Progress Software (PRGS) Margin Decline And One Off Loss Test Bullish Valuation Narrative

Progress Software FY 2025 earnings snapshot

Progress Software (PRGS) has wrapped up FY 2025 with fourth quarter revenue of US$252.7 million and basic EPS of US$0.60, capping off trailing twelve month revenue of US$977.8 million and EPS of US$1.70 against a backdrop of a one off loss of US$21.2 million that affected the period’s results. The company reported quarterly revenue rising from US$238.0 million in Q1 2025 to US$252.7 million in Q4 2025. Over the same period, basic EPS ranged from US$0.25 in Q1 to US$0.60 in Q4, while trailing net profit margin came in at 7.5% compared with 9.1% a year earlier. For investors, an important consideration is how sustainably Progress can convert this revenue base into margins, with forecast earnings growth exceeding forecast revenue growth and placing additional attention on the quality of profitability.

See our full analysis for Progress Software.

With the headline numbers on the table, the next step is to weigh them against the widely followed bull, bear, and consensus narratives around Progress Software to assess which views are supported by the data and which may need to be reconsidered.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Ease Back To 7.5%

• Over the last 12 months, Progress Software reported a net profit margin of 7.5%, compared with 9.1% in the prior year, and this period also includes a one off loss of US$21.2 million.
• What stands out for a bullish view is that trailing net income of US$73.1 million and EPS of US$1.70 sit alongside forecast earnings growth of about 10.1% per year. This combination supports the idea that profitability could build on this base even though margins have softened from 9.1% to 7.5%.
  • Bulls who focus on the margin dip can point out that earnings over the past year still grew about 6.9% compared with the 5 year trend of a 6% yearly decline, so the recent period looks stronger than the longer history in the data provided.
  • At the same time, the large US$21.2 million one off loss in the trailing 12 months reminds you that part of the margin pressure is tied to a specific charge, which bulls may view differently from ongoing operating performance.

To see how these margin trends feed into long term growth stories and valuation checks, many investors look for a single place where the earnings narrative is pulled together. 📊 Read the full Progress Software Consensus Narrative.

Interest Coverage Sits In The Spotlight

• Risk checks flag that interest payments are not well covered by earnings, which sits uncomfortably next to trailing net income of US$73.1 million and a 7.5% margin because it points directly at how much room there is to service debt out of those profits.
• Critics highlight this weak interest coverage as a core bearish concern, and the figures help explain why. Even with earnings forecast to grow around 10.1% per year and revenue growth projected at about 1.3% per year, the company’s ability to comfortably meet interest costs depends on that earnings path playing out while margins hold up from the current 7.5% level.
  • For a bearish narrative, the tension is that the past 5 years show earnings declining roughly 6% per year, so some readers may question how easily the business can support both growth plans and interest costs if results were to look more like that longer term pattern again.
  • On the other hand, the last year’s earnings growth of about 6.9% sits above that 5 year trend, which gives bears concrete data to watch in future reports to see whether the recent improvement in earnings versus history is temporary or becomes more consistent.

Valuation Gap Versus DCF And Peers

• On the valuation side, the shares trade on a P/E of 25.1x compared with 30.9x for the US Software industry and 38.4x for peers, while the DCF fair value in the data is US$87.84 against a current share price of US$42.75, which is about 51.3% below that DCF figure.
• Supporters with a bullish tilt often point to this combination of a lower P/E than industry and peers plus the gap to the US$87.84 DCF fair value as a potential value signal. The numbers in the recent results add some weight to that because trailing revenue of US$977.8 million and net income of US$73.1 million provide tangible cash generating scale that can be compared directly with both the current US$42.75 price and the higher analytical reference points.
  • What is interesting for that bullish angle is that the forecast earnings growth rate of about 10.1% per year is higher than the 5 year earnings trend of a 6% annual decline, which gives context for why some investors might see the current P/E discount as appealing.
  • At the same time, bears can reasonably point out that any perceived discount to DCF fair value or to peers on P/E only matters if margins, currently at 7.5%, and interest coverage both improve or at least remain stable, so valuation and fundamental execution stay tightly linked in this story.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Progress Software's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Progress Software’s softer 7.5% net margin, weak interest coverage, and reliance on forecasts highlight that balance sheet resilience is a key area of concern.

If you want companies where servicing debt looks less tight, check out solid balance sheet and fundamentals stocks screener (391 results) today to focus on businesses built on stronger financial footing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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