06/28/2022 | Press release | Distributed by Public on 06/28/2022 14:18
Three Months Ended | ||||||||||||
GAAP | Non-GAAP | |||||||||||
(In thousands, except percentages and per share amounts) | May 31, 2022 | May 31, 2021 | % Change | May 31, 2022 | May 31, 2021 | % Change | ||||||
Revenue | $ | 148,747 | $ | 122,488 | 21 | % | $ | 150,879 | $ | 129,198 | 17 | % |
Income from operations | $ | 40,235 | $ | 22,282 | 81 | % | $ | 61,298 | $ | 49,712 | 23 | % |
Operating margin | 27 | % | 18 | % | 900bps | 41 | % | 38 | % | 300bps | ||
Net income | $ | 29,110 | $ | 13,557 | 115 | % | $ | 45,886 | $ | 36,513 | 26 | % |
Diluted earnings per share | $ | 0.66 | $ | 0.30 | 120 | % | $ | 1.04 | $ | 0.82 | 27 | % |
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP) | $ | 68,260 | $ | 54,690 | 25 | % | $ | 68,038 | $ | 55,411 | 23 | % |
Updated FY 2022 Guidance (June 28, 2022) |
Prior FY 2022 Guidance (March 29, 2022) |
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(In millions, except percentages and per share amounts) | GAAP | Non-GAAP | GAAP | Non-GAAP | ||
Revenue | $601 - $609 | $609 - $617 | $601 - $609 | $609 - $617 | ||
Diluted earnings per share | $2.11 - $2.21 | $4.05 - $4.11 | $2.16 - $2.23 | $4.01 - $4.09 | ||
Operating margin | 22% - 23% | 39% - 40% | 23% | 39% - 40% | ||
Cash from operations (GAAP) / Adjusted free cash flow (Non-GAAP) |
$188 - $193 | $185 - $190 | $188 - $193 | $185 - $190 | ||
Effective tax rate | 21 | % | 20% - 21% | 21 | % | 20% - 21% |
Q3 2022 Guidance | ||
(In millions, except per share amounts) | GAAP | Non-GAAP |
Revenue | $145 - $148 | $147 - $150 |
Diluted earnings per share | $0.46 - $0.48 | $0.96 - $0.98 |
Investor Contact: | Press Contact: |
Michael Micciche | Erica McShane |
Progress Software | Progress Software |
+1 781 850 8450 | +1 781 280 4000 |
[email protected] | [email protected] |
Three Months Ended | Six Months Ended | |||||||||||
(In thousands, except per share data) | May 31, 2022 | May 31, 2021 | % Change | May 31, 2022 | May 31, 2021 | % Change | ||||||
Revenue: | ||||||||||||
Software licenses | $ | 44,814 | $ | 30,107 | 49 | % | $ | 87,564 | $ | 63,424 | 38 | % |
Maintenance and services | 103,933 | 92,381 | 13 | % | 206,105 | 180,344 | 14 | % | ||||
Total revenue | 148,747 | 122,488 | 21 | % | 293,669 | 243,768 | 20 | % | ||||
Costs of revenue: | ||||||||||||
Cost of software licenses | 2,583 | 1,038 | 149 | % | 5,192 | 2,189 | 137 | % | ||||
Cost of maintenance and services | 15,801 | 14,673 | 8 | % | 30,946 | 27,992 | 11 | % | ||||
Amortization of acquired intangibles | 5,573 | 3,599 | 55 | % | 11,031 | 7,120 | 55 | % | ||||
Total costs of revenue | 23,957 | 19,310 | 24 | % | 47,169 | 37,301 | 26 | % | ||||
Gross profit | 124,790 | 103,178 | 21 | % | 246,500 | 206,467 | 19 | % | ||||
Operating expenses: | ||||||||||||
Sales and marketing | 32,704 | 29,262 | 12 | % | 66,173 | 58,731 | 13 | % | ||||
Product development | 28,643 | 26,415 | 8 | % | 57,316 | 50,963 | 12 | % | ||||
General and administrative | 19,207 | 16,460 | 17 | % | 36,198 | 29,884 | 21 | % | ||||
Amortization of acquired intangibles | 11,892 | 7,979 | 49 | % | 23,614 | 14,858 | 59 | % | ||||
Restructuring expenses | 143 | (64) | (323) | % | 654 | 1,093 | (40) | % | ||||
Acquisition-related expenses | 2,736 | 844 | 224 | % | 3,648 | 1,240 | 194 | % | ||||
Gain on sale of assets held for sale | (10,770) | - | * | (10,770) | - | * | ||||||
Total operating expenses | 84,555 | 80,896 | 5 | % | 176,833 | 156,769 | 13 | % | ||||
Income from operations | 40,235 | 22,282 | 81 | % | 69,667 | 49,698 | 40 | % | ||||
Other expense, net | (3,390) | (5,218) | 35 | % | (6,870) | (7,870) | 13 | % | ||||
Income before income taxes | 36,845 | 17,064 | 116 | % | 62,797 | 41,828 | 50 | % | ||||
Provision for income taxes | 7,735 | 3,507 | 121 | % | 13,233 | 9,310 | 42 | % | ||||
Net income | $ | 29,110 | $ | 13,557 | 115 | % | $ | 49,564 | $ | 32,518 | 52 | % |
Earnings per share: | ||||||||||||
Basic | $ | 0.67 | $ | 0.31 | 116 | % | $ | 1.13 | $ | 0.74 | 53 | % |
Diluted | $ | 0.66 | $ | 0.30 | 120 | % | $ | 1.11 | $ | 0.73 | 52 | % |
Weighted average shares outstanding: | ||||||||||||
Basic | 43,575 | 43,818 | (1) | % | 43,778 | 43,963 | - | % | ||||
Diluted | 44,253 | 44,472 | - | % | 44,480 | 44,562 | - | % | ||||
Cash dividends declared per common share | $ | 0.175 | $ | 0.175 | - | % | $ | 0.350 | $ | 0.350 | - | % |
Stock-based compensation is included in the condensed consolidated statements of operations, as follows: | ||||||||||||
Cost of revenue | $ | 472 | $ | 468 | 1 | % | $ | 883 | $ | 860 | 3 | % |
Sales and marketing | 690 | 1,752 | (61) | % | 2,092 | 3,255 | (36) | % | ||||
Product development | 2,740 | 2,412 | 14 | % | 4,962 | 4,331 | 15 | % | ||||
General and administrative | 5,455 | 3,730 | 46 | % | 9,534 | 6,700 | 42 | % | ||||
Total | $ | 9,357 | $ | 8,362 | 12 | % | $ | 17,471 | $ | 15,146 | 15 | % |
(In thousands) | May 31, 2022 | November 30, 2021 | ||
Assets | ||||
Current assets: | ||||
Cash, cash equivalents and short-term investments | $ | 225,913 | $ | 157,373 |
Accounts receivable, net | 64,733 | 99,815 | ||
Unbilled receivables and contract assets | 32,735 | 25,816 | ||
Other current assets | 32,488 | 39,549 | ||
Assets held for sale | - | 15,255 | ||
Total current assets | 355,869 | 337,808 | ||
Property and equipment, net | 13,649 | 14,345 | ||
Goodwill and intangible assets, net | 925,426 | 958,337 | ||
Right-of-use lease assets | 21,364 | 25,253 | ||
Long-term unbilled receivables and contract assets | 24,253 | 17,464 | ||
Other assets | 14,021 | 10,330 | ||
Total assets | $ | 1,354,582 | $ | 1,363,537 |
Liabilities and shareholders' equity | ||||
Current liabilities: | ||||
Accounts payable and other current liabilities | $ | 62,821 | $ | 84,215 |
Current portion of long-term debt, net | 6,234 | 25,767 | ||
Short-term operating lease liabilities | 7,843 | 7,926 | ||
Short-term deferred revenue | 207,331 | 205,021 | ||
Total current liabilities | 284,229 | 322,929 | ||
Long-term debt, net | 262,337 | 239,992 | ||
Convertible senior notes, net | 351,567 | 294,535 | ||
Long-term operating lease liabilities | 18,965 | 23,130 | ||
Long-term deferred revenue | 51,249 | 47,359 | ||
Other long-term liabilities | 14,089 | 23,103 | ||
Shareholders' equity: | ||||
Common stock and additional paid-in capital | 310,348 | 354,676 | ||
Retained earnings | 61,798 | 57,813 | ||
Total shareholders' equity | 372,146 | 412,489 | ||
Total liabilities and shareholders' equity | $ | 1,354,582 | $ | 1,363,537 |
Three Months Ended | Six Months Ended | |||||||
(In thousands) | May 31, 2022 | May 31, 2021 |
May 31, 2022 |
May 31, 2021 |
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Cash flows from operating activities: | ||||||||
Net income | $ | 29,110 | $ | 13,557 | $ | 49,564 | $ | 32,518 |
Depreciation and amortization | 19,379 | 14,829 | 38,597 | 26,691 | ||||
Gain on sale of assets held for sale | (10,770) | - | (10,770) | - | ||||
Stock-based compensation | 9,357 | 8,362 | 17,471 | 15,146 | ||||
Other non-cash adjustments | 1,673 | 708 | 6,115 | 3,123 | ||||
Changes in operating assets and liabilities | 19,511 | 17,234 | 11,376 | 21,900 | ||||
Net cash flows from operating activities | 68,260 | 54,690 | 112,353 | 99,378 | ||||
Capital expenditures | (1,148) | (950) | (1,979) | (2,116) | ||||
Issuances of common stock, net of repurchases | (22,796) | (17,185) | (43,702) | (28,700) | ||||
Dividend payments to shareholders | (7,789) | (7,763) | (15,573) | (15,617) | ||||
Proceeds from the issuance of debt, net of payment of issuance costs | - | - | 5,517 | - | ||||
Proceeds from sale of long-lived assets, net | - | - | - | - | ||||
Payments of principal on long-term debt | (1,716) | (87,262) | (3,435) | (106,025) | ||||
Proceeds from issuance of Notes, net of issuance costs | - | 349,196 | - | 349,196 | ||||
Purchase of capped calls | - | (43,056) | - | (43,056) | ||||
Other | 17,780 | 619 | 15,359 | 3,605 | ||||
Net change in cash, cash equivalents and short-term investments | 52,591 | 248,289 | 68,540 | 256,665 | ||||
Cash, cash equivalents and short-term investments, beginning of period | 173,322 | 114,371 | 157,373 | 105,995 | ||||
Cash, cash equivalents and short-term investments, end of period | $ | 225,913 | $ | 362,660 | $ | 225,913 | $ | 362,660 |
Three Months Ended | % Change | |||||||||
(In thousands, except per share data) | May 31, 2022 | May 31, 2021 | Non-GAAP | |||||||
Adjusted revenue: | ||||||||||
GAAP revenue | $ | 148,747 | $ | 122,488 | ||||||
Acquisition-related revenue(1)
|
2,132 | 6,710 | ||||||||
Non-GAAP revenue | $ | 150,879 | 100 | % | $ | 129,198 | 100 | % | 17 | % |
Adjusted income from operations: | ||||||||||
GAAP income from operations | $ | 40,235 | 27 | % | $ | 22,282 | 18 | % | ||
Amortization of acquired intangibles | 17,465 | 12 | % | 11,578 | 9 | % | ||||
Restructuring expenses and other | 143 | - | % | (64) | - | % | ||||
Stock-based compensation | 9,357 | 6 | % | 8,362 | 5 | % | ||||
Acquisition-related revenue(1) and expenses
|
4,868 | 3 | % | 7,554 | 6 | % | ||||
Gain on sale of assets held for sale | (10,770) | (7) | % | - | - | % | ||||
Non-GAAP income from operations | $ | 61,298 | 41 | % | $ | 49,712 | 38 | % | 23 | % |
Adjusted net income: | ||||||||||
GAAP net income | $ | 29,110 | 20 | % | $ | 13,557 | 11 | % | ||
Amortization of acquired intangibles | 17,465 | 12 | % | 11,578 | 9 | % | ||||
Restructuring expenses and other | 143 | - | % | (64) | - | % | ||||
Stock-based compensation | 9,357 | 5 | % | 8,362 | 6 | % | ||||
Acquisition-related revenue(1) and expenses
|
4,868 | 3 | % | 7,554 | 6 | % | ||||
Gain on sale of assets held for sale | (10,770) | (7) | % | - | - | % | ||||
Amortization of discount on notes | - | - | % | 1,480 | 1 | % | ||||
Provision for income taxes | (4,287) | (3) | % | (5,954) | (5) | % | ||||
Non-GAAP net income | $ | 45,886 | 30 | % | $ | 36,513 | 28 | % | 26 | % |
Adjusted diluted earnings per share: | ||||||||||
GAAP diluted earnings per share | $ | 0.66 | $ | 0.30 | ||||||
Amortization of acquired intangibles | 0.39 | 0.26 | ||||||||
Stock-based compensation | 0.22 | 0.19 | ||||||||
Acquisition-related revenue(1) and expenses
|
0.11 | 0.17 | ||||||||
Gain on sale of assets held for sale | (0.24) | - | ||||||||
Amortization of discount on notes | - | 0.03 | ||||||||
Provision for income taxes | (0.10) | (0.13) | ||||||||
Non-GAAP diluted earnings per share | $ | 1.04 | $ | 0.82 | 27 | % | ||||
Non-GAAP weighted avg shares outstanding - diluted | 44,253 | 44,472 | - | % | ||||||
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. |
Six Months Ended | % Change | |||||||||
(In thousands, except per share data) | May 31, 2022 | May 31, 2021 | Non-GAAP | |||||||
Adjusted revenue: | ||||||||||
GAAP revenue | $ | 293,669 | $ | 243,768 | ||||||
Acquisition-related revenue(1)
|
4,715 | 17,214 | ||||||||
Non-GAAP revenue | $ | 298,384 | 100 | % | $ | 260,982 | 100 | % | 14 | % |
Adjusted income from operations: | ||||||||||
GAAP income from operations | $ | 69,667 | 24 | % | $ | 49,698 | 20 | % | ||
Amortization of acquired intangibles | 34,645 | 12 | % | 21,978 | 8 | % | ||||
Restructuring expenses and other | 654 | - | % | 1,093 | - | % | ||||
Stock-based compensation | 17,471 | 5 | % | 15,146 | 6 | % | ||||
Acquisition-related revenue(1) and expenses
|
8,363 | 3 | % | 18,454 | 7 | % | ||||
Gain of sale of assets held for sale | (10,770) | (4) | % | - | - | % | ||||
Non-GAAP income from operations | $ | 120,030 | 40 | % | $ | 106,369 | 41 | % | 13 | % |
Adjusted net income: | ||||||||||
GAAP net income | $ | 49,564 | 17 | % | $ | 32,518 | 13 | % | ||
Amortization of acquired intangibles | 34,645 | 12 | % | 21,978 | 8 | % | ||||
Restructuring expenses and other | 654 | - | % | 1,093 | - | % | ||||
Stock-based compensation | 17,471 | 6 | % | 15,146 | 6 | % | ||||
Acquisition-related revenue(1) and expenses
|
8,363 | 3 | % | 18,454 | 7 | % | ||||
Gain of sale of assets held for sale | (10,770) | (4) | % | - | - | % | ||||
Amortization of discount on notes | - | - | % | 1,480 | - | % | ||||
Provision for income taxes | (10,481) | (4) | % | (11,652) | (4) | % | ||||
Non-GAAP net income | $ | 89,446 | 30 | % | $ | 79,017 | 30 | % | 13 | % |
Adjusted diluted earnings per share: | ||||||||||
GAAP diluted earnings per share | $ | 1.11 | $ | 0.73 | ||||||
Amortization of acquired intangibles | 0.78 | 0.49 | ||||||||
Restructuring expenses and other | 0.01 | 0.02 | ||||||||
Stock-based compensation | 0.40 | 0.35 | ||||||||
Acquisition-related revenue(1) and expenses
|
0.19 | 0.41 | ||||||||
Gain of sale of assets held for sale | (0.24) | - | ||||||||
Amortization of discount on notes | - | 0.03 | ||||||||
Provision for income taxes | (0.24) | (0.26) | ||||||||
Non-GAAP diluted earnings per share | $ | 2.01 | $ | 1.77 | 14 | % | ||||
Non-GAAP weighted avg shares outstanding - diluted | 44,480 | 44,562 | - | % | ||||||
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. |
Quarter to Date Adjusted Free Cash Flow | ||||||
(In thousands) | Q2 2022 | Q2 2021 | % Change | |||
Cash flows from operations | $ | 68,260 | $ | 54,690 | 25 | % |
Purchases of property and equipment | (1,148) | (950) | 21 | % | ||
Free cash flow | 67,112 | 53,740 | 25 | % | ||
Add back: restructuring payments | 926 | 1,671 | (45) | % | ||
Adjusted free cash flow | $ | 68,038 | $ | 55,411 | 23 | % |
Year to Date Adjusted Free Cash Flow | ||||||
(In thousands) | Q2 2022 | Q2 2021 | % Change | |||
Cash flows from operations | $ | 112,353 | $ | 99,378 | 13 | % |
Purchases of property and equipment | (1,979) | (2,116) | (6) | % | ||
Free cash flow | 110,374 | 97,262 | 13 | % | ||
Add back: restructuring payments | 2,345 | 4,664 | (50) | % | ||
Adjusted free cash flow | $ | 112,719 | $ | 101,926 | 11 | % |
Fiscal Year 2022 Updated Revenue Guidance | ||||||||||
Fiscal Year Ended | Fiscal Year Ending | |||||||||
November 30, 2021 | November 30, 2022 | |||||||||
(In millions) | Low | % Change | High | % Change | ||||||
GAAP revenue | $ | 531.3 | $ | 600.5 | 13 | % | $ | 608.5 | 15 | % |
Acquisition-related adjustments - revenue(1)
|
26.0 | 8.5 | (67) | % | 8.5 | (67) | % | |||
Non-GAAP revenue | $ | 557.3 | $ | 609.0 | 9 | % | $ | 617.0 | 11 | % |
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Ipswitch and Chef.
|
Fiscal Year 2022 Updated Non-GAAP Operating Margin Guidance | ||||
Fiscal Year Ending November 30, 2022 | ||||
(In millions) | Low | High | ||
GAAP income from operations | $ | 133.5 | $ | 139.8 |
GAAP operating margins | 22 | % | 23 | % |
Acquisition-related revenue | 8.5 | 8.5 | ||
Acquisition-related expense | 4.9 | 4.9 | ||
Restructuring expense | 0.9 | 0.9 | ||
Stock-based compensation | 34.4 | 34.4 | ||
Amortization of acquired intangibles | 69.1 | 69.1 | ||
Gain on sale of assets held for sale | (10.8) | (10.8) | ||
Total adjustments(2)
|
107.0 | 107.0 | ||
Non-GAAP income from operations | $ | 240.5 | $ | 246.8 |
Non-GAAP operating margin | 39 | % | 40 | % |
(2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Kemp and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed.
|
Fiscal Year 2022 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance | ||||
Fiscal Year Ending November 30, 2022 | ||||
(In millions, except per share data) | Low | High | ||
GAAP net income | $ | 93.7 | $ | 98.2 |
Adjustments (from previous table) | 107.0 | 107.0 | ||
Income tax adjustment(3)
|
(20.7) | (22.5) | ||
Non-GAAP net income | $ | 180.0 | $ | 182.7 |
GAAP diluted earnings per share | $ | 2.11 | $ | 2.21 |
Non-GAAP diluted earnings per share | $ | 4.05 | $ | 4.11 |
Diluted weighted average shares outstanding | 44.5 | 44.5 | ||
(3)Tax adjustment is based on a non-GAAP effective tax rate of approximately 20% for Low and 21% for High, calculated as follows:
|
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Non-GAAP income from operations | $ | 240.5 | $ | 246.8 |
Other (expense) income | (15.5) | (15.5) | ||
Non-GAAP income from continuing operations before income taxes | 225.0 | 231.3 | ||
Non-GAAP net income | 180.0 | 182.7 | ||
Tax provision | $ | 45.0 | $ | 48.6 |
Non-GAAP tax rate | 20 | % | 21 | % |
Fiscal Year 2022 Adjusted Free Cash Flow Guidance | ||||
Fiscal Year Ending November 30, 2022 | ||||
(In millions) | Low | High | ||
Cash flows from operations (GAAP) | $ | 188 | $ | 193 |
Purchases of property and equipment | (6) | (6) | ||
Add back: restructuring payments | 3 | 3 | ||
Adjusted free cash flow (non-GAAP) | $ | 185 | $ | 190 |
Q3 2022 Revenue Guidance | ||||||||||
Three Months Ended | Three Months Ending | |||||||||
August 31, 2021 | August 31, 2022 | |||||||||
(In millions) | Low | % Change | High | % Change | ||||||
GAAP revenue | $ | 147.4 | $ | 145.2 | (1) | % | $ | 148.2 | 1 | % |
Acquisition-related adjustments - revenue(1)
|
5.2 | 1.8 | (65) | % | 1.8 | (65) | % | |||
Non-GAAP revenue | $ | 152.6 | $ | 147.0 | (4) | % | $ | 150.0 | (2) | % |
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Ipswitch and Chef.
|
Q3 2022 Non-GAAP Earnings per Share Guidance | ||||
Three Months Ending August 31, 2022 | ||||
Low | High | |||
GAAP diluted earnings per share | $ | 0.46 | $ | 0.48 |
Acquisition-related revenue | 0.04 | 0.04 | ||
Acquisition-related expense | 0.01 | 0.01 | ||
Stock-based compensation | 0.19 | 0.19 | ||
Amortization of acquired intangibles | 0.39 | 0.39 | ||
Total adjustments(2)
|
0.63 | 0.63 | ||
Income tax adjustment | (0.13) | (0.13) | ||
Non-GAAP diluted earnings per share | $ | 0.96 | $ | 0.98 |
(2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Kemp. The final amounts will not be available until the Company's internal procedures and reviews are completed.
|