Executive Summary

Q1 FY25 delivered at the high end on revenue and a meaningful non-GAAP EPS beat: revenue $238.02M (+29% YoY) and non-GAAP EPS $1.31 (+5% YoY); both exceeded S&P Global consensus ($235.64M and $1.06, respectively), with operating leverage from faster-than-planned ShareFile integration and tight expense control . Q1 revenue consensus and EPS consensus from S&P Global: $235.64M*, $1.06*.
Management raised full-year FY25 EPS guidance to $5.25–$5.37 (from $5.00–$5.12) while keeping revenue at $958–$970M and nudged cash flow ranges higher; Q2 guidance implies revenue $235–$241M and non-GAAP EPS $1.28–$1.34 .
ARR reached $836M (+48% YoY, cc), NRR >100%, with maintenance/SaaS/services up 49% YoY and software licenses down 9% YoY, reflecting the portfolio’s recurring mix post-ShareFile .
Key stock reaction catalysts: the EPS beat and FY25 EPS raise, ShareFile synergy momentum (margin/cost), continued deleveraging ($30M revolver repaid; $30M buybacks), and an M&A-ready posture (universal shelf; SaaS playbook) .

What Went Well and What Went Wrong

What Went Well
- Integration tracking ahead/on plan; significant contributions to ARR/revenue and expense savings. “We are ahead, or on plan, with all our ShareFile integration milestones…” — CEO .
- Broad-based demand and cost discipline drove 39% non-GAAP operating margin and an EPS beat ($1.31 vs prior guidance high-end $1.08), with Q1 revenue at top of guide .
- Deleveraging and capital returns: $30M revolver repayment (ahead of plan) and $30M buybacks in Q1; plan to repay $160M in FY25 .
What Went Wrong
- GAAP profitability pressured by higher interest/other expense (Other expense, net: $(19.1)M vs $(7.4)M YoY; GAAP EPS $0.24, -53% YoY) .
- Software licenses revenue declined 9% YoY to $58.45M amid mix shift toward recurring; non-GAAP op margin -300 bps YoY to 39% (still above Q4) .
- Quarterly lumpiness persists due to timing of multiyear subscription renewals; management emphasized ARR as better top-line barometer .

Financial Results

Headline results vs prior-year, prior-quarter, and estimates

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 Consensus*
Revenue ($M)	$184.69	$214.96	$238.02	$235.64*
GAAP Diluted EPS ($)	$0.51	$0.03	$0.24	N/A
Non-GAAP Diluted EPS ($)	$1.25	$1.33	$1.31	$1.06*
GAAP Operating Margin (%)	19%	10%	14%	N/A
Non-GAAP Operating Margin (%)	42%	37%	39%	N/A

Revenue mix (YoY)

Revenue Mix ($M)	Q1 2024	Q1 2025	YoY Change
Software Licenses	$64.10	$58.45	(9)%
Maintenance, SaaS & Professional Services	$120.59	$179.57	+49%
Total Revenue	$184.69	$238.02	+29%

Key KPIs and cash metrics

KPI	Q4 2024	Q1 2025	Notes
Annualized Recurring Revenue (ARR, $M)	$842	$836	+48% YoY (cc) in Q1
Net Retention Rate (NRR)	>100%	>100%	“again surpassed 100%”
DSO (days)	67	48	Improved QoQ and YoY
Cash & Equivalents ($M)	$118.08	$124.16	Q1 end balance
Cash from Operations ($M)	$19.65 (Q4)	$68.95 (Q1)	Seasonally stronger Q1
Adjusted FCF ($M)	$18.09 (Q4)	$73.21 (Q1)
Unlevered FCF ($M)	$237.98 (FY24)	$87.95 (Q1)

Estimates marked with * are S&P Global consensus; Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	FY 2025	$958–$970	$958–$970	Maintained
GAAP EPS ($)	FY 2025	$1.08–$1.23	$1.19–$1.35	Raised
Non-GAAP EPS ($)	FY 2025	$5.00–$5.12	$5.25–$5.37	Raised
GAAP Op Margin (%)	FY 2025	14%–15%	14%–15%	Maintained
Non-GAAP Op Margin (%)	FY 2025	37%–38%	38%	Raised (midpoint)
Cash from Ops ($M)	FY 2025	$216–$228	$216–$228	Maintained
Adjusted FCF ($M)	FY 2025	$225–$237	$226–$238	Raised
Unlevered FCF ($M)	FY 2025	$282–$294	$283–$294	Raised (low end)
GAAP Effective Tax Rate	FY 2025	21%	19%	Lowered
Non-GAAP Effective Tax Rate	FY 2025	20%	20%	Maintained
Revenue ($M)	Q2 2025	n/a	$235–$241	First issuance
GAAP EPS ($)	Q2 2025	n/a	$0.24–$0.30	First issuance
Non-GAAP EPS ($)	Q2 2025	n/a	$1.28–$1.34	First issuance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
ShareFile integration & synergies	Deal announced, expected close before FY-end; non-GAAP OM 41% in Q3; dividend to be suspended to prioritize debt paydown post-close . In Q4, integration “underway” .	“Ahead, or on plan” on milestones; contributing to ARR/revenue and expense savings; target 40% OM for ShareFile by FY-end .	Positive acceleration
ARR/NRR durability	Q3: ARR flat YoY; NRR >100% . Q4: ARR +46% YoY with ShareFile; NRR >100% .	ARR $836M (+48% YoY, cc); NRR >100% .	Strengthening with ShareFile
Revenue lumpiness & multiyear renewals	Noted variability historically .	Reiterated: timing of multiyear renewals drives quarterly revenue lumpiness; focus on ARR as barometer .	Ongoing, managed
AI strategy and portfolio	Ongoing AI features across products (e.g., DevTools, data platform) in prior quarters .	Three AI focus areas outlined; appointment of Chief AI Officer; Data Cloud launch during Q1 .	Execution ramping
M&A posture & financing	Q3 disclosed ShareFile; Q4 suspended dividend for deleveraging .	Considering more SaaS-native assets; shelf registration for flexibility; delevering to ~3.4x net leverage; $160M FY25 debt paydown target .	Active, disciplined
Gross margin expectations for SaaS M&A	n/a	ShareFile GM low-80s%; similar targets for future SaaS acquisitions; minimal dilution to group GM .	Constructive
Macro/SMB health	Q4 DSO up; monitoring .	No notable macro disruptions; ShareFile SMB base “healthy” .	Stable

Management Commentary

“We are ahead, or on plan, with all our ShareFile integration milestones, which are providing significant contributions to ARR and revenues, as well as expense savings.” — CEO .
“Our operating margins of 39% this quarter are indicative of our company-wide focus on expense management and execution as a faster ShareFile integration.” — CEO .
“Some of this efficiency that we’ve gained from the [ShareFile] integration benefits our cost base post integration… Operating margin of 39% exceeded our expectations.” — CFO .
“We paid down $30 million against our revolving line of credit… and repurchased $30 million of Progress stock… now expect to pay down a total of $160 million… during 2025.” — CFO .
“We expect low single-digit ARR growth in 2025.” — CFO .

Q&A Highlights

SMB health in ShareFile: management characterized ShareFile as mission-critical workflow software with healthy SMB demand and no notable deterioration observed .
SaaS M&A gross margin: ShareFile runs at low-80s% GM; future SaaS targets would be managed to similar levels, limiting group GM dilution .
M&A mix bias: not exclusively SaaS, but opportunity set skewing SaaS; preference for ratable, predictable models when assets are otherwise comparable .
Guidance prudence: despite Q1 upside, revenue guide held as it’s early; FX can swing; signals confidence without over-committing .
ARR seasonality: slight Q4→Q1 ARR dip is seasonal from maintenance renewal timing; typically rebounds in Q2 .
AI monetization: traction is anecdotal today; not yet a material revenue uplift embedded in outlook .

Estimates Context

Beat vs consensus: Q1 revenue $238.02M vs $235.64M*; non-GAAP EPS $1.31 vs $1.06* . Q2 guide aligns with consensus ranges: revenue $235–$241M vs $237.23M*; EPS $1.28–$1.34 vs $1.30* .
Estimates marked with * are S&P Global consensus; Values retrieved from S&P Global.

Where estimates may adjust:

Street likely moves FY25 EPS higher on integration-driven cost efficiencies (non-GAAP OM raised to 38%) and lower GAAP tax rate (19% vs 21% prior), with revenue unchanged as renewal timing still governs quarterly variability .

Key Takeaways for Investors

Non-GAAP EPS beat and FY25 EPS raise were driven by faster-than-expected ShareFile synergy capture and disciplined costs; revenue held at the top of Q1 guide and FY revenue stays unchanged as management remains conservative on renewal timing .
Mix shifting toward recurring: maintenance/SaaS/services +49% YoY, software licenses -9% YoY; ARR +48% YoY underscores durability post-ShareFile; NRR >100% .
Deleveraging on track ($160M planned FY25) while preserving M&A flexibility (universal shelf); expect active pipeline with bias to SaaS assets run at low-80s% GM .
Watch interest expense/other expense as a GAAP EPS headwind (Other expense up 158% YoY); non-GAAP framing remains relevant for operational performance .
Operational execution signals: DSO improved to 48 days; cash generation strong (Adj FCF $73.21M; Unlevered FCF $87.95M) supporting debt paydown and opportunistic buybacks .
AI remains strategic with concrete org steps (Chief AI Officer) and product launches (Data Cloud), but not yet a material revenue driver embedded in FY25 outlook .
Near-term trading lens: favorability from EPS beat/raise and synergy momentum; medium-term thesis anchored on recurring mix/ARR durability, margin discipline, and disciplined, SaaS-capable M&A flywheel .