Progress Software: Making Progress Driven by the AI Revolution

Core Insights - Progress Software is leveraging AI-powered infrastructure and business application development platforms to enhance data management for businesses [1] - The company has successfully integrated its $875 million acquisition of ShareFile, contributing to a rebound in stock performance after reaching a nine-month low [2][7] Financial Performance - Progress Software reported an earnings-per-share (EPS) of $1.31 for fiscal Q1 2025, exceeding consensus estimates by $0.25, with revenues increasing by 28.9% year-over-year to $238.02 million [2][3] - Annualized recurring revenue (ARR) grew by 48% year-over-year to $836 million, with the ShareFile acquisition adding approximately $250 million to ARR [3][7] - The company achieved an operating margin of 14%, with an adjusted operating margin of 39% [3] Guidance and Projections - For fiscal Q2, Progress Software provided an EPS guidance of $1.28 to $1.34, with a midpoint of $1.31, surpassing the consensus estimate of $1.17 [4] - Full-year fiscal 2025 EPS guidance is set between $5.25 and $5.37, with a midpoint of $5.31, compared to the consensus estimate of $5.06 [5] - Expected full-year revenues for 2025 are projected between $958 million and $970 million, with a midpoint of $964 million, aligning closely with analyst estimates [5] Acquisition Impact - The integration of ShareFile is on track for completion by September 2025, enhancing the company's ability to pursue future SaaS acquisitions [7] - The acquisition is expected to contribute nearly $250 million to total revenues for fiscal 2025, with high predictability and gross margins exceeding 80% [7] Valuation Metrics - Progress Software's net debt stands at $1.373 billion, with a debt-to-equity ratio of 3.48, although the company has made efforts to reduce debt by $30 million in fiscal Q1 [9] - The updated price-sales (P/S) ratio is 2.63, which is lower than competitors like Pegasystems and SS&C Technologies [11] - The forward price-earnings (P/E) ratio is 10.99, significantly lower than Pegasystems' 33.49 and SS&C's 13.9 [11]