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what it is
PTC sells the software that helps factories design products, manage parts, and keep industrial work from turning into chaos.
how it gets paid
Last year Ptc made $2.7B in revenue.
why it's growing
Revenue grew 19.2% last year. Revenue reached $686 million, up 21% vs. prior year.
what just happened
PTC's latest quarter was about one thing: $1.92 EPS against a $1.55 estimate.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
30/100 earnings predictability — expect surprises
20.8x trailing p/e — priced about right
21.5% return on capital — every dollar works hard here
xvary composite: 60/100 — average
What they do
PTC sells the software that helps factories design products, manage parts, and keep industrial work from turning into chaos.
PTC wins because its software sits inside how manufacturers design and run products. Once your engineers, service teams, and product data are inside the system, switching hurts. That stickiness shows up in an 82.8% gross margin and a $601 million backlog.
How they make money
$2.7B
annual revenue · their business grew +19.2% last year
total revenue
$2.7B
+19.2%
The products that matter
industrial software subscriptions
Software Licenses and Subscriptions
$2.7B revenue
it's the core $2.7B engine. the segment detail on this page is thin, so the bet is simpler than usual: this business already earns a 34.0% net margin and now has to grow into the $3B fy2026 revenue estimate.
the whole story
Key numbers
35.9%
operating margin
PTC turns more than a third of revenue into operating profit. Plain English: this is software with real pricing power.
21.5%
return on capital
Return on capital means profit earned on the money put into the business. So what: PTC is not just growing, it is growing efficiently.
$601M
backlog
Backlog means signed work not yet recognized as revenue. So what: you already have a chunk of future sales spoken for.
20.8x
trailing p/e
Price-to-earnings means how much you pay for each dollar of profit. So what: this is not cheap, but it is not bubble territory either.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 65 / 100
- long-term debt $1.2B (6% of capital)
- net profit margin 33.7% — keeps 34 cents of every dollar in revenue
- return on equity 26% — $0.26 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in PTC 3 years ago → it's now worth $12,860.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
PTC's latest quarter was about one thing: $1.92 EPS against a $1.55 estimate.
Revenue reached $686 million, up 21% vs. prior year. EPS grew 104% vs. prior year to $1.39 on a reported basis, while gross margin stayed elite at 82.8%.
$686M
revenue
$1.39
eps
82.8%
gross margin
the number that mattered
The 23.87% earnings beat matters because it shows PTC is still outrunning expectations even after the stock's recent strength.
-
ptc closed out fiscal 2025 with solid financial results. (year ended september 30th.) in the fiscal fourth quarter, the company reached record customer commitments and increased average contract term length to roughly three years (compared to two years the year prior).this is largely a result of the expanded marketing budget pushing artificial intelligence (ai) solutions.
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recent acquisitions have driven significant cross-selling activity in the computer-aided design segment, up 19% across the top line from a year ago.meanwhile, demand from medical device manufacturers has been supported by evolving regulatory compliance and traceability requirements.
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the company has a healthy backlog of $601 million.
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ptc faces several short-term challenges.the company’s push toward software-as-a-service offerings should help the bottom line in the long run because this business model tends to offer a higher profit margin.
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this can be an expensive transition due to the temporary costs of redesigning workflows.meanwhile, ptc announced that it would be selling its industrial connectivity and internet of things businesses to tpg.
source: company earnings report, 2026
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What could go wrong
the #1 risk is manufacturers standardizing on autodesk or dassault instead of expanding deeper into ptc's engineering software.
med
competitive share loss
PTC operates in categories where Autodesk and Dassault are credible alternatives. if customers stop expanding inside PTC's tools, the switching-cost argument weakens fast.
this would pressure the full $2.7B revenue base and make a 20.8x earnings multiple harder to defend.
med
SaaS transition friction
management has been explicit that the move toward SaaS carries workflow redesign costs. investors like recurring revenue in theory. they get less patient when the transition hits margins first.
if margins fall well below 34.0% during the shift, the stock loses part of the premium attached to software names.
med
backlog that stays backlog
the company has a $601M backlog. that helps visibility, but delayed conversions still delay revenue, cash flow, and confidence.
$601M is roughly 22% of last year's revenue. if conversion slips, the path from $2.7B to the $3B fy2026 estimate gets longer.
med
portfolio reshaping risk
selling the industrial connectivity and IoT businesses can sharpen the story. it also raises the pressure on what stays. a slimmer company gets judged more directly.
if the post-sale business does not grow faster or look more durable, simplification was a narrative win and little else.
a forced slowdown in backlog conversion, a messier SaaS shift, or weaker post-divestiture growth would all hit the same core engine — the $2.7B software base investors are paying 20.8x earnings for.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
backlog conversion
$601M of backlog is the cleanest tell. if it turns into revenue on schedule, the $3B target looks grounded. if it lingers, the stock is pricing hope before proof.
risk
iot business sale to tpg
watch the close of the industrial connectivity and IoT sale, then watch what management does with the cleaner portfolio. simpler only helps if growth and margins get cleaner too.
calendar
contract duration
average contract terms have stretched to roughly three years. if that holds or extends, you get better visibility. if it slips back, the recurring revenue pitch loses some weight.
trend
SaaS margin trade-off
the long-term promise is a cleaner model. the near-term test is simple: you want proof that extra transition cost fades before it becomes a permanent drag on a 34.0% margin business.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a strong short-term edge either way.
risk profile
average
stability score 3 — middle-of-the-pack risk. not a bunker stock and not a rollercoaster.
chart momentum
top 20%
technical score 2 — the chart has held up better than the debate around backlog conversion and the SaaS shift.
earnings predictability
30 / 100
low predictability means the street can still lean the wrong way into a quarter, even in a business with 34.0% margins.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 383 buyers vs. 284 sellers in 3q2025. total institutional holdings: 0.1B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$141
$277
$167
current price
$209
target midpoint · +25% from current · 3-5yr high: $315 (+90% · 17% ann'l return)
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