FULLTEXT DEL 2 AV 2
10-K – 2025-11-21 – ptc-20250930.htm
Asset Purchase Agreement dated November 5, 2025 by and between PTC Inc. and Parrot US Buyer, L.P.
8-K
November 5, 2025
10.1
0-18059
3.1
Restated Articles of Organization of PTC Inc.
10-K
November 23, 2015
3.1
0-18059
3.2
Amended and Restated By-Laws of PTC Inc.
10-K
November 14, 2024
3.2
0-18059
4.1
Indenture, dated as of February 13, 2020, between PTC Inc. and Wells Fargo Bank, National Association, as trustee
8-K
February 13, 2020
4.1
0-18059
4.2
Form of 4.000% senior unsecured notes due 2028
8-K
February 13, 2020
4.3
0-18059
4.3
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934
10-K
November 18, 2019
4.4
0-18059
10.1*
2000 Equity Incentive Plan
8-K
February 21, 2023
10.1
0-18059
10.1-1*
Form of Restricted Stock Unit Certificate (Non-Employee Director)
10-K
November 14, 2024
10.1-1
0-18059
10.1-2*
Form of Restricted Stock Unit Certificate (U.S.)
10-K
November 18, 2016
10.1.11
0-18059
10.1-3*
Form of Restricted Stock Unit Certificate (U.S. EVP)
10-K
November 14, 2024
10.1-3
0-18059
10.1-4*
Form of Restricted Stock Unit Certificate (U.S. Section 16)
10-K
November 14, 2024
10.1-4
0-18059
10.1-5*
Form of Restricted Stock Unit Certificate (U.S.)
10-K
November 20, 2023
10.1.12
0-18059
10.1-6*
Form of Restricted Stock Unit Certificate (U.S. Section 16 and U.S. EVP)
10-K
November 20, 2023
10.1.13
0-18059
10.1-8*
Form of Restricted Stock Unit Certificate (Non-U.S.)
10-K
November 14, 2024
10.1-8
0-18059
10.1-9*
Form of Restricted Stock Unit Certificate (Israel)
10-K
November 14, 2024
10.1-9
0-18059
10.2*
2016 Employee Stock Purchase Plan
8-K
February 21, 2023
10.2
0-18059
10.4-1*
Offer Letter dated July 24, 2023 by and between the Company and Neil Barua
8-K
July 26, 2023
10.1
0-18059
10.4-2*
Executive Agreement between the Company and Neil Barua dated July 24, 2023
8-K
July 26, 2023
10.2
0-18059
10.5*
Form of Executive Agreement dated November 16, 2023 by and between PTC Inc. and each of Kristian Talvitie and Aaron von Staats
10-K
November 20, 2023
10.5
0-18059
10.6*
Executive Agreement dated February 6, 2025 by and between Robert Dahdah and PTC Inc.
10-Q
February 6, 2025
10.1
0-18059
10.10
Office Lease Agreement dated as of September 7, 2017 by and between PTC Inc. and SCD L2 Seaport Square LLC
8-K
September 7, 2017
10
0-18059
10.11
First Amendment to Lease dated as of October 5, 2017 by and between PTC Inc. and SCD L2 Seaport Square LLC
8-K
November 29, 2017
10.23
0-18059
10.16
Fourth Amended and Restated Credit Agreement dated January 3, 2023 by and among PTC, PTC (IFSC) Limited, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders named therein
8-K
January 3, 2023
4.4
0-18059
10.17
Amendment No. 1 dated October 1, 2024 to the Fourth Amended and Restated Credit Agreement dated January 3, 2023 by and among PTC, PTC (IFSC) Limited, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders named therein
8-K
October 7, 2024
10.1
0-18059
44
Table of Contents
10.18
Amendment No. 2 dated November 18, 2025 to the Fourth Amended and Restated Credit Agreement dated January 3, 2023 by and among PTC, PTC (IFSC) Limited, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders named therein
X
19.1
Trading in Company Securities Policy
10-K
November 14, 2024
19.1
0-18059
19.2
Rule 10b5-1 Plan Policy
10-K
November 14, 2024
19.2
0-18059
21.1
Subsidiaries of PTC Inc.
X
23.1
Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm
X
31.1
Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a)
X
31.2
Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a)
X
32**
Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350
X
97.1
Executive Compensation Recoupment Policy
10-K
November 14, 2024
97.1
0-18059
101.INS
Inline XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104
The cover page of the Annual Report on Form 10-K formatted in Inline XBRL (included in Exhibit 101)
* Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of PTC participates.
** Indicates that the exhibit is being furnished with this report and is not filed as a part of it.
45
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PTC Inc.
Date: November 21, 2025
By:
/s/ N EIL B ARUA
Neil Barua
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
(i) Principal Executive Officer:
/s/ N EIL B ARUA
President, Chief Executive Officer, and Director
November 21, 2025
Neil Barua
(ii) Principal Financial Officer:
/s/ K RISTIAN T ALVITIE
Executive Vice President and Chief Financial Officer
November 21, 2025
Kristian Talvitie
(iii) Principal Accounting Officer:
/s/ A LICE C HRISTENSON
Chief Accounting Officer
November 21, 2025
Alice Christenson
(iv) Board of Directors:
/s/ J ANICE C HAFFIN
Chair of the Board
November 21, 2025
Janice Chaffin
/s/ M ARK B ENJAMIN
Director
November 21, 2025
Mark Benjamin
/s/ R OB B ERNSHTEYN
Director
November 21, 2025
Rob Bernshteyn
/s/ A MAR H ANSPAL
Director
November 21, 2025
Amar Hanspal
/s/ M ICHAL K ATZ
Director
November 21, 2025
Michal Katz
/s/ P AUL L ACY
Director
November 21, 2025
Paul Lacy
/s/ C ORINNA L ATHAN
Director
November 21, 2025
Corinna Lathan
/s/ J AMES L ICO
Director
November 21, 2025
James Lico
/s/ T RAC P HAM
Director
November 21, 2025
Trac Pham
46
Table of Contents
APPENDIX A
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of PTC Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of PTC Inc. and its subsidiaries (the "Company") as of September 30, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended September 30, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F- 1
Table of Contents
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Identification of Distinct Performance Obligations
As described in Note 2 to the consolidated financial statements, the Company’s sources of revenue include: (1) subscriptions, (2) perpetual licenses, (3) support for perpetual licenses and (4) professional services. Revenue is derived from the licensing of computer software products, cloud-based offerings, and related support and professional services contracts. During the year ended September 30, 2025, the Company recognized revenue from contracts with customers of $2,739 million. The Company’s contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. On-premises software is determined to be a distinct performance obligation from support. As disclosed by management, significant judgment is used in determining the performance obligations related to these bundled products and services. The corresponding revenues are recognized as the related performance obligations are satisfied.
The principal considerations for our determination that performing procedures relating to revenue recognition - identification of distinct performance obligations, is a critical audit matter are the (i) significant judgment by management when identifying the distinct performance obligations, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s identification of distinct performance obligations within contracts with customers.
F- 2
Table of Contents
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the identification of distinct performance obligations. These procedures also included, among others (i) evaluating the Company’s revenue recognition accounting policy and (ii) testing management’s identification of distinct performance obligations in its contracts with customers by examining revenue contracts on a sample basis and evaluating whether these performance obligations are satisfied at a point in time or satisfied over time.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
November 21, 2025
We have served as the Company’s auditor since 1992.
F- 3
Table of Contents
PTC Inc.
CONSOLIDATED B ALANCE SHEETS
(in thousands, except per share data)
September 30,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
184,415
$
265,808
Accounts receivable, net of allowance for doubtful accounts of $ 1,487 and $ 1,180 at September 30, 2025 and September 30, 2024, respectively
1,001,085
861,953
Prepaid expenses
119,107
102,931
Other current assets
78,760
68,013
Total current assets
1,383,367
1,298,705
Property and equipment, net
60,843
75,187
Goodwill
3,493,316
3,461,891
Acquired intangible assets, net
824,663
897,476
Deferred tax assets
194,070
159,404
Operating right-of-use lease assets
114,974
133,317
Other assets
545,939
357,562
Total assets
$
6,617,172
$
6,383,542
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
11,504
$
24,198
Accrued expenses and other current liabilities
136,140
129,528
Accrued compensation and benefits
199,561
173,797
Accrued income taxes
28,749
39,978
Current portion of long-term debt
25,000
521,467
Deferred revenue
812,271
754,039
Short-term lease obligations
24,179
24,186
Total current liabilities
1,237,404
1,667,193
Long-term debt
1,172,434
1,227,105
Deferred tax liabilities
30,151
32,216
Long-term deferred revenue
14,794
21,235
Long-term lease obligations
148,254
157,568
Other liabilities
187,906
63,827
Total liabilities
2,790,943
3,169,144
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $ 0.01 par value; 5,000 shares authorized; none issued
—
—
Common stock, $ 0.01 par value; 500,000 shares authorized; 119,536 and 120,155 shares issued and outstanding at September 30, 2025 and September 30, 2024, respectively
1,195
1,202
Additional paid-in capital
1,822,590
1,965,307
Retained earnings
2,083,607
1,349,610
Accumulated other comprehensive loss
( 81,163
)
( 101,721
)
Total stockholders’ equity
3,826,229
3,214,398
Total liabilities and stockholders’ equity
$
6,617,172
$
6,383,542
The accompanying notes are an integral part of these consolidated financial statements.
F- 4
Table of Contents
PTC Inc.
CONSOLIDATED STATEM ENTS OF OPERATIONS
(in thousands, except per share data)
Year ended September 30,
2025
2024
2023
Revenue:
License
$
1,162,709
$
806,871
$
747,022
Support and cloud services
1,469,180
1,359,355
1,199,536
Total software revenue
2,631,889
2,166,226
1,946,558
Professional services
107,337
132,246
150,495
Total revenue
2,739,226
2,298,472
2,097,053
Cost of revenue:
Cost of license revenue
46,913
46,850
53,200
Cost of support and cloud services revenue
291,812
274,599
245,027
Total cost of software revenue
338,725
321,449
298,227
Cost of professional services revenue
106,258
123,367
142,779
Total cost of revenue
444,983
444,816
441,006
Gross margin
2,294,243
1,853,656
1,656,047
Operating expenses:
Sales and marketing
566,516
558,954
530,125
Research and development
457,693
433,047
394,370
General and administrative
226,058
232,377
233,516
Amortization of acquired intangible assets
45,948
42,018
40,022
Impairment and other charges (credits), net
15,643
( 802
)
( 460
)
Total operating expenses
1,311,858
1,265,594
1,197,573
Operating income
982,385
588,062
458,474
Interest expense
( 77,019
)
( 119,653
)
( 129,417
)
Other income, net
14,811
553
3,509
Income before income taxes
920,177
468,962
332,566
Provision for income taxes
186,180
92,629
87,026
Net income
$
733,997
$
376,333
$
245,540
Earnings per share—Basic
$
6.12
$
3.14
$
2.07
Earnings per share—Diluted
$
6.08
$
3.12
$
2.06
Weighted-average shares outstanding—Basic
120,005
119,679
118,341
Weighted-average shares outstanding—Diluted
120,777
120,742
119,334
The accompanying notes are an integral part of these consolidated financial statements.
F- 5
Table of Contents
PTC Inc.
CONSOLIDATED STATEMENTS OF C OMPREHENSIVE INCOME
(in thousands)
Year ended September 30,
2025
2024
2023
Net income
$
733,997
$
376,333
$
245,540
Other comprehensive income, net of tax:
Hedge loss arising during the period, net of tax of $ 5.8 million, $ 5.3 million, and $ 2.5 million in 2025, 2024, and 2023, respectively
( 17,863
)
( 16,315
)
( 7,516
)
Foreign currency translation adjustment, net of tax of $ 0 for each period
37,334
36,465
45,692
Change in pension benefit, net of tax of $( 0.8 ) million, $ 1.7 million, and $ 1.3 million in 2025, 2024, and 2023, respectively
1,087
( 3,791
)
( 2,798
)
Other comprehensive income
20,558
16,359
35,378
Comprehensive income
$
754,555
$
392,692
$
280,918
The accompanying notes are an integral part of these consolidated financial statements.
F- 6
Table of Contents
PTC Inc.
CONSOLIDATED STATEM ENTS OF CASH FLOWS
(in thousands)
Year ended September 30,
2025
2024
2023
Cash flows from operating activities:
Net income
$
733,997
$
376,333
$
245,540
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
102,504
108,119
104,760
Amortization of right-of-use lease assets
32,912
33,288
32,402
Stock-based compensation
216,205
223,461
206,459
Other non-cash items, net
( 3,516
)
( 1,625
)
( 4,065
)
Provision (benefit) from deferred income taxes
( 26,283
)
( 39,040
)
16,676
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable
( 121,052
)
( 34,629
)
( 98,607
)
Accounts payable and accrued expenses
( 636
)
( 24,368
)
15,918
Accrued compensation and benefits
20,526
8,404
7,845
Deferred revenue
37,753
81,399
56,572
Accrued income taxes
89,856
65,006
4,639
Other current assets and prepaid expenses
( 8,458
)
( 16,137
)
6,974
Operating lease liabilities
( 10,345
)
( 13,245
)
( 1,929
)
Other noncurrent assets and liabilities
( 195,767
)
( 16,982
)
17,677
Net cash provided by operating activities
867,696
749,984
610,861
Cash flows from investing activities:
Additions to property and equipment
( 11,008
)
( 14,378
)
( 23,814
)
Acquisitions of businesses, net of cash acquired
( 6,532
)
( 93,457
)
( 828,271
)
Settlement of net investment hedges
( 20,753
)
( 13,078
)
( 7,602
)
Other investing activities
—
( 3,901
)
( 6,428
)
Net cash used in investing activities
( 38,293
)
( 124,814
)
( 866,115
)
Cash flows from financing activities:
Borrowings under credit facility
860,000
1,084,845
1,540,000
Repayments of senior notes
( 500,000
)
—
—
Repayments of borrowings under credit facility and acquired debt
( 912,958
)
( 1,038,921
)
( 1,197,000
)
Repurchases of common stock
( 299,998
)
—
—
Proceeds from issuance of common stock
26,062
25,674
21,652
Payments of withholding taxes in connection with stock-based awards
( 80,205
)
( 102,001
)
( 82,448
)
Credit facility origination costs
( 1,171
)
—
( 13,355
)
Payment of deferred acquisition consideration
—
( 620,040
)
—
Other financing activity
( 239
)
( 282
)
( 536
)
Net cash provided by (used in) financing activities
( 908,509
)
( 650,725
)
268,313
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
( 2,372
)
3,223
2,851
Net change in cash, cash equivalents, and restricted cash
( 81,478
)
( 22,332
)
15,910
Cash, cash equivalents, and restricted cash, beginning of period
266,466
288,798
272,888
Cash, cash equivalents, and restricted cash, end of period
$
184,988
$
266,466
$
288,798
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
PTC Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Common Stock
Additional
Accumulated Other
Total
Shares
Amount
Paid-In
Capital
Retained Earnings
Comprehensive
Loss
Stockholders’
Equity
Balance as of September 30, 2022
117,472
$
1,175
$
1,720,580
$
727,737
$
( 153,458
)
$
2,296,034
Common stock issued for employee stock-based awards
1,798
18
( 18
)
—
—
—
Shares surrendered by employees to pay taxes related to stock-based awards
( 620
)
( 7
)
( 82,761
)
—
—
( 82,768
)
Common stock issued for employee stock purchase plan
196
2
21,650
—
—
21,652
Compensation expense from stock-based awards
—
—
161,454
—
—
161,454
Net income
—
—
—
245,540
—
245,540
Loss on net investment hedges, net of tax
—
—
—
—
( 7,516
)
( 7,516
)
Foreign currency translation adjustment
—
—
—
—
45,692
45,692
Change in defined benefit pension items, net of tax
—
—
—
—
( 2,798
)
( 2,798
)
Balance as of September 30, 2023
118,846
$
1,188
$
1,820,905
$
973,277
$
( 118,080
)
$
2,677,290
Common stock issued for employee stock-based awards
1,733
18
( 18
)
—
—
—
Shares surrendered by employees to pay taxes related to stock-based awards
( 612
)
( 6
)
( 101,918
)
—
—
( 101,924
)
Common stock issued for employee stock purchase plan
188
2
25,672
—
—
25,674
Compensation expense from stock-based awards
—
—
220,666
—
—
220,666
Net income
—
—
—
376,333
—
376,333
Loss on net investment hedges, net of tax
—
—
—
—
( 16,315
)
( 16,315
)
Foreign currency translation adjustment
—
—
—
—
36,465
36,465
Change in defined benefit pension items, net of tax
—
—
—
—
( 3,791
)
( 3,791
)
Balance as of September 30, 2024
120,155
$
1,202
$
1,965,307
$
1,349,610
$
( 101,721
)
$
3,214,398
Common stock issued for employee stock-based awards
1,300
13
( 13
)
—
—
—
Shares surrendered by employees to pay taxes related to stock-based awards
( 439
)
( 5
)
( 80,350
)
—
—
( 80,355
)
Common stock issued for employee stock purchase plan
166
2
26,060
—
—
26,062
Compensation expense from stock-based awards
—
—
212,659
—
—
212,659
Repurchases of common stock, including excise tax
( 1,646
)
( 17
)
( 301,073
)
—
—
( 301,090
)
Net income
—
—
—
733,997
—
733,997
Loss on net investment hedges, net of tax
—
—
—
—
( 17,863
)
( 17,863
)
Foreign currency translation adjustment
—
—
—
—
37,334
37,334
Change in defined benefit pension items, net of tax
—
—
—
—
1,087
1,087
Balance as of September 30, 2025
119,536
$
1,195
$
1,822,590
$
2,083,607
$
( 81,163
)
$
3,826,229
The accompanying notes are an integral part of these consolidated financial statements.
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PTC Inc .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Basis of Presentation
Business
PTC Inc. was incorporated in 1985 and is headquartered in Boston, Massachusetts. PTC is a global software company that provides a portfolio of innovative digital solutions that work together to transform how physical products are engineered, manufactured, and serviced.
Basis of Presentation
Our fiscal year-end is September 30. The consolidated financial statements include PTC Inc. (the parent company) and its wholly-owned subsidiaries, including those operating outside the United States. All intercompany balances and transactions have been eliminated in the consolidated financial statements.
We prepare our financial statements under generally accepted accounting principles in the United States that require management to make e stimates and assumptions that affect the amounts reported and the related disclosures. Actual results could differ from these estimates.
2. Summary of Significant Accounting Policies
Foreign Currency Translation
For our non-U.S. operations where the functional currency is the local currency, we translate assets and liabilities at exchange rates in effect at the balance sheet date and record translation adjustments in stockholders’ equity. For our non-U.S. operations where the U.S. Dollar is the functional currency, we remeasure monetary assets and liabilities using exchange rates in effect at the balance sheet date and non-monetary assets and liabilities at historical rates and record resulting exchange gains or losses in Other income, net in the Consolidated Statements of Operations. We translate income statement amounts at average rates for the period. Transaction gains and losses are recorded in Other income, net in the Consolidated Statements of Operations.
Revenue Recognition
Nature of Products and Services
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. Revenue is derived from the licensing of computer software products, cloud-based offerings, and related support and professional services contracts. In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these products or services. To achieve the core principle of this standard, we apply the following five steps:
(1) identify the contract with the customer,
(2) identify the performance obligations in the contract,
(3) determine the transaction price,
(4) allocate the transaction price to performance obligations in the contract, and
(5) recognize revenue when or as we satisfy a performance obligation.
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We enter into contracts that include combinations of licenses, support, cloud-based offerings, and professional services, each of which are accounted for as separate performance obligations with differing revenue recognition patterns referenced below.
Performance Obligation
When Performance Obligation is Typically Satisfied
Term-based subscriptions
On-premises software licenses
Point in Time: Upon the later of when the software is made available or the subscription term commences
Support and cloud-based offerings (including SaaS)
Over Time: Ratably over the contractual term; commencing upon the later of when the software is made available or the subscription term commences
Perpetual software licenses
Point in Time: When the software is made available
Support for perpetual software licenses
Over Time: Ratably over the contractual term
Professional services
Over Time: As services are provided
Judgments and Estimates
Our contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. Significant judgment is used in determining the performance obligations related to these bundled products and services. On-premises software is determined to be a distinct performance obligation from support which is sold for the same term of the subscription. For subscription arrangements which include cloud services and on-premises licenses, we assess whether the cloud component is highly interrelated with the on-premises term-based software licenses. Other than a limited population of subscriptions, the cloud component is not currently deemed to be interrelated with the on-premises term software and, as a result, cloud services are accounted for as a distinct performance obligation from the software and support components of the subscription.
Judgment is required to allocate the transaction price to each performance obligation. We use the estimated standalone selling price method to allocate the transaction price for items that are not sold separately. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance obligations a re satisfied. Where subscriptions include on-premises software and support only, we determined that approximately 55 % of the estimated standalone selling price for subscriptions is attributable to software licenses and approximately 45 % is attributable to support for those licenses. Some of our subscription offerings include a combination of on-premises and cloud-based technology. In such cases, the cloud-based technology is generally considered distinct and receives an allocation of approximately 5 % to 50 % of the estimated stand alone selling price of the subscription. The amounts allocated to cloud are based on assessment of the relative value of the cloud functionality in the subscription, with the remaining amounts allocated between software and support.
Our multi-year, non-cancellable subscription contracts provide customers with an annual right to exchange software within the subscription with other software. Although the exchange right is limited to software products within a similar product grouping, the exchange right is not limited to products with substantially similar features and functionality as those originally delivered. We determined that, for on-premises licenses, this right to exchange previously delivered software for different software represents variable consideration to be accounted for as a liability. We have identified a standard portfolio of contracts with common characteristics and applied the expected value method of determining variable consideration associated with this right. Additionally, in isolated situations that 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 amount of variable consideration. In both circumstances, the variable consideration included in the transaction price is constrained to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of September 30, 2025 and 2024, the total liability was $ 39.7 million and $ 26.0 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.
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Practical Expedients
We have elected certain practical expedients associated with our revenue recognition policy. We do not account for significant financing components if the period between revenue recognition and when the customer pays for the products or services is one year or less. Additionally, we recognize revenue equal to the amount we have a right to invoice when the amount corresponds directly with the value to the customer of our performance to date. Finally, r evenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities.
Cash Equivalents
Our cash equivalents are invested in money market accounts and time deposits of financial institutions. We have established guidelines relative to credit ratings, diversification and maturities that are intended to maintain safety and liquidity. Cash equivalents include highly liquid investments with original maturity periods of three months or less when purchased.
Concentration of Credit Risk and Fair Value of Financial Instruments
The amounts reflected in the Consolidated Balance Sheets for Cash and cash equivalents, Accounts receivable and Accounts payable approximate their fair value due to their short maturities. Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and foreign currency derivative instruments. Our cash, cash equivalents, and foreign currency derivatives are placed with financial institutions with high credit standings. Our credit risk for derivatives is also mitigated due to the short-term nature of the contracts. Our customer base consists of many geographically diverse customers dispersed across many industries. No individual customer comprised more than 10% of our trade accounts receivable as of September 30, 2025 or 2024 or more than 10% of our revenue for the years ended September 30, 2025, 2024 or 2023 .
Fair Value Measurements
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or
• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
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Allowance for Doubtful Accounts
We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. In determining the adequacy of the allowance for doubtful accounts, we analyze specific individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends.
Derivatives
Generally accepted accounting principles require all derivatives, whether designated in a hedging relationship or not, to be recorded on the balance sheet at fair value. 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. 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 anticipated transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts and foreign currency option contracts, to manage our exposure to foreign currency exchange risk to reduce earnings volatility. We do not enter into derivative transactions for trading or speculative purposes. For a description of our non-designated hedge and net investment hedge activity see Note 15. Derivative Financial Instruments .
Non-Designated Hedges
We hedge our net foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately four months . Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the forward contract. Gains and losses on forward contracts and foreign currency monetary assets and liabilities are included in Other income, net.
We hedge our forecasted U.S. Dollar cash flows with foreign exchange option contrac ts to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These options have maturities of up to approximately fourteen months . We do not designate these foreign currency option contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into option contracts as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations may be partially offset by gains on the option contracts. Gains and losses on foreign exchange option contracts are included in Other income, net.
Net Investment Hedges
We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro and Japanese Yen functional subsidiaries. Net investment hedges partially offset the impact of Foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months .
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Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro and Japanese Yen functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in Accumulated other comprehensive loss. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties, and we review our counterparties’ credit at least quarterly.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in Operating right-of-use lease assets, Short-term lease obligations, and Long-term lease obligations on our Consolidated Balance Sheets. Our operating leases are primarily for office space, automobiles, servers, and office equipment. We made an election not to separate lease components from non-lease components for office space, servers and office equipment. We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component, which increases the amount of our lease assets and liabilities. Finance leases are included in Property and equipment, Accrued expenses and other current liabilities, and Other liabilities on our Consolidated Balance Sheets.
Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term as that of the lease payments at the commencement date. The right-of-use assets include any lease payments made and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term, unless the right-of-use asset has been impaired.
Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base non-cancellable lease term when determining the lease assets and liabilities.
Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities. These variable payments include insurance, taxes, index-based payment adjustments, and payments for maintenance and utilities.
Our operating leases expire at various dates through 2037 .
Property and Equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Computer hardware and software are typically amortized ov er three to five years , and furniture and fixtures over three to twelve years . Leasehold improvements are amortiz ed over the shorter of their useful lives or the remaining terms of the related leases. Maintenance and repairs are charged to expense when incurred; additions and improvements are capitalized. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in income.
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Software Development Costs
We incur costs to develop computer software to be licensed or otherwise marketed to customers. Our research and development expenses consist principally of salaries and benefits, costs of computer software and equipment, and facility expenses. Research and development costs are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Development costs for software to be sold externally incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and, upon general release, are amortized using the greater of either the straight-line method over the expected life of the related products or based upon the pattern in which economic benefits related to such assets are realized. The straight-line method is used if it approximates the same amount of expense as that calculated using the ratio that current period gross product revenues bear to total anticipated gross product revenues. No internal development costs for software to be sold externally were capitalized in 2025, 2024 or 2023 . We did no t purchase any software in 2025. We purchased software of $ 4.1 million and $ 1.0 million in 2024 and 2023, respectively. Additionally, we acquired capitalized software through business combinations (for further detail, see Note 5. Acquisitions and Disposition of Businesses ). These assets are included in Acquired intangible assets, net in the accompanying Consolidated Balance Sheets.
Business Combinations
We allocate the purchase price of acquisitions to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. Goodwill is measured as the excess of the purchase price over the value of net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. Any adjustments to estimated fair value are recorded to goodwill, provided that we are within the measurement period (up to one year from the acquisition date) and that we continue to collect information to determine estimated fair value. Subsequent to the measurement period or our final determination of estimated fair value, whichever comes first, adjustments are recorded in the Consolidated Statements of Operations.
Goodwill, Acquired Intangible Assets and Long-lived Assets
Goodwill is the amount by which the purchase price in a business acquisition exceeds the fair value of net identifiable assets on the date of purchase.
Goodwill is evaluated for impairment annually as of the end of the third quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Factors we consider important, on an overall company basis that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value.
Our annual goodwill impairment test is based on either a quantitative or qualitative assessment. A quantitative assessment compares the fair value of the reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. We estimate the fair values of our reporting unit using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for the reporting unit. We estimate these amounts by evaluating historical trends; current budgets and operating plans; and industry data. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair value of our reporting unit exceeds its carrying value. A qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of the reporting unit at the last valuation date.
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During the third fiscal quarter of 2025 , we completed our annual impairment test of goodwill, which was based on a qualitative assessment, and concluded that there was no impairment. Through September 30, 2025, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable.
Lon g-lived assets primarily include property and equipment, right-of-use lease assets, and acquired intangible assets with finite lives (including purchased software, customer lists and trademarks). Purchased software is amortized over periods up to 16 years, customer lists are amortized over periods up to 20 years and trademarks are amortized over periods up to 15 years. We review long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. An impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset or asset group. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.
In 2025, we recorded an impairment charge of $ 15.6 million, of which $ 12.8 million related to lease right-of-use assets and $ 2.8 million related to fixed assets. This impairment was triggered by the sublease of certain portions of our Seaport headquarters, which resulted in both reassessment of the asset grouping and identification of potential impairment. After determining the appropriate asset group, we performed a recoverability test by comparing the undiscounted cash flows for each asset group with its carrying value, in each case concluding that impairment was indicated. The fair value of each asset group was then estimated using a discounted cash flow model. This fair value assessment involved assumptions and estimates, including the sublease term, variable lease payments, the market discount rate, expected construction and broker costs, and estimates of future sublease cash flows for the period after the present sublease ends (when applicable). The impairment charge was recorded to Impairment and other charges (credits), net in the Consolidated Statements of Operations.
Advertising Expenses
Advertising costs are expensed as incurred. Total advertising expenses incurred were $ 11.7 million, $ 15.0 million and $ 11.7 million in 2025, 2024 and 2023 , respectively, and are included in Sales and marketing expenses in the accompanying Consolidated Statements of Operations.
Income Taxes
Our income tax expense includes U.S. and international income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effects of these differences are reported as deferred tax assets and liabilities. Deferred tax assets are recognized for the estimated future tax effects of deductible temporary differences and tax operating loss and credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We 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 deferred tax assets will not be realized, we establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we include an expense within Provision for income taxes in the Consolidated Statements of Operations.
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Comprehensive Income
Comprehensive income consists of Net income and Other comprehensive income, which includes foreign currency translation adjustments, changes in unrecognized actuarial gains and losses (net of tax) related to pension benefits, unrealized gains and losses on hedging instruments and unrealized gains and losses on marketable securities. We do not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as we intend to reinvest permanently undistributed earnings of our foreign subsidiaries. Accumulated other comprehensive loss is reported as a component of Stockholders’ equity and comprised the following as of September 30, 2025: cumulative translation adjustment losses of $ 40.8 million, unrecognized actuarial losses related to pension benefits of $ 13.6 million ($ 9.4 million net of tax), and accumulated net losses from net investment hedges of $ 38.5 million ($ 31.0 million net of tax). As of September 30, 2024, Accumulated other comprehensive loss comprised the following: cumulative translation adjustment losses of $ 78.1 million, unrecognized actuarial losses related to pension benefits of $ 15.2 million ($ 10.5 million net of tax), and accumulated net losses from net investment hedges of $ 14.8 million ($ 13.1 million net of tax).
Earnings per Share (EPS)
Basic EPS is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds. Anti-dilutive shares excluded from the calculations of diluted EPS were immaterial in the years ended September 30, 2025, 2024, and 2023.
The following table presents the calculation for both basic and diluted EPS:
(in thousands, except per share data)
Year ended September 30,
2025
2024
2023
Net income
$
733,997
$
376,333
$
245,540
Weighted average shares outstanding
120,005
119,679
118,341
Dilutive effect of employee stock options, restricted shares and restricted stock units
772
1,063
993
Diluted weighted average shares outstanding
120,777
120,742
119,334
Earnings per share—Basic
$
6.12
$
3.14
$
2.07
Earnings per share—Diluted
$
6.08
$
3.12
$
2.06
Stock-Based Compensation
We measure the compensation cost of employee services received in exchange for an award of equity based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. See Note 11. Equity Incentive Plans for a description of the types of equity awards granted, the compensation expense related to such awards and detail of such awards outstanding. See Note 7. Income Taxes for detail of the tax benefit related to stock-based compensation recognized in the Consolidated Statements of Operations.
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Recently Adopted Accounting Pronouncements
Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU became effective for us in 2025 and resulted in disclosure changes only (see Note 17. Segments).
Pending Accounting Pronouncements
Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software by eliminating project stage-based capitalization and clarifying the probable-to-complete threshold to commence the capitalization of software costs. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. The standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
Measurements of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The ASU will be effective for us in the first quarter of 2027, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. As clarified by ASU 2025-01, ASU 2024-03 will be effective for us in the fourth quarter of 2028. We expect the adoption to result in disclosure changes only.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU will be effective for us in the fourth quarter of 2026. We expect the adoption to result in disclosure changes only.
3. Revenue from Contracts with Customers
Receivables, Contract Assets, and Contract Liabilities
(in thousands)
September 30,
2025
2024
Short-term receivables
$
1,001,085
$
861,953
Long-term receivables
$
378,941
$
200,099
Contract asset
$
11,044
$
14,410
Deferred revenue
$
827,065
$
775,274
As of September 30, 2025 , all our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in Other current assets. As of September 30, 2024 , all our contract assets were included in Other current assets.
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Approximately $ 10.9 million of the September 30, 2024 contract asset balance was transferred to receivables during the year ended September 30, 2025 as a result of the right to payment becoming unconditional. Additions to contract asset of approximately $ 7.5 million primarily related to revenue recognized in the period, net of billings. There were no impairments of contract assets in the year ended September 30, 2025.
During the year ended September 30, 2025, we recognized $ 748.8 million of revenue that was included in deferred revenue as of September 30, 2024. The remainder of the change in the Deferred revenue balance was driven by additional deferrals of $ 800.6 million, primarily from new billings, as well as an increase in the balance resulting from changes in foreign currency exchange rates. For subscription contracts, we generally invoice customers annually.
Costs to Obtain or Fulfill a Contract
We recognize an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred costs (primarily commissions) are amortized proportionately related to revenue over 5 years, which is generally longer than the term of the initial contract because of anticipated renewals as commissions for renewals are not commensurate with commissions related to our initial contracts. As of September 30, 2025 and September 30, 2024, deferred costs of $ 45.1 million and $ 42.5 million, respectively, were included in Other current assets and $ 78.2 million and $ 76.4 million, respectively, were included in Other assets. Amortization expense related to costs to obtain a contract with a customer was $ 54.0 million, $ 52.0 million, and $ 53.4 million in the years ended September 30, 2025, 2024 , and 2023, respectively. There were no substantial imp airments of the contract cost asset in the years ended September 30, 2025 and 2024.
Remaining Performance Obligations (RPO)
Our contracts with customers include transaction price amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as foreign currency exchange rate fluctuations. As of September 30, 2025, RPO totaled $ 2,870.7 million, of which $ 827.1 million is recorded in Deferred revenue and $ 2,043.6 million is not yet recorded in the Consolidated Balance Sheets. Of the total, we expect to recognize approximately 55 % over the next 12 months, 24 % over the next 13 to 24 months, and the remaining amount thereafter.
Disaggregation of Revenue
(in thousands)
Year ended September 30,
2025
2024
2023
Recurring revenue (1)
$
2,600,514
$
2,134,030
$
1,907,918
Perpetual license
31,375
32,196
38,640
Professional services
107,337
132,246
150,495
Total revenue
$
2,739,226
$
2,298,472
$
2,097,053
(1) Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.
We report revenue by the following two product groups:
(in thousands)
Year ended September 30,
2025
2024
2023
Product lifecycle management (PLM)
$
1,741,310
$
1,459,078
$
1,330,316
Computer-aided design (CAD)
997,916
839,394
766,737
Total revenue
$
2,739,226
$
2,298,472
$
2,097,053
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We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia Pacific region. Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.
(in thousands)
Year ended September 30,
2025
2024
2023
Americas (1)
$
1,327,229
$
1,087,929
$
1,023,273
Europe (2)
995,094
859,387
753,796
Asia Pacific
416,903
351,156
319,984
Total revenue
$
2,739,226
$
2,298,472
$
2,097,053
(1) Includes revenue in the United States totaling $ 1,287.5 million, $ 1,057.3 million, and $ 993.8 million for 2025, 2024 and 2023 , respectively.
(2) Includes revenue in Germany totaling $ 368.8 million, $ 330.5 million, and $ 292.0 million for 2025, 2024 and 2023 , respectively.
4. Property and Equipment
Property and equipment consisted of the following:
(in thousands)
September 30,
2025
2024
Computer hardware and software
$
253,382
$
262,085
Furniture and fixtures
18,341
20,177
Leasehold improvements
72,657
79,802
Gross property and equipment
344,380
362,064
Accumulated depreciation and amortization
( 283,537
)
( 286,877
)
Net property and equipment
$
60,843
$
75,187
Depreciation expense was $ 23.7 million, $ 27.6 million and $ 29.0 million in 2025, 2024 and 2023 , respectively. In 2025, we recognized an impairment charge of $ 2.8 million on leasehold improvements and furniture and fixtures related to subleased facilities. For additional information on this impairment charge, see Note 2. Summary of Significant Accounting Policies .
Our material long-lived assets primarily resided in the United States in 2025, 2024 and 2023 .
5. Acqui sitions and Disposition of Businesses
Acquisition and transaction-related costs were $ 9.1 million, $ 3.1 million and $ 18.7 million in 2025, 2024 and 2023, respectively. Acquisition and transaction-related costs include direct costs of potential and completed acquisitions (e.g., investment banker fees and professional fees, including legal and valuation services) and expenses related to acquisition integration activities (e.g., professional fees and severance). Other transactional charges include third-party costs related to unusual transactions, such as the divestiture of a portion of our business. These costs are classified in General and administrative expenses in the accompanying Consolidated Statements of Operations.
Our results of operations include or exclude, as applicable, the results of acquired or sold businesses beginning on their respective acquisition or sale date.
The acquisitions described below have been accounted for as business combinations. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the respective acquisition date. The fair values of intangible assets were based on valuations using discounted cash flow models which require the use of significant estimates and assumptions, including estimating future revenues, future costs, and an applicable discount rate. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.
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Table of Contents
pure-systems
On October 4, 2023, we acquired pure-systems GmbH pursuant to a Share Purchase Agreement. pure-systems was a leading provider of product and software variant management solutions used by manufacturing companies to efficiently manage the different versions of software and systems engineering assets. The purchase price was $ 93.5 million, net of cash acquired, which we financed primarily with a draw on the revolving line of our credit facility. pure-systems had approximately 50 employees on the close date.
The following table outlines the purchase price allocation for pure-systems:
(in thousands)
Goodwill
$
77,118
Customer relationships
17,400
Purchased software
10,000
Trademarks
800
Net tax liability
( 8,860
)
Acquired debt
( 2,475
)
Other net liabilities
( 526
)
Total
$
93,457
The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 18 years, 10 years, and 10 years, respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill will not be deductible for income tax purposes. The amount of goodwill resulting from the purchase price allocation reflects the expected value that will be created by expanding our application lifecycle management (ALM) offerings, which are included within our PLM product group.
Our results of operations for the reported periods if presented on a pro forma basis would not differ materially from our reported results.
ServiceMax
On January 3, 2023, we acquired ServiceMax, Inc. pursuant to a Share Purchase Agreement dated November 17, 2022 by and among PTC, ServiceMax, Inc., and ServiceMax JV, LP. ServiceMax developed and licensed cloud-native, product-centric field service management (FSM) software, which is included within our PLM product group. The purchase price of $ 1,448.2 million, net of cash acquired, was payable in two installments. Upon closing of the transaction, we paid the first installment of $ 828.2 million, as adjusted for working capital, indebtedness, cash, and transaction expenses as set forth in the Share Purchase Agreement. The remaining installment of $ 650.0 million, of which $ 620.0 million represented the fair value as of the acquisition date and $ 30.0 million was imputed interest, was paid in October 2023. The fair value of the deferred acquisition payment was calculated based on our borrowing rate at the time of the acquisition.
PTC borrowed $ 630 million under the revolving line of our credit facility and $ 500 million under the term loan of our credit facility to repay amounts under the prior credit facility and to pay the closing purchase price and transaction expenses related to the acquisition. ServiceMax had approximately 500 employees on the close date. In the year ended September 30, 2023, ServiceMax revenue was $ 137.6 million and ServiceMax earnings were immaterial.
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The following table sets forth the purchase price allocation for ServiceMax. The purchase price allocation includes the finalization of measurement period adjustments related to intangibles and deferred tax liabilities that resulted in a $ 3.5 million increase in customer relationships, a $ 3.2 million increase in net tax liability, and a $ 0.3 million decrease in goodwill compared to the balances reported as of March 31, 2023 . We also recorded a liability of $ 620.0 million related to the fair value of the $ 650.0 million deferred purchase price payment.
(in thousands)
Goodwill
$
974,850
Customer relationships
512,700
Purchased software
106,900
Accounts receivable
58,722
Trademarks
9,000
Other net assets
5,540
Net tax liability
( 121,656
)
Deferred revenue
( 97,829
)
Total
$
1,448,227
The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 20 years , 10 years , and 10 years , respectively, based on the expected economic benefit pattern of the assets. The acquired goodwill will not be deductible for income tax purposes. The amount of goodwill resulting from the purchase price allocation reflects expected future growth as ServiceMax expands our closed-loop product lifecycle management (PLM) strategy.
Unaudited Pro Forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of operations for PTC and ServiceMax for the pro forma year ended September 30, 2023. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2022. Since the acquisition took place in fiscal 2023, the unaudited pro forma financial information was prepared as though ServiceMax was acquired at the beginning of fiscal 2022. The unaudited pro forma financial information for all periods presented includes adjustments to reflect certain business combination effects, including: amortization of acquired intangible assets, including the elimination of related ServiceMax expenses; acquisition-related costs incurred by both parties; reversal of certain costs incurred by ServiceMax which would not have been incurred had the acquisition occurred at the beginning of fiscal 2022; interest expense under the new combined capital structure; stock-based compensation charges; and the related tax effects as though ServiceMax was acquired as of the beginning of fiscal 2022.
The unaudited pro forma financial information for the year ended September 30, 2023 presented below combines the historical results of PTC for the period, the historical results of ServiceMax for the three months ended January 31, 2023, and the effects of the pro forma adjustments listed above.
(in thousands)
Pro forma year ended
September 30,
2023
Revenue
$
2,140,738
Net income
$
239,437
The impact from acquisitions other than ServiceMax for the reported periods if presented on a pro forma basis would not differ materially from our reported results.
Other Acquisitions
In the third quarter of 2025, we acquired IncQuery Group GmbH pursuant to a Share Purchase Agreement. The purchase price was $ 7.9 million, net of cash acquired, of which $ 6.5 million was paid in the period and $ 1.4 million is contingent consideration that may be paid in 2027 to the extent earned.
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PLM Services Business Disposition
In 2022, we sold a portion of our PLM services business to ITC Infotech India Limited pursuant to a Strategic Partner Agreement dated as of April 20, 2022 by and between PTC and ITC Infotech. Consideration received from ITC Infotech for the sale was approximately $ 60.4 million, consisting of $ 32.5 million cash paid on closing and $ 28.0 million of services to be provided by ITC Infotech to PTC for no additional charge. Additionally, there was contingent consideration of up to $ 20 million based on certain performance milestones . We elected to defer the recognition of gains associated with contingent consideration until they became realizable.
In the year ended September 30, 2025, we recognized a $ 13.1 million gain upon the achievement of performance milestones associated with this contingent consideration. This consideration will be received in credits for future services to be provided by ITC Infotech rather than in cash. The gain was recognized in Other income, net in the Consolidated Statements of Operations.
6. Goodwill and Acquired Intangible Assets
Goodwill and acquired intangible assets consisted of the following:
(in thousands)
September 30, 2025
September 30, 2024
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Goodwill (not amortized)
$
3,493,316
$
3,461,891
Intangible assets with finite lives (amortized) (1) :
Purchased software
$
639,104
$
472,357
$
166,747
$
634,439
$
436,471
$
197,968
Capitalized software
22,877
22,877
—
22,877
22,877
—
Customer lists and relationships
1,149,262
505,202
644,060
1,141,086
457,718
683,368
Trademarks and trade names
38,179
24,323
13,856
37,961
21,821
16,140
Other
4,019
4,019
—
3,941
3,941
—
$
1,853,441
$
1,028,778
$
824,663
$
1,840,304
$
942,828
$
897,476
Total goodwill and acquired intangible assets
$
4,317,979
$
4,359,367
(1) The weighted-average useful lives of purchased software, customer lists and relationships, and trademarks and trade names with a remaining net book value are 11 years, 17 years, and 11 years, respectively. The weighted-average useful life for all intangible assets with remaining net book value is 16 y ears.
The changes in the carrying amounts of Goodwill from September 30, 2024 to September 30, 2025 are due to the impact of acquisitions and to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.
Changes in Goodwill were as follows:
(in thousands)
Balance, September 30, 2023
$
3,358,511
pure-systems acquisition
77,118
Foreign currency translation adjustments
26,262
Balance, September 30, 2024
$
3,461,891
Other acquisitions
5,977
Foreign currency translation adjustments
25,448
Balance, September 30, 2025
$
3,493,316
The aggregate amortization expense for intangible assets with finite lives recorded for the years ended September 30, 2025, 2024 and 2023 was reflected in our Consolidated Statements of Operations as follows:
(in thousands)
Year ended September 30,
2025
2024
2023
Amortization of acquired intangible assets
$
45,948
$
42,018
$
40,022
Cost of revenue
32,828
38,495
35,694
Total amortization expense
$
78,776
$
80,513
$
75,716
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The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of September 30, 2025 is $ 79.6 million for 2026, $ 79.7 million for 2027, $ 76.9 million for 2028, $ 73.8 million for 2029, $ 66.2 million for 2030 and $ 448.5 million thereafter.
7. Income Taxes
Our Income before income taxes consisted of the following:
(in thousands)
Year ended September 30,
2025
2024
2023
Domestic
$
418,265
$
43,504
$
( 49,193
)
Foreign
501,912
425,458
381,759
Total income before income taxes
$
920,177
$
468,962
$
332,566
Our Provision for income taxes consisted of the following:
(in thousands)
Year ended September 30,
2025
2024
2023
Current:
Federal
$
128,230
$
44,642
$
7,311
State
21,754
25,359
10,020
Foreign
62,479
61,668
53,019
212,463
131,669
70,350
Deferred:
Federal
( 43,333
)
( 60,378
)
( 11,821
)
State
( 15,630
)
( 7,387
)
( 10,028
)
Foreign
32,680
28,725
38,525
( 26,283
)
( 39,040
)
16,676
Provision for income taxes
$
186,180
$
92,629
$
87,026
Taxes computed at the statutory federal income tax rates are reconciled to the Provision for income taxes as follows:
(in thousands)
Year ended September 30,
2025
2024
2023
Statutory federal income tax rate
$
193,237
21
%
$
98,482
21
%
$
69,839
21
%
State income taxes, net of federal tax benefit
6,124
1
%
4,631
1
%
577
0
%
Federal research and development credits
( 8,552
)
( 1
)%
( 11,203
)
( 2
)%
( 7,751
)
( 2
)%
Uncertain tax positions
( 1,904
)
—
7,268
2
%
23,302
7
%
Foreign tax credit
( 14,410
)
( 2
)%
( 30,119
)
( 7
)%
( 11,415
)
( 3
)%
Foreign rate differences
( 12,135
)
( 1
)%
( 15,368
)
( 3
)%
( 20,829
)
( 6
)%
Foreign tax on U.S. provision
14,452
2
%
15,120
3
%
11,415
3
%
Excess tax benefits from restricted stock
( 8,534
)
( 1
)%
( 9,225
)
( 2
)%
( 6,963
)
( 2
)%
U.S. permanent items
( 920
)
—
2,711
0
%
5,341
2
%
Non-deductible compensation
9,096
1
%
10,157
2
%
8,344
3
%
Base Erosion Anti-Abuse Tax (BEAT)
2,653
—
3,264
1
%
—
—
GILTI, net of foreign tax credits
27,008
3
%
31,388
7
%
17,861
5
%
Foreign-Derived Intangible Income (FDII)
( 20,162
)
( 2
)%
( 15,148
)
( 3
)%
( 8,987
)
( 3
)%
Non-deductible imputed interest
—
—
—
—
6,292
2
%
Other, net
227
( 1
)%
671
0
%
—
( 1
)%
Provision for income taxes
$
186,180
20
%
$
92,629
20
%
$
87,026
26
%
In 2025, 2024, and 2023, our effective tax rate was impacted by our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland and the Cayman Islands. In 2025, 2024, and 2023, the foreign rate differential predominantly relates to these earnings. In addition to the foreign rate differential, our tax rate differed from the U.S. statutory federal income tax due to the net effects of the GILTI and FDII regimes (together referred to as U.S. Tax reform), and the excess tax benefit related to stock-based compensation.
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Our effective tax rates for 2025 and 2024 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 2025 and 2024, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. The IRS procedural guidance change significantly increased our estimated taxable income in 2024, with a lesser impact to taxable income in 2025. In 2025, we recorded tax expense of $ 10.9 million primarily related to accrued interest stemming from the effects of the procedural guidance. In 2024, we recorded a benefit of $ 4.4 million primarily related to an increase to the estimated tax benefit for the deductions associated with GILTI and FDII.
Additionally, in 2025, we recorded tax benefits of $ 10.8 million related to tax reserves in foreign jurisdictions.
In 2024, 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 $ 14.4 million benefit for additional foreign tax credits that became available to us. These benefits were offset by a tax expense of $ 4.6 million related to a tax reserve in a foreign jurisdiction.
Additionally in 2023, our results include tax expense of $ 21.8 million relating to an uncertain tax position regarding transfer pricing in a foreign jurisdiction. Our rate was also impacted by non-deductible imputed interest related to the deferred payment on the acquisition of ServiceMax, Inc.
As of September 30, 2025 and 2024, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $ 179.1 million ($ 28.7 million in Accrued income taxes and $ 150.4 million in Other liabilities) and $ 75.3 million ($ 40.0 million in Accrued income taxes, $ 6.2 million in Accrued expenses and other current liabilities and $ 29.1 million in Other liabilities), respectively. As of September 30, 2025 and 2024, prepaid taxes recorded in Prepaid expenses on the accompanying Consolidated Balance Sheets were $ 20.4 million and $ 14.0 million, respectively. We made net income tax payments of $ 121.7 million, $ 68.6 million and $ 65.9 million in 2025, 2024 and 2023, respectively.
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The significant temporary differences that created deferred tax assets and liabilities are shown below:
(in thousands)
September 30,
2025
2024
Deferred tax assets:
Net operating loss carryforwards
$
12,074
$
14,141
Foreign tax credits
5,996
2,028
Capitalized research and development
176,610
136,001
Pension benefits
6,868
7,629
Prepaid expenses
22,391
18,551
Deferred revenue
2,970
2,607
Stock-based compensation
23,514
22,231
Other reserves not currently deductible
39,888
34,422
Amortization of intangible assets
36,560
60,527
Research and development and other tax credits
8,984
25,706
Lease liabilities
43,650
46,460
Fixed assets
114,109
106,741
Capital loss carryforward
4,517
3,875
Other
5,608
3,528
Gross deferred tax assets
503,739
484,447
Valuation allowance
( 8,529
)
( 21,755
)
Total deferred tax assets
495,210
462,692
Deferred tax liabilities:
Acquired intangible assets not deductible
( 246,107
)
( 257,731
)
Lease assets
( 29,298
)
( 34,160
)
Pension prepayments
( 4,279
)
( 3,283
)
Deferred revenue
( 10,212
)
( 1,243
)
Depreciation
( 3,277
)
( 4,683
)
Deferred income
( 14,518
)
( 11,636
)
Prepaid commissions
( 14,479
)
( 13,738
)
Other
( 9,120
)
( 9,030
)
Total deferred tax liabilities
( 331,290
)
( 335,504
)
Net deferred tax assets
$
163,920
$
127,188
We reassess our valuation allowance requirements each financial reporting period. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to use our existing deferred tax assets.
For U.S. tax return purposes, net operating loss (NOL) carryforwards and tax credits are generally available to be carried forward to future years, subject to certain limitations. At September 30, 2025, we had U.S. federal tax effected NOL carryforwards from acquisitions of $ 0.4 million which expire in 2026 to 2033 . The use of these NOL carryforwards is limited as a result of the change in ownership rules under Internal Revenue Code Section 382 . Additionally, we have tax effected state NOL carryforwards, net of federal benefit, of $ 4.9 million, which expire beginning in 2027 and ending in 2042 .
As of September 30, 2025, we had federal R&D credit carryforwards of $ 2.2 million, which expire beginning in 2026 and ending in 2035 , and Massachusetts R&D credit carryforwards of $ 16.8 million, which expire beginning in 2026 and ending in 2040 . We also had foreign tax credits of $ 6.0 million, which expire beginning in 2032 and ending in 2035 .
We also have tax effected NOL carryforwards in non-U.S. jurisdictions totaling $ 6.7 million, the majority of which do not expire, and non-U.S. tax credit carryforwards of $ 1.2 million that expire beginning in 2031 and ending in 2037 . Additionally, we have tax effected amortization carryforwards of $ 18.0 million in a foreign jurisdiction. There are limitations imposed on the use of such attributes that could restrict the recognition of any tax benefits.
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As of September 30, 2025, we have a valuation allowance of $ 3.4 million against net deferred tax assets in the United States and a valuation allowance of $ 5.1 million against net deferred tax assets in certain foreign jurisdictions. The $ 3.4 million U.S. valuation allowance relates to Massachusetts tax credit carryforwards which 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 restrict the recognition of any tax benefits.
The changes to the valuation allowance were primarily due to the following:
(in thousands)
Year ended September 30,
2025
2024
2023
Valuation allowance, beginning of year
$
21,755
$
21,695
$
22,283
Net increase (decrease) in deferred tax assets with a full valuation allowance
( 13,226
)
60
( 588
)
Valuation allowance, end of year
$
8,529
$
21,755
$
21,695
Our policy is to record estimated interest and penalties related to the underpayment of income taxes as a component of our income tax provision. In 2025, 2024 and 2023 we recorded net interest expense of $ 10.0 million, $ 3.3 million and $ 0.5 million, respectively. In 2025, 2024 and 2023 we had no penalty expenses in our income tax provision. As of September 30, 2025 and 2024, we had accrued $ 13.6 million and $ 3.1 million of estimated interest expense, respectively. We had no accrued tax penalties as of September 30, 2025, 2024 or 2023.
Year ended September 30,
Unrecognized tax benefits (in thousands)
2025
2024
2023
Unrecognized tax benefit, beginning of year
$
65,035
$
50,742
$
23,923
Tax positions related to current year:
Additions
14,736
7,570
7,075
Tax positions related to prior years:
Additions
104,375
10,705
20,855
Reductions
( 9,669
)
( 452
)
—
Settlements
( 16,753
)
( 3,530
)
—
Statute expirations
—
—
( 1,111
)
Unrecognized tax benefit, end of year
$
157,724
$
65,035
$
50,742
In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In accordance with GAAP, our financial statements have not reflected the effects of this accounting method change as we had not received IRS consent as of September 30, 2025. Accordingly, since we reflected the benefits associated with this position in our U.S. federal tax return for the year ended September 30, 2024, which was filed during the fourth quarter of 2025, we have included an unrecognized tax benefit of $ 109.2 million within Other liabilities on the Consolidated Balance Sheets. We subsequently received formal consent from the IRS in October 2025. Consequently, we will release the reserve in the first quarter of 2026, primarily resulting in corresponding decreases to Deferred tax assets and the reserve for unrecognized tax benefits within Other liabilities. Additionally, this will result in a net income tax benefit of $ 6.5 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII as discussed above.
If all of our unrecognized tax benefits as of September 30, 2025 were to become recognizable in the future, we would record a benefit to the income tax provision of $ 32.1 million (which would be partially offset by an increase in the U.S. valuation allowanc e of $ 6.0 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 above, 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.
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Table of Contents
In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. 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. Aud its 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. As of September 30, 2025 , we remained subject to examination in the following major tax jurisdictions for the tax years indicated:
Major Tax Jurisdiction
Open Years
United States
2022 through 2025
Germany
2019 through 2025
France
2023 through 2025
Japan
2020 through 2025
Ireland
2019 through 2025
Additionally, net operating loss and tax credit carryforwards from certain earlier periods in these jurisdictions may be subject to examination to the extent they are used in later periods.
We incurred expenses related to stock-based compensation in 2025, 2024 and 2023 of $ 216.2 million, $ 223.5 million and $ 206.5 million, respectively. Accounting for the tax effects of stock-based awards requires that we establish a deferred tax asset as the compensation is recognized for financial reporting prior to recognizing the tax deductions. The tax benefit recognized in the Consolidated Statements of Operations related to stock-based compensation totaled $ 42.5 million, $ 27.5 million and $ 33.4 million in 2025, 2024 and 2023, respectively. Upon vesting of the stock-based awards, the actual tax deduction is compared with the cumulative financial reporting compensation cost and any excess tax deduction is considered a windfall tax benefit and is recorded to the tax provision. In 2025, 2024 and 2023, net windfall tax benefits of $ 7.4 million, $ 10.2 million and $ 7.8 million were recorded to the tax provision.
Prior to the passage of the U.S. Tax Cuts and Jobs Act in December of 2017 (the Tax Act), we asserted that substantially all of the undistributed earnings of our foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to U.S. federal taxation via 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 of our intention to permanently reinvest these earnings outside the United States 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.
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 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. While there is no material impact on our financial statements for the year ended September 30, 2025, we are in the process of evaluating the prospective impact of the Act to our consolidated financial statements and cash flow.
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8. Debt
As of September 30, 2025 and 2024, we had the following short- and long-term debt obligations:
(in thousands)
September 30,
2025
2024
4.000% Senior notes due 2028
$
500,000
$
500,000
3.625% Senior notes due 2025
—
500,000
Credit facility revolver line (1)(2)
231,250
262,000
Credit facility term loan (1)(2)
468,750
490,625
Total debt
1,200,000
1,752,625
Unamortized debt issuance costs for the senior notes (3)
( 2,566
)
( 4,053
)
Total debt, net of issuance costs (4)
$
1,197,434
$
1,748,572
(1) Unamortized debt issuance costs related to the credit facility were $ 2.7 million included in Other current assets and $ 3.3 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2025 and $ 2.3 million included in Other current assets and $ 5.2 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2024 .
(2) The stated maturity date under the credit facility on which both the revolver line and the term loan will mature and all amounts then outstanding will become due and payable is January 3, 2028 . The term loan began amortizing in March 2024, with payment s remaining of $ 25.0 million in 2026 and 2027, and $ 418.7 million in 2028.
(3) As of September 30, 2025, all unamortized debt issuance costs for the senior notes were included in Long-term debt on the Consolidated Balance Sheet. As of September 30, 2024, $ 0.4 million of unamortized debt issuance costs for the senior notes was included in Current portion of long-term debt and $ 3.6 mill ion was included in Long-term debt on the Consolidated Balance Sheet .
(4) As of September 30, 2025, $ 25.0 million of debt associated with the credit facility term loan was classifie d as short term. As of September 30, 2024, $ 521.5 million of debt was classified as short term, including $ 499.6 millio n associated with the 2025 senior notes and related debt issuance costs and $ 21.9 million associated with the credit facility term loan .
Senior Unsecured Notes
In February 2020, we issued $ 500 million in aggregate principal amount of 4.0 % senior, unsecured long-term debt at par value, due in 2028 (the 2028 Notes) and $ 500 million in aggregate principal amount of 3.625 % senior, unsecured long-term debt at par value, due in February 2025 (the 2025 Notes). In the second quarter of 2025, we redeemed the 2025 Notes using a draw on our revolving credit facility and cash on hand.
As of September 30, 2025, the total estimated fair value of the 2028 Notes was approximately $ 490.0 million based on quoted prices for the notes on that date.
We were in compliance with all the covenants for the 2028 Notes as of September 30, 2025.
Terms of the 2028 Notes
Interest on the 2028 Notes is payable semi-annually on February 15 and August 15. The debt indenture for the 2028 Notes includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions.
We may, on one or more occasions, redeem the 2028 Notes in whole or in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the notes at a purchase price equal to 101 % of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the notes upon such event may be limited by law, by the indenture associated with the notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the notes as required by the indenture, it would constitute an event of default under the indenture which, in turn, may also constitute an event of default under other obligations.
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Credit Agreement
In January 2023, we entered into an amended and restated credit agreement for a secured multi-currency bank credit facility with a syndicate of banks. Ou r credit facility consists of (i) a $ 1.25 billion revolving credit facility, (ii) a $ 500 million term loan credit facility, and (iii) an incremental facility pursuant to which we may incur additional term loan tranches or increase the revolving credit facility.
As of September 30, 2025, unused commitments under our credit facility were approximately $ 1,018.8 million and amounts available for borrowin g were $ 1,001.7 million.
As of September 30, 2025, the fair value of our credit facility approximates its book value.
PTC Inc. and certain foreign subsidiaries are eligible borrowers under the credit facility. Any borrowings by PTC Inc. under the credit facility would be guaranteed by PTC Inc.’s material domestic subsidiaries that become parties to the subsidiary guaranty, if any. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors and secured, subject to exceptions, by a first priority perfected security interest in substantially all existing and after-acquired personal property owned by PTC Inc. and its material domestic subsidiaries (except for certain indirect material domestic subsidiaries). As of the filing of this Form 10-K, there are no subsidiary guarantors of the obligations under the credit facility. As of September 30, 2025 , $ 96.3 million was borrowed by an eligible foreign subsidiary borrower.
Loans under the credit facility bear interest at variable rates that reset every 30 to 180 days depending on the base rate (for USD borrowings, either the adjusted Daily Simple RFR or adjusted Term SOFR) and period selected by us. The spread over the base rate depends on our total leverage ratio. As of September 30, 2025, the annual rate for borrowings outstanding was 5.6 %. A quarterly revolving commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.175 % to 0.325 % per annum, based upon our total leverage ratio.
The credit facility limits our ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; pay dividends and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC Inc. and its material domestic subsidiaries may not invest cash or property in, or loan amounts to, PTC Inc.’s foreign subsidiaries in aggregate amounts exceeding $ 100 million for purposes other than acquisitions of businesses. The credit facility also requires that we maintain certain financial ratios. As of September 30, 2025, we were in compliance with all financial and operating covenants of the credit facility.
In 2025, we incurred $ 1.2 million in financing costs in connection with the October 2024 amendment to our credit agreement, all of which was recorded as deferred debt issuance costs and included in Other assets and Other current assets on the Consolidated Balance Sheet. In 2023, we incurred $ 13.4 million in financing costs in connection with the January 2023 credit facility and related arrangements, of which $ 4.2 million (related to a since-extinguished bridge loan) was expensed in the period and $ 9.2 million was recorded as deferred debt issuance costs and included in Other assets and Other current assets on the Consolidated Balance Sheet. Deferred debt issuance costs are expensed over the term of the obligations.
Interest
In 2025, 2024 and 2023, we incurred interest expense of $ 77.0 million, $ 119.7 million, and $ 129.4 million, respectively, and paid $ 77.8 million, $ 137.0 million and $ 89.8 million, respectively, of interest on our debt. Interest expense in 2023 included $ 30.0 million of interest imputed on the $ 650.0 million deferred acquisition payment related to the ServiceMax acquisition. The average interest rate on borrowings outstanding during 2025, 2024 and 2023 was approximately 4.9 %, 5.4 % and 4.9 %, respectively.
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9. Commitments and Contingencies
As of September 30, 2025 and 2024, we had letters of credit and bank guarantees outstanding of $ 15.6 million (of which $ 0.6 million was collateralized) and $ 15.6 million (of which $ 0.6 million was collateralized), respectively, primarily related to our corporate headquarters lease.
Legal and Regulatory Matters
With respect to legal proceedings and claims, we record an accrual for a contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
We are subject to legal proceedings and claims against us in the ordinary course of business. As of September 30, 2025, we estimate that the range of possible outcomes for such matters is immaterial and we do not believe that resolving them will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a reporting period could be adversely affected.
Guarantees and Indemnification Obligations
We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.
We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.
10. Stockholders’ Equity
Preferred Stock
We may issue up to 5.0 million shares of our preferred stock in one or more series. Of these shares, 0.5 million are designated as Series A Junior Participating Preferred Stock. Our Board of Directors is authorized to fix the rights and terms for any series of preferred stock without additional shareholder approval.
Common Stock
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 use cash from operations and borrowings under our credit facility to make such repurchases. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.
In 2025, w e repurchased 1.65 million shares for $ 300.0 million. We did no t repurchase any shares in 202 4 or 2023.
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11. Equity Incentive Plan s
We have two equity incentive plans, our 2000 Equity Incentive Plan and our 2016 Employee Stock Purchase Plan (ESPP).
Our 2000 Equity Incentive Plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers, and consultants. We award restricted stock units (RSUs) as the principal equity incentive awards, including certain performance-based awards that are earned based on achieving performance criteria established by the Compensation and People Committee of our Board of Directors on or prior to the grant date. Each RSU represents the contingent right to receive one share of our common stock.
Our ESPP allows eligible employees to contribute up to 10 % of their base salary, up to a maximum of $ 25,000 per year and subject to any other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85 % of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period.
The following table shows total stock-based compensation expense recorded in our Consolidated Statements of Operations:
(in thousands)
Year ended September 30,
2025
2024
2023
Cost of license revenue
$
409
$
133
$
145
Cost of support and cloud services revenue
16,435
14,479
12,801
Cost of professional services revenue
5,846
6,827
7,928
Sales and marketing
61,750
68,541
56,394
Research and development
65,119
60,266
58,931
General and administrative
66,646
73,215
70,260
Total stock-based compensation expense
$
216,205
$
223,461
$
206,459
Stock-based compensation expense in 2025, 2024 and 2023 includes $ 7.1 million, $ 6.8 million, and $ 6.8 million respectively, related to our ESPP.
2000 Equity Incentive Plan Accounting and Stock-Based Compensation Expense
The fair value of RSUs granted in 2025, 2024 and 2023 was based on the fair market value of our stock on the date of grant for service- and certain performance- based RSUs and based on a Monte Carlo simulation model for relative total shareholder return (rTSR) performance RSUs. The weighted average fair value per share of RSUs granted in 2025, 2024 and 2023 was $ 186.37 , $ 164.73 and $ 130.64 , respectively.
We account for forfeitures as they occur, rather than estimate expected forfeitures.
As of September 30, 2025, total unrecognized compensation cost related to unvested RSUs expected to vest was approximately $ 201.5 million and the weighted average remaining recognition period for unvested RSUs was 18 months. As of September 30, 2025, the weighted average remaining vesting term for outstanding awards was 1.1 years.
As of September 30, 2025, 4.9 million shares of common stock were available for grant under the equity incentive plan and 1.9 million shares of common stock were reserved for issuance upon vesting of RSUs granted and outstanding.
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The following table sets forth the restricted stock unit activity for the year ended September 30, 2025.
(in thousands, except grant date fair value data)
Shares
Weighted
Average
Grant Date
Fair Value
Aggregate
Intrinsic Value
Balance of outstanding RSUs at October 1, 2024
2,064
$
147.92
Granted (1)
1,232
$
186.37
Vested
( 1,300
)
$
148.03
Forfeited or not earned
( 100
)
$
152.65
Balance of outstanding RSUs at September 30, 2025
1,896
$
173.53
$
384,917
(1) RSUs granted include 17 shares from prior period rTSR awards that were earned upon achievement of the performance criteria and vested in November 2024 and 10 shares from prior period performance-based awards that were earned upon achievement of the performance criteria and vested in November 2024 .
The following table presents the number of RSU awards granted by award type:
(in thousands)
Year ended September 30, 2025
Performance-based RSUs (1)
94
Service-based RSUs (2)
1,045
Relative Total Shareholder Return RSUs (3)
66
(1) The performance-based RSUs are primarily made up of RSUs granted to our executives and are eligible to vest based upon annual performance measures over a three-year period. To the extent earned, those performance-based RSUs will vest in three substantially equal installments on November 15, 2025, November 15, 2026, and November 15, 2027, or the date the Compensation and People Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. Up to a maximum of two times the number of RSUs can be earned.
(2) The service-based RSUs were granted to employees, inc luding our executive officers. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant.
(3) The rTSR RSUs were granted to our executives and are eligible to vest based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of the m easurement period ending on September 30, 2027. The RSUs earned will vest on November 15, 2027, or the date the Compensation and People Committee determines the extent to which the applicable performance criteria have been achieved for each performance period . Up to a maximum of two times the number of rTSR RSUs eligible to be earned for the period may vest. If the stock price as of the beginning of the period is below the stock price at the end of the period, a maximum of 100 % of the rTSR RSUs may vest.
The weighted-average fair value of the rTSR RSUs was $ 243.47 per target RSU on the grant date. The fair value of the rTSR RSUs was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The significant assumptions used in the Monte Carlo simulation model were as follows:
2025
2024
2023
Average volatility of peer group
50.64
%
49.30
%
41.54
%
Risk-free interest rate
4.21
%
4.65
%
4.12
%
Dividend yield
—
%
—
%
—
%
Expected term (in years)
2.88
2.87
2.87
The value of stock issued for vested RSUs is as follows:
(in thousands)
Year ended September 30,
2025
2024
2023
Stock issued for vested RSUs
$
236,697
$
289,333
$
240,066
In 2025, shares issued upon vesting of restricted stock units were net of 0.4 million shares retained by us to cover employee tax withholdings of $ 80.4 million. In 2024, shares issued upon vesting of restricted stock units were net of 0.6 million shares retained by us to cover employee tax withholdings of $ 101.9 million. In 2023, shares issued upon vesting of restricted stock and restricted stock units were net of 0.6 million shares retained by us to cover employee tax withholdings of $ 82.8 million.
As of September 30, 2025 and September 30, 2024 , we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $ 51.3 million and $ 47.7 million, respectively. The liability as of September 30, 2024 was settled via the issuance of shares in the first quarter of 2025.
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12. Employee Benefit Plan
We offer a savings plan to eligible U.S. employees. The plan is qualified under Section 401(k) of the Internal Revenue Code. Participating employees may defer a portion of their pre-tax compensation, as defined, but not more than statutory limits. We contribute 50 % of the amount contributed by the employee, up to a maximum of 3 % of the employee’s earnings. Our matching contributions vest immediately. We made matching contributions of $ 9.3 million, $ 9.2 million and $ 8.6 million in 2025, 2024 and 2023 , respectively.
13. Pension Plans
We maintain several international defined benefit pension plans primarily covering certain employees of Computervision, which we acquired in 1998, and CoCreate, which we acquired in 2008, and covering employees in Japan. Benefits are based upon length of service and average compensation with vesting after one to five years of service. The pension cost was actuarially computed using assumptions applicable to each subsidiary plan and economic environment. We adjust our pension liability related to our plans due to changes in actuarial assumptions and performance of plan investments, as shown below. The vested benefit obligation is determined as the actuarial present value of the vested benefits to which the employee is currently entitled to but based on the employee's expected date of separation or retirement. Effective in 1998, benefits under one of the international plans were frozen indefinitely.
The following table presents the actuarial assumptions used in accounting for the pension plans:
2025
2024
2023
Weighted average assumptions used to determine benefit obligations at September 30 measurement date:
Discount rate
3.8
%
3.3
%
4.2
%
Rate of increase in future compensation
3.0
%
3.0
%
3.0
%
Weighted average assumptions used to determine net periodic pension cost for fiscal years ended September 30:
Discount rate
3.3
%
4.2
%
3.7
%
Rate of increase in future compensation
3.0
%
3.0
%
3.6
%
Rate of return on plan assets
4.8
%
4.8
%
4.8
%
In selecting the expected long-term rate of return on assets, we considered the current investment portfolio, and the investment return goals in the plans’ investment policy statements. We, with input from the plans’ professional investment managers and actuaries, also considered the average rate of earnings expected on the funds invested or to be invested to provide plan benefits. This process included determining expected returns for the various asset classes that comprise the plans’ target asset allocation. This basis for selecting the long-term asset return assumptions is consistent with the prior year. Using generally accepted diversification techniques, the plans’ assets, in aggregate and at the individual portfolio level, are invested so that the total portfolio risk exposure and risk-adjusted returns best meet the plans’ long-term liabilities to employees. Plan asset allocations are reviewed periodically and rebalanced to achieve target allocation among the asset categories when necessary. The discount rate is based on yield curves for highly rated corporate fixed income securities matched against cash flows for each future year.
The weighted long-term rate of return assumption, together with the assumptions used to determine the benefit obligations as of September 30, 2025 in the table above, will be used to determine our 2026 net periodic pension income , which we expect to be approximately $ 0.7 million.
As of September 30, 2025, the weighted average interest credit rate used in our two cash balance pension plans is 4.7 % .
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All non-service net periodic pension costs are presented in Other income, net on the Consolidated Statement of Operations. The actuarially computed components of net periodic pension cost recognized in our Consolidated Statements of Operations for each year are shown below:
(in thousands)
Year ended September 30,
2025
2024
2023
Interest cost of projected benefit obligation
$
2,121
$
2,368
$
2,126
Service cost
578
674
690
Expected return on plan assets
( 3,700
)
( 3,361
)
( 3,541
)
Amortization of prior service cost
—
—
—
Recognized actuarial loss
697
398
241
Settlement gain
( 65
)
( 19
)
—
Net periodic pension (benefit) cost
$
( 369
)
$
60
$
( 484
)
The following tables display the change in benefit obligation and the change in the plan assets and funded status of the plans as well as the amounts recognized in our Consolidated Balance Sheets:
(in thousands)
Year ended September 30,
2025
2024
Change in benefit obligation:
Projected benefit obligation, beginning of year
$
70,242
$
60,433
Service cost
578
674
Interest cost
2,121
2,368
Actuarial loss (gain)
( 2,818
)
7,128
Foreign exchange impact
2,896
3,319
Participant contributions
93
100
Benefits paid
( 2,711
)
( 3,162
)
Settlements
( 941
)
( 618
)
Projected benefit obligation, end of year
$
69,460
$
70,242
Change in plan assets and funded status:
Plan assets at fair value, beginning of year
$
77,757
$
68,875
Actual return on plan assets
2,563
5,120
Employer contributions
3,238
3,697
Participant contributions
93
100
Foreign exchange impact
3,775
3,745
Settlements
( 941
)
( 618
)
Benefits paid
( 2,711
)
( 3,162
)
Plan assets at fair value, end of year
83,774
77,757
Projected benefit obligation, end of year
69,460
70,242
Underfunded status
$
( 11,367
)
$
( 12,438
)
Overfunded status
$
25,681
$
19,953
Accumulated benefit obligation, end of year
$
68,996
$
69,580
Amounts recognized in the balance sheet:
Non-current asset
$
25,681
$
19,953
Non-current liability
$
( 10,979
)
$
( 12,083
)
Current liability
$
( 388
)
$
( 355
)
Amounts in accumulated other comprehensive loss:
Unrecognized actuarial loss
$
13,620
$
15,230
As of September 30, 2025 and 2024, two of our pension plans had projected benefit obligations and accumulated benefit obligations in excess of plan assets. Three international plans were overfunded.
The following table shows the change in Accumulated other comprehensive loss:
(in thousands)
Year ended September 30,
2025
2024
Accumulated other comprehensive loss, beginning of year
$
15,230
$
9,573
Recognized during year - amortization of net actuarial losses
( 697
)
( 398
)
Occurring during year - effect of settlement
65
19
Occurring during year - net actuarial losses (gains)
( 1,681
)
5,369
Foreign exchange impact
703
667
Accumulated other comprehensive loss, end of year
$
13,620
$
15,230
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In 2025, our actuarial gains were impacted by the increase in discount rate f rom 3.3 % in 2024 to 3.8 % in 2025. In 2024, our actuarial losses were impacted by the decrease in discount rate from 4.2 % in 2023 to 3.3 % in 2024.
The following table shows the percentage of total plan assets for each major category of plan assets:
September 30,
Asset category
2025
2024
Equity securities
19
%
12
%
Fixed income securities
57
%
62
%
Commodities
6
%
6
%
Insurance company funds
8
%
9
%
Cash
10
%
11
%
100
%
100
%
We periodically review the pension plans’ investments in the various asset classes . For the CoCreate plans in Germany, assets are actively allocated between equity and fixed income securities to achieve target return. For the other international plans, assets are allocated 100 % to fixed income securities. Th e fixed income securities for the other international plans primarily include investments held with insurance companies with fixed returns. The plans’ investment managers are provided specific guidelines under which they are to invest the assets assigned to them. In general, investment managers are expected to remain fully invested in their asset class with further limitations on risk as related to investments in a single security, portfolio turnover and credit quality.
The German CoCreate plan's investment policy prohibits the use of derivatives associated with leverage and speculation or investments in securities issued by PTC, except through index-related strategies and/or commingled funds. An investment committee oversees management of the pension plans’ assets. Plan assets consist primarily of investments in equity and fixed income securities.
In 2025, 2024 and 2023, our actual return (loss) on plan assets was $ 2.6 million, $ 5.1 million and $ ( 1.9 ) million, respectively.
Based on actuarial valuations and additional voluntary contributions, we contributed $ 3.2 million, $ 3.7 million and $ 1.3 million in 2025, 2024 and 2023, respectively, to the plans. In 2026, we expect to contribute $ 0.6 million to the plans and to directly pay $ 3.6 million in benefits.
As of September 30, 2025, benefit payments expected to be paid over the next ten years are as follows:
(in thousands)
Future Benefit Payments
2026
$
4,402
2027
$
5,072
2028
$
5,061
2029
$
5,164
2030
$
5,209
2031 to 2035
$
27,064
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Fair Value of Plan Assets
The international plan assets are comprised primarily of investments in a trust and an insurance company. The underlying investments in the trust are primarily governmental fixed income securities and equities in funds and exchange-traded funds (ETFs). They are classified as Level 1 because the underlying units of the trust are traded in open public markets. The fair value of the underlying investments in equity securities and fixed income are based upon publicly-traded exchange prices.
(in thousands)
September 30, 2025
Level 1
Level 2
Level 3
Total
Fixed income securities:
Government
$
47,554
$
—
$
—
$
47,554
Equities in funds
15,709
—
—
15,709
Commodities
5,077
—
—
5,077
Insurance company funds (1)
—
6,867
—
6,867
Cash
8,538
—
—
8,538
Options
29
—
—
29
Total plan assets
$
76,907
$
6,867
$
—
$
83,774
(in thousands)
September 30, 2024
Level 1
Level 2
Level 3
Total
Fixed income securities:
Government
$
48,146
$
—
$
—
$
48,146
Equities in funds
9,550
—
—
9,550
Commodities
4,309
—
—
4,309
Insurance company funds (1)
—
7,385
—
7,385
Cash
8,277
—
—
8,277
Options
90
—
—
90
Total plan assets
$
70,372
$
7,385
$
—
$
77,757
(1) These investments are comprised primarily of funds invested with an insurance company in Japan with a guaranteed rate of return. The insurance company invests these assets primarily in government and corporate bonds.
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14. Fair Value Measurements
Money market funds, time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.
The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.
Our significant financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 and 2024 were as follows:
(in thousands)
September 30, 2025
Level 1
Level 2
Level 3
Total
Financial assets:
Cash equivalents (1)
$
38,031
$
—
$
—
$
38,031
Forward contracts
—
6,007
—
6,007
Option contracts
—
6,228
—
6,228
$
38,031
$
12,235
$
—
$
50,266
Financial liabilities:
Forward contracts
—
4,773
—
4,773
$
—
$
4,773
$
—
$
4,773
(in thousands)
September 30, 2024
Level 1
Level 2
Level 3
Total
Financial assets:
Cash equivalents (1)
$
48,509
$
—
$
—
$
48,509
Forward contracts
—
1,202
—
1,202
$
48,509
$
1,202
$
—
$
49,711
Financial liabilities:
Forward contracts
—
4,166
—
4,166
$
—
$
4,166
$
—
$
4,166
(1) Money market funds and time deposits.
15. Derivative Financial Instruments
The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:
(in thousands)
Fair Value of Derivatives
Designated As Hedging
Instruments
Fair Value of Derivatives
Not Designated As
Hedging Instruments
September 30,
2025
2024
2025
2024
Derivative assets: (1)
Forward contracts
$
2,871
$
181
$
3,136
$
1,021
Option contracts
$
—
$
—
$
6,228
$
—
Derivative liabilities: (2)
Forward contracts
$
—
$
630
$
4,773
$
3,536
(1) As of September 30, 2025 and 2024 , current derivative assets are recorded in Other current assets on the Consolidated Balance Sheets.
(2) As of September 30, 2025 and 2024 , current derivative liabilities are recorded in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.
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Non-Designated Hedges
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 th e 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 th e Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts.
The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the years ended September 30, 2025, 2024 and 2023:
(in thousands)
Year ended September 30,
Location of Gain (Loss)
2025
2024
2023
Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged
Other income, net
$
( 5,204
)
$
( 6,238
)
$
( 11,757
)
In 2025, 2024, and 2023 , foreign currency losses, net were $ 2.5 million, $ 1.8 million, and $ 2.1 million, respectively.
Net Investment Hedges
As of September 30, 2025 and 2024, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:
September 30,
Currency Hedged (in thousands)
2025
2024
Euro / U.S. Dollar
$
480,198
$
462,894
Japanese Yen / U.S. Dollar
10,260
10,739
Total
$
490,458
$
473,633
The following table shows the effect of our derivative instruments designated as net investment hedges on the Consolidated Statements of Operations for the years ended September 30, 2025, 2024, and 2023:
(in thousands)
Year ended September 30,
Location of Gain (Loss)
2025
2024
2023
Loss recognized in Other comprehensive income ("OCI")
OCI
$
( 23,684
)
$
( 21,643
)
$
( 10,033
)
Gain (loss) reclassified from OCI to earnings
n/a
$
—
$
—
$
—
Gain recognized, excluded portion
Other income, net
$
6,251
$
4,346
$
4,241
Offsetting Derivative Assets and Liabilities
We have entered into master netting arrangements for our foreign exchange contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.
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The following table sets forth the offsetting of derivative assets as of September 30, 2025:
(in thousands)
Gross Amounts Offset in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2025
Gross Amount of Recognized Assets
Gross Amounts Offset in the Consolidated Balance Sheets
Net Amounts of Assets Presented in the Consolidated Balance Sheets
Financial Instruments
Cash Collateral Received
Net Amount
Foreign exchange contracts
$
12,235
$
—
$
12,235
$
( 4,773
)
$
—
$
7,462
The following table sets forth the offsetting of derivative liabilities as of September 30, 2025:
(in thousands)
Gross Amounts Offset in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheets
As of September 30, 2025
Gross Amount of Recognized Liabilities
Gross Amounts Offset in the Consolidated Balance Sheets
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets
Financial Instruments
Cash Collateral Pledged
Net Amount
Foreign exchange contracts
$
4,773
$
—
$
4,773
$
( 4,773
)
$
—
$
—
16. Leases
Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts, encompassing approximately 250,000 square feet under a lease agreement that runs through June 2037 . Base rent for the first year of the lease was $ 11.0 million and increases by $ 1 per square foot per year thereafter ($ 0.3 million per year). Base rent first became payable on July 1, 2020. In addition to the base rent, we are required to pay our pro rata portions of building operating costs and real estate taxes (together, “Additional Rent”). Annual Additional Rent is estimated to be approximately $ 8.2 million.
In 2025, we subleased certain portions of our Seaport headquarters for lease terms ending May 2031 and June 2037. We recognized an impairment charge of $ 12.8 million on right-of-use assets related to subleased facilities. For additional information on this impairment charge, see Note 2. Summary of Significant Accounting Policies .
The components of lease cost reflected in the Consolidated Statements of Operations for the years ended September 30, 2025, 2024, and 2023 were as follows:
(in thousands)
Year ended September 30,
2025
2024
2023
Operating lease cost
$
32,912
$
33,288
$
32,402
Short-term lease cost
1,453
3,691
5,411
Variable lease cost
10,572
9,919
10,945
Sublease income
( 958
)
( 1,436
)
( 4,749
)
Total lease cost
$
43,979
$
45,462
$
44,009
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Supplemental cash flow information for the years ended September 30, 2025, 2024, and 2023 was as follows:
(in thousands)
Year ended September 30,
2025
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
36,303
$
35,498
$
36,038
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases (1)
$
16,664
$
11,079
$
28,257
(1) In the year ended September 30, 2023, operating lease additions included $ 4.0 million related to the ServiceMax acquisition.
Supplemental balance sheet information related to the leases as of September 30, 2025 and 2024 was as follows:
September 30,
2025
2024
Weighted-average remaining lease term - operating leases
9.4 years
10.3 years
Weighted-average discount rate - operating leases
5.3
%
5.4
%
Maturities of lease liabilities as of September 30, 2025 are as follows:
(in thousands)
Operating Leases
2026
$
31,829
2027
26,987
2028
22,214
2029
18,674
2030
17,460
Thereafter
104,477
Total future lease payments
221,641
Less: imputed interest
( 49,208
)
Total lease liability
$
172,433
As of September 30, 2025, we had an operating lease that had not yet commenced. The lease will commence in 2026 with a lease term of 5 years and we will make future lease payments of approximately $ 7.4 million.
17. Segments
We operate as a single operating and reportable segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer . The CODM evaluates financial performance and allocates resources based on consolidated results, including consolidated net income. The total assets of the segment are reported on the Consolidated Balance Sheets.
See Note 3. Revenue from Contracts with Customers for additional information about our revenue by geographic region and Note 4. Property and Equipment for additional information about our long-lived assets by geographic region.
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The following table presents revenue, significant expenses, and consolidated net income for our reportable segment:
(in thousands)
Year ended September 30,
2025
2024
2023
Revenue
$
2,739,226
$
2,298,472
$
2,097,053
Costs and expenses:
Cost of revenue, adjusted (1)
389,465
384,882
384,438
Operating expenses, adjusted (2)
1,047,636
1,019,250
953,720
Other segment items (3)
568,128
518,007
513,355
Consolidated net income
$
733,997
$
376,333
$
245,540
(1) Cost of revenue, adjusted excludes stock-based compensation and amortization of acquired intangible assets .
(2) Operating expenses, adjusted excludes stock-based compensation, amortization of acquired intangible assets, acquisition and transaction-related charges, and Impairment and other charges (credits), net .
(3) Other segment items include stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges; Impairment and other charges (credits), net; Other income (expense), net; and Provision for income taxes.
18. Subsequent Events
Kepware and ThingWorx Divestiture
On November 5, 2025, we entered into an Asset Purchase Agreement with Parrot US Buyer, L.P., a Delaware limited partnership (“Purchaser”), an entity controlled by investment funds affiliated with TPG Global, LLC. Pursuant to the Asset Purchase Agreement, on the terms and subject to the conditions therein, PTC has agreed to sell, and Purchaser has agreed to acquire, PTC’s Kepware and ThingWorx businesses (collectively, the “Business”), in exchange for total consideration consisting of $ 600 million in cash (the “Purchase Price”) payable at the closing of the transactions contemplated by the Asset Purchase Agreement, subject to certain adjustments, plus the assumption by Purchaser of certain liabilities of the Business specified in the Asset Purchase Agreement, as well as the right to contingent consideration in an amount not to exceed $ 125 million in certain circumstances following a sale of the Business by Purchaser. The transaction is expected to close in the first half of calendar year 2026.
As described in greater detail in the Asset Purchase Agreement, the Purchase Price will be (i) increased or decreased to the extent the Working Capital (as defined in the Asset Purchase Agreement) of the Business as of the Closing is higher or lower than a specified target amount, (ii) decreased by the amount of any Indebtedness (as defined in the Asset Purchase Agreement) of the Business as of the Closing, (iii) decreased by $ 35 million to the extent the Business does not achieve certain financial performance metrics in the month ending prior to Closing, and (iv) decreased by a specified amount reflecting the average billed accounts receivable of the Business as of the four-quarter period ending June 30, 2025.
Credit Facility
On November 18, 2025, we entered into an amendment to our credit agreement. 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 Purchaser 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.
On November 20, 2025, we borrowed $ 70 million under our revolving credit facility to fund working capital requirements.
Share Repurchases
In the first quarter of 2026, we continued our share repurchase program. Through November 20, 2025, we have repurchased $ 71 million of our common stock.
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