Progress Software Expects Domo Deal to Weigh on Fiscal 2027 Margin; Quarterly Earnings Rise Annually

06:54 AM EDT, 10/01/2026 (MT Newswires) -- Progress Software (PRGS) expects its acquisition of Domo's artificial intelligence and data platform business to compress fiscal 2027 operating margins, while the software company reported a year-over-year increase in its fiscal third-quarter earnings. Progress Software last week completed its purchase of Domo's AI and data platform business under a $400 million cash deal agreed in July. The remaining Domo entity was renamed Huckleberry.ai. The company expects Domo's operating margin to run "slightly below" 30% as synergies ramp, resulting in some compression of "maybe 100 to 200 basis points" on Progress Software's overall operating margin for fiscal 2027, Chief Financial Officer Anthony Folger said during an earnings call late Wednesday, according to a FactSet transcript. "A Progress margin in the range of 38% to 39% might look more like 36% to 37% as the integration proceeds," according to Folger. "Any 2027 margin compression is the result of integration timing and it reverses as the synergies are fully realized." For fiscal 2026, Progress Software now anticipates its adjusted operating margin to come in at 38%, down from its previous projection of 39%. The revised guidance includes the impact of Domo's business, Folger said on the call. For the three-month period ended August, Progress Software's adjusted earnings increased to $1.69 per share from $1.50 the year before, while four analysts polled by FactSet expected $1.52. Revenue declined 2% to $246 million, below the consensus of $247.3 million among five analysts. Annual recurring revenue, or ARR, ticked up 1% annually to $873 million on a constant currency basis. "We delivered steady growth in ARR and earnings through strong execution and disciplined expense management, while continuing to improve our balance sheet," Chief Executive Yogesh Gupta said in the earnings release. The company now expects adjusted EPS to be in a range of $6.15 to $6.23 for the ongoing fiscal year, up from its previous guidance of $6.09 to $6.21. Revenue is pegged at $1.04 billion to $1.05 billion, up from the prior forecast of $990 million to $1 billion. Analysts surveyed by FactSet are estimating non-GAAP EPS of $6.19 and sales of $1.03 billion. For the ongoing quarter, the firm is targeting adjusted EPS of $1.24 to $1.33 on revenue of $297 million to $305 million. Analysts are looking for non-GAAP EPS of $1.38 and sales of $278.6 million. Last month, Oracle (ORCL) reported fiscal first-quarter results above Wall Street's estimates as cloud infrastructure sales more than doubled year over year. In July, IBM (IBM) reported second-quarter results that fell short of analysts' estimates.