PTC Earnings: Strong Quarter, but Current Macro Environment a Near-Term Headwind

Narrow-moat PTC reported solid second-quarter results, which were above our estimates for the top and bottom lines. The full-year revenue and profitability outlook was raised slightly, signaling that the near-term demand for digital transformation remains strong. We view PTC’s consistent pipeline velocity and steady execution as encouraging, with management noting that there was no material change in customer behavior entering the second half, although management did decrease their ARR guidance, which signaled to us that some pressure on demand is possible. We maintain our fair value estimate of $179 and see the stock as mildly undervalued.