Summary
Progress Software reported fiscal second quarter revenue of $237.4 million, up 35.6% from the prior-year quarter. The first six months came to $475.4 million, up 32.1%. ShareFile, acquired in the fourth quarter of fiscal 2024, supplied $65.9 million of quarterly revenue and $129.6 million in the first half. The legacy license business shrank: software license revenue fell 6% to $50.8 million. SaaS revenue reached $72.1 million. Annualized recurring revenue was $838 million, up 46% year over year in constant currency, and the net retention rate was 100%. North America revenue rose 43% to $147.3 million.
Gross profit rose 32.9% to $190.1 million, while gross margin slipped to 80.1% from 81.7%. Higher hosting costs and added amortization from ShareFile explain the gap. Operating income climbed 42.2% to $38.6 million, and operating margin widened to 16.3% from 15.5%. Interest expense was $18.1 million. Total other expense, net, rose 167% to $18.8 million. Net income still edged up 5.2% to $17.0 million, and diluted earnings per share rose 5.4% to $0.39. The first half ran the other way: net income fell 27.9% to $28.0 million, and diluted earnings per share dropped 27.6% to $0.63. Non-GAAP diluted earnings per share was $1.40, up 28% from $1.09, and non-GAAP operating margin was 40%, up 200 basis points.
Cash is where the story turns. Operating cash flow fell 52.9% to $30.0 million in the quarter and 26.3% to $98.9 million in the first six months. Management ties the decline to interest costs on the revolver drawn to fund ShareFile. Capital expenditures were $0.5 million, down 48.2%. Days sales outstanding stretched to 53 days from 41 days a year earlier and 48 days in the first quarter. Cash and cash equivalents ended at $102.0 million. The company repaid $40 million on the revolver in the quarter and $70 million year to date, and still aims for $160 million of debt paydown this year. Deferred revenue was $388.6 million, up 33.3%, and remaining performance obligations were $497.5 million, up 44.6%.
Guidance moved up for the full fiscal year ending November 30, 2025. The company raised its full-year outlook for revenue, operating margin, earnings per share and cash flow, and now points to non-GAAP diluted earnings per share of $5.28 to $5.40, up from $5.25 to $5.37, with non-GAAP operating margin of 38% to 39%. For the fiscal third quarter ending August 31, 2025, non-GAAP diluted earnings per share is guided to $1.28 to $1.34.
The risk list is familiar. MOVEit litigation remains in an early stage; motions to dismiss have been filed but not ruled on, and the MDL is not expected to wrap up this fiscal year. Cyber vulnerability response expenses, net, fell to $0.7 million in the quarter. Restructuring tied to the ShareFile action totaled $1.0 million in the quarter and $8.1 million in the first half. The company also closed the purchase of Nuclia, an agentic retrieval-augmented generation vendor, which it called immaterial to the financials. Hitting the ShareFile synergy targets, absorbing higher interest costs, and coping with currency swings are the items to watch. The quarterly dividend remains suspended so capital can go toward debt reduction.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $237.4M | $238.0M | -0.3% | $175.1M | +35.6% |
| Gross profit | $190.1M | $191.8M | -0.9% | $143.0M | +32.9% |
| Gross margin | 80.1% | 80.6% | -0.5 pp | 81.7% | -1.6 pp |
| Sales & marketing | $49.7M | $51.3M | -3.2% | $37.9M | +31.1% |
| General & administrative | $25.6M | $25.6M | +0.1% | $22.0M | +16.6% |
| Total operating expenses | $151.5M | $159.4M | -5.0% | $115.9M | +30.7% |
| Operating income (loss) | $38.6M | $32.4M | +19.1% | $27.1M | +42.2% |
| Operating margin | 16.3% | 13.6% | +2.7 pp | 15.5% | +0.8 pp |
| Net income (loss) | $17.0M | $10.9M | +55.6% | $16.2M | +5.2% |
| Net margin | 7.2% | 4.6% | +2.6 pp | 9.3% | -2.1 pp |
| Diluted EPS | $0.39 | $0.24 | +$0.15 | $0.37 | +$0.02 |
| Net retention rate | 100.0% | 100.0% | ±0.0 pp | 99.0% | +1.0 pp |
Risks
MOVEit Vulnerability litigation remains unresolved; the MDL is in a relatively early stage with motions to dismiss filed but not yet ruled upon, and the company continues to cooperate with governmental inquiries. Cyber vulnerability response expenses, net, were $0.73 million in FY2025 Q2, down 76% from the prior-year quarter, and $1.47 million year to date, down 64%, with future costs expected.
Growth depends heavily on the October 31, 2024 ShareFile acquisition. FY2025 Q2 revenue rose 35.6% year over year to $237.36 million and FY2025 year-to-date revenue rose 32.1%, driven by ShareFile revenue of $65.9 million in Q2 and $129.6 million in the first six months, which raises integration execution risk.
Interest expense rose 159% in FY2025 Q2 to $18.14 million and 155% year to date to $36.57 million due to drawing on the revolving line of credit for ShareFile. Total other expense, net, increased 167% in Q2 and 163% year to date, and the quarterly dividend was suspended to redirect capital toward debt repayment.
Operating cash flow fell 52.9% to $30.00 million in FY2025 Q2 and 26.3% to $98.94 million year to date, primarily due to increased interest expense. Days sales outstanding increased to 53 days in Q2 FY2025 from 41 days in Q2 FY2024.
Gross margin declined 1.6 percentage points to 80.1% in FY2025 Q2 and to 80.3% year to date, driven by higher hosting, headcount, and amortization costs from ShareFile. Operating margin declined 2.3 percentage points year to date to 14.9%.
Software license revenue decreased 6% in FY2025 Q2 and 7% year to date, with DataDirect declines due to timing of renewals on multiyear subscription contracts. Professional services revenue decreased 13% in Q2 and 16% year to date on lower MarkLogic professional services.
Restructuring expenses rose 60% in FY2025 Q2 to $1.04 million and 169% year to date to $8.07 million, primarily from headcount reductions and a facility closure tied to the ShareFile acquisition.
The quarterly dividend was suspended in connection with the ShareFile acquisition, with capital redirected to debt repayment and share repurchases. Share repurchases were $50.1 million in the first six months of FY2025, and $57.2 million remained under authorization as of May 31, 2025.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Annualized Recurring Revenue
Net Retention Rate (NRR)
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q2 FY2025 (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.