Progress Announces Second Quarter 2023 Financial Results
Exceeds Q2 Revenue and Earnings Estimates
ARR increases by 19%; Raises Full Year Guidance
BURLINGTON, Mass, June 29, 2023 (GlobeNewswire) — Progress (Nasdaq: PRGS), the trusted provider of infrastructure software, today announced financial results for its fiscal second quarter ended May 31, 2023.
Second Quarter 2023 Highlights1:
•Revenue of $178.3 million increased 20% year-over-year on both an actual and a constant currency basis.
•Non-GAAP revenue of $179.2 million increased 19% year-over-year on both an actual and a constant currency basis.
•Annualized Recurring Revenue (“ARR”) of $569.0 million increased 19% year-over-year on a constant currency basis.
•Operating margin was 13% and Non-GAAP operating margin was 38%.
•Diluted earnings per share was $0.27 compared to $0.66 in the same quarter last year, a decrease of 59%.
•Non-GAAP diluted earnings per share was $1.06 compared to $1.04 in the same quarter last year, an increase of 2%.
“Progress had another terrific quarter in Q2, and we are very pleased with our results,” said Yogesh Gupta, CEO at Progress. “Execution in the field remains strong, and consistent demand across nearly all products in all geographies again contributed to a solid beat in revenues and EPS. ARR and net retention remain on a positive trend, the MarkLogic integration is on course, and we continue to evaluate potential M&A targets.”
Additional financial highlights included:
Three Months Ended
GAAP
Non-GAAP1
(In thousands, except percentages and per share amounts)
May 31, 2023
May 31, 2022
% Change
May 31, 2023
May 31, 2022
% Change
Revenue
$
178,251
$
148,747
20
%
$
179,233
$
150,879
19
%
Income from operations
$
23,027
$
40,235
(43)
%
$
67,300
$
61,298
10
%
Operating margin
13
%
27
%
(1400) bps
38
%
41
%
(300) bps
Net income
$
12,090
$
29,110
(58)
%
$
46,937
$
45,886
2
%
Diluted earnings per share
$
0.27
$
0.66
(59)
%
$
1.06
$
1.04
2
%
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP)
$
47,951
$
68,260
(30)
%
$
48,040
$
68,038
(29)
%
Other fiscal second quarter 2023 metrics and recent results included:
•Cash, cash equivalents and short-term investments were $125.5 million at the end of the quarter.
•Days sales outstanding was 44 days compared to 39 days in the fiscal second quarter of 2022 and 42 days in the fiscal first quarter of 2023.
•On June 21, 2023, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock which will be paid on September 15, 2023 to shareholders of record as of the close of business on September 1, 2023.
Anthony Folger, CFO, said: “We are very happy with our Q2 results, which again were driven by strong top line performance across virtually all products. Operating margins finished well ahead of our expectations – a reflection of solid execution from our sales teams as well as our integration and operations teams. ARR grew 19% in constant currency to over $569M, which is 3% on a pro-forma basis. At the same time, net retention rates remained steadily above 100% at 101% for the quarter. The balance sheet remains very strong, our net leverage continues to decline, and the MarkLogic integration has begun to achieve material milestones.”
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.
1
2023 Business Outlook
Progress provides the following guidance for the fiscal year ending November 30, 2023 and the fiscal third quarter ending August 31, 2023:
Updated FY 2023 Guidance (June 29, 2023)
Prior FY 2023 Guidance (March 28, 2023)
(In millions, except percentages and per share amounts)
GAAP
Non-GAAP1
GAAP
Non-GAAP1
Revenue
$686 - $694
$690 - $698
$676 - $684
$680 - $688
Diluted earnings per share
$1.35 - $1.43
$4.16 - $4.24
$1.32 - $1.40
$4.09 - $4.17
Operating margin
15% - 16%
38% - 39%
15% - 16%
38% - 39%
Cash from operations (GAAP) / Adjusted free cash flow (Non-GAAP)
$173 - $183
$175 - $185
$173 - $183
$175 - $185
Effective tax rate
20% - 21%
20% - 21%
20% - 21%
20% - 21%
Q3 2023 Guidance
(In millions, except per share amounts)
GAAP
Non-GAAP1
Revenue
$171 - $175
$172 - $176
Diluted earnings per share
$0.27 - $0.31
$0.98 - $1.02
Based on current exchange rates, the expected positive currency translation impact on Progress' fiscal year 2023 business outlook compared to 2022 exchange rates on GAAP and non-GAAP revenue is approximately $1.3 million, and approximately $0.01 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress' fiscal Q3 2023 business outlook compared to 2022 exchange rates on GAAP and non-GAAP revenue is approximately $1.3 million, and approximately $0.01 on GAAP and non-GAAP diluted Q3 2023 earnings per share. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.
Conference Call
Progress will hold a conference call to review its financial results for the fiscal second quarter of 2023 at 5:00 p.m. ET on Thursday, June 29, 2023. Participants must register for the conference call here: https://register.vevent.com/register/BIaa094c13ba6046d19c7d867c718dd6ee. The webcast can be accessed at: https://edge.media-server.com/mmc/p/7qzbqxtn. 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:
2
•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 remaining adjustment is related to our acquisition of Chef and is expected to continue through the end of fiscal year 2023.
•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 - 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.
•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.
•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.
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. 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.
•Provision for income taxes - 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
3
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 the integration of MarkLogic) 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, we may experience reputational harm, legal claims and financial exposure; and (v) risks related to the disruption associated with the ongoing integration of MarkLogic. 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. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
About Progress
Dedicated to propelling business forward in a technology-driven world, Progress (Nasdaq: PRGS) helps businesses drive faster cycles of innovation, fuel momentum and accelerate their path to success. As the trusted provider of the best products to develop, deploy and manage high-impact applications, Progress enables customers to develop the applications and experiences they need, deploy where and how they want and manage it all safely and securely. Hundreds of thousands of enterprises, including 1,700 software companies and 3.5 million developers, depend on Progress to achieve their goals—with confidence. 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
4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
(In thousands, except per share data)
May 31, 2023
May 31, 2022
% Change
May 31, 2023
May 31, 2022
% Change
Revenue:
Software licenses
$
56,407
$
44,814
26
%
$
113,975
$
87,564
30
%
Maintenance and services
121,844
103,933
17
%
228,502
206,105
11
%
Total revenue
178,251
148,747
20
%
342,477
293,669
17
%
Costs of revenue:
Cost of software licenses
2,814
2,583
9
%
5,266
5,192
1
%
Cost of maintenance and services
22,970
15,801
45
%
40,471
30,946
31
%
Amortization of acquired intangibles
7,994
5,573
43
%
14,258
11,031
29
%
Total costs of revenue
33,778
23,957
41
%
59,995
47,169
27
%
Gross profit
144,473
124,790
16
%
282,482
246,500
15
%
Operating expenses:
Sales and marketing
40,147
32,704
23
%
73,901
66,173
12
%
Product development
34,820
28,643
22
%
65,258
57,316
14
%
General and administrative
21,469
19,207
12
%
40,255
36,198
11
%
Amortization of acquired intangibles
17,546
11,892
48
%
31,157
23,614
32
%
Cyber incident and vulnerability response expenses, net
1,483
—
*
4,175
—
*
Restructuring expenses
3,990
143
*
5,387
654
724
%
Acquisition-related expenses
1,991
2,736
(27)
%
3,734
3,648
2
%
Gain on sale of assets held for sale
—
(10,770)
*
—
(10,770)
*
Total operating expenses
121,446
84,555
44
%
223,867
176,833
27
%
Income from operations
23,027
40,235
(43)
%
58,615
69,667
(16)
%
Other expense, net
(8,418)
(3,390)
148
%
(14,082)
(6,870)
105
%
Income before income taxes
14,609
36,845
(60)
%
44,533
62,797
(29)
%
Provision for income taxes
2,519
7,735
(67)
%
8,769
13,233
(34)
%
Net income
$
12,090
$
29,110
(58)
%
$
35,764
$
49,564
(28)
%
Earnings per share:
Basic
$
0.28
$
0.67
(58)
%
$
0.83
$
1.13
(27)
%
Diluted
$
0.27
$
0.66
(59)
%
$
0.81
$
1.11
(27)
%
Weighted average shares outstanding:
Basic
43,343
43,575
(1)
%
43,321
43,778
(1)
%
Diluted
44,470
44,253
—
%
44,411
44,480
—
%
Cash dividends declared per common share
$
0.175
$
0.175
—
%
$
0.350
$
0.350
—
%
Stock-based compensation is included in the condensed consolidated statements of operations, as follows:
Cost of revenue
$
729
$
472
54
%
$
1,349
$
883
53
%
Sales and marketing
1,769
690
156
%
3,264
2,092
56
%
Product development
3,049
2,740
11
%
6,047
4,962
22
%
General and administrative
4,740
5,455
(13)
%
9,379
9,534
(2)
%
Total
$
10,287
$
9,357
10
%
$
20,039
$
17,471
15
%
*not meaningful
5
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
May 31, 2023
November 30, 2022
Assets
Current assets:
Cash and cash equivalents
$
125,531
$
256,277
Accounts receivable, net
87,183
97,834
Unbilled receivables
32,958
29,158
Other current assets
35,410
42,784
Total current assets
281,082
426,053
Property and equipment, net
14,655
14,927
Goodwill and intangible assets, net
1,230,459
888,392
Right-of-use lease assets
23,396
17,574
Long-term unbilled receivables
38,727
39,936
Other assets
13,566
24,597
Total assets
$
1,601,885
$
1,411,479
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and other current liabilities
$
76,126
$
76,629
Current portion of long-term debt, net
9,671
6,234
Short-term operating lease liabilities
10,090
7,471
Short-term deferred revenue, net
227,607
227,670
Total current liabilities
323,494
318,004
Long-term debt, net
422,666
259,220
Convertible senior notes, net
353,696
352,625
Long-term operating lease liabilities
17,654
15,041
Long-term deferred revenue, net
56,030
54,770
Other long-term liabilities
9,530
13,315
Shareholders’ equity:
Common stock and additional paid-in capital
347,537
332,083
Retained earnings
71,278
66,421
Total shareholders’ equity
418,815
398,504
Total liabilities and shareholders’ equity
$
1,601,885
$
1,411,479
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
Six Months Ended
(In thousands)
May 31, 2023
May 31, 2022
May 31, 2023
May 31, 2022
Cash flows from operating activities:
Net income
$
12,090
$
29,110
$
35,764
$
49,564
Depreciation and amortization
27,398
19,379
49,540
38,597
Gain on sale of assets held for sale
—
(10,770)
—
(10,770)
Stock-based compensation
10,287
9,357
20,039
17,471
Other non-cash adjustments
(1,949)
1,673
(6,156)
6,115
Changes in operating assets and liabilities
125
19,511
(4,469)
11,376
Net cash flows from operating activities
47,951
68,260
94,718
112,353
Capital expenditures
(1,584)
(1,148)
(1,969)
(1,979)
Repurchases of common stock, net of issuances
(7,992)
(22,796)
(13,635)
(43,702)
Dividend payments to shareholders
(7,848)
(7,789)
(15,871)
(15,573)
Payments for acquisitions, net of cash acquired
(275)
—
(356,096)
—
Proceeds from the issuance of debt, net of payment of issuance costs
—
—
195,000
5,517
Principal payment on term loan and repayment of revolving line of credit
(26,718)
(1,716)
(28,437)
(3,435)
Other
(928)
17,780
(4,456)
15,359
Net change in cash, cash equivalents and short-term investments
2,606
52,591
(130,746)
68,540
Cash, cash equivalents and short-term investments, beginning of period
122,925
173,322
256,277
157,373
Cash, cash equivalents and short-term investments, end of period
$
125,531
$
225,913
$
125,531
$
225,913
7
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES1
(Unaudited)
Three Months Ended
Six Months Ended
(In thousands, except per share data)
May 31, 2023
May 31, 2022
May 31, 2023
May 31, 2022
Adjusted revenue:
GAAP revenue
$
178,251
$
148,747
$
342,477
$
293,669
Acquisition-related revenue
982
2,132
2,367
4,715
Non-GAAP revenue
$
179,233
$
150,879
$
344,844
$
298,384
Adjusted income from operations:
GAAP income from operations
$
23,027
$
40,235
$
58,615
$
69,667
Amortization of acquired intangibles
25,540
17,465
45,415
34,645
Restructuring expenses and other
3,990
143
5,387
654
Stock-based compensation
10,287
9,357
20,039
17,471
Acquisition-related revenue and expenses
2,973
4,868
6,101
8,363
Cyber incident and vulnerability response expenses, net
1,483
—
4,175
—
Gain on sale of assets held for sale
—
(10,770)
—
(10,770)
Non-GAAP income from operations
$
67,300
$
61,298
$
139,732
$
120,030
Adjusted net income:
GAAP net income
$
12,090
$
29,110
$
35,764
$
49,564
Amortization of acquired intangibles
25,540
17,465
45,415
34,645
Restructuring expenses and other
3,990
143
5,387
654
Stock-based compensation
10,287
9,357
20,039
17,471
Acquisition-related revenue and expenses
2,973
4,868
6,101
8,363
Gain on sale of assets held for sale
—
(10,770)
—
(10,770)
Cyber incident and vulnerability response expenses, net
1,483
—
4,175
—
Provision for income taxes
(9,426)
(4,287)
(17,185)
(10,481)
Non-GAAP net income
$
46,937
$
45,886
$
99,696
$
89,446
Adjusted diluted earnings per share:
GAAP diluted earnings per share
$
0.27
$
0.66
$
0.81
$
1.11
Amortization of acquired intangibles
0.57
0.39
1.02
0.78
Stock-based compensation
0.24
0.22
0.45
0.40
Restructuring expenses and other
0.09
—
0.12
0.01
Acquisition-related revenue and expenses
0.07
0.11
0.14
0.19
Gain on sale of assets held for sale
—
(0.24)
—
(0.24)
Cyber incident and vulnerability response expenses, net
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2023 GUIDANCE1
(Unaudited)
Fiscal Year 2023 Updated Revenue Guidance
Fiscal Year Ended
Fiscal Year Ending
November 30, 2022
November 30, 2023
(In millions)
Low
% Change
High
% Change
GAAP revenue
$
602.0
$
686.3
14
%
$
694.3
15
%
Acquisition-related adjustments - revenue
8.6
3.7
(57)
%
3.7
(57)
%
Non-GAAP revenue
$
610.6
$
690.0
13
%
$
698.0
14
%
Fiscal Year 2023 Updated Non-GAAP Operating Margin Guidance
Fiscal Year Ending November 30, 2023
(In millions)
Low
High
GAAP income from operations
$
106.0
$
110.7
GAAP operating margins
15
%
16
%
Acquisition-related revenue
3.7
3.7
Acquisition-related expense
4.9
4.9
Restructuring expense
6.3
6.3
Stock-based compensation
40.4
40.4
Amortization of acquired intangibles
96.6
96.6
Cyber incident and vulnerability response expenses, net
6.2
6.2
Total adjustments(2)
158.1
158.1
Non-GAAP income from operations
$
264.1
$
268.8
Non-GAAP operating margin
38
%
39
%
(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 2023 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance
Fiscal Year Ending November 30, 2023
(In millions, except per share data)
Low
High
GAAP net income
$
60.2
$
63.9
Adjustments (from previous table)
158.1
158.1
Income tax adjustment(3)
(32.4)
(32.4)
Non-GAAP net income
$
185.9
$
189.6
GAAP diluted earnings per share
$
1.35
$
1.43
Non-GAAP diluted earnings per share
$
4.16
$
4.24
Diluted weighted average shares outstanding
44.7
44.7
2 Tax adjustment is based on a non-GAAP effective tax rate of approximately 20% for Low and 21% for High, calculated as follows:
Non-GAAP income from operations
$
264.1
$
268.8
Other (expense) income
(30.3)
(30.3)
Non-GAAP income from continuing operations before income taxes
233.8
238.5
Non-GAAP net income
185.9
189.6
Tax provision
$
47.9
$
48.9
Non-GAAP tax rate
20
%
21
%
10
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2023 GUIDANCE1
(Unaudited)
Fiscal Year 2023 Adjusted Free Cash Flow Guidance
Fiscal Year Ending November 30, 2023
(In millions)
Low
High
Cash flows from operations (GAAP)
$
173
$
183
Purchases of property and equipment
(5)
(5)
Add back: restructuring payments
7
7
Adjusted free cash flow (non-GAAP)
$
175
$
185
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2023 GUIDANCE1
(Unaudited)
Q3 2023 Revenue Guidance
Three Months Ended
Three Months Ending
August 31, 2022
August 31, 2023
(In millions)
Low
% Change
High
% Change
GAAP revenue
$
151.2
$
171.2
13
%
$
175.2
16
%
Acquisition-related adjustments - revenue
1.8
0.8
(56)
%
0.8
(56)
%
Non-GAAP revenue
$
153.0
$
172.0
12
%
$
176.0
15
%
Q3 2023 Non-GAAP Earnings per Share Guidance
Three Months Ending August 31, 2023
Low
High
GAAP diluted earnings per share
$
0.27
$
0.31
Acquisition-related revenue
0.02
0.02
Acquisition-related expense
0.01
0.01
Restructure expense
0.01
0.01
Stock-based compensation
0.22
0.22
Amortization of acquired intangibles
0.57
0.57
Cyber incident and vulnerability response expenses, net
