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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
(State or other jurisdiction of
incorporation or organization)
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04-2746201
(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PART I
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Other Information
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Item 6.
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(In thousands, except share data)
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February 28,
2018 |
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November 30, 2017
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||||
Assets
|
|
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|
||||
Current assets:
|
|
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|
||||
Cash and cash equivalents
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$
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117,111
|
|
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$
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133,464
|
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Short-term investments
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50,386
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|
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50,145
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Total cash, cash equivalents and short-term investments
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167,497
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183,609
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Accounts receivable (less allowances of $785 and $676, respectively)
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53,843
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61,210
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Other current assets
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16,312
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|
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18,588
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Total current assets
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237,652
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263,407
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Property and equipment, net
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41,761
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42,261
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Intangible assets, net
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85,757
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94,894
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Goodwill
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315,106
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315,041
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Deferred tax assets
|
948
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1,123
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Other assets
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1,916
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1,992
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Total assets
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$
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683,140
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$
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718,718
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Liabilities and shareholders’ equity
|
|
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||||
Current liabilities:
|
|
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|
||||
Current portion of long-term debt
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$
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5,819
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$
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5,819
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Accounts payable
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8,913
|
|
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9,000
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Accrued compensation and related taxes
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17,406
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32,373
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Dividends payable to shareholders
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6,482
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|
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6,619
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|
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Income taxes payable
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1,042
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|
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1,173
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|
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Other accrued liabilities
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18,797
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20,496
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Short-term deferred revenue
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144,573
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132,538
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Total current liabilities
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203,032
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208,018
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Long-term debt
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114,635
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116,090
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Long-term deferred revenue
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9,655
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|
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9,750
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Deferred tax liabilities
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2,163
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|
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2,809
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Other noncurrent liabilities
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6,003
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|
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5,967
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Commitments and contingencies
|
|
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Shareholders’ equity:
|
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||||
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none
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—
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—
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Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 46,297,792 shares in 2018 and 47,281,035 shares in 2017
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255,047
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|
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249,836
|
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Retained earnings
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107,800
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145,247
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Accumulated other comprehensive loss
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(15,195
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)
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(18,999
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)
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Total shareholders’ equity
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347,652
|
|
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376,084
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Total liabilities and shareholders’ equity
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$
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683,140
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|
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$
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718,718
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Three Months Ended
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||||||
(In thousands, except per share data)
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February 28,
2018 |
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February 28,
2017 |
||||
Revenue:
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||||
Software licenses
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$
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25,343
|
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$
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24,322
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Maintenance and services
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68,704
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66,648
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Total revenue
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94,047
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90,970
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Costs of revenue:
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|
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||||
Cost of software licenses
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1,261
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|
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1,588
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Cost of maintenance and services
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9,824
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10,492
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Amortization of acquired intangibles
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5,818
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3,678
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Total costs of revenue
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16,903
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15,758
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Gross profit
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77,144
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75,212
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Operating expenses:
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Sales and marketing
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21,428
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25,721
|
|
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Product development
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20,245
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17,334
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General and administrative
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11,262
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10,568
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Amortization of acquired intangibles
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3,319
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3,179
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Fees related to shareholder activist
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1,258
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—
|
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Restructuring expenses
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1,821
|
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17,139
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Acquisition-related expenses
|
43
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|
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49
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|
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Total operating expenses
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59,376
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73,990
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Income from operations
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17,768
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1,222
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|
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Other (expense) income:
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Interest expense
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(1,165
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)
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(1,082
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)
|
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Interest income and other, net
|
408
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221
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|
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Foreign currency (loss) gain, net
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(828
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)
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(486
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)
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Total other (expense) income, net
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(1,585
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)
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(1,347
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)
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Income (loss) before income taxes
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16,183
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(125
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)
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Provision for income taxes
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3,271
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|
|
400
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Net income (loss)
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$
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12,912
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$
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(525
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)
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Earnings (loss) per share:
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Basic
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$
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0.28
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$
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(0.01
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)
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Diluted
|
$
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0.27
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$
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(0.01
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)
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Weighted average shares outstanding:
|
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||||
Basic
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46,529
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48,733
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Diluted
|
47,476
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48,733
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Cash dividends declared per common share
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$
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0.140
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$
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0.125
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Three Months Ended
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||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
||||
Net income (loss)
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$
|
12,912
|
|
|
$
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(525
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
3,831
|
|
|
1,228
|
|
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Unrealized (loss) gain on investments, net of tax provision of $39 and $40 for 2018 and 2017, respectively
|
(27
|
)
|
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71
|
|
||
Total other comprehensive income, net of tax
|
3,804
|
|
|
1,299
|
|
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Comprehensive income
|
$
|
16,716
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$
|
774
|
|
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Three Months Ended
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||||||
(In thousands)
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February 28,
2018 |
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February 28,
2017 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
12,912
|
|
|
$
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(525
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property and equipment
|
1,682
|
|
|
1,978
|
|
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Amortization of intangibles and other
|
9,620
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|
|
7,382
|
|
||
Stock-based compensation
|
4,570
|
|
|
1,630
|
|
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Loss on disposal of property
|
135
|
|
|
—
|
|
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Deferred income taxes
|
(406
|
)
|
|
4,268
|
|
||
Excess tax benefit from stock plans
|
—
|
|
|
(183
|
)
|
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Allowances for accounts receivable
|
137
|
|
|
40
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
8,329
|
|
|
16,937
|
|
||
Other assets
|
2,382
|
|
|
(2,278
|
)
|
||
Accounts payable and accrued liabilities
|
(17,830
|
)
|
|
(989
|
)
|
||
Income taxes payable
|
(290
|
)
|
|
55
|
|
||
Deferred revenue
|
10,354
|
|
|
8,985
|
|
||
Net cash flows from operating activities
|
31,595
|
|
|
37,300
|
|
||
Cash flows (used in) from investing activities:
|
|
|
|
||||
Purchases of investments
|
(7,374
|
)
|
|
(854
|
)
|
||
Sales and maturities of investments
|
6,816
|
|
|
6,155
|
|
||
Purchases of property and equipment
|
(1,386
|
)
|
|
(383
|
)
|
||
Net cash flows (used in) from investing activities
|
(1,944
|
)
|
|
4,918
|
|
||
Cash flows used in financing activities:
|
|
|
|
||||
Proceeds from stock-based compensation plans
|
2,469
|
|
|
2,770
|
|
||
Payments for taxes related to net share settlements of equity awards
|
—
|
|
|
(1,306
|
)
|
||
Repurchases of common stock
|
(45,000
|
)
|
|
(15,190
|
)
|
||
Excess tax benefit from stock plans
|
—
|
|
|
183
|
|
||
Dividend payments to shareholders
|
(6,619
|
)
|
|
(6,072
|
)
|
||
Payment of long-term debt
|
(1,547
|
)
|
|
(3,750
|
)
|
||
Net cash flows used in financing activities
|
(50,697
|
)
|
|
(23,365
|
)
|
||
Effect of exchange rate changes on cash
|
4,693
|
|
|
1,018
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(16,353
|
)
|
|
19,871
|
|
||
Cash and cash equivalents, beginning of period
|
133,464
|
|
|
207,036
|
|
||
Cash and cash equivalents, end of period
|
$
|
117,111
|
|
|
$
|
226,907
|
|
|
Three Months Ended
|
||||||
|
February 28,
2018 |
|
February 28,
2017 |
||||
Supplemental disclosure:
|
|
|
|
||||
Cash paid (refunded) for income taxes, net of refunds of $307 in 2018 and $2,121 in 2017
|
$
|
1,614
|
|
|
$
|
(209
|
)
|
Cash paid for interest
|
$
|
942
|
|
|
$
|
844
|
|
Non-cash financing activities:
|
|
|
|
||||
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested
|
$
|
43
|
|
|
$
|
9,393
|
|
Unsettled repurchases of common stock
|
$
|
—
|
|
|
$
|
2,894
|
|
Dividends declared
|
$
|
6,482
|
|
|
$
|
6,037
|
|
•
|
Revenue from term licenses with extended payment terms over the term of the agreement within our Data Connectivity and Integration segment
- These transactions are typically recognized when the amounts are billed to the customer under current revenue recognition guidance. In accordance with ASU 2014-09, revenue from term license performance obligations is expected to be recognized upon delivery and revenue from maintenance performance obligations is expected to be recognized over the contract term. To the extent the Company enters into future term licenses with extended payment terms after the adoption of ASU 2014-09, revenue from term licenses with extended payment terms will be recognized prior to the customer being billed and the Company will recognize a net contract asset on the balance sheet. Accordingly, license revenue will be accelerated under ASU 2014-09 as the Company currently does not recognize revenue until the amounts have been billed to the customer.
|
•
|
Revenue from transactions with multiple elements within our Application Development and Deployment segment (i.e., sales of perpetual licenses with maintenance and/or support)
- These transactions are currently recognized ratably over the associated maintenance period as the Company does not have vendor specific objective evidence ("VSOE") for maintenance or support. Under ASU 2014-09, the requirement to have VSOE for undelivered elements that exists under current guidance is eliminated. Accordingly, the Company will recognize a portion of the sales price as revenue upon delivery of the license instead of recognizing the entire sales price ratably over the maintenance period.
|
|
Amortized Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
113,420
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
113,420
|
|
Money market funds
|
3,691
|
|
|
—
|
|
|
—
|
|
|
3,691
|
|
||||
State and municipal bond obligations
|
35,518
|
|
|
—
|
|
|
(164
|
)
|
|
35,354
|
|
||||
U.S. treasury bonds
|
7,700
|
|
|
—
|
|
|
(38
|
)
|
|
7,662
|
|
||||
Corporate bonds
|
7,449
|
|
|
—
|
|
|
(79
|
)
|
|
7,370
|
|
||||
Total
|
$
|
167,778
|
|
|
$
|
—
|
|
|
$
|
(281
|
)
|
|
$
|
167,497
|
|
|
Amortized Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
130,547
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
130,547
|
|
Money market funds
|
2,917
|
|
|
—
|
|
|
—
|
|
|
2,917
|
|
||||
State and municipal bond obligations
|
40,458
|
|
|
—
|
|
|
(231
|
)
|
|
40,227
|
|
||||
U.S. treasury bonds
|
3,517
|
|
|
—
|
|
|
(26
|
)
|
|
3,491
|
|
||||
Corporate bonds
|
6,463
|
|
|
—
|
|
|
(36
|
)
|
|
6,427
|
|
||||
Total
|
$
|
183,902
|
|
|
$
|
—
|
|
|
$
|
(293
|
)
|
|
$
|
183,609
|
|
|
February 28, 2018
|
|
November 30, 2017
|
||||||||||||
|
Cash and
Equivalents
|
|
Short-Term
Investments
|
|
Cash and
Equivalents
|
|
Short-Term
Investments
|
||||||||
Cash
|
$
|
113,420
|
|
|
$
|
—
|
|
|
$
|
130,547
|
|
|
$
|
—
|
|
Money market funds
|
3,691
|
|
|
—
|
|
|
2,917
|
|
|
—
|
|
||||
State and municipal bond obligations
|
—
|
|
|
35,354
|
|
|
—
|
|
|
40,227
|
|
||||
U.S. treasury bonds
|
—
|
|
|
7,662
|
|
|
—
|
|
|
3,491
|
|
||||
Corporate bonds
|
—
|
|
|
7,370
|
|
|
—
|
|
|
6,427
|
|
||||
Total
|
$
|
117,111
|
|
|
$
|
50,386
|
|
|
$
|
133,464
|
|
|
$
|
50,145
|
|
|
February 28,
2018 |
|
November 30,
2017 |
||||
Due in one year or less
|
$
|
24,188
|
|
|
$
|
22,333
|
|
Due after one year
(1)
|
26,198
|
|
|
27,812
|
|
||
Total
|
$
|
50,386
|
|
|
$
|
50,145
|
|
(1)
|
Includes state and municipal bond obligations, U.S. treasury bonds, and corporate bonds, which are securities representing investments available for current operations and are classified as current in the condensed consolidated balance sheets.
|
|
February 28, 2018
|
|
November 30, 2017
|
||||||||||||
|
Notional Value
|
|
Fair Value
|
|
Notional Value
|
|
Fair Value
|
||||||||
Forward contracts to sell U.S. dollars
|
$
|
142,202
|
|
|
$
|
1,153
|
|
|
$
|
119,192
|
|
|
$
|
(27
|
)
|
Forward contracts to purchase U.S. dollars
|
375
|
|
|
(2
|
)
|
|
462
|
|
|
—
|
|
||||
Total
|
$
|
142,577
|
|
|
$
|
1,151
|
|
|
$
|
119,654
|
|
|
$
|
(27
|
)
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
3,691
|
|
|
$
|
3,691
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal bond obligations
|
35,354
|
|
|
—
|
|
|
35,354
|
|
|
—
|
|
||||
U.S. treasury bonds
|
7,662
|
|
|
—
|
|
|
7,662
|
|
|
—
|
|
||||
Corporate bonds
|
7,370
|
|
|
—
|
|
|
7,370
|
|
|
—
|
|
||||
Foreign exchange derivatives
|
$
|
1,151
|
|
|
$
|
—
|
|
|
$
|
1,151
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
2,917
|
|
|
$
|
2,917
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal bond obligations
|
40,227
|
|
|
—
|
|
|
40,227
|
|
|
—
|
|
||||
U.S. treasury bonds
|
3,491
|
|
|
—
|
|
|
3,491
|
|
|
—
|
|
||||
Corporate bonds
|
6,427
|
|
|
—
|
|
|
6,427
|
|
|
—
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign exchange derivatives
|
$
|
(27
|
)
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
$
|
—
|
|
|
February 28, 2018
|
|
November 30, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Purchased technology
|
$
|
154,301
|
|
|
$
|
(94,043
|
)
|
|
$
|
60,258
|
|
|
$
|
154,301
|
|
|
$
|
(88,224
|
)
|
|
$
|
66,077
|
|
Customer-related
|
67,802
|
|
|
(48,828
|
)
|
|
18,974
|
|
|
67,802
|
|
|
(46,230
|
)
|
|
21,572
|
|
||||||
Trademarks and trade names
|
17,740
|
|
|
(11,215
|
)
|
|
6,525
|
|
|
17,740
|
|
|
(10,495
|
)
|
|
7,245
|
|
||||||
Total
|
$
|
239,843
|
|
|
$
|
(154,086
|
)
|
|
$
|
85,757
|
|
|
$
|
239,843
|
|
|
$
|
(144,949
|
)
|
|
$
|
94,894
|
|
Remainder of 2018
|
$
|
26,918
|
|
2019
|
34,932
|
|
|
2020
|
10,152
|
|
|
2021
|
10,033
|
|
|
2022
|
3,722
|
|
|
Total
|
$
|
85,757
|
|
Balance, November 30, 2017
|
$
|
315,041
|
|
Translation adjustments
|
65
|
|
|
Balance, February 28, 2018
|
$
|
315,106
|
|
|
November 30, 2017
|
|
Translation Adjustments
|
|
February 28, 2018
|
||||||
OpenEdge
|
$
|
249,036
|
|
|
$
|
65
|
|
|
$
|
249,101
|
|
Data Connectivity and Integration
|
19,040
|
|
|
—
|
|
|
19,040
|
|
|||
Application Development and Deployment
|
46,965
|
|
|
—
|
|
|
46,965
|
|
|||
Total goodwill
|
$
|
315,041
|
|
|
$
|
65
|
|
|
$
|
315,106
|
|
|
Total
|
|
Life
|
||
Net working capital
|
$
|
(963
|
)
|
|
|
Property, plant and equipment
|
26
|
|
|
|
|
Purchased technology
|
22,100
|
|
|
5 Years
|
|
Trade name
|
1,800
|
|
|
5 Years
|
|
Customer relationships
|
100
|
|
|
5 Years
|
|
Net deferred tax assets
|
1,465
|
|
|
|
|
Goodwill
|
24,351
|
|
|
|
|
Net assets acquired
|
$
|
48,879
|
|
|
|
|
Total
|
|
Life
|
||
Net working capital
|
$
|
(174
|
)
|
|
|
Property, plant and equipment
|
68
|
|
|
|
|
Purchased technology
|
19,900
|
|
|
5 Years
|
|
Trade name
|
800
|
|
|
5 Years
|
|
Customer relationships
|
100
|
|
|
5 Years
|
|
Deferred taxes
|
(5,006
|
)
|
|
|
|
Goodwill
|
12,583
|
|
|
|
|
Net assets acquired
|
$
|
28,271
|
|
|
|
Remainder of 2018
|
$
|
4,640
|
|
2019
|
6,188
|
|
|
2020
|
9,281
|
|
|
2021
|
12,375
|
|
|
2022
|
89,719
|
|
|
Total
|
$
|
122,203
|
|
|
Three Months Ended
|
||||||
|
February 28,
2018 |
|
February 28,
2017 |
||||
Cost of maintenance and services
|
$
|
246
|
|
|
$
|
256
|
|
Sales and marketing
|
370
|
|
|
363
|
|
||
Product development
|
2,046
|
|
|
(104
|
)
|
||
General and administrative
|
1,908
|
|
|
1,115
|
|
||
Total stock-based compensation
|
$
|
4,570
|
|
|
$
|
1,630
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Losses on Investments
|
|
Accumulated Other Comprehensive Loss
|
||||||
Balance, December 1, 2017
|
$
|
(18,770
|
)
|
|
$
|
(229
|
)
|
|
$
|
(18,999
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
3,831
|
|
|
(27
|
)
|
|
3,804
|
|
|||
Balance, February 28, 2018
|
$
|
(14,939
|
)
|
|
$
|
(256
|
)
|
|
$
|
(15,195
|
)
|
|
Excess
Facilities and
Other Costs
|
|
Employee Severance and Related Benefits
|
|
Total
|
||||||
Balance, December 1, 2017
|
$
|
570
|
|
|
$
|
3,556
|
|
|
$
|
4,126
|
|
Costs incurred
|
840
|
|
|
981
|
|
|
1,821
|
|
|||
Cash disbursements
|
(465
|
)
|
|
(2,274
|
)
|
|
(2,739
|
)
|
|||
Translation adjustments and other
|
48
|
|
|
25
|
|
|
73
|
|
|||
Balance, February 28, 2018
|
$
|
993
|
|
|
$
|
2,288
|
|
|
$
|
3,281
|
|
|
Three Months Ended
|
||||||
|
February 28,
2018 |
|
February 28,
2017 |
||||
Net income (loss)
|
$
|
12,912
|
|
|
$
|
(525
|
)
|
Weighted average shares outstanding
|
46,529
|
|
|
48,733
|
|
||
Dilutive impact from common stock equivalents
|
947
|
|
|
—
|
|
||
Diluted weighted average shares outstanding
|
47,476
|
|
|
48,733
|
|
||
Basic earnings (loss) per share
|
$
|
0.28
|
|
|
$
|
(0.01
|
)
|
Diluted earnings (loss) per share
|
$
|
0.27
|
|
|
$
|
(0.01
|
)
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2018 |
|
February 28,
2017 |
||||
Software licenses
|
$
|
25,343
|
|
|
$
|
24,322
|
|
Maintenance
|
61,479
|
|
|
59,138
|
|
||
Services
|
7,225
|
|
|
7,510
|
|
||
Total
|
$
|
94,047
|
|
|
$
|
90,970
|
|
•
|
Streamlined Operating Approach
. In fiscal year 2017, we adapted our organization and operating principles to focus primarily on customer and partner retention and success for many of our core products. For selected products that have new customer acquisition potential, we also strengthened our demand generation and high volume, low touch e-commerce capabilities.
|
•
|
New Product Strategy
. As part of the new strategic plan, we undertook a new product strategy to provide the platform and tools enterprises need to build next generation applications that drive their businesses, known as “Cognitive Applications.” We offer this platform to both new customers and partners as well as our existing OpenEdge partner and customer ecosystems. Our platform for Cognitive Applications makes it easy for developers to build machine learning into their applications, and includes:
|
◦
|
Our leading UI development tools, which enable organizations to easily build engaging user interfaces for any device or front end;
|
◦
|
Our NativeScript offering, which allows developers to use JavaScript to build native applications across multiple mobile platforms;
|
◦
|
A modern serverless cloud backend application platform that runs on any cloud, is secure, high-performing, and highly-scalable while supporting all modern user interfaces;
|
◦
|
Automated and intuitive machine learning capabilities for accelerating the creation and delivery of Cognitive Applications;
|
◦
|
Our data connectivity and integration capabilities;
|
◦
|
Our business logic and rules capabilities; and
|
◦
|
Web Content Management for delivering personalized and engaging digital experiences.
|
•
|
Restructuring
. With the adoption of our new product strategy, we discontinued our investment in our Digital Factory strategy and re-aligned our resources consistent with our core operating approach. To that end, during fiscal year 2017, we implemented restructuring efforts including the consolidation of facilities, implementation of a simplified organizational structure and a reduction of marketing and other external expenses. In addition, we reduced headcount by over 400 employees, totaling over 20% of our workforce. We reduced our full year expenses by over $30 million by the end of fiscal year 2017.
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
As Reported
|
|
Constant
Currency
|
||||||
Revenue
|
$
|
94,047
|
|
|
$
|
90,970
|
|
|
3
|
%
|
|
—
|
%
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
As Reported
|
|
Constant
Currency
|
||||||
License
|
$
|
25,343
|
|
|
$
|
24,322
|
|
|
4
|
%
|
|
1
|
%
|
As a percentage of total revenue
|
27
|
%
|
|
27
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
As Reported
|
|
Constant
Currency
|
||||||
Maintenance
|
$
|
61,479
|
|
|
$
|
59,138
|
|
|
4
|
%
|
|
1
|
%
|
As a percentage of total revenue
|
65
|
%
|
|
65
|
%
|
|
|
|
|
||||
Services
|
7,225
|
|
|
7,510
|
|
|
(4
|
)%
|
|
(5
|
)%
|
||
As a percentage of total revenue
|
8
|
%
|
|
8
|
%
|
|
|
|
|
||||
Total maintenance and services revenue
|
$
|
68,704
|
|
|
$
|
66,648
|
|
|
3
|
%
|
|
—
|
%
|
As a percentage of total revenue
|
73
|
%
|
|
73
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
As Reported
|
|
Constant
Currency
|
||||||
North America
|
$
|
51,641
|
|
|
$
|
50,305
|
|
|
3
|
%
|
|
3
|
%
|
As a percentage of total revenue
|
55
|
%
|
|
55
|
%
|
|
|
|
|
||||
EMEA
|
$
|
33,014
|
|
|
$
|
29,844
|
|
|
11
|
%
|
|
2
|
%
|
As a percentage of total revenue
|
35
|
%
|
|
33
|
%
|
|
|
|
|
||||
Latin America
|
$
|
4,461
|
|
|
$
|
5,023
|
|
|
(11
|
)%
|
|
(11
|
)%
|
As a percentage of total revenue
|
5
|
%
|
|
6
|
%
|
|
|
|
|
||||
Asia Pacific
|
$
|
4,931
|
|
|
$
|
5,798
|
|
|
(15
|
)%
|
|
(17
|
)%
|
As a percentage of total revenue
|
5
|
%
|
|
6
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
As Reported
|
|
Constant Currency
|
||||||
OpenEdge segment
|
$
|
66,408
|
|
|
$
|
64,508
|
|
|
3
|
%
|
|
(1
|
)%
|
Data Connectivity and Integration segment
|
7,604
|
|
|
6,828
|
|
|
11
|
%
|
|
11
|
%
|
||
Application Development and Deployment segment
|
20,035
|
|
|
19,634
|
|
|
2
|
%
|
|
2
|
%
|
||
Total revenue
|
$
|
94,047
|
|
|
$
|
90,970
|
|
|
3
|
%
|
|
—
|
%
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Cost of software licenses
|
$
|
1,261
|
|
|
$
|
1,588
|
|
|
(21
|
)%
|
As a percentage of software license revenue
|
5
|
%
|
|
7
|
%
|
|
|
|||
As a percentage of total revenue
|
1
|
%
|
|
2
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Cost of maintenance and services
|
$
|
9,824
|
|
|
$
|
10,492
|
|
|
(6
|
)%
|
As a percentage of maintenance and services revenue
|
14
|
%
|
|
16
|
%
|
|
|
|||
As a percentage of total revenue
|
10
|
%
|
|
12
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Amortization of acquired intangibles
|
$
|
5,818
|
|
|
$
|
3,678
|
|
|
58
|
%
|
As a percentage of total revenue
|
6
|
%
|
|
4
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Gross profit
|
$
|
77,144
|
|
|
$
|
75,212
|
|
|
3
|
%
|
As a percentage of total revenue
|
82
|
%
|
|
83
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Sales and marketing
|
$
|
21,428
|
|
|
$
|
25,721
|
|
|
(17
|
)%
|
As a percentage of total revenue
|
23
|
%
|
|
28
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Product development
|
$
|
20,245
|
|
|
$
|
17,334
|
|
|
17
|
%
|
As a percentage of total revenue
|
22
|
%
|
|
19
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
General and administrative
|
$
|
11,262
|
|
|
$
|
10,568
|
|
|
7
|
%
|
As a percentage of total revenue
|
12
|
%
|
|
12
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Amortization of acquired intangibles
|
$
|
3,319
|
|
|
$
|
3,179
|
|
|
4
|
%
|
As a percentage of total revenue
|
4
|
%
|
|
3
|
%
|
|
|
|
Three Months Ended
|
||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change |
||||
Fees related to shareholder activist
|
$
|
1,258
|
|
|
$
|
—
|
|
|
*
|
As a percentage of total revenue
|
1
|
%
|
|
—
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Restructuring expenses
|
$
|
1,821
|
|
|
$
|
17,139
|
|
|
(89
|
)%
|
As a percentage of total revenue
|
2
|
%
|
|
19
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Acquisition-related expenses
|
$
|
43
|
|
|
$
|
49
|
|
|
(12
|
)%
|
As a percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Income from operations
|
$
|
17,768
|
|
|
$
|
1,222
|
|
|
1,354
|
%
|
As a percentage of total revenue
|
19
|
%
|
|
2
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change |
|||||
OpenEdge segment
|
$
|
50,646
|
|
|
$
|
46,631
|
|
|
9
|
%
|
Data Connectivity and Integration segment
|
5,975
|
|
|
4,566
|
|
|
31
|
%
|
||
Application Development and Deployment segment
|
13,237
|
|
|
12,098
|
|
|
9
|
%
|
||
Other unallocated expenses
|
(52,090
|
)
|
|
(62,073
|
)
|
|
(16
|
)%
|
||
Income from operations
|
$
|
17,768
|
|
|
$
|
1,222
|
|
|
1,354
|
%
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Interest expense
|
$
|
(1,165
|
)
|
|
$
|
(1,082
|
)
|
|
8
|
%
|
Interest income and other, net
|
408
|
|
|
221
|
|
|
85
|
%
|
||
Foreign currency (loss) gain, net
|
(828
|
)
|
|
(486
|
)
|
|
(70
|
)%
|
||
Total other (expense) income, net
|
$
|
(1,585
|
)
|
|
$
|
(1,347
|
)
|
|
(18
|
)%
|
As a percentage of total revenue
|
(2
|
)%
|
|
(1
|
)%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
|||||
Provision for income taxes
|
$
|
3,271
|
|
|
$
|
400
|
|
|
718
|
%
|
As a percentage of total revenue
|
3
|
%
|
|
—
|
%
|
|
|
|
Three Months Ended
|
||||||||
(In thousands)
|
February 28, 2018
|
|
February 28, 2017
|
|
Percentage
Change
|
||||
Net income (loss)
|
$
|
12,912
|
|
|
$
|
(525
|
)
|
|
*
|
As a percentage of total revenue
|
14
|
%
|
|
(1
|
)%
|
|
|
(In thousands)
|
February 28,
2018 |
|
November 30, 2017
|
||||
Cash and cash equivalents
|
$
|
117,111
|
|
|
$
|
133,464
|
|
Short-term investments
|
50,386
|
|
|
50,145
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
167,497
|
|
|
$
|
183,609
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2018 |
|
February 28,
2017 |
||||
Net income (loss)
|
$
|
12,912
|
|
|
$
|
(525
|
)
|
Non-cash reconciling items included in net income
|
15,738
|
|
|
15,115
|
|
||
Changes in operating assets and liabilities
|
2,945
|
|
|
22,710
|
|
||
Net cash flows from operating activities
|
$
|
31,595
|
|
|
$
|
37,300
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2018 |
|
February 28,
2017 |
||||
Net investment activity
|
$
|
(558
|
)
|
|
$
|
5,301
|
|
Purchases of property and equipment
|
(1,386
|
)
|
|
(383
|
)
|
||
Net cash flows used in investing activities
|
$
|
(1,944
|
)
|
|
$
|
4,918
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2018 |
|
February 28,
2017 |
||||
Proceeds from stock-based compensation plans
|
$
|
2,469
|
|
|
$
|
2,770
|
|
Repurchases of common stock
|
(45,000
|
)
|
|
(15,190
|
)
|
||
Payment of long-term debt
|
(1,547
|
)
|
|
(3,750
|
)
|
||
Dividend payments to shareholders
|
(6,619
|
)
|
|
(6,072
|
)
|
||
Other financing activities
|
—
|
|
|
(1,123
|
)
|
||
Net cash flows used in financing activities
|
$
|
(50,697
|
)
|
|
$
|
(23,365
|
)
|
(In thousands)
|
February 28,
2018 |
|
February 28,
2017 |
||||
Deferred revenue, primarily related to unexpired maintenance and support contracts
|
$
|
154,228
|
|
|
$
|
146,952
|
|
Multi-year licensing arrangements
(1)
|
17,563
|
|
|
23,387
|
|
||
Total revenue backlog
|
$
|
171,791
|
|
|
$
|
170,339
|
|
(1)
|
Our backlog of orders not included on the balance sheet is not subject to our normal accounting controls for information that is either reported in or derived from our basic financial statements. Note that approximately $15.6 million of the multi-year licensing arrangements as of February 28, 2018 relate to DataDirect OEM arrangements, while the remaining amount relates to arrangements in our OpenEdge business unit.
|
•
|
Revenue from term licenses with extended payment terms over the term of the agreement within our Data Connectivity and Integration segment
- These transactions are typically recognized when the amounts are billed to the customer under current revenue recognition guidance. In accordance with ASU 2014-09, revenue from term license performance obligations is expected to be recognized upon delivery and revenue from maintenance performance obligations is expected to be recognized over the contract term. To the extent the Company enters into future term licenses with extended payment terms after the adoption of ASU 2014-09, revenue from term licenses with extended payment terms will be recognized prior to the customer being billed and the Company will recognize a net contract asset on the balance sheet. Accordingly, license revenue will be accelerated under ASU 2014-09 as the Company currently does not recognize revenue until the amounts have been billed to the customer.
|
•
|
Revenue from transactions with multiple elements within our Application Development and Deployment segment (i.e., sales of perpetual licenses with maintenance and/or support)
- These transactions are currently recognized ratably over the associated maintenance period as the Company does not have vendor specific objective evidence ("VSOE") for maintenance or support. Under ASU 2014-09, the requirement to have VSOE for undelivered elements that exists under current guidance is eliminated. Accordingly, the Company will recognize a portion of the sales price as revenue upon delivery of the license instead of recognizing the entire sales price ratably over the maintenance period.
|
•
|
changes in demand for our products;
|
•
|
introduction, enhancement or announcement of products by us or our competitors;
|
•
|
market acceptance of our new products;
|
•
|
the growth rates of certain market segments in which we compete;
|
•
|
size and timing of significant orders;
|
•
|
a high percentage of our revenue is generated in the third month of each fiscal quarter and any failure to receive, complete or process orders at the end of any quarter could cause us to fall short of our revenue targets;
|
•
|
budgeting cycles of customers;
|
•
|
mix of distribution channels;
|
•
|
mix of products and services sold;
|
•
|
mix of international and North American revenues;
|
•
|
fluctuations in currency exchange rates;
|
•
|
changes in the level of operating expenses;
|
•
|
changes in management;
|
•
|
restructuring programs;
|
•
|
changes in our sales force;
|
•
|
completion or announcement of acquisitions by us or our competitors;
|
•
|
customer order deferrals in anticipation of new products announced by us or our competitors; and
|
•
|
general economic conditions in regions in which we conduct business.
|
•
|
longer payment cycles;
|
•
|
credit risk and higher levels of payment fraud;
|
•
|
greater difficulties in accounts receivable collection;
|
•
|
varying regulatory requirements;
|
•
|
compliance with international and local trade, labor and export control laws;
|
•
|
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and corrupt payments to government officials;
|
•
|
restrictions on the transfer of funds;
|
•
|
difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural differences;
|
•
|
reduced or minimal protection of intellectual property rights in some countries;
|
•
|
laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses;
|
•
|
seasonal reductions in business activity during the summer months in Europe and certain other parts of the world;
|
•
|
economic instability in emerging markets; and
|
•
|
potentially adverse tax consequences.
|
•
|
if new or current customers desire only perpetual licenses, we may not be successful in selling subscriptions;
|
•
|
although we intend to support our perpetual license business, the increased emphasis on a cloud strategy may raise concerns among our installed customer base;
|
•
|
we may be unsuccessful in achieving our target pricing;
|
•
|
our revenues might decline over the short or long term as a result of this strategy;
|
•
|
our relationships with existing partners that resell perpetual licenses may be damaged; and
|
•
|
we may incur costs at a higher than forecasted rate as we enhance and expand our cloud operations.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
(1)
|
||||||
December 2017
|
|
825,226
|
|
|
$
|
42.02
|
|
|
825,226
|
|
|
$
|
185,310
|
|
January 2018
|
|
136,202
|
|
|
43.21
|
|
|
136,202
|
|
|
179,422
|
|
||
February 2018
|
|
92,558
|
|
|
47.76
|
|
|
92,558
|
|
|
175,000
|
|
||
Total
|
|
1,053,986
|
|
|
$
|
42.68
|
|
|
1,053,986
|
|
|
$
|
175,000
|
|
(1)
|
In September 2017, our Board of Directors increased our total share repurchase authorization to $250.0 million. As of
February 28, 2018
, there was $175.0 million remaining under this authorization.
|
•
|
Audit Committee - $25,000 for the Chairman and $20,000 for the other members;
|
•
|
Compensation Committee - $25,000 for the Chairman and $15,000 for the other members; and
|
•
|
Nominating and Corporate Governance Committee - $12,500 for the Chairman and $10,000 for the other members.
|
Exhibit No.
|
|
Description
|
|
|
|
10.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
101
|
|
The following materials from Progress Software Corporation’s Quarterly Report on Form 10-Q for the three months ended February 28, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of February 28, 2018 and November 30, 2017; (ii) Condensed Consolidated Statements of Income for the three months ended February 28, 2018 and February 28, 2017; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended February 28, 2018 and February 28, 2017; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended February 28, 2018 and February 28, 2017; and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
Dated:
|
April 6, 2018
|
|
/s/ YOGESH K. GUPTA
|
|
|
|
Yogesh K. Gupta
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
April 6, 2018
|
|
/s/ PAUL A. JALBERT
|
|
|
|
Paul A. Jalbert
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
A.
|
Amounts of 2018 Fiscal Year Compensation
|
•
|
Annual Board Retainer (cash): $50,000
|
•
|
Additional Annual Non-Executive
Chairman Retainer (cash): $50,000 |
•
|
Committee fees (cash):
|
•
|
$200,000 to be delivered in one installment (as set forth below under “Timing”), consisting of Deferred Stock Units (“DSUs”).
|
•
|
The number of DSUs to be issued will be determined by dividing $200,000 by the fair market value of Company common stock on the date of issuance. The DSUs will vest in a single installment on the date of the 2019 Annual Meeting, subject to continued service on the Board through such date, with full acceleration upon a change in control.
|
•
|
DSUs will be settled upon a Director’s separation from service from the Board of Directors or change in control, if earlier, and not upon vesting.
|
•
|
Annual fiscal year cash compensation will be paid in one installment at the Compensation Committee meeting in June or, promptly following the date of the 2018 Annual Meeting, whichever is earlier, or such other date as determined by the Compensation Committee. Amounts paid will be pro-rated for partial year service, with a fractional month of service rounded to a whole month. A Director who joins the Board other than on the first day of the fiscal year will be paid a pro-rated amount of the annual fiscal year compensation.
|
/s/ YOGESH K. GUPTA
|
Yogesh K. Gupta
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ PAUL A. JALBERT
|
Paul A. Jalbert
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ YOGESH K. GUPTA
|
|
/s/ PAUL A. JALBERT
|
||
President and Chief Executive Officer
|
|
Chief Financial Officer
|
||
|
|
|
|
|
Date:
|
April 6, 2018
|
|
Date:
|
April 6, 2018
|