false--11-30FY20190000876167PROGRESS SOFTWARE CORP /MA0.50P3YP3M840000825000400000000P3Y0.0120000000045114935451149354503644100503000006000057000600000.010.01100000001000000000399700090900013850003400000P1YP1YP1YP1YP3YP3YP3YP1YP3YThe Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information. 0000876167 2018-12-01 2019-11-30 0000876167 2020-01-20 0000876167 2019-05-31 0000876167 2019-11-30 0000876167 2018-11-30 0000876167 2017-12-01 2018-11-30 0000876167 2016-12-01 2017-11-30 0000876167 prgs:MaintenanceandServicesMember 2018-12-01 2019-11-30 0000876167 prgs:MaintenanceandServicesMember 2017-12-01 2018-11-30 0000876167 prgs:MaintenanceandServicesMember 2016-12-01 2017-11-30 0000876167 prgs:SoftwareLicensesMember 2017-12-01 2018-11-30 0000876167 prgs:SoftwareLicensesMember 2018-12-01 2019-11-30 0000876167 prgs:SoftwareLicensesMember 2016-12-01 2017-11-30 0000876167 us-gaap:CommonStockMember 2017-12-01 2018-11-30 0000876167 us-gaap:CommonStockMember 2018-12-01 2019-11-30 0000876167 us-gaap:CommonStockMember 2019-11-30 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-01 2018-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2016-12-01 2017-11-30 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-11-30 0000876167 us-gaap:CommonStockMember 2016-12-01 2017-11-30 0000876167 us-gaap:RetainedEarningsMember 2016-12-01 2017-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2017-12-01 0000876167 us-gaap:RetainedEarningsMember 2018-12-01 2019-11-30 0000876167 2017-12-01 0000876167 us-gaap:AdditionalPaidInCapitalMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-11-30 0000876167 us-gaap:RetainedEarningsMember 2017-12-01 2018-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2017-12-01 2018-11-30 0000876167 us-gaap:CommonStockMember 2018-11-30 0000876167 us-gaap:CommonStockMember 2017-11-30 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-11-30 0000876167 us-gaap:RetainedEarningsMember 2019-11-30 0000876167 us-gaap:RetainedEarningsMember 2018-12-01 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-12-01 2017-11-30 0000876167 us-gaap:CommonStockMember 2016-11-30 0000876167 us-gaap:RetainedEarningsMember 2017-11-30 0000876167 2018-12-01 0000876167 us-gaap:RetainedEarningsMember 2017-12-01 0000876167 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2018-11-30 0000876167 us-gaap:RetainedEarningsMember 2016-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2017-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2016-11-30 0000876167 2017-11-30 0000876167 us-gaap:RetainedEarningsMember 2018-11-30 0000876167 us-gaap:AdditionalPaidInCapitalMember 2019-11-30 0000876167 2016-11-30 0000876167 us-gaap:AccountingStandardsUpdate201409Member 2018-12-01 0000876167 srt:MinimumMember us-gaap:AccountingStandardsUpdate201602Member us-gaap:SubsequentEventMember 2019-12-01 0000876167 srt:MinimumMember us-gaap:ComputerEquipmentMember 2018-12-01 2019-11-30 0000876167 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2017-12-01 2018-11-30 0000876167 2018-09-01 2018-11-30 0000876167 srt:MaximumMember us-gaap:FurnitureAndFixturesMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember us-gaap:AccountingStandardsUpdate201602Member us-gaap:SubsequentEventMember 2019-12-01 0000876167 us-gaap:AccountingStandardsUpdate201616Member 2019-08-31 0000876167 srt:MinimumMember us-gaap:EmployeeStockOptionMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccountingStandardsUpdate201409Member us-gaap:RetainedEarningsMember 2018-12-01 0000876167 prgs:ModulusMember us-gaap:ComputerSoftwareIntangibleAssetMember 2018-12-01 2019-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember us-gaap:EmployeeStockOptionMember 2018-12-01 2019-11-30 0000876167 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2018-12-01 2019-11-30 0000876167 prgs:SoftwareLicensesMember srt:MaximumMember 2019-12-01 2019-11-30 0000876167 srt:MinimumMember us-gaap:BuildingAndBuildingImprovementsMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember 2019-11-30 0000876167 us-gaap:AccountingStandardsUpdate201616Member us-gaap:RetainedEarningsMember 2019-11-30 0000876167 2019-12-01 2019-11-30 0000876167 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember us-gaap:ComputerEquipmentMember 2018-12-01 2019-11-30 0000876167 2019-09-01 2019-11-30 0000876167 srt:MaximumMember us-gaap:BuildingAndBuildingImprovementsMember 2018-12-01 2019-11-30 0000876167 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2016-12-01 2017-11-30 0000876167 us-gaap:AccountingStandardsUpdate201616Member 2018-12-01 0000876167 us-gaap:ServiceMember srt:MaximumMember 2019-12-01 2019-11-30 0000876167 srt:MinimumMember us-gaap:FurnitureAndFixturesMember 2018-12-01 2019-11-30 0000876167 us-gaap:MaintenanceMember srt:MaximumMember 2019-12-01 2019-11-30 0000876167 us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2017-12-01 2018-11-30 0000876167 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2017-12-01 2018-11-30 0000876167 us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2016-12-01 2017-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2017-12-01 2018-11-30 0000876167 prgs:MaintenanceandServicesMember us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2016-12-01 2017-11-30 0000876167 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2016-12-01 2017-11-30 0000876167 prgs:MaintenanceandServicesMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2017-12-01 2018-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2016-12-01 2017-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2016-12-01 2017-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2017-12-01 2018-11-30 0000876167 prgs:MaintenanceandServicesMember us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2017-12-01 2018-11-30 0000876167 prgs:MaintenanceandServicesMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2016-12-01 2017-11-30 0000876167 us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2018-11-30 0000876167 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2016-12-01 2017-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2017-12-01 2018-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2018-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2019-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2018-12-01 2019-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2017-11-30 0000876167 us-gaap:AllowanceForCreditLossMember 2016-11-30 0000876167 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-11-30 0000876167 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-11-30 0000876167 us-gaap:AccumulatedTranslationAdjustmentMember 2019-11-30 0000876167 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-01 2018-11-30 0000876167 us-gaap:AccumulatedTranslationAdjustmentMember 2018-11-30 0000876167 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-01 2018-11-30 0000876167 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-11-30 0000876167 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-11-30 0000876167 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-11-30 0000876167 us-gaap:AccumulatedTranslationAdjustmentMember 2017-11-30 0000876167 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-01 2019-11-30 0000876167 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-11-30 0000876167 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-01 2018-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2018-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2018-12-01 2019-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2016-12-01 2017-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2017-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2016-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2017-12-01 2018-11-30 0000876167 prgs:SECSchedule1209AllowanceSalesCreditMemosMember 2019-11-30 0000876167 prgs:SoftwareLicensesMember srt:MinimumMember 2019-12-01 2019-11-30 0000876167 us-gaap:ServiceMember srt:MinimumMember 2019-12-01 2019-11-30 0000876167 us-gaap:MaintenanceMember srt:MinimumMember 2019-12-01 2019-11-30 0000876167 srt:MinimumMember 2019-11-30 0000876167 us-gaap:MunicipalBondsMember 2018-11-30 0000876167 us-gaap:CorporateDebtSecuritiesMember 2018-11-30 0000876167 us-gaap:CashMember 2018-11-30 0000876167 us-gaap:USTreasurySecuritiesMember 2018-11-30 0000876167 us-gaap:MoneyMarketFundsMember 2018-11-30 0000876167 us-gaap:CashMember 2019-11-30 0000876167 us-gaap:MunicipalBondsMember 2019-11-30 0000876167 us-gaap:CorporateDebtSecuritiesMember 2019-11-30 0000876167 us-gaap:USTreasurySecuritiesMember 2019-11-30 0000876167 us-gaap:MoneyMarketFundsMember 2019-11-30 0000876167 us-gaap:ForwardContractsMember 2018-12-01 2019-11-30 0000876167 us-gaap:ForwardContractsMember 2017-12-01 2018-11-30 0000876167 us-gaap:InterestRateSwapMember 2019-07-09 0000876167 us-gaap:OtherAssetsMember 2018-11-30 0000876167 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-07-09 0000876167 us-gaap:OtherCurrentLiabilitiesMember 2018-11-30 0000876167 us-gaap:InterestRateSwapMember 2019-11-30 0000876167 us-gaap:ForwardContractsMember 2016-12-01 2017-11-30 0000876167 us-gaap:ForwardContractsMember 2019-11-30 0000876167 us-gaap:InterestRateSwapMember 2018-11-30 0000876167 prgs:ForeignCurrencyForwardContractsToPurchaseUSDollarsMember 2018-11-30 0000876167 prgs:ForeignCurrencyForwardContractsToSellUSDollarsMember 2018-11-30 0000876167 prgs:ForeignCurrencyForwardContractsToPurchaseUSDollarsMember 2019-11-30 0000876167 prgs:ForeignCurrencyForwardContractsToSellUSDollarsMember 2019-11-30 0000876167 us-gaap:InterestRateSwapMember 2018-12-01 2019-11-30 0000876167 us-gaap:MoneyMarketFundsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:ForeignExchangeContractMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:InterestRateSwapMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:InterestRateSwapMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:ForeignExchangeContractMember 2019-11-30 0000876167 us-gaap:ForeignExchangeContractMember 2019-11-30 0000876167 us-gaap:InterestRateSwapMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:USTreasurySecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:MunicipalBondsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:MoneyMarketFundsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:InterestRateSwapMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:MunicipalBondsMember 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member 2019-11-30 0000876167 us-gaap:FairValueInputsLevel3Member 2018-12-01 2019-11-30 0000876167 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2019-04-03 2019-04-03 0000876167 prgs:DataRPMandKinveyMember us-gaap:TrademarksAndTradeNamesMember 2019-09-01 2019-11-30 0000876167 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember us-gaap:FairValueInputsLevel3Member 2017-12-01 2018-11-30 0000876167 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember us-gaap:FairValueInputsLevel3Member 2018-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2018-11-30 0000876167 us-gaap:ForeignExchangeContractMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:MunicipalBondsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:MunicipalBondsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:MoneyMarketFundsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2018-11-30 0000876167 us-gaap:MoneyMarketFundsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:ForeignExchangeContractMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel3Member us-gaap:USTreasurySecuritiesMember 2018-11-30 0000876167 us-gaap:FairValueInputsLevel1Member us-gaap:ForeignExchangeContractMember 2018-11-30 0000876167 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2018-11-30 0000876167 us-gaap:FurnitureAndFixturesMember 2018-11-30 0000876167 us-gaap:ComputerEquipmentMember 2019-11-30 0000876167 us-gaap:FurnitureAndFixturesMember 2019-11-30 0000876167 us-gaap:ComputerEquipmentMember 2018-11-30 0000876167 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2019-11-30 0000876167 us-gaap:LandBuildingsAndImprovementsMember 2019-11-30 0000876167 us-gaap:LandBuildingsAndImprovementsMember 2018-11-30 0000876167 us-gaap:NoncompeteAgreementsMember 2018-11-30 0000876167 us-gaap:NoncompeteAgreementsMember 2019-11-30 0000876167 us-gaap:TrademarksAndTradeNamesMember 2019-11-30 0000876167 us-gaap:TrademarksAndTradeNamesMember 2018-11-30 0000876167 us-gaap:CustomerRelationshipsMember 2018-11-30 0000876167 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-11-30 0000876167 us-gaap:CustomerRelationshipsMember 2019-11-30 0000876167 us-gaap:ComputerSoftwareIntangibleAssetMember 2018-11-30 0000876167 prgs:DataRPMandKinveyMember 2019-09-01 2019-11-30 0000876167 prgs:DataConnectivityAndIntegrationSegmentMember 2018-11-30 0000876167 prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2019-11-30 0000876167 prgs:DataConnectivityAndIntegrationSegmentMember 2018-12-01 2019-11-30 0000876167 prgs:OpenEdgeSegmentMember 2018-12-01 2019-11-30 0000876167 prgs:DataConnectivityAndIntegrationSegmentMember 2019-11-30 0000876167 prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2018-12-01 2019-11-30 0000876167 prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2018-11-30 0000876167 prgs:OpenEdgeSegmentMember 2019-11-30 0000876167 prgs:OpenEdgeSegmentMember 2018-11-30 0000876167 prgs:DataRPMCorporationMember 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:TradeNamesMember 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:ComputerSoftwareIntangibleAssetMember 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:TradeNamesMember 2017-03-01 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:ComputerSoftwareIntangibleAssetMember 2017-03-01 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:CustomerRelationshipsMember 2017-03-01 2017-03-01 0000876167 prgs:DataRPMCorporationMember us-gaap:CustomerRelationshipsMember 2017-03-01 0000876167 prgs:IpswitchMember 2019-04-30 0000876167 srt:ScenarioPreviouslyReportedMember prgs:IpswitchMember us-gaap:CustomerRelationshipsMember 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:TradeNamesMember 2019-04-30 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:CustomerRelationshipsMember 2019-04-30 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-30 0000876167 srt:ScenarioPreviouslyReportedMember prgs:IpswitchMember us-gaap:TradeNamesMember 2019-04-30 0000876167 srt:ScenarioPreviouslyReportedMember prgs:IpswitchMember 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:CustomerRelationshipsMember 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:TradeNamesMember 2019-04-30 0000876167 prgs:IpswitchMember us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-30 2019-04-30 0000876167 prgs:IpswitchMember 2019-04-30 2019-04-30 0000876167 srt:ScenarioPreviouslyReportedMember prgs:IpswitchMember us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-30 0000876167 prgs:KinveyInc.Member 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:TradeNamesMember 2017-06-01 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:ComputerSoftwareIntangibleAssetMember 2017-06-01 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:CustomerRelationshipsMember 2017-06-01 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:TradeNamesMember 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:CustomerRelationshipsMember 2017-06-01 0000876167 prgs:KinveyInc.Member us-gaap:ComputerSoftwareIntangibleAssetMember 2017-06-01 0000876167 prgs:KinveyInc.Member 2017-06-01 2017-06-01 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:IpswitchMember 2019-04-30 2019-04-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:DataRPMCorporationMember 2018-12-01 2019-11-30 0000876167 prgs:IpswitchMember prgs:TermLoanMember 2019-04-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:DataRPMCorporationMember 2017-03-01 2017-03-01 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:IpswitchMember 2018-12-01 2019-11-30 0000876167 prgs:DataRPMCorporationMember 2017-03-01 2017-03-01 0000876167 prgs:KinveyInc.Member 2016-12-01 2017-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:DataRPMCorporationMember 2017-12-01 2018-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember prgs:DataRPMCorporationMember 2016-12-01 2017-11-30 0000876167 prgs:KinveyInc.Member 2017-12-01 2018-11-30 0000876167 prgs:DataRPMCorporationMember 2018-12-01 2019-11-30 0000876167 prgs:DataRPMCorporationMember 2016-12-01 2017-11-30 0000876167 prgs:KinveyInc.Member 2018-12-01 2019-11-30 0000876167 prgs:DataRPMCorporationMember 2017-12-01 2018-11-30 0000876167 prgs:CreditAgreementMember 2019-11-30 0000876167 us-gaap:RevolvingCreditFacilityMember prgs:CreditAgreementMember 2019-11-30 0000876167 us-gaap:RevolvingCreditFacilityMember prgs:CreditAgreementMember 2019-04-30 0000876167 prgs:CreditAgreementMember 2017-12-01 2018-11-30 0000876167 us-gaap:LetterOfCreditMember prgs:CreditAgreementMember 2019-04-30 0000876167 prgs:CreditAgreementMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember prgs:CreditAgreementMember us-gaap:BaseRateMember 2019-11-30 0000876167 srt:MinimumMember prgs:CreditAgreementMember us-gaap:EurodollarMember 2019-11-30 0000876167 prgs:SwingLineLoansMember prgs:CreditAgreementMember 2019-04-30 0000876167 us-gaap:LetterOfCreditMember prgs:CreditAgreementMember 2019-11-30 0000876167 srt:MaximumMember prgs:CreditAgreementMember 2018-12-01 2019-11-30 0000876167 prgs:CreditAgreementMember 2019-04-30 0000876167 srt:MinimumMember prgs:CreditAgreementMember 2018-12-01 2019-11-30 0000876167 srt:MaximumMember prgs:CreditAgreementMember us-gaap:EurodollarMember 2019-11-30 0000876167 us-gaap:RevolvingCreditFacilityMember prgs:CreditAgreementMember 2017-11-20 0000876167 us-gaap:LetterOfCreditMember prgs:CreditAgreementMember 2017-11-20 0000876167 srt:MinimumMember prgs:CreditAgreementMember us-gaap:BaseRateMember 2019-11-30 0000876167 prgs:CreditAgreementMember 2016-12-01 2017-11-30 0000876167 prgs:DeferredStockUnitMember 2018-12-01 2019-11-30 0000876167 2018-09-01 2018-09-30 0000876167 2017-09-01 2017-09-30 0000876167 2016-12-01 2016-12-31 0000876167 2019-09-24 2019-09-24 0000876167 prgs:DeferredStockUnitMember 2019-11-30 0000876167 2016-09-27 2016-09-27 0000876167 us-gaap:SubsequentEventMember 2020-01-27 0000876167 us-gaap:SellingAndMarketingExpenseMember 2018-12-01 2019-11-30 0000876167 us-gaap:GeneralAndAdministrativeExpenseMember 2016-12-01 2017-11-30 0000876167 prgs:CostOfMaintenanceAndServicesMember 2016-12-01 2017-11-30 0000876167 us-gaap:SellingAndMarketingExpenseMember 2016-12-01 2017-11-30 0000876167 us-gaap:GeneralAndAdministrativeExpenseMember 2017-12-01 2018-11-30 0000876167 us-gaap:ResearchAndDevelopmentExpenseMember 2016-12-01 2017-11-30 0000876167 us-gaap:ResearchAndDevelopmentExpenseMember 2018-12-01 2019-11-30 0000876167 us-gaap:ResearchAndDevelopmentExpenseMember 2017-12-01 2018-11-30 0000876167 prgs:CostOfMaintenanceAndServicesMember 2017-12-01 2018-11-30 0000876167 prgs:CostOfMaintenanceAndServicesMember 2018-12-01 2019-11-30 0000876167 us-gaap:GeneralAndAdministrativeExpenseMember 2018-12-01 2019-11-30 0000876167 us-gaap:SellingAndMarketingExpenseMember 2017-12-01 2018-11-30 0000876167 prgs:TwoZeroZeroEightStockOptionAndIncentivePlanMember 2019-11-30 0000876167 prgs:LongTermIncentivePlanLTIPMember 2017-12-01 2018-02-28 0000876167 us-gaap:EmployeeStockMember 2018-11-30 0000876167 us-gaap:EmployeeStockMember 2016-12-01 2017-11-30 0000876167 prgs:TwoZeroZeroTwoNonqualifiedStockPlanMember 2019-11-30 0000876167 us-gaap:EmployeeStockMember 2017-12-01 2018-11-30 0000876167 us-gaap:EmployeeStockMember 2018-12-01 2019-11-30 0000876167 us-gaap:EmployeeStockOptionMember 2017-12-01 2018-11-30 0000876167 us-gaap:EmployeeStockMember 2017-11-30 0000876167 prgs:TwoZeroZeroFourInducementStockPlanMember 2019-11-30 0000876167 us-gaap:EmployeeStockMember 2019-11-30 0000876167 us-gaap:EmployeeStockOptionMember 2018-12-01 2019-11-30 0000876167 prgs:ProductDevelopmentMember 2016-12-01 2017-11-30 0000876167 us-gaap:EmployeeStockOptionMember 2016-12-01 2017-11-30 0000876167 prgs:LongTermIncentivePlanLTIPMember 2017-12-01 2018-11-30 0000876167 prgs:LongTermIncentivePlanLTIPMember 2016-12-01 2017-11-30 0000876167 prgs:LongTermIncentivePlanLTIPMember 2018-12-01 2019-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2019-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2018-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2016-12-01 2017-11-30 0000876167 prgs:DeferredStockUnitMember 2017-12-01 2018-11-30 0000876167 prgs:DeferredStockUnitMember 2016-12-01 2017-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2017-12-01 2018-11-30 0000876167 us-gaap:RestrictedStockUnitsRSUMember 2015-12-01 2016-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 us-gaap:OtherLiabilitiesMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 prgs:IpswitchMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-12-01 2018-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-12-01 2017-02-28 0000876167 prgs:IpswitchMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-12-01 2017-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-12-01 2017-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-12-01 2018-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-12-01 2017-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-12-01 2018-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2018-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2016-11-30 0000876167 prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2019-11-30 0000876167 us-gaap:FacilityClosingMember prgs:TwoThousandandSeventeenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:IpswitchMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 prgs:IpswitchMember us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 prgs:IpswitchMember us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 prgs:IpswitchMember us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:IpswitchMember us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2019-11-30 0000876167 prgs:IpswitchMember us-gaap:FacilityClosingMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-12-01 2019-11-30 0000876167 prgs:IpswitchMember us-gaap:EmployeeSeveranceMember prgs:TwoThousandandNineteenRestructuringActivitiesMember 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2016-12-01 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2017-12-01 2018-11-30 0000876167 us-gaap:FacilityClosingMember 2019-11-30 0000876167 us-gaap:FacilityClosingMember 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2018-11-30 0000876167 us-gaap:FacilityClosingMember 2018-12-01 2019-11-30 0000876167 us-gaap:FacilityClosingMember 2016-12-01 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2018-12-01 2019-11-30 0000876167 us-gaap:FacilityClosingMember 2017-12-01 2018-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2019-11-30 0000876167 us-gaap:FacilityClosingMember 2016-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2016-11-30 0000876167 us-gaap:FacilityClosingMember 2017-11-30 0000876167 us-gaap:EmployeeSeveranceMember 2017-11-30 0000876167 prgs:DomesticAndForeignTaxAuthorityMember 2019-11-30 0000876167 us-gaap:DomesticCountryMember 2019-11-30 0000876167 us-gaap:StateAndLocalJurisdictionMember 2019-11-30 0000876167 us-gaap:OtherNoncurrentLiabilitiesMember 2019-11-30 0000876167 prgs:IndefiniteLivedCarryforwardsMember 2019-11-30 0000876167 srt:LatinAmericaMember 2016-12-01 2017-11-30 0000876167 us-gaap:EMEAMember 2017-12-01 2018-11-30 0000876167 srt:AsiaPacificMember 2017-12-01 2018-11-30 0000876167 country:CA 2017-12-01 2018-11-30 0000876167 country:US 2017-12-01 2018-11-30 0000876167 srt:LatinAmericaMember 2017-12-01 2018-11-30 0000876167 country:US 2018-12-01 2019-11-30 0000876167 us-gaap:EMEAMember 2018-12-01 2019-11-30 0000876167 country:CA 2016-12-01 2017-11-30 0000876167 srt:LatinAmericaMember 2018-12-01 2019-11-30 0000876167 us-gaap:EMEAMember 2016-12-01 2017-11-30 0000876167 srt:AsiaPacificMember 2018-12-01 2019-11-30 0000876167 country:US 2016-12-01 2017-11-30 0000876167 srt:AsiaPacificMember 2016-12-01 2017-11-30 0000876167 country:CA 2018-12-01 2019-11-30 0000876167 prgs:CorporateAndReconcilingItemsMember 2018-12-01 2019-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:OpenEdgeSegmentMember 2016-12-01 2017-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2018-12-01 2019-11-30 0000876167 us-gaap:OperatingSegmentsMember 2017-12-01 2018-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:DataConnectivityAndIntegrationSegmentMember 2018-12-01 2019-11-30 0000876167 us-gaap:OperatingSegmentsMember 2018-12-01 2019-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:DataConnectivityAndIntegrationSegmentMember 2016-12-01 2017-11-30 0000876167 us-gaap:OperatingSegmentsMember 2016-12-01 2017-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:OpenEdgeSegmentMember 2018-12-01 2019-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:OpenEdgeSegmentMember 2017-12-01 2018-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2016-12-01 2017-11-30 0000876167 prgs:CorporateAndReconcilingItemsMember 2017-12-01 2018-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:ApplicationDevelopmentAndDeploymentSegmentMember 2017-12-01 2018-11-30 0000876167 us-gaap:OperatingSegmentsMember prgs:DataConnectivityAndIntegrationSegmentMember 2017-12-01 2018-11-30 0000876167 prgs:CorporateAndReconcilingItemsMember 2016-12-01 2017-11-30 0000876167 us-gaap:ServiceMember us-gaap:TransferredOverTimeMember 2018-12-01 2019-11-30 0000876167 us-gaap:ServiceMember us-gaap:TransferredOverTimeMember 2017-12-01 2018-11-30 0000876167 us-gaap:MaintenanceMember us-gaap:TransferredOverTimeMember 2018-12-01 2019-11-30 0000876167 us-gaap:MaintenanceMember us-gaap:TransferredOverTimeMember 2016-12-01 2017-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:TransferredAtPointInTimeMember 2017-12-01 2018-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:TransferredAtPointInTimeMember 2018-12-01 2019-11-30 0000876167 prgs:SoftwareLicensesMember us-gaap:TransferredAtPointInTimeMember 2016-12-01 2017-11-30 0000876167 us-gaap:MaintenanceMember us-gaap:TransferredOverTimeMember 2017-12-01 2018-11-30 0000876167 us-gaap:ServiceMember us-gaap:TransferredOverTimeMember 2016-12-01 2017-11-30 0000876167 us-gaap:NonUsMember 2018-11-30 0000876167 country:US 2017-11-30 0000876167 country:US 2019-11-30 0000876167 us-gaap:NonUsMember 2017-11-30 0000876167 us-gaap:NonUsMember 2019-11-30 0000876167 country:US 2018-11-30 0000876167 2019-03-01 2019-05-31 0000876167 2019-06-01 2019-08-31 0000876167 2018-06-01 2018-08-31 0000876167 2017-12-01 2018-02-28 0000876167 2018-12-01 2019-02-28 0000876167 2018-03-01 2018-05-31 prgs:enterprise_customer prgs:developer iso4217:USD xbrli:shares iso4217:USD xbrli:shares prgs:software_vendor xbrli:pure prgs:period prgs:plan prgs:Executives prgs:metric prgs:unit prgs:business prgs:segment
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______.
Commission File Number: 0-19417
 
PROGRESS SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
 
04-2746201
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

14 Oak Park
Bedford, Massachusetts 01730
(Address of principal executive offices) (Zip code)

(781280-4000
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
PRGS
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.     Yes      No  

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
Non-accelerated filer
 
 
Smaller reporting company
 
Emerging growth company
 
 
 
 
 




If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 31, 2019 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of voting stock held by non-affiliates of the registrant was approximately $1,812,000,000.

As of January 20, 2020, there were 45,100,838 common shares outstanding.

Documents Incorporated By Reference
Certain information required in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for our 2020 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A (our “definitive Proxy Statement”).


Table of Contents


PROGRESS SOFTWARE CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2019
INDEX
 
 
 
 
PART I
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
PART II
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
 
 
PART III
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
PART IV
 
 
 
 
Item 15.
Item 16.
 
 
 
 

3

Table of Contents

CAUTIONARY STATEMENTS

This Form 10-K, and other information provided by us or statements made by our directors, officers or employees from time to time, may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as “believe,” “may,” “could,” “would,” “might,” “should,” “expect,” “intend,” “plan,” “estimate,” “target,” “anticipate” and negatives and derivatives of these or similar expressions, or when we make statements concerning future financial results, product offerings or other events that have not yet occurred, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual future results may differ materially from those contained in or implied by our forward-looking statements as a result of various factors. Such factors are more fully described in Item 1A of this Form 10-K under the heading “Risk Factors.” Although we have sought to identify the most significant risks to our business, we cannot predict whether, or to what extent, any of such risks may be realized. We also cannot assure you that we have identified all possible issues which we might face. We undertake no obligation to update any forward-looking statements that we make.

PART I

Item 1. Business

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, the flexibility of a cloud-native app dev platform to deliver modern apps, leading data connectivity technology, web content management, business rules, secure file transfer and network monitoring. Over 1,700 independent software vendors ("ISVs"), 100,000 enterprise customers, and two million developers rely on Progress to power their applications. We operate as three distinct segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment.

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, original equipment manufacturers ("OEMs"), distributors and value-added resellers. These partners develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology.

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.

The key tenets of our strategic plan and operating model are as follows:

Align Resources to Drive Profitability. Our organizational philosophy and operating principles focus primarily on customer and partner retention and success for our core products and a streamlined operating approach in order to more efficiently drive financial results.

Protect and Strengthen Our Core Business. A key element of our strategy is centered on providing the products and tools enterprises need to build modern, strategic business applications. We offer these products and tools to both new customers and partners as well as our existing partner and customer ecosystems. This strategy builds on our inherent DNA and our vast experience in application development that we've acquired over the past 35+ years.

Our offerings enable developers to build the most modern applications quickly and easily, and include:

our OpenEdge software, which provides a unified development environment consisting of development tools, application servers, application management tools, an embedded relational database management system and the capability to connect and integrate with other applications and data sources;
our leading UI development tools, which enable organizations to easily build engaging user interfaces for any device or front end;
our data connectivity and integration capabilities;
our business logic and rules capabilities;

4

Table of Contents

our secure file transfer solutions, which provide secure collaboration and automated file transfers of sensitive data and advanced workflow automation capabilities;
our network management capabilities, which enable small and medium-sized businesses to monitor and manage their IT infrastructure and applications; and
web content management for delivering personalized and engaging digital experiences.

Acquire Accretive Businesses. We are pursuing acquisitions of businesses within the software infrastructure space, with products that appeal to both IT organizations and individual developers. These acquisitions must meet strict financial criteria, which will enable us to drive significant stockholder returns by providing scale and increased cash flows. As described below, in April 2019, we acquired Ipswitch in a transaction that met these strict financial criteria.

Holistic Capital Allocation Approach. We have adopted a shareholder friendly capital allocation policy that utilizes dividends and share repurchases to return capital to shareholders. Pursuant to our capital allocation strategy that we initially announced in September 2017, we have targeted to return approximately 25% of our annual cash flows from operations to stockholders in the form of dividends. We also intend to repurchase our shares sufficient to offset dilution from our equity plans.

In fiscal year 2019, we repurchased and retired 0.7 million shares of our common stock for $25.0 million. In connection with the acquisition of Ipswitch, Inc. (“Ipswitch”) in April 2019, we suspended our stock repurchase program for the remainder of fiscal 2019. We expect to resume share repurchases in fiscal 2020, at a level consistent with our publicly stated capital allocation policy. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand or discontinue the repurchase program at any time. As of November 30, 2019, there was $75.0 million remaining under share repurchase authorization. In January 2020, our Board of Directors increased the total share repurchase authorization to $250.0 million.

We began paying quarterly cash dividends of $0.125 per share of common stock to Progress stockholders in December 2016 and increased the quarterly cash dividend to $0.14 per share in September 2017. In September 2018, the quarterly cash dividend was increased to $0.155 per share of common stock. On September 24, 2019, our Board of Directors approved an additional increase to our quarterly cash dividend from $0.155 to $0.165 per share of common stock. We have declared aggregate per share quarterly cash dividends totaling $0.630, $0.575 and $0.515 for the years ended November 30, 2019, November 30, 2018 and November 30, 2017, respectively. We paid aggregate cash dividends totaling $27.8 million, $25.8 million and $24.1 million for the years ended November 30, 2019, November 30, 2018 and November 30, 2017, respectively. We expect to continue paying quarterly cash dividends in subsequent quarters consistent with our capital allocation strategy.

On April 30, 2019, in furtherance of our acquisition strategy, we acquired all of the outstanding equity interests of Ipswitch, a provider of award-winning and easy-to-use secure data file transfer and network management software, for an aggregate purchase price of approximately $225.0 million.

On September 26, 2019, we announced that we are reducing our current and ongoing investment levels within our cognitive application product lines, which consist primarily of our DataRPM and Kinvey products. Accordingly, our fiscal fourth quarter results include a restructuring charge of $2.5 million. This restructuring charge relates to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation) incurred as part of the reduction in investment. In connection with this restructuring action, during the fiscal fourth quarter, we evaluated the ongoing value of the intangible assets primarily associated with the technologies and trade names obtained in the acquisitions of DataRPM and Kinvey. As a result of this evaluation, we wrote down these assets to fair value, which resulted in a $22.7 million asset impairment charge.

Our Business Segments

OpenEdge Business Segment

The OpenEdge business segment drives growth within OpenEdge’s large, diverse partner base by providing the technology enhancements and marketing support these partners need to sell more of their existing solutions to their customers. The OpenEdge business segment is also focused on providing partners and direct end users with a clear path to develop and integrate cloud-based applications. Our professional services organization helps partners and customers leverage their core assets and develop strategies that protect current investments, while addressing changing business requirements.


5

Table of Contents

The solutions within the OpenEdge business segment include:

Progress OpenEdge

Progress OpenEdge is development software for building dynamic multi-language applications for secure deployment across any platform, any device, and any cloud. OpenEdge provides a unified environment comprising development tools, application servers, application management tools, an embedded relational database management system, and the capability to connect and integrate with other applications and data sources independently or with other Progress products.

Progress Corticon

Progress Corticon is a market-leading Business Rules Management System that provides applications with decision automation, decision change process and decision-related insight capabilities. Corticon helps both business and IT users to quickly create or reuse business rules as well as create, improve, collaborate on, and maintain decision logic.

MOVEit

MOVEit provides secure collaboration and automated file transfers of critical business information between users, locations and partners in compliance with data security regulations such as HIPAA, PCI DSS and the EU’s GDPR, and advanced workflow automation capabilities without the need for scripting.

WhatsUp Gold

WhatsUp Gold is an award-winning network monitoring solution, which enables small and medium-sized businesses and enterprises to continuously monitor and manage their IT infrastructure and applications, assuring high levels of performance and availability.

Progress Kinvey

Progress Kinvey is a modern platform for rapidly building complex enterprise applications and scalable consumer applications experiences. from mission-critical consumer and business experiences for global insurance, manufacturing and media companies, to HIPAA-compliant and life-critical apps for healthcare, health implant manufacturers and pharma.

Data Connectivity and Integration Business Segment

The Data Connectivity and Integration ("DCI") business segment is focused on the growth of our data assets, including the data integration components of our cloud offerings. Data is at the core of every application, and with the exponential growth in the number and volume of data sources, this business segment addresses the increasingly complex challenges that organizations have in accessing and integrating that data.

The solutions within the DCI business segment include:

Progress DataDirect Connect

Progress DataDirect Connect provides data connectivity using industry-standard interfaces to connect applications running on various platforms to any major database, for both corporate IT organizations and software vendors. With software components embedded in the products of over 350 software companies and in the applications of thousands of large enterprises, DataDirect Connect is a global leader in the data connectivity market. The primary products, in addition to other drivers we have developed, are ODBC drivers, JDBC drivers and ADO.NET providers. They provide the capability to connect and integrate with other applications and data sources independently or with our cloud-based offerings.

Progress DataDirect Hybrid Data Pipeline

Progress DataDirect Hybrid Data Pipeline is a data access service that provides simple, secure access to organizations' cloud and on-premises data sources for hybrid cloud applications, such as CRM, data management platforms or hosted analytics. It enables developers to integrate applications and data quickly, no matter whether that data lives-on-site, in the cloud or both.


6

Table of Contents

Application Development and Deployment Business Segment

The Application Development and Deployment ("AD&D") business segment is focused on serving the evolving needs of our substantial developer community in creating modern and engaging applications and digital experiences. This business segment is agile and digitally-driven in its go-to-market, able to react quickly to changes in this rapidly-evolving market. Products in this segment focus on user interface development and content-driven digital experiences.

The solutions within the AD&D business segment include:

Developer Tools

Our Developer Tools (DevTools) business offers a leading set of components for user interface (UI) development for Web, Mobile, Desktop, Chat and AR/VR apps, plus automated application testing and reporting tools. These products make development of modern, engaging application UIs fast and easy for .NET and JavaScript developers. Product lines include Telerik, Kendo UI, Fiddler, and Test Studio.

Sitefinity

Sitefinity is a next-generation web content management and customer analytics platform for managing and optimizing digital experiences. Sitefinity combines superior end user experience with a high level of customization capabilities for developers.

Product Development

Most of our products have been developed by our internal product development staff or the internal staffs of acquired companies. We believe that the features and performance of our products are competitive with those of other available development and deployment tools and that none of the current versions of our products are approaching obsolescence. However, we have invested, and expect to continue to invest in new product development and enhancements of our current products to maintain our competitive position.

As of November 30, 2019, we have five development offices in North America, two primary development offices in India and two primary development offices in EMEA.

Customers

We market our products globally through several channels: directly to end users and indirectly to application partners (or ISVs), OEMs, and system integrators. Sales of our solutions and products through our direct sales force have historically been to business managers or IT managers in corporations and governmental agencies. We also target developers who create business applications, from individuals to teams, within enterprises of all sizes.

We also market our products through indirect channels, primarily application partners. OEMs, and value-added resellers, who embed or add features to our products as part of an integrated solution. We use distributors, both internationally and domestically, in certain locations where we do not have a direct presence or where it is more economically feasible for us to do so. More than half of our license revenues are derived from these indirect channels.

Application Partners

Our application partners cover a broad range of markets, offer an extensive library of business applications and are a source of recurring revenue. We have kept entry costs, consisting primarily of the initial purchase of development licenses, low to encourage a wide variety of application partners to build applications. If an application partner succeeds in marketing its applications, we obtain recurring revenue as the application partner licenses our deployment products to allow its application to be installed and used by customers. In recent years, a significantly increasing amount of our revenue from application partners has been generated from application partners who have chosen to enable their business applications under a software-as-a-service ("SaaS") platform.

Original Equipment Manufacturers

We enter into arrangements with OEMs in which the OEM embeds our products into its solutions, typically either software or technology devices. OEMs typically license the right to embed our products into their solutions and distribute those solutions for initial terms ranging from one to three years. Historically, most of our OEMs have renewed their agreements upon the

7

Table of Contents

expiration of the initial term. However, there is no assurance that they will continue to renew in the future. If any of our largest OEM customers were not to renew their agreements in the future, this could materially impact our DCI segment.

Value Added Resellers

We enter into arrangements with value-added resellers (VARs) in which the VAR adds features or services to our products, then resell those products as an integrated product or complete "turn-key" solution.

No single customer or partner has accounted for more than 10% of our total revenue in any of our last three fiscal years.

Sales and Marketing

We sell our products and solutions through our direct sales force and indirect channel partners. We have sold our products and solutions to enterprises in over 180 countries. Our sales and field marketing groups are organized primarily by region. We operate by region in the Americas, EMEA and Asia Pacific. We believe this structure allows us to maintain direct contact with our customers and support their diverse market requirements. Our international operations provide focused local sales, support and marketing efforts and are able to respond directly to changes in local conditions.

In addition to our direct sales efforts, we distribute our products through systems integrators, resellers, distributors, and OEM partners in the United States and internationally. Systems integrators typically have expertise in vertical or functional markets. In some cases, they resell our products, bundling them with their broader service offerings. In other cases, they refer sales opportunities for our products to our direct sales force. Distributors sublicense our products and provide service and support within their territories. OEMs embed portions of our technology in their product offerings.

Sales personnel are responsible for developing new direct end user accounts, recruiting new indirect channel partners and new independent distributors, managing existing channel partner relationships and servicing existing customers. We actively seek to avoid conflict between the sales efforts of our application partners and our own direct sales efforts. We use our inside sales teams to enhance our direct sales efforts and to generate new business and follow-on business from existing customers.

Our marketing personnel conduct a variety of marketing engagement programs designed to create demand for our products, enhance the market readiness of our products, raise the general awareness of our company and our products and solutions, generate leads for the sales organization and promote our various products. These programs include press relations, analyst relations, investor relations, digital/web marketing, marketing communications, participation in trade shows and industry conferences, and production of sales and marketing literature. We also hold and participate in global events, as well as regional user events in various locations throughout the world.

Our sales and marketing efforts with respect to certain of our products, including DevTools, differ from our traditional sales and marketing efforts because the target markets are different. For these products, we have designed our marketing and sales model to be efficient for high volumes of lower-price transactions. Our marketing efforts focus on driving traffic to our websites and on generating high quality sales leads, in many cases, consisting of developer end users who download a free evaluation of our software. Our sales efforts then focus on converting these leads into paying customers through a high volume, short duration, sales process. Of particular importance to our target market, we enable our customers to buy our products in a manner convenient to them, whether by purchase order, online with a credit card or through our channel partners.

Customer Support

Our customer support staff provides telephone and Web-based support to end users, application developers and OEMs. Customers may purchase maintenance services entitling them to software updates, technical support and technical bulletins. Maintenance is generally not required with our products and is purchased at the customer's option. We provide support to customers primarily through our main regional customer support centers in Bedford, Massachusetts; Morrisville, North Carolina; Alpharetta, Georgia; Madison, Wisconsin; Galway, Ireland; Rotterdam, The Netherlands; Hyderabad, India; Melbourne, Australia; and Sofia, Bulgaria. Local technical support for specific products is provided in certain other countries as well.


8

Table of Contents

Professional Services

Our global professional services organization delivers business solutions for customers through a combination of products, consulting and education. Our consulting organization offers project management, implementation services, custom development, programming and other services. Our consulting organization also provides services to Web-enable existing applications or to take advantage of the capabilities of new product releases. Our education organization offers numerous training options, from traditional instructor-led courses to advanced learning modules available via the web or on digital media.

Our services offerings include: application modernization; data management, managed database services; performance enhancements and tuning; and analytics/business intelligence.

Competition

The computer software industry is intensely competitive. We experience significant competition from a variety of sources with respect to all of our products. Factors affecting competition in the markets we serve include product performance in complex applications, breadth of application solutions, vendor experience, ease of integration, price, training and support.

We compete in various markets with a number of entities, such as salesforce.com, Inc., Amazon.com, Inc., Software AG, Pivotal Software, Inc., IBM Corporation, Microsoft Corporation, Oracle Corporation and other smaller firms. Many of these vendors offer platform-as-a-service, application development, data integration and other tools in conjunction with their CRM, web services, operating systems and relational database management systems. We believe that IBM Corporation, Microsoft Corporation and Oracle Corporation currently dominate the relational database market. We do not believe that there is a dominant vendor in the other infrastructure software markets, including application development. Some of our competitors have greater financial, marketing or technical resources than we have and/or may have experience in, or be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the development, promotion and sale of their products than we can. Increased competition could make it more difficult for us to maintain our revenue and market presence.

Copyrights, Trademarks, Patents and Licenses

We rely on a combination of contractual provisions and copyright, patent, trademark and trade secret laws to protect our proprietary rights in our products. We generally distribute our products under software license agreements that grant customers a perpetual nonexclusive license to use our products and contain terms and conditions prohibiting the unauthorized reproduction or transfer of our products. We also distribute our products through various channel partners, including application partners, OEMs and system integrators. We also license our products under term or subscription arrangements.  In addition, we attempt to protect our trade secrets and other proprietary information through agreements with employees, consultants and channel partners. Although we intend to protect our rights vigorously, there is no assurance that these measures will be successful.

We seek to protect the source code of our products as trade secrets and as unpublished copyrighted works. We hold numerous patents covering portions of our products. We also have several patent applications for some of our other product technologies. Where possible, we seek to obtain protection of our product names and service offerings through trademark registration and other similar procedures throughout the world.

We believe that due to the rapid pace of innovation within our industry, factors such as the technological and creative skills of our personnel are as important in establishing and maintaining a leadership position within the industry as are the various legal protections of our technology. In addition, we believe that the nature of our customers, the importance of our products to them and their need for continuing product support may reduce the risk of unauthorized reproduction, although no assurances can be made in this regard.

Business Segment and Geographical Information

We operate and report as three distinct business segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment. For additional information on our business segments as well as our geographical financial information, see Note 16 to our Consolidated Financial Statements in Item 8 of this Form 10-K.


9

Table of Contents

Employees

As of November 30, 2019, we had 1,538 employees worldwide, including 461 in sales and marketing, 273 in customer support and services, 626 in product development and 178 in administration.

None of our U.S. employees are subject to a collective bargaining agreement. Employees in certain foreign jurisdictions are represented by local workers’ councils and/or collective bargaining agreements as may be customary or required in those jurisdictions. We have experienced no work stoppages and believe our relations with employees are good.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at www.progress.com as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC at www.sec.gov. The information posted on our website is not incorporated into this Annual Report.

Our Code of Conduct is also available on our website. Additional information about this code and amendments and waivers thereto can be found below in Part III, Item 10 of this Form 10-K.


10

Table of Contents

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves certain risks and uncertainties, some of which are beyond our control. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results.

Our revenue and quarterly results may fluctuate, which could adversely affect our stock price. We have experienced, and may in the future experience, significant fluctuations in our quarterly operating results that may be caused by many factors. These factors include:

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;
integration of acquired businesses;
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.

Revenue forecasting is uncertain, and the failure to meet our forecasts could result in a decline in our stock price. Our revenues, particularly new software license revenues, are difficult to forecast. We use a pipeline system to forecast revenues and trends in our business. Our pipeline estimates may prove to be unreliable either in a particular quarter or over a longer period of time, in part because the conversion rate of the pipeline into contracts can be difficult to estimate and requires management judgment. A variation in the conversion rate could cause us to plan or budget incorrectly and result in a material adverse impact on our business or our planned results of operations. Furthermore, most of our expenses are relatively fixed, including costs of personnel and facilities. Thus, an unexpected reduction in our revenue, or failure to achieve the anticipated rate of growth, would have a material adverse effect on our profitability. If our operating results do not meet our publicly stated guidance or the expectations of investors, our stock price may decline.

We recognize a substantial portion of our revenue from sales made through third parties, including our application partners, distributors/resellers, and OEMs, and adverse developments in the businesses of these third parties or in our relationships with them could harm our revenues and results of operations. Our future results depend in large part upon our continued successful distribution of our products through our application partner, distributor/reseller, and OEM channels. The activities of these third parties are not within our direct control. Our failure to manage our relationships with these third parties effectively could impair the success of our sales, marketing and support activities. A reduction in the sales efforts, technical capabilities or financial viability of these parties, a misalignment of interest between us and them, or a termination of our relationship with a major application partner, distributor/reseller, or OEM could have a negative effect on our sales and financial results. Any adverse effect on any of our application partners’, distributors'/resellers', or OEMs’ businesses related to competition, pricing and other factors could also have a material adverse effect on our business, financial condition and operating results.

Changes in accounting principles and guidance, or their interpretation or implementation, may materially adversely affect our reported results of operations or financial position. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) These principles are subject to interpretation by the SEC and various bodies formed to create and interpret appropriate accounting principles and guidance. A

11

Table of Contents

change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results, as well as our processes and related controls.

A failure of our information technology systems could have a material adverse effect on our business. A failure or prolonged interruption in our information technology systems, or any difficulty encountered in upgrading our systems or implementing new systems, that compromises our ability to meet our customers’ needs, or impairs our ability to record, process and report accurate information could have a material adverse effect on our financial condition.

Weakness in the U.S. and international economies may result in fewer sales of our products and may otherwise harm our business. We are subject to risks arising from adverse changes in global economic conditions, especially those in the U.S., Europe and Latin America. If global economic conditions weaken, credit markets tighten and/or financial markets become unstable, customers may delay, reduce or forego technology purchases, both directly and through our application partners, resellers/distributors and OEMs. This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition. Further, deteriorating economic conditions could adversely affect our customers and their ability to pay amounts owed to us. Any of these events would likely harm our business, results of operations, financial condition or cash flows.

Our international operations expose us to additional risks, and changes in global economic and political conditions could adversely affect our international operations, our revenue and our net income. Approximately 45% of our total revenue is generated from sales outside North America. Political and/or financial instability, oil price shocks and armed conflict in various regions of the world can lead to economic uncertainty and may adversely impact our business. For example, the announcement of the Referendum of the United Kingdom’s (the "U.K.") Membership of the European Union ("E.U.") (referred to as "Brexit"), advising for the exit of the U.K. from the E.U., has led to significant, continuing volatility in global stock markets and currency exchange rate fluctuations. If customers’ buying patterns, decision-making processes, timing of expected deliveries and timing of new projects unfavorably change due to economic or political conditions, there would be a material adverse effect on our business, financial condition and operating results.

Other potential risks inherent in our international business include:

longer payment cycles;
credit risk and higher levels of payment fraud;
greater difficulties in accounts receivable collection;
varying regulatory and legal 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, legal impediments and 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;
changes in U.S. or foreign trade policies or practices that increase costs or restrict the distribution of products;
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.

Any one or more of these factors could have a material adverse effect on our international operations, and, consequently, on our business, financial condition and operating results.


12

Table of Contents

Fluctuations in foreign currency exchange rates could have an adverse impact on our financial condition and results of operations. Changes in the value of foreign currencies relative to the U.S. dollar could adversely affect our results of operations and financial position. For example, during periods in which the value of the U.S. dollar strengthens in comparison to certain foreign currencies, particularly in Europe, Brazil and Australia, our reported international revenue is reduced because foreign currencies translate into fewer U.S. dollars. As approximately one-third of our revenue is denominated in foreign currencies, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates.

We seek to reduce our exposure to fluctuations in exchange rates by entering into foreign exchange forward contracts to hedge certain actual and forecasted transactions of selected currencies (mainly in Europe, Brazil, India and Australia). Our currency hedging transactions may not be effective in reducing any adverse impact of fluctuations in foreign currency exchange rates. Further, the imposition of exchange or price controls or other restrictions on the conversion of foreign currencies could have a material adverse effect on our business.

Technology and customer requirements evolve rapidly in our industry, and if we do not continue to develop new products and enhance our existing products in response to these changes, our business could be harmed. Ongoing enhancements to our product sets will be required to enable us to maintain our competitive position and the competitive position of our application partners, distributors/resellers, and OEMs. We may not be successful in developing and marketing enhancements to our products on a timely basis, and any enhancements we develop may not adequately address the changing needs of the marketplace. Overlaying the risks associated with our existing products and enhancements are ongoing technological developments and rapid changes in customer and partner requirements. Our future success will depend upon our ability to develop and introduce in a timely manner new products that take advantage of technological advances and respond to new customer and partner requirements. We may not be successful in developing new products incorporating new technology on a timely basis, and any new products we develop may not adequately address the changing needs of the marketplace or may not be accepted by the market. Failure to develop new products and product enhancements that meet market needs in a timely manner could have a material adverse effect on our business, financial condition and operating results.

We are substantially dependent on our Progress OpenEdge products. We derive a significant portion of our revenue from software license and maintenance revenue attributable to our Progress OpenEdge product set. Accordingly, our future results depend on continued market acceptance of OpenEdge. If consumer demand declines, or new technologies emerge that are superior to, or are more responsive to customer requirements than, OpenEdge such that we are unable to maintain OpenEdge’s competitive position within its marketplace, our business, financial condition and operating results may be materially adversely affected.

If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings. We acquire other companies and intangible assets and may not realize all the economic benefit from those acquisitions, which could cause an impairment of goodwill or intangibles. We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for impairment at least annually. Factors that may cause a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in our stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in industry segments in which we participate. We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively affecting our results of operations.

During the fiscal fourth quarter, we evaluated the ongoing value of the intangible assets associated with the technologies and trade names obtained in the acquisitions of DataRPM and Kinvey. In accordance with ASC 360-10, we record impairment losses on long-lived assets used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. As a result of our decision to reduce our current and ongoing spending levels within our cognitive application product lines, which consist primarily of our DataRPM and Kinvey products, we determined that the intangible assets were fully impaired. As a result, we incurred an impairment charge of $22.7 million in the fourth quarter of fiscal year 2019 (Note 4).

We may make additional acquisitions of businesses, products or technologies that involve additional risks, which could disrupt our business or harm our financial condition, results of operations or cash flows. A key element of our strategy includes the acquisition of businesses that offer complementary products, services and technologies, augment our revenues and cash flows, and meet our strict financial criteria, such as our recent acquisition of Ipswitch. We may not be able to identify suitable acquisition opportunities, or to consummate any such transactions. Any acquisitions that we do complete and their integration involve a number of risks, the occurrence of which could have a material adverse effect on our business, financial condition, operating results or cash flows, including:

13

Table of Contents

unexpected delays, challenges and related expenses, and the disruption of our business;
difficulties of assimilating the operations and personnel of acquired companies;
our potential inability to realize the value of the acquired assets relative to the price paid;
distraction of management from our ongoing businesses;
potential product disruptions associated with the sale of the acquired business's products;
the potential that an acquisition may not further our business strategy as we expected, may not result in revenue and cash flow growth to the degree we expected or at all, or may not achieve expected synergies;
the possibility of incurring significant restructuring charges and amortization expense;
risks related to the assumption of the acquired business's liabilities or any ongoing lawsuits;
potential impairment to assets that we recorded as a part of an acquisition, including intangible assets and goodwill; and
to the extent that we issue stock to pay for an acquisition, dilution to existing stockholders and decreased earnings per share.

Difficulties associated with any acquisitions we may pursue and their integration may be complicated by factors such as:
the size of the business or entity acquired;
geographic and cultural differences;
lack of experience operating in the industry or geographic markets of the acquired business;
potential loss of key employees and customers;
the potential for deficiencies in internal controls at the acquired or combined business;
performance problems with the acquired business’s technology;
exposure to unanticipated liabilities of the acquired business;
insufficient revenue to offset increased expenses associated with the acquisition; and
adverse tax consequences.

If we fail to complete an announced acquisition, our stock price could fall to the extent the price reflects an assumption that such acquisition will be completed, and we may incur significant unrecoverable costs. Further, the failure to consummate an acquisition may result in negative publicity and adversely impact our relationships with our customers, vendors and employees. We may become subject to legal proceedings relating to the acquisition and the integration of acquired businesses may not be successful. Failure to manage and successfully integrate acquired businesses, achieve anticipated levels of profitability of the acquired business, improve margins of the acquired businesses and products, or realize other anticipated benefits of an acquisition could materially harm our business, operating results and margins.

The segments of the software industry in which we participate are intensely competitive, and our inability to compete effectively could harm our business. We experience significant competition from a variety of sources with respect to the marketing and distribution of our products. Many of our competitors have greater financial, marketing or technical resources than we do and may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the promotion and sale of their products than we can. Increased competition could make it more difficult for us to maintain our market presence or lead to downward pricing pressure.

In addition, the marketplace for new products is intensely competitive and characterized by low barriers to entry. For example, an increase in market acceptance of open source software may cause downward pricing pressures. As a result, new competitors possessing technological, marketing or other competitive advantages may emerge and rapidly acquire market share. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, thereby increasing their ability to deliver products that better address the needs of our prospective customers. Current and potential competitors may also be more successful than we are in having their products or technologies widely accepted. We may be unable to compete successfully against current and future competitors, and our failure to do so could have a material adverse effect on our business, prospects, financial condition and operating results.

We rely on the experience and expertise of our skilled employees, and must continue to attract and retain qualified technical, marketing and managerial personnel in order to succeed. Our future success will depend in large part upon our ability to attract and retain highly skilled technical, managerial, sales and marketing personnel. There is significant competition for such personnel in the software industry. We may not continue to be successful in attracting and retaining the personnel we require to develop new and enhanced products and to continue to grow and operate profitably.

Our periodic workforce restructurings can be disruptive. We have in the past restructured or made other adjustments to our workforce in response to management changes, product changes, performance issues, changes in strategy, acquisitions and other internal and external considerations. In the past, these restructurings have resulted in increased restructuring costs and have temporarily reduced productivity. These effects could recur in connection with any future restructurings or we may not

14

Table of Contents

achieve or sustain the expected growth or cost savings benefits of any such restructurings, or do so within the expected timeframe. As a result, our revenues and other results of operations could be negatively affected.

Our business practices with respect to the collection, use and management of personal information could give rise to operational interruption, liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to consumer privacy and data protection. As regulatory focus on privacy issues continues to increase and worldwide laws and regulations concerning the handling of personal information expand and become more complex, potential risks related to data collection and use within our business will intensify. For example, the E.U. and the United States ("U.S.") formally entered into a framework in July 2016 that provides a mechanism for companies to transfer data from E.U. member states to the U.S. This framework, called the Privacy Shield, is intended to address shortcomings identified by the Court of Justice of the E.U. in the previous E.U.-U.S. Safe Harbor Framework, which the Court of Justice invalidated in October 2015. The Privacy Shield and other data transfer mechanisms are likely to be reviewed by the European courts, which may lead to uncertainty about the legal basis for data transfers to the U.S. or interruption of such transfers. In the event any court blocks transfers to or from a particular jurisdiction on the basis that no transfer mechanisms are legally adequate, this could give rise to operational interruption in the performance of services for customers and internal processing of employee information, regulatory liabilities or reputational harm. In addition, U.S. and foreign governments have enacted or are considering enacting legislation or regulations, or may in the near future interpret existing legislation or regulations, in a manner that could significantly impact our ability and the ability of our customers and data partners to collect, augment, analyze, use, transfer and share personal and other information that is integral to certain services we provide.

Regulators globally are also imposing greater monetary fines for privacy violations. For example, in 2016, the E.U. adopted a law governing data practices and privacy called the General Data Protection Regulation (GDPR), which became effective in May 2018. The law establishes new requirements regarding the handling of personal data. Non-compliance with the GDPR may result in monetary penalties of up to 4% of worldwide revenue. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we operate.

Additionally, public perception and standards related to the privacy of personal information can shift rapidly, in ways that may affect our reputation or influence regulators to enact regulations and laws that may limit our ability to provide certain products. Any failure, or perceived failure, by us to comply with U.S. federal, state, or foreign laws and regulations, including laws and regulations regulating privacy, data security, or consumer protection, or other policies, public perception, standards, self-regulatory requirements or legal obligations, could result in lost or restricted business, proceedings, actions or fines brought against us or levied by governmental entities or others, or could adversely affect our business and harm our reputation.

If our products contain software defects or security flaws, it could harm our revenues and expose us to litigation. Our products, despite extensive testing and quality control, may contain defects or security flaws, especially when we first introduce them or when new versions are released. We may need to issue corrective releases of our software products to fix any defects or errors. The detection and correction of any security flaws can be time consuming and costly. Errors in our software products could affect the ability of our products to work with other hardware or software products, delay the development or release of new products or new versions of products, adversely affect market acceptance of our products and expose us to potential litigation. If we experience errors or delays in releasing new products or new versions of products, such errors or delays could have a material adverse effect on our revenue.

We could incur substantial cost in protecting our proprietary software technology or if we fail to protect our technology, which would harm our business. We rely principally on a combination of contract provisions and copyright, trademark, patent and trade secret laws to protect our proprietary technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Policing unauthorized use of our products is difficult. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits. The steps we take to protect our proprietary rights may be inadequate to prevent misappropriation of our technology; moreover, others could independently develop similar technology.


15

Table of Contents

We could be subject to claims that we infringe intellectual property rights of others, which could harm our business, financial condition, results of operations or cash flows. Third parties could assert infringement claims in the future with respect to our products and technology, and such claims might be successful. Litigation relating to any such claims could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits. Any such litigation could also result in our being prohibited from selling one or more of our products, unanticipated royalty payments, reluctance by potential customers to purchase our products, or liability to our customers and could have a material adverse effect on our business, financial condition, operating results and cash flows.

If our security measures are breached, our products and services may be perceived as not being secure, customers may curtail or stop using our products and services, and we may incur significant legal and financial exposure. Our products and services involve the storage and transmission of our customers’ proprietary information and may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service attacks and other disruptive problems Due to the actions of outside parties, employee error, malfeasance, or otherwise, an unauthorized party may obtain access to our data or our customers’ data, which could result in its theft, destruction or misappropriation. Security risks in recent years have increased significantly given the increased sophistication and activities of hackers, organized crime, including state-sponsored organizations and nation-states, and other outside parties. Cyber threats are continuously evolving, increasing the difficulty of defending against them. While we have implemented security procedures and controls to address these threats, our security measures could be compromised or could fail. Any security breach or unauthorized access could result in significant legal and financial exposure, increased costs to defend litigation, indemnity and other contractual obligations, government fines and penalties, damage to our reputation and our brand, and a loss of confidence in the security of our products and services that could potentially have an adverse effect on our business and results of operations. Breaches of our network could disrupt our internal systems and business applications, including services provided to our customers. Additionally, data breaches could compromise technical and proprietary information, harming our competitive position. We may need to spend significant capital or allocate significant resources to ensure effective ongoing protection against the threat of security breaches or to address security related concerns. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose customers. In addition, our insurance coverage may not be adequate to cover all costs related to cybersecurity incidents and the disruptions resulting from such events.

We may have exposure to additional tax liabilities. As a multinational corporation, we are subject to income taxes in the U.S. and various foreign jurisdictions. Significant judgment is required in determining our global provision for income taxes and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our income tax returns are routinely subject to audits by tax authorities. Although we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine our tax estimates, a final determination of tax audits that is inconsistent with such assessments or tax disputes could have an adverse effect on our financial condition, results of operations and cash flows.

We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes in the U.S. and various foreign jurisdictions. We are regularly under audit by tax authorities with respect to these non-income taxes and may have exposure to additional non-income tax liabilities, which could have an adverse effect on our results of operations, financial condition and cash flows.

In addition, our future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws or their interpretation. Such changes could have a material adverse impact on our financial results.

We are required to comply with certain financial and operating covenants under our credit facility and to make scheduled debt payments as they become due; any failure to comply with those covenants or to make scheduled payments could cause amounts borrowed under the facility to become immediately due and payable or prevent us from borrowing under the facility. In April 2019, we entered into an amended and restated credit agreement, which consists of a $301.0 million term loan and a $100.0 million revolving loan (which may be increased by an additional $125.0 million if the existing or additional lenders are willing to make such increased commitments). This facility matures in April 2024, at which time any amounts outstanding will be due and payable in full. We may wish to borrow additional amounts under the facility in the future to support our operations, including for strategic acquisitions and share repurchases.

We are required to comply with specified financial and operating covenants and to make scheduled repayments of our term loan, which may limit our ability to operate our business as we otherwise might operate it. Our failure to comply with any of these covenants or to meet any payment obligations under the facility could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable. We might not have sufficient working capital or liquidity to satisfy any repayment obligations in the event of an

16

Table of Contents

acceleration of those obligations. In addition, if we are not in compliance with the financial and operating covenants at the time we wish to borrow funds, we will be unable to borrow funds.

Our common stock price may continue to be volatile, which could result in losses for investors. The market price of our common stock, like that of other technology companies, is volatile and is subject to wide fluctuations in response to quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates by securities analysts or other events or factors. Our stock price may also be affected by broader market trends unrelated to our performance. As a result, purchasers of our common stock may be unable at any given time to sell their shares at or above the price they paid for them.

Item 1B. Unresolved Staff Comments

As of the date of this report, we do not have any open comments from the SEC related to our financial statements or periodic filings with the SEC.

Item 2. Properties

We own our principal administrative, sales, support, marketing, product development and distribution facilities, which are located in one building totaling approximately 165,000 square feet in Bedford, Massachusetts.

We also maintain offices for administrative, sales, support, marketing, product development and/or distribution purposes in leased facilities in various other locations in North America, including Burlington, Massachusetts and Morrisville, North Carolina, and outside North America, including Sofia, Bulgaria, Hyderabad, India, and Rotterdam, the Netherlands. The terms of our leases generally range from one to fifteen years. We believe that our facilities are adequate for our current needs and that suitable additional space will be available as needed.

Item 3. Legal Proceedings

We are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material effect on our consolidated financial position, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on the NASDAQ Global Select Market under the symbol "PRGS".
 
As of December 31, 2019, our common stock was held by approximately 149 stockholders of record.

In fiscal years 2019 and 2018, we repurchased and retired 0.7 million shares of our common stock for $25.0 million and 2.9 million shares of our common stock for $120.0 million, respectively. In connection with the acquisition of Ipswitch in April 2019, we suspended our stock repurchase program for the remainder of fiscal 2019.

We expect to resume share repurchases in fiscal 2020, at a level consistent with our publicly stated capital allocation policy. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand or discontinue the repurchase program at any time. As of November 30, 2019, there was $75.0 million remaining under the share repurchase authorization. In January 2020, our Board of Directors increased the total share repurchase authorization to $250.0 million.


17

Table of Contents

Stock Repurchases

Information related to the repurchases of our common stock by month in the fourth quarter of fiscal year 2019 is as follows (in thousands, except per share and share data):

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)
September 2019
 

 
$

 

 
$
75,000

October 2019
 

 

 

 
75,000

November 2019
 

 

 

 
75,000

Total
 

 
$

 

 
$
75,000


(1) 
As of November 30, 2019, there was $75.0 million remaining under the current authorization of $250.0 million. In January 2020, our Board of Directors increased the total share repurchase authorization from $75.0 million to $250.0 million.


18

Table of Contents

Stock Performance Graph and Cumulative Total Return

The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the NASDAQ Composite Index and the NASDAQ Computer Index for each of the last five fiscal years ended November 30, 2019, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends.

Comparison of 5 Year Cumulative Total Return(1)
Among Progress Software Corporation, the NASDAQ Composite Index and the
NASDAQ Computer Index
chart-de8ba9536cff5e9ea9ba01.jpg

(1) $100 invested on November 30, 2014 in stock or index, including reinvestment of dividends.
 
November 30,
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
Progress Software Corporation
 
$
100.00

 
$
92.06

 
$
113.47

 
$
158.63

 
$
134.92

 
$
157.83

NASDAQ Composite
 
100.00

 
108.07

 
112.61

 
145.41

 
155.07

 
181.24

NASDAQ Computer
 
100.00

 
108.14

 
115.99

 
164.04

 
171.76

 
223.01



19

Table of Contents

Item 6. Selected Financial Data

The following table sets forth selected financial data for the last five fiscal years (in thousands, except per share data):

Year Ended November 30,
 
2019
 
2018
 
2017
 
2016
 
2015
 
 
 
 
As Adjusted(1)
 
As Adjusted(1)
 
As Reported(1)
 
As Reported(1)
Revenue
 
$
413,298

 
$
378,981

 
$
389,154

 
$
405,341

 
$
377,554

Income (loss) from operations
 
40,084

 
67,814

 
57,490

 
(29,709
)
 
14,754

Net income (loss)
 
26,400

 
49,670

 
29,021

 
(55,726
)
 
(8,801
)
Basic earnings (loss) per share
 
0.59

 
1.09

 
0.60

 
(1.13
)
 
(0.17
)
Diluted earnings (loss) per share
 
0.58

 
1.08

 
0.60

 
(1.13
)
 
(0.17
)
Cash dividends declared per common share
 
0.630

 
0.575

 
0.515

 
0.125

 

Cash, cash equivalents and short-term investments
 
173,685

 
139,513

 
183,609

 
249,754

 
241,279

Total assets
 
881,271

 
644,150

 
718,718

 
754,827

 
877,123

Long-term debt, net, including current portion
 
294,719

 
116,089

 
121,909

 
135,000

 
144,375

Shareholders’ equity
 
330,282

 
324,002

 
404,381

 
406,629

 
522,464

(1)The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. As a result, we have adjusted balances for 2018 and 2017. We have not adjusted 2016 and 2015 for ASC 606. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

Fiscal year 2016 amounts were impacted by a $92.0 million impairment charge related to the goodwill of the Application Development and Deployment reporting unit.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements below about anticipated results and our products and markets are forward-looking statements that are based on our current plans and assumptions. Important information about the bases for these plans and assumptions and factors that may cause our actual results to differ materially from these statements is contained below and in Item 1A. “Risk Factors” of this Annual Report on Form 10-K.

Use of Constant Currency

Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, if the local currencies of our foreign subsidiaries strengthen, our consolidated results stated in U.S. dollars are positively impacted.

As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue growth rates on a constant currency basis enhances the understanding of our revenue results and evaluation of our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.

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, the flexibility of a cloud-native app dev platform to deliver modern apps, leading data connectivity technology, web content management, business rules, secure file transfer, and network monitoring. Over 1,700 independent software vendors, 100,000 enterprise customers, and two million developers rely on Progress to power their applications. We operate as three distinct segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment.


20

Table of Contents

The key tenets of our strategic plan and operating model are as follows:

Align Resources to Drive Profitability. Our organizational philosophy and operating principles focus primarily on customer and partner retention and success for our core products and a streamlined operating approach in order to more efficiently drive financial results.

Protect and Strengthen Our Core Business. A key element of our strategy is centered on providing the platform and tools enterprises need to build modern, strategic business applications. We offer these products and tools to both new customers and partners as well as our existing partner and customer ecosystems. This strategy builds on our inherent DNA and our vast experience in application development that we’ve acquired over the past 35+ years.

Our offerings enable developers to build the most modern applications quickly and easily, and include:

our OpenEdge software, which provides a unified development environment consisting of development tools, application servers, application management tools, an embedded relational database management system and the capability to connect and integrate with other applications and data sources;
our leading UI development tools, which enable organizations to easily build engaging user interfaces for any device or front end;
our data connectivity and integration capabilities;
our business logic and rules capabilities;
our secure file transfer solutions, which provide secure collaboration and automated file transfers of sensitive data and advanced workflow automation capabilities;
our network management capabilities, which enable small and medium-sized businesses to monitor and manage their IT infrastructure and applications; and
web content management for delivering personalized and engaging digital experiences.

Acquire Accretive Businesses. We are pursuing acquisitions of businesses within the software infrastructure space, with products that appeal to both IT organizations and individual developers. These acquisitions must meet strict financial criteria, which will enable us to drive significant stockholder returns by providing scale and increased cash flows. As described below, in April 2019, we acquired Ipswitch in a transaction that met these strict financial criteria.

Holistic Capital Allocation Approach. We have adopted a shareholder friendly capital allocation policy that utilizes dividends and share repurchases to return capital to shareholders. Pursuant to our capital allocation strategy that we initially announced in September 2017, we have targeted to return approximately 25% of our annual cash flows from operations to stockholders in the form of dividends. We also intend to repurchase our shares sufficient to offset dilution from our equity plans.

In fiscal year 2019, we repurchased and retired 0.7 million shares of our common stock for $25.0 million. In connection with the acquisition of Ipswitch in April 2019, we suspended our stock repurchase program for the remainder of fiscal 2019.

We expect to resume share repurchases in fiscal 2020, at a level consistent with our publicly stated capital allocation policy. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand or discontinue the repurchase program at any time. As of November 30, 2019, there was $75.0 million remaining under the share repurchase authorization. In January 2020, our Board of Directors increased the total share repurchase authorization to $250.0 million.

We began paying quarterly cash dividends of $0.125 per share of common stock to Progress stockholders in December 2016 and increased the quarterly cash dividend to $0.14 per share in September 2017. In September 2018, the quarterly cash dividend was increased to $0.155 per share of common stock. On September 24, 2019, our Board of Directors approved an additional increase to our quarterly cash dividend from $0.155 to $0.165 per share of common stock. On January 8, 2020, our Board of Directors declared a quarterly dividend of $0.165 per share of common stock that will be paid on March 16, 2020 to stockholders of record as of the close of business on March 2, 2020. We expect to continue paying quarterly cash dividends in subsequent quarters consistent with our capital allocation strategy.

In furtherance of our acquisition strategy, on April 30, 2019, we acquired all of the outstanding equity interests of Ipswitch, a provider of award-winning and easy-to-use secure data file transfer and network management software, for an aggregate purchase price of approximately $225.0 million.

We expect to continue to evaluate possible acquisitions and other strategic transactions designed to expand our business. As a result, our expected uses of cash could change, our cash position could be reduced and we may incur additional debt

21

Table of Contents

obligations to the extent we complete additional acquisitions. However, we believe that existing cash balances, together with funds generated from operations and amounts available under our credit facility, will be sufficient to finance our operations and meet our foreseeable cash requirements, including quarterly cash dividends and stock repurchases to Progress stockholders, as applicable, through at least the next twelve months.

We derive a significant portion of our revenue from international operations, which are primarily conducted in foreign currencies. The impact of foreign exchange rates had a material impact on revenue in fiscal year 2019. Since approximately one-third of our revenue is denominated in foreign currency, future fluctuations in foreign currency rates may also significantly impact our results.

On September 26, 2019, we announced that we are reducing our current and ongoing investment levels within our cognitive application product lines, which consist primarily of our DataRPM and Kinvey products. Accordingly, our fiscal fourth quarter results include a restructuring charge of $2.5 million. This restructuring charge relates to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation) incurred as a part of the reduction in the investment. In connection with this restructuring action, during the fiscal fourth quarter, we evaluated the ongoing value of the intangible assets primarily associated with the technologies and trade names obtained in the acquisitions of DataRPM and Kinvey. As a result of this evaluation, we wrote down these assets to fair value, which resulted in a $22.7 million asset impairment charge.

Results of Operations

Adoption of New Accounting Standard

We adopted the new accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018, using the full retrospective method, which required us to restate prior comparable periods. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information. Management’s Discussion and Analysis of Financial Condition and Results of Operations has also been adjusted to reflect the full retrospective adoption of ASC 606.

Fiscal Year 2019 Compared to Fiscal Year 2018

Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2019
 
November 30, 2018
 
As Reported
 
Constant
Currency
Revenue
$
413,298

 
$
378,981

 
9
%
 
11
%

Total revenue increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to the acquisition of Ipswitch during the second quarter of fiscal year 2019, and an increase in license sales in our Data Connectivity and Integration segment. Ipswitch contributed $28.2 million in revenue in fiscal year 2019. The increase in total revenue was partially offset by an unfavorable impact from currency exchange rates in fiscal year 2019 as compared to last year. Changes in prices from fiscal year 2018 to 2019 did not have a significant impact on our revenue.

License Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2019
 
November 30, 2018
 
As Reported
 
Constant
Currency
License
$
122,552

 
$
99,800

 
23
%
 
25
%
As a percentage of total revenue
30
%
 
26
%
 
 
 
 

Software license revenue increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to the acquisition of Ipswitch and an increase in license sales in our Data Connectivity and Integration segment. The increase in license revenue was partially offset by an unfavorable impact from currency exchange rates in fiscal year 2019 as compared to last year.


22

Table of Contents

Maintenance and Services Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2019
 
November 30, 2018
 
As Reported
 
Constant
Currency
Maintenance
$
259,006

 
$
249,171

 
4
%
 
6
%
As a percentage of total revenue
63
%
 
66
%
 
 
 
 
Professional services
$
31,740

 
$
30,010

 
6
%
 
7
%
As a percentage of total revenue
7
%
 
8
%
 
 
 
 
Total maintenance and services revenue
$
290,746

 
$
279,181

 
4
%
 
6
%
As a percentage of total revenue
70
%
 
74
%
 
 
 
 

Maintenance revenue increased in fiscal year 2019 as compared fiscal year 2018 due to the acquisition of Ipswitch and a slight increase in maintenance revenue in our Application Development and Deployment segment. This increase was offset by an unfavorable impact from currency exchange rates on our OpenEdge segment maintenance revenue in fiscal year 2019 compared to fiscal year 2018. Professional services revenue increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to an increase in OpenEdge professional services revenue, partially offset by lower professional services revenue generated by our Application Development and Deployment segment.

Revenue by Region

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2019
 
November 30, 2018
 
As Reported
 
Constant
Currency
North America
$
233,911

 
$
204,257

 
15
%
 
15
%
As a percentage of total revenue
57
%
 
54
%
 
 
 
 
EMEA
$
137,301

 
$
135,055

 
2
%
 
6
%
As a percentage of total revenue
33
%
 
35
%
 
 
 
 
Latin America
$
19,665

 
$
18,046

 
9
%
 
16
%
As a percentage of total revenue
5
%
 
5
%
 
 
 
 
Asia Pacific
$
22,421

 
$
21,623

 
4
%
 
7
%
As a percentage of total revenue
5
%
 
6
%
 
 
 
 

Total revenue generated in North America increased $29.7 million, and total revenue generated outside North America increased $4.7 million, in fiscal year 2019 as compared to fiscal year 2018. The increase in North America was primarily due to the acquisition of Ipswitch and higher license revenue generated by our Data Connectivity and Integration segment. The increase in revenue generated in EMEA in fiscal year 2019 as compared to fiscal year 2018 was also due to the acquisition of Ipswitch and higher license revenue generated by our Data Connectivity and Integration segment, partially offset by the unfavorable effect of foreign exchange rates. Revenue generated in Latin America increased in fiscal year 2019 as compared to fiscal year 2018 due to an increase in license sales in our OpenEdge segment. The revenue generated in Asia Pacific increased slightly in fiscal year 2019 as compared to fiscal year 2018 primarily due to the acquisition of Ipswitch.

Total revenue generated in markets outside North America represented 43% of total revenue in fiscal year 2019 compared to 46% of total revenue in the same period last year. If exchange rates had remained constant in fiscal year 2019 as compared to the exchange rates in effect in fiscal year 2018, total revenue generated in markets outside North America would have been 44% of total revenue.

23

Table of Contents


Revenue by Segment

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage Change
OpenEdge segment
$
296,929

 
$
277,806

 
7
 %
Data Connectivity and Integration segment
39,903

 
23,129

 
73
 %
Application Development and Deployment segment
76,466

 
78,046

 
(2
)%
Total revenue
$
413,298

 
$
378,981

 
9
 %

Revenue in the OpenEdge segment increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to the acquisition of Ipswitch, partially offset by an unfavorable impact from currency exchange rates in fiscal year 2019 as compared to last year. Data Connectivity and Integration segment revenue increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to the timing of certain renewals by OEMs. Application Development and Deployment segment revenue decreased in fiscal year 2019 as compared to fiscal year 2018, primarily due to lower license and professional services revenue, partially offset by an increase in maintenance revenue.

Cost of Software Licenses

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Cost of software licenses
$
4,894

 
$
4,769

 
3
%
As a percentage of software license revenue
4
%
 
5
%
 
 
As a percentage of total revenue
1
%
 
1
%
 
 

Cost of software licenses consists primarily of costs of royalties, electronic software distribution, duplication, and packaging. Cost of software licenses as a percentage of software license revenue varies from period to period depending upon the relative product mix. During the periods presented above, cost of software licenses remained relatively flat as a percentage of revenue.

Cost of Maintenance and Services

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Cost of maintenance and services
$
44,463

 
$
39,470

 
13
%
As a percentage of maintenance and services revenue
15
%
 
14
%
 
 
As a percentage of total revenue
11
%
 
10
%
 
 

Cost of maintenance and services consists primarily of costs of providing customer support, consulting, and education. Cost of maintenance and services increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to higher compensation-related costs resulting from an increase in headcount as a result of the acquisition of Ipswitch.


Amortization of Acquired Intangibles

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Amortization of acquired intangibles
$
25,884

 
$
22,734

 
14
%
As a percentage of total revenue
6
%
 
6
%
 
 


24

Table of Contents

Amortization of acquired intangibles included in costs of revenue primarily represents the amortization of the value assigned to technology-related intangible assets obtained in business combinations. Amortization of acquired intangibles increased in fiscal year 2019 as compared to fiscal year 2018, primarily due to the addition of intangible assets associated with the technologies obtained in connection with the acquisition of Ipswitch.

Gross Profit

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Gross profit
$
338,057

 
$
312,008

 
8
%
As a percentage of total revenue
82
%
 
82
%
 
 

Our gross profit increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to the increases of license and maintenance revenue, offset slightly by the increase of cost of maintenance and services and the amortization of acquired intangibles, each as described above.

Sales and Marketing

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Sales and marketing
$
101,701

 
$
93,036

 
9
%
As a percentage of total revenue
25
%
 
25
%
 
 

Sales and marketing expenses increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to increased compensation-related expenses as a result of increased headcount from the acquisition of Ipswitch.

Product Development

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Product development
$
88,572

 
$
79,739

 
11
%
As a percentage of total revenue
21
%
 
21
%
 
 

Product development expenses increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to increased compensation-related expenses as a result of increased headcount from the acquisition of Ipswitch.

General and Administrative

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
General and administrative
$
53,360

 
$
49,050

 
9
%
As a percentage of total revenue
13
%
 
13
%
 
 

General and administrative expenses include the costs of our finance, human resources, legal, information systems and administrative departments. General and administrative expenses increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to increased stock-based compensation expense.


25

Table of Contents

Amortization of Acquired Intangibles

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Amortization of acquired intangibles
$
22,255

 
$
13,241

 
68
%
As a percentage of total revenue
5
%
 
3
%
 
 

Amortization of acquired intangibles included in operating expenses primarily represents the amortization of value assigned to intangible assets obtained in business combinations other than assets identified as purchased technology. Amortization of acquired intangibles increased in fiscal year 2019 as compared to fiscal year 2018 due to the addition of intangible assets obtained in connection with the acquisition of Ipswitch.

Impairment of Intangible and Long-Lived Assets

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Impairment of intangible and long-lived assets
$
24,096

 
$

 
*
As a percentage of total revenue
6
%
 
%
 
 
*Not meaningful

In the fourth quarter of fiscal year 2019 we determined that the intangible assets associated with the technology obtained in connection with the acquisitions of DataRPM and Kinvey were fully impaired, resulting from our decision to reduce our current and ongoing investment levels within our cognitive application product lines. As a result, we incurred an impairment charge of $22.7 million in the fourth quarter of fiscal year 2019. See Note 6 to our Consolidated Financial Statements in Item 8 of this Form 10-K for additional details. In addition, during the fourth quarter of fiscal year 2019, we incurred an additional asset impairment charge of $1.4 million related to the abandonment of certain long-lived assets associated with a sale of corporate land and buildings. See Note 5 to our Consolidated Financial Statements in Item 8 of this Form 10-K for additional details.

Restructuring Expenses

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Restructuring expenses
$
6,331

 
$
2,251

 
181
%
As a percentage of total revenue
2
%
 
1
%
 
 

Restructuring expenses recorded in fiscal year 2019 relate to the restructuring activities that occurred in fiscal years 2019 and 2017. See Note 13 to our Consolidated Financial Statements in Item 8 of this Form 10-K for additional details, including types of expenses incurred and the timing of future expenses and cash payments. See also the Liquidity and Capital Resources section of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Acquisition-Related Expenses

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Acquisition-related expenses
$
1,658

 
$
258

 
*
As a percentage of total revenue
%
 
%
 
 
*Not meaningful

26

Table of Contents


Acquisition-related costs are expensed as incurred and include those costs incurred as a result of a business combination. These costs consist of professional services fees, including third-party legal and valuation-related fees, as well as retention fees, and earn-out payments treated as compensation expense. Acquisition-related expenses in fiscal year 2019 were related to the acquisition of Ipswitch. Acquisition-related expenses in fiscal year 2018 were minimal.

Loss on Assets Held for Sale

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Loss on assets held for sale
$

 
$
5,147

 
*
As a percentage of total revenue
%
 
1
%
 
 
*Not meaningful

In the fourth quarter of fiscal year 2018, we reclassified certain corporate land and building assets previously reported as property and equipment to assets held for sale on our consolidated balance sheets as we were actively marketing them and expected to sell them within one year. As a result, we recognized an impairment charge of $5.1 million, which represented the difference between the fair value less cost to sell and the carrying value of the assets. The impairment charge was recorded to loss on assets held for sale within operating expenses on our fiscal year 2018 consolidated statement of operations. See Note 5 to our Consolidated Financial Statements in Item 8 of this Form 10-K for additional details.

Fees Related to Shareholder Activist

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Fees related to shareholder activist
$

 
$
1,472

 
(100
)%
As a percentage of total revenue
%
 
%
 
 

In September 2017, Praesidium Investment Management, then one of our largest stockholders, publicly announced its disagreement with our strategy in a Schedule 13D filed with the SEC and stated that it was seeking changes in the composition of our Board of Directors. In fiscal year 2018, we incurred professional and other fees relating to Praesidium’s actions.

Income from Operations

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Income from operations
$
40,084

 
$
67,814

 
(41
)%
As a percentage of total revenue
10
%
 
18
%
 
 

Income from operations decreased in fiscal year 2019 as compared to fiscal year 2018. As described above, the decrease was primarily driven by the impairment of intangible and long-lived assets in the fourth quarter of fiscal year 2019, as well as increases in operating expenses, amortization of acquired intangible assets, restructuring expenses and acquisition expenses recorded in fiscal year 2019 as a result of the acquisition of Ipswitch. This decrease was partially offset by increased revenue in fiscal year 2019 and the loss on assets held for sale recorded in fiscal year 2018, as described above.


27

Table of Contents

Income from Operations by Segment

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage Change
OpenEdge segment
$
211,720

 
$
209,986

 
1
 %
Data Connectivity and Integration segment
31,930

 
15,495

 
106
 %
Application Development and Deployment segment
52,473

 
50,959

 
3
 %
Other unallocated expenses
(256,039
)
 
(208,626
)
 
(23
)%
Total income from operations
$
40,084

 
$
67,814

 
(41
)%

Note that 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, loss on assets held for sale, stock-based compensation, fees related to shareholder activist, restructuring, and acquisition-related expenses.

Other (Expense) Income

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Interest expense
$
(9,913
)
 
$
(5,149
)
 
93
 %
Interest income and other, net
1,143

 
1,220

 
(6
)%
Foreign currency loss, net
(2,819
)
 
(3,089
)
 
(9
)%
Total other expense, net
$
(11,589
)
 
$
(7,018
)
 
(65
)%
As a percentage of total revenue
(3
)%
 
(2
)%
 
 

Other expense, net, increased in fiscal year 2019 as compared to fiscal year 2018 primarily due to an increase in interest expense. The change in interest expense is a result of an increase in the principal balance of our debt, which was used to fund the Ipswitch acquisition.

Provision for Income Taxes

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Provision for income taxes
$
2,095

 
$
11,126

 
(81
)%
As a percentage of total revenue
<1%

 
3
%
 
 

Our effective income tax rate was 7% in fiscal year 2019 and 18% in fiscal year 2018. The primary reason for the decrease in the effective rate was due to the loss incurred by our US operations in fiscal year 2019 resulting from the amortization and impairment of intangibles. In addition, the majority of our international profits were earned in a jurisdiction with a statutory tax rate of 10%.

Net Income

 
Fiscal Year Ended
(In thousands)
November 30, 2019
 
November 30, 2018
 
Percentage
Change
Net income
$
26,400

 
$
49,670

 
(47
)%
As a percentage of total revenue
6
%

13
%
 
 



28

Table of Contents

Fiscal 2018 Compared to Fiscal 2017

Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2018
 
November 30, 2017
 
As Reported
 
Constant
Currency
Revenue
$
378,981

 
$
389,154

 
(3
)%
 
(3
)%

Total revenue decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to a decline in license and professional services revenue, partially offset by an increase in maintenance revenue and a favorable impact from foreign currency exchange rates as further described below. Changes in prices from fiscal year 2017 to 2018 did not have a significant impact on our revenue.

License Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2018
 
November 30, 2017
 
As Reported
 
Constant
Currency
License
$
99,800

 
$
113,643

 
(12
)%
 
(13
)%
As a percentage of total revenue
26
%
 
29
%
 
 
 
 

Software license revenue decreased in fiscal year 2018 as compared to fiscal year 2017 due to a decrease in software license revenue in our Data Connectivity and Integration and OpenEdge segments.


Maintenance and Services Revenue

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2018
 
November 30, 2017
 
As Reported
 
Constant
Currency
Maintenance
$
249,171

 
$
243,508

 
2
 %
 
1
 %
As a percentage of total revenue
66
%
 
63
%
 
 
 
 
Professional services
$
30,010

 
$
32,003

 
(6
)%
 
(7
)%
As a percentage of total revenue
8
%
 
8
%
 
 
 
 
Total maintenance and services revenue
$
279,181

 
$
275,511

 
1
 %
 
 %
As a percentage of total revenue
74
%
 
71
%
 
 
 
 

Maintenance revenue increased in fiscal year 2018 as compared to fiscal year 2017 due to an increase in maintenance revenue in our OpenEdge and Application Development and Deployment segments and a favorable impact from currency exchange rates, partially offset by a decline in our Data Connectivity and Integration segment. Professional services revenue decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to lower professional services revenue from our OpenEdge and Application Development and Deployment segments.


29

Table of Contents

Revenue by Region

 
Fiscal Year Ended
 
Percentage Change
(In thousands)
November 30, 2018
 
November 30, 2017
 
As Reported
 
Constant
Currency
North America
$
204,257

 
$
235,815

 
(13
)%
 
(13
)%
As a percentage of total revenue
54
%
 
61
%
 
 
 
 
EMEA
$
135,055

 
$
117,509

 
15
 %
 
11
 %
As a percentage of total revenue
35
%
 
30
%
 
 
 
 
Latin America
$
18,046

 
$
16,002

 
13
 %
 
22
 %
As a percentage of total revenue
5
%
 
4
%
 
 
 
 
Asia Pacific
$
21,623

 
$
19,828

 
9
 %
 
10
 %
As a percentage of total revenue
6
%
 
5
%
 
 
 
 

Total revenue generated in North America decreased $31.6 million, and total revenue generated outside North America increased $21.4 million, in fiscal year 2018 as compared to fiscal year 2017. The decrease in North America was primarily due to a decrease in license revenue in our Data Connectivity and Integration and OpenEdge segments as well as a decrease in maintenance revenue in our OpenEdge and Application Development and Deployment segments. The increase in revenue generated in EMEA in fiscal year 2018 as compared to fiscal year 2017 was primarily due to an increase in maintenance revenue in our OpenEdge and Application Development and Deployment segments, as well as a favorable impact from currency exchange rates. Revenue generated in Latin America and Asia Pacific increased in fiscal year 2018 as compared to fiscal year 2017 due to an increase in maintenance revenue.

Total revenue generated in markets outside North America represented 46% of total revenue in fiscal year 2018 compared to 39% of total revenue in the same period last year. If exchange rates had remained constant in fiscal year 2018 as compared to the exchange rates in effect in fiscal year 2017, total revenue generated in markets outside North America would have been 46% of total revenue.

Revenue by Segment

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage Change
OpenEdge segment
$
277,806

 
$
279,823

 
(1
)%
Data Connectivity and Integration segment
23,129

 
29,434

 
(21
)%
Application Development and Deployment segment
78,046

 
79,897

 
(2
)%
Total revenue
$
378,981

 
$
389,154

 
(3
)%

Revenue in the OpenEdge segment decreased in fiscal year 2018 as compared to fiscal year 2017, largely due to the decrease in license and professional services revenue. Data Connectivity and Integration segment revenue decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to the timing of certain renewals by OEMs. Application Development and Deployment segment revenue decreased in fiscal year 2018 as compared to fiscal year 2017, primarily due to lower license and professional services revenue, partially offset by an increase in maintenance revenue.

Cost of Software Licenses

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage
Change
Cost of software licenses
$
4,769

 
$
5,752

 
(17
)%
As a percentage of software license revenue
5
%
 
5
%
 
 
As a percentage of total revenue
1
%
 
1
%
 
 


30

Table of Contents

Cost of software licenses consists primarily of costs of royalties, electronic software distribution, duplication, and packaging. Cost of software licenses as a percentage of software license revenue varies from period to period depending upon the relative product mix. The decrease in cost of software licenses in fiscal year 2018 was a result of lower payments of royalties to third parties as compared to fiscal year 2017.

Cost of Maintenance and Services

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage
Change
Cost of maintenance and services
$
39,470

 
$
43,299

 
(9
)%
As a percentage of maintenance and services revenue
14
%
 
16
%
 
 
As a percentage of total revenue
10
%
 
11
%
 
 

Cost of maintenance and services consists primarily of costs of providing customer support, consulting, and education. Cost of maintenance and services decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to lower compensation-related costs resulting from a decrease in headcount, partially offset by higher third-party professional services expense.

Amortization of Acquired Intangibles

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage
Change
Amortization of acquired intangibles
$
22,734

 
$
20,108

 
13
%
As a percentage of total revenue
6
%
 
5
%
 
 

Amortization of acquired intangibles included in costs of revenue primarily represents the amortization of the value assigned to technology-related intangible assets obtained in business combinations. Amortization of acquired intangibles increased in fiscal year 2018 as compared to fiscal year 2017. The increase was primarily due to the addition of intangible assets associated with the technologies obtained in connection with the acquisitions of DataRPM in the second quarter of fiscal year 2017 and Kinvey in the third quarter of fiscal year 2017, partially offset by the completion of amortization of certain intangible assets acquired in prior years.

Gross Profit

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage
Change
Gross profit
$
312,008

 
$
319,995

 
(2
)%
As a percentage of total revenue
82
%
 
82
%
 
 

Our gross profit decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to the decrease in license and professional services revenue as well as the increase of amortization of acquired intangibles, offset slightly by the decrease in cost of maintenance and services and cost of software licenses as described above.

Sales and Marketing

 
Fiscal Year Ended
(In thousands)
November 30, 2018
 
November 30, 2017
 
Percentage
Change
Sales and marketing
$
93,036

 
$
101,051

 
(8
)%
As a percentage of total revenue
25
%
 
26
%
 
 


31

Table of Contents

Sales and marketing expenses decreased in fiscal year 2018 as compared to fiscal year 2017 primarily due to lower compensation-related and professional service expenses as a result of the headcount reduction actions which occurred in the first quarter of fiscal year 2017. The decrease was partially offset by higher marketing programs costs related to the go-to-market efforts for Kinvey and DataRPM.

Product Development

 
Fiscal Year Ended
(In thousands)