Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PTC Inc.

CONSOLIDATED B****ALANCE SHEETS

(in thousands, except per share data)

(unaudited)



	June 30, 2026			September 30, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	351,454		$	184,415
Accounts receivable, net of allowance for doubtful accounts of $2,400 and $1,487 at June 30, 2026 and September 30, 2025, respectively		824,107			1,001,085
Prepaid expenses		114,722			119,107
Other current assets		81,583			78,760
Total current assets		1,371,866			1,383,367
Property and equipment, net		62,839			60,843
Goodwill		3,398,303			3,493,316
Acquired intangible assets, net		765,799			824,663
Deferred tax assets		100,544			194,070
Operating right-of-use lease assets		126,048			114,974
Other assets		688,178			545,939
Total assets	$	6,513,577		$	6,617,172
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	34,909		$	11,504
Accrued expenses and other current liabilities		300,576			136,140
Accrued compensation and benefits		167,955			199,561
Accrued income taxes		85,227			28,749
Current portion of long-term debt		25,074			25,000
Deferred revenue		700,298			812,271
Short-term lease obligations		24,070			24,179
Total current liabilities		1,338,109			1,237,404
Long-term debt		1,398,241			1,172,434
Deferred tax liabilities		30,241			30,151
Long-term deferred revenue		12,229			14,794
Long-term lease obligations		160,309			148,254
Other liabilities		104,705			187,906
Total liabilities		3,043,834			2,790,943
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued		—			—
Common stock, $0.01 par value; 500,000 shares authorized; 110,717 and 119,536 shares issued and outstanding at June 30, 2026 and September 30, 2025, respectively		1,107			1,195
Additional paid-in capital		610,985			1,822,590
Retained earnings		2,959,628			2,083,607
Accumulated other comprehensive loss		(101,977	)		(81,163	)
Total stockholders’ equity		3,469,743			3,826,229
Total liabilities and stockholders’ equity	$	6,513,577		$	6,617,172

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEM****ENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three months ended						Nine months ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Revenue:
License	$	205,824		$	251,479		$	838,210		$	678,628
Support and cloud services		370,878			369,867			1,151,720			1,083,819
Total software revenue		576,702			621,346			1,989,930			1,762,447
Professional services		23,347			22,591			70,247			82,984
Total revenue		600,049			643,937			2,060,177			1,845,431
Cost of revenue:
Cost of license revenue		11,016			12,060			36,379			33,222
Cost of support and cloud services revenue		74,817			73,446			230,953			215,101
Total cost of software revenue		85,833			85,506			267,332			248,323
Cost of professional services revenue		23,751			24,519			73,616			79,761
Total cost of revenue		109,584			110,025			340,948			328,084
Gross margin		490,465			533,912			1,719,229			1,517,347
Operating expenses:
Sales and marketing		136,287			141,756			417,271			424,319
Research and development		115,708			116,647			359,824			343,186
General and administrative		59,973			54,145			222,620			162,457
Amortization of acquired intangible assets		11,991			11,536			36,075			34,356
Impairment and other charges, net		—			—			—			4,213
Total operating expenses		323,959			324,084			1,035,790			968,531
Operating income		166,506			209,828			683,439			548,816
Interest expense		(15,771	)		(18,404	)		(48,359	)		(60,058	)
Other income, net		1,705			2,252			467,134			3,321
Income before income taxes		152,440			193,676			1,102,214			492,079
Provision for income taxes		33,660			52,348			226,193			105,875
Net income	$	118,780		$	141,328		$	876,021		$	386,204
Earnings per share—Basic	$	1.04		$	1.18		$	7.46		$	3.22
Earnings per share—Diluted	$	1.03		$	1.17		$	7.43		$	3.20
Weighted-average shares outstanding—Basic		114,677			119,913			117,401			120,106
Weighted-average shares outstanding—Diluted		114,978			120,461			117,844			120,815

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF C****OMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three months ended						Nine months ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Net income	$	118,780		$	141,328		$	876,021		$	386,204
Other comprehensive income (loss), net of tax:
Hedge gain (loss) arising during the period, net of tax of $(1.5) million and $9.7 million in the third quarter of 2026 and 2025, respectively, and $(3.5) million and $6.4 million in the first nine months of 2026 and 2025, respectively		4,697			(29,904	)		10,853			(19,678	)
Foreign currency translation adjustment, net of tax of $0 for each period		(14,315	)		77,862			(32,200	)		50,067
Change in pension benefit, net of tax of $(0.0) million and $(0.1) million in the third quarter of 2026 and 2025, respectively, and $(0.1) million and $(0.2) million in the first nine months of 2026 and 2025, respectively		201			(769	)		533			(238	)
Other comprehensive income (loss)		(9,417	)		47,189			(20,814	)		30,151
Comprehensive income	$	109,363		$	188,517		$	855,207		$	416,355

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine months ended
	June 30, 2026			June 30, 2025
Cash flows from operating activities:
Net income	$	876,021		$	386,204
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		74,180			76,803
Amortization of right-of-use lease assets		25,723			24,459
Stock-based compensation		185,848			161,395
Gain on divestiture of businesses		(464,602	)		—
Other non-cash items, net		(3,010	)		159
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable		158,180			173,557
Accounts payable and accrued expenses		214,882			(21,373	)
Accrued compensation and benefits		(10,297	)		11,044
Deferred revenue		(104,664	)		(16,472	)
Accrued income taxes		116,084			22,409
Other current assets and prepaid expenses		(133,193	)		5,525
Operating lease liabilities		14,322			(4,869	)
Other noncurrent assets and liabilities		(98,183	)		(55,175	)
Net cash provided by operating activities		851,291			763,666
Cash flows from investing activities:
Additions to property and equipment		(16,291	)		(7,462	)
Acquisitions of businesses, net of cash acquired		(3,573	)		(6,532	)
Contribution to solar energy equity investment		(50,146	)		—
Settlement of net investment hedges		26,549			(14,560	)
Divestiture of businesses		523,306			—
Net cash provided by (used in) investing activities		479,845			(28,554	)
Cash flows from financing activities:
Borrowings under credit facility		313,750			860,000
Repayments of senior notes		—			(500,000	)
Repayments of borrowings under credit facility		(88,750	)		(876,708	)
Repurchases of common stock		(1,326,190	)		(224,987	)
Proceeds from issuance of common stock		13,162			13,307
Payments of withholding taxes in connection with stock-based awards		(67,343	)		(71,761	)
Other financing activity		(1,007	)		(1,410	)
Net cash used in financing activities		(1,156,378	)		(801,559	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(7,719	)		(125	)
Net change in cash, cash equivalents, and restricted cash		167,039			(66,572	)
Cash, cash equivalents, and restricted cash, beginning of period		184,988			266,466
Cash, cash equivalents, and restricted cash, end of period	$	352,027		$	199,894
Supplemental disclosure of non-cash financing and investing activities:
Withholding taxes in connection with stock-based awards, accrued	$	4,320		$	6,061
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	32,486		$	15,700
Investment in solar energy project not yet paid	$	134,602		$	—
Repurchase of common stock executed but not settled	$	25,000		$	—

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)



	Three months ended June 30, 2026
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of March 31, 2026		115,498		$	1,155		$	1,110,430		$	2,840,848	$	(92,560	)	$	3,859,873
Common stock issued for employee stock-based awards		423			4			(4	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(132	)		(1	)		(18,641	)		—		—			(18,642	)
Compensation expense from stock-based awards		—			—			49,769			—		—			49,769
Repurchases of common stock, including excise tax		(5,072	)		(51	)		(530,569	)		—		—			(530,620	)
Net income		—			—			—			118,780		—			118,780
Gain on net investment hedges, net of tax		—			—			—			—		4,697			4,697
Foreign currency translation adjustment		—			—			—			—		(14,315	)		(14,315	)
Change in defined benefit pension items, net of tax		—			—			—			—		201			201
Balance as of June 30, 2026		110,717		$	1,107		$	610,985		$	2,959,628	$	(101,977	)	$	3,469,743



	Nine months ended June 30, 2026
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of September 30, 2025		119,536		$	1,195		$	1,822,590		$	2,083,607	$	(81,163	)	$	3,826,229
Common stock issued for employee stock-based awards		1,268			13			(13	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(432	)		(5	)		(71,265	)		—		—			(71,270	)
Common stock issued for employee stock purchase plan		99			1			13,161			—		—			13,162
Compensation expense from stock-based awards		—			—			208,522			—		—			208,522
Repurchases of common stock, including excise tax		(9,754	)		(97	)		(1,362,010	)		—		—			(1,362,107	)
Net income		—			—			—			876,021		—			876,021
Gain on net investment hedges, net of tax		—			—			—			—		10,853			10,853
Foreign currency translation adjustment		—			—			—			—		(32,200	)		(32,200	)
Change in defined benefit pension items, net of tax		—			—			—			—		533			533
Balance as of June 30, 2026		110,717		$	1,107		$	610,985		$	2,959,628	$	(101,977	)	$	3,469,743

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	Three months ended June 30, 2025
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of March 31, 2025		119,926		$	1,199		$	1,909,537		$	1,594,486	$	(118,759	)	$	3,386,463
Common stock issued for employee stock-based awards		451			4			(4	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(143	)		(1	)		(24,256	)		—		—			(24,257	)
Compensation expense from stock-based awards		—			—			37,373			—		—			37,373
Repurchases of common stock, including excise tax		(444	)		(4	)		(75,209	)		—		—			(75,213	)
Net income		—			—			—			141,328		—			141,328
Loss on net investment hedges, net of tax		—			—			—			—		(29,904	)		(29,904	)
Foreign currency translation adjustment		—			—			—			—		77,862			77,862
Change in defined benefit pension items, net of tax		—			—			—			—		(769	)		(769	)
Balance as of June 30, 2025		119,790		$	1,198		$	1,847,441		$	1,735,814	$	(71,570	)	$	3,512,883




	Nine months ended June 30, 2025
	Common Stock											Accumulated
	Shares			Amount			Additional Paid-In Capital			Retained Earnings		Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of September 30, 2024		120,155		$	1,202		$	1,965,307		$	1,349,610	$	(101,721	)	$	3,214,398
Common stock issued for employee stock-based awards		1,261			12			(12	)		—		—			—
Shares surrendered by employees to pay taxes related to stock-based awards		(425	)		(4	)		(77,574	)		—		—			(77,578	)
Common stock issued for employee stock purchase plan		89			1			13,306			—		—			13,307
Compensation expense from stock-based awards		—			—			171,948			—		—			171,948
Repurchases of common stock, including excise tax		(1,290	)		(13	)		(225,534	)		—		—			(225,547	)
Net income		—			—			—			386,204		—			386,204
Loss on net investment hedges, net of tax		—			—			—			—		(19,678	)		(19,678	)
Foreign currency translation adjustment		—			—			—			—		50,067			50,067
Change in defined benefit pension items, net of tax		—			—			—			—		(238	)		(238	)
Balance as of June 30, 2025		119,790		$	1,198		$	1,847,441		$	1,735,814	$	(71,570	)	$	3,512,883

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PTC Inc.

NOTES TO CON****DENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows as of the dates and for the periods indicated. The September 30, 2025 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements.

Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30.

Recently Adopted Accounting Pronouncements

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which expands the scope exceptions of the derivatives guidance and clarifies the guidance on share-based payments from a customer. Specifically, the ASU introduces a scope exception for contracts that are not exchange-traded and that have variables based on operations or activities specific to one of the parties of the contract. The ASU is effective for us in the first quarter of 2028, with early adoption permitted. We early adopted this standard prospectively in the second quarter of 2026. The adoption of this ASU did not have an impact on our consolidated financial statements and related disclosures.

Pending Accounting Pronouncements

Narrow-Scope Improvements for Interim Reporting

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. We expect the adoption to result in disclosure changes only.

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Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software by eliminating project stage-based capitalization and clarifying the probable-to-complete threshold to commence the capitalization of software costs. The ASU will be effective for us in the first quarter of 2029, with early adoption permitted. The standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Measurements of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The ASU will be effective for us in the first quarter of 2027, with early adoption permitted. We do not expect this standard to have a material impact on our consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. As clarified by ASU 2025-01, ASU 2024-03 will be effective for us for the year ended September 30, 2028. We expect the adoption to result in disclosure changes only.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU will be effective for us in the fourth quarter of 2026. We expect the adoption to result in disclosure changes only.

2. Revenue from Contracts with Customers

Receivables, Co**ntract Assets and Contract Liabilities


(in thousands)	June 30, 2026		September 30, 2025
Short-term receivables	$	824,107	$	1,001,085
Long-term receivables	$	420,719	$	378,941
Contract asset	$	13,780	$	11,044
Deferred revenue	$	712,527	$	827,065

During the nine months ended June 30, 2026, we recognized $710.5 million of revenue that was included in Deferred revenue as of September 30, 2025. The remainder of the change in the Deferred revenue balance was driven by additional deferrals, primarily from new billings, offset by a decrease of approximately $56 million related to the Kepware and ThingWorx divestiture and a decrease resulting from changes in foreign currency exchange rates.

Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of June 30, 2026 and September 30, 2025, our total revenue liability was $44.1 million and $39.7 million, respectively, primarily associated with the annual right to exchange on-premises subscription software.

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Remaining Performance Obligations (RPO)

Our contracts with customers include amounts allocated to performance obligations that will be satisfied and recognized as revenue at a later date. The value of RPO and timing of recognition may be impacted by several factors, including the performance obligation type, duration and timing of commencement, as well as foreign currency exchange rate fluctuations. As of June 30, 2026, RPO totaled $2,417.7 million, of which $712.5 million is recorded in Deferred revenue and $1,705.2 million is not yet recorded in the Consolidated Balance Sheets. Of the total, we expect to recognize approximately 54% over the next 12 months, 28% over the next 13 to 24 months, and the remaining amount thereafter.

Disaggregation of Revenue


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Recurring revenue(1)	$	576,011	$	613,583	$	1,976,667	$	1,739,443
Perpetual license		691		7,763		13,263		23,004
Professional services		23,347		22,591		70,247		82,984
Total revenue	$	600,049	$	643,937	$	2,060,177	$	1,845,431

(1)

Recurring revenue is comprised of on-premises subscription, perpetual support, SaaS, and hosting services revenue.

We report revenue by the following two product groups:


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Product lifecycle management (PLM)	$	356,970	$	403,722	$	1,280,640	$	1,153,331
Computer-aided design (CAD)		243,079		240,215		779,537		692,100
Total revenue	$	600,049	$	643,937	$	2,060,177	$	1,845,431

Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below.


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Americas	$	270,305	$	282,560	$	966,829	$	853,352
Europe		202,535		239,286		773,466		686,458
Asia Pacific		127,209		122,091		319,882		305,621
Total revenue	$	600,049	$	643,937	$	2,060,177	$	1,845,431

3. Stock-based Compensation

Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows:


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Cost of license revenue	$	61	$	176	$	267	$	282
Cost of support and cloud services revenue		4,086		4,122		13,548		12,092
Cost of professional services revenue		1,456		993		4,921		4,337
Sales and marketing		16,143		15,059		51,373		46,672
Research and development		15,043		17,788		49,115		48,334
General and administrative		22,593		15,894		66,624		49,678
Total stock-based compensation expense	$	59,382	$	54,032	$	185,848	$	161,395

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As of June 30, 2026 and September 30, 2025, we had liability-classified awards related to stock-based compensation based on a fixed monetary amount of $28.3 million and $51.3 million, respectively. The liability as of September 30, 2025 was settled via the issuance of shares in the first quarter of 2026.

4. Earnings per Share (EPS) and Common Stock

EPS

The following table presents the calculation for both basic and diluted EPS:


(in thousands, except per share data)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Net income	$	118,780	$	141,328	$	876,021	$	386,204
Weighted-average shares outstanding—Basic		114,677		119,913		117,401		120,106
Dilutive effect of restricted stock units		301		548		443		709
Weighted-average shares outstanding—Diluted		114,978		120,461		117,844		120,815
Earnings per share—Basic	$	1.04	$	1.18	$	7.46	$	3.22
Earnings per share—Diluted	$	1.03	$	1.17	$	7.43	$	3.20

There were 0.8 million and 0.1 million anti-dilutive shares for the three and nine months ended June 30, 2026, respectively. There were 0.4 million and 0.0 million anti-dilutive shares for the three and nine months ended June 30, 2025, respectively.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $2 billion of our common stock in the period October 1, 2024 through September 30, 2026 (the “current authorization”), and up to $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. The amount remaining under the current authorization for repurchases as of June 30, 2026 is set forth in Part II, Item 2 Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report.

On March 17, 2026, we entered into an accelerated share repurchase agreement ("ASR") with a major financial institution ("Bank") to repurchase $375 million of our outstanding common stock as a part of our existing share repurchase program. The ASR was funded with proceeds from the Kepware and ThingWorx divestiture. Upon execution of the ASR, we paid the Bank $375 million and received an initial delivery of 1.9 million shares, which represented 80% ($300 million) of the value of the ASR contract.

The remaining $75 million represented the amount held back by the Bank pending final settlement of the ASR, which occurred in June 2026 and resulted in the additional delivery of 0.8 million shares. The total shares repurchased under the ASR equaled $375 million divided by the average daily volume weighted-average price of our common stock during the term of the ASR less a fixed per-share discount. Settlement could have occurred in cash or shares at our election. We accounted for the ASR as an equity transaction; accordingly, this $75 million was recorded as a reduction to Additional paid-in capital in the second quarter of 2026.

In addition to the ASR repurchases described above, in the third quarter and first nine months of 2026, we repurchased 4.3 million shares for $525 million and 7.0 million shares for $975 million, respectively, through open market transactions. In the first nine months of 2026, we also paid $1.1 million in excise taxes related to share repurchases. In the third quarter and first nine months of 2025, we repurchased 0.4 million shares for $75 million and 1.3 million shares for $225 million, respectively, through open market transactions.

All shares repurchased are automatically restored to the status of authorized and unissued.

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5. Acquisitions and Divestitures

Acquisition and transaction-related costs in the third quarter and first nine months of 2026 totaled $2.9 million and $40.0 million, respectively, compared to $1.6 million and $2.4 million in the third quarter and first nine months of 2025, respectively. These costs are classified in General and administrative expense in the accompanying Consolidated Statements of Operations.

Kepware and ThingWorx Divestiture

On March 13, 2026, we sold our Kepware and ThingWorx businesses pursuant to an Asset Purchase Agreement dated November 5, 2025 with Parrot US Buyer, L.P., a Delaware limited partnership (“Purchaser”), an entity controlled by investment funds affiliated with TPG Global, LLC. Total consideration for the transaction was $530.8 million, of which $523.3 million was received as cash proceeds in the second quarter of 2026 and $7.5 million is expected to be received in 2026. Consideration is subject to final working capital and indebtedness adjustments.

Additional future contingent consideration of up to $125 million may be received by PTC in certain circumstances following a sale of the businesses by Purchaser. We have elected to defer the recognition of gains associated with contingent consideration unless and until they become realizable.

Goodwill was allocated to the sold businesses based on a relative fair value allocation of total goodwill. The assets and liabilities of the Kepware and ThingWorx businesses were classified as held for sale in the first quarter of 2026. Upon closing the transaction, we sold $68.2 million of net assets and recognized a gain on the sale of $462.6 million, which is included in Other income, net. This resulted in tax expense of $95.6 million included in our income tax provision in the nine months ended June 30, 2026.

In connection with this divestiture, we entered into a Transition Services Agreement with Purchaser, whereby we agreed to provide certain transition services for up to 12 months from the date of sale. Income under such agreement offsets the operating costs to provide these services and is recognized as a reduction of the related operating expenses.

6. Goodwill and Intangible Assets

During the third quarter of 2026, we completed our annual impairment test of goodwill, which was based on a qualitative assessment, and concluded that there was no impairment. A qualitative assessment is designed to determine whether we believe it is more likely than not that the fair values of our reporting units exceed their carrying values. A qualitative assessment includes a review of qualitative factors, including company-specific (financial performance and long-range plans), industry, and macroeconomic factors, and a consideration of the fair value of each reporting unit at the last valuation date.

Goodwill and acquired intangible assets consisted of the following:


(in thousands)	June 30, 2026						September 30, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill					$	3,398,303					$	3,493,316
Intangible assets with finite lives:
Purchased software	$	547,640	$	401,974	$	145,666	$	639,104	$	472,357	$	166,747
Capitalized software		22,877		22,877		—		22,877		22,877		—
Customer lists and relationships		1,088,385		480,308		608,077		1,149,262		505,202		644,060
Trademarks and trade names		31,822		19,766		12,056		38,179		24,323		13,856
Other		3,469		3,469		—		4,019		4,019		—
Total intangible assets with finite lives	$	1,694,193	$	928,394	$	765,799	$	1,853,441	$	1,028,778	$	824,663
Total goodwill and acquired intangible assets					$	4,164,102					$	4,317,979

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Changes in Goodwill were as follows:


(in thousands)
Balance, October 1, 2025	$	3,493,316
Acquisitions		1,782
Divestiture of businesses		(82,204	)
Foreign currency translation adjustment		(14,591	)
Balance, June 30, 2026	$	3,398,303

The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows:


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Amortization of acquired intangible assets	$	11,991	$	11,536	$	36,075	$	34,356
Cost of revenue		7,753		8,178		23,421		24,609
Total amortization expense	$	19,744	$	19,714	$	59,496	$	58,965

7. Fair Value Measurements

The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or

Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Money market funds, time deposits, and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are generally large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

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Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and September 30, 2025 were as follows:


(in thousands)	June 30, 2026
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	108,853	$	—	$	—	$	108,853
Forward contracts		—		2,138		—		2,138
Option contracts		—		2,927		—		2,927
	$	108,853	$	5,065	$	—	$	113,918
Financial liabilities:
Forward contracts		—		7,573		—		7,573
	$	—	$	7,573	$	—	$	7,573


(in thousands)	September 30, 2025
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents(1)	$	38,031	$	—	$	—	$	38,031
Forward contracts		—		6,007		—		6,007
Option contracts		—		6,228		—		6,228
	$	38,031	$	12,235	$	—	$	50,266
Financial liabilities:
Forward contracts		—		4,773		—		4,773
	$	—	$	4,773	$	—	$	4,773

(1)

Money market funds and time deposits.

Strategic Solar Energy Equity Investment

During the third quarter of 2026, we invested $184.7 million in a solar energy project, of which $50.1 million has been contributed as of June 30, 2026. As of June 30, 2026, the unamortized balance of the investment was $113.1 million included in Other assets on the Consolidated Balance Sheet. As of June 30, 2026, remaining investment commitments totaled $113.5 million and $21.1 million included in Accrued expenses and other current liabilities and Other liabilities, respectively, on the Consolidated Balance Sheet. These are expected to be paid in 2026 and 2027.

We have determined that this investment is a variable interest entity ("VIE"). Because we do not direct the activities that most significantly impact the economic performance of the project company, we are not the primary beneficiary. Therefore, the VIE is not consolidated within our financial statements. Our maximum exposure to the VIE is limited to our contributed capital and future capital commitments and a contingent deficit restoration obligation capped at 55% of our aggregate capital contributions, which would arise only upon liquidation of the VIE and only to the extent PTC has a deficit capital account at the time of liquidation.

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8. Derivative Financial Instruments

We enter into derivative transactions to manage our exposure to fluctuations in foreign exchange rates, specifically foreign currency forward contracts to manage our exposure related to monetary assets and liabilities denominated in foreign currencies and foreign exchange option contracts to manage our exposure related to forecasted cash flows. We do not enter into derivative transactions for trading or speculative purposes.

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:


(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	June 30, 2026		September 30, 2025		June 30, 2026		September 30, 2025
Derivative assets(1):
Forward contracts	$	34	$	2,871	$	2,104	$	3,136
Option contracts	$	—	$	—	$	2,927	$	6,228
Derivative liabilities(2):
Forward contracts	$	4,272	$	—	$	3,301	$	4,773

(1)

As of June 30, 2026 and September 30, 2025, current derivative assets are recorded in Other current assets in the Consolidated Balance Sheets.

(2)

As of June 30, 2026 and September 30, 2025, current derivative liabilities are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Non-Designated Hedges

We hedge our net foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, gains or losses on the underlying foreign-denominated balance are generally offset by the losses or gains on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in Other income, net.

We hedge our forecasted U.S. Dollar cash flows with foreign exchange option contracts to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These options have maturities of up to approximately fourteen months. We do not designate these foreign currency option contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into option contracts as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations may be partially offset by gains on the option contracts. Gains and losses on foreign exchange option contracts are included in Other income, net.

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As of June 30, 2026 and September 30, 2025, we had outstanding forward and option contracts not designated as hedging instruments with notional amounts equivalent to the following:


Currency Hedged (in thousands)	June 30, 2026		September 30, 2025
Euro / U.S. Dollar(1)	$	762,849	$	1,202,830
British Pound / U.S. Dollar		4,727		22,974
Israeli Shekel / U.S. Dollar		19,456		20,094
Indian Rupee / U.S. Dollar		74,490		53,465
Japanese Yen / U.S. Dollar(2)		12,971		131,284
Swiss Franc / U.S. Dollar		14,835		8,960
Swedish Krona / U.S. Dollar		18,770		21,568
New Taiwan Dollar / U.S. Dollar		14,404		23,098
All other		18,938		33,813
Total	$	941,440	$	1,518,086

(1)

As of June 30, 2026, $687.2 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $75.6 million relates to option contracts. As of September 30, 2025, $835.4 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $367.4 million relates to option contracts.

(2)

As of June 30, 2026, $1.4 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $11.6 million relates to option contracts. As of September 30, 2025, $41.9 million of the Japanese Yen to U.S. Dollar outstanding notional amount relates to forward contracts and $89.4 million relates to option contracts.

The following table shows the effect of our non-designated hedges on the Consolidated Statements of Operations for the three and nine months ended June 30, 2026 and June 30, 2025:


(in thousands)		Three months ended					Nine months ended
	Location of Gain (Loss)	June 30, 2026			June 30, 2025		June 30, 2026			June 30, 2025
Net realized and unrealized gain (loss), excluding the underlying foreign currency exposure being hedged	Other income, net	$	(1,886	)	$	4,021	$	(743	)	$	3,661

In the three and nine months ended June 30, 2026, total foreign currency losses, net were $0.6 million and $2.5 million, respectively. In the three and nine months ended June 30, 2025, total foreign currency gains were $1.1 million and $0.0 million, respectively.

Net Investment Hedges

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro and Japanese Yen functional subsidiaries. Net investment hedges partially offset the impact of Foreign currency translation adjustment recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro and Japanese Yen functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in Accumulated other comprehensive loss. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

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As of June 30, 2026 and September 30, 2025, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:


Currency Hedged (in thousands)	June 30, 2026		September 30, 2025
Euro / U.S. Dollar	$	508,428	$	480,198
Japanese Yen / U.S. Dollar		18,608		10,260
Total	$	527,036	$	490,458

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three and nine months ended June 30, 2026 and June 30, 2025:


(in thousands)		Three months ended					Nine months ended
	Location of Gain (Loss)	June 30, 2026		June 30, 2025			June 30, 2026		June 30, 2025
Gain (loss) recognized in Other comprehensive income (loss) ("OCI")	OCI	$	6,226	$	(39,628	)	$	14,386	$	(26,078	)
Gain (loss) reclassified from OCI to earnings	n/a	$	—	$	—		$	—	$	—
Gain recognized, excluded portion	Other income, net	$	1,528	$	1,743		$	5,054	$	4,072

Offsetting Derivative Assets and Liabilities

We have entered into master netting arrangements for our foreign exchange contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

The following table sets forth the offsetting of derivative assets as of June 30, 2026:


(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2026	Gross Amount of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
Foreign exchange contracts	$	5,065	$	—	$	5,065	$	(5,065	)	$	—	$	—

The following table sets forth the offsetting of derivative liabilities as of June 30, 2026:


(in thousands)	Gross Amounts Offset in the Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets
As of June 30, 2026	Gross Amount of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
Foreign exchange contracts	$	7,573	$	—	$	7,573	$	(5,065	)	$	—	$	2,508

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9. Income Taxes


(in thousands)	Three months ended						Nine months ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Income before income taxes	$	152,440		$	193,676		$	1,102,214		$	492,079
Provision for income taxes	$	33,660		$	52,348		$	226,193		$	105,875
Effective income tax rate		22	%		27	%		21	%		22	%

The effective tax rate for the three months ended June 30, 2026 was lower than the effective tax rate for the three months ended June 30, 2025, primarily due to changes in the geographic mix of income before taxes. For the three and nine months ended June 30, 2026, the provision for income taxes included $14.4 million of tax expense related to the Varian Medical Systems, Inc. v. Commissioner tax court ruling and a $7.2 million tax benefit related to a strategic solar energy investment. The nine months ended June 30, 2026 also included $95.6 million of tax expense related to the Kepware and ThingWorx divestiture and a $7.1 million income tax benefit related to the reversal of a prior-year tax charge associated with Internal Revenue Service (IRS) procedural guidance.

The effective tax rate for the three and nine months ended June 30, 2025 reflected increased tax expense associated with the IRS procedural guidance described below. Additionally, the nine months ended June 30, 2025 included a benefit of $10.4 million related to changes in tax reserves associated with prior years in foreign jurisdictions.

In 2024, we recorded a $14.4 million tax benefit for additional foreign tax credits that became available as a result of a U.S. Tax Court ruling in Varian Medical Systems, Inc. v. Commissioner, issued on August 26, 2024. The ruling addressed the U.S. tax treatment of deemed foreign dividends recognized during the transition year of the Tax Cuts and Jobs Act (our fiscal 2018). On April 8, 2026, the U.S. Tax Court granted summary judgment in favor of the IRS, and as a result, we reversed the previously recognized tax benefit.

During the nine months ended June 30, 2026, we recognized tax expense of $95.6 million related to the divestiture of the Kepware and ThingWorx businesses. This amount reflects a reduction from the $102.4 million tax expense recorded during the quarter ended March 31, 2026, resulting from updates to the estimated tax impact of the transaction.

In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In the quarter ended December 31, 2025, upon receiving consent from the IRS, we released the reserve related to the procedural guidance. As a result, we recognized a $7.1 million income tax benefit for the nine months ended June 30, 2026, primarily related to the reversal of the accrued interest and the associated effects on GILTI and FDII.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits.

As of June 30, 2026 and September 30, 2025, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $130.5 million ($85.2 million in Accrued income taxes and $45.3 million recorded in Other Liabilities) and $179.1 million ($28.7 million in Accrued income taxes and $150.4 million in Other liabilities), respectively.

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As of June 30, 2026 and September 30, 2025, we had unrecognized tax benefits of $50.9 million and $157.7 million, respectively. This decrease predominantly relates to the release of the reserve established in 2025 related to the IRS procedural guidance, primarily resulting in corresponding decreases to Deferred tax assets and the reserve for unrecognized tax benefits within Other liabilities. Additionally, this resulted in a $7.1 million net income tax benefit as described above. If all our unrecognized tax benefits as of June 30, 2026 were to become recognizable in the future, we would record a benefit to the income tax provision of $50.9 million, which would be partially offset by an increase in the U.S. valuation allowance of $6.0 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $1 million.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that became applicable to us beginning in 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning 2026.

Tax Benefits of Strategic Solar Energy Equity Investment

During the third quarter of 2026, we invested in a solar energy project as described in Note 7. Fair Value Measurements. We have elected to account for the investment using the proportional amortization method, under which the cost of the investment is amortized over the period that we expect to receive tax benefits from the project. Amortization of and tax benefits associated with the investment are presented within Provision for income taxes on the Consolidated Statement of Operations. The tax benefits associated with the investment reduce cash taxes paid and benefit operating cash flows. During the third quarter of 2026, we recognized $78.8 million of investment tax credits and other tax benefits, partially offset by $71.6 million of investment amortization.

10. Debt

As of June 30, 2026 and September 30, 2025, we had the following debt obligations:


(in thousands)	June 30, 2026			September 30, 2025
4.000% Senior notes due 2028	$	500,000		$	500,000
Credit facility revolver line(1)(2)		475,000			231,250
Credit facility term loan(1)(2)		450,074			468,750
Total debt		1,425,074			1,200,000
Unamortized debt issuance costs for the senior notes(3)		(1,759	)		(2,566	)
Total debt, net of issuance costs(4)	$	1,423,315		$	1,197,434

(1)

Unamortized debt issuance costs related to the credit facility were $2.7 million included in Other current assets and $2.1 million included in Other assets on the Consolidated Balance Sheet as of June 30, 2026 and $2.7 million included in Other current assets and $3.3 million included in Other assets on the Consolidated Balance Sheet as of September 30, 2025.

(2)

The stated maturity date under the credit facility on which both the revolver line and the term loan will mature and all amounts then outstanding will become due and payable is January 3, 2028. The term loan began amortizing in March 2024, with payments remaining of $6.3 million in 2026, $25.0 million in 2027, and $418.7 million in 2028.

(3)

As of June 30, 2026 and September 30, 2025, all unamortized debt issuance costs for the senior notes were included in Long-term debt on the Consolidated Balance Sheets.

(4)

Debt associated with the credit facility that was classified as short term was $25.1 million and $25.0 million as of June 30, 2026 and September 30, 2025, respectively.

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Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes). As of June 30, 2026, the total estimated fair value of the 2028 notes was approximately $490.0 million based on quoted prices for the notes on that date. We were in compliance with all the covenants for the 2028 notes as of June 30, 2026.

Credit Agreement

Our credit facility consists of (i) a $1.25 billion revolving credit facility, (ii) a $500 million term loan credit facility, and (iii) an incremental facility pursuant to which we may incur additional term loan tranches or increase the revolving credit facility. As of June 30, 2026, unused commitments under our revolving credit facility were $774.9 million and the amount available to borrow was $757.5 million. As of June 30, 2026, the fair value of our credit facility approximates its book value. PTC and certain foreign subsidiaries are eligible borrowers under the credit facility. As of June 30, 2026, $46.3 million was borrowed by an eligible foreign subsidiary borrower. We were in compliance with all financial and operating covenants of the credit facility as of June 30, 2026.

Loans under the credit facility bear interest at variable rates. As of June 30, 2026, the annual rate for borrowings outstanding was 5.0%. A quarterly revolving commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.175% to 0.325% per annum, based upon our total leverage ratio.

Interest

We incurred interest expense on our debt of $15.8 million and $48.4 million in the third quarter and first nine months of 2026, respectively, and $18.4 million and $60.1 million in the third quarter and first nine months of 2025, respectively. The average interest rate on borrowings outstanding was approximately 4.6% and 4.7% during the third quarter and first nine months of 2026, respectively, and 5.0% and 4.9% during the third quarter and first nine months of 2025, respectively.

11. Commitments and Contingencies

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements with our customers and business partners in the ordinary course of our business. Under such agreements, we typically indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products. Indemnification may also cover other types of claims, including claims relating to certain data breaches. These agreements typically limit our liability with respect to indemnification claims other than intellectual property infringement claims. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications during the term of the license. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards and, in the case of fixed price services, the agreed-upon specifications. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial.

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12. Segments

We operate as a single operating and reportable segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. The CODM evaluates financial performance and allocates resources based on consolidated results, including consolidated net income. The total assets of the segment are reported on the Consolidated Balance Sheets.

The following table presents revenue, significant expenses, and consolidated net income for our reportable segment:


(in thousands)	Three months ended				Nine months ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Revenue	$	600,049	$	643,937	$	2,060,177	$	1,845,431
Costs and expenses:
Cost of revenue, adjusted(1)		96,228		96,556		298,791		286,764
Operating expenses, adjusted(2)		255,302		262,210		792,581		782,856
Other segment items(3)		129,739		143,843		92,784		389,607
Consolidated net income	$	118,780	$	141,328	$	876,021	$	386,204

(1)

Cost of revenue, adjusted excludes stock-based compensation and amortization of acquired intangible assets.

(2)

Operating expenses, adjusted excludes stock-based compensation, amortization of acquired intangible assets, acquisition and transaction-related charges, and Impairment and other charges, net.

(3)

Other segment items include stock-based compensation; amortization of acquired intangible assets; acquisition and transaction-related charges; Impairment and other charges, net; Other income, net; and Provision for income taxes.

13. Subsequent Events

Share Repurchases and Borrowings under Credit Facility

We repurchased $273.7 million of our common stock in July 2026, financed primarily with $301.3 million of net borrowings under our credit facility.

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