Summary
Progress Software reported fiscal 2025 third quarter revenue of $249.8 million, up 39.8% from the prior-year quarter. Gross profit rose 35.2% to $202.3 million, and operating income increased 8.7% to $43.9 million. Net income fell 31.8% to $19.4 million, while diluted earnings per share declined $0.21 to $0.44. The bottom line absorbed higher costs tied to the ShareFile acquisition. Gross margin slipped to 81.0%, a decline of 2.8 percentage points. Operating margin fell to 17.6%, down 5.0 percentage points. For the first nine months, revenue was $725.2 million, up 34.7%. Net income for the nine months was $47.4 million, down 29.6%, and diluted earnings per share was $1.07, down $0.45.
The quarter showed strong recurring revenue and cash generation. Annualized recurring revenue reached $849 million, up 47% year-over-year on a constant currency basis. Net retention rate was 100%. The ShareFile acquisition added about $260 million of ARR. Deferred revenue was $381.1 million, up 33.5%, and remaining performance obligations were $592.3 million, up 71.2%. Operating cash flow for the quarter was $73.4 million, up 27.4%, but operating cash flow for the first nine months was $172.4 million, down 10.1%. Capital expenditures for the first nine months were $2.8 million, up 22.0%. Non-GAAP operating margin was 40%, and non-GAAP diluted earnings per share was $1.50 compared with $1.26, an increase of 19%. Adjusted free cash flow was $74.4 million, up 29%, and unlevered free cash flow was $88.6 million, up 40%. Days sales outstanding increased to 55 days from 45 days in the prior-year quarter.
The company raised its full-year fiscal 2025 guidance. Revenue guidance is $975 million to $981 million, up from $962 million to $974 million. Non-GAAP diluted earnings per share guidance is $5.50 to $5.56, up from $5.28 to $5.40. Non-GAAP operating margin is guided at 38% to 39%. Cash from operations guidance is $221 million to $231 million. Adjusted free cash flow guidance is $232 million to $242 million, and unlevered free cash flow guidance is $289 million to $299 million. For the fourth quarter, revenue guidance is $250 million to $256 million, and non-GAAP diluted earnings per share guidance is $1.29 to $1.35. Management said currency translation effects are folded into both outlooks, and the full-year tax rate assumption sits at 19% on a GAAP basis.
Risks remain around the MOVEit Vulnerability, which continues to generate litigation and government inquiries. The company also faces integration risk from ShareFile and Nuclia. Interest expense rose because of debt used for the ShareFile acquisition, pressuring net income despite revenue growth. Restructuring and acquisition costs added to operating expenses. Foreign currency fluctuations could affect results, and international operations expose the company to additional volatility. The balance sheet carries debt from the acquisition, and the company repaid $40 million in the third quarter and $110 million in the first nine months. Progress repurchased $15 million of shares in the quarter and $65 million in the first nine months. A new $1.5 billion revolving credit facility increased liquidity. The raised guidance reflects confidence in recurring revenue, but the mix shift toward SaaS and hosting costs will keep margin pressure in focus.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $249.8M | $237.4M | +5.2% | $178.7M | +39.8% |
| Gross profit | $202.3M | $190.1M | +6.4% | $149.6M | +35.2% |
| Gross margin | 81.0% | 80.1% | +0.9 pp | 83.7% | -2.8 pp |
| Sales & marketing | $51.9M | $49.7M | +4.4% | $37.1M | +39.6% |
| General & administrative | $28.3M | $25.6M | +10.4% | $20.5M | +38.1% |
| Total operating expenses | $158.4M | $151.5M | +4.6% | $109.3M | +44.9% |
| Operating income (loss) | $43.9M | $38.6M | +13.6% | $40.3M | +8.7% |
| Operating margin | 17.6% | 16.3% | +1.3 pp | 22.6% | -5.0 pp |
| Net income (loss) | $19.4M | $17.0M | +14.0% | $28.5M | -31.8% |
| Net margin | 7.8% | 7.2% | +0.6 pp | 15.9% | -8.2 pp |
| Diluted EPS | $0.44 | $0.39 | +$0.05 | $0.65 | -$0.21 |
| Net retention rate | 100.0% | 100.0% | ±0.0 pp | 99.0% | +1.0 pp |
Risks
The October 31, 2024 acquisition of ShareFile drove revenue up 39.8% in FY2025 Q3 and added $64.6 million of ShareFile revenue in the quarter, but also drove sharp cost increases: cost of maintenance, SaaS and professional services rose 69% in the quarter (hosting and other up 400%), sales and marketing rose 40%, product development rose 42% and general and administrative rose 38%. Restructuring expenses of $8.98 million year to date (up 171%) relate to headcount reductions and a facility closure tied to the ShareFile acquisition, indicating ongoing integration execution risk.
Interest expense increased to $17.7 million in FY2025 Q3 (up 162%) and $54.3 million year to date (up 157%) due to drawing on the revolving line of credit to fund the ShareFile acquisition, driving total other expense, net up 191% in the quarter. This leverage keeps pressure on profitability, with net income down 31.8% in the quarter and diluted EPS down $0.21 to $0.44.
Gross margin declined 2.8 percentage points to 81.0% in FY2025 Q3 and 2.0 points to 80.5% year to date, and operating margin declined 5.0 points to 17.6% in the quarter and 3.2 points to 15.8% year to date, as higher hosting and amortization costs from ShareFile and Nuclia offset revenue growth. Amortization of acquired intangibles rose 71% in cost of revenue and 91% in operating expenses in the quarter.
Litigation and governmental inquiries tied to the MOVEit Vulnerability continue; the MDL remains in a relatively early stage, a motion for reconsideration is pending after partial dismissal of claims, and the matter is not expected to conclude within this fiscal year. Cyber vulnerability response expenses, net, were $2.1 million year to date and the company expects to incur future costs, partially offset by insurance.
The quarterly dividend was suspended in connection with the ShareFile acquisition and capital is being redirected toward debt repayment, with a stated priority on future M&A and share repurchases. Share repurchases fell to $65.1 million in the first nine months of FY2025 from $86.8 million a year earlier, while cash and cash equivalents declined $19.1 million from November 30, 2024 to $99.0 million and $65.8 million is held by foreign subsidiaries.
Days sales outstanding in accounts receivable rose to 55 days in FY2025 Q3 from 45 days a year earlier due to the timing of billings and collections, and software license revenue fell 2% year to date as it depends on the timing of renewals on multiyear subscription contracts, including DataDirect and MarkLogic. Operating cash flow declined 10.1% year to date to $172.4 million.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Adjusted Free Cash Flow
Annualized Recurring Revenue (ARR)
Net Retention Rate
Free Cash Flow
Unlevered Free Cash Flow
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q3 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.