Progress Announces Second Quarter 2022 Financial Results

Revenue and EPS Exceed Prior Guidance

BURLINGTON, Mass., June 28, 2022 (GLOBE NEWSWIRE) -- Progress (Nasdaq: PRGS), the trusted provider of infrastructure software, today announced financial results for its fiscal second quarter ended May 31, 2022.

Second Quarter 2022 Highlights:

Revenue of $148.7 million increased 21% year-over-year on an actual currency basis, and 24% on a constant currency basis.

Non-GAAP revenue of $150.9 million increased 17% on an actual currency basis, and 19% on a constant currency basis.

Annualized Recurring Revenue (ARR) of $486 million increased 13% year-over-year on a constant currency basis.

Operating margin was 27% and Non-GAAP operating margin was 41%.

Diluted earnings per share was $0.66 compared to $0.30 in the same quarter last year, an increase of 120%.

Non-GAAP diluted earnings per share was $1.04 compared to $0.82 in the same quarter last year, an increase of 27%.

Once again, we are very pleased to report excellent quarterly results, especially during so much market turmoil and global uncertainty, said Yogesh Gupta, CEO at Progress. Progress again performed exceptionally well across the board, exceeding revenue and EPS guidance, which was driven by a Total Growth Strategy that layers accretive M&A over a highly profitable and predictable business with strong recurring revenue and very high retention rates. Despite a tumultuous market and an economy with increasing risks, Progress remains well positioned to continue our steady execution for the remainder of 2022 and beyond.

Additional financial highlights included(1):

Three Months Ended

GAAP Non-GAAP

(In thousands, except percentages and per share amounts) May 31, 2022 May 31, 2021 % Change May 31, 2022 May 31, 2021 % Change

Revenue $ 148,747 $ 122,488 21 % $ 150,879 $ 129,198 17 %

Income from operations $ 40,235 $ 22,282 81 % $ 61,298 $ 49,712 23 %

Operating margin 27 % 18 % 900bps 41 % 38 % 300bps

Net income $ 29,110 $ 13,557 115 % $ 45,886 $ 36,513 26 %

Diluted earnings per share $ 0.66 $ 0.30 120 % $ 1.04 $ 0.82 27 %

Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP) $ 68,260 $ 54,690 25 % $ 68,038 $ 55,411 23 %

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

Other fiscal second quarter 2022 metrics and recent results included:

Cash, cash equivalents and short-term investments were $225.9 million at the end of the quarter.

DSO was 39 days compared to 44 days in the fiscal second quarter of 2021 and 52 days in the fiscal first quarter of 2022.

On June 21, 2022, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on September 15, 2022 to shareholders of record as of the close of business on September 1, 2022.

Anthony Folger, CFO, said: Despite the recent challenges in the global economy, our business continues to perform well across virtually all product lines. Our integration of Kemp is on track, our balance sheet continues to strengthen, and the recurring nature of our revenues and our strong retention rates will continue to serve us well in this environment.

2022 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2022 and the fiscal third quarter ending August 31, 2022:

Updated FY 2022 Guidance

(June 28, 2022) Prior FY 2022 Guidance

(March 29, 2022)

(In millions, except percentages and per share amounts) GAAP Non-GAAP GAAP Non-GAAP

Revenue $601 - $609 $609 - $617 $601 - $609 $609 - $617

Diluted earnings per share $2.11 - $2.21 $4.05 - $4.11 $2.16 - $2.23 $4.01 - $4.09

Operating margin 22% - 23% 39% - 40% 23 % 39% - 40%

Cash from operations (GAAP) /

Adjusted free cash flow (Non-GAAP) $188 - $193 $185 - $190 $188 - $193 $185 - $190

Effective tax rate 21 % 20% - 21% 21 % 20% - 21%

Q3 2022 Guidance

(In millions, except per share amounts) GAAP Non-GAAP

Revenue $145 - $148 $147 - $150

Diluted earnings per share $0.46 - $0.48 $0.96 - $0.98

Based on current exchange rates, the expected negative currency translation impact on Progress fiscal year 2022 business outlook compared to 2021 exchange rates is approximately $11.7 million on GAAP and non-GAAP revenue, and approximately $0.04 on GAAP and non-GAAP diluted earnings per share. The expected negative currency translation impact on Progress fiscal Q3 2022 business outlook compared to 2021 exchange rates on GAAP and non-GAAP revenue is approximately $3.6 million. The expected negative impact on GAAP and non-GAAP diluted Q3 2022 earnings per share is $0.02. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal second quarter of 2022 at 5:00 p.m. ET on Tuesday, June 28, 2022. The call can be accessed on the investor relations section of the company's website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 866-374-5140 or +1 404-400-0571, passcode 186-83-835#. The conference call will include comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These

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