A：The financial results for the fourth fiscal quarter and fiscal year 2025 include annual revenue of $978 million, up 30% year over year, and earnings per share of $5.72, up 16% from fiscal year 2024. For the fourth quarter, revenue finished at $253 million, up 18% year over year, and earnings were 1 dollar 51 cents, well above the high end of guidance.

A：The growth and strong performance in fiscal year 2025 were driven by a combination of Sharefile and the robust performance of the overall product portfolio, especially during the second half of the year, which was increasingly propelled by customers' AI projects.

A：The impact of Sharefile and Newt on Progress Software was significant, as they proved to be excellent acquisitions that met every goal on or ahead of schedule, brought in talented team members with cutting-edge expertise, and have contributed to enhancing the company's results.

A：Highlights from the investment in innovation and R&D during the fourth quarter include the launch of Progress ARKI RA, the industry's first generative content management system with built-in AI capabilities in Sitefinity, an enterprise-grade AI UI generator, and Automate MSK, a new cloud-native file transfer solution.

A：The addition of Progress Federal Solutions to the DoD's Tradewind Solutions Marketplace signifies that the company's scalable, secure, and innovative AI solutions are trusted by the US Department of Defense, and this designation allows DoD customers to rapidly procure and deploy the Progress Data Platform without going through usual government procurement processes.

A：The new facility in Costa Rica serves as a center of excellence for tech support, customer success, sales, and corporate functions, helping to support regional growth in the US time zone and create new opportunities to deliver value to customers and support the company's growth.

A：Progress has been ranked number 1 among large software companies in the region by the Boston Globe in its recent list of top places to work, reflecting the company's positive inclusive culture and effective team retention strategies.

A：Over the past few quarters, Progress's M&A strategy has been marked by selectivity, patience, and discipline. The company has been looking for infrastructure software vendors with solid technology and a stable customer base but has found few suitable assets available in the market.

A：The key components of Progress's financial and strategic outlook include a focus on ARR growth consistent with the script growth experienced in the previous fiscal year. The company expects minimal revenue impact from multi-year contract renewals, projecting annual revenue growth similar to ARR growth. Aggressive debt repayment, including a planned repayment of $250 million of the revolving line of credit, is also highlighted, aiming to improve the net leverage ratio. The company's guidance includes specific financial metrics such as revenue, operating margin, and earnings per share for the first quarter and the full year of 2026.

A：The concerns regarding AI disruption in the business world include the level of hype and fear it has generated, the potential for new competitors to enter the market with offerings similar to current applications, the difficulty of migrating data from existing systems to new ones, the effort and risk involved in such migrations, and the challenge of retraining employees on new systems.

A：Businesses face challenges such as the effort and cost required to migrate data from their current applications to new ones, the risk associated with such migrations, and the need to retrain employees on new systems. Historical examples show that moving from one ERP to another, such as from one to SAP, can be a disaster, particularly for manufacturing companies that depend on such systems for their operations.

A：The speaker believes that although software is becoming AI-enabled, there will still be a demand for digital experiences. People will want to leverage natural language interfaces and easily integrate AI with existing data, making it accessible for business-critical work and workflows.

A：The speaker views the future of software in the market as positive, with continued success expected due to ongoing investment in products. The broad presence of the company across various industries and sectors, from small to large businesses, is anticipated to yield growth. The company is seen as well-hedged due to its extensive reach across the technology stack, which should contribute to maintaining growth rates.

A：The speaker acknowledges that software companies, including Progress, need to embrace AI and help customers leverage it. This is in line with the company's strategy, which is being pursued aggressively to facilitate the monetization of AI for its customers, with the aim to manifest in net retention rates and overall growth.

A：Currently, investment in AI is limited to a small number of tech companies, while many other companies are leveraging existing infrastructure through spending on data centers and foundational business services.

A：The speaker compares the current stage of AI investment to the early internet phase where infrastructure was built rapidly with the expectation that it would take time to find suitable applications. This mirrors the early investment phase in AI, with the expectation that it will accelerate over time, similar to how Amazon developed over a decade after laying infrastructure.

A：The speaker indicates that multi-year contract renewals in fiscal 26 will not have a significant material impact on revenue growth. As a result, there is an implication that free cash flow and its linearity might also be less affected, with the potential for an acceleration in free cash flow. However, specific commentary on the impact of seasonality and linearity of cash flow is not provided.

A：The company's SaaS revenues experienced a strong sequential increase in the last quarter, driven by ShareFile and other SaaS offerings. Looking forward to the next fiscal year, the growth of SaaS, including ShareFile, is expected to be more consistent with the annual results and to follow a steady growth trajectory rather than showing similar strength as in the last quarter.

A：The speaker notes a challenging environment for small companies as customers are questioning their viability and deciding whether to switch to larger alternatives. This uncertainty has led to increased churn and softness in growth and net retention rates for businesses exposed to the federal government. The company remains selective in acquisitions, preferring to buy solid businesses with sustainable retention rates.

A：The guidance for operating margins in the upcoming year is for them to remain roughly flat. The strong performance in the last quarter, which exceeded expectations, was due to ShareFile integration being faster and less costly than anticipated, leading to quicker attainment of target margins. As a result, the company is now in a position to make investments in other business areas and continue to grow.