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Progress Software Beats Q3 Estimates: Guidance Raise to Lift Shares?
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Progress Software (PRGS - Free Report) posted third-quarter fiscal 2024 non-GAAP earnings of $1.26 per share, beating the Zacks Consensus Estimate by 10.53% and increasing 16.7% year over year.
Non-GAAP revenues of $179 million beat the consensus mark by 1.67% and increased 2% year over year on an actual and constant-currency basis. The upside can be attributed to stronger-than-expected demand for multiple products in PRGS’s portfolio, particularly OpenEdge, DevTools, Sitefinity, Loadmaster, Flowmon and MOVEit.
On a constant-currency basis, annualized recurring revenues came in at $582 million, flat year over year. The metric was supported by strong contributions from OpenEdge and a net retention rate of 99%.
PRGS inched up 5.3% year to date compared with the Zacks Computer & Technology sector’s growth of 22.1% over the same time frame. However, we expect that strong third-quarter results and raised guidance will help the stock recover in the near term.
Progress Software Corporation Price, Consensus and EPS Surprise
Software license revenues were $57.9 million, up 14.5% year over year. Maintenance and service revenues were $120.8 million, down 2.9% year over year.
Sales and marketing expenses, as a percentage of revenues, contracted 130 basis points (bps) from the year-ago quarter’s level to 20.8%.
Product development expenses, as a percentage of revenues, expanded 50 bps to 19.4%.
General and administrative expenses, as a percentage of revenues, declined 40 bps from the year-ago quarter’s level to 11.5%.
Progress reported a non-GAAP operating margin of 41.5%, which contracted 260 bps year over year.
PRGS Balance Sheet Details
As of Aug. 31, 2024, cash and cash equivalents were $232.7 million compared with $190.4 million as of May 31, 2024. Total debt was $577 million, representing 2 times of trailing 12-month adjusted EBITDA.
Progress generated $57.52 million in adjusted free cash flow compared with $60.07 million in the previous quarter.
At the end of the fiscal third quarter, the company had $107 million remaining under its current share repurchase authorization.
PRGS Acquisition News
PRGS announced a definitive agreement to acquire ShareFile, a business unit of Cloud Software Group, for $875 million in cash. ShareFile specializes in SaaS-native, AI-powered, document-centric collaboration solutions.
PRGS Raises 2024 Outlook
For fourth-quarter fiscal 2024, Progress expects non-GAAP revenues between $207 million and $217 million.
Progress expects non-GAAP earnings to be between $1.15-$1.25 per share.
For the fiscal 2024, non-GAAP revenues are projected to be between $745 million and $755 million.
Non-GAAP operating margin is expected to be 39% for fiscal 2024.
Non-GAAP earnings are projected to be between $4.75 and $4.85 per share, better than the previous guidance range of $4.70-$4.80 per share for fiscal 2024.
Adjusted free cash flow is expected between $195 million and $205 million for the fiscal 2024.
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Progress Software Beats Q3 Estimates: Guidance Raise to Lift Shares?
Progress Software (PRGS - Free Report) posted third-quarter fiscal 2024 non-GAAP earnings of $1.26 per share, beating the Zacks Consensus Estimate by 10.53% and increasing 16.7% year over year.
Non-GAAP revenues of $179 million beat the consensus mark by 1.67% and increased 2% year over year on an actual and constant-currency basis. The upside can be attributed to stronger-than-expected demand for multiple products in PRGS’s portfolio, particularly OpenEdge, DevTools, Sitefinity, Loadmaster, Flowmon and MOVEit.
On a constant-currency basis, annualized recurring revenues came in at $582 million, flat year over year. The metric was supported by strong contributions from OpenEdge and a net retention rate of 99%.
PRGS inched up 5.3% year to date compared with the Zacks Computer & Technology sector’s growth of 22.1% over the same time frame. However, we expect that strong third-quarter results and raised guidance will help the stock recover in the near term.
Progress Software Corporation Price, Consensus and EPS Surprise
Progress Software Corporation price-consensus-eps-surprise-chart | Progress Software Corporation Quote
PRGS Quarter in Details
Software license revenues were $57.9 million, up 14.5% year over year. Maintenance and service revenues were $120.8 million, down 2.9% year over year.
Sales and marketing expenses, as a percentage of revenues, contracted 130 basis points (bps) from the year-ago quarter’s level to 20.8%.
Product development expenses, as a percentage of revenues, expanded 50 bps to 19.4%.
General and administrative expenses, as a percentage of revenues, declined 40 bps from the year-ago quarter’s level to 11.5%.
Progress reported a non-GAAP operating margin of 41.5%, which contracted 260 bps year over year.
PRGS Balance Sheet Details
As of Aug. 31, 2024, cash and cash equivalents were $232.7 million compared with $190.4 million as of May 31, 2024. Total debt was $577 million, representing 2 times of trailing 12-month adjusted EBITDA.
Progress generated $57.52 million in adjusted free cash flow compared with $60.07 million in the previous quarter.
At the end of the fiscal third quarter, the company had $107 million remaining under its current share repurchase authorization.
PRGS Acquisition News
PRGS announced a definitive agreement to acquire ShareFile, a business unit of Cloud Software Group, for $875 million in cash. ShareFile specializes in SaaS-native, AI-powered, document-centric collaboration solutions.
PRGS Raises 2024 Outlook
For fourth-quarter fiscal 2024, Progress expects non-GAAP revenues between $207 million and $217 million.
Progress expects non-GAAP earnings to be between $1.15-$1.25 per share.
For the fiscal 2024, non-GAAP revenues are projected to be between $745 million and $755 million.
Non-GAAP operating margin is expected to be 39% for fiscal 2024.
Non-GAAP earnings are projected to be between $4.75 and $4.85 per share, better than the previous guidance range of $4.70-$4.80 per share for fiscal 2024.
Adjusted free cash flow is expected between $195 million and $205 million for the fiscal 2024.
Zacks Rank & Stocks to Consider
Progress currently has a Zacks Rank #3 (Hold).
AudioEye (AEYE - Free Report) , Aspen Technology (AZPN - Free Report) and Badger Meter (BMI - Free Report) are some better-ranked stocks in the broader technology sector. AudioEye and Aspen Technology currently sport a Zacks Rank #1 (Strong Buy) at present, while Badger Meter carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AudioEye’s shares have surged 335% in the year-to-date period. The long-term earnings growth rate for AEYE is pegged at 25%.
Aspen Technology’s shares have moved up 6% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 13.12%.
Badger Meter’s shares have appreciated 41.6% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 17.91%.