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Progress Software (PRGS) Q3 Earnings & Revenues Top Estimates

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Progress Software (PRGS - Free Report) reported third-quarter fiscal 2021 non-GAAP earnings of $1.18 per share that beat the Zacks Consensus Estimate by 42.2% and surged 51.3% year over year.  

Non-GAAP revenues of $152.6 million surpassed the consensus mark by 16.9% and soared 37.6% year over year, driven by solid uptake of the company’s core products, namely, DataDirect, OpenEdge, DevTools, Ipswitch and Chef.

The top line also benefited from early closure of two contracts worth $10 million in the reported quarter, which were supposed to close in the fourth quarter.

On a constant-currency basis, annualized recurring revenues (ARR) came in at $444 million, up 25% year over year. Net dollar retention rate surpassed 100% in fiscal third quarter.

 

 

Quarter Details

Software license GAAP revenues were $51.9 million, up 88.7% year over year. Maintenance and service GAAP revenues were $95.5 million, up 16.2% year over year.

GAAP sales and marketing expenses, as a percentage of revenues, contracted 10 basis points (bps) from the year-ago quarter’s level to 20.2%. GAAP product development expenses, as a percentage of revenues, contracted 150 bps from the year-ago quarter’s tally to 17.4%.

GAAP general and administration expenses, as a percentage of revenues, declined 120 bps from the year-ago quarter’s level to 11.2%.

Progress reported non-GAAP operating margin of 46.6%, which expanded 410 bps year over year, driven by strong top-line growth.

Balance Sheet

As of Aug 31, 2021, cash and cash equivalents (and short-term investments) were $383.7 million compared with $362.7 million as of May 31, 2021.

Progress Software generated $35 million in adjusted free cash flow compared with $30.1 million reported in the year-ago quarter and $55.4 million in the previous quarter.

Kemp Acquisition

Progress Software announced its plan to buy Kemp Technologies, a leader in the application experience space, for $258 million in cash. Kemp has more than 1,100 active customers, including Amazon (AMZN - Free Report) , The Walt Disney (DIS - Free Report) , Apple (AAPL - Free Report) , Dell, Raytheon and others.

Progress Software expects to complete the acquisition in the fourth quarter of fiscal 2021.

Guidance

For fourth-quarter fiscal 2021, Progress Software expects non-GAAP revenues between $134 million and $138 million. The Zacks Consensus Estimate for revenues is currently pegged at $140.5 million, indicating growth of 8.9% from the year-ago quarter’s reported figure.

This Zacks Rank #3 (Hold) company expects non-GAAP earnings in the range of 73-75 cents per share. The consensus mark for the same is currently pegged at 88 cents per share, indicating a decline of 3.3% from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For 2021, non-GAAP revenues are now projected between $548 and $552 million compared with $529-$535 million guided previously. Non-GAAP operating margin is expected to be 40% compared with 39% projected earlier.

Non-GAAP earnings are projected between $3.68 and $3.70 per share against $3.46 and $3.50 per share. The Zacks Consensus Estimate for fiscal 2021 revenues and earnings are currently pegged at $532.1 million and $3.48 per share, respectively.