PRGS · Progress Software
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $49.17
Note written ·
Price against the kill line
11.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $49.17, on record since 11 November 2026. The shares are up 2.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $49.17, 11% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 31 August 2026, filed 30 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 246
- Revenue, change on a year (%)
- −1.5
- Gross margin (%)
- 82.7
- Operating margin (%)
- 18.9
- Free cash flow, four quarters ($M)
- 319
- Net cash, cash less debt ($M)
- −1,119
- Price to earnings (×)
- 19.4
- Enterprise value to sales (×)
- 2.9
All filed numbers
What Progress Software reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 246 | −1.5 | 82.7 | 18.9 |
| first filed | 254 | +6.8 | 82.3 | 17.8 |
| first filed | 248 | +4.1 | 82.3 | 18.8 |
| first filed | 253 | +17.5 | 81.6 | 15.2 |
| first filed | 250 | +39.8 | 81.0 | 17.6 |
| first filed | 237 | +35.6 | 80.1 | 16.3 |
| Pre-tax income ($M) | 29.5 |
| Net income ($M) four quarters: 92.4 | 22.8 |
| Diluted shares, change on a year (%) against the quarter to 31 August 2025 | −5.1 |
| Operating cash flow ($M) | 328 |
| Capital spending ($M) | 9.1 |
| Free cash flow ($M) | 319 |
| Cash and short-term investments ($M) | 114 |
| Debt ($M) long-term debt | 1,233 |
| Net cash, cash less debt ($M) | −1,119 |
| Deferred revenue ($M) +6.7% on a year | 407 |
| Backlog, orders not yet delivered ($M) −16.0% on a year | 498 |
| Receivables ($M) | 119 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 530 |
| Market value ($M) | 1,790 |
| Enterprise value, market value plus net debt ($M) | 2,909 |
| Enterprise value to sales (×) | 2.9 |
| Enterprise value to operating income (×) | 16.5 |
| Price to earnings (×) | 19.4 |
| Price to book value (×) | 3.4 |
| Free-cash-flow yield (%) | 17.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 11.5% of shares outstanding sold short, 6.3 days of average trading to cover, −0.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $261K |
| 12 monthsfrom | $0 | $2.7M |
The thesis
Progress Software's Domo purchase lifted its fiscal 2026 revenue outlook, but the weaker fourth-quarter earnings guide and the revolver-funded debt leave the case unproven. The fiscal fourth-quarter report, expected around mid-January 2027 and not yet confirmed by the company, settles whether the added revenue becomes the profit management projects.
The shares closed at $43.80 on 10 November 2026, according to split- and dividend-adjusted daily closes. That is 5.7% below the 52-week high of $46.45. The three-month price change is −2.1%, and the 14-day relative strength index (RSI), a momentum gauge where readings above 70 mark a stretched run, is 50.4. It was 74.7 on 28 October 2026.
The story is well known: the story is well known, the Domo deal closed on 22 September 2026, and interest has cooled since 28 October 2026 as momentum fell back to neutral. A search of company announcements found no new Progress release, filing or guidance change. The fourth-quarter guide that drove the 30 September 2026 sell-off therefore stands as issued.
Bullish and bearish views on Progress Software Corporation
The bull case on Progress Software Corporation (PRGS), in brief: revenue outlook rose sharply. The bear case: fourth-quarter earnings guide missed.
Bull case
- Revenue outlook rose sharply. Progress raised fiscal 2026 revenue guidance to $1.044 billion-$1.052 billion on 30 September 2026, from $990.0 million-$1.002 billion on 30 June 2026. Fourth-quarter revenue is guided to $297 million-$305 million (company release).
- Adjusted earnings keep beating. Third-quarter adjusted earnings per share (EPS) were $1.69 against a $1.51 consensus (Benzinga, 30 September 2026). Fiscal 2026 adjusted EPS guidance is $6.15-$6.23.
- Cash generation is growing. Adjusted free cash flow was $87.161 million in the third quarter, up 17% year on year. Fiscal 2026 is guided to $275 million-$283 million (company release, 30 September 2026).
- Domo economics are quantified. Management said Domo should add well over $100 million of annual EBITDA (earnings before interest, taxes, depreciation and amortization) by the end of fiscal 2027, on steady-state revenue of $280 million-$290 million (Investing.com summary of the 30 September 2026 call).
- Analyst targets sit above the price. DA Davidson reiterated Buy with a $55 target on 2 October 2026 (Investing.com). Oppenheimer kept Outperform with a $50 target on 1 July 2026 (Benzinga).
Bear case
- Fourth-quarter earnings guide missed. Adjusted EPS is guided to $1.24-$1.33 against a $1.43 consensus, and GAAP EPS (generally accepted accounting principles) to a loss of $0.41 to $0.32 (Benzinga, 30 September 2026).
- Reported earnings were cut again. Fiscal 2026 GAAP EPS guidance fell to $1.18-$1.28 from $1.60-$1.74 (company release, 30 September 2026).
- Organic growth is flat to down. Third-quarter revenue was $246.005 million, down 2% year on year, below the $247.325 million consensus. Annualized recurring revenue was $873 million, up 1% in constant currency.
- Debt funds the deal. At 31 August 2026, before the Domo draw, long-term debt was $790 million, convertible notes $442.635 million and cash $113.7 million (10-Q). Management expects Domo to cut fiscal 2027 operating margin by 100 to 200 basis points.
- The rebound has not extended. The shares recovered from a post-report low close of $36.90 on 2 October 2026 to $44.46 on 28 October 2026, then slipped to $43.80 on 10 November 2026 with no new company evidence either way.
Price setup
The last close of $43.80 on 10 November 2026 sits between the post-report low close of $36.90 (2 October 2026) and the 52-week high of $46.45. The 30 September 2026 pre-report close of $39.97 is the nearest level that marks the full loss of the rebound. The shares have held above it since the rebound began.
The momentum reading has reset. RSI fell from 74.7 on 28 October 2026 to 50.4 on 10 November 2026. The three-month change of −2.1% reflects that the price is now close to where it stood in mid-August.
Crowding evidence is light. No earnings date falls inside the next 30 days, the gap to the 52-week high is 5.7%, and the shares are no longer extended. Analyst targets of $50 and $55 (Oppenheimer and DA Davidson) remain above the price.
Catalysts ahead
- 30 November 2026: Fiscal year 2026 ends. Closes the first period that includes Domo, whose contribution the fourth-quarter revenue guide of $297M-$305M depends on.
- ~6 January 2027 (est.): Progress's announcement of its fiscal Q4 report date, based on last year's pattern of a notice two weeks ahead. Confirms when the next test arrives; third-party calendars list dates from 30 December 2026 to about 19 January 2027.
- ~19 January 2027 (est.): Fiscal Q4 and full-year 2026 results (date unconfirmed). Tests the adjusted EPS guide of $1.24-$1.33 and revenue guide of $297M-$305M, and shows early Domo retention and debt paydown.
What would change the view
A daily close above $49.17, 11% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
What it trades with
Progress sells infrastructure and application-development software, and its shares trade on its own acquisition-and-cash-flow story more than on a sector theme. The deal for Domo's assets, announced 22 July 2026 for $400 million, is the main company-specific driver. Domo's remaining listed shell is no longer a proxy for the business. Debt-funded acquisition makes the shares sensitive to interest costs and credit conditions as well as to software spending.
The evidence, claim by claim (8)
- Q3 FY2026 revenue $246.005M, down 2% year on year, vs $247.325M estimate; adjusted EPS $1.69 vs $1.51 estimate; annualized recurring revenue $873M, up 1% in constant currency. Progress Software Q3 FY2026 earnings release (8-K) and Benzinga · as of
- FY2026 revenue guidance raised to $1.044B-$1.052B; adjusted EPS $6.15-$6.23; GAAP EPS cut to $1.18-$1.28 from $1.60-$1.74. Progress Software Q3 FY2026 earnings release (8-K) · as of
- Q4 FY2026 guidance: revenue $297M-$305M, adjusted EPS $1.24-$1.33 vs $1.43 consensus, GAAP EPS loss of $0.41 to $0.32. Progress Software Q3 FY2026 earnings release and Benzinga · as of
- Adjusted free cash flow $87.161M in Q3, up 17% year on year; FY2026 adjusted free cash flow guided to $275M-$283M. Progress Software Q3 FY2026 earnings release (8-K) · as of
- At 31 August 2026, long-term debt $790M, convertible senior notes $442.635M, cash $113.7M; Domo closed 22 September 2026, funded from the revolving credit facility. 10-Q for the quarter ended 31 August 2026 and Q3 FY2026 earnings release · as of
- DA Davidson reiterated Buy with a $55 price target after the Q3 report. Investing.com and GuruFocus · as of
- Adjusted daily close $43.80 on 10 November 2026, 5.7% below the 52-week high of $46.45; 14-day RSI 50.4; three-month price change −2.1%. Split/dividend-adjusted daily closes · as of
- Progress reported fiscal Q4 and full-year 2025 results on 20 January 2026, with the date announced 6 January 2026. Progress Software press release via Barchart · as of
Sources