PTC INC.
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
PTC$195.07+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-05.
0001193125-26-039347
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001193125-26-209869
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 115 current paragraphs.
69 unchanged; 27 reworded; 19 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Given the divestiture of our Kepware and ThingWorx businesses in Q2’26, we are also providing ARR excluding those divested businesses, which removes ARR attributable to those businesses from the applicable prior periods to facilitate meaningful period-to-period comparisons of our continuing business.
Current report
We completed the divestiture of our Kepware and ThingWorx businesses on March 13, 2026. We received $523 million upon closing of the transaction and recognized a $463 million gain on the sale. Refer to Note 5. Acquisitions and Divestituresfor additional detail.
Current report
ARR excluding divested businesses excludes ARR attributable to the Kepware and ThingWorx businesses from the prior‑year period to facilitate period‑to‑period comparison following the Q2'26 divestiture of those businesses.
Current report
PLMsoftware revenue growth in Q2'26 was driven by Windchill license revenue growth in the Americas. PLM software revenue growth in the first six months of FY'26 was driven by license revenue growth in Europe and the Americas, primarily in Windchill.
Current report
PLM ARR decreased 1% (3% constant currency) from Q2’25 to Q2'26, reflecting the impact of the Kepware and ThingWorx divestiture. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 11% (9% constant currency), primarily driven by Windchill and Codebeamer.
Current report
PLM ARR decreased 5% (5% constant currency) in the Americas and grew 4% (1% decrease in constant currency) in Europe and 3% (4% constant currency) in Asia Pacific. Excluding Kepware and ThingWorx from Q2'25 ARR, PLM ARR growth would have been 15% (9% constant currency) in Europe, 15% (16% constant currency) in Asia Pacific, and 7% (7% constant currency) in the Americas, primarily driven by Windchill in each region and Codebeamer in Europe and Asia Pacific.
Current report
$27 million in charges associated with the Kepware and ThingWorx divestiture (included in General and administrative);
Current report
a $19 million increase in compensation expense (excluding stock-based compensation expense), driven by headcount growth prior to the Kepware and ThingWorx divestiture, annual merit increases and severance costs; and
Current report
a $15 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants.
Current report
Operating expenses in the first six months of FY'26 increased compared to the first six months of FY'25, primarily due to the following:
Current report
$37 million in charges associated with the Kepware and ThingWorx divestiture (included in General and administrative);
Current report
a $25 million increase in compensation expense (excluding stock-based compensation expense and severance expense), driven by headcount growth prior to the Kepware and ThingWorx divestiture and annual merit increases;
Current report
a $17 million increase in stock-based compensation, driven by the timing and value of grants and the increase in the number of performance-based grants; and
Current report
a $7 million decrease in outside services, driven by FY'25 consulting services related to our go-to-market realignment and other corporate initiatives.
Current report
Other Income
Current report
Other income, net increased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to the Q2'26 recognition of a $463 million gain on the Kepware and ThingWorx divestiture.
Current report
Cash provided by investing activities in the first six months of FY'26 was driven by $523 million in consideration received for the divestiture of the Kepware and ThingWorx businesses.
Current report
Share Repurchases
Current report
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, and $2 billion of our common stock in the period October 1, 2026 through September 30, 2028. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. In Q2'26, we entered into an ASR to repurchase $375 million of our outstanding common stock as described in Note 4. Earnings per Share (EPS) and Common Stock. Final settlement of the ASR is expected to occur in Q3'26.
Removed paragraphs (6)
Previous report
In Q1'26, we entered into an agreement to sell our Kepware and ThingWorx businesses and classified related assets and liabilities as held for sale. We may receive up to $600 million upon closing of the transaction, subject to adjustments as set forth in the purchase agreement. For further detail, refer to Note 5. Acquisitions and Divestituresto the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. The transaction is expected to close on or before April 1, 2026. Our expected use of the net after-tax proceeds will follow our overall capital allocation strategy of returning excess cash to shareholders via share repurchases.
Previous report
PLMsoftware revenue growth in Q1'26 was primarily driven by Windchill revenue growth in Europe.
Previous report
PLM ARR grew 13% (9% constant currency) from Q1'25 to Q1'26, primarily driven by Windchill and Codebeamer. PLM ARR grew 24% (12% constant currency) in Europe, 15% (13% constant currency) in Asia Pacific, and 6% (6% constant currency) in the Americas.
Previous report
a $10 million increase in acquisition and transaction-related costs, driven by costs associated with the Kepware and ThingWorx divestiture; and
Previous report
Cash provided by investing activities in Q1'26 and Q1'25 was driven by inflows from the settlement of net investment hedges.
Previous report
We expect to use the net after-tax proceeds of the Kepware and ThingWorx divestiture to repurchase shares, in line with our long-term goal of returning excess cash to shareholders.
Reworded paragraphs (27)
Previous wording
Our business is based on a subscription model and 95% of our 2025 revenue was recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to support our customers and pursue mid-to-long-term growth opportunities.
Current wording
Our business is based on a subscription model and approximately 95% of our 2025 and 2026 year-to-date revenue was recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides better business predictability. This, in turn, enables us to make steady and sustained investments to support our customers and pursue mid-to-long-term growth opportunities.
Previous wording
Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, and the expected timing of closing the sale of the Kepware and ThingWorx businesses (the "divestiture"), are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, the effects of import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; our investments in our software solutions, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if customers are slower to adopt those solutions than we expect or if they adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the divestiture may not be consummated when or as we expect if, among other factors, regulatory approvals under applicable laws and regulations are not received when or as we expect, or if other closing conditions are not satisfied when or as we expect or are waived; the future thresholds upon which the additional contingent consideration of up to $125 million related to the divestiture would become payable may not be achieved; other uses of cash or our credit facility limits could limit or preclude the return of excess cash and the net proceeds of the divestiture to shareholders by way of share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected are described below th…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Statements in this document that are not historic facts, including statements about our future operating, financial and growth expectations, potential stock repurchases, and the anticipated benefits of the sale of the Kepware and ThingWorx businesses (the “divestiture”) are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include: the macroeconomic and/or global manufacturing climates may not improve or may deteriorate due to, among other factors, the effects of import tariffs, threats of additional and reciprocal import tariffs, global trade and geopolitical tensions and uncertainty, including the recent military conflict in Iran, volatile foreign exchange rates, high interest rates or increases in interest rates, inflation, and tightening of credit standards and availability, any of which could cause customers to delay or reduce purchases of new software, adopt competing software solutions, reduce the number of subscriptions they carry, or delay payments to us, which would adversely affect our ARR (Annual Run Rate) and/or financial results and cash flow and growth; our investments in our software solutions, including the integration of artificial intelligence (AI) capabilities into our software solutions, may not drive expansion of those solutions and/or generate the ARR and/or cash flow we expect if those capabilities are not made available when or as we expect, if customers are slower to adopt those solutions than we expect, or if customers adopt competing solutions; customers may not build the product data foundations essential for the AI-driven transformation of their business when or as we expect, which could adversely affect our ARR and/or financial results and cash flow and growth; our go-to-market realignment and related initiatives may not generate the ARR and/or financial results or cash flow when or as we expect; the proceeds we receive under the Transition Services Agreement entered into in connection with the divestiture may be lower than expected and/or may not offset our expenses and/or the cash flow impact of the divestiture to the extent expected; the divestiture and/or performance of the Transition Services Agreement may disrupt our business to a greater extent than we expect; other uses of cash or our credit facility limits could limit or preclude the return of excess cash to shareholders by way of share repurchases, or could change the amount and timing of any share repurchases; and foreign exchange rates may differ materially from those we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including changes to tax laws in the U.S. and other countries and the geographic mix of our revenue, expenses, and profits. Other risks and uncertainties that could cause actual results to differ materially from those projected…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
ARR grew 13% (8% constant currency) to $2.49 billion as of the end of Q1’26 compared to Q1’25.
Current wording
ARR grew 3% (1% constant currency) to $2.36 billion as of the end of Q2’26 compared to Q2’25, with growth impacted by the Q2'26 divestiture of Kepware and ThingWorx. Excluding the divested businesses from Q2'25 ARR, ARR growth would have been 11% (8.5% constant currency).
Previous wording
Cash provided by operating activities grew 13% to $270 million in Q1'26 compared to Q1'25. Free cash flow grew 13% to $267 million in Q1'26 compared to Q1'25. In Q1'26, we made $10 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q1'26, we repurchased $200 million of our outstanding shares.
Current wording
Cash provided by operating activities grew 14% to $321 million in Q2'26 compared to Q2'25. Free cash flow grew 14% to $318 million in Q2'26 compared to Q2'25. In Q2'26, we made $5 million of divestiture-related payments. Our cash flow growth is attributable to resilient top-line growth due to our subscription business model and operational discipline. In Q2'26, we used $626 million to repurchase outstanding shares, including $375 million paid upon entry into an Accelerated Share Repurchase agreement (ASR).
Previous wording
Revenue grew 21% (19% constant currency) to $686 million in Q1'26 compared to Q1'25, driven by growth in license revenue due to the higher total value and longer average duration of renewal contracts that commenced in the period. Operating margin grew by approximately 1180 basis points in Q1'26 compared to Q1'25, reflecting higher revenue as well as continued operating discipline. Diluted earnings per share grew 104% to $1.39 in Q1'26 compared to Q1'25, driven by revenue growth.
Current wording
Revenue grew 22% (15% constant currency) to $774 million in Q2'26 compared to Q2'25, reflecting the value and duration of contracts that commenced in the period. Operating margin grew by approximately 310 basis points in Q2'26 compared to Q2'25, reflecting higher revenue and continued operating discipline, offset by the impact of divestiture-related charges of $27 million. Diluted earnings per share grew 270% to $4.98 in Q2'26 compared to Q2'25, primarily driven by the Q2'26 recognition of a $360 million gain, net of tax on the Kepware and ThingWorx divestiture.
Previous wording
If Q1'26 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $6 million, revenue would have been higher by $4 million, and expenses would have been higher by $1 million. If Q1'25 reported results were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $102 million, revenue would have been higher by $16 million, and expenses would have been higher by $6 million.
Current wording
If reported results for the six months ended March 31, 2026 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $23 million, revenue would have been higher by $3 million, and expenses would have been materially consistent. If reported results for the six months ended March 31, 2025 were converted into U.S. Dollars using the rates in effect as of September 30, 2025, ARR would have been higher by $68 million, revenue would have been higher by $50 million, and expenses would have been higher by $17 million.
Previous wording
Under ASC 606, the volume, mix, and duration of contract types (support, SaaS, on-premises subscription) starting or renewing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period. We recognize revenue for the license portion of on-premises subscription contracts when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. We expect that over time a higher portion of our revenue will be recognized ratably as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS. Given the different mix, duration and volume of new and renewing contracts in any period, year-over-year or sequential revenue can vary significantly.
Current wording
Under ASC 606, the value, mix, and duration of contract types (support, SaaS, on-premises subscription) commencing in any given period can have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period over period. We recognize revenue for the license portion of on-premises subscription contracts when we deliver the licenses to the customer, typically on the start date, and we recognize revenue on the support portion of on-premises subscription contracts and stand-alone support contracts ratably over the term. Revenue from our cloud services (primarily SaaS) contracts is recognized ratably. Over time, as we expand our SaaS offerings, release additional cloud functionality into our products, and migrate customers from on-premises subscriptions to SaaS, a higher portion of our revenue would be recognized ratably. Given the different value, mix, and duration of contracts commencing in any period, year-over-year or sequential revenue can vary significantly.
Previous wording
Software revenue growth in Q1'26 was driven by license revenue growth, which reflects the higher total value and longer average duration of contracts that renewed in the current-year period.
Current wording
Software revenue growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was driven by license revenue growth, which was driven by the value and duration of contracts that commenced in the period.
Previous wording
Support and cloud services revenue growth in Q1'26 was driven by growth in both PLM and CAD.
Current wording
Support and cloud services revenue growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was mainly driven by growth in both CAD and PLM.
Previous wording
Professional services revenue decreased in Q1'26 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Current wording
Professional services revenue decreased in Q2'26 and the first six months of FY'26 as we continue to execute on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Previous wording
CADsoftware revenue growth in Q1'26 was driven by Creo revenue growth in the Americas and Europe.
Current wording
CADsoftware revenue growth in Q2'26 and the first six months of FY'26 was driven by Creo license revenue growth in the Americas.
Previous wording
CAD ARR grew 13% (8% constant currency) from Q1'25 to Q1'26, primarily driven by Creo. CAD ARR grew 20% (7% constant currency) in Europe, 12% (10% constant currency) in Asia Pacific, and 7% (7% constant currency) in the Americas.
Current wording
CAD ARR grew 10% (8% constant currency) from Q2’25 to Q2’26, primarily driven by Creo. CAD ARR grew 13% (7% constant currency) in Europe, 10% (11% constant currency) in Asia Pacific, and 8% (7% constant currency) in the Americas, primarily driven by Creo in each region.
Previous wording
License gross margin growth in Q1'26 was in line with license revenue growth. Cost of license revenue grew in Q1'26 compared to Q1'25, primarily due to higher royalty expenses.
Current wording
License gross margin growth in Q2'26 and the first six months of FY'26 was in line with license revenue growth. Cost of license revenue was higher in the first six months of FY'26 compared to the first six months of FY'25, primarily due to higher royalty expenses.
Previous wording
Support and cloud services gross margin growth in Q1'26 was in line with support and cloud services revenue growth. Cost of support and cloud services revenue grew 11% in Q1'26 compared to Q1'25, primarily due to increasing compensation-related costs and cloud and software subscription-related costs as the business grows.
Current wording
Support and cloud services gross margin growth in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods was in line with support and cloud services revenue growth. Cost of support and cloud services revenue increased 9% and 10% in Q2'26 and the first six months of FY'26, respectively, compared to the corresponding FY'25 periods, primarily due to higher cloud and software subscription-related costs and compensation-related costs.
Previous wording
Professional services gross margin decreased in Q1'26 compared to Q1'25, primarily driven by a sharper decrease in professional services revenue than in professional services expense. The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Current wording
Professional services gross margin decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods, primarily due to a sharper decrease in professional services revenue than in professional services expense. The decreases in professional services revenue and costs are due to our continued execution on our strategy of leveraging partners to deliver services rather than contracting to deliver services ourselves.
Previous wording
Total headcount increased 4% between Q1’25 and Q1’26.
Current wording
Total headcount decreased 4% between Q2’25 and Q2’26 due to the Kepware and ThingWorx divestiture.
Previous wording
a $6 million increase in travel-related expenses;
Current wording
a $7 million increase in travel-related expenses;
Previous wording
a $6 million decrease in compensation expense (including stock-based compensation), mainly driven by severance in Q1'25 related to the go-to-market realignment (which was primarily included in Sales and marketing).
Current wording
a $14 million decrease in severance costs primarily related to our FY'25 go-to-market realignment (which was mainly included in Sales and marketing); and
Previous wording
Interest expense in both Q1'26 and Q1'25 includes interest on our revolving credit facility, term loan, and our senior notes due in 2028. Interest expense in Q1'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q1'26 compared to Q1'25 due to lower debt balances.
Current wording
Interest expense in FY'26 and FY'25 includes interest on our revolving credit facility, term loan, and senior notes due in 2028. Interest expense in Q2'25 and the first six months of FY'25 also included interest on our senior notes due in 2025, which were redeemed in Q2'25. Interest expense decreased in Q2'26 and the first six months of FY'26 compared to the corresponding FY'25 periods due to lower debt balances and lower interest rates.
Previous wording
The effective tax rate for Q1'26 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. The effective tax rate for Q1’26 also reflected a net income tax benefit of $7 million related to IRS procedural guidance, as described below. Q1’25 included a benefit of $5 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.
Current wording
The effective tax rate for the first six months of FY'26 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. For Q2'26 and the first six months of FY'26, the provision for income taxes includes tax expense of $102 million on the gain on sale of $463 million related to the Kepware and ThingWorx divestiture. The effective tax rate for the first six months of FY'26 also reflected a net income tax benefit of $7 million related to IRS procedural guidance, as described below. The first six months of FY'25 included a benefit of $10 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction.
Previous wording
In Q1’26, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In Q1’26, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024.
Current wording
In the first six months of FY'26, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In Q1'26, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024.
Previous wording
Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. A significant portion of our cash is generated and held outside the U.S. As of December 31, 2025, we had cash and cash equivalents of $23 million in the U.S., $101 million in Europe, $69 million in Asia Pacific (including India) and $17 million in other countries. We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash inflows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
Current wording
Due to the stability of our subscription model and consistency of annual, up-front billing, we aim to maintain a low cash balance. Cash balances are higher as of Q2'26 compared to Q4'25, reflecting the timing of expected tax payments and payment of divestiture-related charges associated with the Kepware and ThingWorx divestiture. A significant portion of our cash is generated and held outside the U.S. As of March 31, 2026, we had cash and cash equivalents of $27 million in the U.S., $269 million in Europe, $122 million in Asia Pacific (including India) and $21 million in other countries. We have substantial cash requirements in the U.S. but believe that the combination of our existing U.S. cash and cash equivalents, cash available under our revolving credit facility, future U.S. operating cash inflows, and our ability to repatriate cash to the U.S. will be sufficient to meet our ongoing U.S. operating expenses and known capital requirements.
Previous wording
Cash provided by operating activities increased $31 million in Q1'26 compared to Q1'25. Growth was driven by higher collections and lower vendor disbursements, partially offset by higher tax payments and higher salary and related payments. Additionally, Q1'26 included $10 million of divestiture-related payments.
Current wording
Cash provided by operating activities increased $71 million in the first six months of FY'26 compared to the same period in FY'25. Growth was driven by higher collections, partially offset by higher tax payments and higher payroll and related payments. Additionally, the first six months of FY'26 included $15 million of divestiture-related payments.
Previous wording
Cash used in financing activities in Q1'26 included $200 million of repurchases of common stock. Cash used in financing activities in Q1'25 included net payments of $205 million on our credit facility and $75 million of repurchases of common stock.
Current wording
Cash used in financing activities in the first six months of FY'26 was driven by $826 million of repurchases of common stock, including $375 million associated with the ASR entered into in Q2'26. Cash used in financing activities in the first six months of FY'25 included net payments of $360 million on our outstanding debt, including the redemption of our 2025 senior notes primarily using a draw on our credit facility, and $150 million of repurchases of common stock.
Previous wording
As of December 31, 2025, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of December 31, 2025, the annual rate for borrowings outstanding under the credit facility was 5.2%.
Current wording
As of March 31, 2026, we were in compliance with all financial and operating covenants of the credit facility and the note indenture. As of March 31, 2026, the annual rate for borrowings outstanding under the credit facility was 5.1%.
Previous wording
In Q1'26, we recognized a $0.8 million financing charge related to a debt commitment agreement associated with our anticipated divestiture of the Kepware and ThingWorx businesses.
Current wording
In Q2'26, we recognized gains of $462.6 million on the sale of the Kepware and ThingWorx businesses and $2.0 million related to the finalization of contingent consideration associated with the FY'22 sale of a portion of our PLM services business. In Q1'26, we recognized a $0.8 million financing charge related to a debt commitment agreement associated with our anticipated divestiture of the Kepware and ThingWorx businesses.
Previous wording
Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in Q1'25, adjustments exclude a $5.4 million benefit related to the tax impact of tax reserves related to prior years in a foreign jurisdiction.
Current wording
Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. Additionally, in Q2'25, adjustments exclude a $4.9 million benefit related to the tax impact of tax reserves related to prior years in foreign jurisdictions, of which $4.2 million was a non-cash benefit. In the first six months of FY'25, adjustments exclude a $10.4 million benefit related to the tax impact of tax reserves related to prior years in a foreign jurisdiction.