Raised 2026 Guidance
Progress Software Raises 2026 Guidance and Reports Strong Earnings Despite Missing Revenue
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Key Points
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Progress’s $246 million in revenue narrowly missed the $247.6 million analyst consensus, while its $1.69 non-GAAP EPS beat the $1.52 consensus by 11.2%.
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Progress acquired Domo’s AI and Data Platform business for $400 million, funding $390 million of the price through a draw on its revolving credit facility.
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Days sales outstanding improved to 42 days, 13 days better than the year-earlier quarter; Progress also reported $88 million in cash from operations, up 20%.
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Progress ended the quarter with $1.24 billion in total debt and net leverage of about 2.7 times, but repaid $60 million on its revolving credit facility during the quarter, bringing year-to-date repayments to $170 million.
Progress Software reported $246 million in third-quarter revenue and beat profit expectations by raising its full-year outlook, even as it integrates a $400 million acquisition. Defense World reported the company's non-GAAP earnings per share jumped 13% to $1.69, well above analyst expectations, while operating margins expanded to 43% and free cash flow climbed 17% to $87 million. The software company completed its purchase of Domo's AI and Data Platform business in September, broadening its data management capabilities.
Revenue Misses Slightly, But Earnings Power Through
Progress's $246 million quarterly revenue fell 2% year over year and edged below the $247.6 million analyst consensus. However, the company's non-GAAP earnings per share of $1.69 beat expectations of $1.52 by 11.2%, showcasing strong cost discipline. Annualized recurring revenue reached $873 million, a 1% increase in constant currency.
Margins Expand and Cash Generation Accelerates
Progress's operating margin climbed to 43%, up 300 basis points year over year, signaling tighter cost control. Adjusted free cash flow increased 17% to $87 million, while cash from operations jumped 20% to $88 million. Days sales outstanding improved dramatically to 42 days, a 13-day improvement from the prior year, indicating faster customer payments and stronger working capital management.
Domo Acquisition Adds AI Muscle but Tests Margins
Progress closed its September acquisition of Domo's AI and Data Platform for $400 million, funded by drawing $390 million from its revolving credit facility. The deal brought 2,400 enterprise customers into Progress's fold. CEO Yogesh Gupta emphasized the strategic fit: Defense World quoted him saying the platform can "connect data across the enterprise, apply AI to that data, and deliver trusted insights and actions directly into business workflows." Management cautioned that the integration and shift toward SaaS models could pressure margins near-term.
Full-Year Guidance Lifted on Domo Contribution
Progress raised its fiscal 2026 revenue forecast to $1.044 billion–$1.052 billion, up from prior guidance of $990 million–$1.002 billion. The company now expects adjusted earnings per share of $6.15–$6.23 for the year. Fourth-quarter revenue is projected between $297 million and $305 million, reflecting roughly two months of Domo operations. Progress expects Domo to stabilize at $280 million–$290 million in annual revenue and contribute over $100 million in annual EBITDA by full integration in late 2027.
Debt Declining Despite Major Acquisition Spend
Progress ended Q3 with $1.24 billion in total debt and a net leverage ratio of 2.7 times trailing EBITDA. Despite the $400 million Domo purchase, the company repaid $60 million on its revolving credit facility during the quarter and $170 million year to date. Customer retention remained strong at 99%, reflecting stable underlying demand across the software vendor's portfolio.
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