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Progress Software Corporation (PRGS - Free Report) reported first-quarter 2020 non-GAAP earnings of 76 cents per share that beat the Zacks Consensus Estimate by 7%. The figure increased 52% from the year-ago quarter.
Non-GAAP revenues of $113.8 million also surpassed the consensus mark of $112 million. The figure improved 27% on an actual currency basis and 28% on a constant currency (cc) basis.
Higher-than-anticipated sales of OpenEdge, Ipswitch and Data Connectivity and Integration (DCI) solutions drove top-line growth.
Quarter Details
Segment-wise, OpenEdge reported non-GAAP revenues of $91.6 million. Higher sales of network management and secure data file transfer products from Ipswitch were the primary growth drivers.
In first-quarter 2020, Progress Software announced a six-figure new customer win for its Ipswitch MOVEit product.
Progress Software Corporation Price, Consensus and EPS Surprise
Customers also upgraded to the company’s OpenEdge 12 technology to take advantage of security and performance improvements in the latest version.
DCI segment reported non-GAAP revenues of $13.7 million. The company won a number of deals in the quarter.
Application Development and Deployment (AD&D) segment generated non-GAAP revenues of $18.9 million
Region-wise, North America, EMEA, Latin America and Asia Pacific reported non-GAAP revenues of $68.4 million, $35.7 million, $4.1 million and $5.6 million, respectively.
Type-wise, Software license reported non-GAAP revenues of $30.6 million due to increase in license revenues from Ipswich and renewal of multiple multiyear-term OEM contracts within the DCI segment compared to last year.
Maintenance and service reported non-GAAP revenues of $73.8 million and $9.2 million, respectively.
Operating Details
GAAP sales and marketing expenses, as a percentage of revenues, contracted 290 basis points (bps) from the year-ago quarter to 22.1%.
GAAP product development expenses, as a percentage of revenues, contracted 250 bps from the year-ago quarter to 19.7%.
GAAP general and administration expenses, as a percentage of revenues, contracted 210 bps from the year-ago quarter to 11.6%.
Progress Software reported adjusted operating margin of 42%, which expanded 800 bps from the year-ago quarter.
The company reported total GAAP operating expenses (58.4% of revenues) of $64.1 million which increased 10.3% year over year.
Balance Sheet
As of Feb 29, 2020, cash and cash equivalents (and short-term investments) were $177.1 million, up from $173.7 million as of Nov 30, 2019.
Progress Software generated $33.2 million in cash from operations/adjusted free cash flow compared with $36.2 million reported in the previous quarter.
Progress Software repurchased 0.4 million shares for $20 million during the fiscal first quarter, 2020. As of Feb 29, 2020, $230 million remained under this authorization;
The company declared a quarterly cash dividend of 16 cents per share to be paid out on Jun 15, 2020.
Guidance
For the second quarter of 2020, Progress Software expects non-GAAP revenues between $95 and $101 million. The Zacks Consensus Estimate for revenues is currently pegged at $111.8 billion, indicating growth of 24.8% from the year-ago quarter’s reported figure.
The company expects non-GAAP earnings to be in the range of 60-64 cents per share. The Zacks Consensus Estimate is currently pegged at 71 cents per share, indicating growth of 42% from the year-ago quarter’s reported figure.
For 2020, non-GAAP revenues are projected between $428 and $438 million compared with the prior guidance of $448 and $455 million.
For 2020, adjusted operating margin is expected to be 39%. Non-GAAP earnings for 2020 are projected between $2.73 and $2.80 per share compared with $2.87 and $2.92 per share.
The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.9 per share.
Zacks Rank & Stocks to Consider
Progress Software currently has a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Lam Research, Microsoft and Applied Materials is currently pegged at 17.6%, 12.9% and 9.9%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Progress Software (PRGS) Q1 Earnings Beat, Revenues Rise Y/Y
Progress Software Corporation (PRGS - Free Report) reported first-quarter 2020 non-GAAP earnings of 76 cents per share that beat the Zacks Consensus Estimate by 7%. The figure increased 52% from the year-ago quarter.
Non-GAAP revenues of $113.8 million also surpassed the consensus mark of $112 million. The figure improved 27% on an actual currency basis and 28% on a constant currency (cc) basis.
Higher-than-anticipated sales of OpenEdge, Ipswitch and Data Connectivity and Integration (DCI) solutions drove top-line growth.
Quarter Details
Segment-wise, OpenEdge reported non-GAAP revenues of $91.6 million. Higher sales of network management and secure data file transfer products from Ipswitch were the primary growth drivers.
In first-quarter 2020, Progress Software announced a six-figure new customer win for its Ipswitch MOVEit product.
Progress Software Corporation Price, Consensus and EPS Surprise
Progress Software Corporation price-consensus-eps-surprise-chart | Progress Software Corporation Quote
Customers also upgraded to the company’s OpenEdge 12 technology to take advantage of security and performance improvements in the latest version.
DCI segment reported non-GAAP revenues of $13.7 million. The company won a number of deals in the quarter.
Application Development and Deployment (AD&D) segment generated non-GAAP revenues of $18.9 million
Region-wise, North America, EMEA, Latin America and Asia Pacific reported non-GAAP revenues of $68.4 million, $35.7 million, $4.1 million and $5.6 million, respectively.
Type-wise, Software license reported non-GAAP revenues of $30.6 million due to increase in license revenues from Ipswich and renewal of multiple multiyear-term OEM contracts within the DCI segment compared to last year.
Maintenance and service reported non-GAAP revenues of $73.8 million and $9.2 million, respectively.
Operating Details
GAAP sales and marketing expenses, as a percentage of revenues, contracted 290 basis points (bps) from the year-ago quarter to 22.1%.
GAAP product development expenses, as a percentage of revenues, contracted 250 bps from the year-ago quarter to 19.7%.
GAAP general and administration expenses, as a percentage of revenues, contracted 210 bps from the year-ago quarter to 11.6%.
Progress Software reported adjusted operating margin of 42%, which expanded 800 bps from the year-ago quarter.
The company reported total GAAP operating expenses (58.4% of revenues) of $64.1 million which increased 10.3% year over year.
Balance Sheet
As of Feb 29, 2020, cash and cash equivalents (and short-term investments) were $177.1 million, up from $173.7 million as of Nov 30, 2019.
Progress Software generated $33.2 million in cash from operations/adjusted free cash flow compared with $36.2 million reported in the previous quarter.
Progress Software repurchased 0.4 million shares for $20 million during the fiscal first quarter, 2020. As of Feb 29, 2020, $230 million remained under this authorization;
The company declared a quarterly cash dividend of 16 cents per share to be paid out on Jun 15, 2020.
Guidance
For the second quarter of 2020, Progress Software expects non-GAAP revenues between $95 and $101 million. The Zacks Consensus Estimate for revenues is currently pegged at $111.8 billion, indicating growth of 24.8% from the year-ago quarter’s reported figure.
The company expects non-GAAP earnings to be in the range of 60-64 cents per share. The Zacks Consensus Estimate is currently pegged at 71 cents per share, indicating growth of 42% from the year-ago quarter’s reported figure.
For 2020, non-GAAP revenues are projected between $428 and $438 million compared with the prior guidance of $448 and $455 million.
For 2020, adjusted operating margin is expected to be 39%. Non-GAAP earnings for 2020 are projected between $2.73 and $2.80 per share compared with $2.87 and $2.92 per share.
The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.9 per share.
Zacks Rank & Stocks to Consider
Progress Software currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Microsoft Corporation (MSFT - Free Report) and Applied Materials, Inc. (AMAT - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Lam Research, Microsoft and Applied Materials is currently pegged at 17.6%, 12.9% and 9.9%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>