Progress Announces First Quarter 2025 Financial Results
Progress (PRGS) reported strong Q1 2025 financial results, with revenue reaching $238 million, marking a 29% year-over-year growth. The company's Annualized Recurring Revenue (ARR) grew impressively by 48% year-over-year to $836 million.
Key financial metrics include an operating margin of 14% (non-GAAP 39%), and diluted EPS of $0.24 (down 53% YoY), while non-GAAP EPS increased 5% to $1.31. The company maintained strong cash positions with $124.2 million in cash and equivalents, and improved Days Sales Outstanding to 48 days.
During Q1, Progress repurchased $30 million of shares and paid down $30 million of their revolving credit line used for the ShareFile acquisition. The ShareFile integration is progressing as planned and expected to complete by year-end.
Progress (PRGS) ha riportato risultati finanziari solidi per il primo trimestre del 2025, con ricavi che hanno raggiunto 238 milioni di dollari, segnando una crescita del 29% rispetto all'anno precedente. Il Ricavo Ricorrente Annualizzato (ARR) dell'azienda è cresciuto in modo impressionante del 48% su base annua, raggiungendo 836 milioni di dollari.
I principali indicatori finanziari includono un margine operativo del 14% (non-GAAP 39%) e un utile per azione diluito di 0,24 dollari (in calo del 53% rispetto all'anno precedente), mentre l'utile per azione non-GAAP è aumentato del 5% a 1,31 dollari. L'azienda ha mantenuto posizioni di liquidità solide con 124,2 milioni di dollari in contante e equivalenti, e ha migliorato i Giorni di Vendite in Sospeso a 48 giorni.
Durante il primo trimestre, Progress ha riacquistato azioni per 30 milioni di dollari e ha ridotto 30 milioni di dollari della loro linea di credito revolving utilizzata per l'acquisizione di ShareFile. L'integrazione di ShareFile sta procedendo come previsto e si prevede di completarla entro la fine dell'anno.
Progress (PRGS) reportó resultados financieros sólidos para el primer trimestre de 2025, con ingresos que alcanzaron 238 millones de dólares, marcando un crecimiento del 29% en comparación con el año anterior. Los Ingresos Recurrentes Anualizados (ARR) de la compañía crecieron de manera impresionante un 48% interanual, alcanzando 836 millones de dólares.
Las métricas financieras clave incluyen un margen operativo del 14% (non-GAAP 39%) y un EPS diluido de 0.24 dólares (una caída del 53% interanual), mientras que el EPS no-GAAP aumentó un 5% a 1.31 dólares. La empresa mantuvo posiciones de efectivo sólidas con 124.2 millones de dólares en efectivo y equivalentes, y mejoró los Días de Ventas Pendientes a 48 días.
Durante el primer trimestre, Progress recompró acciones por 30 millones de dólares y pagó 30 millones de dólares de su línea de crédito revolvente utilizada para la adquisición de ShareFile. La integración de ShareFile avanza según lo planeado y se espera que se complete a finales de año.
Progress (PRGS)는 2025년 1분기 강력한 재무 결과를 보고했으며, 수익은 2억 3천8백만 달러에 도달하여 전년 대비 29% 성장했습니다. 회사의 연간 반복 수익(ARR)은 전년 대비 48% 증가하여 8억 3천6백만 달러에 이르렀습니다.
주요 재무 지표로는 운영 마진이 14% (비-GAAP 39%)이고, 희석 주당순이익(EPS)은 0.24 달러로 전년 대비 53% 감소했으며, 비-GAAP EPS는 5% 증가하여 1.31 달러에 도달했습니다. 회사는 1억 2천4백20만 달러의 현금 및 현금성 자산을 보유하고 있으며, 미수금 일수를 48일로 개선했습니다.
1분기 동안 Progress는 3천만 달러의 자사주를 매입하고 ShareFile 인수에 사용된 회전 신용 한도에서 3천만 달러를 상환했습니다. ShareFile 통합은 계획대로 진행되고 있으며 연말까지 완료될 것으로 예상됩니다.
Progress (PRGS) a annoncé de solides résultats financiers pour le premier trimestre 2025, avec un chiffre d'affaires atteignant 238 millions de dollars, marquant une croissance de 29 % par rapport à l'année précédente. Le Revenu Annuel Récurrent (ARR) de l'entreprise a connu une croissance impressionnante de 48 % d'une année sur l'autre, atteignant 836 millions de dollars.
Les principaux indicateurs financiers incluent une marge opérationnelle de 14 % (non-GAAP 39 %) et un BPA dilué de 0,24 dollar (en baisse de 53 % par rapport à l'année précédente), tandis que le BPA non-GAAP a augmenté de 5 % pour atteindre 1,31 dollar. L'entreprise a maintenu une solide position de liquidité avec 124,2 millions de dollars en espèces et équivalents, et a amélioré ses Délai de Vente à 48 jours.
Au cours du premier trimestre, Progress a racheté pour 30 millions de dollars d'actions et a remboursé 30 millions de dollars de sa ligne de crédit renouvelable utilisée pour l'acquisition de ShareFile. L'intégration de ShareFile progresse comme prévu et devrait être achevée d'ici la fin de l'année.
Progress (PRGS) hat starke Finanzzahlen für das erste Quartal 2025 gemeldet, mit einem Umsatz von 238 Millionen Dollar, was einem Wachstum von 29% im Vergleich zum Vorjahr entspricht. Der Jährlich wiederkehrende Umsatz (ARR) des Unternehmens wuchs beeindruckend um 48% im Jahresvergleich auf 836 Millionen Dollar.
Wichtige Finanzkennzahlen umfassen eine Betriebsgewinnmarge von 14% (non-GAAP 39%) und einen verwässerten Gewinn pro Aktie (EPS) von 0,24 Dollar (ein Rückgang von 53% im Jahresvergleich), während der non-GAAP EPS um 5% auf 1,31 Dollar gestiegen ist. Das Unternehmen hielt eine starke Liquiditätsposition mit 124,2 Millionen Dollar in Bargeld und Äquivalenten und verbesserte die Forderungslaufzeit auf 48 Tage.
Im ersten Quartal hat Progress Aktien im Wert von 30 Millionen Dollar zurückgekauft und 30 Millionen Dollar seiner revolvierenden Kreditlinie, die für die Übernahme von ShareFile verwendet wurde, zurückgezahlt. Die Integration von ShareFile verläuft planmäßig und wird voraussichtlich bis Ende des Jahres abgeschlossen sein.
- 48% YoY growth in ARR to $836 million
- 29% YoY revenue growth to $238 million
- 5% increase in non-GAAP EPS to $1.31
- Net Retention Rate exceeded 100%
- $30 million share repurchase completed
- $30 million debt reduction
- 53% decrease in GAAP EPS to $0.24
- Operating margin declined to 14% from previous levels
Insights
Progress Software's Q1 2025 results showcase substantial growth with
The sharp divergence between GAAP and non-GAAP results tells an important story. GAAP EPS declined
Progress's capital allocation strategy reveals management confidence, with
Particularly encouraging is the Net Retention Rate exceeding 100%, a critical SaaS metric demonstrating existing customers are expanding their spending rather than churning. This subscription revenue stability provides predictable cash flows and reduces customer acquisition cost pressures.
With raised EPS guidance and strong Q1 performance across their product portfolio, Progress appears well-positioned despite the integration execution risks that still lie ahead for the ShareFile acquisition.
Progress's
Their product portfolio is showing balanced strength, with specific mention of their data platform and infrastructure management products having a "particularly solid quarter." This diversification across multiple software categories provides resilience against sector-specific headwinds.
The 100%+ Net Retention Rate is particularly significant in the current enterprise IT environment, where budget scrutiny remains high. This metric indicates Progress's products are delivering sufficient value that customers not only renew but expand usage, despite potential competitive alternatives.
Progress's focus on completing the ShareFile integration by year-end demonstrates disciplined execution, as elongated integrations typically erode expected synergies. The company's statement that they're "ahead, or on plan, with all ShareFile integration milestones" suggests solid operational execution.
The company's AI-powered digital experience and infrastructure software positioning aligns with current enterprise technology priorities, as businesses continue investing in digital transformation initiatives even amid selective IT spending. Progress appears to be successfully leveraging this strategic focus to drive growth across their product categories.
Annualized Recurring Revenue ("ARR") of
Revenue of
ShareFile Integration Underway
BURLINGTON, Mass., March 31, 2025 (GLOBE NEWSWIRE) -- Progress (Nasdaq: PRGS), the trusted provider of AI-powered digital experience and infrastructure software, today announced financial results for its fiscal first quarter ended February 28, 2025.
First Quarter 2025 Highlights:
- Revenue and non-GAAP revenue of
$238 million increased29% year-over-year on an actual and30% on a constant currency basis. - Annualized Recurring Revenue ("ARR") of
$836 million increased48% year-over-year on a constant currency basis. - Operating margin was
14% and non-GAAP operating margin was39% . - Diluted earnings per share was
$0.24 compared to$0.51 in the same quarter last year, a decrease of53% . - Non-GAAP diluted earnings per share was
$1.31 compared to$1.25 in the same quarter last year, an increase of5% .
"We’re extremely pleased with our excellent Q1 results," said Yogesh Gupta, CEO of Progress. "We are ahead, or on plan, with all our ShareFile integration milestones, which are providing significant contributions to ARR and revenues, as well as expense savings. Our solid performance on the top line was again driven by our product portfolio across the board, with our data platform and infrastructure management products having a particularly solid quarter. Our Net Retention Rate again surpassed
Additional financial highlights included:
Three Months Ended | |||||||||||||||||||||||
GAAP | Non-GAAP | ||||||||||||||||||||||
(In thousands, except percentages and per share amounts) | February 28, 2025 | February 29, 2024 | % Change | February 28, 2025 | February 29, 2024 | % Change | |||||||||||||||||
Revenue | $ | 238,015 | $ | 184,685 | 29 | % | $ | 238,015 | $ | 184,685 | 29 | % | |||||||||||
Income from operations | $ | 32,426 | $ | 35,006 | (7 | )% | $ | 93,595 | $ | 76,756 | 22 | % | |||||||||||
Operating margin | 14 | % | 19 | % | (500) bps | 39 | % | 42 | % | (300) bps | |||||||||||||
Net income | $ | 10,946 | $ | 22,639 | (52 | )% | $ | 58,995 | $ | 55,928 | 5 | % | |||||||||||
Diluted earnings per share | $ | 0.24 | $ | 0.51 | (53 | )% | $ | 1.31 | $ | 1.25 | 5 | % | |||||||||||
Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP) | $ | 68,947 | $ | 70,504 | (2 | )% | $ | 73,211 | $ | 72,204 | 1 | % | |||||||||||
$ | 87,954 | $ | 78,079 | 13 | % | ||||||||||||||||||
See Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures, and Select Performance Metrics and a reconciliation of non-GAAP adjustments to Progress’ GAAP financial results at the end of this press release.
Other fiscal first quarter 2025 metrics and recent results included:
- Cash and cash equivalents were
$124.2 million at the end of the quarter. - Days sales outstanding was 48 days compared to 50 days in the fiscal first quarter of 2024 and 67 days in the fiscal fourth quarter of 2024.
"We’re off to a very strong start for FY25, as our Q1 results demonstrate. Revenues at the high end of guidance reflect steady demand; expenses remain well-controlled; cash flow was again strong; and our bottom-line results and raised EPS guidance reflect numerous positives," said Anthony Folger, CFO of Progress. "Beyond excellent financial performance, we repurchased
2025 Business Outlook
Progress provides the following guidance for the fiscal year ending November 30, 2025 and the fiscal second quarter ending May 31, 2025:
Updated FY 2025 Guidance (March 31, 2025) | Prior FY 2025 Guidance (January 21, 2025) | ||||||||||
(In millions, except percentages and per share amounts) | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||
Revenue | |||||||||||
Diluted earnings per share | |||||||||||
Operating margin | % | 38 | % | % | % | ||||||
Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP) | |||||||||||
Effective tax rate | 19 | % | 20 | % | 21 | % | 20 | % | |||
Q2 2025 Guidance | |||||
(In millions, except per share amounts) | GAAP | Non-GAAP | |||
Revenue | |||||
Diluted earnings per share | |||||
Based on current exchange rates, the expected negative currency translation impact on our:
- Fiscal year 2025 business outlook compared to 2024 exchange rates is approximately
$2.8 million on revenue. - Fiscal Q2 2025 business outlook compared to 2024 exchange rates is approximately
$0.1 million on revenue.
Based on current exchange rates, the currency translation impact is expected to be immaterial on our GAAP and non-GAAP diluted earnings per share for both fiscal year 2025 and Q2 2025.
To the extent that there are changes in exchange rates versus the current environment and/or our expectations, this may have an impact on Progress' business outlook.
Conference Call
Progress will hold a conference call to review its financial results for the fiscal first quarter of 2025 at 5:00 p.m. ET on Monday, March 31, 2025. Participants must register for the conference call here: https://register-conf.media-server.com/register/BIb86bb577ced14b9fa67069eb761f36a9. The webcast can be accessed at: https://edge.media-server.com/mmc/p/bt5rgqn7. The conference call will include comments followed by questions and answers. Attendees must register for the webcast and an archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.
About Progress
Progress (Nasdaq: PRGS) empowers organizations to achieve transformational success in the face of disruptive change. Our software enables our customers to develop, deploy and manage responsible AI-powered applications and digital experiences with agility and ease. Customers get a trusted provider in Progress, with the products, expertise and vision they need to succeed. Over 4 million developers and technologists at hundreds of thousands of enterprises depend on Progress. Learn more at www.progress.com.
Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners.
Investor Contact: | Press Contact: | |
Michael Micciche | Jeff Young | |
Progress Software | Progress Software | |
+1 781 850 8450 | +1 781 280 4000 | |
Investor-Relations@progress.com | PR@progress.com | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | |||||||||||
(In thousands, except per share data) | February 28, 2025 | February 29, 2024 | % Change | ||||||||
Revenue: | |||||||||||
Software licenses | $ | 58,445 | $ | 64,100 | (9 | )% | |||||
Maintenance, SaaS, and professional services | 179,570 | 120,585 | 49 | % | |||||||
Total revenue | 238,015 | 184,685 | 29 | % | |||||||
Costs of revenue: | |||||||||||
Cost of software licenses | 2,925 | 2,731 | 7 | % | |||||||
Cost of maintenance, SaaS, and professional services | 32,884 | 22,219 | 48 | % | |||||||
Amortization of acquired intangibles | 10,422 | 7,859 | 33 | % | |||||||
Total costs of revenue | 46,231 | 32,809 | 41 | % | |||||||
Gross profit | 191,784 | 151,876 | 26 | % | |||||||
Operating expenses: | |||||||||||
Sales and marketing | 51,296 | 39,111 | 31 | % | |||||||
Product development | 46,375 | 34,988 | 33 | % | |||||||
General and administrative | 25,623 | 21,344 | 20 | % | |||||||
Amortization of acquired intangibles | 25,808 | 17,389 | 48 | % | |||||||
Cyber vulnerability response expenses, net | 737 | 987 | (25 | )% | |||||||
Restructuring expenses | 7,029 | 2,349 | 199 | % | |||||||
Acquisition-related expenses | 2,490 | 702 | 255 | % | |||||||
Total operating expenses | 159,358 | 116,870 | 36 | % | |||||||
Income from operations | 32,426 | 35,006 | (7 | )% | |||||||
Other expense, net | (19,124 | ) | (7,399 | ) | 158 | % | |||||
Income before income taxes | 13,302 | 27,607 | (52 | )% | |||||||
Provision for income taxes | 2,356 | 4,968 | (53 | )% | |||||||
Net income | $ | 10,946 | $ | 22,639 | (52 | )% | |||||
Earnings per share: | |||||||||||
Basic | $ | 0.25 | $ | 0.52 | (52 | )% | |||||
Diluted | $ | 0.24 | $ | 0.51 | (53 | )% | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 43,256 | 43,802 | (1 | )% | |||||||
Diluted | 44,887 | 44,826 | — | % | |||||||
Cash dividends declared per common share | $ | — | $ | 0.175 | (100 | )% | |||||
Stock-based compensation is included in the condensed consolidated statements of operations, as follows: | |||||||||||
Cost of revenue | $ | 1,195 | $ | 986 | 21 | % | |||||
Sales and marketing | 3,032 | 2,312 | 31 | % | |||||||
Product development | 4,410 | 3,665 | 20 | % | |||||||
General and administrative | 6,046 | 5,501 | 10 | % | |||||||
Total | $ | 14,683 | $ | 12,464 | 18 | % | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) | February 28, 2025 | November 30, 2024 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 124,161 | $ | 118,077 | |||
Accounts receivable, net | 126,366 | 163,575 | |||||
Unbilled receivables | 35,454 | 34,672 | |||||
Other current assets | 54,694 | 52,489 | |||||
Total current assets | 340,675 | 368,813 | |||||
Property and equipment, net | 13,233 | 13,746 | |||||
Goodwill and intangible assets, net | 1,980,181 | 2,015,748 | |||||
Right-of-use lease assets | 28,308 | 30,894 | |||||
Long-term unbilled receivables | 30,416 | 28,893 | |||||
Other assets | 69,605 | 68,872 | |||||
Total assets | $ | 2,462,418 | $ | 2,526,966 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable and other current liabilities | $ | 90,768 | $ | 113,801 | |||
Short-term operating lease liabilities | 8,975 | 9,202 | |||||
Short-term deferred revenue, net | 328,798 | 332,142 | |||||
Total current liabilities | 428,541 | 455,145 | |||||
Long-term debt, net | 700,000 | 730,000 | |||||
Convertible senior notes, net | 797,277 | 796,267 | |||||
Long-term operating lease liabilities | 24,260 | 26,259 | |||||
Long-term deferred revenue, net | 71,508 | 72,270 | |||||
Other long-term liabilities | 8,985 | 8,237 | |||||
Stockholders’ equity: | |||||||
Common stock and additional paid-in capital | 353,469 | 354,592 | |||||
Retained earnings | 78,378 | 84,196 | |||||
Total stockholders’ equity | 431,847 | 438,788 | |||||
Total liabilities and stockholders’ equity | $ | 2,462,418 | $ | 2,526,966 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended | |||||||
(In thousands) | February 28, 2025 | February 29, 2024 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 10,946 | $ | 22,639 | |||
Depreciation and amortization | 39,209 | 27,544 | |||||
Stock-based compensation | 14,683 | 12,464 | |||||
Other non-cash adjustments | 3,070 | 1,327 | |||||
Changes in operating assets and liabilities | 1,039 | 6,530 | |||||
Net cash flows from operating activities | 68,947 | 70,504 | |||||
Capital expenditures | (1,290 | ) | (309 | ) | |||
Repurchases of common stock, net of issuances | (23,870 | ) | (14,917 | ) | |||
Dividend equivalent and dividend payments to stockholders | (359 | ) | (8,171 | ) | |||
Payments for acquisitions | (1,195 | ) | — | ||||
Principal payment on term loan and repayment of revolving line of credit | (30,000 | ) | (33,437 | ) | |||
Other | (6,149 | ) | (7,406 | ) | |||
Net change in cash and cash equivalents | 6,084 | 6,264 | |||||
Cash and cash equivalents, beginning of period | 118,077 | 126,958 | |||||
Cash and cash equivalents, end of period | $ | 124,161 | $ | 133,222 | |||
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
(Unaudited)
Three Months Ended | |||||||
(In thousands, except per share data) | February 28, 2025 | February 29, 2024 | |||||
Adjusted income from operations: | |||||||
GAAP income from operations | $ | 32,426 | $ | 35,006 | |||
Amortization of acquired intangibles | 36,230 | 25,248 | |||||
Stock-based compensation | 14,683 | 12,464 | |||||
Restructuring expenses | 7,029 | 2,349 | |||||
Acquisition-related expenses | 2,490 | 702 | |||||
Cyber vulnerability response expenses, net | 737 | 987 | |||||
Non-GAAP income from operations | $ | 93,595 | $ | 76,756 | |||
Adjusted net income: | |||||||
GAAP net income | $ | 10,946 | $ | 22,639 | |||
Amortization of acquired intangibles | 36,230 | 25,248 | |||||
Stock-based compensation | 14,683 | 12,464 | |||||
Restructuring expenses | 7,029 | 2,349 | |||||
Acquisition-related expenses | 2,490 | 702 | |||||
Cyber vulnerability response expenses, net | 737 | 987 | |||||
Provision for income taxes | (13,120 | ) | (8,461 | ) | |||
Non-GAAP net income | $ | 58,995 | $ | 55,928 | |||
Adjusted diluted earnings per share: | |||||||
GAAP diluted earnings per share | $ | 0.24 | $ | 0.51 | |||
Amortization of acquired intangibles | 0.80 | 0.56 | |||||
Stock-based compensation | 0.32 | 0.28 | |||||
Restructuring expenses | 0.16 | 0.05 | |||||
Acquisition-related expenses | 0.06 | 0.02 | |||||
Cyber vulnerability response expenses, net | 0.02 | 0.02 | |||||
Provision for income taxes | (0.29 | ) | (0.19 | ) | |||
Non-GAAP diluted earnings per share | $ | 1.31 | $ | 1.25 | |||
Non-GAAP weighted avg shares outstanding - diluted | 44,887 | 44,826 | |||||
OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)
Adjusted Free Cash Flow and Unlevered Free Cash Flow | |||||||||||
Three Months Ended | |||||||||||
(In thousands) | February 28, 2025 | February 29, 2024 | % Change | ||||||||
Cash flows from operations | $ | 68,947 | $ | 70,504 | (2 | )% | |||||
Purchases of property and equipment | (1,290 | ) | (309 | ) | 317 | % | |||||
Free cash flow | 67,657 | 70,195 | (4 | )% | |||||||
Add back: restructuring payments | 5,554 | 2,009 | 176 | % | |||||||
Adjusted free cash flow | $ | 73,211 | $ | 72,204 | 1 | % | |||||
Add back: tax-effected interest expense | 14,743 | 5,875 | 151 | % | |||||||
Unlevered free cash flow | $ | 87,954 | $ | 78,079 | 13 | % | |||||
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE
(Unaudited)
Fiscal Year 2025 Updated Non-GAAP Operating Margin Guidance | |||||||
Fiscal Year Ending November 30, 2025 | |||||||
(In millions) | Low | High | |||||
GAAP income from operations | $ | 137.2 | $ | 145.7 | |||
GAAP operating margins | 14 | % | 15 | % | |||
Acquisition-related expense | 6.0 | 6.0 | |||||
Restructuring expense | 9.4 | 9.4 | |||||
Stock-based compensation | 62.8 | 62.8 | |||||
Amortization of acquired intangibles | 144.9 | 144.9 | |||||
Cyber vulnerability response expenses, net | 4.2 | 4.2 | |||||
Total adjustments(1) | 227.3 | 227.3 | |||||
Non-GAAP income from operations | $ | 364.5 | $ | 373.0 | |||
Non-GAAP operating margin | 38 | % | 38 | % | |||
(1)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed. | |||||||
Fiscal Year 2025 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance | |||||||
Fiscal Year Ending November 30, 2025 | |||||||
(In millions, except per share data) | Low | High | |||||
GAAP net income | $ | 53.2 | $ | 60.9 | |||
Adjustments (from previous table) | 227.3 | 227.3 | |||||
Income tax adjustment(2) | (46.1 | ) | (46.2 | ) | |||
Non-GAAP net income | $ | 234.4 | $ | 242.0 | |||
GAAP diluted earnings per share | $ | 1.19 | $ | 1.35 | |||
Non-GAAP diluted earnings per share | $ | 5.25 | $ | 5.37 | |||
Diluted weighted average shares outstanding | 44.7 | 45.1 |
2 Tax adjustment is based on a non-GAAP effective tax rate of approximately | ||||||||
Fiscal Year Ending November 30, 2025 | ||||||||
Low | High | |||||||
Non-GAAP income from operations | $ | 364.5 | $ | 373.0 | ||||
Other (expense) income | (71.5 | ) | (70.5 | ) | ||||
Non-GAAP income from continuing operations before income taxes | 293.0 | 302.5 | ||||||
Non-GAAP net income | 234.4 | 242.0 | ||||||
Tax provision | $ | 58.6 | $ | 60.5 | ||||
Non-GAAP tax rate | 20 | % | 20 | % | ||||
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE
(Unaudited)
Fiscal Year 2025 Adjusted Free Cash Flow and Unlevered Free Cash Flow Guidance | |||||||
Fiscal Year Ending November 30, 2025 | |||||||
(In millions) | Low | High | |||||
Cash flows from operations (GAAP) | $ | 216 | $ | 228 | |||
Purchases of property and equipment | (7 | ) | (7 | ) | |||
Add back: restructuring payments | 17 | 17 | |||||
Adjusted free cash flow (non-GAAP) | 226 | 238 | |||||
Add back: tax-effected interest expense | 57 | 56 | |||||
Unlevered free cash flow (non-GAAP) | $ | 283 | $ | 294 | |||
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q2 2025 GUIDANCE
(Unaudited)
Q2 2025 Non-GAAP Earnings per Share Guidance | |||||||
Three Months Ending May 31, 2025 | |||||||
Low | High | ||||||
GAAP diluted earnings per share | $ | 0.24 | $ | 0.30 | |||
Acquisition-related expense | 0.04 | 0.04 | |||||
Restructuring expense | 0.03 | 0.03 | |||||
Stock-based compensation | 0.38 | 0.38 | |||||
Amortization of acquired intangibles | 0.83 | 0.83 | |||||
Cyber vulnerability response expenses, net | 0.01 | 0.01 | |||||
Total adjustments(1) | 1.29 | 1.29 | |||||
Income tax adjustment | (0.25 | ) | (0.25 | ) | |||
Non-GAAP diluted earnings per share | $ | 1.28 | $ | 1.34 | |||
(1)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed. | |||||||
Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures and Select Performance Metrics
Progress furnishes certain non-GAAP supplemental information to our financial results. We use such non-GAAP financial measures to evaluate our period-over-period operating performance because our management team believes that excluding the effects of certain GAAP-related items helps to illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as greater understanding of the results from the primary operations of our business. Management also uses such non-GAAP financial measures to establish budgets and operational goals, evaluate performance, and allocate resources. In addition, the compensation of our executives and non-executive employees is based in part on the performance of our business as evaluated by such non-GAAP financial measures. We believe these non-GAAP financial measures enhance investors’ overall understanding of our current financial performance and our prospects for the future by: (i) providing more transparency for certain financial measures, (ii) presenting disclosure that helps investors understand how we plan and measure the performance of our business, (iii) affords a view of our operating results that may be more easily compared to our peer companies, and (iv) enables investors to consider our operating results on both a GAAP and non-GAAP basis (including following the integration period of our prior and proposed acquisitions). However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP") and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information may have a material impact on Progress’ financial results. A reconciliation of non-GAAP adjustments to Progress' GAAP financial results is included in the tables above.
In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures:
- Amortization of acquired intangibles - We exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. Adjustments include preliminary estimates relating to the valuation of intangible assets from ShareFile. The final amounts will not be available until the Company's internal procedures and reviews are completed.
- Stock-based compensation - We exclude stock-based compensation to be consistent with the way management and, in our view, the overall financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include these charges in operating plans.
- Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results. Adjustments include preliminary estimates relating to restructuring expenses from ShareFile. The final amounts will not be available until the Company's internal procedures and reviews are completed.
- Acquisition-related expenses - We exclude acquisition-related expenses in order to provide a more meaningful comparison of the financial results to our historical operations and forward-looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or volume of future acquisitions.
- Cyber vulnerability response expenses, net - We exclude certain expenses resulting from the zero-day MOVEit Vulnerability, as more thoroughly described in our filings with the Securities and Exchange Commission since June 5, 2023. Expenses include costs to investigate and remediate these cyber related matters, as well as legal and other professional services related thereto. Expenses related to such cyber matters are provided net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses. Costs associated with the enhancement of our cybersecurity program are not included within this adjustment. We expect to continue to incur legal and other professional services expenses in future periods associated with the MOVEit vulnerability. Expenses related to such cyber matters are expected to result in operating expenses that would not have otherwise been incurred in the normal course of business operations. We believe that excluding these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
- Provision for income taxes - We adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.
- Constant currency - Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. As exchange rates are an important factor in understanding period-to-period comparisons, we present revenue growth rates on a constant currency basis, which helps improve the understanding of our revenue results and our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates.
In the noted fiscal periods, we also present the following liquidity measures:
- Adjusted free cash flow ("AFCF") and unlevered free cash flow ("Unlevered FCF") - AFCF is equal to cash flows from operating activities less purchases of property and equipment, plus restructuring payments. Unlevered FCF is AFCF plus tax-effected interest expense on outstanding debt.
In the noted fiscal periods, we also present the following select performance metrics:
- Annualized Recurring Revenue ("ARR") - We disclose ARR as a performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources currently represents the substantial majority of our revenues and is expected to continue in the future. We define ARR as the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time. ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations in revenue due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. We use ARR to understand customer trends and the overall health of our business, helping us to formulate strategic business decisions.
We calculate the annualized value of annual and multi-year contracts, and contracts with terms less than one year, by dividing the total contract value of each contract by the number of months in the term and then multiplying by 12. Annualizing contracts with terms less than one-year results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period. We generally do not sell non-SaaS-based contracts with a term of less than one year unless a customer is purchasing additional licenses under an existing annual or multi-year contract. The expectation is that at the time of renewal, such contracts with a term less than one year will renew with the same term as the existing contracts being renewed, such that both contracts are co-termed. Historically, such contracts with a term of less than one year renew at rates equal to or better than annual or multi-year contracts.
For SaaS-based contracts, there is a meaningful percentage of monthly auto-renewing contracts for which annualizing the contracts results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period.
Revenue from term-based license and on-premises subscription arrangements include a portion of the arrangement consideration that is allocated to the software license that is recognized up-front at the point in time control is transferred under ASC 606 revenue recognition principles. ARR for these arrangements is calculated as described above. The expectation is that the total contract value, inclusive of revenue recognized as software license, will be renewed at the end of the contract term.
The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented.
ARR is not defined in GAAP and is not derived from a GAAP measure. Rather, ARR generally aligns to billings (as opposed to GAAP revenue which aligns to the transfer of control of each performance obligation). ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
- Net Retention Rate ("NRR") - We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period end ("Current Period ARR"). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP and is not derived from a GAAP measure.
Note Regarding Forward-Looking Statements
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like "believe," "may," "could," "would," "might," "should," "expect," "intend," "plan," "target," "anticipate" and "continue," the negative of these words, other terms of similar meaning or the use of future dates. Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook (including future acquisition activity) and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation: (i) economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price; (ii) our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses; (iii) we may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts; (iv) if the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors or zero-day vulnerabilities, we may experience reputational harm, legal claims and financial exposure; and the results of inquiries, investigations and legal claims regarding the MOVEit Vulnerability remain uncertain, while the ultimate resolution of these matters could result in losses that may be material to our financial results for a particular period; and (v) future acquisitions may not be successful or may involve unanticipated costs or other integration issues that could disrupt our existing operations; and (vi) expected synergies and benefits of the ShareFile acquisition may not be realized which could negatively impact our future results of operations and financial condition. For further information regarding risks and uncertainties associated with Progress' business, please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
