Financial Analysis

5. Acquisitions and Divestitures Acquisition and transaction-related costs in the third quarter and first nine months of 2026 totaled $ 2.9 million and $ 40.0 million, respectively, compared to $ 1.6 million and $ 2.4 million in the third quarter and first nine months of 2025, respectively. These costs are classified in General and administrative expense in the accompanying Consolidated Statements of Operations. Kepware and ThingWorx Divestiture On March 13, 2026, we sold our Kepware and ThingWorx businesses pursuant to an Asset Purchase Agreement dated November 5, 2025 with Parrot US Buyer, L.P., a Delaware limited partnership (Purchaser), an entity controlled by investment funds affiliated with TPG Global, LLC. Total consideration for the transaction was $ 530.8 million, of which $ 523.3 million was received as cash proceeds in the second quarter of 2026 and $ 7.5 million is expected to be received in 2026. Consideration is subject to final working capital and indebtedness adjustments. Additional future contingent consideration of up to $ 125 million may be received by PTC in certain circumstances following a sale of the businesses by Purchaser. We have elected to defer the recognition of gains associated with contingent consideration unless and until they become realizable. Goodwill was allocated to the sold businesses based on a relative fair value allocation of total goodwill. The assets and liabilities of the Kepware and ThingWorx businesses were classified as held for …

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11. Commitments and Contingencies Guarantees and Indemnification Obligations We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial. We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties b …

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10. Debt As of June 30, 2026 and September 30, 2025, we had the following debt obligations: (in thousands) June 30, 2026 September 30, 2025 4.000% Senior notes due 2028 $ 500,000 $ 500,000 Credit facility revolver line (1)(2) 475,000 231,250 Credit facility term loan (1)(2) 450,074 468,750 Total debt 1,425,074 1,200,000 Unamortized debt issuance costs for the senior notes (3) ( 1,759 ) ( 2,566 ) Total debt, net of issuance costs (4) $ 1,423,315 $ 1,197,434 (1) Unamortized debt issuance costs related to the credit facility were $ 2.7 million included in Other current assets and $ 2.1 million included in Other assets on the Consolidated Balance Sheet as of June 30, 2026 and $ 2.7 million included in Other current assets and $ 3.3 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2025 . (2) The stated maturity date under the credit facility on which both the revolver line and the term loan will mature and all amounts then outstanding will become due and payable is January 3, 2028 . The term loan began amortizing in March 2024, with payments remaining of $ 6.3 mi llion in 2026, $ 25.0 million in 2027, and $ 418.7 million in 2028. (3) As of June 30, 2026 and September 30, 2025, all unamortized debt issuance costs for the senior notes were included in Long-term debt on the Consolidated Balance Sheets. (4) Debt associated with the credit facility that was classified as short term was $ 25.1 million and $ 25.0 million as of June 30, 2026 and Septe …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Disaggregation of Revenue (in thousands) Three months ended Nine months ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Recurring revenue (1) $ 576,011 $ 613,583 $ 1,976,667 $ 1,739,443 Perpetual license 691 7,763 13,263 23,004 Professional services 23,347 22,591 70,247 82,984 Total revenue $ 600,049 $ 643,937 $ 2,060,177 $ 1,845,431 (1) Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

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3. Stock-based Compensation Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows: (in thousands) Three months ended Nine months ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Cost of license revenue $ 61 $ 176 $ 267 $ 282 Cost of support and cloud services revenue 4,086 4,122 13,548 12,092 Cost of professional services revenue 1,456 993 4,921 4,337 Sales and marketing 16,143 15,059 51,373 46,672 Research and development 15,043 17,788 49,115 48,334 General and administrative 22,593 15,894 66,624 49,678 Total stock-based compensation expense $ 59,382 $ 54,032 $ 185,848 $ 161,395 As of June 30, 2026 and September 30, 2025 , we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $ 28.3 million and $ 51.3 million, respectively. The liability as of September 30, 2025 was settled via the issuance of shares in the first quarter of 2026 .

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"7. Fair Value Measurements The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Money market funds, time deposits, and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair …

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6. Goodwill and Intangible Assets During the third quarter of 2026, we completed our annual impairment test of goodwill, which was based on a qualitative assessment, and concluded that there was no impairment. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. 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 each reporting unit at the last valuation date. Goodwill and acquired intangible assets consisted of the following: (in thousands) June 30, 2026 September 30, 2025 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Goodwill $ 3,398,303 $ 3,493,316 Intangible assets with finite lives: Purchased software $ 547,640 $ 401,974 $ 145,666 $ 639,104 $ 472,357 $ 166,747 Capitalized software 22,877 22,877 22,877 22,877 Customer lists and relationships 1,088,385 480,308 608,077 1,149,262 505,202 644,060 Trademarks and trade names 31,822 19,766 12,056 38,179 24,323 13,856 Other 3,469 3,469 4,019 4,019 Total intangible assets with finite lives $ 1,694,193 $ 928,394 $ 765,799 $ 1,853,441 $ 1,028,778 $ 824,663 Total goodwill and acquired intangible assets $ 4,164,102 $ 4,317,979 Changes in Goodwill were as follows: (in thousands) Ba …

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9. Income Taxes (in thousands) Three months ended Nine months ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Income before income taxes $ 152,440 $ 193,676 $ 1,102,214 $ 492,079 Provision for income taxes $ 33,660 $ 52,348 $ 226,193 $ 105,875 Effective income tax rate 22 % 27 % 21 % 22 % The effective tax rate for the three months ended June 30, 2026 was lower than the effective tax rate for the three months ended June 30, 2025, primarily due to changes in the geographic mix of income before taxes. For the three and nine months ended June 30, 2026 , the provision for income taxes included $ 14.4 million of tax expense related to the Varian Medical Systems, Inc. v. Commissioner tax court ruling and a $ 7.2 million tax benefit related to a strategic solar energy investment. The nine months ended June 30, 2026 also included $ 95.6 million of tax expense related to the Kepware and ThingWorx divestiture and a $ 7.1 million income tax benefit related to the reversal of a prior-year tax charge associated with Internal Revenue Service (IRS) procedural guidance. The effective tax rate for the three and nine months ended June 30, 2025 reflected increased tax expense associated with the IRS procedural guidance described below. Additionally, t he nine months ended June 30, 2025 included a benefit of $ 10.4 million related to changes in tax reserves associated with prior years in foreign jurisdictions. In 2024, we recorded a $ 14.4 million tax benefit for additional foreign …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Pronouncements Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which expands the scope exceptions of the derivatives guidance and clarifies the guidance on share-based payments from a customer. Specifically, the ASU introduces a scope exception for contracts that are not exchange-traded and that have variables based on operations or activities specific to one of the parties of the contract. The ASU is effective for us in the first quarter of 2028, with early adoption permitted. We early adopted this standard prospectively in the second quarter of 2026. The adoption of this ASU did not have an impact on our consolidated financial statements and related disclosures. Pending Accounting Pronouncements Narrow-Scope Improvements for Interim Reporting In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. We expect the adoption to result in disclosure changes only. Targeted Improvements …

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2. Revenue from Contracts with Customers Receivables, Co ntract Assets and Contract Liabilities (in thousands) June 30, 2026 September 30, 2025 Short-term receivables $ 824,107 $ 1,001,085 Long-term receivables $ 420,719 $ 378,941 Contract asset $ 13,780 $ 11,044 Deferred revenue $ 712,527 $ 827,065 During the nine months ended June 30, 2026, we recognized $ 710.5 million of revenue that was included in Deferred revenue as of September 30, 2025. The remainder of the change in the Deferred revenue balance was driven by additional deferrals, primarily from new bil lings, offset by a decrease of approximately $ 56 million related to the Kepware and ThingWorx divestiture and a decrease resulting from changes in foreign currency exchange rates. Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of June 30, 2026 and September 30, 2025, our total revenue liability was $ 44.1 million and $ 39.7 million, respectively, primarily associated with the annual right to exchange on-premises subscription software. Remaining Performance Obligations (RPO) Our contracts with customers include amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as forei …

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"12. Segments We operate as a single operating and reportable segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (""CODM"") in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer . The CODM evaluates financial performance and allocates resources based on consolidated results, including consolidated net income. The total assets of the segment are reported on the Consolidated Balance Sheets. The following table presents revenue, significant expenses, and consolidated net income for our reportable segment: (in thousands) Three months ended Nine months ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Revenue $ 600,049 $ 643,937 $ 2,060,177 $ 1,845,431 Costs and expenses: Cost of revenue, adjusted (1) 96,228 96,556 298,791 286,764 Operating expenses, adjusted (2) 255,302 262,210 792,581 782,856 Other segment items (3) 129,739 143,843 92,784 389,607 Consolidated net income $ 118,780 $ 141,328 $ 876,021 $ 386,204 (1) Cost of revenue, adjusted excludes stock-based compensation and amortization of acquired intangible assets . (2) Operating expenses, adjusted excludes stock-based compensation, amortization of acquired intangible assets, acquisition and transaction-related charges, and Impairment and other charges, net . (3) Other segment items include stock-based compensation; amortization of acquir …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

13. Subsequent Events Share Repurchases and Borrowings under Credit Facility We repurchased $ 273.7 million of our common stock in July 2026, financed primarily with $ 301.3 million of net borrowings under our credit facility.

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