What were the key takeaways from Progress Software’s earnings call?

What does Progress Software do and what are its main business segments?

What is the revenue and EPS growth rate for Progress Software year over year?

What is Progress Software's gross profit margin?

What factors drove the changes in Progress Software's revenue and profit?

Did Progress Software beat or miss consensus estimates last quarter?

What is Progress Software's latest dividend and current dividend yield?

What is the market's earnings forecast for Progress Software next quarter?

- **Record Fiscal Year**: FY25 revenue of $978M (+30% YoY) and EPS of $5.72, exceeding guidance by $14M revenue and 6% operating income.
- **AI-Driven Growth**: 100% net retention rate, 2% ARR growth, and $852M ARR, with AI innovations like agentic RAG and generative CMS driving customer loyalty.
- **Strong Financial Health**: Q4 EPS of $1.51 (vs. $1.35 high-end guidance), $247M FY25 free cash flow, and $202M remaining under share buyback program.
- **FY26 Outlook**: Targets $1B revenue, 39% operating margin, and $320M unlevered free cash flow, with disciplined debt repayment to reduce leverage to 2.7x.
- **AI Market Perspective**: CEO dismisses short-term AI disruption fears, emphasizing Progress' role as a trusted infrastructure partner in an AI-driven world.

**【Management Opening Remarks】**
- CEO Yogesh Gupta highlighted FY25 as Progress' strongest year, with $978M revenue (+30% YoY) and EPS of $5.72 (+16% YoY), driven by ShareFile integration and AI-driven customer projects.
- CFO Anthony Folger emphasized strong cash flow ($247M FY25) and debt repayment plans, with $202M remaining under share repurchase authorization.

**【CEO Summary Section】**
- FY25 ARR reached $852M (+2% YoY), with 100% net retention rate and 2% ARR growth across multiple products.
- AI innovations, such as agentic RAG and generative CMS, drove customer recommitment, exemplified by a Fortune 50 agriculture company leveraging Progress' data platform for $10M+ value.
- FY26 guidance targets $1B revenue and 39% operating margin, with $320M unlevered free cash flow at midpoint.
- Expansion in Costa Rica and internal AI adoption for cost efficiency (e.g., 4% voluntary attrition rate).

**【CFO Financial Commentary】**
- Q4 revenue: $253M (+18% YoY), EPS: $1.51 (vs. $1.35 high-end guidance), driven by ShareFile and OpenEdge outperformance.
- FY25 free cash flow: $247M (+16% YoY), with $40M Q4 share buybacks and $105M FY25 total.
- FY26 outlook: $966M-$1B revenue, 39% operating margin, and $260M-$274M adjusted free cash flow.
- Debt repayment plan to reduce net leverage to 2.7x by FY26 end, supporting M&A flexibility.

**【Q&A Key Highlights】**
- **AI Impact on Software**: CEO notes long-term AI disruption fears are overblown; businesses prioritize stable, mission-critical apps over DIY solutions. Progress' focus on AI-enabled infrastructure (e.g., data governance, workflow automation) positions it as a trusted partner.
- **Net Retention Rate**: 100% sustained due to broad-based ARR growth, though AI monetization is early-stage. CFO expects similar ARR growth in FY26.
- **Free Cash Flow Linearity**: CFO anticipates no significant changes in seasonality, with Q4 2025 cash flow boosted by back-end bookings.
- **M&A Strategy**: Selective focus on infrastructure software with stable installed bases; recent Nuclia acquisition adds AI functionality to products.
- **Contract Renewals**: FY26 guidance assumes minimal impact from multiyear renewals, aligning revenue growth with ARR trajectory.


Progress Software Corporation (PRGS) Q4 2025 Earnings Call Transcript

- **Record Q3 Performance**: $250M revenue, 40% operating margin, and 47% ARR growth highlight strong execution and AI-driven demand.
- **ShareFile Success**: AI features in ShareFile are driving 3,000+ customer adoptions and exceeding ARR growth targets.
- **AI Expansion Opportunities**: Cross-sell of Agentic RAG with existing products and 30%+ developer efficiency gains in DevTools are key growth drivers.
- **Capital Discipline**: $65M share buybacks YTD and $40M debt repayment, with flexibility to adjust based on market conditions.
- **M&A Pipeline**: $200M added to repurchase authorization, targeting SaaS and infrastructure software with GenAI synergies.

**【CEO Summary Section】**
- **Q3 Financial Highlights**: Revenue of $250 million, EPS of $1.50, and operating margin of 40%, all exceeding guidance. ARR grew 47% YoY to $849 million, with net retention rate at 100%.
- **ShareFile Integration Success**: AI features like the document assistant are driving adoption, with 3,000+ customers using the AI-powered secure share recommender. ShareFile ARR growth exceeded expectations.
- **AI-Driven Growth**: Customers are adopting GenAI capabilities across products (e.g., MarkLogic 12, Agentic RAG) to extract insights from data. OpenEdge MCP Connector for ABL is seeing strong early adoption.
- **Capital Allocation**: Repurchased $15 million in Q3 (total $65 million YTD) and repaid $40 million debt, with $200 million added to share repurchase authorization.

**【CFO Financial Commentary】**
- **Revenue and Profitability**: Q3 revenue up 40% YoY, operating income $99 million (+25% YoY), and free cash flow $74 million (+29% YoY). FY2025 guidance raised to $975-981 million revenue and $5.50-5.56 EPS.
- **Balance Sheet Strength**: Ended Q3 with $99 million cash and $1.4 billion debt, net leverage 3.5x. Revolver expanded to $1.5 billion, providing flexibility for M&A.
- **Expense Management**: R&D maintained at 18% of revenue, with cost control driving margin expansion.

**【Q&A Key Highlights】**
- **AI Impact on NRR**: CEO emphasized AI adoption is improving net retention through product upgrades (e.g., higher-edition DevTools with AI coding assistants). Expansion via edition upgrades is a key pricing lever.
- **ShareFile Integration**: Surprises included strong customer loyalty and seamless system migration. AI adoption in ShareFile is driving organic growth beyond initial expectations.
- **M&A Strategy**: Focus on SaaS and infrastructure software with high-margin synergies. Agentic RAG technology is a key differentiator for acquisitions.
- **Gross Margin Trends**: SaaS mix growth was offset by margin expansion in legacy products, resulting in stable gross margins.


Progress Software Corporation (PRGS) Q3 2025 Earnings Call Transcript

- **Revenue Growth**: Q2 revenue up 36% YoY to $237M, ARR +46% to $838M, driven by OpenEdge and ShareFile AI expansions.
- **Strategic AI Investment**: $20M Nuclia acquisition to integrate RAG AI across product portfolio, with 3.5x faster document processing in ShareFile.
- **Financial Strength**: Operating margin 40%, EPS beat by $0.06; FY25 guidance raised with free cash flow $228-240M.
- **Operational Efficiency**: AI-driven cost savings in R&D, IT, and customer support; DSO normalization expected in H2 post-ShareFile integration.

**【CEO Opening Remarks】**
- Announced $20M acquisition of Nuclia, a SaaS AI platform for genAI and RAG capabilities, to accelerate R&D and customer retention.
- Q2 revenue $237M (+36% YoY), ARR $838M (+46% YoY), net retention 100%, operating margin 40%.
- Highlighted OpenEdge wins with biotech, pharma, and European retailers; ShareFile AI features driving 3.5x faster document collection.
- Integrated AI into internal operations (e.g., AI coding tools, predictive analytics) to reduce costs and improve efficiency.

**【CFO Financial Commentary】**
- Q2 GAAP EPS $1.40 vs. guidance high of $1.34, driven by $40M debt repayment and $20M share buybacks.
- Operating expenses $142M (+31% YoY) due to ShareFile integration; DSO 53 days (up from 48 days) due to billing transition.
- Q3 guidance: Revenue $237-243M, EPS $1.28-1.34; FY25 updated: Revenue $962-974M, operating margin 38-39%, free cash flow $228-240M.

**【Q&A Highlights】**
- Nuclia to be integrated across products (ShareFile, OpenEdge, Sitefinity); no material financial impact in FY25.
- CFO clarified Q2 free cash flow underperformance due to ShareFile billing transition, expects normalization in H2.
- Emphasized disciplined M&A (e.g., $20M Nuclia vs. prior $200M+ deals) and focus on reducing net leverage to 3.4x.

Progress Software Corporation (PRGS) Q2 2025 Earnings Call Transcript

- **ARR Growth Supercharged**: 48% YoY ARR rise to $836M, driven by ShareFile and core products. SaaS mix jumps to 30%.
- **Debt Paydown Accelerated**: $30M debt repayment in Q1, total FY25 paydown of $160M. Share buybacks cut to $70M.
- **M&A Playbook Updated**: Targeting SaaS-native assets with low 80s% gross margins. New shelf registration for agile M&A.
- **AI Investment Payoff**: Appointed Chief AI Officer; early wins in financial services, streaming, and industrial machinery.
- **Financial Strength**: EPS $1.31 (vs. $1.08 high end), operating margin 39%. FY25 EPS guidance raised to $5.25-$5.37.


**【CEO Key Highlights】**
- **ARR Growth**: Q1 ARR reached $836M, up 48% YoY (3.4% pro forma), driven by ShareFile and core products like OpenEdge and DevTools. Net retention rate exceeded 100%.
- **ShareFile Integration**: 4 months post-acquisition, integration is ahead of plan with 40%+ operating margin target for ShareFile by FY25 end. SaaS revenue mix rose to ~30% vs. 3% pre-acquisition.
- **Debt Management**: $30M debt repayment in Q1 (vs. Q2 plan), total FY25 debt paydown of $160M. Share buybacks reduced to $70M from $80M.
- **M&A Strategy**: Focused on SaaS-native, high-gross margin (low 80s%) assets with AI relevance. Filed universal shelf registration for agile capital access.
- **AI Investment**: Appointed Chief AI Officer to accelerate AI in product development, customer workflows, and operational efficiency. Early wins in financial services, streaming, and industrial machinery.

**【CFO Financial Breakdown】**
- **Revenue**: $238M (high end of guidance), +29% YoY. Non-GAAP EPS $1.31 vs. $1.08 high end. Operating margin 39%, up 170bps YoY.
- **Cost Control**: Total costs $144M (+34% YoY), but 5% below expectations due to ShareFile synergies. Unlevered free cash flow $88M, +12% YoY.
- **Balance Sheet**: Cash $124M, total debt $1.51B. Net leverage ~3.4x post-synergies. DSO improved to 48 days (from 67 days prior).
- **FY25 Guidance Update**: EPS raised to $5.25-$5.37 (prev $4.95-$5.15). ARR growth ~low single digits, operating margin ~38%.

**【Q&A Key Takeaways】**
- **ShareFile Customer Health**: SMB clients show no macro stress, with 86K customers using mission-critical workflow tools. ARR growth resilient despite macro uncertainty.
- **SaaS Acquisition Focus**: Prefer low 80s% gross margin SaaS vs. sub-60% legacy assets. No forced shift to SaaS, but natural tilt due to market dynamics.
- **ARR Volatility**: Q1-Q2 ARR dip due to ~$10M contract timing; expect Q2 flattish ARR. FY25 ARR growth ~3-4% (excluding ShareFile).
- **AI Revenue Impact**: Early AI wins (e.g., streaming recommendations, industrial UI) are anecdotal; NRR growth ~2.5% ex-ShareFile. No material AI revenue yet.
- **Geopolitical Risks**: No impact on international operations; ~5% federal gov exposure. Customers trust Progress as long-term partner.


Progress Software (PRGS)-31 Mar 25-2025 Q1 Earnings call transcript

- **Record Growth**: FY24 revenue $753M (+8%), ARR $842M (+46% YoY). Q4 revenue near high-end of $215M guidance.
- **ShareFile Impact**: $250M FY25 contribution, driving SaaS mix to 30%. Target 40%+ operating margin by FY25.
- **AI Innovation**: GenAI adoption accelerates with customers using MarkLogic for secure, context-aware applications. U.S. govt agency expands use case.
- **Financial Strength**: $212M free cash flow (+21%), $1.54B debt (net $1.42B). Plan to repay $150M in FY25.
- **FY25 Outlook**: 27-29% revenue growth, 37-38% operating margin, $5-5.12 EPS.

**【CEO Summary Section】**
- **Revenue and ARR Growth**: Q4 revenue of $215 million (near high-end guidance), FY24 total revenue $753 million (+8% YoY). ARR grew 46% YoY to $842 million, with 4% pro forma growth including ShareFile. Net retention rate >100% even excluding ShareFile.
- **ShareFile Integration**: Acquired for $850 million, contributed $21M in Q4. Expected to add $250M to FY25 revenue, driving SaaS mix to ~30%. Target to achieve 40%+ operating margin by FY25.
- **AI and Product Innovation**: Expanded GenAI capabilities in MarkLogic, OpenEdge, and ShareFile. Customers using AI-powered data platforms for secure, context-aware applications (e.g., U.S. govt agency expanding MarkLogic use).
- **M&A Strategy**: Disciplined approach to acquiring "great businesses" with future relevance, strong customer bases, and cultural fit. ShareFile integration on track for <12 months.

**【CFO Financial Commentary】**
- **Q4 Financials**: GAAP net income $42M, Non-GAAP EPS $1.33 (+$0.08 vs. high-end guidance). Free cash flow $18M, FY24 total $212M (+21% YoY). Ended with $118M cash, $1.54B debt (net debt $1.42B).
- **FY25 Guidance**: Revenue $958-970M (+27-29%), operating margin 37-38%, unlevered free cash flow $282-294M. EPS $5-5.12, assuming 46M shares (incl. 1.4M from convertible notes).
- **Debt Management**: Plan to repay $150M of $730M revolver used for ShareFile. Interest expense to rise due to higher rates, but focusing on rapid debt reduction.

**【Q&A Highlights】**
- **Organic Growth Drivers**: OpenEdge, DataDirect, MarkLogic saw strong demand driven by data criticality and AI integration. Global demand consistent, with North America and Europe leading.
- **ShareFile Churn**: Net retention rate similar to Progress baseline (>100%). Gross churn higher but offset by upsell opportunities.
- **M&A in High Rate Environment**: Competitive advantage from low leverage, disciplined valuation approach. Higher rates may lead to more reasonable valuations for targets.
- **SaaS Reporting**: Will separate SaaS revenue in FY25 filings, including ShareFile and other cloud products (~30% of total).

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