Progress Software combines sticky, high-margin infrastructure software with disciplined M&A and an AI-ready data-platform catalyst, offering substantial five-year upside despite litigation and integration risks.
Overview
Progress Software is a global provider of enterprise application development, data, infrastructure, digital-experience, and secure-collaboration software serving more than 100,000 organizations. Its investment profile is a disciplined consolidator of mature, mission-critical assets rather than a high-organic-growth software company: approximately 75% of revenue comes from maintenance, SaaS, and professional services, supported by $868 million of recurring ARR and 100% pro forma NRR. **Q2 2026 demonstrated strong financial execution**, with revenue of $253.47 million, up 7% year over year and $10.72 million above consensus, non-GAAP EPS of $1.62 versus $1.46 expected, a 40.0% non-GAAP operating margin, and adjusted free cash flow of $79.21 million. Management raised FY2026 adjusted free-cash-flow guidance to $271 million-$283 million and paid down $50 million of debt, reducing net leverage to 2.9x. The $400 million Domo acquisition is the principal strategic catalyst, potentially creating an AI-ready data-governance layer when combined with MarkLogic. Shares at $45.22 trade at 6.99x normalized non-GAAP EPS and imply an 18% free-cash-flow yield, but litigation, leverage, acquisition integration, and modest organic growth constrain the risk profile.