Progress Software (PRGS) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $238 million, up 29–30% year-over-year, driven by the ShareFile acquisition, with ARR at $836 million, up 48% year-over-year.

• ShareFile contributed $250 million to ARR and $63.6 million to Q1 revenue, now representing nearly 30% of total revenue.

• Net retention rate exceeded 100%, indicating strong customer loyalty and expansion.

• Non-GAAP EPS was $1.31, well above guidance; GAAP EPS was $0.24, down 52–53% year-over-year due to higher costs and interest expense.

• ShareFile integration is ahead of schedule, contributing to ARR, revenue, and expense savings.

Financial highlights

• Operating margin was 39% (non-GAAP) and 14% (GAAP), with gross margin at 81%.

• Operating income was $94 million (non-GAAP) and $32.4 million (GAAP); non-GAAP net income was $59 million, up 5% year-over-year.

• Cash from operations was $68.9 million; adjusted free cash flow was $73–73.2 million; unlevered free cash flow was $88 million.

• Days sales outstanding improved to 48 days, down from 50 days a year ago and 67 days in the prior quarter.

• Interest expense rose 151% to $18.4 million due to debt for the ShareFile acquisition.

Outlook and guidance

• FY 2025 revenue guidance: $958–$970 million; non-GAAP EPS: $5.25–$5.37; non-GAAP operating margin: 38%.

• Q2 2025 revenue guidance: $235–$241 million; non-GAAP EPS: $1.28–$1.34.

• Adjusted free cash flow for FY 2025: $225–$238 million; unlevered free cash flow: $283–$294 million.

• Debt repayment target for 2025 increased to $160 million; share repurchase forecast lowered to $70 million.

• Currency translation impact expected to be immaterial for EPS; revenue impact of $2.8 million for FY 2025.