Progress Software (PRGS) investor relations material

Executive summary

• Fiscal year 2025 delivered record revenue of $978 million, up 30% year-over-year, and Q4 revenue of $253 million, up 18% year-over-year, with non-GAAP EPS of $5.72, up 16% from 2024, and Q4 non-GAAP EPS of $1.51, exceeding guidance.

• Annualized recurring revenue (ARR) reached $852 million, growing 2% year-over-year, with a net retention rate of 100%.

• ShareFile integration completed ahead of schedule, significantly contributing to growth, alongside increased demand from AI-driven projects.

• Strong expense discipline and operational execution led to outperformance in both revenue and operating income guidance.

• Adjusted free cash flow for FY25 was $247 million, up 16% year-over-year, surpassing guidance.

Financial highlights

• Full-year revenue: $978 million, up $224 million (30%) from prior year, driven by ShareFile.

• Q4 revenue: $253 million, up 18% year-over-year.

• Q4 GAAP operating margin was 15%, non-GAAP operating margin 38%; full-year non-GAAP operating margin 39%.

• Q4 adjusted free cash flow was $62 million, up 243%; full-year adjusted free cash flow was $247 million, up 16%.

• Deferred revenue at year-end: $425 million, up $21 million year-over-year.

Outlook and guidance

• FY 2026 revenue guidance: $986 million to $1 billion (1-2% growth), non-GAAP EPS: $5.82 to $5.96, and non-GAAP operating margin of 39%.

• Q1 2026 revenue guidance: $244 million to $250 million; non-GAAP EPS: $1.56 to $1.62.

• Unlevered free cash flow expected between $313 million and $326 million; adjusted free cash flow for FY26 expected at $260 million to $274 million.

• ARR growth expected to remain at 2% year-over-year.

• $250 million in debt repayments planned for FY 2026, targeting net leverage ratio of 2.7x.