Product design software company PTC (NASDAQ: PTC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 21.4% year on year to $685.8 million. On top of that, next quarter’s revenue guidance ($740 million at the midpoint) was surprisingly good and 7.9% above what analysts were expecting. Its non-GAAP profit of $1.92 per share was 22.8% above analysts’ consensus estimates.
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PTC (PTC) Q4 CY2025 Highlights:
- Revenue: $685.8 million vs analyst estimates of $633.7 million (21.4% year-on-year growth, 8.2% beat)
- Adjusted EPS: $1.92 vs analyst estimates of $1.56 (22.8% beat)
- Adjusted Operating Income: $309.6 million vs analyst estimates of $259.5 million (45.1% margin, 19.3% beat)
- The company slightly lifted its revenue guidance for the full year to $2.81 billion at the midpoint from $2.78 billion
- Management raised its full-year Adjusted EPS guidance to $7.92 at the midpoint, a 2.6% increase
- Operating Margin: 32.2%, up from 20.4% in the same quarter last year
- Free Cash Flow Margin: 39%, up from 11.2% in the previous quarter
- Annual Recurring Revenue: $2.49 billion (13.1% year-on-year growth, beat)
- Billings: $573.4 million at quarter end, up 6.7% year on year
- Market Capitalization: $17.75 billion
"PTC delivered solid financial results in Q1'26, driven by large deal volume and competitive displacements. The continued progress we're making with our go-to-market transformation is resulting in strong and strategic demand capture. This gives us greater confidence that we are building a more durable, multi-year growth engine," said Neil Barua, President and CEO, PTC.
Company Overview
Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ: PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, PTC grew its sales at a 13.3% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about PTC.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. PTC’s annualized revenue growth of 14.5% over the last two years is above its five-year trend, but we were still disappointed by the results. 
This quarter, PTC reported robust year-on-year revenue growth of 21.4%, and its $685.8 million of revenue topped Wall Street estimates by 8.2%. Company management is currently guiding for a 16.3% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
PTC’s ARR came in at $2.49 billion in Q4, and over the last four quarters, its growth was underwhelming as it averaged 11.6% year-on-year increases. This alternate topline metric grew slower than total sales, which likely means that the recurring portions of the business are growing slower than less predictable, choppier ones such as implementation fees. If this continues, the quality of its revenue base could decline. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
PTC is extremely efficient at acquiring new customers, and its CAC payback period checked in at 16.9 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from PTC’s Q4 Results
We were impressed by PTC’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, its billings missed. Overall, we think this was a decent quarter with some key metrics above expectations. The market seemed to be hoping for more, and the stock traded down 1.2% to $149.86 immediately following the results.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
