Progress Software Corp (PRGS) Q3 2025 Earnings Call Highlights: Surpassing Expectations with …

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• Revenue: $250 million, exceeding previous guidance.

• Earnings Per Share (EPS): $1.50, above the high end of guidance.

• Operating Margin: 40%, surpassing expectations.

• Annualized Recurring Revenue (ARR): $849 million, 47% year-over-year growth.

• Net Retention Rate: 100%.

• Debt Repayment: $40 million paid down in Q3.

• Share Repurchase: $15 million in Q3, $65 million year-to-date.

• Cash and Cash Equivalents: $99 million.

• Total Debt: $1.4 billion.

• Adjusted Free Cash Flow: $74 million, 29% increase from the previous year.

• Unlevered Free Cash Flow: $89 million, 40% increase from the previous year.

• Revolving Credit Facility: Increased capacity from $900 million to $1.5 billion.

Release Date: September 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Progress Software Corp (NASDAQ:PRGS) reported revenues of $250 million, surpassing previous guidance and showing strong performance across products and geographies.

• Earnings per share were $1.50, exceeding the high end of guidance, with an operating margin of 40%, reflecting excellent execution and cost control.

• Annualized recurring revenue (ARR) grew by 47% year-over-year, demonstrating strong demand and customer retention.

• The company successfully integrated ShareFile, enhancing its product offerings and achieving better-than-expected ARR and top-line growth.

• Progress Software Corp (NASDAQ:PRGS) increased its revolver capacity from $900 million to $1.5 billion, providing greater financial flexibility for future growth and acquisitions.

• Despite strong quarterly performance, the full-year guidance was only modestly increased, indicating potential conservatism or uncertainty in future projections.

• The integration of ShareFile, while successful, presented challenges due to its complexity as a carve-out from a larger entity.

• The company’s net debt position remains significant at $1.3 billion, with a net leverage of approximately 3.5 times trailing 12-month adjusted EBITDA.

• Deferred revenue decreased slightly from the second quarter, reflecting normal seasonality but also indicating potential fluctuations in revenue recognition.

• The company faces ongoing challenges in maintaining high gross margins as it integrates SaaS products with traditionally higher costs.

Q: Can you elaborate on how AI initiatives will impact external benchmarks like net retention rates or pricing power? A: Yogesh Gupta, President and CEO, explained that AI initiatives are expected to first impact net retention rates (NRR) as they enhance customer retention and expansion. The company is focusing on integrating AI capabilities into higher-end product editions, which could indirectly drive pricing opportunities by encouraging customers to upgrade.