Progress Software Announces Third Quarter 2025 Financial Results

Annualized Recurring Revenue ("ARR") of $849 million Grew 47% year-over-yearRevenue of $250 million Grew 40% year-over-yearRaises Full Year Guidance for Revenue, Earnings Per Share, and Cash Flow BURLINGTON, Mass., Sept. 29, 2025 (GLOBE NEWSWIRE) -- Progress Software (Nasdaq: PRGS), the trusted provider of AI-powered digital experience and infrastructure software, today announced financial results for its fiscal third quarter ended August 31, 2025. Third Quarter 2025 Highlights: Revenue of $250 million increased 40% year-over-year on an actual currency basis and 38% on a constant currency basis.Annualized Recurring Revenue ("ARR") of $849 million increased 47% year-over-year on a constant currency basis.Operating margin was 18% and non-GAAP operating margin was 40%.Diluted earnings per share was $0.44 compared to $0.65 in the same quarter last year, a decrease of 32%. Non-GAAP diluted earnings per share was $1.50 compared to $1.26 in the same quarter last year, an increase of 19%. "Our third quarter performance was truly exceptional," said Progress CEO, Yogesh Gupta. "Net retention remains strong at 100%, while ARR continues to grow steadily. Q3 was very solid in terms of revenue, earnings, cash flow, and execution. ShareFile is meaningfully contributing to top and bottom-line results as we successfully passed every major milestone on our integration plan. On the product front, we continue to invest and innovate in AI capabilities, including agentic RAG technology, which we are now embedding across our product portfolio to empower customers to extract more value from their own data using GenAI." Additional financial highlights included: Three Months Ended GAAP Non-GAAP(in thousands, except percentages and per share amounts)August 31,2025 August 31,2024 % Change August 31,2025 August 31,2024 % ChangeRevenue$249,795 $178,686 40% $249,795 $178,686 40%Income from operations$43,874 $40,349 9% $99,423 $74,123 34%Operating margin 18% 23% (500) bps 40% 41% (100) bpsNet income$19,413 $28,464 (32)% $65,723 $55,216 19%Diluted earnings per share$0.44 $0.65 (32)% $1.50 $1.26 19%Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP)$73,446 $57,658 27% $74,428 $57,525 29%$88,617 $63,149 40% See Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures, and Select Performance Metrics and a reconciliation of non-GAAP adjustments to Progress’ GAAP financial results at the end of this press release. Other fiscal third quarter 2025 metrics and recent results included: Cash and cash equivalents were $99.0 million at the end of the quarter.Days sales outstanding was 55 days compared to 45 days in the fiscal third quarter of 2024 and 53 days in the fiscal second quarter of 2025.On September 23, 2025, our Board of Directors increased our share repurchase authorization by $200.0 million to $242.2 million. Anthony Folger, Progress CFO, said: "Our Q3 results reflect the durability of our revenue streams, cash flow, and earnings, highlighted by continued outperformance in the field, the successful integration of ShareFile, and ongoing expense control company-wide. ARR again grew and net retention remained at 100%. On the balance sheet, we continued to pay down debt aggressively and repurchased another $15 million of shares, while increasing liquidity with a new $1.5 billion revolving credit facility. We’re well positioned to close out FY25 and our positive outlook is reflected in our increased guidance." 2025 Business Outlook Progress provides the following guidance for the fiscal year ending November 30, 2025 and the fiscal fourth quarter ending November 30, 2025: Updated FY 2025 Guidance(September 29, 2025) Prior FY 2025 Guidance (June 30, 2025)(in millions, except percentages and per share amounts)GAAP Non-GAAP GAAP Non-GAAPRevenue$975 - $981 $975 - $981 $962 - $974 $962 - $974Diluted earnings per share$1.38 - $1.45 $5.50 - $5.56 $1.27 - $1.43 $5.28 - $5.40Operating margin15% 38% - 39% 15% 38% - 39%Cash from operations (GAAP) /Adjusted free cash flow (non-GAAP) / Unlevered free cash flow (non-GAAP)$221 - $231 $232 - $242$289 - $299 $218 - $230 $228 - $240$285 - $296Effective tax rate19% 20% 17% 20% Q4 2025 Guidance(in millions, except per share amounts)GAAP Non-GAAPRevenue$250 - $256 $250 - $256Diluted earnings per share$0.31 - $0.37 $1.29 - $1.35 Based on current exchange rates, the expected positive currency translation impact on our: Fiscal year 2025 business outlook compared to 2024 exchange rates is approximately $4.0 million on revenue.GAAP and non-GAAP diluted earnings per share for fiscal year 2025 is approximately $0.03.Fiscal Q4 2025 business outlook compared to 2024 exchange rates is approximately $2.5 million on revenue.GAAP and non-GAAP diluted earnings per share for fiscal Q4 2025 is approximately $0.01. To the extent that there are changes in exchange rates versus the current environment and/or our expectations, this may have an impact on Progress' business outlook. Conference Call Progress will hold a conference call to review its financial results for the fiscal third quarter of 2025 at 5:00 p.m. ET on Monday, September 29, 2025. Participants must register for the conference call here: https://register-conf.media-server.com/register/BI3c81d17f962244a88dfaf9ee6925ed85. The webcast can be accessed at: https://edge.media-server.com/mmc/p/axecrzfw/. The conference call will include comments followed by questions and answers. Attendees must register for the webcast and an archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call. About Progress Progress Software (Nasdaq: PRGS) empowers organizations to achieve transformational success in the face of disruptive change. Our software enables our customers to develop, deploy and manage responsible AI-powered applications and digital experiences with agility and ease. Customers get a trusted provider in Progress, with the products, expertise and vision they need to succeed. Over 4 million developers and technologists at hundreds of thousands of enterprises depend on Progress. Learn more at www.progress.com. Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners. Investor Contact:Press Contact:Michael MiccicheJeff YoungProgress SoftwareProgress Software+1 781 850 8450+1 781 280 4000Investor-Relations@progress.comPR@progress.com CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended Nine Months Ended(in thousands, except per share data)August 31,2025 August 31,2024 % Change August 31,2025 August 31,2024 % ChangeRevenue: Software licenses$63,437 $57,850 10% $172,677 $175,929 (2)%Maintenance, SaaS, and professional services 186,358 120,836 54% 552,488 362,519 52%Total revenue 249,795 178,686 40% 725,165 538,448 35%Costs of revenue: Cost of software licenses 2,833 2,700 5% 8,745 7,928 10%Cost of maintenance, SaaS, and professional services 33,919 20,057 69% 100,567 64,452 56%Amortization of acquired intangibles 10,784 6,307 71% 31,743 21,564 47%Total costs of revenue 47,536 29,064 64% 141,055 93,944 50%Gross profit 202,259 149,622 35% 584,110 444,504 31%Operating expenses: Sales and marketing 51,850 37,141 40% 152,823 114,141 34%Product development 49,432 34,720 42% 142,377 105,143 35%General and administrative 28,308 20,503 38% 79,568 63,830 25%Amortization of acquired intangibles 26,415 13,810 91% 78,286 47,515 65%Cyber vulnerability response expenses, net 659 927 (29)% 2,126 4,950 (57)%Restructuring expenses 907 308 194% 8,979 3,308 171%Acquisition-related expenses 814 1,864 (56)% 5,035 3,114 62%Total operating expenses 158,385 109,273 45% 469,194 342,001 37%Income from operations 43,874 40,349 9% 114,916 102,503 12%Other expense, net (17,668) (6,070) 191% (55,544) (20,489) 171%Income before income taxes 26,206 34,279 (24)% 59,372 82,014 (28)%Provision for income taxes 6,793 5,815 17% 11,984 14,723 (19)%Net income$19,413 $28,464 (32)% $47,388 $67,291 (30)% Earnings per share: Basic$0.45 $0.66 (32)% $1.10 $1.55 (29)%Diluted$0.44 $0.65 (32)% $1.07 $1.52 (30)%Weighted average shares outstanding: Basic 42,988 42,872 —% 43,099 43,296 —%Diluted 43,717 43,711 —% 44,253 44,167 —% Cash dividends declared per common share$— $0.175 (100)% $— $0.525 (100)% Stock-based compensation is included in the condensed consolidated statements of operations, as follows: Cost of revenue$1,486 $834 78% $4,241 $2,732 55%Sales and marketing 3,275 2,169 51% 9,970 6,939 44%Product development 4,709 3,199 47% 14,103 10,255 38%General and administrative 6,500 4,356 49% 19,080 15,085 26%Total$15,970 $10,558 51% $47,394 $35,011 35% CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (in thousands)August 31,2025 November 30,2024Assets Current assets: Cash and cash equivalents$99,008 $118,077Accounts receivable, net 151,431 163,575Unbilled receivables, current portion 35,930 34,672Other current assets 49,176 52,489Total current assets 335,545 368,813Property and equipment, net 13,134 13,746Goodwill and intangible assets, net 1,928,615 2,015,748Right-of-use lease assets 27,727 30,894Unbilled receivables, non-current portion 30,760 28,893Other assets 85,930 68,872Total assets$2,421,711 $2,526,966Liabilities and shareholders’ equity Current liabilities: Accounts payable and other current liabilities$103,686 $113,801Convertible senior notes, current portion, net 358,619 —Operating lease liabilities, current portion 8,788 9,202Deferred revenue, current portion, net 298,716 332,142Total current liabilities 769,809 455,145Long-term debt, net 620,000 730,000Convertible senior notes, non-current portion, net 440,713 796,267Operating lease liabilities, non-current portion 22,705 26,259Deferred revenue, non-current portion, net 82,346 72,270Other non-current liabilities 8,456 8,237Stockholders’ equity: Common stock and additional paid-in capital 372,052 354,592Retained earnings 105,630 84,196Total stockholders’ equity 477,682 438,788Total liabilities and stockholders’ equity$2,421,711 $2,526,966 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Three Months Ended Nine Months Ended(in thousands)August 31,2025 August 31,2024 August 31,2025 August 31,2024Cash flows from operating activities: Net income$19,413 $28,464 $47,388 $67,291 Depreciation and amortization 40,121 23,108 118,898 78,181 Stock-based compensation 15,970 10,558 47,394 35,011 Other non-cash adjustments (2,363) (6,128) (625) (5,613)Changes in operating assets and liabilities 305 1,656 (40,666) 16,973 Net cash flows from operating activities 73,446 57,658 172,389 191,843 Capital expenditures (1,055) (1,064) (2,840) (2,328)Repurchases of common stock, net of issuances (11,720) (9,750) (49,068) (69,303)Dividend equivalent and dividend payments to stockholders — (7,692) (654) (23,814)Payments for acquisitions, net of cash acquired (19,458) — (20,653) — Proceeds from the issuance of debt, net of payment of issuance costs (5,961) — (5,961) 431,929 Repayment of revolving line of credit and principal payment on term loan (40,000) — (110,000) (371,250)Purchase of capped calls — — — (42,210)Other 1,750 3,141 (2,282) (9,112)Net change in cash and cash equivalents (2,998) 42,293 (19,069) 105,755 Cash and cash equivalents, beginning of period 102,006 190,420 118,077 126,958 Cash and cash equivalents, end of period$99,008 $232,713 $99,008 $232,713 RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES(Unaudited) Three Months Ended Nine Months Ended(in thousands, except per share data)August 31,2025 August 31,2024 August 31,2025 August 31,2024Adjusted income from operations: GAAP income from operations$43,874 $40,349 $114,916 $102,503 Amortization of acquired intangibles 37,199 20,117 110,029 69,079 Stock-based compensation 15,970 10,558 47,394 35,011 Restructuring expenses 907 308 8,979 3,308 Acquisition-related expenses 814 1,864 5,035 3,114 Cyber vulnerability response expenses, net 659 927 2,126 4,950 Non-GAAP income from operations$99,423 $74,123 $288,479 $217,965 Adjusted net income: GAAP net income$19,413 $28,464 $47,388 $67,291 Amortization of acquired intangibles 37,199 20,117 110,029 69,079 Stock-based compensation 15,970 10,558 47,394 35,011 Restructuring expenses 907 308 8,979 3,308 Acquisition-related expenses 814 1,864 5,035 3,114 Cyber vulnerability response expenses, net 659 927 2,126 4,950 Provision for income taxes (9,239) (7,022) (34,484) (23,710)Non-GAAP net income$65,723 $55,216 $186,467 $159,043 Adjusted diluted earnings per share: GAAP diluted earnings per share$0.44 $0.65 $1.07 $1.52 Amortization of acquired intangibles 0.85 0.46 2.49 1.56 Stock-based compensation 0.36 0.24 1.07 0.80 Restructuring expenses 0.02 0.01 0.20 0.07 Acquisition-related expenses 0.02 0.04 0.11 0.07 Cyber vulnerability response expenses, net 0.02 0.02 0.05 0.11 Provision for income taxes (0.21) (0.16) (0.78) (0.53)Non-GAAP diluted earnings per share$1.50 $1.26 $4.21 $3.60 Non-GAAP weighted avg shares outstanding - diluted 43,717 43,711 44,253 44,167 OTHER NON-GAAP FINANCIAL MEASURES(Unaudited) Adjusted Free Cash Flow and Unlevered Free Cash Flow Three Months Ended Nine Months Ended(in thousands)August 31,2025 August 31,2024 % Change August 31,2025 August 31,2024 % ChangeCash flows from operations$73,446 $57,658 27% $172,389 $191,843 (10)%Purchases of property and equipment (1,055) (1,064) (1)% (2,840) (2,328) 22%Free cash flow 72,391 56,594 28% 169,549 189,515 (11)%Add back: restructuring payments 2,037 931 119% 15,158 4,287 254%Adjusted free cash flow$74,428 $57,525 29% $184,707 $193,802 (5)%Add back: tax-effected interest expense 14,189 5,624 152% 43,442 17,105 154%Unlevered free cash flow$88,617 $63,149 40% $228,149 $210,907 8% RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE(Unaudited) Fiscal Year 2025 Updated Non-GAAP Operating Margin Guidance Fiscal Year Ending November 30, 2025(in millions)Low HighGAAP income from operations$146.9 $151.2 GAAP operating margins 15% 15%Acquisition-related expense 5.8 5.8 Restructuring expense 10.3 10.3 Stock-based compensation 63.4 63.4 Amortization of acquired intangibles 145.5 145.5 Cyber vulnerability response expenses, net 3.4 3.4 Total adjustments(1) 228.4 228.4 Non-GAAP income from operations$375.3 $379.6 Non-GAAP operating margin 38% 39% (1) Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and Nuclia, and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed. Fiscal Year 2025 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance Fiscal Year Ending November 30, 2025(in millions, except per share data)Low HighGAAP net income$60.8 $64.3 Adjustments (from previous table) 228.4 228.4 Income tax adjustment(2) (46.5) (46.5)Non-GAAP net income$242.7 $246.2 GAAP diluted earnings per share$1.38 $1.45 Non-GAAP diluted earnings per share$5.50 $5.56 Diluted weighted average shares outstanding 44.1 44.3 2 Tax adjustment is based on a non-GAAP effective tax rate of approximately 20%, calculated as follows: Fiscal Year Ending November 30, 2025 Low HighNon-GAAP income from operations $375.3 $379.6 Other (expense) income (71.8) (71.8)Non-GAAP income from continuing operations before income taxes 303.5 307.8 Non-GAAP net income 242.7 246.2 Tax provision $60.8 $61.6 Non-GAAP tax rate 20% 20% RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE(Unaudited) Fiscal Year 2025 Adjusted Free Cash Flow and Unlevered Free Cash Flow Guidance Fiscal Year Ending November 30, 2025(in millions)Low HighCash flows from operations (GAAP)$221 $231 Purchases of property and equipment (6) (6)Add back: restructuring payments 17 17 Adjusted free cash flow (non-GAAP) 232 242 Add back: tax-effected interest expense 57 57 Unlevered free cash flow (non-GAAP)$289 $299 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q4 2025 GUIDANCE(Unaudited) Q4 2025 Non-GAAP Earnings per Share Guidance Three Months Ending November 30, 2025 Low HighGAAP diluted earnings per share$0.31 $0.37 Acquisition-related expense 0.02 0.02 Restructuring expense 0.03 0.03 Stock-based compensation 0.36 0.36 Amortization of acquired intangibles 0.81 0.81 Cyber vulnerability response expenses, net 0.03 0.03 Total adjustments(1) 1.25 1.25 Income tax adjustment (0.27) (0.27)Non-GAAP diluted earnings per share$1.29 $1.35 (1) Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and Nuclia, and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed. Important Information Regarding Non-GAAP Financial Measures, Liquidity Measures and Select Performance Metrics Progress furnishes certain non-GAAP supplemental information to our financial results. We use such non-GAAP financial measures to evaluate our period-over-period operating performance because our management team believes that excluding the effects of certain GAAP-related items helps to illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as greater understanding of the results from the primary operations of our business. Management also uses such non-GAAP financial measures to establish budgets and operational goals, evaluate performance, and allocate resources. In addition, the compensation of our executives and non-executive employees is based in part on the performance of our business as evaluated by such non-GAAP financial measures. We believe these non-GAAP financial measures enhance investors’ overall understanding of our current financial performance and our prospects for the future by: (i) providing more transparency for certain financial measures, (ii) presenting disclosure that helps investors understand how we plan and measure the performance of our business, (iii) affording a view of our operating results that may be more easily compared to our peer companies, and (iv) enabling investors to consider our operating results on both a GAAP and non-GAAP basis (including following the integration period of our prior acquisitions). However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP") and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information may have a material impact on Progress’ financial results. A reconciliation of non-GAAP adjustments to Progress' GAAP financial results is included in the tables above. In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures: Amortization of acquired intangibles - We exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. Adjustments include preliminary estimates relating to the valuation of intangible assets from ShareFile and Nuclia. The final amounts will not be available until the Company's internal procedures and reviews are completed.Stock-based compensation - We exclude stock-based compensation to be consistent with the way management and, in our view, the overall financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include these charges in operating plans.Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results. Adjustments include preliminary estimates relating to restructuring expenses from ShareFile. The final amounts will not be available until the Company's internal procedures and reviews are completed.Acquisition-related expenses - We exclude acquisition-related expenses in order to provide a more meaningful comparison of the financial results to our historical operations and forward-looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity, and/or volume of past acquisitions, which often drives the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or volume of future acquisitions.Cyber vulnerability response expenses, net - We exclude certain expenses resulting from the MOVEit Vulnerability, as more thoroughly described in our filings with the Securities and Exchange Commission since June 5, 2023. Expenses include costs to investigate and remediate these cyber related matters, as well as legal and other professional services related thereto. Expenses related to such cyber matters are provided net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses. Costs associated with the enhancement of our cybersecurity program are not included within this adjustment. We expect to continue to incur legal and other professional services expenses in future periods associated with the MOVEit Vulnerability. Expenses related to such cyber matters are expected to result in operating expenses that would not have otherwise been incurred in the normal course of business operations. We believe that excluding these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.Provision for income taxes - We adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.Constant currency - Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. As exchange rates are an important factor in understanding period-to-period comparisons, we present revenue growth rates on a constant currency basis, which helps improve the understanding of our revenue results and our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. In the noted fiscal periods, we also present the following liquidity measures: Adjusted free cash flow ("AFCF") and unlevered free cash flow ("Unlevered FCF") - AFCF is equal to cash flows from operating activities less purchases of property and equipment, plus restructuring payments. Unlevered FCF is AFCF plus tax-effected interest expense on outstanding debt. In the noted fiscal periods, we also present the following select performance metrics: Annualized Recurring Revenue ("ARR") - We disclose ARR as a performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources currently represents the substantial majority of our revenues and is expected to continue in the future. We define ARR as the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time. ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations in revenue due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. We use ARR to understand customer trends and the overall health of our business, helping us to formulate strategic business decisions.We calculate the annualized value of annual and multi-year contracts, and contracts with terms less than one year, by dividing the total contract value of each contract by the number of months in the term and then multiplying by 12. Annualizing contracts with terms less than one-year results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period. We generally do not sell non-SaaS-based contracts with a term of less than one year unless a customer is purchasing additional licenses under an existing annual or multi-year contract. The expectation is that at the time of renewal, such contracts with a term less than one year will renew with the same term as the existing contracts being renewed, such that both contracts are co-termed. Historically, such contracts with a term of less than one year renew at rates equal to or better than annual or multi-year contracts.For SaaS-based contracts, there is a meaningful percentage of monthly auto-renewing contracts for which annualizing the contracts results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period.Revenue from term-based license and on-premises subscription arrangements include a portion of the arrangement consideration that is allocated to the software license that is recognized up-front at the point in time control is transferred under ASC 606 revenue recognition principles. ARR for these arrangements is calculated as described above. The expectation is that the total contract value, inclusive of revenue recognized as software license, will be renewed at the end of the contract term.The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented.ARR is not defined in GAAP and is not derived from a GAAP measure. Rather, ARR generally aligns to billings (as opposed to GAAP revenue which aligns to the transfer of control of each performance obligation). ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. Net Retention Rate ("NRR") - We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period end ("Current Period ARR"). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP and is not derived from a GAAP measure. Note Regarding Forward-Looking Statements This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like "believe," "may," "could," "would," "might," "should," "expect," "intend," "plan," "target," "anticipate" and "continue," the negative of these words, other terms of similar meaning or the use of future dates. Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook (including future acquisition activity) and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation: (i) economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price; (ii) our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses; (iii) we may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts; (iv) if the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors or zero-day vulnerabilities, we may experience reputational harm, legal claims and financial exposure; and the results of inquiries, investigations and legal claims regarding the MOVEit Vulnerability remain uncertain, while the ultimate resolution of these matters could result in losses that may be material to our financial results for a particular period; (v) future acquisitions may not be successful or may involve unanticipated costs or other integration issues that could disrupt our existing operations; and (vi) expected synergies and benefits of the ShareFile acquisition may not be realized which could negatively impact our future results of operations and financial condition. For further information regarding risks and uncertainties associated with Progress' business, please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Progress Software Announces Third Quarter 2025 Financial Results

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