PTC Q2 Deep Dive: AI Integration and Go-to-Market Transformation Drive Outperformance

Engineering and design software provider PTC (NASDAQ:PTC) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 24.2% year on year to $643.9 million. On top of that, next quarter’s revenue guidance ($755 million at the midpoint) was surprisingly good and 5.6% above what analysts were expecting. Its non-GAAP profit of $1.64 per share was 35.3% above analysts’ consensus estimates.

Is now the time to buy PTC? Find out in our full research report (it’s free).

StockStory’s Take

PTC’s second-quarter results were well received by the market, as the company delivered growth and operating leverage that exceeded Wall Street’s expectations. Management attributed the strong quarter to ongoing adoption of its digital engineering and product lifecycle management platforms, as well as early traction from new AI-driven features. CEO Neil Barua highlighted that customer demand remained resilient despite macroeconomic uncertainty, stating, “Our vision for our customers’ digital transformations is resonating,” and emphasized the importance of PTC’s solutions in enabling customers to accelerate time to market and manage complexity.

Looking ahead, PTC’s improved guidance reflects management’s confidence in its product data foundation strategy and the increasing relevance of AI capabilities. CEO Neil Barua pointed to a robust pipeline of large deals and an expanding relationship with strategic partners, including NVIDIA, as key drivers for the coming quarters. He acknowledged that while some macro risks and input cost pressures persist, demand for digital transformation and regulatory-driven traceability are supporting growth. Management expects its ongoing go-to-market transformation and new AI releases to further solidify PTC’s market position.

Key Insights from Management’s Remarks

Management pinpointed several company-specific factors behind the robust quarterly performance and more optimistic outlook, with a particular focus on operational improvements and AI advancements.

• Go-to-market transformation: Management credited early results from its revamped go-to-market strategy, noting improved win rates among tenured sales representatives and better collaboration across sales, marketing, and customer success. The company is seeing greater engagement with C-level decision-makers, which is helping drive larger deal opportunities.

• AI-enhanced product portfolio: The release of Creo 12, featuring AI-driven generative design, and the launch of Arena Supply Chain Intelligence with embedded AI capabilities, were highlighted as major steps forward. These updates are designed to help customers manage complex product development and supply chain risks more efficiently.

• Expansion in key verticals: PTC reported notable wins in the medical technology, automotive, and aerospace and defense sectors. These included competitive customer takeaways and expanded deployments of Windchill+, Codebeamer, and ServiceMax, illustrating the growing strategic importance of PTC’s solutions in regulated and complex industries.

• ServiceMax integration: While ServiceMax’s integration has differentiated PTC’s core product lineup, management acknowledged some one-time customer churn events that weighed on this business. However, they expressed confidence that these issues are unlikely to persist and remain committed to cross-selling ServiceMax within the PTC customer base.

• Strategic partnerships: The partnership with NVIDIA was cited as evidence of PTC’s ability to bridge digital and physical AI applications, reinforcing the value of its product data foundation approach. Management believes this collaboration opens new avenues for growth as physical AI becomes more prevalent in manufacturing and engineering.

Drivers of Future Performance

Management expects continued growth, driven by AI integration, large deal momentum, and go-to-market execution, but notes that macroeconomic headwinds and input costs remain watch items.

• AI capabilities and product launches: PTC plans to release additional AI-driven features across its core products in the next quarter, building on positive customer feedback. Management sees these enhancements as critical to expanding addressable market opportunities and increasing customer retention.

• Large deal pipeline: The company reported its highest-ever pipeline of $5 million-plus deals, especially in regulated verticals. Management emphasized the importance of closing these strategic deals, noting that executive-level engagement is improving conversion rates and overall visibility into deal closure timing.

• Macro and input cost risks: While management perceives stabilization in trade and policy uncertainty, they remain cautious about input costs and tariffs, which continue to differ by geography and industry. These factors are being closely monitored and have been factored into current guidance.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace of adoption and monetization of new AI features across PTC’s product suite, (2) the successful execution and closure of large pipeline deals, especially in regulated industries, and (3) ongoing progress in the go-to-market transformation, including increased sales productivity and cross-selling of ServiceMax. Developments in trade policy and input costs will also be important to watch for potential impacts on customer budgets and deal timing.

PTC currently trades at $206, up from $203.30 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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