Press Release

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Jan 14, 2021
Progress Reports 2020 Fiscal Fourth Quarter and Year End Results

Solid Execution Drove Growth and Operating Leverage
Acquisition of Chef Bolsters Position in DevOps Market and Drives Fiscal 2021 Revenue Growth

BEDFORD, Mass., Jan. 14, 2021 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the leading provider of products to develop, deploy and manage high-impact business applications, today announced results for its fiscal fourth quarter and fiscal year ended November 30, 2020.

Fourth Quarter 2020 Highlights:

  • Revenue of $122.4 million increased 5% year-over-year on an actual currency basis, and 4% on a constant currency basis.
  • Non-GAAP revenue of $129.1 million increased 5% on an actual currency basis, and 4% constant currency basis.
  • Operating margin was 15% and Non-GAAP operating margin was 37%.
  • Diluted earnings per share was $0.39 compared to diluted loss per share of $0.11 in the same quarter last year.
  • Non-GAAP diluted earnings per share was $0.91 compared to $0.79 in the same quarter last year, an increase of 15%.
  • On October 5, 2020, the company completed the acquisition of Chef Software, a global leader in the growing DevOps and DevSecOps markets.

“I am thrilled with our results both for the fourth quarter and the full year 2020 and believe they reflect the durability of our business and our success in executing our total growth strategy,” said Yogesh Gupta, CEO at Progress. “Chef extends our long-standing leadership position in the developer ecosystem, we are very pleased with the customer response and the rapid pace of the integration. The investments we’ve made to bolster our M&A capabilities, combined with the large, fragmented and growing DevOps market opportunity, position us well to execute on our total growth strategy for years to come, enabling us to deliver sustained shareholder value.”

Additional financial highlights included:

  Three Months Ended
  GAAP   Non-GAAP
(In thousands, except percentages and per share amounts) November 30,
2020
  November 30,
2019
  Change   November 30,
2020
  November 30,
2019
  Change
Revenue $ 122,385     $ 117,038     5%   $ 129,063     $ 123,416     5%
Income (loss) from operations $ 18,514     $ (6,026 )   *   $ 48,081     $ 47,285     2%
Operating margin 15 %   (5 )%   *   37 %   38 %   (100) bps
Net income (loss) $ 17,661     $ (4,740 )   *   $ 41,118     $ 35,720     15%
Diluted earnings (loss) per share $ 0.39     $ (0.11 )   *   $ 0.91     $ 0.79     15%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$ 42,762     $ 36,601     17%   $ 40,656     $ 36,705     11%
                                       
*Not meaningful                                      
                                       

Other fiscal fourth quarter 2020 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $106.0 million at the end of the quarter.
  • DSO was 54 days, compared to 56 days in the fiscal fourth quarter of 2019 and 49 days in the fiscal third quarter of 2020.
  • Pursuant to the $250 million share authorization by the Board of Directors, Progress repurchased 1.0 million shares for $40 million during the fiscal fourth quarter of 2020. As of November 30, 2020, there was $190 million remaining under this authorization.
  • On January 12, 2020, Progress' Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2021 to shareholders of record as of the close of business on March 1, 2021.

“We’re excited to deliver results that reflect a strong and durable top line, expanded operating margin and meaningful growth in earnings per share,” said Anthony Folger, CFO at Progress. “As we begin to realize synergies from the acquisition of Chef, we are very well positioned to deliver strong fiscal 2021 results.”

Full Year Results

  Fiscal Year Ended
  GAAP   Non-GAAP
(In thousands, except percentages and per share amounts) November 30,
2020
  November 30,
2019
  Change   November 30,
2020
  November 30,
2019
  Change
Revenue $ 442,150     $ 413,298     7%   $ 456,212     $ 431,961     6%
Income from operations $ 107,728     $ 40,084     169%   $ 182,761     $ 162,258     13%
Operating margin 24 %   10 %   1400 bps   40 %   38 %   200 bps
Net income $ 79,722     $ 26,400     202%   $ 140,082     $ 121,745     15%
Diluted earnings per share $ 1.76     $ 0.58     203%   $ 3.09     $ 2.69     15%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$ 144,847     $ 128,484     13%   $ 142,453     $ 128,893     11%
                                       

2021 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2021 and for the fiscal first quarter ending February 28, 2021, together with actual results for the same periods in the fiscal year ending November 30, 2020:

  FY 2021 Guidance   FY 2020 Actual
(In millions, except percentages and per share amounts) FY 2021
GAAP
  FY 2021
Non-GAAP
  FY 2020
GAAP
  FY 2020
Non-GAAP
Revenue $487 - $495   $513 - $521   $ 442   $ 456
Diluted earnings per share $1.40 - $1.46   $3.22 - $3.28   $ 1.76   $ 3.09
Operating margin 19%   37%     24%     40%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$151 - $156   $150 - $155   $ 145   $ 142
Effective tax rate 21%   20%     18%     18%


  Q1 2021 Guidance   Q1 2020 Actual
(In millions, except per share amounts) Q1 2021
GAAP
  Q1 2021
Non-GAAP
  Q1 2020
GAAP
  Q1 2020
Non-GAAP
Revenue $109 - $113   $119 - $123   $ 110   $ 114
Diluted earnings per share $0.21 - $0.25   $0.72 - $0.76   $ 0.46   $ 0.76

Based on current exchange rates, the expected positive currency translation impact on Progress' fiscal year 2021 business outlook compared to 2020 exchange rates is approximately $6.4 million on GAAP and non-GAAP revenue, and approximately $0.02 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress' fiscal Q1 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $1.4 million. The expected currency translation impact on GAAP and non-GAAP earnings per share for fiscal Q1 2021 is not material. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal fourth quarter of 2020 at 5:00 p.m. ET on Thursday, January 14, 2021. The call 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 1-888-458-4121, pass code 6657134. The conference call will include comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress 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 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.  A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below and is available on the Progress website at www.progress.com within the investor relations section. 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 also available on the Progress website 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' 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) Economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, and may make acquisitions in the future, and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (9) Delay or failure to realize the expected synergies and benefits of the Chef acquisition could negatively impact our future results of operations and financial condition; (10) The continuing impact of the coronavirus disease (COVID-19) outbreak on our employees, customers, partners, and the global financial markets could adversely affect our business, results of operations and financial condition.

For further information regarding risks and uncertainties associated with Progress' business, please refer to Progress' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2019 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 29, 2020, May 31, 2020 and August 31, 2020. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (NASDAQ: PRGS) provides the best products to develop, deploy and manage high-impact business applications. Our comprehensive product stack is designed to make technology teams more productive and we have a deep commitment to the developer community, both open source and commercial alike. With Progress, organizations can accelerate the creation and delivery of strategic business applications, automate the process by which apps are configured, deployed and scaled, and make critical data and content more accessible and secure—leading to competitive differentiation and business success. Over 1,700 independent software vendors, 100,000 enterprise customers, and three million developers rely on Progress to power their applications. Learn about Progress at www.progress.com or +1-800-477-6473.

Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners.

Investor Contact:   Press Contact:
Garo Toomajanian   Erica McShane
Progress Software   Progress Software
+1 781 280 4817   +1 781 280 4000
Investor-Relations@progress.com   PR@progress.com
     

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

  Three Months Ended   Fiscal Year Ended
(In thousands, except per share data) November 30, 2020   November 30, 2019   % Change   November 30, 2020   November 30, 2019   % Change
Revenue:                      
Software licenses $ 37,443     $ 39,336     (5 ) %   $ 115,249     $ 122,552     (6 ) %
Maintenance and services 84,942     77,702     9   %   326,901     290,746     12   %
Total revenue 122,385     117,038     5   %   442,150     413,298       %
Costs of revenue:                      
Cost of software licenses 1,171     1,598     (27 ) %   4,473     4,894     (9 ) %
Cost of maintenance and services 14,137     12,281     15   %   49,744     44,463     12   %
Amortization of acquired intangibles 2,923     6,887     (58 ) %   7,897     25,884     (69 ) %
Total costs of revenue 18,231     20,766     (12 ) %   62,114     75,241     (17 ) %
Gross profit 104,154     96,272     8   %   380,036     338,057     12    %
Operating expenses:                      
Sales and marketing 32,013     29,369     9   %   100,113     101,701     (2 ) %
Product development 24,482     23,868     3   %   88,599     88,572       %
General and administrative 15,302     14,915     3   %   54,004     53,360     1   %
Amortization of acquired intangibles 7,565     7,414     2   %   20,049     22,255     (10 ) %
Impairment of intangible & long-lived assets(1)     24,096     (100 ) %       24,096     (100 ) %
Restructuring expenses 4,080     2,338     75   %   5,906     6,331     (7 ) %
Acquisition-related expenses 2,198     298     638   %   3,637     1,658     119   %
Total operating expenses 85,640     102,298     (16 ) %   272,308     297,973     (9 ) %
Income (loss) from operations 18,514     (6,026 )   *   107,728     40,084     169   %
Other expense, net (1,887 )   (3,551 )   47   %   (11,093 )   (11,589 )   4   %
Income (loss) before income taxes 16,627     (9,577 )   *   96,635     28,495     239   %
(Benefit) provision for income taxes (1,034 )   (4,837 )   (79 ) %   16,913     2,095     (707 ) %
Net income (loss) $ 17,661     $ (4,740 )   *   $ 79,722     $ 26,400     202   %
                       
Earnings (loss) per share:                      
Basic $ 0.39     $ (0.11 )   *   $ 1.78     $ 0.59     202   %
Diluted $ 0.39     $ (0.11 )   *   $ 1.76     $ 0.58     203   %
Weighted average shares outstanding:                      
Basic 44,723     44,882       %   44,886     44,791       %
Diluted 45,140     44,882     1   %   45,321     45,340       %
                       
Cash dividends declared per common share $ 0.175     $ 0.165     6   %   $ 0.670     $ 0.630     6   %
(1)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.


Stock-based compensation is included in the condensed consolidated statements of operations, as follows:            
                       
Cost of revenue $ 357     $ 323     11   %   $ 1,336     $ 1,134     18   %
Sales and marketing 1,267     950     33   %   4,462     4,155     7   %
Product development 1,768     1,812     (2 ) %   7,286     7,205     1   %
General and administrative 2,731     2,815     (3 ) %   10,398     10,817     (4 ) %
Total $ 6,123     $ 5,900     4   %   $ 23,482     $ 23,311     1   %
                                               
*Not meaningful                                              
                                               


CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands) November 30,
2020
  November 30,
2019
Assets      
Current assets:      
Cash, cash equivalents and short-term investments $ 105,995     $ 173,685  
Accounts receivable, net 84,040     72,820  
Unbilled receivables and contract assets 24,917     10,880  
Other current assets 23,983     27,280  
Total current assets 238,935     284,665  
Property and equipment, net 29,817     29,765  
Goodwill and intangible assets, net 704,473     532,216  
Right-of-use lease assets 30,635      
Long-term unbilled receivables and contract assets 17,133     12,492  
Other assets 20,789     22,133  
Total assets $ 1,041,782     $ 881,271  
Liabilities and shareholders' equity      
Current liabilities:      
Accounts payable and other current liabilities $ 70,899     $ 72,674  
Current portion of long-term debt, net 18,242     10,717  
Short-term operating lease liabilities 7,015      
Short-term deferred revenue 166,387     157,494  
Total current liabilities 262,543     240,885  
Long-term debt, net 364,260     284,002  
Long-term operating lease liabilities 26,966      
Long-term deferred revenue 26,908     19,752  
Other long-term liabilities 15,092     6,350  
Shareholders' equity:      
Common stock and additional paid-in capital 306,244     295,953  
Retained earnings 39,769     34,329  
Total shareholders' equity 346,013     330,282  
Total liabilities and shareholders' equity $ 1,041,782     $ 881,271  
               

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)  

  Three Months Ended   Fiscal Year Ended
(In thousands) November 30,
2020
  November 30,
2019
  November 30,
2020
  November 30,
2019
Cash flows from operating activities:              
Net income (loss) $ 17,661     $ (4,740 )   $ 79,722     $ 26,400  
Depreciation and amortization 12,044     16,519     34,765     56,679  
Stock-based compensation 6,123     5,900     23,482     23,311  
Impairment of intangible and long-lived assets(1)     24,096         24,096  
Other non-cash adjustments (2,024 )   (8,252 )   6,287     (13,947 )
Changes in operating assets and liabilities 8,958     3,078     591     11,945  
Net cash flows from operating activities 42,762     36,601     144,847     128,484  
Capital expenditures (3,098 )   (2,168 )   (6,517 )   (3,998 )
Repurchases of common stock, net of issuances (37,927 )   2,918     (48,901 )   (15,735 )
Dividend payments to shareholders (7,542 )   (6,941 )   (29,900 )   (27,760 )
Payments for acquisitions, net of cash acquired (213,057 )       (213,057 )   (225,298 )
Proceeds from the issuance of debt, net of payment of issuance costs 98,500         98,500     183,374  
Proceeds from sale of long-lived assets, net 889         889     6,146  
Payments of principal on long-term debt (3,763 )   (1,882 )   (11,288 )   (5,309 )
Other (888 )   (240 )   (2,263 )   (5,732 )
Net change in cash, cash equivalents and short-term investments (124,124 )   28,288     (67,690 )   34,172  
Cash, cash equivalents and short-term investments, beginning of period 230,119     145,397     173,685     139,513  
Cash, cash equivalents and short-term investments, end of period $ 105,995     $ 173,685     $ 105,995     $ 173,685  
(1)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
 

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FOURTH QUARTER
(Unaudited)

  Three Months Ended           % Change    
(In thousands, except per share data) November 30, 2020       November 30, 2019       Non-GAAP    
Adjusted revenue:                              
GAAP revenue $ 122,385             $ 117,038                  
Acquisition-related revenue(1) 6,678             6,378                  
Non-GAAP revenue $ 129,063     100   %   $ 123,416     100   %   5   %
                               
Adjusted income from operations:                              
GAAP income (loss) from operations $ 18,514     15   %   $ (6,026 )   (5 ) %        
Amortization of acquired intangibles 10,488     8   %   14,301     12   %        
Stock-based compensation 6,123     4   %   5,900     4   %        
Impairment of intangible and long-lived assets(2)       %   24,096     20   %        
Restructuring expenses and other 4,080     3   %   2,338     2   %        
Acquisition-related revenue(1) and expenses 8,876     7   %   6,676     5   %        
Non-GAAP income from operations $ 48,081     37   %   $ 47,285     38   %   2   %
                               
Adjusted net income:                              
GAAP net income (loss) $ 17,661     14   %   $ (4,740 )   (4 ) %        
Amortization of acquired intangibles 10,488     8   %   14,301     12   %        
Stock-based compensation 6,123     5   %   5,900     4   %        
Impairment of intangible and long-lived assets(2)       %   24,096     20   %        
Restructuring expenses and other 4,080     3   %   2,338     2   %        
Acquisition-related revenue(1) and expenses 8,876     7   %   6,676     5   %        
Provision for income taxes (6,110 )   (5 ) %   (12,851 )   (10 ) %        
Non-GAAP net income $ 41,118     32   %   $ 35,720     29   %   15   %
                               
Adjusted diluted earnings per share:                              
GAAP diluted earnings (loss) per share $ 0.39             $ (0.11 )                
Amortization of acquired intangibles 0.23             0.32                  
Stock-based compensation 0.14             0.13                  
Impairment of intangible and long-lived assets(2)             0.53                  
Restructuring expenses and other 0.09             0.05                  
Acquisition-related revenue(1) and expenses 0.20             0.15                  
Provision for income taxes (0.14 )           (0.28 )                
Non-GAAP diluted earnings per share $ 0.91             $ 0.79             15   %
                               
Non-GAAP weighted avg shares outstanding - diluted 45,140             45,484             (1 ) %
                               
(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 Progress' Application Development and Deployment business segment for Chef in fiscal year 2020 and Progress' OpenEdge business segment for Ipswitch in fiscal year 2019.
(2)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
                               
                               

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FISCAL YEAR
(Unaudited)

  Fiscal Year Ended         % Change  
(In thousands, except per share data) November 30, 2020       November 30, 2019       Non-GAAP  
Adjusted revenue:                            
GAAP revenue $ 442,150             $ 413,298                
Acquisition-related revenue(1) 14,062             18,663                
Non-GAAP revenue $ 456,212     100   %   $ 431,961     100   %   %
                             
Adjusted income from operations:                            
GAAP income from operations $ 107,728     24   %   $ 40,084     10   %      
Amortization of acquired intangibles 27,946     6   %   48,139     11   %      
Stock-based compensation 23,482     5   %   23,311     5   %      
Impairment of intangible and long-lived assets(2)       %   24,096     6   %      
Restructuring expenses and other 5,906     1   %   6,307     1   %      
Acquisition-related revenue(1) and expenses 17,699     4   %   20,321     5   %      
Non-GAAP income from operations $ 182,761     40   %   $ 162,258     38   %   13 %
                             
Adjusted net income:                            
GAAP net income $ 79,722     18   %   $ 26,400     6   %      
Amortization of acquired intangibles 27,946     6   %   48,139     11   %      
Stock-based compensation 23,482     5   %   23,311     5   %      
Impairment of intangible and long-lived assets(2)       %   24,096     6   %      
Restructuring expenses and other 5,906     1   %   6,307     1   %      
Acquisition-related revenue(1) and expenses 17,699     4   %   20,321     5   %      
Provision for income taxes (14,673 )   (3 ) %   (26,829 )   (6 ) %      
Non-GAAP net income $ 140,082     31   %   $ 121,745     28   %   15 %
                             
Adjusted diluted earnings per share:                            
GAAP diluted earnings per share $ 1.76             $ 0.58                
Amortization of acquired intangibles 0.62             1.07                
Stock-based compensation 0.51             0.51                
Impairment of intangible and long-lived assets(2)             0.53                
Restructuring expenses and other 0.13             0.14                
Acquisition-related revenue(1) and expenses 0.39             0.45                
Provision for income taxes (0.32 )           (0.59 )              
Non-GAAP diluted earnings per share $ 3.09             $ 2.69             15 %
                             
Non-GAAP weighted avg shares outstanding - diluted 45,321             45,340             %
 
(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 Progress' Application Development and Deployment business segment for Chef in fiscal year 2020 and Progress' OpenEdge business segment for Ipswitch in fiscal year 2019.
(2)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
 
 

OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)

Quarter to Date Adjusted Free Cash Flow          
           
(In thousands) Q4 2020   Q4 2019   % Change
Cash flows from operations $ 42,762     $ 36,601     17   %
Purchases of property and equipment (3,098 )   (2,168 )   43   %
Free cash flow 39,664     34,433     15   %
Add back: restructuring payments 992     2,272     (56 ) %
Adjusted free cash flow $ 40,656     $ 36,705     11   %


Year to Date Adjusted Free Cash Flow          
           
(In thousands) FY 2020   FY 2019   % Change
Cash flows from operations $ 144,847     $ 128,484     13   %
Purchases of property and equipment (6,517 )   (3,998 )   63   %
Free cash flow 138,330     124,486     11   %
Add back: restructuring payments 4,123     4,407     (6 ) %
Adjusted free cash flow $ 142,453     $ 128,893     11   %
                       
                       

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)

Fiscal Year 2021 Revenue Guidance
  Fiscal Year Ended   Fiscal Year Ending
  November 30, 2020   November 30, 2021
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 442.1     $ 487.3     10 %   $ 495.3     12 %
Acquisition-related adjustments - revenue(1) 14.1     25.7     82 %   25.7     82 %
Non-GAAP revenue $ 456.2     $ 513.0     12 %   $ 521.0     14 %
                   
(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 Progress' Application Development and Deployment business segment for Chef and Progress' OpenEdge business segment for Ipswitch.


Fiscal Year 2021 Non-GAAP Operating Margin Guidance
  Fiscal Year Ending November 30, 2021
(In millions) Low   High
GAAP income from operations $ 91.2     $ 94.6  
GAAP operating margin 19 %   19 %
Acquisition-related revenue 25.7     25.7  
Restructuring expense 1.9     1.9  
Stock-based compensation 27.3     27.3  
Acquisition-related expenses 0.3     0.3  
Amortization of intangibles 44.9     44.9  
Total adjustments 100.1     100.1  
Non-GAAP income from operations $ 191.3     $ 194.7  
Non-GAAP operating margin 37 %   37 %


Fiscal Year 2021 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
  Fiscal Year Ending November 30, 2021
(In millions, except per share data) Low   High
GAAP net income $ 62.4     $ 65.1  
Adjustments (from previous table) 100.1     100.1  
Income tax adjustment(2) (19.2 )   (19.2 )
Non-GAAP net income $ 143.3     $ 146.0  
       
GAAP diluted earnings per share $ 1.40     $ 1.46  
Non-GAAP diluted earnings per share $ 3.22     $ 3.28  
       
Diluted weighted average shares outstanding 44.5     44.5  
       
(2)Tax adjustment is based on a non-GAAP effective tax rate of approximately 20% for Low and High, calculated as follows:
Non-GAAP income from operations $ 191.3     $ 194.7  
Other (expense) income (12.2 )   (12.2 )
Non-GAAP income from continuing operations before income taxes 179.1     182.5  
Non-GAAP net income 143.3     146.0  
Tax provision $ 35.8     $ 36.5  
Non-GAAP tax rate 20  %   20  %
           

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)

Fiscal Year 2021 Adjusted Free Cash Flow Guidance
  Fiscal Year Ending November 30, 2021
(In millions) Low   High
Cash flows from operations (GAAP) $ 151     $ 156  
Purchases of property and equipment (7 )   (7 )
Add back: restructuring payments 6     6  
Adjusted free cash flow (non-GAAP) $ 150     $ 155  
               

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1 2021 GUIDANCE
(Unaudited)

Q1 2021 Revenue Guidance
  Three Months Ended   Three Months Ending
  February 29, 2020   February 28, 2021
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 109.7     $ 108.8     (1 ) %   $ 112.8     3 %
Acquisition-related adjustments - revenue(1) 4.1     10.2     149       10.2     149  
Non-GAAP revenue $ 113.8     $ 119.0     5   %   $ 123.0     8 %
                   
(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 Progress; Application Development and Deployment business segment for Chef and Progress' OpenEdge business segment for Ipswitch.


Q1 2021 Non-GAAP Earnings per Share Guidance
  Three Months Ending February 28, 2021
  Low   High
GAAP diluted earnings per share $ 0.21     $ 0.25  
Acquisition-related revenue 0.23     0.23  
Stock-based compensation 0.15     0.15  
Amortization of intangibles 0.23     0.23  
Restructuring expense 0.03     0.03  
Total adjustments 0.64     0.64  
Income tax adjustment (0.13 )   (0.13 )
Non-GAAP diluted earnings per share $ 0.72     $ 0.76  


 


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Source: Progress Software Corporation