January 13, 2015

Progress Software Reports 2014 Fiscal Fourth Quarter and Year End Results

BEDFORD, Mass.--(BUSINESS WIRE)-- Progress Software Corporation (NASDAQ: PRGS), a global software company that simplifies and enables the development, deployment and management of business applications, today announced results for its fiscal fourth quarter and fiscal year ended November 30, 2014.

Revenue from continuing operations was $97.9 million in the fourth quarter compared to $91.0 million in the same quarter last year, a year over year increase of 8% on an actual currency basis and 10% on a constant currency basis.

Additional financial highlights included:

On a GAAP basis in the fiscal fourth quarter of 2014:

  • Income from operations was $27.0 million compared to $23.9 million in the same quarter last year;
  • Income from continuing operations was $14.5 million compared to $14.6 million in the same quarter last year;
  • Net income was $14.5 million compared to $15.0 million in the same quarter last year; and
  • Diluted earnings per share from continuing operations was $0.28, unchanged from the same quarter last year.

On a non-GAAP basis in the fiscal fourth quarter of 2014:

  • Income from operations was $38.0 million compared to $33.5 million in the same quarter last year;
  • Operating margin was 39% compared to 37% in the same quarter last year;
  • Income from continuing operations was $24.1 million compared to $22.5 million in the same quarter last year; and
  • Diluted earnings per share from continuing operations was $0.47 compared to $0.43 in the same quarter last year.

"Our positive momentum continued in 2014, resulting in significant growth in operating income and cash flow over the previous year," said Phil Pead, President and CEO of Progress Software. "Entering 2015, we are now able to offer application developers an unrivaled choice. With Progress, developers have seamless access to the broadest range of data sources, tools to create the most engaging user experiences and a leading platform to build mobile apps. They also benefit from the choice to build and deploy apps from scratch or take advantage of our productivity platform. Further, the recent addition of Telerik Sitefinity to our portfolio provides developers with an intuitive end-to-end web content management, digital marketing and customer analytics solution. These choices underscore our commitment to becoming the preferred destination for application developers."

Other fiscal fourth quarter 2014 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $283.3 million;
  • Cash from operations was $39.2 million compared to $17.9 million in the same quarter in fiscal year 2013; and
  • DSO from continuing operations was 63 days, compared to 66 days in the fiscal third quarter of 2014.

In addition, as previously announced, during the fourth quarter, Progress began operating as three distinct business units: OpenEdge, Application Development and Deployment, and Data Connectivity and Integration, each with dedicated sales, product management and product marketing functions. Progress adopted segment reporting for its three business units in the fourth quarter, and this press release includes quarterly results of operations by segment for fiscal 2013 and fiscal 2014.

Also during the fourth quarter of fiscal year 2014, Progress acquired 100% of the capital stock of BravePoint, Inc. (BravePoint) from Chesapeake Utilities Corporation in exchange for an aggregate sum of $12.0 million in cash. BravePoint is based in Norcross, Georgia and is a leading provider of consulting, training and application development services designed to increase customers' profitability and competitiveness through the use of technology.

Furthermore, shortly after the fourth quarter ended, Progress completed the acquisition of privately held Telerik AD, a leading provider of application development tools, for $262.5 million. Telerik enables its 1.4 million strong developer community to create compelling user experiences across cloud, web, mobile and desktop applications. Through this acquisition, Progress now provides comprehensive cloud and on-premise platform offerings that enable developers to rapidly create beautiful applications, driven by data for any web, desktop or mobile platform. Progress funded the purchase price from a combination of existing cash resources and a $150 million term loan, which is part of a new $300 million term and revolving credit facility with JPMorgan Chase Bank, N.A. and a syndicate of other lenders. This new credit facility replaced Progress' prior $150 million revolving credit facility.

Full Year Results

On a GAAP basis in the fiscal year 2014:

  • Revenue from continuing operations was $332.5 million compared to $334.0 million in fiscal year 2013;
  • Income from operations was $80.7 million compared to $63.7 million in the prior fiscal year;
  • Income from continuing operations was $49.5 million compared to $39.8 million in the prior fiscal year;
  • Net income was $49.5 million compared to $74.9 million in the prior fiscal year;
  • Diluted earnings per share from continuing operations was $0.96 compared to $0.72 in the prior fiscal year; and
  • Cash from operations was $107.7 million compared to $4.6 million in the prior fiscal year.

On a non-GAAP basis in the fiscal year 2014:

  • Income from operations was $117.4 million compared to $100.1 million in fiscal year 2013;
  • Operating margin was 35% compared to 30% in the prior fiscal year;
  • Income from continuing operations was $77.9 million compared to $66.0 million in the prior fiscal year; and
  • Diluted earnings per share from continuing operations was $1.51 compared to $1.19 in the prior fiscal year.

2015 Business Outlook

Progress Software provides the following guidance for the fiscal year ending November 30, 2015:

  • Non-GAAP revenue is expected to be between $425 million and $435 million;
  • Non-GAAP earnings per share is expected to be between $1.37 and $1.47;
  • Non-GAAP operating margin is expected to be approximately 27%;
  • Free cash flow is expected to be between $90 million and $93 million; and
  • Non-GAAP effective tax rate is expected to be between 33% and 34%.

Progress Software provides the following guidance for the first fiscal quarter ending February 28, 2015:

  • Non-GAAP revenue is expected to be between $93 million and $96 million; and
  • Non-GAAP earnings per share is expected to be between $0.22 and $0.24.

Our fiscal 2015 business outlook reflects the following:

  • Full year impact of the Modulus, BravePoint, and Telerik acquisitions and related financing; and
  • Our financial guidance includes the impact of the recent significant strengthening of the US dollar and is based on current exchange rates. With approximately 55% of our revenue stream outside of North America, this has a negative impact on our 2015 business outlook of $17-$18 million on non-GAAP revenue and $0.10-$0.11 cents on our non-GAAP earnings per share, when compared to 2014 actual exchange rates. To the extent that there are further changes in exchange rates versus the current environment, this may have an additional impact on our business outlook.

Free cash flow is equal to cash flows from operating activities less purchases of property and equipment and capitalized software development costs.

Conference Call

The Progress Software quarterly investor conference call to review its fiscal fourth quarter of 2014 will be broadcast live at 5:00 p.m. ET on Tuesday, January 13, 2015 and can be accessed on the investor relations section of the company's website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-888-539-3612, pass code 7867622. The conference call will include brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress Software website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress Software provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress Software believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company's performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is available on the Progress website at www.progress.com within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like "believe," "may," "could," "would," "might," "should,""expect," "intend," "plan," "target," "anticipate" and "continue," the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding Progress's strategic plans; future revenue growth, operating margin and cost savings; product development, strategic partnering and marketing initiatives; the growth rates of certain markets; and other statements regarding the future operation, direction and success of Progress's business. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Market acceptance of Progress's strategy and product development initiatives; (2) pricing pressures and the competitive environment in the software industry and Platform-as-a-Service market; (3) Progress's ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy; (4) uncertainties relating to Progress' acquisition of Telerik, including whether Progress will be able to realize expected benefits and anticipated synergies of the acquisition and whether Telerik's business will be successfully integrated with Progress Software's business; (5) Progress's ability to make acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (6) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (7) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (8) the receipt and shipment of new orders; (9) Progress's ability to expand its relationships with channel partners and to manage the interaction of channel partners with its direct sales force; (10) the timely release of enhancements to Progress's products and customer acceptance of new products; (11) the positioning of Progress's products in its existing and new markets; (12) variations in the demand for professional services and technical support; (13) Progress's ability to penetrate international markets and manage its international operations; and (14) changes in exchange rates. For further information regarding risks and uncertainties associated with Progress's business, please refer to Progress's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2013 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 28, 2014, May 31, 2014 and August 31, 2014. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Progress Software Corporation

Progress Software Corporation (NASDAQ: PRGS) is a global software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source, with enhanced performance, minimal IT complexity and low total cost of ownership. Progress Software can be reached at www.progress.com or 1-781-280-4000.

Progress is a trademark or registered trademarks of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.

           
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 
Three Months Ended Fiscal Year Ended
(In thousands, except per share data)

November
30, 2014

   

November
30, 2013

    % Change

November
30, 2014

   

November
30, 2013

    % Change
Revenue:
Software licenses $ 41,154 $ 37,392 10 % $ 117,801 $ 122,312 (4 )%
Maintenance and services 56,740   53,588   6 % 214,732   211,684   1 %
Total revenue 97,894   90,980   8 % 332,533   333,996   %
Costs of revenue:
Cost of software licenses 1,445 1,856 (22 )% 6,396 6,889 (7 )%
Cost of maintenance and services 8,574 5,710 50 % 24,864 26,753 (7 )%
Amortization of acquired intangibles 1,106   529   109 % 2,999   1,340   124 %
Total costs of revenue 11,125   8,095   37 % 34,259   34,982   (2 )%
Gross profit 86,769   82,885   5 % 298,274   299,014   %
Operating expenses:
Sales and marketing 30,085 26,911 12 % 101,496 105,997 (4 )%
Product development 13,397 14,428 (7 )% 58,965 57,336 3 %
General and administrative 13,056 13,604 (4 )% 48,292 55,994 (14 )%
Amortization of acquired intangibles 225 211 7 % 653 760 (14 )%
Restructuring expenses 265 2,856 (91 )% 2,266 11,983 (81 )%
Acquisition-related expenses 2,714   975   178 % 5,862   3,204   83 %
Total operating expenses 59,742   58,985   1 % 217,534   235,274   (8 )%
Income from operations 27,027   23,900   13 % 80,740   63,740   27 %
Other (expense) income, net (357 ) (294 ) (21 )% (2,936 ) (957 ) 207 %
Income from continuing operations before income taxes 26,670   23,606   13 % 77,804   62,783   24 %
Provision for income taxes 12,207   8,988   36 % 28,346   23,006   23 %
Income from continuing operations 14,463   14,618   (1 )% 49,458   39,777   24 %
Income (loss) from discontinued operations, net   418   (100 )%   35,130   (100 )%
Net income $ 14,463   $ 15,036   (4 )% $ 49,458   $ 74,907   (34 )%
 
Earnings per share:
Basic:
Continuing operations $ 0.29 $ 0.28 4 % $ 0.97 $ 0.73 33 %
Discontinued operations   0.01   (100 )%   0.64   (100 )%
Net income per share $ 0.29   $ 0.29   % 0.97   $ 1.37   (29 )%
Diluted:
Continuing operations $ 0.28 $ 0.28 % $ 0.96 $ 0.72 33 %
Discontinued operations   0.01   (100 )%   0.63   (100 )%
Net income per share $ 0.28   $ 0.29   (3 )% $ 0.96   $ 1.35   (29 )%
Weighted average shares outstanding:
Basic 50,432 51,731 (3 )% 50,840 54,516 (7 )%
Diluted 51,121 52,655 (3 )% 51,466 55,379 (7 )%
 
 

CONDENSED CONSOLIDATED BALANCE SHEETS

           
(In thousands) November 30,
2014

November
30, 2013

Assets
Current assets:
Cash, cash equivalents and short-term investments $ 283,268 $ 231,440
Accounts receivable, net 68,311 66,784
Other current assets 34,094   39,587
Total current assets 385,673   337,811
Property and equipment, net 59,351 57,030
Goodwill and intangible assets, net 253,414 234,236
Other assets 4,623   53,110
Total assets $ 703,061   $ 682,187
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other current liabilities $ 60,746 $ 68,186
Short-term deferred revenue 92,557   96,393
Total current liabilities 153,303   164,579
Long-term deferred revenue 3,683 1,144
Other long-term liabilities 2,830 2,810
Shareholders' equity:
Common stock and additional paid-in capital 209,778 205,307
Retained earnings 333,467   308,347
Total shareholders' equity 543,245   513,654
Total liabilities and shareholders' equity $ 703,061   $ 682,187
 
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

           
Three Months Ended Fiscal Year Ended
(In thousands)

November 30,
2014

    November 30,
2013
November 30,
2014
    November 30,
2013
Cash flows from operating activities:
Net income $ 14,464 $ 15,036 $ 49,458 $ 74,907
Depreciation and amortization 4,311 3,061 15,296 14,435
Stock-based compensation 6,679 5,039 24,873 21,399
Net gains on sales of dispositions (610 ) (71,601 )
Other non-cash adjustments 15,545 8,985 17,777 9,432
Changes in operating assets and liabilities (1,774 ) (13,652 ) 290   (43,992 )
Net cash flows from operating activities 39,225   17,859   107,694   4,580  
Capital expenditures (1,610 ) (2,073 ) (11,801 ) (5,062 )
Redemptions and sales of auction-rate-securities 26,196 25
Issuances of common stock, net of repurchases 5,774 (30,032 ) (36,116 ) (222,107 )
Payments for acquisitions, net of cash acquired (12,000 ) (24,493 ) (9,450 )
Proceeds from divestitures, net 3,300 111,120
Other (9,413 ) 3,704   (12,952 ) (2,883 )
Net change in cash, cash equivalents and short-term investments 21,976   (10,542 ) 51,828   (123,777 )
Cash, cash equivalents and short-term investments, beginning of period 261,292   241,982   231,440   355,217  
Cash, cash equivalents and short-term investments, end of period $ 283,268   $ 231,440   $ 283,268   $ 231,440  
 
 

RESULTS OF OPERATIONS BY SEGMENT

                     
(In thousands) Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014
Segment revenue:
OpenEdge $ 66,734 $ 73,192 $ 71,847 $ 84,948 $ 296,721
Data Connectivity and Integration 7,639 7,407 7,175 12,551 34,772
Application Development and Deployment 165   228   252   395   1,040  
Total revenue 74,538   80,827   79,274   97,894   332,533  
Segment costs of revenue and operating expenses:
OpenEdge 17,391 15,855 15,524 22,041 70,811
Data Connectivity and Integration 2,797 2,601 2,515 4,395 12,308
Application Development and Deployment 1,553   1,763   2,446   3,592   9,354  
Total costs of revenue and operating expenses 21,741   20,219   20,485   30,028   92,473  
Segment contribution margin:
OpenEdge 49,343 57,337 56,323 62,907 225,910
Data Connectivity and Integration 4,842 4,806 4,660 8,156 22,464
Application Development and Deployment (1,388 ) (1,535 ) (2,194 ) (3,197 ) (8,314 )
Total contribution margin 52,797   60,608   58,789   67,866   240,060  
Corporate expenses (1) 31,415   32,187   29,216   29,850   122,668  
Non-GAAP operating income 21,382   28,421   29,573   38,016   117,392  
GAAP adjustment (2) 7,380   8,141   10,142   10,989   36,652  
GAAP operating income 14,002   20,280   19,431   27,027   80,740  
 
(In thousands) Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013
Segment revenue:
OpenEdge $ 74,368 $ 70,929 $ 69,406 $ 78,805 $ 293,508
Data Connectivity and Integration 9,365 10,772 7,955 11,997 40,089
Application Development and Deployment   4   217   178   399  
Total revenue 83,733   81,705   77,578   90,980   333,996  
Segment costs of revenue and operating expenses:
OpenEdge 24,579 20,063 18,988 20,045 83,675
Data Connectivity and Integration 2,582 3,132 3,090 3,593 12,397
Application Development and Deployment     589   1,023   1,612  
Total costs of revenue and operating expenses 27,161   23,195   22,667   24,661   97,684  
Segment contribution margin:
OpenEdge 49,789 50,866 50,418 58,760 209,833
Data Connectivity and Integration 6,783 7,640 4,865 8,404 27,692
Application Development and Deployment   4   (372 ) (845 ) (1,213 )
Total contribution margin 56,572   58,510   54,911   66,319   236,312  
Corporate expenses (1) 35,020   34,795   33,552   32,809   136,176  
Non-GAAP operating income 21,552   23,715   21,359   33,510   100,136  
GAAP adjustment (2) 5,759   9,329   11,698   9,610   36,396  
GAAP operating income 15,793   14,386   9,661   23,900   63,740  
 

(1) The following expenses are not allocated to our segments as we manage and report our business in these functional areas on a consolidated basis only: product development, corporate marketing, and general and administration.
(2) The following expenses are included in the GAAP adjustment: amortization of acquired intangibles, stock-based compensation, restructuring, acquisition related, and transition expenses.

SUPPLEMENTAL INFORMATION

 
 
Revenue from continuing operations by Type
                             
(In thousands) Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 FY 2013
License $ 37,392 $ 22,264 $ 27,988 $ 26,393 $ 41,154 $ 117,799 $ 122,312
Maintenance 51,230 50,181 50,305 50,746 51,268 202,500 202,857
Professional services 2,358 2,093 2,534 2,135 5,472 12,234 8,827
Total revenue $ 90,980 $ 74,538 $ 80,827 $ 79,274 $ 97,894 $ 332,533 $ 333,996
 
Revenue from continuing operations by Region
 
(In thousands) Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 FY 2013
North America $ 42,833 $ 34,586 $ 36,827 $ 35,654 $ 43,654 $ 150,721 $ 154,279
EMEA 35,256 29,315 33,698 32,995 35,327 131,335 133,600
Latin America 6,526 5,108 5,703 5,695 8,406 24,912 25,370
Asia Pacific 6,365 5,529 4,599 4,930 10,507 25,565 20,747
Total revenue $ 90,980 $ 74,538 $ 80,827 $ 79,274 $ 97,894 $ 332,533 $ 333,996
 
 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

           
Three Months Ended Fiscal Year Ended
(In thousands, except per share data) November 30,
2014
    November 30,
2013
November 30,
2014
    November 30,
2013
GAAP income from operations $ 27,027 $ 23,900 $ 80,740 $ 63,740
GAAP operating margin 28 % 26 % 24 % 19 %
Amortization of acquired intangibles 1,331 740 3,652 2,100
Stock-based compensation (1) 6,679 5,039 24,873 19,109
Restructuring expenses 265 2,856 2,266 11,983
Acquisition-related expenses 2,427 975 5,575 3,204
Transition expenses 287     287    
Total operating adjustments 10,989   9,610   36,653   36,396  
Non-GAAP income from operations $ 38,016   $ 33,510   $ 117,393   $ 100,136  
Non-GAAP operating margin 39 % 37 % 35 % 30 %
 
GAAP income from continuing operations $ 14,463 $ 14,618 $ 49,458 $ 39,777
Operating adjustments (from above) 10,989 9,610 36,653 36,396
Realized loss on sales of auction-rate-securities 2,554
Income tax adjustment (1,383 ) (1,759 ) (10,768 ) (10,159 )
Total income from continuing operations adjustments 9,606   7,851   28,439   26,237  
Non-GAAP income from continuing operations $ 24,069   $ 22,469   $ 77,897   $ 66,014  
 
GAAP diluted earnings per share from continuing operations $ 0.28 $ 0.28 $ 0.96 $ 0.72
Income from continuing operations adjustments (from above) 0.19   0.15   0.55   0.47  
Non-GAAP diluted earnings per share from continuing operations $ 0.47   $ 0.43   $ 1.51   $ 1.19  
 
Diluted weighted average shares outstanding 51,121 52,655 51,466 55,379
 
 
(1) Stock-based compensation is included in the GAAP statements of income, as follows:
 
Cost of revenue $ 173 $ 101 $ 612 $ 601
Sales and marketing 907 931 4,642 3,599
Product development 1,103 1,036 5,289 4,723
General and administrative 4,496   2,971   14,330   10,186  
Stock-based compensation from continuing operations $ 6,679   $ 5,039   $ 24,873   $ 19,109  
 
 
      Three Months Ended     Fiscal Year Ended
(In thousands, except per share data)

November 30,
2014

   

November 30,
2013

November 30,
2014

   

November 30,
2013

GAAP costs of revenue $ 11,125 $ 8,095 $ 34,259 $ 34,982
GAAP operating expenses 59,742 58,985 217,534 235,274
GAAP expenses 70,867 67,080 251,793 270,256
Operating adjustments (from above) 10,989 9,610 36,653 36,396
Non-GAAP expenses $ 59,878 $ 57,470 $ 215,140 $ 233,860
 
 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2015 GUIDANCE
(Unaudited)
 
 
Fiscal Year 2015 Revenue Growth Guidance
      Fiscal Year Ended       Fiscal Year Ending
November 30, 2014 November 30, 2015
(In millions) Low     % Change     High     % Change
GAAP revenue $ 332.5 $ 390.0 17 % $ 400.0 20 %
Acquisition-related adjustments - revenue (1) $   $ 35.0   100 % $ 35.0   100 %
Non-GAAP revenue $ 332.5   $ 425.0   28 % $ 435.0   31 %
 

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

 
 
Fiscal Year 2015 Non-GAAP Operating Margin Guidance
     
Fiscal Year Ending November 30, 2015
(In millions) Low       High
GAAP income from operations $ 22.4 $ 26.2
GAAP operating margins 6 % 7 %
Acquisition-related revenue 35.0 35.0
Restructuring expense 5.5 5.5
Stock-based compensation 30.6 30.6
Acquisition related expense 3.4 3.4
Amortization of intangibles 16.8   16.8  
Total adjustments 91.3   91.3  
Non-GAAP income from operations $ 113.7   $ 117.5  
Non-GAAP operating margin 27 % 27 %
 
 
Fiscal Year 2015 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
     
Fiscal Year Ending November 30, 2015
(In millions, except per share data) Low       High
GAAP net income $ 11.7 $ 14.3
Adjustments (from above) 91.3 91.3
Income tax adjustment (2) (30.5 ) (29.5 )
Non-GAAP net income $ 72.5   $ 76.1  
 
GAAP diluted earnings per share $ 0.22 $ 0.28
Non-GAAP diluted earnings per share $ 1.37 $ 1.47
 
Diluted weighted average shares outstanding 53.0 51.7
 
(2) Tax adjustment is based on a non-GAAP effective tax rate of 34% for Low and 33% for High, calculated as follows:
Non-GAAP income from operations $ 113.7 $ 117.5
Other income (expense) (3.9 ) (3.9 )
Non-GAAP income from continuing operations before income taxes 109.8   113.6  
Non-GAAP net income 72.5   76.1  
Tax provision 37.3   37.5  
Non-GAAP tax rate 34 % 33 %
 
 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1 2015 GUIDANCE
(Unaudited)
 
 
Q1 2015 Revenue Growth Guidance
           
Three Months Ended Three Months Ending
February 28, 2014 February 28, 2015
(In millions) Low     % Change     High     % Change
GAAP revenue $ 74.5 $ 79.5 7 % $ 82.5 11 %
Acquisition-related adjustments - revenue (1) $   $ 13.5   100 % $ 13.5   100 %
Non-GAAP revenue $ 74.5   $ 93.0   25 % $ 96.0   29 %
 

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

 
 
Q1 2015 Non-GAAP Earnings per Share Guidance
     
Three Months Ending February 28, 2015
 
Low       High
GAAP diluted earnings per share $ (0.14 ) $ (0.12 )
Acquisition-related revenue 0.26 0.26
Restructuring expense 0.03 0.03
Stock-based compensation 0.15 0.15
Acquisition related expense 0.02 0.02
Amortization of intangibles 0.08   0.08  
Total adjustments 0.54   0.54  
Income tax adjustment $ (0.18 ) $ (0.18 )
Non-GAAP diluted earnings per share $ 0.22   $ 0.24  

Progress Software
Investor Contact:
Brian Flanagan, +1 781-280-4817
flanagan@progress.com
or
Press Contact:
Erica Burns, +1 888-365-2779 (x3135)
erica.burns@progress.com

Source: Progress Software Corporation

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