Progress Software Corporation

Progress reported Q2 revenue of $253 million, up 7% year over year, ARR of approximately $868 million, up 2% year over year in constant currency, operating margin of 40%, and EPS of $1.62, up about 16% year over year. Adjusted free cash flow was approximately $79 million in the quarter versus $37 million a year ago, and first-half adjusted free cash flow was $178 million. For Q3 2026, management guided to revenue of $244 million to $250 million and EPS of $1.53 to $1.59. For full-year 2026, revenue is expected to be $990 million to just over $1 billion, operating margin about 39%, adjusted free cash flow of $271 million to $283 million, unlevered free cash flow of $323 million to $334 million, and EPS of $6.09 to $6.21.

Yogesh Gupta said Q2 showed the resilience of Progress’s portfolio and that the company is increasingly well positioned around AI, especially where customers need context, control and trusted data. He emphasized the importance of Progress’s three core software layers—business logic/workflows, data/content, and security/infrastructure management—and pointed to the new Chef Enterprise Management for NVIDIA’s DGX Spark as evidence of that strategy. His tone was confident and constructive, with repeated comments about strong execution, healthy customer engagement and optimism on both organic demand and M&A.

Anthony Folger highlighted broad-based top-line strength, especially in DataDirect, Chef, MarkLogic and LoadMaster, while noting that some Q2 revenue beat was helped by deal timing. He said total operating expenses were about $151 million, operating income was $103 million, and free cash flow benefited from strong collections; cash and cash equivalents were $103 million, total debt was $1.3 billion, and net leverage improved to about 2.9x from 3.4x at the start of the fiscal year. He also said the company repaid net $110 million of debt in the first half, repurchased about $55 million of stock, and updated the full-year plan to roughly $220 million of net debt repayment and about $75 million of share repurchases.

Analysts asked about M&A appetite, especially whether Progress could do another ShareFile-sized deal and what management meant by sellers adjusting expectations. Yogesh said transactions in the 10% to 25% of company revenue range are within the firm’s comfort zone, that cloud-based businesses are acceptable, and that AI relevance is a key criterion; he also said seller expectations are starting to move closer to reality, though not fully reset. On guidance, management said Q3 revenue was influenced by Q2 timing, that SaaS renewal durations are not shortening despite AI-related portfolio reviews, and that Q2 free cash flow was unusually strong because of ShareFile-related cleanup and collections normalization.