Progress Software (PRGS) AI Stock Analysis

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Progress Software

(NASDAQ:PRGS)

78Outperform

Progress Software is a solid performer with strong financial metrics, particularly in revenue growth and cash flow generation. The successful integration of ShareFile and strategic focus on AI bolster its future prospects. However, the high P/E ratio and reliance on debt are notable risks. The stock exhibits moderate technical momentum, suggesting cautious optimism.

Progress Software (PRGS) vs. S&P 500 (SPY)

Market Cap

$2.54B

Dividend Yield1.19%

Average Volume (3M)837.21K

Price to Earnings (P/E)45.8

Beta (1Y)0.22

Revenue Growth12.85%

EPS Growth-16.89%

CountryUS

Employees2,815

SectorTechnology

Sector Strength57

IndustrySoftware - Application

Share Statistics

EPS (TTM)1.29

Shares Outstanding43,025,993

10 Day Avg. Volume546,969

30 Day Avg. Volume837,207

Financial Highlights & Ratios

PEG Ratio6.76

Price to Book (P/B)N/A

Price to Sales (P/S)3.13

Price to Cash Flow (P/CF)30.00

P/FCF Ratio35.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$73.60

Price Target Upside24.51% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Progress Software Business Overview & Revenue Model

Company DescriptionProgress Software Corporation (PRGS) is a global software company that specializes in providing cutting-edge solutions for developing, deploying, and managing business applications. Operating within the technology sector, Progress offers a wide range of products and services, including application development platforms, data connectivity solutions, and digital experience technologies. The company's core offerings empower businesses to create high-performing applications and address complex IT challenges efficiently.

How the Company Makes MoneyProgress Software generates revenue primarily through the sale of software licenses, subscriptions, and support services. The company offers its products on a perpetual license basis, as well as through subscription models, allowing customers to choose the best fit for their needs. Additionally, Progress provides maintenance and support services, which contribute significantly to its recurring revenue streams. The company leverages strategic partnerships and acquisitions to expand its product portfolio and market reach, further enhancing its revenue-generating capabilities.

Progress Software Financial Statement Overview

Summary

Progress Software displays strong financial health with consistent revenue growth, high operational efficiency, and robust cash flow generation. The company maintains a stable balance sheet, though reliance on debt is moderate and warrants cautious monitoring. Overall, the financial statements reflect a well-managed company with a positive outlook.

Income Statement

Very Positive

Progress Software demonstrates a strong financial performance with consistent revenue growth, as seen in the 7.07% increase from the prior year in the TTM period. The gross profit margin is robust at 80.15%, indicating effective cost management. However, the net profit margin has slightly decreased to 7.03%, suggesting increased expenses or other costs affecting net income. The EBIT margin of 15.57% and EBITDA margin of 25.09% show healthy operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.92, suggesting moderate leverage. The company's return on equity is 13.14%, indicating reasonable profitability relative to shareholder investments. The equity ratio stands at 17.54%, which implies a lower reliance on equity financing, hence a potential risk if debt levels rise.

Cash Flow

Very Positive

Cash flow analysis reveals a strong operational cash flow to net income ratio of 3.73, suggesting excellent cash generation from operations. The free cash flow to net income ratio is 3.62, reflecting efficient capital expenditure management. The free cash flow has slightly decreased by 0.49% year-over-year, which is manageable given the overall positive cash flow metrics.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
806.74M	753.41M	694.44M	602.01M	531.31M	442.15M
	Gross Profit
646.52M	622.93M	567.86M	507.52M	452.86M	380.04M
	EBIT
125.66M	124.00M	110.52M	132.13M	116.10M	107.73M
	EBITDA
239.96M	124.00M	213.38M	214.77M	178.93M	149.50M
	Net Income Common Stockholders
56.74M	68.44M	70.20M	95.07M	78.42M	79.72M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
124.16M	118.08M	126.96M	251.76M	157.37M	106.00M
	Total Assets
2.46B	2.53B	1.60B	1.41B	1.36B	1.04B
	Total Debt
830.51M	831.73M	747.11M	640.59M	591.35M	416.48M
	Net Debt
706.35M	713.65M	620.15M	384.31M	435.94M	318.49M
	Total Liabilities
2.03B	2.09B	1.14B	1.01B	951.05M	695.77M
	Stockholders Equity
431.85M	438.79M	459.71M	393.99M	412.49M	346.01M
Cash Flow		Free Cash Flow
205.28M	206.29M	168.35M	186.07M	173.88M	138.33M
	Operating Cash Flow
211.47M	211.49M	173.92M	192.16M	178.53M	144.85M
	Investing Cash Flow
-860.08M	-857.91M	-360.38M	-6.09M	-258.62M	-218.69M
	Financing Cash Flow
644.37M	640.82M	51.19M	-91.68M	131.46M	6.15M

Progress Software Technical Analysis

Technical Analysis Sentiment

Positive

Last Price59.11

Price Trends

50DMA

55.87

Positive

100DMA

59.59

Negative

200DMA

60.31

Negative

Market Momentum

MACD

0.50

Negative

RSI

59.26

Neutral

STOCH

72.68

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRGS, the sentiment is Positive. The current price of 59.11 is above the 20-day moving average (MA) of 56.29, above the 50-day MA of 55.87, and below the 200-day MA of 60.31, indicating a neutral trend. The MACD of 0.50 indicates Negative momentum. The RSI at 59.26 is Neutral, neither overbought nor oversold. The STOCH value of 72.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PRGS.

Progress Software Risk Analysis

Progress Software disclosed 37 risk factors in its most recent earnings report. Progress Software reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Progress Software Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PRGS	78 Outperform	$2.54B	45.84	12.70%	1.19%	12.85%	-16.89%
DV	67 Neutral	$2.14B	40.74	5.21%	―	14.72%	-22.00%
FORM	66 Neutral	$2.18B	31.94	7.50%	―	15.16%	-15.16%
TDC	64 Neutral	$2.08B	18.53	85.07%	―	-4.53%	93.29%
TTMI	62 Neutral	$2.04B	37.01	3.66%	―	9.41%	―
RNG	62 Neutral	$2.27B	―	16.58%	―	8.99%	63.84%
Sector *	59 Neutral	$10.74B	10.21	-6.69%	3.04%	7.44%	-10.92%

* Technology Sector Average

Performance Comparison

PRGS

Progress Software

59.11

9.09

18.17%

FORM

Formfactor

28.34

-16.41

-36.67%

TDC

Teradata

21.61

-16.06

-42.63%

TTMI

TTM Technologies

20.42

5.29

34.96%

RNG

RingCentral

25.15

-5.49

-17.92%

DoubleVerify Holdings

13.28

-16.95

-56.07%

Progress Software Earnings Call Summary

Earnings Call Date: Mar 31, 2025 | % Change Since: 14.75% | Next Earnings Date: Jul 1, 2025

Earnings Call Sentiment Positive

The earnings call was largely positive, with significant growth in ARR and successful integration of ShareFile contributing to improved financial performance. While there are some potential challenges related to revenue timing and future M&A, the overall outlook remains strong due to effective execution and strategic focus on AI and SaaS opportunities.

Highlights

Strong Start to Fiscal Year 2025

Annualized recurring revenue (ARR) increased 48% year-over-year in constant currency, driven largely by the acquisition of ShareFile. Revenue for the quarter reached $238 million, up 30% in constant currency, and earnings per share of $1.31 exceeded expectations.

Successful ShareFile Integration

The integration of ShareFile is proceeding ahead of plan, contributing significantly to ARR, revenue, and cost savings. Operating margins reached 39%, highlighting effective expense management and ShareFile integration.

Robust Customer Wins and AI Integration

Significant customer wins across various industries with ShareFile and other products, driven by AI capabilities and secure document management solutions. AI efforts focus on building AI-powered applications and improving product usability.

Debt Reduction and Share Repurchases

Paid down $30 million on revolving credit and repurchased $30 million in stock, showing commitment to prudent capital allocation and shareholder returns.

Lowlights

Revenue Lumpy Due to Multi-Year Contracts

Revenue growth was affected by the timing of multi-year subscription contract renewals, which can create fluctuations in quarterly revenue.

Potential Challenges with Future M&A

The competitive market and high valuations of potential acquisition targets, particularly in AI, may pose challenges for future mergers and acquisitions.

Company Guidance

In the first quarter of fiscal year 2025, Progress Software Corporation reported impressive financial results, driven significantly by the integration of ShareFile. The company's annualized recurring revenue (ARR) surged by 48% year-over-year in constant currency, largely attributed to ShareFile's contribution, while the net retention rate exceeded 100%. Quarterly revenues reached $238 million, marking a 30% increase in constant currency, and earnings per share were $1.31, surpassing the upper guidance range. Operating margins stood at a robust 39%, reflecting effective expense management and ShareFile's faster integration. Progress Software also made strategic capital moves, reducing debt by $30 million and repurchasing $30 million of its stock. The company remains focused on prudent capital allocation and is optimistic about future acquisition opportunities, bolstered by ShareFile's SaaS platform, which now constitutes nearly 30% of total revenue.

Progress Software Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures

Progress Software Reports Strong Q1 Fiscal 2025 Results

Positive

Mar 31, 2025

Progress announced its financial results for the first quarter of fiscal 2025, ending February 28, 2025. The company reported a 29% year-over-year increase in revenue to $238 million and a 48% increase in annualized recurring revenue to $836 million. The ShareFile integration is progressing well, contributing to revenue growth and expense savings. Despite a decrease in GAAP diluted earnings per share, non-GAAP diluted earnings per share increased by 5%. The company repurchased $30 million of shares and paid down $30 million of its revolving credit line. Progress’s strong performance reflects steady demand and effective cost management, with a positive outlook for the remainder of the fiscal year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.