Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported annual revenue of $978 million, a 30% increase year over year, and earnings per share of $5.72, up 16% from fiscal year 2024 [5][18] - The fourth quarter revenue was $253 million, an 18% increase year over year, with earnings of $1.51, exceeding guidance [6][19] - The company achieved a 100% net retention rate and a 2% year-over-year growth in annual recurring revenue (ARR) to $852 million, which now represents over 87% of total revenue [5][17] Business Line Data and Key Metrics Changes - The growth in ARR was driven by multiple products, including ShareFile, OpenEdge, WhatsUp Gold, and DevTools, with ShareFile being a significant contributor to the overall revenue growth [17][18] - Operating income for Q4 was $96 million, resulting in an operating margin of 38%, which exceeded internal expectations [19] Market Data and Key Metrics Changes - The company noted strong performance in the second half of the fiscal year, particularly due to customer investments in AI projects [5][7] - The integration of ShareFile and Nuclia's technology has been well-received, contributing positively to the company's product offerings and customer satisfaction [8][9] Company Strategy and Development Direction - The company is focused on continuing its total growth strategy, with an emphasis on M&A opportunities among infrastructure software vendors [14][15] - The company plans to aggressively repay its revolving line of credit used for the ShareFile acquisition, aiming to improve its net leverage ratio [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the FY 2026 guidance, anticipating revenue between $986 million and $1 billion, representing 1-2% growth over 2025 [22] - The management highlighted the importance of AI in driving future growth and emphasized the company's commitment to innovation and product development [29][30] Other Important Information - The company opened a new facility in Costa Rica to enhance tech support and customer success, strengthening its regional presence [12] - The company maintained a low voluntary attrition rate of 6% for fiscal 2025, reflecting a positive workplace culture [13] Q&A Session Summary Question: Perspective on AI's impact on software - Management acknowledged the hype and fear surrounding AI but emphasized that businesses will continue to rely on existing applications and tools, suggesting that fears of disruption are overblown in the near term [26][29] Question: Monetization path of AI and net retention rates - Management indicated that while net retention rates remain strong, the broader investment in AI is still limited to a small number of tech companies, suggesting that significant growth in this area may take time [39][40] Question: Revenue growth and free cash flow expectations - Management noted that Q4 cash flow was strong due to backend-loaded bookings, and they expect free cash flow growth to outpace revenue growth in 2026 [42][43] Question: SaaS revenue strength and guidance - Management confirmed that Q4 saw strong SaaS revenue growth driven by ShareFile and other products, but they do not expect this trend to dramatically outpace overall business growth in 2026 [47][48] Question: Retention rates of acquisition targets - Management observed that smaller companies are facing challenges with customer retention due to fears of AI disruption, leading to increased selectivity in acquisition targets [50][51]

Core Insights - Progress Federal Solutions has achieved "Awardable" status in the DoD's Tradewinds Solutions Marketplace, enabling rapid procurement of its Data Platform by U.S. Department of Defense customers [1][3] - The Progress Data Platform integrates database, search, and semantic AI capabilities, aimed at enhancing decision-making and operational efficiency for defense and civilian agencies [1][4] Company Overview - Progress Federal Solutions is a subsidiary of Progress Software, focusing on delivering AI-powered solutions tailored for U.S. federal, defense, and public sector organizations [3][7] - The company emphasizes its commitment to scalable, secure, and innovative AI solutions that support government agencies in achieving their objectives [3] Product Features - The Progress Data Platform allows agencies to integrate, manage, and operationalize complex data, providing a unified environment for structured and unstructured data [4][9] - Key functionalities include real-time information access, government-grade security, and the application of semantic AI for enhanced intelligence and situational awareness [9] Marketplace Context - The Tradewinds Solutions Marketplace is designed to facilitate the procurement and adoption of AI/ML, data, and analytics capabilities within the DoD [2][6] - Solutions in the marketplace are assessed through competitive procedures, ensuring they meet significant challenges faced by the DoD [6]

Core Insights - Progress Software has launched Progress Federal Solutions, Inc., a wholly owned subsidiary aimed at serving the specialized needs of U.S. federal, defense, and public sector organizations [1][2] - The subsidiary will leverage Progress Software's technology portfolio to help government agencies accelerate digital transformation and meet compliance mandates [2][3] Company Overview - Progress Federal Solutions operates independently while utilizing the full strength of Progress Software's technology [2] - The subsidiary focuses on enabling data-driven decision-making and faster time to value for federal and defense agencies [3][4] Technology and Solutions - Progress Federal Solutions builds on the foundation of MarkLogic, acquired in 2023, specializing in data management and integration [4] - The subsidiary offers the Progress Data Platform, an AI-powered solution designed to connect, curate, and consume data across complex environments [7] - Key capabilities include automated semantics for progressive AI, progressive graphs, progressive vectors, and cloud-first digital experience platforms [8] Market Demand - Government agencies are increasingly prioritizing AI, particularly generative AI and machine learning, to enhance operations and data interpretation [6] - The integration of generative AI with semantic technologies and knowledge graphs is expected to deliver greater value to digital ecosystems [6] Partnerships and Distribution - Carahsoft Technology Corp. serves as a public sector distributor for Progress Federal Solutions, making the technology portfolio available through reseller partners [9]