Progress Software (PRGS) Q3 2026 Financial Results Summary
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Progress Software (PRGS) Q3 2026: Revenue Decline, Earnings Growth — Cautiously Optimistic
Progress Software (Nasdaq: PRGS) reported its fiscal third quarter results for 2026, revealing a mixed performance that has left shareholders with a cautious outlook. The company experienced a revenue decline while achieving notable growth in earnings per share.
Key Findings
- Revenue: $246 million, a decrease of $5 million or -2% YoY.
- Annualized Recurring Revenue (ARR): $873 million, an increase of $8 million or +1% YoY.
- Diluted Earnings Per Share (EPS): $0.55, an increase of $0.11 or +25% YoY.
- Non-GAAP Diluted EPS: $1.69, an increase of $0.19 or +13% YoY.
Analyst Opinion
This quarter presents a mixed bag for shareholders. While the decline in revenue is concerning, the growth in earnings per share indicates effective cost management and operational efficiency. The increase in ARR suggests that the company is maintaining its customer base and recurring revenue streams, which is crucial for long-term stability. However, the revenue drop raises questions about the company's growth trajectory and market demand for its products.
Financial Metrics
- Operating Margin: 19%
- Non-GAAP Operating Margin: 43%
- Cash and Cash Equivalents: $113.7 million
- Days Sales Outstanding: 42 days, down from 55 days YoY.
Strategic Developments
Progress Software recently closed the acquisition of Domo's AI and Data Platform Business, which is expected to enhance its capabilities in AI and data management. This strategic move aligns with the company's focus on providing value through its differentiated software portfolio. CEO Yogesh Gupta emphasized the importance of this acquisition in driving business outcomes for customers.
Guidance and Market Outlook
- Revenue: Expected between $297 million and $305 million.
- GAAP Diluted EPS: Expected to be between $(0.41) and $(0.32).
- Non-GAAP Diluted EPS: Expected to be between $1.24 and $1.33.
The company anticipates a positive currency translation impact of approximately $0.6 million on revenue for Q4 2026, which could provide a slight buffer against the revenue decline.
Forward Catalysts
Investors should closely monitor the integration of the Domo acquisition and its impact on future revenue growth. Additionally, the upcoming fiscal fourth quarter results will be critical in assessing whether the company can reverse its revenue decline and sustain its earnings growth. The market will also be watching for any changes in customer demand and how effectively Progress Software can leverage its enhanced capabilities in AI and data management.
In conclusion, while the quarter's results reflect some challenges, the growth in earnings and ARR, coupled with strategic acquisitions, provide a foundation for cautious optimism moving forward.
Here are the requested tables from the press release:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Note: All amounts in the table are in thousands.
| August 31, 2026 | August 31, 2025 | % Change | Nine Months Ended | August 31, 2026 | August 31, 2025 | % Change | |
|---|---|---|---|---|---|---|---|
| Revenue | $ 63,905 | $ 63,914 | — % | $ 172,322 | $ 172,056 | 16 % | |
| Licenses | 18,972 | 18,524 | -2 % | 54,087 | 52,552 | -1 % | |
| Subscription | 24,084 | 24,164 | -2 % | 74,616 | 72,546 | 3 % | |
| Cost of Revenue | 2,188 | 2,284 | -4 % | 9,867 | 8,757 | 8 % | |
| Cost of License | 30,026 | 33,287 | -9 % | 95,425 | 100,643 | -5 % | |
| Cost of Service | 8,197 | 10,301 | -17 % | 26,575 | 31,187 | -16 % | |
| Total Operating Expense | 50,450 | 51,054 | -3 % | 15,879 | 15,181 | 3 % | |
| Net Income | $ 22,776 | $ 19,413 | 17 % | $ 47,468 | $ 33,474 | 41 % | |
| Earnings Per Share | $ 0.55 | $ 0.44 | 25 % | $ 1.58 | $ 1.07 | 48 % |
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Note: All amounts in the table are in thousands.
| August 31, 2026 | November 30, 2025 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 113,653 | $ 94,807 |
| Accounts receivable, net | 118,811 | 195,783 |
| Unbilled receivables, current | 50,158 | 46,599 |
| Other current assets | 47,376 | 62,776 |
| Total current assets | 329,998 | 399,965 |
| Property and equipment, net | 15,263 | 13,694 |
| Goodwill and intangible assets | 1,789,210 | 1,893,082 |
| Right-of-use lease assets | 29,751 | 25,842 |
| Unbilled receivables, non-current | 39,413 | 29,950 |
| Other assets | 98,958 | 95,125 |
| Total assets | $ 2,302,593 | $ 2,457,658 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable and other current liabilities | $ 94,942 | $ 117,331 |
| Convertible senior notes, current portion, net | — | 359,163 |
| Operating lease liabilities, current portion | 7,750 | 8,490 |
| Deferred revenue, current portion | 311,936 | 324,750 |
| Total current liabilities | 414,628 | 809,734 |
| Long-term debt | 790,000 | 600,000 |
| Operating lease liabilities, non-current | 24,648 | 21,077 |
| Deferred revenue, non-current | 94,531 | 100,329 |
| Convertible senior notes, non-current portion, net | 442,635 | 441,186 |
| Other non-current liabilities | 6,173 | 6,983 |
| Stockholders' equity: | ||
| Common stock and additional paid-in capital | 432,123 | 384,119 |
| Retained earnings | 97,855 | 94,230 |
| Total stockholders' equity | 529,978 | 478,349 |
| Total liabilities and stockholders' equity | $ 2,302,593 | $ 2,457,658 |
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