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Progress 2020 First Quarter Results Exceed Guidance

/EIN News/ -- BEDFORD, Mass., March 26, 2020 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the leading provider of application development and digital experience technologies, today announced results for its fiscal first quarter ended February 29, 2020.

On a GAAP basis, revenue was $109.7 million during the quarter compared to $89.5 million in the same quarter last year, a year-over-year increase of 22% on an actual currency basis and 23% on a constant currency basis. On a non-GAAP basis, revenue was $113.8 million during the quarter compared to $89.5 million in the same quarter last year, an increase of 27% on an actual currency basis and 28% on a constant currency basis.

On a GAAP basis, diluted earnings per share during the quarter was $0.46 compared to $0.21 in the same quarter last year, an increase of 119%.  On a non-GAAP basis, diluted earnings per share during the quarter was $0.76 compared to $0.50 in the same quarter last year, an increase of 52%.

“Q1 was a very strong quarter for us,” said Yogesh Gupta, CEO at Progress. “We exceeded both our revenue and EPS guidance, sustaining the momentum we achieved in 2019. Given the durable nature of our business, I’m confident that we can deliver solid results despite the current level of macro-economic uncertainty. Longer-term, we remain optimistic in our opportunity to drive shareholder value through accretive acquisitions in the software infrastructure space."

Additional financial highlights included:

   
  Three Months Ended
  GAAP   Non-GAAP
(In thousands, except percentages and per share amounts) February 29,
2020
  February 28
2019
  %
Change
  February 29,
2020
  February 28,
2019
  %
Change
Revenue $ 109,683     $ 89,549     22 %   $ 113,762     $ 89,549     27 %
Income from operations $ 30,712     $ 15,409     99 %   $ 47,973     $ 30,251     59 %
Operating margin 28 %   17 %   65 %   42 %   34 %   24 %
Net income $ 21,116     $ 9,402     125 %   $ 34,703     $ 22,725     53 %
Diluted earnings per share $ 0.46     $ 0.21     119 %   $ 0.76     $ 0.50     52 %
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP) $ 33,016     $ 24,444     35 %   $ 33,297     $ 24,357     37 %
                                           

Anthony Folger, CFO, said: “We achieved solid cash flows in Q1, and our strong operating margins and EPS growth for the quarter demonstrate the significant leverage we have in our business. While our 2020 results will be impacted by the economic challenges brought on by the COVID-19 crisis, we remain confident in the overall health of our business, and in our ability to continue to execute on our strategy.”

Other fiscal first quarter 2020 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $177.1 million at the end of the quarter;
  • DSO was 49 days compared to 56 days in both the fiscal first quarter of 2019 and the fiscal fourth quarter of 2019;
  • Pursuant to the $250 million share authorization by the Board of Directors, Progress repurchased 0.4 million shares for $20.0 million during the fiscal first quarter of 2020. As of February 29, 2020, there was $230.0 million remaining under this authorization; and
  • On March 18, 2020, our Board of Directors declared a quarterly dividend of $0.165 per share of common stock that will be paid on June 15, 2020 to shareholders of record as of the close of business on June 1, 2020.

2020 Updated Business Outlook

Progress provides the following updated guidance for the fiscal year ending November 30, 2020 and the fiscal second quarter ending May 31, 2020, which reflects the expected impact of COVID-19 and changes in currency translation:

       
  Prior FY 2020 Guidance
(January 16, 2020)
  Updated FY 2020 Guidance
(March 26, 2020)
(In millions, except percentages and per share amounts) FY 2020
GAAP*
  FY 2020
Non-GAAP
  FY 2020
GAAP
  FY 2020
Non-GAAP
Revenue $440 - $447   $448 - $455   $420 - $430   $428 - $438
Diluted earnings per share $1.87 - $1.91   $2.87 - $2.92   $1.73 - $1.80   $2.73 - $2.80
Operating margin 27%   39%   27%   39%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$149 - $154   $145 - $150   $128 - $138   $125 - $135
Effective tax rate 21%   20%   22%   21%
               

*The FY2020 projected GAAP diluted earnings per share of $1.96 to $2.01 shown in the January 16, 2020 press release was incorrect, and should have been $1.87 to $1.91. The FY2020 projected GAAP effective tax rate of 17% shown in the January 16, 2020 press release was incorrect, and should have been 21%.

   
  Q2 2020 Guidance
(In millions, except per share amounts) Q2 2020
GAAP
  Q2 2020
Non-GAAP
Revenue $93 - $99   $95 - $101
Diluted earnings per share $0.36 - $0.40   $0.60 - $0.64
       

The expected economic impact of the COVID-19 crisis on our current 2020 business outlook is a reduction of approximately $10 to $13 million on GAAP and non-GAAP revenue, and approximately $0.06 to $0.08 on GAAP and non-GAAP earnings per share.

Based on current exchange rates, the expected negative currency translation impact on Progress' fiscal year 2020 business outlook compared to 2019 exchange rates is approximately $7 million on GAAP and non-GAAP revenue, and $0.06 on GAAP and non-GAAP earnings per share. The expected negative currency translation impact on Progress' fiscal Q2 2020 business outlook compared to 2019 exchange rates is approximately $2.5 million on GAAP and non-GAAP revenue, and $0.02 on GAAP and non-GAAP earnings per share. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal first quarter of 2020 at 5:00 p.m. ET on Thursday, March 26, 2020. The call can be accessed on the investor relations section of the company’s website, located at www.progress.com.  Additionally, you can listen to the call by telephone by dialing 1-800-458-4121, pass code 6922367. The conference call will include comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP"). Progress believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results.  A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below and is available on the Progress website at www.progress.com within the investor relations section. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is also available on the Progress website within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “should,” “expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services or other offerings are compromised or subject to a successful cyber-attack, or if such offerings contain significant coding or configuration errors, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, including our recent acquisition of Ipswitch, and may make acquisitions in the future, and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (9) The coronavirus disease (COVID-19) outbreak and the impact it could have on our employees, customers, partners, and the global financial markets could adversely affect our business, results of operations and financial condition. For further information regarding risks and uncertainties associated with Progress' business, please refer to Progress' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2019. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (NASDAQ: PRGS) offers the leading platform for developing and deploying strategic business applications. We enable customers and partners to deliver modern, high-impact digital experiences with a fraction of the effort, time and cost. Progress offers powerful tools for easily building adaptive user experiences across any type of device or touchpoint, the flexibility of a cloud-native app dev platform to deliver modern apps, leading data connectivity technology, web content management, business rules, secure file transfer, network monitoring, plus award-winning machine learning that enables cognitive capabilities to be a part of any application. 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
  Three Months Ended
(In thousands, except per share data) February 29,
2020
  February 28,
2019
  % Change
Revenue:          
Software licenses $ 30,629     $ 22,802     34 %
Maintenance and services 79,054     66,747     18 %
Total revenue 109,683     89,549     22 %
Costs of revenue:          
Cost of software licenses 1,389     1,167     19 %
Cost of maintenance and services 11,851     9,439     26 %
Amortization of acquired intangibles 1,646     5,433     (70 )%
Total costs of revenue 14,886     16,039     (7 )%
Gross profit 94,797     73,510     29 %
Operating expenses:          
Sales and marketing 24,198     22,323     8 %
Product development 21,654     19,890     9 %
General and administrative 12,748     12,285     4 %
Amortization of acquired intangibles 4,131     3,188     30 %
Restructuring expenses 1,040     415     151 %
Acquisition-related expenses 314         *
Total operating expenses 64,085     58,101     10 %
Income from operations 30,712     15,409     99 %
Other expense, net (3,397 )   (2,003 )   (70 )%
Income before income taxes 27,315     13,406     104 %
Provision for income taxes 6,199     4,004     55 %
Net income $ 21,116     $ 9,402     125 %
           
Earnings per share:          
Basic $ 0.47     $ 0.21     124 %
Diluted $ 0.46     $ 0.21     119 %
Weighted average shares outstanding:          
Basic 44,897     44,956     %
Diluted 45,515     45,286     1 %
           
Cash dividends declared per common share $ 0.165     $ 0.155     6 %

*Not meaningful

Stock-based compensation is included in the condensed consolidated statements of operations, as follows:
           
Cost of revenue $ 319     $ 244     31 %
Sales and marketing 1,050     1,048     %
Product development 1,926     1,928     %
General and administrative 2,756     2,586     7 %
Total $ 6,051     $ 5,806     4 %
                     

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
(In thousands) February 29,
2020
  November 30,
 2019
Assets      
Current assets:      
Cash, cash equivalents and short-term investments $ 177,055     $ 173,685  
Accounts receivable, net 62,184     72,820  
Unbilled receivables and contract assets 10,908     10,880  
Other current assets 24,591     27,280  
Total current assets 274,738     284,665  
Long-term unbilled receivables and contract assets 12,792     12,492  
Property and equipment, net 29,150     29,765  
Goodwill and intangible assets, net 526,404     532,216  
Right-of-use lease assets 25,907      
Other assets 21,191     22,133  
Total assets $ 890,182     $ 881,271  
Liabilities and shareholders' equity      
Current liabilities:      
Accounts payable and other current liabilities $ 50,473     $ 72,674  
Current portion of long-term debt, net 12,599     10,717  
Short-term lease liability 6,601      
Short-term deferred revenue 161,049     157,494  
Total current liabilities 230,722     240,885  
Long-term debt, net 280,382     284,002  
Long-term lease liability 21,049      
Long-term deferred revenue 19,749     19,752  
Other long-term liabilities 10,323     6,350  
Shareholders' equity:      
Common stock and additional paid-in capital 296,699     295,953  
Retained earnings 31,258     34,329  
Total shareholders' equity 327,957     330,282  
Total liabilities and shareholders' equity $ 890,182     $ 881,271  
               

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)  

   
  Three Months Ended
(In thousands) February 29,
2020
  February 28,
2019
Cash flows from operating activities:      
Net income $ 21,116     $ 9,402  
Depreciation and amortization 7,669     10,486  
Stock-based compensation 6,051     5,806  
Other non-cash adjustments 5,347     (2,827 )
Changes in operating assets and liabilities (7,167 )   1,577  
Net cash flows from operating activities 33,016     24,444  
Capital expenditures (1,148 )   (246 )
Repurchases of common stock, net of issuances (15,755 )   (23,106 )
Dividend payments to shareholders (7,468 )   (6,992 )
Payments of principal on long-term debt (1,882 )   (1,547 )
Other (3,393 )   1,392  
Net change in cash, cash equivalents and short-term investments 3,370     (6,055 )
Cash, cash equivalents and short-term investments, beginning of period 173,685     139,513  
Cash, cash equivalents and short-term investments, end of period $ 177,055     $ 133,458  
               

RESULTS OF OPERATIONS BY SEGMENT
(Unaudited)

   
  Three Months Ended
(In thousands) February 29,
2020
  February 28,
2019
  % Change
Segment revenue:          
OpenEdge $ 77,079     $ 65,252     18 %
Data Connectivity and Integration 13,685     6,000     128 %
Application Development and Deployment 18,919     18,297     3 %
Total revenue 109,683     89,549     22 %
Segment costs of revenue and operating expenses:          
OpenEdge 19,750     18,315     8 %
Data Connectivity and Integration 2,680     1,500     79 %
Application Development and Deployment 7,288     5,427     34 %
Total costs of revenue and operating expenses 29,718     25,242     18 %
Segment contribution margin:          
OpenEdge 57,329     46,937     22 %
Data Connectivity and Integration 11,005     4,500     145 %
Application Development and Deployment 11,631     12,870     (10 )%
Total contribution margin 79,965     64,307     24 %
Other unallocated expenses(1) 49,253     48,898     1 %
Income from operations 30,712     15,409     99 %
Other expense, net (3,397 )   (2,003 )   (70 )%
Income before income taxes $ 27,315     $ 13,406     104 %
           
(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: certain product development and corporate sales and marketing expenses, customer support, administration, amortization and impairment of acquired intangibles, impairment of long-lived assets, loss on assets held for sale, stock-based compensation, restructuring, and acquisition-related expenses.

SUPPLEMENTAL INFORMATION
(Unaudited)

Revenue by Type                
                   
(In thousands) Q1 2019   Q2 2019   Q3 2019   Q4 2019   Q1 2020
Software licenses $ 22,802     $ 29,728     $ 30,686     $ 39,336     $ 30,629  
Maintenance 59,999     62,528     67,611     68,868     70,056  
Services 6,748     7,739     8,419     8,834     8,998  
Total revenue $ 89,549     $ 99,995     $ 106,716     $ 117,038     $ 109,683  
                   
Revenue by Region                
                   
(In thousands) Q1 2019   Q2 2019   Q3 2019   Q4 2019   Q1 2020
North America $ 46,498     $ 57,060     $ 60,208     $ 70,145     $ 65,413  
EMEA 33,372     33,633     35,109     35,187     34,988  
Latin America 4,461     4,108     5,470     5,626     4,000  
Asia Pacific 5,218     5,194     5,929     6,080     5,282  
Total revenue $ 89,549     $ 99,995     $ 106,716     $ 117,038     $ 109,683  
                   
Revenue by Segment                  
                   
(In thousands) Q1 2019   Q2 2019   Q3 2019   Q4 2019   Q1 2020
OpenEdge $ 65,252     $ 67,820     $ 78,607     $ 85,250     $ 77,079  
Data Connectivity and Integration 6,000     12,932     8,754     12,217     13,685  
Application Development and Deployment 18,297     19,243     19,355     19,571     18,919  
Total revenue $ 89,549     $ 99,995     $ 106,716     $ 117,038     $ 109,683  
                                       

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

       
  Three Months Ended   % Change
(In thousands, except per share data) February 29, 2020   February 28, 2019   Non-GAAP
Adjusted revenue:                  
GAAP revenue $ 109,683         $ 89,549          
Acquisition-related revenue(1) 4,079                  
Non-GAAP revenue $ 113,762     100 %   $ 89,549     100 %   27 %
                   
Adjusted income from operations:                  
GAAP income from operations $ 30,712     28 %   $ 15,409     17 %    
Amortization of acquired intangibles 5,777         8,621          
Restructuring expenses 1,040         415          
Stock-based compensation 6,051         5,806          
Acquisition-related revenue(1) and expenses 4,393                  
Non-GAAP income from operations $ 47,973     42 %   $ 30,251     34 %   59 %
                   
Adjusted net income:                  
GAAP net income $ 21,116     19 %   $ 9,402     10 %    
Amortization of acquired intangibles 5,777         8,621          
Restructuring expenses 1,040         415          
Stock-based compensation 6,051         5,806          
Acquisition-related revenue(1) and expenses 4,393                  
Provision for income taxes (3,674 )       (1,519 )        
Non-GAAP net income $ 34,703     31 %   $ 22,725     25 %   53 %
                   
Adjusted diluted earnings per share:                  
GAAP diluted earnings per share $ 0.46         $ 0.21          
Amortization of acquired intangibles 0.13         0.19          
Restructuring expenses 0.02         0.01          
Stock-based compensation 0.13         0.12          
Acquisition-related revenue(1) and expenses 0.10                  
Provision for income taxes (0.08 )       (0.03 )        
Non-GAAP diluted earnings per share $ 0.76         $ 0.50         52 %
                   
Non-GAAP weighted avg shares outstanding - diluted 45,515         45,286         1 %
                   
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Progress' OpenEdge business segment for Ipswitch.
 

OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)

Revenue by Type          
           
(In thousands) Q1 2020   Non-GAAP
Adjustment(1)
  Non-GAAP
Revenue
Software licenses $ 30,629     $ 54     $ 30,683  
Maintenance 70,056     3,823     73,879  
Services 8,998     202     9,200  
Total revenue $ 109,683     $ 4,079     $ 113,762  
           
Revenue by Region          
           
(In thousands) Q1 2020   Non-GAAP
Adjustment(1)
  Non-GAAP
Revenue
North America $ 65,413     $ 3,002     $ 68,415  
EMEA 34,988     741     35,729  
Latin America 4,000     66     4,066  
Asia Pacific 5,282     270     5,552  
Total revenue $ 109,683     $ 4,079     $ 113,762  
           
Revenue by Segment          
           
(In thousands) Q1 2020   Non-GAAP
Adjustment(1)
  Non-GAAP
Revenue
OpenEdge $ 77,079     $ 4,079     $ 81,158  
Data Connectivity and Integration 13,685         13,685  
Application Development and Deployment 18,919         18,919  
Total revenue $ 109,683     $ 4,079     $ 113,762  
           
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Progress' OpenEdge business segment for Ipswitch.


Adjusted Free Cash Flow          
           
(In thousands) Q1 2020   Q1 2019   % Change
Cash flows from operations $ 33,016     $ 24,444     35 %
Purchases of property and equipment (1,148 )   (246 )   367 %
Free cash flow 31,868     24,198     32 %
Add back: restructuring payments 1,429     159     799 %
Adjusted free cash flow $ 33,297     $ 24,357     37 %
                     

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2020 GUIDANCE
(Unaudited)

Fiscal Year 2020 Updated Revenue Guidance
  Fiscal Year Ended   Fiscal Year Ending
  November 30, 2019   November 30, 2020
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 413.3     $ 419.7     2 %   $ 429.7     4 %
Acquisition-related adjustments - revenue(1) 18.7     8.3     (56 )%   8.3     (56 )%
Non-GAAP revenue $ 432.0     $ 428.0     (1 )%   $ 438.0     1 %
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Progress' OpenEdge business segment for Ipswitch.


Fiscal Year 2020 Updated Non-GAAP Operating Margin Guidance
  Fiscal Year Ending November 30, 2020
(In millions) Low   High
GAAP income from operations $ 112.2     $ 116.1  
GAAP operating margins 27 %   27 %
Acquisition-related revenue 8.3     8.3  
Restructuring expense 1.0     1.0  
Stock-based compensation 23.3     23.3  
Amortization of intangibles 23.2     23.2  
Total adjustments 55.8     55.8  
Non-GAAP income from operations $ 168.0     $ 171.9  
Non-GAAP operating margin 39 %   39 %
           


Fiscal Year 2020 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance
  Fiscal Year Ending November 30, 2020
(In millions, except per share data) Low   High
GAAP net income $ 77.9     $ 81.0  
Adjustments (from previous table) 55.8     55.8  
Income tax adjustment(2) (10.7 )   (10.7 )
Non-GAAP net income $ 123.0     $ 126.1  
       
GAAP diluted earnings per share $ 1.73     $ 1.80  
Non-GAAP diluted earnings per share $ 2.73     $ 2.80  
       
Diluted weighted average shares outstanding 45.0     45.0  
       
(2)Tax adjustment is based on a non-GAAP effective tax rate of approximately 21% for Low and High, calculated as follows:
Non-GAAP income from operations $ 168.0     $ 171.9  
Other (expense) income (12.3 )   (12.3 )
Non-GAAP income from continuing operations before income taxes 155.7     159.6  
Non-GAAP net income 123.0     126.1  
Tax provision $ 32.7     $ 33.5  
Non-GAAP tax rate 21 %   21 %
           

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2020 GUIDANCE
(Unaudited)

Fiscal Year 2020 Updated Adjusted Free Cash Flow Guidance
  Fiscal Year Ending November 30, 2020
(In millions) Low   High
Cash flows from operations (GAAP) $ 128     $ 138  
Purchases of property and equipment (6 )   (6 )
Add back: restructuring payments 3     3  
Adjusted free cash flow (non-GAAP) $ 125     $ 135  
               

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q2 2020 GUIDANCE
(Unaudited)

Q2 2020 Revenue Guidance
  Three Months Ended   Three Months Ending
  May 31, 2019   May 31, 2020
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 100.0     $ 92.9     (7 )%   $ 98.9     (1 )%
Acquisition-related adjustments - revenue(1) 3.5     2.1     (40 )%   2.1     (40 )%
Non-GAAP revenue $ 103.5     $ 95.0     (8 )%   $ 101.0     (2 )%
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Progress' OpenEdge business segment for Ipswitch.


Q2 2020 Non-GAAP Earnings per Share Guidance
  Three Months Ending May 31, 2020
  Low   High
GAAP diluted earnings per share $ 0.36     $ 0.40  
Acquisition-related revenue 0.05     0.05  
Stock-based compensation 0.11     0.11  
Amortization of intangibles 0.13     0.13  
Total adjustments 0.29     0.29  
Income tax adjustment (0.05 )   (0.05 )
Non-GAAP diluted earnings per share $ 0.60     $ 0.64  
               


Investor Contact:   Press Contact:
Brian Flanagan   Erica McShane
Progress Software   Progress Software
+1 781 280 4817   +1 888 365 2779 (x3135)
flanagan@progress.com   erica.mcshane@progress.com

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