Progress Software Reports 2013 Fiscal First Quarter Results
Progress Software Reports 2013 Fiscal First Quarter Results
BEDFORD, Mass.--(BUSINESS WIRE)-- Progress Software Corporation (NAS: PRGS) , a global software company that simplifies and enables the development, deployment and management of business applications, announced today results for its fiscal first quarter ended February 28, 2013.
Revenue was $89.3 million compared to $87.2 million, a year over year increase of 3% on a constant currency basis, or an increase of 2% using actual exchange rates.
On a GAAP basis in the fiscal first quarter of 2013:
- Income from operations was $14.7 million compared to $19.2 million in the same quarter last year;
- Income from continuing operations was $9.1 million compared to $12.0 million in the same quarter last year;
- Net income was $31.1 million compared to $7.5 million in the same quarter last year, and includes the gains on the divestitures of the Actional, Artix, DataXtend, ObjectStore, Orbacus, Orbix, Savvion and Sonic product lines of $35.1 million; and
- Diluted earnings per share from continuing operations was $0.16 compared to $0.19 in the same quarter last year.
On a non-GAAP basis in the fiscal first quarter of 2013:
- Income from operations was $21.1 million compared to $26.7 million in the same quarter last year;
- Operating margin was 24%;
- Income from continuing operations was $13.5 million compared to $18.4 million in the same quarter last year; and
- Diluted earnings per share from continuing operations was $0.23 compared to $0.29 in the same quarter last year.
Phil Pead, President and Chief Executive Officer of Progress Software, said, "Our performance in the quarter reflects continued momentum as we execute on our strategic plan. Our initiatives to improve our operating margin are well under way and I am pleased with our early progress. In addition, we have begun to focus on building our foundation for future revenue growth by releasing new and innovative functionality across our solution suites and significantly increasing our customer engagement."
Other fiscal first quarter 2013 results included the following:
- Net cash received from the divestitures of the Actional, Artix, DataXtend, ObjectStore, Orbacus, Orbix, Savvion and Sonic product lines was $73.4 million;
- Under the previously announced and implemented 10b5-1 plan to repurchase $250.0 million of common stock by June 30, 2013, through February 28, 2013, the company has repurchased 9.3 million shares for $194.7 million;
- Cash, cash equivalents and short-term investments decreased to $321.4 million from $355.2 million at the end of the fiscal fourth quarter of 2012;
- Cash outflows from operations were $25.1 million, compared to cash inflows from operations of $38.5 million in the same quarter in fiscal year 2012. Operating cash outflows in the first quarter of fiscal year 2013 includes $41.7 million in tax payments for the gains realized on the divestitures which occurred in the fourth quarter of fiscal year 2012 and the first quarter of fiscal year 2013; and
- DSO from continuing operations was 65 days, compared to 70 days in the fiscal fourth quarter of 2012.
Progress Software provides the following guidance for the fiscal second quarter ending May 31, 2013:
- On a constant currency basis, revenue growth is expected to be essentially flat compared to the fiscal second quarter of 2012; and
- Non-GAAP operating margin is expected to be in the range of 21% 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 and stock-based compensation of $5.5 million to $6.4 million, for a GAAP operating margin in the range of 12% to 16%.
The Progress Software quarterly investor conference call to review its fiscal first quarter of 2013 will be broadcast live at 5:00 p.m. ET on Wednesday, March 27, 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 1-888-556-4997, pass code 7342287. 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) market conditions, timing constraints and other factors that could impact Progress's ability to complete the proposed share repurchases in fiscal 2013; (6) Progress's ability to make technology acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (7) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (8) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (9) the receipt and shipment of new orders; (10) Progress's ability to expand its relationships with channel partners and to manage the interaction of channel partners with its direct sales force; (11) the timely release of enhancements to Progress's products and customer acceptance of new products; (12) the positioning of Progress's products in its existing and new markets; (13) variations in the demand for professional services and technical support; (14) Progress's ability to penetrate international markets and manage its international operations; and (15) 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, 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 (NAS: PRGS) is a global software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source, with enhanced performance, minimal IT complexity and low total cost of ownership. Progress Software can be reached 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|Three Months Ended|
|(In thousands, except per share data)|
|Maintenance and services||56,603||55,324||2||%|
|Costs of revenue:|
|Cost of software licenses||2,239||1,498||49||%|
|Cost of maintenance and services||8,857||8,760||1||%|
|Amortization of acquired intangibles||286||392||(27||)%|
|Total costs of revenue||11,382||10,650||7||%|
|Sales and marketing||31,535||29,205||8||%|
|General and administrative||14,682||15,415||(5||)%|
|Amortization of acquired intangibles||209||242||(14||)%|
|Total operating expenses||63,172||57,341||10||%|
|Income from operations||14,715||19,222||(23||)%|
|Other (expense) income, net||(548||)||270||(303||)%|
|Income from continuing operations before income taxes||14,167||19,492||(27||)%|
|Provision for income taxes||5,044||7,542||(33||)%|
|Income from continuing operations||9,123||11,950||(24||)%|
|Income (loss) from discontinued operations, net||21,995||(4,461||)||593||%|
|Earnings per share:|
|Net income per share||$||0.54||$||0.12||350||%|
|Net income per share||$||0.53||$||0.12||342||%|
|Weighted average shares outstanding:|
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash, cash equivalents and short-term investments||$||321,375||$||355,217|
|Accounts receivable, net||64,026||70,793|
|Other current assets||47,440||32,779|
|Assets held for sale||—||68,029|
|Total current assets||432,841||526,818|
|Property and equipment, net||61,528||63,071|
|Goodwill and intangible assets, net||230,678||231,229|
|Liabilities and shareholders' equity|
|Accounts payable and other current liabilities||$||65,572||$||110,944|
|Short-term deferred revenue||115,564||103,925|
|Liabilities held for sale||—||25,285|
|Total current liabilities||181,136||240,154|
|Long-term deferred revenue||1,284||2,817|
|Other long-term liabilities||2,138||3,607|
|Common stock and additional paid-in capital||264,810||300,333|
|Total shareholders' equity||595,816||638,399|
|Total liabilities and shareholders' equity||$||780,374||$||884,977|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|Three Months Ended|
|(In thousands)||February 28,|
|Cash flows from operating activities:|
|Depreciation and amortization||3,401||8,562|
|Net gains on sales of dispositions||(35,106||)||—|
|Other non-cash adjustments||(2,927||)||359|
|Changes in operating assets and liabilities||(26,451||)||15,028|
|Net cash flows from operating activities||(25,059||)||38,529|
|Redemptions and sales of auction-rate-securities||25||225|
|Issuances of common stock, net of repurchases||(80,069||)||13,973|
|Proceeds from divestitures, net||73,381||—|
|Net change in cash, cash equivalents and short-term investments||(33,842||)||53,748|
|Cash, cash equivalents and short-term investments, beginning of period||355,217||261,416|
|Cash, cash equivalents and short-term investments, end of period||$||321,375||$||315,164|
|Revenue by Type|
|(In thousands)||Q1 2012||Q2 2012||Q3 2012||Q4 2012||Q1 2013|