NASDAQ: PRGS PROGRESS SOFTWARE CORP /MA 8-K

Progress Software beats Q2 guidance, raises FY2026 outlook on 7% revenue growth

Filed June 30, 2026 · Period ending June 30, 2026 · ~1 min read

Key Changes

high

Q2 revenue of $253M beat guidance ($240M-$246M) and grew 7% YoY; non-GAAP EPS of $1.62 exceeded guidance ($1.47-$1.53), up 16% YoY. ARR reached $868M with 100% net retention.

Exhibit 99.1 view on EDGAR →
high

Full-year revenue guidance raised to $990M-$1,002M (from $988M-$1,000M); non-GAAP EPS guidance increased to $6.09-$6.21 (from $5.91-$6.03) on Q2 outperformance.

Exhibit 99.1 view on EDGAR →
medium

Net leverage reduced to 2.9X through $50M debt paydown in Q2 ($110M YTD); company models $220M total debt repayment for FY2026 while repurchasing $35M shares in Q2.

Exhibit 99.2 view on EDGAR →
medium

Q3 guidance set at $244M-$250M revenue and $1.53-$1.59 non-GAAP EPS, reflecting continued momentum following Q2 beat.

Exhibit 99.2 view on EDGAR →
medium

Repurchased $360M of convertible senior notes during the six months ended May 31, 2026, drawing $360M from revolving credit facility to fund the transaction.

Exhibit 99.1 view on EDGAR →

Summary

Progress Software delivered a strong second quarter that exceeded expectations and prompted management to raise full-year guidance. Revenue of $253 million beat the high end of guidance by $7 million and grew 7% year-over-year, driven by broad-based demand and momentum in AI-powered offerings. Non-GAAP earnings per share of $1.62 surpassed guidance and grew 16% from the prior year.

The company's recurring revenue base remains healthy with $868 million in ARR and a 100% net retention rate, indicating stable customer relationships. Management raised full-year revenue guidance by $2 million at the midpoint and increased non-GAAP EPS guidance by $0.15 at the midpoint, reflecting confidence in sustained momentum.

The company is executing a balanced capital allocation strategy: it reduced net leverage to 2.9X through aggressive debt paydown ($110 million year-to-date, targeting $220 million for the full year) while simultaneously repurchasing $55 million of shares year-to-date to offset equity dilution. Progress also refinanced $360 million of convertible notes during the period, optimizing its capital structure. For retail investors, the Q2 beat and raised guidance signal operational strength and improving profitability (40% non-GAAP operating margin). The combination of deleveraging and share buybacks demonstrates disciplined capital management, positioning the company to pursue accretive M&A while maintaining financial flexibility. Third-quarter guidance of $244M-$250M revenue suggests continued growth trajectory.

Section-by-Section Diff

Event · Exhibit 99.1

~6,200 words View exhibit on EDGAR ↗

Progress Software reported Q2 2026 revenue of $253M (+7% YoY), raised FY2026 guidance, and paid down debt to 2.9X net leverage.

4 Added

Added Q2 2026 earnings high

Added in current filing · view on EDGAR → · paraphrased

Revenue of $253 million increased 7% year-over-year on an actual currency basis and 6% on a constant currency basis.

Annualized Recurring Revenue ("ARR") of $868 million increased 2% year-over-year on a constant currency basis.

Operating margin was 18% and non-GAAP operating margin was 40%.

Diluted earnings per share was $0.50 compared to $0.39 in the same quarter last year, an increase of 28%.

Non-GAAP diluted earnings per share was $1.62 compared to $1.40 in the same quarter last year, an increase of 16%.

Progress Software reported second quarter fiscal 2026 results for the period ended May 31, 2026. Revenue grew 7% year-over-year to $253 million, driven by broad-based demand and momentum in AI-powered offerings. Annualized Recurring Revenue reached $868 million, up 2% year-over-year on a constant currency basis. GAAP diluted EPS increased 28% to $0.50, while non-GAAP diluted EPS rose 16% to $1.62. Operating margin was 18% on a GAAP basis and 40% on a non-GAAP basis, unchanged from the prior year quarter.

Added FY2026 guidance raised high

Added in current filing · view on EDGAR → · paraphrased

Revenue $990 - $1,002

Diluted earnings per share $1.60 - $1.74 $6.09 - $6.21

Operating margin 16% 39 %

Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP) $273 - $285 $271 - $283

$323 - $334

Progress raised its full-year fiscal 2026 guidance. Revenue guidance increased to $990-$1,002 million from the prior range of $988-$1,000 million. Non-GAAP diluted EPS guidance rose to $6.09-$6.21 from $5.91-$6.03. GAAP diluted EPS guidance was lowered to $1.60-$1.74 from $1.71-$1.87, reflecting higher tax rates. Cash from operations guidance increased to $273-$285 million from $266-$278 million. The guidance raise reflects Q2 outperformance and positive outlook.

Added Q3 2026 guidance medium

Added in current filing · view on EDGAR →

Revenue $244 - $250 $244 - $250

Diluted earnings per share $0.35 - $0.41 $1.53 - $1.59

Progress provided guidance for the fiscal third quarter ending August 31, 2026. The company expects revenue of $244-$250 million, GAAP diluted EPS of $0.35-$0.41, and non-GAAP diluted EPS of $1.53-$1.59.

Added Convertible notes repurchase and credit facility draw medium

Added in current filing · view on EDGAR →

Repurchases of convertible senior notes (360,000) — (360,000) —

Proceeds from revolving line of credit 360,000 — 360,000 —

Repayment of revolving line of credit (50,000) (40,000) (110,000) (70,000)

During the six months ended May 31, 2026, Progress repurchased $360 million of convertible senior notes. The company drew $360 million from its revolving credit facility and made net repayments of $110 million on the revolver during the period. These transactions reflect active debt management and capital structure optimization.

Event · Exhibit 99.2

~4,600 words View exhibit on EDGAR ↗

4 Added

Added Q2 2026 earnings results high

Added in current filing · view on EDGAR →

Revenues of $253M vs. prior guidance of $240M - $246M, up 7% year-over-year as reported, or 6% in constant currency • ARR: $868M, up 2% year-over-year • NRR: 100% • Operating margin: 40% • EPS: $1.62, above high-end of prior guidance of $1.47 - $1.53 • Adjusted Free Cash Flow: $79M

Progress Software reported Q2 2026 revenue of $253 million, exceeding the high end of prior guidance ($240M-$246M) and up 7% year-over-year. Non-GAAP EPS of $1.62 also beat guidance ($1.47-$1.53). Annualized recurring revenue reached $868 million (up 2% YoY) with a net retention rate of 100%. Operating margin was 40% and adjusted free cash flow was $79 million.

Added Updated FY 2026 guidance high

Added in current filing · view on EDGAR → · paraphrased

FY 2026 Updated Outlook Revenue $990M - $1,002M ... Non-GAAP EPS $6.09 - $6.21

Progress raised its full-year 2026 revenue guidance to $990M-$1,002M (from prior $988M-$1,000M) and non-GAAP EPS guidance to $6.09-$6.21 (from prior $5.91-$6.03). The company also raised adjusted free cash flow guidance to $271M-$283M (from $263M-$275M). Operating margin guidance remains at 39%.

Added Debt repayment and share repurchases medium

Added in current filing · view on EDGAR → · paraphrased

$50M repaid in Q2 '26; $110M YTD • Currently modeling $220M in debt repayment for FY '26 ... $35M of shares repurchased in Q2 '26; $55M YTD

Progress repaid $50 million of debt in Q2 2026 ($110 million year-to-date) and is modeling $220 million in total debt repayment for fiscal 2026. The company also repurchased $35 million of shares in Q2 ($55 million year-to-date), using free cash flow to both deleverage and offset equity dilution.

Added Capital allocation strategy medium

Added in current filing · view on EDGAR →

Continue to prioritize accretive M&A opportunities that meet our disciplined criteria to create the strongest returns. Repurchase shares to offset dilution from our equity programs. ... Use our significant free cash flow to aggressively pay down debt and reload for the next acquisition.

Progress outlined its capital allocation priorities: (1) accretive M&A meeting disciplined criteria, (2) share repurchases to offset equity dilution (with flexibility to adjust based on M&A timing), and (3) aggressive debt paydown to prepare for future acquisitions. Management retains flexibility to increase, reduce, or suspend repurchases depending on market conditions and M&A opportunities.