Progress Software Beats on EPS But GAAP Results Lag

Progress Software (Nasdaq: PRGS  ) reported earnings on Sep. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Aug. 31 (Q3), Progress Software missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank significantly and GAAP earnings per share dropped significantly.

Gross margins increased, operating margins grew, net margins dropped.

Revenue details
Progress Software reported revenue of $107.2 million. The seven analysts polled by S&P Capital IQ expected a top line of $112.4 million on the same basis. GAAP reported sales were 16% lower than the prior-year quarter's $128.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.31. The six earnings estimates compiled by S&P Capital IQ predicted $0.23 per share. GAAP EPS of $0.09 for Q3 were 31% lower than the prior-year quarter's $0.13 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 84.5%, 230 basis points better than the prior-year quarter. Operating margin was 15.7%, 410 basis points better than the prior-year quarter. Net margin was 5.4%, 130 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $125.8 million. On the bottom line, the average EPS estimate is $0.35.

Next year's average estimate for revenue is $476.9 million. The average EPS estimate is $1.08.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 45 members out of 54 rating the stock outperform, and nine members rating it underperform. Among 17 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 12 give Progress Software a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Progress Software is outperform, with an average price target of $24.86.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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