prgs-20220831
PROGRESS SOFTWARE CORP /MA0000876167FALSE2022Q3November 30http://fasb.org/us-gaap/2022#AccountingStandardsUpdate202006CumulativeEffectPeriodOfAdoptionMember0.0174525P3YP3Y100008761672021-12-012022-08-3100008761672022-09-27xbrli:shares00008761672022-08-31iso4217:USD00008761672021-11-30iso4217:USDxbrli:shares0000876167prgs:SoftwareLicensesMember2022-06-012022-08-310000876167prgs:SoftwareLicensesMember2021-06-012021-08-310000876167prgs:SoftwareLicensesMember2021-12-012022-08-310000876167prgs:SoftwareLicensesMember2020-12-012021-08-310000876167prgs:MaintenanceandServicesMember2022-06-012022-08-310000876167prgs:MaintenanceandServicesMember2021-06-012021-08-310000876167prgs:MaintenanceandServicesMember2021-12-012022-08-310000876167prgs:MaintenanceandServicesMember2020-12-012021-08-3100008761672022-06-012022-08-3100008761672021-06-012021-08-3100008761672020-12-012021-08-310000876167us-gaap:CommonStockMember2021-11-300000876167us-gaap:AdditionalPaidInCapitalMember2021-11-300000876167us-gaap:RetainedEarningsMember2021-11-300000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-11-3000008761672020-12-012021-11-300000876167us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-11-300000876167srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2021-11-300000876167srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-11-300000876167us-gaap:CommonStockMember2021-12-012022-08-310000876167us-gaap:AdditionalPaidInCapitalMember2021-12-012022-08-310000876167us-gaap:RetainedEarningsMember2021-12-012022-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-012022-08-310000876167us-gaap:CommonStockMember2022-08-310000876167us-gaap:AdditionalPaidInCapitalMember2022-08-310000876167us-gaap:RetainedEarningsMember2022-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-08-310000876167us-gaap:CommonStockMember2022-05-310000876167us-gaap:AdditionalPaidInCapitalMember2022-05-310000876167us-gaap:RetainedEarningsMember2022-05-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-05-3100008761672022-05-310000876167us-gaap:CommonStockMember2022-06-012022-08-310000876167us-gaap:AdditionalPaidInCapitalMember2022-06-012022-08-310000876167us-gaap:RetainedEarningsMember2022-06-012022-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-012022-08-310000876167us-gaap:CommonStockMember2020-11-300000876167us-gaap:AdditionalPaidInCapitalMember2020-11-300000876167us-gaap:RetainedEarningsMember2020-11-300000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-11-3000008761672020-11-300000876167us-gaap:CommonStockMember2020-12-012021-08-310000876167us-gaap:AdditionalPaidInCapitalMember2020-12-012021-08-310000876167us-gaap:RetainedEarningsMember2020-12-012021-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-012021-08-310000876167us-gaap:CommonStockMember2021-08-310000876167us-gaap:AdditionalPaidInCapitalMember2021-08-310000876167us-gaap:RetainedEarningsMember2021-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-08-3100008761672021-08-310000876167us-gaap:CommonStockMember2021-05-310000876167us-gaap:AdditionalPaidInCapitalMember2021-05-310000876167us-gaap:RetainedEarningsMember2021-05-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-05-3100008761672021-05-310000876167us-gaap:CommonStockMember2021-06-012021-08-310000876167us-gaap:AdditionalPaidInCapitalMember2021-06-012021-08-310000876167us-gaap:RetainedEarningsMember2021-06-012021-08-310000876167us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-012021-08-31prgs:software_vendorprgs:developer0000876167srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2021-11-300000876167us-gaap:CashMember2022-08-310000876167us-gaap:MoneyMarketFundsMember2022-08-310000876167us-gaap:USTreasurySecuritiesMember2022-08-310000876167us-gaap:CashMember2021-11-300000876167us-gaap:MoneyMarketFundsMember2021-11-300000876167us-gaap:USTreasurySecuritiesMember2021-11-300000876167us-gaap:CorporateDebtSecuritiesMember2021-11-300000876167us-gaap:CorporateDebtSecuritiesMember2022-08-310000876167us-gaap:InterestRateSwapMember2019-07-090000876167us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateSwapMember2019-07-09xbrli:pure0000876167us-gaap:OtherNoncurrentLiabilitiesMember2022-08-310000876167us-gaap:InterestRateSwapMember2022-08-310000876167us-gaap:InterestRateSwapMember2021-11-300000876167us-gaap:ForwardContractsMember2021-12-012022-08-310000876167us-gaap:ForwardContractsMemberus-gaap:OtherNoncurrentLiabilitiesMember2022-08-310000876167us-gaap:ForwardContractsMemberus-gaap:OtherCurrentLiabilitiesMember2022-08-310000876167us-gaap:ForwardContractsMemberus-gaap:OtherNoncurrentLiabilitiesMember2021-11-300000876167us-gaap:ForwardContractsMemberus-gaap:AccruedLiabilitiesMember2021-11-300000876167us-gaap:ForwardContractsMember2022-06-012022-08-310000876167us-gaap:ForwardContractsMember2021-06-012021-08-310000876167us-gaap:ForwardContractsMember2020-12-012021-08-310000876167prgs:ForeignCurrencyForwardContractsToSellUSDollarsMember2022-08-310000876167prgs:ForeignCurrencyForwardContractsToSellUSDollarsMember2021-11-300000876167prgs:ForeignCurrencyForwardContractsToPurchaseUSDollarsMember2022-08-310000876167prgs:ForeignCurrencyForwardContractsToPurchaseUSDollarsMember2021-11-300000876167us-gaap:MoneyMarketFundsMember2022-08-310000876167us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-08-310000876167us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2022-08-310000876167us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-08-310000876167us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-08-310000876167us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2022-08-310000876167us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2022-08-310000876167us-gaap:InterestRateSwapMember2022-08-310000876167us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2022-08-310000876167us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-08-310000876167us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-08-310000876167us-gaap:ForeignExchangeContractMember2022-08-310000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Member2022-08-310000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2022-08-310000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2022-08-310000876167us-gaap:MoneyMarketFundsMember2021-11-300000876167us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-11-300000876167us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2021-11-300000876167us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2021-11-300000876167us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-11-300000876167us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2021-11-300000876167us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2021-11-300000876167us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-11-300000876167us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2021-11-300000876167us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2021-11-300000876167us-gaap:ForeignExchangeContractMember2021-11-300000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Member2021-11-300000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2021-11-300000876167us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2021-11-300000876167us-gaap:InterestRateSwapMember2021-11-300000876167us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2021-11-300000876167us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2021-11-300000876167us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2021-11-300000876167us-gaap:ConvertibleDebtMember2022-08-310000876167us-gaap:OtherCurrentAssetsMember2022-08-310000876167us-gaap:OtherCurrentAssetsMember2021-11-300000876167us-gaap:ComputerSoftwareIntangibleAssetMember2022-08-310000876167us-gaap:ComputerSoftwareIntangibleAssetMember2021-11-300000876167us-gaap:CustomerRelationshipsMember2022-08-310000876167us-gaap:CustomerRelationshipsMember2021-11-300000876167us-gaap:TrademarksAndTradeNamesMember2022-08-310000876167us-gaap:TrademarksAndTradeNamesMember2021-11-300000876167us-gaap:NoncompeteAgreementsMember2022-08-310000876167us-gaap:NoncompeteAgreementsMember2021-11-300000876167prgs:KempAcquisitionMember2021-11-012021-11-010000876167prgs:KempAcquisitionMember2021-11-010000876167prgs:KempAcquisitionMember2021-11-012022-08-310000876167prgs:KempAcquisitionMember2022-08-310000876167us-gaap:ComputerSoftwareIntangibleAssetMemberprgs:KempAcquisitionMember2021-11-010000876167us-gaap:ComputerSoftwareIntangibleAssetMemberprgs:KempAcquisitionMember2022-08-310000876167us-gaap:ComputerSoftwareIntangibleAssetMemberprgs:KempAcquisitionMember2021-11-012022-08-310000876167us-gaap:TradeNamesMemberprgs:KempAcquisitionMember2021-11-010000876167us-gaap:TradeNamesMemberprgs:KempAcquisitionMember2022-08-310000876167us-gaap:TradeNamesMemberprgs:KempAcquisitionMember2021-11-012022-08-310000876167us-gaap:CustomerRelationshipsMemberprgs:KempAcquisitionMember2021-11-010000876167us-gaap:CustomerRelationshipsMemberprgs:KempAcquisitionMember2022-08-310000876167us-gaap:CustomerRelationshipsMemberprgs:KempAcquisitionMember2021-11-012022-08-310000876167prgs:KempAcquisitionMember2022-06-012022-08-310000876167prgs:KempAcquisitionMember2021-12-012022-08-310000876167prgs:KempAcquisitionMember2021-06-012021-08-310000876167prgs:KempAcquisitionMember2020-12-012021-08-310000876167prgs:ChefAcquisitionMember2020-10-052020-10-050000876167prgs:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2020-10-052020-10-050000876167prgs:ChefAcquisitionMember2020-10-050000876167prgs:ChefAcquisitionMember2020-10-052022-08-310000876167prgs:ChefAcquisitionMember2022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:ComputerSoftwareIntangibleAssetMember2020-10-050000876167prgs:ChefAcquisitionMemberus-gaap:ComputerSoftwareIntangibleAssetMember2022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:ComputerSoftwareIntangibleAssetMember2020-10-052022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:TradeNamesMember2020-10-050000876167prgs:ChefAcquisitionMemberus-gaap:TradeNamesMember2022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:TradeNamesMember2020-10-052022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:CustomerRelationshipsMember2020-10-050000876167prgs:ChefAcquisitionMemberus-gaap:CustomerRelationshipsMember2022-08-310000876167prgs:ChefAcquisitionMemberus-gaap:CustomerRelationshipsMember2020-10-052022-08-310000876167prgs:ChefAcquisitionMember2022-06-012022-08-310000876167prgs:ChefAcquisitionMember2021-12-012022-08-310000876167us-gaap:LineOfCreditMember2022-08-310000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-04-300000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-04-012021-04-300000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-08-310000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-12-012022-08-31prgs:day00008761672021-04-0800008761672021-04-082021-04-080000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-04-080000876167prgs:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-11-300000876167us-gaap:ConvertibleDebtMember2021-11-300000876167us-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMemberus-gaap:SecuredDebtMember2022-01-250000876167us-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-01-250000876167us-gaap:BridgeLoanMemberus-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMember2022-01-250000876167us-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMemberus-gaap:LetterOfCreditMember2022-01-250000876167us-gaap:LineOfCreditMemberus-gaap:EurodollarMemberprgs:AmendedCreditAgreementMembersrt:MinimumMember2022-08-310000876167srt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:EurodollarMemberprgs:AmendedCreditAgreementMember2022-08-310000876167us-gaap:BaseRateMemberus-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMembersrt:MinimumMember2022-08-310000876167srt:MaximumMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMember2022-08-310000876167us-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2021-12-012022-08-310000876167srt:MaximumMemberus-gaap:LineOfCreditMemberprgs:AmendedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-12-012022-08-310000876167prgs:AmendedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-08-310000876167prgs:AmendedCreditAgreementMember2022-08-310000876167prgs:CreditAgreementMember2022-08-310000876167prgs:CreditAgreementMember2022-06-012022-08-310000876167prgs:CreditAgreementMember2021-06-012021-08-310000876167prgs:CreditAgreementMember2021-12-012022-08-310000876167prgs:CreditAgreementMember2020-12-012021-08-310000876167prgs:AmendedCreditAgreementMemberus-gaap:LetterOfCreditMember2022-08-310000876167srt:MinimumMember2022-08-310000876167srt:MaximumMember2022-08-3100008761672019-11-3000008761672020-01-310000876167prgs:LongTermIncentivePlanLTIPMember2021-12-012022-08-31prgs:metric0000876167prgs:LongTermIncentivePlanLTIPMember2020-12-012021-11-300000876167prgs:LongTermIncentivePlanLTIPMember2019-12-012020-11-300000876167prgs:LongTermIncentivePlanLTIPMemberprgs:TwentyTwentyPlanMember2019-12-012020-11-300000876167prgs:LongTermIncentivePlanLTIPMemberprgs:TwentyTwentyTwoPlanMember2021-12-012022-08-310000876167prgs:LongTermIncentivePlanLTIPMemberprgs:TwentyTwentyOnePlanMember2020-12-012021-11-300000876167prgs:LongTermIncentivePlanLTIPMemberprgs:TwentyTwentyTwoPlanMember2020-12-012021-11-300000876167prgs:LongTermIncentivePlanLTIPMemberprgs:TwentyTwentyOnePlanMember2021-12-012022-08-310000876167us-gaap:EmployeeStockOptionMember2021-12-012022-08-310000876167us-gaap:RestrictedStockUnitsRSUMember2021-12-012022-08-310000876167prgs:CostOfMaintenanceAndServicesMember2022-06-012022-08-310000876167prgs:CostOfMaintenanceAndServicesMember2021-06-012021-08-310000876167prgs:CostOfMaintenanceAndServicesMember2021-12-012022-08-310000876167prgs:CostOfMaintenanceAndServicesMember2020-12-012021-08-310000876167us-gaap:SellingAndMarketingExpenseMember2022-06-012022-08-310000876167us-gaap:SellingAndMarketingExpenseMember2021-06-012021-08-310000876167us-gaap:SellingAndMarketingExpenseMember2021-12-012022-08-310000876167us-gaap:SellingAndMarketingExpenseMember2020-12-012021-08-310000876167prgs:ProductDevelopmentMember2022-06-012022-08-310000876167prgs:ProductDevelopmentMember2021-06-012021-08-310000876167prgs:ProductDevelopmentMember2021-12-012022-08-310000876167prgs:ProductDevelopmentMember2020-12-012021-08-310000876167us-gaap:GeneralAndAdministrativeExpenseMember2022-06-012022-08-310000876167us-gaap:GeneralAndAdministrativeExpenseMember2021-06-012021-08-310000876167us-gaap:GeneralAndAdministrativeExpenseMember2021-12-012022-08-310000876167us-gaap:GeneralAndAdministrativeExpenseMember2020-12-012021-08-310000876167us-gaap:AccumulatedTranslationAdjustmentMember2021-11-300000876167us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-11-300000876167us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-11-300000876167us-gaap:AccumulatedTranslationAdjustmentMember2021-12-012022-08-310000876167us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-012022-08-310000876167us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-012022-08-310000876167us-gaap:AccumulatedTranslationAdjustmentMember2022-08-310000876167us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-08-310000876167us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-08-310000876167us-gaap:TransferredAtPointInTimeMemberprgs:SoftwareLicensesMember2022-06-012022-08-310000876167us-gaap:TransferredAtPointInTimeMemberprgs:SoftwareLicensesMember2021-06-012021-08-310000876167us-gaap:TransferredAtPointInTimeMemberprgs:SoftwareLicensesMember2021-12-012022-08-310000876167us-gaap:TransferredAtPointInTimeMemberprgs:SoftwareLicensesMember2020-12-012021-08-310000876167us-gaap:MaintenanceMemberus-gaap:TransferredOverTimeMember2022-06-012022-08-310000876167us-gaap:MaintenanceMemberus-gaap:TransferredOverTimeMember2021-06-012021-08-310000876167us-gaap:MaintenanceMemberus-gaap:TransferredOverTimeMember2021-12-012022-08-310000876167us-gaap:MaintenanceMemberus-gaap:TransferredOverTimeMember2020-12-012021-08-310000876167us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2022-06-012022-08-310000876167us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2021-06-012021-08-310000876167us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2021-12-012022-08-310000876167us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2020-12-012021-08-310000876167srt:NorthAmericaMember2022-06-012022-08-310000876167srt:NorthAmericaMember2021-06-012021-08-310000876167srt:NorthAmericaMember2021-12-012022-08-310000876167srt:NorthAmericaMember2020-12-012021-08-310000876167us-gaap:EMEAMember2022-06-012022-08-310000876167us-gaap:EMEAMember2021-06-012021-08-310000876167us-gaap:EMEAMember2021-12-012022-08-310000876167us-gaap:EMEAMember2020-12-012021-08-310000876167srt:LatinAmericaMember2022-06-012022-08-310000876167srt:LatinAmericaMember2021-06-012021-08-310000876167srt:LatinAmericaMember2021-12-012022-08-310000876167srt:LatinAmericaMember2020-12-012021-08-310000876167srt:AsiaPacificMember2022-06-012022-08-310000876167srt:AsiaPacificMember2021-06-012021-08-310000876167srt:AsiaPacificMember2021-12-012022-08-310000876167srt:AsiaPacificMember2020-12-012021-08-3100008761672022-09-012022-08-310000876167us-gaap:FacilityClosingMember2021-11-300000876167us-gaap:EmployeeSeveranceMember2021-11-300000876167us-gaap:FacilityClosingMember2021-12-012022-08-310000876167us-gaap:EmployeeSeveranceMember2021-12-012022-08-310000876167us-gaap:FacilityClosingMember2022-08-310000876167us-gaap:EmployeeSeveranceMember2022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2022-06-012022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2021-12-012022-08-310000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2021-11-300000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2021-11-300000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2021-11-300000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2021-12-012022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2021-12-012022-08-310000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2022-08-310000876167prgs:TwoThousandAndTwentyOneRestructuringActivitiesMember2022-08-312022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMember2022-06-012022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMember2021-12-012022-08-310000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyRestructuringActivitiesMember2021-11-300000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2021-11-300000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMember2021-11-300000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyRestructuringActivitiesMember2021-12-012022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2021-12-012022-08-310000876167us-gaap:FacilityClosingMemberprgs:TwoThousandAndTwentyRestructuringActivitiesMember2022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMemberus-gaap:EmployeeSeveranceMember2022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMember2022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMemberprgs:OperatingLeaseLiabilityCurrentMember2022-08-312022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMemberprgs:OperatingLeaseLiabilityNoncurrentMember2022-08-312022-08-310000876167prgs:TwoThousandAndTwentyRestructuringActivitiesMember2022-08-312022-08-3100008761672021-03-012021-05-31prgs:segment

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____.
Commission File Number: 0-19417
PROGRESS SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter) 
Delaware 04-2746201
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

15 Wayside Road, Suite 400
Burlington, Massachusetts 01803
(Address of principal executive offices) (Zip code)

(781280-4000
(Registrant’s telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per sharePRGSThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer 
Non-accelerated filer 
(Do not check if a smaller reporting company)Smaller reporting company 
Emerging growth company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
As of September 27, 2022, there were 42,998,323 shares of the registrant’s common stock, $.01 par value per share, outstanding.



PROGRESS SOFTWARE CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2022
TABLE OF CONTENTS
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.
2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets
(In thousands, except share data)August 31, 2022November 30, 2021
Assets
Current assets:
Cash and cash equivalents$224,115 $155,406 
Short-term investments749 1,967 
Total cash, cash equivalents and short-term investments224,864 157,373 
Accounts receivable (less allowances of $1,150 and $634, respectively)
82,258 99,815 
Unbilled receivables and contract assets27,847 25,816 
Other current assets29,465 39,549 
Assets held for sale 15,255 
Total current assets364,434 337,808 
Long-term unbilled receivables and contract assets25,972 17,464 
Property and equipment, net13,409 14,345 
Intangible assets, net233,436 287,185 
Goodwill672,901 671,152 
Right-of-use lease assets18,950 25,253 
Deferred tax assets5,735 1,415 
Other assets11,455 8,915 
Total assets$1,346,292 $1,363,537 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt, net$6,234 $25,767 
Accounts payable7,717 9,683 
Accrued compensation and related taxes35,887 47,116 
Dividends payable to stockholders8,099 7,925 
Short-term operating lease liabilities7,443 7,926 
Other accrued liabilities16,878 19,491 
Short-term deferred revenue197,425 205,021 
Total current liabilities279,683 322,929 
Long-term debt, net260,779 239,992 
Convertible senior notes, net352,108 294,535 
Long-term operating lease liabilities16,662 23,130 
Long-term deferred revenue53,696 47,359 
Deferred tax liabilities5,712 14,163 
Other noncurrent liabilities10,679 8,940 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none
  
Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 42,998,323 shares in 2022 and 44,146,193 shares in 2021
430 441 
Additional paid-in capital318,559 354,235 
Retained earnings86,513 90,256 
Accumulated other comprehensive loss(38,529)(32,443)
Total stockholders’ equity366,973 412,489 
Total liabilities and stockholders’ equity$1,346,292 $1,363,537 
See notes to unaudited condensed consolidated financial statements.
3


Condensed Consolidated Statements of Operations
 
 Three Months EndedNine Months Ended
(In thousands, except per share data)August 31, 2022August 31, 2021August 31, 2022August 31, 2021
Revenue:
Software licenses$47,618 $51,930 $135,182 $115,354 
Maintenance and services103,599 95,487 309,704 275,831 
Total revenue151,217 147,417 444,886 391,185 
Costs of revenue:
Cost of software licenses2,477 1,574 7,669 3,763 
Cost of maintenance and services15,761 14,895 46,707 42,887 
Amortization of acquired intangibles5,558 3,599 16,589 10,719 
Total costs of revenue23,796 20,068 70,965 57,369 
Gross profit127,421 127,349 373,921 333,816 
Operating expenses:
Sales and marketing34,595 29,737 100,768 88,468 
Product development28,650 25,616 85,966 76,579 
General and administrative20,141 16,451 56,339 46,335 
Amortization of acquired intangibles11,716 7,978 35,330 22,836 
Restructuring expenses130 40 784 1,133 
Acquisition-related expenses168 1,481 3,816 2,721 
Gain on sale of assets held for sale  (10,770) 
Total operating expenses95,400 81,303 272,233 238,072 
Income from operations32,021 46,046 101,688 95,744 
Other (expense) income:
Interest expense(4,009)(6,510)(11,368)(13,625)
Interest income and other, net247 99 991 222 
Foreign currency gain (loss), net(577)(128)(832)(1,006)
Total other expense, net(4,339)(6,539)(11,209)(14,409)
Income before income taxes27,682 39,507 90,479 81,335 
Provision for income taxes5,885 8,531 19,118 17,841 
Net income$21,797 $30,976 $71,361 $63,494 
Earnings per share:
Basic$0.50 $0.71 $1.64 $1.45 
Diluted$0.50 $0.70 $1.61 $1.43 
Weighted average shares outstanding:
Basic43,211 43,762 43,589 43,896 
Diluted43,935 44,502 44,299 44,542 
Cash dividends declared per common share$0.175 $0.175 $0.525 $0.525 
See notes to unaudited condensed consolidated financial statements.
4


Condensed Consolidated Statements of Comprehensive Income
Three Months EndedNine Months Ended
(In thousands)August 31, 2022August 31, 2021August 31, 2022August 31, 2021
Net income$21,797 $30,976 $71,361 $63,494 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(7,632)(2,179)(10,955)922 
Unrealized gain on hedging activity, net of tax provision of $377 and $1,542 for the third quarter and first nine months of 2022, respectively and net of tax provision of $155 and $502 for the third quarter and first nine months of 2021, respectively
1,191 479 4,882 1,551 
Unrealized loss on investments, net of tax of $0 and a tax benefit of $4 for the third quarter and first nine months of 2022 and net of tax benefit of $4 and $16 for the third quarter and first nine months of 2021, respectively
(1)(15)(13)(54)
Total other comprehensive (loss) income, net of tax(6,442)(1,715)(6,086)2,419 
Comprehensive income$15,355 $29,261 $65,275 $65,913 

See notes to unaudited condensed consolidated financial statements.

5


Condensed Consolidated Statements of Stockholders’ Equity
 
Nine Months Ended August 31, 2022
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
(in thousands)Number of SharesAmount
Balance, December 1, 202144,146 $441 $354,235 $90,256 $(32,443)$412,489 
Cumulative effect of adoption of ASU 2020-06— — (47,456)4,893 — (42,563)
Issuance of stock under employee stock purchase plan246 2 7,235 — — 7,237 
Exercise of stock options78 1 2,878 — — 2,879 
Vesting of restricted stock units and release of deferred stock units188 2 (2)— —  
Withholding tax payments related to net issuance of RSUs— — (5,405)— — (5,405)
Stock-based compensation— — 26,110 — — 26,110 
Dividends declared— — — (23,525)— (23,525)
Treasury stock repurchases and retirements(1,660)(16)(19,036)(56,472)— (75,524)
Net income— — — 71,361 — 71,361 
Other comprehensive loss— — — — (6,086)(6,086)
Balance, August 31, 202242,998 $430 $318,559 $86,513 $(38,529)$366,973 

Three Months Ended August 31, 2022
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
(in thousands)Number of SharesAmount
Balance, June 1, 202243,454 $435 $309,913 $93,885 $(32,087)$372,146 
Issuance of stock under employee stock purchase plan68 — 2,024 — — 2,024 
Exercise of stock options18 — 643 — — 643 
Stock-based compensation— — 8,639 — — 8,639 
Dividends declared— — — (7,783)— (7,783)
Treasury stock repurchases and retirements(542)(5)(2,660)(21,386)— (24,051)
Net income— — — 21,797 — 21,797 
Other comprehensive loss— — — — (6,442)(6,442)
Balance, August 31, 202242,998 $430 $318,559 $86,513 $(38,529)$366,973 


6


Nine Months Ended August 31, 2021
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
(in thousands)Number of SharesAmount
Balance, December 1, 202044,241 $442 $305,802 $72,547 $(32,778)$346,013 
Issuance of stock under employee stock purchase plan212 2 5,924 — — 5,926 
Exercise of stock options87 1 2,840 — — 2,841 
Vesting of restricted stock units and release of deferred stock units100 1 (1)— —  
Withholding tax payments related to net issuance of RSUs— — (2,398)— — (2,398)
Stock-based compensation— — 21,985 — — 21,985 
Equity components of Notes, net of issuance costs and tax— — 47,456 — — 47,456 
Purchase of capped calls, net of tax— — (32,507)— — (32,507)
Dividends declared— — — (23,456)— (23,456)
Treasury stock repurchases and retirements(797)(8)(5,862)(29,130)— (35,000)
Net income— — — 63,494 — 63,494 
Other comprehensive income— — — — 2,419 2,419 
Balance, August 31, 202143,843 $438 $343,239 $83,455 $(30,359)$396,773 

Three Months Ended August 31, 2021
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
(in thousands)Number of SharesAmount
Balance, June 1, 202143,745 $437 $333,627 $60,301 $(28,644)$365,721 
Issuance of stock under employee stock purchase plan67 1 1,885 — — 1,886 
Exercise of stock options31 — 1,009 — — 1,009 
Withholding tax payments related to net issuance of RSUs— — (25)— — (25)
Stock-based compensation— — 6,839 — — 6,839 
Equity components of Notes, net of issuance costs and tax— — (341)— — (341)
Purchase of capped calls, net of tax— — 245 — — 245 
Dividends declared— — — (7,822)— (7,822)
Net income— — — 30,976 — 30,976 
Other comprehensive loss— — — — (1,715)(1,715)
Balance, August 31, 202143,843 $438 $343,239 $83,455 $(30,359)$396,773 


7


Condensed Consolidated Statements of Cash Flows
 
 Nine Months Ended
(In thousands)August 31, 2022August 31, 2021
Cash flows from operating activities:
Net income$71,361 $63,494 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment3,682 4,147 
Amortization of acquired intangibles and other52,545 33,988 
Amortization of debt discount and issuance costs on Notes1,595 4,942 
Stock-based compensation26,110 21,985 
Non-cash lease expense5,919 6,095 
Gain on sale of assets held for sale(10,770) 
Deferred income taxes(286)(1,596)
Allowances for bad debt and sales credits710 (370)
Changes in operating assets and liabilities:
Accounts receivable2,858 (1,319)
Other assets11,174 2,590 
Inventories(1,264) 
Accounts payable and accrued liabilities(10,055)(5,994)
Lease liabilities(6,481)(6,440)
Income taxes payable(748)3,079 
Deferred revenue5,673 10,001 
Net cash flows from operating activities152,023 134,602 
Cash flows from investing activities:
Sales and maturities of investments1,200 4,150 
Purchases of property and equipment(3,086)(2,741)
Proceeds from sale of long-lived assets, net25,998  
Decrease in escrow receivable and other134 2,330 
Net cash flows from investing activities24,246 3,739 
Cash flows (used in) from financing activities:
Proceeds from stock-based compensation plans10,384 9,247 
Payments for taxes related to net share settlements of equity awards(5,405)(2,398)
Repurchases of common stock(75,524)(35,000)
Proceeds from issuance of senior convertible notes, net of issuance costs of $9.9 million
 350,100 
Purchase of capped calls (43,056)
Dividend payments to stockholders(23,351)(23,372)
Proceeds from the issuance of debt7,474  
Payment of principal on long-term debt(5,154)(111,669)
Payment of debt issuance costs(1,957)(904)
Net cash flows (used in) from financing activities(93,533)142,948 
Effect of exchange rate changes on cash(14,027)616 
Net increase in cash and cash equivalents68,709 281,905 
Cash and cash equivalents, beginning of period155,406 97,990 
Cash and cash equivalents, end of period$224,115 $379,895 
8


Condensed Consolidated Statements of Cash Flows, continued
Nine Months Ended
August 31, 2022August 31, 2021
Supplemental disclosure:
Cash paid for income taxes, net of refunds of $920 in 2022 and $807 in 2021
$8,954 $9,920 
Cash paid for interest$5,470 $6,564 
Non-cash investing and financing activities:
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested$18,204 $8,779 
Dividends declared$8,099 $7,988 
See notes to unaudited condensed consolidated financial statements.
9


Notes to Condensed Consolidated Financial Statements

Note 1: Basis of Presentation

Company Overview - Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") is dedicated to propelling business forward in a technology-driven world. Progress helps businesses drive faster cycles of innovation, fuel momentum and accelerate their path to success. As the trusted provider of the best products to develop, deploy and manage high-impact applications, Progress enables customers to develop the applications and experiences the need, deploy where and how they want and manage it all safely and securely. Hundreds of thousands of enterprises, including 1,700 software companies and 3.5 million developers depend on Progress to achieve their goals—with confidence.

Our products are generally sold as perpetual licenses, but certain products also use term licensing models and our cloud-based offerings use a subscription-based model. More than half of our worldwide license revenue is realized through relationships with indirect channel partners (principally independent software vendors), original equipment manufacturers ("OEMs"), distributors and value-added resellers. Independent software vendors develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. OEMs are companies that embed our products into their own software products or devices. Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution.

We operate in North and Latin America (the "Americas"); Europe, the Middle East and Africa ("EMEA"); and the Asia Pacific region, through local subsidiaries as well as independent distributors.

Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021, as filed with the SEC on January 27, 2022, as amended by a Form 10-K/A filed on March 30, 2022 (together, the "2021 10-K").

We made no material changes in the application of our significant accounting policies that were disclosed in our 2021 10-K. We have prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in our 2021 10-K, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an on-going basis, management evaluates its estimates and records changes in estimates in the period in which they become known. These estimates are based on historical data and experience, as well as various other assumptions that management believes to be reasonable under the circumstances. The most significant estimates relate to: the timing and amount of revenue recognition, including the determination of the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and the transaction price allocated to performance obligations; the realization of tax assets and estimates of tax liabilities; fair values of investments in marketable securities; intangible assets and goodwill valuations; the recognition and disclosure of contingent liabilities; the collectability of accounts receivable; and assumptions used to determine the fair value of stock-based compensation. Actual results could differ from those estimates.

10


Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements
Income Taxes

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 updates specific areas of ASC 740, Income Taxes, to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. The Company adopted this standard effective December 1, 2021. The adoption of this standard did not have a material effect on the Company's condensed consolidated financial position and results of operations.

Convertible Debt

On December 1, 2021, we early adopted Accounting Standards Update No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06") on a modified retrospective basis. Under ASU 2020-06, we no longer separate the convertible senior notes into liability and equity components. We recognized the cumulative effect of initially applying this new standard as of December 1, 2021, as an adjustment to the December 1, 2021 opening balance of retained earnings. The conversion option that was previously accounted for in equity under the cash conversion model was recombined into the convertible debt outstanding, and as a result, additional paid in capital and the related unamortized debt discount on the convertible senior notes were reduced. The removal of the remaining debt discount recorded for this previous separation has the effect of increasing our net debt balance. We recorded a $47.5 million decrease to additional paid-in capital, a $56.0 million decrease to debt discount, a $4.9 million increase to retained earnings, and a $13.4 million decrease to long-term deferred tax liabilities. There was no impact to the Company’s statements of cash flows as the result of the adoption of ASU 2020-06. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. See Note 8: Debt for additional information regarding the terms of the Convertible Senior Notes (the "Notes").

The new standard requires the use of the "if-converted" method to calculate the diluted earnings per common share. Refer to Note 16: Earnings Per Share for effect of the convertible notes on diluted earnings per common share.

Note 2: Cash, Cash Equivalents and Investments

A summary of our cash, cash equivalents and available-for-sale investments at August 31, 2022 is as follows (in thousands):
 
Amortized Cost BasisUnrealized GainsUnrealized LossesFair Value
Cash$197,777 $— $— $197,777 
Money market funds26,338 — — 26,338 
U.S. treasury bonds750  (1)749 
Total$224,865 $ $(1)$224,864 

A summary of our cash, cash equivalents and available-for-sale investments at November 30, 2021 is as follows (in thousands):
 
Amortized Cost BasisUnrealized GainsUnrealized LossesFair Value
Cash$130,371 $— $— $130,371 
Money market funds25,035 — — 25,035 
U.S. treasury bonds748 9  757 
Corporate bonds1,203 7  1,210 
Total$157,357 $16 $ $157,373 

11


Such amounts are classified on our condensed consolidated balance sheets as follows (in thousands):
 
 August 31, 2022November 30, 2021
 Cash and EquivalentsShort-Term InvestmentsCash and EquivalentsShort-Term Investments
Cash$197,777 $— $130,371 $— 
Money market funds26,338 — 25,035 — 
U.S. treasury bonds— 749 — 757 
Corporate bonds—  — 1,210 
Total$224,115 $749 $155,406 $1,967 

The fair value of debt securities by contractual maturity due in one year or less was $0.7 million and $2.0 million as of August 31, 2022 and November 30, 2021, respectively. There were no debt securities by contractual maturity due after one year as of August 31, 2022 or November 30, 2021.
 
We did not hold any investments with continuous unrealized losses as of August 31, 2022 or November 30, 2021.

12


Note 3: Derivative Instruments

Cash Flow Hedge

On July 9, 2019, we entered into an interest rate swap contract with an initial notional amount of $150.0 million to manage the variability of cash flows associated with approximately one-half of our variable rate debt. The contract matures on April 30, 2024 and requires periodic interest rate settlements. Under this interest rate swap contract, we receive a floating rate based on the greater of 1-month LIBOR or 0.00%, and pay a fixed rate of 1.855% on the outstanding notional amount.

We have designated the interest rate swap as a cash flow hedge and assess the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. To the extent that the interest rate swap is highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative are included as a component of other comprehensive loss on our condensed consolidated balance sheets. Although we have determined at the onset of the hedge that the interest rate swap will be a highly effective hedge throughout the term of the contract, any portion of the fair value swap subsequently determined to be ineffective will be recognized in earnings. On January 25, 2022, we amended our prior credit facility (see Note 8: Debt). We reassessed the hedge in connection with the debt amendment and determined that it is still highly effective. As of August 31, 2022, the fair value of the hedge was a gain of $3.3 million, which was included in other assets on our condensed consolidated balance sheets.

The following table presents our interest rate swap contract where the notional amount reflects the quarterly amortization of the interest rate swap, which is equal to approximately one-half of the corresponding reduction in the balance of our term loan as we make scheduled principal payments. The fair value of the derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in thousands):
 August 31, 2022November 30, 2021
 Notional ValueFair ValueNotional ValueFair Value
Interest rate swap contracts designated as cash flow hedges$123,750 $3,346 $133,125 $(3,078)

Forward Contracts

We generally use forward contracts that are not designated as hedging instruments to hedge economically the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies. We generally do not hedge the net assets of our international subsidiaries.

All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and generally expire between 30 days and 2 years from the date the contract was entered. At August 31, 2022, $4.3 million and $0.1 million was recorded in other noncurrent liabilities and other current assets on our condensed consolidated balance sheets. At November 30, 2021, $0.3 million and $0.1 million were recorded in other noncurrent liabilities and other accrued liabilities, respectively, on our condensed consolidated balance sheets.

In the three and nine months ended August 31, 2022, realized and unrealized losses of $5.4 million and $9.0 million, respectively, from our forward contracts were recognized in foreign currency gain (loss), net, on our condensed consolidated statements of operations. In the three and nine month ended August 31, 2021, realized and unrealized losses of $2.3 million and realized and unrealized gains of $0.4 million, respectively, from our forward contracts were recognized in foreign currency gain (loss), net, on our condensed consolidated statements of operations. These gains and losses were substantially offset by realized and unrealized gains and losses in the offsetting positions.

13


The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):
 
 August 31, 2022November 30, 2021
 Notional ValueFair ValueNotional ValueFair Value
Forward contracts to sell U.S. dollars$81,089 $(4,211)$79,777 $(371)
Forward contracts to purchase U.S. dollars618 4 119 (1)
Total$81,707 $(4,207)$79,896 $(372)

Note 4: Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at August 31, 2022 (in thousands):
 
  Fair Value Measurements Using
 Total Fair ValueLevel 1Level 2Level 3
Assets
Money market funds$26,338 $26,338 $ $ 
U.S. treasury bonds749  749  
Interest rate swap3,346  3,346  
Liabilities
Foreign exchange derivatives$(4,207)$ $(4,207)$ 

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2021 (in thousands):
 
  Fair Value Measurements Using
 Total Fair ValueLevel 1Level 2Level 3
Assets
Money market funds$25,035 $25,035 $ $ 
U.S. treasury bonds757  757  
Corporate bonds1,210  1,210  
Liabilities
Foreign exchange derivatives(372) (372) 
Interest rate swap$(3,078)$ $(3,078)$ 

When developing fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted market prices to measure fair value. The valuation technique used to measure fair value for our Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

14


Fair Value of the Convertible Senior Notes

The Notes’ fair value, inclusive of the conversion feature embedded in the Notes, was $364.1 million as of August 31, 2022. The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 1 in the fair value hierarchy. See Note 8: Debt for additional information.

Note 5: Inventories

The components of inventories were as follows (in thousands):

August 31, 2022November 30, 2021
Finished goods$1,773 $1,631 
Purchased parts and fabricated assemblies2,867 1,920 
Total$4,640 $3,551 

At August 31, 2022 and November 30, 2021, the inventories balances of $4.6 million and $3.6 million were recorded in other current assets on the condensed consolidated balance sheets.

Note 6: Intangible Assets and Goodwill

Intangible Assets

Intangible assets are comprised of the following significant classes (in thousands):
 
August 31, 2022November 30, 2021
 Gross Carrying AmountAccumulated AmortizationNet Book ValueGross Carrying AmountAccumulated AmortizationNet Book Value
Purchased technology$212,700 $(145,389)$67,311 $212,700 $(128,797)$83,903 
Customer-related306,308 (152,864)153,444 306,308 (119,357)186,951 
Trademarks and trade names37,611 (24,930)12,681 37,611 (21,556)16,055 
Non-compete agreement2,000 (2,000) 2,000 (1,724)276 
Total$558,619 $(325,183)