Strong ARR growth and strategic…

• Gain: $753 million for FY24, close to the high-end guidance of $755 million.

• Unlevered free cash flow: $238 million for FY24.

• ARR (annual recurring revenue): $842 million, representing 46% year-over-year growth.

• Net retention rate: More than 100%, excluding and including ShareFile results.

• Operating margin: 37% for Q4 FY24.

• Earnings per share (EPS): $1.33 for Q4 FY24, $0.08 above high-end guidance.

• Deferred income: $404 million at the end of the fourth quarter of FY24.

• Adjusted Free Cash Flow: $212 million for FY24, up 21% from the previous year.

• ShareFile contribution: $21 million in revenue in Q4 FY24.

• Debt: $1.54 billion, with a net debt position of $1.42 billion.

• Revenue guidance for FY25: Between $958 million and $970 million.

• EPS guidance for FY25: Between $5 and $5.12.

• Operating margin guidance for FY25: 37% to 38%.

• Unlevered Free Cash Flow Guidance for FY25: Between $282 million and $294 million.

Release date: January 21, 2025

For the full earnings call transcript, please refer to the full earnings call transcript.

• Progress Software Corp (NASDAQ:PRGS) beat the upper end of earnings and free cash flow expectations, growing ARR 46% at constant currency.

• The ShareFile acquisition is expected to add approximately $250 million to revenue in FY25, significantly increasing the percentage of recurring revenue.

• The company has a strong focus on innovation, integrating new AI capabilities into their product offering, increasing customer value.

• Progress Software Corp (NASDAQ:PRGS) has a disciplined M&A strategy focused on acquiring great companies with exceptional products and strong customer bases.

• The company maintains a strong employee culture, with low employee turnover and high employee engagement, which contributes to operational efficiency and lower recruitment costs.

• ShareFile integration is still ongoing, relying on transition services from Cloud Software Group, which could pose operational challenges.

• Interest expense is expected to increase significantly in FY25 due to the financing of the ShareFile acquisition, which will impact earnings per share.

• Operating margin for ShareFile is currently below 20%, which could impact overall profitability until full integration and synergies are achieved.

• The company’s revenues can be lumpy due to the timing of contract renewals, which can impact financial predictability.

• There is risk associated with managing multiple go-to-market strategies, which can impact operational focus and efficiency.

Q: What is driving the revitalization of organic demand for Progress Software’s flagship solutions such as OpenEdge, DataDirect and MarkLogic? Are there differences in demand per region or end market? A: Yogesh Gupta, CEO, explained that demand is driven by the increasing importance of data as these products are critical for mission-critical data management. Demand is strong worldwide, especially in North America and Europe. Anthony Folger, CFO, added that the AI ​​capabilities on their platform strengthen upsell capabilities across all regions and channels.

Story continues