Financial Performance - Q3 2025 revenues reached $250 million, exceeding prior guidance of $237 million - $243 million, representing a 38% year-over-year increase in constant currency[10] - Annualized Recurring Revenue (ARR) grew by 47% year-over-year in constant currency to $849 million, with a 3% pro-forma increase[10, 12] - Net Retention Rate (NRR) remained strong at 100%[10] - Non-GAAP Earnings Per Share (EPS) was $1.50, surpassing the high end of prior guidance of $1.28 - $1.34[10] - The company's operating margin was 40%[10] Guidance and Outlook - Q4 2025 revenue is projected to be between $250 million and $256 million, with EPS between $1.29 and $1.35[10] - Fiscal Year 2025 revenue guidance has been updated to $975 million - $981 million, up from $962 million - $974 million[10] - Fiscal Year 2025 EPS guidance has been raised to $5.50 - $5.56, from $5.28 - $5.40[10] Growth Strategy - The company has an ARR Compound Annual Growth Rate (CAGR) of 20% from Q3 2020 to Q3 2025[18] - The company has a revenue CAGR of 15% from 2021 to 2025(E)[19] - The company has an operating income CAGR of 13% from 2021 to 2025(E), with non-GAAP operating margins consistently above 35%[20]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides unaudited condensed consolidated financial statements and detailed notes on accounting policies, assets, liabilities, and operations [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | (in thousands) | August 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $335,545 | $368,813 | | Total assets | $2,421,711 | $2,526,966 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $769,809 | $455,145 | | Total liabilities and stockholders' equity | $2,421,711 | $2,526,966 | | Total stockholders' equity | $477,682 | $438,788 | - Total assets decreased by **$105.255 million** from November 30, 2024, to August 31, 2025, primarily driven by a decrease in intangible assets and cash and cash equivalents. Total current liabilities significantly increased by **$314.664 million**, mainly due to the current portion of convertible senior notes[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income over specific reporting periods Three Months Ended August 31, 2025 vs 2024 | (in thousands, except per share data) | August 31, 2025 | August 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | $249,795 | $178,686 | 40% | | Gross profit | $202,259 | $149,622 | 35% | | Income from operations | $43,874 | $40,349 | 9% | | Net income | $19,413 | $28,464 | (32)% | | Basic EPS | $0.45 | $0.66 | (32)% | | Diluted EPS | $0.44 | $0.65 | (32)% | Nine Months Ended August 31, 2025 vs 2024 | (in thousands, except per share data) | August 31, 2025 | August 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | $725,165 | $538,448 | 35% | | Gross profit | $584,110 | $444,504 | 31% | | Income from operations | $114,916 | $102,503 | 12% | | Net income | $47,388 | $67,291 | (30)% | | Basic EPS | $1.10 | $1.55 | (29)% | | Diluted EPS | $1.07 | $1.52 | (30)% | - Revenue growth for both the three and nine months ended August 31, 2025, was primarily driven by the acquisition of ShareFile. However, net income and EPS decreased significantly due to increased interest expense and amortization of acquired intangibles[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, reflecting total changes in equity from non-owner sources Comprehensive Income (in thousands) | Period | Net Income | Foreign Currency Translation Adjustments | Total Other Comprehensive Income (Loss) | Comprehensive Income | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended Aug 31, 2025 | $19,413 | $654 | $654 | $20,067 | | Three Months Ended Aug 31, 2024 | $28,464 | $2,084 | $2,084 | $30,548 | | Nine Months Ended Aug 31, 2025 | $47,388 | $3,788 | $3,788 | $51,176 | | Nine Months Ended Aug 31, 2024 | $67,291 | $643 | $(492) | $66,799 | - Comprehensive income for the nine months ended August 31, 2025, was **$51.176 million**, a decrease from **$66.799 million** in the prior year, primarily reflecting the decrease in net income, despite a positive foreign currency translation adjustment[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts, including net income, stock transactions, and other comprehensive income Stockholders' Equity Changes (Nine Months Ended August 31, 2025) | (in thousands) | Balance, Dec 1, 2024 | Issuance of stock | Exercise of stock options | Withholding tax payments | Stock-based compensation | Treasury stock repurchases | Net income | Other comprehensive income | Balance, Aug 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $438,788 | $11,004 | $4,589 | $(10,101) | $47,394 | $(65,168) | $47,388 | $3,788 | $477,682 | - Total stockholders' equity increased from **$438.788 million** at December 1, 2024, to **$477.682 million** at August 31, 2025. Key drivers included net income of **$47.388 million** and stock-based compensation of **$47.394 million**, partially offset by treasury stock repurchases of **$65.168 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flows (Nine Months Ended August 31, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows from operating activities | $172,389 | $191,843 | | Net cash flows used in investing activities | $(23,493) | $(2,328) | | Net cash flows used in financing activities | $(175,784) | $(85,275) | | Net (decrease) increase in cash and cash equivalents | $(19,069) | $105,755 | | Cash and cash equivalents, end of period | $99,008 | $232,713 | - Net cash from operating activities decreased by **$19.454 million** YoY, primarily due to increased interest expense. Investing activities saw a significant increase in cash used, mainly due to payments for acquisitions (**$20.653 million** in 2025 vs. none in 2024). Financing activities used substantially more cash in 2025 (**$175.784 million** vs. **$85.275 million**), driven by repayment of revolving credit facility and common stock repurchases, contrasting with proceeds from senior convertible notes in 2024[16](index=16&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1: Basis of Presentation](index=11&type=section&id=Note%201:%20Basis%20of%20Presentation) This note describes the company's business, accounting principles, and the basis for preparing the financial statements - Progress Software Corporation provides software products for AI-powered applications and digital experiences, utilizing perpetual, term, and SaaS licensing models. The company operates globally through direct sales and indirect channel partners (ISVs, OEMs, VARs)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules for interim reporting and GAAP, with no material changes in significant accounting policies since the 2024 Annual Report[21](index=21&type=chunk)[22](index=22&type=chunk) - New accounting pronouncements include ASU 2023-07 (Segment Reporting, effective FY2025), ASU 2023-09 (Income Tax Disclosures, effective FY2026), ASU 2024-03/2025-01 (Expense Disaggregation, effective FY2028/2029), and ASU 2025-06 (Internal-Use Software, effective FY2029). The company is evaluating their impact[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2: Fair Value Measurements](index=12&type=section&id=Note%202:%20Fair%20Value%20Measurements) This note details the valuation methods and classifications for assets and liabilities measured at fair value Fair Value Measurements (August 31, 2025, in thousands) | (in thousands) | Total Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Money market funds | $1,175 | $1,175 | — | — | | Foreign exchange derivatives | $112 | — | $112 | — | | **Liabilities** | | | | | | Contingent consideration | $(1,080) | — | — | $(1,080) | - Contingent consideration related to the Nuclia acquisition (Q3 2025) is classified as Level 3, valued at **$1.080 million** using a Monte Carlo simulation due to unobservable inputs. This liability will be remeasured each period[29](index=29&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) Convertible Senior Notes Fair Value (in thousands) | (in thousands) | August 31, 2025 Carrying Value | August 31, 2025 Fair Value | November 30, 2024 Carrying Value | November 30, 2024 Fair Value | | :--- | :--- | :--- | :--- | :--- | | Convertible senior notes due 2026 | $358,619 | $362,778 | $356,946 | $449,094 | | Convertible senior notes due 2030 | $440,713 | $460,752 | $439,321 | $550,827 | | Total | $799,332 | $823,530 | $796,267 | $999,921 | [Note 3: Intangible Assets and Goodwill](index=14&type=section&id=Note%203:%20Intangible%20Assets%20and%20Goodwill) This note provides information on the company's intangible assets and goodwill, including changes and amortization Intangible Assets (in thousands) | (in thousands) | August 31, 2025 Net Book Value | November 30, 2024 Net Book Value | | :--- | :--- | :--- | | Purchased technology | $161,228 | $188,736 | | Customer-related | $424,689 | $495,224 | | Trademarks and trade names | $33,446 | $39,611 | | Total | $619,363 | $723,571 | - Net book value of intangible assets decreased by **$104.208 million** from November 30, 2024, to August 31, 2025. Amortization expense for intangible assets was **$37.2 million** for the three months and **$110.0 million** for the nine months ended August 31, 2025, significantly higher than the prior year due to recent acquisitions[37](index=37&type=chunk) Goodwill Changes (Nine Months Ended August 31, 2025, in thousands) | (in thousands) | Amount | | :--- | :--- | | Balance, December 1, 2024 | $1,292,177 | | Additions from business combinations | $15,397 | | Measurement period adjustments | $1,632 | | Translation adjustments | $46 | | Balance, August 31, 2025 | $1,309,252 | - Goodwill increased by **$17.075 million** to **$1,309.252 million**, primarily due to the acquisition of Nuclia and measurement period adjustments related to ShareFile[39](index=39&type=chunk) [Note 4: Business Combinations](index=15&type=section&id=Note%204:%20Business%20Combinations) This note details recent acquisitions, including purchase prices, allocation of assets, and pro forma financial impacts - On June 30, 2025, Progress acquired Nuclia, an AI solutions innovator, for **$21.4 million**, including **$20.3 million** cash and **$1.1 million** contingent consideration. The acquisition primarily allocated to purchased technology and goodwill[40](index=40&type=chunk)[41](index=41&type=chunk) - The ShareFile acquisition (October 31, 2024) for **$875.0 million** was funded by a revolving credit facility and cash. Measurement period adjustments in Q1 FY2025 increased goodwill by **$1.6 million**[43](index=43&type=chunk)[44](index=44&type=chunk) ShareFile Acquisition Pro Forma Financial Information (Nine Months Ended August 31, 2024, in thousands) | (in thousands, except per share data) | Pro Forma Nine Months Ended August 31, 2024 | | :--- | :--- | | Revenue | $722,032 | | Net income | $39,886 | | Net income per basic share | $0.92 | | Net income per diluted share | $0.90 | - ShareFile contributed **$64.6 million** in revenue for the three months and **$194.1 million** for the nine months ended August 31, 2025[48](index=48&type=chunk) [Note 5: Debt](index=17&type=section&id=Note%205:%20Debt) This note outlines the company's debt obligations, including convertible senior notes and revolving credit facilities Debt Obligations (in thousands) | (in thousands) | August 31, 2025 Net Carrying Amount | November 30, 2024 Net Carrying Amount | | :--- | :--- | :--- | | 3.5% convertible senior notes due 2030 | $440,713 | $439,321 | | Revolving credit facility | $620,000 | $730,000 | | 1.0% convertible senior notes due 2026 (current portion) | $358,619 | — | | Total debt | $1,419,332 | $1,526,267 | - Total debt decreased by **$106.935 million** from November 30, 2024, to August 31, 2025, primarily due to a **$110.0 million** repayment on the revolving credit facility. The company entered into an amended **$1.5 billion** secured revolving credit facility on July 21, 2025, maturing July 21, 2030, with **$620.0 million** outstanding as of August 31, 2025[53](index=53&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The credit agreement includes customary affirmative and negative covenants, including maintaining compliance with consolidated interest charge coverage and senior secured net leverage ratios[58](index=58&type=chunk)[59](index=59&type=chunk) [Note 6: Common Stock Repurchases](index=18&type=section&id=Note%206:%20Common%20Stock%20Repurchases) This note details the company's common stock repurchase activities and remaining authorization Common Stock Repurchases (in thousands, except shares) | Period | Shares Repurchased | Value (in millions) | | :--- | :--- | :--- | | Three Months Ended Aug 31, 2025 | 0.3 million | $15.0 | | Three Months Ended Aug 31, 2024 | 0.3 million | $14.3 | | Nine Months Ended Aug 31, 2025 | 1.2 million | $65.1 | | Nine Months Ended Aug 31, 2024 | 1.6 million | $86.8 | - As of August 31, 2025, **$42.2 million** remained under the share repurchase authorization. On September 23, 2025, the Board increased the authorization by **$200.0 million** to an aggregate of **$242.2 million**[60](index=60&type=chunk) [Note 7: Stock-Based Compensation](index=18&type=section&id=Note%207:%20Stock-Based%20Compensation) This note describes the company's stock-based compensation plans and related expenses - Stock-based compensation expense is recognized over the service period, generally four or five years for options and three or four years for restricted stock units. Performance stock units and employee stock purchase plans use accelerated attribution[61](index=61&type=chunk) Stock-Based Compensation Expense (in thousands) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost of maintenance, SaaS, and professional services | $1,486 | $834 | $4,241 | $2,732 | | Sales and marketing | $3,275 | $2,169 | $9,970 | $6,939 | | Product development | $4,709 | $3,199 | $14,103 | $10,255 | | General and administrative | $6,500 | $4,356 | $19,080 | $15,085 | | Total stock-based compensation | $15,970 | $10,558 | $47,394 | $35,011 | [Note 8: Revenue Recognition](index=19&type=section&id=Note%208:%20Revenue%20Recognition) This note explains the company's policies for recognizing revenue from various sources and geographic regions Revenue by Type (in thousands) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Software licenses | $63,437 | $57,850 | $172,677 | $175,929 | | Maintenance | $104,849 | $103,088 | $307,875 | $307,616 | | SaaS | $71,512 | $6,082 | $213,027 | $17,641 | | Professional services | $9,997 | $11,666 | $31,586 | $37,262 | | Total revenue | $249,795 | $178,686 | $725,165 | $538,448 | Geographic Revenue (in thousands) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | North America | $163,404 | $104,369 | $465,376 | $314,553 | | EMEA | $68,339 | $57,031 | $208,321 | $177,656 | | Latin America | $6,221 | $5,363 | $16,126 | $14,630 | | Asia Pacific | $11,831 | $11,923 | $35,342 | $31,609 | | Total revenue | $249,795 | $178,686 | $725,165 | $538,448 | - SaaS revenue experienced significant growth, increasing by **1,076%** for the three months and **1,108%** for the nine months ended August 31, 2025, primarily due to the ShareFile acquisition. North America revenue also saw substantial growth (**57%** for three months, **48%** for nine months) driven by the same acquisition[64](index=64&type=chunk)[65](index=65&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - As of August 31, 2025, transaction price allocated to remaining performance obligations was **$592.3 million**, with approximately **74%** expected to be recognized within the next year[68](index=68&type=chunk) [Note 9: Restructuring](index=20&type=section&id=Note%209:%20Restructuring) This note details the company's restructuring activities, including costs incurred and expected cash disbursements Restructuring Activity (Nine Months Ended August 31, 2025, in thousands) | (in thousands) | Excess Facilities and Other Costs | Employee Severance and Related Benefits | Total | | :--- | :--- | :--- | :--- | | Balance, December 1, 2024 | $4,339 | $5,695 | $10,034 | | Costs incurred | $2,466 | $6,513 | $8,979 | | Cash disbursements | $(3,604) | $(11,554) | $(15,158) | | Balance, August 31, 2025 | $3,201 | $679 | $3,880 | - Restructuring costs incurred during the nine months ended August 31, 2025, totaled **$8.979 million**, primarily related to the integration of the ShareFile business. Cash disbursements for these expenses are expected through Q4 fiscal year 2025, with no additional material expenses anticipated[70](index=70&type=chunk) [Note 10: Earnings Per Share](index=21&type=section&id=Note%2010:%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted earnings per share Earnings Per Share Calculation (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $19,413 | $28,464 | $47,388 | $67,291 | | Weighted average shares outstanding (basic) | 42,988 | 42,872 | 43,099 | 43,296 | | Diluted weighted average shares outstanding | 43,717 | 43,711 | 44,253 | 44,167 | | Basic EPS | $0.45 | $0.66 | $1.10 | $1.55 | | Diluted EPS | $0.44 | $0.65 | $1.07 | $1.52 | - Stock awards representing approximately **844,000 shares** (three months) and **978,000 shares** (nine months) were excluded from diluted EPS calculation for August 31, 2025, as they were anti-dilutive. The convertible notes were out of the money for the three months ended August 31, 2025, and for both periods in 2024, thus not included in diluted EPS calculation for those periods, but the 2026 Notes were included for the nine months ended August 31, 2025[71](index=71&type=chunk)[72](index=72&type=chunk) [Note 11: Segment Information](index=21&type=section&id=Note%2011:%20Segment%20Information) This note states that the company operates as a single operating segment - The company operates as a single operating segment: software products for the development, deployment, and management of responsible, AI-powered applications and digital experiences. The Chief Executive Officer, as the CODM, evaluates financial information on a consolidated basis[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 12: Cyber Related Matters](index=22&type=section&id=Note%2012:%20Cyber%20Related%20Matters) This note discusses ongoing legal and financial impacts related to the MOVEit Vulnerability - The company continues to address the MOVEit Vulnerability, with class action lawsuits centralized in multi-district litigation (MDL). Motions to dismiss were partially granted in July 2025, dismissing about half of the claims. The MDL is not expected to conclude this fiscal year[75](index=75&type=chunk) Cyber Vulnerability Response Expenses, Net (in thousands) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net costs incurred | $659 | $927 | $2,126 | $4,950 | | Insurance recoveries | $400 | $600 | $1,700 | $2,500 | - The company expects to incur ongoing investigation, legal, and professional services expenses. While a loss is reasonably possible, a range of possible losses cannot be reasonably estimated due to the early stage of litigation and uncertainties regarding class certification and damages. No loss contingency liability has been recorded as of August 31, 2025[77](index=77&type=chunk) - The company maintained **$15.0 million** in cybersecurity insurance coverage, with approximately **$5.0 million** remaining as of August 31, 2025[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, liquidity, and critical accounting policies [Overview](index=23&type=section&id=Overview) This section introduces the company's business, critical accounting policies, and use of constant currency reporting - Progress provides software products for developing, deploying, and managing AI-powered applications and digital experiences[80](index=80&type=chunk) - Critical accounting policies, including revenue recognition, loss contingencies (MOVEit Vulnerability), and business combinations, remain unchanged from the 2024 Annual Report[81](index=81&type=chunk) - The company uses constant currency reporting to enhance understanding of revenue results, translating current period results using prior period weighted average foreign currency exchange rates[82](index=82&type=chunk)[83](index=83&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the key drivers of changes in revenue, gross profit, operating expenses, and net income - Total revenue increased by **40%** (**38%** constant currency) for the three months and **35%** (**34%** constant currency) for the nine months ended August 31, 2025, primarily due to the ShareFile acquisition, which contributed **$64.6 million** and **$194.1 million**, respectively[85](index=85&type=chunk) Revenue Growth by Type (YoY % Change) | Revenue Type | 3 Months Ended Aug 31, 2025 | 9 Months Ended Aug 31, 2025 | | :--- | :--- | :--- | | Software licenses | 10% | (2)% | | Maintenance | 2% | 0% | | SaaS | 1,076% | 1,108% | | Professional services | (14)% | (15)% | - SaaS revenue growth was overwhelmingly driven by ShareFile. North America revenue increased by **57%** (three months) and **48%** (nine months) due to the ShareFile acquisition, while revenue outside North America increased by **$12.1 million** and **$35.9 million** over the same periods[87](index=87&type=chunk)[88](index=88&type=chunk) - Gross profit increased by **35%** (three months) and **31%** (nine months) but decreased as a percentage of total revenue (**81%** vs. **84%** and **81%** vs. **83%** respectively) due to higher hosting costs from ShareFile[93](index=93&type=chunk) - Operating expenses (Sales & Marketing, Product Development, General & Administrative, Amortization of Acquired Intangibles) all increased significantly year-over-year, primarily due to increased personnel, marketing, and hosting costs associated with the ShareFile acquisition[94](index=94&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Net income decreased by **32%** for the three months and **30%** for the nine months ended August 31, 2025, primarily due to a substantial increase in interest expense (**162%** and **157%** respectively) resulting from debt incurred for the ShareFile acquisition[103](index=103&type=chunk)[106](index=106&type=chunk) [Select Performance Metrics](index=31&type=section&id=Select%20Performance%20Metrics) This section presents key operational metrics such as Annualized Recurring Revenue and Net Retention Rate - Annualized Recurring Revenue (ARR) was **$849.0 million** as of August 31, 2025, an increase of **47%** year-over-year from **$576.0 million**, primarily driven by the ShareFile acquisition[114](index=114&type=chunk) - Net retention rates have generally ranged between **100%** and **102%** for all periods presented, indicating strong customer retention and expansion[116](index=116&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt, and ability to meet future financial obligations - Cash and cash equivalents decreased by **$19.1 million** from November 30, 2024, to August 31, 2025, primarily due to debt repayments (**$110.0 million**), common stock repurchases (**$65.1 million**), and acquisitions (**$20.7 million**), partially offset by cash from operations (**$172.4 million**)[117](index=117&type=chunk) - The company suspended its quarterly dividend as of September 9, 2024, to redirect capital towards debt repayment and increase liquidity for future M&A and share repurchases[125](index=125&type=chunk) - Management believes existing cash balances, funds from operations, and the revolving credit facility will be sufficient to meet foreseeable cash requirements for at least the next twelve months, including capital expenditures, acquisitions, and debt repayments[128](index=128&type=chunk) [Legal and Other Regulatory Matters](index=35&type=section&id=Legal%20and%20Other%20Regulatory%20Matters) This section provides updates on ongoing legal proceedings and regulatory issues - The company continues to face class action lawsuits and governmental investigations related to the MOVEit Vulnerability. While some claims have been dismissed, the litigation is ongoing, and future costs are expected to be reduced by insurance coverage[130](index=130&type=chunk)[131](index=131&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for details on recently issued accounting pronouncements - Refer to Note 1: Basis of Presentation for details on recently issued accounting pronouncements and their potential impact[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there were no significant changes to the company's quantitative and qualitative disclosures about market risk during the first nine months of fiscal year 2025, apart from repayments on the revolving credit facility and other debt changes - No significant changes to market risk disclosures were reported for the first nine months of fiscal year 2025, except for revolving credit facility repayments and debt changes[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures as of August 31, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of August 31, 2025[134](index=134&type=chunk)[135](index=135&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended August 31, 2025[136](index=136&type=chunk) [PART II OTHER INFORMATION](index=37&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 for details on legal proceedings related to the MOVEit Vulnerability and states that other ordinary course legal matters are not expected to have a material effect on the company's financial position - Legal proceedings related to the MOVEit Vulnerability are discussed in Note 12. Other ordinary course legal matters are not expected to materially affect financial position, results of operations, or cash flows[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the company's 2024 Annual Report for a comprehensive discussion of risk factors that could materially affect the business - For a complete discussion of risk factors, refer to Part I, Item 1A. Risk Factors in the 2024 Annual Report[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchase activities during the third quarter of fiscal year 2025 and updates on the share repurchase authorization Common Stock Repurchases (Third Quarter Fiscal Year 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | June 2025 | — | $— | — | $57,220 | | July 2025 | 283,412 | $52.91 | 283,412 | $42,220 | | August 2025 | — | — | — | $42,220 | | Total | 283,412 | $52.91 | 283,412 | $42,220 | - As of August 31, 2025, **$42.2 million** remained under the current share repurchase authorization. On September 23, 2025, the Board increased the authorization by **$200.0 million**, bringing the aggregate to **$242.2 million**[140](index=140&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section reports on the adoption of a new Form of Notice of Grant of Stock Options and Grant Agreement and confirms no insider adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - A new Form of Notice of Grant of Stock Options and Grant Agreement was adopted under the Progress Software Corporation 2008 Stock Option and Incentive Plan for administrative updates[141](index=141&type=chunk) - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the third quarter of fiscal year 2025[142](index=142&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including the Fifth Amended and Restated Credit Agreement, Form of Notice of Grant of Stock Options, CEO/CFO certifications, and iXBRL financial statements - Key exhibits include the Fifth Amended and Restated Credit Agreement (Exhibit 10.1), Form of Notice of Grant of Stock Options and Grant Agreement (Exhibit 10.2), CEO and CFO certifications (Exhibits 31.1, 31.2), and iXBRL formatted financial statements (Exhibit 101)[144](index=144&type=chunk) [Signatures](index=40&type=section&id=Signatures) This section contains the duly authorized signatures of the registrant's President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, and Senior Vice President and Chief Accounting Officer, certifying the report - The report is signed by Yogesh K. Gupta (President and CEO), Anthony Folger (EVP and CFO), and Domenic LoCoco (SVP and Chief Accounting Officer) on September 29, 2025[147](index=147&type=chunk)

[Executive Summary & Q3 2025 Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Q3%202025%20Highlights) Progress Software delivered strong Q3 2025 results, highlighting strategic execution, ShareFile integration, and AI investments [Overall Performance and Strategic Commentary](index=1&type=section&id=1.1.%20Overall%20Performance%20and%20Strategic%20Commentary) Progress Software reported exceptional Q3 2025 results, driven by strong financials, successful ShareFile integration, and AI innovation - Progress CEO Yogesh Gupta described Q3 performance as **\"truly exceptional\"** with solid revenue, earnings, cash flow, and execution[3](index=3&type=chunk) - **Net retention remains strong at 100%**, and **ARR continues to grow steadily**[3](index=3&type=chunk)[5](index=5&type=chunk) - ShareFile is **meaningfully contributing to top and bottom-line results**, with all major integration milestones successfully passed[3](index=3&type=chunk)[5](index=5&type=chunk) - Continued investment and innovation in **AI capabilities**, including agentic RAG technology, embedded across the product portfolio to empower customers[3](index=3&type=chunk) - The company **aggressively paid down debt** and **repurchased $15 million of shares**, while increasing liquidity with a new **$1.5 billion revolving credit facility**[5](index=5&type=chunk) [Key Financial Highlights (Q3 2025)](index=1&type=section&id=1.2.%20Key%20Financial%20Highlights%20(Q3%202025)) Progress Software reported Q3 2025 revenue up 40% to $250M, ARR up 47% to $849M, and non-GAAP EPS up 19% to $1.50 Q3 2025 Financial Highlights (YoY Growth, in thousands, except per share amounts) | Metric | Q3 2025 (GAAP) | Q3 2024 (GAAP) | % Change (GAAP) | Q3 2025 (Non-GAAP) | Q3 2024 (Non-GAAP) | % Change (Non-GAAP) | | :-------------------------------- | :------------- | :------------- | :-------------- | :----------------- | :----------------- | :------------------ | | Revenue | $249,795 | $178,686 | 40 % | $249,795 | $178,686 | 40 % | | Income from operations | $43,874 | $40,349 | 9 % | $99,423 | $74,123 | 34 % | | Operating margin | 18 % | 23 % | (500) bps | 40 % | 41 % | (100) bps | | Net income | $19,413 | $28,464 | (32)% | $65,723 | $55,216 | 19 % | | Diluted earnings per share | $0.44 | $0.65 | (32)% | $1.50 | $1.26 | 19 % | | Cash from operations (GAAP) | $73,446 | $57,658 | 27 % | - | - | - | | Adjusted free cash flow (non-GAAP) | - | - | - | $74,428 | $57,525 | 29 % | | Unlevered free cash flow (non-GAAP) | - | - | - | $88,617 | $63,149 | 40 % | - **Annualized Recurring Revenue (ARR)** of **$849 million** increased **47% year-over-year** on a constant currency basis[2](index=2&type=chunk)[6](index=6&type=chunk) - **Cash and cash equivalents** were **$99.0 million** at the end of the quarter[7](index=7&type=chunk) - **Days sales outstanding** was **55 days**, compared to 45 days in Q3 2024 and 53 days in Q2 2025[7](index=7&type=chunk) - The Board of Directors increased the **share repurchase authorization by $200.0 million to $242.2 million** on September 23, 2025[7](index=7&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=3&type=section&id=2.%20Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) This section presents the company's GAAP statements of operations, balance sheets, and cash flows [Statements of Operations](index=3&type=section&id=2.1.%20Statements%20of%20Operations) Q3 2025 total revenue rose 40% to $249.8M, but GAAP net income fell 32% to $19.4M due to higher expenses Revenue Breakdown (Three Months Ended August 31) | Revenue Category | 2025 (in thousands) | 2024 (in thousands) | % Change | | :----------------------- | :------------------ | :------------------ | :------- | | Software licenses | $63,437 | $57,850 | 10 % | | Maintenance, SaaS, and professional services | $186,358 | $120,836 | 54 % | | **Total revenue** | **$249,795** | **$178,686** | **40 %** | Key P&L Items (Three Months Ended August 31) | Item | 2025 (in thousands) | 2024 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | Gross profit | $202,259 | $149,622 | 35 % | | Income from operations | $43,874 | $40,349 | 9 % | | Other expense, net | $(17,668) | $(6,070) | 191 % | | Income before income taxes | $26,206 | $34,279 | (24)% | | Provision for income taxes | $6,793 | $5,815 | 17 % | | **Net income** | **$19,413** | **$28,464** | **(32)%** | | Diluted earnings per share | $0.44 | $0.65 | (32)% | - **Total operating expenses increased by 45% YoY**, driven by significant increases in **amortization of acquired intangibles (91%)**, **product development (42%)**, and **sales and marketing (40%)**[12](index=12&type=chunk) - **Cash dividends declared per common share decreased from $0.175 in Q3 2024 to $0 in Q3 2025**[12](index=12&type=chunk) [Balance Sheets](index=4&type=section&id=2.2.%20Balance%20Sheets) Total assets decreased to $2.42B, while liabilities increased due to convertible senior notes, despite lower long-term debt Key Balance Sheet Items (in thousands) | Item | August 31, 2025 (in thousands) | November 30, 2024 (in thousands) | | :---------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $99,008 | $118,077 | | Total current assets | $335,545 | $368,813 | | Goodwill and intangible assets, net | $1,928,615 | $2,015,748 | | **Total assets** | **$2,421,711** | **$2,526,966** | | Convertible senior notes, current portion, net | $358,619 | — | | Total current liabilities | $769,809 | $455,145 | | Long-term debt, net | $620,000 | $730,000 | | Convertible senior notes, non-current portion, net | $440,713 | $796,267 | | **Total liabilities and stockholders' equity** | **$2,421,711** | **$2,526,966** | - **Total stockholders' equity increased to $477.7 million from $438.8 million**[13](index=13&type=chunk) [Statements of Cash Flows](index=5&type=section&id=2.3.%20Statements%20of%20Cash%20Flows) Q3 2025 operating cash flow rose 27% to $73.4M, but nine-month operating cash flow decreased 10% to $172.4M Net Cash Flows from Operating Activities | Period | August 31, 2025 (in thousands) | August 31, 2024 (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Three Months Ended | $73,446 | $57,658 | 27 % | | Nine Months Ended | $172,389 | $191,843 | (10)% | - Key cash flow activities for the three months ended August 31, 2025, included **repurchases of common stock ($11.7 million)**, **payments for acquisitions ($19.5 million)**, and **repayment of revolving line of credit and term loan ($40.0 million)**[14](index=14&type=chunk) - **Net change in cash and cash equivalents for Q3 2025 was a decrease of $3.0 million**, compared to an increase of $42.3 million in Q3 2024[14](index=14&type=chunk) [Non-GAAP Financial Measures (Q3 2025)](index=6&type=section&id=3.%20Non-GAAP%20Financial%20Measures%20(Q3%202025)) This section details the company's Q3 2025 non-GAAP financial measures, including adjusted income, EPS, and free cash flow [Adjusted Income from Operations](index=6&type=section&id=3.1.%20Adjusted%20Income%20from%20Operations) Non-GAAP income from operations for Q3 2025 increased 34% to $99.4M, with a 40% operating margin Adjusted Income from Operations (Three Months Ended August 31) | Item | 2025 (in thousands) | 2024 (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :------- | | GAAP income from operations | $43,874 | $40,349 | 9 % | | Amortization of acquired intangibles | $37,199 | $20,117 | 85 % | | Stock-based compensation | $15,970 | $10,558 | 51 % | | Restructuring expenses | $907 | $308 | 194 % | | Acquisition-related expenses | $814 | $1,864 | (56)% | | Cyber vulnerability response expenses, net | $659 | $927 | (29)% | | **Non-GAAP income from operations** | **$99,423** | **$74,123** | **34 %** | - **Non-GAAP operating margin was 40% in Q3 2025**, compared to 41% in Q3 2024[4](index=4&type=chunk) [Adjusted Net Income and Diluted EPS](index=6&type=section&id=3.2.%20Adjusted%20Net%20Income%20and%20Diluted%20EPS) Non-GAAP net income grew 19% to $65.7M, and diluted EPS increased 19% to $1.50, after tax adjustments Adjusted Net Income (Three Months Ended August 31) | Item | 2025 (in thousands) | 2024 (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :------- | | GAAP net income | $19,413 | $28,464 | (32)% | | Amortization of acquired intangibles | $37,199 | $20,117 | 85 % | | Stock-based compensation | $15,970 | $10,558 | 51 % | | Restructuring expenses | $907 | $308 | 194 % | | Acquisition-related expenses | $814 | $1,864 | (56)% | | Cyber vulnerability response expenses, net | $659 | $927 | (29)% | | Provision for income taxes | $(9,239) | $(7,022) | 32 % | | **Non-GAAP net income** | **$65,723** | **$55,216** | **19 %** | Adjusted Diluted Earnings per Share (Three Months Ended August 31) | Item | 2025 (per share) | 2024 (per share) | % Change | | :------------------------------------------ | :--------------- | :--------------- | :------- | | GAAP diluted earnings per share | $0.44 | $0.65 | (32)% | | **Non-GAAP diluted earnings per share** | **$1.50** | **$1.26** | **19 %** | [Adjusted and Unlevered Free Cash Flow](index=7&type=section&id=3.3.%20Adjusted%20and%20Unlevered%20Free%20Cash%20Flow) Adjusted free cash flow rose 29% to $74.4M, and unlevered free cash flow increased 40% to $88.6M in Q3 2025 Adjusted Free Cash Flow (Three Months Ended August 31) | Item | 2025 (in thousands) | 2024 (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :------- | | Cash flows from operations | $73,446 | $57,658 | 27 % | | Purchases of property and equipment | $(1,055) | $(1,064) | (1)% | | Free cash flow | $72,391 | $56,594 | 28 % | | Add back: restructuring payments | $2,037 | $931 | 119 % | | **Adjusted free cash flow** | **$74,428** | **$57,525** | **29 %** | Unlevered Free Cash Flow (Three Months Ended August 31) | Item | 2025 (in thousands) | 2024 (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :------- | | Adjusted free cash flow | $74,428 | $57,525 | 29 % | | Add back: tax-effected interest expense | $14,189 | $5,624 | 152 % | | **Unlevered free cash flow** | **$88,617** | **$63,149** | **40 %** | [Fiscal Year 2025 Business Outlook and Guidance](index=2&type=section&id=4.%20Fiscal%20Year%202025%20Business%20Outlook%20and%20Guidance) This section outlines the company's updated full-year and Q4 2025 financial guidance, including non-GAAP reconciliations [Updated Full Year 2025 Guidance](index=2&type=section&id=4.1.%20Updated%20Full%20Year%202025%20Guidance) Progress Software raised FY 2025 guidance, projecting revenue of $975M-$981M and non-GAAP diluted EPS of $5.50-$5.56 Updated FY 2025 Guidance (vs. Prior Guidance, in millions, except per share amounts) | Metric | Updated FY 2025 Guidance (GAAP) | Prior FY 2025 Guidance (GAAP) | Updated FY 2025 Guidance (Non-GAAP) | Prior FY 2025 Guidance (Non-GAAP) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :--------------------------------- | :--------------------------------- | | Revenue (in millions) | $975 - $981 | $962 - $974 | $975 - $981 | $962 - $974 | | Diluted earnings per share | $1.38 - $1.45 | $1.27 - $1.43 | $5.50 - $5.56 | $5.28 - $5.40 | | Operating margin | 15% | 15% | 38% - 39% | 38% - 39% | | Cash from operations (GAAP) | $221 - $231 | $218 - $230 | - | - | | Adjusted free cash flow (non-GAAP) | - | - | $232 - $242 | $228 - $240 | | Unlevered free cash flow (non-GAAP) | - | - | $289 - $299 | $285 - $296 | | Effective tax rate | 19 % | 17 % | 20 % | 20 % | - The expected positive currency translation impact on **FY 2025 revenue is approximately $4.0 million** and on GAAP and non-GAAP diluted EPS is approximately **$0.03**[11](index=11&type=chunk) [Fourth Quarter 2025 Guidance](index=2&type=section&id=4.2.%20Fourth%20Quarter%202025%20Guidance) Q4 2025 guidance projects revenue between $250M-$256M, with GAAP diluted EPS of $0.31-$0.37 and non-GAAP EPS of $1.29-$1.35 Q4 2025 Guidance (in millions, except per share amounts) | Metric | GAAP | Non-GAAP | | :-------------------------- | :----------- | :----------- | | Revenue | $250 - $256 | $250 - $256 | | Diluted earnings per share | $0.31 - $0.37 | $1.29 - $1.35 | - The expected positive currency translation impact on **Q4 2025 revenue is approximately $2.5 million** and on GAAP and non-GAAP diluted EPS is approximately **$0.01**[11](index=11&type=chunk) [Non-GAAP Guidance Reconciliations (FY 2025)](index=8&type=section&id=4.3.%20Non-GAAP%20Guidance%20Reconciliations%20(FY%202025)) This section provides detailed reconciliations for the company's non-GAAP financial guidance for fiscal year 2025 [Non-GAAP Operating Margin Guidance](index=8&type=section&id=4.3.1.%20Non-GAAP%20Operating%20Margin%20Guidance) The company projects a non-GAAP operating margin of 38%-39% for FY 2025, consistent with prior guidance after adjustments FY 2025 Non-GAAP Operating Margin Guidance (in millions) | Item | Low (in millions) | High (in millions) | | :------------------------------------------ | :---------------- | :---------------- | | GAAP income from operations | $146.9 | $151.2 | | GAAP operating margins | 15 % | 15 % | | Total adjustments | $228.4 | $228.4 | | **Non-GAAP income from operations** | **$375.3** | **$379.6** | | **Non-GAAP operating margin** | **38 %** | **39 %** | [Non-GAAP Earnings per Share and Effective Tax Rate Guidance](index=8&type=section&id=4.3.2.%20Non-GAAP%20Earnings%20per%20Share%20and%20Effective%20Tax%20Rate%20Guidance) FY 2025 non-GAAP diluted EPS is guided between $5.50-$5.56, based on a 20% non-GAAP effective tax rate FY 2025 Non-GAAP Diluted EPS Guidance (in millions, except per share data) | Item | Low | High | | :------------------------------------------ | :---- | :---- | | GAAP net income | $60.8 | $64.3 | | Adjustments (from previous table) | $228.4 | $228.4 | | Income tax adjustment | $(46.5) | $(46.5) | | **Non-GAAP net income** | **$242.7** | **$246.2** | | GAAP diluted earnings per share | $1.38 | $1.45 | | **Non-GAAP diluted earnings per share** | **$5.50** | **$5.56** | - The **non-GAAP effective tax rate for FY 2025 is approximately 20%**[20](index=20&type=chunk) [Adjusted and Unlevered Free Cash Flow Guidance](index=9&type=section&id=4.3.3.%20Adjusted%20and%20Unlevered%20Free%20Cash%20Flow%20Guidance) FY 2025 adjusted free cash flow is expected to be $232M-$242M, and unlevered free cash flow $289M-$299M FY 2025 Adjusted and Unlevered Free Cash Flow Guidance (in millions) | Item | Low (in millions) | High (in millions) | | :------------------------------------------ | :---------------- | :---------------- | | Cash flows from operations (GAAP) | $221 | $231 | | Purchases of property and equipment | $(6) | $(6) | | Add back: restructuring payments | $17 | $17 | | **Adjusted free cash flow (non-GAAP)** | **$232** | **$242** | | Add back: tax-effected interest expense | $57 | $57 | | **Unlevered free cash flow (non-GAAP)** | **$289** | **$299** | [Non-GAAP Guidance Reconciliations (Q4 2025)](index=9&type=section&id=4.4.%20Non-GAAP%20Guidance%20Reconciliations%20(Q4%202025)) This section provides detailed reconciliations for the company's non-GAAP financial guidance for Q4 2025 [Non-GAAP Earnings per Share Guidance](index=9&type=section&id=4.4.1.%20Non-GAAP%20Earnings%20per%20Share%20Guidance) Q4 2025 non-GAAP diluted EPS is projected at $1.29-$1.35, after accounting for various non-GAAP adjustments Q4 2025 Non-GAAP Diluted EPS Guidance | Item | Low (per share) | High (per share) | | :------------------------------------------ | :-------------- | :-------------- | | GAAP diluted earnings per share | $0.31 | $0.37 | | Total adjustments | $1.25 | $1.25 | | Income tax adjustment | $(0.27) | $(0.27) | | **Non-GAAP diluted earnings per share** | **$1.29** | **$1.35** | [Supplemental Information](index=2&type=section&id=5.%20Supplemental%20Information) This section provides additional context, including company information, conference call details, and explanations of key metrics [About Progress Software](index=2&type=section&id=5.1.%20About%20Progress%20Software) Progress Software provides AI-powered digital experience and infrastructure software, serving over 4 million developers and technologists - Progress Software empowers organizations to achieve transformational success by enabling them to develop, deploy, and manage **responsible AI-powered applications and digital experiences**[10](index=10&type=chunk) - **Over 4 million developers and technologists** at hundreds of thousands of enterprises depend on Progress[10](index=10&type=chunk) [Conference Call Information](index=2&type=section&id=5.2.%20Conference%20Call%20Information) Progress Software will host a conference call on September 29, 2025, at 5:00 p.m. ET to discuss Q3 2025 results - A conference call to review fiscal third quarter 2025 financial results will be held at **5:00 p.m. ET on Monday, September 29, 2025**[9](index=9&type=chunk) - Participants must register for the conference call via the provided link: `https://register-conf.media-server.com/register/BI3c81d17f962244a88dfaf9ee6925ed85`[9](index=9&type=chunk) - The webcast can be accessed at: `https://edge.media-server.com/mmc/p/axecrzfw/`[9](index=9&type=chunk) [Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures and Select Performance Metrics](index=10&type=section&id=5.3.%20Important%20Information%20Regarding%20Non-GAAP%20Financial%20Measures,%20Liquidity%20Measures%20and%20Select%20Performance%20Metrics) This section explains non-GAAP financial measures, liquidity measures, and performance metrics used by management for evaluation and investor understanding - **Non-GAAP financial measures** are used by management to evaluate period-over-period operating performance, illustrate underlying business trends, and provide a more comparable measure of continuing business[24](index=24&type=chunk) - These non-GAAP measures are not in accordance with, or an alternative to, GAAP and should be considered in conjunction with GAAP results, as excluded items may **materially impact financial results**[24](index=24&type=chunk) [Non-GAAP Adjustments Explained](index=10&type=section&id=5.3.1.%20Non-GAAP%20Adjustments%20Explained) Progress Software adjusts GAAP results for items like amortization, stock-based compensation, and restructuring to provide a clearer view of core performance - **Amortization of acquired intangibles** is excluded because these expenses are unrelated to core operating performance and vary significantly based on acquisition timing and magnitude[25](index=25&type=chunk) - **Stock-based compensation** is excluded to align with management and financial community evaluation, as it is generally not controllable short-term and varies significantly[25](index=25&type=chunk) - **Restructuring expenses, acquisition-related expenses, and cyber vulnerability response expenses (net)** are excluded as they distort trends, are unpredictable, or are not part of normal business operations[25](index=25&type=chunk) - The **provision for income taxes** is adjusted by excluding the tax impact of the other non-GAAP adjustments[25](index=25&type=chunk) - **Revenue growth rates** are presented on a constant currency basis to mitigate fluctuations from foreign currency exchange rates and improve period-to-period comparisons[25](index=25&type=chunk)[26](index=26&type=chunk) [Liquidity Measures Explained](index=11&type=section&id=5.3.2.%20Liquidity%20Measures%20Explained) AFCF is cash from operations less capital expenditures plus restructuring payments; Unlevered FCF adds tax-effected interest expense - **Adjusted Free Cash Flow (AFCF)** is defined as cash flows from operating activities less purchases of property and equipment, plus restructuring payments[27](index=27&type=chunk) - **Unlevered Free Cash Flow (Unlevered FCF)** is AFCF plus tax-effected interest expense on outstanding debt[27](index=27&type=chunk) [Select Performance Metrics Explained (ARR, NRR)](index=11&type=section&id=5.3.3.%20Select%20Performance%20Metrics%20Explained%20(ARR,%20NRR)) Progress Software uses ARR (annualized recurring revenue from contracts) and NRR (revenue growth from existing customers) as key performance metrics - **Annualized Recurring Revenue (ARR)** is the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time, used to understand customer trends and business health[27](index=27&type=chunk) - **ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services**, calculated at constant currency[27](index=27&type=chunk)[30](index=30&type=chunk) - **Net Retention Rate (NRR)** is calculated by comparing the ARR from a cohort of customers 12 months prior to their ARR at the current period end, including expansion and net of contraction/attrition, but excluding new customers[31](index=31&type=chunk) [Note Regarding Forward-Looking Statements](index=12&type=section&id=5.4.%20Note%20Regarding%20Forward-Looking%20Statements) Forward-looking statements are subject to risks including economic conditions, international operations, cybersecurity, and acquisition integration challenges - Statements regarding Progress' business outlook and financial guidance are considered **\"forward-looking statements\"** subject to various risks and uncertainties[32](index=32&type=chunk) - Key risk factors include **adverse economic, geopolitical, and market conditions**; **international sales and operations risks** (e.g., foreign currency gains and losses); and potential failure to achieve financial forecasts due to various factors[32](index=32&type=chunk) - Other risks include **cybersecurity compromises** (such as the MOVEit Vulnerability), **unsuccessful future acquisitions or unanticipated integration costs**, and the possibility that expected synergies and benefits from the ShareFile acquisition may not be realized[32](index=32&type=chunk)

Core Insights - Progress Software reported an Annualized Recurring Revenue (ARR) of $849 million, reflecting a 47% year-over-year growth [1][6] - The company's revenue for the third quarter reached $250 million, marking a 40% increase year-over-year [1][6] - Full-year guidance for revenue, earnings per share, and cash flow has been raised, indicating a positive outlook for the remainder of the fiscal year [1][9] Financial Performance - Net retention rate remains strong at 100%, with consistent ARR growth [3][8] - Operating income for the third quarter was $43.9 million, a 9% increase from the previous year [4][18] - The operating margin was reported at 18%, while the non-GAAP operating margin stood at 40% [4][6] Earnings and Cash Flow - Net income for the quarter was $19.4 million, a decrease of 32% compared to the same quarter last year [4][18] - Diluted earnings per share (EPS) was $0.44, down from $0.65 year-over-year, while non-GAAP diluted EPS increased by 19% to $1.50 [4][6] - Cash from operations increased by 27% to $73.4 million, with adjusted free cash flow rising by 29% to $74.4 million [4][24] Business Outlook - Updated guidance for fiscal year 2025 includes revenue expectations of $975 to $981 million and diluted EPS of $1.38 to $1.45 [9][27] - The company anticipates an operating margin of 15% and a non-GAAP operating margin between 38% and 39% for the fiscal year [9][27] - The effective tax rate is projected to be around 19% for GAAP and 20% for non-GAAP measures [9][27] Strategic Developments - The integration of ShareFile is contributing positively to both top and bottom-line results, with significant milestones achieved [3][8] - Continued investment in AI capabilities, including the development of agentic RAG technology, is a focus for the company [3][8] - The Board of Directors has authorized an increase in share repurchase by $200 million, bringing the total to $242.2 million [7][8]

Core Insights - Progress Software has announced the early customer review and testing of the Progress OpenEdge MCP Connector for ABL, which integrates Generative AI and Retrieval-Augmented Generation to enhance development and modernization for OpenEdge platform users [1][2][3] Group 1: Product Features and Benefits - The MCP Connector provides context-aware developer assistance tailored to OpenEdge Advanced Business Language (ABL), offering precise coding guidance, refactoring support, and documentation generation [2][3] - It integrates seamlessly with popular development environments like Visual Studio Code, enhancing developer productivity and allowing for flexible approaches to documentation [4][5] - The connector automates repetitive tasks such as boilerplate code generation and unit testing, improving code quality and compliance with organizational standards [7][8] Group 2: Strategic Value - The MCP Connector offers a future-ready foundation for organizations modernizing OpenEdge systems, reducing costs, mitigating risks, and enhancing developer productivity [6] - It supports real-time collaboration and aligns with business logic, enabling teams to deliver results faster and with greater confidence [6] - The connector aids in reducing technical debt through intelligent analysis and refactoring, accelerating time-to-value for modernization projects [8] Group 3: Customer Feedback and Market Potential - Early testing participants have expressed strong enthusiasm for the MCP Connector's potential to significantly boost developer productivity [4][5] - The integration of AI within the Progress development environment is seen as a key pillar for application modernization and refactoring strategies [5] - The early results indicate impressive improvements in developer productivity, showcasing the connector's promise in the evolving AI landscape [5]

Earnings Expectations - Carnival Corp (NYSE: CCL) is expected to report quarterly earnings of $1.32 per share on revenue of $8.10 billion [2] - Progress Software Corp (NASDAQ: PRGS) is anticipated to post earnings of $1.30 per share on revenue of $240.11 million [2] - Jefferies Financial Group Inc (NYSE: JEF) is projected to report quarterly earnings of 80 cents per share on revenue of $1.92 billion [2] - Vail Resorts Inc (NYSE: MTN) is expected to report a quarterly loss of $4.75 per share on revenue of $273.91 million [2] Stock Movements - Carnival shares increased by 0.1% to $30.65 in after-hours trading [2] - Progress Software shares rose by 0.4% to $42.20 in after-hours trading [2] - JFB Construction Holdings (NASDAQ: JFB) shares surged by 95.5% to $13.39 following a $44 million private placement announcement [2] - Vail Resorts shares gained 0.6% to $148.58 in after-hours trading [2] - Jefferies Financial shares slightly declined to $66.70 in after-hours trading [2]

Group 1 - Progress Software Corporation (NASDAQ:PRGS) launched Progress Federal Solutions, Inc., a wholly owned subsidiary aimed at serving U.S. federal, defense, and public sector organizations [1][2] - The new subsidiary will operate independently while utilizing the technology portfolio of Progress Software Corporation [1] - In Q2 2025, Progress Software reported an Annual Recurring Revenue (ARR) of $838 million, reflecting a 46% year-over-year growth [3] - The company's revenue for Q2 2025 was $237 million, showing a 36% year-over-year increase on an actual currency basis and a 35% increase on a constant currency basis [3] - Progress Software achieved a Net Retention Rate of 100%, indicating the consistent strength of its product offerings [3] - The company made progress in reducing its revolving credit facility, paying down an additional $40 million in Q2 2025 [3]

Group 1 - Progress Software Corporation is set to release its third-quarter earnings results on September 29, with analysts expecting earnings of $1.30 per share, an increase from $1.26 per share in the same period last year [1] - The company projects quarterly revenue of $240.11 million, compared to $178.69 million a year earlier, indicating significant growth [1] - In the second quarter, Progress Software reported better-than-expected earnings, leading to a slight increase in share price to $41.20 [2] Group 2 - Citigroup analyst Fatima Boolani maintained a Neutral rating and reduced the price target from $64 to $57 [4] - Wedbush analyst Daniel Ives reiterated an Outperform rating with a price target of $75 [4] - Guggenheim analyst John Difucci maintained a Buy rating with a price target of $83 [4] - Jefferies analyst Brent Thill kept a Hold rating and raised the price target from $65 to $70 [4] - Oppenheimer analyst Ittai Kidron maintained an Outperform rating and increased the price target from $70 to $80 [4]

Progress Software Corporation (NASDAQ: PRGS) will release earnings results for the third quarter, after the closing bell on Monday, Sept. 29.Analysts expect the Burlington, Massachusetts-based company to report quarterly earnings at $1.30 per share, up from $1.26 per share in the year-ago period. Progress Software projects quarterly revenue of $240.11 million, compared to $178.69 million a year earlier, according to data from Benzinga Pro.On June 30, Progress Software posted better-than-expected earnings fo ...

Core Viewpoint - Wall Street analysts anticipate Progress Software (PRGS) to report quarterly earnings of $1.30 per share, reflecting a year-over-year increase of 3.2%, with revenues expected to reach $240.35 million, up 34.5% from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised upward by 0.3% in the last 30 days, indicating a reassessment of initial estimates by covering analysts [1][2]. - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock price performance [2]. Revenue Projections - Analysts project 'Revenue- Software licenses' to be $65.52 million, indicating a year-over-year increase of 13.3% [4]. - The average estimate for 'Revenue- Maintenance' is $107.45 million, reflecting a change of 4.2% from the year-ago quarter [4]. - 'Revenue- Maintenance and services (Maintenance, SaaS, and professional services)' is expected to reach $174.20 million, suggesting a significant year-over-year increase of 44.2% [5]. Stock Performance - Progress Software shares have experienced a decline of 9.7% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.1% [5]. - With a Zacks Rank of 3 (Hold), PRGS is expected to perform in line with the overall market in the near future [5].