Massachusetts | 04-2746201 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | Amortization of acquired intangibles – In all periods presented, we excluded amortization of acquired intangibles because such expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. |
• | Stock-based compensation – In all periods presented, we excluded stock-based compensation to be consistent with the way management and the financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. |
• | Restructuring expenses – In all periods presented, we excluded restructuring expenses incurred because such expenses distort trends and are not part of our core operating results. |
• | Acquisition-related expenses – In all periods presented, we excluded acquisition-related expenses because such expenses distort trends and are not part of our core operating results. |
• | Realized loss on sales of auction rate securities – In all periods presented, we excluded realized losses on sales of auction rate securities because such expenses distort trends and are not part of our core operating results. |
• | Income tax adjustment – In all periods presented, we adjusted our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above. |
Exhibit No. | Description | |
99.1 | Press release issued by Progress Software Corporation dated September 25, 2014 |
Date: | September 25, 2014 | Progress Software Corporation | |
By: | /s/ CHRIS E. PERKINS | ||
Chris E. Perkins | |||
Senior Vice President, Finance and Administration and Chief Financial Officer |
Exhibit 99.1 |
Investor Contact: | Press Contact: | |
Brian Flanagan | Jill Adams | |
Progress Software | Progress Software | |
+1 781 280 4817 | +1 781 280 4474 | |
flanagan@progress.com | jiadams@progress.com |
• | Income from operations was $19.4 million compared to $9.7 million in the same quarter last year; |
• | Income from continuing operations was $11.1 million compared to $7.2 million in the same quarter last year; |
• | Net income was $11.1 million compared to $24.8 million in the same quarter last year; and |
• | Diluted earnings per share from continuing operations was $0.22 compared to $0.13 in the same quarter last year. |
• | Income from operations was $29.6 million compared to $21.4 million in the same quarter last year; |
• | Operating margin was 37% compared to 28% in the same quarter last year; |
• | Income from continuing operations was $20.0 million compared to $14.7 million in the same quarter last year; and |
• | Diluted earnings per share from continuing operations was $0.39 compared to $0.27 in the same quarter last year. |
• | Cash, cash equivalents and short-term investments were $261.3 million; |
• | Cash inflows from operations were $25.9 million compared to cash outflows from operations of $1.9 million in the same quarter in fiscal year 2013; |
• | DSO was 66 days, compared to 65 days in the fiscal second quarter of 2014; and |
• | Under the previously announced authorization by the Board of Directors to repurchase up to $100 million of common stock, the company has repurchased 2.3 million shares for $52.6 million as of August 31, 2014. |
• | Revenue is expected to be between $331 million and $335 million; |
• | Non-GAAP earnings per share is expected to be between $1.47 and $1.50; |
• | Non-GAAP operating margin is expected to be approximately 34%; |
• | Free cash flow is expected to be between $79 million and $81 million; and |
• | Non-GAAP effective tax rate is expected to be between 32% and 33%. |
• | Revenue is expected to be between $96 million and $100 million; and |
• | Non-GAAP earnings per share is expected to be between $0.44 and $0.47. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands, except per share data) | August 31, 2014 | August 31, 2013 | % Change | August 31, 2014 | August 31, 2013 | % Change | |||||||||||||||
Revenue: | |||||||||||||||||||||
Software licenses | $ | 26,393 | $ | 25,666 | 3 | % | $ | 76,645 | $ | 84,920 | (10 | )% | |||||||||
Maintenance and services | 52,881 | 51,912 | 2 | % | 157,994 | 158,096 | — | % | |||||||||||||
Total revenue | 79,274 | 77,578 | 2 | % | 234,639 | 243,016 | (3 | )% | |||||||||||||
Costs of revenue: | |||||||||||||||||||||
Cost of software licenses | 1,805 | 1,587 | 14 | % | 4,951 | 5,033 | (2 | )% | |||||||||||||
Cost of maintenance and services | 5,222 | 6,403 | (18 | )% | 16,276 | 21,043 | (23 | )% | |||||||||||||
Amortization of acquired intangibles | 834 | 529 | 58 | % | 1,893 | 811 | 133 | % | |||||||||||||
Total costs of revenue | 7,861 | 8,519 | (8 | )% | 23,120 | 26,887 | (14 | )% | |||||||||||||
Gross profit | 71,413 | 69,059 | 3 | % | 211,519 | 216,129 | (2 | )% | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Sales and marketing | 22,477 | 24,554 | (8 | )% | 71,425 | 79,086 | (10 | )% | |||||||||||||
Product development | 14,975 | 14,615 | 2 | % | 45,568 | 42,908 | 6 | % | |||||||||||||
General and administrative | 12,162 | 13,660 | (11 | )% | 35,236 | 42,390 | (17 | )% | |||||||||||||
Amortization of acquired intangibles | 116 | 211 | (45 | )% | 428 | 549 | (22 | )% | |||||||||||||
Restructuring expenses | 1,680 | 5,401 | (69 | )% | 2,001 | 9,127 | (78 | )% | |||||||||||||
Acquisition-related expenses | 572 | 957 | (40 | )% | 3,148 | 2,229 | 41 | % | |||||||||||||
Total operating expenses | 51,982 | 59,398 | (12 | )% | 157,806 | 176,289 | (10 | )% | |||||||||||||
Income from operations | 19,431 | 9,661 | 101 | % | 53,713 | 39,840 | 35 | % | |||||||||||||
Other income (expense), net | (2,457 | ) | 177 | (1,488 | )% | (2,581 | ) | (663 | ) | (289 | )% | ||||||||||
Income from continuing operations before income taxes | 16,974 | 9,838 | 73 | % | 51,132 | 39,177 | 31 | % | |||||||||||||
Provision for income taxes | 5,879 | 2,634 | 123 | % | 16,138 | 14,018 | 15 | % | |||||||||||||
Income from continuing operations | 11,095 | 7,204 | 54 | % | 34,994 | 25,159 | 39 | % | |||||||||||||
Income (loss) from discontinued operations, net | — | 17,639 | (100 | )% | — | 34,712 | (100 | )% | |||||||||||||
Net income | $ | 11,095 | $ | 24,843 | (55 | )% | $ | 34,994 | $ | 59,871 | (42 | )% | |||||||||
Earnings per share: | |||||||||||||||||||||
Basic: | |||||||||||||||||||||
Continuing operations | $ | 0.22 | $ | 0.13 | 69 | % | $ | 0.69 | $ | 0.45 | 53 | % | |||||||||
Discontinued operations | — | 0.33 | (100 | )% | — | 0.63 | (100 | )% | |||||||||||||
Net income per share | $ | 0.22 | $ | 0.46 | (52 | )% | $ | 0.69 | $ | 1.08 | (36 | )% | |||||||||
Diluted: | |||||||||||||||||||||
Continuing operations | $ | 0.22 | $ | 0.13 | 69 | % | $ | 0.68 | $ | 0.45 | 51 | % | |||||||||
Discontinued operations | — | 0.32 | (100 | )% | — | 0.62 | (100 | )% | |||||||||||||
Net income per share | $ | 0.22 | $ | 0.46 | (52 | )% | $ | 0.68 | $ | 1.06 | (36 | )% | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 50,383 | 53,532 | (6 | )% | 50,975 | 55,451 | (8 | )% | |||||||||||||
Diluted | 50,931 | 54,389 | (6 | )% | 51,590 | 56,292 | (8 | )% |
(In thousands) | August 31, 2014 | November 30, 2013 | |||||
Assets | |||||||
Current assets: | |||||||
Cash, cash equivalents and short-term investments | $ | 261,292 | $ | 231,440 | |||
Accounts receivable, net | 57,840 | 66,784 | |||||
Other current assets | 33,550 | 39,587 | |||||
Total current assets | 352,682 | 337,811 | |||||
Property and equipment, net | 59,176 | 57,030 | |||||
Goodwill and intangible assets, net | 245,816 | 234,236 | |||||
Other assets | 18,970 | 53,110 | |||||
Total assets | $ | 676,644 | $ | 682,187 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable and other current liabilities | $ | 55,090 | $ | 68,186 | |||
Short-term deferred revenue | 93,086 | 96,393 | |||||
Total current liabilities | 148,176 | 164,579 | |||||
Long-term deferred revenue | 2,193 | 1,144 | |||||
Other long-term liabilities | 1,998 | 2,810 | |||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital | 200,681 | 205,307 | |||||
Retained earnings | 323,596 | 308,347 | |||||
Total shareholders’ equity | 524,277 | 513,654 | |||||
Total liabilities and shareholders’ equity | $ | 676,644 | $ | 682,187 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | August 31, 2014 | August 31, 2013 | August 31, 2014 | August 31, 2013 | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 11,095 | $ | 24,843 | $ | 34,994 | $ | 59,871 | |||||||
Depreciation and amortization | 3,938 | 3,897 | 10,985 | 11,374 | |||||||||||
Stock-based compensation | 6,940 | 5,573 | 18,194 | 16,360 | |||||||||||
Net gains on sales of dispositions | — | (35,885 | ) | — | (70,991 | ) | |||||||||
Other non-cash adjustments | 1,856 | 2,648 | 2,232 | 447 | |||||||||||
Changes in operating assets and liabilities | 2,099 | (2,937 | ) | 2,064 | (30,340 | ) | |||||||||
Net cash flows from operating activities | 25,928 | (1,861 | ) | 68,469 | (13,279 | ) | |||||||||
Capital expenditures | (2,154 | ) | (603 | ) | (10,191 | ) | (2,989 | ) | |||||||
Redemptions and sales of auction-rate-securities | 26,196 | — | 26,196 | 25 | |||||||||||
Issuances of common stock, net of repurchases | (13,795 | ) | (47,981 | ) | (41,890 | ) | (192,075 | ) | |||||||
Payments of acquisitions, net of cash acquired | — | — | (12,493 | ) | (9,450 | ) | |||||||||
Proceeds from divestitures, net | — | 37,739 | 3,300 | 111,120 | |||||||||||
Other | (1,459 | ) | (1,116 | ) | (3,539 | ) | (6,587 | ) | |||||||
Net change in cash, cash equivalents and short-term investments | 34,716 | (13,822 | ) | 29,852 | (113,235 | ) | |||||||||
Cash, cash equivalents and short-term investments, beginning of period | 226,576 | 255,804 | 231,440 | 355,217 | |||||||||||
Cash, cash equivalents and short-term investments, end of period | $ | 261,292 | $ | 241,982 | $ | 261,292 | $ | 241,982 |
Revenue from continuing operations by Type | |||||||||||||||||||||||||||
(In thousands) | Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | YTD 2014 | YTD 2013 | ||||||||||||||||||||
License | $ | 25,666 | $ | 37,392 | $ | 22,264 | $ | 27,988 | $ | 26,393 | $ | 76,645 | $ | 84,920 | |||||||||||||
Maintenance | 49,752 | 51,230 | 50,181 | 50,305 | 50,746 | 151,232 | 151,627 | ||||||||||||||||||||
Professional services | 2,160 | 2,358 | 2,093 | 2,534 | 2,135 | 6,762 | 6,469 | ||||||||||||||||||||
Total revenue | $ | 77,578 | $ | 90,980 | $ | 74,538 | $ | 80,827 | $ | 79,274 | $ | 234,639 | $ | 243,016 | |||||||||||||
Revenue from continuing operations by Region | |||||||||||||||||||||||||||
(In thousands) | Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | YTD 2014 | YTD 2013 | ||||||||||||||||||||
North America | $ | 34,596 | $ | 42,833 | $ | 34,586 | $ | 36,827 | $ | 35,654 | $ | 107,067 | $ | 111,445 | |||||||||||||
EMEA | 32,315 | 35,256 | 29,315 | 33,698 | 32,995 | 96,008 | 98,344 | ||||||||||||||||||||
Latin America | 5,496 | 6,526 | 5,108 | 5,703 | 5,695 | 16,506 | 18,844 | ||||||||||||||||||||
Asia Pacific | 5,171 | 6,365 | 5,529 | 4,599 | 4,930 | 15,058 | 14,383 | ||||||||||||||||||||
Total revenue | $ | 77,578 | $ | 90,980 | $ | 74,538 | $ | 80,827 | $ | 79,274 | $ | 234,639 | $ | 243,016 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share data) | August 31, 2014 | August 31, 2013 | August 31, 2014 | August 31, 2013 | |||||||||||
GAAP income from operations | $ | 19,431 | $ | 9,661 | $ | 53,713 | $ | 39,840 | |||||||
GAAP operating margin | 25 | % | 12 | % | 23 | % | 16 | % | |||||||
Amortization of acquired intangibles | 950 | 740 | 2,321 | 1,360 | |||||||||||
Stock-based compensation (1) | 6,940 | 4,600 | 18,194 | 14,070 | |||||||||||
Restructuring expenses | 1,680 | 5,401 | 2,001 | 9,127 | |||||||||||
Acquisition-related expenses | 572 | 957 | 3,148 | 2,229 | |||||||||||
Total operating adjustments | 10,142 | 11,698 | 25,664 | 26,786 | |||||||||||
Non-GAAP income from operations | $ | 29,573 | $ | 21,359 | $ | 79,377 | $ | 66,626 | |||||||
Non-GAAP operating margin | 37 | % | 28 | % | 34 | % | 27 | % | |||||||
GAAP income from continuing operations | $ | 11,095 | $ | 7,204 | $ | 34,994 | $ | 25,159 | |||||||
Operating adjustments (from above) | 10,142 | 11,698 | 25,664 | 26,786 | |||||||||||
Realized loss on sales of auction-rate-securities | 2,554 | — | 2,554 | — | |||||||||||
Income tax adjustment | (3,748 | ) | (4,230 | ) | (9,387 | ) | (8,399 | ) | |||||||
Total income from continuing operations adjustments | 8,948 | 7,468 | 18,831 | 18,387 | |||||||||||
Non-GAAP income from continuing operations | $ | 20,043 | $ | 14,672 | $ | 53,825 | $ | 43,546 | |||||||
GAAP diluted earnings per share from continuing operations | $ | 0.22 | $ | 0.13 | $ | 0.68 | $ | 0.45 | |||||||
Income from continuing operations adjustments (from above) | 0.18 | 0.14 | 0.37 | 0.33 | |||||||||||
Non-GAAP diluted earnings per share from continuing operations | $ | 0.39 | $ | 0.27 | $ | 1.04 | $ | 0.77 | |||||||
Diluted weighted average shares outstanding | 50,931 | 54,389 | 51,590 | 56,292 | |||||||||||
(1) Stock-based compensation is included in the GAAP statements of income, as follows: | |||||||||||||||
Cost of revenue | $ | 141 | $ | 133 | $ | 439 | $ | 500 | |||||||
Sales and marketing | 1,546 | 748 | 3,736 | 2,668 | |||||||||||
Product development | 1,407 | 999 | 4,186 | 3,687 | |||||||||||
General and administrative | 3,846 | 2,720 | 9,833 | 7,215 | |||||||||||
Stock-based compensation from continuing operations | $ | 6,940 | $ | 4,600 | $ | 18,194 | $ | 14,070 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share data) | August 31, 2014 | August 31, 2013 | August 31, 2014 | August 31, 2013 | |||||||||||
GAAP costs of revenue | $ | 7,861 | $ | 8,519 | $ | 23,120 | $ | 26,887 | |||||||
GAAP operating expenses | 51,982 | 59,398 | 157,806 | 176,289 | |||||||||||
GAAP expenses | 59,843 | 67,917 | 180,926 | 203,176 | |||||||||||
Operating adjustments (from above) | 10,142 | 11,698 | 25,664 | 26,786 | |||||||||||
Non-GAAP expenses | $ | 49,701 | $ | 56,219 | $ | 155,262 | $ | 176,390 | |||||||
Fiscal Year 2014 Revenue Growth Guidance | |||||||||
Fiscal Year Ended | Fiscal Year Ending | ||||||||
November 30, 2013 | November 30, 2014 | ||||||||
(In millions) | Low | % Change | High | % Change | |||||
Total revenue | $334 | $331 | (1)% | $335 | —% | ||||
Fiscal Year 2014 Non-GAAP Operating Margin Guidance | |||||||
Fiscal Year Ending November 30, 2014 | |||||||
(In millions) | Low | High | |||||
GAAP income from operations | $ | 77.4 | $ | 78.8 | |||
GAAP operating margins | 23 | % | 24 | % | |||
Restructuring expense | 2.5 | 2.5 | |||||
Stock-based compensation | 23.3 | 23.3 | |||||
Acquisition related expense | 3.5 | 3.5 | |||||
Amortization of intangibles | 3.2 | 3.2 | |||||
Realized loss on sale of auction rate securities | 2.6 | 2.6 | |||||
Total operating adjustments | 35.1 | 35.1 | |||||
Non-GAAP income from operations | $ | 112.5 | $ | 113.9 | |||
Non-GAAP operating margin | 34 | % | 34 | % |
Fiscal Year 2014 Non-GAAP Earnings per Share and Effective Tax Rate Guidance | |||||||
Fiscal Year Ending November 30, 2014 | |||||||
(In millions, except per share data) | Low | High | |||||
GAAP net income | $ | 51.2 | $ | 51.3 | |||
Operating adjustments (from above) | 35.1 | 35.1 | |||||
Income tax adjustment (2) | (9.8 | ) | (10.1 | ) | |||
Non-GAAP net income | $ | 76.5 | $ | 76.3 | |||
GAAP diluted earnings per share | $ | 0.98 | $ | 1.01 | |||
Non-GAAP diluted earnings per share | $ | 1.47 | $ | 1.50 | |||
Diluted weighted average shares outstanding | 52.0 | 51.0 | |||||
(2) Tax adjustment is based on a non-GAAP effective tax rate of 32% for Low and 33% for High, calculated as follows: | |||||||
Non-GAAP income from operations | $ | 112.5 | $ | 113.9 | |||
Non-GAAP net income | 76.5 | 76.3 | |||||
Tax provision | 36.0 | 37.6 | |||||
Non-GAAP tax rate | 32 | % | 33 | % |
Q4 2014 Revenue Growth Guidance | |||||||||
Three Months Ended | Three Months Ending | ||||||||
November 30, 2013 | November 30, 2014 | ||||||||
(In millions) | Low | % Change | High | % Change | |||||
Total revenue | $91 | $96 | 6% | $100 | 10% | ||||
Q4 2014 Non-GAAP Earnings per Share Guidance | |||||||
Three Months Ending November 30, 2014 | |||||||
Low | High | ||||||
GAAP diluted earnings per share | $ | 0.31 | $ | 0.34 | |||
Restructuring expense | 0.01 | 0.01 | |||||
Stock-based compensation | 0.10 | 0.10 | |||||
Acquisition related expense | 0.01 | 0.01 | |||||
Amortization of intangibles | 0.02 | 0.02 | |||||
Total operating adjustments | 0.14 | 0.14 | |||||
Income tax adjustment | $ | (0.01 | ) | $ | (0.01 | ) | |
Non-GAAP diluted earnings per share | $ | 0.44 | $ | 0.47 |