Revenue Falls Short, Earnings Beat
In the second quarter of calendar year 2026, PTC reported revenue of $600 million, reflecting a 6.8% drop compared to the previous year. Analysts had forecasted revenue of $608 million, so the company missed expectations by 1.3%. However, PTC outperformed predictions for non-GAAP earnings, posting $1.58 per share, which exceeded the average forecast by 1%.
Adjusted operating income reached $248.5 million, slightly under the estimated $251.7 million. The operating margin fell to 27.7%, down from 32.6% in the same period of the prior year, indicating inconsistent performance in operations.
Looking ahead, PTC increased its full-year adjusted EPS guidance to $8.15 at the midpoint, representing a 4.8% growth. For the upcoming third quarter, the company anticipates revenue of $660 million, 1.3% above the estimated $651.6 million. Management attributes the raised expectations to the growing adoption of its AI-driven and cloud-native offerings.
CEO Neil Barua highlighted recent improvements in customer engagement, particularly in sectors like defense and industrial automation. These sectors have contributed to new contract wins, which are supporting recurring revenue. According to CFO Jennifer DiRico, the company's strong pipeline and demand generation have given management confidence in its performance for the remainder of the year.
Billings and Market Outlook
At the end of the quarter, PTC's billings stood at $544 million, a decrease of 8.2% compared to the prior year. Annual recurring revenue came in at $2.41 billion, below the $2.46 billion forecasted by analysts. Despite the shortfall, the company remains optimistic about its long-term trajectory.
PTC's stock was valued at a market capitalization of $15.3 billion as of the reporting period. The company is counting on AI-integrated products, such as Creo AI and Onshape Labs, to fuel adoption and generate more value for clients. These tools are expected to be central to PTC's strategy in the months ahead.