In a market where tech stocks are often associated with high growth and volatility, Progress Software (PRGS) has been flying under the radar. However, its recent earnings report has caught my attention, and I believe it’s worth taking a closer look.

Progress Software reported better-than-expected results for Q1 2025, beating EPS estimates by 24% and revenue expectations by 29%. The company also raised its full-year profit guidance, citing strong demand for its AI infrastructure software. This is music to the ears of investors who have been waiting for a turnaround in this stock.

The numbers are impressive: annualized recurring revenue soared 48% to $836 million, with net retention rates above 100%, marking the second consecutive quarter it surpassed that mark. CEO Yogesh Gupta attributed these gains to “our product portfolio across the board,” highlighting the strength of its data platform and infrastructure management products.

But what’s even more interesting is Progress Software’s ability to adapt to changing market conditions. The company has been investing heavily in AI, which has paid off with a 29% year-over-year revenue growth rate. This trend suggests that PRGS may be well-positioned for future success as the demand for AI infrastructure software continues to grow.

Of course, no stock is without its risks. Progress Software’s shares have fallen nearly 15% so far in 2025, and some investors might view this dip as a buying opportunity. However, it’s essential to remember that past performance does not guarantee future results.

As an investor, I believe it’s crucial to consider the company’s financials before making any decisions. Progress Software has a solid balance sheet with $806 million in sales and a market capitalization of over $2 billion. The stock also boasts a gross margin of 74% and operating income of $157 million for Q1.

While some investors might view this as a hidden gem, others may see it as an opportunity to get in on the ground floor before the company’s growth accelerates further. As always, I recommend doing your own research and consulting with financial experts before making any investment decisions.

Key Takeaways:

• Progress Software reported better-than-expected Q1 2025 earnings
• Revenue grew by 29% year-over-year to $238 million
• Annualized recurring revenue soared 48%
• Net retention rates above 100%, marking the second consecutive quarter it surpassed that mark

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