Progress Software Corporation (PRGS) shares are taking a dip on Monday following the announcement of a definitive agreement to acquire ShareFile for $875 million. This strategic move combines cash and an existing revolving credit facility to bring ShareFile’s innovative document-centric collaboration platform under the Progress umbrella.
ShareFile stands out for its SaaS-native, AI-powered solutions, catering to key sectors like business services, financial services, healthcare, and construction. The acquisition is poised to significantly boost Progress’ revenue, adding over $240 million annually and expanding its customer base by over 86,000.
This deal is anticipated to finalize within Progress’ fiscal year, ending November 30, 2024, subject to regulatory approvals and customary closing procedures. Yogesh Gupta, CEO of Progress, highlights the strategic fit of ShareFile with Progress’ Digital Experience portfolio. He envisions the acquisition enabling organizations to streamline secure document and content sharing, thereby enhancing both client and team collaboration.
To accommodate this significant investment, Progress’ Board of Directors has made the decision to suspend the quarterly dividend. This capital reallocation will prioritize debt repayment, bolster liquidity for future M&A activities, and support share repurchases.
Despite the acquisition, Progress remains optimistic about its financial performance. The company anticipates its third-quarter revenue and adjusted earnings per share (EPS) to meet or exceed the high end of its previous guidance. This translates to revenue projections of $174 million to $178 million and adjusted EPS of $1.11 to $1.15. The analyst consensus for the third quarter is currently positioned at $175.9 million for revenue and $1.14 for adjusted EPS. Progress is scheduled to unveil its financial results for the third quarter after the market closes on Tuesday, September 24, 2024.
For investors seeking exposure to Progress Software, the Small Cap US Equity Select ETF (RNSC) presents an option.
At the time of writing, PRGS shares are experiencing a 1.59% decline, settling at $56.74.
