x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE (State or other jurisdiction of incorporation or organization) | 04-2746201 (I.R.S. Employer Identification No.) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. | ||
(In thousands, except share data) | August 31, 2018 | November 30, 2017 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 98,697 | $ | 133,464 | |||
Short-term investments | 39,184 | 50,145 | |||||
Total cash, cash equivalents and short-term investments | 137,881 | 183,609 | |||||
Accounts receivable (less allowances of $701 and $676, respectively) | 45,817 | 61,210 | |||||
Other current assets | 13,696 | 18,588 | |||||
Total current assets | 197,394 | 263,407 | |||||
Property and equipment, net | 42,689 | 42,261 | |||||
Intangible assets, net | 67,712 | 94,894 | |||||
Goodwill | 314,951 | 315,041 | |||||
Deferred tax assets | 876 | 1,123 | |||||
Other assets | 1,810 | 1,992 | |||||
Total assets | $ | 625,432 | $ | 718,718 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt, net | $ | 5,819 | $ | 5,819 | |||
Accounts payable | 8,299 | 9,000 | |||||
Accrued compensation and related taxes | 17,534 | 32,373 | |||||
Dividends payable to shareholders | 6,324 | 6,619 | |||||
Income taxes payable | 2,889 | 1,173 | |||||
Other accrued liabilities | 15,498 | 20,496 | |||||
Short-term deferred revenue | 131,854 | 132,538 | |||||
Total current liabilities | 188,217 | 208,018 | |||||
Long-term debt, net | 111,725 | 116,090 | |||||
Long-term deferred revenue | 12,975 | 9,750 | |||||
Deferred tax liabilities | 1,323 | 2,809 | |||||
Other noncurrent liabilities | 5,720 | 5,967 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none | — | — | |||||
Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 45,133,361 shares in 2018 and 47,281,035 shares in 2017 | 263,255 | 249,836 | |||||
Retained earnings | 68,329 | 145,247 | |||||
Accumulated other comprehensive loss | (26,112 | ) | (18,999 | ) | |||
Total shareholders’ equity | 305,472 | 376,084 | |||||
Total liabilities and shareholders’ equity | $ | 625,432 | $ | 718,718 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share data) | August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | |||||||||||
Revenue: | |||||||||||||||
Software licenses | $ | 27,204 | $ | 28,529 | $ | 78,986 | $ | 78,443 | |||||||
Maintenance and services | 68,479 | 68,781 | 206,846 | 203,050 | |||||||||||
Total revenue | 95,683 | 97,310 | 285,832 | 281,493 | |||||||||||
Costs of revenue: | |||||||||||||||
Cost of software licenses | 1,077 | 1,337 | 3,571 | 4,347 | |||||||||||
Cost of maintenance and services | 10,110 | 10,970 | 29,445 | 32,724 | |||||||||||
Amortization of acquired intangibles | 5,509 | 5,768 | 17,226 | 14,129 | |||||||||||
Total costs of revenue | 16,696 | 18,075 | 50,242 | 51,200 | |||||||||||
Gross profit | 78,987 | 79,235 | 235,590 | 230,293 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 21,752 | 23,159 | 64,838 | 70,116 | |||||||||||
Product development | 19,338 | 19,620 | 59,405 | 55,745 | |||||||||||
General and administrative | 12,218 | 11,164 | 35,670 | 33,338 | |||||||||||
Amortization of acquired intangibles | 3,319 | 3,319 | 9,956 | 9,721 | |||||||||||
Fees related to shareholder activist | — | — | 1,472 | — | |||||||||||
Restructuring expense | 135 | 923 | 2,382 | 18,724 | |||||||||||
Acquisition-related expenses | 42 | 751 | 128 | 844 | |||||||||||
Total operating expenses | 56,804 | 58,936 | 173,851 | 188,488 | |||||||||||
Income from operations | 22,183 | 20,299 | 61,739 | 41,805 | |||||||||||
Other (expense) income, net: | |||||||||||||||
Interest expense | (1,337 | ) | (1,221 | ) | (3,774 | ) | (3,455 | ) | |||||||
Interest income and other, net | 322 | 239 | 961 | 717 | |||||||||||
Foreign currency (loss) gain, net | (946 | ) | (418 | ) | (2,017 | ) | (1,561 | ) | |||||||
Total other (expense) income, net | (1,961 | ) | (1,400 | ) | (4,830 | ) | (4,299 | ) | |||||||
Income before income taxes | 20,222 | 18,899 | 56,909 | 37,506 | |||||||||||
Provision for income taxes | 3,476 | 7,727 | 11,848 | 16,518 | |||||||||||
Net income | $ | 16,746 | $ | 11,172 | $ | 45,061 | $ | 20,988 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.37 | $ | 0.23 | $ | 0.99 | $ | 0.43 | |||||||
Diluted | $ | 0.37 | $ | 0.23 | $ | 0.97 | $ | 0.43 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 45,130 | 48,071 | 45,730 | 48,342 | |||||||||||
Diluted | 45,576 | 48,370 | 46,380 | 48,631 | |||||||||||
Cash dividends declared per common share | $ | 0.140 | $ | 0.125 | $ | 0.420 | $ | 0.375 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | |||||||||||
Net income | $ | 16,746 | $ | 11,172 | $ | 45,061 | $ | 20,988 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Foreign currency translation adjustments | (1,950 | ) | 5,920 | (7,137 | ) | 11,291 | |||||||||
Unrealized gains on investments, net of tax provision of $18 and $57 for the third quarter and first nine months of 2018, respectively and $17 and $62 for the third quarter and first nine months of 2017, respectively | 52 | 27 | 24 | 105 | |||||||||||
Total other comprehensive (loss) income, net of tax | (1,898 | ) | 5,947 | (7,113 | ) | 11,396 | |||||||||
Comprehensive income | $ | 14,848 | $ | 17,119 | $ | 37,948 | $ | 32,384 |
Nine Months Ended | |||||||
(In thousands) | August 31, 2018 | August 31, 2017 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 45,061 | $ | 20,988 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of property and equipment | 5,158 | 5,794 | |||||
Amortization of intangibles and other | 28,489 | 25,530 | |||||
Stock-based compensation | 14,716 | 9,559 | |||||
Loss on disposal of property | 201 | 186 | |||||
Deferred income taxes | (1,487 | ) | 3,518 | ||||
Excess tax benefit from stock plans | — | (403 | ) | ||||
Allowances for accounts receivable | 140 | 53 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 15,017 | 15,769 | |||||
Other assets | 4,465 | 3,783 | |||||
Accounts payable and accrued liabilities | (20,290 | ) | (10,971 | ) | |||
Income taxes payable | 1,575 | 759 | |||||
Deferred revenue | 3,980 | (1,394 | ) | ||||
Net cash flows from operating activities | 97,025 | 73,171 | |||||
Cash flows from (used in) investing activities: | |||||||
Purchases of investments | (8,258 | ) | (30,482 | ) | |||
Sales and maturities of investments | 18,495 | 25,904 | |||||
Purchases of property and equipment | (5,968 | ) | (865 | ) | |||
Payments for acquisitions, net of cash acquired | — | (77,149 | ) | ||||
Proceeds from sale of property, plant and equipment, net | — | 1,557 | |||||
Net cash flows from (used in) investing activities | 4,269 | (81,035 | ) | ||||
Cash flows used in financing activities: | |||||||
Proceeds from stock-based compensation plans | 7,943 | 7,245 | |||||
Payments for taxes related to net share settlements of equity awards | (1,942 | ) | (2,369 | ) | |||
Repurchases of common stock | (110,000 | ) | (43,936 | ) | |||
Excess tax benefit from stock plans | — | 403 | |||||
Dividend payments to shareholders | (19,472 | ) | (18,151 | ) | |||
Payment of long-term debt | (4,641 | ) | (11,250 | ) | |||
Net cash flows used in financing activities | (128,112 | ) | (68,058 | ) | |||
Effect of exchange rate changes on cash | (7,949 | ) | 13,643 | ||||
Net decrease in cash and cash equivalents | (34,767 | ) | (62,279 | ) | |||
Cash and cash equivalents, beginning of period | 133,464 | 207,036 | |||||
Cash and cash equivalents, end of period | $ | 98,697 | $ | 144,757 |
Nine Months Ended | |||||||
August 31, 2018 | August 31, 2017 | ||||||
Supplemental disclosure: | |||||||
Cash paid for income taxes, net of refunds of $889 in 2018 and $3,584 in 2017 | $ | 7,515 | $ | 10,469 | |||
Cash paid for interest | $ | 3,096 | $ | 2,703 | |||
Non-cash investing and financing activities: | |||||||
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested | $ | 9,546 | $ | 13,833 | |||
Dividends declared | $ | 6,324 | $ | 5,975 |
• | 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 an unbilled receivable on the balance sheet. Accordingly, the recognition of 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 | $ | 92,827 | $ | — | $ | — | $ | 92,827 | |||||||
Money market funds | 5,870 | — | — | 5,870 | |||||||||||
State and municipal bond obligations | 24,349 | — | (125 | ) | 24,224 | ||||||||||
U.S. treasury bonds | 6,715 | — | (25 | ) | 6,690 | ||||||||||
Corporate bonds | 8,332 | — | (62 | ) | 8,270 | ||||||||||
Total | $ | 138,093 | $ | — | $ | (212 | ) | $ | 137,881 |
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 |
August 31, 2018 | November 30, 2017 | ||||||||||||||
Cash and Equivalents | Short-Term Investments | Cash and Equivalents | Short-Term Investments | ||||||||||||
Cash | $ | 92,827 | $ | — | $ | 130,547 | $ | — | |||||||
Money market funds | 5,870 | — | 2,917 | — | |||||||||||
State and municipal bond obligations | — | 24,224 | — | 40,227 | |||||||||||
U.S. treasury bonds | — | 6,690 | — | 3,491 | |||||||||||
Corporate bonds | — | 8,270 | — | 6,427 | |||||||||||
Total | $ | 98,697 | $ | 39,184 | $ | 133,464 | $ | 50,145 |
August 31, 2018 | November 30, 2017 | ||||||
Due in one year or less | $ | 26,209 | $ | 22,333 | |||
Due after one year (1) | 12,975 | 27,812 | |||||
Total | $ | 39,184 | $ | 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 on the condensed consolidated balance sheets. |
August 31, 2018 | November 30, 2017 | ||||||||||||||
Notional Value | Fair Value | Notional Value | Fair Value | ||||||||||||
Forward contracts to sell U.S. dollars | $ | 149,204 | $ | (1,806 | ) | $ | 119,192 | $ | (27 | ) | |||||
Forward contracts to purchase U.S. dollars | — | — | 462 | — | |||||||||||
Total | $ | 149,204 | $ | (1,806 | ) | $ | 119,654 | $ | (27 | ) |
Fair Value Measurements Using | |||||||||||||||
Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||
Money market funds | $ | 5,870 | $ | 5,870 | $ | — | $ | — | |||||||
State and municipal bond obligations | 24,224 | — | 24,224 | — | |||||||||||
U.S. treasury bonds | 6,690 | — | 6,690 | — | |||||||||||
Corporate bonds | 8,270 | — | 8,270 | — | |||||||||||
Liabilities | |||||||||||||||
Foreign exchange derivatives | $ | (1,806 | ) | $ | — | $ | (1,806 | ) | $ | — |
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 | ) | $ | — |
August 31, 2018 | November 30, 2017 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||
Purchased technology | $ | 154,301 | $ | (105,451 | ) | $ | 48,850 | $ | 154,301 | $ | (88,224 | ) | $ | 66,077 | |||||||||
Customer-related | 67,802 | (54,024 | ) | 13,778 | 67,802 | (46,230 | ) | 21,572 | |||||||||||||||
Trademarks and trade names | 17,740 | (12,656 | ) | 5,084 | 17,740 | (10,495 | ) | 7,245 | |||||||||||||||
Total | $ | 239,843 | $ | (172,131 | ) | $ | 67,712 | $ | 239,843 | $ | (144,949 | ) | $ | 94,894 |
Remainder of 2018 | $ | 8,873 | |
2019 | 34,932 | ||
2020 | 10,152 | ||
2021 | 10,033 | ||
2022 | 3,722 | ||
Total | $ | 67,712 |
Balance, November 30, 2017 | $ | 315,041 | |
Translation adjustments | (90 | ) | |
Balance, August 31, 2018 | $ | 314,951 |
November 30, 2017 | Translation adjustments | August 31, 2018 | |||||||||
OpenEdge | $ | 249,036 | $ | (90 | ) | $ | 248,946 | ||||
Data Connectivity and Integration | 19,040 | — | 19,040 | ||||||||
Application Development and Deployment | 46,965 | — | 46,965 | ||||||||
Total goodwill | $ | 315,041 | $ | (90 | ) | $ | 314,951 |
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 | $ | 1,546 | |
2019 | 6,188 | ||
2020 | 9,281 | ||
2021 | 12,375 | ||
2022 | 89,719 | ||
Total | $ | 119,109 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | ||||||||||||
Cost of maintenance and services | $ | (96 | ) | $ | 239 | $ | 419 | $ | 790 | ||||||
Sales and marketing | 762 | 808 | 2,127 | 1,371 | |||||||||||
Product development | 1,744 | 1,645 | 5,774 | 2,699 | |||||||||||
General and administrative | 2,156 | 1,604 | 6,396 | 4,699 | |||||||||||
Total stock-based compensation | $ | 4,566 | $ | 4,296 | $ | 14,716 | $ | 9,559 |
Foreign Currency Translation Adjustment | Unrealized (Losses) Gains on Investments | Accumulated Other Comprehensive Loss | |||||||||
Balance, December 1, 2017 | $ | (18,770 | ) | $ | (229 | ) | $ | (18,999 | ) | ||
Other comprehensive loss before reclassifications, net of tax | (7,137 | ) | 24 | (7,113 | ) | ||||||
Balance, August 31, 2018 | $ | (25,907 | ) | $ | (205 | ) | $ | (26,112 | ) |
Excess Facilities and Other Costs | Employee Severance and Related Benefits | Total | |||||||||
Balance, December 1, 2017 | $ | 570 | $ | 3,556 | $ | 4,126 | |||||
Costs incurred | 1,132 | 1,250 | 2,382 | ||||||||
Cash disbursements | (1,172 | ) | (4,752 | ) | (5,924 | ) | |||||
Translation adjustments and other | 45 | 10 | 55 | ||||||||
Balance, August 31, 2018 | $ | 575 | $ | 64 | $ | 639 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | ||||||||||||
Net income | $ | 16,746 | $ | 11,172 | $ | 45,061 | $ | 20,988 | |||||||
Weighted average shares outstanding | 45,130 | 48,071 | 45,730 | 48,342 | |||||||||||
Dilutive impact from common stock equivalents | 446 | 299 | 650 | 289 | |||||||||||
Diluted weighted average shares outstanding | 45,576 | 48,370 | 46,380 | 48,631 | |||||||||||
Basic earnings per share | $ | 0.37 | $ | 0.23 | $ | 0.99 | $ | 0.43 | |||||||
Diluted earnings per share | $ | 0.37 | $ | 0.23 | $ | 0.97 | $ | 0.43 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | |||||||||||
Segment revenue: | |||||||||||||||
OpenEdge | $ | 68,029 | $ | 68,135 | $ | 204,404 | $ | 198,533 | |||||||
Data Connectivity and Integration | 7,597 | 8,987 | 20,989 | 22,911 | |||||||||||
Application Development and Deployment | 20,057 | 20,188 | 60,439 | 60,049 | |||||||||||
Total revenue | 95,683 | 97,310 | 285,832 | 281,493 | |||||||||||
Segment costs of revenue and operating expenses: | |||||||||||||||
OpenEdge | 16,419 | 18,374 | 47,194 | 52,538 | |||||||||||
Data Connectivity and Integration | 1,520 | 2,200 | 4,823 | 6,531 | |||||||||||
Application Development and Deployment | 7,071 | 6,369 | 20,068 | 19,896 | |||||||||||
Total costs of revenue and operating expenses | 25,010 | 26,943 | 72,085 | 78,965 | |||||||||||
Segment contribution margin: | |||||||||||||||
OpenEdge | 51,610 | 49,761 | 157,210 | 145,995 | |||||||||||
Data Connectivity and Integration | 6,077 | 6,787 | 16,166 | 16,380 | |||||||||||
Application Development and Deployment | 12,986 | 13,819 | 40,371 | 40,153 | |||||||||||
Total contribution margin | 70,673 | 70,367 | 213,747 | 202,528 | |||||||||||
Other unallocated expenses (1) | 48,490 | 50,068 | 152,008 | 160,723 | |||||||||||
Income from operations | 22,183 | 20,299 | 61,739 | 41,805 | |||||||||||
Other (expense) income, net | (1,961 | ) | (1,400 | ) | (4,830 | ) | (4,299 | ) | |||||||
Income before income taxes | $ | 20,222 | $ | 18,899 | $ | 56,909 | $ | 37,506 | |||||||
(1) The following expenses are not allocated to our segments as we manage and report our business in these functional areas on a consolidated basis only: certain product development and corporate sales and marketing expenses, customer support, administration, amortization of acquired intangibles, stock-based compensation, fees related to shareholder activist, restructuring, and acquisition-related expenses. |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | |||||||||||
Software licenses | $ | 27,204 | $ | 28,529 | $ | 78,986 | $ | 78,443 | |||||||
Maintenance | 60,566 | 60,536 | 184,368 | 179,572 | |||||||||||
Services | 7,913 | 8,245 | 22,478 | 23,478 | |||||||||||
Total revenue | $ | 95,683 | $ | 97,310 | $ | 285,832 | $ | 281,493 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | August 31, 2018 | August 31, 2017 | |||||||||||
North America | $ | 52,212 | $ | 55,703 | $ | 154,676 | $ | 157,438 | |||||||
EMEA | 33,422 | 31,830 | 101,769 | 92,320 | |||||||||||
Latin America | 4,341 | 5,009 | 13,058 | 15,669 | |||||||||||
Asia Pacific | 5,708 | 4,768 | 16,329 | 16,066 | |||||||||||
Total revenue | $ | 95,683 | $ | 97,310 | $ | 285,832 | $ | 281,493 |
• | 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. |
• | Product Strategy. As part of the strategic plan implemented in early 2017, 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 enables developers to build the most modern applications quickly and easily, 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 high productivity 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 in fiscal year 2017, 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) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Revenue | $ | 95,683 | $ | 97,310 | (2 | )% | (1 | )% |
Nine Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Revenue | $ | 285,832 | $ | 281,493 | 2 | % | — | % |
Three Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Software Licenses | $ | 27,204 | $ | 28,529 | (5 | )% | (4 | )% | |||||
As a percentage of total revenue | 28 | % | 29 | % |
Nine Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Software Licenses | $ | 78,986 | $ | 78,443 | 1 | % | (1 | )% | |||||
As a percentage of total revenue | 28 | % | 28 | % |
Three Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Maintenance | $ | 60,566 | $ | 60,536 | — | % | 1 | % | |||||
As a percentage of total revenue | 63 | % | 62 | % | |||||||||
Services | 7,913 | 8,245 | (4 | )% | (4 | )% | |||||||
As a percentage of total revenue | 8 | % | 8 | % | |||||||||
Total maintenance and services revenue | $ | 68,479 | $ | 68,781 | — | % | — | % | |||||
As a percentage of total revenue | 72 | % | 71 | % |
Nine Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
Maintenance | $ | 184,368 | $ | 179,572 | 3 | % | 1 | % | |||||
As a percentage of total revenue | 65 | % | 64 | % | |||||||||
Services | 22,478 | 23,478 | (4 | )% | (5 | )% | |||||||
As a percentage of total revenue | 8 | % | 8 | % | |||||||||
Total maintenance and services revenue | $ | 206,846 | $ | 203,050 | 2 | % | — | % | |||||
As a percentage of total revenue | 72 | % | 72 | % |
Three Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
North America | $ | 52,212 | $ | 55,703 | (6 | )% | (6 | )% | |||||
As a percentage of total revenue | 55 | % | 57 | % | |||||||||
Europe, the Middle East and Africa ("EMEA") | $ | 33,422 | $ | 31,830 | 5 | % | 5 | % | |||||
As a percentage of total revenue | 35 | % | 33 | % | |||||||||
Latin America | $ | 4,341 | $ | 5,009 | (13 | )% | (1 | )% | |||||
As a percentage of total revenue | 4 | % | 5 | % | |||||||||
Asia Pacific | $ | 5,708 | $ | 4,768 | 20 | % | 23 | % | |||||
As a percentage of total revenue | 6 | % | 5 | % |
Nine Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
North America | $ | 154,676 | $ | 157,438 | (2 | )% | (2 | )% | |||||
As a percentage of total revenue | 54 | % | 56 | % | |||||||||
EMEA | $ | 101,769 | $ | 92,320 | 10 | % | 4 | % | |||||
As a percentage of total revenue | 36 | % | 33 | % | |||||||||
Latin America | $ | 13,058 | $ | 15,669 | (17 | )% | (11 | )% | |||||
As a percentage of total revenue | 4 | % | 5 | % | |||||||||
Asia Pacific | $ | 16,329 | $ | 16,066 | 2 | % | 2 | % | |||||
As a percentage of total revenue | 6 | % | 6 | % |
Three Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
OpenEdge segment | $ | 68,029 | $ | 68,135 | — | % | 1 | % | |||||
Data Connectivity and Integration segment | 7,597 | 8,987 | (15 | )% | (16 | )% | |||||||
Application Development and Deployment segment | 20,057 | 20,188 | (1 | )% | (1 | )% | |||||||
Total revenue | $ | 95,683 | $ | 97,310 | (2 | )% | (1 | )% |
Nine Months Ended | Percentage Change | ||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | As Reported | Constant Currency | |||||||||
OpenEdge segment | $ | 204,404 | $ | 198,533 | 3 | % | 1 | % | |||||
Data Connectivity and Integration segment | 20,989 | 22,911 | (8 | )% | (9 | )% | |||||||
Application Development and Deployment segment | 60,439 | 60,049 | 1 | % | 1 | % | |||||||
Total revenue | $ | 285,832 | $ | 281,493 | 2 | % | — | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Cost of software licenses | $ | 1,077 | $ | 1,337 | (19 | )% | $ | 3,571 | $ | 4,347 | (18 | )% | |||||||||
As a percentage of software license revenue | 4 | % | 5 | % | 5 | % | 6 | % | |||||||||||||
As a percentage of total revenue | 1 | % | 1 | % | 1 | % | 2 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Cost of maintenance and services | $ | 10,110 | $ | 10,970 | (8 | )% | $ | 29,445 | $ | 32,724 | (10 | )% | |||||||||
As a percentage of maintenance and services revenue | 15 | % | 16 | % | 14 | % | 16 | % | |||||||||||||
As a percentage of total revenue | 11 | % | 11 | % | 10 | % | 12 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Amortization of acquired intangibles | $ | 5,509 | $ | 5,768 | (4 | )% | $ | 17,226 | $ | 14,129 | 22 | % | |||||||||
As a percentage of total revenue | 6 | % | 6 | % | 6 | % | 5 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Gross profit | $ | 78,987 | $ | 79,235 | — | % | $ | 235,590 | $ | 230,293 | 2 | % | |||||||||
As a percentage of total revenue | 83 | % | 81 | % | 82 | % | 82 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Sales and marketing | $ | 21,752 | $ | 23,159 | (6 | )% | $ | 64,838 | $ | 70,116 | (8 | )% | |||||||||
As a percentage of total revenue | 23 | % | 24 | % | 23 | % | 25 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Product development costs | $ | 19,338 | $ | 19,620 | (1 | )% | $ | 59,405 | $ | 55,745 | 7 | % | |||||||||
As a percentage of total revenue | 20 | % | 20 | % | 21 | % | 20 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
General and administrative | $ | 12,218 | $ | 11,164 | 9 | % | $ | 35,670 | $ | 33,338 | 7 | % | |||||||||
As a percentage of total revenue | 13 | % | 11 | % | 12 | % | 12 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Amortization of acquired intangibles | $ | 3,319 | $ | 3,319 | — | % | $ | 9,956 | $ | 9,721 | 2 | % | |||||||||
As a percentage of total revenue | 3 | % | 3 | % | 3 | % | 3 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||
Fees related to shareholder activist | $ | — | $ | — | * | $ | 1,472 | $ | — | * | |||||||||
As a percentage of total revenue | — | % | — | % | 1 | % | — | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Restructuring expenses | $ | 135 | $ | 923 | (85 | )% | $ | 2,382 | $ | 18,724 | (87 | )% | |||||||||
As a percentage of total revenue | — | % | 1 | % | 1 | % | 7 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Acquisition-related expenses | $ | 42 | $ | 751 | (94 | )% | $ | 128 | $ | 844 | (85 | )% | |||||||||
As a percentage of total revenue | — | % | 1 | % | — | % | — | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Income from operations | $ | 22,183 | $ | 20,299 | 9 | % | $ | 61,739 | $ | 41,805 | 48 | % | |||||||||
As a percentage of total revenue | 23 | % | 21 | % | 22 | % | 15 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
OpenEdge segment | $ | 51,610 | $ | 49,761 | 4 | % | $ | 157,210 | $ | 145,995 | 8 | % | |||||||||
Data Connectivity and Integration segment | 6,077 | 6,787 | (10 | )% | 16,166 | 16,380 | (1 | )% | |||||||||||||
Application Development and Deployment segment | 12,986 | 13,819 | (6 | )% | 40,371 | 40,153 | 1 | % | |||||||||||||
Other unallocated expenses (1) | (48,490 | ) | (50,068 | ) | (3 | )% | (152,008 | ) | (160,723 | ) | (5 | )% | |||||||||
Income from operations | $ | 22,183 | $ | 20,299 | 9 | % | $ | 61,739 | $ | 41,805 | 48 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Interest expense | $ | (1,337 | ) | $ | (1,221 | ) | (10 | )% | $ | (3,774 | ) | $ | (3,455 | ) | (9 | )% | |||||
Interest income and other, net | 322 | 239 | 35 | % | 961 | 717 | 34 | % | |||||||||||||
Foreign currency (loss) gain, net | (946 | ) | (418 | ) | (126 | )% | (2,017 | ) | (1,561 | ) | (29 | )% | |||||||||
Total other (expense) income, net | $ | (1,961 | ) | $ | (1,400 | ) | (40 | )% | $ | (4,830 | ) | $ | (4,299 | ) | (12 | )% | |||||
As a percentage of total revenue | (2 | )% | (1 | )% | (2 | )% | (2 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Provision for income taxes | $ | 3,476 | $ | 7,727 | (55 | )% | $ | 11,848 | $ | 16,518 | (28 | )% | |||||||||
As a percentage of total revenue | 4 | % | 8 | % | 4 | % | 6 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(In thousands) | August 31, 2018 | August 31, 2017 | Percentage Change | August 31, 2018 | August 31, 2017 | Percentage Change | |||||||||||||||
Net income | $ | 16,746 | $ | 11,172 | 50 | % | $ | 45,061 | $ | 20,988 | 115 | % | |||||||||
As a percentage of total revenue | 18 | % | 11 | % | 16 | % | 7 | % |
(In thousands) | August 31, 2018 | November 30, 2017 | |||||
Cash and cash equivalents | $ | 98,697 | $ | 133,464 | |||
Short-term investments | 39,184 | 50,145 | |||||
Total cash, cash equivalents and short-term investments | $ | 137,881 | $ | 183,609 |
Nine Months Ended | |||||||
(In thousands) | August 31, 2018 | August 31, 2017 | |||||
Net income | $ | 45,061 | $ | 20,988 | |||
Non-cash reconciling items included in net income | 47,217 | 44,237 | |||||
Changes in operating assets and liabilities | 4,747 | 7,946 | |||||
Net cash flows from operating activities | $ | 97,025 | $ | 73,171 |
Nine Months Ended | |||||||
(In thousands) | August 31, 2018 | August 31, 2017 | |||||
Net investment activity | $ | 10,237 | $ | (4,578 | ) | ||
Purchases of property and equipment | (5,968 | ) | (865 | ) | |||
Proceeds from sale of property, plant and equipment, net | — | 1,557 | |||||
Payments for acquisitions, net of cash acquired | — | (77,149 | ) | ||||
Net cash flows from (used in) investing activities | $ | 4,269 | $ | (81,035 | ) |
Nine Months Ended | |||||||
(In thousands) | August 31, 2018 | August 31, 2017 | |||||
Proceeds from stock-based compensation plans | $ | 7,943 | $ | 7,245 | |||
Repurchases of common stock | (110,000 | ) | (43,936 | ) | |||
Payment of long-term debt | (4,641 | ) | (11,250 | ) | |||
Dividend payments to shareholders | (19,472 | ) | (18,151 | ) | |||
Other financing activities | (1,942 | ) | (1,966 | ) | |||
Net cash flows used in financing activities | $ | (128,112 | ) | $ | (68,058 | ) |
(In thousands) | August 31, 2018 | August 31, 2017 | |||||
Deferred revenue, primarily related to unexpired maintenance and support contracts | $ | 144,829 | $ | 140,706 | |||
Multi-year licensing arrangements (1) | 13,684 | 19,834 | |||||
Total revenue backlog | $ | 158,513 | $ | 160,540 |
(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 $12.3 million and $18.1 million of the multi-year licensing arrangements as of August 31, 2018 and August 31, 2017, respectively, relate to DataDirect OEM arrangements, while the remaining amount relates to arrangements in our OpenEdge business unit. |
• | 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) | ||||||||||
June 2018 | 513,308 | $ | 38.94 | 513,308 | $ | 110,000 | ||||||||
July 2018 | — | — | — | 110,000 | ||||||||||
August 2018 | — | — | — | 110,000 | ||||||||||
Total | 513,308 | $ | 38.94 | 513,308 | $ | 110,000 |
(1) | In September 2017, our Board of Directors increased our total share repurchase authorization to $250.0 million. As of August 31, 2018, there was $110.0 million remaining under this authorization, which expires at the end of fiscal year 2019. |
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 and nine months ended August 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of August 31, 2018 and November 30, 2017; (ii) Condensed Consolidated Statements of Income for the three and nine months ended August 31, 2018 and 2017; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended August 31, 2018 and 2017; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended August 31, 2018 and 2017; and (v) Notes to Condensed Consolidated Financial Statements. |
* | Filed herewith |
** | Furnished herewith |
Dated: | October 5, 2018 | /s/ YOGESH K. GUPTA | |
Yogesh K. Gupta | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Dated: | October 5, 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. The same proration rule will also apply to any partial year service on any committee. |
/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: | October 5, 2018 | Date: | October 5, 2018 |
Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Aug. 31, 2018 |
Sep. 27, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | PROGRESS SOFTWARE CORP /MA | |
Entity Central Index Key | 0000876167 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --11-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding (in shares) | 44,902,607 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Assets | ||
Allowance for accounts receivable | $ 701 | $ 676 |
Stockholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 45,133,361 | 47,281,035 |
Common stock, shares outstanding (in shares) | 45,133,361 | 47,281,035 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Revenue: | ||||
Total revenue | $ 95,683 | $ 97,310 | $ 285,832 | $ 281,493 |
Costs of revenue: | ||||
Amortization of acquired intangibles | 5,509 | 5,768 | 17,226 | 14,129 |
Total costs of revenue | 16,696 | 18,075 | 50,242 | 51,200 |
Gross profit | 78,987 | 79,235 | 235,590 | 230,293 |
Operating expenses: | ||||
Sales and marketing | 21,752 | 23,159 | 64,838 | 70,116 |
Product development | 19,338 | 19,620 | 59,405 | 55,745 |
General and administrative | 12,218 | 11,164 | 35,670 | 33,338 |
Amortization of acquired intangibles | 3,319 | 3,319 | 9,956 | 9,721 |
Fees related to shareholder activist | 0 | 0 | 1,472 | 0 |
Restructuring expense | 135 | 923 | 2,382 | 18,724 |
Acquisition-related expenses | 42 | 751 | 128 | 844 |
Total operating expenses | 56,804 | 58,936 | 173,851 | 188,488 |
Income from operations | 22,183 | 20,299 | 61,739 | 41,805 |
Other (expense) income, net: | ||||
Interest expense | (1,337) | (1,221) | (3,774) | (3,455) |
Interest income and other, net | 322 | 239 | 961 | 717 |
Foreign currency (loss) gain, net | (946) | (418) | (2,017) | (1,561) |
Total other (expense) income, net | (1,961) | (1,400) | (4,830) | (4,299) |
Income before income taxes | 20,222 | 18,899 | 56,909 | 37,506 |
Provision for income taxes | 3,476 | 7,727 | 11,848 | 16,518 |
Net income | $ 16,746 | $ 11,172 | $ 45,061 | $ 20,988 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.37 | $ 0.23 | $ 0.99 | $ 0.43 |
Diluted (in dollars per share) | $ 0.37 | $ 0.23 | $ 0.97 | $ 0.43 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 45,130 | 48,071 | 45,730 | 48,342 |
Diluted (in shares) | 45,576 | 48,370 | 46,380 | 48,631 |
Cash dividends declared per common share (in dollars per share) | $ 0.14 | $ 0.125 | $ 0.42 | $ 0.375 |
Software licenses | ||||
Revenue: | ||||
Total revenue | $ 27,204 | $ 28,529 | $ 78,986 | $ 78,443 |
Costs of revenue: | ||||
Cost of maintenance and services | 1,077 | 1,337 | 3,571 | 4,347 |
Maintenance and services | ||||
Revenue: | ||||
Total revenue | 68,479 | 68,781 | 206,846 | 203,050 |
Costs of revenue: | ||||
Cost of maintenance and services | $ 10,110 | $ 10,970 | $ 29,445 | $ 32,724 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 16,746 | $ 11,172 | $ 45,061 | $ 20,988 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | (1,950) | 5,920 | (7,137) | 11,291 |
Unrealized gains on investments, net of tax provision of $18 and $57 for the third quarter and first nine months of 2018, respectively and $17 and $62 for the third quarter and first nine months of 2017, respectively | 52 | 27 | 24 | 105 |
Total other comprehensive (loss) income, net of tax | (1,898) | 5,947 | (7,113) | 11,396 |
Comprehensive income | $ 14,848 | $ 17,119 | $ 37,948 | $ 32,384 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax provision included in accumulated unrealized losses on investments | $ 18 | $ 17 | $ 57 | $ 62 |
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Statement of Cash Flows [Abstract] | ||
Proceeds from income tax refunds | $ 889 | $ 3,584 |
Basis of Presentation |
9 Months Ended | ||||||||
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Aug. 31, 2018 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Basis of Presentation | Basis of Presentation Company Overview - Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") offers the leading platform for developing and deploying strategic business applications. We enable customers and partners to deliver modern, high-impact digital experiences with a fraction of the effort, time and cost. Progress offers powerful tools for easily building adaptive user experiences across any type of device or touchpoint, award-winning machine learning that enables cognitive capabilities to be a part of any application, the flexibility of a serverless cloud to deploy modern apps, business rules, web content management, plus leading data connectivity technology. Over 1,700 independent software vendors, 100,000 enterprise customers, and 2 million developers rely on Progress to power their applications. Our products are generally sold as perpetual licenses, but certain products also use term licensing models and our cloud-based offerings use a subscription-based model. More than half of our worldwide license revenue is realized through relationships with indirect channel partners, principally application partners and original equipment manufacturers ("OEMs"). Application partners are ISVs that develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. OEMs are companies that embed our products into their own software products or devices. We operate in North America and Latin America (the "Americas"); Europe, the Middle East and Africa ("EMEA"); and the Asia Pacific region, through local subsidiaries as well as independent distributors. Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2017, as amended ("Annual Report"). We made no material changes in the application of our significant accounting policies that were disclosed in our Annual Report. We have prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in our Annual Report, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year. Recent Accounting Pronouncements - In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement. The guidance in ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in ASU 2018-15. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 gives entities the option to reclassify the disproportionate income tax effects ("stranded tax effects") caused by the newly-enacted US Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The update also requires new disclosures, some of which are applicable for all entities. The guidance in ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently considering whether to adopt the optional reclassification of the stranded tax effects and evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance in ASU 2017-12 is required for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 amends Topic 350 to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This update requires the performance of an annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance in ASU 2017-04 is required for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently considering whether to adopt this update prior to the required adoption date. In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Under current GAAP, the recognition of current and deferred income taxes for an intra-entity transfer are prohibited until the asset has been sold to an outside party. The amendments in ASU 2016-16 are effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and disclosure requirements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 is intended to simplify various aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance in ASU 2016-09 is required for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The standard requires, on a prospective basis, the recognition of all excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations and the tax effect of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. The excess tax benefits and tax deficiencies should not be considered in an entity's calculation of its annual estimated effective tax rate and, as excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method to calculate diluted earnings per share should exclude such excess tax benefits. Further, on either a prospective or retrospective basis, excess tax benefits should be classified as operating activities in the statement of cash flows. The standard also provides entities the option to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, which is to be applied in accordance with a modified retrospective transition. Additionally, the standard updates the threshold to qualify for equity classification for minimum statutory tax withholding requirements by permitting an entity to withhold up to the maximum statutory rates in the applicable jurisdictions, applied on a modified retrospective basis. Finally, the standard requires that cash paid by an employer to a taxing authority when directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows, applied retrospectively. We adopted this standard at the beginning of the first quarter of fiscal year 2018 and elected to classify excess tax benefits as operating activities on a prospective basis in the condensed consolidated statement of cash flows. As such, the prior period condensed consolidated statement of cash flows was not adjusted. We also elected to account for forfeitures as they occur and recorded a cumulative-effect adjustment of $0.6 million to retained earnings during the period of adoption. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial position, results of operations, and cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which requires lessees to record most leases on their balance sheets, recognizing a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The guidance in ASU 2016-02 is required for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We currently expect that most of our operating lease commitments will be subject to the update and recognized as operating lease liabilities and right-of-use assets upon adoption. However, we are currently evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provided in Topic 606 requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. This new guidance was initially effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016 and early adoption was not permitted. However, in July 2015, the FASB voted to defer the effective date of this ASU by one year for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the effective date for the Company will be December 1, 2018. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. The Company currently plans to adopt this ASU in accordance with the full retrospective approach, effective December 1, 2018. Fiscal year 2019 quarterly results, and comparative prior periods, will be prepared in accordance with ASC Topic 606. The first Annual Report on Form 10-K issued in accordance with ASC Topic 606 will be for the period ended November 30, 2019. Management is currently assessing the impact the adoption of this standard will have on the Company’s consolidated financial statements, but anticipates that the revenue recognition related to accounting for the following transactions will be most impacted:
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Cash, Cash Equivalents and Investments |
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Investments and Cash [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments A summary of our cash, cash equivalents and available-for-sale investments at August 31, 2018 is as follows (in thousands):
A summary of our cash, cash equivalents and available-for-sale investments at November 30, 2017 is as follows (in thousands):
Such amounts are classified on our condensed consolidated balance sheets as follows (in thousands):
The fair value of debt securities by contractual maturity is as follows (in thousands):
We did not hold any investments with continuous unrealized losses as of August 31, 2018 or November 30, 2017. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments We generally use forward contracts that are not designated as hedging instruments to hedge economically the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies. We generally do not hedge the net assets of our international subsidiaries. All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and expire from 30 days to one year. At August 31, 2018, $1.8 million was recorded in other accrued liabilities on the condensed consolidated balance sheet. At November 30, 2017, $0.2 million and $0.2 million was recorded in other accrued liabilities and other assets, respectively, on the consolidated balance sheet. In the three and nine months ended August 31, 2018, realized and unrealized losses of $1.0 million and $4.1 million, respectively, from our forward contracts were recognized in foreign currency (loss) gain, net, on the condensed consolidated statements of operations. In the three and nine months ended August 31, 2017, realized and unrealized gains of $5.2 million and $9.6 million, respectively, from our forward contracts were recognized in foreign currency (loss) gain, net on the condensed consolidated statements of operations. The losses and gains were substantially offset by realized and unrealized gains and losses on the offsetting positions. The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Recurring Fair Value Measurements The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at August 31, 2018 (in thousands):
The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2017 (in thousands):
When developing fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted market prices to measure fair value. The valuation technique used to measure fair value for our Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument. We did not have any nonrecurring fair value measurements during the nine months ended August 31, 2018. |
Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible Assets Intangible assets are comprised of the following significant classes (in thousands):
In the three and nine months ended August 31, 2018, amortization expense related to intangible assets was $8.8 million and $27.2 million, respectively. In the three and nine months ended August 31, 2017, amortization expense related to intangible assets was $9.1 million and $23.9 million, respectively. Future amortization expense for intangible assets as of August 31, 2018, is as follows (in thousands):
Goodwill Changes in the carrying amount of goodwill in the nine months ended August 31, 2018 are as follows (in thousands):
Changes in the goodwill balances by reportable segment in the nine months ended August 31, 2018 are as follows (in thousands):
During the quarter ending August 31, 2018, no triggering events occurred that would indicate that it is more likely than not that the carrying values of any of our reporting units exceeded their fair values. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations Kinvey Acquisition On June 1, 2017, we acquired by merger 100% of the outstanding securities of Kinvey for an aggregate sum of $49.2 million, which includes approximately $0.3 million held-back from the founder of Kinvey as an incentive to remain with the Company for at least two years following the acquisition. The $0.3 million held-back is being recorded to expense over the service period. Kinvey allows developers to set up, use, and operate a serverless cloud backend for any native, hybrid, web, or IoT app built using any development tools. The acquisition was accounted for as a business combination, and accordingly, the results of operations of Kinvey are included in our operating results as part of the OpenEdge business segment from the date of acquisition. We paid the purchase price in cash from available funds. The total consideration, less the $0.3 million held-back discussed above, which is considered to be a compensation arrangement, was allocated to Kinvey's tangible assets, identifiable intangible assets and assumed liabilities based on their estimated fair values. The excess of the total consideration, less the amount held-back from the founder, over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was completed in the fourth quarter of fiscal year 2017 upon the finalization of our valuation of identifiable intangible assets and deferred taxes. The allocation of the purchase price is as follows (in thousands):
The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to price the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. Deferred taxes include deferred tax liabilities resulting from the tax effects of fair value adjustments related to identifiable intangible assets, which are more than offset by the value of deferred tax assets acquired from Kinvey. Tangible assets acquired and assumed liabilities were recorded at fair value. We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $24.4 million of goodwill, which is not deductible for tax purposes. Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) are not included as a component of consideration paid, but are required to be expensed as incurred. We incurred minimal acquisition-related costs during the three and nine months ended August 31, 2018, which are included in acquisition-related expenses on our condensed consolidated statements of operations. We have not disclosed the amount of revenues and earnings of Kinvey since acquisition, nor pro forma financial information, as those amounts are not significant to our consolidated financial statements. DataRPM Acquisition On March 1, 2017, we acquired by merger 100% of the outstanding securities of DataRPM for an aggregate sum of $30.0 million. Approximately $1.7 million of the purchase price was paid to DataRPM’s founders in the form of restricted stock units, subject to a two-year vesting schedule and continued employment. DataRPM is a leader in cognitive predictive maintenance for the industrial IoT ("IIoT") market. The acquisition was accounted for as a business combination, and accordingly, the results of operations of DataRPM are included in our operating results as part of the OpenEdge business segment from the date of acquisition. We paid the purchase price in cash from available funds. The total consideration, less the fair value of the granted restricted stock units discussed above, which are considered compensation arrangements, was allocated to DataRPM’s tangible assets, identifiable intangible assets and assumed liabilities based on their estimated fair values. The excess of the total consideration, less the fair value of the restricted stock units, over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was completed in the fourth quarter of fiscal year 2017 upon the finalization of our valuation of identifiable intangible assets and deferred taxes. The allocation of the purchase price is as follows (in thousands):
The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to price the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. Deferred taxes include deferred tax liabilities resulting from the tax effects of fair value adjustments related to identifiable intangible assets, partially offset by the fair value of deferred tax assets acquired from DataRPM. Tangible assets acquired and assumed liabilities were recorded at fair value. We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $12.6 million of goodwill, which is not deductible for tax purposes. As discussed above, approximately $1.7 million of the total consideration was paid to DataRPM’s founders in restricted stock units, subject to a vesting schedule and continued employment. We concluded that the restricted stock units are compensation arrangements and we are recognizing stock-based compensation expense in accordance with the vesting schedule over the service period of the awards, which is two-years. During the three months ended August 31, 2018, we incurred minimal stock-based compensation expense related to these restricted stock units. During the nine months ended August 31, 2018, as a result of the termination of employment of one of the founders, we recorded a minimal credit to stock-based compensation expense related to forfeitures. These amounts are included in operating expenses on our condensed consolidated statements of operations. Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) are not included as a component of consideration transferred, but are required to be expensed as incurred. We did not incur any acquisition-related costs during the three and nine months ended August 31, 2018 and do not expect to incur additional material costs with respect to this acquisition. We have not disclosed the amount of revenues and earnings of DataRPM since acquisition, nor pro forma financial information, as those amounts are not significant to our consolidated financial statements. |
Term Loan and Line of Credit |
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Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||
Term Loan and Line of Credit | Term Loan and Line of Credit Our credit agreement provides for a $123.8 million secured term loan and a $150.0 million secured revolving credit facility. The revolving credit facility may be made available in U.S. Dollars and certain other currencies and may be increased by up to an additional $125.0 million if the existing or additional lenders are willing to make such increased commitments. The revolving credit facility has sublimits for swing line loans up to $25.0 million and for the issuance of standby letters of credit in a face amount up to $25.0 million. We expect to use the revolving credit facility for general corporate purposes, including acquisitions of other businesses, and may also use it for working capital. The credit facility matures on November 20, 2022, when all amounts outstanding will be due and payable in full. The revolving credit facility does not require amortization of principal. The outstanding balance of the term loan as of August 31, 2018 was $119.1 million, with $6.2 million due in the next 12 months. The term loan requires repayment of principal at the end of each fiscal quarter, beginning with the fiscal quarter ended February 28, 2018. The principal repayment amounts are in accordance with the following schedule: (i) eight payments of $1.5 million each, (ii) four payments of $2.3 million each, (iii) four payments of $3.1 million each, (iv) three payments of $3.9 million each, and (v) the last payment is of the remaining principal amount. Any amounts outstanding under the term loan thereafter would be due on the maturity date. The term loan may be prepaid before maturity in whole or in part at our option without penalty or premium. As of August 31, 2018, the carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds. The interest rate of the credit facility as of August 31, 2018 was 3.63%. Costs incurred to obtain our long-term debt of $1.8 million are recorded as debt issuance costs as a direct deduction from the carrying value of the debt liability on our condensed consolidated balance sheets as of August 31, 2018. These costs are being amortized over the term of the debt agreement using the effective interest rate method. Amortization expense related to the debt issuance costs of $0.1 million for the three months ended August 31, 2018 and August 31, 2017 and $0.3 million for the nine months ended August 31, 2018 and August 31, 2017, respectively, is recorded in interest expense on our condensed consolidated statements of operations. Revolving loans may be borrowed, repaid, and reborrowed until November 20, 2022, at which time all amounts outstanding must be repaid. As of August 31, 2018, there were no amounts outstanding under the revolving line and $1.3 million of letters of credit. As of August 31, 2018, aggregate principal payments of long-term debt for the next five years are (in thousands):
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Common Stock Repurchases |
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Common Stock Repurchases [Abstract] | |
Common Stock Repurchases | Common Stock Repurchases In the three and nine months ended August 31, 2018, we repurchased and retired 0.5 million shares of our common stock for $20.0 million and 2.6 million shares for $110.0 million, respectively. In the three and nine months ended August 31, 2017, we repurchased and retired 0.6 million shares for $19.0 million and 1.5 million shares for $43.9 million, respectively. The shares were repurchased in all periods as part of our Board of Directors authorized share repurchase program. In September 2017, our Board of Directors increased our total share repurchase authorization to $250.0 million. As of August 31, 2018, there was $110.0 million remaining under this current authorization. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense reflects the fair value of stock-based awards, less the present value of expected dividends, measured at the grant date and recognized over the relevant service period. We estimate the fair value of each stock-based award on the measurement date using the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model. During fiscal years 2016 and 2017, we granted performance-based restricted stock units that include a three-year market condition under a Long-Term Incentive Plan (“LTIP”) where the performance measurement period is three years. Vesting of the LTIP awards is based on our level of attainment of specified total shareholder return ("TSR") targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods and is also subject to the continued employment of the grantees. In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model. During the first quarter of fiscal year 2018, we granted performance-based restricted stock units that include two performance metrics under the LTIP where the performance measurement period is three years. Vesting of the 2018 LTIP awards is as follows: (i) 50% is based on the three-year market condition as described above (TSR), and (ii) 50% is based on achievement of a three-year cumulative performance condition (operating income). In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model for the market condition portion of the award, and used the closing price of our common stock on the date of grant, less the present value of expected dividends, for the portion related to the performance condition. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally 4 years for options and 3 years for restricted stock units. We recognize stock-based compensation expense related to our employee stock purchase plan using an accelerated attribution method. The following table provides the classification of stock-based compensation as reflected on our condensed consolidated statements of operations (in thousands):
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated balances of other comprehensive loss during the nine months ended August 31, 2018 (in thousands):
The tax effect on accumulated unrealized (losses) gains on investments was minimal as of August 31, 2018 and November 30, 2017. |
Restructuring Charges |
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Restructuring Charges | Restructuring Charges The following table provides a summary of activity for our restructuring actions, which are detailed further below (in thousands):
During fiscal year 2017, we undertook certain operational restructuring initiatives intended to significantly reduce annual costs. As part of this action, management committed to a new strategic plan highlighted by a new product strategy and a streamlined operating approach. To execute these operational restructuring initiatives, we reduced our global workforce by over 20%. These workforce reductions occurred in substantially all functional units and across all geographies in which we operate. We also consolidated offices in various locations during fiscal year 2017 and fiscal year 2018. We expect to incur additional expenses related to facility closures as part of this restructuring action through fiscal year 2019, but we do not expect these additional costs to be material. Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation), facilities costs, which include fees to terminate lease agreements and costs for unused space, net of sublease assumptions, and other costs, which include asset impairment charges. As part of this fiscal year 2017 restructuring, for the three and nine months ended August 31, 2018, we incurred expenses of $0.1 million and $2.4 million, respectively, which are recorded in restructuring expenses on the condensed consolidated statements of operations. Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2019. The short-term portion of the restructuring reserve of $0.5 million is included in other accrued liabilities and the long-term portion of $0.1 million is included in other noncurrent liabilities on the condensed consolidated balance sheets at August 31, 2018. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax provision for the third quarter of fiscal years 2018 and 2017 reflects our estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events which are recorded in the period in which they occur. The estimates are reevaluated each quarter based on our estimated tax expense for the full fiscal year. Our effective income tax rate was 17% in the third quarter of fiscal year 2018 compared to 41% in the third quarter of fiscal year 2017, and 21% in the first nine months of fiscal year 2018 compared to 44% in the same period last year. The primary reason for the decrease in the effective rate is due to the enactment of tax reform in the United States in December 2017. During the first quarter of fiscal year 2018, the Tax Cuts and Jobs Act (the "Act") was enacted in the United States. The Act reduces the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and, effective fiscal year 2019, creates new taxes on certain foreign sourced earnings. In December 2017, the SEC issued SAB 118, which directs taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. As of August 31, 2018, we have not completed our accounting for the tax effects of enactment of the Act, however, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. As a result of the Act, we re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to changes in deferred tax amounts. During the first quarter of fiscal year 2018, we recognized a provisional tax benefit of $1.4 million related to the re-measurement of our U.S. deferred tax balances. During the third quarter of fiscal year 2018, we recognized an additional provisional tax benefit of $0.6 million related to the re-measurement of our U.S. deferred tax balances for the true-up of deferred tax assets and liabilities that we expect upon the filing of our fiscal year 2017 U.S. income tax return in the fourth quarter of fiscal year 2018. The one-time transition tax associated with the Act is based on our total post-1986 earnings and profits ("E&P") that we previously deferred from U.S. federal taxation. During the first quarter of fiscal year 2018, we made a provisional determination that we have an accumulated deficit in our foreign subsidiaries' E&P and thus do not have a transition tax associated with deferred foreign earnings related to the Act. We have not yet completed our calculation of the total post-1986 E&P for our foreign subsidiaries or the tax pools of our foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. Our Federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2015. Our state income tax returns have been examined or are closed by statute for all years prior to fiscal year 2013. Tax authorities for certain non-U.S. jurisdictions are also examining returns. With some exceptions, we are generally not subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2012. |
Earnings per share |
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Earnings per share | Earnings per share We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding plus the effect of outstanding dilutive stock options, restricted stock units and deferred stock units, using the treasury stock method. The following table sets forth the calculation of basic and diluted earnings per share on an interim basis (in thousands, except per share data):
We excluded stock awards representing approximately 690,000 shares and 577,000 shares of common stock from the calculation of diluted earnings per share in the three and nine months ended August 31, 2018, respectively, because these awards were anti-dilutive. In the three and nine months ended August 31, 2017, we excluded stock awards representing 905,000 shares and 648,000 shares of common stock, respectively, from the calculation of diluted earnings per share as they were anti-dilutive. |
Business Segments and International Operations |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments and International Operations | Business Segments and International Operations Operating segments are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer. We operate as three distinct business segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment. We do not manage our assets or capital expenditures by segment or assign other income (expense) and income taxes to segments. We manage and report such items on a consolidated company basis. The following table provides revenue and contribution margin from our reportable segments and reconciles to our consolidated income before income taxes:
Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, and consulting and education. Information relating to revenue from customers by revenue type is as follows (in thousands):
In the following table, revenue attributed to North America includes sales to customers in the U.S. and sales to certain multinational organizations. Revenue from EMEA, Latin America and the Asia Pacific region includes sales to customers in each region plus sales from the U.S. to distributors in these regions. Information relating to revenue from external customers from different geographical areas is as follows (in thousands):
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Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2017, as amended ("Annual Report"). We made no material changes in the application of our significant accounting policies that were disclosed in our Annual Report. We have prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in our Annual Report, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements - In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement. The guidance in ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in ASU 2018-15. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 gives entities the option to reclassify the disproportionate income tax effects ("stranded tax effects") caused by the newly-enacted US Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The update also requires new disclosures, some of which are applicable for all entities. The guidance in ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently considering whether to adopt the optional reclassification of the stranded tax effects and evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance in ASU 2017-12 is required for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 amends Topic 350 to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This update requires the performance of an annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance in ASU 2017-04 is required for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently considering whether to adopt this update prior to the required adoption date. In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Under current GAAP, the recognition of current and deferred income taxes for an intra-entity transfer are prohibited until the asset has been sold to an outside party. The amendments in ASU 2016-16 are effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and disclosure requirements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 is intended to simplify various aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance in ASU 2016-09 is required for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The standard requires, on a prospective basis, the recognition of all excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations and the tax effect of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. The excess tax benefits and tax deficiencies should not be considered in an entity's calculation of its annual estimated effective tax rate and, as excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method to calculate diluted earnings per share should exclude such excess tax benefits. Further, on either a prospective or retrospective basis, excess tax benefits should be classified as operating activities in the statement of cash flows. The standard also provides entities the option to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, which is to be applied in accordance with a modified retrospective transition. Additionally, the standard updates the threshold to qualify for equity classification for minimum statutory tax withholding requirements by permitting an entity to withhold up to the maximum statutory rates in the applicable jurisdictions, applied on a modified retrospective basis. Finally, the standard requires that cash paid by an employer to a taxing authority when directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows, applied retrospectively. We adopted this standard at the beginning of the first quarter of fiscal year 2018 and elected to classify excess tax benefits as operating activities on a prospective basis in the condensed consolidated statement of cash flows. As such, the prior period condensed consolidated statement of cash flows was not adjusted. We also elected to account for forfeitures as they occur and recorded a cumulative-effect adjustment of $0.6 million to retained earnings during the period of adoption. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial position, results of operations, and cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which requires lessees to record most leases on their balance sheets, recognizing a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The guidance in ASU 2016-02 is required for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We currently expect that most of our operating lease commitments will be subject to the update and recognized as operating lease liabilities and right-of-use assets upon adoption. However, we are currently evaluating the effect that implementation of this update will have upon adoption on our consolidated financial position and results of operations. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provided in Topic 606 requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. This new guidance was initially effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016 and early adoption was not permitted. However, in July 2015, the FASB voted to defer the effective date of this ASU by one year for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the effective date for the Company will be December 1, 2018. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. The Company currently plans to adopt this ASU in accordance with the full retrospective approach, effective December 1, 2018. Fiscal year 2019 quarterly results, and comparative prior periods, will be prepared in accordance with ASC Topic 606. The first Annual Report on Form 10-K issued in accordance with ASC Topic 606 will be for the period ended November 30, 2019. Management is currently assessing the impact the adoption of this standard will have on the Company’s consolidated financial statements, but anticipates that the revenue recognition related to accounting for the following transactions will be most impacted:
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Cash, Cash Equivalents and Investments (Tables) |
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Investments and Cash [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash, Cash Equivalents and Trading and Available-for-sale Investments | A summary of our cash, cash equivalents and available-for-sale investments at August 31, 2018 is as follows (in thousands):
A summary of our cash, cash equivalents and available-for-sale investments at November 30, 2017 is as follows (in thousands):
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Summary of Cash, Cash Equivalents and Trading and Available-for-sale Investments by Balance Sheet Classification | Such amounts are classified on our condensed consolidated balance sheets as follows (in thousands):
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Fair Value of Debt Securities by Contractual Maturity | The fair value of debt securities by contractual maturity is as follows (in thousands):
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Foreign Currency Forward Contracts | The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements within the Fair Value Hierarchy of the Financial Assets | The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at August 31, 2018 (in thousands):
The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2017 (in thousands):
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Intangible Assets and Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Intangible assets are comprised of the following significant classes (in thousands):
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Schedule of Future Amortization Expense from Intangible Assets Held | Future amortization expense for intangible assets as of August 31, 2018, is as follows (in thousands):
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Schedule of Goodwill | Changes in the carrying amount of goodwill in the nine months ended August 31, 2018 are as follows (in thousands):
Changes in the goodwill balances by reportable segment in the nine months ended August 31, 2018 are as follows (in thousands):
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Business Combinations (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation of the purchase price is as follows (in thousands):
The allocation of the purchase price is as follows (in thousands):
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Term Loan and Line of Credit (Tables) |
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Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | As of August 31, 2018, aggregate principal payments of long-term debt for the next five years are (in thousands):
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Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Classification of Stock-Based Compensation | The following table provides the classification of stock-based compensation as reflected on our condensed consolidated statements of operations (in thousands):
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following table summarizes the changes in accumulated balances of other comprehensive loss during the nine months ended August 31, 2018 (in thousands):
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Restructuring Charges (Tables) |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring Activity | The following table provides a summary of activity for our restructuring actions, which are detailed further below (in thousands):
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Earnings per share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | The following table sets forth the calculation of basic and diluted earnings per share on an interim basis (in thousands, except per share data):
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Business Segments and International Operations (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following table provides revenue and contribution margin from our reportable segments and reconciles to our consolidated income before income taxes:
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Revenue from External Customers by Products and Services | Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, and consulting and education. Information relating to revenue from customers by revenue type is as follows (in thousands):
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Revenue from External Customers from Different Geographical Areas | In the following table, revenue attributed to North America includes sales to customers in the U.S. and sales to certain multinational organizations. Revenue from EMEA, Latin America and the Asia Pacific region includes sales to customers in each region plus sales from the U.S. to distributors in these regions. Information relating to revenue from external customers from different geographical areas is as follows (in thousands):
|
Basis of Presentation (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Aug. 31, 2018
enterprise_customer
Developer
software_vendor
|
Nov. 30, 2017
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of independent software vendors | software_vendor | 1,700 | |
Number of enterprise customers | enterprise_customer | 100,000 | |
Number of developers | Developer | 2,000,000 | |
Retained Earnings | Accounting Standards Update 2016-09, Excess Tax Benefit Component | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of new accounting principle | $ | $ 0.6 |
Cash, Cash Equivalents and Investments (Fair Value of Debt Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Investments and Cash [Abstract] | ||
Due in one year or less | $ 26,209 | $ 22,333 |
Due after one year | 12,975 | 27,812 |
Total | $ 39,184 | $ 50,145 |
Cash, Cash Equivalents and Investments (Narrative) (Details) - position |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Investments and Cash [Abstract] | ||
Number of investments in continuous unrealized loss position | 0 | 0 |
Derivative Instruments (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Nov. 30, 2017 |
|
Forward Contracts | |||||
Derivative [Line Items] | |||||
Minimum maturity period, foreign currency derivative | 30 days | ||||
Maximum maturity period, foreign currency derivative | 1 year | ||||
Loss (gain) on foreign currency forward contracts | $ 1.0 | $ (5.2) | $ 4.1 | $ (9.6) | |
Other Current Liabilities | |||||
Derivative [Line Items] | |||||
Derivative liabilities | $ 1.8 | $ 1.8 | $ 0.2 | ||
Other Assets | |||||
Derivative [Line Items] | |||||
Derivative liabilities | $ 0.2 |
Derivative Instruments (Foreign Currency Forward Contracts) (Details) - USD ($) $ in Thousands |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Derivative [Line Items] | ||
Notional Value | $ 149,204 | $ 119,654 |
Fair Value | (1,806) | (27) |
Forward contracts to sell U.S. dollars | ||
Derivative [Line Items] | ||
Notional Value | 149,204 | 119,192 |
Fair Value | (1,806) | (27) |
Forward contracts to purchase U.S. dollars | ||
Derivative [Line Items] | ||
Notional Value | 0 | 462 |
Fair Value | $ 0 | $ 0 |
Intangible Assets and Goodwill (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 239,843 | $ 239,843 |
Accumulated Amortization | (172,131) | (144,949) |
Net Book Value | 67,712 | 94,894 |
Purchased technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 154,301 | 154,301 |
Accumulated Amortization | (105,451) | (88,224) |
Net Book Value | 48,850 | 66,077 |
Customer-related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 67,802 | 67,802 |
Accumulated Amortization | (54,024) | (46,230) |
Net Book Value | 13,778 | 21,572 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 17,740 | 17,740 |
Accumulated Amortization | (12,656) | (10,495) |
Net Book Value | $ 5,084 | $ 7,245 |
Intangible Assets and Goodwill (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible assets, amortization expense | $ 8.8 | $ 9.1 | $ 27.2 | $ 23.9 |
Intangible Assets and Goodwill (Schedule Of Future Amortization Expense) (Details) - USD ($) $ in Thousands |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 8,873 | |
2019 | 34,932 | |
2020 | 10,152 | |
2021 | 10,033 | |
2022 | 3,722 | |
Net Book Value | $ 67,712 | $ 94,894 |
Intangible Assets and Goodwill (Schedule of Goodwill) (Details) $ in Thousands |
9 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance, November 30, 2017 | $ 315,041 |
Translation adjustments | (90) |
Balance, August 31, 2018 | 314,951 |
OpenEdge | |
Goodwill [Roll Forward] | |
Balance, November 30, 2017 | 249,036 |
Translation adjustments | (90) |
Balance, August 31, 2018 | 248,946 |
Data Connectivity and Integration | |
Goodwill [Roll Forward] | |
Balance, November 30, 2017 | 19,040 |
Translation adjustments | 0 |
Balance, August 31, 2018 | 19,040 |
Application Development and Deployment | |
Goodwill [Roll Forward] | |
Balance, November 30, 2017 | 46,965 |
Translation adjustments | 0 |
Balance, August 31, 2018 | $ 46,965 |
Business Combinations (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 01, 2017 |
Mar. 01, 2017 |
Aug. 31, 2018 |
Nov. 30, 2017 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 314,951 | $ 315,041 | ||
Kinvey, Inc. | ||||
Business Acquisition [Line Items] | ||||
Percentage of voting interests acquired | 100.00% | |||
Total purchase consideration | $ 49,200 | |||
Amount held back as an incentive to founder | $ 300 | |||
Period for founder to stay with company following acquisition (at least) | 2 years | |||
Goodwill | $ 24,351 | |||
DataRPM Corporation | ||||
Business Acquisition [Line Items] | ||||
Percentage of voting interests acquired | 100.00% | |||
Total purchase consideration | $ 30,000 | |||
Goodwill | 12,583 | |||
Consideration payable in form of restricted stock units | $ 1,700 | |||
DataRPM Corporation | Restricted Stock Units | ||||
Business Acquisition [Line Items] | ||||
Award vesting period | 2 years |
Term Loan and Line of Credit (Future Maturities) (Details) $ in Thousands |
Aug. 31, 2018
USD ($)
|
---|---|
Line of Credit Facility [Abstract] | |
Remainder of 2018 | $ 1,546 |
2019 | 6,188 |
2020 | 9,281 |
2021 | 12,375 |
2022 | 89,719 |
Total | $ 119,109 |
Common Stock Repurchases (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Sep. 30, 2017 |
|
Common Stock Repurchases [Abstract] | |||||
Common stock repurchased and retired (in shares) | 0.5 | 0.6 | 2.6 | 1.5 | |
Common stock repurchased and retired | $ 20.0 | $ 19.0 | $ 110.0 | $ 43.9 | |
Stock repurchase authorization | $ 250.0 | ||||
Remaining authorized repurchase amount | $ 110.0 | $ 110.0 |
Stock-Based Compensation (Narrative) (Details) - metric |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Feb. 28, 2018 |
Aug. 31, 2018 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Long-Term Incentive Plan (LTIP) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award market condition period | 3 years | 3 years | 3 years | |
Stock-based compensation award service period (in years) | 3 years | 3 years | 3 years | 3 years |
Number of performance metrics | 2 | |||
Percentage of shares based on market condition of total shareholder return | 50.00% | |||
Percentage of shares based on cumulative performance condition | 50.00% | |||
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation award service period (in years) | 4 years | |||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation award service period (in years) | 3 years |
Accumulated Other Comprehensive Loss (Details) $ in Thousands |
9 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Other comprehensive loss before reclassifications, net of tax | $ (7,113) |
Foreign Currency Translation Adjustment | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance, December 1, 2017 | (18,770) |
Other comprehensive loss before reclassifications, net of tax | (7,137) |
Balance, August 31, 2018 | (25,907) |
Unrealized (Losses) Gains on Investments | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance, December 1, 2017 | (229) |
Other comprehensive loss before reclassifications, net of tax | 24 |
Balance, August 31, 2018 | (205) |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance, December 1, 2017 | (18,999) |
Balance, August 31, 2018 | $ (26,112) |
Restructuring Charges (Summary of Restructuring Activity) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | $ 4,126 | |||
Costs incurred | $ 135 | $ 923 | 2,382 | $ 18,724 |
Cash disbursements | (5,924) | |||
Translation adjustments and other | 55 | |||
Ending Balance | 639 | 639 | ||
Excess Facilities and Other Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 570 | |||
Costs incurred | 1,132 | |||
Cash disbursements | (1,172) | |||
Translation adjustments and other | 45 | |||
Ending Balance | 575 | 575 | ||
Employee Severance and Related Benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 3,556 | |||
Costs incurred | 1,250 | |||
Cash disbursements | (4,752) | |||
Translation adjustments and other | 10 | |||
Ending Balance | $ 64 | $ 64 |
Restructuring Charges (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | $ 135 | $ 923 | $ 2,382 | $ 18,724 |
Other accrued liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Short-term portion of restructuring reserve | 500 | 500 | ||
Other Noncurrent Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Long-term portion of restructuring reserve | $ 100 | $ 100 | ||
2017 Restructuring Activities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Global workforce reduction (as a percent) (over) | 20.00% |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2018 |
Feb. 28, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate (as a percent) | 17.00% | 41.00% | 21.00% | 44.00% | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Provisional tax benefit | $ (3,476) | $ (7,727) | $ (11,848) | $ (16,518) | |
Adjustment for Error Correction | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Provisional tax benefit | $ 600 | $ 1,400 |
Earnings per share (Calculation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 16,746 | $ 11,172 | $ 45,061 | $ 20,988 |
Weighted average shares outstanding (in shares) | 45,130 | 48,071 | 45,730 | 48,342 |
Dilutive impact from common stock equivalents (in shares) | 446 | 299 | 650 | 289 |
Diluted weighted average shares outstanding (in shares) | 45,576 | 48,370 | 46,380 | 48,631 |
Basic earnings per share (in dollars per share) | $ 0.37 | $ 0.23 | $ 0.99 | $ 0.43 |
Diluted earnings per share (in dollars per share) | $ 0.37 | $ 0.23 | $ 0.97 | $ 0.43 |
Earnings per share (Narrative) (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Earnings Per Share [Abstract] | ||||
Number of shares excluded from the calculation of diluted earnings per share (in shares) | 690 | 905 | 577 | 648 |
Business Segments and International Operations (Revenue from External Customers by Product) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 95,683 | $ 97,310 | $ 285,832 | $ 281,493 |
Software licenses | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 27,204 | 28,529 | 78,986 | 78,443 |
Maintenance | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 60,566 | 60,536 | 184,368 | 179,572 |
Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 7,913 | $ 8,245 | $ 22,478 | $ 23,478 |
Business Segments and International Operations (Revenue from External Customers from Different Geographical Areas) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2018 |
Aug. 31, 2017 |
|
Revenue from External Customer [Line Items] | ||||
Segment revenue | $ 95,683 | $ 97,310 | $ 285,832 | $ 281,493 |
North America | ||||
Revenue from External Customer [Line Items] | ||||
Segment revenue | 52,212 | 55,703 | 154,676 | 157,438 |
EMEA | ||||
Revenue from External Customer [Line Items] | ||||
Segment revenue | 33,422 | 31,830 | 101,769 | 92,320 |
Latin America | ||||
Revenue from External Customer [Line Items] | ||||
Segment revenue | 4,341 | 5,009 | 13,058 | 15,669 |
Asia Pacific | ||||
Revenue from External Customer [Line Items] | ||||
Segment revenue | $ 5,708 | $ 4,768 | $ 16,329 | $ 16,066 |
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