Summary
Progress Software reported first-quarter fiscal 2022 revenue of $144.9 million, up 19.5% from the prior-year quarter. Gross profit rose 17.8% to $121.7 million. Operating income increased 7.4% to $29.4 million. Net income was $20.5 million, up 7.9%. Diluted EPS came in at $0.46, up $0.04. The top line benefited from the Kemp acquisition, which closed in the fourth quarter of fiscal 2021, plus growth in Chef, OpenEdge, and DevTools. Software license revenue and maintenance and services revenue both increased, according to the filing. Constant currency revenue growth was 21%.
Margins narrowed despite higher profit dollars. Gross margin was 84.0%, down 1.2 percentage points from the prior-year quarter. Operating margin was 20.3%, down 2.3 points. The filing says gross profit increased primarily due to higher revenue, offset by increases in costs of software licenses, costs of maintenance and services, and amortization of intangibles. Operating income increased for the same reason, but operating expenses also rose. Sales and marketing, product development, and general and administrative costs all increased year over year. Kemp integration costs and higher personnel expenses added pressure. The company also recorded restructuring expenses related to the Kemp and Chef acquisitions, though it said it does not expect those costs to be material. Acquisition-related expenses increased due to Kemp and other acquisition pursuits.
Recurring revenue metrics remain central to the story. Annual recurring revenue was $479.0 million, up 12% year over year, with the Kemp acquisition as the primary driver. Net dollar retention stayed in the 100% to 102% range. Deferred revenue rose 25.2% to $261.5 million. Remaining performance obligations increased 23.6% to $276.0 million. Progress operates as one segment and continues to emphasize customer and partner retention, predictable recurring revenue, and accretive acquisitions. Management says ARR mitigates fluctuations due to seasonality, contract term, and sales mix. It includes maintenance, software upgrade rights, public cloud and on-premises subscription-based transactions, and managed services. The company cautions that ARR is not a forecast and that active contracts may or may not be renewed.
Cash generation was roughly flat. Operating cash flow was $44.1 million, down 1.3% from the prior-year quarter. Capital expenditures were $0.8 million, down 28.7%. The filing attributes the operating cash flow decline to higher compensation payments, partly offset by cash from Kemp and strong receivable collections. Days sales outstanding improved to 52 days from 53 days. The company continues to use cash for acquisitions, dividends, and share repurchases, and it entered an amended credit agreement in January 2022. Progress says existing cash, funds from operations, and amounts available under its credit facility should finance operations and foreseeable cash requirements, including capital expenditures, debt repayments, dividends, share repurchases, acquisitions, lease commitments, restructuring obligations, and other long-term obligations.
Management's strategy remains total growth through acquisitions that meet strict financial criteria. The Kemp deal extended the product portfolio into Application Experience Management. The company also returns capital through dividends and buybacks. The MD&A does not provide formal financial guidance for the next quarter or the full fiscal year, so the reported quarter and the stated operating model serve as the main reference points.
Risks are broad. The filing cites economic, geopolitical, and market conditions, foreign currency fluctuations, renewal rates, delays or size reductions in transactions, the shift to cloud and subscription models, partner channel dependence, cybersecurity, acquisition integration, COVID-19, and Russia's invasion of Ukraine. About one-third of revenue is denominated in foreign currency, so exchange-rate swings can affect reported results. The company also carries debt from its convertible notes and term loan, which adds interest expense and leverage considerations. Progress depends on an extensive partner channel and international sales and operations. It faces risks if it cannot develop new or differentiated products, if security measures are compromised, or if acquisitions disrupt existing operations.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $144.9M | $140.1M | +3.4% | $121.3M | +19.5% |
| Gross profit | $121.7M | $119.0M | +2.2% | $103.3M | +17.8% |
| Gross margin | 84.0% | 85.0% | -1.0 pp | 85.2% | -1.2 pp |
| Sales & marketing | $33.5M | $37.4M | -10.6% | $29.5M | +13.6% |
| General & administrative | $17.0M | $18.8M | -9.6% | $13.4M | +26.6% |
| Total operating expenses | $92.3M | $98.7M | -6.5% | $75.9M | +21.6% |
| Operating income (loss) | $29.4M | $20.4M | +44.6% | $27.4M | +7.4% |
| Operating margin | 20.3% | 14.5% | +5.8 pp | 22.6% | -2.3 pp |
| Net income (loss) | $20.5M | $14.9M | +37.0% | $19.0M | +7.9% |
| Net margin | 14.1% | 10.7% | +3.5 pp | 15.6% | -1.5 pp |
| Diluted EPS | $0.46 | $0.33 | +$0.13 | — | — |
| Net retention rate | 100.0% | 98.0% | +2.0 pp | — | — |
Risks
Russia's invasion of Ukraine in February 2022 has created sanctions and economic uncertainty; the filing states that 40% of fiscal 2021 revenue came from outside North America and 32% from EMEA, so disruption in these regions could harm operations and business outlook.
The risk factor notes that security risks have increased significantly and that the Russian invasion of Ukraine elevates the risk of cyber-attacks on U.S. companies; any breach could lead to legal and financial exposure, government fines, and loss of customer confidence.
The filing states approximately 40% of total fiscal 2021 revenue was generated outside North America; risks include longer payment cycles, credit risk, export controls, sanctions, and foreign currency exposure, with about one-third of revenue denominated in foreign currencies.
The company relies on its technology infrastructure and third-party hosted services, and a significant number of systems are not redundant; failure or disruption from war, cyber-attack, or catastrophic events could interrupt billing, order fulfillment, and customer support.
Progress acquired Kemp in November 2021 for $258 million and pursues accretive M&A; integration risks include disruption, failure to realize synergies, restructuring charges, goodwill impairment, and dilution if stock is issued.
As of February 28, 2022, the company had approximately $621 million of consolidated indebtedness, including a $273.3 million term loan outstanding under a credit agreement with financial covenants and a springing maturity feature; failure to comply or repay could accelerate obligations.
Revenue forecasting is uncertain, particularly new software license revenue, and a high percentage of revenue is generated in the third month of each fiscal quarter; failure to close, complete, or process orders at quarter end could cause revenue shortfalls.
Weakness in the U.S. and international economies, supply chain issues, rising energy prices, and accelerating inflation may increase labor costs, tighten credit markets, and reduce customer demand or ability to pay.
Future success depends on attracting and retaining highly skilled technical, managerial, sales, and marketing personnel, and there is significant competition for such personnel in the software industry.
The company is subject to complex global laws on trade, export control, data privacy, anti-corruption, and sanctions; new sanctions in response to the Russian invasion of Ukraine increase compliance risk, and GDPR non-compliance can result in penalties up to 4% of worldwide revenue.
The company is substantially dependent on its OpenEdge products for a significant portion of software license and maintenance revenue; if demand declines or superior technologies emerge, business and operating results could be materially adversely affected.
Chef offerings incorporate open source components, and open source licensing practices can limit the value of software copyright assets and increase competition from new open source or hybrid offerings.
The ongoing COVID-19 pandemic could delay sales cycles, cause customers to fail to renew or request payment deferrals and pricing concessions, and disrupt third-party service providers; the full impact remains uncertain.
SaaS KPIs
All quarters →Net Retention Rate
Annualized Recurring Revenue
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.