Progress Software PRGS shares have rallied 17.3% over the past three months, outperforming the Zacks Computer & Technology sector’s growth of 2.2% and the Zacks Computer - Software industry’s return of 3.6%.

PRGS shares have outperformed industry peers, including Adobe ADBE, CommVault Systems CVLT and Manhattan Associates MANH, over the same timeframe.

While CommVault and Manhattan Associates shares have returned 12.3% and 5%, respectively, Adobe shares have fallen 10.6%.

PRGS shares are riding on demand for its AI-powered infrastructure software solutions and a strong emphasis on high-value recurring revenue streams, ensuring a stable financial performance.

PRGS’ Prospects Ride on Strong Portfolio & Acquisitions

Progress Software's Annual Recurring Revenue (ARR) reached $582 million in the third quarter of 2024. This marks slight year-over-year growth and an approximately 1% sequential rise from the previous quarter.

This growth was primarily driven by stronger-than-expected demand for key products in PRGS’s portfolio. Some significant contributors to this performance were OpenEdge, DevTools, Sitefinity, LoadMaster, Flowmon and MOVEit, which saw heightened adoption.

Progress Software recently acquired ShareFile — a unit of Cloud Software. ShareFile is a cloud-based platform that uses AI to enable seamless document collaboration. It focuses on simplifying workflows for industries like financial services, healthcare and professional services.

This acquisition enhances Progress Software’s capabilities in offering secure and efficient business solutions. By integrating ShareFile, the company strengthens its portfolio and broadens its reach in high-demand sectors.

PRGS's operating margin exceeded expectations in the third quarter of 2024 and was up 200 basis points year over year. A strong non-GAAP operating margin of 41% reflects the company's focus on growing business and managing costs effectively.

PRGS’s 2024 Outlook Looks Promising

For the fourth quarter of 2024, Progress Software expects non-GAAP revenues between $207 million and $217 million.

The Zacks Consensus Estimate for the fourth quarter of 2024 revenues is pegged at $211.34 million, indicating year-over-year growth of 19.05%.
Progress Software expects non-GAAP earnings of $1.15-$1.25 per share.

The consensus mark for earnings is pegged at $1.21 per share, suggesting 18.63% growth from the figure reported in the year-ago quarter.

For 2024, non-GAAP revenues are projected between $745 million and $755 million.
 
The Zacks Consensus Estimate for revenues is pegged at $749.79 million, indicating year-over-year growth of 7.40%.

PRGS expects non-GAAP earnings between $4.75 and $4.85 per share.
 
The consensus mark for earnings is pegged at $4.81 per share, indicating year-over-year growth of 10.57%.

Zacks Rank

Progress Software currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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