |  | $ | 6.7 |
Net cash used in financing activities |  | $ | (866.8 | ) |  | $ | (551.1 | )

Cash, Cash Equivalents and Restricted Cash

We invest our cash with highly rated financial institutions. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. Cash balances are higher as of Q2'26 compared to Q4'25, reflecting the timing of expected tax payments and payment of divestiture-related charges associated with the Kepware and ThingWorx divestiture. A significant portion of our cash is generated and held outside the U.S. As of March 31, 2026, we had cash and cash equivalents of $27 million in the U.S., $269 million in Europe, $122 million in Asia Pacific (including India) and $21 million in other countries. We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash inflows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.

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Cash Provided by Operating Activities

Cash provided by operating activities increased $71 million in the first six months of FY'26 compared to the same period in FY'25. Growth was driven by higher collections, partially offset by higher tax payments and higher payroll and related payments. Additionally, the first six months of FY'26 included $15 million of divestiture-related payments.

Cash Provided by Investing Activities

Cash provided by investing activities in the first six months of FY'26 was driven by $523 million in consideration received for the divestiture of the Kepware and ThingWorx businesses.

Cash Used in Financing Activities

Cash used in financing activities in the first six months of FY'26 was driven by $826 million of repurchases of common stock, including $375 million associated with the ASR entered into in Q2'26. Cash used in financing activities in the first six months of FY'25 included net payments of $360 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and $150 million of repurchases of common stock.

Outstanding Debt

(in millions) |  | March 31, 2026 |  |  | September 30, 2025 |
4.000% Senior notes due 2028 |  | $ | 500.0 |  |  | $ | 500.0 |
Credit facility revolver line |  |  | 243.8 |  |  |  | 231.3 |
Credit facility term loan |  |  | 456.3 |  |  |  | 468.8 |
Total debt |  | $ | 1,200.0 |  |  | $ | 1,200.0 |
Unamortized debt issuance costs for the senior notes |  |  | (2.0 | ) |  |  | (2.6 | )
Total debt, net of issuance costs |  | $ | 1,198.0 |  |  | $ | 1,197.4 |
Undrawn under credit facility revolver |  | $ | 1,006.3 |  |  | $ | 1,018.8 |
Undrawn under credit facility revolver available to borrow |  | $ | 989.2 |  |  | $ | 1,001.7 |

As of March 31, 2026, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of March 31, 2026, the annual rate for borrowings outstanding under the credit facility was 5.1%.

Our credit facility and our senior notes are described in Note 10. Debt to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. As of March 31, 2026, $25 million of our debt associated with the credit facility term loan was classified as current.

Share Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2026, and $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. In Q2'26, we entered into an ASR to repurchase $375 million of our outstanding common stock as described in Note 4. Earnings per Share (EPS) and Common Stock. Final settlement of the ASR is expected to occur in Q3'26.

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Future Expectations

We believe that existing cash and cash equivalents, together with cash inflows from operations and amounts available under the credit facility, will be sufficient to meet our working capital and capital expenditure requirements through at least the next twelve months and to meet our known long-term capital requirements.

Our expected uses and sources of cash could change, our cash position could be reduced, and we could incur additional debt obligations if we retire other debt, engage in strategic transactions, or repurchase shares, any of which could be commenced, suspended, or completed at any time. Any such repurchases or retirement of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any debt retirement or issuance, share repurchases, or strategic transactions may be material.

Operating and Non-GAAP Financial Measures

Operating Measure

ARR

ARR (Annual Run Rate) represents the annualized value of our portfolio of active subscription software, SaaS, hosting, and support contracts as of the end of the reporting period. We calculate ARR as follows:

•
We consider a contract to be active when the product or service contractual term commences (the “start date”) until the right to use the product or service ends (the “expiration date”). Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced.
•
For contracts that include annual values that change over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include any future committed increases in the contract value as of the date of the ARR calculation.
•
As ARR includes only contracts that are active at the end of the reporting period, ARR does not reflect assumptions or estimates regarding future contract renewals or non-renewals.
•
Active contracts are annualized by dividing the total active contract value by the contract duration in days (expiration date minus start date), then multiplying that by 365 days (or 366 days for leap years).

We believe ARR is a valuable operating measure to assess the health of a subscription business because it is aligned with the amount that we invoice the customer on an annual basis. We generally invoice customers annually for the current year of the contract. A customer with a one-year contract will typically be invoiced for the total value of the contract at the beginning of the contractual term, while a customer with a multi-year contract will be invoiced for each annual period at the beginning of each year of the contract.

ARR increases by the annualized value of active contracts that commence in a reporting period and decreases by the annualized value of contracts that expire in the reporting period.

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As ARR is not annualized recurring revenue, it is not calculated based on recognized or unearned revenue and is not affected by variability in the timing of revenue under ASC 606, particularly for on-premises license subscriptions where a substantial portion of the total value of the contract is recognized as revenue at a point in time upon the later of when the software is made available, or the subscription term commences.

ARR should be viewed independently of recognized and unearned revenue and is not intended to be combined with, or to replace, either of those items. Investors should consider our ARR operating measure only in conjunction with our GAAP financial results.

Non-GAAP Financial Measures

Our non-GAAP financial measures and the reasons we use them and exclude the items identified below are described in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2025.

The non-GAAP financial measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are:

•
non-GAAP gross margin—GAAP gross margin
•
non-GAAP operating income—GAAP operating income
•
non-GAAP operating margin—GAAP operating margin
•
non-GAAP net income—GAAP net income
•
non-GAAP diluted earnings per share—GAAP diluted earnings per share
•
free cash flow—cash flow from operations

The non-GAAP financial measures other than free cash flow exclude, as applicable: stock-based compensation expense; amortization of acquired intangible assets; acquisition and transaction-related charges included in General and administrative expenses; Impairment and other charges (credits), net; non-operating charges (credits), net; and income tax adjustments as defined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 and as reflected in the reconciliation tables.

The items excluded from the non-GAAP financial measures often have a material impact on our financial results, certain of those items are recurring, and other items often recur. Accordingly, the non-GAAP financial measures included in this Quarterly Report on Form 10-Q should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP. The following tables reconcile each of these non-GAAP financial measures to its most closely comparable GAAP measure on our financial statements.

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(in millions, except per share amounts) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
GAAP gross margin |  | $ | 660.7 |  |  | $ | 530.1 |  |  | $ | 1,228.8 |  |  | $ | 983.4 |
Stock-based compensation |  |  | 7.1 |  |  |  | 5.5 |  |  |  | 13.1 |  |  |  | 11.4 |
Amortization of acquired intangible assets included in cost of revenue |  |  | 7.8 |  |  |  | 8.1 |  |  |  | 15.7 |  |  |  | 16.4 |
Non-GAAP gross margin |  | $ | 675.6 |  |  | $ | 543.7 |  |  | $ | 1,257.6 |  |  | $ | 1,011.3 |
GAAP operating income |  | $ | 295.8 |  |  | $ | 223.5 |  |  | $ | 516.9 |  |  | $ | 339.0 |
Stock-based compensation |  |  | 68.6 |  |  |  | 51.5 |  |  |  | 126.5 |  |  |  | 107.4 |
Amortization of acquired intangible assets |  |  | 19.8 |  |  |  | 19.5 |  |  |  | 39.8 |  |  |  | 39.3 |
Acquisition and transaction-related charges |  |  | 26.5 |  |  |  | 0.6 |  |  |  | 37.1 |  |  |  | 0.8 |
Impairment and other charges, net |  |  | — |  |  |  | 4.2 |  |  |  | — |  |  |  | 4.2 |
Non-GAAP operating income |  | $ | 410.7 |  |  | $ | 299.3 |  |  | $ | 720.3 |  |  | $ | 490.6 |
GAAP net income |  | $ | 590.7 |  |  | $ | 162.6 |  |  | $ | 757.2 |  |  | $ | 244.9 |
Stock-based compensation |  |  | 68.6 |  |  |  | 51.5 |  |  |  | 126.5 |  |  |  | 107.4 |
Amortization of acquired intangible assets |  |  | 19.8 |  |  |  | 19.5 |  |  |  | 39.8 |  |  |  | 39.3 |
Acquisition and transaction-related charges |  |  | 26.5 |  |  |  | 0.6 |  |  |  | 37.1 |  |  |  | 0.8 |
Impairment and other charges, net |  |  | — |  |  |  | 4.2 |  |  |  | — |  |  |  | 4.2 |
Non-operating credits, net(1) |  |  | (464.6 | ) |  |  | — |  |  |  | (463.9 | ) |  |  | — |
Income tax adjustments(2) |  |  | 78.4 |  |  |  | (21.7 | ) |  |  | 53.3 |  |  |  | (46.4 | )
Non-GAAP net income |  | $ | 319.3 |  |  | $ | 216.8 |  |  | $ | 550.0 |  |  | $ | 350.1 |
GAAP diluted earnings per share |  | $ | 4.98 |  |  | $ | 1.35 |  |  | $ | 6.35 |  |  | $ | 2.02 |
Stock-based compensation |  |  | 0.58 |  |  |  | 0.43 |  |  |  | 1.06 |  |  |  | 0.89 |
Amortization of acquired intangible assets |  |  | 0.17 |  |  |  | 0.16 |  |  |  | 0.33 |  |  |  | 0.32 |
Acquisition and transaction-related charges |  |  | 0.22 |  |  |  | 0.01 |  |  |  | 0.31 |  |  |  | 0.01 |
Impairment and other charges, net |  |  | — |  |  |  | 0.03 |  |  |  | — |  |  |  | 0.03 |
Non-operating credits, net(1) |  |  | (3.92 | ) |  |  | — |  |  |  | (3.89 | ) |  |  | — |
Income tax adjustments(2) |  |  | 0.66 |  |  |  | (0.18 | ) |  |  | 0.45 |  |  |  | (0.38 | )
Non-GAAP diluted earnings per share |  | $ | 2.69 |  |  | $ | 1.79 |  |  | $ | 4.61 |  |  | $ | 2.89 |
Cash provided by operating activities |  | $ | 320.9 |  |  | $ | 281.3 |  |  | $ | 590.7 |  |  | $ | 519.7 |
Capital expenditures |  |  | (2.7 | ) |  |  | (2.8 | ) |  |  | (5.0 | ) |  |  | (5.6 | )
Free cash flow |  | $ | 318.2 |  |  | $ | 278.5 |  |  | $ | 585.7 |  |  | $ | 514.2 |

(1)
In Q2'26, we recognized gains of $462.6 million on the sale of the Kepware and ThingWorx businesses and $2.0 million related to the finalization of contingent consideration associated with the FY'22 sale of a portion of our PLM services business. In Q1'26, we recognized a $0.8 million financing charge related to a debt commitment agreement associated with our anticipated divestiture of the Kepware and ThingWorx businesses.
(2)
Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in Q2'25, adjustments exclude a $4.9 million benefit related to the tax impact of tax reserves related to prior years in foreign jurisdictions, of which $4.2 million was a non-cash benefit. In the first six months of FY'25, adjustments exclude a $10.4 million benefit related to the tax impact of tax reserves related to prior years in a foreign jurisdiction.

Operating margin impact of non-GAAP adjustments:

|  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
GAAP operating margin |  |  | 38.2 | % |  |  | 35.1 | % |  |  | 35.4 | % |  |  | 28.2 | %
Stock-based compensation |  |  | 8.9 | % |  |  | 8.1 | % |  |  | 8.7 | % |  |  | 8.9 | %
Amortization of acquired intangible assets |  |  | 2.6 | % |  |  | 3.1 | % |  |  | 2.7 | % |  |  | 3.3 | %
Acquisition and transaction-related charges |  |  | 3.4 | % |  |  | 0.1 | % |  |  | 2.5 | % |  |  | 0.1 | %
Impairment and other charges, net |  |  | 0.0 | % |  |  | 0.7 | % |  |  | 0.0 | % |  |  | 0.4 | %
Non-GAAP operating margin |  |  | 53.0 | % |  |  | 47.0 | % |  |  | 49.3 | % |  |  | 40.8 | %

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposure as described in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of our 2025 Annual Report on Form 10-K.

ITEM 4. CONTROLS AN D PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2026.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the period ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHE R INFORMATION

ITEM 1A. RI SK FACTORS

In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I. Item 1A. Risk Factors in our 2025 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below shows the shares of our common stock we repurchased in Q2'26.

Period | Total Number of Shares (or Units) Purchased |  | Average Price Paid per Share (or Unit) |  | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |  | Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) |
January 1, 2026 - January 31, 2026 |  | — |  | $ | — |  |  | — |  | $ | 1,500,012,797 |
February 1, 2026 - February 28, 2026 |  | 674,704 |  | $ | 154.83 |  |  | 674,704 |  | $ | 1,395,549,001 |
March 1, 2026 - March 31, 2026 |  | 2,865,427 |  | $ | 155.49 |  |  | 2,865,427 |  | $ | 950,012,977 |
Total |  | 3,540,131 |  | $ | 155.36 |  |  | 3,540,131 |  | $ | 950,012,977 |

(1)
As announced on November 6, 2024, our Board of Directors authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2027. In Q3’26, in connection with authorizing the repurchase of $2 billion of our common stock for the period October 1, 2026 through September 30, 2028, the Board of Directors amended the current authorization to end on September 30, 2026.

ITEM 5. OTHER INFORMATION

Director and Executive Officer Adoption, Modification or Termination of 10b5-1 Plans in Q2'26

None.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On May 5, 2026, Jennifer DiRico, Executive Vice President, Chief Financial Officer of the Company entered into an Executive Agreement with PTC Inc. (the “Company”).

The Executive Agreement provides certain compensation and employment protections to the executive. The Executive Agreement provides that, upon a change in control of the Company, (i) all performance measures under any outstanding equity award held by the executive will be deemed to have been met at the target level, and (ii) the executive will receive a payment in an amount equal to the pro-rata portion of the executive’s target incentive bonus for the current year. Upon any termination of the executive’s employment after a change in control of the Company, (i) all equity awards held by the executive will accelerate and vest in full, (ii) the executive will receive a payment in an amount equal to: (a) 100% of the executive’s highest base salary in the six months preceding the termination date, plus (b) 100% of the executive’s highest applicable target bonus, and (iii) the executive will be entitled to continued participation in the Company’s medical, dental and vision benefit plans (the “Benefit Plans”) for one year, or payment of an amount sufficient to purchase substantially equivalent benefits if continued participation is not permitted under the applicable Benefit Plan or if the Benefit Plan is terminated. The Executive Agreement also provides that, upon termination of the executive’s employment by the Company without cause (i) the executive will receive a payment in an amount equal to 100% of the executive’s highest base salary in the six months preceding the termination date plus 100%

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of the executive’s target bonus for the year in which the termination occurs, (ii) all equity awards held by the executive that would have vested in the twelve months following the termination date will vest, and (iii) the executive will be entitled to continued participation in the Benefit Plans or payment in lieu thereof as described above. The Executive Agreement also provides that upon termination of the executive’s employment by the Company due to the executive’s death or disability, all equity held by the executive will vest in full. To receive the payments and benefits under the Executive Agreement, the executive must execute a release of claims in favor of the Company and continue to comply with the terms of the executive’s Restrictive Covenant Agreement with the Company. The preceding description of the Executive Agreement is qualified by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.1 to this Form 10-Q.

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ITEM 6. EXH IBITS

|  |  |  |  |  | Incorporated by Reference
Exhibit Number |  | Description |  | Filed Herewith |  | Form |  | Filling Date |  | Exhibit |  | SEC File No.
3.1 |  | Restated Articles of Organization of PTC Inc. |  |  |  | 10-K |  | November 23, 2015 |  | 3.1 |  | 0-18059
3.2 |  | Amended and Restated By-Laws of PTC Inc. |  |  |  | 10-K |  | November 14, 2024 |  | 3.2 |  | 0-18059
4.1 |  | Indenture dated as of February 13, 2020, between PTC Inc. and Wells Fargo Bank, National Association, as trustee |  |  |  | 8-K |  | February 13, 2020 |  | 4.1 |  | 0-18059
4.2 |  | Form of 4.000% senior unsecured notes due 2028 |  |  |  | 8-K |  | February 13, 2020 |  | 4.3 |  | 0-18059
10.1* |  | Executive Agreement dated May 5, 2026 by and between Jennifer DiRico and PTC Inc. |  | X |  |  |  |  |  |  |  |
31.1 |  | Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) |  | X |  |  |  |  |  |  |  |
31.2 |  | Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) |  | X |  |  |  |  |  |  |  |
32** |  | Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350 |  | X |  |  |  |  |  |  |  |
101.INS |  | Inline XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |  |  |  |  |  |  |  |  |  |
101.SCH |  | Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |  |  |  |  |  |  |  |  |  |
104 |  | The cover page of the Q2 Form 10-Q formatted in Inline XBRL (included in Exhibit 101) |  |  |  |  |  |  |  |  |  |

* Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of PTC participates.

** Indicates that the exhibit is being furnished, not filed, with this report.

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SIGNA TURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

| PTC Inc.
| By: |  | /S/ JENNIFER DIRICO
|  |  | Jennifer DiRico Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: May 6, 2026

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