Progress Software — Third Quarter 2026 Earnings Summary

Financial Performance

• Revenue was $246.0 million, a 2% decrease year-over-year on both an actual and constant currency basis.
• Annualized Recurring Revenue (ARR) reached $873 million, a 1% increase year-over-year on a constant currency basis.
• Operating margin was 19% (GAAP) and 43% (Non-GAAP), compared to 18% and 40% respectively in the prior year quarter.
• Diluted earnings per share (EPS) were $0.55, a 25% increase from $0.44 in the same quarter last year.
• Non-GAAP diluted EPS was $1.69, a 13% increase from $1.50 in the same quarter last year.
• Cash from operations (GAAP) was $88.0 million, a 20% increase from $73.4 million in the prior year quarter.
• Adjusted free cash flow (Non-GAAP) was $87.2 million, a 17% increase from $74.4 million in the prior year quarter.
• Unlevered free cash flow (Non-GAAP) was $100.7 million, a 14% increase from $88.6 million in the prior year quarter.
• Cash and cash equivalents were $113.7 million at the end of the quarter.
• Days sales outstanding (DSO) was 42 days, down from 55 days in the fiscal third quarter of 2025 and 73 days in the fiscal fourth quarter of 2025.
• Total assets were $2.30 billion as of August 31, 2026, down from $2.46 billion as of November 30, 2025.
• Long-term debt was $790.0 million as of August 31, 2026, up from $600.0 million as of November 30, 2025.
• Deferred revenue totaled $406.5 million ($311.9 million current, $94.5 million non-current) as of August 31, 2026, down from $425.1 million ($324.8 million current, $100.3 million non-current) as of November 30, 2025.

Guidance and Future Outlook

• Updated Fiscal Year 2026 Revenue guidance is $1,044 million to $1,052 million (GAAP and Non-GAAP), compared to prior guidance of $990 million to $1,002 million.
• Updated Fiscal Year 2026 Diluted EPS guidance is $1.18 to $1.28 (GAAP) and $6.15 to $6.23 (Non-GAAP), compared to prior guidance of $1.60 to $1.74 (GAAP) and $6.09 to $6.21 (Non-GAAP).
• Updated Fiscal Year 2026 Operating margin guidance is 13% (GAAP) and 38% (Non-GAAP), compared to prior guidance of 16% (GAAP) and 39% (Non-GAAP).
• Updated Fiscal Year 2026 Adjusted free cash flow guidance is $275 million to $283 million, compared to prior guidance of $271 million to $283 million.
• Updated Fiscal Year 2026 Unlevered free cash flow guidance is $330 million to $338 million, compared to prior guidance of $323 million to $334 million.
• Fiscal Q4 2026 Revenue guidance is $297 million to $305 million.
• Fiscal Q4 2026 Diluted EPS guidance is a loss of $(0.41) to $(0.32) (GAAP) and $1.24 to $1.33 (Non-GAAP).
• Expected positive currency translation impact on Fiscal Year 2026 revenue is approximately $9.4 million compared to 2025 exchange rates.
• Expected positive currency translation impact on Fiscal Year 2026 GAAP and Non-GAAP diluted EPS is approximately $0.11.
• Expected positive currency translation impact on Fiscal Q4 2026 revenue is approximately $0.6 million compared to 2025 exchange rates.
• Expected positive currency translation impact on Fiscal Q4 2026 GAAP and Non-GAAP diluted EPS is approximately $0.02.

Business Segments and Product Lines

• The company announced the closing of the acquisition of Domo's AI and Data Platform Business.
• Software license revenue was $63.6 million for the quarter, flat year-over-year.
• Maintenance, SaaS, and professional services revenue was $182.4 million, a 2% decrease year-over-year.
• Total revenue for the nine months ended August 31, 2026, was $747.3 million, a 3% increase from $725.2 million in the prior year period.

Market and Competitive Landscape

• Management stated the company is uniquely positioned to help organizations drive business outcomes with confidence as they seek context and control to realize the full potential of AI.
• The company aims to help customers unlock the value of their data and accelerate AI-powered innovation following the Domo acquisition.
• Progress describes itself as an AI infrastructure software leader.

Risks and Challenges

• The press release notes that future acquisitions may not be successful or may involve unanticipated costs or integration issues.
• Risks include economic, geopolitical, and market conditions adversely affecting business, results of operations, and financial condition.
• International sales and operations are subject to risks related to foreign currency gains and losses.
• Potential failure to achieve financial forecasts due to transaction delays, size reductions, fewer large transactions, currency fluctuations, or declining renewal rates.
• Risks regarding security measures being compromised, successful cyber-attacks, or software vulnerabilities causing reputational harm, legal claims, and financial exposure.
• Uncertainty regarding the results of inquiries, investigations, and legal claims regarding the MOVEit Vulnerability, which could result in material losses.
• Exchange rate changes versus current expectations may impact the business outlook.

Management Commentary and Tone

• Yogesh Gupta, CEO, stated that results reflect the strength of the strategy, resilience of the business model, and value of the differentiated software portfolio.
• Gupta noted steady growth in ARR and earnings through strong execution and disciplined expense management while improving the balance sheet.
• Anthony Folger, CFO, described execution in the third quarter as "very strong," citing year-over-year growth in ARR and adjusted free cash flow of more than 1% and 17%, respectively.
• Folger highlighted a non-GAAP operating margin of 43% as a testament to the stability, durability, and efficiency of the operating model.
• Management expressed confidence in integrating Domo and continuing to deliver on the Total Growth Strategy.

Other Key Points

• The acquisition of Domo's AI and Data Platform Business closed during the quarter.
• The company incurred $3.5 million in cyber vulnerability response expenses, net, for the quarter, up from $0.7 million in the prior year period.
• Restructuring expenses were $0.1 million for the quarter, down from $0.9 million in the prior year period.
• Acquisition-related expenses were $3.9 million for the quarter, up from $0.8 million in the prior year period.
• Stock-based compensation totaled $16.1 million for the quarter, up 1% from $16.0 million in the prior year period.
• The company repurchased common stock for $14.3 million during the quarter.
• The company repaid $60.0 million on its revolving line of credit during the quarter.
• The effective tax rate for the quarter was 25% (GAAP) and 20% (Non-GAAP).
• The company will hold a conference call on September 30, 2026, at 5:00 p.m. ET to review results.