Progress Software Corporation (PRGS)

Item 1. Business

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 with agility and ease. 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.

A key element of our strategy is centered on the goal of building and maintaining leading products and tools organizations need to build, deploy, and manage modern, strategic business applications. We offer our products and tools to both new customers and partners, as well as our existing partner and customer ecosystems.

Our organizational philosophy and operating principles focus primarily on customer and partner retention and success, and a streamlined operating approach to drive predictable and stable recurring revenue and high levels of profitability.

We are pursuing a total growth strategy driven by accretive acquisitions of businesses and products that meet our strict strategic, financial, and operating criteria, which help to further our goal of providing stockholder returns. In April 2019, we acquired Ipswitch; in October 2020, we acquired Chef Software; in November 2021, we acquired Kemp Technologies; in February 2023, we acquired MarkLogic; in October 2024, we acquired ShareFile; and in June 2025, we acquired Nuclia.

Our capital allocation policy emphasizes accretive M&A, which we believe allows us to expand our business and drive significant stockholder returns. We also utilize share repurchases to return capital to stockholders. We currently intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and may elect to conduct additional repurchases based on market conditions and other factors.

Our Products

In recent years, our total growth strategy, described above, has resulted in the expansion of our product portfolio. Described below are the leading products in our portfolio.

Progress Agentic RAG: A next-generation Agentic Rag-as-a-Service platform offering fast, flexible, and modular retrieval functionality to artificial intelligence ("AI") agents from a wide variety of unstructured data formats.

Progress Automate MFT: Scalable, cloud-native Software-as-a-Service ("SaaS") platform for automated and secure file transfers.

Progress Chef: DevOps/DevSecOps automation software to achieve secure, continuous delivery of critical applications and infrastructure.

Progress Corticon: Decision automation platform to transform user experiences by streamlining and automating complex business rules using AI—without having to code.

Progress DataDirect: Secure data connectivity tools for Relational, NoSQL, Big Data, and SaaS data sources.

Progress Developer Tools: The comprehensive software development tooling collection including .NET and JavaScript UI components for web, desktop and mobile applications, AI-prompt components, reporting and report management tools and automated testing and mocking tools.

Progress Flowmon: AI-powered network security and visibility product with automated response across hybrid cloud ecosystems.

Progress Kemp LoadMaster: Flexible application delivery and security product offering cloud-native, virtual, and hardware load balancers.

Progress MarkLogic: Data agility platform to securely connect data and metadata, create and interpret meaning, and consume high-quality contextualized data across the enterprise software system.

Progress MOVEit: Managed file transfer software for managing and controlling the movement of sensitive files, providing the ability to secure them both at-rest and in-transit, and meeting strict compliance requirements.

Progress OpenEdge: An application development platform for running business-critical applications needing high-performance, high availability, and flexible deployment options for extensibility, scalability, security, and performance.

Progress Semaphore: Semantic AI platform that transforms data into meaningful insights, empowering organizations to leverage RAG for accurate, contextually relevant Gen AI responses, manage knowledge models, and to automatically extract and classify meaning from both structured and unstructured data.

Progress ShareFile: SaaS-native AI-powered document centric collaboration platform that includes workflow automation, client portals, file synchronization, and sharing and integrated eSignature.

Progress Sitefinity: Digital experience platform foundation, delivering intelligent, AI-powered, ROI-driving tools for marketers and an extensible platform for developers to create engaging, cross-channel digital experiences.

Progress WhatsUp Gold: Network infrastructure monitoring software providing complete visibility of all network devices, servers, virtual machines, cloud and wireless environments to find and fix network problems.

Product Development

We believe that the features and performance of our products are competitive with those of other available digital experience and infrastructure software products and that none of the current versions of our products are approaching obsolescence. However, we have invested, and expect to continue to invest, in new product development and enhancements of our current products to maintain our competitive position. Our primary development offices are located in Sofia, Bulgaria; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Limerick, Ireland; Manresa, Spain; Alpharetta, Georgia; Burlington, Massachusetts; Madison, Wisconsin; and Raleigh, North Carolina.

Customers

We sell our products globally directly to end users and through various indirect sales channels. Sales of our products through our direct sales force have historically been to business managers or IT managers in corporations and governmental agencies. We also target developers who create business applications, from individuals to teams, within enterprises of all sizes.

Nearly half of our worldwide revenue is realized through relationships with indirect channel partners, principally independent software vendors ("ISVs"), original equipment manufacturers ("OEMs"), distributors, and value-added resellers ("VARs"). We use distributors and resellers, both internationally and domestically, in certain locations where we do not have a direct presence or where it is more economically or contractually feasible for us to do so.

Independent Software Vendors

ISVs develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. Our ISVs cover a broad range of markets, offer an extensive library of business applications, and are a source of recurring revenue. We have kept entry costs, consisting primarily of the initial purchase of development licenses, low to encourage a wide variety of ISVs to build applications. If an ISV succeeds in marketing its applications, we obtain recurring revenue as the ISV licenses our products to allow its application to be installed and used by customers. In recent years, a significantly increasing amount of our revenue from ISVs has been generated from ISVs who have chosen to enable their business applications under a SaaS platform.

Original Equipment Manufacturers

OEMs are companies that embed our products into their own software products or devices. We enter into arrangements with OEMs in which the OEM embeds our products into its solutions, typically either software or technology devices. OEMs typically license the right to embed our products into their solutions and distribute those solutions for initial terms ranging from one to three years. Historically, most of our OEMs have renewed their agreements upon the expiration of the initial term.

Value Added Resellers, Systems Integrators and Distributors

We enter into arrangements with VARs in which the VARs add features or services to our product, then resell it as an integrated product or complete "turn-key" solution. Systems integrators typically have expertise in vertical or functional markets: they may resell our products by bundling them with their broader service offerings or refer sales opportunities to our direct sales force. Distributors resell our products, services, and support within their territories.

No single customer or partner has accounted for more than 10% of our total revenue in any of our last three fiscal years.

Sales and Marketing

Many of our products are sold as perpetual licenses, but certain products also use term licensing models, and our cloud-based offerings use a subscription-based model. We sell our products through our direct sales force and indirect channel partners. Our sales and field marketing groups are organized primarily by geographic region (i.e., North America, EMEA, Latin America, and Asia Pacific). We believe this structure allows us to maintain direct contact with our customers and partners, while supporting their diverse market requirements. Our international operations provide focused local sales, support, and marketing efforts and are able to respond directly to changes in local conditions.

Sales personnel are responsible for developing new direct end user accounts, recruiting new indirect channel partners and new independent distributors, managing existing channel partner relationships, and servicing existing customers.

Our marketing personnel conduct a variety of marketing engagement programs designed to create demand for our products, enhance the market readiness of our products, raise the general awareness of our company and our products, generate leads for the sales organization, and promote our various products. These programs include public relations, industry analyst relations, digital/web marketing, demand generation, participation in trade shows, industry conferences, regional user events, and production of sales and marketing literature.

Our marketing efforts focus on driving traffic to our websites, generating high quality sales leads, and building visibility for our corporate and product brands. Our sales efforts then focus on converting these leads into paying customers.

Customer Support

Our customer support staff provides telephone, email, and web-based support to end users, application developers, and OEMs. Customers purchase maintenance services entitling them to software updates, technical support, and technical bulletins. Maintenance is generally not required with those products sold under perpetual license agreements and is purchased at the customer's option. SaaS products are sold as a subscription that includes maintenance and support. We provide support to customers primarily through our main regional customer support centers in Sofia, Bulgaria; San Jose, Costa Rica; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Limerick, Ireland; Rotterdam, The Netherlands; Singapore; Alpharetta, Georgia; Burlington, Massachusetts; Madison, Wisconsin; and Raleigh, North Carolina. Local technical support for specific products is provided in certain other countries as well.

Professional Services

Our global professional services organization delivers business solutions for customers through a combination of products, consulting, and education. Our consulting organization offers project management, implementation services, custom software development, programming, and other services. Our consulting organization also provides services to web-enable existing applications or to take advantage of the capabilities of new Progress product releases. Our education organization offers numerous training options, from traditional instructor-led courses to advanced learning modules available via the web or on digital media.

Our services offerings include: application modernization; infrastructure automation; development operations; data management; managed database services; performance enhancements and tuning; and analytics/business intelligence.

Competition

The software industry is intensely competitive. We experience significant competition from a variety of sources with respect to all of our products. We believe that certain competitive factors affect the market for our software products and services, which may include: (i) vendor and product reputation; (ii) product quality, performance and price; (iii) the availability of software products on multiple platforms; (iv) product scalability; (v) product integration with other enterprise applications; (vi) software functionality and features; (vii) software ease of use; (viii) the quality of professional services, customer support services and training; and (ix) the ability to address specific customer business problems. We believe the relative importance of each of these factors depends upon the concerns and needs of each specific customer.

We compete with multiple companies, some that have single or narrow solutions, and some that have a range of software solutions. Many companies offer platform-as-a-service, application development, data integration, and other tools in conjunction with offerings such as customer relationship management, web services, operating systems, and relational database management systems. We compete with software vendors that offer their products under a proprietary software license model, and various other vendors that offer their solutions in an open-source licensing or freely available distribution model.

We do not believe that there is a dominant vendor in the markets in which we compete. However, some of our competitors have greater and/or more experienced financial, marketing, or technical resources than we have, or may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the development, promotion, and sale of their products than we are able. Increased competition could make it more difficult for us to maintain our revenue and market presence.

Intellectual Property

We rely on a combination of contractual provisions and copyright, patent, trademark, and trade secret laws to protect our proprietary rights in our products. Except as described below with respect to our Chef products, we primarily distribute or offer our products as a service under software license agreements that grant customers a nonexclusive license to use our products, but contain terms and conditions prohibiting the unauthorized reproduction, use, or transfer of our products. We generally offer our products through various models, including perpetual, term, or subscription licensing models. Our cloud or SaaS offerings are generally provided under a subscription model. We also distribute products through various channel partners, including ISVs, OEMs, and systems integrators.

We seek to protect the source code of our products as trade secrets and as unpublished copyrighted works. We hold numerous patents covering portions of our products. We also have several patent applications for product technologies. Where possible, we seek to obtain protection of our product names and service offerings through trademark registration and other similar procedures throughout the world. We also protect our trade secrets and other proprietary information through agreements with employees, consultants and channel partners.

Our Chef offerings incorporate software components licensed to the general public under open source licenses. We obtain many components from software developed and released by contributors to independent open source components of our offerings. Open source licenses grant licensees broad permissions to use, copy, modify, and redistribute our platform. As a result, open source development and licensing practices can limit the value of our software copyright assets.

We believe that due to the rapid pace of innovation within our industry, factors such as the technological and creative skills of our personnel are as important in establishing and maintaining a leadership position within the industry as are the various legal protections of our technology. In addition, we believe that the nature of our customers, the importance of our products to them, and their need for continuing product support may reduce the risk of unauthorized reproduction, although no assurances can be made in this regard.

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Financial statements

data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-03-31 (period ending 2026-02-28).

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 2025 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 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.

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, Nature of Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements in Item 8 of our 2025 Annual Report. There have been no significant changes to our critical accounting policies and estimates since our 2025 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 accounting principles generally accepted in the United States of America.

Results of Operations

Revenue

	Three Months Ended				Percentage Change
(in thousands)	February 28, 2026		February 28, 2025		As Reported		Constant Currency
Revenue	$	247,799	$	238,015	4	%	2	%

Total revenue increased as compared to the same period last year primarily due to increases in license sales of our OpenEdge product offering and a positive foreign currency impact.

Software Licenses Revenue

	Three Months Ended						Percentage Change
(in thousands)	February 28, 2026			February 28, 2025			As Reported		Constant Currency
Software licenses	$	67,581		$	58,445		16	%	11	%
As a percentage of total revenue	27		%	25		%

Software licenses revenue increased in the first quarter of fiscal year 2026 primarily due to increases in our OpenEdge product offering.

Maintenance, SaaS, and Professional Services Revenue

	Three Months Ended						Percentage Change
(in thousands)	February 28, 2026			February 28, 2025			As Reported		Constant Currency
Maintenance	$	100,339		$	99,535		1	%	(2)	%
As a percentage of total revenue	40		%	42		%
SaaS	70,461			69,410			2	%	1	%
As a percentage of total revenue	28		%	29		%
Professional services	9,418			10,625			(11)	%	(13)	%
As a percentage of total revenue	4		%	4		%
Total maintenance, SaaS, and professional services	$	180,218		$	179,570		—	%	(2)	%
As a percentage of total revenue	73		%	75		%

Maintenance revenue increased in the first quarter of fiscal year 2026 due to a positive foreign currency impact. SaaS revenue slightly increased as compared to the same period last year. Professional services revenue decreased across multiple product offerings as compared to the same period last year.

Cost of Software Licenses

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Cost of software licenses	$	3,013		$	2,925		3	%
As a percentage of software licenses revenue	4		%	5		%

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 first quarter of fiscal year 2026 compared to the same period last year was related to increased royalty costs.

Cost of Maintenance, SaaS, and Professional Services

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Cost of maintenance, SaaS, and professional services	$	32,100		$	32,884		(2)	%
As a percentage of maintenance, SaaS, and professional services revenue	18		%	18		%

Cost of maintenance, SaaS, and professional services consist primarily of hosting costs, and personnel-related costs attributable to customer support, cloud operations, consulting, and education. The decrease year-over-year was primarily due to decreased contractors and headcount related costs in fiscal year 2026.

Amortization of Acquired Intangibles – Costs of Revenue

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Amortization of acquired intangibles	$	8,751		$	10,422		(16)	%
As a percentage of total revenue	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 decrease is due to certain existing intangible assets being fully amortized as compared to the prior period.

Sales and Marketing

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Sales and marketing	$	51,997		$	51,296		1	%
As a percentage of total revenue	21		%	22		%

Sales and marketing expenses increased due to increased marketing and sales events costs, partially offset by lower personnel-related costs.

Product Development

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Product development	$	50,474		$	46,375		9	%
As a percentage of total revenue	20		%	19		%

Product development expenses increased primarily due to increased personnel-related costs associated with higher headcount.

General and Administrative

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
General and administrative	$	26,504		$	25,623		3	%
As a percentage of total revenue	11		%	11		%

General and administrative expenses include the costs of our finance, human resources, legal, information systems, and administrative departments. The increase was due to higher stock-based compensation expense, partially offset by lower contractors and outside services and other general and administrative costs.

Amortization of Acquired Intangibles – Operating Expenses

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Amortization of acquired intangibles	$	25,617		$	25,808		(1)	%
As a percentage of total revenue	10		%	11		%

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 decreased in the first quarter of fiscal year 2026 due to certain existing intangible assets being fully amortized as compared to the prior period.

Cyber Vulnerability Response Expenses, Net

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Cyber vulnerability response expenses, net	$	1,358		$	737		84	%
As a percentage of total revenue	1		%	—		%

As previously disclosed, since the discovery of the MOVEit Vulnerability that was disclosed on June 5, 2023, we have incurred expenses and will incur future costs related to litigation and governmental investigations related to the MOVEit Vulnerability. Such costs and expenses 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
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Restructuring expenses	$	706		$	7,029		(90)	%
As a percentage of total revenue	—		%	3		%

Restructuring expenses recorded in the first quarter of fiscal year 2026 primarily relate to the headcount reduction action in November 2025, and facility closures in other existing restructuring actions. Restructuring expenses recorded in the first quarter 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
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Acquisition-related expenses	$	814		$	2,490		(67)	%
As a percentage of total revenue	—		%	1		%

Acquisition-related costs are expensed as incurred and include those costs incurred as a result of business combinations. These costs consist of professional service fees, including third-party legal and valuation-related fees. Acquisition-related expenses in the first quarter of fiscal year 2026 primarily related to our pursuit of other acquisition opportunities. Acquisition-related expenses in the same period of fiscal year 2025 were primarily related to our acquisition of ShareFile.

Other (Expense) Income

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Interest expense	$	(15,246)		$	(18,429)		(17)	%
Interest income and other, net	317			487			(35)	%
Foreign currency loss, net	(1,244)			(1,182)			5	%
Total other expense, net	$	(16,173)		$	(19,124)		15	%
As a percentage of total revenue	(7)		%	(8)		%

Total other expense, net, decreased in the first quarter of fiscal year 2026 as compared to the same period last year primarily due to a decrease in interest expense resulting from principal payments made on our revolving line of credit. 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.

Provision for Income Taxes

	Three Months Ended
(in thousands)	February 28, 2026			February 28, 2025			Percentage Change
Provision for income taxes	$	7,479		$	2,356		217	%
As a percentage of income before income taxes	25		%	18		%

Our effective tax rate was 25% and 18% in the first fiscal quarters of 2026 and 2025, respectively. The increase in the effective rate is primarily due to changes in the jurisdictional mix of earnings, including the proportion of U.S. versus non-U.S. income and discrete tax expense of $0.5 million in the first fiscal quarter of 2026 compared to a discrete tax benefit of $0.3 million in the first fiscal quarter of 2025.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law, introducing significant changes to the U.S. federal income tax system. The legislation contains key modifications to the provisions of the 2017 Tax Cuts and Jobs Act and has multiple effective dates. In our fiscal 2026, provisions under OBBBA allow for an immediate deduction of U.S. Research & Experimental expenditures and a return to interest expense limitations based on EBITDA, which results in a reduction to the current taxes payable.

Select Performance Metrics:

Management evaluates 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 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 $863.0 million and $849.0 million as of February 28, 2026 and February 28, 2025, respectively, which is an increase of 2% year-over-year.

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 99% and 100% 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 28, 2026					November 30, 2025
Cash and cash equivalents			$	113,171				$	94,807

The increase in cash and cash equivalents of $18.4 million from the end of fiscal year 2025 was due to cash inflows from operations of $98.6 million, $1.7 million in cash received from the issuance of common stock, and the effect of exchange rates on cash of $1.3 million. The cash inflows described above were offset by cash outflows of $60.0 million to pay down the revolving line of credit, repurchases of common stock of $20.4 million, and purchases of property and equipment of $2.7 million. Except as described below, there are no limitations on our ability to access our cash and cash equivalents.

As of February 28, 2026, $69.0 million of our cash and cash equivalents was held by our foreign subsidiaries. The Company has 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
(in thousands)	February 28, 2026		February 28, 2025
Net cash flows provided by operating activities	$	98,626	$	68,947
Net cash flows used in investing activities	$	(2,705)	$	(2,485)
Net cash flows used in financing activities	$	(78,877)	$	(58,870)

Cash Flows Provided by Operating Activities

The increase in cash generated from operations in the first three months of fiscal year 2026 as compared to the same period last year was primarily due to increased collections in fiscal year 2026.

Our gross accounts receivable as of February 28, 2026, decreased by $50.8 million from the end of fiscal year 2025. Our days sales outstanding ("DSO") in accounts receivable was 52 days in the first quarter of fiscal year 2026 compared to 48 days and 73 days in the first and fourth fiscal quarters of 2025, respectively, due to the timing of billings and collections.

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 months of fiscal year 2026, we purchased $2.7 million of property and equipment. In the first quarter of fiscal year 2025 we had $1.3 million of purchases of property and equipment and a payment of $1.2 million related to the acquisition of ShareFile.

Cash Flows Used in Financing Activities

We received $5.4 million from the exercise of stock options and the issuance of shares under our employee stock purchase plan in the first three months of fiscal year 2026 as compared to $6.2 million in the first three months of fiscal year 2025. We made withholding tax payments related to net share settlements of equity awards of $3.7 million in the first three months of fiscal year 2026 as compared to $4.6 million in the first three months of fiscal year 2025. We repurchased $20.4 million of our common stock under our share repurchase plan in the first three months of fiscal year 2026 as compared to $30.1 million in the same period of the prior year. Further, we made payments on our revolving line of credit of $60.0 million through the first quarter of fiscal year 2026 as compared to $30.0 million in the first quarter of fiscal year 2025.

Share Repurchases

On September 23, 2025, our Board of Directors increased the share repurchase authorization by $200.0 million to an aggregate authorization of $242.2 million. In the three months ended February 28, 2026 and 2025, we repurchased and retired 0.5 million shares for $20.0 million and 0.5 million shares for $30.0 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 28, 2026, there was $182.2 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.

Convertible Senior Notes and Long-Term Debt

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

Liquidity Outlook

Cash from operations in fiscal year 2026 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 2025 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.

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 outstanding indebtedness. In the future, we may use the available capacity under our revolving credit facility for any 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. We may also use the available capacity for general corporate purposes.

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 has also consolidated an insurance subrogation complaint (where an insurer is seeking recovery for expenses incurred on behalf of its insured in connection with the MOVEit Vulnerability) and, as of the date of this filing, one customer cross-claim. The MDL remains in a relatively early stage and is not expected to conclude within the next twelve months. Motions to dismiss were filed and partially granted in July 2025, then further partially granted in January 2026 in response to our motions for reconsideration. In all, the court has dismissed, in whole or in part, 23 of the 33 claims asserted by the plaintiffs in the MDL. As previously disclosed, we have also cooperated with inquiries and investigations from various governmental authorities, a number of which have been formally closed and, as of the date of this filing, have not resulted in any prosecution or enforcement actions.

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, Summary of Significant Accounting Policies to the condensed consolidated financial statements for further discussion.

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Held by

holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Recent insider activity

Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 2 transactions across 2 insiders. Net: -9,493 shares, -$275,185.

Date	Insider	Role	Action	Shares	Price	Value
2026-05-19	FOLGER ANTHONY	Chief Financial Officer	Sell	-4,474 ×2	$29.13	-$130,334
2026-05-18	WANG YUFAN STEPHANIE	Chief Legal Officer	Sell	-5,019 ×2	$28.86	-$144,852

Source: SEC Form 4 filings.

Next expected filings

~2026-06-30 10-Q expected by 2026-07-03 (in 5 days)
~2026-09-29 10-Q expected by 2026-10-02 (in 96 days)
~2027-01-20 10-K expected by 2027-01-22 (in 209 days)
~2027-03-31 10-Q expected by 2027-04-03 (in 279 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-03-31 10-Q Quarterly Report
2026-03-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-01-20 10-K Annual Report
2026-01-20 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-09-29 10-Q Quarterly Report
2025-09-29 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-07-22 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
2025-06-30 10-Q Quarterly Report
2025-06-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-03-31 10-Q Quarterly Report
2025-03-31 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-01-21 10-K Annual Report
2025-01-21 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2024-10-31 8-K Completion of Acquisition/Disposition; Regulation FD Disclosure; Financial Statements and Exhibits
2024-10-08 10-Q Quarterly Report

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