PRGS
$46.27
Progress Software
$.48
1.05%
Earnings Details
2nd Quarter May 2021
Thursday, June 24, 2021 4:15:00 PM
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Summary

Progress Software Beats

Progress Software (PRGS) reported 2nd Quarter May 2021 earnings of $0.80 per share on revenue of $122.5 million. The consensus earnings estimate was $0.72 per share on revenue of $121.9 million. The Earnings Whisper number was $0.75 per share. Revenue grew 22.0% on a year-over-year basis.

The company said it expects third quarter non-GAAP earnings of $0.81 to $0.83 per share on revenue of $129.0 million to $132.0 million. The current consensus earnings estimate is $0.85 per share on revenue of $132.30 million for the quarter ending August 31, 2021. The company also said it now expects fiscal 2021 non-GAAP earnings of $3.46 to $3.50 per share on revenue of $529.0 million to $535.0 million. The company's previous guidance was earnings of $3.38 to $3.42 per share on revenue of $519.0 million to $527.0 million and the current consensus earnings estimate is $3.39 per share on revenue of $524.88 million for the year ending November 30, 2021.

Progress Software Corporation is a software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source.

Results
Reported Earnings
$0.80
Earnings Whisper
$0.75
Consensus Estimate
$0.72
Reported Revenue
$122.5 Mil
Revenue Estimate
$121.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Progress Announces Second Quarter 2021 Financial Results

Q2 Revenue and Earnings Per Share Exceed Guidance 
Full Year Guidance Raised

BEDFORD, Mass., June 24, 2021 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the leading provider of products to develop, deploy and manage high-impact business applications, today announced financial results for its fiscal second quarter ended May 31, 2021.

Second Quarter 2021 Highlights:

  • Revenue of $122.5 million increased 22% year-over-year on an actual currency basis, and 19% on a constant currency basis.
  • Non-GAAP revenue of $129.2 million increased 26% on an actual currency basis, and 23% on a constant currency basis.
  • Annualized Recurring Revenue (ARR) of $437 million increased 23% year-over-year on a constant currency basis.
  • Operating margin was 18% and Non-GAAP operating margin was 38%.
  • Diluted earnings per share was $0.30 compared to $0.37 in the same quarter last year, a decrease of 19%. 
  • Non-GAAP diluted earnings per share was $0.82 compared to $0.63 in the same quarter last year, an increase of 30%.

“We delivered a strong second quarter, which came in well ahead of our top- and bottom-line guidance ranges, demonstrating the success of our total growth strategy,” said Yogesh Gupta, CEO at Progress. “Our outperformance was driven by a combination of strength in our core business coupled with our acquired DevOps products from Chef, which is achieving nearly all of the integration synergies we expected ahead of schedule. The combination of another quarter of outperformance in our core businesses along with Chef proceeding ahead of plan makes us increasingly confident in our expectations for a strong year.”

Additional financial highlights included(1):

 Three Months Ended
 GAAP Non-GAAP
(In thousands, except percentages and per share amounts)May 31, 2021 May 31, 2020 %
Change
 May 31, 2021 May 31, 2020 %
Change
Revenue$122,488   $100,383  22 % $129,198   $102,505  26%
Income from operations$22,282   $25,309  (12)% $49,712   $39,590  26%
Operating margin18 % 25% (700) bps   38 % 39% (100) bps 
Net income$13,557   $16,968  (20)% $36,513   $28,656  27%
Diluted earnings per share$0.30   $0.37  (19)% $0.82   $0.63  30%
Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP)$54,690   $37,957  44 % $55,411   $38,399  44%

(1) See Legal Notice Regarding Non-GAAP Financial Information

Other fiscal second quarter 2021 metrics and recent results included:

  • Cash, cash equivalents and short-term investments were $362.7 million at the end of the quarter.
  • DSO was 44 days compared to 47 days in the fiscal second quarter of 2020 and 53 days in the fiscal first quarter of 2021.
  • Pursuant to the $250 million share authorization by the Board of Directors, Progress repurchased 0.4 million shares for $20.0 million during the second fiscal quarter of 2021. As of May 31, 2021, there was $155.0 million remaining under this authorization.
  • During the second quarter, the company completed an offering of convertible senior unsecured notes in the aggregate amount of $360,000,000, including the over allotment. To mitigate potential dilution to existing shareholders, the company privately negotiated capped call transactions that effectively doubled the conversion premium, for an effective conversion price of $89.88 per share.
  • On June 22, 2021, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on September 15, 2021 to shareholders of record as of the close of business on September 1, 2021.
  • During the second quarter, Progress began operating as one distinct segment to align with the way that management internally analyzes the business. Progress previously reported results based on three segments.

Anthony Folger, CFO, said: “We’re very pleased with the performance of our core business and our continued success integrating Chef. Our second quarter results reflect strength across all product lines and we're very pleased with the growth in ARR and the improvement in our net retention rates, both of which were introduced as key metrics last quarter. At the same time, we are achieving acquisition synergies sooner than anticipated, which contributed to our strong profitability and cash flows. These results reinforce our optimism and increase our confidence, providing us with comfort to raise our FY21 guidance again this quarter.”

2021 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2021 and the fiscal third quarter ending August 31, 2021:

 Updated FY 2021 Guidance
(June 24, 2021)
 Prior FY 2021 Guidance
(March 25, 2021)
(In millions, except percentages and per share amounts)GAAP Non-GAAP GAAP Non-GAAP
Revenue$503 - $509 $529 - $535 $493 - $501 $519 - $527
Diluted earnings per share$1.51 - $1.55 $3.46 - $3.50 $1.56 - $1.60 $3.38 - $3.42
Operating margin21% 39% 20% 38%
Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)
$160 - $164 $158 - $162 $157 - $162 $155 - $160
Effective tax rate20% - 21% 20% - 21% 21 % 20 %


 Q3 2021 Guidance
(In millions, except per share amounts)GAAP Non-GAAP
Revenue$124 - $127 $129 - $132
Diluted earnings per share$0.34 - $0.36 $0.81 - $0.83

Based on current exchange rates, the expected positive currency translation impact on Progress' fiscal year 2021 business outlook compared to 2020 exchange rates is approximately $8.4 million on GAAP and non-GAAP revenue, and approximately $0.05 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress' fiscal Q3 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $2.2 million. The expected positive impact on GAAP and non-GAAP diluted Q3 2021 earnings per share is $0.02. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal second quarter of 2021 at 5:00 p.m. ET on Thursday, June 24, 2021. The call can be accessed on the investor relations section of the company’s website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 800-458-4121 or +1 773-377-9334, passcode 3588537. The conference call will include comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP"). Progress believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results.  A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below and is available on the Progress website at www.progress.com within the investor relations section. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is also available on the Progress website within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “should,” “expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, and may make acquisitions in the future, and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (9) Delay or failure to realize the expected synergies and benefits of the Chef acquisition could negatively impact our future results of operations and financial condition. (10) The continuing impact of the coronavirus disease (COVID-19) outbreak on our employees, customers, partners, and the global financial markets could adversely affect our business, results of operations and financial condition. For further information regarding risks and uncertainties associated with Progress' business, please refer to Progress' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2020. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (NASDAQ: PRGS) provides the best products to develop, deploy and manage high-impact business applications. Our comprehensive product stack is designed to make technology teams more productive and we have a deep commitment to the developer community, both open source and commercial alike. With Progress, organizations can accelerate the creation and delivery of strategic business applications, automate the process by which apps are configured, deployed and scaled, and make critical data and content more accessible and secure—leading to competitive differentiation and business success. Over 1,700 independent software vendors, 100,000 enterprise customers, and three million developers rely on Progress to power their applications. Learn about Progress at www.progress.com or +1-800-477-6473.

Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners.

Investor Contact:Press Contact:
Michael MiccicheErica McShane
Progress SoftwareProgress Software
+1 781 850 8450+1 781 280 4000
Investor-Relations@progress.comPR@progress.com

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 Three Months Ended Six Months Ended
(In thousands, except per share data)May 31,
2021
 May 31,
2020
 %
Change
 May 31,
2021
 May 31,
2020
 %
Change
Revenue:           
Software licenses$30,107   $19,663   53  % $63,424   $50,292   26  %
Maintenance and services92,381   80,720   14  % 180,344   159,774   13  %
Total revenue122,488   100,383   22  % 243,768   210,066   16  %
Costs of revenue:           
Cost of software licenses1,038   810   28  % 2,189   2,199   —  %
Cost of maintenance and services14,673   11,785   25  % 27,992   23,636   18  %
Amortization of acquired intangibles3,599   1,664   116  % 7,120   3,310   115  %
Total costs of revenue19,310   14,259   35  % 37,301   29,145   28  %
Gross profit103,178   86,124   20  % 206,467   180,921   14  %
Operating expenses:           
Sales and marketing29,262   21,716   35  % 58,731   45,914   28  %
Product development26,415   21,787   21  % 50,963   43,441   17  %
General and administrative16,460   12,440   32  % 29,884   25,188   19  %
Amortization of acquired intangibles7,979   4,177   91  % 14,858   8,308   79  %
Restructuring expenses(64)  695   (109)% 1,093   1,735   (37)%
Acquisition-related expenses844      —  % 1,240   314   295  %
Total operating expenses80,896   60,815   33  % 156,769   124,900   26  %
Income from operations22,282   25,309   (12)% 49,698   56,021   (11)%
Other expense, net(5,218)  (2,847)  (83)% (7,870)  (6,244)  (26)%
Income before income taxes17,064   22,462   (24)% 41,828   49,777   (16)%
Provision for income taxes3,507   5,494   (36)% 9,310   11,693   (20)%
Net income$13,557   $16,968   (20)% $32,518   $38,084   (15)%
            
Earnings per share:           
Basic$0.31   $0.38   (18)% $0.74   $0.85   (13)%
Diluted$0.30   $0.37   (19)% $0.73   $0.84   (13)%
Weighted average shares outstanding:           
Basic43,818   44,889   (2)% 43,963   44,893   (2)%
Diluted44,472   45,267   (2)% 44,562   45,391   (2)%
            
Cash dividends declared per common share$0.175   $0.165    % $0.350   $0.330    %


Stock-based compensation is included in the condensed consolidated statements of operations, as follows:      
Cost of revenue$468  $338  38 % $860  $657  31 %
Sales and marketing1,752  1,110  58 % 3,255  2,160  51 %
Product development2,412  1,899  27 % 4,331  3,825  13 %
General and administrative3,730  2,276  64 % 6,700  5,032  33 %
Total$8,362  $5,623  49 % $15,146  $11,674  30 %

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)May 31, 2021 November 30, 2020
Assets   
Current assets:   
Cash, cash equivalents and short-term investments$362,660  $105,995 
Accounts receivable, net64,045  84,040 
Unbilled receivables and contract assets23,157  24,917 
Other current assets21,106  23,983 
Total current assets470,968  238,935 
Property and equipment, net29,333  29,817 
Goodwill and intangible assets, net682,499  704,473 
Right-of-use lease assets30,833  30,635 
Long-term unbilled receivables and contract assets10,742  17,133 
Other assets15,619  20,789 
Total assets$1,239,994  $1,041,782 
Liabilities and shareholders’ equity   
Current liabilities:   
Accounts payable and other current liabilities$61,239  $70,899 
Current portion of long-term debt, net22,005  18,242 
Short-term operating lease liabilities7,361  7,015 
Short-term deferred revenue175,472  166,387 
Total current liabilities266,077  262,543 
Long-term debt, net254,757  364,260 
Convertible senior notes, net288,023   
Long-term operating lease liabilities26,541  26,966 
Long-term deferred revenue27,158  26,908 
Other long-term liabilities11,717  15,092 
Shareholders’ equity:   
Common stock and additional paid-in capital334,064  306,244 
Retained earnings31,657  39,769 
Total shareholders’ equity365,721  346,013 
Total liabilities and shareholders’ equity$1,239,994  $1,041,782 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)  

 Three Months Ended Six Months Ended
(In thousands)May 31,
2021
 May 31,
2020
 May 31,
2021
 May 31,
2020
Cash flows from operating activities:       
Net income$13,557   $16,968   $32,518   $38,084  
Depreciation and amortization14,829   7,572   26,691   15,241  
Stock-based compensation8,362   5,623   15,146   11,674  
Other non-cash adjustments708   2,309   3,123   7,656  
Changes in operating assets and liabilities17,234   5,485   21,900   (1,682) 
Net cash flows from operating activities54,690   37,957   99,378   70,973  
Capital expenditures(950)  (609)  (2,116)  (1,757) 
Issuances of common stock, net of repurchases(17,185)  3,063   (28,700)  (12,692) 
Dividend payments to shareholders(7,763)  (7,438)  (15,617)  (14,906) 
Payments of principal on long-term debt(87,262)  (1,880)  (106,025)  (3,762) 
Proceeds from issuance of Notes, net of issuance costs349,196      349,196     
Purchase of capped calls(43,056)     (43,056)    
Other619   (4,503)  3,605   (7,896) 
Net change in cash, cash equivalents and short-term investments248,289   26,590   256,665   29,960  
Cash, cash equivalents and short-term investments, beginning of period114,371   177,055   105,995   173,685  
Cash, cash equivalents and short-term investments, end of period$362,660   $203,645   $362,660   $203,645  

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - SECOND QUARTER
(Unaudited)

 Three Months Ended % Change
(In thousands, except per share data)May 31, 2021 May 31, 2020 Non-GAAP
Adjusted revenue:         
GAAP revenue$122,488     $100,383      
Acquisition-related revenue(1)6,710     2,122      
Non-GAAP revenue$129,198   100 % $102,505   100 % 26 %
          
Adjusted income from operations:         
GAAP income from operations$22,282   18 % $25,309   25 %  
Amortization of acquired intangibles11,578   9 % 5,841   6 %  
Restructuring expenses and other(64)   % 695   1 %  
Stock-based compensation8,362   5 % 5,623   5 %  
Acquisition-related revenue(1) and expenses7,554   6 % 2,122   2 %  
Non-GAAP income from operations$49,712   38 % $39,590   39 % 26 %
          
Adjusted net income:         
GAAP net income$13,557   11 % $16,968   17 %  
Amortization of acquired intangibles11,578   9 % 5,841   6 %  
Restructuring expenses and other(64)   % 695   1 %  
Stock-based compensation8,362   6 % 5,623   5 %  
Acquisition-related revenue(1) and expenses7,554   6 % 2,122   2 %  
Amortization of discount on notes1,480   1 %     %  
Provision for income taxes(5,954)  (5)% (2,593)  (3)%  
Non-GAAP net income$36,513   28 % $28,656   28 % 27 %
          
Adjusted diluted earnings per share:         
GAAP diluted earnings per share$0.30     $0.37      
Amortization of acquired intangibles0.26     0.13      
Restructuring expenses and other     0.02      
Stock-based compensation0.19     0.12      
Acquisition-related revenue(1) and expenses0.17     0.05      
Amortization of discount on notes0.03           
Provision for income taxes(0.13)    (0.06)     
Non-GAAP diluted earnings per share$0.82     $0.63     30 %
          
Non-GAAP weighted avg shares outstanding - diluted44,472     45,267     (2)%
          
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - YEAR TO DATE
(Unaudited)

 Six Months Ended % Change
(In thousands, except per share data)May 31, 2021 May 31, 2020 Non-GAAP
Adjusted revenue:         
GAAP revenue$243,768     $210,066      
Acquisition-related revenue(1)17,214     6,201      
Non-GAAP revenue$260,982   100 % $216,267   100 % 21 %
          
Adjusted income from operations:         
GAAP income from operations$49,698   20 % $56,021   27 %  
Amortization of acquired intangibles21,978   8 % 11,618   5 %  
Restructuring expenses and other1,093    % 1,735    %  
Stock-based compensation15,146   6 % 11,674   5 %  
Acquisition-related revenue(1) and expenses18,454   7 % 6,515   3 %  
Non-GAAP income from operations$106,369   41 % $87,563   40 % 21 %
          
Adjusted net income:         
GAAP net income$32,518   13 % $38,084   18 %  
Amortization of acquired intangibles21,978   8 % 11,618   6 %  
Restructuring expenses and other1,093    % 1,735   1 %  
Stock-based compensation15,146   6 % 11,674   5 %  
Acquisition-related revenue(1) and expenses18,454   7 % 6,515   2 %  
Amortization of discount on notes1,480    %     %  
Provision for income taxes(11,652)  (4)% (6,267)  (3)%  
Non-GAAP net income$79,017   30 % $63,359   29 % 25 %
          
Adjusted diluted earnings per share:         
GAAP diluted earnings per share$0.73     $0.84      
Amortization of acquired intangibles0.49     0.26      
Restructuring expenses and other0.02     0.04      
Stock-based compensation0.35     0.26      
Acquisition-related revenue(1) and expenses0.41     0.14      
Amortization of discount on notes0.03           
Provision for income taxes(0.26)    (0.14)     
Non-GAAP diluted earnings per share$1.77     $1.40     26 %
          
Non-GAAP weighted avg shares outstanding - diluted44,562     45,391     (2)%
          
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

OTHER NON-GAAP FINANCIAL MEASURES
(Unaudited)

Quarter to Date Adjusted Free Cash Flow     
      
(In thousands)Q2 2021 Q2 2020 % Change
Cash flows from operations$54,690   $37,957   44 %
Purchases of property and equipment(950)  (609)  56 %
Free cash flow53,740   37,348   44 %
Add back: restructuring payments1,671   1,051   59 %
Adjusted free cash flow$55,411   $38,399   44 %


Year to Date Adjusted Free Cash Flow     
      
(In thousands)Q2 2021 Q2 2020 % Change
Cash flows from operations$99,378   $70,973   40 %
Purchases of property and equipment(2,116)  (1,757)  20 %
Free cash flow97,262   69,216   41 %
Add back: restructuring payments4,664   2,480   88 %
Adjusted free cash flow$101,926   $71,696   42 %

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)

Fiscal Year 2021 Updated Revenue Guidance
 Fiscal Year Ended Fiscal Year Ending
 November 30, 2020 November 30, 2021
(In millions)  Low % Change High % Change
GAAP revenue$442.1  $503.0  14% $509.0  15%
Acquisition-related adjustments - revenue(1)14.1  26.0  84% 26.0  84%
Non-GAAP revenue$456.2  $529.0  16% $535.0  17%
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Ipswitch and Chef.


Fiscal Year 2021 Updated Non-GAAP Operating Margin Guidance
 Fiscal Year Ending November 30, 2021
(In millions)Low High
GAAP income from operations$106.2  $108.4 
GAAP operating margins21 % 21 %
Acquisition-related revenue26.0  26.0 
Acquisition-related expense1.3  1.3 
Restructuring expense1.2  1.2 
Stock-based compensation28.8  28.8 
Amortization of acquired intangibles44.9  44.9 
Total adjustments(2)102.2  102.2 
Non-GAAP income from operations$208.4  $210.6 
Non-GAAP operating margin39 % 39 %
(2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Chef and restructuring expenses. The final amounts will not be available until the Company’s internal procedures and reviews are completed.


Fiscal Year 2021 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance
 Fiscal Year Ending November 30, 2021
(In millions, except per share data)Low High
GAAP net income$67.3   $69.1  
Adjustments (from previous table)102.2   102.2  
Amortization of discount on notes7.2   7.2  
Income tax adjustment(3)(22.4)  (22.4) 
Non-GAAP net income$154.3   $156.1  
    
GAAP diluted earnings per share$1.51   $1.55  
Non-GAAP diluted earnings per share$3.46   $3.50  
    
Diluted weighted average shares outstanding44.6   44.6  
    
(3)Tax adjustment is based on a non-GAAP effective tax rate of approximately 21% for Low and 20% for High, calculated as follows:
Non-GAAP income from operations$208.4   $210.6  
Other (expense) income(14.3)  (14.3) 
Non-GAAP income from continuing operations before income taxes194.1   196.3  
Non-GAAP net income154.3   156.1  
Tax provision$39.8   $40.2  
Non-GAAP tax rate21 % 20 %

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE
(Unaudited)

Fiscal Year 2021 Adjusted Free Cash Flow Guidance
 Fiscal Year Ending November 30, 2021
(In millions)Low High
Cash flows from operations (GAAP)$160   $164  
Purchases of property and equipment(7)  (7) 
Add back: restructuring payments5   5  
Adjusted free cash flow (non-GAAP)$158   $162  

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2021 GUIDANCE
(Unaudited)

Q3 2021 Revenue Guidance
 Three Months Ended Three Months Ending
 August 31, 2020 August 31, 2021
(In millions)  Low % Change High % Change
GAAP revenue$109.7  $123.8  13% $126.8  16%
Acquisition-related adjustments - revenue(1)1.2  5.2  333% 5.2  333%
Non-GAAP revenue$110.9  $129.0  16% $132.0  19%
(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Ipswitch and Chef.


Q3 2021 Non-GAAP Earnings per Share Guidance
 Three Months Ending August 31, 2021
 Low High
GAAP diluted earnings per share$0.34   $0.36  
Acquisition-related revenue0.12   0.12  
Stock-based compensation0.15   0.15  
Amortization of acquired intangibles0.26   0.26  
Total adjustments(2)0.53   0.53  
Amortization of discount on notes0.06   0.06  
Income tax adjustment(0.12)  (0.12) 
Non-GAAP diluted earnings per share$0.81   $0.83  
(2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Chef. The final amounts will not be available until the Company’s internal procedures and reviews are completed.

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Source: Progress Software Corporation