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Progress Software (PRGS) Q4 Earnings Beat, Revenues Rise Y/Y

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Progress Software (PRGS - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 91 cents per share that beat the Zacks Consensus Estimate by 18.2%. The figure increased 15.2% from the year-ago quarter.  

Non-GAAP revenues of $129.1 million also surpassed the consensus mark by 1.5%. The figure improved 4.6% year over year driven by strong sales of OpenEdge and DCI products.

Quarter Details

Software license GAAP revenues were $37.4 million, down 4.8% year over year. Maintenance and service GAAP revenues were $84.9 million, up 9.3% from the year-ago quarter.

GAAP sales and marketing expenses, as a percentage of revenues, expanded 240 basis points (bps) from the year-ago quarter to 26.2%.
 

Progress Software Corporation Price, Consensus and EPS Surprise

 

Progress Software Corporation Price, Consensus and EPS Surprise

Progress Software Corporation price-consensus-eps-surprise-chart | Progress Software Corporation Quote

 

GAAP product development expenses, as a percentage of revenues, expanded 70 bps from the year-ago quarter to 20%.

GAAP general and administration expenses, as a percentage of revenues, expanded 40 bps from the year-ago quarter to 12.5%.

Progress Software reported adjusted operating margin of 37.3%, which contracted 110 bps from the year-ago quarter.

Balance Sheet

As of Nov 30, 2020, cash and cash equivalents (and short-term investments) were $106 million.

Progress Software generated $42.8 million in cash from operations compared with $36.6 million reported in the year-ago quarter.

Progress Software repurchased 1 million shares for $40 million during fourth-quarter 2020. As of Nov 30, 2020, $190 million remained under this authorization.

The company declared a quarterly cash dividend of $0.175 per share to be paid out on Mar 15, 2021.

Guidance

For the first quarter of 2021, Progress Software expects non-GAAP revenues between $119 million and $123 million. The Zacks Consensus Estimate for revenues is currently pegged at $129 million, indicating growth of 13.4% from the year-ago quarter’s reported figure.

For the first quarter of 2021, DataDirect product is expected to decline by almost $9 million.

The company expects non-GAAP earnings to be in the range of 72-76 cents per share. The consensus mark is currently pegged at 83 cents per share, indicating growth of 9.2% from the year-ago quarter’s reported figure.

For 2021, non-GAAP revenues are projected between $513 and $521 million. Adjusted operating margin is expected to be 37%. Non-GAAP earnings are projected between $3.22 and $3.28 per share.

The Zacks Consensus Estimate for 2021 revenues and earnings are currently pegged at $513.50 million and $3.30 per share, respectively.

For DataDirect product line, revenues are expected to be flat. Annual contract value is expected to be in the range of $32-$33 million.

Progress Software expects the integration of Chef to continue throughout 2021. Management expects cost synergies from the acquisition to aid profitability with an operating margin contribution from Chef of at least 35%.

Progress Software also assumes that operating expenses related to travel, facilities and related activities will be lower during the first half of 2021 due to the continuing COVID-19 restrictions.

Zacks Rank & Stocks to Consider

Progress Software currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Apple (AAPL - Free Report) , Amphenol (APH - Free Report) and Avnet (AVT - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All the three stocks are scheduled to report their quarterly results on Jan 27.

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