It has been about a month since the last earnings report for PTC Inc. (PTC Quick QuotePTC - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PTC Inc. due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for PTC Inc. before we dive into how investors and analysts have reacted as of late.

PTC's Q2 Earnings Beat Estimates

PTC reported second-quarter fiscal 2026 non-GAAP earnings of $2.69 per share, which jumped 50% year over year and beat the Zacks Consensus Estimate by 30.6%. Management had estimated non-GAAP EPS in the range of $1.87 to $2.47.

Quarterly revenues increased 21.7% year over year to $774 million and surpassed the consensus estimate by 8.5%. Strong demand for AI-driven product lifecycle modernization, improving renewal rates and higher-duration renewals supported the upside. Management highlighted growing customer demand for AI-enabled industrial software, continued execution of its go-to-market transformation and a major capital return strategy centered around aggressive share repurchases. PTC’s “Intelligent Product Lifecycle” vision is gaining traction with customers, particularly as manufacturers modernize their product data infrastructure to prepare for enterprise AI adoption.

The combination of AI-driven product strategy, disciplined execution, resilient cash generation and aggressive buybacks positions the company well for long-term growth.

Revenues by Product Group

PLM and CAD businesses continue to experience solid growth momentum.

In the fiscal second quarter, PLM revenues were $492 million, up 24% year over year.

CAD revenues were $282 million, up 17% year over year.

PTC Benefits From ARR Momentum

PTC continued to gain traction from its Intelligent Product Lifecycle strategy as customers increasingly modernize product data foundations to support AI adoption.

At the end of the fiscal second quarter, constant-currency ARR excluding Kepware and ThingWorx rose 8.5% year over year to $2.39 billion, reaching the high end of management’s guidance. Management highlighted strong pipeline growth, improving sales productivity and rising deferred ARR for fiscal 2027 and beyond.

The company noted that AI-related modernization demand remained strong across CAD, PLM and ALM offerings. Customers increasingly view product data systems as critical AI infrastructure, particularly in complex industrial workflows.

PTC Sees Strength Across PLM and CAD

PLM continued to outperform as customers consolidated product lifecycle management environments around Windchill and related offerings.

PLM and CAD ARR were $1,394 million and $970 million, respectively, rising 11% and 10% year over year, respectively.

Management emphasized that customers are accelerating migrations to newer Windchill and Creo versions to enable AI-based workflow automation. The company also cited growing momentum in electronics, high-tech, aerospace and defense verticals.

PTC Expands Profitability and Cash Flow

Operating margin on a non-GAAP basis increased 600 basis points on a year-over-year basis to 53%.

Operating cash flow increased 14% year over year to $321 million. Free cash flow also rose 14% to $318 million, exceeding the company’s guidance of $310-$315 million.

Management indicated that revenue and earnings benefited from a higher mix of longer-duration renewals during the quarter. The company also continued to tightly manage operating expenses while investing in AI-related product releases and go-to-market initiatives.

PTC nearly doubled AI releases planned for fiscal 2026 compared with fiscal 2025 and reiterated plans to introduce its first AI-native products. Management sees meaningful long-term monetization opportunities as AI agents become embedded across industrial workflows.

PTC Accelerates Share Repurchases

PTC remained aggressive on capital returns following the divestiture of Kepware and ThingWorx.

During the quarter, the company repurchased $250 million of common stock and deployed the full $375 million of net after-tax divestiture proceeds into an accelerated share repurchase program.

Management expects to repurchase an additional $250 million of stock in the fiscal third quarter. For fiscal 2026, total share repurchases are projected between $1.225 billion and $1.325 billion. The board also approved a new $2 billion share repurchase authorization effective from Oct. 1, 2026, through fiscal 2028. PTC expects diluted shares outstanding to decline to roughly 115-116 million shares in the third quarter from 120 million in the prior-year period.

The company ended the quarter with cash and cash equivalents of $439 million. Total debt remained at $1.2 billion, resulting in a debt-to-EBITDA ratio of 0.8.

PTC Raises Fiscal 2026 Outlook

PTC raised its fiscal 2026 revenue and earnings outlook following the second-quarter outperformance and favorable currency movements.

The company now expects fiscal 2026 revenues between $2.58 billion and $2.82 billion compared with the prior outlook of $2.54-$2.81 billion. Non-GAAP earnings are projected between $6.65 and $8.90 per share versus the earlier guidance of $6.36-$8.84.

For the third quarter of fiscal 2026, PTC estimates revenues in the $580-$640 million band. Non-GAAP EPS is projected in the range of $1.24-$1.78. Management projects constant-currency ARR growth of 8-9%. Cash from operations is expected to be $255-$260 million, and free cash flow is forecasted to be $240-$245 million.

Management stated that strong demand capture, improving renewal rates and expanding deferred ARR visibility provide confidence in delivering stronger growth in the second half of fiscal 2026.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -15.49% due to these changes.

VGM Scores

Currently, PTC Inc. has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock has a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PTC Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

PTC Inc. belongs to the Zacks Computer - Software industry. Another stock from the same industry, SAP (SAP Quick QuoteSAP - Free Report) , has gained 7.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

SAP reported revenues of $11.18 billion in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $2.01 for the same period compares with $1.51 a year ago.

SAP is expected to post earnings of $2.06 per share for the current quarter, representing a year-over-year change of +21.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

SAP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.