Delaware | 04-2746201 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press release issued by Progress Software Corporation dated June 28, 2017 |
Date: | June 28, 2017 | Progress Software Corporation | |
By: | /s/ PAUL A. JALBERT | ||
Paul A. Jalbert | |||
Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press release issued by Progress Software Corporation dated June 28, 2017 |
Exhibit 99.1 |
Investor Contact: | Press Contact: | |
Brian Flanagan | Erica Burns | |
Progress Software | Progress Software | |
+1 781 280 4817 | +1 888 365 2779 (x3135) | |
flanagan@progress.com | erica.burns@progress.com |
• | Revenue was $93.2 million compared to $96.1 million in the same quarter in fiscal year 2016; |
• | Income from operations was $20.3 million compared to $12.3 million in the same quarter last year; |
• | Net income was $10.3 million compared to $7.3 million in the same quarter last year; |
• | Diluted earnings per share was $0.21 compared to $0.14 in the same quarter last year; and |
• | Cash from operations was $22.4 million compared to $26.8 million in the same quarter last year. |
• | Revenue was $93.4 million compared to $96.7 million in the same quarter last year; |
• | Income from operations was $32.6 million compared to $27.0 million in the same quarter last year; |
• | Operating margin was 35% compared to 28% in the same quarter last year; |
• | Net income was $20.5 million compared to $16.4 million in the same quarter last year; |
• | Diluted earnings per share was $0.42 compared to $0.33 in the same quarter last year; and |
• | Adjusted free cash flow was $27.9 million compared to $26.4 million in the same quarter last year. |
• | Cash, cash equivalents and short-term investments were $245.1 million at the end of the quarter; |
• | DSO was 42 days, compared to 45 days in the fiscal second quarter of 2016; |
• | Under the previously announced authorization by the Board of Directors to repurchase up to $200 million of shares of common stock, Progress repurchased 0.2 million shares for $6.9 million during the fiscal second quarter of 2017. As of May 31, 2017, there was $110.4 million remaining under this authorization; and |
• | On June 21, 2017, our Board of Directors declared a quarterly dividend of $0.125 per share of common stock that will be paid on September 15, 2017 to shareholders of record as of the close of business on September 1, 2017. |
(In millions, except percentages and per share amounts) | FY 2017 GAAP | FY 2017 Non-GAAP | Q3 2017 GAAP | Q3 2017 Non-GAAP | |||||
Revenue | $390 - $395 | $391 - $396 | $93 - $96 | $93 - $96 | |||||
Diluted earnings per share | $0.66 - $0.73 | $1.73 - $1.78 | $0.17 - $0.19 | $0.41 - $0.43 | |||||
Operating margin | 16% - 17% | 33% - 34% | * | * | |||||
Adjusted free cash flow | $86 - $91 | $100 - $105 | * | * | |||||
Effective tax rate | 43 | % | 33 | % | * | * |
• | Acquisition-related revenue - In all periods presented, we include acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik AD ("Telerik") that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. We acquired Telerik on December 2, 2014. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. We believe these adjustments are useful to management and investors as a measure of the ongoing performance of the business because, although we cannot be certain that customers will renew their contracts, we (and Telerik) have historically experienced high renewal rates on maintenance and support agreements and other customer contracts. Additionally, although acquisition-related revenue adjustments are non-recurring with respect to past acquisitions, we expect to incur these adjustments in connection with any future acquisitions. |
• | Amortization of acquired intangibles - In all periods presented, we exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. |
• | Stock-based compensation - In all periods presented, we exclude stock-based compensation to be consistent with the way management and the financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include these charges in operating plans. Stock-based compensation will continue in future periods. |
• | Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results. |
• | Acquisition-related and transition expenses - In all periods presented, we exclude acquisition-related expenses because those expenses distort trends and are not part of our core operating results. In recent years, we have completed a number of acquisitions, which result in our incurring operating expenses which would not otherwise have been incurred. By excluding certain transition, integration and other acquisition-related expense items in connection with acquisitions, this provides more meaningful comparisons of the financial results to our historical operations and forward looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition related costs, may not be indicative of the size, complexity and/or volume of future acquisitions. |
• | Income tax adjustment - In all periods presented, we adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above. In addition, during the fiscal second quarter of 2016, we adjusted our income tax provision to remove from non-GAAP income the positive impact of an out-of-period adjustment recorded to the income tax provision. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(In thousands, except per share data) | May 31, 2017 | May 31, 2016 | % Change | May 31, 2017 | May 31, 2016 | % Change | |||||||||||||||
Revenue: | |||||||||||||||||||||
Software licenses | $ | 25,592 | $ | 28,787 | (11 | )% | $ | 49,914 | $ | 52,742 | (5 | )% | |||||||||
Maintenance and services | 67,621 | 67,331 | — | % | 134,269 | 132,857 | 1 | % | |||||||||||||
Total revenue | 93,213 | 96,118 | (3 | )% | 184,183 | 185,599 | (1 | )% | |||||||||||||
Costs of revenue: | |||||||||||||||||||||
Cost of software licenses | 1,422 | 1,233 | 15 | % | 3,010 | 2,715 | 11 | % | |||||||||||||
Cost of maintenance and services | 11,262 | 11,063 | 2 | % | 21,754 | 21,392 | 2 | % | |||||||||||||
Amortization of acquired intangibles | 4,683 | 3,939 | 19 | % | 8,361 | 7,878 | 6 | % | |||||||||||||
Total costs of revenue | 17,367 | 16,235 | 7 | % | 33,125 | 31,985 | 4 | % | |||||||||||||
Gross profit | 75,846 | 79,883 | (5 | )% | 151,058 | 153,614 | (2 | )% | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Sales and marketing | 21,236 | 29,138 | (27 | )% | 46,957 | 58,796 | (20 | )% | |||||||||||||
Product development | 18,791 | 22,297 | (16 | )% | 36,125 | 44,094 | (18 | )% | |||||||||||||
General and administrative | 11,606 | 12,264 | (5 | )% | 22,174 | 24,644 | (10 | )% | |||||||||||||
Amortization of acquired intangibles | 3,223 | 3,185 | 1 | % | 6,402 | 6,370 | 1 | % | |||||||||||||
Restructuring expenses | 662 | 331 | 100 | % | 17,801 | 265 | 6,617 | % | |||||||||||||
Acquisition-related expenses | 44 | 324 | (86 | )% | 93 | 396 | (77 | )% | |||||||||||||
Total operating expenses | 55,562 | 67,539 | (18 | )% | 129,552 | 134,565 | (4 | )% | |||||||||||||
Income from operations | 20,284 | 12,344 | 64 | % | 21,506 | 19,049 | 13 | % | |||||||||||||
Other (expense) income, net | (1,552 | ) | (1,361 | ) | (14 | )% | (2,899 | ) | (3,186 | ) | 9 | % | |||||||||
Income before income taxes | 18,732 | 10,983 | 71 | % | 18,607 | 15,863 | 17 | % | |||||||||||||
Provision for income taxes | 8,391 | 3,708 | 126 | % | 8,791 | 5,372 | 64 | % | |||||||||||||
Net income | $ | 10,341 | $ | 7,275 | 42 | % | $ | 9,816 | $ | 10,491 | (6 | )% | |||||||||
Earnings per share: | |||||||||||||||||||||
Basic | $ | 0.21 | $ | 0.15 | 40 | % | $ | 0.20 | $ | 0.21 | (5 | )% | |||||||||
Diluted | $ | 0.21 | $ | 0.14 | 50 | % | $ | 0.20 | $ | 0.21 | (5 | )% | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 48,221 | 49,873 | (3 | )% | 48,477 | 50,341 | (4 | )% | |||||||||||||
Diluted | 48,490 | 50,354 | (4 | )% | 48,762 | 50,897 | (4 | )% | |||||||||||||
Cash dividends declared per common share | $ | 0.125 | $ | — | 100 | % | $ | 0.250 | $ | — | 100 | % |
(In thousands) | May 31, 2017 | November 30, 2016 | |||||
Assets | |||||||
Current assets: | |||||||
Cash, cash equivalents and short-term investments | $ | 245,082 | $ | 249,754 | |||
Accounts receivable, net | 43,894 | 65,678 | |||||
Other current assets | 22,332 | 20,621 | |||||
Total current assets | 311,308 | 336,053 | |||||
Property and equipment, net | 44,863 | 50,105 | |||||
Goodwill and intangible assets, net | 377,562 | 358,894 | |||||
Other assets | 3,331 | 9,775 | |||||
Total assets | $ | 737,064 | $ | 754,827 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable and other current liabilities | $ | 62,345 | $ | 59,778 | |||
Current portion of long-term debt | 14,643 | 15,000 | |||||
Short-term deferred revenue | 133,254 | 128,960 | |||||
Total current liabilities | 210,242 | 203,738 | |||||
Long-term deferred revenue | 8,820 | 8,801 | |||||
Long-term debt | 111,964 | 120,000 | |||||
Other long-term liabilities | 13,202 | 15,659 | |||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital | 242,331 | 239,496 | |||||
Retained earnings | 150,505 | 167,133 | |||||
Total shareholders’ equity | 392,836 | 406,629 | |||||
Total liabilities and shareholders’ equity | $ | 737,064 | $ | 754,827 |
Three Months Ended | Six Months Ended | ||||||||||||||
(In thousands) | May 31, 2017 | May 31, 2016 | May 31, 2017 | May 31, 2016 | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 10,341 | $ | 7,275 | $ | 9,816 | $ | 10,491 | |||||||
Depreciation and amortization | 10,490 | 9,969 | 19,848 | 19,909 | |||||||||||
Stock-based compensation | 3,633 | 6,293 | 5,263 | 13,231 | |||||||||||
Other non-cash adjustments | 444 | 1,691 | 4,571 | 977 | |||||||||||
Changes in operating assets and liabilities | (2,479 | ) | 1,532 | 20,231 | 4,654 | ||||||||||
Net cash flows from operating activities | 22,429 | 26,760 | 59,729 | 49,262 | |||||||||||
Capital expenditures | (140 | ) | (1,204 | ) | (523 | ) | (2,617 | ) | |||||||
Repurchases of common stock, net of issuances | (7,503 | ) | (47,137 | ) | (19,923 | ) | (52,509 | ) | |||||||
Dividend payments to shareholders | (6,044 | ) | — | (12,116 | ) | — | |||||||||
Payments for acquisitions | (28,270 | ) | — | (28,270 | ) | — | |||||||||
Payment of long-term debt | (3,750 | ) | (1,875 | ) | (7,500 | ) | (5,625 | ) | |||||||
Other | 4,168 | 1,074 | 3,931 | (681 | ) | ||||||||||
Net change in cash, cash equivalents and short-term investments | (19,110 | ) | (22,382 | ) | (4,672 | ) | (12,170 | ) | |||||||
Cash, cash equivalents and short-term investments, beginning of period | 264,192 | 251,491 | 249,754 | 241,279 | |||||||||||
Cash, cash equivalents and short-term investments, end of period | $ | 245,082 | $ | 229,109 | $ | 245,082 | $ | 229,109 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(In thousands) | May 31, 2017 | May 31, 2016 | % Change | May 31, 2017 | May 31, 2016 | % Change | |||||||||||||||
Segment revenue: | |||||||||||||||||||||
OpenEdge | $ | 65,890 | $ | 66,928 | (2 | )% | $ | 130,398 | $ | 131,061 | (1 | )% | |||||||||
Data Connectivity and Integration | 7,096 | 10,005 | (29 | )% | 13,924 | 16,601 | (16 | )% | |||||||||||||
Application Development and Deployment | 20,227 | 19,185 | 5 | % | 39,861 | 37,937 | 5 | % | |||||||||||||
Total revenue | 93,213 | 96,118 | (3 | )% | 184,183 | 185,599 | (1 | )% | |||||||||||||
Segment costs of revenue and operating expenses: | |||||||||||||||||||||
OpenEdge | 16,287 | 17,296 | (6 | )% | 34,164 | 35,360 | (3 | )% | |||||||||||||
Data Connectivity and Integration | 2,069 | 3,134 | (34 | )% | 4,331 | 6,035 | (28 | )% | |||||||||||||
Application Development and Deployment | 5,991 | 9,724 | (38 | )% | 13,527 | 18,535 | (27 | )% | |||||||||||||
Total costs of revenue and operating expenses | 24,347 | 30,154 | (19 | )% | 52,022 | 59,930 | (13 | )% | |||||||||||||
Segment contribution: | |||||||||||||||||||||
OpenEdge | 49,603 | 49,632 | — | % | 96,234 | 95,701 | 1 | % | |||||||||||||
Data Connectivity and Integration | 5,027 | 6,871 | (27 | )% | 9,593 | 10,566 | (9 | )% | |||||||||||||
Application Development and Deployment | 14,236 | 9,461 | 50 | % | 26,334 | 19,402 | 36 | % | |||||||||||||
Total contribution | 68,866 | 65,964 | 4 | % | 132,161 | 125,669 | 5 | % | |||||||||||||
Other unallocated expenses (1) | 48,582 | 53,620 | (9 | )% | 110,655 | 106,620 | 4 | % | |||||||||||||
Income from operations | 20,284 | 12,344 | 64 | % | 21,506 | 19,049 | 13 | % | |||||||||||||
Other (expense) income, net | (1,552 | ) | (1,361 | ) | (14 | )% | (2,899 | ) | (3,186 | ) | 9 | % | |||||||||
Income before provision for income taxes | $ | 18,732 | $ | 10,983 | 71 | % | $ | 18,607 | $ | 15,863 | 17 | % | |||||||||
(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. |
Revenue by Type | |||||||||||||||||||
(In thousands) | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | ||||||||||||||
License | $ | 28,787 | $ | 33,624 | $ | 48,497 | $ | 24,322 | $ | 25,592 | |||||||||
Maintenance | 59,485 | 60,368 | 60,188 | 59,138 | 59,898 | ||||||||||||||
Services | 7,846 | 8,026 | 9,039 | 7,510 | 7,723 | ||||||||||||||
Total revenue | $ | 96,118 | $ | 102,018 | $ | 117,724 | $ | 90,970 | $ | 93,213 | |||||||||
Revenue by Region | |||||||||||||||||||
(In thousands) | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | ||||||||||||||
North America | $ | 53,392 | $ | 58,275 | $ | 68,471 | $ | 50,305 | $ | 51,430 | |||||||||
EMEA | 31,577 | 32,719 | 35,301 | 29,844 | 30,646 | ||||||||||||||
Latin America | 4,389 | 4,667 | 8,407 | 5,023 | 5,637 | ||||||||||||||
Asia Pacific | 6,760 | 6,357 | 5,545 | 5,798 | 5,500 | ||||||||||||||
Total revenue | $ | 96,118 | $ | 102,018 | $ | 117,724 | $ | 90,970 | $ | 93,213 | |||||||||
Revenue by Segment | |||||||||||||||||||
(In thousands) | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | ||||||||||||||
OpenEdge | $ | 66,928 | $ | 67,534 | $ | 77,672 | $ | 64,508 | $ | 65,890 | |||||||||
Data Connectivity and Integration | 10,005 | 14,251 | 17,157 | 6,828 | 7,096 | ||||||||||||||
Application Development and Deployment | 19,185 | 20,233 | 22,895 | 19,634 | 20,227 | ||||||||||||||
Total revenue | $ | 96,118 | $ | 102,018 | $ | 117,724 | $ | 90,970 | $ | 93,213 |
Three Months Ended | % Change | |||||||||||||||
(In thousands, except per share data) | May 31, 2017 | May 31, 2016 | Non-GAAP | |||||||||||||
Adjusted revenue: | ||||||||||||||||
GAAP revenue | $ | 93,213 | $ | 96,118 | ||||||||||||
Acquisition-related revenue (1) | 214 | 564 | ||||||||||||||
Non-GAAP revenue | $ | 93,427 | 100 | % | $ | 96,682 | 100 | % | (3 | )% | ||||||
Adjusted gross margin: | ||||||||||||||||
GAAP gross margin | $ | 75,846 | 81 | % | $ | 79,883 | 83 | % | ||||||||
Amortization of acquired intangibles | 4,683 | 6 | % | 3,939 | 4 | % | ||||||||||
Stock-based compensation (2) | 294 | — | % | 180 | — | % | ||||||||||
Acquisition-related revenue (1) | 214 | — | % | 564 | — | % | ||||||||||
Non-GAAP gross margin | $ | 81,037 | 87 | % | $ | 84,566 | 87 | % | (4 | )% | ||||||
Adjusted operating expenses: | ||||||||||||||||
GAAP operating expenses | $ | 55,562 | 60 | % | $ | 67,539 | 70 | % | ||||||||
Amortization of acquired intangibles | (3,223 | ) | (3 | )% | (3,185 | ) | (3 | )% | ||||||||
Restructuring expenses and other | (498 | ) | (1 | )% | (331 | ) | — | % | ||||||||
Acquisition-related expenses | (44 | ) | — | % | (324 | ) | — | % | ||||||||
Stock-based compensation (2) | (3,339 | ) | (4 | )% | (6,113 | ) | (7 | )% | ||||||||
Non-GAAP operating expenses | $ | 48,458 | 52 | % | $ | 57,586 | 60 | % | (16 | )% | ||||||
Adjusted income from operations: | ||||||||||||||||
GAAP operating income | $ | 20,284 | 22 | % | $ | 12,344 | 13 | % | ||||||||
Amortization of acquired intangibles | 7,906 | 8 | % | 7,124 | 7 | % | ||||||||||
Restructuring expenses and other | 498 | 1 | % | 331 | — | % | ||||||||||
Stock-based compensation (2) | 3,633 | 4 | % | 6,293 | 7 | % | ||||||||||
Acquisition-related | 258 | — | % | 888 | 1 | % | ||||||||||
Non-GAAP income from operations | $ | 32,579 | 35 | % | $ | 26,980 | 28 | % | 21 | % | ||||||
Adjusted diluted earnings per share: | ||||||||||||||||
GAAP diluted earnings per share | $ | 0.21 | $ | 0.14 | ||||||||||||
Amortization of acquired intangibles | 0.16 | 0.14 | ||||||||||||||
Restructuring expenses and other | 0.01 | 0.01 | ||||||||||||||
Stock-based compensation (2) | 0.07 | 0.13 | ||||||||||||||
Acquisition-related | 0.01 | 0.02 | ||||||||||||||
Provision for income taxes | (0.04 | ) | (0.11 | ) | ||||||||||||
Non-GAAP diluted earnings per share | $ | 0.42 | $ | 0.33 | 27 | % | ||||||||||
Non-GAAP weighted avg shares outstanding - diluted | 48,490 | 50,354 | (4 | )% | ||||||||||||
(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 | $ | 294 | $ | 180 | ||||||||||||
Sales and marketing | 200 | 962 | ||||||||||||||
Product development | 1,158 | 2,397 | ||||||||||||||
General and administrative | 1,981 | 2,754 | ||||||||||||||
Operating Expenses | 3,339 | 6,113 | ||||||||||||||
Total | $ | 3,633 | $ | 6,293 |
Six Months Ended | % Change | |||||||||||||||
(In thousands, except per share data) | May 31, 2017 | May 31, 2016 | Non-GAAP | |||||||||||||
Adjusted revenue: | ||||||||||||||||
GAAP revenue | $ | 184,183 | $ | 185,599 | ||||||||||||
Acquisition-related revenue (1) | 446 | 1,321 | ||||||||||||||
Non-GAAP revenue | $ | 184,629 | 100 | % | $ | 186,920 | 100 | % | (1 | )% | ||||||
Adjusted gross margin: | ||||||||||||||||
GAAP gross margin | $ | 151,058 | 82 | % | $ | 153,614 | 83 | % | ||||||||
Amortization of acquired intangibles | 8,361 | 5 | % | 7,878 | 4 | % | ||||||||||
Stock-based compensation (2) | 551 | — | % | 376 | — | % | ||||||||||
Acquisition-related revenue (1) | 446 | — | % | 1,321 | — | % | ||||||||||
Non-GAAP gross margin | $ | 160,416 | 87 | % | $ | 163,189 | 87 | % | (2 | )% | ||||||
Adjusted operating expenses: | ||||||||||||||||
GAAP operating expenses | $ | 129,552 | 70 | % | $ | 134,565 | 72 | % | ||||||||
Amortization of acquired intangibles | (6,402 | ) | (3 | )% | (6,370 | ) | (4 | )% | ||||||||
Restructuring expenses and other | (17,637 | ) | (10 | )% | (265 | ) | — | % | ||||||||
Acquisition-related expenses | (93 | ) | — | % | (396 | ) | — | % | ||||||||
Stock-based compensation (2) | (4,712 | ) | (2 | )% | (12,855 | ) | (7 | )% | ||||||||
Non-GAAP operating expenses | $ | 100,708 | 55 | % | $ | 114,679 | 61 | % | (12 | )% | ||||||
Adjusted income from operations: | ||||||||||||||||
GAAP operating income | $ | 21,506 | 12 | % | $ | 19,049 | 10 | % | ||||||||
Amortization of acquired intangibles | 14,763 | 8 | % | 14,248 | 8 | % | ||||||||||
Restructuring expenses and other | 17,637 | 9 | % | 265 | — | % | ||||||||||
Stock-based compensation (2) | 5,263 | 3 | % | 13,231 | 7 | % | ||||||||||
Acquisition-related | 539 | — | % | 1,717 | 1 | % | ||||||||||
Non-GAAP income from operations | $ | 59,708 | 32 | % | $ | 48,510 | 26 | % | 23 | % | ||||||
Adjusted diluted earnings per share: | ||||||||||||||||
GAAP diluted earnings per share | $ | 0.20 | $ | 0.21 | ||||||||||||
Amortization of acquired intangibles | 0.30 | 0.28 | ||||||||||||||
Restructuring expenses and other | 0.36 | — | ||||||||||||||
Stock-based compensation (2) | 0.11 | 0.26 | ||||||||||||||
Acquisition-related | 0.01 | 0.03 | ||||||||||||||
Provision for income taxes | (0.21 | ) | (0.19 | ) | ||||||||||||
Non-GAAP diluted earnings per share | $ | 0.77 | $ | 0.59 | 31 | % | ||||||||||
Non-GAAP weighted avg shares outstanding - diluted | 48,762 | 50,897 | (4 | )% | ||||||||||||
(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 | $ | 551 | $ | 376 | ||||||||||||
Sales and marketing | 563 | 2,041 | ||||||||||||||
Product development | 1,054 | 5,077 | ||||||||||||||
General and administrative | 3,095 | 5,737 | ||||||||||||||
Operating Expenses | 4,712 | 12,855 | ||||||||||||||
Total | $ | 5,263 | $ | 13,231 |
Revenue by Type | |||||||||||
(In thousands) | Q2 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
License | $ | 25,592 | $ | 47 | $ | 25,639 | |||||
Maintenance | 59,898 | 167 | 60,065 | ||||||||
Services | 7,723 | — | 7,723 | ||||||||
Total revenue | $ | 93,213 | $ | 214 | $ | 93,427 | |||||
Revenue by Region | |||||||||||
(In thousands) | Q2 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
North America | $ | 51,430 | $ | 214 | $ | 51,644 | |||||
EMEA | 30,646 | — | 30,646 | ||||||||
Latin America | 5,637 | — | 5,637 | ||||||||
Asia Pacific | 5,500 | — | 5,500 | ||||||||
Total revenue | $ | 93,213 | $ | 214 | $ | 93,427 | |||||
Revenue by Segment | |||||||||||
(In thousands) | Q2 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
OpenEdge | $ | 65,890 | $ | — | $ | 65,890 | |||||
Data Connectivity and Integration | 7,096 | — | 7,096 | ||||||||
Application Development and Deployment | 20,227 | 214 | 20,441 | ||||||||
Total revenue | $ | 93,213 | $ | 214 | $ | 93,427 | |||||
(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. | |||||||||||
Adjusted Free Cash Flow | |||||||||||
(In thousands) | Q2 2017 | Q2 2016 | % Change | ||||||||
Cash flows from operations | $ | 22,429 | $ | 26,760 | (16 | )% | |||||
Purchases of property and equipment | (140 | ) | (1,204 | ) | (88 | )% | |||||
Free cash flow | 22,289 | 25,556 | (13 | )% | |||||||
Add back: restructuring payments | 5,566 | 891 | 525 | % | |||||||
Adjusted free cash flow | $ | 27,855 | $ | 26,447 | 5 | % |
Revenue by Type | |||||||||||
(In thousands) | YTD 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
License | $ | 49,914 | $ | 99 | $ | 50,013 | |||||
Maintenance | 119,036 | 347 | 119,383 | ||||||||
Services | 15,233 | — | 15,233 | ||||||||
Total revenue | $ | 184,183 | $ | 446 | $ | 184,629 | |||||
Revenue by Region | |||||||||||
(In thousands) | YTD 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
North America | $ | 101,735 | $ | 446 | $ | 102,181 | |||||
EMEA | 60,490 | — | 60,490 | ||||||||
Latin America | 10,660 | — | 10,660 | ||||||||
Asia Pacific | 11,298 | — | 11,298 | ||||||||
Total revenue | $ | 184,183 | $ | 446 | $ | 184,629 | |||||
Revenue by Segment | |||||||||||
(In thousands) | YTD 2017 | Non-GAAP Adjustment (1) | Non-GAAP Revenue | ||||||||
OpenEdge | $ | 130,398 | $ | — | $ | 130,398 | |||||
Data Connectivity and Integration | 13,924 | — | 13,924 | ||||||||
Application Development and Deployment | 39,861 | 446 | 40,307 | ||||||||
Total revenue | $ | 184,183 | $ | 446 | $ | 184,629 | |||||
(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. | |||||||||||
Adjusted Free Cash Flow | |||||||||||
(In thousands) | YTD 2017 | YTD Q2 2016 | % Change | ||||||||
Cash flows from operations | $ | 59,729 | $ | 49,262 | 21 | % | |||||
Purchases of property and equipment | (523 | ) | (2,617 | ) | (80 | )% | |||||
Free cash flow | 59,206 | 46,645 | 27 | % | |||||||
Add back: restructuring payments | 11,630 | 2,483 | 368 | % | |||||||
Adjusted free cash flow | $ | 70,836 | $ | 49,128 | 44 | % |
(In thousands) | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | ||||||||||||||||||||
GAAP revenue | $ | 18,752 | $ | 19,185 | $ | 20,233 | $ | 22,895 | $ | 81,065 | $ | 19,634 | $ | 20,226 | |||||||||||||
Add: change in deferred revenue | |||||||||||||||||||||||||||
Beginning balance | 49,252 | 49,237 | 51,693 | 51,736 | 49,252 | 52,971 | 51,298 | ||||||||||||||||||||
Ending balance | 49,237 | 51,693 | 51,736 | 52,971 | 52,971 | 51,298 | 52,400 | ||||||||||||||||||||
Change in deferred revenue | (15 | ) | 2,456 | 43 | 1,235 | 3,719 | (1,673 | ) | 1,102 | ||||||||||||||||||
Non-GAAP bookings | $ | 18,737 | $ | 21,641 | $ | 20,276 | $ | 24,130 | $ | 84,784 | $ | 17,961 | $ | 21,328 |
(In thousands) | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | ||||||||||||||||||||
SaaS Revenue - Application Development and Deployment | $ | 1,071 | $ | 1,079 | $ | 1,160 | $ | 1,163 | $ | 4,473 | $ | 963 | $ | 854 |
Fiscal Year 2017 Revenue Growth Guidance | |||||||||||||||||
Fiscal Year Ended | Fiscal Year Ending | ||||||||||||||||
November 30, 2016 | November 30, 2017 | ||||||||||||||||
(In millions) | Low | % Change | High | % Change | |||||||||||||
GAAP revenue | $ | 405.3 | $ | 390.0 | (4 | )% | $ | 395.0 | (3 | )% | |||||||
Acquisition-related adjustments - revenue (1) | 2.1 | 1.0 | (52 | )% | 1.0 | (52 | )% | ||||||||||
Non-GAAP revenue | $ | 407.4 | $ | 391.0 | (4 | )% | $ | 396.0 | (3 | )% | |||||||
(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. |
Fiscal Year 2017 Non-GAAP Operating Margin Guidance | |||||||
Fiscal Year Ending November 30, 2017 | |||||||
(In millions) | Low | High | |||||
GAAP income from operations | $ | 61.9 | $ | 68.4 | |||
GAAP operating margins | 16 | % | 17 | % | |||
Acquisition-related revenue | 1.0 | 1.0 | |||||
Acquisition-related expense | 0.1 | 0.1 | |||||
Stock-based compensation | 15.0 | 15.0 | |||||
Restructuring expense and other | 20.0 | 18.0 | |||||
Amortization of intangibles | 32.9 | 32.9 | |||||
Total adjustments | 69.0 | 67.0 | |||||
Non-GAAP income from operations | $ | 130.9 | $ | 135.4 | |||
Non-GAAP operating margin | 33 | % | 34 | % |
Fiscal Year 2017 Non-GAAP Earnings per Share and Effective Tax Rate Guidance | |||||||
Fiscal Year Ending November 30, 2017 | |||||||
(In millions, except per share data) | Low | High | |||||
GAAP net income | $ | 32.1 | $ | 35.8 | |||
Adjustments (from previous table) | 69.0 | 67.0 | |||||
Income tax adjustment (2) | (17.1 | ) | (15.8 | ) | |||
Non-GAAP net income | $ | 84.0 | $ | 87.0 | |||
GAAP diluted earnings per share | $ | 0.66 | $ | 0.73 | |||
Non-GAAP diluted earnings per share | $ | 1.73 | $ | 1.78 | |||
Diluted weighted average shares outstanding | 48.6 | 48.8 | |||||
(2) Tax adjustment is based on a non-GAAP effective tax rate of 33% for Low and High, calculated as follows: | |||||||
Non-GAAP income from operations | $ | 130.9 | $ | 135.4 | |||
Other (expense) income, net | (5.6 | ) | (5.6 | ) | |||
Non-GAAP income from continuing operations before income taxes | 125.3 | 129.8 | |||||
Non-GAAP net income | 84.0 | 87.0 | |||||
Tax provision | $ | 41.3 | $ | 42.8 | |||
Non-GAAP tax rate | 33 | % | 33 | % |
Q3 2017 Revenue Growth Guidance | |||||||||||||||||
Three Months Ended | Three Months Ending | ||||||||||||||||
August 31, 2016 | August 31, 2017 | ||||||||||||||||
(In millions) | Low | % Change | High | % Change | |||||||||||||
GAAP revenue | $ | 102.0 | $ | 92.6 | (9 | )% | $ | 95.6 | (6 | )% | |||||||
Acquisition-related adjustments - revenue (1) | 0.4 | 0.4 | — | % | 0.4 | — | % | ||||||||||
Non-GAAP revenue | $ | 102.4 | $ | 93.0 | (9 | )% | $ | 96.0 | (6 | )% | |||||||
(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. |
Q3 2017 Non-GAAP Earnings per Share Guidance | |||||||
Three Months Ending August 31, 2017 | |||||||
Low | High | ||||||
GAAP diluted earnings per share | $ | 0.17 | $ | 0.19 | |||
Acquisition-related revenue | 0.01 | 0.01 | |||||
Stock-based compensation | 0.10 | 0.10 | |||||
Amortization of intangibles | 0.19 | 0.19 | |||||
Total adjustments | 0.30 | 0.30 | |||||
Income tax adjustment | $ | (0.06 | ) | $ | (0.06 | ) | |
Non-GAAP diluted earnings per share | $ | 0.41 | $ | 0.43 |