Progress Software Announces Preliminary Financial Results for Fiscal Q3 2017; Better-Than-Expected Q3 Revenues and Diluted Earnings Per Share; Board of Directors Raises Quarterly Dividend 12%
--CEO Issues Special Letter to Shareholders as One-Year Anniversary Approaches--
|(In millions, except percentages and per share amounts)||
|Diluted earnings per share||
|Cash flows from operations/ adjusted free cash flow||
*We do not provide quarterly guidance for this financial measure.
These preliminary financial results are subject to revision until the Company reports its full third quarter of fiscal year 2017 results on September 27, 2017.
"Our preliminary third quarter results exceed our guidance and reflect
continued strong execution of the strategy set forth by our new
leadership team earlier this year," said
Board Increases Quarterly Dividend 12%; Sets New Target Payout Ratio Based on Strong Cash Flow
Progress also announced that its Board of Directors approved a 12%
increase in the Company's quarterly cash dividend from
The Board of Directors also set a target dividend payout ratio of between 25-30% of the Company's annual cash flow from operations, reflecting the continued strength of the Company's cash flow generation.
Progress to Host Third Quarter Conference Call on September 27, 2017
The Company will release full results for its third fiscal quarter
ended August 31, 2017, along with its updated outlook for the remainder
of the year, after the market close on
CEO Issues Special Letter to Progress Shareholders
In addition to announcing better-than-expected preliminary revenues and diluted earnings per share for the Company's fiscal third quarter, and an increase in the quarterly dividend, Progress' CEO also published an update on the Company's strategy and business in a letter to shareholders, which follows below:
Dear Fellow Progress Shareholder,
As we approach my first anniversary as CEO of Progress, I would like to
provide an update on our business and the execution of our strategy. I
am very pleased with the strong preliminary fiscal third quarter results
we announced today, which exceeded our own expectations as set forth in
the guidance we provided at the end of the second quarter. We will
present our final results and our expectations for the fourth quarter on
our earnings call on
As a reminder, in
At the same time, we also articulated how we would leverage our inherent application development DNA to build on the capabilities of our products and address the future needs of our strong customer base. Progress has always delivered the platform and tools that organizations need to develop and deploy mission-critical business applications.
As the types of devices and interfaces on which applications run proliferate, the number of systems that need to be connected rises, and the amount of data produced skyrockets. Businesses and ISVs are looking for a platform that will enable them to quickly and easily develop modern, intelligent cloud applications - what we call Cognitive Applications. These applications will include automated machine-learning, enabling organizations to harness previously unused volumes of data to make better, faster decisions, and operate much more efficiently.
Through our acquisitions of Kinvey and
We have also successfully executed on our efforts to improve how we manage our business. I have built a new management team comprised of seasoned executives, who have brought to Progress a consistent approach emphasizing customer retention and maximizing efficiencies. In January, we undertook a large restructuring of our operations that included a 20% reduction in our headcount. The savings from that effort, coupled with steps we took to streamline our operations, have enabled us to achieve year-over-year improvement in our operating margins from 28% for the first nine months of fiscal 2016 to 34% for the first nine months of fiscal 2017, as well as provide additional flexibility to invest in our business. We will continue to seek out opportunities to further enhance our margins and drive incremental cash flow.
As a result of these efforts and prudent expense management, we announced on our second quarter earnings call in June that we had exceeded our expectations for revenue, operating income and earnings per share, and we increased our fiscal 2017 annual guidance for operating margin, EPS and free cash flow. Our preliminary results for the third quarter exceed the guidance we provided in our report of second quarter results and build upon the performance of our core business in the first half of the year.
Our new, highly-energized management team is complemented by a Board of Directors that has been refreshed with the addition of three new members over the past 11 months. Our management and board are 100% focused on driving shareholder value.
We have consistently demonstrated our commitment to returning capital to
shareholders, as evidenced by the fact that Progress has returned over
In the interim, I am happy to report that the Board has approved a 12%
increase in the Company's quarterly cash dividend. As a result, the
quarterly cash dividend will increase from
Following our third quarter announcement, we will be actively engaging with our shareholders to discuss our strategy. I look forward to these interactions. As part of our commitment to shareholders, our Board and management value regular engagement with all shareholders, and we are always receptive to constructive input. It has long been our practice to listen to and thoughtfully consider all ideas that have the potential to enhance shareholder value.
In keeping with this approach, we wanted to provide an update regarding
recent discussions with
Among Praesidium's ideas was the consideration of a potential acquisition of a particular, unrelated third party. We evaluated the idea but ultimately concluded that it was not in the best interests of Progress or its shareholders. Our Board appreciated the suggestion, as well as the other constructive ideas to drive shareholder value, and we look forward to engaging in further discussions with Praesidium about their ideas.
Praesidium has also suggested, among other things, that our Board
consider adding specific individuals to our Board of Directors. Progress
is committed to having a Board of Directors that has the right skills
and diversity of experience and provides strong, independent oversight
of the Company. Above all else, our Board is guided by shareholders'
best interests in every decision.
We are very pleased with our progress to date and excited about our
future prospects, as we focus on continuing to enhance our strong core
businesses. Based on our solid financial performance and the Company's
healthy cash flow generation, we look forward to closing out the fiscal
year and beginning 2018 with good momentum. We encourage shareholders to
participate in our earnings call on
I and the Board thank you for your investment in Progress and in the confidence you place in our leadership team.
Legal Notice Regarding Non-GAAP Financial Information
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, including the
uncertain economic environment in
Progress (NASDAQ: PRGS) offers the leading platform for developing and deploying mission-critical business applications. Progress empowers enterprises and ISVs to build and deliver cognitive-first applications, that harness big data to derive business insights and competitive advantage. Progress offers leading technologies for easily building powerful user interfaces across any type of device, a reliable, scalable and secure backend platform to deploy modern applications, leading data connectivity to all sources, and award-winning predictive analytics that brings the power of machine learning to any organization. Over 1,700 independent software vendors, 100,000 enterprise customers, and two 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.
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - QTD
|Three Months Ended|
|(In thousands, except per share data)||
|Adjusted income from operations:|
|GAAP operating income||$||20,299|
|Amortization of acquired intangibles||9,087|
|Restructuring expenses and other||923|
|Non-GAAP income from operations||$||35,669|
|Adjusted diluted earnings per share:|
|GAAP diluted earnings per share||$||0.23|
|Amortization of acquired intangibles||0.19|
|Restructuring expenses and other||0.02|
|Provision for income taxes||(0.07||)|
|Non-GAAP diluted earnings per share||$||0.48|
|Non-GAAP weighted avg shares outstanding - diluted||48,370|
|Adjusted Free Cash Flow|
|Three Months Ended|
|Cash flows from operations||$||13,442|
|Purchases of property and equipment||(342||)|
|Free cash flow||13,100|
|Add back: restructuring payments||5,241|
|Adjusted free cash flow||$||18,341|
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