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Progress Reports 2023 Fiscal Fourth Quarter and Year End Results

Fourth Quarter Revenues and Earnings Per Share Ahead of Estimates
ARR Growth of 17% Year-over-Year

BURLINGTON, Mass., Jan. 16, 2024 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the trusted provider of infrastructure software, today announced financial results for its fiscal fourth quarter and fiscal year ended November 30, 2023.

Fourth Quarter 2023 Highlights1:

  • Revenue of $177.0 million increased 13% year-over-year on an actual currency basis and 11% year-over-year on a constant currency basis.
  • Non-GAAP revenue of $177.5 million increased 12% year-over-year on an actual currency basis and 10% year-over-year on a constant currency basis.
  • Annualized Recurring Revenue (“ARR”) of $574 million increased 17% year-over-year on a constant currency basis.
  • Operating margin was 13% and non-GAAP operating margin was 35%.
  • Diluted earnings per share was $0.34 compared to $0.54 in the same quarter last year, a decrease of 37%.
  • Non-GAAP diluted earnings per share was $1.02 compared to $1.12 in the same quarter last year, a decrease of 9%.

“I am extremely pleased with our strong finish to fiscal 2023,” said Yogesh Gupta, CEO at Progress. “We executed at or ahead of plan each quarter, generated $175 million in adjusted free cash flow, and substantially integrated MarkLogic ahead of schedule. In the fourth quarter, we paid down another $30 million of debt, and we remain well-positioned operationally and financially for our next acquisition. MarkLogic will contribute to full-year results in fiscal 2024, further propelling our operating income and cash flow, as well as revenues. We’re looking forward to another great year ahead.”

Additional financial highlights included(1):

  Three Months Ended
  GAAP   Non-GAAP1
(In thousands, except percentages and per share amounts) November 30,
2023
  November 30,
2022
  % Change   November 30,
2023
  November 30,
2022
  % Change
Revenue $ 176,970     $ 157,127     13 %   $ 177,523     $ 159,174     12 %
Income from operations $ 22,537     $ 30,443     (26 )%   $ 62,515     $ 61,983     1 %
Operating margin   13 %     19 %   (600) bps       35 %     39 %   (400) bps  
Net income $ 15,335     $ 23,708     (35 )%   $ 45,769     $ 49,238     (7 )%
Diluted earnings per share $ 0.34     $ 0.54     (37 )%   $ 1.02     $ 1.12     (9 )%
Cash from operations (GAAP) /Adjusted free cash flow (non-GAAP) $ 33,161     $ 40,137     (17 )%   $ 32,893     $ 37,462     (12 )%

_______________
1 See Important Information Regarding Non-GAAP Financial Information and a reconciliation of non-GAAP adjustments to Progress' GAAP financial results at the end of this press release.

Other fiscal fourth quarter 2023 metrics and recent results included:

  • Cash and cash equivalents were $127.0 million at the end of the quarter.
  • Days sales outstanding was 62 days consistent with 62 days in the fiscal fourth quarter of 2022, and 49 days in the fiscal third quarter of 2023.
  • On January 9, 2024, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock, which will be paid on March 15, 2024 to shareholders of record as of the close of business on March 1, 2024.

“Our Q4 2023 results were again strong across nearly every metric, with ARR up 17% year-over-year and net retention again at 100%, in line with our target,” said Anthony Folger, CFO at Progress. “Our balance sheet is in excellent shape, our operations continue to improve, we are continually enhancing our ability to acquire and integrate to achieve solid returns, and the company is poised to deliver another strong performance in the coming year.”

Full Year Results

  Fiscal Year Ended
  GAAP   Non-GAAP1
(In thousands, except percentages and per share amounts) November 30,
2023
  November 30,
2022
  % Change   November 30,
2023
  November 30,
2022
  % Change
Revenue $ 694,439     $ 602,013     15 %   $ 698,150     $ 610,618     14 %
Income from operations $ 110,523     $ 132,131     (16 )%   $ 270,637     $ 242,088     12 %
Operating margin   16 %     22 %   (600) bps       39 %     40 %   (100) bps  
Net income $ 70,197     $ 95,069     (26 )%   $ 194,214     $ 182,774     6 %
Diluted earnings per share $ 1.57     $ 2.15     (27 )%   $ 4.35     $ 4.13     5 %
Cash from operations (GAAP) /Adjusted free cash flow (non-GAAP) $ 173,920     $ 192,160     (9 )%   $ 175,453     $ 189,418     (7 )%
                                       

2024 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2024 and the fiscal first quarter ending February 29, 2024, together with actual results for the same periods in the fiscal year ending November 30, 2023:

  FY 2024 Guidance   FY 2023 Actual
(In millions, except percentages and per share amounts) FY 2024
GAAP
  FY 2024
Non-GAAP1
  FY 2023
GAAP
  FY 2023
Non-GAAP1
Revenue $722 - $732     $722 - $732     $ 694     $ 698  
Diluted earnings per share $1.94 - $2.06     $4.58 - $4.68     $ 1.57     $ 4.35  
Operating margin 19% - 20 %   39% - 40 %     16 %     39 %
Cash from operations (GAAP) / Adjusted free cash flow (non-GAAP) $202 - $212     $202 - $212     $ 174     $ 175  
Effective tax rate 21 %   20 %     12 %     19 %
                           


  Q1 2024 Guidance   Q1 2023 Actual
(In millions, except per share amounts) Q1 2024
GAAP
  Q1 2024
Non-GAAP
  Q1 2023
GAAP
  Q1 2023
Non-GAAP
Revenue $180 - $184   $180 - $184   $ 164   $ 166
Diluted earnings per share $0.38 - $0.42   $1.12 - $1.16   $ 0.53   $ 1.19
                   

Based on current exchange rates, the expected positive currency translation impact on our:

  • Fiscal year 2024 business outlook compared to 2023 exchange rates is approximately $2.3 million on GAAP and non-GAAP revenue.
  • GAAP and non-GAAP diluted earnings per share for fiscal year 2024 is approximately $0.02.
  • Fiscal Q1 2024 business outlook compared to 2023 exchange rates on GAAP and non-GAAP revenue is approximately $1.0 million.
  • GAAP and non-GAAP diluted earnings per share for fiscal Q1 2024 is approximately $0.01.

To the extent that there are changes in exchange rates versus the current environment and/or our expectations, this may have an impact on Progress' business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal fourth quarter of 2023 at 5:00 p.m. ET on Tuesday, January 16, 2024. Participants must register for the conference call here: https://register.vevent.com/register/BI2cac545d106e49b5a6d3d34a92aa7ff4. The webcast can be accessed at: https://edge.media-server.com/mmc/p/fnimqsgo. The conference call will include comments followed by questions and answers. Attendees must register for the webcast and 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.

Important Information Regarding Non-GAAP Financial Information

Progress furnishes certain non-GAAP supplemental information to our financial results. We use such non-GAAP financial measures to evaluate our period-over-period operating performance because our management team believes that by excluding the effects of certain GAAP-related items that in their opinion do not reflect the ordinary earnings of our operations, such information helps to illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as greater understanding of the results from the primary operations of our business. Management also uses such non-GAAP financial measures to establish budgets and operational goals, evaluate performance, and allocate resources. In addition, the compensation of our executives and non-executive employees is based in part on the performance of our business as evaluated by such non-GAAP financial measures. We believe these non-GAAP financial measures enhance investors’ overall understanding of our current financial performance and our prospects for the future by: (i) providing more transparency for certain financial measures, (ii) presenting disclosure that helps investors understand how we plan and measure the performance of our business, (iii) affords a view of our operating results that may be more easily compared to our peer companies, and (iv) enables investors to consider our operating results on both a GAAP and non-GAAP basis (including following the integration period of our prior and proposed acquisitions). However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (“GAAP”) and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information may have a material impact on Progress’ financial results. A reconciliation of non-GAAP adjustments to Progress' GAAP financial results is included in the tables at the end of this press release.

In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures:

  • Acquisition-related revenue - We include acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue that would have been recognized prior to our adoption of Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) during the fourth quarter of fiscal year 2021. The acquisition-related revenue in our results relates to Chef Software, Inc. and Ipswitch, Inc., which we acquired on October 5, 2020 and April 30, 2019, respectively. Since GAAP accounting required the elimination of this revenue prior to the adoption of ASU 2021-08, 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 have historically experienced high renewal rates on maintenance and support agreements and other customer contracts. Upon our adoption of ASU 2021-08, this adjustment is no longer applicable to subsequent acquisitions. The adjustments related to our acquisitions of Ipswitch and Chef were completed as of the end of fiscal years 2022 and 2023, respectively.
  • Amortization of acquired intangibles - 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. Adjustments include preliminary estimates relating to the valuation of intangible assets from MarkLogic Corporation (“MarkLogic”), which we acquired on February 7, 2023. The final amounts will not be available until the Company's internal procedures and reviews are completed.
  • Stock-based compensation - We exclude stock-based compensation to be consistent with the way management and, in our view, the overall 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.
  • Restructuring expenses and other - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results. Adjustments include preliminary estimates relating to restructuring expenses from MarkLogic. The final amounts will not be available until the Company's internal procedures and reviews are completed.
  • Acquisition-related expenses - We exclude acquisition-related expenses in order to provide a more meaningful comparison 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.
  • Cyber incident and vulnerability response expenses, net
    • Cyber incident - We exclude certain expenses resulting from the detection of irregular activity on certain portions of our corporate network, as more thoroughly described in the Form 8-K that we filed on December 19, 2022.
    • MOVEit Vulnerability - We exclude certain expenses resulting from the zero-day MOVEit Vulnerability, as more thoroughly described in the Form 8-K that we filed on June 5, 2023 and Form 10-Qs filed on July 7, 2023 and October 10, 2023. We currently intend to provide additional updates regarding the MOVEit Vulnerability in our Form 10-K for the fiscal year ended November 30, 2023.

Expenses include costs to investigate and remediate these cyber related matters, as well as legal and other professional services related thereto. Expenses related to such cyber matters are provided net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses. Costs associated with the enhancement of our cybersecurity program are not included within this adjustment. We expect to continue to incur legal and other professional services expenses in future periods associated with the MOVEit vulnerability. We do not expect to incur additional costs associated with the cyber incident as the investigation is closed. Expenses related to such cyber matters are expected to result in operating expenses that would not have otherwise been incurred in the normal course of business operations. We believe that excluding these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.

  • Gain on sale of assets held for sale - We exclude the gain associated with the sale of our Bedford, Massachusetts headquarters during fiscal year 2022. We don’t believe such gains are part of our core operating results because they are inconsistent in amount and frequency and therefore may distort operating trends.
  • Income tax adjustment - We adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.
  • Constant Currency - Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. As exchange rates are an important factor in understanding period-to-period comparisons, we present revenue growth rates on a constant currency basis, which helps improve the understanding of our revenue results and our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.
  • Annual Recurring Revenue (ARR) - We provide an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years. ARR represents the annualized contract value for all active and contractually binding term-based contracts at the end of a reporting period. ARR includes maintenance, software upgrade rights, public cloud and on-premises subscription-based transactions and managed services. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
  • Net Retention Rate - We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period end ("Current Period ARR"). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP.

We also provide guidance on adjusted free cash flow, which is equal to cash flows from operating activities less purchases of property and equipment, plus restructuring payments.

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 (including future acquisition activity) 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: (i) 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; (ii) 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; (iii) 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; (iv) if the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors or zero-day vulnerabilities (as we experienced in May 2023 with the MOVEit Vulnerability), we may experience reputational harm, legal claims and financial exposure; and the results of inquiries, investigations and legal claims regarding the MOVEit Vulnerability remain uncertain, while the ultimate resolution of these matters could result in losses that may be material to our financial results for a particular period; and (v) future acquisitions may not be successful or may involve unanticipated costs or other integration issues that could disrupt our existing operations; and (vi) expected synergies and benefits of the MarkLogic acquisition may not be realized which could negatively impact our future 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, 2022 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended May 31, 2023 and August 31, 2023. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (Nasdaq: PRGS) provides software that enables organizations to develop and deploy their mission-critical applications and experiences, as well as effectively manage their data platforms, cloud and IT infrastructure. As an experienced, trusted provider, we make the lives of technology professionals easier. Over 4 million developers and technologists at hundreds of thousands of enterprises depend on Progress. Learn more at www.progress.com.

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

Investor Contact: Press Contact:
Michael Micciche Erica McShane
Progress Software Progress Software
+1 781 850 8450 +1 781 280 4000
Investor-Relations@progress.com PR@progress.com
   

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

  Three Months Ended   Fiscal Year Ended
(In thousands, except per share data) November 30, 2023   November 30, 2022   % Change   November 30, 2023   November 30, 2022   % Change
Revenue:                      
Software licenses $ 56,270     $ 53,154     6 %   $ 220,789     $ 188,336     17 %
Maintenance and services   120,700       103,973     16 %     473,650       413,677     14 %
Total revenue   176,970       157,127     13 %     694,439       602,013     15 %
Costs of revenue:                      
Cost of software licenses   3,155       2,574     23 %     11,153       10,243     9 %
Cost of maintenance and services   22,592       15,470     46 %     85,255       62,177     37 %
Amortization of acquired intangibles   7,916       5,487     44 %     30,169       22,076     37 %
Total costs of revenue   33,663       23,531     43 %     126,577       94,496     34 %
Gross profit   143,307       133,596     7 %     567,862       507,517     12 %
Operating expenses:                      
Sales and marketing   43,563       39,992     9 %     156,076       140,760     11 %
Product development   34,005       28,602     19 %     132,401       114,568     16 %
General and administrative   22,111       21,537     3 %     83,157       77,876     7 %
Amortization of acquired intangibles   17,605       11,538     53 %     66,430       46,868     42 %
Restructuring expenses   2,177       95     *       8,407       879     *  
Acquisition-related expenses   271       787     (66 )%     4,704       4,603     2 %
Cyber incident and vulnerability response expenses, net   1,038       602     72 %     6,164       602     924 %
Gain on sale of assets held for sale             *             (10,770 )   *  
Total operating expenses   120,770       103,153     17 %     457,339       375,386     22 %
Income from operations   22,537       30,443     (26 )%     110,523       132,131     (16 )%
Other expense, net   (8,365 )     (3,667 )   (128 )%     (30,866 )     (14,876 )   (107 )%
Income before income taxes   14,172       26,776     (47 )%     79,657       117,255     (32 )%
(Benefit) provision for income taxes   (1,163 )     3,068     (138 )%     9,460       22,186     (57 )%
Net income $ 15,335     $ 23,708     (35 )%   $ 70,197     $ 95,069     (26 )%
                         
Earnings per share:                        
Basic $ 0.35     $ 0.55     (36 )%   $ 1.62     $ 2.19     (26 )%
Diluted $ 0.34     $ 0.54     (37 )%   $ 1.57     $ 2.15     (27 )%
Weighted average shares outstanding:                      
Basic   43,729       43,134     1 %     43,456       43,475     %
Diluted   44,829       44,091     2 %     44,658       44,247     1 %
                       
Cash dividends declared per common share $ 0.175     $ 0.175     %   $ 0.700     $ 0.700     %

*not meaningful

Stock-based compensation is included in the condensed consolidated statements of operations, as follows:

Cost of revenue $ 830     $ 559     48 %   $ 2,976     $ 1,969     51 %
Sales and marketing   1,770       1,461     21 %     6,797       4,884     39 %
Product development   3,102       2,778     12 %     12,214       10,326     18 %
General and administrative   4,716       6,186     (24 )%     18,542       19,915     (7 )%
Total $ 10,418     $ 10,984     (5 )%   $ 40,529     $ 37,094     9 %
                                           

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands) November 30, 2023   November 30, 2022
Assets      
Current assets:      
Cash and cash equivalents $ 126,958     $ 256,277  
Accounts receivable, net   125,825       97,834  
Unbilled receivables   29,965       29,158  
Other current assets   48,040       42,784  
Total current assets   330,788       426,053  
Property and equipment, net   15,225       14,927  
Goodwill and intangible assets, net   1,186,379       888,392  
Right-of-use lease assets   18,711       17,574  
Long-term unbilled receivables   28,373       39,936  
Other assets   23,307       24,597  
Total assets $ 1,602,783     $ 1,411,479  
Liabilities and shareholders' equity      
Current liabilities:      
Accounts payable and other current liabilities $ 92,805     $ 76,629  
Current portion of long-term debt, net   13,109       6,234  
Short-term operating lease liabilities   10,114       7,471  
Short-term deferred revenue, net   236,090       227,670  
Total current liabilities   352,118       318,004  
Long-term debt, net   356,111       259,220  
Long-term operating lease liabilities   13,000       15,041  
Long-term deferred revenue, net   58,946       54,770  
Convertible senior notes, net   354,772       352,625  
Other long-term liabilities   8,121       13,315  
Shareholders' equity:      
Common stock and additional paid-in capital   371,017       332,083  
Retained earnings   88,698       66,421  
Total shareholders' equity   459,715       398,504  
Total liabilities and shareholders' equity $ 1,602,783     $ 1,411,479  
               

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)  

  Three Months Ended   Fiscal Year Ended
(In thousands) November 30, 2023   November 30, 2022   November 30, 2023   November 30, 2022
Cash flows from operating activities:              
Net income $ 15,335     $ 23,708     $ 70,197     $ 95,069  
Depreciation and amortization   27,862       19,022       105,294       76,844  
Gain on sale of assets held for sale                     (10,770 )
Stock-based compensation   10,418       10,984       40,529       37,094  
Other non-cash adjustments   (7,669 )     (5,390 )     (18,760 )     953  
Changes in operating assets and liabilities   (12,785 )     (8,187 )     (23,340 )     (7,030 )
Net cash flows from operating activities   33,161       40,137       173,920       192,160  
Capital expenditures   (2,389 )     (3,004 )     (5,570 )     (6,090 )
Issuances of common stock, net of repurchases   1,621       4,264       (8,006 )     (60,876 )
Dividend payments to shareholders   (7,885 )     (7,712 )     (31,554 )     (31,063 )
Payments for acquisitions, net of cash acquired               (355,250 )      
Proceeds from the issuance of debt, net of payment of issuance costs         (304 )     195,000       5,213  
Principal payment on term loan and repayment of revolving line of credit   (31,718 )     (1,719 )     (91,875 )     (6,873 )
Other   (3,831 )     (249 )     (5,984 )     6,433  
Net change in cash and cash equivalents   (11,041 )     31,413       (129,319 )     98,904  
Cash and cash equivalents, beginning of period   137,999       224,864       256,277       157,373  
Cash and cash equivalents, end of period $ 126,958     $ 256,277     $ 126,958     $ 256,277  
                               

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES1
(Unaudited)

  Three Months Ended Fiscal Year Ended
(In thousands, except per share data) November 30, 2023   November 30, 2022   November 30, 2023   November 30, 2022
Adjusted revenue:              
GAAP revenue $ 176,970     $ 157,127     $ 694,439     $ 602,013  
Acquisition-related revenue   553       2,047       3,711       8,605  
Non-GAAP revenue $ 177,523     $ 159,174     $ 698,150     $ 610,618  
               
Adjusted income from operations:              
GAAP income from operations $ 22,537     $ 30,443     $ 110,523     $ 132,131  
Amortization of acquired intangibles   25,521       17,025       96,599       68,944  
Stock-based compensation   10,418       10,984       40,529       37,094  
Restructuring expenses and other   2,177       95       8,407       879  
Acquisition-related revenue and expenses   824       2,834       8,415       13,208  
Cyber incident and vulnerability response expenses, net   1,038       602       6,164       602  
Gain on sale of assets held for sale                     (10,770 )
Non-GAAP income from operations $ 62,515     $ 61,983     $ 270,637     $ 242,088  
               
Adjusted net income:              
GAAP net income $ 15,335     $ 23,708     $ 70,197     $ 95,069  
Amortization of acquired intangibles   25,521       17,025       96,599       68,944  
Stock-based compensation   10,418       10,984       40,529       37,094  
Restructuring expenses and other   2,177       95       8,407       879  
Acquisition-related revenue and expenses   824       2,834       8,415       13,208  
Cyber incident and vulnerability response expenses, net   1,038       602       6,164       602  
Gain on sale of assets held for sale                     (10,770 )
Provision for income taxes   (9,544 )     (6,010 )     (36,097 )     (22,252 )
Non-GAAP net income $ 45,769     $ 49,238     $ 194,214     $ 182,774  
               
Adjusted diluted earnings per share:              
GAAP diluted earnings per share $ 0.34     $ 0.54     $ 1.57     $ 2.15  
Amortization of acquired intangibles   0.57       0.39       2.16       1.56  
Stock-based compensation   0.23       0.26       0.91       0.83  
Restructuring expenses and other   0.05             0.19       0.02  
Acquisition-related revenue and expenses   0.02       0.06       0.19       0.30  
Cyber incident and vulnerability response expenses, net   0.02       0.01       0.14       0.01  
Gain on sale of assets held for sale                     (0.24 )
Provision for income taxes   (0.21 )     (0.14 )     (0.81 )     (0.50 )
Non-GAAP diluted earnings per share $ 1.02     $ 1.12     $ 4.35     $ 4.13  
               
Non-GAAP weighted avg shares outstanding - diluted   44,829       44,091       44,658       44,247  
               

OTHER NON-GAAP FINANCIAL MEASURES1
(Unaudited)

Adjusted Free Cash Flow                      
  Three Months Ended   Fiscal Year Ended
(In thousands) November 30, 2023   November 30, 2022   % Change   November 30, 2023   November 30, 2022   % Change
Cash flows from operations $ 33,161     $ 40,137     (17 )%   $ 173,920     $ 192,160     (9 )%
Purchases of property and equipment   (2,389 )     (3,004 )   (20 )%     (5,570 )     (6,090 )   (9 )%
Free cash flow   30,772       37,133     (17 )%     168,350       186,070     (10 )%
Add back: restructuring payments   2,121       329     545 %     7,103       3,348     112 %
Adjusted free cash flow $ 32,893     $ 37,462     (12 )%   $ 175,453     $ 189,418     (7 )%
                                       

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2024 GUIDANCE1
(Unaudited)

Fiscal Year 2024 Revenue Guidance
  Fiscal Year Ended   Fiscal Year Ending
  November 30, 2023   November 30, 2024
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 694.4     $ 722.0     4 %   $ 732.0     5 %
Acquisition-related adjustments - revenue   3.8           (100 )%         (100 )%
Non-GAAP revenue $ 698.2     $ 722.0     3 %   $ 732.0     5 %
                                   


Fiscal Year 2024 Non-GAAP Operating Margin Guidance
  Fiscal Year Ending November 30, 2024
(In millions) Low   High
GAAP income from operations $ 138.1     $ 145.4  
GAAP operating margin   19 %     20 %
Restructuring expense and other   2.3       2.3  
Stock-based compensation   47.7       47.7  
Acquisition-related expenses   3.6       3.6  
Amortization of intangibles   89.4       89.4  
Cyber incident and vulnerability response expenses, net   4.0       4.0  
Total adjustments(2)   147.0       147.0  
Non-GAAP income from operations $ 285.1     $ 292.4  
Non-GAAP operating margin   39 %     40 %

(2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from MarkLogic and restructuring expenses. The final amounts will not be available until the Company's internal procedures and reviews are completed.

Fiscal Year 2024 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
  Fiscal Year Ending November 30, 2024
(In millions, except per share data) Low   High
GAAP net income $ 87.2     $ 93.0  
Adjustments (from previous table)   147.0       147.0  
Income tax adjustment(3)   (28.3 )     (28.2 )
Non-GAAP net income $ 205.9     $ 211.8  
       
GAAP diluted earnings per share $ 1.94     $ 2.06  
Non-GAAP diluted earnings per share $ 4.58     $ 4.68  
       
Diluted weighted average shares outstanding   45.0       45.2  


         
3 Tax adjustment is based on a non-GAAP effective tax rate of approximately 20%, calculated as follows:
Non-GAAP income from operations   $ 285.1     $ 292.4  
Other (expense) income     (27.7 )     (27.7 )
Non-GAAP income from continuing operations before income taxes     257.4       264.7  
Non-GAAP net income     205.9       211.8  
Tax provision   $ 51.5     $ 52.9  
Non-GAAP tax rate     20 %     20 %

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2024 GUIDANCE1
(Unaudited)

Fiscal Year 2024 Adjusted Free Cash Flow Guidance
  Fiscal Year Ending November 30, 2024
(In millions) Low   High
Cash flows from operations (GAAP) $ 202     $ 212  
Purchases of property and equipment   (5 )     (5 )
Add back: restructuring payments   5       5  
Adjusted free cash flow (non-GAAP) $ 202     $ 212  
               

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1 2024 GUIDANCE1
(Unaudited)

Q1 2024 Revenue Guidance
  Three Months Ended   Three Months Ending
  February 28, 2023   February 29, 2024
(In millions)     Low   % Change   High   % Change
GAAP revenue $ 164.2     $ 180.0     10 %   $ 184.0     12 %
Acquisition-related adjustments - revenue   1.4           (100 )%         (100 )%
Non-GAAP revenue $ 165.6     $ 180.0     9 %   $ 184.0     11 %
                                   


Q1 2024 Non-GAAP Earnings per Share Guidance
  Three Months Ending February 29, 2024
  Low   High
GAAP diluted earnings per share $ 0.38     $ 0.42  
Acquisition-related expense   0.02       0.02  
Stock-based compensation   0.27       0.27  
Amortization of intangibles   0.57       0.57  
Restructuring expense and other   0.02       0.02  
Cyber incident and vulnerability response expenses, net   0.04       0.04  
Total adjustments   0.92       0.92  
Income tax adjustment   (0.18 )     (0.18 )
Non-GAAP diluted earnings per share $ 1.12     $ 1.16  
               

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