July 1, 2015

Progress Software Reports 2015 Fiscal Second Quarter 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 second quarter ended May 31, 2015.

Revenue in the quarter was $88.8 million compared to $80.8 million in the same quarter last year, a year over year increase of 10% on an actual currency basis and 19% on a constant currency basis. On a non-GAAP basis, revenue was $100.9 million compared to $80.8 million in the same quarter last year.

Additional financial highlights included:

On a GAAP basis in the fiscal second quarter of 2015:

  • Revenue was $88.8 million compared to $80.8 million in the same quarter in fiscal year 2014;
  • Loss from operations was $2.7 million compared to income from operations of $20.3 million in the same quarter last year;
  • Net income was $5.8 million compared to $12.8 million in the same quarter last year; and
  • Diluted earnings per share was $0.11 compared to $0.25 in the same quarter last year.

On a non-GAAP basis in the fiscal second quarter of 2015:

  • Revenue was $100.9 million compared to $80.8 million in the same quarter last year;
  • Income from operations was $27.8 million compared to $28.4 million in the same quarter last year;
  • Operating margin was 28% compared to 35% in the same quarter last year;
  • Net income was $18.1 million compared to $19.2 million in the same quarter last year;
  • Diluted earnings per share was $0.35 compared to $0.37 in the same quarter last year; and
  • Free cash flow was $17.6 million compared to $15.6 million in the same quarter last year.

"Our FY15 momentum continues with a strong performance in Q2 as we continue to execute on our strategy," said Phil Pead, President and CEO of Progress Software. "All business units contributed solid results with some key technology releases during the quarter."

Other fiscal second quarter 2015 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $199.1 million;
  • Cash flows from operations were $20.8 million compared to $17.1 million in the same quarter in fiscal year 2014;
  • DSO was 50 days, compared to 56 days in the fiscal first quarter of 2015; and
  • Under the previously announced authorization by the Board of Directors to repurchase up to $100 million of shares of common stock, Progress repurchased 1.0 million shares for $25.0 million during the fiscal second quarter of 2015, with $14.5 million remaining under the current authorization.

Business Outlook

Progress Software's fiscal 2015 financial guidance includes the impact of the significant strengthening of the US dollar that began in late 2014 and is based on current exchange rates. The negative currency translation impact on Progress Software's 2015 business outlook compared to 2014 exchange rates is $25 - $26 million on non-GAAP revenue and $0.13 - $0.14 on non-GAAP earnings per share. To the extent that there are further changes in exchange rates versus the current environment, this may have an additional impact on Progress Software's business outlook.

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

  • Non-GAAP revenue is expected to be between $415 million and $425 million (unchanged);
  • Non-GAAP earnings per share is expected to be between $1.45 and $1.52 (previously $1.35 and $1.45);
  • Non-GAAP operating margin is expected to be approximately 28% (previously approximately 27%);
  • Free cash flow is expected to be between $92 million and $95 million (previously $90 million and $93 million); and
  • Non-GAAP effective tax rate is expected to be approximately 33% (previously between 33% and 34%).

Progress Software provides the following guidance for the fiscal third quarter ending August 31, 2015:

  • Non-GAAP revenue is expected to be between $101 million and $104 million; and
  • Non-GAAP earnings per share is expected to be between $0.35 and $0.38.

Conference Call

The Progress Software quarterly investor conference call to review its fiscal second quarter of 2015 will be broadcast live at 5:00 p.m. ET on Wednesday, July 1, 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 1-888-427-9411, pass code 6889835. 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 business outlook and financial guidance. 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, 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 Six Months Ended
(In thousands, except per share data)

May 31,
2015

May 31,
2014

%
Change

May 31,
2015

   

May 31,
2014

   

%
Change

Revenue:
Software licenses $ 28,722 $ 27,988 3 % $ 53,953 $ 50,252 7 %
Maintenance and services 60,095   52,839   14 % 116,245   105,113   11 %
Total revenue 88,817   80,827   10 % 170,198   155,365   10 %
Costs of revenue:
Cost of software licenses 1,365 1,139 20 % 3,085 3,146 (2 )%
Cost of maintenance and services 10,288 5,709 80 % 21,563 11,054 95 %
Amortization of acquired intangibles 4,093   530   672 % 8,726   1,059   724 %
Total costs of revenue 15,746   7,378   113 % 33,374   15,259   119 %
Gross profit 73,071   73,449   (1 )% 136,824   140,106   (2 )%
Operating expenses:
Sales and marketing 31,852 24,359 31 % 62,602 48,868 28 %
Product development 22,290 15,480 44 % 45,111 30,593 47 %
General and administrative 13,673 11,428 20 % 27,988 23,155 21 %
Amortization of acquired intangibles 3,171 148 2,043 % 6,373 312 1,943 %
Restructuring expenses 3,810 124 2,973 % 6,153 320 1,823 %
Acquisition-related expenses 1,010   1,630   (38 )% 2,518   2,576   (2 )%
Total operating expenses 75,806   53,169   43 % 150,745   105,824   42 %
(Loss) income from operations (2,735 ) 20,280   (113 )% (13,921 ) 34,282   (141 )%
Other (expense) income, net (1,025 ) (129 ) 695 % (93 ) (123 ) (24 )%
(Loss) income before income taxes (3,760 ) 20,151   (119 )% (14,014 ) 34,159   (141 )%
(Benefit) provision for income taxes (9,529 ) 7,352   (230 )% (18,812 ) 10,260   (283 )%
Net income 5,769   12,799   (55 )% 4,798   23,899   (80 )%
 
Earnings per share:
Basic $ 0.11 $ 0.25 (56 )% $ 0.10 $ 0.47 (79 )%
Diluted $ 0.11 $ 0.25 (56 )% $ 0.09 $ 0.46 (80 )%
Weighted average shares outstanding:
Basic 50,342 51,049 (1 )% 50,505 51,271 (1 )%
Diluted 51,085 51,673 (1 )% 51,224 51,919 (1 )%
       

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands) May 31,
2015

November 30,
2014

Assets
Current assets:
Cash, cash equivalents and short-term investments $ 199,121 $ 283,268
Accounts receivable, net 56,440 68,311
Other current assets 57,018   34,094
Total current assets 312,579   385,673
Property and equipment, net 57,653 59,351
Goodwill and intangible assets, net 499,138 253,414
Other assets 7,648   4,623
Total assets $ 877,018   $ 703,061
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other current liabilities $ 61,854 $ 60,746
Current portion of long-term debt 7,500
Short-term deferred revenue 127,037   92,557
Total current liabilities 196,391   153,303
Long-term deferred revenue 2,588 3,683
Long-term debt 138,750
Other long-term liabilities 16,290 2,830
Shareholders' equity:
Common stock and additional paid-in capital 212,157 209,778
Retained earnings 310,842   333,467
Total shareholders' equity 522,999   543,245
Total liabilities and shareholders' equity $ 877,018   $ 703,061
     

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended Six Months Ended
(In thousands)

May 31,
2015

   

May 31,
2014

May 31,
2015

   

May 31,
2014

Cash flows from operating activities:
Net income $ 5,769 $ 12,799 $ 4,798 $ 23,899
Depreciation and amortization 10,360 3,573 21,495 7,047
Stock-based compensation 6,439 5,709 12,275 11,254
Other non-cash adjustments (7,509 ) 1,866 (25,408 ) 375
Changes in operating assets and liabilities 5,732   (6,831 ) 44,771   (35 )
Net cash flows from operating activities 20,791   17,116   57,931   42,540  
Capital expenditures (3,147 ) (1,519 ) (5,788 ) (8,037 )
Issuances of common stock, net of repurchases (22,023 ) (22,196 ) (26,512 ) (28,095 )
Payments for acquisitions (12,493 ) (246,275 ) (12,493 )
Proceeds from the issuance of debt, net of payments of principle and debt issuance costs (1,875 ) 144,543
Proceeds from divestitures, net 4,500 3,300
Other (5,789 ) (2,381 ) (12,546 ) (2,079 )
Net change in cash, cash equivalents and short-term investments (12,043 ) (21,473 ) (84,147 ) (4,864 )
Cash, cash equivalents and short-term investments, beginning of period 211,164   248,049   283,268   231,440  
Cash, cash equivalents and short-term investments, end of period $ 199,121   $ 226,576   $ 199,121   $ 226,576  
       

 

RESULTS OF OPERATIONS BY SEGMENT

 
Three Months Ended Six Months Ended
(In thousands) May 31, 2015     May 31, 2014     % Change May 31, 2015     May 31, 2014     % Change
Segment revenue:
OpenEdge $ 71,906 $ 73,192 (2 )% $ 141,377 $ 139,926 1 %
Data Connectivity and Integration 7,275 7,407 (2 )% 14,388 15,046 (4 )%
Application Development and Deployment 9,636   228   4,126 % 14,433   393   3,573 %
Total revenue 88,817   80,827   10 % 170,198   155,365   10 %
Segment costs of revenue and operating expenses:
OpenEdge 18,446 15,855 16 % 37,980 33,246 14 %
Data Connectivity and Integration 3,133 2,601 20 % 6,383 5,398 18 %
Application Development and Deployment 10,851   1,763   515 % 20,235   3,316   510 %
Total costs of revenue and operating expenses 32,430   20,219   60 % 64,598   41,960   54 %
Segment contribution:
OpenEdge 53,460 57,337 (7 )% 103,397 106,680 (3 )%
Data Connectivity and Integration 4,142 4,806 (14 )% 8,005 9,648 (17 )%
Application Development and Deployment (1,215 ) (1,535 ) 21 % (5,802 ) (2,923 ) (98 )%
Total contribution 56,387   60,608   (7 )% 105,600   113,405   (7 )%
Other unallocated expenses (1) 59,122   40,328   47 % 119,521   79,123   51 %
(Loss) income from operations (2,735 ) 20,280   (113 )% (13,921 ) 34,282   (141 )%
Other income (expense), net (1,025 ) (129 ) 695 % (93 ) (123 ) (24 )%
(Loss) income before provision for income taxes (3,760 ) 20,151   (119 )% (14,014 ) 34,159   (141 )%
 

 

(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, administration, amortization of acquired intangibles, stock-based compensation, restructuring, and acquisition related expenses.

                           

SUPPLEMENTAL INFORMATION

 
Revenue by Type
 
(In thousands) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
License $ 27,988 $ 26,393 $ 41,154 $ 25,231 $ 28,722
Maintenance 50,305 50,746 51,268 49,239 52,656
Services 2,534   2,135   5,472   6,911   7,439
Total revenue $ 80,827   $ 79,274   $ 97,894   $ 81,381   $ 88,817
 
Revenue by Region
 
(In thousands) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
North America $ 36,827 $ 35,654 $ 43,654 $ 42,125 $ 47,520
EMEA 33,698 32,995 35,327 27,863 31,146
Latin America 5,703 5,695 8,406 4,967 4,388
Asia Pacific 4,599   4,930   10,507   6,426   5,763
Total revenue $ 80,827   $ 79,274   $ 97,894   $ 81,381   $ 88,817
 
Revenue by Segment
 
(In thousands) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
OpenEdge $ 73,192 $ 71,847 $ 84,948 $ 69,471 $ 71,906
Data Connectivity and Integration 7,407 7,175 12,551 7,113 7,275
Application Development and Deployment 228   252   395   4,797   9,636
Total revenue $ 80,827   $ 79,274   $ 97,894   $ 81,381   $ 88,817
       

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - QTD

 
Three Months Ended May 31,

%
Change

 
2015     2014
(In thousands, except per share data) GAAP     Adj.     Non-GAAP GAAP     Adj.     Non-GAAP Non-GAAP  
TOTAL REVENUE $ 88,817 $ 12,034 $ 100,851 $ 80,827 $ $ 80,827 25 %
Software licenses (1) 28,722 3,018 31,740 27,988 27,988 13 %
Maintenance and services (1) 60,095 9,016 69,111 52,839 52,839 31 %
 
TOTAL COSTS OF REVENUE $ 15,746 $ (4,247 ) $ 11,499 $ 7,378 $ (676 ) $ 6,702 72 %
Amortization of acquired intangibles 4,093 (4,093 ) 530 (530 )
Stock-based compensation (2) 154 (154 ) 146 (146 )
 
GROSS MARGIN % 82 % 89 % 91 % 92 % (3 )%
 
TOTAL OPERATING EXPENSES $ 75,806 $ (14,276 ) $ 61,530 $ 53,169 $ (7,465 ) $ 45,704 35 %
Amortization of acquired intangibles 3,171 (3,171 ) 148 (148 )
Restructuring expenses 3,810 (3,810 ) 124 (124 )
Acquisition-related expenses 1,010 (1,010 ) 1,630 (1,630 )
Stock-based compensation (2) 6,285 (6,285 ) 5,563 (5,563 )
 
(LOSS) INCOME FROM OPERATIONS $ (2,735 ) $ 30,557 $ 27,822 $ 20,280 $ 8,141 $ 28,421 (2 )%
 
OPERATING MARGIN (3 )% 28 % 25 % 35 % (7 )%
 
TOTAL OTHER (EXPENSE) INCOME, NET $ (1,025 ) $ $ (1,025 ) $ (129 ) $ $ (129 ) (695 )%
 
(BENEFIT) PROVISION FOR INCOME TAXES $ (9,529 ) $ 18,198 $ 8,669 $ 7,352 $ 1,711 $ 9,063 (4 )%
 
NET INCOME $ 5,769 $ 12,359 $ 18,128 $ 12,799 $ 6,430 $ 19,229 (6 )%
 
DILUTED EARNINGS PER SHARE $ 0.11 $ 0.24 $ 0.35 $ 0.25 $ 0.12 $ 0.37 (5 )%
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 51,085 51,085 51,673 51,673 (1 )%
(1) Adjustments to revenue relate to acquisition-related revenue, which 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. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:
 
Cost of revenue 154 146
Sales and marketing 1,488 991
Product development 1,062 1,425
General and administrative 3,735   3,147  
Total $ 6,439   $ 5,709  
 

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - YTD

     
Six Months Ended May 31, % Change
2015     2014
(In thousands, except per share data) GAAP     Adj.     Non-GAAP GAAP     Adj.     Non-GAAP Non-GAAP
TOTAL REVENUE $ 170,198 $ 26,107 $ 196,305 $ 155,365 $ $ 155,365 26 %
Software licenses (1) 53,953 6,764 60,717 50,252 50,252 21 %
Maintenance and services (1) 116,245 19,343 135,588 105,113 105,113 29 %
 
TOTAL COSTS OF REVENUE $ 33,374 $ (9,045 ) $ 24,329 $ 15,259 $ (1,357 ) $ 13,902 75 %
Amortization of acquired intangibles 8,726 (8,726 ) 1,059 (1,059 )
Stock-based compensation (2) 319 (319 ) 298 (298 )
 
GROSS MARGIN % 80 % 88 % 90 % 91 % (3 )%
 
TOTAL OPERATING EXPENSES $ 150,745 $ (27,000 ) $ 123,745 $ 105,824 $ (14,164 ) $ 91,660 35 %
Amortization of acquired intangibles 6,373 (6,373 ) 312 (312 )
Restructuring expenses 6,153 (6,153 ) 320 (320 )
Acquisition-related expenses 2,518 (2,518 ) 2,576 (2,576 )
Stock-based compensation (2) 11,956 (11,956 ) 10,956 (10,956 )
 
(LOSS) INCOME FROM OPERATIONS $ (13,921 ) $ 62,152 $ 48,231 $ 34,282 $ 15,521 $ 49,803 (3 )%
 
OPERATING MARGIN (8 )% 25 % 22 % 32 % (7 )%
 
TOTAL OTHER (EXPENSE) INCOME, NET (3) $ (93 ) $ 266 $ 173 $ (123 ) $ $ (123 ) 241 %
 
(BENEFIT) PROVISION FOR INCOME TAXES $ (18,812 ) $ 33,950 $ 15,138 $ 10,260 $ 5,638 $ 15,898 (5 )%
 
NET INCOME $ 4,798 $ 28,468 $ 33,266 $ 23,899 $ 9,883 $ 33,782 (2 )%
 
DILUTED EARNINGS PER SHARE $ 0.09 $ 0.56 $ 0.65 $ 0.46 $ 0.19 $ 0.65 %
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 51,224 51,224 51,919 51,919 (1 )%
(1) Adjustments to revenue relate to acquisition-related revenue, which 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. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:
 
Cost of revenue 319 298
Sales and marketing 2,725 2,190
Product development 2,564 2,778
General and administrative 6,667   5,988  
Total $ 12,275   $ 11,254  
(3) Adjustment to other income (expense), net relates to the termination of Progress' prior revolving credit facility with JPMorgan Chase Bank, N.A. and the other lenders party to the credit facility in connection with entering into the new credit facility, which was used to partially fund the acquisition of Telerik. Upon termination, the outstanding debt issuance costs related to the prior revolving credit facility were written off to other income (expense) in the GAAP statements of income.
               

OTHER NON-GAAP FINANCIAL MEASURES - QTD

 
Revenue by Type
 
(In thousands) Q2 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

License $ 28,722 $ 3,018 $ 31,740
Maintenance 52,656 9,016 61,672
Services 7,439     7,439  
Total revenue $ 88,817   $ 12,034   $ 100,851  
 
Revenue by Region
 
(In thousands) Q2 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

North America $ 47,520 $ 10,742 $ 58,262
EMEA 31,146 938 32,084
Latin America 4,388 61 4,449
Asia Pacific 5,763   293   6,056  
Total revenue $ 88,817   $ 12,034   $ 100,851  
 
Revenue by Segment
 
(In thousands) Q2 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

OpenEdge $ 71,906 $ $ 71,906
Data Connectivity and Integration $ 7,275 $ $ 7,275
Application Development and Deployment $ 9,636   $ 12,034   $ 21,670  
Total revenue $ 88,817   $ 12,034   $ 100,851  
 
(1) Adjustments to revenue relate to acquisition-related revenue, which 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. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
 
Free Cash Flow
 
(In thousands) Q2 2015 Q2 2014 % Change
Cash flows from operations $ 20,791 $ 17,116 21 %
Purchases of property and equipment $ (2,070 ) $ (402 ) (415 )%
Capitalized software development costs $ (1,077 ) $ (1,117 ) 4 %
Free cash flow $ 17,644   $ 15,597   13 %
               

 

OTHER NON-GAAP FINANCIAL MEASURES - YTD

 
Revenue by Type
 
(In thousands) YTD 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

License $ 53,953 $ 6,763 $ 60,716
Maintenance 101,894 19,344 121,238
Services 14,351     14,351  
Total revenue $ 170,198   $ 26,107   $ 196,305  
 
Revenue by Region
 
(In thousands) YTD 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

North America $ 89,644 $ 22,020 $ 111,664
EMEA 59,010 3,029 62,039
Latin America 9,356 187 9,543
Asia Pacific 12,188   871   13,059  
Total revenue $ 170,198   $ 26,107   $ 196,305  
 
Revenue by Segment
 
(In thousands) YTD 2015

Non-GAAP
Adjustment (1)

Non-GAAP
Revenue

OpenEdge $ 141,377 $ $ 141,377
Data Connectivity and Integration $ 14,388 $ $ 14,388
Application Development and Deployment $ 14,433   $ 26,107   $ 40,540  
Total revenue $ 170,198   $ 26,107   $ 196,305  
 
(1) Adjustments to revenue relate to acquisition-related revenue, which 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. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
 
Free Cash Flow
 
(In thousands) YTD 2015 YTD Q2 2014 % Change
Cash flows from operations $ 57,931 $ 42,540 36 %
Purchases of property and equipment $ (4,405 ) $ (6,099 ) 28 %
Capitalized software development costs $ (1,383 ) $ (1,938 ) 29 %
Free cash flow $ 52,143   $ 34,503   51 %
 

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 $ 380.0 14 % $ 390.0 17 %
Acquisition-related adjustments - revenue (1) $   $ 35.0   100 % $ 35.0   100 %
Non-GAAP revenue $ 332.5   $ 415.0   25 % $ 425.0   28 %
 

 

(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 $ 11.8 $ 15.8
GAAP operating margins 3 % 4 %
Acquisition-related revenue 35.0 35.0
Restructuring expense 6.7 6.7
Stock-based compensation 26.6 26.6
Acquisition related expense 4.5 4.5
Amortization of intangibles 29.6   29.6  
Total adjustments 102.4   102.4  
Non-GAAP income from operations $ 114.2   $ 118.2  
Non-GAAP operating margin 28 % 28 %
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 $ 6.2 $ 8.8
Adjustments (from previous table) 102.4 102.4
Income tax adjustment (2) (33.7 ) (33.0 )
Non-GAAP net income $ 74.9   $ 78.2  
 
GAAP diluted earnings per share $ 0.12 $ 0.17
Non-GAAP diluted earnings per share $ 1.45 $ 1.52
 
Diluted weighted average shares outstanding 51.5 51.5
 
(2) Tax adjustment is based on a non-GAAP effective tax rate of 33% for both Low and High, calculated as follows:
Non-GAAP income from operations $ 114.2 $ 118.2
Other income (expense) (1.9 ) (1.9 )
Non-GAAP income from continuing operations before income taxes 112.3   116.3  
Non-GAAP net income 74.9   78.2  
Tax provision $ 37.4   $ 38.1  
Non-GAAP tax rate 33 % 33 %
 

 

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2015 GUIDANCE

(Unaudited)

 
Q3 2015 Revenue Growth Guidance
Three Months Ended   Three Months Ending
August 31, 2014 August 31, 2015
(In millions) Low   % Change   High   % Change
GAAP revenue $ 79.3 $ 95.0 20 % $ 98.0 24 %
Acquisition-related adjustments - revenue (1) $   $ 6.0   100 % $ 6.0   100 %
Non-GAAP revenue $ 79.3   $ 101.0   27 % $ 104.0   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.
Q3 2015 Non-GAAP Earnings per Share Guidance
    Three Months Ending August 31, 2015
Low     High
GAAP diluted earnings per share $ (0.07 ) $ (0.04 )
Acquisition-related revenue 0.12 0.12
Restructuring expense 0.01 0.01
Stock-based compensation 0.14 0.14
Acquisition related expense 0.02 0.02
Amortization of intangibles 0.14   0.14  
Total adjustments 0.43   0.43  
Income tax adjustment $ (0.01 ) $ (0.01 )
Non-GAAP diluted earnings per share $ 0.35   $ 0.38  

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

Source: Progress Software Corporation

News Provided by Acquire Media


Close window | Back to top

Copyright 2017 Progress Software Corporation