Progress Software (PRGS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $175.1 million, exceeding guidance but down 2% year-over-year; non-GAAP EPS was $1.09, up 3%, and ARR grew 1% to $579 million with a net retention rate of 99%.

• Operating margin was 16% GAAP (up 300 bps) and 38% non-GAAP; net income rose 34% to $16.2 million.

• Cash and equivalents increased to $190.4 million, with cash flow and DSOs improving to 41 days.

• Share repurchases totaled $50 million in Q2, with $122 million remaining under authorization.

• Quarterly dividend of $0.175 per share declared, payable September 16, 2024.

Financial highlights

• Q2 2024 revenue was $175.1 million, above guidance; non-GAAP EPS was $1.09, and adjusted free cash flow was $64.1 million, up 33% year-over-year.

• Operating income was $67 million non-GAAP, with a non-GAAP margin of 38%; GAAP operating margin was 16%.

• Net income for Q2 2024 was $16.2 million, up 34% year-over-year; non-GAAP net income was $47.9 million, up 2%.

• Cash and cash equivalents increased to $190.4 million at quarter-end.

• Net leverage stood at 2.2x trailing 12-month adjusted EBITDA.

Outlook and guidance

• Q3 2024 revenue expected between $174 million and $178 million; non-GAAP EPS between $1.11 and $1.15.

• FY 2024 revenue guidance raised to $725–$735 million; non-GAAP EPS expected at $4.70–$4.80.

• FY 2024 GAAP EPS expected at $1.98–$2.10; non-GAAP operating margin projected at 39–40%.

• Adjusted free cash flow guidance remains $205–$215 million.

• Share repurchases for the year expected to total $103 million, up from $78 million previously.