Progress Software Corp (NASDAQ:PRGS) stock rallies 19.09% (As on January 21, 11:22:53 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fourth-quarter adjusted EPS results and issued first-quarter guidance above estimates. The successful integration of ShareFile and innovations like the agentic RAG technology contributed significantly to these results. The company closed Q4 with ARR of $852 million, approximately 2% pro forma year-over-year growth. This growth in ARR was driven by multiple products, including ShareFile, OpenEdge, WhatsUp Gold, and the DevTools products. And consistent with prior quarters, the net retention rate remained strong at 100%. Operating income for the quarter was $96 million for an operating margin of 38%. The company ended the year with cash and cash equivalents of $95 million and debt of $1.4 billion, for a net debt position of $1.3 billion. The net leverage ratio at year-end was approximately 3.4 times.

Moreover, DSO for the quarter was seventy-three days, up six days compared to the year-ago quarter. Deferred revenue was $425 million at the end of the fourth quarter, up approximately $21 million year over year and $44 million sequentially, reflecting strong fourth-quarter top-line performance. Adjusted free cash flow was $62 million for the quarter, and $247 million for the year, an increase of 16% over the prior year. The company also continued to return capital to shareholders, repurchasing $40 million in stock in Q4 and $105 million for the full fiscal year 2025. The company ended the fiscal year with $202 million remaining under the current share repurchase authorization. The company modeled $250 million of repayments for fiscal 2026, which would improve our net leverage ratio to approximately 2.7 times by year-end.

PRGS in the fourth quarter of FY25 has reported the adjusted earnings per share of $1.51, beating the analysts’ estimates for the adjusted earnings per share of $1.31. The company had reported the adjusted revenue growth of 18 percent to $252.67 million in the fourth quarter of FY25, missing the analysts’ estimates for revenue of $252.87 million. The revenue strength in the quarter was broad-based, with outperformance coming from OpenEdge and ShareFile, both of which performed better than the internal expectations

Looking ahead, Progress forecasts revenue to reach $1 billion in FY 2026, an operating margin of 39%, earnings per share are expected to be between $5.82 and $5.96 per share with unlevered free cash flow of nearly $320 million at the midpoint.