Progress Software (NASDAQ:PRGS) reported what management described as its “strongest year to date” in fiscal 2025, citing the integration and contribution of ShareFile, steady execution across the portfolio, and a growing wave of customer AI projects during the second half of the year.
Fiscal 2025 results and fourth-quarter performance
For fiscal 2025, Progress delivered revenue of $978 million, up 30% year over year, and non-GAAP earnings per share of $5.72, up 16% from fiscal 2024. CEO Yogesh Gupta said the company exceeded the midpoint of its original January revenue guidance by about $14 million and beat operating income guidance by 6%.
The company highlighted continued strength in annual recurring revenue (ARR) and retention. ARR finished the quarter at $852 million, representing approximately 2% pro forma year-over-year growth, with a 100% net retention rate. Gupta noted that ARR now represents over 87% of total revenue.
Folger said ARR growth was driven by multiple products, including ShareFile, OpenEdge, WhatsUp Gold, and the company’s DevTools products. In Q4 specifically, Progress cited outperformance from OpenEdge and ShareFile versus internal expectations.
Margins, expenses, and cash flow
On profitability, Progress posted fourth-quarter operating income of $96 million, translating to an operating margin of 38%. Total costs and operating expenses were $156 million for the quarter and $593 million for the full year, with Folger stating the increases were “entirely driven by the inclusion of a full year of ShareFile activity.”
Progress ended the year with $95 million in cash and cash equivalents and $1.4 billion in debt, resulting in a net debt position of $1.3 billion. The company’s net leverage ratio was approximately 3.4x at year-end, which Folger said was slightly better than expected following the completion of the ShareFile integration.
Adjusted free cash flow was $62 million in Q4 and $247 million for fiscal 2025, up 16% year over year. Progress also repurchased $40 million of stock in the fourth quarter and $105 million for the full year, ending fiscal 2025 with $202 million remaining under its current repurchase authorization.
AI-focused product updates and customer activity
Progress repeatedly pointed to AI as a major theme in both its product roadmap and customer demand. Gupta said customer AI projects increasingly propelled performance in the second half of fiscal 2025, and he tied the company’s FY26 confidence to expectations for continued AI investment.
During prepared remarks, Gupta outlined several AI-related launches and enhancements across the portfolio, including:
- Progress Agentic RAG, which the company called an industry-leading product designed to help organizations use generative AI “with confidence.”
- The “industry’s first” generative content management system with built-in RAG capabilities in Sitefinity, including native multilingual, agentic RAG-based AI intended to generate dynamic user experiences based on visitor prompts and activity.
- An enterprise-grade agentic UI generator leveraging Telerik and Kendo UI libraries to generate multi-component page layouts from natural language prompts within a developer’s IDE.
- Automate MFT, a new cloud-native file transfer solution that Progress said can reduce total cost of ownership by up to 50% versus traditional products.
Gupta also cited a customer example involving a Fortune 50 agriculture and food company using the Progress Data Platform to unify structured and unstructured data spanning “hundreds” of sources and nearly “1,000” formats, which he said produced actionable insights worth “tens of millions of dollars.”
In addition, Progress noted that the U.S. Department of Defense Chief Digital and AI Office added Progress Federal Solutions Group to the TradeWinds Solutions Marketplace, which the company described as a list of pre-approved AI providers that can speed procurement and deployment of the Progress Data Platform.
Acquisitions, operations, and FY26 outlook
Progress provided updates on two acquisitions discussed during the year. Gupta said the company completed the integration of ShareFile—Progress’s largest acquisition to date—hitting milestones “on or ahead of schedule.” He also said Progress acquired and fully integrated Nuclia’s agentic RAG technology, describing customer reception as strong and emphasizing the additional functionality brought into the product set.
Progress also announced an expanded presence in Costa Rica, building on ShareFile’s footprint with a new facility intended to serve as a center of excellence for technical support, customer success, sales, and corporate functions.
On M&A, Gupta said Progress remains focused on infrastructure software vendors with solid technology and stable install bases, but noted that “few such assets have come to market” recently. He emphasized selectivity, patience, and discipline, adding that while some software is “available cheap,” it does not necessarily meet Progress’s quality criteria.
For fiscal 2026, management guided to revenue between $986 million and $1.0 billion (roughly 1% to 2% growth), operating margin of 39%, adjusted free cash flow of $260 million to $274 million, and unlevered free cash flow of $313 million to $326 million. EPS is expected between $5.82 and $5.96. For the first quarter of FY26, Progress expects revenue of $244 million to $250 million and EPS of $1.56 to $1.62.
Folger said the company expects ARR growth “generally consistent” with the roughly 2% growth seen in FY25, and he indicated that the FY26 outlook assumes minimal revenue impact from the timing of multi-year contract renewals. Progress also plans to repay $250 million of revolver borrowings in FY26, targeting a net leverage ratio of approximately 2.7x by year-end. The company expects to roll its 2026 convertible notes into its revolving credit facility when those notes mature in April 2026.
In the Q&A, Gupta downplayed near-term fears that AI will rapidly displace enterprise application software, arguing that major businesses are unlikely to rewrite core systems like ERP, HR, and financial platforms over the next one to three years due to data migration hurdles, business risk, and retraining requirements. He said Progress’s products operate within customer environments to help govern data, run workflows, manage content, and deliver digital experiences—areas he expects to become increasingly AI-enabled rather than replaced.
About Progress Software (NASDAQ:PRGS)
Progress Software (NASDAQ: PRGS) is a global provider of enterprise software designed to simplify and accelerate the delivery of business applications. The company’s offerings span digital experience management, application development and deployment, data connectivity and integration, and predictive analytics. Progress supports organizations in building, deploying, and managing mission-critical applications across on-premises, cloud and hybrid environments, helping to reduce development complexity and operational overhead.
Key products in Progress’s portfolio include Progress OpenEdge, a robust development and database platform for building transactional applications; Progress DataDirect, which enables high-performance connectivity to disparate data sources; Progress Sitefinity, a digital experience platform for content management and personalization; Progress Telerik, a suite of UI controls and developer tools; and Progress Kinvey, a serverless backend platform for mobile and web applications.
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