0000876167-26-000051
SEC filingRevenue grew 4% YoY to $247.8M, driven by OpenEdge license sales; operating margin expanded to 18.8% from 13.6% due to lower restructuring and acquisition costs.
Total revenue for the first quarter of fiscal 2026 was $247.8 million, up 4% year-over-year (2% on a constant currency basis). The increase was primarily driven by a 16% jump in software licenses revenue to $67.6 million, attributed to strong OpenEdge sales. Maintenance revenue grew a modest 1% to $100.3 million, SaaS revenue rose 2% to $70.5 million, and professional services declined 11% to $9.4 million. Gross profit improved to $203.9 million, yielding a gross margin of 82.3% versus 80.6% in the prior year, as cost of revenue grew only 3% versus 4% revenue growth, aided by lower contractor costs and fully amortized intangible assets. Operating income surged 43% to $46.5 million, pushing operating margin from 13.6% to 18.8%. The primary drivers were a 90% drop in restructuring expenses ($0.7 million vs. $7.0 million) and a 67% drop in acquisition-related expenses ($0.8 million vs. $2.5 million). Sales and marketing expense edged up 1%, product development rose 9% due to higher headcount, and G&A increased 3% on stock-based compensation. Net income more than doubled to $22.4 million from $10.7 million, with an effective tax rate of 25% versus 18% a year earlier, impacted by the OBBBA legislation.
The MD&A does not report formal segment information. However, the revenue breakdown highlights the dominance of maintenance (40% of total revenue) and SaaS (28%), together representing 73% of revenue (down from 75% a year ago). The shift reflects faster growth in software licenses (27% of revenue vs. 25% prior), driven by OpenEdge. The decline in professional services (4% of revenue) and stable SaaS growth suggest a focus on higher-margin recurring licensing and subscription models. ARR reached $863 million, up 2% year-over-year, with net retention rates consistently in the 99-100% range, indicating strong customer retention and modest expansion.
The company did not provide quantitative guidance for future periods. Management's outlook is qualitative, noting that cash from operations in fiscal 2026 could be affected by risks detailed in the annual report, but existing cash, operating cash flows, and the revolving credit facility are expected to cover foreseeable cash needs, including capex, debt repayment, share repurchases, and acquisitions. The suspension of dividends continues, with capital redirected to debt reduction and share repurchases. Key strategic priorities include leveraging the OpenEdge product line and managing the MOVEit Vulnerability litigation, for which insurance recovery is expected to mitigate costs.
Total debt stood at $1.341 billion as of February 28, 2026, consisting of $540 million drawn on the revolving credit facility (down from $600 million at November 30, 2025), $360 million in 1.0% convertible senior notes due 2026, and $450 million in 3.5% convertible senior notes due 2030. The company repaid $60 million on the revolver during the quarter. Deferred revenue totaled $424.6 million, while remaining performance obligations (RPO) were $527.5 million, with approximately 75% expected to be recognized within the next year.
No purchase commitments or off-balance-sheet obligations were disclosed in the Notes. The only contingent liability noted is the $1.1 million fair value of the Nuclia earn-out, classified as Level 3 and unchanged during the quarter.
During the three months ended February 28, 2026, Progress repurchased and retired 0.5 million shares for $20.4 million. As of that date, $182.2 million remained under the board-authorized repurchase program (authorized in September 2025). Dividend equivalent payments to stockholders totaled $0.2 million. No new debt was issued; the company focused on reducing revolver borrowings. Capital expenditures were not disclosed in the Notes, but the cash flow statement shows $2.7 million for the quarter (not included per instructions).
The company operates as a single reportable segment. Revenue for the quarter was $247.8 million, up 4.1% year-over-year from $238.0 million. Geographically, North America contributed $152.7 million (61.6% of total), EMEA $78.4 million (31.6%), Asia Pacific $11.2 million (4.5%), and Latin America $5.5 million (2.2%). No single customer or country outside the U.S. exceeded 10% of revenue.