Progress Software (NASDAQ: PRGS) lifts 2026 outlook after Q2 beat
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Progress Software reported solid fiscal Q2 2026 results, with revenue of $253.5 million, up 7% year-over-year, driven by broad-based demand and AI-powered offerings. GAAP operating margin improved to 18%, while non-GAAP operating margin remained high at 40%.
GAAP diluted EPS rose to $0.50 from $0.39, a 28% increase, and non-GAAP diluted EPS climbed to $1.62 from $1.40, up 16%. Annualized Recurring Revenue reached $868 million, growing 2% year-over-year, with a net retention rate of 100% and cash from operations of $78.8 million, more than doubling versus last year.
On this backdrop, Progress modestly raised its full-year 2026 outlook, now guiding revenue to $990–$1,002 million and non-GAAP EPS to $6.09–$6.21, alongside strong projected cash generation and a continued focus on debt reduction and disciplined M&A.
Positive
- Q2 beat and strong profit expansion: Revenue reached $253.5M, 7% year-over-year growth and above guidance, while GAAP EPS rose 28% and non-GAAP EPS 16%, supported by a 40% non-GAAP operating margin.
- Guidance raised with strong cash outlook: FY 2026 revenue guidance increased to $990–$1,002M and non-GAAP EPS to $6.09–$6.21, alongside projected GAAP cash from operations of $273–$285M and unlevered free cash flow of $323–$334M.
Negative
- None.
Insights
Progress delivered a clean beat-and-raise quarter with strong profitability and cash generation.
Progress Software posted Q2 2026 revenue of $253.5M, up 7% year-over-year, above prior guidance of $240–$246M. Non-GAAP operating margin held at a robust 40%, supporting non-GAAP EPS of $1.62, above the prior $1.47–$1.53 range.
Growth was balanced: license revenue rose 36%, while ARR reached $868M, up 2% year-over-year, and net retention was 100%. Cash from operations of $78.8M and unlevered free cash flow of $91.9M underscore the model’s cash efficiency.
Management nudged FY 2026 guidance higher, with revenue now $990–$1,002M and non-GAAP EPS of $6.09–$6.21. They also target GAAP cash from operations of $273–$285M and unlevered free cash flow of $323–$334M. Actual performance versus this raised bar will become clearer with the Q3 2026 results.
8-K Event Classification
3 items: 2.02, 7.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q2 2026 Revenue: $253.5M
Q2 2026 GAAP diluted EPS: $0.50
Q2 2026 non-GAAP diluted EPS: $1.62
+5 more
8 metrics
Q2 2026 Revenue
$253.5M
Three months ended May 31, 2026; 7% year-over-year growth
Q2 2026 GAAP diluted EPS
$0.50
Up from $0.39 in Q2 2025; 28% increase
Q2 2026 non-GAAP diluted EPS
$1.62
Up from $1.40 in Q2 2025; 16% increase
Annualized Recurring Revenue
$868M
ARR at Q2 2026; 2% year-over-year growth
Net Retention Rate
100%
Trailing twelve months through Q2 2026
Q2 2026 cash from operations
$78.8M
Three months ended May 31, 2026; up 163% year-over-year
FY 2026 revenue guidance
$990M–$1,002M
Updated outlook as of June 30, 2026
FY 2026 non-GAAP EPS guidance
$6.09–$6.21
Updated outlook as of June 30, 2026
Key Terms
Annualized Recurring Revenue, Net Retention Rate, non-GAAP operating margin, unlevered free cash flow, +2 more
6 terms
Annualized Recurring Revenue financial
"Annualized Recurring Revenue ("ARR") of $868 million increased 2% year-over-year"
Annualized recurring revenue is the predictable income a business expects to earn over a year from ongoing customer subscriptions or contracts. It’s similar to estimating how much money you would make in a year if your current monthly income stayed the same. Investors use this figure to assess the stability and growth potential of a company's revenue stream.
Net Retention Rate financial
"ARR growth was solid at 2% and our net retention rate was 100%"
Net retention rate measures how much revenue a company keeps and grows from its existing customers over a set period, after accounting for expansions, contractions and lost customers. Think of it like checking whether a garden of existing plants is producing more fruit this year than last — it shows whether the current customer base is becoming more valuable or shrinking. Investors use it to judge revenue sustainability and growth potential without relying on new customers.
non-GAAP operating margin financial
"Operating margin was 18% and non-GAAP operating margin was 40%."
Non-GAAP operating margin is a way companies show how much profit they make from their main business activities, excluding certain expenses or income they consider unusual or non-recurring. It helps investors see how well the company is performing in its normal operations, without the effects of one-time costs or gains that might distort the picture.
unlevered free cash flow financial
"Unlevered free cash flow (non-GAAP) | $ 91,935 | | | $ 51,579"
Unlevered free cash flow is the cash a company generates from its core business after paying operating costs and reinvesting in the business, but before any interest or debt repayments. It shows how much cash would be available to all providers of capital—owners and lenders alike—and helps investors compare underlying business performance and value companies without the distortion of different debt levels, like judging a car’s fuel efficiency before adding cargo weight.
Adjusted free cash flow financial
"Adjusted free cash flow | $ 79,206 | | | $ 37,068"
Adjusted free cash flow is the amount of money a company generates from its operations after accounting for essential expenses and investments, like maintaining or upgrading equipment. It shows how much cash is truly available to grow the business, pay debts, or return to shareholders, helping investors see the company's financial health more clearly.
Convertible senior notes financial
"Convertible senior notes, non-current portion, net | 442,147"
Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.
Earnings Snapshot
Revenue: $253.5M · Guidance included
Q2 2026
Revenue
$253.5M
+7% YoY
GAAP diluted EPS
$0.50
+28% YoY
Non-GAAP diluted EPS
$1.62
+16% YoY
GAAP operating margin
18%
+200 bps YoY
Non-GAAP operating margin
40%
flat YoY
Guidance
For FY 2026, Progress guides revenue to $990–$1,002M and non-GAAP EPS to $6.09–$6.21, with GAAP cash from operations of $273–$285M and unlevered free cash flow of $323–$334M.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2026
Progress Software Corporation
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission file number) | (I.R.S. Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip code) | |||||||
Registrant’s telephone number, including area code: (781 ) 280-4000
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition
On June 30, 2026, Progress Software Corporation ("Progress") issued a press release announcing its financial results for the fiscal second quarter ended May 31, 2026. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any other filing by Progress under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure
In connection with the issuance of the press release attached hereto as Exhibit 99.1, the supplemental data attached as Exhibit 99.2 to this Current Report will be available on the Progress website within the investor relations section prior to the live conference call.
The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any other filing by Progress under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description | |||||||
| 99.1 | Press release issued by Progress Software Corporation dated June 30, 2026 | |||||||
| 99.2 | Q2 2026 Supplemental Data | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | June 30, 2026 | Progress Software Corporation | |||||||||
| By: | /s/ ANTHONY FOLGER | ||||||||||
| Anthony Folger | |||||||||||
| Chief Financial Officer | |||||||||||
 | Exhibit 99.1 | |||||||
P R E S S A N N O U N C E M E N T
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) | May 31, 2026 | May 31, 2025 | % Change | May 31, 2026 | May 31, 2025 | % Change | |||||||||||||||||||||||||||||
| Revenue | $ | 253,465 | $ | 237,355 | 7 | % | $ | 253,465 | $ | 237,355 | 7 | % | |||||||||||||||||||||||
| Income from operations | $ | 45,202 | $ | 38,616 | 17 | % | $ | 102,623 | $ | 95,461 | 8 | % | |||||||||||||||||||||||
| Operating margin | 18 | % | 16 | % | 200 bps | 40 | % | 40 | % | 0 bps | |||||||||||||||||||||||||
| Net income | $ | 21,073 | $ | 17,029 | 24 | % | $ | 68,369 | $ | 61,749 | 11 | % | |||||||||||||||||||||||
| Diluted earnings per share | $ | 0.50 | $ | 0.39 | 28 | % | $ | 1.62 | $ | 1.40 | 16 | % | |||||||||||||||||||||||
| Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP) | $ | 78,837 | $ | 29,996 | 163 | % | $ | 79,206 | $ | 37,068 | 114 | % | |||||||||||||||||||||||
| $ | 91,935 | $ | 51,579 | 78 | % | ||||||||||||||||||||||||||||||
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."
1
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) | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||
| Revenue | $990 - $1,002 | $990 - $1,002 | $988 - $1,000 | $988 - $1,000 | |||||||||||||||||||
| Diluted earnings per share | $1.60 - $1.74 | $6.09 - $6.21 | $1.71 - $1.87 | $5.91 - $6.03 | |||||||||||||||||||
| Operating margin | 16% | 39 | % | 16% - 17% | 39 | % | |||||||||||||||||
| Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP) | $273 - $285 | $271 - $283 | $266 - $278 | $263 - $275 | |||||||||||||||||||
| $323 - $334 | $315 - $326 | ||||||||||||||||||||||
| Effective tax rate | 25 | % | 20 | % | 23 | % | 20 | % | |||||||||||||||
| Q3 2026 Guidance | |||||||||||
| (in millions, except per share amounts) | GAAP | Non-GAAP | |||||||||
| Revenue | $244 - $250 | $244 - $250 | |||||||||
| Diluted earnings per share | $0.35 - $0.41 | $1.53 - $1.59 | |||||||||
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 | |||||||
2
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
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (in thousands, except per share data) | May 31, 2026 | May 31, 2025 | May 31, 2026 | May 31, 2025 | |||||||||||||||||||
| Adjusted income from operations: | |||||||||||||||||||||||
| GAAP income from operations | $ | 45,202 | $ | 38,616 | $ | 91,667 | $ | 71,042 | |||||||||||||||
| Amortization of acquired intangibles | 35,105 | 36,600 | 69,473 | 72,830 | |||||||||||||||||||
| Stock-based compensation | 20,509 | 16,741 | 38,983 | 31,424 | |||||||||||||||||||
| Restructuring expenses | 1,480 | 1,043 | 2,186 | 8,072 | |||||||||||||||||||
| Acquisition-related expenses | (939) | 1,731 | (125) | 4,221 | |||||||||||||||||||
| Cyber vulnerability response expenses, net | 1,266 | 730 | 2,624 | 1,467 | |||||||||||||||||||
| Non-GAAP income from operations | $ | 102,623 | $ | 95,461 | $ | 204,808 | $ | 189,056 | |||||||||||||||
| Adjusted net income: | |||||||||||||||||||||||
| GAAP net income | $ | 21,073 | $ | 17,029 | $ | 43,886 | $ | 27,975 | |||||||||||||||
| Amortization of acquired intangibles | 35,105 | 36,600 | 69,473 | 72,830 | |||||||||||||||||||
| Stock-based compensation | 20,509 | 16,741 | 38,983 | 31,424 | |||||||||||||||||||
| Restructuring expenses | 1,480 | 1,043 | 2,186 | 8,072 | |||||||||||||||||||
| Acquisition-related expenses | (939) | 1,731 | (125) | 4,221 | |||||||||||||||||||
| Cyber vulnerability response expenses, net | 1,266 | 730 | 2,624 | 1,467 | |||||||||||||||||||
| Provision for income taxes | (10,125) | (12,125) | (20,358) | (25,245) | |||||||||||||||||||
| Non-GAAP net income | $ | 68,369 | $ | 61,749 | $ | 136,669 | $ | 120,744 | |||||||||||||||
| Adjusted diluted earnings per share: | |||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 0.50 | $ | 0.39 | $ | 1.03 | $ | 0.63 | |||||||||||||||
| Amortization of acquired intangibles | 0.83 | 0.83 | 1.63 | 1.64 | |||||||||||||||||||
| Stock-based compensation | 0.49 | 0.37 | 0.92 | 0.71 | |||||||||||||||||||
| Restructuring expenses | 0.03 | 0.02 | 0.05 | 0.18 | |||||||||||||||||||
| Acquisition-related expenses | (0.02) | 0.04 | — | 0.09 | |||||||||||||||||||
| Cyber vulnerability response expenses, net | 0.03 | 0.02 | 0.06 | 0.03 | |||||||||||||||||||
| Provision for income taxes | (0.24) | (0.27) | (0.48) | (0.57) | |||||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 1.62 | $ | 1.40 | $ | 3.21 | $ | 2.71 | |||||||||||||||
| Non-GAAP weighted avg shares outstanding - diluted | 42,310 | 44,156 | 42,519 | 44,522 | |||||||||||||||||||
OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)
| 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.
11
June 30, 2026 Q2 2026 Supplemental Information Progress Financial Results
2© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Forward Looking Statements This presentation 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 presentation include, but are not limited to, statements regarding Progress’s strategy; future revenue growth, operating margin, and cost savings; future acquisitions; and other statements regarding the future operation, direction, prospects, and success of Progress’s business. There are a number of factors that could cause actual results or future performance or achievements 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 Progress' filings with the U.S. Securities and Exchange Commission, including our quarterly report on Form 10-Q for the fiscal quarter ending May 30, 2026, and 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 presentation. Non-GAAP Financial Measures We refer to certain non-GAAP financial measures in this presentation, including but not limited to, non-GAAP revenue, non-GAAP income from operations and operating margin, adjusted free cash flow, annualized recurring revenue ("ARR"), Net Retention Rate ("NRR"), and non-GAAP diluted earnings per share. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles (“GAAP”). Please see "Important Information Regarding Non-GAAP Financial Information" below for additional information. A reconciliation between non-GAAP measures and the most directly comparable GAAP measures appears in our earnings press release for the fiscal second quarter ended May 31, 2026, and fiscal full year ended November 30, 2025, which is furnished on a Form 8-K concurrently with this presentation and is available in the Investor Relations section of our website.
3© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Conference Call Details Please note: Webcast is listen-only. What: When: Time: Register for the Live Call: Access the Webcast: Progress Fiscal Q2 ’26 Financial Results Tuesday, June 30, 2026 5:00 p.m. ET Use this link. here.
4© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Summary Highlights Q2 2026 All f igures are non-GAAP. Definitions of non-GAAP financial measures (including ARR and NRR) are found in Important Information Regarding Non-GAAP Financial Information. • Revenues of $253M vs. prior guidance of $240M - $246M, up 7% year-over-year as reported, or 6% in constant currency • ARR: $868M, up 2% year-over-year • NRR: 100% • Operating margin: 40% • EPS: $1.62, above high-end of prior guidance of $1.47 - $1.53 • Adjusted Free Cash Flow: $79M Rev growth of 7%, ARR growth of 2% underlines strong quarter Updated FY ’26 Guidance: Revenue: $990M - $1,002M EPS: $6.09 - $6.21 Q3 ’26 Guidance: Revenue: $244M - $250M EPS: $1.53 - $1.59
5© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Annualized Recurring Revenue Trend (Pro Forma) All periods reported in constant currency, using current year budgeted exchange rates ARR growth of 2% year-over-year ShareFile included in all periods Consistent Annual Growth Net Retention % - TTM 101% 100% 100% 100% 99% 100% 99% 99% 100%
6© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Total Growth Strategy Invest & Innovate Invest in our products and incorporate the latest technologies and capabilities to sustain relevance well into the future. Acquire & Integrate Disciplined M&A: pay a reasonable multiple for high-quality technology with strong recurring revenue; integrate quickly to reach 40% operating margins. Focus on Customer Success Ensure our customers continue to realize greater value from our products, leading to higher retention rates.
7© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Total Growth Strategy: Driving ARR Growth All periods reported in constant currency, using current year budgeted exchange rates Excludes ARR values from acquisitions prior to purchase date ARR CAGR of 15% Q2 2021 – Q2 2026
8© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Total Growth Strategy: Driving Revenue Growth Revenue CAGR of 13% 2022 – 2026(E)* * Represents the mid-point of our FY’26 guidance range
9© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Total Growth Strategy: Growing Profitability Operating Income CAGR of 13% 2022 – 2026(E)* Best-in-class non-GAAP operating margins consistently above 35% * Represents the mid-point of our FY’26 guidance range
10© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Total Growth Strategy: Growing Unlevered Free Cash Flow Unlevered FCF CAGR of 13% 2022 – 2026(E)* * Represents the mid-point of our FY’26 guidance range
11© 2025 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved.6 Capital Allocation Strategy PRIMARY FOCUS Continue to prioritize accretive M&A opportunities that meet our disciplined criteria to create the strongest returns. Repurchase shares to offset dilution from our equity programs. • Management has flexibility to increase, reduce, or suspend repurchases depending on market conditions and other considerations including size and timing of proposed M&A. • $35M of shares repurchased in Q2 ’26; $55M YTD Use our significant free cash flow to aggressively pay down debt and reload for the next acquisition. • $50M repaid in Q2 ’26; $110M YTD • Currently modeling $220M in debt repayment for FY '26
12© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Well Defined M&A Framework ▪ Cast a wide net across infrastructure software for AI-resilient businesses ▪ Tight alignment increases synergy potential ▪ ~10-25% of current Progress revenues ▪ Can be financed and integrated efficiently ▪ High recurring revenue and customer retention ▪ Potential to achieve operational efficiency ▪ Focused on sustained returns, accretiveROIC > WACC Financial Characteristics Appropriate Sizing End Market Alignment
13© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Summary Q2 2026 Financial Results Q2 2026 Results Prior Q2 2026 Outlook (provided on March 30, 2026) Revenue $253M $240M - $246M GAAP earnings per share (Diluted) $0.50 $0.35 - $0.41 Non-GAAP earnings per share (Diluted) $1.62 $1.47 - $1.53 GAAP Operating Margin 18% Not guided Non-GAAP Operating Margin 40% Not guided Cash from Operations (GAAP) $79M Not guided Adjusted Free Cash Flow (Non-GAAP) $79M Not guided Unlevered Free Cash Flow (Non-GAAP) $92M Not guided
14© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Business Outlook (as of June 30, 2026) Q3 2026 Current Outlook FY 2026 Prior Outlook (provided on March 30, 2026) FY 2026 Updated Outlook Revenue $244M - $250M $988M - $1,000M $990M - $1,002M GAAP EPS $0.35 - $0.41 $1.71 - $1.87 $1.60 - $1.74 Non-GAAP EPS $1.53 - $1.59 $5.91 - $6.03 $6.09 - $6.21 GAAP Operating Margin Not guided 16% - 17% 16% Non-GAAP Operating Margin Not guided 39% Unchanged Cash from Operations (GAAP) Not guided $266M - $278M $273M - $285M Adjusted Free Cash Flow (Non- GAAP) Not guided $263M - $275M $271M - $283M Unlevered Free Cash Flow (Non- GAAP) Not guided $315M - $326M $323M - $334M GAAP Effective Tax Rate Not guided 23% 25% Non-GAAP Effective Tax Rate Not guided 20% Unchanged
15© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Outstanding Debt and Potential Impact on Share Count Approximately $5.0M of additional interest expense in FY 2026 for amortization of debt issuance costs Convertible Balance: $450M Interest Rate: 3.50% Conversion Price: $67.74 Expiration: March 1, 2030 Capped Call Coverage: up to $92.98* * Subject to downward adjustment for dividend policy Revolver (as of 5/31/26) Balance: $850M drawn out of $1.5B Interest Rate: 1.25% to 2.5% above benchmark Current interest rate ~ 5.4% as of May 31, 2026 Unused revolver fee: 0.15% - 0.35% Expiration: July 21, 2030 $50 $55 $60 $65 $70 $75 $80 Impact of convertible notes on diluted weighted average share count (M)* 0.0 0.0 0.0 0.0 0.2 0.6 1.0 * Does not contemplate the impact on diluted weighted average share count from other events such as repurchases, issuance under equity plans, etc. Future Share Price
Supplemental Financial Information
17© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Supplemental Revenue Information (Unaudited) Quarterly Revenue by Region and by Type (GAAP) (in thousands) Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Revenue by Type License 58,445 50,795 63,437 65,210 67,581 68,979 Maintenance 99,535 103,491 104,849 102,299 100,339 101,222 SaaS 69,410 72,105 71,512 74,901 70,461 73,005 Professional Services 10,625 10,964 9,997 10,256 9,418 10,259 Total Revenue $ 238,015 $ 237,355 $ 249,795 $ 252,666 $ 247,799 $ 253,465 Revenue by Region North America 154,646 147,326 163,404 158,390 152,689 162,529 EMEA 66,943 73,039 68,339 72,587 78,380 70,608 Latin America 5,052 4,853 6,221 5,541 5,526 5,790 Asia Pacific 11,374 12,137 11,831 16,148 11,204 14,538 Total Revenue $ 238,015 $ 237,355 $ 249,795 $ 252,666 $ 247,799 $ 253,465
18© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. 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 acquisit ions). 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 between non-GAAP measures and the most directly comparable GAAP measures appears in our earnings press release for the fiscal quarter ended May 31, 2026, which is furnished on a Form 8-K concurrently with this presentation and is available on the Progress website at www.progress.com within the investor relations section. In this presentation, we may reference the following 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 acquisit ion-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. Important Information Regarding Non-GAAP Financial Information
19© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Important Information Regarding Non-GAAP Financial Information • Provision for income taxes - We adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above. • 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 f iscal 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 activit ies less purchases of property and equipment, plus restructuring payments. Unlevered FCF is AFCF plus tax-effected interest expense on outstanding debt. In the noted f iscal 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.
20© 2026 Progress Software Corporation and/or its subsidiaries or aff iliates. All rights reserved. Important Information Regarding Non-GAAP Financial Information • ARR continued - 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 comp anies. 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. • 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.
FAQ
How did Progress Software (PRGS) perform in Q2 2026?
Progress Software delivered Q2 2026 revenue of $253.5 million, up 7% year-over-year, with strong profitability. GAAP EPS was $0.50 versus $0.39 a year ago, and non-GAAP EPS reached $1.62 versus $1.40, reflecting operating leverage and disciplined cost control.
What were Progress Software’s key profitability metrics in Q2 2026?
Progress reported a GAAP operating margin of 18% and a non-GAAP operating margin of 40% in Q2 2026. GAAP net income was $21.1 million, while non-GAAP net income totaled $68.4 million, highlighting the impact of amortization, stock-based compensation, and other adjustments.
How is Progress Software’s recurring revenue base trending in 2026?
Annualized Recurring Revenue for Progress Software reached $868 million in Q2 2026, growing 2% year-over-year on a constant currency basis. The company also reported a 100% net retention rate, indicating that recurring revenue from existing customers was maintained after expansions, contractions, and churn.
Did Progress Software update its full-year 2026 financial guidance?
Yes. Progress now guides FY 2026 revenue to $990–$1,002 million, slightly above prior guidance, and non-GAAP diluted EPS to $6.09–$6.21. It also expects GAAP cash from operations of $273–$285 million and unlevered free cash flow of $323–$334 million.
What is Progress Software’s cash flow and balance sheet position in Q2 2026?
In Q2 2026, Progress generated $78.8 million of cash from operations, with adjusted free cash flow of $79.2 million and unlevered free cash flow of $91.9 million. Cash and cash equivalents were $103 million, and the company continued reducing debt while maintaining access to a sizable revolving credit facility.
What guidance did Progress Software give for Q3 2026?
For Q3 2026, Progress expects revenue between $244 million and $250 million. GAAP diluted EPS is guided to $0.35–$0.41, while non-GAAP diluted EPS is projected at $1.53–$1.59, reflecting ongoing investment and high-margin operations.