Progress(PRGS) - 2025 Q1 - Quarterly Report

Revenue Performance - Total revenue for the three months ended February 28, 2025, was $238.0 million, representing a 29% increase compared to$ 184.7 million for the same period in 2024[71] - ShareFile contributed $63.6 million to revenue in the first quarter of fiscal year 2025 following its acquisition[71] - Software license revenue decreased by 9% to$ 58.4 million, down from $64.1 million, accounting for 25% of total revenue[72] - Maintenance, SaaS, and professional services revenue increased by 49% to$ 179.6 million, representing 75% of total revenue[73] - North America generated $154.6 million in revenue, a 44% increase from$ 107.3 million, accounting for 65% of total revenue[74] Profitability and Expenses - Gross profit increased by 26% to $191.8 million, with a gross margin of 81%[79] - Sales and marketing expenses rose by 31% to$ 51.3 million, representing 22% of total revenue[80] - Product development costs increased by 33% to $46.4 million, maintaining 19% of total revenue[81] - General and administrative expenses increased by 20% to$ 25.6 million, accounting for 11% of total revenue[82] - Amortization of intangibles increased by 48% to $25.8 million, representing 11% of total revenue due to the acquisition of ShareFile[83] - Cyber vulnerability response expenses decreased by 25% year-over-year, totaling$ 737,000 for the three months ended February 28, 2025, compared to $987,000 for the same period in 2024[84] - Restructuring expenses increased by 199%, amounting to$ 7,029,000 for the three months ended February 28, 2025, up from $2,349,000 in the prior year[86] - Acquisition-related expenses rose by 255%, reaching$ 2,490,000 for the three months ended February 28, 2025, compared to $702,000 in the same period of 2024[87] Income and Cash Flow - Income from operations decreased by 7%, totaling$ 32,426,000 for the three months ended February 28, 2025, down from $35,006,000 in the prior year[88] - Net income fell by 52%, amounting to$ 10,946,000 for the three months ended February 28, 2025, compared to $22,639,000 for the same period in 2024[91] - Net cash flows from operating activities were$ 68,947,000 for the three months ended February 28, 2025, compared to $70,504,000 in the same period of 2024[104] - Cash and cash equivalents increased by$ 6.1 million from the end of fiscal year 2024, totaling $124,161,000 as of February 28, 2025[102] Recurring Revenue and Customer Retention - Annualized Recurring Revenue (ARR) increased by 48% year-over-year, reaching$ 836 million as of February 28, 2025, up from $566 million in the prior year[99] - Net retention rates remained stable, generally ranging between 100% and 102% for all periods presented, indicating strong customer retention[101] Strategic Decisions and Risks - The company suspended its quarterly dividend to redirect capital towards debt repayment and future M&A activities following the ShareFile acquisition[110] - MOVEit Transfer products were attacked, leading to compromised personal data and ongoing class action lawsuits[114] - The litigation related to the MOVEit Vulnerability is in an early stage, with motions to dismiss filed but not yet ruled upon[114] - Future expenses and liabilities from the MOVEit Vulnerability are expected to be mitigated by insurance[115] - No significant changes to market risk disclosures were noted during the first three months of fiscal year 2025[117]