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Progress Software (PRGS) Q2 Earnings & Revenues Top Estimates

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Progress Software (PRGS - Free Report) reported second-quarter fiscal 2021 non-GAAP earnings of 82 cents per share that beat the Zacks Consensus Estimate by 13.9%. The figure increased 30% from the year-ago quarter’s levels.  

Non-GAAP revenues of $129.2 million also surpassed the consensus mark by 5.7%. Non-GAAP revenues increased 26% year over year on actual currency basis (up 23% on constant currency basis) driven by solid uptake of the company’s core products namely OpenEdge, MOVEit and WhatsUp Gold along with Chef.

Quarter Details

Total revenues of $122.5 million increased 22% on actual currency basis (up 19% on constant currency) on a year-over-year basis.

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

 

Software license GAAP revenues were $30.1 million, up 53% year over year. Maintenance and service GAAP revenues were $92.4 million, up 14% from the year-ago quarter’s figures.

GAAP sales and marketing expenses, as a percentage of revenues, expanded 230 basis points (bps) from the year-ago quarter’s levels to 23.9%. GAAP product development expenses, as a percentage of revenues, contracted 10 bps from the year-ago quarter’s tally to 21.6%.

However, GAAP general and administration expenses, as a percentage of revenues, expanded 100 bps from the year-ago quarter’s levels to 13.4%.

Progress Software reported non-GAAP operating margin of 38%, which contracted 100 bps from the year-ago quarter’s figures.

On a constant-currency basis, annualized recurring revenue (ARR) came in at $437 million, up 23% year over year. Net dollar retention rate surpassed 100% in fiscal second quarter.

Balance Sheet

As of May 31, 2021, cash and cash equivalents (and short-term investments) were $362.7 million compared with $114.4 million as of Feb 28, 2021.

Progress Software generated $55.4 million as adjusted free cash flow compared with $38.4 million reported in the year-ago quarter and $46.5 million in the previous quarter.

Progress Software repurchased 0.4 million shares for $20 million during second-quarter fiscal 2021. As of May 31, 2021, $155 million remained under this authorization.

The company declared a quarterly cash dividend of $0.175 per share to be paid out on Sep 15, 2021 to shareholders as of Sep 1.

Guidance

For third-quarter fiscal 2021, Progress Software expects non-GAAP revenues between $129 million and $132 million. The Zacks Consensus Estimate for revenues is currently pegged at $129.6 million, indicating growth of 16.9% from the year-ago quarter’s reported figure.

The company expects non-GAAP earnings in the range of 81-83 cents per share. The consensus mark is currently pegged at 81 cents per share, indicating an improvement of 3.9% from the year-ago quarter’s reported figure.

For 2021, non-GAAP revenues are now projected between $529 and $535 million compared with $519-$527 million guided previously. Non-GAAP operating margin is expected to be 39% compared with 38% projected earlier.

Non-GAAP earnings are projected between $3.46 and $3.50 per share against $3.38 and $3.42 sper share.

The Zacks Consensus Estimate for 2021 revenues and earnings are currently pegged at $523.9 million and $3.39 per share, respectively.

Zacks Rank & Stocks to Consider

Progress Software currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader computer and technology sector worth consideration include Facebook (FB - Free Report) , Zoom Video (ZM - Free Report) and Silicon Motion Technology (SIMO - Free Report) . All the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Facebook, Zoom Video and Silicon Motion is currently pegged at 20.1%, 15.6% and 8%, respectively.

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