Progress Software Q2 2026 Earnings Call - AI Data Context Drives Broad Portfolio Strength and Raised Guidance

Tawanda, Conference Call Operator: Hello, welcome to Progress Software second quarter 2026 earnings conference call. At this time, all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask the question during the session, you will need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Michael Micciche. Sir, you may begin.

Michael Micciche, Investor Relations, Progress Software: Thank you, Tawanda. Good afternoon, everybody. Thanks for joining us for Progress Software second fiscal quarter 2026 financial results conference call. With me tonight are Yogesh Gupta, our President and CEO, and Anthony Folger, our Chief Financial Officer. Before we get started, let’s go through the safe harbor statement. During this call, we will discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives, and other information that might be considered forward-looking. Such forward-looking information represents Progress Software’s outlook and guidance only as of today and is subject to risks and uncertainties, our actual results may differ materially.

For a description of the factors that may affect our future results and operations, please refer to the risk factors in our SEC filings, particularly the risk factors section of our most recent Form 10-K and the latest 10-Q, which was filed in conjunction with this announcement this evening. Progress assumes no obligation to update forward-looking statements included in this call. Additionally, please note that all the financial figures referenced in this call tonight are non-GAAP measures unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP figures in our earnings press release, which was issued after the market close today. This document contains additional information related to our financial results for the second quarter of fiscal 2026. I recommend that you reference it for specific details.

We’ve also provided a slide presentation that contains supplemental data for our second quarter and provides additional highlights and financial metrics. Both the earnings release and the supplemental presentation are available on the investor relations section of our website at investors.progress.com. Of course, today’s call is being recorded in its entirety, it should be available for replay shortly after we finish tonight on the investor relations section of our website. With that out of the way, Yogesh, I’ll turn it over to you.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Thank you, Mike, and good afternoon, everyone. Q2 was another strong quarter for Progress Software as our results exceeded our expectations, and we were able to raise our guidance again for the full year. Our Q2 2026 results reflect the resilience of our product portfolio, strong execution by all our teams, and the continued loyalty of our customers. Revenue of $253 million was up 7% year-over-year, with ARR of $868 million, up 2% year-over-year in constant currency. Operating margin was 40%, and earnings per share were $1.62, well ahead of the high end of our guidance. We also generated approximately $79 million of adjusted free cash flow and delivered a net retention rate of 100%. These results exceeded our expectations and guidance across every metric and were driven by broad-based strength throughout the portfolio.

We saw particularly strong performance in our data platform products as our customers increasingly leverage their business data to provide context for AI. We also saw strength across the rest of our portfolio, including infrastructure management and content-driven workflow automation, demonstrating the benefits of our diversified product strategy and the mission-critical role our software continues to play for customers of all sizes around the world. When viewed against the backdrop of the last several quarters, I believe Q2 reinforces the strength and consistency of our business model. Over the past year, we have continued to demonstrate our ability to generate durable recurring revenue, strong margins, and significant cash flows while integrating acquisitions, reducing debt, investing in innovation, and navigating a rapidly evolving technology environment. Over the past year, investors have tried to sort out whether AI ultimately will benefit or disrupt software.

Our view remains largely unchanged, that AI represents an opportunity for Progress Software. The reason being, while certain aspects of the software business are dramatically changing, enterprises have begun to realize that context and control are key to AI efficacy, outcomes, and value. These realizations play to the strengths of Progress Software. Our data platform and workflow automation products provide the context needed for AI to deliver reliable, verifiable, and trustworthy outcomes. These products, along with our infrastructure management offerings, deliver the control that AI needs for security, risk mitigation, and cost control. Every modern enterprise runs on three foundational software layers: business logic and workflows; data and content; and security and infrastructure management. Progress Software has spent decades earning a place in that core. We are uniquely positioned in those three foundational layers, which continue to be critical in a world where AI is changing how businesses run.

Over the past few years, we’ve been embedding AI capabilities across our portfolio and have increasingly focused on helping customers build responsible AI-powered applications and digital experiences. We continue to see growing customer interest in leveraging our technologies to improve productivity, automate workflows, and accelerate innovation. Just today, we launched Progress Chef Enterprise Management for NVIDIA DGX Spark, the world’s smallest AI supercomputer, as NVIDIA calls it. NVIDIA is bringing powerful AI computing out of the data center and into the hands of developers across the enterprise. As the adoption of systems grows across offices, research facilities, edge locations, and secure facilities, organizations will need to manage them with the same rigor as the rest of their critical infrastructure. Recognizing that, NVIDIA identified Progress Software and our Progress Chef platform as a critical enterprise manageability partner to support DGX Spark deployments.

This Chef capability extends the reach of Progress’s infrastructure management control to a fast-growing class of persistent AI infrastructure at the edge and underscores our broader strategy to help organizations develop, deploy, and manage AI securely and responsibly across their data, digital experiences, and the underlying infrastructure. Speaking of data, we’re particularly encouraged about the Progress Data Platform. Last quarter, we highlighted a seven-figure deal amongst our wins, and we saw continued momentum through the second quarter. As organizations move beyond AI experimentation and into production deployments, they are increasingly recognizing that successful AI outcomes depend on leveraging data for context. AI agents are only as effective as the enterprise knowledge that underlies them, the context. Much of that knowledge lives in systems of record and unstructured content, documents, emails, support records, and conversations, often disconnected from the systems where AI operates.

Simply trying to provide all that context to AI is hard and extremely expensive. Token expenses rise dramatically, and the accuracy of outcomes continually worsens as the context window grows for AI. Progress Agentic RAG and the data platforms transform fragmented business information into governed AI-ready intelligence, significantly improving tokenomics as well as the speed, accuracy, and reliability of the AI output. Those organizations that lead and succeed with AI will be the ones that securely contextualize and operationalize enterprise knowledge at scale. Our Data Platform helps customers address these challenges while improving accuracy, reducing complexity, and lowering the cost of AI deployments. We remain optimistic about the broad technology landscape. AI continues to reshape the software world, and we will continue to anticipate and respond while monitoring those trends closely.

We remain confident that our products will continue to be highly relevant and integral to our customers’ success, and in many cases are becoming even more valuable as customers seek trusted platforms on which to build their AI strategies. You can see this across our business in many ways, and it is especially apparent on our balance sheet. In Q2, collections improved again, and days sales outstanding declined significantly compared to where we exited fiscal year 2025. Our balance sheet continues to strengthen, and our leverage profile continues to improve as we paid down another $50 million of debt. Combined with our first quarter actions, we have now reduced debt by approximately $110 million during the first half of the fiscal year. We will continue to reduce leverage significantly through the rest of the year. Our capital allocation strategy remains unchanged.

First, we will reduce leverage and strengthen our balance sheet. Second, we will repurchase shares when we believe that valuation presents an attractive opportunity. Let me take a moment to reiterate our focus on our total growth strategy, which as we have said before, has three components. First, we innovate and invest in our products and our people, delivering new products and new capabilities faster than ever before while continuing to grow our people skills. Second, we look to grow our product portfolio and customer base through disciplined M&A with a specific focus on future AI relevance. Third, continue an unrelenting focus on our customers to drive the net retention rate to 100%. Speaking of M&A, our perspective is gradually becoming more optimistic as we see signs of sellers beginning to adjust their expectations.

Our strong balance sheet enables us to rapidly execute on the right opportunity. We remain very active in evaluating potential targets while staying disciplined. Go-forward AI relevance continues to be one of the key criteria when evaluating acquisition targets. We have built significant shareholder value over many years through a thoughtful and deliberate acquisition strategy. We will remain steadfast on our discipline and on our return thresholds. Turning to the outlook, our strong first half performance gives us confidence to raise our full year expectations, as Anthony will go through next. While customer activity and deal size can vary from quarter to quarter, we’re pleased with the momentum exiting Q2. Our updated guidance reflects both the strength of the first half execution and an optimistic and prudent view of the remainder of the year. In closing, we’re very pleased with our Q2 results.

We exceeded expectations on revenue, earnings, and cash flow. ARR improved, collections strengthened. We’re continuing to pay down debt aggressively. Most importantly, we believe Progress remains committed to helping our customers navigate a period of unprecedented technological change. We continue to see healthy customer engagement across the portfolio, growing interest in our AI-enabled data and infrastructure offerings, and strong demand for the mission-critical software our customers rely on every day. These factors, combined with a disciplined approach to capital allocation and M&A, position us well to continue creating shareholder value over the long term. As ever, I want to acknowledge and thank Progress employees around the globe for their continued excellence and dedication to making and keeping our customers successful. With that, I’ll turn the call over to Anthony.

Anthony Folger, Chief Financial Officer, Progress Software: All right. Thanks, Yogesh. Good afternoon, everyone. We’re very pleased to report outstanding second quarter results, a quarter highlighted by terrific performance across all key metrics. With that, let’s get right into the numbers. I’ll start with ARR, which remains our key metric for assessing top-line performance. We closed Q2 with ARR of approximately $868 million, representing 2% pro forma year-over-year growth. For clarity, our pro forma results include ARR from acquired businesses in all periods presented. This growth was broad-based across our portfolio, including OpenEdge, LoadMaster, WhatsUp Gold, MOVEit, our DevTools products, and ShareFile. Consistent with prior quarters, our net retention rate was strong, coming in at 100%, up from 99% last quarter. In addition to solid ARR growth, Q2 revenue of $253 million exceeded the high end of our guidance range and grew approximately 7% on a year-over-year basis.

Again, driven by broad-based strength across the portfolio, most notably DataDirect, Chef, MarkLogic, and LoadMaster. As we’ve mentioned on previous calls, the renewal timing of subscription contracts can have a meaningful one-time impact on revenue in any given quarter. That dynamic contributed positively in Q2, and combined with strong demand, resulted in very strong year-over-year growth. Beyond the product line contributions I’ve detailed, it’s also worth echoing Yogesh’s comments on our Q2 top-line performance, especially increased demand for our Progress Data Platform and the AI use cases that PDP solves for enterprises. Turning to expenses. Total cost and operating expenses were approximately $151 million for the quarter, up 6% compared to the year-ago quarter. The year-over-year increase included higher variable costs associated with our strong top-line performance and was otherwise very much in line with our expectations.

Importantly, relative to the revenue outperformance, our incremental margins were strong, demonstrating continued cost discipline across the business. Operating income of $103 million was well above our expectations, resulting in an operating margin of 40% for the quarter. Earnings per share of $1.62 also came in well ahead of our expectations, driven largely by our strong revenue performance. On a year-over-year basis, EPS grew by approximately 16%. Turning now to a few balance sheet and cash flow metrics. We ended the quarter with cash and cash equivalents of $103 million and total debt of $1.3 billion, for a net debt position of approximately $1.2 billion. Our net leverage ratio at the end of Q2 was approximately 2.9 times on a trailing 12-month basis, marking a significant improvement from 3.4 times at the beginning of the fiscal year.

As planned, our 2026 convertible notes matured in April, and the $360 million in principal was paid using our revolving credit facility. With that maturity behind us, our total debt is now comprised of $850 million drawn on our revolving credit facility and $450 million as convertible notes due in 2030. At the end of Q2, we had $650 million in unused revolver capacity, providing ample liquidity and flexibility to continue executing our total growth strategy. DSO for the quarter was 49 days, an improvement of four days compared to 53 days in the year-ago quarter. Deferred revenue was approximately $423 million at the end of Q2, an increase of approximately $35 million compared to the year-ago quarter. Adjusted free cash flow was $79 million for the quarter, a significant increase compared to $37 million in the prior year quarter, was driven by strong collections and excellent operating performance.

On a first-half basis, adjusted free cash flow was $178 million. Again, a reflection of strong operating performance and improved collections spanning both Q1 and Q2. As for capital allocation, during the first half, we repaid net $110 million of debt and repurchased approximately $55 million of Progress stock, leaving approximately $148 million remaining under our current share repurchase authorization. This capital allocation mix represents a slight shift from our initial plan, allowing for more share repurchases while maintaining meaningful leverage reduction. As previously noted, our net leverage ratio now stands at 2.9 times. Turning now to our outlook for Q3 and the full year. Before getting into the numbers, I’d like to provide some context on how we’re thinking about the second half of the year. First, revenue in the first half was exceptionally strong. Year-over-year growth of more than 5%, including 7% in Q2.

We’re thrilled with this performance and the underlying demand it reflects. That said, our first half growth was partially influenced by deal timing. As we’ve noted many times on past calls, the clearest read on our underlying top-line momentum is ARR, which grew 2% year-over-year. We’ll keep that in mind as I turn to the outlook. Next, on capital allocation, we’ve updated our full year plan to reflect approximately $220 million of net debt repayment and approximately $75 million of share repurchases. At current valuation levels, we believe our shares are an attractive value, have therefore allocated a little more towards repurchases while still maintaining aggressive deleveraging. As a result, we now expect to end the year with approximately $740 million drawn on our revolving credit facility and a net leverage ratio of approximately 2.8 times.

With that context, for the third quarter of 2026, we expect revenue between $244 million and $250 million, and earnings per share of between $1.53 and $1.59. For the full year 2026, we are raising our outlook and now expect revenue between $990 million and just over $1 billion, an increase of $2 million from our prior guidance, reflecting approximately 1%-2.5% growth over fiscal year 2025. We expect an operating margin for the year of approximately 39%, adjusted free cash flow of between $271 million and $283 million, and unlevered free cash flow of between $323 million and $334 million, both meaningful increases from our prior guidance. Finally, earnings per share of between $6.09 and $6.21, an increase of $0.18 from our prior guidance.

Our guidance for full year EPS assumes a tax rate of 20%, the repurchase of approximately $75 million in Progress shares, total debt repayment of approximately $220 million, and approximately 42 million weighted shares outstanding. In closing, Q2 was an exceptional quarter that demonstrates the strength and resilience of our diversified product portfolio. We delivered revenue and earnings above expectations, generated strong free cash flow, and continued to make excellent progress on deleveraging our balance sheet. We’re entering the second half with confidence in our ability to execute, and we believe we remain well-positioned to deliver on our raised outlook for fiscal 2026 and beyond. With that, I’d like to open the call for questions.

Tawanda, Conference Call Operator: Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of John DiFucci with Guggenheim Securities. Your line is open.

John DiFucci, Analyst, Guggenheim Securities: Thank you. Thanks for taking my question. I have a question for you, Yogesh, and another for Anthony. Yogesh, you said you’re starting to see potential sellers beginning to adjust their expectations. We’re more than a year and a half now after the successful ShareFile acquisition, which was a different animal for you. Beyond just the size, it was very different, and it was successful.

Anthony Folger, Chief Financial Officer, Progress Software: Yeah.

John DiFucci, Analyst, Guggenheim Securities: I guess, given this experience, what’s your appetite for similar acquisitions of size or pure SaaS like that was or is? On the other side of the coin, can you also just talk a little bit more, give a little more color on your comments, your prepared comments, where you said that sellers are beginning to adjust their expectations? Thanks.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Absolutely, John. Definitely. I think the first part of the question, yes. I think we are comfortable with doing a transaction that is at the same scale in terms of the size of the business that we acquire. As you know, John, our criteria historically has been that we want to pick up companies that are about 10%-25% of our

Scale and size on revenue, given that we are now about $1 billion in revenue, ShareFile is just about a 25% contributor to that. You’re looking at another ShareFile size acquisition as being very well within that. When we acquired it, actually, it was significantly more because our denominator was smaller. We’re very comfortable doing that. We’re also comfortable buying businesses that are cloud-based. However, just like we did with ShareFile, just like we did with other acquisitions, including MarkLogic, we’re very cognizant of the fact that AI relevance and what the future lies for the business has to also be something that we get very comfortable with. That is such a critical thing, and we want to make sure that just like our platform, our portfolio is strong. Anything we pick up continues to have a great future ahead in the world of AI.

In terms of my comment about we’re beginning to see sellers adjusting their expectations. John, I think over the last few quarters, I have mentioned that when we talk to sellers, their expectations are still sort of not yet reset. I wouldn’t say that they have been completely reset, but I think we’re beginning to see some change in tone. We’re beginning to see folks going, "Yeah, we understand that the software industry is being reset in terms of valuations." That’s where that commentary comes from. That comes from several conversations, not just one or two that we’re having with potential targets. As you know, we speak to 50-60 targets every quarter. That continues unabated right now and has been.

It really was something that I thought was worthwhile sharing because I have said consistently over the prior few quarters that people’s expectations are still, unfortunately, out of line with reality. I wouldn’t say that they are completely in line with reality, but I do believe that there is movement, and there’s meaningful movement towards getting in line with reality.

John DiFucci, Analyst, Guggenheim Securities: Got it. That all makes sense, Yogesh, we expect you to keep doing what you’re doing, which you’ve done so far. Thank you. Anthony, if I could follow up here. Fiscal 3Q, results look really good, the guidance looks good. Fiscal 3Q revenue guidance was a touch below the street. You saw this quarter a sequential acceleration in your SaaS business. Was that more seasonal? We saw something similar to that last year, then the SaaS growth sequentially wasn’t the same into 3Q. Is that how we should be thinking about the guidance, or am I off somehow?

Anthony Folger, Chief Financial Officer, Progress Software: No, John, I think we certainly saw some strength in SaaS revenue this quarter. Sequentially, there was a nice step up. In prior quarters, we’ve had just some cleanup that we’ve had to do on ShareFile, we talked about that a little bit last quarter. The further away we get from close date, the smaller that cleanup becomes. I think we’re not completely normalized yet in terms of that business, but certainly getting to much smaller numbers and their impact on the business. Yeah, I think we’re just starting to see maybe a more normalized ShareFile number in that SaaS line. I wouldn’t expect it to bounce around materially, right? I mean, sequentially quarter to quarter, things should be moving like you would expect with a typical SaaS business.

I think it’s more the cleanup in the past that we’ve been dealing with in prior quarters, this one felt a bit cleaner and a bit stronger.

John DiFucci, Analyst, Guggenheim Securities: That sequential revenue guidance, which is just a little bit below the street at the midpoint, I don’t know.

Anthony Folger, Chief Financial Officer, Progress Software: Yeah.

Is there anything to think about that, then?

Yeah, it was just the timing. I mentioned we had, let’s say a little over 5% growth in the first half of the year and 7% growth in Q2. I mentioned some of that was timing. We did have some deals that we had expected in Q3, came in in Q2. Probably a little more than half the beat, maybe, for Q2 was timing. That pulls from Q3 into Q2. I don’t think it diminishes the strength we saw in Q2, but certainly causes us to just slide some numbers around from quarter to quarter. Like I mentioned, I think what we’re seeing is, for the full year, maybe 1%-2.5% revenue growth, which starts to map a little more closely to the ARR growth we’ve been seeing for the past few quarters.

John DiFucci, Analyst, Guggenheim Securities: Got it. Okay, thanks. That’s all really helpful. Thanks, guys.

Anthony Folger, Chief Financial Officer, Progress Software: Yep.

Tawanda, Conference Call Operator: Thank you.

John DiFucci, Analyst, Guggenheim Securities: Kid Rock.

Please stand by for our next questioner. Our next question comes from the line of Ittai Kidron with Oppenheimer & Co.. Your line is open.

Ittai Kidron, Analyst, Oppenheimer & Co.: Thanks. Hey, guys. Solid numbers. Yogesh, I wanted to start with you. You talked about in the prepared remarks about the data platform workflow and infrastructure management as kind of important vehicles for AI. Can you quantify roughly perhaps what % of your revenue is positioned within those portfolios? With AI now in place, is there a case to be made that over the next two, three years, you could actually drive, I don’t know, two or three, four points of organic growth off this portfolio that’s associated with AI?

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Ittai, as you know, we don’t do guidance for two, three years out, but joking aside, right? The business, when you think about our data plus content business, it’s actually more than two-thirds of our total business. I think people forget how much we are in the data and content and the workflows around that and the business. The whole thing around keeping information under control, connecting to information, integrating information sources together, leveraging that for AI, it is truly the bigger part of our business. I think that you’re right. I think over time, we expect that to be a healthy part of our business. To me, the fact that we are growing ARR 2% organic, we’ve sort of shared that over and over again over the last couple of years, that that’s where we see us landing.

I think we feel good about that going forward. I think part of the reason is that the data business, the data and content business, is going to be more and more important. I think the question in terms of further out, it’ll be interesting to see how adoption grows. We would love nothing more than to have great organic growth, but at this stage, where we feel confident is the 2% range that we’ve talked about.

Ittai Kidron, Analyst, Oppenheimer & Co.: Is the 2% volume driven? You think with AI, you can drive better price increases?

Yogesh Gupta, President and Chief Executive Officer, Progress Software: I think it’s a combination, right? When you think about it, a lot of the data platform business is somehow or the other related to consumption of data. I think people don’t think of it that way. When you think about it, right, if you’re a data platform, the more data you store in it, the more data you access from it, the more you need a greater capacity. It is an indirect connection to consumption. It is not a direct connection to consumption. It is that. In that sense, if I may say so, for now, it is purely a capacity/consumption driven growth among the existing customer base. We have one new customer, as I’ve talked about, with our data platform business. That’s an interesting early set of indicators, and let’s see how that goes.

I think that to us, pricing is a secondary lever, Ittai, that we have not pulled on yet. We think that if we get to a stage where we start seeing that there is an opportunity for us to do something there, we absolutely will. Right now, what we’re talking about is not really pricing based, but more consumption, volume of information, and really, the amount of work that they get out of the platform.

Ittai Kidron, Analyst, Oppenheimer & Co.: Got it. Anthony, a couple for you. A very good free cash flow in the first half of the year. $178, I think you mentioned, was the number. You talked about $110 for the second half. I understand that part of the $178 was just better collections, which probably there’s a limit to how much you can squeeze there. I’m guessing, wondering how comfortable are you with that $110? What are the opportunities for upside here? How do I think about that?

Anthony Folger, Chief Financial Officer, Progress Software: Yeah. The first half was definitely, I would say, an exceptional half for free cash flow. Really, Ittai, if you go back to last year, after we acquired ShareFile, there was a lot of talk about a lot of cleanup we had to do. We had to move billing systems. If you go back to Q2 of last year, we had a really low cash flow quarter because we were going through that transition. I would maybe characterize it by saying our DSOs got extended last year and some of those receivables built up. I think the team did a good job of just operationally breaking through a lot of those issues Q3, Q4 last year, and then really driving accelerated collections this year in the first half to clean that up.

I think we’re very confident in the second half outlook around free cash flow. Certainly, we like to put numbers out that we think we can beat. I think we’re very comfortable with it. The first half is definitely a bit of an outlier because last year, there was a lot of cleanup that needed to be done, and we sort of saw the benefits of it in the first half of this year.

Ittai Kidron, Analyst, Oppenheimer & Co.: Very good. Maybe last one, and maybe it’s for both of you. As I think about M&A going forward, I guess it’s good to hear that you’re a little bit more optimistic here. When I look at your capacity to do M&A, you’ve got $650, I think, on the revolver, you’ve got $100 on the balance sheet, so $750 put together. I’m just trying to think, do you envision an acquisition that will require to even increase your revolver even more? Or you’re thinking about it more in the context of the capacity that’s available to you within the revolver? Would love to get a perspective on this.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Yeah. We believe that we want to stay within the revolver. Again, one never says never, but in general, we feel good about what we can do with that. Again, as I said, I think valuations are coming our way a little bit. We should be able to do whatever we are looking to do within that revolver. That is our intent at this point at least, Sethai.

Ittai Kidron, Analyst, Oppenheimer & Co.: Okay.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Again, if some unique, phenomenally wonderful opportunity comes up and it makes sense, we will obviously do what’s right for the business. I right now don’t expect us to do anything where going beyond the revolver is required. I think existing capacity is very good, and it continues to get better every quarter, every month, right, as we pay down debt.

Ittai Kidron, Analyst, Oppenheimer & Co.: Got it. Thank you, guys. Good luck.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Thank you.

Tawanda, Conference Call Operator: Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone. Please stand by for our next question. Our next question comes from the line of Lucky Schreiner with D.A. Davidson. Your line is open.

Lucky Schreiner, Analyst, D.A. Davidson: Great. Thanks for taking my questions. Obviously the license outperformance, some of that deal timing. I’m curious if you’ve noticed any change in duration of contracts, especially as customers evaluate their SaaS portfolios in the age of AI. Are you seeing any change, better or worse, in terms of the contract durations that you’re signing with customers? Thanks.

Anthony Folger, Chief Financial Officer, Progress Software: Yeah. Thanks, Lucky. I would say we’re not seeing a change. I think for the most part, deals that were coming in at three years or five years on the last cycle are getting renewed for similar duration. I wouldn’t say there’s necessarily a change that’s driving things. It’s just the timing of when those renewals come through. To be honest, your comment, I think is spot on. I think the narrative out there is that there’s a lot of companies that are reevaluating everything based on the AI dynamics and opportunities out there, you would think maybe we’d see a shortening in term or duration, and we’re not. We continue to see good strength across the portfolio in that regard. I think, again, it just feels like it’s been a really strong quarter and a really strong first half.

Lucky Schreiner, Analyst, D.A. Davidson: Yeah. Agreed. Retention rates obviously improving shows that out as well. Maybe a follow-up. In terms of the strong demand across your customer base, anything to call out from a vertical perspective? Previously you’ve called out a nice one with a semiconductor company, but in general, any tailwinds within certain customer bases that you’d want to call out?

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Lucky, I don’t think there’s any specific one. There is a fair bit of business in those industries that have some regulatory pressures and regulatory needs. We see good traction there. We see good traction with government sector, in some aspects of it, obviously not all. I think it just depends on how the things land within each quarter. Ours is a very broad business. As you know, it’s way more horizontal than most businesses are, Lucky. We don’t see a strong trend in any vertical that I would say, "You know what? That’s a great vertical for us, and will be, let’s say, for the next quarter or two." If it were, we would share that, but it isn’t.

Lucky Schreiner, Analyst, D.A. Davidson: Awesome. Appreciate you taking my questions.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: You’re welcome.

Tawanda, Conference Call Operator: Thank you. Ladies and gentlemen, I’m showing no further questions in the queue. I would now like to turn the call back over to Yogesh Gupta for closing remarks.

Yogesh Gupta, President and Chief Executive Officer, Progress Software: Thank you for joining us this evening. We look forward to speaking with you in the near future. Have a good night.

Tawanda, Conference Call Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.