[January 16, 2017] |
|
Progress Reports 2016 Fiscal Fourth Quarter and Year End Results
Progress (NASDAQ: PRGS) today announced results for its fiscal fourth
quarter and fiscal year ended November 30, 2016.
Revenue was $117.7 million during the quarter compared to $112.7 million
in the same quarter last year, a year over year increase of 4% on an
actual currency basis and 5% on a constant currency basis. On a non-GAAP
basis, revenue was $118.0 million compared to $115.4 million in the same
quarter last year, an increase of 2% on an actual currency basis and 3%
on a constant currency basis.
On a GAAP basis, diluted loss per share was $1.52 (reflecting the
impairment charge described below) compared to a diluted loss per share
of $0.19 in the same quarter last year. On a non-GAAP basis, diluted
earnings per share was $0.62 compared to $0.53 in the same quarter last
year.
Additional financial highlights included:
On a GAAP basis in the fiscal fourth quarter of 2016:
-
Revenue was $117.7 million compared to $112.7 million in the same
quarter in fiscal year 2015;
-
Progress recorded a non-cash impairment charge of $92.0 million, or a
diluted loss per share of $1.89, as a result of reduced future growth
expectations within its Application Development & Deployment segment
related to the Telerik business;
-
Loss from operations was $62.4 million (reflecting the impairment
charge described above) compared to income from operations of $20.1
million in the same quarter last year;
-
Net loss was $73.8 million (reflecting the impairment charge described
above) compared to a net loss of $9.5 million in the same quarter last
year;
-
Diluted loss per share was $1.52 (reflecting the impairment charge
described above) compared to a diluted loss per share of $0.19 in the
same quarter last year; and
-
Cash from operations was $33.9 million compared to $27.6 million in
the same quarter last year.
On a non-GAAP basis in the fiscal fourth quarter of 2016:
-
Revenue was $118.0 million compared to $115.4 million in the same
quarter last year;
-
Income from operations was $42.6 million compared to $40.5 million in
the same quarter last year;
-
Operating margin was 36% compared to 35% in the same quarter last year;
-
Net income was $30.5 million compared to $27.3 million in the same
quarter last year;
-
Diluted earnings per share was $0.62 compared to $0.53 in the same
quarter last year; and
-
Adjusted free cash flow was $32.4 million compared to $28.7 million in
the same quarter last year.
Yogesh Gupta, CEO at Progress, said: "I am pleased with our earnings per
share and adjusted free cash flow performance during the quarter despite
revenue falling short of our goals. Initiatives undertaken during the
quarter to manage our expenses allowed us to reach this outcome. I am
excited by the opportunities we have in front of us, and look forward to
what we can accomplish in 2017 and beyond."
Other fiscal fourth quarter 2016 metrics and recent results included:
-
Cash, cash equivalents and short-term investments were $249.8 million;
-
DSO from continuing operations was 50 days, compared to 49 days in the
fiscal third quarter of 2016 and 52 days in the fiscal fourth quarter
of 2015; and
-
Under the previously announced authorization by the Board of Directors
to repurchase up to $200 million of shares of common stock, Progress
repurchased 0.3 million shares for $7.7 million during the fiscal
fourth quarter of 2016.
-
On September 27, 2016, our Board of Directors approved the initiation
of a quarterly cash dividend to Progress shareholders. The first
quarterly dividend of $0.125 per share of common stock was paid on
December 15, 2016 to shareholders of record as of the close of
business on December 1, 2016.
-
On January 11, 2017, our Board of Directors declared a quarterly
dividend of $0.125 per share of common stock payable on March 15, 2017
to shareholders of record as of the close of business on March 1, 2017.
Full Year Results
On a GAAP basis in the fiscal year 2016:
-
Revenue was $405.3 million compared to $377.6 million in fiscal year
2015;
-
Loss from operations was $29.7 million (reflecting the fiscal fourth
quarter impairment charge described above)compared to income from
operations of $14.8 million in the prior fiscal year;
-
Net loss was $55.7 million (reflecting the fiscal fourth quarter
impairment charge described above) compared to a net loss of $8.8
million in the prior fiscal year;
-
Diluted loss per share was $1.13 (reflecting the fiscal fourth quarter
impairment charge described above) compared to a diluted loss per
share of $0.17 in the prior fiscal year; and
-
Cash from operations was $102.8 million compared to $104.5 million in
the prior fiscal year.
On a non-GAAP basis in the fiscal year 2016:
-
Revenue was $407.4 million compared to $412.4 million in fiscal year
2015;
-
Income from operations was $123.1 million compared to $120.4 million
in the prior fiscal year;
-
Operating margin was 30% compared to 29% in the prior fiscal year;
-
Net income was $82.3 million compared to $80.6 million in the prior
fiscal year;
-
Diluted earnings per share was $1.65 compared to $1.58 in the prior
fiscal year; and
-
Adjusted free cash flow was $100.6 million compared to $102.0 million
in the prior fiscal year.
New Strategic Plan
Progress also announced today a new strategic plan highlighted by a new
product strategy and a streamlined operating approach with a tighter
focus on areas of strength to more efficiently drive revenue. Below are
the key tenets of the new plan:
-
Streamlined Operating Approach to Improve Execution. In FY
2017, with a product portfolio and go-to-market initiatives
emphasizing core strengths, Progress aims for better focus, execution
and value to customers and partners. Progress' core products compete
within stable but mature markets, so Progress is adapting its
organization and operating principles to focus primarily on customer
and partner retention and success. For products such as Dev Tools and
Telerik Platform, Progress will also strengthen its high volume, low
touch e-commerce capabilities.
-
Investment in New Product Strategy. As part of the plan,
Progress will undertake a new product strategy that will leverage its
application development platform capabilities, and enable its
customers and partners to build next generation applications that
drive their businesses. Progress will accomplish this by providing the
platform and tools enterprises need to build "Cognitive Applications",
which are the future of application development. This new product
strategy builds on the Company's inherent DNA and vast experience in
application development established over 35 years.
Cognitive Applications learn business characteristics and behavior from
data and leverage it for competitive advantage. They connect to all the
data whether it is from systems of record or the "Internet of Things."
They support all types of user interactions - web and mobile today,
chatbots, voice, virtual reality and tactile interfaces of tomorrow.
Progress' platform for Cognitive Applications will make it easy for
developers to build these new applications and will include:
-
Progress' NativeScript offering, which allows developers to use
JavaScript to build native applications across multiple platforms;
-
A mission-critical back-end-as-a-service platform that runs on any
cloud, is secure, high-performant, and highly-scalable while
supporting all modern user interfaces;
-
Automated and intuitive machine learning capabilities for accelerating
the creation and delivery of Cognitive Apps;
-
Progress' data connectivity and integration capabilities; and
-
Progress' business logic and rules capabilities.
-
Efficient Alignment of Resources. Progress remains committed to
spending thoughtfully, operating efficiently and driving
profitability. With the adoption of its new product strategy, Progress
will discontinue its investment in its Digital Factory offering and
will re-align its resources consistent with its core operating
approach. To that end, Progress will implement restructuring efforts
that will include consolidating facilities, implementing a simplified
organizational structure and reducing marketing and other external
expenses. In addition, Progress intends to reduce headcount by
approximately 450 employees, totaling over 20% of the Company's
workforce. Initial headcount reductions will begin in the fiscal first
quarter of 2017 and should be substantially completed by the end of
the fiscal second quarter of 2017, subject to local laws and
consultation processes. After investments in our new product strategy,
Progress expects to reduce net annual run-rate costs by approximately
$20 million by the end of FY 2017.
"Over the past three months, members of my executive management team and
I met with customers and partners and collaborated with employees to
determine the best plan for growth and profitability," stated Gupta.
"Market feedback and lessons learned from previous product strategies
helped inform our view, and we fully intend to evolve Progress into a
leaner company that will help lead in building the applications of
tomorrow. The Board of Directors and I are confident that Progress has
the right DNA and experience to make our new strategy successful for the
benefit of all stakeholders."
Progress also announced that Jerry Rulli, Progress' Chief Operating
Officer, will be leaving the company at the end of the fiscal first
quarter of 2017.
Gupta added, "I'd like to thank Jerry for all of his hard work during
his time at Progress, and for his efforts in helping to solidify and
simplify our core business."
2017 Business Outlook
Progress provides the following guidance for the fiscal year ending
November 30, 2017 and the first fiscal quarter ending February 28, 2017:
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(In millions, except percentages and per share amounts)
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FY 2017 GAAP
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FY 2017 Non-GAAP
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Q1 2017 GAAP
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Q1 2017 Non-GAAP
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Revenue
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$387 - $395
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$388 - $396
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$86 - $89
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$86 - $89
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Diluted earnings per share
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$0.56 - $0.64
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$1.64 - $1.69
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$(0.12) - $(0.06)
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$0.25 - $0.27
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Operating margin
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14% - 15%
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32% - 33%
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*
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*
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Adjusted free cash flow
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$85 - $93
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$95 - $100
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*
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*
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Effective tax rate
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43
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%
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33
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%
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*
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*
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*We do not provide guidance for this financial measure.
Progress' fiscal 2017 financial guidance is based on current exchange
rates. The negative currency translation impact on Progress' fiscal year
2017 business outlook compared to 2016 exchange rates is approximately
$7.0 million on GAAP and non-GAAP revenue. The negative currency
translation impact on Progress' fiscal Q1 2017 business outlook compared
to 2016 exchange rates is approximately $1.0 million on GAAP and
non-GAAP revenue. To the extent that there are further changes in
exchange rates versus the current environment, this may have an
additional impact on Progress' business outlook.
Conference Call
The Progress quarterly investor conference call to review its fiscal
fourth quarter of 2016 will be broadcast live at 8:30 a.m. ET on
Tuesday, January 17, 2017 and 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
1-877-856-1956, pass code 9896155. The conference call will include
brief 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.
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.
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 below 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 acquired intangible assets, stock-based compensation
expense, restructuring charges, acquisition-related expenses, certain
identified non-operating gains and losses, 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 and capitalized software development
costs, 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 by Telerik AD
("Telerik") that would otherwise have been recognized but for the
purchase accounting treatment of the acquisition of Telerik. We
acquired Telerik on December 2, 2014. 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 (and Telerik) 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 goodwill and acquired intangibles - In the
current annual period, we exclude impairment charges applicable to
goodwill and acquired intangible 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. In addition, in the current
annual period, we adjusted our income tax provision to remove from
non-GAAP income the positive impact of an out-of-period adjustment
recorded to the income tax provision during the fiscal second quarter
of 2016.
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 weaken, our consolidated
results stated in U.S. dollars are negatively 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.
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, including the
uncertain economic environment in Europe as a result of the recent
Brexit vote, and the continued difficult economic environment in Brazil
and other parts of the world, 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 or other offerings are compromised
or subject to a successful cyber-attack, or if such offerings contain
significant coding or configuration errors, we may experience
reputational harm, legal claims and financial exposure. (8) We 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. 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, 2015 and its Quarterly Reports on Form 10-Q for the fiscal
quarters ended February 29, 2016, May 31, 2016 and August 31, 2016.
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) is a global leader in application development, empowering
enterprises to build mission-critical business applications to succeed
in an evolving business environment. With offerings spanning web, mobile
and data for on-premise and cloud environments, Progress powers
businesses worldwide, promoting success one application at a time. Learn
about Progress at www.progress.com
or 1-781-280-4000.
Progress is a trademark 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.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
|
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|
|
|
|
Three Months Ended
|
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Fiscal Year Ended
|
(In thousands, except per share data)
|
|
|
November 30, 2016
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|
November 30, 2015
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% Change
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|
November 30, 2016
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November 30, 2015
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% Change
|
Revenue:
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Software licenses
|
|
|
$
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48,497
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|
|
$
|
44,457
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|
9
|
%
|
|
$
|
134,863
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|
|
$
|
130,250
|
|
|
4
|
%
|
Maintenance and services
|
|
|
69,227
|
|
|
68,261
|
|
|
1
|
%
|
|
270,478
|
|
|
247,304
|
|
|
9
|
%
|
Total revenue
|
|
|
117,724
|
|
|
112,718
|
|
|
4
|
%
|
|
405,341
|
|
|
377,554
|
|
|
7
|
%
|
Costs of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of software licenses
|
|
|
1,317
|
|
|
1,453
|
|
|
(9
|
)%
|
|
5,456
|
|
|
5,979
|
|
|
(9
|
)%
|
Cost of maintenance and services
|
|
|
11,543
|
|
|
9,758
|
|
|
18
|
%
|
|
44,760
|
|
|
40,933
|
|
|
9
|
%
|
Amortization of acquired intangibles
|
|
|
3,678
|
|
|
4,025
|
|
|
(9
|
)%
|
|
15,496
|
|
|
16,830
|
|
|
(8
|
)%
|
Total costs of revenue
|
|
|
16,538
|
|
|
15,236
|
|
|
9
|
%
|
|
65,712
|
|
|
63,742
|
|
|
3
|
%
|
Gross profit
|
|
|
101,186
|
|
|
97,482
|
|
|
4
|
%
|
|
339,629
|
|
|
313,812
|
|
|
8
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
32,853
|
|
|
32,259
|
|
|
2
|
%
|
|
121,501
|
|
|
124,867
|
|
|
(3
|
)%
|
Product development
|
|
|
22,786
|
|
|
21,391
|
|
|
7
|
%
|
|
88,587
|
|
|
86,924
|
|
|
2
|
%
|
General and administrative
|
|
|
10,478
|
|
|
15,229
|
|
|
(31
|
)%
|
|
46,532
|
|
|
57,294
|
|
|
(19
|
)%
|
Impairment of goodwill
|
|
|
92,000
|
|
|
-
|
|
|
100
|
%
|
|
92,000
|
|
|
-
|
|
|
100
|
%
|
Amortization of acquired intangibles
|
|
|
3,179
|
|
|
3,186
|
|
|
-
|
%
|
|
12,735
|
|
|
12,745
|
|
|
-
|
%
|
Impairment of intangible assets
|
|
|
-
|
|
|
-
|
|
|
-
|
%
|
|
5,051
|
|
|
-
|
|
|
100
|
%
|
Restructuring expenses
|
|
|
1,463
|
|
|
4,274
|
|
|
(66
|
)%
|
|
1,692
|
|
|
12,989
|
|
|
(87
|
)%
|
Acquisition-related expenses
|
|
|
791
|
|
|
1,059
|
|
|
(25
|
)%
|
|
1,240
|
|
|
4,239
|
|
|
(71
|
)%
|
Total operating expenses
|
|
|
163,550
|
|
|
77,398
|
|
|
111
|
%
|
|
369,338
|
|
|
299,058
|
|
|
24
|
%
|
(Loss) income from operations
|
|
|
(62,364
|
)
|
|
20,084
|
|
|
(411
|
)%
|
|
(29,709
|
)
|
|
14,754
|
|
|
(301
|
)%
|
Other (expense) income, net
|
|
|
(1,097
|
)
|
|
(1,142
|
)
|
|
(4
|
)%
|
|
(5,571
|
)
|
|
(2,400
|
)
|
|
132
|
%
|
(Loss) income before income taxes
|
|
|
(63,461
|
)
|
|
18,942
|
|
|
(435
|
)%
|
|
(35,280
|
)
|
|
12,354
|
|
|
(386
|
)%
|
Provision for income taxes
|
|
|
10,332
|
|
|
28,412
|
|
|
(64
|
)%
|
|
20,446
|
|
|
21,155
|
|
|
(3
|
)%
|
Net loss
|
|
|
$
|
(73,793
|
)
|
|
$
|
(9,470
|
)
|
|
679
|
%
|
|
$
|
(55,726
|
)
|
|
$
|
(8,801
|
)
|
|
533
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(1.52
|
)
|
|
$
|
(0.19
|
)
|
|
700
|
%
|
|
$
|
(1.13
|
)
|
|
$
|
(0.17
|
)
|
|
565
|
%
|
Diluted
|
|
|
$
|
(1.52
|
)
|
|
$
|
(0.19
|
)
|
|
700
|
%
|
|
$
|
(1.13
|
)
|
|
$
|
(0.17
|
)
|
|
565
|
%
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
48,631
|
|
|
50,435
|
|
|
(4
|
)%
|
|
49,481
|
|
|
50,391
|
|
|
(2
|
)%
|
Diluted
|
|
|
48,631
|
|
|
50,435
|
|
|
(4
|
)%
|
|
49,481
|
|
|
50,391
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
November 30, 2016
|
|
|
November 30, 2015
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
|
$
|
249,754
|
|
|
|
$
|
241,279
|
Accounts receivable, net
|
|
|
65,678
|
|
|
|
66,459
|
Other current assets
|
|
|
20,621
|
|
|
|
15,671
|
Total current assets
|
|
|
336,053
|
|
|
|
323,409
|
Property and equipment, net
|
|
|
50,105
|
|
|
|
54,226
|
Goodwill and intangible assets, net
|
|
|
358,894
|
|
|
|
484,098
|
Other assets
|
|
|
9,775
|
|
|
|
15,390
|
Total assets
|
|
|
$
|
754,827
|
|
|
|
$
|
877,123
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
|
$
|
59,778
|
|
|
|
$
|
65,314
|
Current portion of long-term debt
|
|
|
15,000
|
|
|
|
9,375
|
Short-term deferred revenue
|
|
|
128,960
|
|
|
|
125,227
|
Total current liabilities
|
|
|
203,738
|
|
|
|
199,916
|
Long-term deferred revenue
|
|
|
8,801
|
|
|
|
8,844
|
Long-term debt
|
|
|
120,000
|
|
|
|
135,000
|
Other long-term liabilities
|
|
|
15,659
|
|
|
|
10,899
|
Shareholders' equity:
|
|
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
239,496
|
|
|
|
227,930
|
Retained earnings
|
|
|
167,133
|
|
|
|
294,534
|
Total shareholders' equity
|
|
|
406,629
|
|
|
|
522,464
|
Total liabilities and shareholders' equity
|
|
|
$
|
754,827
|
|
|
|
$
|
877,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
(In thousands)
|
|
|
November 30, 2016
|
|
|
November 30, 2015
|
|
|
November 30, 2016
|
|
|
November 30, 2015
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(73,793
|
)
|
|
|
$
|
(9,470
|
)
|
|
|
$
|
(55,726
|
)
|
|
|
$
|
(8,801
|
)
|
Depreciation and amortization
|
|
|
9,525
|
|
|
|
10,069
|
|
|
|
39,321
|
|
|
|
41,680
|
|
Stock-based compensation
|
|
|
3,531
|
|
|
|
5,192
|
|
|
|
22,541
|
|
|
|
24,004
|
|
Other non-cash adjustments
|
|
|
94,033
|
|
|
|
21,776
|
|
|
|
97,813
|
|
|
|
2,000
|
|
Changes in operating assets and liabilities
|
|
|
638
|
|
|
|
(10
|
)
|
|
|
(1,104
|
)
|
|
|
45,657
|
|
Net cash flows from operating activities
|
|
|
33,934
|
|
|
|
27,557
|
|
|
|
102,845
|
|
|
|
104,540
|
|
Capital expenditures
|
|
|
(2,042
|
)
|
|
|
(1,126
|
)
|
|
|
(5,786
|
)
|
|
|
(8,845
|
)
|
Issuances of common stock, net of repurchases
|
|
|
(5,930
|
)
|
|
|
2,610
|
|
|
|
(69,270
|
)
|
|
|
(19,799
|
)
|
Payments for acquisitions, net of cash acquired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(246,275
|
)
|
Proceeds from the issuance of debt, net of payments of principle and
debt issuance costs
|
|
|
(1,875
|
)
|
|
|
-
|
|
|
|
(9,375
|
)
|
|
|
142,588
|
|
Proceeds from divestitures, net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,500
|
|
Other
|
|
|
(7,017
|
)
|
|
|
(6,066
|
)
|
|
|
(9,939
|
)
|
|
|
(18,698
|
)
|
Net change in cash, cash equivalents and short-term investments
|
|
|
17,070
|
|
|
|
22,975
|
|
|
|
8,475
|
|
|
|
(41,989
|
)
|
Cash, cash equivalents and short-term investments, beginning of
period
|
|
|
232,684
|
|
|
|
218,304
|
|
|
|
241,279
|
|
|
|
283,268
|
|
Cash, cash equivalents and short-term investments, end of period
|
|
|
$
|
249,754
|
|
|
|
$
|
241,279
|
|
|
|
$
|
249,754
|
|
|
|
$
|
241,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESULTS OF OPERATIONS BY SEGMENT
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
(In thousands)
|
|
|
November 30, 2016
|
|
|
November 30, 2015
|
|
|
% Change
|
|
|
November 30, 2016
|
|
|
November 30, 2015
|
|
|
% Change
|
Segment revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OpenEdge
|
|
|
$
|
77,672
|
|
|
|
$
|
81,159
|
|
|
|
(4
|
)%
|
|
|
$
|
276,267
|
|
|
|
$
|
295,934
|
|
|
|
(7
|
)%
|
Data Connectivity and Integration
|
|
|
17,157
|
|
|
|
15,257
|
|
|
|
12
|
%
|
|
|
48,009
|
|
|
|
37,926
|
|
|
|
27
|
%
|
Application Development and Deployment
|
|
|
22,895
|
|
|
|
16,302
|
|
|
|
40
|
%
|
|
|
81,065
|
|
|
|
43,694
|
|
|
|
86
|
%
|
Total revenue
|
|
|
117,724
|
|
|
|
112,718
|
|
|
|
4
|
%
|
|
|
405,341
|
|
|
|
377,554
|
|
|
|
7
|
%
|
Segment costs of revenue and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OpenEdge
|
|
|
19,399
|
|
|
|
20,556
|
|
|
|
(6
|
)%
|
|
|
72,938
|
|
|
|
77,085
|
|
|
|
(5
|
)%
|
Data Connectivity and Integration
|
|
|
3,896
|
|
|
|
4,256
|
|
|
|
(8
|
)%
|
|
|
12,760
|
|
|
|
13,819
|
|
|
|
(8
|
)%
|
Application Development and Deployment
|
|
|
10,625
|
|
|
|
9,217
|
|
|
|
15
|
%
|
|
|
40,180
|
|
|
|
39,386
|
|
|
|
2
|
%
|
Total costs of revenue and operating expenses
|
|
|
33,920
|
|
|
|
34,029
|
|
|
|
-
|
%
|
|
|
125,878
|
|
|
|
130,290
|
|
|
|
(3
|
)%
|
Segment contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OpenEdge
|
|
|
58,273
|
|
|
|
60,603
|
|
|
|
(4
|
)%
|
|
|
203,329
|
|
|
|
218,849
|
|
|
|
(7
|
)%
|
Data Connectivity and Integration
|
|
|
13,261
|
|
|
|
11,001
|
|
|
|
21
|
%
|
|
|
35,249
|
|
|
|
24,107
|
|
|
|
46
|
%
|
Application Development and Deployment
|
|
|
12,270
|
|
|
|
7,085
|
|
|
|
73
|
%
|
|
|
40,885
|
|
|
|
4,308
|
|
|
|
849
|
%
|
Total contribution
|
|
|
83,804
|
|
|
|
78,689
|
|
|
|
7
|
%
|
|
|
279,463
|
|
|
|
247,264
|
|
|
|
13
|
%
|
Other unallocated expenses (1)
|
|
|
146,168
|
|
|
|
58,605
|
|
|
|
149
|
%
|
|
|
309,172
|
|
|
|
232,510
|
|
|
|
33
|
%
|
(Loss) income from operations
|
|
|
(62,364
|
)
|
|
|
20,084
|
|
|
|
(411
|
)%
|
|
|
(29,709
|
)
|
|
|
14,754
|
|
|
|
(301
|
)%
|
Other (expense) income, net
|
|
|
(1,097
|
)
|
|
|
(1,142
|
)
|
|
|
(4
|
)%
|
|
|
(5,571
|
)
|
|
|
(2,400
|
)
|
|
|
132
|
%
|
(Loss) income before provision for income taxes
|
|
|
(63,461
|
)
|
|
|
18,942
|
|
|
|
(435
|
)%
|
|
|
(35,280
|
)
|
|
|
12,354
|
|
|
|
(386
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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: product development, corporate marketing,
administration, amortization and impairment of acquired intangibles,
impairment of goodwill, stock-based compensation, restructuring, and
acquisition related expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2015
|
|
|
Q1 2016
|
|
|
Q2 2016
|
|
|
Q3 2016
|
|
|
Q4 2016
|
|
|
FY 2016
|
|
|
FY 2015
|
License
|
|
|
$
|
44,457
|
|
|
|
$
|
23,955
|
|
|
|
$
|
28,787
|
|
|
|
$
|
33,624
|
|
|
|
$
|
48,497
|
|
|
|
$
|
134,863
|
|
|
|
$
|
130,250
|
Maintenance
|
|
|
60,458
|
|
|
|
58,336
|
|
|
|
59,485
|
|
|
|
60,368
|
|
|
|
60,188
|
|
|
|
238,377
|
|
|
|
217,718
|
Professional services
|
|
|
7,803
|
|
|
|
7,190
|
|
|
|
7,846
|
|
|
|
8,026
|
|
|
|
9,039
|
|
|
|
32,101
|
|
|
|
29,586
|
Total revenue
|
|
|
$
|
112,718
|
|
|
|
$
|
89,481
|
|
|
|
$
|
96,118
|
|
|
|
$
|
102,018
|
|
|
|
$
|
117,724
|
|
|
|
$
|
405,341
|
|
|
|
$
|
377,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2015
|
|
|
Q1 2016
|
|
|
Q2 2016
|
|
|
Q3 2016
|
|
|
Q4 2016
|
|
|
FY 2016
|
|
|
FY 2015
|
North America
|
|
|
$
|
68,112
|
|
|
|
$
|
49,065
|
|
|
|
$
|
53,392
|
|
|
|
$
|
58,275
|
|
|
|
$
|
68,471
|
|
|
|
$
|
229,203
|
|
|
|
$
|
207,566
|
EMEA
|
|
|
34,504
|
|
|
|
31,221
|
|
|
|
31,577
|
|
|
|
32,719
|
|
|
|
35,301
|
|
|
|
130,818
|
|
|
|
124,171
|
Latin America
|
|
|
3,617
|
|
|
|
3,693
|
|
|
|
4,389
|
|
|
|
4,667
|
|
|
|
8,407
|
|
|
|
21,156
|
|
|
|
17,594
|
Asia Pacific
|
|
|
6,485
|
|
|
|
5,502
|
|
|
|
6,760
|
|
|
|
6,357
|
|
|
|
5,545
|
|
|
|
24,164
|
|
|
|
28,223
|
Total revenue
|
|
|
$
|
112,718
|
|
|
|
$
|
89,481
|
|
|
|
$
|
96,118
|
|
|
|
$
|
102,018
|
|
|
|
$
|
117,724
|
|
|
|
$
|
405,341
|
|
|
|
$
|
377,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2015
|
|
|
Q1 2016
|
|
|
Q2 2016
|
|
|
Q3 2016
|
|
|
Q4 2016
|
|
|
FY 2016
|
|
|
FY 2015
|
OpenEdge
|
|
|
$
|
81,159
|
|
|
|
$
|
64,133
|
|
|
|
$
|
66,928
|
|
|
|
$
|
67,534
|
|
|
|
$
|
77,672
|
|
|
|
$
|
276,267
|
|
|
|
$
|
295,934
|
Data Connectivity and Integration
|
|
|
15,257
|
|
|
|
6,596
|
|
|
|
10,005
|
|
|
|
14,251
|
|
|
|
17,157
|
|
|
|
48,009
|
|
|
|
37,926
|
Application Development and Deployment
|
|
|
16,302
|
|
|
|
18,752
|
|
|
|
19,185
|
|
|
|
20,233
|
|
|
|
22,895
|
|
|
|
81,065
|
|
|
|
43,694
|
Total revenue
|
|
|
$
|
112,718
|
|
|
|
$
|
89,481
|
|
|
|
$
|
96,118
|
|
|
|
$
|
102,018
|
|
|
|
$
|
117,724
|
|
|
|
$
|
405,341
|
|
|
|
$
|
377,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- FOURTH QUARTER
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended November 30,
|
|
% Change
|
|
|
|
2016
|
|
2015
|
|
(In thousands, except per share data)
|
|
|
GAAP
|
|
Adj.
|
|
Non- GAAP
|
|
GAAP
|
|
Adj.
|
|
Non- GAAP
|
|
Non- GAAP
|
TOTAL REVENUE
|
|
|
$
|
117,724
|
|
|
$
|
288
|
|
|
$
|
118,012
|
|
|
$
|
112,718
|
|
|
$
|
2,660
|
|
|
$
|
115,378
|
|
|
2
|
%
|
Software licenses (1)
|
|
|
48,497
|
|
|
71
|
|
|
48,568
|
|
|
44,457
|
|
|
571
|
|
|
45,028
|
|
|
8
|
%
|
Maintenance and services (1)
|
|
|
69,227
|
|
|
217
|
|
|
69,444
|
|
|
68,261
|
|
|
2,089
|
|
|
70,350
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COSTS OF REVENUE
|
|
|
$
|
16,538
|
|
|
$
|
(3,977
|
)
|
|
$
|
12,561
|
|
|
$
|
15,236
|
|
|
$
|
(4,180
|
)
|
|
$
|
11,056
|
|
|
14
|
%
|
Amortization of acquired intangibles
|
|
|
3,678
|
|
|
(3,678
|
)
|
|
-
|
|
|
4,025
|
|
|
(4,025
|
)
|
|
-
|
|
|
|
Stock-based compensation (2)
|
|
|
299
|
|
|
(299
|
)
|
|
-
|
|
|
155
|
|
|
(155
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN %
|
|
|
86
|
%
|
|
|
|
89
|
%
|
|
86
|
%
|
|
|
|
90
|
%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
$
|
163,550
|
|
|
$
|
(100,665
|
)
|
|
$
|
62,885
|
|
|
$
|
77,398
|
|
|
$
|
(13,556
|
)
|
|
$
|
63,842
|
|
|
(1
|
)%
|
Amortization and impairment of acquired intangibles
|
|
|
3,179
|
|
|
(3,179
|
)
|
|
-
|
|
|
3,186
|
|
|
(3,186
|
)
|
|
-
|
|
|
|
Impairment of goodwill
|
|
|
92,000
|
|
|
(92,000
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Restructuring expenses
|
|
|
1,463
|
|
|
(1,463
|
)
|
|
-
|
|
|
4,274
|
|
|
(4,274
|
)
|
|
-
|
|
|
|
Acquisition-related expenses
|
|
|
791
|
|
|
(791
|
)
|
|
-
|
|
|
1,059
|
|
|
(1,059
|
)
|
|
-
|
|
|
|
Stock-based compensation (2)
|
|
|
3,232
|
|
|
(3,232
|
)
|
|
-
|
|
|
5,037
|
|
|
(5,037
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
$
|
(62,364
|
)
|
|
$
|
104,930
|
|
|
$
|
42,566
|
|
|
$
|
20,084
|
|
|
$
|
20,396
|
|
|
$
|
40,480
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN
|
|
|
(53
|
)%
|
|
|
|
36
|
%
|
|
18
|
%
|
|
|
|
35
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER (EXPENSE) INCOME, NET
|
|
|
$
|
(1,097
|
)
|
|
$
|
-
|
|
|
$
|
(1,097
|
)
|
|
$
|
(1,142
|
)
|
|
$
|
-
|
|
|
$
|
(1,142
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
$
|
10,332
|
|
|
$
|
663
|
|
|
$
|
10,995
|
|
|
$
|
28,412
|
|
|
$
|
(16,342
|
)
|
|
$
|
12,070
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
|
$
|
(73,793
|
)
|
|
$
|
104,267
|
|
|
$
|
30,474
|
|
|
$
|
(9,470
|
)
|
|
$
|
36,738
|
|
|
$
|
27,268
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED (LOSS) EARNINGS PER SHARE
|
|
|
$
|
(1.52
|
)
|
|
$
|
2.14
|
|
|
$
|
0.62
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.72
|
|
|
$
|
0.53
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
|
|
|
48,631
|
|
|
598
|
|
|
49,229
|
|
|
50,435
|
|
|
691
|
|
|
51,126
|
|
|
(4
|
)%
|
(1) Adjustments to revenue relate to acquisition-related revenue,
which constitutes revenue reflected as pre-acquisition deferred
revenue by Telerik that would otherwise have been recognized but for
the purchase accounting treatment of the acquisition of Telerik.
Since GAAP accounting requires the elimination of this revenue, GAAP
results alone do not fully capture all of our economic activities.
Note that acquisition-related revenue adjustments entirely relate to
Progress' Application Development and Deployment business unit.
|
(2) Stock-based compensation is included in the GAAP statements of
income, as follows:
|
Cost of revenue
|
|
|
299
|
|
|
|
|
|
|
155
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
1,301
|
|
|
|
|
|
|
477
|
|
|
|
|
|
|
|
Product development
|
|
|
2,365
|
|
|
|
|
|
|
1,957
|
|
|
|
|
|
|
|
General and administrative
|
|
|
(434
|
)
|
|
|
|
|
|
2,603
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
3,531
|
|
|
|
|
|
|
$
|
5,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- FISCAL YEAR
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended November 30,
|
|
% Change
|
|
|
|
2016
|
|
2015
|
|
(In thousands, except per share data)
|
|
|
GAAP
|
|
Adj.
|
|
Non- GAAP
|
|
GAAP
|
|
Adj.
|
|
Non- GAAP
|
|
Non- GAAP
|
TOTAL REVENUE
|
|
|
$
|
405,341
|
|
|
$
|
2,014
|
|
|
$
|
407,355
|
|
|
$
|
377,554
|
|
|
$
|
34,852
|
|
|
$
|
412,406
|
|
|
(1
|
)%
|
Software licenses (1)
|
|
|
134,863
|
|
|
360
|
|
|
135,223
|
|
|
130,250
|
|
|
8,751
|
|
|
139,001
|
|
|
(3
|
)%
|
Maintenance and services (1)
|
|
|
270,478
|
|
|
1,654
|
|
|
272,132
|
|
|
247,304
|
|
|
26,101
|
|
|
273,405
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COSTS OF REVENUE
|
|
|
$
|
65,712
|
|
|
$
|
(16,395
|
)
|
|
$
|
49,317
|
|
|
$
|
63,742
|
|
|
$
|
(17,447
|
)
|
|
$
|
46,295
|
|
|
7
|
%
|
Amortization of acquired intangibles
|
|
|
15,496
|
|
|
(15,496
|
)
|
|
-
|
|
|
16,830
|
|
|
(16,830
|
)
|
|
-
|
|
|
|
Stock-based compensation (2)
|
|
|
899
|
|
|
(899
|
)
|
|
-
|
|
|
617
|
|
|
(617
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN %
|
|
|
84
|
%
|
|
|
|
88
|
%
|
|
83
|
%
|
|
|
|
89
|
%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
$
|
369,338
|
|
|
$
|
(134,360
|
)
|
|
$
|
234,978
|
|
|
$
|
299,058
|
|
|
$
|
(53,360
|
)
|
|
$
|
245,698
|
|
|
(4
|
)%
|
Amortization and impairment of acquired intangibles
|
|
|
17,786
|
|
|
(17,786
|
)
|
|
-
|
|
|
12,745
|
|
|
(12,745
|
)
|
|
-
|
|
|
|
Impairment of goodwill
|
|
|
92,000
|
|
|
(92,000
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Restructuring expenses
|
|
|
1,692
|
|
|
(1,692
|
)
|
|
-
|
|
|
12,989
|
|
|
(12,989
|
)
|
|
-
|
|
|
|
Acquisition-related expenses
|
|
|
1,240
|
|
|
(1,240
|
)
|
|
-
|
|
|
4,239
|
|
|
(4,239
|
)
|
|
-
|
|
|
|
Stock-based compensation (2)
|
|
|
21,642
|
|
|
(21,642
|
)
|
|
-
|
|
|
23,387
|
|
|
(23,387
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
$
|
(29,709
|
)
|
|
$
|
152,769
|
|
|
$
|
123,060
|
|
|
$
|
14,754
|
|
|
$
|
105,659
|
|
|
$
|
120,413
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN
|
|
|
(7
|
)%
|
|
|
|
30
|
%
|
|
4
|
%
|
|
|
|
29
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER (EXPENSE) INCOME, NET (3)
|
|
|
$
|
(5,571
|
)
|
|
$
|
-
|
|
|
$
|
(5,571
|
)
|
|
$
|
(2,400
|
)
|
|
$
|
266
|
|
|
$
|
(2,134
|
)
|
|
161
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES (4)
|
|
|
$
|
20,446
|
|
|
$
|
14,722
|
|
|
$
|
35,168
|
|
|
$
|
21,155
|
|
|
$
|
16,574
|
|
|
$
|
37,729
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
|
$
|
(55,726
|
)
|
|
$
|
138,047
|
|
|
$
|
82,321
|
|
|
$
|
(8,801
|
)
|
|
$
|
89,351
|
|
|
$
|
80,550
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED (LOSS) EARNINGS PER SHARE
|
|
|
$
|
(1.13
|
)
|
|
$
|
2.78
|
|
|
$
|
1.65
|
|
|
$
|
(0.17
|
)
|
|
$
|
1.75
|
|
|
$
|
1.58
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
|
|
|
49,481
|
|
|
558
|
|
|
50,039
|
|
|
50,391
|
|
|
729
|
|
|
51,120
|
|
|
(2
|
)%
|
(1) Adjustments to revenue relate to acquisition-related revenue,
which constitutes revenue reflected as pre-acquisition deferred
revenue by Telerik that would otherwise have been recognized but for
the purchase accounting treatment of the acquisition of Telerik.
Since GAAP accounting requires the elimination of this revenue, GAAP
results alone do not fully capture all of our economic activities.
Note that acquisition-related revenue adjustments entirely relate to
Progress' Application Development and Deployment business unit.
|
(2) Stock-based compensation is included in the GAAP statements of
income, as follows:
|
Cost of revenue
|
|
|
899
|
|
|
|
|
|
|
617
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
4,093
|
|
|
|
|
|
|
4,805
|
|
|
|
|
|
|
|
Product development
|
|
|
9,965
|
|
|
|
|
|
|
5,433
|
|
|
|
|
|
|
|
General and administrative
|
|
|
7,584
|
|
|
|
|
|
|
13,149
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
22,541
|
|
|
|
|
|
|
$
|
24,004
|
|
|
|
|
|
|
|
|
|
|
|
(3) In the prior year period, the adjustment to other income (expense),
net relates to the termination of Progress' prior revolving credit
facility in connection with entering into the new credit facility. Upon
termination, the outstanding debt issuance costs related to the prior
revolving credit facility were written off to other income (expense) in
the GAAP statements of income. (4) In the current period, we
identified an error in our prior year income tax provision whereby
income tax expense was overstated for the year ended November 30, 2015
related to our tax treatment of an intercompany gain. We corrected this
error by recording an out of period $2.7 million tax benefit in our
quarter ended May 31, 2016 financial statements. We adjusted our income
tax provision to remove from non-GAAP income the positive impact of this
out-of-period adjustment.
|
|
|
|
|
|
|
|
|
OTHER NON-GAAP FINANCIAL MEASURES - FOURTH QUARTER
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Revenue by Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
License
|
|
|
$
|
48,497
|
|
|
$
|
71
|
|
|
$
|
48,568
|
|
Maintenance
|
|
|
60,188
|
|
|
217
|
|
|
60,405
|
|
Services
|
|
|
9,039
|
|
|
-
|
|
|
9,039
|
|
Total revenue
|
|
|
$
|
117,724
|
|
|
$
|
288
|
|
|
$
|
118,012
|
|
|
|
|
|
|
|
|
|
|
Revenue by Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
North America
|
|
|
$
|
68,471
|
|
|
$
|
244
|
|
|
$
|
68,715
|
|
EMEA
|
|
|
35,301
|
|
|
38
|
|
|
35,339
|
|
Latin America
|
|
|
8,407
|
|
|
-
|
|
|
8,407
|
|
Asia Pacific
|
|
|
5,545
|
|
|
6
|
|
|
5,551
|
|
Total revenue
|
|
|
$
|
117,724
|
|
|
$
|
288
|
|
|
$
|
118,012
|
|
|
|
|
|
|
|
|
|
|
Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
OpenEdge
|
|
|
$
|
77,672
|
|
|
$
|
-
|
|
|
$
|
77,672
|
|
Data Connectivity and Integration
|
|
|
$
|
17,157
|
|
|
$
|
-
|
|
|
$
|
17,157
|
|
Application Development and Deployment
|
|
|
$
|
22,895
|
|
|
$
|
288
|
|
|
$
|
23,183
|
|
Total revenue
|
|
|
$
|
117,724
|
|
|
$
|
288
|
|
|
$
|
118,012
|
|
|
|
|
|
|
|
|
|
|
(1) Adjustments to revenue relate to acquisition-related revenue,
which constitutes revenue reflected as pre-acquisition deferred
revenue by Telerik that would otherwise have been recognized but for
the purchase accounting treatment of the acquisition of Telerik.
Since GAAP accounting requires the elimination of this revenue, GAAP
results alone do not fully capture all of our economic activities.
Note that acquisition-related revenue adjustments entirely relate to
Progress' Application Development and Deployment business segment.
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Q4 2016
|
|
Q4 2015
|
|
% Change
|
Cash flows from operations
|
|
|
$
|
33,934
|
|
|
$
|
27,557
|
|
|
23
|
%
|
Purchases of property and equipment
|
|
|
$
|
(2,042
|
)
|
|
$
|
(1,126
|
)
|
|
(81
|
)%
|
Capitalized software development costs
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
-
|
%
|
Free cash flow
|
|
|
$
|
31,892
|
|
|
$
|
26,431
|
|
|
21
|
%
|
Add back: restructuring payments
|
|
|
$
|
515
|
|
|
$
|
2,246
|
|
|
(77
|
)%
|
Adjusted free cash flow
|
|
|
$
|
32,407
|
|
|
$
|
28,677
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NON-GAAP FINANCIAL MEASURES - FISCAL YEAR
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Revenue by Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
FY 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
License
|
|
|
$
|
134,863
|
|
|
$
|
360
|
|
|
$
|
135,223
|
|
Maintenance
|
|
|
238,377
|
|
|
1,654
|
|
|
240,031
|
|
Services
|
|
|
32,101
|
|
|
-
|
|
|
32,101
|
|
Total revenue
|
|
|
$
|
405,341
|
|
|
$
|
2,014
|
|
|
$
|
407,355
|
|
|
|
|
|
|
|
|
|
|
Revenue by Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
FY 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
North America
|
|
|
$
|
229,203
|
|
|
$
|
1,747
|
|
|
$
|
230,950
|
|
EMEA
|
|
|
130,818
|
|
|
221
|
|
|
131,039
|
|
Latin America
|
|
|
21,156
|
|
|
5
|
|
|
21,161
|
|
Asia Pacific
|
|
|
24,164
|
|
|
41
|
|
|
24,205
|
|
Total revenue
|
|
|
$
|
405,341
|
|
|
$
|
2,014
|
|
|
$
|
407,355
|
|
|
|
|
|
|
|
|
|
|
Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
FY 2016
|
|
Non-GAAP Adjustment (1)
|
|
Non-GAAP Revenue
|
OpenEdge
|
|
|
$
|
276,267
|
|
|
$
|
-
|
|
|
$
|
276,267
|
|
Data Connectivity and Integration
|
|
|
$
|
48,009
|
|
|
$
|
-
|
|
|
$
|
48,009
|
|
Application Development and Deployment
|
|
|
$
|
81,065
|
|
|
$
|
2,014
|
|
|
$
|
83,079
|
|
Total revenue
|
|
|
$
|
405,341
|
|
|
$
|
2,014
|
|
|
$
|
407,355
|
|
|
|
|
|
|
|
|
|
|
(1) Adjustments to revenue relate to acquisition-related revenue,
which constitutes revenue reflected as pre-acquisition deferred
revenue by Telerik that would otherwise have been recognized but for
the purchase accounting treatment of the acquisition of Telerik.
Since GAAP accounting requires the elimination of this revenue, GAAP
results alone do not fully capture all of our economic activities.
Note that acquisition-related revenue adjustments entirely relate to
Progress' Application Development and Deployment business segment.
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
FY 2016
|
|
FY 2015
|
|
% Change
|
Cash flows from operations
|
|
|
$
|
102,845
|
|
|
$
|
104,540
|
|
|
(2
|
)%
|
Purchases of property and equipment
|
|
|
$
|
(5,786
|
)
|
|
$
|
(7,184
|
)
|
|
19
|
%
|
Capitalized software development costs
|
|
|
$
|
-
|
|
|
$
|
(1,661
|
)
|
|
100
|
%
|
Free cash flow
|
|
|
$
|
97,059
|
|
|
$
|
95,695
|
|
|
1
|
%
|
Add back: restructuring payments
|
|
|
$
|
3,539
|
|
|
$
|
6,343
|
|
|
(44
|
)%
|
Adjusted free cash flow
|
|
|
$
|
100,598
|
|
|
$
|
102,038
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Bookings from Application Development and Deployment
Segment
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Q1 2015
|
|
Q2 2015
|
|
Q3 2015
|
|
Q4 2015
|
|
FY 2015
|
GAAP revenue
|
|
$
|
4,797
|
|
|
$
|
9,636
|
|
|
$
|
12,958
|
|
|
$
|
16,302
|
|
|
$
|
43,693
|
|
Add: change in deferred revenue
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
108
|
|
|
23,081
|
|
|
33,440
|
|
|
41,012
|
|
|
108
|
|
Ending balance
|
|
23,081
|
|
|
33,440
|
|
|
41,012
|
|
|
49,252
|
|
|
49,252
|
|
Change in deferred revenue
|
|
22,973
|
|
|
10,359
|
|
|
7,572
|
|
|
8,240
|
|
|
49,144
|
|
Less: acquired deferred revenue balance from Telerik
|
|
(7,915
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,915
|
)
|
Non-GAAP bookings
|
|
$
|
19,855
|
|
|
$
|
19,995
|
|
|
$
|
20,530
|
|
|
$
|
24,542
|
|
|
$
|
84,922
|
|
(In thousands)
|
|
Q1 2016
|
|
Q2 2016
|
|
Q3 2016
|
|
Q4 2016
|
|
FY 2016
|
GAAP revenue
|
|
$
|
18,752
|
|
|
$
|
19,185
|
|
|
$
|
20,233
|
|
|
$
|
22,895
|
|
|
$
|
81,065
|
Add: change in deferred revenue
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
49,252
|
|
|
49,237
|
|
|
51,693
|
|
|
51,736
|
|
|
49,252
|
Ending balance
|
|
49,237
|
|
|
51,693
|
|
|
51,736
|
|
|
52,971
|
|
|
52,971
|
Change in deferred revenue
|
|
(15
|
)
|
|
2,456
|
|
|
43
|
|
|
1,235
|
|
|
3,719
|
Less: acquired deferred revenue balance from Telerik
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Non-GAAP bookings
|
|
$
|
18,737
|
|
|
$
|
21,641
|
|
|
$
|
20,276
|
|
|
$
|
24,130
|
|
|
$
|
84,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SaaS Revenue (Hosted Services) from Application Development and
Deployment Segment
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Q1 2015
|
|
Q2 2015
|
|
Q3 2015
|
|
Q4 2015
|
|
FY 2015
|
SaaS Revenue - Application Development and Deployment
|
|
$
|
567
|
|
|
$
|
713
|
|
|
$
|
765
|
|
|
$
|
975
|
|
|
$
|
3,020
|
(In thousands)
|
|
Q1 2016
|
|
Q2 2016
|
|
Q3 2016
|
|
Q4 2016
|
|
FY 2016
|
SaaS Revenue - Application Development and Deployment
|
|
$
|
1,071
|
|
|
$
|
1,079
|
|
|
$
|
1,160
|
|
|
$
|
1,163
|
|
|
$
|
4,473
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2017 GUIDANCE
|
(Unaudited)
|
|
Fiscal Year 2017 Non-GAAP Revenue Guidance
|
|
|
Fiscal Year Ended
|
|
Fiscal Year Ending
|
|
|
November 30, 2016
|
|
November 30, 2017
|
(In millions)
|
|
|
|
Low
|
|
% Change
|
|
High
|
|
% Change
|
GAAP revenue
|
|
$
|
405.3
|
|
|
$
|
387.3
|
|
|
(4
|
)%
|
|
$
|
395.3
|
|
|
(2
|
)%
|
Acquisition-related adjustments - revenue (1)
|
|
$
|
2.1
|
|
|
$
|
0.7
|
|
|
(65
|
)%
|
|
$
|
0.7
|
|
|
(65
|
)%
|
Non-GAAP revenue
|
|
$
|
407.4
|
|
|
$
|
388.0
|
|
|
(5
|
)%
|
|
$
|
396.0
|
|
|
(3
|
)%
|
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue by Telerik that would otherwise have
been recognized but for the purchase accounting treatment of the
acquisition of Telerik. Since GAAP accounting requires the elimination
of this revenue, GAAP results alone do not fully capture all of our
economic activities.
|
Fiscal Year 2017 Non-GAAP Operating Margin Guidance
|
|
|
|
|
|
Fiscal Year Ending November 30, 2017
|
(In millions)
|
|
Low
|
|
High
|
GAAP income from operations
|
|
$
|
53.6
|
|
|
$
|
61.2
|
|
GAAP operating margins
|
|
14
|
%
|
|
15
|
%
|
Acquisition-related revenue
|
|
0.7
|
|
|
0.7
|
|
Restructuring expense
|
|
20.0
|
|
|
17.0
|
|
Stock-based compensation
|
|
24.1
|
|
|
24.1
|
|
Amortization of intangibles
|
|
27.4
|
|
|
27.4
|
|
Total adjustments
|
|
72.2
|
|
|
69.2
|
|
Non-GAAP income from operations
|
|
$
|
125.8
|
|
|
$
|
130.4
|
|
Non-GAAP operating margin
|
|
32
|
%
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017 Non-GAAP Earnings per Share and Effective Tax
Rate Guidance
|
|
|
|
|
|
|
|
Fiscal Year Ending November 30, 2017
|
(In millions, except per share data)
|
|
Low
|
|
High
|
GAAP net income
|
|
$
|
27.5
|
|
|
$
|
31.8
|
|
Adjustments (from above)
|
|
72.2
|
|
|
69.2
|
|
Income tax adjustment (2)
|
|
(19.0
|
)
|
|
(17.2
|
)
|
Non-GAAP net income
|
|
$
|
80.7
|
|
|
$
|
83.8
|
|
|
|
|
|
|
GAAP diluted earnings per share
|
|
$
|
0.56
|
|
|
$
|
0.64
|
|
Non-GAAP diluted earnings per share
|
|
$
|
1.64
|
|
|
$
|
1.69
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
49.1
|
|
|
49.6
|
|
|
|
|
|
|
(2) Tax adjustment is based on a non-GAAP effective tax rate of
approximately 33% for Low and High, calculated as follows:
|
Non-GAAP income from operations
|
|
$
|
125.8
|
|
|
$
|
130.4
|
|
Other (expense) income
|
|
(5.4
|
)
|
|
(5.4
|
)
|
Non-GAAP income from continuing operations before income taxes
|
|
120.4
|
|
|
125.0
|
|
Non-GAAP net income
|
|
80.7
|
|
|
83.8
|
|
Tax provision
|
|
39.7
|
|
|
41.2
|
|
Non-GAAP tax rate
|
|
33
|
%
|
|
33
|
%
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2017 GUIDANCE
|
(Unaudited)
|
|
Fiscal Year 2017 Adjusted Free Cash Flow Guidance
|
|
|
|
|
|
Fiscal Year Ending November 30, 2017
|
(In millions)
|
|
Low
|
|
High
|
Cash flows from operations (GAAP)
|
|
$
|
85
|
|
|
$
|
93
|
|
Purchases of property and equipment
|
|
(10
|
)
|
|
(10
|
)
|
Add back: restructuring payments
|
|
20
|
|
|
17
|
|
Adjusted free cash flow (non-GAAP)
|
|
$
|
95
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1
2017 GUIDANCE
|
(Unaudited)
|
|
Q1 2017 Non-GAAP Revenue Guidance
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ending
|
|
|
February 29, 2016
|
|
February 28, 2017
|
(In millions)
|
|
|
|
Low
|
|
% Change
|
|
High
|
|
% Change
|
GAAP revenue
|
|
$
|
89.5
|
|
|
$
|
85.8
|
|
|
(4
|
)%
|
|
$
|
88.8
|
|
|
(1
|
)%
|
Acquisition-related adjustments - revenue (1)
|
|
$
|
0.7
|
|
|
$
|
0.2
|
|
|
(71
|
)%
|
|
$
|
0.2
|
|
|
(71
|
)%
|
Non-GAAP revenue
|
|
$
|
90.2
|
|
|
$
|
86.0
|
|
|
(5
|
)%
|
|
$
|
89.0
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue by Telerik that would otherwise have
been recognized but for the purchase accounting treatment of the
acquisition of Telerik. Since GAAP accounting requires the elimination
of this revenue, GAAP results alone do not fully capture all of our
economic activities.
|
Q1 2017 Non-GAAP Earnings per Share Guidance
|
|
|
|
|
|
Three Months Ending February 28, 2017
|
|
|
Low
|
|
High
|
GAAP diluted earnings per share
|
|
$
|
(0.12
|
)
|
|
$
|
(0.06
|
)
|
Acquisition-related revenue
|
|
-
|
|
|
-
|
|
Restructuring expense
|
|
0.35
|
|
|
0.28
|
|
Stock-based compensation
|
|
0.10
|
|
|
0.10
|
|
Amortization of intangibles
|
|
0.14
|
|
|
0.14
|
|
Total adjustments
|
|
0.59
|
|
|
0.52
|
|
Income tax adjustment
|
|
$
|
(0.22
|
)
|
|
$
|
(0.19
|
)
|
Non-GAAP diluted earnings per share
|
|
$
|
0.25
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170116005751/en/
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