Summary
Progress reported fiscal 2024 third-quarter revenue of $178.69 million, up 2.1% from the prior-year quarter. Year-to-date revenue reached $538.45 million, up 4.1%. Gross profit rose 5.3% to $149.62 million in the quarter, and gross margin was 83.7%, up 2.5 percentage points from the prior-year quarter. On a year-to-date basis, gross profit was $444.50 million, up 4.7%, with a gross margin of 82.6%, up 0.5 percentage points. Operating income increased 37.4% to $40.35 million in the quarter, and operating margin was 22.6%, up 5.8 percentage points. Year-to-date operating income was $102.50 million, up 16.5%, with an operating margin of 19.0%, up 2.0 percentage points.
Net income was $28.46 million in the quarter, up 49.0% from the prior-year quarter. Diluted EPS rose to $0.65, up $0.23 or 54.8%. For the first nine months, net income was $67.29 million, up 22.7%, and diluted EPS was $1.52, up $0.29 or 23.6%. Operating cash flow was $57.66 million in the quarter, up 25.2%. Year-to-date operating cash flow was $191.84 million, up 36.3%. Capital expenditures were $1.06 million in the quarter, down 12.2%, and $2.33 million year to date, down 26.8%. Deferred revenue was $285.38 million, up 2.0% from the prior-year quarter. Remaining performance obligations were $346.00 million, up 20.1%.
Annualized recurring revenue was $582.0 million as of August 31, 2024, compared with $581.0 million as of August 31, 2023, which the company described as relatively flat. Net retention rates have generally ranged between 99% and 101%. Days sales outstanding improved to 45 days in the third fiscal quarter of 2024 from 49 days in the third fiscal quarter of 2023. The first nine months of fiscal 2024 included MarkLogic for the full period, while the prior-year period included revenue from the acquisition in February 2023, or about seven months. Progress is pursuing the ShareFile acquisition, and acquisition-related expenses in the quarter were primarily related to that pursuit. The board suspended the quarterly dividend on September 9, 2024 in connection with the ShareFile acquisition and plans to redirect that capital toward debt repayment to increase liquidity for future M&A and share repurchases. In the quarter, the company repurchased and retired 0.3 million shares for $14.3 million. In the first nine months, it repurchased and retired 1.6 million shares for $86.8 million. As of August 31, 2024, $107.2 million remained under the current share repurchase authorization.
Management said existing cash balances, funds generated from operations and amounts available under the revolving credit facility should be sufficient to finance operations and meet foreseeable cash requirements through at least the next twelve months, including the proposed ShareFile acquisition. The company refinanced debt during the period, issuing convertible senior notes and paying off the outstanding term loan and revolving line of credit. Risks remain. The MOVEit Vulnerability is subject to litigation and governmental investigations, and Progress has incurred expenses and will incur future costs, though it expects insurance to reduce exposure. MOVEit Transfer and MOVEit Cloud represented less than 4% in aggregate of revenue for the nine months ended August 31, 2024. Foreign currency loss increased due to rate volatility and timing of intercompany and hedge settlement activities. Restructuring expenses in the first nine months primarily related to a facility closure tied to the MarkLogic acquisition. The company also noted that cash from operations in fiscal 2024 could be affected by risks detailed in its 2023 Annual Report.
The quarter showed a mix of steady top-line growth and stronger profitability. Revenue growth was modest, but gross margin and operating margin expanded, helped by lower costs of revenue and operating expenses. The company continued to face a maintenance and services revenue decline in the quarter, though that line grew in the first nine months. Software license revenue grew in the quarter. The company is pursuing the ShareFile acquisition while suspending its dividend, a shift in capital allocation that prioritizes debt repayment and future M&A over direct shareholder income. Net retention has stayed within its recent range, and remaining performance obligations of $346.00 million were up 20.1% from the prior-year quarter.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $178.7M | $175.1M | +2.1% | $175.0M | +2.1% |
| Gross profit | $149.6M | $143.0M | +4.6% | $142.1M | +5.3% |
| Gross margin | 83.7% | 81.7% | +2.0 pp | 81.2% | +2.5 pp |
| Sales & marketing | $37.1M | $37.9M | -2.0% | $38.6M | -3.8% |
| General & administrative | $20.5M | $22.0M | -6.7% | $20.8M | -1.4% |
| Total operating expenses | $109.3M | $115.9M | -5.7% | $112.7M | -3.0% |
| Operating income (loss) | $40.3M | $27.1M | +48.6% | $29.4M | +37.4% |
| Operating margin | 22.6% | 15.5% | +7.1 pp | 16.8% | +5.8 pp |
| Net income (loss) | $28.5M | $16.2M | +75.8% | $19.1M | +49.0% |
| Net margin | 15.9% | 9.3% | +6.7 pp | 10.9% | +5.0 pp |
| Diluted EPS | $0.65 | $0.37 | +$0.28 | $0.42 | +$0.23 |
| Customers | 86,000 | — | — | 23 | +373813.0% |
| Net retention rate | 99.0% | 99.0% | ±0.0 pp | 100.0% | -1.0 pp |
Risks
The MOVEit Vulnerability remains subject to litigation and governmental investigations, with expenses already incurred and future costs expected, though MOVEit Transfer and MOVEit Cloud were less than 4% of revenue for the nine months ended August 31, 2024. The company expects exposure to be reduced by insurance.
The pending ShareFile acquisition drove a 167% increase in acquisition-related expenses in FY2024 Q3 versus the prior-year quarter. The Board suspended the quarterly dividend in connection with the deal and plans to redirect capital toward debt repayment, future M&A, and share repurchases.
Total maintenance and services revenue decreased 3% in FY2024 Q3, with maintenance down 2% and services down 8%, and DataDirect revenue decreased because of the timing of renewals on multiyear subscription contracts. ARR was relatively flat year-over-year at $582.0 million as of August 31, 2024 versus $581.0 million as of August 31, 2023.
Foreign currency loss, net increased 78% in FY2024 Q3 and 88% in the first nine months of FY2024 due to rate volatility and timing of intercompany and hedge settlement activities. International revenue represented 42% of total revenue in the first nine months of FY2024.
The dividend suspension and debt refinancing, including issuance of convertible senior notes and repayment of the term loan and revolving line of credit, reduce financial flexibility and redirect capital toward debt repayment. Management still expects existing cash, operations, and revolver availability to fund the ShareFile acquisition and foreseeable cash needs.
Latin America revenue decreased 15% in FY2024 Q3 and decreased 4% in the first nine months of FY2024, while Asia Pacific revenue grew 20% in the quarter. EMEA revenue was flat in the quarter.
The effective tax rate increased to 17% in FY2024 Q3 from 9% in FY2023 Q3, primarily because the prior-year quarter included discrete tax benefits related to stock-based compensation and IRS Notice 2023-55.
SaaS KPIs
All quarters →Annualized Recurring Revenue (ARR)
Net Retention Rate
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q3 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.