Shares of Progress Software (NASDAQ:PRGS) dropped on Friday after the application development platform provider reported its fiscal third-quarter results. While the company beat analyst estimates for both revenue and earnings, the outlook for the fourth quarter fell short of expectations. The stock was down about 9.6% at 1 p.m. EDT.
Progress reported third-quarter revenue of $106.7 million, up 15% year over year. Non-GAAP (adjusted) revenue was up 25% to $115.5 million, beating analyst estimates by about $4.7 million. Revenue from software licenses was up 34% to $30.7 million, while maintenance and services revenue rose 9% to $76.0 million.
Non-GAAP earnings per share came in at $0.75, up from $0.55 in the prior-year period and $0.07 better than analysts were predicting. The company forecasts that nearly all the expected $15 million of cost synergies related to the acquisition of Ipswitch will be achieved by the end of the year.
Progress's outlook for the fourth quarter was a little less rosy. The company expects non-GAAP revenue between $116 and $119 million, up from $111.5 million in the prior-year period and well below the average analyst estimate of $122.1 million. Non-GAAP EPS guidance of $0.73 to $0.75 was in line with expectations.
While the market is reacting poorly to Progress' guidance, CEO Yogesh Gupta remained optimistic: "Our core business continues to perform well, and with our focus on accretive M&A going forward, I'm excited about our opportunity to create long-term value for our shareholders."