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Progress
Software Corporation (NASDAQ: PRGS), a global software company that
simplifies and enables the development, deployment and management of
business applications, announced today results for its fiscal fourth
quarter and fiscal year ended November 30, 2012.
As of the fiscal fourth quarter of 2012, the results of all non-Core
product lines are reported in discontinued operations because those
product lines have been divested or are under agreement to be divested,
and have also met the accounting criteria for such classification.
Continuing operations include the results of the Core product lines and
principally general and administrative costs related to the non-Core
product lines, which do not qualify for discontinued operations.
References to the Core product lines or Core segment include Progress®
OpenEdge® platform, DataDirect® Connect products and the Decision
Analytics portfolio (comprising Progress Apama®, Progress Corticon® BRMS
and the Progress Control Tower®). References to the non-Core product
lines include Actional, Artix, DataXtend, FuseSource, ObjectStore,
Orbacus, Orbix, Savvion, Shadow and Sonic.
Revenue from continued and discontinued operations was $121.7 million in
the fiscal fourth quarter of 2012, compared to $136.3 million in the
same quarter last year. Non-GAAP EPS was $0.42 in the fiscal fourth
quarter of 2012, compared to $0.34 in the same quarter last year.
Consolidated results in the fiscal fourth quarter of 2012 were:
Revenue was $91.3 million, essentially flat on a constant currency
basis year over year, or down 2% using actual exchange rates, and
excludes $30.5 million and $42.8 million of revenue from discontinued
operations in the current quarter and same quarter last year,
respectively;
Income from operations was $16.9 million compared to $28.4 million in
the same quarter last year;
Income from continuing operations was $11.6 million compared to $17.2
million in the same quarter last year;
Diluted earnings per share from continuing operations was $0.18
compared to $0.27 in the same quarter last year; and
Non-GAAP diluted earnings per share from continuing operations was
$0.23 compared to $0.36 in the same quarter last year.
Results for the Core segment in the fiscal fourth quarter of 2012 were:
Core revenue was $91.3 million, essentially flat to the same quarter
last year on a constant currency basis, or a decrease of 2% using
actual exchange rates;
Core income from operations was $27.2 million compared to $42.7
million in the same quarter last year; and
Operating margin for the Core segment was 30%.
Phil Pead, President and Chief Executive Officer of Progress Software,
said, "Overall, we are pleased with our performance in the fiscal fourth
quarter. During the quarter we remained focused on executing on our
strategic plan and now enter 2013 with substantially all non-Core assets
divested. I am also pleased that we have hired Chris Perkins, who will
start as Chief Financial Officer on February 1, 2013."
Mr. Pead continued, "Our focus for 2013 is to improve our operating
margins, build the foundation for future revenue growth by expanding the
functionality of our existing solutions and begin to leverage our Core
competencies to enable application development using our platform, data
integration and connectivity and data analytics in the Cloud."
Other fiscal fourth quarter 2012 results included the following:
Cash flows from operations were $28.4 million, an increase from $8.2
million in the same quarter in fiscal year 2011;
Net cash received from the divestitures of FuseSource and Shadow was
$46.6 million;
The company repurchased 4.5 million shares of its common stock for
$88.4 million as part of its previously announced and implemented
10b5-1 plan to repurchase $250.0 million by June 30, 2013;
Cash, cash equivalents and short-term investments increased to $355.2
million from $261.4 million at the end of the fiscal fourth quarter of
2011;
DSO from continuing operations was 70 days, compared to DSO of 73 days
in the fiscal fourth quarter of 2011; and
Headcount was 1,395, down 7% from the end of last quarter and down 20%
from one year ago.
Business Outlook
Progress Software provides the following guidance for the fiscal first
quarter ending February 28, 2013:
On a constant currency basis, revenue growth is expected to be
essentially flat compared to the fiscal first quarter of 2012; and
Non-GAAP operating margin is expected to be in the range of 20% to 24%.
The non-GAAP operating margin guidance excludes the items we
traditionally exclude from our non-GAAP reporting metrics: amortization
of intangible assets of $0.5 million to $0.6 million and stock-based
compensation of $5.5 million to $6.4 million, for a GAAP operating
margin in the range of 12% to 16%.
Conference Call
The Progress Software quarterly investor conference call to review its
fiscal fourth quarter and fiscal year end of 2012 will be broadcast live
at 5:00 p.m. ET on Thursday, January 3, 2013 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
1-888-715-1397, pass code 4194275. The conference call will include only
brief comments followed by questions and answers. An archived version of
the conference call and supporting materials will be available on the
Progress Software website within the investor
relations section after the live conference call.
Legal Notice Regarding Non-GAAP Financial Information
Progress Software 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 Software 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. Management uses these
non-GAAP results to compare the company's performance to that of prior
periods for analysis of trends and for budget and planning purposes. A
reconciliation of non-GAAP adjustments to the company's GAAP financial
results is included in the tables below. Additional information
regarding the company's non-GAAP financial information is contained in
the company's Current Report on Form 8-K filed with the Securities and
Exchange Commission in connection with this press release, which is
available on the Progress website at www.progress.com
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's
strategic plan and the expected timing for completion; the components of
that plan including operational restructuring, product divestitures and
return of capital to shareholders; acquisitions; future revenue growth,
operating margin and cost savings; product development, strategic
partnering and marketing initiatives; the growth rates of certain
markets; and other statements regarding the future operation, direction
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:
(1) Progress's ability to realize the expected benefits and cost savings
from its strategic plan; (2) market acceptance of Progress's strategic
plan and product development initiatives; (3) disruption caused by
implementation of the strategic plan and related restructuring and
divestitures on relationships with employees, customers, ISVs, other
channel partners, vendors and other business partners; (4) pricing
pressures and the competitive environment in the software industry and
Platform-as-a-Service market; (5) Progress's ability to complete the
proposed product divestitures in a timely manner, at favorable prices or
at all; (6) market conditions, timing constraints and other factors that
could impact Progress's ability to complete the proposed share
repurchases in fiscal 2013; (7) the accuracy of Progress's methodology
for allocating non-dedicated costs and expenses (including general and
administrative expenses) to its Core and non-Core segments; (8)
Progress's ability to make technology acquisitions and to realize the
expected benefits and anticipated synergies from such acquisitions; (9)
the continuing weakness in the U.S. and international economies, which
could result in fewer sales of Progress's products and/or delays in the
implementation of Progress's strategic plan and may otherwise harm
Progress's business; (10) business and consumer use of the Internet and
the continuing adoption of Cloud technologies; (11) the receipt and
shipment of new orders; (12) Progress's ability to expand its
relationships with channel partners and to manage the interaction of
channel partners with its direct sales force; (13) the timely release of
enhancements to Progress's products and customer acceptance of new
products; (14) the positioning of Progress's products in its existing
and new markets; (15) variations in the demand for professional services
and technical support; (16) Progress's ability to penetrate
international markets and manage its international operations; and (17)
changes in exchange rates. For further information regarding risks and
uncertainties associated with Progress's business, please refer to
Progress's filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the fiscal year ended
November 30, 2011, as amended, and Quarterly Reports on Form 10-Q for
the fiscal quarters ended February 29, 2012, May 31, 2012 and August 31,
2012. Progress undertakes no obligation to update any forward-looking
statements, which speak only as of the date of this press release.
Progress Software Corporation
Progress Software Corporation (NASDAQ: PRGS) is a global software
company that simplifies and enables the development, deployment and
management of business applications on-premise or on any Cloud, on any
platform and on any device with minimal IT complexity and low total cost
of ownership. Progress Software can be reached at www.progress.com
or 1-781-280-4000.
Apama, Corticon, DataDirect Connect, OpenEdge, the Progress Control
Tower, Artix, Orbix and Orbacus are trademarks or registered trademarks
of Progress Software Corporation or one of its subsidiaries or
affiliates in the U.S. and other countries. Any other trademarks
contained herein are the property of their respective owners.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Fiscal Year Ended
November
November
November
November
(In thousands, except per share data)
30, 2012
30, 2011
% Change
30, 2012
30, 2011
% Change
Revenue:
Software licenses
$
35,726
$
34,225
4
%
$
113,270
$
125,966
(10
)%
Maintenance and services
55,545
59,319
(6
)%
221,935
234,738
(5
)%
Total revenue
91,271
93,544
(2
)%
335,205
360,704
(7
)%
Costs of revenue:
Cost of software licenses
1,777
1,175
51
%
6,112
5,430
13
%
Cost of maintenance and services
9,020
9,324
(3
)%
36,192
37,238
(3
)%
Amortization of acquired intangibles
290
509
(43
)%
1,259
2,600
(52
)%
Total costs of revenue
11,087
11,008
1
%
43,563
45,268
(4
)%
Gross profit
80,184
82,536
(3
)%
291,642
315,436
(8
)%
Operating expenses:
Sales and marketing
35,414
26,787
32
%
117,855
102,618
15
%
Product development
13,415
11,023
22
%
53,017
44,876
18
%
General and administrative
14,216
16,120
(12
)%
62,053
61,816
—
Amortization of acquired intangibles
234
153
53
%
962
966
—
Restructuring expenses
(2
)
(505
)
100
%
6,885
3,383
104
%
Acquisition-related expenses
—
536
(100
)%
215
536
(60
)%
Total operating expenses
63,277
54,114
17
%
240,987
214,195
13
%
Income from operations
16,907
28,422
(41
)%
50,655
101,241
(50
)%
Other (expense) income, net
(680
)
85
(900
)%
196
(519
)
138
%
Income from continuing operations before income taxes
16,227
28,507
(43
)%
50,851
100,722
(50
)%
Provision for income taxes
4,645
11,286
(59
)%
17,440
34,380
(49
)%
Income from continuing operations
11,582
17,221
(33
)%
33,411
66,342
(50
)%
Income (loss) from discontinued operations, net
24,443
(5,046
)
584
%
14,033
(6,713
)
309
%
Net income
$
36,025
$
12,175
196
%
$
47,444
$
59,629
(20
)%
Earnings per share:
Basic:
Continuing operations
$
0.18
$
0.27
(33
)%
$
0.53
$
1.01
(48
)%
Discontinued operations
0.39
(0.08
)
588
%
0.22
(0.10
)
320
%
Net income per share
$
0.57
$
0.19
200
%
0.75
$
0.91
(18
)%
Diluted
Continuing operations
$
0.18
$
0.27
(33
)%
$
0.52
$
0.98
(47
)%
Discontinued operations
0.38
(0.08
)
575
%
0.22
(0.10
)
320
%
Net income per share
$
0.57
$
0.19
200
%
$
0.74
$
0.88
(16
)%
Weighted average shares outstanding:
Basic
62,859
63,074
—
62,881
65,705
(4
)%
Diluted
63,576
63,973
(1
)%
63,741
67,540
(6
)%
CONDENSED CONSOLIDATED BALANCE SHEETS
November 30,
November 30,
(In thousands)
2012
2011
Assets
Current assets:
Cash, cash equivalents and short-term investments
$
355,217
$
261,416
Accounts receivable, net
70,793
110,927
Other current assets
32,779
35,568
Assets held for sale
68,029
—
Total current assets
526,818
407,911
Property and equipment, net
63,071
66,206
Goodwill and intangible assets, net
231,229
320,619
Other assets
63,859
69,527
Total assets
$
884,977
$
864,263
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and other current liabilities
$
110,944
$
80,417
Short-term deferred revenue
103,925
145,727
Liabilities held for sale
25,285
—
Total current liabilities
240,154
226,144
Long-term deferred revenue
2,817
6,619
Other long-term liabilities
3,607
6,390
Shareholders’ equity:
Common stock and additional paid-in capital
300,333
309,221
Retained earnings
338,066
315,889
Total shareholders’ equity
638,399
625,110
Total liabilities and shareholders’ equity
$
884,977
$
864,263
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Fiscal Year Ended
November 30,
November 30,
November 30,
November 30,
(In thousands)
2012
2011
2012
2011
Cash flows from operating activities:
Net income
$
36,025
$
12,175
$
47,444
$
59,629
Depreciation and amortization
5,597
10,445
30,966
35,078
Stock-based compensation
6,729
7,244
28,233
25,999
Net gains and impairment on sales of dispositions and assets held
for sale
(36,504
)
—
(36,504
)
—
Other non-cash adjustments
(896
)
6,293
866
4,472
Changes in operating assets and liabilities
17,450
(27,991
)
33,110
1,116
Net cash flows from operating activities
28,401
8,166
104,115
126,294
Capital expenditures
(1,129
)
(3,091
)
(7,735
)
(17,047
)
Redemptions and sales of auction-rate-securities
6,030
—
8,955
6,300
Issuances of common stock, net of repurchases
(76,392
)
(56,941
)
(52,108
)
(150,337
)
Payments for acquisitions, net of cash acquired
—
(22,900
)
—
(22,900
)
Proceeds from divestitures, net of direct costs
46,590
—
46,590
—
Other
(490
)
(10,361
)
(6,016
)
(3,290
)
Net change in cash, cash equivalents and short-term investments
3,010
(85,127
)
93,801
(60,980
)
Cash, cash equivalents and short-term investments, beginning of
period
352,207
346,543
261,416
322,396
Cash, cash equivalents and short-term investments, end of period
$
355,217
$
261,416
$
355,217
$
261,416
RESULTS OF OPERATIONS BY SEGMENT
Three Months Ended
Fiscal Year Ended
November 30,
November 30,
November 30,
November 30,
(In thousands)
2012
2011
2012
2011
Revenue:
Core segment
$
91,271
$
93,544
$
335,205
$
360,704
Non-Core segment
—
—
—
—
Total revenue
$
91,271
$
93,544
$
335,205
$
360,704
Income (loss) from operations:
Core segment
$
27,157
$
42,708
$
111,276
$
161,900
Non-Core segment
(5,197
)
(8,351
)
(27,030
)
(32,306
)
Unallocated items (1)
(5,053
)
(5,935
)
(33,591
)
(28,353
)
Total income from operations
$
16,907
$
28,422
$
50,655
$
101,241
(1) The following items are not allocated to our segments, as we manage
and report our business using these items on a consolidated company
basis only: stock-based compensation, amortization of acquired
intangibles, transition expenses, restructuring expenses,
acquisition-related expenses, litigation settlement and proxy-related
costs.
SUPPLEMENTAL INFORMATION
Revenue by Type
(In thousands)
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
FY 2012
FY 2011
License
$
34,225
$
31,889
$
21,813
$
23,842
$
35,725
$
113,269
$
125,967
Maintenance
54,652
51,723
52,883
51,860
52,381
208,847
217,371
Professional services
4,667
3,601
3,708
2,615
3,165
13,089
17,366
Total revenue
$
93,544
$
87,213
$
78,404
$
78,317
$
91,271
$
335,205
$
360,704
Revenue by Region
(In thousands)
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
FY 2012
FY 2011
North America
$
39,553
$
37,590
$
32,900
$
35,665
$
40,219
$
146,374
$
146,572
EMEA
38,182
34,698
32,447
29,782
34,224
131,151
153,206
Latin America
8,975
7,979
7,539
7,234
8,655
31,407
34,349
Asia Pacific
6,834
6,946
5,518
5,636
8,173
26,273
26,577
Total revenue
$
93,544
$
87,213
$
78,404
$
78,317
$
91,271
$
335,205
$
360,704
Revenue Included in Net Income
(In thousands)
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
FY 2012
FY 2011
Continuing operations
$
93,544
$
87,213
$
78,404
$
78,317
$
91,271
$
335,205
$
360,704
Discontinued operations
42,796
37,213
36,192
33,664
30,451
137,520
172,891
Total
$
136,340
$
124,426
$
114,596
$
111,981
$
121,722
$
472,725
$
533,595
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
Reconciliation of GAAP to non-GAAP Income from Operations and
Operating Margin
Three Months Ended
Fiscal Year Ended
November 30,
November 30,
November 30,
November 30,
(In thousands, except per share data)
2012
2011
2012
2011
GAAP income from operations
$
16,907
$
28,422
$
50,655
$
101,241
GAAP operating margin
19
%
30
%
15
%
28
%
Amortization of acquired intangibles
524
662
2,221
3,566
Stock-based compensation (1)
4,531
5,181
20,111
20,108
Transition expenses
—
61
—
760
Restructuring expenses
(2
)
(505
)
6,885
3,383
Acquisition-related expenses
—
536
215
536
Litigation settlement
—
—
900
—
Proxy contest-related costs
—
—
3,259
—
Total non-GAAP adjustments
5,053
5,935
33,591
28,353
Non-GAAP income from operations
$
21,960
$
34,357
$
84,246
$
129,594
Non-GAAP operating margin
24
%
37
%
25
%
36
%
(1) Stock-based compensation is included in the GAAP statements of
income, as follows:
Cost of revenue
$
174
$
316
$
898
$
760
Sales and marketing
639
882
4,280
3,258
Product development
981
1,022
3,950
3,202
General and administrative
2,737
2,961
10,983
12,888
Stock-based compensation from continuing operations
$
4,531
$
5,181
$
20,111
$
20,108
Reconciliation of GAAP to non-GAAP Diluted Earnings per Share
from Continuing Operations
Three Months Ended
Fiscal Year Ended
November 30,
November 30,
November 30,
November 30,
(In thousands, except per share data)
2012
2011
2012
2011
GAAP income from continuing operations
$
11,582
$
17,221
$
33,411
$
66,342
Amortization of acquired intangibles
524
662
2,221
3,566
Stock-based compensation
4,531
5,181
20,111
20,108
Transition expenses
—
61
—
760
Restructuring expenses
(2
)
(505
)
6,885
3,383
Acquisition-related expenses
—
536
215
536
Litigation settlement
—
—
900
—
Proxy contest-related costs
—
—
3,259
—
Income tax adjustment
(2,094
)
(84
)
(9,299
)
(8,229
)
Total non-GAAP adjustments
2,959
5,851
24,292
20,124
Non-GAAP income from continuing operations
$
14,541
$
23,072
$
57,703
$
86,466
GAAP diluted earnings per share from continuing operations
$
0.18
$
0.27
$
0.52
$
0.98
Total non-GAAP adjustments (from above)
0.05
0.09
0.38
0.30
Non-GAAP diluted earnings per share from continuing operations
$
0.23
$
0.36
$
0.91
$
1.28
Diluted weighted average shares outstanding
63,576
63,973
63,741
67,540
Reconciliation of GAAP to non-GAAP Diluted Earnings per Share
Three Months Ended
Fiscal Year Ended
November 30,
November 30,
November 30,
November 30,
(In thousands, except per share data)
2012
2011
2012
2011
GAAP net income
$
36,025
$
12,175
$
47,444
$
59,629
Amortization of acquired intangibles
2,725
5,682
19,090
23,746
Stock-based compensation (1)
6,729
7,244
28,233
25,999
Transition expenses
—
109
—
1,163
Restructuring expenses
4,036
—
17,742
4,627
Acquisition-related expenses
—
536
215
536
Litigation settlement
—
—
900
—
Proxy contest-related costs
—
—
3,259
—
Net gains and loss on sales of dispositions and assets held for sale
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With the help of cloud computing, some brick-and-mortar stores are combating showrooming, a trend where consu...
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SYS-CON Events announced today that Wowrack will exhibit at SYS-CON's 12th International Cloud Expo, which will take place on June 10–13, 2013, at the Javits Center in New York City, New York.
Wowrack’s core expertise lies in high-availability Private and Public Cloud IaaS Hosti...
Many have heard of OAuth but are unsure of how it might apply to their business.
In his session at the 12th International Cloud Expo, Alistair Farquharson, CTO of SOA Software, will describe how OAuth can be used to facilitate certain business models and simplify the sharing of...
“Cloud has everything to do with what has happened with Big Data,” explained Jason Deck, Director of Strategic Alliances at Logicworks, in this exclusive Q&A with Cloud Expo Conference Chair Jeremy Geelan. “Big Data doesn’t exist in its easily accessible way without cloud. From r...
SYS-CON Events announced today that nfina Technologies, a provider of highly reliable cloud server products, will exhibit at SYS-CON's 12th International Cloud Expo, which will take place on June 10–13, 2013, at the Javits Center in New York City, New York.
nfina Technologies de...
It turns out cloud computing could be the most useful sales associate on the floor, and you won't have to worry about it stealing sales leads, ala “Glengarry Glen Ross.”
With the help of cloud computing, some brick-and-mortar stores are combating showrooming, a trend where consu...
