prgs-20210114
0000876167falsePROGRESS SOFTWARE CORP /MA00008761672021-01-142021-01-14


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

January 14, 2021
Date of Report (Date of earliest event reported)
 Progress Software Corporation
(Exact name of registrant as specified in its charter)
 
Delaware0-1941704-2746201
(State or other jurisdiction of incorporation or organization)(Commission file number)(I.R.S. Employer Identification No.)
14 Oak Park
Bedford, Massachusetts 01730
(Address of principal executive offices, including zip code)
(781280-4000
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.



Item 2.02 Results of Operations and Financial Condition

On January 14, 2021, Progress Software Corporation ("Progress") issued a press release announcing its financial results for the fiscal fourth quarter ended November 30, 2020. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not deemed incorporated by reference into any other filing of the company, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

Non-GAAP Financial Information - Progress provides non-GAAP supplemental information to its financial results. We use this non-GAAP information to evaluate our period-over-period operating performance because our management believes the information helps illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as a greater understanding of the results from the primary operations of our business, by excluding the effects of certain items that do not reflect the ordinary earnings of our operations. Management also uses this non-GAAP financial information to establish budgets and operational goals, which are communicated internally and externally, evaluate performance, and allocate resources. In addition, compensation of our executives and non-executive employees is based in part on the performance of our business evaluated using this same non-GAAP information. We believe this non-GAAP financial information enhances investors’ overall understanding of our current financial performance and our prospects for the future by providing more transparency for certain financial measures and providing a level of disclosure that helps investors understand how we plan and measure our business. We believe that providing this non-GAAP information affords investors a view of our operating results that may be more easily compared to our peer companies and enables investors to consider our operating results on both a GAAP and non-GAAP basis during and following the integration period of our 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 often have a material impact on Progress’ financial results. A reconciliation of non-GAAP adjustments to Progress' GAAP financial results is included in the tables in the press release and is available on the Progress website at www.progress.com within the investor relations section.

As described in more detail below, non-GAAP revenue, non-GAAP costs of sales and operating expenses, non-GAAP income from operations and operating margin, non-GAAP net income, and non-GAAP diluted earnings per share exclude the effect of purchase accounting on the fair value of acquired deferred revenue, amortization of acquired intangible assets, impairment of intangible and long-lived assets, stock-based compensation expense, restructuring charges, acquisition-related and transition expenses, and the related tax effects of the preceding items. 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.

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 - In all periods presented, we include acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. The acquisition-related revenue in our results relates to Chef and Ipswitch, which we acquired on October 5, 2020 and April 30, 2019, respectively. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. We believe these adjustments are useful to management and investors as a measure of the ongoing performance of the business because, although we cannot be certain that customers will renew their contracts, we have historically experienced high renewal rates on maintenance and support agreements and other customer contracts. Additionally, although acquisition-related revenue adjustments are non-recurring with respect to past acquisitions, we expect to incur these adjustments in connection with any future acquisitions.
Amortization of acquired intangibles - In all periods presented, we exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired.
Impairment of intangible and long-lived assets - In fiscal year 2019, we exclude impairment charges applicable to acquired intangible assets and long-lived assets because such expenses distort trends and are not part of our core operating results. Such impairment charges are inconsistent in amount and frequency and we believe that eliminating these amounts, when significant and not reflective of ongoing business and operating results, facilitates a more



meaningful evaluation of our current operating performance and comparisons to our operating performance in other periods.
Stock-based compensation - In all periods presented, we exclude stock-based compensation to be consistent with the way management and the financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include these charges in operating plans. Stock-based compensation will continue in future periods.
Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results.
Acquisition-related and transition expenses - In all periods presented, we exclude acquisition-related expenses because those expenses distort trends and are not part of our core operating results. In recent years, we have completed a number of acquisitions, which result in our incurring operating expenses which would not otherwise have been incurred. By excluding certain transition, integration and other acquisition-related expense items in connection with acquisitions, this provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or volume of future acquisitions.
Income tax adjustment - In all periods presented, we adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.

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. For example, if the local currencies of our foreign subsidiaries strengthen, our consolidated results stated in U.S. dollars are positively impacted.

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.

Item 7.01 Regulation FD Disclosure

In connection with the issuance of the press release attached hereto as Exhibit 99.1, the supplemental data attached as Exhibit 99.2 to this Current Report will be available on the Progress website within the investor relations section prior to the live conference call.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.
Exhibit No.Description
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:January 14, 2021Progress Software Corporation
By:/s/ ANTHONY FOLGER
Anthony Folger
Chief Financial Officer



Document
https://cdn.kscope.io/eca8ab0fc171778fb1d934c94ddcbfad-newprogresslogoa231a.jpg
Exhibit 99.1

P R E S S A N N O U N C E M E N T

Progress Reports 2020 Fiscal Fourth Quarter and Year End Results

Solid Execution Drove Growth and Operating Leverage
Acquisition of Chef Bolsters Position in DevOps Market and Drives Fiscal 2021 Revenue Growth


BEDFORD, Mass, January 14, 2021 (GlobeNewswire) — Progress (NASDAQ: PRGS), the leading provider of products to develop, deploy and manage high-impact business applications, today announced results for its fiscal fourth quarter and fiscal year ended November 30, 2020.

Fourth Quarter 2020 Highlights:

Revenue of $122.4 million increased 5% year-over-year on an actual currency basis, and 4% on a constant currency basis.
Non-GAAP revenue of $129.1 million increased 5% on an actual currency basis, and 4% constant currency basis.
Operating margin was 15% and Non-GAAP operating margin was 37%.
Diluted earnings per share was $0.39 compared to diluted loss per share of $0.11 in the same quarter last year.
Non-GAAP diluted earnings per share was $0.91 compared to $0.79 in the same quarter last year, an increase of 15%.
On October 5, 2020, the company completed the acquisition of Chef Software, a global leader in the growing DevOps and DevSecOps markets.

“I am thrilled with our results both for the fourth quarter and the full year 2020 and believe they reflect the durability of our business and our success in executing our total growth strategy” said Yogesh Gupta, CEO at Progress. “Chef extends our long-standing leadership position in the developer ecosystem, we are very pleased with the customer response and the rapid pace of the integration. The investments we’ve made to bolster our M&A capabilities, combined with the large, fragmented and growing DevOps market opportunity, position us well to execute on our total growth strategy for years to come, enabling us to deliver sustained shareholder value.”

Additional financial highlights included:
Three Months Ended
GAAPNon-GAAP
(In thousands, except percentages and per share amounts)November 30, 2020November 30, 2019ChangeNovember 30, 2020November 30, 2019Change
Revenue$122,385 $117,038 %$129,063 $123,416 %
Income (loss) from operations$18,514 $(6,026)*$48,081 $47,285 %
Operating margin15 %(5)%*37 %38 %(100) bps
Net income (loss)$17,661 $(4,740)*$41,118 $35,720 15 %
Diluted earnings (loss) per share$0.39 $(0.11)*$0.91 $0.79 15 %
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP)$42,762 $36,601 17 %$40,656 $36,705 11 %
*Not meaningful

Other fiscal fourth quarter 2020 metrics and recent results included:

Cash, cash equivalents and short-term investments were $106.0 million at the end of the quarter.
DSO was 54 days, compared to 56 days in the fiscal fourth quarter of 2019 and 49 days in the fiscal third quarter of 2020.
1


Pursuant to the $250 million share authorization by the Board of Directors, Progress repurchased 1.0 million shares for $40 million during the fiscal fourth quarter of 2020. As of November 30, 2020, there was $190 million remaining under this authorization.
On January 12, 2020, Progress' Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2021 to shareholders of record as of the close of business on March 1, 2021.

“We’re excited to deliver results that reflect a strong and durable top line, expanded operating margin and meaningful growth in earnings per share,” said Anthony Folger, CFO at Progress. “As we begin to realize synergies from the acquisition of Chef, we are very well positioned to deliver strong fiscal 2021 results.”

Full Year Results
Fiscal Year Ended
GAAPNon-GAAP
(In thousands, except percentages and per share amounts)November 30, 2020November 30, 2019ChangeNovember 30, 2020November 30, 2019Change
Revenue$442,150 $413,298 %$456,212 $431,961 %
Income from operations$107,728 $40,084 169 %$182,761 $162,258 13 %
Operating margin24 %10 %1400 bps40 %38 %200 bps
Net income$79,722 $26,400 202 %$140,082 $121,745 15 %
Diluted earnings per share$1.76 $0.58 203 %$3.09 $2.69 15 %
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP)$144,847 $128,484 13 %$142,453 $128,893 11 %

2021 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2021 and for the fiscal first quarter ending February 28, 2021, together with actual results for the same periods in the fiscal year ending November 30, 2020:
FY 2021 GuidanceFY 2020 Actual
(In millions, except percentages and per share amounts)FY 2021
GAAP
FY 2021
Non-GAAP
FY 2020
GAAP
FY 2020
Non-GAAP
Revenue$487 - $495$513 - $521$442 $456 
Diluted earnings per share$1.40 - $1.46$3.22 - $3.28$1.76 $3.09 
Operating margin19%37%24%40%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$151 - $156$150 - $155$145 $142 
Effective tax rate21 %20 %18%18%
Q1 2021 GuidanceQ1 2020 Actual
(In millions, except per share amounts)Q1 2021
GAAP
Q1 2021
Non-GAAP
Q1 2020
GAAP
Q1 2020
Non-GAAP
Revenue$109 - $113$119 - $123$110 $114 
Diluted earnings per share$0.21 - $0.25$0.72 - $0.76$0.46 $0.76 

Based on current exchange rates, the expected positive currency translation impact on Progress' fiscal year 2021 business outlook compared to 2020 exchange rates is approximately $6.4 million on GAAP and non-GAAP revenue, and approximately $0.02 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress' fiscal Q1 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $1.4 million. The expected currency translation impact on GAAP and non-GAAP earnings per share for fiscal Q1 2021 is not material. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.

2


Conference Call

Progress will hold a conference call to review its financial results for the fiscal fourth quarter of 2020 at 5:00 p.m. ET on Thursday, January 14, 2021. 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 1-888-458-4121, pass code 6657134. 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, 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, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, 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) Delay or failure to realize the expected synergies and benefits of the Chef acquisition could negatively impact our future results of operations and financial condition; (10) The continuing impact of the coronavirus disease (COVID-19) outbreak 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 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 29, 2020, May 31, 2020 and August 31, 2020. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

3


About Progress

Progress (NASDAQ: PRGS) provides the best products to develop, deploy and manage high-impact business applications. Our comprehensive product stack is designed to make technology teams more productive and we have a deep commitment to the developer community, both open source and commercial alike. With Progress, organizations can accelerate the creation and delivery of strategic business applications, automate the process by which apps are configured, deployed and scaled, and make critical data and content more accessible and secure—leading to competitive differentiation and business success. Over 1,700 independent software vendors, 100,000 enterprise customers, and three 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.

Investor Contact:Press Contact:
Garo ToomajanianErica McShane
Progress SoftwareProgress Software
+1 781 280 4817+1 781 280 4000
Investor-Relations@progress.comPR@progress.com
4


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedFiscal Year Ended
(In thousands, except per share data)November 30, 2020November 30, 2019% ChangeNovember 30, 2020November 30, 2019% Change
Revenue:
Software licenses$37,443 $39,336 (5)%$115,249 $122,552 (6)%
Maintenance and services84,942 77,702 %326,901 290,746 12 %
Total revenue122,385 117,038 %442,150 413,298 %
Costs of revenue:
Cost of software licenses1,171 1,598 (27)%4,473 4,894 (9)%
Cost of maintenance and services14,137 12,281 15 %49,744 44,463 12 %
Amortization of acquired intangibles2,923 6,887 (58)%7,897 25,884 (69)%
Total costs of revenue18,231 20,766 (12)%62,114 75,241 (17)%
Gross profit104,154 96,272 %380,036 338,057 12 %
Operating expenses:
Sales and marketing32,013 29,369 %100,113 101,701 (2)%
Product development24,482 23,868 %88,599 88,572 — %
General and administrative15,302 14,915 %54,004 53,360 %
Amortization of acquired intangibles7,565 7,414 %20,049 22,255 (10)%
Impairment of intangible & long-lived assets(1)
— 24,096 (100)%— 24,096 (100)%
Restructuring expenses4,080 2,338 75 %5,906 6,331 (7)%
Acquisition-related expenses2,198 298 638 %3,637 1,658 119 %
Total operating expenses85,640 102,298 (16)%272,308 297,973 (9)%
Income (loss) from operations18,514 (6,026)*107,728 40,084 169 %
Other expense, net(1,887)(3,551)47 %(11,093)(11,589)%
Income (loss) before income taxes16,627 (9,577)*96,635 28,495 239 %
(Benefit) provision for income taxes(1,034)(4,837)(79)%16,913 2,095 (707)%
Net income (loss)$17,661 $(4,740)*$79,722 $26,400 202 %
Earnings (loss) per share:
Basic$0.39 $(0.11)*$1.78 $0.59 202 %
Diluted$0.39 $(0.11)*$1.76 $0.58 203 %
Weighted average shares outstanding:
Basic44,723 44,882 — %44,886 44,791 — %
Diluted45,140 44,882 %45,321 45,340 — %
Cash dividends declared per common share$0.175 $0.165 %$0.670 $0.630 %
(1)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
Stock-based compensation is included in the condensed consolidated statements of operations, as follows:
Cost of revenue$357 $323 11 %$1,336 $1,134 18 %
Sales and marketing1,267 950 33 %4,462 4,155 %
Product development1,768 1,812 (2)%7,286 7,205 %
General and administrative2,731 2,815 (3)%10,398 10,817 (4)%
Total$6,123 $5,900 %$23,482 $23,311 %
*Not meaningful



5


CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)November 30, 2020November 30, 2019
Assets
Current assets:
Cash, cash equivalents and short-term investments$105,995 $173,685 
Accounts receivable, net84,040 72,820 
Unbilled receivables and contract assets24,917 10,880 
Other current assets23,983 27,280 
Total current assets238,935 284,665 
Property and equipment, net29,817 29,765 
Goodwill and intangible assets, net704,473 532,216 
Right-of-use lease assets30,635 — 
Long-term unbilled receivables and contract assets17,133 12,492 
Other assets20,789 22,133 
Total assets$1,041,782 $881,271 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other current liabilities$70,899 $72,674 
Current portion of long-term debt, net18,242 10,717 
Short-term operating lease liabilities7,015 — 
Short-term deferred revenue166,387 157,494 
Total current liabilities262,543 240,885 
Long-term debt, net364,260 284,002 
Long-term operating lease liabilities26,966 — 
Long-term deferred revenue26,908 19,752 
Other long-term liabilities15,092 6,350 
Shareholders' equity:
Common stock and additional paid-in capital306,244 295,953 
Retained earnings39,769 34,329 
Total shareholders' equity346,013 330,282 
Total liabilities and shareholders' equity$1,041,782 $881,271 


6


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)  
 Three Months EndedFiscal Year Ended
(In thousands)November 30, 2020November 30, 2019November 30, 2020November 30, 2019
Cash flows from operating activities:
Net income (loss)$17,661 $(4,740)$79,722 $26,400 
Depreciation and amortization12,044 16,519 34,765 56,679 
Stock-based compensation6,123 5,900 23,482 23,311 
Impairment of intangible and long-lived assets(1)
— 24,096 — 24,096 
Other non-cash adjustments(2,024)(8,252)6,287 (13,947)
Changes in operating assets and liabilities8,958 3,078 591 11,945 
Net cash flows from operating activities42,762 36,601 144,847 128,484 
Capital expenditures(3,098)(2,168)(6,517)(3,998)
Repurchases of common stock, net of issuances
(37,927)2,918 (48,901)(15,735)
Dividend payments to shareholders(7,542)(6,941)(29,900)(27,760)
Payments for acquisitions, net of cash acquired(213,057)— (213,057)(225,298)
Proceeds from the issuance of debt, net of payment of issuance costs98,500 — 98,500 183,374 
Proceeds from sale of long-lived assets, net889 — 889 6,146 
Payments of principal on long-term debt(3,763)(1,882)(11,288)(5,309)
Other(888)(240)(2,263)(5,732)
Net change in cash, cash equivalents and short-term investments(124,124)28,288 (67,690)34,172 
Cash, cash equivalents and short-term investments, beginning of period230,119 145,397 173,685 139,513 
Cash, cash equivalents and short-term investments, end of period$105,995 $173,685 $105,995 $173,685 
(1)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.

7



RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FOURTH QUARTER
(Unaudited)
 Three Months Ended% Change
(In thousands, except per share data)November 30, 2020November 30, 2019Non-GAAP
Adjusted revenue:
GAAP revenue$122,385 $117,038 
Acquisition-related revenue(1)
6,678 6,378 
Non-GAAP revenue$129,063 100 %$123,416 100 %%
Adjusted income from operations:
GAAP income (loss) from operations$18,514 15 %$(6,026)(5)%
Amortization of acquired intangibles10,488 %14,301 12 %
Stock-based compensation6,123 %5,900 %
Impairment of intangible and long-lived assets(2)
— — %24,096 20 %
Restructuring expenses and other4,080 %2,338 %
Acquisition-related revenue(1) and expenses
8,876 %6,676 %
Non-GAAP income from operations$48,081 37 %$47,285 38 %%
Adjusted net income:
GAAP net income (loss)$17,661 14 %$(4,740)(4)%
Amortization of acquired intangibles10,488 %14,301 12 %
Stock-based compensation6,123 %5,900 %
Impairment of intangible and long-lived assets(2)
— — %24,096 20 %
Restructuring expenses and other4,080 %2,338 %
Acquisition-related revenue(1) and expenses
8,876 %6,676 %
Provision for income taxes(6,110)(5)%(12,851)(10)%
Non-GAAP net income$41,118 32 %$35,720 29 %15 %
Adjusted diluted earnings per share:
GAAP diluted earnings (loss) per share$0.39 $(0.11)
Amortization of acquired intangibles0.23 0.32 
Stock-based compensation0.14 0.13 
Impairment of intangible and long-lived assets(2)
— 0.53 
Restructuring expenses and other0.09 0.05 
Acquisition-related revenue(1) and expenses
0.20 0.15 
Provision for income taxes(0.14)(0.28)
Non-GAAP diluted earnings per share$0.91 $0.79 15 %
Non-GAAP weighted avg shares outstanding - diluted45,140 45,484 (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' Application Development and Deployment business segment for Chef in fiscal year 2020 and Progress' OpenEdge business segment for Ipswitch in fiscal year 2019.
(2)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
8


RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FISCAL YEAR
(Unaudited)
 Fiscal Year Ended% Change
(In thousands, except per share data)November 30, 2020November 30, 2019Non-GAAP
Adjusted revenue:
GAAP revenue$442,150 $413,298 
Acquisition-related revenue(1)
14,062 18,663 
Non-GAAP revenue$456,212 100 %$431,961 100 %%
Adjusted income from operations:
GAAP income from operations$107,728 24 %$40,084 10 %
Amortization of acquired intangibles27,946 %48,139 11 %
Stock-based compensation23,482 %23,311 %
Impairment of intangible and long-lived assets(2)
— — %24,096 %
Restructuring expenses and other5,906 %6,307 %
Acquisition-related revenue(1) and expenses
17,699 %20,321 %
Non-GAAP income from operations$182,761 40 %$162,258 38 %13 %
Adjusted net income:
GAAP net income$79,722 18 %$26,400 %
Amortization of acquired intangibles27,946 %48,139 11 %
Stock-based compensation23,482 %23,311 %
Impairment of intangible and long-lived assets(2)
— — %24,096 %
Restructuring expenses and other5,906 %6,307 %
Acquisition-related revenue(1) and expenses
17,699 %20,321 %
Provision for income taxes(14,673)(3)%(26,829)(6)%
Non-GAAP net income$140,082 31 %$121,745 28 %15 %
Adjusted diluted earnings per share:
GAAP diluted earnings per share$1.76 $0.58 
Amortization of acquired intangibles0.62 1.07 
Stock-based compensation0.51 0.51 
Impairment of intangible and long-lived assets(2)
— 0.53 
Restructuring expenses and other0.13 0.14 
Acquisition-related revenue(1) and expenses
0.39 0.45 
Provision for income taxes(0.32)(0.59)
Non-GAAP diluted earnings per share$3.09 $2.69 15 %
Non-GAAP weighted avg shares outstanding - diluted45,321 45,340 — %
(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' Application Development and Deployment business segment for Chef in fiscal year 2020 and Progress' OpenEdge business segment for Ipswitch in fiscal year 2019.
(2)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.
9


OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)
Quarter to Date Adjusted Free Cash Flow
(In thousands)Q4 2020Q4 2019% Change
Cash flows from operations$42,762 $36,601 17 %
Purchases of property and equipment(3,098)(2,168)43 %
Free cash flow39,664 34,433 15 %
Add back: restructuring payments992 2,272 (56)%
Adjusted free cash flow$40,656 $36,705 11 %

Year to Date Adjusted Free Cash Flow
(In thousands)FY 2020FY 2019% Change
Cash flows from operations$144,847 $128,484 13 %
Purchases of property and equipment(6,517)(3,998)63 %
Free cash flow138,330 124,486 11 %
Add back: restructuring payments4,123 4,407 (6)%
Adjusted free cash flow$142,453 $128,893 11 %


10


RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)
Fiscal Year 2021 Revenue Guidance
Fiscal Year EndedFiscal Year Ending
November 30, 2020November 30, 2021
(In millions)Low% ChangeHigh% Change
GAAP revenue$442.1 $487.3 10 %$495.3 12 %
Acquisition-related adjustments - revenue(1)
14.1 25.7 82 %25.7 82 %
Non-GAAP revenue$456.2 $513.0 12 %$521.0 14 %
(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' Application Development and Deployment business segment for Chef and Progress' OpenEdge business segment for Ipswitch.
Fiscal Year 2021 Non-GAAP Operating Margin Guidance
Fiscal Year Ending November 30, 2021
(In millions)LowHigh
GAAP income from operations$91.2 $94.6 
GAAP operating margin19 %19 %
Acquisition-related revenue25.7 25.7 
Restructuring expense1.9 1.9 
Stock-based compensation27.3 27.3 
Acquisition-related expenses0.3 0.3 
Amortization of intangibles44.9 44.9 
Total adjustments100.1 100.1 
Non-GAAP income from operations$191.3 $194.7 
Non-GAAP operating margin37 %37 %
Fiscal Year 2021 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
Fiscal Year Ending November 30, 2021
(In millions, except per share data)LowHigh
GAAP net income$62.4 $65.1 
Adjustments (from previous table)100.1 100.1 
Income tax adjustment(2)
(19.2)(19.2)
Non-GAAP net income$143.3 $146.0 
GAAP diluted earnings per share$1.40 $1.46 
Non-GAAP diluted earnings per share$3.22 $3.28 
Diluted weighted average shares outstanding44.5 44.5 
(2)Tax adjustment is based on a non-GAAP effective tax rate of approximately 20% for Low and High, calculated as follows:
Non-GAAP income from operations$191.3 $194.7 
Other (expense) income(12.2)(12.2)
Non-GAAP income from continuing operations before income taxes179.1 182.5 
Non-GAAP net income143.3 146.0 
Tax provision$35.8 $36.5 
Non-GAAP tax rate20 %20 %
11


RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)
Fiscal Year 2021 Adjusted Free Cash Flow Guidance
Fiscal Year Ending November 30, 2021
(In millions)LowHigh
Cash flows from operations (GAAP)$151 $156 
Purchases of property and equipment(7)(7)
Add back: restructuring payments
Adjusted free cash flow (non-GAAP)$150 $155 

12


RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1 2021 GUIDANCE
(Unaudited)
Q1 2021 Revenue Guidance
Three Months EndedThree Months Ending
February 29, 2020February 28, 2021
(In millions)Low% ChangeHigh% Change
GAAP revenue$109.7 $108.8 (1)%$112.8 %
Acquisition-related adjustments - revenue(1)
4.1 10.2 149 %10.2 149 %
Non-GAAP revenue$113.8 $119.0 %$123.0 %
(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; Application Development and Deployment business segment for Chef and Progress' OpenEdge business segment for Ipswitch.

Q1 2021 Non-GAAP Earnings per Share Guidance
Three Months Ending February 28, 2021
LowHigh
GAAP diluted earnings per share$0.21 $0.25 
Acquisition-related revenue0.23 0.23 
Stock-based compensation0.15 0.15 
Amortization of intangibles0.23 0.23 
Restructuring expense0.03 0.03 
Total adjustments0.64 0.64 
Income tax adjustment(0.13)(0.13)
Non-GAAP diluted earnings per share$0.72 $0.76 



13
a2020q4financialresults
Q4 2020 Supplemental Data Progress Financial Results Exhibit 99.2


 
2© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Legal Notice This presentation 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 presentation include, but are not limited to, statements regarding Progress’s strategy; acquisitions; future revenue growth, operating margin and cost savings; strategic partnering and marketing initiatives; and other statements regarding the future operation, direction, prospects and success of Progress’s business. 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: ▪ 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. ▪ 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. ▪ 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. ▪ 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. ▪ We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. ▪ 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. ▪ 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, we may experience reputational harm, legal claims and financial exposure. ▪ We have made acquisitions, 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. ▪ Delay or failure to realize the expected synergies and benefits of the Chef acquisition could adversely impact our future results of operations and financial condition. ▪ The continuing impact of the coronavirus disease (COVID-19) outbreak 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 our business, please refer to our filings with the Securities and Exchange Commission. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this presentation, except for statements relating to Progress' projected results for the quarter ended February 28, 2021 and fiscal year ended November 30, 2021, which speak only as of January 14, 2021. Finally, during this presentation we will be referring to non-GAAP financial measures such as non-GAAP revenue, non-GAAP income from operations and operating margin, adjusted free cash flow and non-GAAP diluted earnings per share. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation between non-GAAP and the most directly comparable GAAP financial measures appears in our earnings press release for the fiscal quarter ended November 30, 2020 and is available in the Investor Relations section of our Web site.


 
3© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. What: Progress Q4 2020 Financial Results Conference Call When: Thursday, January 14th, 2021 Time: 5:00 p.m. ET Live Call: 1-888-458-4121, pass code 6657134 Live / Recorded Webcast: http://investors.progress.com Conference Call Details


 
4© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. • Strong financial results — Non-GAAP Revenue, non-GAAP EPS and Free Cash Flow all above high end of guidance range – Results driven by stronger than expected performance by OpenEdge and DCI products – Continued to improve the mix of recurring revenue; ended 2020 with 80% recurring mix — Delivered operating margin above 40% driven by top line strength and continued cost management • Chef acquisition closed on October 5, 2020 — DevOps pioneer and leader providing a continuous delivery automation platform for IT operators and security teams to securely build, deploy and manage any application in modern multi-cloud and hybrid environments, as well as on premises — Integration and financial results both tracking to plan — Integration to continue throughout 2021 resulting in more accretion later in the year • Enhanced M&A capabilities aimed at sourcing, executing and integrating acquisitions more efficiently to take advantage of large and growing DevOps market opportunity Summary Highlights


 
5© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Progress is a trusted provider of the best products to develop, deploy and manage high-impact business applications


 
6© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. The Evolving Application / Technology Team Developers IT Ops DevOps Designers Data AnalystsBusiness Analysts Data Scientists DevSecOps QA


 
7© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. M&A Framework --- Goal is to double the size of the company in 5 years --- Accretive M&A enables us to add scale and cash flows, and generate strong shareholder returns ▪ Target acquisition profile: ➢ Complementary to our business (product, audience & growth profile) ➢ Significant recurring revenue and excellent retention rates ➢ Cost synergistic and accretive ➢ Operating margins after synergies that are consistent with our overall margins ➢ ROIC above our weighted average cost of capital


 
8© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Progress Investment Highlights Durable, predictable financial model High quality revenue base and highly recurring revenue model Accretive M&A and operational efficiencies driving margin improvement Track record of successful acquisition integration and synergy achievement Delivering meaningful earnings per share and free cash flow growth Disciplined and shareholder friendly capital allocation strategy


 
9© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Q4 2020 Outlook (9/29/2020) Q4 2020 Results GAAP Revenue $119 M - $123 M $122.4 M (+5% YoY) Non-GAAP Revenue $125 M - $129 M $129.1 M (+5% YoY) GAAP earnings per share (Diluted) $0.26 - $0.29 $0.39 Non-GAAP earnings per share (Diluted) $0.76 - $0.79 $0.91 (+15%) GAAP Operating Margin Not guided 15% Non-GAAP Operating Margin Not guided 37% (-100 Bps YoY) Adjusted Free Cash Flow Not guided $40.7 M (+11% YoY) Summary Q4 2020 Financial Results


 
10© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. FY 2020 Outlook (9/29/2020) FY 2020 Results GAAP Revenue $438 M - $442 M $442.2 M (+7% YoY) Non-GAAP Revenue $452 M - $456 M $456.2 M (+6% YoY) GAAP earnings per share (Diluted) $1.63 - $1.66 $1.76 (+203%) Non-GAAP earnings per share (Diluted) $2.94 - $2.97 $3.09 (+15%) GAAP Operating Margin 24% 24% (+1400 Bps YoY) Non-GAAP Operating Margin 40% 40% (+200 Bps YoY) Adjusted Free Cash Flow $135 M - $140 M $142.5 M (+11% YoY) Summary 2020 Financial Results


 
11© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. * Excludes impact of FX by using constant exchange rates for all years. Recurring Revenue includes: Maintenance Revenue, Revenue derived from hosted/SaaS solutions and subscription revenue derived from subscription or term license arrangements Mission critical nature of the applications we power + Net revenue retention rate on maintenance – well over 90% = High percentage of recurring revenue and durability during uncertain times 74% 76% 78% 80% 2017 2018 2019 2020 Recurring Revenue % * Recurring Revenue Contributing to Stability


 
12© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. $29 $23 $40 $34 FY17 FY18 FY19 FY20 DCI Revenue ($M) - ASC 606 $32 $32 $32 FY18 FY19 FY20 DCI ACV ($M) • Variability in revenue primarily caused by multi- year term license contracts • Annual Contract Value shows consistent performance DCI Revenue vs. ACV -- the impact of ASC 606


 
13© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Driving Operating Leverage (% of non-GAAP revenue) 34% 35% 38% 40% 2017 2018 2019 2020 Non-GAAP Operating Margin $132 $134 $162 $183 2017 2018 2019 2020 Non-GAAP Operating Income ($M) Focus on cost management and running a lean, profitable business Integrating acquisitions into our operating model drives more scale in operating margin (Ipswitch in May 2019 and Chef in October 2020)


 
14© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Strong free cash flow and low leverage ratios allow for greater financing flexibility to execute total growth strategy $101 $122 $120 $129 $142 2016 2017 2018 2019 2020 Non-GAAP Adjusted Free Cash Flow Strong Liquidity/Debt Capacity 0.9 0.7 0.6 0.5 0.3 1.5 1.7 1.7 1.6 1.6 1.6 2.0 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Leverage Ratios Net Leverage Ratio Gross Leverage Ratio


 
15© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Capital Allocation • Continue to return capital to shareholders in the form of dividends • Accretive M&A that meets our disciplined criteria • Repurchase shares to offset dilution from our equity programs — Existing authorization $250M; $190M remaining — Flexibility to increase, reduce or suspend repurchases, depending on market conditions and size and timing of M&A Primary focus Share Repurchases $358 Cash Dividends $108 Debt Principal Payments $43 Capital Spending $27 Acquisitions $516 Capital Allocation 2016 – 2020 Share repurchase authorization • Current total: $250M • Remaining: $190M


 
16© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Business Outlook (as of January 14, 2021) Q1 2021 (1/14/2021) FY 2021 (1/14/2021) Non-GAAP Revenue $119 M - $123 M $513 M – $521 M Non-GAAP EPS $0.70 - $0.73 $3.22 – $3.28 Non-GAAP Operating Margin Not guided 37% Non-GAAP Adjusted Free Cash Flow Not guided $150 M – $155 M Non-GAAP Effective Tax Rate Not guided 20%


 
Supplemental Financial Information


 
18© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Results of Operations by Segment (Presented on a GAAP basis) (Unaudited) (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 of acquired intangibles, stock-based compensation, restructuring, and acquisition-related expenses.


 
19© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Supplemental Revenue Information (Presented on a GAAP basis) (Unaudited)


 
20© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Other NON-GAAP Financial Measures (Unaudited)


 
21© 2021 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. Other NON-GAAP Financial Measures (Unaudited)