PRGS - Earnings call transcript Q3 2017 | Progress Software Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Progress Software Corporation Q3 Investor Relations Conference Call. At this time, I would like to turn the conference over to Brian Flanagan, Vice President, Investor Relations. Please go ahead.

Brian Flanagan

Thank you, Shannon. Good afternoon, everyone and thanks for joining us for Progress Software’s fiscal third quarter 2017 earnings call. Yogesh our and Chief is and Executive today Jalbert, Paul Financial me Gupta, Chief President Officer With Officer.

and and subject outlook we Before like we product is available press Harbor the whether represents developments as might today discuss plans, which well call, information included risks or corporate forward-looking information be no our review to regarding statement of assumes to or would of financial result outlook our Safe otherwise. may a in Software and of that remind you cost obligation Progress uncertainties. our operating get that guidance statements both during in strategies, started, Please performance, as update website for this to this information, future Progress forward-looking new I at Investor as release, considered only other call, is Relations This section and initiatives this today’s Software’s forward-looking. progress.com. in as the

call, this margin flow per and to the operating on basis. Additionally, earnings are cash we refer adjusted amounts a and share non-GAAP free diluted on revenue,

conference call now website to section. via recorded Relations and recommend available the You in Today, it in I find for This earnings GAAP the comparable be I details. you most issued will a fiscal numbers the XXXX full on that, contains measures document will Investor quarter financial Today’s these financial reconciliation for its directly it financial our can non-GAAP With today. the third press our results we to website. our Yogesh. will published over entirety release reference in release our of our of details on replay be turn and specific

Yogesh Gupta

delighted enterprise this months, on relationships and XX%. Four, after the a XX we core A important as you shareholder Welcome we steps I more to the you, walking recently, reflecting field providing forward several our begin in relationships new the so, Thank board. call. have have Gary covered ISVs team, I with commitment a the But our first and am OpenEdge gap over for of an X our my to shareholder September our am least new we strategy. I elaborate let their and management through of I Two, past of good partners have including X addition several our quarter our customers. strengthened key Three, us on update built this January, themes the looking also conference will quarter our have efficient you our to letter. by One, and everyone. with and for we on customers releases over had to to organization our of results third to as core Gary our afternoon headcount fiscal on head my the that restructured before at our most them we drive me I operations product XX core CEO. months indicator during products. Quinn continued years. make do year is of reduced taken XX by recapping revised products. value with Brian

have and depend managing and with dividend those commitment efficiently share come to shareholders year-over-year. the Five, margins had and DevTools These our Data XX.X XX% our the upon in from bolstering to time buyback. relationship core reflect the January returned and For have and expense we example, that with prudent focus customers we form products Connectivity our of multiple to same million And while year, management throughout on XX% at ISVs OpenEdge within and over and we business $XX six, our to releases released steps portfolio. restructuring our us. our expanded our

be strong can this our performance highlighted am performance laser the revenue financial which pleased of focus. continuing of we traced was QX very by exceeded license guidance, strong I directly high-end our that to Our ISVs. OpenEdge

We share also our by guidance exceeded $X.XX. earnings per

essential enhancing and the in are and we of us with planning cash we a our detail dividend September that of margins to we of to FY completed are margin, to We we ‘XX approach believe ‘XX established and To the FY beyond. as flow the end, reported XX% It progress operating value. provide profitability additional has the DataRPM am Paul guidance few have with and pleased two in reported while revenue, press our in our FY have integrating release enabled we enabled I this made also end on moments. on that Kinvey, earnings today. share which financial stages the and momentum ‘XX maximizing earlier as also to-date year. shareholder results raise again flow for we XX. quarterly in guidance we acquisitions will our We per in free are us has our are cash pleased operating as increase targeting we still

support forward, financial will shortly. I with strategy continue discuss to line that M&A our in criteria Going will and specific strategic

fortunate have us acquisitions. to that balance are make a We enables strong to sheet future

will we be disciplined doing However, extremely in so.

manage my well. on strategy shortly to and go in like that, our More letter. shareholders. as to prudently covered enhanced greater cash themes capital With September we the We to would XX business I return have I allocation our as flow into this on also continue detail

but needs not center which At customer is of commitment must our core we and the DataDirect position only into we of an customers. investment. XXXX. be of our To our in the level of strategy, the updated Let’s year, a articulated start successful, which unwavering large with today, At for OpenEdge, Telerik to January of beginning and our to the serving installed maintain strategy well the we expand future. profit strategy requires our certain success, base retention,

begin needed to path a fiercely future path, to competitive strong historically applications stay of new would our Without markets. customers and our on products, to customer strong very build built products technology. suffer the also we which this our and products our D&A remain businesses. that a how needs provide loyal ISVs the although capabilities retention eventually these to from have determination, on grow ISVs for Based inherent providing they if the We to built using our their leverage of application we non-Progress recognized such to We defined them our in would development and address future base. their

delivered to always and have organization’s that the applications. mission-critical business into develop We deploy platform need

competitive business applications We also articulated business mission-critical characteristics data it advantage. and tomorrow’s vision learn our leverage would from for that their

to being applications we quickly be would deploy providing am that those as efficiently. thrilled for and XXXX, much the I efforts progress solutions tomorrow’s themselves without report necessary build presented now Our to that our and this my the in is building realized seizing and platform best through offer advantage quickly vision effectively. cost and deploying made have Kinvey. applications opportunities in We and competitive DataRPM to not the could

few a explain to minutes take what mean. I me Let

timely manner we ‘XX, deploying of through began not year building internal efforts. recognized providing market fulfill responsive best in fiscal application of As we and our a and the that tomorrow’s could vision development platform we

We rules decision platform the requirements from UI of and generation many and faster of machine we needed to through the to machine data end Machine applications enables such world harness offer and needed of emerged. to next as platform much class the efficiently. our build is of While capabilities learning logic tools, volumes elements connectivity Automated additional foundational strong back we better, organizations to make best-in-class critical critical on expand and more capabilities. had needed data we unused to learning tomorrow. for learning previously business operate

and of customers. become dramatically platform added our with do emphasize this predictive is key applications for businesses manage building capabilities completed secure, of platform built an manufacturing A this these industrial acquisitions, core challenge expense of complete. will easily on these base is strong reducing leading also come developers a ramp Kinvey with the related point, Critically, DataRPM for use FY mobile tooling With have sales continue with customers. efforts strategy. must to also new and new predictive combines provider The XX focused for applications, features timing Two these strong for applications. less addressing and We To require intelligent taken that and of to similar requirement is back a offer and have and expensive the a OpenEdge $XX leading app-by-app on time-to-market. further cognitive provider is and applications. our they which now validated their provides of on IoT marketing to we and not cloud-based ‘XX cognitive cloud-native, to process back-end capabilities, customers. way to The to by server We their solution Having fashion. All lean complicated, our for needed both advance of OpenEdge existing web DataRPM platform robust ERP partners our chose a and up quickly maintenance. half acquisitions our platform. domain, platform and strong acquired analytic than technologies. responded our in predictive development and our we prone without in cost from to need We and them ERP a the ISVs end cloud scalable. and modern, end focusing features back-end with what We adopters largest consistent critical. basis because this less significant of back that demand. our industrial front highly the even the met made million early mobile, end be performant a best reception expense platform consistent a associated DataRPM, last in time-consuming, a we cloud is ensure equally And has data our we partners have develop the call, cohesive partner developers. OpenEdge we set total will predictive has into a future We error these not connectivity integrating we Kinvey, build the to maintenance almost run and maintenance this businesses and to before of applications IoT, in needs strides With applications initial is back-end of integration

the we result, have with projects these several in prospects a pipeline. As

We are well customers acquisitions critical enabled meet compelling to of last This as new future is the and ISV well What repeating. attract Progress bears software ISVs customers. now they and customers. point our to to the our needs these needs positioned of makes future that enterprise as serve so

allowed to industry past this us application million major were as is a and done database, partners need have we a first future revenue applications saw our OpenEdge Today, company their we the in the Only as course, the to from a in we cloud. SaaS trends ago, in deploy the with plus applications shifted stream model $XX decade for in revenue partners offer their well. Of in cloud a development our double-digit low multi-tenant growth rate. which deploying in the

a view of the Let me about reasons now two spend are overall to There principle few talking M&A our within acquisitions. we for context us strategy. minutes how pursue

DataRPM add continuously and evolving important our to profitability we meet elsewhere critical capability evolving customer take to to recognized those that is to or the needs must organic we is not look will Kinvey which will an first serving If strategy, to large customers. of is of core of product suffer. revenue our to don’t, and base development. meet are requirements. likely our examples technology critical filling gaps they We conducive retention, steps business and needs The installed that

we remain in we made not acquisitions additions, and to in In light ‘XX, position in we a strengthening in future. do of platform need make As to I these this competitive the the and grow mentioned would offer their advances customers ISVs expect our FY of foreseeable to without to be not the they our earlier, business. other platform type have

capital profile. in synergistic. mind, there or product, revenue be minimum, of structure than capital hurdle that our invested in of significant type we evolve. recurring be highly At currently complementary must which our and operating above kind We margin. to in estimate the return average approximately that year although is and this optimize of over weighted would weighted off company. is are the completion that benchmarks acquisitions current operating depend time second and WAC, Bearing target that interest likely risk better acquisitions cost growth offerings of margin large core These generate and are bolster that opportunities on would as a within market the rate after These a equal target capital. upon of profile would our average business must our part we to The is in acquisition rates expense will X% to audience target. add terms the synergies of cost the X exact XX%, to The fluctuate

Given businesses acquisition pursue earnings. of the would anticipate our to be return criteria, we kind accretive financial profile intend of and non-GAAP the to our that any such we immediately

to we are financial We extremely we these to our our businesses run we are leverage because pursuing to and going more follow can these efficiently. approach in model these We can to in acquisitions, criteria be acquisitions. disciplined be these going successful believe operating

that confident to aggressively us class Also, targeted focused businesses expertise. expenses a managing that an applications new is when that investments, vendors audience teams world business Conversely, we competition Our are and we we their application our acquisitions. can not am enterprises pursue in have will and the other intimately in primary can our and them development with organization goals. acquire. with mission-critical while proven enter do to familiar we business enabling direct margins look by I the we core one strength pursuing to our run and require This we markets will that expand management with making operating same for build achieve our and acquisitions lean put levels. have we is limited and selling team us to or I core ISVs which software solutions

Importantly, believe acquisitions, disciplined extremely know sheet to can we acquisitions. have finance leverage strong balance we while to we that going want support that you we a to using are in be our

gross a Xx maximize a to of target will will above support on to temporary shareholders. we a level would our evaluate Xx debt to ratio that we value leverage, that EBITDA transaction For for basis going although

to long capital am of in allocation, ‘XX returning I that shareholders. Progress’ to history we have capital Turning pleased FY built upon

capital Our capital continuing to our We most our shareholder the long-term dividends, buybacks allocate share to efficient value. manner goal in is to M&A. allocate create and carefully

will FY and announced to paying annual of continued XX% in reflecting confidence we our a flow As quarterly of you quarterly ‘XX. cash September on of we from in began XX% the a dividend XX, stability our dividends strength our XX% cash On target operating and recall, established increase ratio flows, payout operation.

we during million QX, dividends FY of have ‘XX. end the $XX of As paid out in

has Turning $XX almost in repurchased to buybacks, Progress million $XXX since it of shares share XXXX, million including FY ‘XX.

allocation to Our capital repurchases our to authorization as million. $XXX ongoing Board remains share we committed part of have And today, increase total framework. an announced our overall in

to completed the with $XXX by FY remaining targeting ‘XX end of million shares the by are be our the We ‘XX. FY of end balance to of repurchase

cash to intend future target of flow Going our forward, in from annual repurchases. we share XX% operations

fit utilize appropriate acquisitions a targeted that our to As facility execute fund intend I sheet credit to existing and we where earlier, M&A discussed strong on to our framework, balance profile.

communication. to few Praesidium a words I recent wanted Investment Before Management’s about closing, say

Board previously Praesidium’s has As ideas from believes have the our carefully and remarks many should apparent my considered said, observations be which today. of we merit, have

our shareholders. recognizes company’s also of we Board continuing value past coming our will acquisitions, articulated we I of welcome views and business, regarding forward with capital the to we perspectives but shareholders. our you allocation to go-forward looking of forward Praesidium’s dialogue as believe the the meaningful with have many that strategy, M&A all always look meeting of Praesidium a We days. am during create which Our

completely the strategy. past executing made business excellent on and have in are focused year We our strides

refreshed a focused signs early We management of has a new improvement. that and strategy operational shown have board a team,

and over to Paul? disciplined I and QX return strong plan review going our a now FY to outline detail in a high am excited expectations shareholders acquisitions. to our more have to and bar our cash performance call for consider also QX ‘XX. Paul turn about will I We prospects forward to our and the

Paul Jalbert

Thank you, afternoon Yogesh everyone. good and

non-GAAP mentioned, referring remarks adjusted share basis. that flow on my all per I and Brian to be earning free operating amounts cash revenue, in income, are a As will the

please release. the to results GAAP our For earnings refer

in For high-end well of our total guidance which OpenEdge $XX.X weaker overachievement a segment provided third resulted our within $XX of from closed the million than earlier guidance range since our revenue FX that June. above million, as revenue The a few favorable expected X-figure was our approximately $X.X was million. a deals dollar U.S. quarter, impact we from of as $XXX,XXX

than during of the impact a from by higher cents partially our lower than of the program well at expected lower Our provided QX was and decline quarter into was and expected. expected above focus lower year revenue the $X.XX Expenses $X.XX. from our also positive was negative revenue the factored versus management. as our overachievement overall were perform guidance by by EPS $X.XX expenses restructuring of the and actual our by both movements The decreased to for expected, a $X.XX a lower high-end from EPS in On immaterial. to we revenue due offset the Overall, led continues efforts expenses. exchange DCI on reflecting earlier of impact impact lower partners segment year-over-year X% rate due of consisted OpenEdge business on year-over-year this was marketing $X.XX Despite EPS guidance quarter. prudent higher for The year core as to exchange revenues, our hiring last focused June. tax continued This related basis, and the X% increased expense rate quarter to our more and rates. of entirely $X.XX

decrease on rates The year-over-year decrease due from will and $XX million XX% license a for year a a $XX of constant was of DCI our in I primarily total exchange at increase expected, was on lower the constant the exchange quarter, was XX% on and X% revenue to rates actual quarter, flat for moment. a which basis. catch segment, service to last Maintenance year-over-year and an As basis. license revenue currency further million revenue actual the at currency

North I North third license Latin America America $XX mentioned and earlier basis, The to revenue partially The enterprise deals revenue in our OpenEdge that segment. had to our the that due last versus lower the The was last due revenue down ago. large APJ year. down million, America up QX And constant by from occurred primarily our revenue few the increased million due was from third OpenEdge For X% primarily was revenue a decrease in edge revenue in primarily offset quarter EMEA license we On was by in X% region, last year $X QX was Latin $XX APJ to revenue. where from decrease year. higher total direct geography, several million, EMEA XX%. million, the same was currency segment $X of a DCI was down OpenEdge a to quarter, for America quarter in lower the deals maintenance decline in license revenue year-over-year large OpenEdge increase was related in year. primarily of X%

Maintenance well growth flat decreased to who at our from revenue deployed XX%. constant is channel all again partially but segment, for from revenue The over license had their third model. fueled in quarter partners offset year. renewals revenue was OpenEdge partially SaaS performance were essentially license enterprises. revenue Turning our million applications by a direct OpenEdge was partner license with from from increase that by partners, was $XX by the solid We which another last our currency.

XX% we expect XX% deal going a of our included the quarter, revenue a of $X QX for forward. QX XX% of year. a low DCI million, million, with multimillion double-digits to $X.X Our largest versus XX% the revenue and revenue year. this dollar of Year-to-date, to OpenEdge $XX.X decline billing is compared continue of in OEMs. million SaaS related to be one last from up was up versus last was scheduled XXXX QX multiyear

since was this earlier, our into factored we a of decline June also As into guidance annual in the I year. the guidance and beginning provided quarterly mentioned

in up revenue our XXXX of into past, agreements. renewals for business current our to renewals, with due As this timing backlog we and we Based discussed in and expect license is the visibility upcoming QX revenue QX XXXX. of line lumpy invoicing OEM be and our to partner ramp on somewhat DCI in of the our revenue

end was $XX.X Our third multiyear at backlog QX to of million year. million of the $XX.X at last license the end compared quarter of

million, million for to AD&D segment year, were and and Demand costs X% more QX our from year. due of spend. last expenses the up ago. segment, flat bookings versus year-over-year in year. XXXX $XX and million the of a revenue lower both were operating decrease our program renewals result lower X% Telerik for The QX the $X for of benefit of both strong versus our to expenses $XX fiscal of $XX for QX Turning last a are million was restructuring while was total compensation Operating quarter, last marketing to for AD&D as year bookings Sitefinity down costs efforts quarter than as decrease well facility decreased products DevTools were and the

also primary continue business manage our We aggressively our while prudently growth initiatives. investing in expenses to core

announced and basis have compared expenses decreased saving total successfully by that last January a cost initiatives to costs We have year-to-date achieved on in $XX million we and our year. approximately

income of in management to expenses I Yogesh margins This core operating beyond actions XX% mentioned cost from ongoing has and management expenses the last increased our as of year last expectations allowed operating XXXX approximately by just that in remarks. that from XXX The full to reductions year from was QX this $XX the original operating business on expense QX to focused XX% us XX% decrease additional margin and basis in million improvement year, his to income mentioned. lot income result margin million. restructuring as expand compared well our of the savings QX while expect grew both $XX of going our XX% target aggressive points We our margins will as operating year. over forward

ended quarter and Moving to company cash sheet investments flow short-term million. balance the cash, balance strong The sheet few and metrics. equivalents a a with with cash $XXX on of

the capital cash In adjusted price capital. offset the of $XX was QX per revenue costs $XXX of of the we and day Year-to-date, average million was in we lower a quarter of QX for repurchased increases. EMEA. cash at with shares $XXX is businesses was repurchased third results and million. share flow flow estimated $XX.XX last with driven end collections from with and at versus million cost up million. tax strong shares balance primarily X the million free for of across Deferred in approximately the million million quarter, debt total in million. was sequentially compared XXXX of quarter, an XXXX million. at DevTools, of the had XX performance OpenEdge, free well lower under The by all days, up authorization, of XXX,XXX $XXX working X operating down good At for year-over-year year end payments quarter, particularly $XX DSO $XX remaining higher for geographies X as that Our the a QX authorization. QX flow as changes days by all quarter was million Adjusted Sitefinity Of QX showing cash of year. previous $XX spending the $X $XXX million to at $XX end we last

XXXX new expect be five of our to have to a by meaningful authorization quarters. impact the next up end million, QX with to have any to We not a a over repurchased $XXX share spend QX expect million now we we the made repurchase As targeted which EPS. this purchases under on do authorization to Yogesh mentioned, $XXX

repurchases to business XXXX. provide continue will now our share turn like I’d for going on revised forward. to guidance to year actual fiscal and We updates quarterly outlook

the $X exchange $XXX XXXX $X $XXX low and The the revenue to relative be to million of increase to and of million on our impact expect primarily due rates is our million, increase results estimates. on on an original prior end our million the high between end versus favorable guidance. year-to-date We

one-third during invoiced and in than of year headwinds the half the As U.S. first currency related dollar of the this revenue. created non-U.S. throughout of other dollar a reminder, is approximately revenue strengthening translation our the U.S. XXXX to our currencies of

dollar of rates, this revenue. U.S. we quarter based current the about during now expected XXXX currency the impact $X and positive million weakened However, on exchange translation on

Our was million. a previous impact negative $X of estimate

our earnings earnings per per for XX% represents to of of $X.XX. the versus $X.XX versus $X.XX expect XX% full share we increase of XXXX to prior Moving our guidance, to to year, share an of EPS our This both $X.XX $X.XX, guidance.

included required. our discussed XXXX that benefit $X.XX allowance As during valuation release we our previous calls, results the a one-time was longer of to income the tax related no

Excluding EPS to XX%. growth this XX% would one-time benefit, XXXX be

extent, the of dollar XXXX further improved for to outlook lesser negative points to EPS estimates. XX% Our weakening impact while approximately and our outlook on the XX%, XX% the We to management, our expense operational efficiencies the of EPS immaterial, relative to increase our is translation on XXX Based net U.S. a XXXX a the current XXX XXXX. XXXX and basis successful the throughout has be operating of point XXX estimate year, versus basis now our expect a currency impact to was during previous rates, result for of improvement original $X.XX. of our XXXX restructuring, ongoing exchange margin an and previous over estimate prudent

run in business margins going confident forward. operating the our targeting to are We efficiently. XX% ability comfortable feel We

flow free million ends million $XXX an at million, between to XXXX guidance are of increase cash $XXX be increasing adjusted both We and our for of $X also the range.

XX% year versus the our We prior for approximately XX% effective full rate approximately expect of guidance XX%. an to tax of

share per for business ongoing our cost DataRPM the restructuring operations, acquired earnings that be and businesses, Kinvey. will our guidance core newly required savings margins, reflects XXXX cash management, from operating to strengthen Our free investments expense in and flow

dollar year. our expect million, for segment primarily recognized calls to our XXXX. our in ramp quarter, license perpetual the impact have previous decrease a fourth driven that discussed decrease year-over-year revenue The For negative on primarily by due between DCI multimillion would last and The a that a to was of QX earnings is on to $XXX product be QX lower revenue deal this from was X%. in we QX revenue attributable revenue million in role-based to one-time $XXX We OpenEdge to from our and AD&D deal segments. year-over-year X% growth

DCI revenue good have in and scheduled us for step and the up pipeline OEM in renewals projections deals visibility for giving strong backlog our enterprise for for confidence OpenEdge sequential a We direct the partner QX. and

the $X.XX quarter of for to We in X%. QX a X% share to $X.XX expect decrease last earnings compared $X.XX fourth to of per of year,

earlier, Excluding mentioned tax to income expected to is the by X% X%. benefit QX increase EPS $X.XX I

guidance for impact of rates, $X.XX on million to revenue which based is fourth the year-over-year quarter has $X on Our EPS. million and $X current favorable a exchange on

income, annual margins operating While QX, quarterly operating we don’t efficiencies. controls usually guidance cost our of of strong issue implies approximately XX% of and another for for XX% indication our guidance operational approximately

Before closing, critical the his The outlined strong. I of strategies and ensuring that a capital were would M&A core like in businesses comments few remain allocation to and acquisitions that remarks. DataRPM Yogesh to regarding make Kinvey our

current least continue that our are ensure which Going flows margins post-acquisition cash on will that as focused will acquisition complementary operating as and grow. at margins, forward, we with our accretive be to high

increase shareholders. free performance. with QX full and our enable us revenue, rigorous strongest meets company for will our margin addition, approach create we we ensure are focused share dividends, year-to-date cash disciplined EPS, value a results In year repurchases the These will and focused the adjusted flow. we and allocation possible our operating and criteria pleased for utilizing financial estimates closing, drive that to capital again In M&As financial take that in

allowed has flows restructuring operating us throughout the year. expand Our increase cash margins, to our

focused our newly We businesses. to I making also continue With business that, measured back Q&A. like core optimize and strengthen to while would for hand in measurements acquired it Brian to

Brian Flanagan

your session. That formal keep the hand Paul. follow-up. you like questions. ask I today. you, now question concludes one to and over I your our I remarks the call to Thank to the will now your to operator up open conduct that Q&A to primary for would remarks

Operator

take will We and gentlemen. you, Yes, Koenig our Instructions] Securities. from first ladies sir. Steve with question Thank [Operator Wedbush

Steve Koenig

Thanks Hi, for my questions. gentlemen. taking

Yogesh Gupta

Steve. Hi,

Steve Koenig

strategy me since Hi. contention with Yes, let now. bone of the start the right that’s application cognitive so

to on hard yet, revenue is it’s but line, that strategy So, the working. evidence see

and timeframes working? can we whether the impact the what to that in milestones are strategy use are should other So, we which not gauge to revenue strategy or is expect with there see

Yogesh Gupta

expect Steve, as and exceed on and success we way lift had number. this well least previously we customers stated We actually back that that handful measure, initial our the by was year of or at our initial the doing doubling have we DataRPM expectation to our of of are that. for

enthusiastic started we ISVs, have need. very validated us strategy. responding personally future to the are ISVs how them And have, I actually which to customers. Our our OpenEdge about take have They they their already to to-date into speaking are

because maintenance, that OpenEdge is on efforts I other targeting for the focusing to our XX our that predictive we would has of industrial manufacturing years. success things has One share that center over our base of half like an the initial market Right, been been ERP almost application. partner we are are the of so

we our helping broader have on before. focusing this to partners us are as very their strategy a as segment have already starting said, partners solve customers. to already the I than specific business these just And by partners, we so validated these this by market, to So problem done take rather

As metrics we the other share what you will year business making. is progress show the with will of financial that kind evolves, next

Steve Koenig

caller. will my next move on second question the over then Okay. And I turn and to to

call guided beyond margin to fiscal operating you the Yogesh, in expanding made you about side, and XX%, ‘XX margin believe remark on the on and to world levels. class a So said you I

class I’d you mean or world that XX%? XX% beyond to mean do is you by do understand So getting levels, clarify, to like

Yogesh Gupta

size. We XX%, our a for Steve, mean business

We are a million $XXX revenue company.

If you that those are with companies our look that at other best-in-class are in we believe margins. a truly similar profile, market

Steve Koenig

much. will I Thank leave at it that. Okay, very you

Operator

Benchmark. The next Schappel comes from question Mark with

Mark Schappel

expenses and Hi, margins good year as have and company is to evening. beyond. Yogesh, I question ramp next at marketing I year maintaining question suspect for that next and pretty to going XX% a with you. going the have their operating areas, at flat. out meaningfully place sales regarding that them apps build you are taking lot And and cutting in other you have suggest be XX%, keeping side. of to relatively to start especially the marketing cognitive initiatives revenue margins in to the sales business, being flat operating

more it? additional areas there of your on some squeezing you just next think that are thoughts for So, out year what opportunities is costs

Yogesh Gupta

demand. I the up So, scaling that and marketing Mark things and one of big running in is sales not growing ahead lean am a believer very of businesses them really by

run different I this that have organizations. lean I always do ways people think the

expect we solutions. and so do up ramp advance for demand marketing And our of sales in to not

right. as and We we that is business find to those that and bring well, we it run have also can before we efficiencies opportunities And better, to this for I continually as exercise an ongoing improve where will know can you more what pretty daily said much bear. that’s look our

Mark Schappel

cognitive solutions? And initiatives an the as great. Okay, as your forward, to date are for putting launch you. Thank apps on close then follow-up a those you official move calendar

Yogesh Gupta

of said integrated Mark products that So, our end will our we acquisition have as predictive by Kinvey and get the year. into maintenance

are along expect once We I right. ready, way well would And the product it’s launch to path. that

already to into with are feedback said taking however from and seeing tremendously partners. customers have We us positive market I as And we going already. our they already started their are them

So, products. we already products, customers in launched haven’t projects doing get our working are use officially them we with them our to working and the to them partners for with but

Mark Schappel

Okay, you. great. Thank

Yogesh Gupta

Thanks Mark.

Operator

Mattson Thalmann. Glenn with question from Ladenburg comes next The

Yogesh Gupta

Hi, Glenn.

Glenn Mattson

full one working Hi, the Yogesh. flow, assumption that? curious One is the the quick on year cash capital for what free on

Yogesh Gupta

Yes, to of higher do when profitability are had quarter the we business. some the the have to payments in tax higher that fourth

Glenn Mattson

general or? capital just sense So, guess I year can what outflow working a me of the give modest you full

Yogesh Gupta

Yes, I should be numbers have me, those flat. Glenn. it with don’t fairly

Glenn Mattson

that’s Okay, fine.

buyback is So, in Yogesh, of interesting the that. kind

a make often. too level forward period haven’t think time at that XX concerted for of these, traded returning you to of earnings I never effort equated period some to capital for but shareholders, non-GAAP company times Progress for – the time some has

if pardon wondered you not this if maybe the right for doing in so necessarily going some against and the are of me, the on to And defend put all this return that place perhaps is order a reasons. case, then of are that’s strategy out capital in being attacks there that’s

that I to So relatively lofty as be lofty you about guess, evaluations? making decision, would I I curious just – think how it’s came

Yogesh Gupta

with So, you that want start Paul I will do and to come back that. to

Paul Jalbert

Sure.

cash $XXX So, million of January, a cash at we have large million balance hopefully $XXX flow in here. fairly

to say the strategy of capital shareholders allocation we outlined certainly to that good capital we the that vehicle So, overall just context is right. a in repurchase share returning

So repurchases subject are we feel as well. market are share conditions – always they to

Yogesh Gupta

Sorry, Glenn, actually flow that, to what between use is would authorized over but cash isn’t in right to end the $XXX FY we ‘XX and going of Board up stock, capital that like the has I allocation buyback will with a it million strategy forward. that we add would just now of to that come XX% our that addition says

just to think This one-time this structured us do basically I a very plan. So, a decided a to thing. is that is not we plan

strong business. So very we believe a that we have

this going forward for in our thing and the to do we our believe business is We confidence have shareholders. right

Glenn Mattson

of in Okay. well allocation is or as flow? free valuation the a XX% buyback cash But factor that the discussion was

Yogesh Gupta

always is is you as you valuation. much Glenn, buyback know how on know Valuation, based we a criteria always and valuation

Glenn Mattson

thanks that. for Okay,

Yogesh Gupta

Thanks, Glenn.

Operator

comes question next The Sidoti. Galinko from Matthew with

Matthew Galinko

afternoon. good Hi,

Yogesh Gupta

Hi Matt.

Matthew Galinko

Hey.

a of fair out managing capacity kind curious talked your meets criteria there what new amount transaction? capital integrating is the of and for your about you I of is for sort set strategy, that am you that what and outlook internal your So, sort M&A

Yogesh Gupta

management So, Matt, over we the very that built strong team have past a have XX we months.

of that from that together to the very believe type We about. kind want this We put M&A. we we operations and we in deliver of results execute positively would these we an place of internal believe can feel set and we on M&A have processes can

kind And are that things the come they meet is processes when obviously this we will of they we have So can they results. and We am earlier. as strict deliver strong structures a which as opportunities management we have I outlined and strong will make opportunistic, team, come our and want – do, – in I long place right, on which along. along to confident they truly don’t these that like sure criteria,

Matthew Galinko

pulled to change me majority sort just Got it. your to of correct payout does cash like wrong, my math looking target you as does sizable of it pretty And that above a I of repurchase being am at could dividend can that ratios. reigns levering takes And scale leverage reasonably on maybe flow it and you your to too annual returned of if much? just you the larger acquisition bit to right math are sounds that a are point of your a up follow-up up reach so maybe transaction do given make that sort without targeted where a but good sort if that shareholders, you you your to

Yogesh Gupta

out these identifying about we we I I to to over do things then Yes. leverage to But EBITDA again figure bring debts the if that go disciplined ought we very temporarily would to levels. are the said, mean, to as down them. Xx, target what those be ratio going

them out. Paul, to criteria around. the things be segment. our all to market we always very to don’t opportunistic. these that and laid add? have to be going come They meet about executing have are They on are want We you disciplined They do in

Paul Jalbert

So right flow XX% the roughly you forward share operations our I our at to going of that returned dividends if we of of think have cash said going so cash XX% look and form flow from in repurchases. we

obviously get be. are to targeted leverage would could back repurchases tell just some our would at ratio in then us we line would what we depending what we the of share the if an While looking acquisition, on with leverage, and spend

Matthew Galinko

Got thank it. Alright, you.

Operator

that gentlemen, it for turn to concludes closing remarks. question-and-answer Mr. back session. ladies Flanagan And I our will and

Brian Flanagan

QX that Time. holding results the Thank at Wednesday, you day close financial to you, And will Yogesh X p.m. for call for remarks. January I the would on over to Shannon. like we remind XX, markets conference financial Thank the you the at us call XXXX closing our all today. on Eastern now his turn joining releasing I same after plan

Yogesh Gupta

Brian. you, Thank

we on execute out XXXX continue ‘XX pleased to excited past our to future with three to-date strategy. our prospects FY performance cash we our beginning healthy forward solid as and over Building business very closing We flow the momentum. progress look about financial quarters, our are and good on and with

with meeting wonderful to all accomplishments. evening. to We and discuss have you are you a joining strategy and our objectives looking forward Thank for

Operator

conclude gentlemen and you that Ladies your does you. participation. thank today’s for conference. Thank We

You disconnect. may now

Progress Software (PRGS) 27 Sep 172017 Q3 Earnings call transcript