Progress Software PRGS reported first-quarter fiscal 2026 non-GAAP earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 1.91% and increased 22% year over year.
Non-GAAP revenues of $247.8 million beat the consensus mark by 0.93% but increased 4% on a year-over-year basis and 2% on a constant currency basis. The upside can be attributed to strong expected demand for multiple products in PRGS’ portfolio, particularly ShareFile, OpenEdge, WhatsUp Gold and DevTools.
On a constant-currency basis, annualized recurring revenues were $863 million, up 2% year over year, driven by broad-based contributions across all portfolios, including OpenEdge, ShareFile, Loadmaster, WhatsUp Gold, MOVEit and our DevTools products. The net retention rate remained strong at 99%.
PRGS shares have increased 2.37% in the pre-market trading.
Progress Software Corporation Price, Consensus and EPS Surprise
Progress Software Corporation price-consensus-eps-surprise-chart | Progress Software Corporation Quote
Quarter Details
Software license revenues were $67.6 million, up 15.6% year over year. Maintenance and service revenues were $180.2 million, up 0.4% year over year.
The growth can be attributed to the strong performance of the overall product portfolio, especially in the second half of the year, fueled by customers’ AI projects, along with the contribution of ShareFile.
Sales and marketing expenses, as a percentage of revenues, decreased 60 basis points (bps) from the year-ago quarter’s level to 21%.
Product development expenses, as a percentage of revenues, increased 90 bps to 20.4%.
General and administrative expenses, as a percentage of revenues, decreased 10 bps from the year-ago quarter’s level to 10.7%.
Progress Software reported a non-GAAP operating margin of 41.2%, which expanded 190 bps year over year.
Balance Sheet of PRGS
As of Feb. 28, 2026, cash and cash equivalents were $113 million compared with $95 million as of Nov. 30, 2025. Total debt was $1.35 billion, with a net debt position of approximately $1.24 billion.
In the reported quarter, the company generated a cash flow from operations of $98.6 million compared with $62.8 million in the previous quarter.
The company generated $98.8 million in adjusted free cash flow in the reported quarter compared with $62.1 million in the previous quarter.
PRGS Offers Q2 & FY26 Guidance
For second-quarter fiscal 2026, Progress Software expects non-GAAP revenues between $240 million and $246 million. The Zacks Consensus Estimate for revenues is currently pegged at $245.51 million, indicating growth of 3.15% from the year-ago quarter’s reported figure.
Progress Software expects non-GAAP earnings between $1.47 and $1.53 per share. The consensus mark is currently pegged at $1.57 per share, indicating growth of 19.9% from the year-ago quarter’s reported figure.
For fiscal 2026, non-GAAP revenues are projected between $988 million and $1 billion, with the non-GAAP operating margin expected to be 39%.
Non-GAAP earnings are projected between $5.91 and $6.03 per share, better than the previous guidance of $5.82-$5.96 per share for fiscal 2026.
The Zacks Consensus Estimate for fiscal 2026 revenues and earnings is currently pegged at $989.52 million and $5.86 per share, respectively.
Adjusted free cash flow is expected to be between $263 million and $275 million for fiscal 2026.
PRGS’ Zacks Rank & Stocks to Consider
Currently, Progress Software carries a Zacks Rank #3 (Hold).
Advanced Energy Industries AEIS, Digital Turbine APPS and Ciena CIEN are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.
Advanced Energy Industries and Digital Turbine carry a Zacks Rank #2 (Buy) at present, while Ciena sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Advanced Energy Industries, Digital Turbine and Ciena is currently pegged at 19.3%, 41.5% and 52.9%, respectively.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ciena Corporation (CIEN): Free Stock Analysis Report
Progress Software Corporation (PRGS): Free Stock Analysis Report
Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report
Digital Turbine, Inc. (APPS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).