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Progress Announces Second Quarter 2022 Financial Results
来源: Nasdaq GlobeNewswire / 28 6月 2022 16:15:01 America/New_York
Revenue and EPS Exceed Prior Guidance
BURLINGTON, Mass., June 28, 2022 (GLOBE NEWSWIRE) -- Progress (Nasdaq: PRGS), the trusted provider of infrastructure software, today announced financial results for its fiscal second quarter ended May 31, 2022.
Second Quarter 2022 Highlights:
- Revenue of $148.7 million increased 21% year-over-year on an actual currency basis, and 24% on a constant currency basis.
- Non-GAAP revenue of $150.9 million increased 17% on an actual currency basis, and 19% on a constant currency basis.
- Annualized Recurring Revenue (ARR) of $486 million increased 13% year-over-year on a constant currency basis.
- Operating margin was 27% and Non-GAAP operating margin was 41%.
- Diluted earnings per share was $0.66 compared to $0.30 in the same quarter last year, an increase of 120%.
- Non-GAAP diluted earnings per share was $1.04 compared to $0.82 in the same quarter last year, an increase of 27%.
“Once again, we are very pleased to report excellent quarterly results, especially during so much market turmoil and global uncertainty,” said Yogesh Gupta, CEO at Progress. “Progress again performed exceptionally well across the board, exceeding revenue and EPS guidance, which was driven by a Total Growth Strategy that layers accretive M&A over a highly profitable and predictable business with strong recurring revenue and very high retention rates. Despite a tumultuous market and an economy with increasing risks, Progress remains well positioned to continue our steady execution for the remainder of 2022 and beyond.”
Additional financial highlights included(1):
Three Months Ended GAAP Non-GAAP (In thousands, except percentages and per share amounts) May 31, 2022 May 31, 2021 % Change May 31, 2022 May 31, 2021 % Change Revenue $ 148,747 $ 122,488 21 % $ 150,879 $ 129,198 17 % Income from operations $ 40,235 $ 22,282 81 % $ 61,298 $ 49,712 23 % Operating margin 27 % 18 % 900bps 41 % 38 % 300bps Net income $ 29,110 $ 13,557 115 % $ 45,886 $ 36,513 26 % Diluted earnings per share $ 0.66 $ 0.30 120 % $ 1.04 $ 0.82 27 % Cash from operations (GAAP) /Adjusted free cash flow (Non-GAAP) $ 68,260 $ 54,690 25 % $ 68,038 $ 55,411 23 % (1)See Legal Notice Regarding Non-GAAP Financial Information
Other fiscal second quarter 2022 metrics and recent results included:
- Cash, cash equivalents and short-term investments were $225.9 million at the end of the quarter.
- DSO was 39 days compared to 44 days in the fiscal second quarter of 2021 and 52 days in the fiscal first quarter of 2022.
- On June 21, 2022, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on September 15, 2022 to shareholders of record as of the close of business on September 1, 2022.
Anthony Folger, CFO, said: “Despite the recent challenges in the global economy, our business continues to perform well across virtually all product lines. Our integration of Kemp is on track, our balance sheet continues to strengthen, and the recurring nature of our revenues and our strong retention rates will continue to serve us well in this environment.”
2022 Business Outlook
Progress provides the following guidance for the fiscal year ending November 30, 2022 and the fiscal third quarter ending August 31, 2022:
Updated FY 2022 Guidance
(June 28, 2022)Prior FY 2022 Guidance
(March 29, 2022)(In millions, except percentages and per share amounts) GAAP Non-GAAP GAAP Non-GAAP Revenue $601 - $609 $609 - $617 $601 - $609 $609 - $617 Diluted earnings per share $2.11 - $2.21 $4.05 - $4.11 $2.16 - $2.23 $4.01 - $4.09 Operating margin 22% - 23% 39% - 40% 23 % 39% - 40% Cash from operations (GAAP) /
Adjusted free cash flow (Non-GAAP)$188 - $193 $185 - $190 $188 - $193 $185 - $190 Effective tax rate 21 % 20% - 21% 21 % 20% - 21% Q3 2022 Guidance (In millions, except per share amounts) GAAP Non-GAAP Revenue $145 - $148 $147 - $150 Diluted earnings per share $0.46 - $0.48 $0.96 - $0.98 Based on current exchange rates, the expected negative currency translation impact on Progress' fiscal year 2022 business outlook compared to 2021 exchange rates is approximately $11.7 million on GAAP and non-GAAP revenue, and approximately $0.04 on GAAP and non-GAAP diluted earnings per share. The expected negative currency translation impact on Progress' fiscal Q3 2022 business outlook compared to 2021 exchange rates on GAAP and non-GAAP revenue is approximately $3.6 million. The expected negative impact on GAAP and non-GAAP diluted Q3 2022 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 2022 at 5:00 p.m. ET on Tuesday, June 28, 2022. 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 866-374-5140 or +1 404-400-0571, passcode 186-83-835#. 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 Kemp 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, 2021. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
About Progress
Dedicated to propelling business forward in a technology-driven world, Progress (Nasdaq: PRGS) helps businesses drive faster cycles of innovation, fuel momentum and accelerate their path to success. As the trusted provider of the best products to develop, deploy and manage high-impact applications, Progress enables customers to develop the applications and experiences they need, deploy where and how they want and manage it all safely and securely. Hundreds of thousands of enterprises, including 1,700 software companies and 3.5 million developers, depend on Progress to achieve their goals—with confidence. Learn more at www.progress.com.
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 Micciche Erica McShane Progress Software Progress Software +1 781 850 8450 +1 781 280 4000 Investor-Relations@progress.com PR@progress.com CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)Three Months Ended Six Months Ended (In thousands, except per share data) May 31, 2022 May 31, 2021 % Change May 31, 2022 May 31, 2021 % Change Revenue: Software licenses $ 44,814 $ 30,107 49 % $ 87,564 $ 63,424 38 % Maintenance and services 103,933 92,381 13 % 206,105 180,344 14 % Total revenue 148,747 122,488 21 % 293,669 243,768 20 % Costs of revenue: Cost of software licenses 2,583 1,038 149 % 5,192 2,189 137 % Cost of maintenance and services 15,801 14,673 8 % 30,946 27,992 11 % Amortization of acquired intangibles 5,573 3,599 55 % 11,031 7,120 55 % Total costs of revenue 23,957 19,310 24 % 47,169 37,301 26 % Gross profit 124,790 103,178 21 % 246,500 206,467 19 % Operating expenses: Sales and marketing 32,704 29,262 12 % 66,173 58,731 13 % Product development 28,643 26,415 8 % 57,316 50,963 12 % General and administrative 19,207 16,460 17 % 36,198 29,884 21 % Amortization of acquired intangibles 11,892 7,979 49 % 23,614 14,858 59 % Restructuring expenses 143 (64 ) (323 )% 654 1,093 (40 )% Acquisition-related expenses 2,736 844 224 % 3,648 1,240 194 % Gain on sale of assets held for sale (10,770 ) — * (10,770 ) — * Total operating expenses 84,555 80,896 5 % 176,833 156,769 13 % Income from operations 40,235 22,282 81 % 69,667 49,698 40 % Other expense, net (3,390 ) (5,218 ) 35 % (6,870 ) (7,870 ) 13 % Income before income taxes 36,845 17,064 116 % 62,797 41,828 50 % Provision for income taxes 7,735 3,507 121 % 13,233 9,310 42 % Net income $ 29,110 $ 13,557 115 % $ 49,564 $ 32,518 52 % Earnings per share: Basic $ 0.67 $ 0.31 116 % $ 1.13 $ 0.74 53 % Diluted $ 0.66 $ 0.30 120 % $ 1.11 $ 0.73 52 % Weighted average shares outstanding: Basic 43,575 43,818 (1 )% 43,778 43,963 — % Diluted 44,253 44,472 — % 44,480 44,562 — % Cash dividends declared per common share $ 0.175 $ 0.175 — % $ 0.350 $ 0.350 — % Stock-based compensation is included in the condensed consolidated statements of operations, as follows: Cost of revenue $ 472 $ 468 1 % $ 883 $ 860 3 % Sales and marketing 690 1,752 (61 )% 2,092 3,255 (36 )% Product development 2,740 2,412 14 % 4,962 4,331 15 % General and administrative 5,455 3,730 46 % 9,534 6,700 42 % Total $ 9,357 $ 8,362 12 % $ 17,471 $ 15,146 15 % CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(In thousands) May 31, 2022 November 30, 2021 Assets Current assets: Cash, cash equivalents and short-term investments $ 225,913 $ 157,373 Accounts receivable, net 64,733 99,815 Unbilled receivables and contract assets 32,735 25,816 Other current assets 32,488 39,549 Assets held for sale — 15,255 Total current assets 355,869 337,808 Property and equipment, net 13,649 14,345 Goodwill and intangible assets, net 925,426 958,337 Right-of-use lease assets 21,364 25,253 Long-term unbilled receivables and contract assets 24,253 17,464 Other assets 14,021 10,330 Total assets $ 1,354,582 $ 1,363,537 Liabilities and shareholders’ equity Current liabilities: Accounts payable and other current liabilities $ 62,821 $ 84,215 Current portion of long-term debt, net 6,234 25,767 Short-term operating lease liabilities 7,843 7,926 Short-term deferred revenue 207,331 205,021 Total current liabilities 284,229 322,929 Long-term debt, net 262,337 239,992 Convertible senior notes, net 351,567 294,535 Long-term operating lease liabilities 18,965 23,130 Long-term deferred revenue 51,249 47,359 Other long-term liabilities 14,089 23,103 Shareholders’ equity: Common stock and additional paid-in capital 310,348 354,676 Retained earnings 61,798 57,813 Total shareholders’ equity 372,146 412,489 Total liabilities and shareholders’ equity $ 1,354,582 $ 1,363,537 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)Three Months Ended Six Months Ended (In thousands) May 31,
2022May 31,
2021May 31,
2022May 31,
2021Cash flows from operating activities: Net income $ 29,110 $ 13,557 $ 49,564 $ 32,518 Depreciation and amortization 19,379 14,829 38,597 26,691 Gain on sale of assets held for sale (10,770 ) — (10,770 ) — Stock-based compensation 9,357 8,362 17,471 15,146 Other non-cash adjustments 1,673 708 6,115 3,123 Changes in operating assets and liabilities 19,511 17,234 11,376 21,900 Net cash flows from operating activities 68,260 54,690 112,353 99,378 Capital expenditures (1,148 ) (950 ) (1,979 ) (2,116 ) Issuances of common stock, net of repurchases (22,796 ) (17,185 ) (43,702 ) (28,700 ) Dividend payments to shareholders (7,789 ) (7,763 ) (15,573 ) (15,617 ) Proceeds from the issuance of debt, net of payment of issuance costs — — 5,517 — Proceeds from sale of long-lived assets, net — — — — Payments of principal on long-term debt (1,716 ) (87,262 ) (3,435 ) (106,025 ) Proceeds from issuance of Notes, net of issuance costs — 349,196 — 349,196 Purchase of capped calls — (43,056 ) — (43,056 ) Other 17,780 619 15,359 3,605 Net change in cash, cash equivalents and short-term investments 52,591 248,289 68,540 256,665 Cash, cash equivalents and short-term investments, beginning of period 173,322 114,371 157,373 105,995 Cash, cash equivalents and short-term investments, end of period $ 225,913 $ 362,660 $ 225,913 $ 362,660 RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - SECOND QUARTER
(Unaudited)Three Months Ended % Change (In thousands, except per share data) May 31, 2022 May 31, 2021 Non-GAAP Adjusted revenue: GAAP revenue $ 148,747 $ 122,488 Acquisition-related revenue(1) 2,132 6,710 Non-GAAP revenue $ 150,879 100 % $ 129,198 100 % 17 % Adjusted income from operations: GAAP income from operations $ 40,235 27 % $ 22,282 18 % Amortization of acquired intangibles 17,465 12 % 11,578 9 % Restructuring expenses and other 143 — % (64 ) — % Stock-based compensation 9,357 6 % 8,362 5 % Acquisition-related revenue(1) and expenses 4,868 3 % 7,554 6 % Gain on sale of assets held for sale (10,770 ) (7)% — — % Non-GAAP income from operations $ 61,298 41 % $ 49,712 38 % 23 % Adjusted net income: GAAP net income $ 29,110 20 % $ 13,557 11 % Amortization of acquired intangibles 17,465 12 % 11,578 9 % Restructuring expenses and other 143 — % (64 ) — % Stock-based compensation 9,357 5 % 8,362 6 % Acquisition-related revenue(1) and expenses 4,868 3 % 7,554 6 % Gain on sale of assets held for sale (10,770 ) (7)% — — % Amortization of discount on notes — — % 1,480 1 % Provision for income taxes (4,287 ) (3)% (5,954 ) (5)% Non-GAAP net income $ 45,886 30 % $ 36,513 28 % 26 % Adjusted diluted earnings per share: GAAP diluted earnings per share $ 0.66 $ 0.30 Amortization of acquired intangibles 0.39 0.26 Stock-based compensation 0.22 0.19 Acquisition-related revenue(1) and expenses 0.11 0.17 Gain on sale of assets held for sale (0.24 ) — Amortization of discount on notes — 0.03 Provision for income taxes (0.10 ) (0.13 ) Non-GAAP diluted earnings per share $ 1.04 $ 0.82 27 % Non-GAAP weighted avg shares outstanding - diluted 44,253 44,472 — % (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, 2022 May 31, 2021 Non-GAAP Adjusted revenue: GAAP revenue $ 293,669 $ 243,768 Acquisition-related revenue(1) 4,715 17,214 Non-GAAP revenue $ 298,384 100 % $ 260,982 100 % 14 % Adjusted income from operations: GAAP income from operations $ 69,667 24 % $ 49,698 20 % Amortization of acquired intangibles 34,645 12 % 21,978 8 % Restructuring expenses and other 654 — % 1,093 — % Stock-based compensation 17,471 5 % 15,146 6 % Acquisition-related revenue(1) and expenses 8,363 3 % 18,454 7 % Gain of sale of assets held for sale (10,770 ) (4)% — — % Non-GAAP income from operations $ 120,030 40 % $ 106,369 41 % 13 % Adjusted net income: GAAP net income $ 49,564 17 % $ 32,518 13 % Amortization of acquired intangibles 34,645 12 % 21,978 8 % Restructuring expenses and other 654 — % 1,093 — % Stock-based compensation 17,471 6 % 15,146 6 % Acquisition-related revenue(1) and expenses 8,363 3 % 18,454 7 % Gain of sale of assets held for sale (10,770 ) (4)% — — % Amortization of discount on notes — — % 1,480 — % Provision for income taxes (10,481 ) (4)% (11,652 ) (4)% Non-GAAP net income $ 89,446 30 % $ 79,017 30 % 13 % Adjusted diluted earnings per share: GAAP diluted earnings per share $ 1.11 $ 0.73 Amortization of acquired intangibles 0.78 0.49 Restructuring expenses and other 0.01 0.02 Stock-based compensation 0.40 0.35 Acquisition-related revenue(1) and expenses 0.19 0.41 Gain of sale of assets held for sale (0.24 ) — Amortization of discount on notes — 0.03 Provision for income taxes (0.24 ) (0.26 ) Non-GAAP diluted earnings per share $ 2.01 $ 1.77 14 % Non-GAAP weighted avg shares outstanding - diluted 44,480 44,562 — % (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 2022 Q2 2021 % Change Cash flows from operations $ 68,260 $ 54,690 25 % Purchases of property and equipment (1,148 ) (950 ) 21 % Free cash flow 67,112 53,740 25 % Add back: restructuring payments 926 1,671 (45)% Adjusted free cash flow $ 68,038 $ 55,411 23 % Year to Date Adjusted Free Cash Flow (In thousands) Q2 2022 Q2 2021 % Change Cash flows from operations $ 112,353 $ 99,378 13 % Purchases of property and equipment (1,979 ) (2,116 ) (6)% Free cash flow 110,374 97,262 13 % Add back: restructuring payments 2,345 4,664 (50)% Adjusted free cash flow $ 112,719 $ 101,926 11 % RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2022 GUIDANCE
(Unaudited)Fiscal Year 2022 Updated Revenue Guidance Fiscal Year Ended Fiscal Year Ending November 30, 2021 November 30, 2022 (In millions) Low % Change High % Change GAAP revenue $ 531.3 $ 600.5 13 % $ 608.5 15 % Acquisition-related adjustments - revenue(1) 26.0 8.5 (67)% 8.5 (67)% Non-GAAP revenue $ 557.3 $ 609.0 9 % $ 617.0 11 % (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 2022 Updated Non-GAAP Operating Margin Guidance Fiscal Year Ending November 30, 2022 (In millions) Low High GAAP income from operations $ 133.5 $ 139.8 GAAP operating margins 22 % 23 % Acquisition-related revenue 8.5 8.5 Acquisition-related expense 4.9 4.9 Restructuring expense 0.9 0.9 Stock-based compensation 34.4 34.4 Amortization of acquired intangibles 69.1 69.1 Gain on sale of assets held for sale (10.8 ) (10.8 ) Total adjustments(2) 107.0 107.0 Non-GAAP income from operations $ 240.5 $ 246.8 Non-GAAP operating margin 39 % 40 % (2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Kemp and restructuring expenses. The final amounts will not be available until the Company’s internal procedures and reviews are completed. Fiscal Year 2022 Updated Non-GAAP Earnings per Share and Effective Tax Rate Guidance Fiscal Year Ending November 30, 2022 (In millions, except per share data) Low High GAAP net income $ 93.7 $ 98.2 Adjustments (from previous table) 107.0 107.0 Income tax adjustment(3) (20.7 ) (22.5 ) Non-GAAP net income $ 180.0 $ 182.7 GAAP diluted earnings per share $ 2.11 $ 2.21 Non-GAAP diluted earnings per share $ 4.05 $ 4.11 Diluted weighted average shares outstanding 44.5 44.5 (3)Tax adjustment is based on a non-GAAP effective tax rate of approximately 20% for Low and 21% for High, calculated as follows: Non-GAAP income from operations $ 240.5 $ 246.8 Other (expense) income (15.5 ) (15.5 ) Non-GAAP income from continuing operations before income taxes 225.0 231.3 Non-GAAP net income 180.0 182.7 Tax provision $ 45.0 $ 48.6 Non-GAAP tax rate 20 % 21 % RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2022 GUIDANCE
(Unaudited)Fiscal Year 2022 Adjusted Free Cash Flow Guidance Fiscal Year Ending November 30, 2022 (In millions) Low High Cash flows from operations (GAAP) $ 188 $ 193 Purchases of property and equipment (6 ) (6 ) Add back: restructuring payments 3 3 Adjusted free cash flow (non-GAAP) $ 185 $ 190 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2022 GUIDANCE
(Unaudited)Q3 2022 Revenue Guidance Three Months Ended Three Months Ending August 31, 2021 August 31, 2022 (In millions) Low % Change High % Change GAAP revenue $ 147.4 $ 145.2 (1)% $ 148.2 1 % Acquisition-related adjustments - revenue(1) 5.2 1.8 (65)% 1.8 (65)% Non-GAAP revenue $ 152.6 $ 147.0 (4)% $ 150.0 (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. Acquisition-related revenue adjustments relate to Ipswitch and Chef. Q3 2022 Non-GAAP Earnings per Share Guidance Three Months Ending August 31, 2022 Low High GAAP diluted earnings per share $ 0.46 $ 0.48 Acquisition-related revenue 0.04 0.04 Acquisition-related expense 0.01 0.01 Stock-based compensation 0.19 0.19 Amortization of acquired intangibles 0.39 0.39 Total adjustments(2) 0.63 0.63 Income tax adjustment (0.13 ) (0.13 ) Non-GAAP diluted earnings per share $ 0.96 $ 0.98 (2)Total adjustments include preliminary estimates relating to the valuation of intangible assets acquired from Kemp. The final amounts will not be available until the Company’s internal procedures and reviews are completed. 
