Company: PTC
Filing Date: 2025-11-21
Form Type: 10-K
Source: 0001193125-25-291326
Chunk: 64

Company: PTC INC.
Filing Date: 2025-11-21
Form: 10-K
Item: Item 6
Chunk 64
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 licenses, support, cloud-based offerings, and professional services, each of which are accounted for as separate performance obligations with differing revenue recognition patterns referenced below. 

         Performance Obligation
          
         When Performance Obligation is Typically Satisfied

         Term-based subscriptions

         On-premises software licenses
          
         Point in Time: Upon the later of when the software is made available or the subscription term commences

         Support and cloud-based offerings (including SaaS)
          
         Over Time: Ratably over the contractual term; commencing upon the later of when the software is made available or the subscription term commences

         Perpetual software licenses
          
         Point in Time: When the software is made available

         Support for perpetual software licenses
          
         Over Time: Ratably over the contractual term

         Professional services
          
         Over Time: As services are provided
        
       Judgments and EstimatesOur contracts with customers for subscriptions typically include commitments to transfer term-based, on-premises software licenses bundled with support and/or cloud services. Significant judgment is used in determining the performance obligations related to these bundled products and services. On-premises software is determined to be a distinct performance obligation from support which is sold for the same term of the subscription. For subscription arrangements which include cloud services and on-premises licenses, we assess whether the cloud component is highly interrelated with the on-premises term-based software licenses. Other than a limited population of subscriptions, the cloud component is not currently deemed to be interrelated with the on-premises term software and, as a result, cloud services are accounted for as a distinct performance obligation from the software and support components of the subscription.Judgment is required to allocate the transaction price to each performance obligation. We use the estimated standalone selling price method to allocate the transaction price for items that are not sold separately. The estimated standalone selling price is determined using all information reasonably available to us, including market conditions and other observable inputs. The corresponding revenues are recognized as the related performance obligations are satisfied. Where subscriptions include on-premises software and support only, we determined that approximately 55% of the estimated standalone selling price for subscriptions is attributable to software licenses and approximately 45% is attributable to support for those licenses. Some of our subscription offerings include a combination of on-premises and cloud-based technology. In such cases, the cloud-based technology is generally considered distinct and receives an allocation of approximately 5% to 50% of the