Progress(US:PRGS)2025-06-30 20:21Revenue Performance - Total revenue for the three months ended May 31, 2025, was $237.4 million, representing a 36% increase compared to $175.1 million for the same period in 2024[74]. - Revenue for the first six months of fiscal year 2025 was $475.4 million, a 32% increase from $359.8 million in the same period last year[74]. - ShareFile contributed $65.9 million and $129.6 million to revenue in the second quarter and first six months of fiscal year 2025, respectively[74]. - Maintenance, SaaS, and professional services revenue increased by 54% to $186.6 million for the three months ended May 31, 2025, compared to $121.1 million in the same period last year[76]. - SaaS revenue increased by 1,104% to $72.1 million for the three months ended May 31, 2025, compared to $6.0 million in the same period last year[76]. - North America generated $147.3 million in revenue for the three months ended May 31, 2025, a 43% increase from $102.9 million in the same period last year[78]. - Total revenue from markets outside North America represented 38% of total revenue in the second quarter of fiscal year 2025, down from 41% in the same period of fiscal year 2024[79]. Cost and Expense Analysis - Cost of software licenses for the three months ended May 31, 2025, was $3.0 million, a 20% increase from $2.5 million in the same period last year[80]. - Cost of maintenance, SaaS, and professional services increased by 52% year-over-year to $33,764,000 for the three months ended May 31, 2025, and by 50% to $66,648,000 for the six months ended May 31, 2025[81]. - Hosting and other costs in maintenance, SaaS, and professional services surged by 375% year-over-year to $9,047,000 for the three months ended May 31, 2025[81]. - The increase in costs across various segments was primarily attributed to the acquisition of ShareFile, impacting maintenance, SaaS, and professional services, sales and marketing, and product development expenses[81][84][85][87]. Profitability Metrics - Gross profit rose by 33% year-over-year to $190,067,000 for the three months ended May 31, 2025, and by 29% to $381,851,000 for the six months ended May 31, 2025[83]. - Income from operations for the three months ended May 31, 2025, was $38,616 thousand, a 42% increase from $27,148 thousand in 2024, and for the six months ended May 31, 2025, it was $71,042 thousand, a 14% increase from $62,154 thousand in 2024[92]. - Net income for the three months ended May 31, 2025, was $17,029 thousand, a 5% increase from $16,188 thousand in 2024, while for the six months ended May 31, 2025, it was $27,975 thousand, a 28% decrease from $38,827 thousand in 2024[95]. Operating Expenses - Sales and marketing expenses increased by 31% year-over-year to $49,677,000 for the three months ended May 31, 2025, and by 31% to $100,973,000 for the six months ended May 31, 2025[84]. - Product development costs grew by 31% year-over-year to $46,570,000 for the three months ended May 31, 2025, and by 32% to $92,945,000 for the six months ended May 31, 2025[85]. - General and administrative expenses increased by 17% year-over-year to $25,637,000 for the three months ended May 31, 2025, and by 18% to $51,260,000 for the six months ended May 31, 2025[87]. - Amortization of acquired intangibles rose by 42% year-over-year to $10,537,000 for the three months ended May 31, 2025, and by 37% to $20,959,000 for the six months ended May 31, 2025[82]. - Cyber vulnerability response expenses decreased by 76% year-over-year to $730,000 for the three months ended May 31, 2025, and by 64% to $1,467,000 for the six months ended May 31, 2025[89]. Restructuring and Acquisition Costs - Restructuring expenses for the three months ended May 31, 2025, were $1,043 thousand, a 60% increase from $651 thousand in the same period of 2024, and for the six months ended May 31, 2025, they were $8,072 thousand, up 169% from $3,000 thousand in 2024[90]. - Acquisition-related expenses for the three months ended May 31, 2025, were $1,731 thousand, a 216% increase from $548 thousand in the same period of 2024, and for the six months ended May 31, 2025, they were $4,221 thousand, up 238% from $1,250 thousand in 2024[91]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $16.1 million from the end of fiscal year 2024, totaling $102,006 thousand as of May 31, 2025, due to various cash outflows including $70.0 million for debt repayment and $50.1 million for stock repurchases[106]. - Net cash flows from operating activities for the six months ended May 31, 2025, were $98,943 thousand, down from $134,185 thousand in the same period of 2024, primarily due to increased interest expenses[108]. - Gross accounts receivable decreased by $21.0 million from the end of fiscal year 2024, with days sales outstanding (DSO) increasing to 53 days from 41 days year-over-year[110]. Share Repurchase and Dividends - The company repurchased $50.1 million of common stock in the first six months of fiscal year 2025, compared to $72.4 million in the same period of the prior year[112]. - The Board of Directors increased the share repurchase authorization by $150 million, totaling $228 million, with $57.2 million remaining as of May 31, 2025[113]. - In the three months ended May 31, 2025, the company repurchased 0.4 million shares for $20 million, compared to 1.0 million shares for $49.9 million in the same period of 2024[113]. - The quarterly dividend was suspended as of September 9, 2024, to redirect capital towards debt repayment and increase liquidity for future M&A and share repurchases[114]. - The company expects existing cash balances and funds generated from operations to be sufficient to meet foreseeable cash requirements for at least the next twelve months[117]. - The company is continuously evaluating additional financing options to support general corporate purposes or repay amounts under the revolving credit facility[118]. Legal and Market Risks - The MOVEit Vulnerability incident has led to class action lawsuits and ongoing governmental investigations, with potential future costs expected to be mitigated by insurance[119][120]. - There were no significant changes to market risk disclosures during the first six months of fiscal year 2025, aside from repayments on the revolving credit facility[122].