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- **Strategic Divestiture**: Sold Kepware and ThingWorx to TPG for up to $725M, freeing PTC to focus on CAD, PLM, AI, and SaaS.
- **Financial Strength**: Q4 ARR +8.5% YoY, free cash flow +16% YoY to $857M; guiding to $1B+ free cash flow in 2026.
- **AI and Growth**: Integrating AI into core products, with 2026 ARR guidance of 7.5-9.5% (excl. divested businesses).
- **Capital Return**: Planning $150-250M share buybacks/Q, starting with $200M in Q1 2026.
- **Operational Efficiency**: 310bps expansion in operating efficiency ratio to 45%, driven by ARR growth and cost control.

**【Management Remarks】**
- Announced definitive agreement to divest Kepware and ThingWorx businesses to TPG for up to $725 million in total cash consideration, with $565 million upfront payment expected in Q2 2026.
- Transaction aims to enhance operational focus on core CAD, PLM, AI, and SaaS offerings, aligning with Intelligent Product Lifecycle vision.
- Q4 2025 ARR grew 8.5% YoY (constant currency) to $2.446 billion, with free cash flow up 16% YoY to $857 million.
- Fiscal 2026 free cash flow guidance of $1 billion includes Kepware and ThingWorx until transaction close.

**【CEO Summary Section】**
- Fiscal 2025 execution highlights: 8.5% ARR growth, 16% free cash flow growth, and record deferred ARR under contract.
- Key wins: Largest Codebeamer deal in automotive, competitive displacement in med tech, and Onshape SaaS expansion.
- Fiscal 2026 ARR guidance: 7-9% with Kepware/ThingWorx, 7.5-9.5% without; targeting $1 billion+ free cash flow.
- Capital allocation strategy: Share buybacks ($150-250M/Q) and disciplined R&D investment.
- AI integration roadmap: New capabilities in ServiceMax, Onshape, Arena, and upcoming Creo updates.

**【CFO Financial Commentary】**
- Q4 2025 ARR (constant currency): $2.446 billion (+8.5% YoY), with Kepware/ThingWorx contributing $160M ARR (-1% YoY).
- Fiscal 2026 ARR guidance: 7-9% (incl. Kepware/ThingWorx), 7.5-9.5% (excl.).
- Free cash flow impact: $840M in 2026 if transaction closes April 1, 2026, with $160M one-time costs (taxes, fees).
- Fiscal 2026 revenue guidance: +10%+ first half, mid-single digits Q3, down Q4 due to 2025 Q4 overperformance.
- Operating efficiency ratio expanded 310bps to 45% in 2025, driven by ARR growth and cost control.

**【Q&A Key Highlights】**
- **Divestiture Rationale**: TPG's operational expertise better aligns with factory-floor IoT focus, freeing PTC to prioritize product data foundation and AI.
- **Free Cash Flow Tailwinds**: $1B+ guidance includes $174M tax benefit from Section 174, offset by $20M one-time CapEx.
- **Go-to-Market Momentum**: Verticalized sales force execution improving deal velocity, with Q4 deferred ARR skewed to 2026+.
- **AI Strategy**: Embedding generative AI in core products (e.g., ServiceMax, Onshape) to enable contextual data-driven decisions.
- **RPO Visibility**: 55% of total RPO expected to recognize in next 12 months, reflecting strong multiyear contract pipeline.


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