Progress Software's Big Bet: Acquires ShareFile For $875M While Hitting Pause On Dividends

Benzinga
2024.09.09 17:49
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Progress Software Corporation is set to acquire ShareFile for an undisclosed amount, slowing dividends to focus on debt repayment and future mergers. ShareFile, specializing in AI-powered document collaboration, is projected to generate over $20 million in annual revenue and gain 86,000 customers. Progress anticipates meeting or exceeding its third-quarter revenue and adjusted EPS guidance ranging from $125 million to $130 million and $0.11 to $0.15, respectively. PRGS shares fell 1.59% to $50.74 on the news. The deal is expected to close within the company's fiscal year ending November 30, 2024, pending regulatory approvals.

Progress Software Corporation PRGS shares are trading lower on Monday. The company entered a definitive deal to acquire ShareFile for $875 million, in a combination of cash and an existing revolving credit facility.

ShareFile offers SaaS-native, AI-powered document-centric collaboration for sectors including business services, financial services, healthcare, and construction.

ShareFile is expected to contribute over $240 million in annual revenue and add more than 86,000 customers to Progress.

The acquisition is expected to close within Progress’ fiscal year, ending November 30, 2024, pending regulatory approvals and other customary closing conditions.

Yogesh Gupta, CEO of Progress. “ShareFile fits strategically with Progress’ Digital Experience portfolio to enable organizations to deliver more effective client and team collaboration while simplifying the secure sharing of documents and other content.”

Dividend Suspension: Progress’ Board of Directors has approved suspending the quarterly dividend upon closing the ShareFile acquisition.

The capital will be redirected to debt repayment, increasing liquidity for future M&A and share repurchases.

Outlook: Progress expects its third-quarter revenue and adjusted EPS outlook to meet or exceed the high end of the prior guidance for revenue of $174 million- $178 million and adjusted EPS of $1.11 – $1.15. The analyst consensus is $175.9 million for revenue and $1.14 for adjusted EPS.

Progress plans to release financial results for its third quarter results after the market closes on Tuesday, September 24, 2024.

Investors can gain exposure to the stock via Small Cap US Equity Select ETF RNSC.

Price Action: PRGS shares are down 1.59% at $56.74 at the last check Monday.

Image from Shutterstock

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