PRGS - Earnings call transcript Q2 2019 | Progress Software Corporation

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Operator

Good day, and welcome to the Progress Software Corporation Q2, 2019 Investor Relations Call. At this time, I'd like to turn the conference over to Mr. Brian Flanagan, Vice President of Investor Relations. Please go ahead, sir.

Brian Flanagan

Thank you, Codey. thanks XXXX us earnings and fiscal Progress everyone, quarter second call. afternoon, for for joining Software's Good With me Officer. today Executive Officer; is Yogesh Gupta, Paul our President Jalbert, Chief Financial and and Chief

remind information subject Before started, considered that we discuss plans, performance, outlook we our might initiatives represents forward-looking. outlook operating during future and strategies, I'd to be will financial get for Progress corporate this Software's you like and call, forward-looking that This product only information other to the regarding well and information, today's as review of website Safe guidance which as in Investor is our and and of our Please risks at today available in as section well as uncertainties. Harbour progress.com. this Relations earnings statement release, is

no in to statements result obligation as a forward-looking the this new whether assumes developments otherwise. included of update Progress or call Software

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

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

now I'll over with Yogesh. turn to it that, And

Yogesh Gupta

quarter earnings everyone. And thank Thanks for you our afternoon, Brian. second attending Good call.

revenue high EPS strong press flows our release, range end were very and QX in well this performance. had we you've the afternoon's a solid. seen were guidance cash of above really and Both As

by timing seen due segment, our in Although, I encouraged business. also am revenue, our is DCI of the revenue overall OpenEdge the momentum achieved overachievement better-than-expected within and much we've

very I'll and business our later, keeping are pleased realizing we've while acquisition past we’ve details I in products Ipswitch of more strong. over healthy well with into the months we Ipswitch. am two and our processes. this strides made get And projected synergies we on the people, quarter, way to the completed but During on the their integrating

XX% performance. margins now financial performance our our quarters of pleased to we've both start the continued our to on the half, on and for in full $X.XX for is are raised a and the increase Based XXX well annual see I we remainder more our projection as guidance and remarks, work increasing two EPS. execution as the first details but year, second strong year, the of our to reflected operating end. XX% his optimism $X.XX by during the in will to of way provide Paul margin in an of hard great points expect high This our am basis EPS

revenue from for versus Let's has of is primarily this by consecutive our direct turn This few OpenEdge. OpenEdge enterprises. segments, expectations, time with increased starting to that quarter a now third over our highlights the driven performed each

encouraged this am of much flagship our by I While to is with product. trend timing, deal seeing overall are certainly we due the

received by performed applications also from in fueled SaaS partners OpenEdge QX revenue, related who an cloud. the increase in in the Our well their we sell partners

and we strength health key OpenEdge, and both QX well on a renewals, and an direct annual basis. these growth represents for as business related an SaaS important XX% of stream customer from continue double-digit to OpenEdge again partners well of over expect were the revenue satisfaction, in The for us, enterprises. indicator ISV as Maintenance

our our ongoing to XX within enable existing generate what these retention our OpenEdge us in investments release times, high OpenEdge like many rates are of last customer stated I base. As quarter

meaningful product during driven past. position including win partner discontinued backs these back enhancements had these Based EMEA, one retailers in maintenance We point one their largest runs is in customer to addition, the of who in their well quarter. during customer win QX, world, as highlight locations at several both us the on in and way have I'd some our retail offices the of the revenue customers this In contributed to a and that optical to like as OpenEdge. central

can and several features. maintenance and their move forward on discontinued cutting-edge a are modern, are regularly discussing This maintenance had updated how OpenEdge They because but step only was as apps. back and modernize capabilities products ago, with current we now help we're next possible our years them

of had exciting quarter new later multi-billion-dollar significant OEM also expected. a very internet and had of year-over-year This that timing services expected with stronger a we OEM the close in renewals to the to was DCI that What's than large the even was that even year. We provider several growth significant signed good we increase more quarter, products. due we segment, had from a DCI our related based is US global during the

as revenue forward. is figure marquee ACV contribute it meaningfully and will win for multiyear us going to deal; six This a a and our DCI

by also QX QX and are with AD&D X% consistent first the outlined versus last segment well disappointing performed bouncing we in back quarter. bookings grew Our by XX% trending last quarter. sequentially a from expectations and year

to the the closed expected. transaction that as going I and on April a integration made provide far. well, color we've mentioned progress I wanted The Turning more XX briefly to little so Ipswitch. on is

impact Ipswitch expenses. So, of the our and operating results revenue QX one include of

and criteria renewal has accretive EPS complementary of Ipswitch business start acquisition. are high Let's the for such and business. what products cash of with It the is solid an customers meets that reminder our non-GAAP made for The flow revenue also this all in immediately rate both with Progress. and to potential to recurring of levels similar us. place strict maintenance have we acquisition ideal

synergies the already completed, XX% of The EPS cost of part full we've we feel and and guidance margins of operating for the to And slightly finally, by synergy. cost leveraging our over are is model after our bulk of Ipswitch we plan identified comfortable of million reason which year. increasing expect operating infrastructure, ahead the contribute $XX

pleased In of reaction expansions the large range, deal. addition, we positive Ipswitch. start. of revenue constitute partner the but month we off very and customer had six-figure course, only a so to an I It's In were the We've performance. and are new month seen and channel with customer of far in for which customer May deals encouraging number bookings Ipswitch's to been am existing alone, wins that one

this enthusiasm collaboration before particularly in performance seen employees proud we from the we remaining focused Progress and this on begin Ipswitch of business Overall, segment. the team, and after my we of as the to the also I achieve will OpenEdge $XX Ipswitch's both this projected contribution revenue levels acquisition year. of the operations response am the fold our high for positive We've that from confidence into million business objective. bolsters that

are which increased confident flow Ipswitch for scale going strong cash and execute and like forward, returns We in our on ability our generates provide to acquisitions shareholders.

top Successfully integrating our Ipswitch remains priority.

our a criteria However, we pipeline we are approach. deliberate actively and our remain also will of strict opportunities that in building meet

part conference partner a countries Before all customer XXX ProgressNEXT, success minutes conference including with over The and was product. few annual Ipswitch even sessions recapping offerings in a of I to in May. than attendees newly I'd our close, from that taking huge last our was and XX bigger covering spend we held like acquired year's our

such our Over OpenEdge our new DCI at Autonomous on half XX, attending future DataRPM. that initiatives of of a Connector, our Customer delivering of NEXT and Those to some important new was validation Rest modern, are access Cloud, as is high-productivity to was partner their year, focused Sitefinity this reaction capability products Kinvey broader newer the company evidence appeal audience. our to particular success. and

media from United We with additional and also than Megan viewers stream to Sessions for pre the the States. speech right were workshop up more the Technology representation live the of had conference X,XXX strong keynote packed Smith, former industry by of event. Chief Officer the along

Overall, of a and attended was enthusiasm the our sponsors partners, showcase. and level employees engagement tremendous premier who from there annual customers,

a solid half out very XXXX. closed now first we've summary, to in So

be performing businesses with Our performance well which am success. OpenEdge are particularly cornerstone our continues pleased the and the to I of of

half well to of on an in with emphasis the integration focus continuing will Ipswitch. business second on be our the run ongoing Our

are and healthy relationship to committed revenue Ipswitch for the renewal their customer are We we this contribution projecting rate. year delivering standing while long maintaining

We advance potentially will synergies work to also the timeline even to our to planned returns the enabling achieve more us the investors. of quickly

emphasis for XXXX. am ongoing Our business our financial the efficiently, I we will goals confident and right on with direction in operating is achieve coupled tending that

and in now QX turn am more I to our review QX FYXXXX. to financial over detail Paul expectations to things performance and Paul? outline our going for

Paul Jalbert

Yogesh and afternoon, everyone. good Thank you,

all please which adopted to be referring I'll non-GAAP a financial been remarks amounts XXXX reminder, on adjusted the have Also, method. we December in all that using that a XXX ASC basis. are results XXXX full As retrospective to X, my note effective reflect

DCI expected for our was above The our from revenue within our was Ipswitch million renewals driven by expectations. primarily OpenEdge several in Revenue million, sales included quarter, $X.X of than segment large which range. timing segment. direct license and guidance our total the month For our consistent the results by was better to OEM high-end our overachievement with was within $XXX.X second of enterprises

to guidance the were earnings quarter, due $X.XX share Our above per the revenue. $X.XX our the higher for high-end of range

compared due a as QX of exchange This and constant million includes Looking year, actual than at ago million was rates, for to currency fluctuations was exchange consolidated foreign consistent higher quarter which revenue at our last $XXX.X expectations. to impact higher of year a on with the a revenue $X.X total basis. negative XX% XX%

basis. a compared of a primarily segment contracts actual increased well of last The May. was in of as revenue Ipswitch month our the from XX% of as by million constant term license currency OEM at renewal DCI $XX.X to for a as from multiyear exchange higher ago rates year, number revenue and the year increase due XX% on to License

and Maintenance currency an basis. This a increase increase exchange and $XX.X X% again on addition due of the services Ipswitch. actual revenue at rates X% to year-over-year of was primarily is constant million,

constant our second with for to up all comparisons quarter, QX at by XXXX. of $XX.X OpenEdge currency. revenue now X% the million Turning revenue was segment versus

part and was primary revenue. driver a being is OpenEdge as segment our the reported behind as Now of Ipswitch increased reminder,

the for it higher expected from due QX For the license to comparison year-over-year enterprises line, OpenEdge was down product difficult was of quarter, XXXX. revenue although than versus direct

be ISV both including a over partners License offer again maintenance rates and in related our SaaS during from renewal cloud. sales channel partner stable well of their the our and for for quarter quarter once customers. who billings OpenEdge ISV enterprise partners continues achieved OpenEdge from XX% We to direct strong solid applications

significant a Revenue than quarter, $XX.X projected for growth year-over-year. DCI anticipated. QX earlier in in last even actual increase was OEM revenue sequentially segment. our and million both several due We the large the to year. year of completion the is to the Turning But Xx nearly stronger of renewals had the

However, a while QX, for year timing renewals the revenue drove significant increase of our has the view these not changed. full in

OEM Our our of and treatment associated segment these due results quarterly And renewals this the we annually ASC effective timing contract and evaluate to XXX. remains for the fluctuate value reasons, to believe DCI the business. for under most renewal way accounting

is to we We ACV with OEM way and in our million to predictable, fluctuate to $XX going forward. consistent contract million expect $XX not expect do meaningful the for very economic continue Since value XXXX. ACV to of a XXXX be DCI steady

to and the for Turning Total QX higher maintenance. rebounding million, were QX for bookings million slight the lower booking was the renewal $XX.X to and The bookings quarter. last revenue with license was by growth. with nicely our pleased bookings year-over-year segment, year quarter, both partially up compared due a Sitefinity. X% of to offset down XXXX. for increase $XX.X sales, I DevTools The XX% performance AD&D from in primarily increase to am decrease sequential X% due maintenance versus was

international X% XX%. versus The constant was $XX.X geography down total QX, our XXXX. million, revenue $X.X America XX% North was at EMEA up Latin up and by revenue $X.X million, $XX.X Asia revenue X%. currency. was Pacific with up revenue regions America million, was million, revenue

increase income expenses and the was for Operating operating $X increase Ipswitch. $XX.X was QX million cost to an QX for addition of XXXX of Total or primarily million, quarter, up XX% from million $XX due from XXXX an the of due was year XXXX. revenue and of basis QX, increase the above QX margin versus points of last our the operating quarter. XXX XX% XX%, nearly QX of expectations for to In

contribution a from increase quarter, lower impact EPS or rate the due tax the year. negative than foreign as $X.XX $X.XX QX was of and Ipswitch, XX% $X.XX higher last higher was The well primarily by as revenue partially to through offset exchange. from

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

the of a includes at debt new facility. similar covenants was prior million balance principal of part million of was QX used term debt and end facility that finance $XXX additional terms, partially credit Our to credit $XXX $XXX acquisition, This substantially $XXX The million and million. the the loan line and revolving our million revolving $XXX with as facility. expansion feature rate of interest includes Ipswitch

Our now our capacity our strong, flow. leverage within cash very X.Xx given ratio is EBITDA well consistent manageable and

of QX, down XX XXXX from was for DSO up days year. days days, and two QX XX sequentially last

balances. primarily revenue revenue to the And $XX eliminated Deferred revenue second in Ipswitch addition quarter, is accounting compared under purchase $XX end balance million QX up Ipswitch not due of does deferred of to acquisition revenue of was which the deferred pre deferred XXXX the include GAAP. $XXX million million of at

our We reporting this performance that revenue quarterly and business. will forward better guidance include reflect of going to in non-GAAP true

for year. Adjusted to free cash $XX million the was flow compared of million QX quarter in last $XX

business to and outlook for turn to like fiscal our guidance XXXX I'd and QX.

$XXX full is our from to year outlook. million, unchanged our guidance million $XXX revenue prior For

earnings and margin operating to Turning share. per

While our primarily our both running half to we timing our are related guidance revenue, increasing profitability of This for of is focus the operations over achievement metrics. first reflection for ongoing these of and on Ipswitch our XXXX annual the margin raised identified. high to basis we end. to XXX cost XX%, and range acceleration as operating have We've a for efficiently well points guidance XX% the our of increase of at as of was the synergies

on guidance. and $X.XX low a For now $X.XX EPS, to the our $X.XX prior guidance an our of is on end end compared $X.XX, high increase to

to planning Ipswitch XXXX substantially additional we reminder, from higher shares acquisition be the repurchases. a returns As we during expected are on a not would repurchasing on than as are share

repurchases level our share policy. resume to fiscal capital in publicly a XXXX at expect allocation We stated consistent with

$XXX,XXX our our adjusted for our impact guidance exchange increase guidance. to is is is previous to exchange XX%, from revenue we forecast impact Our XXXX $X.X $XXX million, free expected $X.XX also translation flow million on now Based negative on on year compared in EPS from of rate, now currency guidance unchanged unchanged. negative an $X.XX, $XXX current of full the a is total cash and tax rate and rate increase an of March, provided prior our million, approximately expected

XXXX. to our Turning guidance for QX,

We between a of to to which expect increase increase our The revenue of revenue from X% to step-down represent Ipswitch DCI revenue from revenue QX our primarily expected in to to due inclusion QX. a is be full total is million, revenue $XXX year-over-year of approximately in the revenue million offsets DCI quarter's and $XXX XX%. QX. XX% a

The is $X year-over-year be currency our translation revenue million. impact a negative QX on expected to

an also of share to $X.XX compared efficiently. to on for last on per manage earnings translation QX in quarter, $X.XX is year, business efforts to a in Based XX%. the This our $X.XX negative par expected expect impact to We of of rate, ongoing Ipswitch increase related currency the to to third exchange current the but $X.XX. to be expected QX our our contribution EPS XX%

revenue guidance for is margin closing, of full to and we've first $XX both plan our And the financial slightly pleased in cost of in increase with we QX on actually from expected the synergies track half. year with identified. ability contribution I The Now and performance million realizing ahead am and our EPS. Ipswitch are very our in operating

sustaining successful forward and XXXX. the closing our business is Our and second in momentum a cash I Overall flows out look to half healthy are strong.

like it I'd Q&A. that over Brian to to for With turn

Brian Flanagan

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

Operator

Instructions] [Operator

will Matthew National we go ahead. Please And Galinko our question take from with Securities. first

MatthewGalinko

can back highlighting are your brought you brought particular So doing? hear any guys maintenance was back feature in was OpenEdge customer now? that there them EMEA fold? that can key me or in How the you there anything Hi, to you on highlight into --

YogeshGupta

you what know of -- the focused are enhancements all years hearing back So, within been been over last as making and what we OpenEdge have Matt, to the few customers our to we've around as from they want partners see.

scale performance, of availability, as XXX% large So, the environments. a lot of readiness as type or combination uptime uptime both XX.XXX% for for around of is cloud a well XX

They the those year, continuous this that year, So, the around of thought these application to and trying and release all hey, for really effort what that -- done. XX.X they had we you is server and presence of added the not this now availability, are using this ongoing have a released last to are on online retailer. their improved guys so released basically they say, really we us great guys things all

you and would forward go like on we how to modernize forward. we come back with So move and

MatthewGalinko

thanks. customers? And -- of of for an sort for those follow-up Did -- of it, engaged that with what as wanted maintenance? the does they just they Got the you like you that look exchange a sorts and I you one. pipeline were had customer what sorts off were So of understanding potential while guess

YogeshGupta

think we as is so have with are engagement some that for on not who engaged it us. who with currently basis. Matt, clear-- customers and it maintenance -- is we are So periodic customers yes, a on don't -- same the we our we left clearly of our have do amount I

So we do, that. do

team his account in has follow-up. on know, put emphasis you As Gary and an management

that going on. with therefore efforts been win helped have tremendously back our And so has that

Operator

our Mark take question with Schappel next from will Benchmark. We

MarkSchappel

say the on let job my taking Thanks afternoon. just good for quarter. me and nice question Hi,

me start think you of remarks. Let could your and prepared deal, your in I out called provider, comments just multiyear catch internet couldn’t one a it if time. just was off, more new all remarks US you wondering I with review DCI your was

YogeshGupta

Yes.

company. an names in this a significant field. signed one the which we well-known with that new and leaders this going household them meaningful differentiated. is figure, to is who OEM considered this somebody internet multiyear deal what six the quarter to They of their is it And revenue DCI So the of easily during comes a we somebody when is one that could build of like ACV try lots forward. something bring to is have recognize and we’ll both themselves. They clearly spend unique This table money deal, contribution are and to and

tremendously So, was win And gratifying to first the I for of really us. while. OEM, know a meaningful don't it is a it

thing. us, So, a really to it's exciting

MarkSchappel

Real why in question, to catch because That's actually your acquisition Congratulations new first That's I OEM I quick that. the while that completed. on asked attention, my a you stated believe was, as already correctly? $XX on I synergies have for one of planned it Ipswitch. you wins Did well. that meaningful that that the in prepared remarks, In good. million

YogeshGupta

said What specifically had we that slightly what million the -- already No, we was are no. of those cost plan. we completed of bulk and of ahead $XX synergies

but are. not of no, So, bulk are all we them the completed

which is EPS increasing were are plan guidance We slightly of and the year. why comfortable our full for ahead we

MarkSchappel

the these Are Hey, Kinvey pipeline still the very for building little, if in the any, on products prepared great. And DataRPM products Thanks and commentary remarks. clarification. mode? then in

YogeshGupta

Yes.

them. with market to go to continue We

well. the applicability before, but a the version of of positive, initiatives also vertical, be other from in I continuous within quite bit Kinvey the partners reaction some verticals HIPAA-compliant customers in our healthcare to demand see we our very see we and As said and to as new

where are our spend and So, we not point we we be are see disclose manage are to we demand to the traction at ready we seeing, and go-to-market activities with a to continue do metrics, but aligned Mark.

of End Q&A

Operator

to conclude or any Flanagan like closing back today's Thank additional I'd again for Mr. now turn conference it the remarks. you. does And to over session. question-and-answer

Brian Flanagan

Thank today. you all the you call joining and thank for

the XXXX plan closing the we releasing Thursday, on at X for for third Time. financial reminder, remarks. call a the XXXX As fiscal his our over September day markets conference results XX, close Eastern Yogesh after same on PM of and to I'll the holding financial turn now quarter call

Yogesh Gupta

ability positioned momentum lots continued am about I future. Brian. joining you. of enthusiastic our Progress our head for we right you, you shareholders. create our successful our support to things for We our exciting And in of real and as Thank half and thank now into the maintained us are Thank bye. on a QX I at call XXXX your are and for happening today. value second for year. the Bye, again well There

Operator

for you. today's all conclude Thank That does your participation. Thank you conference.

You may disconnect. now

Brian Flanagan	Vice President, Treasury and Investor Relations
Yogesh Gupta	Chief Executive Officer
Paul Jalbert	Chief Financial Officer
Matthew Galinko	National Securities
Mark Schappel	Benchmark

Progress Software (PRGS) 27 Jun 192019 Q2 Earnings call transcript