Progress Software Announces Second Quarter 2026 Financial Results
Revenue of $253 million grew 7% year-over-year
Annualized Recurring Revenue ("ARR") of $868 million grew 2% year-over-year
BURLINGTON, Mass., June 30, 2026 — Progress Software (Nasdaq: PRGS), the trusted provider of AI-powered digital experience and infrastructure software, today announced financial results for its fiscal second quarter ended May 31, 2026.
Second Quarter 2026 Highlights:
•Revenue of $253 million increased 7% year-over-year on an actual currency basis and 6% on a constant currency basis.
•Annualized Recurring Revenue ("ARR") of $868 million increased 2% year-over-year on a constant currency basis.
•Operating margin was 18% and non-GAAP operating margin was 40%.
•Diluted earnings per share was $0.50 compared to $0.39 in the same quarter last year, an increase of 28%.
•Non-GAAP diluted earnings per share was $1.62 compared to $1.40 in the same quarter last year, an increase of 16%.
"Q2 was another strong quarter for Progress, highlighted by broad-based demand across our portfolio and driven meaningfully by continued momentum in our AI-powered offerings," said Yogesh Gupta, CEO of Progress Software. "Our teams are executing well against our strategy, while maintaining the operational discipline that enables us to invest in innovation, strengthen the balance sheet, and continue to create long-term value for shareholders. As we look ahead, we remain confident that our customers will leverage our products to accelerate their AI and digital transformation initiatives."
Additional financial highlights included:
Three Months Ended
GAAP
Non-GAAP
(in thousands, except percentages and per share amounts)
See Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures, and Select Performance Metrics and a reconciliation of non-GAAP adjustments to Progress' GAAP financial results at the end of this press release.
Other fiscal second quarter 2026 metrics and recent results included:
•Cash and cash equivalents were $103 million at the end of the quarter.
•Days sales outstanding was 49 days compared to 53 days in the fiscal second quarter of 2025 and 73 days in the fiscal fourth quarter of 2025.
Anthony Folger, Progress CFO, said: "Our Q2 revenues were ahead of expectations, and the outperformance was largely driven by the success of several AI powered product offerings. ARR growth was solid at 2% and our net retention rate was 100%. On the balance sheet, we paid down debt aggressively, bringing our trailing twelve-month net leverage ratio to 2.9X, and also repurchased another $35 million of shares during the quarter. We are currently well-positioned and our positive outlook is reflected in our increased guidance."
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2026 Business Outlook
Progress provides the following guidance for the fiscal year ending November 30, 2026 and the fiscal third quarter ending August 31, 2026:
Updated FY 2026 Guidance
(June 30, 2026)
Prior FY 2026 Guidance (March 30, 2026)
(in millions, except percentages and per share amounts)
Based on current exchange rates, the expected positive currency translation impact on our:
•Fiscal year 2026 business outlook compared to 2025 exchange rates is approximately $8.8 million on revenue.
•GAAP and non-GAAP diluted earnings per share for fiscal year 2026 is approximately $0.11.
•Fiscal Q3 2026 business outlook compared to 2025 exchange rates is approximately $0.2 million on revenue.
•GAAP and non-GAAP diluted earnings per share for fiscal Q3 2026 is approximately $0.02.
To the extent that there are changes in exchange rates versus the current environment and/or our expectations, this may have an impact on Progress' business outlook.
Conference Call
Progress will hold a conference call to review its financial results for the fiscal second quarter of 2026 at 5:00 p.m. ET on Tuesday, June 30, 2026. Participants must register for the conference call here: https://register-conf.media-server.com/register/BI4a8f3a3282e74ab2ada736bc5bd92ec1. The webcast can be accessed at: https://edge.media-server.com/mmc/p/ctm7obvp. The conference call will include comments followed by questions and answers. Attendees must register for the webcast and an archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.
About Progress
Progress Software (Nasdaq: PRGS) empowers organizations to achieve transformational success in the face of disruptive change. Our software enables our customers to develop, deploy and manage responsible AI-powered applications and personalized digital experiences with agility and ease. Businesses of all sizes get a trusted provider in Progress, with the products, expertise and vision they need to turn AI disruption into a competitive advantage. Millions of developers and technologists at hundreds of thousands of organizations depend on Progress every day. Learn more at www.progress.com.
Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners.
Investor Contact:
Press Contact:
Michael Micciche
Jeff Young
Progress Software
Progress Software
+1 781 850 8450
+1 781 280 4000
Investor-Relations@progress.com
PR@progress.com
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
(in thousands, except per share data)
May 31, 2026
May 31, 2025
% Change
May 31, 2026
May 31, 2025
% Change
Revenue:
Software licenses
$
68,979
$
50,795
36
%
$
136,560
$
109,240
25
%
Maintenance, SaaS, and professional services
184,486
186,560
(1)
%
364,704
366,130
—
%
Total revenue
253,465
237,355
7
%
501,264
475,370
5
%
Costs of revenue:
Cost of software licenses
3,675
2,987
23
%
6,688
5,912
13
%
Cost of maintenance, SaaS, and professional services
32,259
33,764
(4)
%
64,359
66,648
(3)
%
Amortization of acquired intangibles
8,938
10,537
(15)
%
17,689
20,959
(16)
%
Total costs of revenue
44,872
47,288
(5)
%
88,736
93,519
(5)
%
Gross profit
208,593
190,067
10
%
412,528
381,851
8
%
Operating expenses:
Sales and marketing
54,341
49,677
9
%
106,338
100,973
5
%
Product development
48,840
46,570
5
%
99,314
92,945
7
%
General and administrative
32,236
25,637
26
%
58,740
51,260
15
%
Amortization of acquired intangibles
26,167
26,063
—
%
51,784
51,871
—
%
Cyber vulnerability response expenses, net
1,266
730
73
%
2,624
1,467
79
%
Restructuring expenses
1,480
1,043
42
%
2,186
8,072
(73)
%
Acquisition-related expenses
(939)
1,731
(154)
%
(125)
4,221
(103)
%
Total operating expenses
163,391
151,451
8
%
320,861
310,809
3
%
Income from operations
45,202
38,616
17
%
91,667
71,042
29
%
Other expense, net
(16,362)
(18,752)
13
%
(32,535)
(37,876)
14
%
Income before income taxes
28,840
19,864
45
%
59,132
33,166
78
%
Provision for income taxes
7,767
2,835
174
%
15,246
5,191
194
%
Net income
$
21,073
$
17,029
24
%
$
43,886
$
27,975
57
%
Earnings per share:
Basic
$
0.50
$
0.40
25
%
$
1.04
$
0.65
60
%
Diluted
$
0.50
$
0.39
28
%
$
1.03
$
0.63
63
%
Weighted average shares outstanding:
Basic
41,901
43,053
(3)
%
42,028
43,154
(3)
%
Diluted
42,310
44,156
(4)
%
42,519
44,522
(4)
%
Stock-based compensation is included in the condensed consolidated statements of operations, as follows:
Costs of revenue
$
1,508
$
1,560
(3)
%
$
3,126
$
2,755
13
%
Sales and marketing
4,059
3,663
11
%
8,142
6,695
22
%
Product development
5,847
4,984
17
%
11,442
9,394
22
%
General and administrative
9,095
6,534
39
%
16,273
12,580
29
%
Total
$
20,509
$
16,741
23
%
$
38,983
$
31,424
24
%
3
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
May 31, 2026
November 30, 2025
Assets
Current assets:
Cash and cash equivalents
$
102,978
$
94,807
Accounts receivable, net
125,209
195,783
Unbilled receivables, current portion
51,297
46,599
Other current assets
57,018
62,776
Total current assets
336,502
399,965
Property and equipment, net
14,938
13,694
Goodwill and intangible assets, net
1,824,329
1,893,082
Right-of-use lease assets
31,526
25,842
Unbilled receivables, non-current portion
44,139
29,950
Other assets
94,189
95,125
Total assets
$
2,345,623
$
2,457,658
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and other current liabilities
$
83,422
$
117,331
Convertible senior notes, current portion, net
—
359,163
Operating lease liabilities, current portion
8,144
8,490
Deferred revenue, current portion
324,469
324,750
Total current liabilities
416,035
809,734
Long-term debt
850,000
600,000
Operating lease liabilities, non-current portion
26,467
21,077
Deferred revenue, non-current portion
98,756
100,329
Convertible senior notes, non-current portion, net
442,147
441,186
Other non-current liabilities
6,135
6,983
Stockholders' equity:
Common stock and additional paid-in capital
416,043
384,119
Retained earnings
90,040
94,230
Total stockholders' equity
506,083
478,349
Total liabilities and stockholders' equity
$
2,345,623
$
2,457,658
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
Six Months Ended
(in thousands)
May 31, 2026
May 31, 2025
May 31, 2026
May 31, 2025
Operating activities:
Net income
$
21,073
$
17,029
$
43,886
$
27,975
Depreciation and amortization
38,186
39,568
75,646
78,777
Stock-based compensation
20,509
16,741
38,983
31,424
Other non-cash adjustments
3,713
(1,332)
10,961
1,738
Changes in operating assets and liabilities
(4,644)
(42,010)
7,987
(40,971)
Net cash flows from operating activities
78,837
29,996
177,463
98,943
Capital expenditures
(1,864)
(495)
(4,569)
(1,785)
Repurchases of common stock, net of issuances
(32,061)
(13,478)
(47,026)
(37,348)
Dividend equivalent payments to stockholders
—
(295)
—
(654)
Payments for acquisitions
—
—
—
(1,195)
Repurchases of convertible senior notes
(360,000)
—
(360,000)
—
Proceeds from revolving line of credit
360,000
—
360,000
—
Repayment of revolving line of credit
(50,000)
(40,000)
(110,000)
(70,000)
Other
(5,105)
2,117
(7,697)
(4,032)
Net change in cash and cash equivalents
(10,193)
(22,155)
8,171
(16,071)
Cash and cash equivalents, beginning of period
113,171
124,161
94,807
118,077
Cash and cash equivalents, end of period
$
102,978
$
102,006
$
102,978
$
102,006
5
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
Adjusted Free Cash Flow and Unlevered Free Cash Flow
Three Months Ended
Six Months Ended
(in thousands)
May 31, 2026
May 31, 2025
% Change
May 31, 2026
May 31, 2025
% Change
Cash flows from operations
$
78,837
$
29,996
163
%
$
177,463
$
98,943
79
%
Purchases of property and equipment
(1,864)
(495)
277
%
(4,569)
(1,785)
156
%
Free cash flow
76,973
29,501
161
%
172,894
97,158
78
%
Add back: restructuring payments
2,233
7,567
(70)
%
5,157
13,121
(61)
%
Adjusted free cash flow
$
79,206
$
37,068
114
%
$
178,051
$
110,279
61
%
Add back: tax-effected interest expense
12,729
14,511
(12)
%
24,926
29,253
(15)
%
Unlevered free cash flow
$
91,935
$
51,579
78
%
$
202,977
$
139,532
45
%
6
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2026 GUIDANCE
(Unaudited)
Fiscal Year 2026 Updated Non-GAAP Operating Margin Guidance
Fiscal Year Ending November 30, 2026
(in millions)
Low
High
GAAP income from operations
$
157.2
$
164.1
GAAP operating margin
16
%
16
%
Restructuring expense
2.6
2.6
Stock-based compensation
73.5
73.5
Acquisition-related expenses
5.0
5.0
Amortization of acquired intangibles
137.3
137.3
Cyber vulnerability response expenses, net
12.4
12.4
Total adjustments(1)
230.8
230.8
Non-GAAP income from operations
$
388.0
$
394.9
Non-GAAP operating margin
39
%
39
%
Fiscal Year 2026 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance
Fiscal Year Ending November 30, 2026
(in millions, except per share data)
Low
High
GAAP net income
$
67.7
$
73.6
Adjustments (from previous table)
230.8
230.8
Income tax adjustment(2)
(41.7)
(41.3)
Non-GAAP net income
$
256.8
$
263.1
GAAP diluted earnings per share
$
1.60
$
1.74
Non-GAAP diluted earnings per share
$
6.09
$
6.21
Diluted weighted average shares outstanding
42.2
42.4
1 Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Nuclia and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed.
2 Tax adjustment is based on a non-GAAP effective tax rate of approximately 20%, calculated as follows:
Fiscal Year Ending November 30, 2026
Low
High
Non-GAAP income from operations
$
388.0
$
394.9
Other (expense) income, net
(67.0)
(66.0)
Non-GAAP income from continuing operations before income taxes
321.0
328.9
Non-GAAP net income
256.8
263.1
Tax provision
$
64.2
$
65.8
Non-GAAP tax rate
20
%
20
%
7
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2026 GUIDANCE
(Unaudited)
Fiscal Year 2026 Updated Adjusted Free Cash Flow and Unlevered Free Cash Flow Guidance
Fiscal Year Ending November 30, 2026
(in millions)
Low
High
Cash flows from operations (GAAP)
$
273
$
285
Purchases of property and equipment
(8)
(8)
Add back: restructuring payments
6
6
Adjusted free cash flow (non-GAAP)
271
283
Add back: tax-effected interest expense
52
51
Unlevered free cash flow (non-GAAP)
$
323
$
334
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2026 GUIDANCE
(Unaudited)
Q3 2026 Non-GAAP Earnings per Share Guidance
Three Months Ending August 31, 2026
Low
High
GAAP diluted earnings per share
$
0.35
$
0.41
Acquisition-related expense
0.07
0.07
Stock-based compensation
0.41
0.41
Amortization of acquired intangibles
0.85
0.85
Cyber vulnerability response expenses, net
0.13
0.13
Total adjustments(3)
1.46
1.46
Income tax adjustment
(0.28)
(0.28)
Non-GAAP diluted earnings per share
$
1.53
$
1.59
3 Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Nuclia and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed.
8
Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures, and Select Performance Metrics
Progress furnishes certain non-GAAP supplemental information to our financial results. We use such non-GAAP financial measures to evaluate our period-over-period operating performance because our management team believes that excluding the effects of certain GAAP-related items helps to illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as greater understanding of the results from the primary operations of our business. Management also uses such non-GAAP financial measures to establish budgets and operational goals, evaluate performance, and allocate resources. In addition, the compensation of our executives and non-executive employees is based in part on the performance of our business as evaluated by such non-GAAP financial measures. We believe these non-GAAP financial measures enhance investors' overall understanding of our current financial performance and our prospects for the future by: (i) providing more transparency for certain financial measures, (ii) presenting disclosure that helps investors understand how we plan and measure the performance of our business, (iii) affording a view of our operating results that may be more easily compared to our peer companies, and (iv) enabling investors to consider our operating results on both a GAAP and non-GAAP basis (including following the integration period of our prior acquisitions). However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP") and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information may have a material impact on Progress' financial results. A reconciliation of non-GAAP adjustments to Progress' GAAP financial results is included in the tables above.
In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures:
•Amortization of acquired intangibles - We exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. Adjustments include preliminary estimates relating to the valuation of intangible assets from Nuclia. The final amounts will not be available until the Company's internal procedures and reviews are completed.
•Stock-based compensation - We exclude stock-based compensation to be consistent with the way management and, in our view, the overall financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size, and nature of awards granted. As such, we do not include these charges in operating plans.
•Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results.
•Acquisition-related expenses - We exclude acquisition-related expenses in order to provide a more meaningful comparison of the financial results to our historical operations and forward-looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity, and/or volume of past acquisitions, which often drives the magnitude of acquisition-related costs, may not be indicative of the size, complexity, and/or volume of future acquisitions.
•Cyber vulnerability response expenses, net - We exclude certain expenses resulting from the MOVEit Vulnerability, as more thoroughly described in our filings with the Securities and Exchange Commission since June 5, 2023. Such expenses primarily consist of legal and other professional services related thereto. Expenses related to such cyber matters are provided net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses. Costs associated with the enhancement of our cybersecurity program are not included within this adjustment. We expect to continue to incur legal and other professional services expenses in future periods associated with the MOVEit Vulnerability. Expenses related to such cyber matters are expected to result in operating expenses that would not have otherwise been incurred in the normal course of business operations. We believe that excluding these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
•Provision for income taxes - We adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.
9
•Constant currency - Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. As exchange rates are an important factor in understanding period-to-period comparisons, we present revenue growth rates on a constant currency basis, which helps improve the understanding of our revenue results and our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates.
In the noted fiscal periods, we also present the following liquidity measures:
•Adjusted free cash flow ("AFCF") and unlevered free cash flow ("Unlevered FCF") - AFCF is equal to cash flows from operating activities less purchases of property and equipment, plus restructuring payments. Unlevered FCF is AFCF plus tax-effected interest expense on outstanding debt.
In the noted fiscal periods, we also present the following select performance metrics:
•Annualized Recurring Revenue ("ARR") - We disclose ARR as a performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources currently represents the substantial majority of our revenues and is expected to continue in the future. We define ARR as the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time. ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations in revenue due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. We use ARR to understand customer trends and the overall health of our business, helping us to formulate strategic business decisions.
We calculate the annualized value of annual and multi-year contracts, and contracts with terms less than one year, by dividing the total contract value of each contract by the number of months in the term and then multiplying by 12. Annualizing contracts with terms less than one-year results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period. We generally do not sell non-SaaS-based contracts with a term of less than one year unless a customer is purchasing additional licenses under an existing annual or multi-year contract. The expectation is that at the time of renewal, such contracts with a term less than one year will renew with the same term as the existing contracts being renewed, such that both contracts are co-termed. Historically, such contracts with a term of less than one year renew at rates equal to or better than annual or multi-year contracts.
For SaaS-based contracts, there is a meaningful percentage of monthly auto-renewing contracts for which annualizing the contracts results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period.
Revenue from term-based license and on-premises subscription arrangements include a portion of the arrangement consideration that is allocated to the software license that is recognized up-front at the point in time control is transferred under ASC 606 revenue recognition principles. ARR for these arrangements is calculated as described above. The expectation is that the total contract value, inclusive of revenue recognized as software license, will be renewed at the end of the contract term.
The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented.
ARR is not defined in GAAP and is not derived from a GAAP measure. Rather, ARR generally aligns to billings (as opposed to GAAP revenue which aligns to the transfer of control of each performance obligation). ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
10
•Net Retention Rate ("NRR") - We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period end ("Current Period ARR"). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP and is not derived from a GAAP measure.
Note Regarding Forward-Looking Statements
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like "believe," "may," "could," "would," "might," "should," "expect," "intend," "plan," "target," "anticipate" and "continue," the negative of these words, other terms of similar meaning or the use of future dates. Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook (including future acquisition activity) and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation: (i) economic, geopolitical, and market conditions can adversely affect our business, results of operations, and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price; (ii) our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses; (iii) we may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts; (iv) if the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors or zero-day vulnerabilities, we may experience reputational harm, legal claims and financial exposure; and the results of inquiries, investigations and legal claims regarding the MOVEit Vulnerability remain uncertain, while the ultimate resolution of these matters could result in losses that may be material to our financial results for a particular period; and (v) future acquisitions may not be successful or may involve unanticipated costs or other integration issues that could disrupt our existing operations. For further information regarding risks and uncertainties associated with Progress' business, please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended November 30, 2025. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
