Progress Software (PRGS) Q3 2026 earnings summary

Executive summary

• Q3 2026 revenue was $246 million, within guidance, but down 2% year-over-year due to renewal timing; ARR reached $873 million, up 1% year-over-year, with a net retention rate of 99%.

• Non-GAAP EPS was $1.69, up 13% year-over-year and above guidance; GAAP EPS was $0.55, up from $0.44.

• Non-GAAP operating margin was 43%; GAAP operating margin was 19%.

• The $400 million acquisition of Domo's AI and data platform business closed, funded by a $390 million revolver draw, expanding AI capabilities.

• Major customers expanded relationships, citing reliability, security, and operational efficiency.

Financial highlights

• ARR ended at $873 million, up 1% year-over-year; net retention rate held at 99%.

• Q3 revenue was $246 million; year-to-date revenue was $747.3 million, up 3%.

• Non-GAAP operating income was $105 million, up 6% year-over-year; adjusted free cash flow was $87 million, up 17%.

• Gross profit margin for Q3 was 83%.

• Diluted EPS for Q3 was $0.55 (GAAP) and $1.69 (non-GAAP); net income was $22.8 million, up 17%.

Outlook and guidance

• Q4 2026 revenue guidance is $297–$305 million; non-GAAP EPS $1.24–$1.33.

• FY 2026 revenue guidance raised to $1,044–$1,052 million; non-GAAP EPS $6.15–$6.23; GAAP EPS $1.18–$1.28.

• FY 2026 non-GAAP operating margin expected at 38%; adjusted free cash flow $275–$283 million.

• Fiscal 2027 margin expected to compress to 36–37% due to Domo integration, with recovery post-synergies.

• Currency translation expected to positively impact FY 2026 revenue by $9.4 million.