Summary
Progress Software reported $247.8 million of revenue for the fiscal first quarter ended February 28, 2026, up 4.1% from $238.0 million in the prior-year quarter. Increases in license sales of the OpenEdge product offering and a positive foreign currency impact drove the gain. Gross profit rose 6.3% to $203.9 million, and gross margin improved 1.7 percentage points to 82.3%. Operating income advanced 43.3% to $46.5 million, with operating margin expanding to 18.8% from 13.6%. Net income climbed 108.4% to $22.8 million, and diluted earnings per share was $0.53 compared with $0.24. Profit growth far outpaced revenue growth because amortization of acquired intangibles, restructuring charges and acquisition-related costs all came in lower than they did a year ago.
Recurring revenue metrics stayed solid. Annualized recurring revenue was $863 million, up 2% year over year on a constant currency basis, and the net retention rate was 99%. Management reported a non-GAAP operating margin of 41% and non-GAAP diluted earnings per share of $1.60 against $1.31 a year earlier, an increase of 22%.
Cash generation was the standout. Operating cash flow for the quarter was $98.6 million, up 43.0% from $68.9 million, while capital expenditures were $2.7 million, up from $1.3 million. Adjusted free cash flow, a non-GAAP measure, was $98.8 million, up 35% from $73.2 million, and unlevered free cash flow was $111.0 million, up 26% from $88.0 million. Deferred revenue was $424.6 million, up 6.1%, and remaining performance obligations were $527.5 million, up 10.3%. Days sales outstanding was 52 days, compared with 48 days in the fiscal first quarter of 2025 and 73 days in the fiscal fourth quarter of 2025. Gross accounts receivable fell $50.8 million from the end of fiscal 2025 on the timing of billings and collections.
The updated outlook covers both the full fiscal year and the fiscal second quarter. For the year ending November 30, 2026, the company guides to non-GAAP diluted earnings per share of $5.91 to $6.03 and a non-GAAP operating margin of 39%. Adjusted free cash flow is projected at $263 million to $275 million, and unlevered free cash flow at $315 million to $326 million. For the fiscal second quarter ending May 31, 2026, the outlook is non-GAAP diluted earnings per share of $1.47 to $1.53. Currency translation is expected to add approximately $9.4 million to full-year revenue and about $2.6 million of revenue in the fiscal second quarter. The full-year revenue range was little changed from the January guidance, and the operating margin outlook was unchanged.
Capital allocation stayed tilted toward debt reduction and buybacks. The company repaid $60 million on its revolving credit facility during the quarter and repurchased $20 million of stock, leaving cash and cash equivalents of $113.2 million at the end of the quarter. Interest expense was $15.2 million, down from $18.4 million, as the revolver balance came down. Lower charges flattered the year-over-year comparison on the bottom line. Restructuring expenses were $0.7 million against $7.0 million, acquisition-related expenses were $0.8 million against $2.5 million, and cyber vulnerability response expenses, net, were $1.4 million against $0.7 million. The effective tax rate rose, mostly on the jurisdictional mix of earnings and a discrete tax expense. MOVEit remains the biggest known overhang. The multidistrict litigation sits at a relatively early stage and is not expected to conclude within the next twelve months, although the court has dismissed, in whole or in part, 23 of the 33 claims asserted by the plaintiffs. Management also points to currency fluctuations, delays or reductions in large transactions, fewer large deals in a given quarter, renewal rate declines and acquisition integration as risks to the outlook.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $247.8M | $252.7M | -1.9% | $238.0M | +4.1% |
| Gross profit | $203.9M | $206.1M | -1.1% | $191.8M | +6.3% |
| Gross margin | 82.3% | 81.6% | +0.7 pp | 80.6% | +1.7 pp |
| Sales & marketing | $52.0M | $58.2M | -10.6% | $51.3M | +1.4% |
| General & administrative | $26.5M | $28.6M | -7.5% | $25.6M | +3.4% |
| Total operating expenses | $157.5M | $167.8M | -6.1% | $159.4M | -1.2% |
| Operating income (loss) | $46.5M | $38.4M | +21.1% | $32.4M | +43.3% |
| Operating margin | 18.8% | 15.2% | +3.6 pp | 13.6% | +5.1 pp |
| Net income (loss) | $22.8M | $25.7M | -11.4% | $10.9M | +108.4% |
| Net margin | 9.2% | 10.2% | -1.0 pp | 4.6% | +4.6 pp |
| Diluted EPS | $0.53 | $0.58 | -$0.05 | $0.24 | +$0.29 |
| Net retention rate | 99.0% | 100.0% | -1.0 pp | 100.0% | -1.0 pp |
Risks
The MOVEit Vulnerability multidistrict litigation remains in a relatively early stage and is not expected to conclude within the next twelve months; the court has dismissed, in whole or in part, 23 of the 33 claims asserted, and one customer cross-claim has been consolidated. Cyber vulnerability response expenses, net rose 84% year over year to $1.4 million in FY2026 Q1, and the company expects to incur future costs related to litigation and governmental investigations.
FY2026 Q1 revenue growth of 4.1% was driven primarily by increases in license sales of the OpenEdge product offering, with software licenses revenue up 16% as reported (11% constant currency) while total maintenance, SaaS, and professional services revenue was flat as reported and down 2% on a constant currency basis. Professional services revenue declined 11% as reported across multiple product offerings.
Management attributed the 1% as reported increase in maintenance revenue in FY2026 Q1 solely to a positive foreign currency impact, with maintenance down 2% on a constant currency basis and total maintenance, SaaS, and professional services down 2% on a constant currency basis. Foreign currency loss, net increased 5% year over year to $1.2 million in FY2026 Q1 due to rate volatility and timing of intercompany and hedge settlement activities.
Product development expense rose 9% year over year to $50.5 million in FY2026 Q1, primarily on increased personnel-related costs associated with higher headcount, while restructuring expenses recorded in FY2026 Q1 relate mainly to the November 2025 headcount reduction action and facility closures.
The effective tax rate increased to 25% in FY2026 Q1 from 18% in FY2025 Q1 primarily due to changes in the jurisdictional mix of earnings and a $0.5 million discrete tax expense versus a $0.3 million discrete benefit a year earlier, with the One Big Beautiful Bill Act introducing further changes to U.S. federal income tax provisions effective across multiple dates.
Interest expense was $15.2 million in FY2026 Q1, down 17% year over year after $60.0 million of revolving line of credit payments in the quarter versus $30.0 million a year earlier, and the company may use revolver capacity for payments on the 2026 Notes at or prior to maturity. Liquidity remains exposed to capital and credit market disruption per the company's own cautionary language.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Adjusted Free Cash Flow
Annualized Recurring Revenue (ARR)
Unlevered Free Cash Flow
Net Revenue Retention (NRR)
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q1 FY2026 (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.