The 10-second takeaway
For the quarter ended Nov. 30 (Q4), Progress Software beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped, and earnings per share shrank significantly.
Margins contracted across the board.
Progress Software reported revenue of $136 million. The six analysts polled by S&P Capital IQ foresaw a top line of $134 million. Sales were 6.1% lower than the prior-year quarter's $145 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.34. The five earnings estimates compiled by S&P Capital IQ predicted $0.33 per share on the same basis. GAAP EPS of $0.18 for Q4 were 42% lower than the prior-year quarter's $0.31 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 83.6%, 230 basis points worse than the prior-year quarter. Operating margin was 14.5%, 980 basis points worse than the prior-year quarter. Net margin was 8.6%, 610 basis points worse than the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods.
What does the future hold?
Next quarter's average estimate for revenue is $121 million. On the bottom line, the average EPS estimate is $0.25.
Next year's average estimate for revenue is $519 million. The average EPS estimate is $1.24.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 39 members out of 49 rating the stock outperform, and 10 members rating it underperform. Among 16 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 11 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.
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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. 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.