Progress Software (NASDAQ:PRGS) announced robust financial results for its fiscal first quarter ended February 28, 2026, surpassing analyst expectations for both revenue and earnings per share. The company posted revenue of approximately $248 million, a 4% increase year-over-year, and adjusted earnings per share (EPS) of $1.60, a 22% rise from the prior year. This performance was primarily attributed to strong demand for their AI-driven product offerings and stable customer retention.
Following these strong Q1 results, Progress Software raised its full-year 2026 guidance. The company now anticipates full-year revenue to be between $988 million and $1.01 billion, and adjusted EPS to range from $5.91 to $6.03. For the fiscal second quarter, Progress Software expects revenue between $240 million and $246 million, with adjusted EPS in the range of $1.47 to $1.53. These updated projections reflect management's cautious optimism, despite a challenging broader software-as-a-service (SaaS) market.
Key financial highlights from Q1 2026 also included an annual recurring revenue (ARR) of $863 million, showing 2% pro forma growth, and a net retention rate that held strong at 99%, indicating a sticky customer base. The non-GAAP operating margin reached 41%, and adjusted free cash flow was $99 million, representing a 35% year-over-year increase. The company continued its capital allocation strategy, including approximately $60 million in debt repayment and $20 million in share repurchases during the quarter. Wedbush maintained an 'Outperform' rating but lowered its price target, citing SaaS sector conditions, even as they acknowledged Progress Software's solid execution in Q1 and its early-stage AI integration proactiveinvestors.com.
Despite the positive Q1 report and raised outlook, shares of Progress Software experienced a decline of about 7% to approximately $26 in early trading following the announcement proactiveinvestors.com. Analysts noted that while the company delivered beats on revenue and earnings and showed continued margin strength and cash flow generation, broader SaaS sector conditions might overshadow these positive results proactiveinvestors.com.
