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Progress (PRGS) Set to Buy MarkLogic, Guides Upbeat Q4 Results

Zacks Equity Research
·3-min read

Progress Software PRGS recently announced that it has entered into a definitive agreement to buy MarkLogic, a Vector Capital portfolio company and a well-known name in managing complex data as well as metadata.

Progress is expected to acquire MarkLogic for $355 million. The acquisition is currently expected to close in early 2023.

Progress also provided upbeat preliminary results for fourth-quarter fiscal 2022, now scheduled to be reported on Jan 17. Annual recurring revenues (ARR) are now expected to be roughly $497 million, up 3.5% year over year in the to-be-reported quarter.

This also reflects modest sequential growth. In third-quarter fiscal 2022, Progress reported an ARR of $495 million, up 13% year over year.

 

Progress Software Corporation Price and Consensus

Progress Software Corporation price-consensus-chart | Progress Software Corporation Quote

 

Portfolio Strength Drives Progress’ Prospects

Progress shares have gained 11.3% in the past year, outperforming the Zacks Computer & Technology sector, which has declined 33.1% over the same time frame.

Progress has been benefiting from a strong portfolio with a robust adoption rate for its Chef, OpenEdge, DataDirect and Sitefinity solutions. In the fiscal third quarter, the net dollar retention rate was 101.4%.

The latest deal, once completed, will further strengthen Progress’ portfolio. Leveraging MarkLogic’s multi-model NoSQL database, along with robust semantic metadata management and AI capabilities, Progress will be able to deliver solutions that will help its customers derive significant value from complex data.

The MarkLogic acquisition is expected to add more than $100 million in annual revenues and contribute strong cash flows upon completion.

Upbeat Guidance Reflects Solid Growth

Progress now anticipates non-GAAP revenues and earnings per share to be within or above the high-end of previously issued guidance provided on Sep 27, 2022.

For fourth-quarter fiscal 2022, non-GAAP revenues are expected between $158 million and $166 million. Non-GAAP earnings are expected to be in the range of $1.06-$1.10 per share.

The Zacks Consensus Estimate is currently pegged at $1.09 per share, indicating growth of 18.5% from the year-ago quarter’s reported figure.

For fiscal 2022, non-GAAP revenues are projected between $609 million and $617 million compared with $557 million reported in fiscal 2021.

Non-GAAP operating margin is expected between 39% and 40% compared with the 41% reported in fiscal 2021.

Non-GAAP earnings are projected between $4.08 and $4.12 per share compared with $3.87 reported in fiscal 2021.

The Zacks Consensus Estimate for fiscal 2022 revenues and earnings is currently pegged at $613.04 million and $4.10 per share, respectively.

Zacks Rank & Stocks to Consider

Progress currently has a Zacks Rank #3 (Hold).

Arista Networks ANET, Asure Software ASUR and Cogent Communications CCOI are some better-ranked stocks worth considering in the broader Computer & Technology sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Arista shares have dropped 17.5% in the past year. The Zacks Consensus Estimate for ANET’s fourth-quarter 2022 earnings stands at $1.21 per share, unchanged over the past 30 days.

Asure shares have gained 32.5% in the past year. The Zacks Consensus Estimate for ASUR’s fourth-quarter 2022 earnings stands at 1 cent per share, unchanged over the past 30 days.

Cogent shares have declined 15.3% in the past year. The consensus mark for CCOI’s fourth-quarter 2022 earnings stands at 18 cents per share, down a penny over the past 30 days.

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