Investor Contact: Press Contact:Michael Micciche Jeff YoungProgress Software Progress Software+1 781 850 8450 +1 781 280 4000Investor-Relations@progress.com PR@progress.com CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended(In thousands, except per share data)February 28, 2025 February 29, 2024 % ChangeRevenue: Software licenses$58,445 $64,100 (9)%Maintenance, SaaS, and professional services 179,570 120,585 49%Total revenue 238,015 184,685 29%Costs of revenue: Cost of software licenses 2,925 2,731 7%Cost of maintenance, SaaS, and professional services 32,884 22,219 48%Amortization of acquired intangibles 10,422 7,859 33%Total costs of revenue 46,231 32,809 41%Gross profit 191,784 151,876 26%Operating expenses: Sales and marketing 51,296 39,111 31%Product development 46,375 34,988 33%General and administrative 25,623 21,344 20%Amortization of acquired intangibles 25,808 17,389 48%Cyber vulnerability response expenses, net 737 987 (25)%Restructuring expenses 7,029 2,349 199%Acquisition-related expenses 2,490 702 255%Total operating expenses 159,358 116,870 36%Income from operations 32,426 35,006 (7)%Other expense, net (19,124) (7,399) 158%Income before income taxes 13,302 27,607 (52)%Provision for income taxes 2,356 4,968 (53)%Net income$10,946 $22,639 (52)% Earnings per share: Basic$0.25 $0.52 (52)%Diluted$0.24 $0.51 (53)%Weighted average shares outstanding: Basic 43,256 43,802 (1)%Diluted 44,887 44,826 —% Cash dividends declared per common share$— $0.175 (100)% Stock-based compensation is included in the condensed consolidated statements of operations, as follows:Cost of revenue$1,195 $986 21%Sales and marketing 3,032 2,312 31%Product development 4,410 3,665 20%General and administrative 6,046 5,501 10%Total$14,683 $12,464 18% CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands)February 28, 2025 November 30, 2024Assets Current assets: Cash and cash equivalents$124,161 $118,077 Accounts receivable, net 126,366 163,575 Unbilled receivables 35,454 34,672 Other current assets 54,694 52,489 Total current assets 340,675 368,813 Property and equipment, net 13,233 13,746 Goodwill and intangible assets, net 1,980,181 2,015,748 Right-of-use lease assets 28,308 30,894 Long-term unbilled receivables 30,416 28,893 Other assets 69,605 68,872 Total assets$2,462,418 $2,526,966 Liabilities and shareholders’ equity Current liabilities: Accounts payable and other current liabilities$90,768 $113,801 Short-term operating lease liabilities 8,975 9,202 Short-term deferred revenue, net 328,798 332,142 Total current liabilities 428,541 455,145 Long-term debt, net 700,000 730,000 Convertible senior notes, net 797,277 796,267 Long-term operating lease liabilities 24,260 26,259 Long-term deferred revenue, net 71,508 72,270 Other long-term liabilities 8,985 8,237 Stockholders’ equity: Common stock and additional paid-in capital 353,469 354,592 Retained earnings 78,378 84,196 Total stockholders’ equity 431,847 438,788 Total liabilities and stockholders’ equity$2,462,418 $2,526,966 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Three Months Ended(In thousands)February 28, 2025 February 29, 2024Cash flows from operating activities: Net income$10,946 $22,639 Depreciation and amortization 39,209 27,544 Stock-based compensation 14,683 12,464 Other non-cash adjustments 3,070 1,327 Changes in operating assets and liabilities 1,039 6,530 Net cash flows from operating activities 68,947 70,504 Capital expenditures (1,290) (309)Repurchases of common stock, net of issuances (23,870) (14,917)Dividend equivalent and dividend payments to stockholders (359) (8,171)Payments for acquisitions (1,195) — Principal payment on term loan and repayment of revolving line of credit (30,000) (33,437)Other (6,149) (7,406)Net change in cash and cash equivalents 6,084 6,264 Cash and cash equivalents, beginning of period 118,077 126,958 Cash and cash equivalents, end of period$124,161 $133,222 RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES(Unaudited) Three Months Ended(In thousands, except per share data)February 28, 2025 February 29, 2024Adjusted income from operations: GAAP income from operations$32,426 $35,006 Amortization of acquired intangibles 36,230 25,248 Stock-based compensation 14,683 12,464 Restructuring expenses 7,029 2,349 Acquisition-related expenses 2,490 702 Cyber vulnerability response expenses, net 737 987 Non-GAAP income from operations$93,595 $76,756 Adjusted net income: GAAP net income$10,946 $22,639 Amortization of acquired intangibles 36,230 25,248 Stock-based compensation 14,683 12,464 Restructuring expenses 7,029 2,349 Acquisition-related expenses 2,490 702 Cyber vulnerability response expenses, net 737 987 Provision for income taxes (13,120) (8,461)Non-GAAP net income$58,995 $55,928 Adjusted diluted earnings per share: GAAP diluted earnings per share$0.24 $0.51 Amortization of acquired intangibles 0.80 0.56 Stock-based compensation 0.32 0.28 Restructuring expenses 0.16 0.05 Acquisition-related expenses 0.06 0.02 Cyber vulnerability response expenses, net 0.02 0.02 Provision for income taxes (0.29) (0.19)Non-GAAP diluted earnings per share$1.31 $1.25 Non-GAAP weighted avg shares outstanding - diluted 44,887 44,826 OTHER NON-GAAP FINANCIAL MEASURES(Unaudited) Adjusted Free Cash Flow and Unlevered Free Cash Flow Three Months Ended(In thousands)February 28, 2025 February 29, 2024 % ChangeCash flows from operations$68,947 $70,504 (2)%Purchases of property and equipment (1,290) (309) 317%Free cash flow 67,657 70,195 (4)%Add back: restructuring payments 5,554 2,009 176%Adjusted free cash flow$73,211 $72,204 1%Add back: tax-effected interest expense 14,743 5,875 151%Unlevered free cash flow$87,954 $78,079 13% RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE(Unaudited) Fiscal Year 2025 Updated Non-GAAP Operating Margin Guidance Fiscal Year Ending November 30, 2025(In millions)Low HighGAAP income from operations$137.2 $145.7 GAAP operating margins 14% 15%Acquisition-related expense 6.0 6.0 Restructuring expense 9.4 9.4 Stock-based compensation 62.8 62.8 Amortization of acquired intangibles 144.9 144.9 Cyber vulnerability response expenses, net 4.2 4.2 Total adjustments(1) 227.3 227.3 Non-GAAP income from operations$364.5 $373.0 Non-GAAP operating margin 38% 38%(1)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and restructuring expenses.
The final amounts will not be available until the Company's internal procedures and reviews are completed. Fiscal Year 2025 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance Fiscal Year Ending November 30, 2025(In millions, except per share data)Low HighGAAP net income$53.2 $60.9 Adjustments (from previous table) 227.3 227.3 Income tax adjustment(2) (46.1) (46.2)Non-GAAP net income$234.4 $242.0 GAAP diluted earnings per share$1.19 $1.35 Non-GAAP diluted earnings per share$5.25 $5.37 Diluted weighted average shares outstanding 44.7 45.1 2 Tax adjustment is based on a non-GAAP effective tax rate of approximately 20%, calculated as follows: Fiscal Year Ending November 30, 2025 Low HighNon-GAAP income from operations $364.5 $373.0 Other (expense) income (71.5) (70.5)Non-GAAP income from continuing operations before income taxes 293.0 302.5 Non-GAAP net income 234.4 242.0 Tax provision $58.6 $60.5 Non-GAAP tax rate 20% 20% RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2025 GUIDANCE(Unaudited) Fiscal Year 2025 Adjusted Free Cash Flow and Unlevered Free Cash Flow Guidance Fiscal Year Ending November 30, 2025(In millions)Low HighCash flows from operations (GAAP)$216 $228 Purchases of property and equipment (7) (7)Add back: restructuring payments 17 17 Adjusted free cash flow (non-GAAP) 226 238 Add back: tax-effected interest expense 57 56 Unlevered free cash flow (non-GAAP)$283 $294 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q2 2025 GUIDANCE(Unaudited) Q2 2025 Non-GAAP Earnings per Share Guidance Three Months Ending May 31, 2025 Low HighGAAP diluted earnings per share$0.24 $0.30 Acquisition-related expense 0.04 0.04 Restructuring expense 0.03 0.03 Stock-based compensation 0.38 0.38 Amortization of acquired intangibles 0.83 0.83 Cyber vulnerability response expenses, net 0.01 0.01 Total adjustments(1) 1.29 1.29 Income tax adjustment (0.25) (0.25)Non-GAAP diluted earnings per share$1.28 $1.34 (1)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from ShareFile and restructuring expenses.
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 the results of inquiries, investigations and legal claims regarding the MOVEit Vulnerability remain uncertain, while the ultimate resolution of these matters could result in losses that may be material to our financial results for a particular period; and (v) future acquisitions may not be successful or may involve unanticipated costs or other integration issues that could disrupt our existing operations; and (vi) expected synergies and benefits of the ShareFile acquisition may not be realized which could negatively impact our future results of operations and financial condition.
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