PRGS

Progress runs a deliberate "total growth strategy": acquire mature, sticky software (Ipswitch, Chef, Kemp, MarkLogic, ShareFile, Nuclia), milk high-margin recurring revenue, and return capital via buybacks. The model works on cash flow — gross margin is 80.8%, operating cash flow is $235M against just $5.7M of capex (~$229M free cash flow, a ~16% FCF yield on the $1.43B market cap). On that lens the stock is cheap and the $105M of buybacks (shrinking shares ~2.9%) is well-funded. The MD&A confirms the formula explicitly: "predictable and stable recurring revenue and high levels of profitability," funded by "accretive acquisitions."

The catch is that almost none of the headline growth is organic and almost none of it reaches the bottom line. Revenue's +29.8% jump is overwhelmingly ShareFile, which contributed $261.6M in FY2025 — strip it out and the base barely moved. Meanwhile net income has gone nowhere in four years ($95.1M in FY2022 → $70.2M → $68.4M → $73.1M), because the debt and intangible amortization that fund the deals ($464M of intangibles from ShareFile alone) eat the operating gains. Net margin has compressed to 7.5% and EPS rose only 7.8%. You are paying 20.4x earnings for a company whose earnings have been flat since 2022 — the multiple is only justified by the cash flow, not the income statement.