UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~February~~May 2831, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____.

Commission File Number: 0-19417

PROGRESS SOFTWARE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						04-2746201
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


15 Wayside Road, Suite 400, Burlington, Massachusetts						01803
(Address of principal executive offices)						(Zip code)

Registrant’s telephone number, including area code: (781) 280-4000

Not applicable

(Former name or former address and formal fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRGS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~March~~June 2726, 2025, there were 43,~~025~~108,~~995~~347 shares of the registrant’s common stock, $.01 par value per share, outstanding.

PROGRESS SOFTWARE CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~FEBRUARY~~MAY 2831, 2025

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of February 28, 2025 and November 30, 2024	3
	Condensed Consolidated Balance Sheets as of May 31, 2025 and November 30, 2024	3
	Condensed Consolidated Statements of Operations for the three months ended February 28, 2025 and February 29, 2024	4
	Condensed Consolidated Statements of Operations for the three and six months ended May 31, 2025 and 2024	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended February 28, 2025 and February 29, 2024	5
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended May 31, 2025 and 2024	5
	Condensed Consolidated Statements of Stockholders' Equity for the three months ended February 28, 2025 and February 29, 2024	6
	Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended May 31, 2025 and 2024	6
	Condensed Consolidated Statements of Cash Flows for the three months ended February 28, 2025 and February 29, 2024	7
	Condensed Consolidated Statements of Cash Flows for the six months ended May 31, 2025 and 2024	8
	Notes to Condensed Consolidated Financial Statements	910
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1819
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2731
Item 4.	Controls and Procedures	2731
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2833
Item 1A.	Risk Factors	2833
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2833
Item 5.	Other Information	2934
Item 6.	Exhibits	3035
	Signatures	3136

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share data)	~~February~~May 2831, 2025		November 30, 2024
Assets
Current assets:
Cash and cash equivalents	$	~~124~~102,~~161~~006	$	118,077
Accounts receivable, net	~~126~~140,~~366~~122		163,575
Unbilled receivables	35,454		34,672
Unbilled receivables, current portion	34,136		34,672
Other current assets	5449,~~694~~387		52,489
Total current assets	~~340~~325,~~675~~651		368,813
Long-term unbilled receivables	30,416		28,893
Unbilled receivables, non-current portion	29,890		28,893
Property and equipment, net	1312,~~233~~474		13,746
Intangible assets, net	~~686~~650,~~359~~557		723,571
Goodwill	1,293,~~822~~830		1,292,177
Right-of-use lease assets	2827,~~308~~351		30,894
Deferred tax assets	5762,~~452~~048		56,179
Other assets	1211,~~153~~791		12,693
Total assets	$	2,~~462~~413,~~418~~592	$	2,526,966
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	149,~~770~~043	$	13,910
Short-term deferred revenue, net	328,798		332,142
Deferred revenue, current portion, net	308,360		332,142
Accrued compensation and related payroll taxes	43,154		64,672
Convertible senior notes, current portion, net	358,051		—
Short-term operating lease liabilities	8,975		9,202
Accrued compensation and related payroll taxes	41,727		64,672
Other accrued liabilities	32,844		35,219
Operating lease liabilities, current portion	8,250		9,202
Total current liabilities	428,541		455,145
Other accrued liabilities	24,840		35,219
Long-term deferred revenue, net	71,508		72,270
Total current liabilities	750,271		455,145
Convertible senior notes, net	797,277		796,267
Deferred revenue, non-current portion, net	80,219		72,270
Long-term debt, net	700,000		730,000
Convertible senior notes, non-current portion, net	440,244		796,267
Long-term operating lease liabilities	24,260		26,259
Long-term debt, net	660,000		730,000
Deferred tax liabilities	2,286		2,279
Operating lease liabilities, non-current portion	22,548		26,259
Other noncurrent liabilities	6,699		5,958
Deferred tax liabilities	2,481		2,279
Other non-current liabilities	5,128		5,958
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none	—		—
Common stock, $0.01 par value; authorized, 200,000,000 shares; issued and outstanding, 43,021,707 shares in 2025 and 43,360,695 shares in 2024	430		434
Common stock, $0.01 par value; authorized, 200,000,000 shares; issued and outstanding, 43,100,936 shares in 2025 and 43,360,695 shares in 2024	431		434
Additional paid-in capital	~~353~~362,~~039~~091		354,158
Retained earnings	~~115~~123,~~999~~254		120,405
Accumulated other comprehensive loss	(3733,~~621~~075)		(36,209)
Total stockholders’ equity	~~431~~452,~~847~~701		438,788
Total liabilities and stockholders’ equity	$	2,~~462~~413,~~418~~592	$	2,526,966

See notes to unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Operations

	Three Months Ended				Six Months Ended
(in thousands, except per share data)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
Revenue:
Software licenses	$	5850,~~445~~795	$	6453,~~100~~979	$	109,240	$	118,079
Maintenance, SaaS, and professional services	~~179~~186,~~570~~560		~~120~~121,~~585~~098		366,130		241,683
Total revenue	~~238~~237,~~015~~355		~~184~~175,~~685~~077		475,370		359,762
Costs of revenue:
Cost of software licenses	2,~~925~~987		2,~~731~~497		5,912		5,228
Cost of maintenance, SaaS, and professional services	3233,~~884~~764		22,~~219~~176		66,648		44,395
Amortization of acquired intangibles	10,~~422~~537		7,~~859~~398		20,959		15,257
Total costs of revenue	4647,~~231~~288		32,~~809~~071		93,519		64,880
Gross profit	~~191~~190,~~784~~067		~~151~~143,~~876~~006		381,851		294,882
Operating expenses:
Sales and marketing	5149,~~296~~677		3937,~~111~~889		100,973		77,000
Product development	46,~~375~~570		3435,~~988~~435		92,945		70,423
General and administrative	25,~~623~~637		21,~~344~~983		51,260		43,327
Amortization of acquired intangibles	2526,~~808~~063		1716,~~389~~316		51,871		33,705
Cyber vulnerability response expenses, net	~~737~~730		~~987~~3,036		1,467		4,023
Restructuring expenses	71,~~029~~043		~~2,349~~651		8,072		3,000
Acquisition-related expenses	21,~~490~~731		~~702~~548		4,221		1,250
Total operating expenses	~~159~~151,~~358~~451		~~116~~115,~~870~~858		310,809		232,728
Income from operations	3238,~~426~~616		3527,~~006~~148		71,042		62,154
Other (expense) income:
Interest expense	(18,~~429~~138)		(7,~~344~~007)		(36,567)		(14,351)
Interest income and other, net	~~487~~294		~~624~~928		781		1,552
Foreign currency loss, net	(~~1,182~~908)		(~~679~~941)		(2,090)		(1,620)
Total other expense, net	(1918,~~124~~752)		(7,~~399~~020)		(37,876)		(14,419)
Income before income taxes	1319,~~302~~864		2720,~~607~~128		33,166		47,735
Provision for income taxes	2,~~356~~835		43,~~968~~940		5,191		8,908
Net income	$	1017,~~946~~029	$	2216,~~639~~188	$	27,975	$	38,827
Earnings per share:
Basic	$	0.2540	$	0.5237	$	0.65	$	0.89
Diluted	$	0.2439	$	0.5137	$	0.63	$	0.87
Weighted average shares outstanding:
Basic	43,~~256~~053		43,~~802~~213		43,154		43,508
Diluted	44,~~887~~156		4443,~~826~~964		44,522		44,395
Cash dividends declared per common share	$	—	$	0.175	$	—	$	0.350

See notes to unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Income

	Three Months Ended				Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
Net income	$	1017,~~946~~029	$	2216,~~639~~188	$	27,975	$	38,827
Other comprehensive loss, net of tax:
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(14,~~412)~~546		~~(1,546)~~105		3,134		(1,441)
Unrealized loss on hedging activity, net of tax benefit of $218 for the three months ended February 29, 2024	—		(690)
Unrealized loss on hedging activity, net of tax benefit of $142 and $360 for the three and six months ended May 31, 2024, respectively	—		(445)		—		(1,135)
Total other comprehensive loss, net of tax	(1,412)		(2,236)
Total other comprehensive income (loss), net of tax	4,546		(340)		3,134		(2,576)
Comprehensive income	$	921,~~534~~575	$	2015,~~403~~848	$	31,109	$	36,251

See notes to unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

	Three Months Ended February 28, 2025
	Six Months Ended May 31, 2025
	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Number of Shares	Amount
Balance, December 1, 2024	43,361	$	434	$	354,158	$	120,405	$	(36,209)	$	438,788
Issuance of stock under employee stock purchase plan	57176	—1		27,~~196~~402		—		—		27,~~196~~403
Exercise of stock options	37155	—2		14,~~470~~250		—		—		14,~~470~~252
Vesting of restricted stock units	~~187~~477	25		(25)		—		—		—
Withholding tax payments related to net issuance of RSUs	(81178)	(12)		(410,~~640~~099)		—		—		(410,~~641~~101)
Stock-based compensation	—	—		1431,~~683~~424		—		—		1431,~~683~~424
Treasury stock repurchases and retirements, including excise tax	(~~539~~890)	(59)		(1425,~~826~~039)		(1525,~~352~~126)		—		(3050,~~183~~174)
Net income	—	—		—		1027,~~946~~975		—		1027,~~946~~975
Other comprehensive loss	—	—		—		—		(1,412)		(1,412)
Other comprehensive income	—	—		—		—		3,134		3,134
Balance, February 28, 2025	43,022	$	430	$	353,039	$	115,999	$	(37,621)	$	431,847
Balance, May 31, 2025	43,101	$	431	$	362,091	$	123,254	$	(33,075)	$	452,701

	Three Months Ended February 29, 2024
	Three Months Ended May 31, 2025
	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Number of Shares	Amount
Balance, December 1, 2023	43,796	$	438	$	370,579	$	120,858	$	(32,160)	$	459,715
Balance, March 1, 2025	43,022	$	430	$	353,039	$	115,999	$	(37,621)	$	431,847
Issuance of stock under employee stock purchase plan	66119	1		25,~~530~~206		—		—		25,~~531~~207
Exercise of stock options	80118	12		32,~~249~~780		—		—		32,~~250~~782
Vesting of restricted stock units	~~244~~290	23		(23)		—		—		—
Withholding tax payments related to net issuance of RSUs	(~~103~~97)	(1)		(5,~~889~~459)		—		—		(5,~~890~~460)
Stock-based compensation	—	—		1216,~~464~~741		—		—		1216,~~464~~741
Dividends declared	—	—		—		(8,230)		—		(8,230)
Treasury stock repurchases and retirements, including excise tax	(351)	(4)		(10,213)		(9,774)		—		(19,991)
Treasury stock repurchases and retirements	(394)	(4)		(10,658)		(11,838)		—		(22,500)
Net income	—	—		—		17,029		—		17,029
Net income	—	—		—		22,639		—		22,639
Other comprehensive income	—	—		—		—		4,546		4,546
Other comprehensive loss	—	—		—		—		(2,236)		(2,236)
Balance, May 31, 2025	43,101	$	431	$	362,091	$	123,254	$	(33,075)	$	452,701
Balance, February 29, 2024	43,689	$	437	$	372,273	$	123,429	$	(34,396)	$	461,743

Condensed Consolidated Statements of Cash Flows


	Six Months Ended May 31, 2024
	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Number of Shares	Amount
Balance, December 1, 2023	43,796	$	438	$	370,579	$	120,858	$	(32,160)	$	459,715
Issuance of stock under employee stock purchase plan	182	2		6,918		—		—		6,920
Exercise of stock options	134	1		5,545		—		—		5,546
Vesting of restricted stock units	498	5		(5)		—		—		—
Withholding tax payments related to net issuance of RSUs	(192)	(1)		(10,591)		—		—		(10,592)
Stock-based compensation	—	—		24,453		—		—		24,453
Purchase of capped calls, net of tax	—	—		(32,080)		—		—		(32,080)
Dividends declared	—	—		—		(16,097)		—		(16,097)
Treasury stock repurchases and retirements	(1,355)	(14)		(34,437)		(37,998)		—		(72,449)
Net income	—	—		—		38,827		—		38,827
Other comprehensive loss	—	—		—		—		(2,576)		(2,576)
Balance, May 31, 2024	43,063	$	431	$	330,382	$	105,590	$	(34,736)	$	401,667

	Three Months Ended
	Three Months Ended May 31, 2024
(in thousands)	February 28, 2025		February 29, 2024
	Common Stock				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Cash flows from operating activities:
(in thousands)	Number of Shares		Amount
Net income	$	10,946	$	22,639
Balance, March 1, 2024	43,689		$	437	$	372,273	$	123,429	$	(34,396)	$	461,743
Adjustments to reconcile net income to net cash provided by operating activities:
Issuance of stock under employee stock purchase plan	116		1		4,388		—		—		4,389
Depreciation and amortization of property and equipment	1,619		1,589
Exercise of stock options	54		—		2,296		—		—		2,296
Amortization of acquired intangibles and other	36,581		25,408
Vesting of restricted stock units	254		3		(3)		—		—		—
Amortization of debt discount and issuance costs	1,009		547
Withholding tax payments related to net issuance of RSUs	(89)		—		(4,702)		—		—		(4,702)
Stock-based compensation	~~14,683~~—		~~12,464~~—		11,989		—		—		11,989
Non-cash lease expense	3,443		4,259
Purchase of capped calls, net of tax	—		—		(32,080)		—		—		(32,080)
Deferred income taxes	(1,696)		(3,295)
Dividends declared	—		—		—		(7,867)		—		(7,867)
Credit losses and other sales allowances	1,323		363
Treasury stock repurchases and retirements	(961)		(10)		(23,779)		(26,160)		—		(49,949)
Changes in operating assets and liabilities:
Net income	—		—		—		16,188		—		16,188
Accounts receivable	33,008		30,454
Other comprehensive loss	—		—		—		—		(340)		(340)
Other assets	(2,168)		1,530
Balance, May 31, 2024	43,063		$	431	$	330,382	$	105,590	$	(34,736)	$	401,667
Accounts payable and accrued liabilities	(22,821)		(24,897)
Lease liabilities	(3,080)		(2,949)
Income taxes payable	(260)		(461)
Deferred revenue, net	(3,640)		2,853
Net cash flows from operating activities	68,947		70,504
Net cash flows used in investing activities:
Purchases of property and equipment	(1,290)		(309)
Payments for acquisitions	(1,195)		—
Net cash flows used in investing activities	(2,485)		(309)
Net cash flows used in financing activities:
Proceeds from equity plans	6,238		7,583
Payments for taxes related to net share settlements of equity awards	(4,641)		(5,890)
Repurchases of common stock, including excise tax	(30,108)		(22,500)
Dividend equivalent and dividend payments to stockholders	(359)		(8,171)
Repayment of revolving line of credit	(30,000)		(30,000)
Principal payment on term loan	—		(3,437)
Net cash flows used in financing activities	(58,870)		(62,415)
Effect of exchange rate changes on cash and cash equivalents	(1,508)		(1,516)
Net increase in cash and cash equivalents	6,084		6,264
Cash and cash equivalents, beginning of period	118,077		126,958
Cash and cash equivalents, end of period	$	124,161	$	133,222

Condensed Consolidated Statements of Cash Flows


	Six Months Ended
(in thousands)	May 31, 2025		May 31, 2024
Cash flows from operating activities:
Net income	$	27,975	$	38,827
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	3,217		3,171
Amortization of acquired intangibles and other	73,532		50,367
Amortization of debt discount and issuance costs	2,028		1,535
Stock-based compensation	31,424		24,453
Non-cash lease expense	5,878		6,532
Deferred income taxes	(6,131)		(6,404)
Credit losses and other sales allowances	1,991		387
Changes in operating assets and liabilities:
Accounts receivable	23,635		34,171
Other assets	3,656		10,421

Accounts payable and accrued liabilities	(38,869)		(21,484)
Lease liabilities	(6,988)		(5,734)
Income taxes payable	(1,020)		(389)
Deferred revenue, net	(21,385)		(1,668)
Net cash flows from operating activities	98,943		134,185
Net cash flows used in investing activities:


Purchases of property and equipment	(1,785)		(1,264)
Payments for acquisitions	(1,195)		—
Net cash flows used in investing activities	(2,980)		(1,264)
Net cash flows used in financing activities:
Proceeds from equity plans	12,760		12,896
Payments for taxes related to net share settlements of equity awards	(10,101)		(10,592)
Repurchases of common stock, including excise tax	(50,108)		(72,449)
Proceeds from issuance of senior convertible notes, net of issuance costs of $11,200	—		438,750
Purchase of capped calls	—		(42,210)
Dividend equivalent and dividend payments to stockholders	(654)		(16,122)

Repayment of revolving line of credit	(70,000)		(110,000)
Principal payment on term loan	—		(261,250)
Payment of credit facility debt issuance costs	—		(6,821)
Net cash flows used in financing activities	(118,103)		(67,798)
Effect of exchange rate changes on cash and cash equivalents	6,069		(1,661)
Net (decrease) increase in cash and cash equivalents	(16,071)		63,462
Cash and cash equivalents, beginning of period	118,077		126,958
Cash and cash equivalents, end of period	$	102,006	$	190,420

Condensed Consolidated Statements of Cash Flows, continued

	Three Months Ended
	Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024
Supplemental disclosure:
Cash paid for income taxes, net of refunds of $778 in 2025 and $856 in 2024	$	3,121	$	3,179
Cash paid for income taxes, net of refunds of $1,101 in 2025 and $1,028 in 2024	$	6,740	$	6,346
Cash paid for interest	$	1233,~~121~~387	$	57,~~570~~961
Non-cash investing and financing activities:
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested	$	1030,~~677~~075	$	1328,~~947~~987
Dividends declared and unpaid	$	—	$	8,~~435~~351

See notes to unaudited condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements

Note 1: Basis of Presentation

Company Overview - Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides software products that enable our customers to develop, deploy and manage responsible AI-powered applications and digital experiences.

Many of our products are sold as perpetual licenses, but certain products use term licensing models and our cloud-based offerings are marketed as software-as-a-service ("SaaS") offerings. More than half of our worldwide license revenue is realized through relationships with indirect channel partners, principally independent software vendors ("ISVs"), original equipment manufacturers ("OEMs"), distributors and value-added resellers. ISVs develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. OEMs are companies that embed our products into their own software products or devices. Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution. In October 2024, we acquired ShareFile, a SaaS offering.

We operate in North America, Latin America, Europe, the Middle East and Africa ("EMEA"), and Asia and Australia ("Asia Pacific"), through local subsidiaries as well as independent distributors.

Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024, as filed with the SEC on January 21, 2025 (our "2024 Annual Report").

We made no material changes in the application of our significant accounting policies that were disclosed in our 2024 Annual Report. We have prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in our 2024 Annual Report, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year.

Use of Estimates

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an on-going basis, management evaluates its estimates and records changes in estimates in the period in which they become known. These estimates are based on historical data and experience, as well as various other assumptions that management believes to be reasonable under the circumstances. The most significant estimates relate to revenue recognition, loss contingencies and the MOVEit Vulnerability (as defined herein), and business combinations. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period. The Company is currently evaluating the impact that the adoption of this standard and will include the additional disclosures in the financial statements for the fiscal year ~~ended~~ending November 30, 2025.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to improve the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company beginning with the annual period ending November 30, 2026, allowing for adoption on a prospective basis or

910

a retrospective option. Early adoption is permitted. The adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.

Note 2: Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at ~~February~~May 2831, 2025:

			Fair Value Measurements Using
(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Assets
Money market funds	$	1,~~962~~170	$	1,~~962~~170	$	—	$	—
Liabilities
Foreign exchange derivatives	$	239	$	—	$	239	$	—
Foreign exchange derivatives	$	(1,752)	$	—	$	(1,752)	$	—

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2024:


			Fair Value Measurements Using
(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Assets

Money market funds	$	1,823	$	1,823	$	—	$	—
Liabilities
Foreign exchange derivatives	$	(624)	$	—	$	(624)	$	—

When developing fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted market prices to measure fair value. The valuation technique used to measure fair value for our Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates.

1011

Assets and Liabilities Not Carried at Fair Value

Fair Value of the Convertible Senior Notes

The following table details the fair value and carrying value of our Convertible Senior Notes due 2026 and 2030 (together referred to as "the Notes"):

	February 28, 2025				November 30, 2024
	May 31, 2025				November 30, 2024
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible senior notes due 2026(1)	$	~~357~~358,~~497~~051	$	~~391~~416,~~775~~531	$	356,946	$	449,094
Convertible senior notes due 2030(2)	~~439~~440,~~780~~244		~~485~~511,~~864~~875		439,321		550,827
Total	$	~~797~~798,~~277~~295	$	~~877~~928,~~639~~406	$	796,267	$	999,921

(1) The carrying value of the convertible senior notes due 2026 (the "2026 Notes"), is reflected net of $21.59 million and $3.1 million of unamortized debt issuance costs as of ~~February~~May 2831, 2025 and November 30, 2024, respectively.

(2) The carrying value of the convertible senior notes due 2030 (the "2030 Notes"), is reflected net of $109.28 million and $10.7 million of unamortized debt issuance costs as of ~~February~~May 2831, 2025 and November 30, 2024, respectively.

The fair value of the Notes is based on quoted prices in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.

Fair Value of Other Financial Assets and Liabilities

The carrying amounts of other financial assets and liabilities including cash and cash equivalents, accounts receivable, unbilled accounts receivable, accounts payable, and accrued liabilities approximate their respective fair values due to their immediate or short-term maturities.

Borrowings under our revolving credit facility are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. The Company considers this as a Level 2 input.

Note 3: Intangible Assets and Goodwill

Intangible Assets

Intangible assets are comprised of the following significant classes:

	February 28, 2025						November 30, 2024
	May 31, 2025						November 30, 2024
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Purchased technology	$	399,000	$	(~~220~~231,~~686~~224)	$	~~178~~167,~~314~~776	$	399,000	$	(210,264)	$	188,736
Customer-related	776,608		(~~306~~329,~~138~~348)		~~470~~447,~~470~~260		777,608		(282,384)		495,224
Trademarks and trade names	77,111		(3941,~~536~~590)		3735,~~575~~521		77,111		(37,500)		39,611
Total	$	1,252,719	$	(~~566~~602,~~360~~162)	$	~~686~~650,~~359~~557	$	1,253,719	$	(530,148)	$	723,571

In the three and six months ended ~~February~~May 2831, 2025, amortization expense related to intangible assets was $36.6 million and ~~February~~$72.8 million, respectively. In the three and six months ended May 2931, 2024, amortization expense related to intangible assets was $3623.27 million and $2549.20 million, respectively.

~~Future amortization expense for intangible assets as of February 28, 2025, is as follows:~~12

(in thousands)
Remainder of 2025	$	108,406
2026	135,361
2027	111,026
2028	99,443
2029	99,443
Thereafter	132,680
Total	$	686,359

Future amortization expense for intangible assets as of May 31, 2025, is as follows:


(in thousands)
Remainder of 2025	$	71,805
2026	136,070
2027	111,026
2028	99,443
2029	99,443
Thereafter	132,770
Total	$	650,557

Goodwill

Changes in the carrying amount of goodwill in the ~~three~~six months ended ~~February~~May 2831, 2025 are as follows:

(in thousands)
Balance, December 1, 2024	$	1,292,177
Additions(1)	1,632
Translation adjustments	1321
Balance, February 28, 2025	$	1,293,822
Balance, May 31, 2025	$	1,293,830

(1) The additions to goodwill during fiscal year 2025 represent measurement period adjustments related to the acquisition of ShareFile in October 2024. See Note 4: Business Combinations for additional information.

Note 4: Business Combinations

ShareFile Acquisition

On October 31, 2024, we completed the acquisition of ShareFile from Cloud Software Group, Inc. and its subsidiaries ~~("Cloud")~~ for an aggregate purchase price of $875.0 million in cash, subject to a $25.0 million working capital credit and certain customary adjustments. We funded the acquisition through $730.0 million in borrowings under our existing $900.0 million revolving credit facility and cash on hand. Refer to Note 5: Debt for further information.

The acquisition consideration for ShareFile has been preliminarily allocated to ShareFile’s assets and assumed liabilities based on estimated fair values. The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period, which is up to one year from the acquisition date. During the ~~three~~first ~~months~~quarter ~~ended~~of ~~February~~fiscal ~~28,~~year 2025, the Company identified measurement period adjustments that resulted in increases in goodwill totaling $1.6 million. There were no measurement period adjustments identified in the second quarter of fiscal year 2025.

The preliminary allocation of the purchase price, including the measurement period adjustments, is as follows:


(in thousands)	Initial Purchase Price Allocation		Measurement Period Adjustments		Adjusted Purchase Price Allocation		Life
Net working capital	$	892	$	940	$	1,832
Property, plant and equipment	54		—		54
Purchased technology	119,000		—		119,000		7 years
Trade name	27,000		—		27,000		7 years
Customer relationships	319,000		(1,000)		318,000		7 years
Deferred taxes	23,456		(377)		23,079
Deferred revenue	(96,159)		—		(96,159)
Goodwill	459,459		1,632		461,091
Net assets acquired	$	852,702	$	1,195	$	853,897

The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. The valuation assumptions take into consideration our estimates of customer attrition, technology obsolescence, and revenue growth projections.

We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $461.1 million of goodwill, of which a portion is deductible for tax purposes.

12Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) and certain acquisition restructuring and related charges are not included as a component of consideration transferred but are required to be expensed as incurred. During the three and six months ended May 31, 2025, we incurred approximately $1.4 million and $3.7 million, respectively, of acquisition-related costs, which are included in acquisition-related expenses on our condensed consolidated statement of operations.

~~Acquisition-related~~The ~~transaction~~amount ~~costs~~of ~~(e.g.,~~revenue ~~legal,~~of ~~due~~ShareFile ~~diligence,~~included ~~valuation,~~in ~~and~~our ~~other~~condensed ~~professional~~consolidated ~~fees)~~statement ~~and~~of ~~certain~~operations ~~acquisition~~during ~~restructuring~~the three and ~~related~~six ~~charges~~months ~~are~~ended ~~not~~May 31, ~~included~~2025, aswas a$65.9 million ~~component~~and of$129.6 million, ~~consideration~~respectively. ~~transferred~~We ~~but~~determined ~~are~~that ~~required~~disclosing tothe beamount ~~expensed~~of asShareFile ~~incurred.~~related ~~During~~earnings included in the ~~three~~condensed ~~months~~consolidated ~~ended~~statement ~~February~~of ~~28,~~operations ~~2025~~is impracticable, weas ~~incurred~~certain ~~approximately~~operations ~~$2.3 million~~ of ~~acquisition-related~~ShareFile ~~costs,~~were ~~which~~integrated ~~are~~into ~~included~~the inoperations ~~acquisition-related~~of ~~expenses~~the onCompany ~~our~~from ~~condensed~~the ~~consolidated~~date ~~statement~~ of ~~operations~~acquisition.

~~The~~In ~~amount~~connection ofand ~~revenue~~concurrent ofwith the ShareFile ~~included~~acquisition, inwe ~~our~~entered ~~condensed~~into ~~consolidated~~a ~~statement~~Transition ofServices ~~operations~~Agreement ~~during~~("TSA") ~~the~~with ~~three~~Cloud ~~months~~Software ~~ended February 28~~Group, ~~2025,~~Inc. ~~was~~for ~~$63.6 million.~~a Weperiod ~~determined~~of ~~that~~six ~~disclosing~~months from the ~~amount~~date of ~~ShareFile~~acquisition, ~~related~~with ~~earnings~~the ~~included~~option into extend the ~~condensed~~TSA ~~consolidated~~beyond ~~statement~~this ofperiod ~~operations~~for iscertain ~~impracticable,~~services. asThe ~~certain~~TSA ~~operations~~was terminated during the second quarter of ~~ShareFile~~fiscal ~~were~~year ~~integrated~~2025 ~~into~~and ~~the~~expenses ~~operations~~related ofto the ~~Company~~TSA ~~from~~were not significant during the ~~date~~three ofand ~~acquisition~~six months ended May 31, 2025.

In connection and concurrent with the ShareFile acquisition, we entered into a Transition Services Agreement ("TSA") with Cloud for a period of six months from the date of acquisition, with the option to extend the TSA beyond this period for certain services. Expenses related to the TSA were not significant during the three months ended February 28, 2025 and are not expected to be significant in future periods.

Pro Forma Information

The following pro forma financial information presents the combined results of operations of Progress and ShareFile as if the acquisition had occurred on December 1, 2022, after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the ShareFile acquisition and factually supportable. These pro forma adjustments include: (i) a net increase in amortization expense to record amortization expense relating to the $464.0 million of acquired identifiable intangible assets, (ii) an increase in interest expense to record interest for the periods presented as a result of drawing down our revolving line of credit in connection with the acquisition, (iii) an increase in acquisition-related expenses in connection with the acquisition that were not included in the purchase price, (iv) additional expense related to the TSA entered into between Progress and Cloud Software Group, Inc., and (v) the income tax effect of the adjustments made at the statutory tax rate of the U.S. (approximately 24.0%).

The pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on December 1, 2022.

(in thousands, except per share data)	Pro Forma Three Months Ended May 31, 2024		~~Pro Forma Three Months Ended February 29, 2024~~
Revenue	$	236,565	$	~~244,595~~
Net income	$	7,276	$	~~12,528~~
Net income per basic share	$	0.17	$	~~0.29~~
Net income per diluted share	$	0.17	$	~~0.28~~


(in thousands, except per share data)	Pro Forma Six Months Ended May 31, 2024
Revenue	$	481,160
Net income	$	19,804
Net income per basic share	$	0.46
Net income per diluted share	$	0.45

Note 5: Debt

As of ~~February~~May 2831, 2025 ~~and November 30~~, ~~2024,~~ we had the following debt obligations:

(in thousands)	~~February~~Outstanding ~~28, 2025~~Principal		~~November~~Unamortized ~~30,~~Discount ~~2024~~and Issuance Costs for the Notes		Net Carrying Amount
1.0% convertible senior notes due 2026	$	360,000	$	360,000
Long-term debt:
3.5% convertible senior notes due 2030	~~450,000~~$	450,000	~~450,000~~$	(9,756)	$	440,244
Revolving credit facility	~~700~~660,000		~~730,000~~—		660,000
Total face value of long-term debt	1,510,000		1,540,000
Total long-term debt	1,110,000		(9,756)		1,100,244
Unamortized discount and issuance costs for the Notes	(12,723)		(13,733)
Current portion of long-term debt:
Long-term debt	$	1,497,277	$	1,526,267
1.0% convertible senior notes due 2026	360,000		(1,949)		358,051
Total debt	$	1,470,000	$	(11,705)	$	1,458,295

~~During~~As ~~the~~of ~~three~~November ~~months ended February 28~~30, ~~2025~~2024, we ~~repaid~~had ~~$30.0 million on~~ the ~~revolving~~following ~~credit~~debt ~~facility. The average interest rate of the revolving credit facility during the three months ended February 28, 2025 was 6.60%, and the interest rate as of February 28, 2025 was 6.67%.~~obligations:


(in thousands)	Outstanding Principal		Unamortized Discount and Issuance Costs for the Notes		Net Carrying Amount
Long-term debt:
1.0% convertible senior notes due 2026	$	360,000	$	(3,053)	$	356,947
3.5% convertible senior notes due 2030	450,000		(10,680)		439,320
Revolving credit facility	730,000		—		730,000
Total debt	$	1,540,000	$	(13,733)	$	1,526,267

During the six months ended May 31, 2025, we repaid $70.0 million on the revolving credit facility and reclassified the 1.0% convertible senior notes due April 15, 2026 from long-term debt to current liabilities. The average interest rate of the revolving credit facility during the three and six months ended May 31, 2025 was 6.67% and 6.64%, respectively, and the interest rate as of May 31, 2025 was 6.67%.

Note 6: Common Stock Repurchases

In January 2023, our Board of Directors increased the share repurchase authorization by $150.0 million to an aggregate authorization of $228.0 million. In the three months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, we repurchased and retired 0.54 million shares for $3020.0 million and 1.0 million shares for $49.9 million, respectively. In the six months ended May 31, 2025 and May 31, 2024, we repurchased and retired 0.9 million shares for $50.0 million and 1.4 million shares for $2272.54 million, respectively. As of ~~February~~May 2831, 2025, there was $7757.2 million remaining under the current authorization.

Note 7: Stock-Based Compensation

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant service period. We estimate the fair value of each stock-based award on the measurement date using either the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate, and dividend yield. We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally four or five years for options and three or four years for restricted stock units, and adjust the expense each period for actual forfeitures. We recognize stock-based compensation expense related to performance stock units and our employee stock purchase plan using an accelerated attribution.

In 2025, 2024, and 2023, we granted performance-based restricted stock units that include two performance metrics under our Long-Term Incentive Plan ("LTIP") where the performance measurement period is three years. For the 2025, 2024, and 2023 plans, the vesting terms were based on the following: (i) 75% is based on achievement of a three-year cumulative operating income, and (ii) 25% is based on our level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods. The vesting of LTIP awards is also subject to continued employment of the grantees through the performance period, except in the event of a qualifying termination. In order to estimate the fair value of such awards, we use a Monte Carlo Simulation valuation model for the market condition portion of the award, and used the closing price of our common stock on the date of grant, less the present value of expected dividends when applicable, for the portion related to the performance condition.

The following table provides the classification of stock-based compensation as reflected on our condensed consolidated statements of operations:

	Three Months Ended				Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
Cost of maintenance, SaaS, and professional services	$	1,~~195~~560	$	~~986~~912	$	2,755	$	1,898
Sales and marketing	3,~~032~~663		2,~~312~~458		6,695		4,770
Product development	4,~~410~~984		3,~~665~~391		9,394		7,056
General and administrative	6,~~046~~534		5,~~501~~228		12,580		10,729
Total stock-based compensation	$	1416,~~683~~741	$	1211,~~464~~989	$	31,424	$	24,453

Note 8: Revenue Recognition

Timing of Revenue Recognition

Our revenues are derived from licensing our products and from related services, which consist of maintenance, SaaS, and ~~consulting~~professional ~~and education~~services. Information relating to revenue from external customers by revenue type is as follows:

	Three Months Ended				Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
Performance obligations transferred at a point in time:
Software licenses	$	5850,~~445~~795	$	6453,~~100~~979	$	109,240	$	118,079
Performance obligations transferred over time:
Maintenance	99103,~~535~~491		102,~~025~~503		203,026		204,528
SaaS	6972,~~410~~105		5,~~571~~988		141,515		11,559
Professional services	10,~~625~~964		12,~~989~~607		21,589		25,596
Total revenue	$	~~238~~237,~~015~~355	$	~~184~~175,~~685~~077	$	475,370	$	359,762

Geographic Revenue

In the following table, revenue attributed to North America includes sales to customers in the U.S. and Canada and sales to certain multinational organizations. Revenue from EMEA, Latin America and the Asia Pacific region includes sales to customers in each region plus sales from the U.S. to distributors in these regions. Information relating to revenue from external customers from different geographical areas is as follows:

	Three Months Ended				Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
North America	$	~~154~~147,~~646~~326	$	~~107~~102,~~282~~902	$	301,972	$	210,184
EMEA	6673,~~943~~039		6357,~~087~~538		139,982		120,625
Latin America	54,~~052~~853		4,~~668~~599		9,905		9,267
Asia Pacific	1112,~~374~~137		910,~~648~~038		23,511		19,686
Total revenue	$	~~238~~237,~~015~~355	$	~~184~~175,~~685~~077	$	475,370	$	359,762

~~No single customer, partner, or country outside the U.S. accounted for more than 10% of our total revenue for the three months ended February 28, 2025 or February 29, 2024.~~ 16

No single customer, partner, or country outside the U.S. accounted for more than 10% of our total revenue for the three and six months ended May 31, 2025 or May 31, 2024.

Contract Balances

Unbilled Receivables and Contract Assets

As of ~~February~~May 2831, 2025, billing of our ~~long~~non-~~term~~current unbilled receivables is expected to occur as follows:

(in thousands)
2026	$	2119,~~713~~667
2027	810,~~703~~223
Total	$	3029,~~416~~890

Contract assets arise when revenue is recognized in excess of billings and the right to the amount due from customers is conditioned on something other than the passage of time, such as the completion of a related performance obligation. We did not have any net contract assets as of ~~February~~May 2831, 2025 or November 30, 2024.

Deferred Revenue

Deferred revenue is recorded when revenue is recognized subsequent to customer invoicing. Deferred revenue expected to be recognized as revenue more than one year subsequent to the balance sheet date is included in long-term liabilities on the condensed consolidated balance sheets. Our net deferred revenue balance is primarily made up of deferred maintenance and deferred revenue related to our SaaS offerings.

As of ~~February~~May 2831, 2025, the changes in net deferred revenue were as follows:

(in thousands)
Balance, December 1, 2024	$	404,412
Billings and other	~~233~~459,~~909~~537
Revenue recognized that was deferred in prior periods	(~~147~~252,~~219~~819)
Revenue recognized from current period arrangements	(90222,~~796~~551)
Balance, February 28, 2025	$	400,306
Balance, May 31, 2025	$	388,579

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of ~~February~~May 2831, 2025, transaction price allocated to remaining performance obligations was $~~478~~497.35 million. We expect to recognize approximately 7876% of the revenue within the next year and the remainder thereafter.

Deferred Contract Costs

Certain of our sales incentive programs meet the requirements to be capitalized. Depending upon the sales incentive program and the related revenue arrangement, such capitalized costs are amortized over the longer of (i) the product life, which is generally three to five years; or (ii) the term of the related revenue contract. We determined that a three to five year product life represents the period of benefit that we receive from these incremental costs based on both qualitative and quantitative factors, which include customer contracts, industry norms, and product upgrades. Total deferred contract costs were $5.95 million and $6.7 million as of ~~February~~May 2831, 2025 and November 30, 2024, respectively, and are included in other current assets and other assets on our condensed consolidated balance sheets. Amortization of deferred contract costs is included in sales and marketing expense on our condensed consolidated statement of operations and was minimal in all periods presented.

Note 9: Restructuring

The following table provides a summary of activity for our restructuring actions:

(in thousands)	Excess Facilities and Other Costs		Employee Severance and Related Benefits		Total
Balance, December 1, 2024	$	4,339	$	5,695	$	10,034
Costs incurred	1,~~624~~752		56,~~405~~320		78,~~029~~072
Cash disbursements	(~~908~~2,694)		(410,~~646~~427)		(513,~~554~~121)
Translation and other adjustments	—		~~(4)~~24		~~(4)~~24
Balance, February 28, 2025	$	5,055	$	6,450	$	11,505
Balance, May 31, 2025	$	3,397	$	1,612	$	5,009

Costs incurred during the three and six months ended ~~February~~May 2831, 2025 are primarily related to our restructuring action that commenced in fiscal year 2024, asarising ~~well~~from asthe ~~facility~~integration ~~closures~~of inthe ~~connection~~ShareFile ~~with~~business. ~~previous~~Cash disbursements for expenses incurred to date under this restructuring ~~actions~~are inexpected to be made through the fourth quarter of fiscal ~~years~~year ~~2023~~2025. ~~and~~The ~~2020~~restructuring reserve is included in other accrued liabilities on the condensed consolidated balance sheets as of May 31, 2025. We do not expect to incur additional material expenses asin ~~part~~connection ofwith ~~these~~this ~~actions~~restructuring.

Note 10: Earnings Per Share

We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding plus the effect of outstanding dilutive stock options, restricted stock units, and deferred stock units, using the treasury stock method and the effect of our convertible debt using the if-converted method. The following table sets forth the calculation of basic and diluted earnings per share on an interim basis:

	Three Months Ended				Six Months Ended
(in thousands, except per share data)	~~February~~May 2831, 2025		~~February~~May 2931, 2024		May 31, 2025		May 31, 2024
Net income	$	1017,~~946~~029	$	2216,~~639~~188	$	27,975	$	38,827
Weighted average shares outstanding	43,~~256~~053		43,~~802~~213		43,154		43,508
Effect of dilution from common stock equivalents	1,~~163~~043		~~1,024~~751		1,104		887
Effect of dilution from if-converted convertible notes	~~468~~60		—		264		—
Diluted weighted average shares outstanding	44,~~887~~156		4443,~~826~~964		44,522		44,395
Earnings per share:
Basic	$	0.2540	$	0.5237	$	0.65	$	0.89
Diluted	$	0.2439	$	0.5137	$	0.63	$	0.87

We excluded stock awards representing approximately ~~397~~776,000 and ~~714~~586,000 shares of common stock, respectively, from the calculation of diluted earnings per share in the three and six months ended ~~February~~May 2831, 2025 as these awards were anti-dilutive. We excluded stock awards representing approximately 1,273,000 and ~~February 29~~993,000 ~~2024~~shares of common stock, respectively, from the calculation of diluted earnings per share in the three and six months ended May 31, 2024, as these awards were anti-dilutive.

The dilutive impact of the Notes on our calculation of diluted earnings per share is measured using the if-converted method. However, because the principal amount of the Notes will be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any. During the three and six months ended ~~February~~May 2831, 2025, we included the 2026 Notes in our diluted earnings per share calculation and we excluded the 2030 Notes in our diluted earnings per share calculation because the conversion feature in the 2030 Notes was out of the money. During the three and six months ended ~~February~~May 2931, 2024, we did not include the ~~2026~~ Notes in our diluted earnings per share calculation because the conversion feature in the Notes was out of the money.

Note 11: Segment Information

Operating segments are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. Our CODM is our Chief Executive Officer.

We operate as one operating segment: software products for the development, deployment, and management of responsible, AI-powered applications and digital experiences. Our CODM evaluates financial information on a consolidated basis.

Note 12: Cyber Related Matters

MOVEit Vulnerability

As previously disclosed, on the evening of May 28, 2023, we learned that our MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer) products were attacked by a threat actor who compromised and exfiltrated personal data from various customer-controlled MOVEit Transfer environments (the "MOVEit Vulnerability"). As a result of the MOVEit Vulnerability, we are party to certain class action lawsuits filed by individuals who claim to have been impacted by the exfiltration of data from the environments of our MOVEit Transfer customers, which have been centralized in multi-district litigation in the District of Massachusetts (the "MDL"). The MDL remains in a relatively early litigation stage in which motions to dismiss have been filed but not yet ruled upon. In the event dismissals are not granted, the MDL is not expected to conclude within this fiscal year. We have also been cooperating with inquires and investigations from various governmental authorities, none of which have, as of this filing, resulted in any prosecution or enforcement actions.

Expenses Incurred and Future Costs

~~For~~During the three and six months ended ~~February~~May 2831, 2025 ~~and February 29~~, ~~2024,~~ we incurred net costs of approximately $0.7 million and $1.05 million, respectively, related to the MOVEit Vulnerability. The costs recognized are net of insurance recoveries of $0.76 million and $01.83 million for the three and six months ended ~~February~~May 2831, 2025, respectively. During the three and ~~February~~six months ended May 2931, 2024, we incurred net costs of $3.0 million and $4.0 million, respectively, related to the MOVEit Vulnerability. The costs recognized are net of insurance recoveries of $1.9 million for the three and six months ended May 31, 2024. The timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses.

We expect to continue to incur investigation, legal and professional services expenses associated with the MOVEit Vulnerability in future periods. We will recognize these expenses as services are received, net of insurance recoveries. While a loss from these matters is reasonably possible, we cannot reasonably estimate a range of possible losses at this time, particularly while the foregoing matters remain ongoing. Furthermore, with respect to the MDL, the proceedings remain in the early stages, alleged damages have not been specified, there is uncertainty as to the likelihood of a class or classes being certified or the ultimate size of any class if certified, and there are significant factual and legal issues to be resolved. Also, each of the governmental inquiries and investigations mentioned above could result in adverse judgements, settlements, fines, penalties, or other resolutions, the amount, scope and timing of which could be material, but of which we are currently unable to reasonably estimate. Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of ~~February~~May 2831, 2025.

Insurance Coverage

During the period when the MOVEit Vulnerability occurred, we maintained $15.0 million of cybersecurity insurance coverage, which is expected to reduce our exposure to expenses and liabilities arising from these events. As of ~~February~~May 2831, 2025, we have recorded approximately $67.51 million of insurance recoveries related to the MOVEit Vulnerability, providing us with approximately $65.04 million of remaining cybersecurity insurance coverage under the applicable policy. We will pursue recoveries to the maximum extent available under our insurance policies.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain information that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended; Section 21E of the Securities Exchange Act of 1934, as amended; and the Private Securities Litigation Reform Act of 1995. Whenever we use words such as "believe," "may," "could," "would," "might," "should," "expect," "intend," "plan," "estimate," "target," "anticipate" and negatives and derivatives of these or similar expressions, or when we make statements concerning future financial results, product offerings or other events that have not yet occurred, we are making forward-looking statements. Actual future results may differ materially from those contained in or implied by our forward-looking statements due to various factors which are more fully described in Part I, Item 1A. Risk Factors in our 2024 Annual Report as well as any risk factors described in Part II, Item 1A of this Quarterly Report on Form 10-Q. Although we have sought to identify the most significant risks to our business, we cannot predict whether, or to what

extent, any of such risks may be realized. We also cannot assure you that we have identified all possible issues that we might face. We undertake no obligation to update any forward-looking statements that we make. 19

Factors in our 2024 Annual Report as well as any risk factors described in Part II, Item 1A of this Quarterly Report on Form 10-Q. Although we have sought to identify the most significant risks to our business, we cannot predict whether, or to what extent, any of such risks may be realized. We also cannot assure you that we have identified all possible issues that we might face. We undertake no obligation to update any forward-looking statements that we make.

Overview

Progress provides software products that enable our customers to develop, deploy and manage responsible AI-powered applications and digital experiences.

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. We make estimates and assumptions in the preparation of our consolidated financial statements that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates. The most significant estimates relate to revenue recognition, loss contingencies and the MOVEit Vulnerability, and business combinations. For further information regarding the application of these and other accounting policies, see Note 1: Basis of Presentation to our Consolidated Financial Statements in Item 8 of our 2024 Annual Report. There have been no significant changes to our critical accounting policies and estimates since our 2024 Annual Report.

Use of Constant Currency

Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, if the local currencies of our foreign subsidiaries strengthen, our consolidated results stated in U.S. dollars are positively impacted.

As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue growth rates on a constant currency basis enhances the understanding of our revenue results and evaluation of our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.

Results of Operations

Business Development

On October 31, 2024, we acquired ShareFile from Cloud Software Group, Inc. As a result of this acquisition, we recorded $96.2 million of deferred revenue and $464.0 million of intangible assets, as further described in Note 4: Business Combinations. We expect to recognize additional SaaS revenue, as well as increased amortization expense and interest expense, in future periods as a result of this acquisition.

Revenue

Three Months Ended

% Change

(in thousands)

~~February~~May 2831, 2025

~~February~~May 2931, 2024

As Reported

Constant Currency

Revenue

~~238~~237,~~015~~355

~~184~~175,~~685~~077

2936

3035

Total revenue increased as compared to the same period last year primarily due to our acquisition of ShareFile in the fourth quarter of fiscal year 2024. ShareFile revenue in the first quarter of fiscal year 2025 was $63.6 million. These increases were partially offset by a decrease in our DataDirect product offering as a result of the timing of renewals on multiyear subscription contracts.


	Six Months Ended				% Change
(in thousands)	May 31, 2025		May 31, 2024		As Reported		Constant Currency
Revenue	$	475,370	$	359,762	32	%	32	%

Total revenue increased as compared to the same period last year primarily due to our acquisition of ShareFile in the fourth quarter of fiscal year 2024. ShareFile revenue in the second quarter and first six months of fiscal year 2025 was $65.9 million and $129.6 million, respectively. These increases were partially offset by a decrease in our DataDirect product offering in all periods presented as a result of the timing of renewals on multiyear subscription contracts.

Software License Revenue

	Three Months Ended						% Change
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			As Reported		Constant Currency
Software licenses	$	5850,~~445~~795		$	6453,~~100~~979		(96)	%	(87)	%
As a percentage of total revenue	2521		%	3531		%


	Six Months Ended						% Change
(in thousands)	May 31, 2025			May 31, 2024			As Reported		Constant Currency
Software licenses	$	109,240		$	118,079		(7)	%	(7)	%
As a percentage of total revenue	23		%	33		%

Software license revenue decreased compared to the same period last year primarily due to the decrease in our DataDirect product offering, as described above.

1921

Maintenance, SaaS, and Professional Services Revenue

	Three Months Ended						% Change
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			As Reported		Constant Currency
Maintenance	$	99103,~~535~~491		$	102,~~025~~503		~~(2)~~1	%	~~(1)~~—	%
As a percentage of total revenue	4244		%	5559		%
SaaS	6972,~~410~~105			5,~~571~~988			1,~~146~~104	%	1,~~146~~104	%
As a percentage of total revenue	2930		%	3		%
Professional services	10,~~625~~964			12,~~989~~607			(1813)	%	(1814)	%
As a percentage of total revenue	45		%	7		%
Total maintenance, SaaS, and professional services revenue	$	~~179~~186,~~570~~560		$	~~120~~121,~~585~~098		4954	%	5054	%
As a percentage of total revenue	7579		%	6569		%

Maintenance revenue slightly decreased as compared to the same period last year primarily due to the negative impact of foreign exchange. SaaS revenue increased as compared to the same period last year due to our acquisition of ShareFile. Professional services revenue decreased as compared to the same period last year primarily due to a decrease in MarkLogic professional services revenue.


	Six Months Ended						% Change
(in thousands)	May 31, 2025			May 31, 2024			As Reported		Constant Currency
Maintenance	$	203,026		$	204,528		(1)	%	—	%
As a percentage of total revenue	43		%	57		%
SaaS	141,515			11,559			1,124	%	1,124	%
As a percentage of total revenue	30		%	3		%
Professional services	21,589			25,596			(16)	%	(16)	%
As a percentage of total revenue	5		%	7		%
Total maintenance, SaaS, and professional services revenue	$	366,130		$	241,683		51	%	52	%
As a percentage of total revenue	77		%	67		%

Maintenance revenue remained relatively flat as compared to the same period last year. SaaS revenue increased as compared to the same periods last year due to our acquisition of ShareFile. Professional services revenue decreased as compared to the same periods last year primarily due to a decrease in MarkLogic professional services revenue.

Revenue by Region

	Three Months Ended						% Change
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			As Reported		Constant Currency
North America	$	~~154~~147,~~646~~326		$	~~107~~102,~~282~~902		4443	%	4443	%
As a percentage of total revenue	6562		%	5859		%
Europe, the Middle East and Africa ("EMEA")	$	66,943		$	63,087		6	%	8	%
EMEA	$	73,039		$	57,538		27	%	24	%
As a percentage of total revenue	2831		%	3433		%
Latin America	$	54,~~052~~853		$	4,~~668~~599		86	%	2013	%
As a percentage of total revenue	2		%	3		%
Asia Pacific	$	1112,~~374~~137		$	910,~~648~~038		1821	%	2021	%
As a percentage of total revenue	5		%	5		%

Total revenue generated in North America increased $47.4 million, and total revenue generated outside North America increased $6.0 million, as compared to the same period last year. The increases in each region were primarily due to the acquisition of ShareFile.


	Six Months Ended						% Change
(in thousands)	May 31, 2025			May 31, 2024			As Reported		Constant Currency
North America	$	301,972		$	210,184		44	%	44	%
As a percentage of total revenue	64		%	58		%
EMEA	$	139,982		$	120,625		16	%	16	%
As a percentage of total revenue	29		%	34		%
Latin America	$	9,905		$	9,267		7	%	17	%
As a percentage of total revenue	2		%	3		%
Asia Pacific	$	23,511		$	19,686		19	%	21	%
As a percentage of total revenue	5		%	5		%

Total revenue generated in ~~markets outside~~ North America ~~represented~~increased ~~35%~~$44.4 million and ~~42%~~$91.8 ofmillion ~~total revenue~~ in the second quarter and first ~~three~~six months of fiscal year 2025, respectively. Total revenue generated outside North America increased $17.9 million and ~~fiscal~~$23.8 ~~year~~million ~~2024,~~over ~~respectively~~the same periods. The increases in each region were primarily due to the acquisition of ShareFile.

Total revenue generated in markets outside North America represented 38% and 41% of total revenue in the second quarter of fiscal year 2025 and fiscal year 2024, respectively. In the first six months of fiscal year 2025 and fiscal year 2024 total revenue generated in markets outside North America represented 36% and 42%, respectively.

Cost of Software Licenses

	Three Months Ended										Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			Change				May 31, 2025			May 31, 2024			Change
Cost of software licenses	$	2,~~925~~987		$	2,~~731~~497		$	~~194~~490	720	%	$	5,912		$	5,228		$	684	13	%
As a percentage of software license revenue	56		%	45		%					5		%	4		%

Cost of software licenses consists primarily of royalties, electronic software distribution, duplication, and packaging. Cost of software licenses as a percentage of software license revenue varies from period to period depending upon the relative product mix. The increase in the second quarter of fiscal year 2025 compared to the same period last year was related to increased royalty costs, credit card fees, and hardware sales. The increase in the first six months of fiscal year 2025 as compared to the same period last year was primarily due to increased hardware sales.

2023

Cost of Maintenance, SaaS, and Professional Services

	Three Months Ended										Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			Change				May 31, 2025			May 31, 2024			Change
Cost of maintenance, SaaS, and professional services	$	3233,~~884~~764		$	22,~~219~~176		$	1011,~~665~~588	4852	%	$	66,648		$	44,395		$	22,253	50	%
As a percentage of maintenance, SaaS, and professional services revenue	18		%	18		%					18		%	18		%
Components of cost of maintenance, SaaS, and professional services:
Personnel related costs	$	2021,~~770~~283		$	1716,~~045~~770		$	34,~~725~~513	2227	%	$	42,053		$	33,814		$	8,239	24	%
Hosting and other	89,~~910~~047			1,~~766~~904			7,~~144~~143		~~405~~375	%	17,957			3,670			14,287		389	%
Contractors and outside services	3,~~204~~434			3,~~408~~502			(~~204~~68)		(62)	%	6,638			6,911			(273)		(4)	%
Total cost of maintenance, SaaS, and professional services	$	3233,~~884~~764		$	22,~~219~~176		$	1011,~~665~~588	4852	%	$	66,648		$	44,395		$	22,253	50	%

Cost of maintenance, SaaS, and professional services consists primarily of hosting costs, and personnel related costs attributable to customer support, cloud operations, consulting, and education. The increase year-over-year in all periods presented was primarily due to increased hosting and headcount related costs resulting from our acquisition of ShareFile.

Amortization of Acquired Intangibles

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Amortization of intangibles	$	10,422		$	7,859		33	%
Amortization of acquired intangibles	$	10,537		$	7,398		42	%	$	20,959		$	15,257		37	%
As a percentage of total revenue	4		%	4		%			4		%	4		%

Amortization of acquired intangibles included in costs of revenue primarily represents the amortization of the value assigned to technology-related intangible assets obtained in business combinations. The year-over-year increase in all periods presented is due to the acquisition of ShareFile.

Gross Profit

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Gross profit	$	~~191~~190,~~784~~067		$	~~151~~143,~~876~~006		2633	%	$	381,851		$	294,882		29	%
As a percentage of total revenue	8180		%	82		%			80		%	82		%

Our gross profit increased in all periods presented primarily due to the increase in revenue, partially offset by the increases in costs of maintenance, SaaS, and professional services, and amortization of acquired intangibles.

Sales and Marketing

	Three Months Ended										Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			Change				May 31, 2025			May 31, 2024			Change
Sales and marketing	$	5149,~~296~~677		$	3937,~~111~~889		$	1211,~~185~~788	31	%	$	100,973		$	77,000		$	23,973	31	%
As a percentage of total revenue	2221		%	2122		%					21		%	21		%
Components of sales and marketing:
Personnel related costs	$	4341,~~818~~486		$	33,~~093~~241		$	108,~~725~~245	3225	%	$	85,305		$	66,334		$	18,971	29	%
Marketing programs and other	6,~~462~~553			53,~~425~~811			12,~~037~~742		1972	%	13,014			9,236			3,778		41	%
Contractors and outside services	1,~~016~~638			~~593~~837			~~423~~801		7196	%	2,654			1,430			1,224		86	%
Total sales and marketing	$	5149,~~296~~677		$	3937,~~111~~889		$	1211,~~185~~788	31	%	$	100,973		$	77,000		$	23,973	31	%

Sales and marketing expenses in all periods presented increased primarily due to increased personnel related costs, increased marketing and sales events costs, and increased contractors and outside services costs, each associated with our acquisition of ShareFile.

Product Development

	Three Months Ended										Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			Change				May 31, 2025			May 31, 2024			Change
Product development costs	$	46,~~375~~570		$	3435,~~988~~435		$	11,~~387~~135	3331	%	$	92,945		$	70,423		$	22,522	32	%
As a percentage of total revenue	1920		%	1920		%					20		%	20		%
Components of product development costs:
Personnel related costs	$	44,~~537~~392		$	3334,~~596~~151		$	10,~~941~~241	3330	%	$	88,929		$	67,747		$	21,182	31	%
Contractors and outside services	1,~~511~~791			1,~~082~~161			~~429~~630		4054	%	3,302			2,243			1,059		47	%
Other product development costs	~~327~~387			~~310~~123			17264		5215	%	714			433			281		65	%
Total product development costs	$	46,~~375~~570		$	3435,~~988~~435		$	11,~~387~~135	3331	%	$	92,945		$	70,423		$	22,522	32	%

Product development expenses in all periods presented increased primarily due to increased personnel related costs, as well as increased contractors and outside services costs, each associated with our acquisition of ShareFile.

General and Administrative

	Three Months Ended										Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			Change				May 31, 2025			May 31, 2024			Change
General and administrative	$	25,~~623~~637		$	21,~~344~~983		$	43,~~279~~654	2017	%	$	51,260		$	43,327		$	7,933	18	%
As a percentage of total revenue	11		%	1213		%					11		%	12		%
Components of general and administrative:
Personnel related costs	$	1820,~~840~~541		$	17,963		$	~~877~~2,578	514	%	$	39,380		$	35,926		$	3,454	10	%
Contractors and outside services	43,~~064~~619			2,~~575~~602			1,~~489~~017		5839	%	7,683			5,177			2,506		48	%
Other general and administrative costs	21,~~719~~477			~~806~~1,418			~~1,913~~59		~~237~~4	%	4,197			2,224			1,973		89	%
Total cost of general and administrative	$	25,~~623~~637		$	21,~~344~~983		$	43,~~279~~654	2017	%	$	51,260		$	43,327		$	7,933	18	%

General and administrative expenses include the costs of our finance, human resources, legal, information systems and administrative departments. The increases in all periods presented in personnel related costs, contractors and outside services, and other general and administrative costs were primarily related to our acquisition of ShareFile.

Amortization of Acquired Intangibles

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Amortization of intangibles	$	25,808		$	17,389		48	%
Amortization of acquired intangibles	$	26,063		$	16,316		60	%	$	51,871		$	33,705		54	%
As a percentage of total revenue	11		%	9		%			11		%	9		%

Amortization of acquired intangibles included in operating expenses primarily represents the amortization of value assigned to intangible assets obtained in business combinations other than assets identified as purchased technology. Amortization of acquired intangibles increased in all periods presented due to the addition of ShareFile intangible assets, as discussed above.

Cyber Vulnerability Response Expenses, Net

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Cyber vulnerability response expenses, net	$	~~737~~730		$	~~987~~3,036		(2576)	%	$	1,467		$	4,023		(64)	%
As a percentage of total revenue	—		%	12		%			—		%	1		%

As previously disclosed, following the discovery of the MOVEit Vulnerability that was disclosed on June 5, 2023, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of this matter. Cyber vulnerability response costs relate to the engagement of external cybersecurity experts and other incident response professionals and are net of received and expected insurance recoveries. Please refer to Note 12: Cyber Related Matters for additional details and updates regarding the MOVEit Vulnerability.

2226

incident response professionals and are net of received and expected insurance recoveries. Please refer to Note 12: Cyber Related Matters for additional details and updates regarding the MOVEit Vulnerability.

Restructuring Expenses

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Restructuring expenses	$	71,~~029~~043		$	~~2,349~~651		~~199~~60	%	$	8,072		$	3,000		169	%
As a percentage of total revenue	3—		%	1—		%			2		%	1		%

Restructuring expenses recorded in the ~~first~~second quarter and first six months of fiscal year 2025 primarily relate to headcount reductions and a facility closure in connection with the restructuring action related to the ShareFile acquisition in November 2024. See Note 9: Restructuring for additional details, including types of expenses incurred and the timing of future expenses and cash payments.

Acquisition-Related Expenses

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Acquisition-related expenses	$	21,~~490~~731		$	~~702~~548		~~255~~216	%	$	4,221		$	1,250		238	%
As a percentage of total revenue	1		%	—		%			1		%	—		%

Acquisition-related costs are expensed as incurred and include those costs incurred as a result of a business combination. These costs consist of professional service fees, including third-party legal and valuation-related fees. Acquisition-related expenses in the ~~first~~second quarter and first six months of fiscal year 2025 were primarily related to our acquisition of ShareFile. Acquisition-related expenses in the same periods of fiscal year 2024 were primarily related to our pursuit of other acquisition opportunities.

Income from Operations

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Income from operations	$	3238,~~426~~616		$	3527,~~006~~148		~~(7)~~42	%	$	71,042		$	62,154		14	%
As a percentage of total revenue	1416		%	1916		%			15		%	17		%

Income from operations ~~decreased~~increased year-over-year due to an increase in revenue, offset by increases in costs of revenue and operating expenses, ~~offset by an increase in revenue,~~ as shown above.

Other (Expense) Income

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Interest expense	$	(18,~~429~~138)		$	(7,~~344~~007)		~~151~~159	%	$	(36,567)		$	(14,351)		155	%
Interest income and other, net	~~487~~294			~~624~~928			(2268)	%	781			1,552			(50)	%
Foreign currency loss, net	(~~1,182~~908)			(~~679~~941)			74(4)	%	(2,090)			(1,620)			29	%
Total other expense, net	$	(1918,~~124~~752)		$	(7,~~399~~020)		~~158~~167	%	$	(37,876)		$	(14,419)		163	%
As a percentage of total revenue	(8)		%	(4)		%			(8)		%	(4)		%

Total other expense, net, increased in the ~~first~~second quarter and first six months of fiscal year 2025 as compared to the same ~~period~~periods last year primarily due to an increase in interest expense resulting from costs associated with drawing on our revolving line of credit to acquire ShareFile. Refer to Note 5: Debt, for further discussion. Foreign currency loss increased year-over-year due to rate volatility and timing of intercompany and hedge settlement activities.

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Provision for Income Taxes

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Provision for income taxes	$	2,~~356~~835		$	43,~~968~~940		(5328)	%	$	5,191		$	8,908		(42)	%
As a percentage of income before income taxes	1814		%	1820		%			16		%	19		%

Our effective ~~income~~ tax rate was 1814% and 20% in the ~~first~~second fiscal quarter of ~~both~~ 2025 and 2024~~. In the first fiscal quarter of 2024~~, ~~there~~respectively. ~~were~~The ~~discrete~~primary ~~tax~~reason ~~benefits~~for ~~related~~the todecrease ~~stock-based~~in ~~compensation and~~ the ~~statute~~effective ofrate ~~limitations~~was ~~expiring~~due onto ~~uncertain tax positions~~$1.1 ~~While~~million ~~there~~of ~~were no significant~~ discrete tax benefits in the ~~first~~second fiscal quarter of 2025, ~~the~~compared ~~overall~~to ~~effective~~$0.2 ~~tax~~million ~~rate~~of isdiscrete ~~lower~~tax ~~due~~benefits toin the ~~geographical~~second ~~mix~~fiscal quarter of ~~profit~~2024.

Net Income

	Three Months Ended								Six Months Ended
(in thousands)	~~February~~May 2831, 2025			~~February~~May 2931, 2024			% Change		May 31, 2025			May 31, 2024			% Change
Net income	$	1017,~~946~~029		$	2216,~~639~~188		~~(52)~~5	%	$	27,975		$	38,827		(28)	%
As a percentage of total revenue	57		%	129		%			6		%	11		%

Select Performance Metrics:

We evaluate our financial performance using a number of financial and operating metrics. These metrics are periodically reviewed and revised to reflect changes in our business.

Annualized Recurring Revenue ("ARR")

We disclose ARR as a performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources currently represents the substantial majority of our revenues and is expected to continue in the future. We define ARR as the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time. ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations in revenue due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. We use ARR to understand customer trends and the overall health of our business, helping us to formulate strategic business decisions.

We calculate the annualized value of annual and multi-year contracts, and contracts with terms less than one year, by dividing the total contract value of each contract by the number of months in the term and then multiplying by 12. Annualizing contracts with terms less than one-year results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period. We generally do not sell non-SaaS-based contracts with a term of less than one year unless a customer is purchasing additional licenses under an existing annual or multi-year contract. The expectation is that at the time of renewal, such contracts with a term less than one year will renew with the same term as the existing contracts being renewed, such that both contracts are co-termed. Historically, such contracts with a term of less than one year renew at rates equal to or better than annual or multi-year contracts.

For SaaS-based contracts, there is a meaningful percentage of monthly auto-renewing contracts for which annualizing the contracts results in amounts being included in our ARR that are in excess of the total contract value for those contracts at the end of the reporting period.

Revenue from term-based license and on-premises subscription arrangements include a portion of the arrangement consideration that is allocated to the software license that is recognized up-front at the point in time control is transferred under ASC 606 revenue recognition principles. ARR for these arrangements is calculated as described above. The expectation is that the total contract value, inclusive of revenue recognized as software license, will be renewed at the end of the contract term.

The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented.

ARR is not defined in GAAP and is not derived from a GAAP measure. Rather, ARR generally aligns to billings (as opposed to GAAP revenue which aligns to the transfer of control of each performance obligation). ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those

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items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

Our ARR was $~~836~~838 million and $~~566~~573 million as of ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, respectively, which is an increase of 4846% year-over-year. The growth in ARR was primarily driven by the acquisition of ShareFile.

Net Retention Rate

We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period end ("Current Period ARR"). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP and is not derived from a GAAP measure.

Our net retention rates have generally ranged between 100% and 102% for all periods presented. We believe net retention rates can be a helpful indicator of the durability of top line performance.

Liquidity and Capital Resources

Cash and Cash Equivalents

(in thousands)			~~February~~May 2831, 2025						November 30, 2024
Cash and cash equivalents			$	~~124~~102,~~161~~006					$	118,077

The ~~increase~~decrease in cash and cash equivalents of $616.1 million from the end of fiscal year 2024 was due to cash ~~inflows~~outflows ~~from operations~~ of $6870.70 million, ~~and~~to ~~$1.6~~pay ~~million~~down inthe ~~cash~~revolving ~~received~~line ~~from~~of ~~the~~credit, ~~issuance~~repurchases of common stock. ~~The~~of ~~cash~~$50.1 ~~inflows~~million, ~~described~~purchases ~~above~~of ~~were~~property ~~offset~~and byequipment ~~cash~~of ~~outflows~~$1.8 ofmillion, a $301.02 million topayment ~~pay~~related ~~down~~to the ~~revolving~~acquisition ~~line~~ of ~~credit~~ShareFile, ~~repurchases~~and of$0.7 ~~common~~million ~~stock~~in ofdividend ~~$30~~equivalent payments to stockholders.1 ~~million,~~The ~~the~~cash ~~effect~~outflows ofdescribed ~~exchange~~above ~~rates~~were onoffset by cash inflows from operations of $198.59 million, ~~purchases~~the effect of ~~property~~exchange ~~and~~rates ~~equipment~~on cash of $16.31 million, and a $1.2.7 million ~~payment~~in ~~related~~cash toreceived from the ~~acquisition~~issuance of ~~ShareFile~~common stock. Except as described below, there are no limitations on our ability to access our cash and cash equivalents.

As of ~~February~~May 2831, 2025, $6362.39 million of our cash and cash equivalents was held by our foreign subsidiaries. As a result of the debt obligations arising from the ShareFile acquisition, in the fourth quarter of fiscal 2024 we determined that a substantial portion of unremitted foreign earnings are no longer indefinitely reinvested. As a result of this, we plan to utilize worldwide cash based on the needs of the parent entity. These amounts will be repatriated as needed. Deferred taxes are recorded for earnings of our foreign operations that we determine are not indefinitely reinvested.

	Three Months Ended
	Six Months Ended
(in thousands)	~~February~~May 2831, 2025		~~February~~May 2931, 2024
Net cash flows from operating activities	$	6898,~~947~~943	$	70134,~~504~~185
Net cash flows used in investing activities	$	(2,~~485~~980)	$	(~~309~~1,264)
Net cash flows used in financing activities	$	(58118,~~870~~103)	$	(6267,~~415~~798)

Cash Flows From Operating Activities

The decrease in cash generated from operations in the first ~~quarter~~six months of fiscal year 2025 as compared to the same period last year was primarily due to increased ~~costs of maintenance, SaaS, and professional services, and operating expenses, as well as increased~~ interest expense resulting from the draw down on our revolving line of credit in the fourth quarter of fiscal year 2024. ~~This was offset by higher billings and collections.~~

Our gross accounts receivable as of ~~February~~May 2831, 2025, decreased by $3621.0 million from the end of fiscal year 2024. Our days sales outstanding (DSO) in accounts receivable ~~decreased~~increased to 4853 days in the ~~first~~second quarter of fiscal year 2025 from 5041 days in the ~~first~~second fiscal quarter of 2024 due to the timing of billings and collections.

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Cash Flows Used in Investing Activities

Net cash outflows and inflows of our net investment activity are generally a result of the timing of our purchases and maturities of securities, which are classified as cash equivalents, as well as the timing of acquisitions and divestitures. In the first ~~three~~six months of fiscal year 2025, we purchased $1.38 million of property and equipment, and had payments for acquisitions of $1.2 million. InThrough the ~~first~~second quarter of fiscal year 2024 we had $01.3 million of purchases of property and equipment.

Cash Flows Used in Financing Activities

We received $612.28 million from the exercise of stock options and the issuance of shares under our employee stock purchase plan in the first ~~three~~six months of fiscal year 2025 as compared to $712.69 million in the first ~~three~~six months of fiscal year 2024. We made withholding tax payments related to net share settlements of equity awards of $410.61 million in the ~~three~~first six months of fiscal year 2025 as compared to $510.96 million in the first ~~three~~six months of fiscal year 2024. We repurchased $3050.1 million of our common stock under our share repurchase plan in the first ~~three~~six months of fiscal year 2025 as compared to $2272.54 million in the same period of the prior year. Further, we made payments on our revolving line of credit of $3070.0 million inand $110.0 million through the ~~first~~second ~~quarter~~quarters of fiscal years 2025 and 2024, respectively. ~~Finally~~During the second quarter of fiscal year 2024, we ~~made~~received ~~dividend~~net ~~payments~~proceeds from the issuance of debt of $851.29 million (we refinanced our debt by issuing the convertible senior notes and used the proceeds to pay off the outstanding balance of the term loan and revolving line of credit under our ~~stockholders~~previous ~~during~~credit agreement). In the first ~~three~~quarter ~~months~~ of fiscal year 2024. Wewe ~~also~~ made payments on our ~~pre~~long-~~existing~~ term ~~loan~~debt of $333.4 million in(including a $30.0 million repayment on the revolving line of credit). Finally, we made dividend equivalent payments of $0.7 million to our stockholders during the first ~~quarter~~six months of fiscal year 2025, as compared to $16.1 million of dividend and dividend equivalent payments made to stockholders through the first six months of fiscal year 2024.

Share Repurchase Program

In January 2023, our Board of Directors increased our share repurchase authorization by $150 million, to an aggregate authorization of $228.0 million. In the three months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, we repurchased and retired 0.54 million shares for $3020.0 million and 1.0 million shares for $49.9 million, respectively. In the six months ended May 31, 2025 and May 31, 2024, we repurchased and retired 0.9 million shares for $50.0 million and 1.4 million shares for $2272.5 4 million, respectively. The shares were repurchased in both periods as part of the share repurchase program as authorized by our Board of Directors. As of ~~February~~May 2831, 2025, there was $7757.2 million remaining under the current authorization.

Dividends

As announced on September 9, 2024, our Board of Directors approved the suspension of our quarterly dividend in connection with the ShareFile acquisition and plans to redirect such capital toward the repayment of debt to increase liquidity for future M&A and for share repurchases, both of which are prioritized in our capital allocation policy.

Restructuring Activities

See Note 9: Restructuring to the condensed consolidated financial statements.

Long-term Debt and Credit Facility

See Note 5: Debt to the condensed consolidated financial statements.

Liquidity Outlook

Cash from operations in fiscal year 2025 could be affected by various risks and uncertainties, including, but not limited to, the effects of various risks detailed in Part I, Item 1A. Risk Factors in our 2024 Annual Report, including increased disruption and volatility in capital markets and credit markets that could adversely affect our liquidity and capital resources in the future. However, based on our current business plan, we believe that existing cash balances, together with funds generated from operations and amounts available under our revolving credit facility, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next twelve months. Our foreseeable cash needs include capital expenditures, acquisitions, debt repayments, share repurchases, lease commitments, restructuring obligations, and other long-term obligations.

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We expect to continue to make payments on the revolving credit facility and are also continuously evaluating additional financing options, the net proceeds of which could be used for general corporate purposes or to repay amounts outstanding under our revolving credit facility. In the future, we may use the available capacity under our revolving credit facility for general corporate purposes, which may include payments made in connection with any settlement of the 2026 Notes upon conversion, redemption or repayment of our 2026 Notes at or prior to the 2026 Notes maturity.

Legal and Other Regulatory Matters

MOVEit Vulnerability

As previously disclosed, on the evening of May 28, 2023, we learned that our MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer) products were attacked by a threat actor who compromised and exfiltrated personal data from various customer-controlled MOVEit Transfer environments. As a result of the MOVEit Vulnerability, we are party to certain class action lawsuits filed by individuals who claim to have been impacted by the exfiltration of data from the environments of our MOVEit Transfer customers, which have been centralized in the MDL. The MDL remains in a relatively early litigation stage in which motions to dismiss have been filed but not yet ruled upon. In the event dismissals are not granted, the MDL is not expected to conclude within this fiscal year. We have also been cooperating with inquires and investigations from various governmental authorities, none of which have, as of this filing, resulted in any prosecution or enforcement actions. Please see our 2024 Annual Report and previous SEC filings for additional information, including risk factors, related to the MOVEit Vulnerability.

We are subject to litigation and governmental investigations related to the MOVEit Vulnerability, for which we have incurred expenses and will incur future costs. We expect our exposure to such expenses and liabilities to be reduced by insurance. Please refer to Note 12: Cyber Related Matters to the condensed consolidated financial statements for additional details and updates regarding the MOVEit Vulnerability.

Recent Accounting Pronouncements

Refer to Note 1: Basis of Presentation to the condensed consolidated financial statements for further discussion.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

During the first ~~three~~six months of fiscal year 2025, with the exception of repayments on our revolving credit facility, there were no significant changes to our quantitative and qualitative disclosures about market risk. Please refer to Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk included in our 2024 Annual Report, for a more complete discussion of the market risks we encounter.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act") that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

Our management, including our principal executive and principal financial officers, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The Company acquired ShareFile on October 31, 2024. Management excluded ShareFile from its assessment of the effectiveness of the Company’s disclosure controls as of ~~February 28~~May 31, 2025. ShareFile represented, in aggregate, approximately 2% of the Company’s total consolidated assets (excluding goodwill and intangibles, which are included in the scope of the assessment) and approximately 27% of total consolidated revenues, as of and for the ~~three~~six months ended ~~February 28~~May 31, 2025. Based on this evaluation, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~February 28~~May 31, 2025.

(b) Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended ~~February~~May 2831, 2025 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 12: Cyber Related Matters to the condensed consolidated financial statements for a discussion of legal proceedings related to the MOVEit Vulnerability. Our 2024 Annual Report and previous SEC filings also contain additional information, including risk factors, related to the MOVEit Vulnerability.

We are also subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material effect on our financial position, results of operations, or cash flows.

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves certain risks and uncertainties, some of which are beyond our control. In addition to the information provided in this report, please refer to Part I, Item 1A. Risk Factors in our 2024 Annual Report for a more complete discussion regarding certain factors that could materially affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Information related to the repurchases of our common stock by month in the ~~first~~second quarter of fiscal year 2025 is as follows:

(in thousands, except per share and share data)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
Period
December 2024	—	$	—	—	$	107,220
March 2025	—	$	—	—	$	77,220
January 2025	538,847	55.65		538,847	77,220
April 2025	351,216	56.93		351,216	57,220
February 2025	—	—		—	77,220
May 2025	—	—		—	57,220
Total	~~538~~351,~~847~~216	$	5556.6593	~~538~~351,~~847~~216	$	7757,220

(1)On January 10, 2023, our Board of Directors increased the share repurchase authorization by 150.0 million, to an aggregate authorization of $228.0 million. As of ~~February~~May 2831, 2025, there was $7757.2 million remaining under this authorization.

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Item 5. Other Information

During the ~~first~~second quarter of fiscal year 2025, none of our directors or officers informed us of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as those terms are defined in Regulation S-K, Item 408, except as described in the table below:

Name and Title

Character of Trading Arrangement1

Date Adopted

Duration2

Aggregate Number of Shares of Common Stock to be Sold Pursuant to Trading Arrangement

Loren Jarrett,EVP & GM, Digital Experience

Filing Compare · PROGRESS SOFTWARE CORP /MA