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Blueprint

May 22,
2017

By EDGAR

Securities
and Exchange Commission

100 F
Street, N.E.

Washington,
DC 20549

Attention: Kathleen
Collins, Accounting Branch Chief

Re: PTC Inc.

Form
10-K for the Fiscal Year Ended September 30, 2016

Filed
November 18, 2016

File
No. 000-18059

Ladies
and Gentlemen:

This
letter is submitted in response to Kathleen Collins’ letter
dated May 8, 2017 setting forth the comments of the staff of the
Securities and Exchange Commission (the “Staff”)
regarding the Form 10-K filed November 18, 2016 (the
“2016 Form 10-K”) by PTC Inc. (the
“Company”). Please find our responses to the
Staff’s comments below. For your convenience, the comments in
Ms. Collins’ letter are restated below, followed by our
response.

Form 10-K for the Fiscal Year Ended September 30, 2016

Item 15. Exhibits and Financial Statement Schedules

Consolidated Statements of Operations, page F-4

1.

In
your response to prior comment 1 you provide the historical gross
margins for “license and subscription” and
“support” to explain why you believe it is appropriate
to combine all costs, excluding professional services, into one
cost of revenue line item. While we understand that you no longer
include such a breakdown in your consolidated statements of
operations, please provide us with similar gross margin information
for fiscal 2016 and to date in fiscal 2017. In this regard, we note
that the license and subscription margins decreased from 88% in
fiscal 2014 to 85% in fiscal 2015. If there are further reductions
in such margins, please explain the reasons for such change. For
example, to the extent that the margins for your subscription
products are impacting the software margins, please revise to
include a discussion of such impact in MD&A. Also, while you
state that the same group of individuals provides support for both
license and subscription products, tell us whether you are able to
apply a reasonable methodology to separately reflect the costs of
these revenue streams to the extent that the margins differ
significantly.

Response:

License
and subscription gross margins were approximately 76% in 2016 and
78% to date in 2017. Support gross margins were approximately 87%
in 2016 and 85% to date in 2017. These margins are based on costs
as internally reported and do not include an allocation of support
costs to subscription.

License
and subscription margins decreased in 2016 and to date in 2017,
compared to 2015, due to a higher mix of subscription sales, which
has caused perpetual license revenue to decrease as customers move
from perpetual licenses to subscription licenses. (As reported,
perpetual license revenue decreased 39% in 2016 compared to 2015
and decreased 29% in the first six months of 2017 compared to the
first six months of 2016.) We have discussed this effect, and the
fact that margins and earnings have decreased and will continue to
decrease as a result of the subscription transition, in our 2016
Annual Report on Form 10-K and our 2017 Quarterly Reports on
Form 10-Q.

We
disclosed the following in MD&A on page 16 of our 2016
Annual Report (and we made similar disclosures on page 25 of
each of our Quarterly Reports for the first and second quarters of
fiscal 2017 ended December 31, 2016 and April 1, 2017,
respectively):

“Subscription

Historically, the
majority of our software licenses were sold as perpetual licenses,
under which customers own the software license and revenue is
recognized at the time of sale. We began offering subscription
licensing for our core Solutions Group products in 2015 and
expanded our subscription program in 2016. Under a subscription,
customers pay a periodic fee to license our software and access
technical support over a specified period of time. As part of our
expanded subscription program, we also launched a program for our
existing customers to convert their support contracts to
subscription contracts. A number of customers converted their
support contracts to subscriptions in 2016, and we expect there
will be continued opportunities to convert existing support
contracts to subscription contracts in 2017 and beyond due to the
renewal cycles of certain of those contracts.

In
2016, 56% of our bookings were sold as subscriptions, compared to
17% in 2015. We expect that in 2017 a significant majority of our
license and subscription bookings could be subscription. The
transition to a subscription licensing model has had, and will
continue to have, an adverse impact on revenue, operating margin
and EPS growth relative to periods in which we primarily sold
perpetual licenses, until the transition of our customer base to
subscription is completed.”

We
have also disclosed the effect of the decline in perpetual license
revenue on gross margin in MD&A in our filings for 2016 and
2017 to date, as follows:

“Gross
margin as a percentage of total revenue in 2016 compared to 2015
reflects lower software margins due to lower perpetual license
revenue.”

(Page 20
of our 2016 Form 10-K)

“Gross margin as a percentage of total
revenue in the first quarter of 2017 compared to the first quarter
of 2016 reflects lower perpetual license
revenue.”

(Page 30 of our First Quarter 2017 Form 10-Q)

“Gross
margin as a percentage of total revenue in the second quarter and
first six months of 2017 compared to the second quarter and first
six months of 2016 reflects lower perpetual license revenue and an
increase in cloud services revenue, which has lower margins than
perpetual license, subscription and support
revenue.”

(Page 31 of our Second Quarter 2017 Form 10-Q)

We have also disclosed in MD&A
the reasons for material
changes in cost of software revenue. For example, we made the
disclosures set forth below in our recent
filings.

“In
the first quarter 2017, compared to the first quarter of 2016,
total compensation, benefit costs and travel costs increased $4.2
million (21%) primarily as a result of more headcount supporting
our cloud services business.”

(Page 31 of our First Quarter 2017 Form 10-Q)

“In
the second quarter and first six months of 2017 compared to the
second quarter and first six months of 2016, total compensation,
benefit costs and travel expenses increased 20% ($4.0 million) and
20% ($8.2 million), respectively, primarily as a result of more
headcount supporting our cloud services
business.”

(Page 32 of our Second Quarter 2017 Form 10-Q)

For
future filings, we will develop a reasonable allocation methodology
to allocate a portion of support costs to the cost of license and
subscription and will report cost
of license and subscription revenue and cost of support revenue, and the
associated margins, separately. We
will continue to discuss the reasons for changes in our margins and
costs in MD&A.

2.

We note that prior
to fiscal 2016, you separately presented cost of support revenue in
your statement of operations. Considering the related service
revenues are greater than 10% of total revenue and as the cost of
revenue information appears to be readily available, please revise
to separately present the related cost of support revenue in your
consolidated statement of operations. We refer you to Item 5-03(b)
of Regulation S-X.

Response:

As discussed above in our response to your first
comment, in future filings we will present cost of support revenue
separately from cost of license and
subscription revenue in our
consolidated statement of operations.

* * * *
* * *

If you
have any questions, please do not hesitate to call me at (781)
370-5133.

Very
truly yours,

PTC
INC.

/s/Ronald
Van Houwelingen

Ronald
Van Houwelingen

Corporate
Vice President, Finance