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Progress Announces Third Quarter 2021 Financial Results

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·21-min read
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Q3 Revenue and EPS Significantly Ahead of Guidance
Full Year 2021 Guidance Raised Again

BEDFORD, Mass., Sept. 23, 2021 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the leading provider of products to develop, deploy and manage high-impact business applications, today announced financial results for its fiscal third quarter ended August 31, 2021.

Third Quarter 2021 Highlights:

  • Revenue of $147.4 million increased 34% year-over-year on an actual currency basis, and 33% on a constant currency basis.

  • Non-GAAP revenue of $152.6 million increased 38% on an actual currency basis, and 36% on a constant currency basis.

  • Annualized Recurring Revenue (ARR) of $444 million increased 25% year-over-year on a constant currency basis.

  • Operating margin was 31% and Non-GAAP operating margin was 47%.

  • Diluted earnings per share was $0.70 compared to $0.53 in the same quarter last year, an increase of 32%.

  • Non-GAAP diluted earnings per share was $1.18 compared to $0.78 in the same quarter last year, an increase of 51%.

“We’re very pleased to announce Q3 results that significantly beat our previous guidance for revenue and earnings, and we’re raising 2021 guidance for the third time this year,” said Yogesh Gupta, CEO at Progress. “We also announced the signing of a definitive agreement to acquire Kemp, a leader in the Application Experience (‘AX’) space. Kemp meets all our acquisition criteria, fits perfectly with our total growth strategy, and brings a very talented team to Progress.”

Additional financial highlights included(1):

Three Months Ended

GAAP

Non-GAAP

(In thousands, except percentages and per share amounts)

August 31,
2021

August 31,
2020

%
Change

August 31,
2021

August 31,
2020

%
Change

Revenue

$

147,417

$

109,699

34

%

$

152,597

$

110,882

38

%

Income from operations

$

46,046

$

33,193

39

%

$

71,163

$

47,117

51

%

Operating margin

31

%

30

%

100 bps

47

%

42

%

500 bps

Net income

$

30,976

$

23,977

29

%

$

52,577

$

35,605

48

%

Diluted earnings per share

$

0.70

$

0.53

32

%

$

1.18

$

0.78

51

%

Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP)

$

35,224

$

31,112

13

%

$

35,022

$

30,101

16

%

(1)See Legal Notice Regarding Non-GAAP Financial Information

Other fiscal third quarter 2021 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $383.7 million at the end of the quarter.

  • DSO was 54 days compared to 49 days in the fiscal third quarter of 2020 and 44 days in the fiscal second quarter of 2021.

  • On September 21, 2021, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on December 15, 2021 to shareholders of record as of the close of business on December 1, 2021.

  • On September 23, 2021, we announced a definitive agreement to acquire Kemp Technologies, a leader in the Application Experience space, for $258 million in cash.

Anthony Folger, CFO, said: “Q3 results were outstanding across every metric and our confidence in our business is reflected in the increased outlook for 2021. In addition to our strong financial results and outlook, we continued to execute our total growth strategy while remaining disciplined with the acquisition of Kemp, a deal that positions us exceptionally well for 2022 and beyond.”

2021 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2021 and the fiscal fourth quarter ending November 30, 2021:

Updated FY 2021 Guidance
(September 23, 2021)

Prior FY 2021 Guidance
(June 24, 2021)

(In millions, except percentages and per share amounts)

GAAP

Non-GAAP

GAAP

Non-GAAP

Revenue

$520 - $524

$548 - $552

$503 - $509

$529 - $535

Diluted earnings per share

$1.56 - $1.58

$3.68 - $3.70

$1.51 - $1.55

$3.46 - $3.50

Operating margin

21%

40%

21%

39%

Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)

$168 - $172

$168 - $172

$160 - $164

$158 - $162

Effective tax rate

20% - 21%

20% - 21%

20% - 21%

20% - 21%


Q4 2021 Guidance

(In millions, except per share amounts)

GAAP

Non-GAAP

Revenue

$129 - $133

$134 - $138

Diluted earnings per share

$0.13 - $0.15

$0.73 - $0.75

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 $6.8 million on GAAP and non-GAAP revenue, and approximately $0.04 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress’ fiscal Q4 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $0.6 million. The expected positive impact on GAAP and non-GAAP diluted Q4 2021 earnings per share is $0.01. 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 third quarter of 2021 at 5:00 p.m. ET on Thursday, September 23, 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 800-773-2954 or +1 847-413-3731, passcode 50220857. 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 Kemp 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, 2020. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (NASDAQ: PRGS) provides 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:

Michael Micciche

Erica McShane

Progress Software

Progress Software

+1 781 850 8450

+1 781 280 4000

Investor-Relations@progress.com

PR@progress.com



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended

Nine Months Ended

(In thousands, except per share data)

August 31,
2021

August 31,
2020

%
Change

August 31,
2021

August 31,
2020

%
Change

Revenue:

Software licenses

$

51,930

$

27,514

89

%

$

115,354

$

77,806

48

%

Maintenance and services

95,487

82,185

16

%

275,831

241,959

14

%

Total revenue

147,417

109,699

34

%

391,185

319,765

22

%

Costs of revenue:

Cost of software licenses

1,574

1,103

43

%

3,763

3,302

14

%

Cost of maintenance and services

14,895

11,971

24

%

42,887

35,607

20

%

Amortization of acquired intangibles

3,599

1,664

116

%

10,719

4,974

116

%

Total costs of revenue

20,068

14,738

36

%

57,369

43,883

31

%

Gross profit

127,349

94,961

34

%

333,816

275,882

21

%

Operating expenses:

Sales and marketing

29,737

22,186

34

%

88,468

68,100

30

%

Product development

25,616

20,676

24

%

76,579

64,117

19

%

General and administrative

16,451

13,514

22

%

46,335

38,702

20

%

Amortization of acquired intangibles

7,978

4,176

91

%

22,836

12,484

83

%

Restructuring expenses

40

91

(56

)%

1,133

1,826

(38

)%

Acquisition-related expenses

1,481

1,125

32

%

2,721

1,439

89

%

Total operating expenses

81,303

61,768

32

%

238,072

186,668

28

%

Income from operations

46,046

33,193

39

%

95,744

89,214

7

%

Other expense, net

(6,539

)

(2,962

)

(121

)%

(14,409

)

(9,206

)

(57

)%

Income before income taxes

39,507

30,231

31

%

81,335

80,008

2

%

Provision for income taxes

8,531

6,254

36

%

17,841

17,947

(1

)%

Net income

$

30,976

$

23,977

29

%

$

63,494

$

62,061

2

%

Earnings per share:

Basic

$

0.71

$

0.53

34

%

$

1.45

$

1.38

5

%

Diluted

$

0.70

$

0.53

32

%

$

1.43

$

1.37

4

%

Weighted average shares outstanding:

Basic

43,762

45,036

(3

)%

43,896

44,941

(2

)%

Diluted

44,502

45,364

(2

)%

44,542

45,382

(2

)%

Cash dividends declared per common share

$

0.175

$

0.165

6

%

$

0.525

$

0.495

6

%


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

Cost of revenue

$

374

$

322

16

%

$

1,234

$

979

26

%

Sales and marketing

1,424

1,035

38

%

4,679

3,195

46

%

Product development

1,848

1,693

9

%

6,179

5,518

12

%

General and administrative

3,193

2,635

21

%

9,893

7,667

29

%

Total

$

6,839

$

5,685

20

%

$

21,985

$

17,359

27

%



CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)

August 31, 2021

November 30, 2020

Assets

Current assets:

Cash, cash equivalents and short-term investments

$

383,677

$

105,995

Accounts receivable, net

77,031

84,040

Unbilled receivables and contract assets

28,479

24,917

Other current assets

19,710

23,983

Total current assets

508,897

238,935

Property and equipment, net

28,724

29,817

Goodwill and intangible assets, net

670,602

704,473

Right-of-use lease assets

28,286

30,635

Long-term unbilled receivables and contract assets

22,225

17,133

Other assets

16,753

20,789

Total assets

$

1,275,487

$

1,041,782

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable and other current liabilities

$

70,713

$

70,899

Current portion of long-term debt, net

23,886

18,242

Short-term operating lease liabilities

7,269

7,015

Short-term deferred revenue

169,740

166,387

Total current liabilities

271,608

262,543

Long-term debt, net

247,375

364,260

Convertible senior notes, net

291,283

Long-term operating lease liabilities

24,010

26,966

Long-term deferred revenue

33,280

26,908

Other long-term liabilities

11,158

15,092

Shareholders’ equity:

Common stock and additional paid-in capital

343,677

306,244

Retained earnings

53,096

39,769

Total shareholders’ equity

396,773

346,013

Total liabilities and shareholders’ equity

$

1,275,487

$

1,041,782



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended

Nine Months Ended

(In thousands)

August 31,
2021

August 31,
2020

August 31,
2021

August 31,
2020

Cash flows from operating activities:

Net income

$

30,976

$

23,977

$

63,494

$

62,061

Depreciation and amortization

16,383

7,480

43,074

22,721

Stock-based compensation

6,839

5,685

21,985

17,359

Other non-cash adjustments

1,009

655

4,132

8,311

Changes in operating assets and liabilities

(19,983

)

(6,685

)

1,917

(8,367

)

Net cash flows from operating activities

35,224

31,112

134,602

102,085

Capital expenditures

(625

)

(1,662

)

(2,741

)

(3,419

)

Issuances of common stock, net of repurchases

2,947

1,719

(25,753

)

(10,973

)

Dividend payments to shareholders

(7,755

)

(7,452

)

(23,372

)

(22,358

)

Payments of principal on long-term debt

(5,644

)

(3,763

)

(111,669

)

(7,525

)

Proceeds from issuance of Notes, net of issuance costs

349,196

Purchase of capped calls

(43,056

)

Other

(3,130

)

6,520

475

(1,376

)

Net change in cash, cash equivalents and short-term investments

21,017

26,474

277,682

56,434

Cash, cash equivalents and short-term investments, beginning of period

362,660

203,645

105,995

173,685

Cash, cash equivalents and short-term investments, end of period

$

383,677

$

230,119

$

383,677

$

230,119



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

Three Months Ended

% Change

(In thousands, except per share data)

August 31, 2021

August 31, 2020

Non-GAAP

Adjusted revenue:

GAAP revenue

$

147,417

$

109,699

Acquisition-related revenue(1)

5,180

1,183

Non-GAAP revenue

$

152,597

100

%

$

110,882

100

%

38

%

Adjusted income from operations:

GAAP income from operations

$

46,046

31

%

$

33,193

30

%

Amortization of acquired intangibles

11,577

8

%

5,840

5

%

Restructuring expenses and other

40

%

91

%

Stock-based compensation

6,839

4

%

5,685

5

%

Acquisition-related revenue(1) and expenses

6,661

4

%

2,308

2

%

Non-GAAP income from operations

$

71,163

47

%

$

47,117

42

%

51

%

Adjusted net income:

GAAP net income

$

30,976

21

%

$

23,977

22

%

Amortization of acquired intangibles

11,577

8

%

5,840

5

%

Restructuring expenses and other

40

%

91

%

Stock-based compensation

6,839

3

%

5,685

5

%

Acquisition-related revenue(1) and expenses

6,661

4

%

2,308

2

%

Amortization of discount on notes

2,868

2

%

%

Provision for income taxes

(6,384

)

(4

)%

(2,296

)

(2

)%

Non-GAAP net income

$

52,577

34

$

35,605

32

%

48

%

Adjusted diluted earnings per share:

GAAP diluted earnings per share

$

0.70

$

0.53

Amortization of acquired intangibles

0.26

0.12

Stock-based compensation

0.15

0.13

Acquisition-related revenue(1) and expenses

0.15

0.05

Amortization of discount on notes

0.06

Provision for income taxes

(0.14

)

(0.05

)

Non-GAAP diluted earnings per share

$

1.18

$

0.78

51

%

Non-GAAP weighted avg shares outstanding - diluted

44,502

45,364

(2

)%

(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.



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

Nine Months Ended

% Change

(In thousands, except per share data)

August 31, 2021

August 31, 2020

Non-GAAP

Adjusted revenue:

GAAP revenue

$

391,185

$

319,765

Acquisition-related revenue(1)

22,394

7,384

Non-GAAP revenue

$

413,579

100

%

$

327,149

100

%

26

%

Adjusted income from operations:

GAAP income from operations

$

95,744

24

%

$

89,214

28

%

Amortization of acquired intangibles

33,555

8

%

17,458

5

%

Restructuring expenses and other

1,133

%

1,826

%

Stock-based compensation

21,985

5

%

17,359

5

%

Acquisition-related revenue(1) and expenses

25,115

6

%

8,823

3

%

Non-GAAP income from operations

$

177,532

43

%

$

134,680

41

%

32

%

Adjusted net income:

GAAP net income

$

63,494

16

%

$

62,061

19

%

Amortization of acquired intangibles

33,555

8

%

17,458

5

%

Restructuring expenses and other

1,133

%

1,826

%

Stock-based compensation

21,985

5

%

17,359

5

%

Acquisition-related revenue(1) and expenses

25,115

6

%

8,823

3

%

Amortization of discount on notes

4,348

1

%

%

Provision for income taxes

(18,036

)

(4

)%

(8,563

)

(2

)%

Non-GAAP net income

$

131,594

32

%

$

98,964

30

%

33

%

Adjusted diluted earnings per share:

GAAP diluted earnings per share

$

1.43

$

1.37

Amortization of acquired intangibles

0.75

0.38

Restructuring expenses and other

0.03

0.04

Stock-based compensation

0.48

0.39

Acquisition-related revenue(1) and expenses

0.56

0.19

Amortization of discount on notes

0.10

Provision for income taxes

(0.40

)

(0.19

)

Non-GAAP diluted earnings per share

$

2.95

$

2.18

35

%

Non-GAAP weighted avg shares outstanding - diluted

44,542

45,382

(2

)%

(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.



OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)

Quarter to Date Adjusted Free Cash Flow

(In thousands)

Q3 2021

Q3 2020

% Change

Cash flows from operations

$

35,224

$

31,112

13

%

Purchases of property and equipment

(625

)

(1,662

)

(62

)%

Free cash flow

34,599

29,450

17

%

Add back: restructuring payments

423

651

(35

)%

Adjusted free cash flow

$

35,022

$

30,101

16

%


Year to Date Adjusted Free Cash Flow

(In thousands)

Q3 2021

Q3 2020

% Change

Cash flows from operations

$

134,602

$

102,085

32

%

Purchases of property and equipment

(2,741

)

(3,419

)

(20

)%

Free cash flow

131,861

98,666

34

%

Add back: restructuring payments

5,087

3,131

62

%

Adjusted free cash flow

$

136,948

$

101,797

35

%



RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)

Fiscal Year 2021 Updated Revenue Guidance

Fiscal Year Ended

Fiscal Year Ending

November 30, 2020

November 30, 2021

(In millions)

Low

% Change

High

% Change

GAAP revenue

$

442.1

$

520.4

18

%

$

524.4

19

%

Acquisition-related adjustments - revenue(1)

14.1

27.6

96

%

27.6

96

%

Non-GAAP revenue

$

456.2

$

548.0

20

%

$

552.0

21

%

(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 Ipswitch, Chef, and Kemp.


Fiscal Year 2021 Updated Non-GAAP Operating Margin Guidance

Fiscal Year Ending November 30, 2021

(In millions)

Low

High

GAAP income from operations

$

108.9

$

110.0

GAAP operating margins

21

%

21

%

Acquisition-related revenue

27.6

27.6

Acquisition-related expense

3.4

3.4

Restructuring expense

4.8

4.8

Stock-based compensation

28.9

28.9

Amortization of acquired intangibles

46.9

46.9

Total adjustments(2)

111.6

111.6

Non-GAAP income from operations

$

220.5

$

221.6

Non-GAAP operating margin

40

%

40

%

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


Fiscal Year 2021 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance

Fiscal Year Ending November 30, 2021

(In millions, except per share data)

Low

High

GAAP net income

$

69.7

$

70.6

Adjustments (from previous table)

111.6

111.6

Amortization of discount on notes

7.2

7.2

Income tax adjustment(3)

(24.4

)

(24.3

)

Non-GAAP net income

$

164.1

$

165.1

GAAP diluted earnings per share

$

1.56

$

1.58

Non-GAAP diluted earnings per share

$

3.68

$

3.70

Diluted weighted average shares outstanding

44.6

44.6

(3)Tax adjustment is based on a non-GAAP effective tax rate of approximately 21% for Low and 20% for High, calculated as follows:

Non-GAAP income from operations

$

220.5

$

221.6

Other (expense) income

(14.0

)

(14.0

)

Non-GAAP income from continuing operations before income taxes

206.5

207.6

Non-GAAP net income

164.1

165.1

Tax provision

$

42.4

$

42.5

Non-GAAP tax rate

21

%

20

%



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)

Low

High

Cash flows from operations (GAAP)

$

168

$

172

Purchases of property and equipment

(5

)

(5

)

Add back: restructuring payments

5

5

Adjusted free cash flow (non-GAAP)

$

168

$

172



RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q4 2021 GUIDANCE
(Unaudited)

Q4 2021 Revenue Guidance

Three Months Ended

Three Months Ending

November 30, 2020

November 30, 2021

(In millions)

Low

% Change

High

% Change

GAAP revenue

$

122.4

$

129.2

6

%

$

133.2

9

%

Acquisition-related adjustments - revenue(1)

6.7

5.2

(22

)%

5.2

(22

)%

Non-GAAP revenue

$

129.1

$

134.4

4

%

$

138.4

7

%

(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 Ipswitch, Chef, and Kemp.


Q4 2021 Non-GAAP Earnings per Share Guidance

Three Months Ending November 30, 2021

Low

High

GAAP diluted earnings per share

$

0.13

$

0.15

Acquisition-related revenue

0.12

0.12

Acquisition-related expense

0.02

0.02

Restructuring expense

0.08

0.08

Stock-based compensation

0.15

0.15

Amortization of acquired intangibles

0.30

0.30

Total adjustments(2)

0.67

0.67

Amortization of discount on notes

0.06

0.06

Income tax adjustment

(0.13

)

(0.13

)

Non-GAAP diluted earnings per share

$

0.73

$

0.75

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


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