fiscal third quarter 2026
Filed Sep 30, 2026ARR of $873 million grew 1% year-over-year; revenue of $246 million decreased 2% year-over-year; acquisition of Domo's AI and Data Platform Business closed.
ARR, operating income, earnings per share and cash flow increased, but quarterly revenue declined 2% year-over-year and maintenance, SaaS, and professional-services revenue declined 2%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended August 31, 2026GAAP | $246.0M | – | (2) % |
| Software licenses revenue, three months ended August 31, 2026GAAP | $ 63,556 | – | — % |
| Maintenance, SaaS, and professional services revenue, three months ended August 31, 2026GAAP | $ 182,449 | – | (2) % |
| Total costs of revenue, three months ended August 31, 2026GAAP | $42.47M | – | (11) % |
| Gross profit, three months ended August 31, 2026GAAP | $203.5M | – | 1 % |
| Sales and marketing expense, three months ended August 31, 2026GAAP | $ 50,462 | – | (3) % |
| Product development expense, three months ended August 31, 2026GAAP | $ 46,054 | – | (7) % |
| General and administrative expense, three months ended August 31, 2026GAAP | $ 26,781 | – | (5) % |
| Cyber vulnerability response expenses, net, three months ended August 31, 2026GAAP | $3.46M | – | 424 % |
| Restructuring expenses, three months ended August 31, 2026GAAP | $146K | – | (84) % |
| Acquisition-related expenses, three months ended August 31, 2026GAAP | $3.93M | – | 383 % |
| Total operating expenses, three months ended August 31, 2026GAAP | $157.0M | – | (1) % |
| Income from operations, three months ended August 31, 2026GAAP | $46.55M | – | 6 % |
| Operating margin, three months ended August 31, 2026GAAP | 19 % | – | 100 bps |
| Income from operations, three months ended August 31, 2026non-GAAP | $105.3M | – | 6 % |
| Operating margin, three months ended August 31, 2026non-GAAP | 43 % | – | 300 bps |
| Net income, three months ended August 31, 2026GAAP | $22.78M | – | 17 % |
| Net income, three months ended August 31, 2026non-GAAP | $70.20M | – | 7 % |
| Basic earnings per share, three months ended August 31, 2026GAAP | $ 0.55 | – | 22 % |
| Diluted earnings per share, three months ended August 31, 2026GAAP | $ 0.55 | – | 25 % |
| Diluted earnings per share, three months ended August 31, 2026non-GAAP | $ 1.69 | – | 13 % |
| Cash flows from operating activities, three months ended August 31, 2026GAAP | $88.01M | – | 20 % |
| Free cash flow, three months ended August 31, 2026other | $86.32M | – | 19 % |
| Adjusted free cash flow, three months ended August 31, 2026non-GAAP | $87.16M | – | 17 % |
| Unlevered free cash flow, three months ended August 31, 2026non-GAAP | $100.7M | – | 14 % |
| ARR, fiscal third quarter 2026other | $873M | – | 1% year-over-year on a constant currency basis |
| Total revenue, nine months ended August 31, 2026GAAP | $ 747,269 | – | 3 % |
| Software licenses revenue, nine months ended August 31, 2026GAAP | $ 200,116 | – | 16 % |
| Maintenance, SaaS, and professional services revenue, nine months ended August 31, 2026GAAP | $ 547,153 | – | (1) % |
| Gross profit, nine months ended August 31, 2026GAAP | $ 616,066 | – | 5 % |
| Income from operations, nine months ended August 31, 2026GAAP | $138.2M | – | 20 % |
| Net income, nine months ended August 31, 2026GAAP | $66.66M | – | 41 % |
| Diluted earnings per share, nine months ended August 31, 2026GAAP | $ 1.58 | – | 48 % |
| Income from operations, nine months ended August 31, 2026non-GAAP | $310.1M | – | – |
| Net income, nine months ended August 31, 2026non-GAAP | $206.9M | – | – |
| Diluted earnings per share, nine months ended August 31, 2026non-GAAP | $ 4.91 | – | – |
| Cash flows from operating activities, nine months ended August 31, 2026GAAP | $265.5M | – | 54 % |
| Free cash flow, nine months ended August 31, 2026other | $ 259,210 | – | 53 % |
| Adjusted free cash flow, nine months ended August 31, 2026non-GAAP | $ 265,212 | – | 44 % |
| Unlevered free cash flow, nine months ended August 31, 2026non-GAAP | $ 303,664 | – | 33 % |
| Days sales outstanding, fiscal third quarter 2026other | 42 days | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Software licensesRevenue category reported in the condensed consolidated statements of operations. | $ 63,556 | – | — % |
| Maintenance, SaaS, and professional servicesRevenue category reported in the condensed consolidated statements of operations. | $ 182,449 | – | (2) % |
fiscal year ending November 30, 2026 and fiscal fourth quarter ending November 30, 2026 outlook
- RevenueFY 2026: $1,044 - $1,052; Q4 2026: $297 - $305
- Tax rate25 % GAAP; 20 % non-GAAP
- NoteFY 2026 GAAP diluted earnings per share: $1.18 - $1.28
- NoteFY 2026 non-GAAP diluted earnings per share: $6.15 - $6.23
- NoteFY 2026 GAAP operating margin: 13 %
- NoteFY 2026 non-GAAP operating margin: 38 %
- NoteFY 2026 cash flows from operations: $274 - $282
- NoteFY 2026 adjusted free cash flow: $275 - $283
- NoteFY 2026 unlevered free cash flow: $330 - $338
- NoteQ4 2026 GAAP diluted loss per share: $(0.41) - $(0.32)
- NoteQ4 2026 non-GAAP diluted earnings per share: $1.24 - $1.33
- NoteExpected positive currency translation impact on FY 2026 revenue: approximately $9.4 million
- NoteExpected positive currency translation impact on FY 2026 GAAP and non-GAAP diluted earnings per share: approximately $0.11
- NoteExpected positive currency translation impact on Q4 2026 revenue: approximately $0.6 million
- NoteExpected positive currency translation impact on Q4 2026 GAAP and non-GAAP diluted (loss) earnings per share: approximately $0.02
Capital returns
- Repurchases of common stock, net of issuances: $ 14,263 for the three months ended August 31, 2026, compared to $ 11,720 for the three months ended August 31, 2025.
- Repurchases of common stock, net of issuances: $ 61,289 for the nine months ended August 31, 2026, compared to $ 49,068 for the nine months ended August 31, 2025.
- Repurchases of convertible senior notes: $ 360,000 for the nine months ended August 31, 2026.
What drove it
- ARR of $873 million increased 1% year-over-year on a constant currency basis.
- Software licenses revenue was $ 63,556, compared to $ 63,437, while maintenance, SaaS, and professional services revenue was $ 182,449, compared to $ 186,358.
- Total costs of revenue declined 11 % to $ 42,467, and total operating expenses declined 1 % to $ 156,988.
- The acquisition of Domo's AI and Data Platform Business closed.
Concerns
- Revenue decreased 2% year-over-year both on an actual and a constant currency basis.
- Maintenance, SaaS, and professional services revenue decreased 2 % year-over-year.
- Cyber vulnerability response expenses, net, were $ 3,455, compared to $ 659, and acquisition-related expenses were $ 3,928, compared to $ 814.
- The company expects to continue to incur legal and other professional services expenses associated with the MOVEit Vulnerability.
- Q4 2026 GAAP diluted loss per share guidance is $(0.41) - $(0.32).
What to watch
- Q4 2026 revenue guidance of $297 - $305.
- FY 2026 updated revenue guidance of $1,044 - $1,052, compared with prior FY 2026 guidance of $990 - $1,002.
- Integration of Domo's AI and Data Platform Business, including preliminary estimates relating to the valuation of intangible assets acquired from Domo and restructuring expenses.
- FY 2026 GAAP operating margin guidance of 13 % and non-GAAP operating margin guidance of 38 %.
- Future cyber vulnerability response expenses, net, associated with the MOVEit Vulnerability.
Balance sheet and cash flow
- Cash and cash equivalents were $113.7 million at the end of the quarter.
- Cash and cash equivalents: $ 113,653 at August 31, 2026, compared to $ 94,807 at November 30, 2025.
- Long-term debt: $ 790,000 at August 31, 2026, compared to $ 600,000 at November 30, 2025.
- Convertible senior notes, non-current portion, net: $ 442,635 at August 31, 2026, compared to $ 441,186 at November 30, 2025.
- Accounts receivable, net: $ 118,811 at August 31, 2026, compared to $ 195,783 at November 30, 2025.
- Total assets: $ 2,302,593 at August 31, 2026, compared to $ 2,457,658 at November 30, 2025.
- Total stockholders' equity: $ 529,978 at August 31, 2026, compared to $ 478,349 at November 30, 2025.
- Capital expenditures: $ 1,695 for the three months ended August 31, 2026, compared to $ 1,055 for the three months ended August 31, 2025.
- Capital expenditures: $ 6,264 for the nine months ended August 31, 2026, compared to $ 2,840 for the nine months ended August 31, 2025.
Analysis
Progress reported a mixed fiscal third quarter. Revenue was $246 million, down 2% year-over-year both on an actual and constant-currency basis, while ARR of $873 million increased 1% year-over-year on a constant-currency basis. Software licenses revenue was essentially unchanged at $ 63,556, but maintenance, SaaS, and professional services revenue declined 2 % to $ 182,449. For the nine months ended August 31, 2026, total revenue increased 3 % to $ 747,269, supported by 16 % growth in software licenses revenue.
Profitability improved despite the quarterly revenue decline. GAAP income from operations increased 6 % to $ 46,550 and GAAP operating margin was 19 %, compared with 18 %. Non-GAAP income from operations increased 6 % to $ 105,257 and non-GAAP operating margin was 43 %, compared with 40 %. Total costs of revenue fell 11 % and total operating expenses declined 1 %, with lower sales and marketing, product development, general and administrative, and restructuring expense. These reductions were partly offset by higher cyber vulnerability response expenses and acquisition-related expenses.
GAAP net income increased 17 % to $ 22,776, and diluted earnings per share increased 25 % to $ 0.55. Non-GAAP net income increased 7 % to $ 70,204, and non-GAAP diluted earnings per share increased 13 % to $ 1.69. Cash generation was also stronger: cash flows from operating activities increased 20 % to $ 88,011, adjusted free cash flow increased 17 % to $ 87,161, and unlevered free cash flow increased 14 % to $ 100,687. Days sales outstanding improved to 42 days from 55 days in the fiscal third quarter of 2025 and 73 days in the fiscal fourth quarter of 2025.
The balance sheet showed cash and cash equivalents of $113.7 million, long-term debt of $ 790,000, and convertible senior notes, non-current portion, net of $ 442,635. The company repurchased $ 14,263 of common stock during the quarter and repurchased $ 360,000 of convertible senior notes over the nine-month period. The Domo AI and Data Platform acquisition has closed, and the company said its guidance includes preliminary estimates related to the valuation of acquired intangible assets and restructuring expenses.
For FY 2026, Progress raised revenue guidance to $1,044 - $1,052 from prior guidance of $990 - $1,002, while guiding to GAAP diluted earnings per share of $1.18 - $1.28 and non-GAAP diluted earnings per share of $6.15 - $6.23. It expects FY 2026 GAAP operating margin of 13 % and non-GAAP operating margin of 38 %. Q4 guidance calls for revenue of $297 - $305, GAAP diluted loss per share of $(0.41) - $(0.32), and non-GAAP diluted earnings per share of $1.24 - $1.33. The principal reported issues to monitor are the decline in recurring revenue categories, Domo integration costs, and ongoing MOVEit-related legal and professional-services expenses.
Management, verbatim
This quarter's results reflect the strength of our strategy, the resilience of our business model, and the value our differentiated software portfolio delivers to customers worldwide.
Yogesh Gupta, CEO of Progress Software
We delivered steady growth in ARR and earnings through strong execution and disciplined expense management, while continuing to improve our balance sheet.
Yogesh Gupta, CEO of Progress Software
Our execution in the third quarter was very strong with year-over-year growth in ARR and adjusted free cash flow of more than 1% and 17%, respectively.
Anthony Folger, Progress CFO
Not in the filing
stated, not guessed- Prior-release outlook was not provided, so no comparison of reported actual results against prior guidance is included.
- Reportable operating segment disclosures were not provided.
- Gross margin was not reported.
- Q4 2026 gross margin, operating-expense, operating-margin, tax-rate, cash-flow, and free-cash-flow guidance were not provided.
- Net retention rate was defined but not reported.
- Dividend declaration or cash dividend payment for the fiscal third quarter 2026 was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.