Progress Software (PRGS) AI Stock Analysis

• Market Cap: $1.86B
• Dividend Yield: N/A
• Average Volume (3M): 491.31K
• Price to Earnings (P/E): 39.7
• Beta (1Y): 0.27
• Revenue Growth: 31.41%
• EPS Growth: -40.89%
• Country: US
• Employees: 2,815
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.50
• Shares Outstanding: 42,907,574
• 10 Day Avg. Volume: 481,026
• 30 Day Avg. Volume: 491,306
• PEG Ratio: -17.52
• Price to Book (P/B): 6.75
• Price to Sales (P/S): 3.93
• P/FCF Ratio: 14.35
• Enterprise Value/Market Cap: 1.81
• Enterprise Value/Revenue: 3.59
• Enterprise Value/Gross Profit: 4.43
• Enterprise Value/Ebitda: 12.05
• 1Y Price Target: $66.25
• Price Target Upside: 51.91% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $48.00 ▲(10.07% Upside)

Progress Software's overall stock score is driven by strong earnings call performance and solid financial growth, particularly in ARR and AI integration. However, mixed technical indicators and high valuation metrics slightly offset these strengths. The company must address profitability challenges and improve cash conversion to enhance its financial health further.

Positive Factors

Strong ARR Growth

The significant ARR growth indicates strong market demand and effective execution, supporting long-term revenue stability and business expansion.

AI-Driven Product Enhancements

AI integration enhances product offerings, driving customer engagement and competitive advantage, positioning the company well in the evolving tech landscape.

New Product Launch in AWS Marketplace

Listing in AWS Marketplace expands distribution channels, increasing accessibility and potential customer base, supporting long-term growth and market presence.

Negative Factors

Declining Net Profit Margin

The decline in net profit margin suggests rising costs or inefficiencies, which could impact profitability if not addressed, affecting long-term financial health.

Flat Net Retention Rate

Stable but non-growing retention rates indicate challenges in expanding existing customer relationships, potentially limiting future revenue growth.

Lower Operating Cash Flow Coverage

Lower cash flow conversion suggests potential liquidity issues, which could constrain operational flexibility and investment capacity over time.

Progress Software Business Overview & Revenue Model

Company Description

Progress Software Corporation (PRGS) is a global software company that provides products for application development, data connectivity, and digital experience management. Founded in 1981, the company operates primarily in the technology sector, offering a range of solutions including application development frameworks, data integration tools, and analytics. Progress is recognized for its flagship products such as the Telerik development tools, the OpenEdge application platform, and the Sitefinity digital experience platform, which help businesses build, deploy, and manage applications efficiently across various environments.

How the Company Makes Money

Progress Software generates revenue through multiple streams, primarily from software licensing, subscription services, and professional services. The company's key revenue streams include the sale of licenses for its development tools and platforms, ongoing subscriptions for cloud-based services, and support and maintenance contracts. Additionally, Progress earns income from consulting services that assist clients in implementing and optimizing their software solutions. Strategic partnerships with other technology firms enhance its offerings and broaden its market reach, contributing to its overall financial performance. The shift towards cloud computing and digital transformation also positions Progress to capitalize on the growing demand for modern application development and data management solutions.

Progress Software Financial Statement Overview

Summary

Progress Software demonstrates strong revenue growth and efficient cost management, as evidenced by its high gross profit margin. However, declining net profit and EBIT margins highlight potential profitability challenges. The balance sheet shows improved leverage, but the decrease in return on equity suggests reduced profitability. Cash flow metrics indicate effective cash management, although the lower operating cash flow coverage ratio warrants attention. Overall, the company is on a positive growth trajectory but must address profitability and cash conversion issues to sustain its financial health.

Income Statement

Progress Software shows a solid revenue growth rate of 8.18% in the TTM, indicating a positive growth trajectory. The gross profit margin remains strong at 81.11%, reflecting efficient cost management. However, the net profit margin has decreased to 5.16% in the TTM from 9.08% in the previous year, suggesting increased expenses or other financial pressures. The EBIT and EBITDA margins are healthy, but there is a noticeable decline in EBIT margin from 16.76% to 9.88%, which could be a concern if not addressed.

Balance Sheet

The company's debt-to-equity ratio has improved from 3.56 to 1.74, indicating a reduction in leverage and a more balanced capital structure. However, the return on equity has decreased from 15.60% to 10.78%, suggesting a decline in profitability relative to shareholder equity. The equity ratio remains stable, indicating a consistent proportion of equity financing.

Cash Flow

Operating cash flow to net income ratio is 0.25, which is lower than previous periods, indicating potential challenges in converting income into cash. However, free cash flow growth is positive at 9.26%, and the free cash flow to net income ratio remains strong at 0.97, suggesting effective cash management despite the lower operating cash flow coverage.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	940.13M	753.41M	694.44M	602.01M	531.31M	442.15M
Gross Profit	762.53M	622.93M	567.86M	507.52M	452.86M	380.04M
EBITDA	280.06M	124.00M	213.38M	214.77M	178.93M	149.50M
Net Income	48.53M	68.44M	70.20M	95.07M	78.42M	79.72M
Balance Sheet
Total Assets	2.42B	2.53B	1.60B	1.41B	1.36B	1.04B
Cash, Cash Equivalents and Short-Term Investments	99.01M	118.08M	126.96M	251.76M	157.37M	106.00M
Total Debt	830.83M	1.56B	757.22M	640.59M	599.28M	423.50M
Total Liabilities	1.94B	2.09B	1.14B	1.01B	951.05M	695.77M
Stockholders Equity	477.68M	438.79M	459.71M	393.99M	412.49M	346.01M
Cash Flow
Free Cash Flow	186.32M	206.29M	168.35M	186.07M	173.88M	138.33M
Operating Cash Flow	192.04M	211.49M	173.92M	192.16M	178.53M	144.85M
Investing Cash Flow	-879.07M	-857.91M	-360.38M	-6.09M	-258.62M	-218.69M
Financing Cash Flow	550.31M	640.82M	51.19M	-91.68M	131.46M	6.15M

Progress Software Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 43.61
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRGS, the sentiment is Negative. The current price of 43.61 is above the 20-day moving average (MA) of 42.63, above the 50-day MA of 43.39, and below the 200-day MA of 50.80, indicating a neutral trend. The MACD of 0.44 indicates Negative momentum. The RSI at 53.20 is Neutral, neither overbought nor oversold. The STOCH value of 32.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRGS.

Progress Software Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CXM	77 Outperform	$1.94B	18.58	21.35%	―	6.48%	168.94%
PRGS	71 Outperform	$1.86B	39.69	10.75%	―	31.41%	-40.89%
RNG	63 Neutral	$2.54B	208.62	―	―	5.45%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
DBD	58 Neutral	$2.40B	48.98	4.66%	―	-2.86%	985.78%
AMPL	52 Neutral	$1.47B	-14.46	-37.47%	―	12.78%	-20.47%

Progress Software Corporate Events

Progress Software Reports Strong Q3 2025 Financial Results

On September 29, 2025, Progress Software announced its financial results for the third quarter of fiscal year 2025, ending August 31. The company reported a 40% year-over-year revenue increase to $250 million and a 47% rise in annualized recurring revenue to $849 million. Despite a decrease in GAAP diluted earnings per share by 32%, non-GAAP diluted earnings per share rose by 19%. The company highlighted the successful integration of ShareFile and ongoing investments in AI capabilities, contributing to strong operational performance. Progress also raised its full-year guidance for revenue, earnings per share, and cash flow, reflecting a positive outlook for the remainder of the fiscal year.