Progress Software Corporation

Q3 revenue was $246 million, roughly mid-guidance. Operating margin was 43%, up 300 basis points year over year, and EPS was $1.69, up about 13% year over year and above the high end of guidance. ARR ended at approximately $873 million, up more than 1% constant currency, and net retention rate was 99%. Adjusted free cash flow was $87 million, up 17%, and unlevered free cash flow was $101 million, up 14%; year-to-date adjusted free cash flow was $265 million, up 44%. For the balance sheet, cash was $114 million, debt was about $1.24 billion, net debt was about $1.1 billion, and net leverage was about 2.7x. For Q4 FY2026, the company guided to revenue of $297 million to $305 million and EPS of $1.24 to $1.33. For full-year FY2026, revenue guidance was raised to $1.044 billion to $1.052 billion, operating margin to 38%, adjusted free cash flow to $275 million to $283 million, unlevered free cash flow to $330 million to $338 million, and EPS to $6.15 to $6.23.

Yogesh Gupta said the quarter showed the durability of Progress’s portfolio, with strength in OpenEdge, DataDirect, MOVEit and LoadMaster, plus continued momentum in regulated and security-sensitive environments. He emphasized that customers are increasingly interested in AI-enabled capabilities that combine “context” and “control,” and positioned Domo as a strategic addition to the data platform and AI stack. His tone was confident and upbeat, while also stressing that Domo integration, retention improvement and synergy execution are now the immediate focus.

Anthony Folger highlighted the quarter’s operating leverage: total cost and operating expenses were about $141 million, down about $10 million or 6% year over year, while operating income rose 6% to $105 million. He pointed to strong cash generation, with adjusted free cash flow of $87 million, DSO improving to 42 days from 55 days a year ago and 73 days at fiscal 2025 year-end, and year-to-date debt repayment of $170 million. On Domo, he said Progress paid $400 million in cash, or $390 million of actual cash outlay after cash acquired and transaction effects, expects FY27 incremental interest expense of about $21 million, and expects Domo to settle around $280 million to $290 million of steady-state revenue.

Analysts focused on how Progress will extract margin from Domo, whether the strong cash flow is sustainable, and how AI and changing pricing models affect the portfolio. Management said synergies will come from eliminating redundant public-company costs, consolidating G&A, shifting some services work to partners, and reducing go-to-market spend, while still investing in product R&D. On pricing, Yogesh said consumption and capacity models should benefit from rising data usage and AI complexity, but seat-based models face pressure; he also said cross-sell is not included in the Domo revenue model yet and would be upside if it materializes.