10-K – 2025-11-21 – ptc-20250930.htm

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Table of Contents

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 

☑

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the Fiscal Year Ended: September 30 , 2025
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

Name of each exchange on which registered

Common Stock, $.01 par value per share

PTC

NASDAQ Global Select Market

Securities registered pursuant
to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
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 or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of our voting stock held by non-affiliates was approximately $ 18,551,172,440 on March 31, 2025 based on the last reported sale price of our common stock on the Nasdaq Global Select Market on that date. There were 119,925,951 shares of our common stock outstanding on that day and 119,448,261 shares of our common stock outstanding on November 19, 2025.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement in connection with the 2026 Annual Meeting of Shareholders (2026 Proxy Statement) are incorporated by reference into Part III.

 

Table of Contents

 

PTC Inc.
ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 2025
Table of Contents
 

 

 

Page

PART I.

 

 

Item 1.

Business

1

Item 1A.

Risk Factors

7

Item 1B.

Unresolved Staff Comments

17

Item 1C.

Cybersecurity

17

Item 2.

Properties

19

Item 3.

Legal Proceedings

19

Item 4.

Mine Safety Disclosures

19

PART II.

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

20

Item 6.

Reserved

20

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

37

Item 8.

Financial Statements and Supplementary Data

39

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

39

Item 9A.

Controls and Procedures

39

Item 9B.

Other Information

40

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

41

PART III.

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

42

Item 11.

Executive Compensation

42

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

42

Item 13.

Certain Relationships and Related Transactions, and Director Independence

42

Item 14.

Principal Accounting Fees and Services

42

PART IV.

 

 

Item 15.

Exhibits and Financial Statement Schedules

43

Item 16.

Form 10-K Summary

43

Exhibit Index

44

Signatures

46

APPENDIX A

 

 

 

Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238 )

F- 1

 

Consolidated Financial Statements

F- 4

 

Notes to Consolidated Financial Statements

F- 9

 

 

 

 
 

 

Table of Contents

 

Cautionary Note About Forward-Looking Statements
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In particular, statements that are not historical facts, including but not limited to, statements about our anticipated financial results, capital development and growth, stock repurchases, our artificial intelligence initiatives, our environmental sustainability initiatives, and the development of our products, markets and workforce, are forward-looking statements. These forward-looking statements are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, whether in the negative or affirmative. Forward-looking statements are based on our current plans, expectations and assumptions and are not guarantees of future performance. Factors that may cause our actual results to differ materially from these statements include, but are not limited to, the risks and uncertainties discussed in Item 1A. “Risk Factors” and elsewhere throughout this Annual Report. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We caution readers not to place undue reliance on any forward-looking statements, which only speak as of the date made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
Unless otherwise indicated, all references to a year reflect our fiscal year that ends on September 30.
Website References
References to our PTC.com website in this Annual Report and to our 2025 Impact Report, expected to be published in December 2025, are provided for convenience. The content on PTC.com and in our 2025 Impact Report is not incorporated by reference into this Annual Report.
PART I
ITEM 1. Bu siness
Our Business
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

1

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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 95% of our 2025 revenue is 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.
Our Principal Products and Services
PLM software products for product data management and process orchestration
Our Windchill ® PLM application suite manages all aspects of the product development lifecycle—from concept through service and end-of-life. Windchill provides real-time information sharing, dynamic data visualization, and the ability to collaborate across geographically distributed teams, enabling manufacturers to elevate their product development, manufacturing, field service, and end-of-life processes.
Our Codebeamer ® and pure::variants TM application lifecycle management (ALM) solutions enable companies to accelerate the development of products that contain software, including software-defined products that require multiple software variants to be created and updated over the life of the product.
Our ServiceMax ® service lifecycle management (SLM) solution enables companies to improve asset uptime with optimized in-person and remote service, boost technician productivity with the latest mobile tools, and deliver metrics for confident decision making.
Our Servigistics ® service parts management solution enables companies to effectively manage their service parts inventory, enabling them to optimize equipment availability and uptime, and increase customer satisfaction.
Our Arena ® Software as a Service (SaaS) PLM solution enables product teams to collaborate virtually anytime and anywhere, making it easier to share the latest product and quality information with internal teams and supply chain partners and deliver innovative products to customers faster. Our Arena quality management system software connects quality and product designs into a single system to simplify regulatory compliance.
CAD software products for product data authoring
Our Creo ® 3D CAD technology enables the digital design, testing, and modification of product models. With its design simulation, additive manufacturing, and generative design innovations, we enable our customers to be first to market with differentiated products. From initial concept to design, simulation, and analysis, Creo provides designers with innovative tools to efficiently create better products, faster.

2

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Our Onshape ® SaaS product development platform unites computer-aided design with data management, collaboration tools, and real-time analytics. A cloud-native multi-tenant solution that can be instantly deployed on virtually any computer or mobile device, Onshape enables teams to work together from just about anywhere. Real-time design reviews, commenting, and simultaneous editing enable a collaborative workflow where multiple design iterations can be completed in parallel and merged into the final design.
Our Markets and How We Address Them
We aim to create value for our customers, increase our Annual Run Rate (ARR) and cash flow, and deliver long-term value for shareholders. We focus our resources and attention on the solutions described above, where we believe we can create the greatest customer value.
Our growth is primarily driven by existing customers that continue to upgrade and expand their PTC footprint, multi-product adoption by customers, our commercial optimization initiatives, and new customers.
Approximately 75% of our sales are from products and services sold directly by our sales force to end-user customers. The rest of our sales of products and services are through third-party resellers. In general, our sales force focuses on large accounts, while our reseller channel provides a cost-effective means of covering the small- and medium-size business markets. Our strategic reseller and software partners enable us to increase our market reach, offer broader solutions, and add compelling technology to our offerings. Our strategic services partners provide service offerings to help customers implement our product offerings and transition to SaaS.
Additional financial information about our international and domestic operations may be found in Note 3. Revenue from Contracts with Customers of Notes to Consolidated Financial Statements in this Annual Report, which information is incorporated herein by reference.
Competition
We compete with a number of companies whose offerings address one or more specific functional areas covered by our solutions. For enterprise CAD and PLM solutions, we compete with large established companies including Autodesk, Dassault Systèmes SA, and Siemens AG. For our ALM products, we compete with IBM, Jama Software, Inc. and Siemens AG. For our SLM products, we compete with enterprise software companies such as Oracle, SAP, IFS AB, Microsoft, and Salesforce, and with companies that offer point solutions.
Proprietary Rights
Our software products and related technical know-how, along with our trademarks, including our company names, product names and logos, are proprietary. We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents and common law safeguards, including trade secret protection. The nature and extent of such legal protection depends in part on the type of intellectual property right and the relevant jurisdiction. In the U.S., we are generally able to maintain our trademark registrations for as long as the trademarks are in use and to maintain our patents for up to 20 years from the earliest effective filing date. We also use license management and other anti-piracy technology measures, as well as contractual restrictions, to curtail the unauthorized use and distribution of our products.
Our proprietary rights are subject to the risks and uncertainties described under Item 1A. Risk Factors, II. Risks Related to Our Intellectual Property below, which is incorporated into this section by reference.

3

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Environmental Sustainability
At PTC, we’re working to contribute to the decarbonization and circularity of global manufacturing. While we have a climate action plan committed to reducing our company’s “footprint,” we believe far larger benefits will flow from our “handprint” stemming from our software offerings, which enable manufacturers to design, build, and service their products more sustainably.
Footprint
Our emission reduction plan is validated by the Science Based Targets initiative (SBTi). Our near-term commitment is to reduce by 2030 combined Scope 1 (direct emissions from owned/controlled operations) and Scope 2 (indirect energy use) emissions by 50% and reduce Scope 3 - Category 1 (Purchased Goods and Services) by 25% compared to our 2022 baseline. Our long-term net-zero commitment is to reach net-zero across all scope emissions by 2050, with absolute reductions of over 90% across Scopes 1-3, with accredited carbon removal offsets for the remaining 10% (or less) as needed.
We have already begun to implement programs and pursue initiatives to reduce our emissions and carbon footprint, including:
• entering into a Virtual Power Purchase Agreement (VPPA);

• prioritizing energy efficiency and accessibility to public transportation when selecting office space; and

• providing a subsidy for employees' public transportation commute costs.

Handprint
Environmental sustainability is integral to our product offerings. With our software, manufacturers can support their sustainability and compliance initiatives, including by designing with less material, enhancing product repairability and circularity, improving factory efficiency, and enabling remote service.
In preparation for our sustainability reporting obligations, we conducted an enterprise-wide double materiality assessment to assess our sustainability risks and opportunities. As part of our assessment, we identified financially material opportunities related to consumer demand for software solutions that enable the mitigation of climate change and support the transition to a circular economy. While these opportunities cannot yet be quantified to a reasonable degree of certainty, additional qualitative information about these opportunities can be found in our 2025 Impact Report, which we expect to release in December 2025 in compliance with California’s Climate-Related Financial Risk Act.

4

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People and Culture
Within our work environment, we seek to create an inclusive culture in which all employees can thrive. This is a key aspect of our talent strategy. Our approach is focused on promoting an agile culture, an increased sense of belonging, engaged work environments, and high-performing teams.

PTC at-a-Glance
As of September 30, 2025, PTC had 7,642 full-time employees. Our employee population is geographically diverse and serves a geographically diverse customer and partner network.

 

5

Table of Contents

 

Compensation and Benefits
PTC provides a comprehensive and competitive compensation and benefits package designed to attract, retain, motivate, and engage talent around the world, including base salaries, and, for eligible roles, incentive and equity compensation. Employees also have the opportunity to purchase PTC stock at a discount through our Employee Stock Purchase Plan in eligible jurisdictions.
Our benefit offerings are designed to meet the needs of our employees and their families around the world. Specific offerings differ country by country due to cultural norms, market dynamics, and legal requirements, but we provide a wide variety of core health and financial programs such as healthcare, life and disability insurance, employee assistance plans, retirement savings and pension benefit plans, and generous paid family leave and vacation time.
Talent Development & Employee Engagement
As we focus on enhancing the employee experience, we are increasing our efforts to invest in our people and create meaningful opportunities to learn, grow, develop, and advance their careers. We have development programs and coaching programs, as well as numerous other self-led learning paths. The variety of options means that employees have the ability to focus on the development path most meaningful to them.
Our Culture
We are committed to building a strong and inclusive workforce. We review and revise our practices and processes based on feedback and engagement scores from employee pulse surveys. We also integrate inclusive and thoughtful practices into the planning and execution of how we attract, select, develop, and retain talent.
Additional Information About Our Employee Initiatives
You can find more information about our employee initiatives in our 2025 Impact Report, which we expect to release in December 2025.
Available Information
We make available free of charge on our website at www.ptc.com the following reports as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC: our Annual Reports on Form 10-K; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934. Our Proxy Statements for our Annual Meetings and Section 16 trading reports on SEC Forms 3, 4 and 5 also are available on our website.
Corporate Information
PTC was incorporated in Massachusetts in 1985 and is headquartered in Boston, Massachusetts.

6

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ITEM 1A. Ri sk Factors
The following are important factors we have identified that could affect an investment in our securities. You should consider them carefully when evaluating an investment in PTC securities, because these factors could cause actual results to differ materially from historical results or any forward-looking statements. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, operating results, and prospects.
I. Risks Related to Our Business Operations and Industry
We face significant competition, which could adversely affect our business, financial condition, operating results, and prospects if we are unable to successfully compete.
The markets for our products and solutions are rapidly changing and characterized by intense competition, disruptive technology developments, evolving distribution models and increasingly lower barriers to entry. If we are unable to provide products and solutions that address customers’ needs as well as our competitors’ products and solutions do, or to align our pricing, licensing and delivery models with customer preferences, we could lose customers and/or fail to attract new customers, which could adversely affect our business, financial condition, operating results, and prospects.
For example, customer demand for SaaS solutions is increasing. While our Arena, ServiceMax, and Onshape solutions are cloud-native SaaS solutions, and we have introduced our Windchill+ and Creo+ SaaS solutions, customers may not adopt them as we expect. If we are unable to compete successfully with competitors offering SaaS solutions, we could lose customers and/or fail to attract new customers, which could adversely affect our business, financial condition, operating results, and prospects.
Our current and potential competitors range from large and well-established companies to emerging start-ups. Some of our competitors and potential competitors have greater name recognition in the markets we serve and more financial, technical, sales and marketing, and other resources, which could limit our ability to gain customer recognition and confidence in our products and solutions and successfully sell our products and solutions, which could adversely affect our ability to grow our business.
A breach of security in our products or computer systems, or those of our third-party service providers, could compromise the integrity of our products, cause loss of data, harm our reputation, create additional liability and adversely affect our business, financial condition, operating results, and prospects.
We have implemented and continue to implement measures intended to maintain the security and integrity of our products, source code and IT systems. The potential for a security breach or system disruption has significantly increased over time as the scope, number, intensity and sophistication of attempted cyberattacks and cyber intrusions have increased – particularly cyberattacks and intrusions designed to access and exfiltrate information and to disrupt and lock up access to systems for the purpose of demanding a ransom payment. It is impossible for us to eliminate the risk of a successful cyberattack or intrusion, and, in fact, we regularly deal with security issues and have experienced security incidents from time to time. Accordingly, there is a risk that a cyberattack or intrusion will be successful and that such event will be material.
In addition, we offer cloud services to our customers and some of our products, including our SaaS products, are hosted by third-party service providers, which expose us to additional risks as those repositories of our customers’ proprietary data may be targeted and a cyberattack or intrusion may be successful and material. Interception of data transmission, misappropriation or modification of data, corruption of data and attacks against our service providers may adversely affect our products or product and service delivery. Malicious code, viruses or vulnerabilities that are undetected by us or our service providers may disrupt our business operations generally and may have a disproportionate effect on our products that are developed and delivered in the cloud environment.

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While we devote resources to maintaining the security and integrity of our products and systems, as well as performing due diligence of our third-party service providers, security breaches that have not had a material effect on our business or that of our customers have occurred, and we will continue to face cybersecurity threats and exposure. A significant breach of the security and/or integrity of our products or systems, or those of our third-party service providers, whether intentional or by human error by our employees or others, could disrupt our business operations or those of our customers, could prevent our products from functioning properly, could enable access to our sensitive, proprietary or confidential information or that of our customers. This could require us to incur significant costs of investigation, remediation and/or payment of a ransom; harm our reputation; cause customers to stop buying our products; and cause us to face lawsuits and potential liability, any of which could have a material adverse effect on our business, financial condition, operating results, and prospects.
We have a large ecosystem of strategic, technology, and software partners and system integrators that enable us to enhance our products and offerings, expand our market reach, and accelerate our customers’ digital transformation journeys. Failures by those partners or termination of those relationships could adversely affect our business, financial condition, operating results, and prospects.
We have many strategic, technology, and software partner and system integrator relationships with other companies that provide technologies and software that we embed in our solutions, that provide implementation services to our customers, that we work with to offer complementary solutions and services, and that market and sell our solutions. If these companies fail to perform as we expect, or if a company terminates or substantially alters the terms of the relationship, we could experience delays in product development, reduced or delayed sales, customer dissatisfaction, incur additional expenses, and our business, financial condition, results of operations, and prospects could be materially adversely affected.
We increasingly rely on third-party providers of cloud infrastructure services to deliver our offerings to users on our platform, and any disruption of or interference with our use of these services could adversely affect our business, financial condition, operating results, and prospects.
Our continued growth depends in part on the ability of our existing and potential customers to use and access our cloud services or our website in order to download our software or encrypted access keys for our software within an acceptable amount of time. We use a number of third-party service providers that we do not control for key components of our infrastructure, particularly with respect to development and delivery of our cloud-based products. The use of these service providers gives us greater flexibility in efficiently delivering a more tailored, scalable customer experience, but also exposes us to additional risks and vulnerabilities. Third-party service providers operate their own platforms that we access, and we are, therefore, vulnerable to their service interruptions. We may experience interruptions, delays and outages in service and availability from time to time as a result of problems with our third-party service providers’ infrastructure. Lack of availability of this infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud, and/or security attacks that we cannot predict or prevent. Such outages could adversely impact our business, financial condition, results of operations, and prospects.
If we are unable to renew our agreements with our cloud service providers on commercially reasonable terms, or any of our agreements are prematurely terminated, or we need to add new cloud services providers to increase capacity and uptime, we could experience interruptions, downtime, delays, and additional expenses related to transferring to and providing support for these new platforms. Any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platforms and impair our ability to attract new users, any of which could adversely affect our business, financial condition, results of operations, and prospects.

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We may be unable to hire or retain employees with the necessary skills to operate and grow our business, which could adversely affect our ability to compete and adversely affect our business, financial condition, results of operations, and prospects.
Our success depends upon our ability to attract and retain highly skilled employees to develop and sell our products and solutions and to operate and grow our business. Competition for such employees in our industry is intense worldwide.
If we are unable to attract and retain employees with the requisite skills to develop and sell our products and solutions, or to guide, operate and support our business, we may be unable to compete successfully, which would adversely affect our business, financial condition, results of operations, and prospects.
We depend on sales within the discrete manufacturing sector and our business could be adversely affected if manufacturing activity does not grow or if it contracts, or if manufacturers are adversely affected by other macroeconomic factors.
A large amount of our sales are to customers in the discrete manufacturing sector. Manufacturers worldwide continue to face uncertainty about the global macroeconomic environment due to, among other factors, the effects of recently imposed import tariffs and threats of additional import tariffs, the effects of earlier and ongoing supply chain disruptions, high interest rates and inflation, volatile foreign exchange rates and the current relative strength of the U.S. Dollar, and the U.S. government’s focus on technology transactions with non-U.S. entities. Customers may delay, reduce, or forego purchases of our solutions due to these challenges and concerns, which could adversely affect our business, financial condition, results of operations, and prospects.
If we fail to successfully develop competitive SaaS solutions and to transform our operations to support the sale of SaaS solutions, our business and prospects could be adversely affected.
Transforming our business to offer and support SaaS solutions requires considerable additional investment in our organization. Whether we will be successful and will accomplish our business and financial objectives is subject to risks and uncertainties, including but not limited to: our ability to include functionality and usability in such offerings that address customer requirements, our ability to further develop and scale infrastructure, our ability and the ability of our partners to transition existing customer implementations to SaaS, customer demand, attach and renewal rates, channel adoption, and our costs. If we are unable to successfully establish these new offerings and navigate our business transition, our business, financial condition, results of operations, and prospects could be adversely affected.
Because our sales and operations are globally dispersed, we face additional compliance risks, and any compliance failure could adversely affect our business and prospects.
We sell and deliver software and services and maintain support operations in many countries whose laws and practices differ from one another and are subject to unexpected changes. Managing these geographically dispersed operations requires significant attention and resources to ensure compliance with laws of those countries and those of the U.S. governing our activities in non-U.S. countries.
Those laws include, but are not limited to, anti-corruption laws and regulations (including the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010), data privacy laws and regulations (including the European Union's General Data Privacy Regulation), and trade and economic sanctions laws and regulations (including laws administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. State Department, the U.S. Department of Commerce, the United Nations Security Council and other sanctions authorities). Our compliance risks are heightened due to the go-to-market approach for our business that relies heavily on a partner ecosystem, the fact that some of the countries we operate in have a higher incidence of corruption and fraudulent business practices, the fact that we sell to governments and state-owned business enterprises, and the fact that global enforcement of laws has significantly increased.

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Accordingly, while we strive to maintain a comprehensive compliance program, an employee, agent or business partner may violate our policies or U.S. or other applicable laws, as has occurred in the past, or we may inadvertently violate such laws. Investigations of alleged violations of those laws can be expensive and disruptive. Violations of such laws can lead to civil and/or criminal prosecutions, substantial fines and other sanctions, including the revocation of our rights to continue certain operations, and also cause business loss and reputational harm, which could adversely affect our business, financial condition, results of operations, and prospects.
We and our customers are subject to an increasing number of laws and regulations enacted by multiple countries and jurisdictions that require new and extensive disclosures on sustainability topics, and, in some cases, remediation of adverse effects. This evolving regulatory environment will increase our compliance costs and expose us to risks associated with regulatory compliance.
The regulatory landscape for sustainability disclosures continues to evolve and expand and impose greater disclosure obligations on us. These laws and regulations include the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) and Corporate Sustainability Due Diligence Directive (“CSDDD”), and California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Disclosure Act. These frameworks require extensive disclosures related to sustainability risks and opportunities. Additionally, the CSDDD will require us to conduct due diligence to identify, prevent, mitigate, and account for actual and potential adverse impacts on human rights and the environment arising from our operations and those of our customers and suppliers, and to remediate such impacts. Compliance with these laws and regulations requires significant investment in resources, including the implementation of new reporting systems, enhanced data collection processes, and robust due diligence procedures.
Many of our customers and potential customers are also subject to these laws and directives. As a result, those companies will be required to assess our sustainability efforts and impacts. If we are unable to satisfactorily address their requests for information or other sustainability-related requirements or expectations, customers may reduce or terminate their contracts with us and customers and potential customers may choose alternative software solutions, which could adversely affect our business, financial condition, results of operations, and prospects.
The regulatory landscape for sustainability disclosures and obligations continues to evolve and expand, and additional laws or regulatory requirements may impose further compliance burdens on us and further increase our compliance and operating costs.
We are subject to increasing, evolving, and conflicting expectations and scrutiny with respect to our sustainability disclosures and initiatives. Failure to meet stakeholder expectations or actual or perceived inconsistencies or inaccuracies in our sustainability disclosures could result in reputational harm, regulatory investigations, or litigation.
Expectations around environmental, social, governance and other sustainability matters continue to evolve rapidly, and stakeholders – including investors, customers, employees, and regulators – are increasingly focused on our sustainability disclosures and performance against targets. If we fail, or are perceived to have failed, to make progress on our stated sustainability targets or initiatives, or if our sustainability initiatives or disclosures are or are perceived to be inadequate, inaccurate, misleading, or unlawful, our reputation could be harmed, and we could face regulatory investigations, enforcement actions, fines, penalties, and litigation, any of which could adversely affect our business, financial condition, results of operations, and prospects. Additionally, differing stakeholder views on sustainability priorities may create tension or conflict, which could adversely affect our reputation, employee morale, or investor relations.

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Our use of artificial intelligence (“AI”) technology and the incorporation of AI technology into our products carries risks and challenges that could adversely affect our business, financial condition, results of operations, and prospects.
We are increasingly incorporating AI capabilities into many of our products to enable our customers to become more agile and productive. The integration of AI into our products presents risks and challenges, including that we may be unable to integrate AI technologies into our products when or as we expect, that our customers do not appreciate or realize the anticipated benefits of such technologies, that competitors may incorporate AI into their products more quickly or effectively, that our AI-based solutions could produce inaccurate results or have other unintended consequences, or that our AI-based solutions may expose us to lawsuits, regulatory investigations, or other proceedings, and subject us to legal liability as well as brand and reputational harm, all of which could negatively affect our business, financial condition, results of operations, and prospects.
We also use AI tools internally to make certain business processes more efficient. While these technologies offer significant benefits, they also create risks and challenges. Although we implement measures to address the accuracy and appropriate use of AI tools, including internal AI policies and training, these efforts may not always be successful. Inadvertent selection of AI tools that introduce bias, errors, or hallucinations, as well as any failure by our employees, contractors, or partners to adhere to our AI policies, or inappropriate use of AI, could result in violations of confidentiality obligations, laws, or regulations, jeopardize our intellectual property rights, or expose our products or business systems to defects and malware, any of which could adversely affect our business, financial condition, results of operations, and prospects.
II. Risks Related to Our Intellectual Property
We may be unable to adequately protect our proprietary rights, which could adversely affect our competitive position, business and prospects.
Our software products are proprietary. We protect our intellectual property rights in these items by relying on copyrights, trademarks, patents, and common law safeguards, including trade secret protection, as well as restrictions on disclosures and transferability contained in our agreements with other parties. Despite these measures, the laws of all relevant jurisdictions may not afford adequate protection to our software products and other intellectual property. In addition, we frequently encounter attempts by individuals and companies to pirate our software. If our measures to protect our intellectual property rights fail, others may be able to use those rights, which could reduce our competitiveness and adversely affect our business, financial condition, operating results, and prospects.
Any legal action to protect our intellectual property rights that we may bring or be engaged in could be expensive, divert management’s attention from regular operations, and lead to additional claims against us, and we may not prevail, any of which could adversely affect our business, financial condition, operating results, and prospects.
Many of our products and services incorporate or depend on open source software components, which are governed by various open source licenses. Some of these licenses may require, as a condition of use, modification, or distribution, that we make available the source code of our proprietary software or derivative works. While we maintain policies and procedures designed to monitor and control the use of open source software in our products and in any third-party software that is incorporated into our products, and ensure compliance with applicable licenses, these controls may not be effective in all cases. If we inadvertently use open source software in a manner that triggers such disclosure obligations, we could be required to publicly disclose portions of our proprietary code, which could result in a loss of competitive advantage and intellectual property rights, which could adversely affect our business, financial condition, operating results, and prospects.

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Intellectual property infringement claims could be asserted against us, which could be expensive to defend, could result in limitations on our use of the claimed intellectual property, and could adversely affect our business and prospects.
The software industry is characterized by frequent litigation regarding copyright, patent and other intellectual property rights. We have faced such lawsuits from time to time. Any such claim could result in significant expense to us and divert the efforts of our technical and management personnel. We cannot be sure that we would prevail against any such asserted claims. If we did not prevail, we could be prevented from using the claimed intellectual property or be required to enter into royalty or licensing agreements, which might not be available on terms acceptable to us. In addition to possible claims with respect to our proprietary products, some of our products contain technology developed by and licensed from third parties and we may likewise be susceptible to infringement claims with respect to these third-party technologies.
III. Risks Related to Acquisitions and Divestitures
Businesses we acquire may not generate the sales and earnings we anticipate and may otherwise adversely affect our business and prospects.
We have acquired, and intend to continue to acquire, new businesses and technologies. If we fail to successfully integrate and manage the businesses and technologies we acquire, if an acquisition does not further our business strategy or return a level of sales as we expect, or if a business we acquire has unexpected legal or financial liabilities, our business, financial condition, results of operations, and prospects could be adversely affected.
The types of issues that we may face in integrating and operating the acquired business include:
• difficulties managing an acquired company’s technologies or lines of business or entering new markets where we have limited or no prior experience or where competitors may have stronger market positions;

• unanticipated operating difficulties in connection with the acquired entities, including potential declines in sales of the acquired entity;

• complications relating to the assumption of pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business;

• litigation arising from the transaction, including potential intellectual property claims or disputes following an acquisition;

• diversion of management and employee attention;

• challenges with implementing adequate and appropriate controls, procedures and policies in an acquired business;

• potential loss of key personnel in connection with an acquisition; and

• potential incompatibility of business cultures.

Further, if we do not achieve the expected return on our investments, it could impair the intangible assets and goodwill that we recorded as part of an acquisition, which could require us to record a reduction in the value of those assets.

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Divestitures of businesses or assets may not achieve the intended strategic or financial benefits and may otherwise adversely affect our business and prospects.
We have divested, and may in the future divest, businesses, product lines, or other assets as part of our ongoing business strategy. If we fail to successfully execute and manage these divestitures, if a divestiture does not yield the anticipated financial or operational benefits, or if the businesses or assets we divest have unexpected legal, financial, or operational liabilities, our business, financial condition, results of operations, and prospects could be adversely affected.
The types of issues that we may face in connection with divestitures include:
• difficulties separating the operations, technologies, or personnel of the business to be divested from our ongoing operations;

• disruption to our remaining business, including loss of revenue or customers associated with the divested business or asset;

• unanticipated costs or liabilities, including indemnification obligations, retained liabilities, or disputes with purchasers;

• diversion of management and employee attention from ongoing operations;

• challenges in reallocating resources and personnel following the divestiture;

• potential loss of key personnel who may leave as a result of the transaction;

• adverse impacts on our relationships with customers, partners, or suppliers;

• potential incompatibility of business cultures or systems during transition; and

• litigation arising from the transaction, including disputes over purchase price adjustments, indemnities, or other contractual terms.

Further, if investors or analysts do not like or understand the divestiture or if they believe we did not receive a fair price for the business or assets, they may sell their shares or alter their view of our prospects, which could cause our share price to decline.
We may incur significant debt or issue a material amount of debt or equity securities to finance an acquisition, which could adversely affect our operating flexibility, business and prospects.
If we were to incur a significant amount of debt—whether by borrowing funds under our credit facility or otherwise or issuing new debt securities—to finance an acquisition, our interest expense, debt service requirements and leverage would increase significantly. The increases in these expenses and in our leverage could constrain our ability to operate as we might otherwise or to borrow additional amounts and could adversely affect our business, financial condition, results of operations, and prospects.
If we were to issue a significant amount of equity securities in connection with an acquisition, existing shareholders would be diluted and our stock price could decline.

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IV. Risks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our business, financial condition, results of operations, and prospects, as well as our ability to meet our payment obligations under our debt.
We have a substantial amount of indebtedness. As of November 21, 2025, our total debt outstanding was approximately $1,270 million, $500 million of which was associated with the 4.000% senior notes issued in February 2020, which mature in February 2028 and are unsecured ("2028 Notes"); $301 million of which was borrowed under our credit facility revolving line, which matures in January 2028; and $469 million of which was borrowed under our credit facility term loan (which began amortizing in March 2024). All amounts outstanding under the credit facility and the 2028 Notes will be due and payable in full on their respective maturity dates. As of November 21, 2025, we had unused commitments under our credit facility of approximately $949 million. PTC Inc. and one of our foreign subsidiaries are eligible borrowers under the credit facility and certain other foreign subsidiaries may become borrowers under our credit facility in the future, subject to certain conditions.
Specifically, our level of debt could:
• make it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults;

• result in an event of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses;

• limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

• reduce the availability of our cash to fund working capital, capital expenditures, acquisitions and other general corporate purposes and limit our ability to obtain additional financing for these purposes;

• increase our vulnerability to adverse economic and industry conditions;

• amplify the risk of increased interest rates as certain of our borrowings, including borrowings under our credit facility, are at variable rates of interest;

• limit our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; and

• place us at a competitive disadvantage compared to other, less leveraged competitors.

Any of the above-listed factors could have an adverse effect on our business, financial condition, results of operations, and prospects, and our ability to meet our payment obligations under our debt agreements.

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Despite our current level of indebtedness, we and our subsidiaries might incur substantially more debt and other obligations. This could further exacerbate the risks to our business, financial condition, and prospects described above.
We and our subsidiaries might incur significant additional indebtedness and other obligations in the future, including secured debt. Although the credit agreement governing our credit facility contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions. The additional indebtedness incurred in compliance with these restrictions could be substantial. In addition, the credit agreement and the indenture governing our senior notes due 2028, will not prevent us from incurring obligations that do not constitute indebtedness. If new debt is added to our current debt levels, or we incur other obligations, the related risks that we now face could increase.
We may not be able to generate enough cash to service all our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful, and could harm our business and prospects.
Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors, some of which are beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our debt agreements restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our ability to satisfy our debt obligations.
If we cannot make scheduled payments on our debt, we will be in default and the lenders under our credit facility could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings, the holders of our 2028 Notes could declare all outstanding principal, premium, if any, and interest to be due and payable, and we could be forced into bankruptcy or liquidation. These events could result in a loss of your investment.

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We are required to comply with certain financial and operating covenants under our debt agreements. Any failure to comply with those covenants could cause amounts borrowed to become immediately due and payable and/or prevent us from borrowing under the credit facility.
We are required to comply with specified financial and operating covenants under our debt agreements and to make payments under our debt, which limit our ability to operate our business as we otherwise might operate it. Our failure to comply with any of these covenants or to meet any debt payment obligations could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and/or unpaid fees, becoming immediately due and payable. We might not have enough working capital or liquidity to satisfy any repayment obligations if those obligations were accelerated. In addition, if we are not in compliance with the financial and operating covenants under the credit facility when we wish to borrow funds, we will be unable to borrow funds to pursue certain corporate initiatives, including strategic acquisitions, which could adversely affect our business and prospects.
V. Risks Related to Our Common Stock
Our stock price has been volatile, which may make it harder to resell shares at a favorable time and price.
Market prices for securities of software companies are generally volatile and are subject to significant fluctuations that may be unrelated or disproportionate to the operating performance of these companies. Accordingly, the trading prices and valuations of software companies’ stocks, and of ours, may not be predictable. Negative changes in the public’s perception of the prospects of software companies, or of PTC or the markets we serve, could depress our stock price regardless of our operating results.
Also, a large percentage of our common stock is held by institutional investors. Purchases and sales of our common stock by these investors could have a significant impact on the market price of our stock.
If our results of operations do not meet market or analysts’ expectations, our stock price could decline.
Our quarterly operating results fluctuate depending on many factors, including the effect of ASC 606 on revenue recognition for the on-premises software subscriptions we offer, variability in the timing of start dates for our subscription offerings, length of contracts, and renewals, and significant unexpected expenses in a quarter. Accordingly, our quarterly results are difficult to predict and we may be unable to confirm or adjust expectations with respect to our operating results for a quarter until that quarter has closed. If our quarterly operating results do not meet market or analysts’ expectations, our stock price could decline.
VI. General Risk Factors
Our international businesses present economic and operating risks, which could adversely affect our business and prospects.
We expect that our international operations will continue to expand and to account for a significant portion of our total revenue. Because we transact business in various foreign currencies, the volatility of foreign exchange rates has had and may in the future have a material adverse effect on our revenue, expenses, cash flows and operating results.
Other risks inherent in our international operations include, but are not limited to, the following:
• difficulties in staffing and managing foreign sales and development operations;

• exposure of our operations and employees to political instability and armed conflict in the countries and regions in which we operate, including Israel;

• increased financial accounting and reporting burdens and complexities;

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• increased regulatory and compliance risks;

• inadequate local infrastructure; and

• greater difficulty in protecting our intellectual property.

We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense, reduce our net income, and increase our tax payment obligations.
As a multinational organization, we are subject to income taxes as well as non-income based taxes in the U.S. and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our tax returns are subject to review by various taxing authorities. Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes could be different from what is reflected in our reported income tax provisions and accruals.
Our effective tax rate and tax payment obligations can be adversely affected by several factors, many of which are outside of our control, including:
• changes in tax laws regulations, and interpretations in multiple jurisdictions in which we operate;

• assessments, and any related tax interest or penalties, by taxing authorities;

• changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;

• changes to the financial accounting rules for income taxes;

• unanticipated changes in tax rates; and

• changes to a valuation allowance on net deferred tax assets, if any.

ITEM 1B. Unresolved St aff Comments
None.
Item 1C. Cybersecurity
We are subject to various cybersecurity risks in connection with our business. For more information on our cybersecurity related risks, see Item 1A. Risk Factors, I. Risks Related to Our Business Operations and Industry of this Annual Report.
Our Approach
We take a holistic, multi-layered approach to cybersecurity and privacy that combines traditional Defense-in-Depth methods with next-generation Zero Trust principles. In developing our cybersecurity risk management program, we are informed by industry benchmarks and standards, including the cybersecurity framework created by the National Institute of Standards and Technology (“NIST”) and the Software Assurance Maturity Model developed by the OWASP (the “OWASP SAMM”). We also have various security-related certifications and authorizations, including ISO 27001, SOC 2 Type II and FedRAMP, for certain of our products and services.
People . Recognizing that technology alone cannot mitigate all security threats, we focus on developing our most critical resource: our people. Our corporate cybersecurity awareness activities are combined with enterprise-wide and department-specific tools and mandatory employee training, providing our employees with knowledge and resources to support our efforts to mitigate security threats.

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Process . We maintain processes and policies to try to anticipate security risks and facilitate compliance with applicable contractual obligations, regulations, and standards, as well as address any incidents or violations. We focus on continuous improvement and constantly mature our processes to keep pace with the rapidly evolving cybersecurity threat landscape.
Technology . We seek to automate processes and remove the potential for human error to the extent feasible by implementing technology solutions. From fundamental IT security to development of our software products and keeping our customers’ data safe, we aim to maintain a secure infrastructure that is appropriately monitored for possible threats.
These three key elements of people, process, and technology are tightly interwoven to support our aim to secure our environments and the data for which we are a custodian .
Governance
Cybersecurity is a risk area with oversight at the highest levels of the organization, including the Executive and Board Level. The overall operational program is led by the Cybersecurity Strategy Council, a cross-functional team of executives and subject matter experts, led by our Chief Product Security Officer, Chief Information Security Officer and Chief Compliance Officer. The Cybersecurity Strategy Council oversees a “Three Lines Model” of Operations, Risk Monitoring and Oversight, and Audit, to effectively address cybersecurity, risk management, and control. All Cybersecurity, Risk, and Internal Audit functions report to the PTC Executive Leadership Team.
We provide regular updates on our cybersecurity strategic plans, programs, and initiatives to the Cybersecurity Committee of the Board of Directors at its four regularly scheduled meetings per year. Our Incident Response Plans provide for notice, and continued updates, to the Cybersecurity Committee of applicable incidents on a timely basis .

Risk Assessment
We conduct an annual cybersecurity maturity assessment. Periodically, we engage a third-party security consulting firm to conduct an Enterprise Security Maturity Assessment. This independent assessment provides a mechanism to benchmark our current risk profile and enables us to measure progress as we make program improvements. Identified cybersecurity risks are reviewed by the Cybersecurity Strategy Council, which ensures that risk tolerances are established and used to appropriately manage risks and address the risks identified.
Third-Party Vendor Risk Management
Our Vendor Risk Management (VRM) program is designed to meet cybersecurity, privacy, regulatory and compliance obligations, by managing risk associated with third-party vendors who have access to PTC IT systems and data . Prior to outsourcing or allowing third-party access to PTC or customer systems, IP, or data; risks associated with such activity are identified and documented. The process of selecting a third-party vendor includes due diligence of the vendor service or product in question. Third-party companies using PTC facilities or accessing PTC’s IT Systems are subject to PTC’s VRM review and must demonstrate that proper security measures are in place before they have access to any PTC IT systems or data. All such vendors are to be approved by PTC’s VRM process and contractually bound to maintain appropriate cybersecurity technical and organization measures and to protect PTC’s data to which they may have access.

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Incident Response
We maintain an Enterprise Cybersecurity Incident Response Policy to address cybersecurity incidents. The Policy is tested on a periodic basis, including an ongoing improvement program involving periodic tabletop exercises. Cybersecurity incident handling is managed by individual organizations with cybersecurity responsibility and monitored/guided by applicable corporate functions. All Cybersecurity Incident Response Plans under the Policy are based on industry standards, such as the NIST Computer Security Incident Handling Guide – Special Publication 800-61.
Management’s Role in Assessing and Managing Our Risks from Cybersecurity Threats
Our Cybersecurity Program is overseen by executives on our Executive Leadership Team and managed by our Cybersecurity Strategy Council, including our Senior Vice President, Chief Information Security Officer (CISO), who reports to our Executive Vice President, Chief Digital and Information Officer (CDO) . Our CISO is responsible for day-to-day risk management activities, including staying informed about and monitoring prevention, detection, mitigation, and remediation efforts through regular communication and reporting from professionals in the information security team, and the use of technological tools and software. Our CDO is responsible for our broader IT program, which includes our ability to remediate and recover from a cybersecurity incident while reducing impacts to the business and operations . Our CDO and CISO regularly report directly to the Cybersecurity Committee of the Board of Directors on our Cybersecurity Program and efforts to prevent, detect, mitigate, and remediate issues. In addition, we have an escalation process in place to inform senior management and the Cybersecurity Committee and the Board of Directors of material issues.

Management Experience
Our CDO and CISO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CDO joined PTC as Chief Digital and Information Officer in January 2022 and is responsible for PTC’s global information technology (IT) team, overseeing PTC’s digital infrastructure and working with business leaders to guide PTC’s digital process optimization strategy. He has more than two decades of IT and operations leadership. Before joining PTC, he served as Global Vice President and Chief Information Officer for Avaya, where he led a globally-dispersed team of 1,200 IT professionals to support the entire global Avaya enterprise. Prior to Avaya, he held technology leadership roles at Arise Virtual Solutions Inc., Oracle, and Colorado College.
Our CISO joined PTC as Cyber Information Security Officer in April 2022 and, before joining PTC, was the Vice President, Information Technology, North America and Europe for Alorica, where he led Alorica’s transformation to a secure endpoint architecture for 90,000 global remote and hybrid employees.

ITEM 2. Prope rties
We currently have 61 office locations used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work. Of our total of approximately 897,000 square feet of leased facilities used in operations, approximately 281,000 square feet are located in the U.S., including approximately 169,000 square feet at our headquarters facility located in Boston, Massachusetts, and approximately 267,000 square feet are located in India, where a significant amount of our research and development is conducted.
ITEM 3. Legal Pro ceedings
None.
ITEM 4. Mine Safety Disclosures
Not applicable.

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PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockho lder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the Nasdaq Global Select Market under the symbol "PTC."
On September 30, 2025, the close of our fiscal year, and on November 19, 2025, our common stock was held by 821 and 815 shareholders of record, respectively.
The table below shows the shares of our common stock we repurchased in the fourth quarter of 2025.

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)

 

 July 1, 2025 - July 31, 2025

 

—

 

 

$

—

 

 

 

—

 

 

$

1,775,012,684

 

 August 1, 2025 - August 31, 2025

 

 

236,795

 

 

$

211.14

 

 

 

236,795

 

 

$

1,725,015,150

 

 September 1, 2025 - September 30, 2025

 

 

119,627

 

 

$

209.00

 

 

 

119,627

 

 

$

1,700,012,666

 

Total

 

 

356,422

 

 

$

210.42

 

 

 

356,422

 

 

$

1,700,012,666

 

(1) As announced on November 6, 2024, 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, 2027.

ITEM 6. [Re served]

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ITEM 7. Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations
Our Operating and Non-GAAP Financial Measures
Our discussion of results includes discussion of our ARR (Annual Run Rate) operating measure, non-GAAP financial measures, and disclosure of our results on a constant currency basis. ARR and our non-GAAP financial measures, including the reasons we use those 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.
Executive Overview
ARR grew 10% (8.5% constant currency) to $2.48 billion as of the end of FY'25 compared to FY’24.
Cash provided by operating activities grew 16% to $868 million in FY'25 compared to FY'24. Free cash flow grew 16% to $857 million in FY'25 compared to FY'24. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In FY'25, we made net debt repayments of $553 million and repurchased $300 million of our outstanding shares. We ended FY’25 with cash and cash equivalents of $184 million and gross debt of $1.20 billion, which debt carried an aggregate weighted average interest rate of 4.9%.
Revenue grew 19% (18% constant currency) in FY'25 compared to FY'24. Under ASC 606, the timing of revenue recognition for on-premises subscription revenue can vary significantly, impacting reported revenue, operating margin, and earnings per share. FY'25 revenue growth reflects the higher total value and longer average duration of contracts that commenced in the current year. Operating margin grew by approximately 1030 basis points in FY'25 compared to FY'24, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 95% to $6.08 in FY'25 compared to FY'24, driven by revenue growth.
On November 5, 2025, we entered into a definitive agreement with an affiliate of TPG, under which we agreed to sell our Kepware and ThingWorx businesses for total consideration of up to $725 million, if certain targets are achieved. We may receive up to $600 million upon closing of the transaction, which may be reduced by $35 million if certain growth targets are not achieved for a period between signing and closing, and further adjusted as set forth in the purchase agreement. We may receive up to $125 million of contingent consideration upon the sale of the business by TPG. The transaction is expected to close in the first half of calendar 2026. Our expected use of the net after-tax proceeds will follow our overall capital allocation strategy of returning excess cash to shareholders via share repurchases, while allowing for potential tuck-in acquisitions.
Results of Operations
The following table shows the measures that we consider the most significant indicators of our business performance. In addition to providing operating income, operating margin, diluted earnings per share and cash from operations as calculated under GAAP, we provide our ARR operating measure and non-GAAP operating income, non-GAAP operating margin, non-GAAP diluted earnings per share, and free cash flow for the reported periods. We also provide a view of our actual results on a constant currency basis. Our non-GAAP financial measures exclude the items described in Non-GAAP Financial Measures below. Investors should use our non-GAAP financial measures only in conjunction with our GAAP results.

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For discussion of our FY'24 results and comparison to our FY'23 results, refer to Management's Discussion and Analysis of Financial Conditions and Results of Operations in our Annual Report on Form 10-K for the year ended September 30, 2024.
 

(Dollar amounts in millions, except per share data)

 

Year ended September 30,

 

 

Percent Change

 

 

 

2025

 

 

2024

 

 

Actual

 

 

Constant Currency (1)

 

ARR

 

$

2,478.5

 

 

$

2,254.7

 

 

 

10

%

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total recurring revenue (2)

 

$

2,600.5

 

 

$

2,134.0

 

 

 

22

%

 

 

21

%

Perpetual license

 

 

31.4

 

 

 

32.2

 

 

 

(3

)%

 

 

(3

)%

Professional services

 

 

107.3

 

 

 

132.2

 

 

 

(19

)%

 

 

(19

)%

Total revenue

 

 

2,739.2

 

 

 

2,298.5

 

 

 

19

%

 

 

18

%

Total cost of revenue

 

 

445.0

 

 

 

444.8

 

 

 

0

%

 

 

0

%

Gross margin

 

 

2,294.2

 

 

 

1,853.7

 

 

 

24

%

 

 

23

%

Operating expenses

 

 

1,311.9

 

 

 

1,265.6

 

 

 

4

%

 

 

3

%

Operating income

 

$

982.4

 

 

$

588.1

 

 

 

67

%

 

 

64

%

Non-GAAP operating income (1)

 

$

1,302.1

 

 

$

894.3

 

 

 

46

%

 

 

44

%

Operating margin

 

 

36

%

 

 

26

%

 

 

 

 

 

 

Non-GAAP operating margin (1)

 

 

48

%

 

 

39

%

 

 

 

 

 

 

Diluted earnings per share (3)

 

$

6.08

 

 

$

3.12

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share (1)(3)

 

$

7.94

 

 

$

5.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

867.7

 

 

$

750.0

 

 

 

 

 

 

 

Capital expenditures

 

 

(11.0

)

 

 

(14.4

)

 

 

 

 

 

 

Free cash flow

 

$

856.7

 

 

$

735.6

 

 

 

 

 

 

 

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

(3) This amount differs from our Q4'25 earnings release due to an immaterial adjustment related to foreign currency option contracts entered into in Q4'25 resulting in a $7.0 million decrease in Net income and a $0.06 decrease in GAAP and non-GAAP Diluted earnings per share.

Impact of Foreign Currency Exchange on Results of Operations
Approximately 50% of our revenue and 35% 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. Changes in foreign currency exchange rates were a slight tailwind to reported income statement results compared to constant currency results in FY’25. ARR was positively impacted by more favorable currency exchange rates, particularly the Euro to U.S. Dollar exchange rate, as of September 30, 2025 compared to September 30, 2024.
The results of operations in the table above, and the tables and discussions below about revenue by line of business and product group present both actual percentage changes year over year and percentage changes on a constant currency basis. Our constant currency disclosures are calculated by multiplying the results in local currency for FY'25 and FY'24 by the exchange rates in effect on September 30, 2024. If FY'25 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been lower by $33 million, revenue would have been higher by $21 million, and expenses would have been higher by $9 million. If FY'24 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2024, ARR would have been the same, revenue would have been higher by $34 million, and expenses would have been higher by $14 million.

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Revenue
Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing 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 up front 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. We continue to convert existing support contracts to on-premises subscriptions, resulting in a shift to up-front recognition of on-premises subscription license revenue in the period converted compared to ratable recognition for a perpetual support contract. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. We expect that over time a higher portion of our revenue will be recognized ratably as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue can vary significantly.
Revenue by Line of Business
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

Percent Change

 

 

 

2025

 

 

2024

 

 

Actual

 

 

Constant Currency

 

License (1)

 

$

1,162.7

 

 

$

806.9

 

 

 

44

%

 

 

43

%

Support and cloud services (2)

 

 

1,469.2

 

 

 

1,359.4

 

 

 

8

%

 

 

7

%

Software revenue

 

 

2,631.9

 

 

 

2,166.2

 

 

 

21

%

 

 

21

%

Professional services

 

 

107.3

 

 

 

132.2

 

 

 

(19

)%

 

 

(19

)%

Total revenue

 

$

2,739.2

 

 

$

2,298.5

 

 

 

19

%

 

 

18

%

 
(1) Includes perpetual licenses and the license portion of on-premises subscription sales.

(2) Includes support on perpetual licenses, the support portion of on-premises subscription sales, SaaS, and hosting services.

Software revenue growth in FY'25 was driven by license revenue growth, which reflects the higher total value and notably longer average duration of contracts commencing in the current year. These large contracts with longer durations additionally drove a $179 million (89%) year-over-year increase in long-term receivables and a $601 million (27%) year-over-year increase in Remaining Performance Obligations (RPO).
Support and cloud services revenue growth in FY'25 was mainly driven by growth in PLM.
Professional services revenue decreased in FY'25 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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Table of Contents

 

Software Revenue by Product Group
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

Percent Change

 

 

 

2025

 

 

2024

 

 

Actual

 

 

Constant Currency

 

PLM

 

$

1,639.0

 

 

$

1,333.4

 

 

 

23

%

 

 

22

%

CAD

 

 

992.9

 

 

 

832.8

 

 

 

19

%

 

 

19

%

Software revenue

 

$

2,631.9

 

 

$

2,166.2

 

 

 

21

%

 

 

21

%

PLM software revenue growth in FY'25 was driven by the higher total value and longer average duration of contracts commencing in the period. PLM software revenue grew across all geographic regions, primarily driven by Windchill.
PLM ARR grew 10% (8% constant currency) from September 30, 2024 to September 30, 2025, primarily driven by Windchill and Codebeamer.
CAD software revenue growth in FY'25 was driven by the higher total value and longer average duration of contracts commencing in the period. CAD software revenue grew across all geographic regions, primarily driven by Creo.
CAD ARR grew 10% (9% constant currency) from September 30, 2024 to September 30, 2025, primarily driven by Creo.
Gross Margin
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

 

 

 

 

2025

 

 

2024

 

 

Percent Change

 

License gross margin

 

$

1,115.8

 

 

$

760.0

 

 

 

47

%

License gross margin percentage

 

 

96

%

 

 

94

%

 

 

 

Support and cloud services gross margin

 

$

1,177.4

 

 

$

1,084.8

 

 

 

9

%

Support and cloud services gross margin percentage

 

 

80

%

 

 

80

%

 

 

 

Professional services gross margin

 

$

1.1

 

 

$

8.9

 

 

 

(88

)%

Professional services gross margin percentage

 

 

1

%

 

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gross margin

 

$

2,294.2

 

 

$

1,853.7

 

 

 

24

%

Total gross margin percentage

 

 

84

%

 

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin (1)

 

$

2,349.8

 

 

$

1,913.6

 

 

 

23

%

Non-GAAP gross margin percentage (1)

 

 

86

%

 

 

83

%

 

 

 

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

License gross margin grew at a higher rate than license revenue in FY'25 due mainly to license revenue growth. Total cost of license revenue in FY'25 remained consistent with FY'24, with lower intangible amortization expense offsetting growth in other areas.
Support and cloud services gross margin growth in FY'25 was in line with support and cloud services revenue growth. Cost of support and cloud services grew 6% in FY'25, primarily due to increasing compensation-related costs and cloud and software subscription-related costs as the business grows.
Professional services gross margin decreased in FY’25 compared to FY’24, primarily driven by 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.

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Table of Contents

 

Operating Expenses
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

 

 

 

 

2025

 

 

2024

 

 

Percent Change

 

Sales and marketing

 

$

566.5

 

 

$

559.0

 

 

 

1

%

% of total revenue

 

 

21

%

 

 

24

%

 

 

 

Research and development

 

 

457.7

 

 

 

433.0

 

 

 

6

%

% of total revenue

 

 

17

%

 

 

19

%

 

 

 

General and administrative

 

 

226.1

 

 

 

232.4

 

 

 

(3

)%

% of total revenue

 

 

8

%

 

 

10

%

 

 

 

Amortization of acquired intangible assets

 

 

45.9

 

 

 

42.0

 

 

 

9

%

% of total revenue

 

 

2

%

 

 

2

%

 

 

 

Impairment and other charges (credits), net

 

 

15.6

 

 

 

(0.8

)

 

 

2,050

%

% of total revenue

 

 

1

%

 

 

0

%

 

 

 

Total operating expenses

 

$

1,311.9

 

 

$

1,265.6

 

 

 

4

%

Total headcount increased by 2% between September 30, 2024 and September 30, 2025.
Operating expenses in FY'25 compared to FY'24 increased primarily due to the following:
• a $19 million (2%) increase in total compensation expense (including stock-based compensation), driven by a $17 million increase in severance costs primarily related to our go-to-market realignment (which is mainly included in Sales and marketing) and headcount growth, offset by lower compensation charges in General and administrative due to our FY'24 chief executive officer succession;

• $16 million impairment charges recognized in Q2'25 and Q4'25 related to the lease assets associated with the subleased portion of our Boston office; and

• a $6 million increase in acquisition and transaction-related costs.

Interest Expense
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

 

 

 

 

2025

 

 

2024

 

 

Percent Change

 

Interest expense

 

$

(77.0

)

 

$

(119.7

)

 

 

(36

)%

 
Interest expense includes interest on our revolving credit facility, term loan, senior notes that were redeemed in Q2'25, and senior notes due in 2028. The decrease in interest expense was driven by lower debt balances and lower interest rates.
Other Income
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

 

 

 

 

2025

 

 

2024

 

 

Percent Change

 

Interest income

 

$

3.4

 

 

$

4.4

 

 

 

(22

)%

Other income (expense), net

 

 

11.4

 

 

 

(3.8

)

 

 

398

%

Other income, net

 

$

14.8

 

 

$

0.6

 

 

 

2,578

%

Other income, net increased in FY'25 compared to FY'24, primarily driven by a $13 million contingent consideration earnout recognized in Q4'25 related to the sale of a portion of our PLM services business in FY'22. An immaterial adjustment related to foreign currency option contracts entered into in Q4'25 resulted in a $9.3 million decrease in Other income, net compared to amounts from our Q4'25 earnings release.

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Table of Contents

 

Income Taxes
 

(Dollar amounts in millions)

 

Year ended September 30,

 

 

 

 

 

 

2025

 

 

2024

 

 

Percent Change

 

Income before income taxes

 

$

920.2

 

 

$

469.0

 

 

 

96

%

Provision for income taxes

 

$

186.2

 

 

$

92.6

 

 

 

101

%

Effective income tax rate

 

 

20

%

 

 

20

%

 

 

 

An immaterial adjustment related to foreign currency option contracts entered into in Q4'25 resulted in a $2.3 million decrease to Provision for income taxes compared to amounts from our Q4’25 earnings release.
Our effective tax rates for FY'25 and FY'24 were impacted by a number of offsetting items as outlined below, as well as by the year-over-year increase in Income before income taxes, which was primarily domestic; however, there was ultimately no net change in the effective tax rate year-over-year. In FY'25 and FY'24, our income tax rate included the effects of Internal Revenue Service (IRS) procedural guidance requiring consent for previously automatic changes of accounting method. The IRS procedural guidance change significantly increased our estimated taxable income in FY'24, with a lesser impact to taxable income in FY'25. In FY'25, we recorded tax expense of $11 million primarily related to accrued interest stemming from the effects of the procedural guidance. In FY'24, we recorded a benefit of $4 million primarily related to an increase to the estimated tax benefit for the deductions associated with Global Intangible Low-Taxed Income ("GILTI") and Foreign-Derived Intangible Income ("FDII").
Additionally, in FY'25, we recorded tax benefits of $11 million related to tax reserves in foreign jurisdictions.
In FY'24, the rate was impacted by a U.S. Tax Court ruling in Varian Medical Systems, Inc. v. Commissioner, issued on August 26, 2024. The ruling related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Act (our fiscal 2018). As a result, we recorded a $14 million benefit for additional foreign tax credits that became available to us. These benefits were offset by a tax expense of $5 million related to a tax reserve in a foreign jurisdiction.
In FY'24, we requested consent from the IRS to change the accounting method for the treatment of certain deductions. In accordance with GAAP, our financial statements reflect the fact that as of September 30, 2025 we had not received the consent. Accordingly, we have included an unrecognized tax benefit of $109 million within Other liabilities on the Consolidated Balance Sheets. We received this consent in October 2025. Consequently, in Q1'26 we will release the reserve, primarily resulting in a decrease to Deferred tax assets.
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.
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 will be applicable to us beginning in FY'26. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. There is no material impact to our financial statements for FY'25. We are in the process of evaluating the prospective impact of the Act to our consolidated financial statements and cash flow, but currently expect such changes will have a material positive cash impact in FY'26 and FY'27, which is reflected in our guidance. As our review is not yet complete, our expectations could change.

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Table of Contents

 

Liquidity and Capital Resources
 

(in millions)

 

September 30,

 

 

 

2025

 

 

2024

 

Cash and cash equivalents

 

$

184.4

 

 

$

265.8

 

Restricted cash

 

 

0.6

 

 

 

0.7

 

Total

 

$

185.0

 

 

$

266.5

 

 

(in millions)

 

Year ended September 30,

 

 

 

2025

 

 

2024

 

Net cash provided by operating activities

 

$

867.7

 

 

$

750.0

 

Net cash used in investing activities

 

$

(38.3

)

 

$

(124.8

)

Net cash used in financing activities

 

$

(908.5

)

 

$

(650.7

)

 
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. A significant portion of our cash is generated and held outside the U.S. As of September 30, 2025, we had cash and cash equivalents of $18 million in the U.S., $87 million in Europe, $63 million in Asia Pacific (including India), and $16 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.
Cash Provided by Operating Activities
Cash provided by operating activities increased by $118 million in FY'25 compared to FY'24. This increase was driven by higher collections, lower interest payments, and lower vendor disbursements, partially offset by higher tax payments and higher severance payments. Interest payments were $59 million lower in FY'25 than in FY'24, driven by the Q1'24 payment of $30 million of imputed interest on a deferred acquisition payment associated with our FY'23 acquisition of ServiceMax, as well as lower interest payments in FY'25 due mainly to lower debt balances.
Cash Used in Investing Activities
Cash used in investing activities in FY'25 was driven by outflows from the settlement of net investment hedges. Cash used in investing activities in FY'24 was driven by the acquisition of pure-systems for $93 million.
Cash Used in Financing Activities
 
Cash used in financing activities in FY'25 included net payments of $553 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and the repurchase of $300 million of our common stock. Cash used in financing activities in FY'24 included $620 million paid to settle the ServiceMax deferred acquisition payment, partially offset by net borrowings of $46 million to fund that payment and the pure-systems acquisition. Payments of withholding taxes in connection with vesting of stock-based awards were lower in FY'25 compared to FY'24, primarily driven by the vesting of certain awards in connection with the chief executive officer succession in Q2'24.

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Outstanding Debt

(in millions)

 

September 30,

 

 

 

2025

 

 

2024

 

4.000% Senior notes due 2028

 

$

500.0

 

 

$

500.0

 

3.625% Senior notes due 2025

 

 

—

 

 

 

500.0

 

Credit facility revolver line

 

 

231.3

 

 

 

262.0

 

Credit facility term loan

 

 

468.8

 

 

 

490.6

 

Total debt

 

 

1,200.0

 

 

 

1,752.6

 

Unamortized debt issuance costs for the senior notes

 

 

(2.6

)

 

 

(4.1

)

Total debt, net of issuance costs

 

$

1,197.4

 

 

$

1,748.6

 

 

 

 

 

 

 

 

Undrawn under credit facility revolver

 

$

1,018.8

 

 

$

988.0

 

Undrawn under credit facility revolver available to borrow

 

$

1,001.7

 

 

$

972.1

 

As of September 30, 2025, we were in compliance with all financial and operating covenants of the credit facility and the senior note indenture. As of September 30, 2025, the annual rate for borrowings outstanding under the credit facility was 5.6%.
Our credit facility and our senior notes, including the financial and operating covenants and limitations on the payment of dividends, are described in Note 8. Debt of Notes to the Consolidated Financial Statements in this Annual Report. As of September 30, 2025, $25 million of our debt associated with the credit facility term loan was classified as current. In Q2'25, we redeemed the 2025 senior notes using a draw on our revolving credit facility and cash on hand.
Share Repurchase Authorization
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, 2027. We may use cash from operations and borrowings under our credit facility to make any such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.
In FY'25, we repurchased 1.65 million shares for $300 million. We did not repurchase any shares in FY'24.
Our long-term goal is to return excess cash to shareholders via share repurchases, while also taking into consideration the interest rate environment and strategic initiatives and acquisitions, which could cause us to reduce, suspend, or cease repurchases. We expect to repurchase approximately $150 to $250 million of our common stock per quarter in FY'26.
Expectations for 2026
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.
We expect to use the net after-tax proceeds of the Kepware and ThingWorx divestiture to repurchase shares, in line with our long-term goal of returning excess cash to shareholders.
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.

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Contractual Obligations
At September 30, 2025, our future contractual obligations were related to debt, leases, pension liabilities, unrecognized tax benefits, and purchase obligations. See Note 8. Debt, Note 16. Leases, Note 13. Pension Plans, and Note 7. Income Taxes of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $188.8 million, with $91.9 million expected to be paid in FY'26 and $96.9 million thereafter. Purchase obligations represent minimum commitments due to third parties, including royalty contracts, research and development contracts, telecommunication contracts, information technology maintenance contracts in support of internal-use software and hardware, financing leases, operating leases with original terms of less than 12 months, and other marketing and consulting contracts. Contracts for which our commitment is variable or based on volumes with no fixed minimum quantities and contracts that can be canceled without payment penalties are not included in the purchase obligation amounts above. The purchase obligations included above are in addition to amounts included in Current liabilities and Prepaid expenses recorded on our September 30, 2025 Consolidated Balance Sheet.
As of September 30, 2025, we had letters of credit and bank guarantees outstanding of approximately $15.6 million (of which $0.6 million was collateralized).
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
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.
Stock-based compensation is a non-cash expense relating to stock-based awards issued to executive officers, employees and outside directors, consisting of restricted stock units. We exclude this expense as it is a non-cash expense and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies in our industry.
Amortization of acquired intangible assets is a non-cash expense that is impacted by the timing and magnitude of our acquisitions. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Acquisition and transaction-related charges included in General and administrative expenses are direct costs of potential and completed acquisitions and expenses related to acquisition integration activities, including transaction fees, due diligence costs, severance and professional fees. Subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are also included within acquisition and transaction-related charges. Other transactional charges include third-party costs related to structuring merger and acquisition transactions outside of ordinary business operations. We do not include these costs when reviewing our operating results internally. The occurrence and amount of these costs varies depending on the timing and size of acquisitions and transactions.
In Q2'25, we changed the income statement caption of Restructuring and other charges (credits), net to Impairment and other charges (credits), net to reflect that the amounts presented are mainly impairment charges rather than restructuring charges. We correspondingly revised the caption with respect to the list of items excluded from our non-GAAP financial measures and, as reflected below, the list of items covered under that caption to reflect the primary charges and credits included in the adjustment. All charges and credits under the captioned line item remain the same.

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Impairment and other charges (credits), net are charges associated with disposal or exit activities, including lease impairment and abandonment charges, net charges or income related to impaired or exited facilities, restructuring severance charges resulting from substantial employee reduction actions, and other related costs.
Non-operating charges (credits), net are gains or losses associated with sales or changes in value of assets or liabilities that are generally investing or financing in nature and are not indicative of our ongoing ordinary operating activities. In FY'25, we recognized a gain related to contingent consideration earned upon the achievement of performance milestones associated with the FY'22 sale of a portion of our PLM services business. In FY'24, we recognized a non-operating impairment charge related to an available-for-sale debt security.
Income tax adjustments include the tax impact of the items above. Additionally, we exclude other material tax items that we do not include when reviewing our operating results internally. For example, in FY'25, adjustments include a benefit for a tax reserve related to prior years in a foreign jurisdiction. Adjustments in FY'24 include a charge for a tax reserve related to prior years in a foreign jurisdiction.
Free cash flow is cash flow from operations net of capital expenditures, which are expenditures for property and equipment and consist primarily of facility improvements, office equipment, computer equipment, and software. We believe that free cash flow, in conjunction with cash from operations, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations. Free cash flow is not a measure of cash available for discretionary expenditures.
We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results. We believe that these non-GAAP financial measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) for managing our business and evaluating our performance. We believe that providing non-GAAP financial measures also affords investors a view of our operating results that may be more easily compared to the results of other companies in our industry that use similar financial measures to supplement their GAAP results.
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 Annual Report 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)

 

Year ended September 30,

 

 

 

2025

 

 

2024

 

GAAP gross margin

 

$

2,294.2

 

 

$

1,853.7

 

Stock-based compensation

 

 

22.7

 

 

 

21.4

 

Amortization of acquired intangible assets included in cost of revenue

 

 

32.8

 

 

 

38.5

 

Non-GAAP gross margin

 

$

2,349.8

 

 

$

1,913.6

 

GAAP operating income

 

$

982.4

 

 

$

588.1

 

Stock-based compensation

 

 

216.2

 

 

 

223.5

 

Amortization of acquired intangible assets

 

 

78.8

 

 

 

80.5

 

Acquisition and transaction-related charges

 

 

9.1

 

 

 

3.1

 

Impairment and other charges (credits), net

 

 

15.6

 

 

 

(0.8

)

Non-GAAP operating income

 

$

1,302.1

 

 

$

894.3

 

GAAP net income

 

$

734.0

 

 

$

376.3

 

Stock-based compensation

 

 

216.2

 

 

 

223.5

 

Amortization of acquired intangible assets

 

 

78.8

 

 

 

80.5

 

Acquisition and transaction-related charges

 

 

9.1

 

 

 

3.1

 

Impairment and other charges (credits), net

 

 

15.6

 

 

 

(0.8

)

Non-operating charges (credits), net (1)

 

 

(13.1

)

 

 

2.0

 

Income tax adjustments (2)

 

 

(81.8

)

 

 

(71.2

)

Non-GAAP net income

 

$

958.8

 

 

$

613.4

 

GAAP diluted earnings per share

 

$

6.08

 

 

$

3.12

 

Stock-based compensation

 

 

1.79

 

 

 

1.85

 

Amortization of acquired intangible assets

 

 

0.65

 

 

 

0.67

 

Acquisition and transaction-related charges

 

 

0.08

 

 

 

0.03

 

Impairment and other charges (credits), net

 

 

0.13

 

 

 

(0.01

)

Non-operating charges (credits), net (1)

 

 

(0.11

)

 

 

0.02

 

Income tax adjustments (2)

 

 

(0.68

)

 

 

(0.59

)

Non-GAAP diluted earnings per share

 

$

7.94

 

 

$

5.08

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

867.7

 

 

$

750.0

 

Capital expenditures

 

 

(11.0

)

 

 

(14.4

)

Free cash flow

 

$

856.7

 

 

$

735.6

 

 
(1) In FY'25, we recognized a $13.1 million gain related to contingent consideration earned upon the achievement of performance milestones associated with the FY'22 sale of a portion of our PLM services business. In FY'24, we recognized an impairment loss of $2.0 million on an available-for-sale debt security.

(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 FY'25, adjustments exclude a $10.4 million tax benefit or $0.09 per share for a tax reserve related to prior years in a foreign jurisdiction. In FY'24, adjustments exclude a tax expense of $4.4 million or $0.04 per share for a tax reserve related to prior years in a foreign jurisdiction.

Operating margin impact of non-GAAP adjustments:
 

 

 

Year ended September 30,

 

 

 

2025

 

 

2024

 

GAAP operating margin

 

 

35.9

%

 

 

25.6

%

Stock-based compensation

 

 

7.9

%

 

 

9.7

%

Amortization of acquired intangible assets

 

 

2.9

%

 

 

3.5

%

Acquisition and transaction-related charges

 

 

0.3

%

 

 

0.1

%

Impairment and other charges (credits), net

 

 

0.6

%

 

 

(—

)%

Non-GAAP operating margin

 

 

47.5

%

 

 

38.9

%

 

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Critical Accounting Policies and Estimates
We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our reported revenues, results of operations, and net income, as well as on the value of certain assets and liabilities on our balance sheet. These estimates, assumptions and judgments are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time.
The accounting policies, methods and estimates used to prepare our financial statements are described generally in Note 2. Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements in this Annual Report. The most important accounting judgments and estimates that we made in preparing the financial statements involved:
• revenue recognition;

• accounting for income taxes; and

• valuation of assets and liabilities acquired in business combinations.

A critical accounting policy is one that is both material to the presentation of our financial statements and requires us to make subjective or complex judgments that could have a material effect on our financial condition and results of operations. Critical accounting policies require us to make assumptions about matters that are uncertain at the time of the estimate, and different estimates that we could have used, or changes in the estimates that are reasonably likely to occur, may have a material impact on our financial condition or results of operations. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.
Accounting policies, guidelines and interpretations related to our critical accounting policies and estimates are generally subject to numerous sources of authoritative guidance and are often reexamined by accounting standards rule makers and regulators. These rule makers and/or regulators may promulgate interpretations, guidance or regulations that may result in changes to our accounting policies, which could have a material impact on our financial position and results of operations.
Revenue Recognition
We record revenues in accordance with the guidance provided by ASC 606, Revenue from Contracts with Customers . For a full description of our revenue accounting policy, refer to Note 2. Summary of Significant Accounting Policies , included in the Notes to Consolidated Financial Statements in this Annual Report.
Our sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses, and (4) professional services. Subscriptions include term-based on-premises licenses and related support, Software-as-a-Service (SaaS), and hosting services.

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Judgments and Estimates
Determination of performance obligations. Our subscriptions are frequently sold as a bundle of products and services, typically pairing on-premises term software licenses with support and, for certain offerings, cloud services over the same term. Significant judgment is used in determining the performance obligations related to these bundled products and services. On-premises software is typically determined to be a distinct performance obligation and is thus recognized separately from the support and cloud components. On-premises software revenue is generally recognized at the point in time that the software is made available to the customer, while the support and cloud software revenue components are recognized ratably over the term of the contract. In cases where subscriptions include cloud functionality and on-premises software, an assessment has been performed to determine whether the cloud services are distinct from the on-premises software. In the substantial majority of instances, cloud services provide incremental functionality to customers and have been considered distinct and recognized separately from the on-premises software. This assessment could have a significant impact on the timing of revenue recognition and may change as our product offerings evolve.
Allocation of transaction price. We estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among the performance obligations. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. Significant judgment is used in determining the standalone selling prices of the on-premises license, support, and cloud components of our subscription products. These estimates are subject to change as our product offerings change and could have a significant impact due to the difference in the timing of revenue recognition for on-premises licenses versus support and cloud.
Right to exchange. Our multi-year, non-cancellable subscription contracts provide customers with an annual right to exchange software within the original subscription with other software. When it applies to on-premises licenses, we account for this right as a liability. For most contracts, we use the expected value method to determine the liability associated with this right across a portfolio of contracts. Where contracts are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the liability for each individual contract. In both circumstances, the transaction price is constrained based on our estimates, which impacts the amount of revenue recognized. Changes in these estimates could significantly impact revenue for any given period.
Accounting for Income Taxes
As part of the process of preparing our consolidated financial statements, we are required to calculate our income tax expense based on taxable income by jurisdiction. There are many transactions and calculations about which the ultimate tax outcome is uncertain; as a result, our calculations involve estimates by management. Some of these uncertainties arise as a consequence of revenue-sharing, cost-reimbursement and transfer pricing arrangements among related entities and the differing tax treatment of revenue and cost items across various jurisdictions. If tax authorities compelled us to revise or to account differently for our arrangements, that revision could affect our recorded tax liabilities.
The income tax accounting process also involves estimating our actual current tax liability, together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of our deferred tax assets will not be realized, we must establish a valuation allowance as a charge to income tax expense.

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We have unrecognized tax benefits as of September 30, 2025 of $157.7 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. As described in Note 7. Income Taxes , within the next 12 months the amount of unrecognized tax benefits related to the IRS consent will be reduced by $109.2 million. Apart from that, we do not believe it is reasonably possible that there could be additional reductions to the amount of unrecognized tax benefits within the next 12 months.
As of September 30, 2025, we have a valuation allowance of $3.4 million against net deferred tax assets in the U.S. and a valuation allowance of $5.1 million against net deferred tax assets in certain foreign jurisdictions. The valuation allowance recorded in the U.S. relates to Massachusetts tax credit carryforwards that we do not expect to realize a benefit from prior to expiration.
The valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards, the majority of which do not expire. However, there are limitations imposed on the utilization of such capital losses that could further restrict the recognition of any tax benefits. We will continue to reassess our valuation allowance requirements each financial reporting period.
Prior to the passage of the U.S. Tax Act, we asserted that substantially all of the undistributed earnings of our foreign subsidiaries were considered indefinitely invested and accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to a one-time transition tax and there is therefore no longer a material cumulative basis difference associated with the undistributed earnings. We maintain our assertion to permanently reinvest these earnings outside the U.S. unless repatriation can be done substantially tax-free, with the exception of our Taiwan subsidiary. If we decide to repatriate any additional non-U.S. earnings in the future, we may be required to establish a deferred tax liability on such earnings. The amount of unrecognized deferred tax liability on the undistributed earnings would not be material.
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. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.
Valuation of Assets and Liabilities Acquired in Business Combinations
In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Determining these fair values requires management to make significant estimates and assumptions, especially with respect to intangible assets.
Our identifiable intangible assets acquired consist of purchased software, trademarks, customer lists and contracts, and software support agreements and related relationships. Purchased software consists of products that have reached technological feasibility and the combination of processes, inventions and trade secrets related to the design and development of acquired products. Customer lists and contracts and software support agreements and related relationships represent the underlying relationships and agreements with customers of the acquired company’s installed base. We have generally valued intangible assets using discounted cash flow models. Critical estimates in valuing certain of the intangible assets include but are not limited to:
• future expected revenues and costs related to software license sales, customer support agreements, customer contracts and related customer relationships and acquired developed technologies and trademarks and trade names; and

• discount rates used to determine the present value of estimated future cash flows.

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In addition, we estimate the useful lives of our intangible assets based upon the expected period over which we anticipate generating economic benefits from the related intangible asset.
Net tangible assets consist of the fair values of tangible assets less the fair values of assumed liabilities and obligations. Except for deferred revenues, net tangible assets were generally valued by us at the respective carrying amounts recorded by the acquired company, if we believed that their carrying values approximated their fair values at the acquisition date. Deferred revenue for acquisitions reflect the amounts that would have been deferred as of the acquisition date in accordance with ASC 606.
In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period (up to one year from the acquisition date) and we continue to collect information in order to determine their estimated values. Subsequent to the measurement period or our final determination of the estimated value of uncertain tax positions or tax-related valuation allowances, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect our provision for income taxes in our Consolidated Statements of Operations.
Our estimates of fair value are based upon assumptions believed to be reasonable at that time, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results.
When events or changes in circumstances indicate that the carrying value of a finite-lived intangible asset may not be recoverable, we perform an assessment of the asset for potential impairment. This assessment is based on projected undiscounted future cash flows over the asset’s remaining life. If the carrying value of the asset exceeds its undiscounted cash flows, we record an impairment loss equal to the excess of the carrying value over the fair value of the asset, determined using projected discounted future cash flows of the asset.
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 2. Summary of Significant Accounting Policies , included in the Notes to Consolidated Financial Statements of this Annual Report, 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.
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not consolidated (to the extent of our ownership interest therein) into our financial statements. We have not entered into any transactions with unconsolidated entities whereby we have subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.
 

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ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
We face exposure to financial market risks, including adverse movements in foreign currency exchange rates and changes in interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results.
Foreign currency exchange risk
Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our most significant foreign currency exposures relate to Eurozone countries, Japan, Sweden, Switzerland, China and India. 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 or hold foreign currency derivative financial instruments for trading or speculative purposes.
Our non-U.S. revenues are generally transacted through our non-U.S. subsidiaries and typically are denominated in their local currency. In addition, expenses that are incurred by our non-U.S. subsidiaries typically are denominated in their local currency. Approximately 50% of our revenue and 35% of our expenses were transacted in currencies other than the U.S. Dollar. Currency translation affects our reported results because we report our results of operations in U.S. Dollars. Historically, our most significant currency risk has been changes in the Euro and Japanese Yen relative to the U.S. Dollar. Based on current revenue and expense levels (excluding stock-based compensation), a $0.10 change in the USD to EUR exchange rate and a 10 Yen change in the Yen to USD exchange rate would impact operating income by approximately $44 million and $10 million, respectively.
Our exposure to foreign currency exchange rate fluctuations arises in part from intercompany transactions, with most intercompany transactions occurring between a U.S. Dollar functional currency entity and a foreign currency denominated entity. Intercompany transactions typically are denominated in the local currency of the non-U.S. Dollar functional currency subsidiary in order to centralize foreign currency risk. Also, both PTC (the parent company) and our non-U.S. subsidiaries may transact business with our customers and vendors in a currency other than their functional currency (transaction risk). In addition, we are exposed to foreign exchange rate fluctuations as the financial results and balances of our non-U.S. subsidiaries are translated into U.S. Dollars (translation risk). If sales to customers outside the United States increase, our exposure to fluctuations in foreign currency exchange rates will increase.
Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the U.S. Dollar value of balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. Our foreign currency hedging program uses forward contracts to manage the foreign currency exposures that exist as part of our ongoing business operations. Foreign currency forward contracts are primarily denominated in the Euro, Japanese Yen, and Indian Rupee currencies, and have maturities of less than four months.
Additionally, we use foreign currency option contracts to reduce the risk that forecast U.S. Dollar cash flows will be adversely affected by changes in Euro or Japanese Yen exchange rates. Foreign currency option contracts are denominated in the Euro and Japanese Yen currencies, and have maturities of less than fourteen months.
The majority of our foreign currency forward and option contracts are not designated as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into these derivative 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 contracts and currency impacts on the Euro or Japanese Yen-denominated operations may be partially offset by gains on the option contracts. Gains and losses on these derivatives and foreign currency denominated monetary assets and liabilities are included in Other income, net.

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As of September 30, 2025 and 2024, we had outstanding forward and option contracts not designated as hedging instruments with notional amounts equivalent to the following:
 

 

 

September 30,

 

Currency Hedged (in thousands)

 

2025

 

 

2024

 

Euro / U.S. Dollar (1)

 

$

1,202,830

 

 

$

781,398

 

British Pound / U.S. Dollar

 

 

22,974

 

 

 

24,810

 

Israeli Shekel / U.S. Dollar

 

 

20,094

 

 

 

12,535

 

Indian Rupee / U.S. Dollar

 

 

53,465

 

 

 

—

 

Japanese Yen / U.S. Dollar (2)

 

 

131,284

 

 

 

42,340

 

Swiss Franc / U.S. Dollar

 

 

8,960

 

 

 

74,939

 

Swedish Krona / U.S. Dollar

 

 

21,568

 

 

 

48,596

 

Chinese Renminbi / U.S. Dollar

 

 

7,134

 

 

 

32,124

 

New Taiwan Dollar / U.S. Dollar

 

 

23,098

 

 

 

16,368

 

All other

 

 

26,679

 

 

 

25,368

 

Total

 

$

1,518,086

 

 

$

1,058,478

 

(1) 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. As of September 30, 2024, all the Euro to U.S. Dollar outstanding notional amount relates to forward contracts.

(2) 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. As of September 30, 2024, all the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.

 
Debt
In addition to the $500 million due under our 2028 Notes, as of September 30, 2025, we had $700 million outstanding under our credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by us. These loans are subject to interest rate risk as interest rates will be adjusted at each rollover date to the extent such amounts are not repaid. As of September 30, 2025, the weighted average annual rate on the credit facility loans was 5.6%. Based on the borrowings outstanding and interest rates in effect as of September 30, 2025, a 100 basis point per annum change in interest rate applied over a one-year period would have a $7 million impact on annual earnings and cash flows.
Cash and cash equivalents
As of September 30, 2025, cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased. We invest our cash with highly rated financial institutions in North America, Europe and Asia Pacific and in diversified domestic and international money market mutual funds. As of September 30, 2025, we had cash and cash equivalents of $18 million in the United States, $87 million in Europe, $63 million in Asia Pacific (including India), and $16 million in other countries. Given the short maturities and investment grade quality of the portfolio holdings at September 30, 2025, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents.
Our invested cash is subject to interest rate fluctuations and, for non-U.S. operations, foreign currency exchange rate risk. In a declining interest rate environment, we would experience a decrease in interest income. The opposite holds true in a rising interest rate environment. Over the past several years, the U.S. Federal Reserve Board, European Central Bank and Bank of England have changed certain benchmark interest rates, which has led to declines and increases in market interest rates. These changes in market interest rates have resulted in fluctuations in interest income earned on our cash and cash equivalents. Interest income will continue to fluctuate based on changes in market interest rates and levels of cash available for investment. Changes in foreign currencies relative to the U.S. Dollar had an unfavorable impact of $2.4 million and a favorable impact of $3.2 million on our consolidated cash balances in FY'25 and FY'24, respectively. The impact in FY'25 was due in particular to changes in the Japanese Yen, Indian Rupee, and Swedish Krona.

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ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements and notes to the consolidated financial statements are attached as APPENDIX A.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation 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 Annual Report. Based on this evaluation, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2025.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2025 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013) . Based on this assessment and those criteria, our management concluded that, as of September 30, 2025, our internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting as of September 30, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears under Item 8.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
Director and Executive Officer Adoption, Modification or Termination of 10b5-1 Plans in Q4’25
Our Section 16 officers and directors may enter into plans or arrangements for the purchase or sale of our securities that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. Such plans and arrangements must comply in all respects with our insider trading policies, including our policy governing entry into and operation of 10b5-1 plans and arrangements.

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During the quarter ended September 30, 2025 , the following Section 16 officers adopted Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K of the Exchange Act). All plans adopted covered only sales of PTC common stock. No plans were modified or terminated .
 

Name and Title of Director or Section 16 Officer

Date of Adoption, Modification, or Termination

Duration of the Plan
 

Aggregate Number of Shares of Common Stock that may be Sold under the Plan

Kristian Talvitie
Executive Vice President, Chief Financial Officer

 

Adopted
August 6, 2025

Ends
February 6, 2026

4,658

Aaron von Staats
Executive Vice President, General Counsel
 

 

Adopted
September 5, 2025

 

Ends
August 15, 2026

 

967 , plus all net vested shares issued for the FY2025 Corporate Incentive Plan, plus 10% of total shares that vest on November 15, 2025 under performance-based RSU awards granted on November 16, 2022, November 15, 2023, and November 13, 2024, plus 80% of net vested shares after selling 10% of total shares that vest on November 15, 2025 under time-based and performance-based RSU awards granted on November 16, 2022, November 15, 2023, and November 13, 2024  (1)(2)(3)

(1) The total number of shares that would be issued for the FY2025 Corporate Incentive Plan could not be known when the plan was adopted as the FY2025 performance period had not yet ended and attainment of the performance measure was not known.

(2) The total number of shares that would be earned and vested under the performance-based RSU awards for the FY2025 performance period could not be known when the plan was adopted as the FY2025 performance period had not yet ended and attainment of the performance measures was not known.

(3) The total number of net vested shares could not be known when the plan was adopted as the amount of shares to be withheld for taxes was not known.

Amendment No. 2 to Credit Agreement
On November 18, 2025, PTC Inc. (“PTC”) and PTC (IFSC) Limited, a subsidiary of PTC, entered into Amendment No. 2 (the “Amendment”) to the Fourth Amended and Restated Credit Agreement dated January 3, 2023 (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, and the Lenders named therein.
The Amendment amends the asset sale restrictions to eliminate the restriction entirely for the divestiture of PTC’s Kepware and ThingWorx businesses pursuant to that certain Asset Purchase Agreement dated November 5, 2025, between PTC and Parrot US Buyer, L.P., and to permit sales of assets up to an aggregate of $ 250 million in book value in any fiscal year as long as no Default or Event of Default exists or would exist after consummation of the sale.
All capitalized terms used herein without definition have the meanings assigned in the Credit Agreement.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of Amendment No. 2 to the Credit Agreement, which is filed as Exhibit 10.18 hereto and incorporated herein by reference.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.

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PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
The information required by this item not set forth below may be found under the headings “Corporate Governance and the Board of Directors," “Insider Trading Policies and Procedures,” "Our Executive Officers," “Delinquent Section 16(a) Reports,” and “Transactions with Related Persons” appearing in our 2026 Proxy Statement. Such information is incorporated herein by reference.
Code of Ethics for Senior Executive Officers
We have adopted a Code of Ethics for Senior Executive Officers that applies to our President and Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, as well as others. The Code is embedded in our Code of Business Conduct and Ethics applicable to all employees. A copy of the Code of Business Conduct and Ethics is publicly available on our website at www.ptc.com. If we make any substantive amendments to, or grant any waiver from, including any implicit waiver, the Code of Ethics for Senior Executive Officers to or for our President and Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer, we will disclose the nature of such amendment or waiver in a current report on Form 8-K.
ITEM 11. Executive Compensation
Information with respect to director and executive compensation may be found under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Tables,” “Compensation Committee Report,” and “Pay Ratio Disclosure” appearing in our 2026 Proxy Statement. Such information is incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information about our common stock ownership may be found under the heading “Information about PTC Common Stock Ownership” appearing in our 2026 Proxy Statement. Such information is incorporated herein by reference.
EQUITY COMPENSATION PLAN INFORMATION
as of September 30, 2025

Plan Category

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights

 

 

Weighted-average exercise price of outstanding options, warrants and rights

 

 

Number of securities remaining available for future issuance under equity compensation plans

 

Equity compensation plans approved by security holders:

 

 

 

 

 

 

 

 

 

2000 Equity Incentive Plan (1)

 

 

1,895,958

 

 

 

—

 

 

 

4,875,216

 

2016 Employee Stock Purchase Plan (2)

 

 

—

 

 

 

—

 

 

 

1,869,559

 

Total

 

 

1,895,958

 

 

 

—

 

 

 

6,744,775

 

(1) All of the shares issuable upon vesting are restricted stock units, which have no exercise price.

(2) This amount represents the total number of shares remaining available under the 2016 Employee Stock Purchase Plan, of which 76,622 shares are subject to purchase during the current offering period.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Information with respect to this item may be found under the headings “Independence of Our Directors,” “Review of Transactions with Related Persons” and “Transactions with Related Persons” appearing in our 2026 Proxy Statement. Such information is incorporated herein by reference.
ITEM 14. Principal Accounting Fees and Services
Information with respect to this item may be found under the headings “Engagement of Independent Auditor and Approval of Professional Services and Fees” and “PricewaterhouseCoopers LLP Services and Fees” in our 2026 Proxy Statement. Such information is incorporated herein by reference.

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PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(a) Documents Filed as Part of Form 10-K
 

1.

Financial Statements

 

 

Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Boston, MA, PCAOB ID: 238 )

F- 1

 

Consolidated Balance Sheets as of September 30, 2025 and 2024

F- 4

 

Consolidated Statements of Operations for the years ended September 30, 2025, 2024 and 2023

F- 5

 

Consolidated Statements of Comprehensive Income for the years ended September 30, 2025, 2024 and 2023

F- 6

 

Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024 and 2023

F- 7

 

Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2025, 2024 and 2023

F- 8

 

Notes to Consolidated Financial Statements

F- 9

2.

Financial Statement Schedules

 

 

Schedules have been omitted since they are either not required, not applicable, or the information is otherwise included in the Financial Statements per Item 15(a)1 above.

 

 

 

 

3.

Exhibits

 

 

The list of exhibits in the Exhibit Index is incorporated herein by reference.

 

 
(b) Exhibits
We hereby file the exhibits listed in the attached Exhibit Index.
(c) Financial Statement Schedules
None.
ITEM 16. Form 10-K Summary
None.

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EXHIBIT INDEX
 

 

 

 

 

 

 

Incorporated by Reference

Exhibit
Number

 

Description

 

Filed Herewith

 

Form

 

Filing Date

 

Exhibit

 

SEC File No.

 

 

 

 

 

 

 

 

 

 

 

 

 

2.1