Progress Software (PRGS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $179 million, up 2% year-over-year, exceeding the high end of guidance, with non-GAAP EPS of $1.26 up 17% and GAAP EPS of $0.65 up 55% year-over-year.

• Annual recurring revenue (ARR) was $582 million, flat year-over-year, with a net retention rate of 99%.

• Operating margin was 41% non-GAAP and 23% GAAP, with strong expense management and execution.

• Announced definitive agreement to acquire ShareFile for $875 million in cash, expected to close by fiscal year-end; deal to be funded with cash and revolving credit facility.

• SEC and international regulators concluded investigations into the MOVEit vulnerability with no enforcement action.

Financial highlights

• Q3 non-GAAP revenue was $179 million (guidance: $174–$178 million); non-GAAP EPS was $1.26 (guidance: $1.11–$1.15); GAAP EPS was $0.65 (guidance: $0.48–$0.52).

• Net income for Q3 was $28.5 million, up 49% year-over-year; non-GAAP net income was $55.2 million.

• Adjusted free cash flow for Q3 was $58 million, up 21% year-over-year.

• Cash and cash equivalents stood at $232.7 million at quarter-end.

• Repurchased $14 million in stock during Q3, totaling $87 million year-to-date, with $107 million remaining under authorization.

Outlook and guidance

• Q4 2024 revenue expected between $207 million and $217 million; non-GAAP EPS between $1.15 and $1.25.

• Full year 2024 revenue guidance is $745–$755 million, non-GAAP operating margin ~39%, adjusted free cash flow $195–$205 million, and non-GAAP EPS $4.75–$4.85.

• ShareFile expected to contribute $18–$20 million in Q4 revenue, with 15–20% operating margin and negative adjusted free cash flow due to deal structure.

• ShareFile’s adjusted free cash flow expected to turn positive throughout 2025.

• Guidance assumes one month of ShareFile contribution; positive currency impact expected to be modest.