PTC Inc. (PTC) Up 0.1% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for PTC Inc. (PTC). Shares have added about 0.1% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is PTC Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.PTC's Q3 Earnings Beat EstimatesPTC reported third-quarter fiscal 2025 non-GAAP earnings per share (EPS) of $1.64, beating the Zacks Consensus Estimate by 34.4%. The company reported non-GAAP EPS of 98 cents in the prior-year quarter. Management had estimated non-GAAP EPS in the range of $1.05 to $1.30.Revenues came in at $644 million, rising 24% year over year (up 22% at constant currency or cc). The top line beat the consensus estimate by 10.6%. Management projected revenues in the $560-$600 million band. The company’s focus on digital product innovation, combined with its shift toward SaaS and subscription-based models, is creating a stable and scalable revenue base. Even as the broader economic landscape remains uncertain, its go-to-market strategy resonates well across various industries and regions, helping PTC navigate market uncertainties. With a strong subscription model, continued momentum in key product segments — CAD, PLM, ALM, SLM and SaaS — and a solid capital allocation strategy, PTC aims for long-term growth.In addition, during the quarter, PTC advanced its AI efforts with the launch of Creo 12, the most updated version yet, featuring enhancements like AI-driven generative design. In PLM, it introduced Arena Supply Chain Intelligence to enable AI-based supply chain risk monitoring within the PLM system.Top-Line DetailsRecurring revenues of $613.6 million rose 27.4% year over year. Perpetual licenses increased 10.1% to $7.8 million.Revenues by License, Support and ServicesLicense revenues (39% of total revenues) were $251.5 million, up 68.6% from the year-ago quarter figure.Support and cloud services revenues (57.5%) of $370 million increased 8.9% year over year.Professional services revenues (3.5%) were $22.6 million, down 24.7% year over year.Revenues by Product GroupDemand for PLM and CAD solutions remains strong and continues to grow steadily. In the fiscal third quarter, PLM revenues were $404 million, gaining 23% year over year. CAD revenues were $240 million, up 27%.ARR Growth Reflects Business StrengthAnnualized recurring revenues (ARR) were $2.4 billion, up 14% year over year. At constant currency, ARR was $2.37 billion, up 9.3%. The uptick was driven by strong performance across all divisions and regions.In the fiscal third quarter, PLM and CAD ARR were $1,481 million and $934 million, rising 14% and 13% year over year, respectively.Operating DetailsTotal operating expenses came in at $324 million compared with $310.9 million in the prior-year quarter.Operating income on a non-GAAP basis was $285.2 million, up from $164.4 million in the prior-year quarter.Operating margin on a non-GAAP basis increased 1,260 basis points year over year to 44%.Balance Sheet & Cash FlowAs of June 30, 2025, cash and cash equivalents were $199 million compared with $235 million as of March 31, 2025.Total debt, net of deferred issuance costs, was $1.23 billion as of June 30, 2025, compared with $1.54 billion as of March 31, 2025. Cash provided by operating activities was $244 million compared with the prior-year quarter figure of $214 million. The free cash flow was $242 million compared with $212 million reported in the year-ago quarter.During the fiscal third quarter, PTC repurchased $75 million worth of its stock, in line with its previously announced $300 million buyback plan for fiscal 2025. Another $75 million in repurchases is expected in the fiscal fourth quarter to complete this initiative.Updated Fiscal 2025 Financial GuidanceRevenues for fiscal 2025 are now projected in the range of $2,570 to $2,630 million, indicating a rise of 12-14% year over year. The prior view was $2,445 to $2,565 million. Non-GAAP EPS is now estimated in the $6.63-$7.03 band, suggesting a rise of 31-38%. Earlier, PTC predicted the metric to be $5.80 to $6.55.For fiscal 2025, cash from operations is projected to be around $860 million, indicating a rise of about 15% on a year-over-year basis. The free cash flow is forecasted to be roughly $850 million, suggesting about a 16% increase. Previously, PTC viewed operating cash flow and free cash flow in the $855-$865 million and $840-$850 million bands, respectively. PTC now projects 8% to 9% growth in ARR on a constant currency basis for fiscal 2025, broadened from the earlier view of 7% to 9%.For the fourth quarter fiscal 2025, PTC estimates revenues in the $725-$785 million band. Non-GAAP EPS is projected in the range of $2.10 to $2.50. Cash from operations is expected to be in the band of $93-$98 million, and free cash flow is forecasted to be between $90 million and $95 million.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.The consensus estimate has shifted 18.01% due to these changes.VGM ScoresCurrently, PTC Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock has a grade of F on the value side, putting it in the lowest quintile for value investors.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PTC Inc. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PTC Inc. (PTC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks