Progress Software Shares Slip After Q2 Results, Guides Q3 Below Consensus

  • Progress Software Corp PRGS reported second-quarter revenue growth of 21% year-over-year to $148.7 million, +24% on a constant currency basis. Adjusted revenue was $150.9 million (+17% Y/Y) and +19% Y/Y on a constant currency basis, beating the consensus of $146.93 million.
  • Adjusted EPS was $1.04, much higher than the consensus of $0.95.
  • Annualized Recurring Revenue (ARR) increased 13% Y/Y to $486 million.
  • The gross margin declined by 35 bps to 83.9%. Adjusted operating income increased 23% Y/Y to $61.3 million, and margin expanded by 300 bps to 41%.
  • PRGS generated cash from operating activities year-to-date of $112.35 million, compared to $99.38 million a year ago. Adjusted free cash flow totaled $112.72 million (+11% Y/Y).
  • The company held cash, cash equivalents, and short-term investments of $225.9 million at the end of the quarter.
  • Dividend: The company declared a quarterly dividend of $0.175 per share of common stock that will be paid on September 15, 2022, to shareholders of record as of the close of business on September 1, 2022.
  • 3Q22 Outlook: Progress Software expects GAAP revenue of $145 million - $148 million and Non-GAAP of $147 million - $150 million vs. a consensus of $160.23 million.
  • It expects EPS of $0.46 - $0.48 and Adjusted EPS of $0.96 - $0.98, vs. a consensus of $1.11.
  • FY22 Outlook: The company expects GAAP revenue of $601 million - $609 million and Non-GAAP revenue of $609 million - $617 million, vs. a consensus of $614.76 million.
  • PRGS sees EPS of $2.11 - $2.21 and adjusted EPS of $4.05 - $4.11, vs. consensus of $4.06. Operating margin of 22% - 23% and adjusted operating margin of 39% - 40%.
  • It expects an Adjusted free cash flow of $185 million - $190 million.
  • Price Action: PRGS shares are trading lower by 1.64% at $48 during the post-market session on Tuesday.

Posted In: BriefsEarningsNewsGuidanceDividends

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