Summary
Progress reported first quarter fiscal 2024 results for the period ended February 29, 2024. Revenue was $184.68 million, up 12.5% from the prior-year quarter. The top line benefited from the MarkLogic acquisition completed in February 2023. That deal added a full quarter of revenue in the current period, while the prior-year quarter included only one month of MarkLogic activity. OpenEdge also contributed growth. Those gains were partly offset by a decline in DataDirect because of the timing of renewals on multiyear subscription contracts. Software license revenue and maintenance and services revenue both increased. Total revenue growth was 12% as reported and 12% on a constant currency basis. Annualized recurring revenue was $571.0 million as of February 29, 2024, compared with $570.0 million as of February 28, 2023, remaining constant year over year. Net retention rate stayed in the range of 99% to 102%. The company said the high net retention rates illustrate predictable and durable top line performance.
Profitability was mixed. Gross profit rose 10.0% to $151.88 million. Gross margin slipped to 82.2%, down 1.8 percentage points from the prior-year quarter. Operating income was $35.01 million, down 1.6% year over year. Operating margin fell to 19.0%, down 2.7 percentage points. Net income was $22.64 million, down 4.4%. Diluted earnings per share came in at $0.51, down $0.02 from the prior-year quarter. The margin pressure came from costs tied to the MarkLogic acquisition, including higher amortization of intangibles and personnel costs across sales, marketing, product development, and general and administrative functions. Restructuring expenses and cyber incident response costs also weighed on results. Income from operations decreased because costs of revenue and operating expenses rose, though higher revenue partly offset the increase.
Cash generation was a bright spot. Operating cash flow was $70.50 million, up 50.8% from the prior-year quarter. The increase came from higher billings and collections. Capital expenditures were $0.31 million, down 19.7%. Deferred revenue was $296.13 million, down 1.9% from the prior-year quarter. Remaining performance obligations, or RPO, were $348.0 million, up 12.6% from the prior-year quarter. The deferred revenue decline and the RPO increase point to different trends in contracted backlog and billings timing. Days sales outstanding in accounts receivable increased to 50 days from 42 days in the first fiscal quarter of 2023 due to the timing of billings. Management said it believes existing cash balances, funds generated from operations, and amounts available under its credit facility will be sufficient to finance operations and meet foreseeable cash requirements through at least the next twelve months. The company also repurchased shares and paid dividends during the quarter.
The quarter had no formal quantitative guidance for the next quarter or the full fiscal year. Management did offer qualitative expectations for fiscal year 2024. It expects annual interest expense to decrease for the remainder of 2024 because of the reduced contractual interest rate on the 2030 convertible notes. It also expects interest income to continue growing during fiscal year 2024. Risks remain. The MOVEit Vulnerability has led to litigation and governmental investigations, and the company expects future costs, though it expects insurance to reduce its exposure. Renewal timing on multiyear subscription contracts can swing revenue. Foreign currency moves can affect reported results. Integration of MarkLogic and restructuring actions add execution risk. The company's liquidity outlook depends on cash from operations, which could be affected by capital market volatility and other risks detailed in its annual report. The quarter showed solid revenue growth and strong cash flow, but margins and net income declined. The balance between recurring revenue stability and cost pressure will be important to watch.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $184.7M | $177.0M | +4.4% | $164.2M | +12.5% |
| Gross profit | $151.9M | $143.3M | +6.0% | $138.0M | +10.0% |
| Gross margin | 82.2% | 81.0% | +1.3 pp | 84.0% | -1.8 pp |
| Sales & marketing | $39.1M | $43.6M | -10.2% | $33.8M | +15.9% |
| General & administrative | $21.3M | $22.1M | -3.5% | $18.8M | +13.6% |
| Total operating expenses | $116.9M | $120.8M | -3.2% | $102.4M | +14.1% |
| Operating income (loss) | $35.0M | $22.5M | +55.3% | $35.6M | -1.6% |
| Operating margin | 18.9% | 12.7% | +6.2 pp | 21.7% | -2.7 pp |
| Net income (loss) | $22.6M | $15.3M | +47.6% | $23.7M | -4.4% |
| Net margin | 12.3% | 8.7% | +3.6 pp | 14.4% | -2.2 pp |
| Diluted EPS | $0.51 | $0.34 | +$0.17 | $0.53 | -$0.02 |
| Net retention rate | 99.0% | 100.0% | -1.0 pp | 101.0% | -2.0 pp |
Risks
The MOVEit Vulnerability continues to expose the company to litigation and governmental investigations, with future costs expected though partially offset by insurance. Cyber incident and vulnerability response expenses, net decreased 63% in Q1 FY2024, but the matter remains unresolved and could lead to additional liabilities.
Although total revenue increased 12.5% in Q1 FY2024, gross margin decreased 1.8 percentage points and operating margin decreased 2.7 percentage points. Operating income decreased 1.6%, net income decreased 4.4%, and diluted EPS decreased 3.8%, while cost of maintenance and services increased 27%, sales and marketing increased 16%, product development increased 15%, and general and administrative increased 14%.
The MarkLogic acquisition drove $26.7 million of the revenue increase in Q1 FY2024 and added significant intangible amortization and operating costs. Integration and purchase accounting costs contributed to higher expenses and lower operating income, creating execution and profitability risk.
Interest expense increased 26% and total other expense, net increased 31% in Q1 FY2024 due to term loan and revolving line of credit borrowings used to fund the MarkLogic acquisition. The company also repaid $30.0 million on the revolving line of credit during the quarter and holds $73.0 million of cash in foreign subsidiaries that is not available to fund domestic operations.
Deferred revenue decreased 1.9% in Q1 FY2024 versus the prior-year quarter, and DataDirect revenue decreased due to the timing of renewals on multiyear subscription contracts. RPO increased 12.6%, but ARR remained constant at $571.0 million compared with $570.0 million, and net retention rates ranged between 99% and 102%, highlighting renewal timing and expansion risk.
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 FY2024 (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.