Progress(US:PRGS)2022-09-27 23:51Financial Data and Key Metrics Changes - Annual recurring revenues (ARR) grew to $495 million, up approximately 13% year-over-year on an as-reported basis and 4% year-over-year on a pro forma basis [11][28] - Revenue for the quarter was $153.1 million, exceeding the high end of prior guidance by approximately $3 million [11][29] - Earnings per share (EPS) for the quarter was $1, which was $0.02 above the high end of the guidance range [34] - Adjusted free cash flow was $39 million for the quarter, up $4 million or 11% from the year-ago quarter [36] Business Line Data and Key Metrics Changes - Noteworthy strength was observed in the product lines of Chef, OpenEdge, DataDirect, and Sitefinity [12] - The net dollar retention rate was over 100%, coming in at 101.4% [11] Market Data and Key Metrics Changes - The company faced a foreign exchange headwind of over $5 million in the quarter, impacting revenue [12][30] - DSO (Days Sales Outstanding) improved to 48 days compared to 54 days in the year-ago quarter [35] Company Strategy and Development Direction - The Total Growth Strategy focuses on strengthening core businesses, operational excellence, and capital deployment for shareholder returns [9][13] - The company is committed to disciplined M&A, targeting strong enterprise software businesses with durable recurring revenue models [15][17] - A realignment of go-to-market product and operational teams is underway to enhance integration and customer service [18][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining revenue guidance despite macroeconomic challenges and foreign exchange impacts [8][56] - The company is not seeing elongation in sales cycles or significant changes in renewal activity, indicating stable demand [66] - The outlook for full-year 2022 revenue is maintained between $609 million and $617 million, with an increase in EPS guidance to between $4.08 and $4.12 [39][40] Other Important Information - The company repurchased approximately $24 million of its stock during the quarter, with $80 million remaining under the current share repurchase authorization [36] - Employee engagement scores remain in the top quartile of the tech industry, contributing to lower turnover rates [21] Q&A Session Summary Question: Update on price increases across the portfolio - Management indicated that price increases are being implemented gradually, with some segments unable to change prices due to long-term contracts [44][46] Question: Drivers of net retention rates - The primary driver of net retention is upselling within existing relationships, supported by strong customer success initiatives [50] Question: Insights on macroeconomic conditions and guidance - Management remains confident in business stability, noting that demand has not fallen off despite macroeconomic challenges [55][57] Question: Any unusual renewal activity or pull-forwards - No unusual renewal activity was reported, and the company is not anticipating significant anomalies in revenue distribution [60] Question: M&A market activity - The company is actively looking for acquisition opportunities and is not waiting for prices to drop [78] Question: Mix of enterprise versus mid-market customers - The majority of the business is mid-market, with a focus on growing this segment while also serving enterprise customers [81][84]