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What changed in PROGRESS SOFTWARE CORP /MA's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PROGRESS SOFTWARE CORP /MA's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+289 added−249 removedSource: 10-K (2024-01-26) vs 10-K (2023-01-27)

Top changes in PROGRESS SOFTWARE CORP /MA's 2023 10-K

289 paragraphs added · 249 removed · 174 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIf an ISV succeeds in marketing its applications, we obtain recurring revenue as the ISV licenses our products to allow its application to be installed and used by customers. In recent years, a significantly increasing amount of our revenue from ISVs has been generated from ISVs who have chosen to enable their business applications under a software-as-a-service ("SaaS") platform.
Biggest changeIn recent years, a significantly increasing amount of our revenue from ISVs has been generated from ISVs 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.
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.
We also license 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.
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. Our Chef offerings incorporate software components licensed to the general public under open source licenses.
We also have several patent applications for 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. Our Chef offerings incorporate software components licensed to the general public under open source licenses.
Except as described below with respect to our Chef 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 ISVs, OEMs and systems integrators.
Except as described below with respect to our Chef products, we frequently 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 products through various channel partners, including ISVs, OEMs and systems integrators.
Therefore, we provide our employees with competitive compensation and benefits, opportunities for equity ownership, and development programs that enable continued learning and growth. 8 Employee Engagement, Development and Training We invest significant resources to develop our in-house talent and deepen our employees’ skill sets, both to strengthen our company and help further our employees’ personal career goals.
Therefore, we provide our employees with competitive compensation and benefits, opportunities for equity ownership, and development programs that enable continued learning and growth. 7 Employee Engagement, Development and Training We invest significant resources to develop our in-house talent and deepen our employees’ skill sets, both to strengthen our company and help further our employees’ personal career goals.
Progress DataDirect : Secure data connectivity tools for Relational, NoSQL, Big Data and SaaS data sources. 5 Progress WhatsUp Gold : Network infrastructure monitoring software providing complete visibility of all network devices, servers, virtual machines, cloud and wireless environments to find and fix network problems.
Progress DataDirect : Secure data connectivity tools for Relational, NoSQL, Big Data and SaaS data sources. 4 Progress WhatsUp Gold : Network infrastructure monitoring software providing complete visibility of all network devices, servers, virtual machines, cloud and wireless environments to find and fix network problems.
Although we intend to protect our rights vigorously, and do not intend to infringe upon the intellectual property rights of other parties, 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.
Although we intend to protect our rights vigorously, and do not intend to infringe upon the intellectual property rights of other parties, there is no assurance that our efforts 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.
The information posted on our website is not incorporated into this Annual Report on Form 10-K. 9
The information posted on our website is not incorporated into this Annual Report on Form 10-K. 8
We have an Inclusion and Diversity Advisory Committee, made up of a diverse group of Progress employees from around the globe with varying backgrounds, skill sets and viewpoints.
We have an Inclusion and Diversity Advisory Committee, made up of Progress employees from around the globe with varying backgrounds, skill sets and viewpoints.
Refer to Note 15: Revenue Recognition and Note 19: Business Segments and International Operations to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information by geographic area.
Refer to Note 14: Revenue Recognition and Note 18: Business Segments and International Operations to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information by geographic area.
Systems Integrators typically have expertise in vertical or functional markets: they may resell our products by bundling them with their broader service offerings or refer sales opportunities to our direct sales force. Distributors resell our products, services and support within their territories.
Systems Integrators typically have expertise in vertical or functional markets: they may resell our products by bundling them with their broader service offerings or refer sales opportunities to our direct sales force.
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 believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.
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. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.
Human Capital As of November 30, 2022, we had 2,071 employees worldwide, including 664 in sales and marketing, 324 in customer support and services, 842 in product development and 241 in administration. None of our U.S. employees are subject to a collective bargaining agreement.
Human Capital As of November 30, 2023, we had 2,284 employees worldwide, including 739 in sales and marketing, 394 in customer support and services, 886 in product development and 265 in administration. None of our U.S. employees are subject to a collective bargaining agreement.
No single customer or partner has accounted for more than 10% of our total revenue in any of our last three fiscal years. 6 Sales and Marketing We sell our products through our direct sales force and indirect channel partners. Our sales and field marketing groups are organized primarily by geographic region (i.e.
Distributors resell our products, services and support within their territories. 5 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 through our direct sales force and indirect channel partners.
We provide support to customers primarily through our main regional customer support centers in Burlington, Massachusetts; Morrisville, North Carolina; Alpharetta, Georgia; Madison, Wisconsin; Limerick, Ireland; Rotterdam, The Netherlands; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Singapore; and Sofia, Bulgaria. Local technical support for specific products is provided in certain other countries as well.
Maintenance is generally not required with those products sold under perpetual license agreements and is purchased at the customer's option. We provide support to customers primarily through our main regional customer support centers in Burlington, Massachusetts; Morrisville, North Carolina; Alpharetta, Georgia; Madison, Wisconsin; Limerick, Ireland; Rotterdam, The Netherlands; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Singapore; and Sofia, Bulgaria.
Progress MOVEit: Managed File Transfer software for managing and controlling the movement of sensitive files, securing them both at-rest and in-transit, and ensuring strict adherence to compliance requirements.
Progress Kemp LoadMaster : Flexible application delivery and security product offering cloud-native, virtual and hardware load balancers. Progress MOVEit: Managed File Transfer software for managing and controlling the movement of sensitive files, providing the ability to secure them both at-rest and in-transit, and ensuring strict adherence to compliance requirements.
We use distributors and resellers, both internationally and domestically, in certain locations where we do not have a direct presence or where it is more economically or contractually feasible for us to do so. More than half of our license revenues are derived from these indirect channels.
OEMs, and value-added resellers ("VARs"), who embed or add features to our products as part of an integrated solution. We use distributors and resellers, both internationally and domestically, in certain locations where we do not have a direct presence or where it is more economically or contractually feasible for us to do so.
Historically, most of our OEMs have renewed their agreements upon the 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 DataDirect product line.
If any of our largest OEM customers were not to renew their agreements in the future, this could materially impact our DataDirect product line.
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 infrastructure software products and that none of the current versions of our products are approaching obsolescence.
Product Development We believe that the features and performance of our products are competitive with those of other available infrastructure software products 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.
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 ISVs and our own direct sales efforts.
Our international operations provide focused local sales, support and marketing efforts and are able to respond directly to changes in local conditions. 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.
Progress Developer Tools: The comprehensive software development tooling collection including .NET and JavaScript UI components for web, desktop and mobile applications, reporting and report management tools and automated testing and mocking tools. Progress Kemp LoadMaster : Flexible application delivery and security product offering cloud-native, virtual and hardware load balancers.
Progress Chef: DevOps/DevSecOps automation software to achieve secure, continuous delivery of critical applications and infrastructure. Progress Developer Tools: The comprehensive software development tooling collection including .NET and JavaScript UI components for web, desktop and mobile applications, reporting and report management tools and automated testing and mocking tools.
We also target developers who create business applications, from individuals to teams, within enterprises of all sizes. We also sell our products through indirect channels, primarily ISVs. OEMs, and value-added resellers ("VARs"), who embed or add features to our products as part of an integrated solution.
Sales of our 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 sell our products through indirect channels, primarily ISVs.
North America, EMEA, Latin America, 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.
Our sales and field marketing groups are organized primarily by geographic region (i.e. North America, EMEA, Latin America, and Asia Pacific). We believe this structure allows us to maintain direct contact with our customers and partners, while supporting their diverse market requirements.
More than half of our worldwide license revenue is realized through relationships with indirect channel partners (principally independent software vendors ("ISVs")); original equipment manufacturers ("OEMs"); and value-added resellers ("VARs") , s ystems integrators, and distributors.
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 independent software vendors, original equipment manufacturers, distributors and value-added resellers.
We operate in North America and Latin America (the "Americas"); Europe, the Middle East and Africa ("EMEA"); and Asia and Australia ("Asia Pacific"), through local subsidiaries as well as independent distributors.
Item 1. Business Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides enterprise software products for the development, deployment and management of high-impact business applications. We operate in North America, Latin America, Europe, the Middle East and Africa ("EMEA"), and Asia and Australia ("Asia Pacific"), through local subsidiaries as well as independent distributors.
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. Our primary development offices are located in Burlington, Massachusetts; Morrisville, North Carolina; Alpharetta, Georgia; Madison, Wisconsin; Sofia, Bulgaria; Limerick, Ireland; Brno, Czech Republic; and Bengaluru and Hyderabad, India.
Our primary development offices are located in Burlington, Massachusetts; Morrisville, North Carolina; Alpharetta, Georgia; Madison, Wisconsin; Sofia, Bulgaria; Limerick, Ireland; Brno, Czech Republic; and Bengaluru and Hyderabad, India. Customers We sell our products globally through several channels: directly to end users and indirectly through ISVs, OEMs, systems integrators, VARs and distributors.
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; infrastructure automation; development operations; data management, managed database services; performance enhancements and tuning; and analytics/business intelligence. Competition The software industry is intensely competitive.
Our services offerings include: application modernization; infrastructure automation; development operations; data management, managed database services; performance enhancements and tuning; and analytics/business intelligence. Competition The software industry is intensely competitive. We experience significant competition from a variety of sources with respect to all of our products.
This makes critical data and content more accessible and secure and technology teams more productive. We have a deep commitment to the developer community, both open source and commercial alike. Described below are some of the products that make up our comprehensive product portfolio.
We have a deep commitment to the developer community, both open source and commercial alike. Described below are some of the products that make up our comprehensive product portfolio. Progress OpenEdge: An application development platform for running business-critical applications needing high-performance, high availability and flexible deployment options for extensibility, scalability, security and performance.
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.
Local technical support for specific products is provided in certain other countries as well. 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 software development, programming and other services.
Independent Software Vendors Our ISVs 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 ISVs to build applications.
We have kept entry costs, consisting primarily of the initial purchase of development licenses, low to encourage a wide variety of ISVs to build applications. If an ISV succeeds in marketing its applications, we obtain recurring revenue as the ISV licenses our products to allow its application to be installed and used by customers.
Many of these vendors offer platform-as-a-service, application development, data integration and other tools 7 in conjunction with their CRM, web services, operating systems, and relational database management systems. We compete with software vendors that offer their products under a proprietary software license model, and various other vendors that offer their solutions in an open-source licensing or freely available distribution model.
We compete with software vendors that offer their products under a proprietary software license model, and various other vendors that offer their solutions in an open-source licensing or freely available distribution model. 6 We do not believe that there is a dominant vendor in the infrastructure software markets in which we compete.
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.
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 expiration of the initial term. However, there is no assurance that they will continue to renew in the future.
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.
These programs include public relations, industry analyst relations, digital/web marketing, demand generation, participation in trade shows, industry conferences, regional user events, and production of sales and marketing literature. Our marketing efforts focus on driving traffic to our websites, generating high quality sales leads and building visibility for our corporate and product brands.
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Item 1. Business Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") is the trusted provider of the best products to develop, deploy and manage high-impact business applications. We enable our customers to develop the applications and experiences they need, deploy where and how they want, and manage it all safely and securely.
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Independent software vendors develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. Original equipment manufacturers are companies that embed our products into their own software products or devices.
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Progress helps customers drive faster cycles of innovation, fuel momentum and accelerate their path to success. 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.
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Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution. Our Products With Progress, businesses can automate and optimize the process by which applications are developed, deployed and managed. This makes critical data and content more accessible and secure and technology teams more productive.
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Strategic Plan and Operating Model The key tenets of our strategic plan and operating model are based on our Total Growth Strategy, the three-pillar approach focused on: investing and innovating in our current product portfolio, customer retention, and growth through accretive acquisition (“M&A”): Be the Trusted Provider of the Best Products to Develop, Deploy and Manage High Impact Applications .
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Progress MarkLogic: Data agility platform to securely connect data and metadata, create and interpret meaning, and consume high-quality contextualized data across the enterprise software system. Progress Semaphore: Semantic AI platform that transforms data into meaningful insights, empowering organizations to manage knowledge models, and to automatically extract and classify meaning from both structured and unstructured data.
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A key element of our strategy is centered on building and maintaining the best products and tools enterprises need to build, deploy, and manage 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.
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More than half of our license revenues are derived from these indirect channels. Independent Software Vendors Our ISVs cover a broad range of markets, offer an extensive library of business applications and are a source of recurring revenue.
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Focus on Customer and Partner Retention to Drive Recurring Revenue and Profitability . Our organizational philosophy and operating principles focus primarily on customer and partner retention and success, and a streamlined operating approach to drive predictable and stable recurring revenue and high levels of profitability. Follow a Total Growth Strategy through Accretive M&A.
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Our sales efforts then focus on converting these leads into paying customers. Customer Support Our customer support staff provides telephone and Web-based support to end users, application developers and OEMs. Customers purchase maintenance services entitling them to software updates, technical support and technical bulletins.
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We focus on accretive acquisitions of businesses within the software infrastructure space, with products that appeal to both information technology ("IT") organizations and individual developers. Potential acquisitions must meet strict financial and other criteria, which help further our goal to provide significant stockholder returns by providing scale and increased cash flows.
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Our consulting organization also provides services to web-enable existing applications or to take advantage of the capabilities of new Progress 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.
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In April 2019, we acquired Ipswitch, Inc.; in October 2020, we acquired Chef Software, Inc.; and in November 2021, we acquired Kemp Technologies.
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Many companies offer platform-as-a-service, application development, data integration and other tools in conjunction with offerings such as customer relationship management, web services, operating systems, and relational database management systems.
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In addition, on January 3, 2023, we announced our entry into a definitive agreement with Vector Maven Holdings, Inc. and Vector Maven Holdings, L.P. to acquire MarkLogic Corporation ("MarkLogic"), a leader in managing complex data and metadata (subject to the satisfaction of the terms and conditions set forth in the definitive agreement).
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In recent years, our total growth strategy, described above, has resulted in the rapid expansion of our product portfolio. As our portfolio evolves, we continuously evaluate our organization for additional synergies and efficiencies. In connection therewith, we are working to realign our go-to-market, product, and operational teams and to increase centralization of shared services and functions across our company.
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We believe that these changes will improve collaboration among the teams that develop, sell, and support our 4 products; enhance our ability to integrate acquired businesses; and lead to greater system uniformity and increased operating efficiency. Employ a Multi-Faceted Capital Allocation Strategy .
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Our capital allocation policy emphasizes accretive M&A, which allows us to expand our business and drive significant stockholder returns. We also utilize dividends and share repurchases to return capital to stockholders.
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We intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and to continue to return a portion of our annual cash flows from operations to stockholders in the form of dividends. In fiscal year 2022, we repurchased and retired 1.7 million shares of our common stock for $77.0 million.
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As of November 30, 2022, there was $78.0 million remaining under the share repurchase program authorized by our Board of Directors. On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million.
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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.
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We began paying quarterly cash dividends of $0.125 per share of common stock to Progress stockholders in December 2016 and have paid quarterly dividends since that time.
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On September 23, 2022, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock which was paid on December 15, 2022 to stockholders of record as of the close of business on December 1, 2022.
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On January 10, 2023, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2023 to shareholders of record as of the close of business on March 1, 2023.
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Future declarations of dividends, if any, and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. As described above, we expect to continue to pursue acquisitions meeting our financial criteria that are designed to expand our business and drive significant stockholder returns.
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As a result, our expected uses of cash could change, our cash position could be reduced, and we may incur additional debt obligations to the extent we complete additional acquisitions.
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However, we currently 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.
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We derive a significant portion of our revenue from international operations, which are primarily conducted in foreign currencies. As a result, changes in the value of these foreign currencies relative to the U.S. dollar have significantly impacted our results of operations and may impact our future results of operations.
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Since approximately one-third of our revenue is denominated in foreign currency, and given the recent volatility in the global economy, our revenue results in the fiscal year 2022 were impacted by fluctuations in foreign currency exchange rates. Our Products With Progress, businesses can automate and optimize the process by which applications are developed, deployed and managed.
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Progress OpenEdge: An application development platform for running business-critical applications needing high-performance, high availability and flexible deployment options for extensibility, scalability, security and performance. Progress Chef: DevOps/DevSecOps automation software to achieve secure, continuous delivery of critical applications and infrastructure.
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Customers We sell our products globally through several channels: directly to end users and indirectly through ISVs, OEMs, systems integrators, VARs and distributors. Sales of our products through our direct sales force have historically been to business managers or IT managers in corporations and governmental agencies.
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Our sales and marketing efforts with respect to certain products 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.
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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.
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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.
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Customers purchase maintenance services entitling them to software updates, technical support and technical bulletins. Maintenance is generally not required with those products sold under perpetual license agreements and is purchased at the customer's option.
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We experience significant competition from a variety of sources with respect to all of our products.
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We do not believe that there is a dominant vendor in the infrastructure software markets in which we compete.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

51 edited+52 added−10 removed116 unchanged
Biggest changeRussia’s invasion of Ukraine has also elevated the risk of cyber-attacks on U.S. and global companies, and as discussed elsewhere herein, any such cyber-attack could similarly impact or disrupt our commercial activities. Although we cannot predict what the impacts may be, our global operations and reliance on interconnected technology increase the risk to our operations.
Biggest changeAlthough we cannot predict what the impacts may be, our global operations and reliance on interconnected technology increase the risk to our operations. The extent and duration of the conflict in Ukraine and the Middle East, geopolitical tensions, inflationary pressures and resulting market disruptions are impossible to predict but could be substantial.
These factors include: • changes in demand for our products; • introduction, enhancement or announcement of products by us or our competitors; 16 • market acceptance of our new products, including acquired 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, including unforeseen expenses incurred in connection with items such as cyber security instances; • changes in management; • restructuring programs; • changes in our sales force; • completion or announcement of acquisitions by us or our competitors; • integration of acquired businesses or inability to realize expected synergies; • customer order deferrals in anticipation of new products announced by us or our competitors; • general economic conditions in regions in which we conduct business; and • other factors such as political or social unrest, terrorist attacks, other hostilities, natural disasters, cyber-attacks, and potential public health crises, such as pandemics.
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, including acquired 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, including unforeseen expenses incurred in connection with items such as cyber security instances; • changes in management; • restructuring programs; • changes in our sales force; • completion or announcement of acquisitions by us or our competitors; • integration of acquired businesses or inability to realize expected synergies; • customer order deferrals in anticipation of new products announced by us or our competitors; • general economic conditions in regions in which we conduct business; and • other factors such as political or social unrest, terrorist attacks, other hostilities, natural disasters, cyber-attacks, and potential public health crises, such as pandemics.
Even if an acquisition is successful, integration of a new business involves a number of risks that could have a material adverse effect on our business, financial condition, operating results or cash flows, including: 10 • difficulties of assimilating the operations and personnel, products or systems 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; • the risk that an acquired company’s cybersecurity may not have been sufficient and could cause a post-acquisition risk once integrated into our systems; • 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.
Even if an acquisition is successful, integration of a new business involves a number of risks that could have a material adverse effect on our business, financial condition, operating results or cash flows, including: 9 • difficulties of assimilating the operations and personnel, products or systems 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; • the risk that an acquired company’s cybersecurity may not have been sufficient and could cause a post-acquisition risk once integrated into our systems; • 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.
A catastrophic event including a cyber event a war or an act of terrorism that results in the loss, destruction, misappropriation, corruption or disruption of any of our data, our customer’s data or our data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected, and the adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event.
A catastrophic event including a cyber event a war or an act of terrorism that results in the loss, destruction, misappropriation, corruption or disruption of any of our data, our customer’s data or our 14 data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected, and the adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event.
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.
Although we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine our tax estimates, a final determination of tax 16 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 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); however, our currency hedging transactions may not be effective in reducing the adverse impact of 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 17 and Australia); however, our currency hedging transactions may not be effective in reducing the adverse impact of fluctuations in foreign currency exchange rates.
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 14 certain services in jurisdictions that we operate.
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.
In either case, and in other cases, our obligations under the Notes and the indenture could increase the cost of acquiring us or otherwise discourage a third 18 party from acquiring us or removing incumbent management, including in a transaction that Noteholders or holders of our common stock may view as favorable.
In either case, and in other cases, our obligations under the Notes and the indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that Noteholders or holders of our common stock may view as favorable.
As disclosed on December 19, 2022, following the detection of irregular activity on certain portions of our corporate network, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of the cyber incident.
As disclosed on December 19, 2022, following the detection of irregular activity on certain portions of our corporate network, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of the cyber incident (the "November 2022 Cyber Incident").
This facility matures in January 2027, 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.
This Credit Facility matures in January 2027, 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.
Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of our Convertible Senior Notes with an aggregate principal amount of $325 million, due April 15, 2026 (the "Notes"); and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; 18 • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of our Convertible Senior Notes with an aggregate principal amount of $360 million, due April 15, 2026 (the "Notes"); and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
In response to the Russian invasion of Ukraine, new sanctions have been imposed by the U.S., Canada, the United Kingdom, the European Union, and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine.
In response to the Russian invasion of Ukraine, sanctions have been imposed by the U.S., Canada, the United Kingdom, the European Union, and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine.
The overall macro global economy, including the ongoing military conflict in Ukraine is highly unpredictable and has already led to market disruptions, including volatile capital markets, higher interest rates and debt capital costs, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, as well as supply chain disruptions and increases in costs of certain raw materials and transportation, which have in turn contributed to global inflationary pressures.
The overall macro global economy, including the ongoing military conflict in Ukraine and the Middle East, is highly unpredictable and has already led to market disruptions, including volatile capital markets, higher interest rates and debt capital costs, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, as well as supply chain disruptions and increases in costs of certain raw materials and transportation, which have in turn contributed to global inflationary pressures.
A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full.
A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately 19 payable in full.
As demonstrated by this cyber incident, 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, corruption or misappropriation and thus legal and financial exposure.
As demonstrated by the November 2022 Cyber Incident, 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, corruption or misappropriation and thus legal and financial exposure.
In January 2022, we entered into an amended and restated credit agreement, which provides for a $275.0 million term loan and a $300.0 million 17 revolving loan (which may be increased by an additional $260.0 million if the existing or additional lenders are willing to make such increased commitments).
In January 2022, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which provides for a $275.0 million term loan and a $300.0 million revolving credit facility (which may be increased by an additional $260.0 million if the existing or additional lenders are willing to make such increased commitments) (the "Credit Facility").
In addition, governmental entities in the U.S. and other countries 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.
In addition, governmental entities in the U.S. and other countries 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 business functions.
We derive a significant portion of our revenue from software license and maintenance revenue attributable to our OpenEdge product set, which in fiscal year 2022 accounted for approximately 42% of our aggregate revenue on a consolidated basis. Accordingly, our future results depend on continued market acceptance of OpenEdge.
We derive a significant portion of our revenue from software license and maintenance revenue attributable to our OpenEdge product set, which in fiscal year 2023 accounted for approximately 37% of our aggregate revenue on a consolidated basis. Accordingly, our future results depend on continued market acceptance of OpenEdge.
Risks Related to our Indebtedness and Convertible Senior Notes Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations. As of November 30, 2022, we had approximately $618 million of consolidated indebtedness.
Risks Related to our Indebtedness and Convertible Senior Notes Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations. As of November 30, 2023, we had approximately $724 million of consolidated indebtedness.
A disruption, infiltration or failure of these systems or third-party hosted services in the event of a major earthquake, fire, flood, tsunami or other weather event, power loss, telecommunications failure, software or hardware malfunctions, pandemics (including the COVID-19 pandemic or other future pandemics), cyber-attack or other similar interruptions to our business, war (including the Russian invasion of Ukraine), terrorist attack or other catastrophic event that our disaster recovery plans do not adequately address, could cause system interruptions, reputational harm, loss of intellectual property, delays in our product development, lengthy interruptions in our services, breaches of data security and loss, destruction, misappropriation or corruption of critical company or customer data.
A disruption, infiltration or failure of these systems or third-party hosted services in the event of a major earthquake, fire, flood, tsunami or other weather event, power loss, telecommunications failure, software or hardware malfunctions, pandemics, cyber-attack or other similar interruptions to our business, war, terrorist attack or other catastrophic event that our disaster recovery plans do not adequately address, could cause system interruptions, reputational harm, loss of intellectual property, delays in our product development, lengthy interruptions in our services, breaches of data security and loss, destruction, misappropriation or corruption of critical company or customer data.
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 43% of our total fiscal 2022 revenue, was generated from sales outside North America.
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 41% of our total fiscal 2023 revenue, was generated from sales outside North America.
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. In addition, our business has been, and could in the future be, adversely affected by regional or global health crises, such as the COVID-19 pandemic.
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. In addition, our business has been, and could in the future be, adversely affected by regional or global health crises.
Breaches of our network could disrupt our internal systems and business applications, including services provided to our customers. Additionally, data breaches could compromise 12 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.
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 protect against the threat of security breaches or to address security related concerns.
U.S. and global markets are continuing to experience volatility and disruption following among other things the escalation of geopolitical tensions in February 2022 with Russia’s invasion of Ukraine.
U.S. and global markets are continuing to experience volatility and disruption following among other things the escalation of geopolitical tensions in February 2022 with Russia’s invasion of Ukraine and the recent Israel-Hamas conflict.
Although we have policies and procedures in place designed to ensure compliance with applicable sanctions, our employees, contractors, and agents may take actions in violation of such policies and applicable law and ultimately we could be held responsible.
Although we have policies and procedures in place that are designed to comply with applicable sanctions, our employees, contractors, and agents may take actions in violation of such policies and applicable law and ultimately we could be held responsible.
Given our meaningful reliance on revenue generated outside of North America (which constituted 43% of our total revenue in fiscal 2022) and our reliance on revenue generated in EMEA (which constituted 35% of our total revenue in fiscal 2022), disruption of commercial activities in these regions may materially adversely affect our financial condition and results of operations.
Given our meaningful reliance on revenue generated outside of North America (which constituted 41% of our total revenue in fiscal 2023) and our reliance on revenue generated in EMEA (which constituted 32% of our total revenue in fiscal 2023), disruption of commercial activities in these regions may materially adversely affect our financial condition and results of operations.
We have 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; and we may undertake similar restructuring or realignment initiatives in the future.
We have 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; and we may undertake similar restructuring or realignment initiatives in the future. In the past, realignment initiatives have resulted in increased restructuring costs and have temporarily reduced productivity.
Furthermore, some of our customers and partners may seek bankruptcy protection or other similar relief and fail to pay 13 amounts due to us, or pay those amounts more slowly, either of which could adversely affect our operating results, financial position and cash flow.
In addition, in the ordinary course of business, some of our customers and partners may seek bankruptcy protection or other similar relief and fail to pay amounts due to us, or pay those amounts more slowly, either of which could adversely affect our operating results, financial position and cash flow.
If customers or partners delay payment or fail to pay us under the terms of our agreements, we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our contracts, including litigation.
If customers or partners seek refunds, delay implementation of our products, delay payment, fail to pay us under the terms of our agreements, or terminate use of our products, we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our contracts (including litigation related thereto).
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. including but not limited to from loss of customer or company data, loss of customers or otherwise.
Any prolonged economic disruption could affect demand for our products and services and adversely impact our results of operations and financial condition. 11 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. including but not limited to from loss of customer or company data, loss of customers or otherwise.
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, on July 16, 2020, the Court of Justice of the European Union invalidated the E.U.-U.S.
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.
Political instability may lead 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.
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.
The regulatory environment applicable to the handling of EEA residents' personal data, which is governed by the General Data Protection Regulation of 2018 (“GDPR”), may cause us to assume additional liabilities or incur additional costs, and could result in our business, operating results and financial condition being harmed.
For example, the regulatory environment applicable to the handling of the European Economic Area ("EEA") residents' personal data, which is governed by the General Data Protection Regulation of 2018 (“GDPR”) and/or respectively the national data protection laws of United Kingdom, Switzerland, and other countries we operate, may cause us to assume additional liabilities, obligations or incur additional costs, and could result in our business, operating results and financial condition being harmed.
These efforts may divert management’s focus and resources from our core business, other corporate initiatives, or strategic opportunities. We may also experience a loss of 11 continuity, loss of accumulated knowledge, or inefficiency during transitional periods.
Furthermore, management has dedicated, and will continue to dedicate, significant time and effort to implementing such realignment initiatives. These efforts may divert management’s focus and resources from our core business, other corporate initiatives, or strategic opportunities. We may also experience a loss of continuity, loss of accumulated knowledge, or inefficiency during transitional periods.
In addition, if we fail to complete an announced acquisition (such as MarkLogic), 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.
In addition, 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.
During the investigation, we and our external advisors uncovered evidence of unauthorized access to our corporate network, including evidence that certain company data had been exfiltrated. As the investigation remains ongoing, we continue to assess the potential impact on our business, operations and financial results.
During the investigation, we and our external advisors uncovered evidence of unauthorized access to our corporate network, including evidence that certain company data had been exfiltrated.
Further, deteriorating economic conditions could adversely affect our customers and their ability to pay amounts owed to us (see Our customers and partners may delay payment or fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment ).
Further, deteriorating economic conditions could adversely affect our customers and their ability to pay amounts owed to us (see Our customers and partners may seek refunds, delay implementation timelines, delay payment, fail to pay us in accordance with the terms of their agreements, or terminate use of our products, all of which can have an adverse effect on us ).
Political and/or financial instability, oil price shocks and armed conflict in various regions of the world, including, but not limited to, Russia's invasion of Ukraine in February 2022, or increased cyber incidents as a result therefrom or otherwise, can lead to economic uncertainty and may adversely impact our business.
Political and/or financial instability, oil price shocks and armed conflict in various regions of the world, including, but not limited to, Russia's invasion of Ukraine and the Israel-Hamas conflict, can lead to economic uncertainty and may adversely impact our business. Political instability may lead to significant, continuing volatility in global stock markets and currency exchange rate fluctuations.
The extent and duration of the conflict in Ukraine, geopolitical tensions, inflationary pressures and resulting market disruptions are impossible to predict but could be substantial. Fluctuations in foreign currency exchange rates or interest rates have had, and could continue to have, an adverse impact on our financial condition and results of operations.
Fluctuations in foreign currency exchange rates or interest rates have had, and could continue to have, an adverse impact on our financial condition and results of operations.
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.
If we are held responsible for a violation of U.S. sanctions laws, we may be subject to various penalties, any of which could have a material adverse effect on our business, financial condition or results of operations. 15 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.
Additionally, we and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA. Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.
Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.
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.
We may become subject to legal proceedings relating to the acquisition and the integration of acquired businesses may not be successful.
Our customers and partners may delay payment or fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment.
Our customers and partners may seek refunds, delay implementation timelines, delay payment, fail to pay us in accordance with the terms of their agreements, or terminate use of our products, all of which can have an adverse effect on us.
These risks will increase if we successfully complete the acquisition of MarkLogic, which will increase the amount and variety of government entities that we contract with. 15 Risks Related to Financial Performance or General Economic Conditions Weakness in the U.S. and international economies may result in fewer sales of our products and may otherwise harm our business.
Risks Related to Financial Performance or General Economic Conditions 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.
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.
In addition, any such matters could affect the ability of our products to work with hardware or other software products, delay the development or release of new products or new versions of products (due to a reallocation of our internal resources), and/or adversely affect market acceptance of our products, all of which could have a material adverse effect on our operating results and cash flows.
There can be no assurance that we can accomplish or implement all of the desired initiatives, or that the activities under those initiatives will result in the desired synergies or efficiencies. Furthermore, management has dedicated, and will continue to dedicate, significant time and effort to implementing such realignment initiatives.
Future realignment initiatives may be complex and could result in significant costs and expenses, which could negatively impact our reputation, financial condition, operating results and shareholder value. There can be no assurance that we can accomplish or implement all of the desired initiatives, or that the activities under those initiatives will result in the desired synergies or efficiencies.
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 ISVs, resellers/distributors and OEMs.
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 ISVs, 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.
We may be required to repay the Credit Agreement prior to the stated maturity date, if the springing maturity feature is triggered. On January 25, 2022, we entered into an amended and restated credit agreement (the "Credit Agreement"), which provides for a $275.0 million secured term loan and a $300.0 million secured revolving line of credit.
We may be required to repay the Credit Agreement prior to the stated maturity date, if the springing maturity feature is triggered.
We may need to issue corrective releases of our software products to fix any defects or errors. Depending upon the severity of any such events, the detection and correction of any security flaws can be time consuming and costly.
Our products, despite extensive testing and quality control, may, and at times do, contain defects, vulnerabilities or security flaws. In the ordinary course of business, we may need to issue corrective releases of our software products to fix any defects, vulnerabilities, or security flaws.
For example, the California Privacy Rights Act (which amends the California Consumer Privacy Act) took effect on January 1, 2023; Virginia, Colorado, Utah and Connecticut also have privacy laws taking effect in 2023 (and other state legislatures are considering varying privacy laws and regulations); and several privacy bills are under congressional review at the federal level.
Other U.S. state legislatures have also implemented varying privacy laws and regulations, or are considering implementing legislation that we expect to become effective in the near term. Moreover, several privacy bills are under congressional review at the U.S. federal level.
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. A failure of our information technology systems, including a cyber incident, could have a material adverse effect on our business.
In addition, our insurance coverage may not be adequate to cover all costs related to cybersecurity incidents or the exploitation of vulnerabilities as well as the disruptions and liabilities resulting from such events. A failure of our information technology systems, including a cyber incident, could have a material adverse effect on our business.
Removed
As described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 below, we are currently working to realign our go-to-market, product, and operational teams, as well as increase centralization of shared services and functions across our company.
Added
Integration of artificial intelligence into our product offerings and our use of artificial intelligence in our operations could result in reputational or competitive harm, legal liability, and other adverse effects on our business. We have integrated, and plan to further integrate, AI capabilities into certain components of product offerings, and we expect to use AI in our operations.
Removed
In the past, realignment initiatives have resulted in increased restructuring costs and have temporarily reduced productivity. Current and future realignment initiatives may be complex and could result in significant costs and expenses, which could negatively impact our reputation, financial condition, operating results and shareholder value.
Added
Such integration and use of AI may become more important in our product offerings and operations over time. These AI-related initiatives, whether successful or not, could cause us to incur substantial costs and could result in delays in our software release cadence.
Removed
Any prolonged economic disruption could affect demand for our products and services and adversely impact our results of operations and financial condition.
Added
Our competitors or other third parties may incorporate AI into their products or operations more quickly or more successfully than we do, which could impair our ability to compete effectively. Additionally, AI algorithms may be flawed and datasets underlying AI algorithms may be insufficient or contain biased information.
Removed
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.
Added
If the AI tools integrated into our products or that we use in our operations produce analyses or recommendations that are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be adversely affected.
Removed
If we are held responsible for a violation of U.S. sanctions laws, we may be subject to various penalties, any of which could have a material adverse effect on our business, financial condition or results of operations.
Added
Other companies have experienced cybersecurity incidents that implicate confidential and proprietary company data and/or the personal data of end users of AI applications integrated into their software offerings or used in their operations.
Removed
Privacy Shield, a system for complying with EU data protection requirements when transferring personal data from the European Economic Area ("EEA") to the U.S. Other data transfer mechanisms remain intact, although still subject to considerable scrutiny by certain member states and their Data Protection Authorities. On October 7, 2022, President Biden signed an executive order implementing the E.U.-U.S.
Added
If we were to experience a cybersecurity incident, whether related to the integration of AI capabilities into our product offerings or our use of AI 10 applications in our operations, our business and results of operations could be adversely affected.
Removed
Data Privacy Framework, which is intended to replace the original E.U.-U.S. Privacy Shield, and on December 13, 2022, the European Commission initiated a process to adopt an adequacy decision for this new framework.
Added
AI also presents various emerging legal, regulatory and ethical issues, and the incorporation of AI into our product offerings and our use of AI applications in our operations could require us to expend significant resources in developing, testing and maintaining our product offerings and may cause us to experience brand, reputational, or competitive harm, or incur legal liability.
Removed
However, European companies will not be able to rely on the framework for sharing data with certified companies in the U.S. unless and until a final decision is published.
Added
On October 30, 2023, the Biden administration issued an Executive Order to, among other things, establish extensive new standards for AI safety and security. Other jurisdictions may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging.
Removed
As a result, we may experience reluctance or refusal by current or prospective European customers to use our products, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA residents.
Added
These restrictions may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our product offerings or business practices, or prevent or limit our use of AI.
Removed
This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition.
Added
If our products contain software defects or security flaws, it could harm our revenues by causing us to lose customers and could increase our liabilities by exposing us to costly governmental investigations or litigation. For example, the exploitation of the zero-day MOVEit Vulnerability in May 2023 has resulted in informal government inquiries, three formal government investigations, and private litigation.
Added
Depending upon the severity of any such matters, the detection and correction of such matters can be time consuming and costly. If any such issues are exploited by malicious threat actors, we could experience, among other things, material adverse impact to our revenues due to loss of customers and increased liabilities due to costly governmental investigations or litigation.
Added
For example, during the third quarter of 2023, we released patches for vulnerabilities affecting WS_FTP, one of our file-transfer products that is deployed on-premise in our customers’ environments.
Added
Notwithstanding our efforts to promptly patch such vulnerabilities and encourage customers to deploy the patch as quickly as possible, we do not have telemetry into our WS_FTP customers’ environments or control over their patching activity, and there have been reports of exploitation of these vulnerabilities following the release of our security patches.
Added
As disclosed via a Form 8-K filed on June 5, 2023, on the evening of May 28, 2023 (Eastern Time), our MOVEit technical support team received an initial customer support call indicating unusual activity within their MOVEit Transfer instance.
Added
An investigative team was mobilized and, on May 30, 2023, the investigative team discovered a zero-day vulnerability in MOVEit Transfer (including our cloud-hosted version of MOVEit Transfer known as MOVEit Cloud).
Added
The investigative team determined the zero-day vulnerability (the “MOVEit Vulnerability”) could provide for unauthorized escalated privileges and access to the customer’s underlying environment in both MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer that we deploy in both (i) a public cloud format, as well as (ii) for a small group of customers, in customer-dedicated cloud instances that are hosted, separate and apart from the public instances of our MOVEit Cloud platform).
Added
We promptly took down MOVEit Cloud for further investigation and notified all then-known current and former MOVEit Transfer and MOVEit Cloud customers in order to apprise them of the MOVEit Vulnerability and alert them to immediate remedial actions.
Added
In parallel, our team developed a patch for all supported versions of MOVEit Transfer and MOVEit Cloud, which was released on May 31, 2023, and allowed for the restoration of MOVEit Cloud that same day.
Added
MOVEit Transfer is a secure file-transfer software that is installed by customers on-premise and does not have any on-going telemetry after installation that allows us to track, among other things, a customer’s product usage, deployed version, file transfer activity (including any data that is transferred by or stored within the customer’s MOVEit Transfer instance), or whether the customer has applied any security patches or bug fixes to their MOVEit Transfer instance.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties During fiscal year 2022, we sold our corporate headquarters in Bedford, Massachusetts and moved to an existing leased office space in Burlington, Massachusetts. We lease our headquarters facility, which includes administrative, sales, support, marketing, product development and distribution functions, in one building totaling approximately 33,000 square feet in Burlington, Massachusetts.
Biggest changeItem 2. Properties We lease our headquarters facility, which includes administrative, sales, support, marketing, product development and distribution functions, in one building totaling approximately 33,000 square feet in Burlington, Massachusetts.
Depending on their role, this means that employees can choose their office location, as well as continue to work from home some or all the time. As of November 30, 2022, we have not terminated any significant lease arrangements. We believe our facilities are adequate for the conduct of our business.
Depending on their role, this means that employees can choose their office location, as well as continue to work from home some or all the time. As of November 30, 2023, we have not terminated any significant lease arrangements. We believe our facilities are adequate for the conduct of our business.
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 Morrisville, North Carolina, and Alpharetta, Georgia and outside North America, including Sofia, Bulgaria, Limerick, Ireland, Brno, Czech Republic, Bengaluru and Hyderabad, India, and Rotterdam, the Netherlands.
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 Morrisville, North Carolina, and Alpharetta, Georgia, Redwood City, California, Vienna, Virginia and outside North America, including Sofia, Bulgaria, Limerick, Ireland, Brno, Czech Republic, Bengaluru and Hyderabad, India, Singapore, Singapore and Rotterdam, the Netherlands.
Our focus remains on promoting employee health and safety, so we are not requiring employees to return to the office at this time. At the end of fiscal year 2021, we adopted an approach to work that gives our employees more flexibility to choose where to work.
The terms of our leases generally range from one to fifteen years. At the end of fiscal year 2021, we adopted an approach to work that gives our employees more flexibility to choose where to work.
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The terms of our leases generally range from one to fifteen years. Beginning in March 2020, our employees across all geographic regions shifted to working from home due to the COVID-19 pandemic. In early 2021, we reopened our offices in locations where it was permissible to do so, but most of our employees continued to work from home.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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.
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Item 3. Legal Proceedings Please see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 - Recent Developments: MOVEit Vulnerability for a discussion of legal proceedings related to the MOVEit Vulnerability. Item 4. Mine Safety Disclosures Not applicable. 20 PART II
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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

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe have declared aggregate per share quarterly cash dividends totaling $0.70, $0.70 and $0.67 for the years ended November 30, 2022, November 30, 2021 and November 30, 2020, respectively. We paid aggregate cash dividends totaling $31.1 million, $31.6 million and $29.9 million for the years ended November 30, 2022, November 30, 2021 and November 30, 2020, respectively.
Biggest changeWe have declared aggregate per share quarterly cash dividends totaling $0.70 for each of the years ended November 30, 2023, 2022 and 2021. We paid aggregate cash dividends totaling $31.6 million, $31.1 million and $31.6 million for the years ended November 30, 2023, 2022 and 2021, respectively.
Our Board of Directors may choose to suspend, decrease, or discontinue utilizing dividends as part of our capital allocation strategy at any time, particularly, if doing so, may advance our accretive M&A strategy. 20 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, 2022, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends.
Our Board of Directors may choose to suspend, decrease, or discontinue utilizing dividends as part of our capital allocation strategy at any time, particularly, if doing so, may advance our accretive M&A strategy. 21 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, 2023, 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 (1) $100 invested on November 30, 2017 in stock or index, including reinvestment of dividends.
Comparison of 5 Year Cumulative Total Return (1) Among Progress Software Corporation, the NASDAQ Composite Index and the NASDAQ Computer Index (1) $100 invested on November 30, 2018 in stock or index, including reinvestment of dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market and Stockholders Our common stock trades on the NASDAQ Global Select Market under the symbol "PRGS". As of December 31, 2022, our common stock was held by approximately 128 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market and Stockholders Our common stock trades on the NASDAQ Global Select Market under the symbol "PRGS". As of December 31, 2023, our common stock was held by approximately 121 stockholders of record.
Unregistered Sales of Equity Securities and Use of Proceeds All issuances of unregistered securities during fiscal year 2022, if any, have previously been disclosed in filings with the SEC. 19 Recent Sales of Unregistered Equity Securities All issuances of unregistered securities during fiscal year 2022, if any, have previously been disclosed in filings with the SEC.
Unregistered Sales of Equity Securities and Use of Proceeds All issuances of unregistered securities during fiscal year 2023, if any, have previously been disclosed in filings with the SEC. Recent Sales of Unregistered Equity Securities All issuances of unregistered securities during fiscal year 2023, if any, have previously been disclosed in filings with the SEC.
Stock Repurchases and Dividends Repurchases of our common stock by month in the fourth quarter of fiscal year 2022 were as follows: 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 September 2022 — $ — — $ 79,476 October 2022 33,856 44.79 33,856 77,959 November 2022 — — — 77,959 Total 33,856 $ 44.79 33,856 $ 77,959 On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million.
Stock Repurchases and Dividends Repurchases of our common stock by month in the fourth quarter of fiscal year 2023 were as follows: 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 September 2023 — $ — — $ 197,959 October 2023 — — — 197,959 November 2023 76,373 51.86 76,373 193,998 Total 76,373 $ 51.86 76,373 $ 193,998 On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million.
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November 30, 2017 2018 2019 2020 2021 2022 Progress Software Corporation $ 100.00 $ 85.05 $ 99.49 $ 97.00 $ 117.20 $ 128.98 NASDAQ Composite 100.00 106.64 124.64 177.46 226.04 166.83 NASDAQ Computer 100.00 104.71 135.95 208.91 293.19 210.78 Item 6. [Reserved]
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November 30, 2018 2019 2020 2021 2022 2023 Progress Software Corporation $ 100.00 $ 116.98 $ 114.05 $ 137.80 $ 151.65 $ 153.19 NASDAQ Composite 100.00 116.88 166.41 211.96 156.44 194.07 NASDAQ Computer 100.00 129.83 196.65 280.00 201.30 291.72 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSales and Marketing Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 Change Sales and marketing $ 140,760 $ 125,890 $ 14,870 12 % As a percentage of total revenue 23 % 24 % Components of sales and marketing: Personnel related costs $ 119,350 $ 107,335 $ 12,015 11 % Contractors and outside services 3,156 3,079 77 3 % Marketing programs and other 18,254 15,476 2,778 18 % Total sales and marketing $ 140,760 $ 125,890 $ 14,870 12 % Sales and marketing expenses increased in fiscal year 2022 primarily due to increased personnel related costs associated with our acquisition of Kemp, as well as increases in marketing and sales events costs . 25 Product Development Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 Change Product development $ 114,568 $ 103,338 $ 11,230 11 % As a percentage of total revenue 19 % 19 % Components of product development costs: Personnel related costs $ 111,009 $ 98,747 $ 12,262 12 % Contractors and outside services 2,699 3,504 (805) (23) % Other product development costs 860 1,087 (227) (21) % Total product developments costs $ 114,568 $ 103,338 $ 11,230 11 % Product development expenses increased in fiscal year 2022 primarily due to increased personnel related costs associated with our acquisition of Kemp, partially offset by decreased contractors and outside services costs and other product development costs .
Biggest changeSales and Marketing Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 Change Sales and marketing $ 156,076 $ 140,760 $ 15,316 11 % As a percentage of total revenue 22 % 23 % Components of sales and marketing: Personnel related costs $ 134,820 $ 119,350 $ 15,470 13 % Contractors and outside services 3,890 3,156 734 23 % Marketing programs and other 17,366 18,254 (888) (5) % Total sales and marketing $ 156,076 $ 140,760 $ 15,316 11 % Sales and marketing expenses increased in fiscal year 2023 primarily due to increased personnel related costs associated with our acquisition of MarkLogic, as well as increases in contractors and outside services costs, partially offset by a decrease in marketing programs.
The SSP of SaaS performance obligations is determined based upon observable prices in stand-alone SaaS transactions. We also consider whether an arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations, although we do not have a history of offering these elements.
The SSP of SaaS performance obligations is determined based upon observable prices in stand-alone SaaS transactions. 32 We also consider whether an arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations, although we do not have a history of offering these elements.
As such, they are not available to fund our domestic operations. If we were to repatriate these earnings, we may be subject to income tax withholding in certain tax jurisdictions and a portion of the repatriated earnings may be subject to U.S. income tax.
As such, they are not deemed available to fund our domestic operations. If we were to repatriate these earnings, we may be subject to income tax withholding in certain tax jurisdictions and a portion of the repatriated earnings may be subject to U.S. income tax.
The Credit Agreement matures on the earlier of (i) January 25, 2027 and (ii) the date that is 181 days prior to the maturity date of our Notes (defined below) subject to certain conditions. The revolving credit facility does not require amortization of principal.
The Credit Agreement matures on the earlier of (i) January 25, 2027 and (ii) the date that is 181 days prior to the maturity date of our Notes (defined below) subject to certain conditions. The Credit Facility does not require amortization of principal.
Net Dollar Retention Rate We calculate net dollar retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end (“Prior Period ARR”). We then calculate the ARR from these same customers as of the current period end (“Current Period ARR”).
Net Retention Rate We calculate net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end (“Prior Period ARR”). We then calculate the ARR from these same customers as of the current period end (“Current Period ARR”).
The first eight payments are in the principal amount of $1.7 million each, the following four payments are in the principal amount of $3.4 million each, the following eight payments are in the principal amount of $5.2 million each and the last payment is of the remaining principal amount.
The first eight payments were in the principal amount of $1.7 million each, the following four payments are in the principal amount of $3.4 million each, the following eight payments are in the principal amount of $5.2 million each and the last payment is of the remaining principal amount.
See Note 9: Debt for further discussion. Convertible Senior Notes In April 2021, we issued, in a private placement, Convertible Senior Notes with an aggregate principal amount of $325 million, due April 15, 2026, unless earlier repurchased, redeemed or converted (the "Notes"). There are no required principal payments prior to the maturity of the Notes.
See Note 8: Debt for further discussion. Convertible Senior Notes In April 2021, we issued, in a private placement, Convertible Senior Notes with an aggregate principal amount of $325 million, due April 15, 2026, unless earlier repurchased, redeemed or converted. There are no required principal payments prior to the maturity of the Notes.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended November 30, 2022 compared to the year ended November 30, 2021.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended November 30, 2023 compared to the year ended November 30, 2022.
We are also required to maintain compliance with a consolidated interest charge coverage ratio and a consolidated total net leverage ratio. Additionally, the Credit Agreement includes customary events of default, that in event of, could result in the acceleration of the obligations under the Credit Agreement. We are in compliance with all financial covenants as of November 30, 2022.
We are also required to maintain compliance with a consolidated interest charge coverage ratio and a consolidated total net leverage ratio. Additionally, the Credit Agreement includes customary events of default, that in event of, could result in the acceleration of the obligations under the Credit Agreement. We are in compliance with all financial covenants as of November 30, 2023.
Most significantly, in the second quarter of fiscal year 2021, we received $349.2 million in net proceeds from the issuance of convertible senior notes and paid $43.1 million to purchase capped calls in connection with the convertible note offering.
Most significantly, in the second quarter of fiscal year 2021, we received $350.1 million in net proceeds from the issuance of convertible senior notes and paid $43.1 million to purchase capped calls in connection with the convertible note offering.
As described above, we expect to continue to pursue acquisitions meeting our financial criteria and designed to expand our business and drive significant stockholder returns. As a result, our expected uses of cash could change, our cash position could be reduced, and we may incur additional debt obligations to the extent we complete additional acquisitions.
We expect to continue to pursue acquisitions meeting our financial criteria that are designed to expand our business and drive significant stockholder returns. As a result, our expected uses of cash could change, our cash position could be reduced, and we may incur additional debt obligations to the extent we complete additional acquisitions.
In addition, we repurchased $77.0 million of our common stock under our share repurchase plan in fiscal year 2022, compared to $35.0 million in fiscal year 2021, and $60.0 million in fiscal year 2020. Indemnification Obligations We include standard intellectual property indemnification provisions in our licensing agreements in the ordinary course of business.
In addition, we repurchased $34.0 million of our common stock under our share repurchase plan in fiscal year 2023, compared to $77.0 million in fiscal year 2022, and $35.0 million in fiscal year 2021. Indemnification Obligations We include standard intellectual property indemnification provisions in our licensing agreements in the ordinary course of business.
Our organizational philosophy and operating principles focus primarily on customer and partner retention and success and a streamlined operating approach in order to more efficiently drive, predictable and stable recurring revenue and high levels of profitability. Follow a Total Growth Strategy through Accretive M&A.
Focus on Customer and Partner Retention to Drive Recurring Revenue and Profitability . Our organizational philosophy and operating principles focus primarily on customer and partner retention and success, and a streamlined operating approach to drive predictable and stable recurring revenue and high levels of profitability. Follow a Total Growth Strategy through Accretive M&A.
These costs primarily consist of professional services fees, including third-party legal and valuation-related fees, as well as retention fees. Acquisition-related expenses in fiscal year 2022 were primarily related to our pursuit of other acquisition opportunities. Acquisition-related expenses in fiscal year 2021 were primarily related to the acquisition of Kemp, as well as our pursuit of other acquisition opportunities.
These costs primarily consist of professional services fees, including third-party legal and valuation-related fees, as well as retention fees. Acquisition-related expenses in fiscal year 2023 were primarily related to the acquisition of MarkLogic, as well as our pursuit of other acquisition opportunities. Acquisition-related expenses in fiscal year 2022 were primarily related to our pursuit of other acquisition opportunities.
On January 10, 2023, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2023 to shareholders of record as of the close of business on March 1, 2023.
On January 9, 2024, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2024 to shareholders of record as of the close of business on March 1, 2024.
On September 23, 2022, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that was paid on December 15, 2022 to stockholders of record as of the close of business on December 1, 2022.
On September 20, 2023, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that was paid on December 15, 2023 to stockholders of record as of the close of business on December 1, 2023.
Our capital allocation policy emphasizes accretive M&A, which allows us to expand our business and drive significant stockholder returns. We also utilize dividends and share repurchases to return capital to stockholders.
Employ a Multi-Faceted Capital Allocation Strategy . Our capital allocation policy emphasizes accretive M&A, which allows us to expand our business and drive significant stockholder returns. We also utilize dividends and share repurchases to return capital to stockholders.
If exchange rates had remained constant in fiscal year 2022 as compared to the exchange rates in effect in fiscal year 2021, total revenue generated in markets outside North America would have been 45% of total revenue.
If exchange rates had remained constant in fiscal year 2023 as compared to the exchange rates in effect in fiscal year 2022, total revenue generated in markets outside North America would have been 41% of total revenue.
However, we do not anticipate that the repatriation of earnings would have a material adverse impact on our liquidity. Share Repurchases In fiscal years 2022 and 2021, we repurchased and retired 1.7 million shares of our common stock for $77.0 million and 0.8 million shares of our common stock for $35.0 million, respectively.
However, we do not anticipate that the repatriation of earnings would have a material adverse impact on our liquidity. Share Repurchases In fiscal years 2023 and 2022, we repurchased and retired 0.6 million shares of our common stock for $34.0 million and 1.7 million shares of our common stock for $77.0 million, respectively.
Liquidity Outlook Cash from operations in fiscal year 2023 could be affected by various risks and uncertainties, including, but not limited to, the effects of various risks detailed in Part I, Item 1A titled “Risk Factors” which have led to increased disruption and volatility in capital markets and credit markets that could adversely affect our liquidity and capital resources.
Liquidity Outlook Cash from operations in fiscal year 2024 could be affected by various risks and uncertainties, including, but not limited to, the effects of various risks detailed in Part I, Item 1A titled “Risk Factors” which may lead to disruption and volatility in capital markets and credit markets that could adversely affect our liquidity and capital resources.
Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net dollar retention rate.
Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net retention rate. Net retention rate is not calculated in accordance with GAAP.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Progress Software Corporation.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the results of operations and financial condition of Progress Software Corporation.
The debt proceeds were offset by payments on our long-term debt of $6.9 million in fiscal year 2022 compared to $117.3 million in fiscal year 2021 (including a $98.5 million repayment on the revolving line of credit), and $11.3 million in fiscal year 2020.
The debt proceeds were offset by payments on our long-term debt of $91.9 million in fiscal year 2023 (including a $85.0 million repayment on the revolving line of credit), compared to $6.9 million in fiscal year 2022, and $117.3 million in fiscal year 2021 (including a $98.5 million repayment on the revolving line of credit).
For a discussion of the year ended November 30, 2021 compared to the year ended November 30, 2020, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended November 30, 2021, as amended. 21 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.
For a discussion of the year ended November 30, 2022 compared to the year ended November 30, 2021, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended November 30, 2022. 22 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.
Amortization of Acquired Intangibles Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Amortization of acquired intangibles $ 22,076 $ 14,936 48 % As a percentage of total revenue 4 % 3 % 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 Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Amortization of acquired intangibles $ 30,169 $ 22,076 37 % As a percentage of total revenue 4 % 4 % 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.
In fiscal year 2022 we received $26.0 million net proceeds from the sale of long-lived assets . Cash used in investing activities was impacted by the acquisition of Kemp for a net cash amount of $254.0 million, and Chef for a net cash amount of $213.1 million, in fiscal years 2021 and 2020, respectively.
Cash used in investing activities was impacted by the acquisition of MarkLogic for a net cash amount of $355.3 million, and Kemp for a net cash amount of $254.0 million, in fiscal years 2023 and 2021, respectively. In fiscal year 2022 we received $26.0 million net proceeds from the sale of long-lived assets.
Amortization of Intangibles Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Amortization of intangibles $ 46,868 $ 31,996 46 % As a percentage of total revenue 8 % 6 % Amortization of 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 Intangibles Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Amortization of intangibles $ 66,430 $ 46,868 42 % As a percentage of total revenue 10 % 8 % Amortization of 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.
Cost of maintenance and services increased primarily due to higher personnel and hosting related costs resulting from the acquisition of Kemp, offset by decreased contractors and outside services costs.
Cost of maintenance and services increased primarily due to higher personnel related costs, contractors and outside services costs, and hosting related costs resulting from the acquisition of MarkLogic.
In fiscal year 2020, we repurchased and retired 1.4 million shares of our common stock for $60.0 million. As of November 30, 2022, there was $78.0 million remaining under the current share repurchase authorization. On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million.
In fiscal year 2021, we repurchased and retired 0.8 million shares of our common stock for $35.0 million. On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million. As of November 30, 2023, there was $194.0 million remaining under the current share repurchase authorization.
As of November 30, 2022, there were no outstanding amounts under the revolving line of credit and $2.3 million of letters of credit. The Credit Agreement contains customary affirmative and negative covenants, in each case subject to customary exceptions for a credit facility of this size and type.
As of November 30, 2023, there was $110.0 million outstanding amounts under the revolving line of credit and $2.5 million of letters of credit. The Credit Agreement contains customary affirmative and negative covenants, in each case subject to customary exceptions for a credit facility of this size and type.
Amortization of acquired intangibles increased in fiscal year 2022 due to the addition of Kemp acquired intangibles, as discussed above.
Amortization of acquired intangibles increased in fiscal year 2023 due to the addition of MarkLogic acquired intangibles, as discussed above.
Restructuring Expenses Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Restructuring expenses $ 879 $ 6,308 (86) % As a percentage of total revenue — % 1 % Restructuring expenses recorded in fiscal year 2022 primarily relate to the restructuring activities that occurred in fiscal years 2021 and 2020.
Restructuring Expenses Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Restructuring expenses $ 8,407 $ 879 856 % As a percentage of total revenue 1 % — % Restructuring expenses recorded in fiscal year 2023 primarily relate to the restructuring activities that occurred in fiscal years 2023 and 2020.
Gain on Sale of Assets Held for Sale Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Gain on sale of assets held for sale $ (10,770) $ — * As a percentage of total revenue 2 % — % *Not meaningful In the second quarter of fiscal year 2022, we sold corporate land and building assets previously reported as assets held for sale on our consolidated balance sheet.
See Note 19: Cyber Related Matters for further discussion. 27 Gain on Sale of Assets Held for Sale Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Gain on sale of assets held for sale $ — $ (10,770) * As a percentage of total revenue — % 2 % *Not meaningful In the second quarter of fiscal year 2022, we sold corporate land and building assets previously reported as assets held for sale on our consolidated balance sheet.
The increase in non-cash reconciling items included in net income primarily relates to the increase in amortization of intangibles due to the recent acquisition of Kemp. Our gross accounts receivable as of November 30, 2022 decreased by $1.8 million from the end of fiscal year 2021.
The increase in non-cash reconciling items included in net income primarily relates to the increase in amortization of intangibles due to the recent acquisition of MarkLogic. Our gross accounts receivable as of November 30, 2023 increased by $27.9 million from the end of fiscal year 2022.
Cash Flows from (used in) Investing Activities Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 November 30, 2020 Net investment activity $ 1,950 $ 5,950 $ 11,392 Purchases of property and equipment (6,090) (4,654) (6,517) Proceeds from sale of long-lived assets, net 25,998 — 889 Decrease in escrow receivable and other 134 2,330 — Payments for acquisitions, net of cash acquired — (253,961) (213,057) Net cash flows from (used in) investing activities $ 21,992 $ (250,335) $ (207,293) Net cash outflows and inflows of our net investment activity are generally a result of the timing of our purchases and maturities of securities, which are classified as cash equivalents or short-term securities, as well as the timing of acquisitions and divestitures.
Cash Flows (used in) from Investing Activities Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 November 30, 2021 Net investment activity $ 438 $ 1,950 $ 5,950 Purchases of property and equipment (5,570) (6,090) (4,654) Proceeds from sale of long-lived assets, net — 25,998 — Other investing activities — 134 2,330 Payments for acquisitions, net of cash acquired (355,250) — (253,961) Net cash flows from (used in) investing activities $ (360,382) $ 21,992 $ (250,335) Net cash outflows and inflows of our net investment activity are generally a result of the timing of our purchases and maturities of securities, which are classified as cash equivalents, as well as the timing of acquisitions and divestitures.
General and administrative expenses increased in fiscal year 2022 primarily due to higher personnel related costs associated with our acquisition of Kemp, as well as increases in contractors and outside services and other general and administrative costs.
General and administrative expenses increased in fiscal year 2023 primarily due to higher personnel related costs associated with our acquisition of MarkLogic, as well as increases in contractors and outside services, partially offset by a decrease in other general and administrative costs.
Except as described below, there are no limitations on our ability to access our cash, cash equivalents and short-term investments. Cash, cash equivalents and short-term investments held by our foreign subsidiaries were $51.8 million and $36.8 million at November 30, 2022 and 2021, respectively. Foreign cash includes unremitted foreign earnings, which are invested indefinitely outside of the U.S.
Except as described below, there are no limitations on our ability to access our cash and cash equivalents. 29 Cash and cash equivalents held by our foreign subsidiaries were $61.1 million at November 30, 2023. Foreign cash includes unremitted foreign earnings, which are invested indefinitely outside of the U.S.
Cost of Software Licenses Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 Change Cost of software licenses $ 10,243 $ 5,271 $ 4,972 94 % As a percentage of software license revenue 5 % 3 % As a percentage of total revenue 2 % 1 % Cost of software licenses consists primarily of costs of inventories, royalties, electronic software distribution, duplication, and packaging.
Cost of Software Licenses Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 Change Cost of software licenses $ 11,153 $ 10,243 $ 910 9 % As a percentage of software license revenue 5 % 5 % As a percentage of total revenue 2 % 2 % Cost of software licenses consists primarily of costs of inventories, royalties, electronic software distribution, duplication, and packaging.
Gross Profit Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Gross profit $ 507,517 $ 452,864 12 % As a percentage of total revenue 84 % 85 % Our gross profit increased primarily due to the increase in revenue, offset by the increases of costs of licenses, costs of maintenance and services, and the amortization of intangibles, each as described above.
The year over year increase was due to the addition of MarkLogic acquired intangibles. 25 Gross Profit Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Gross profit $ 567,862 $ 507,517 12 % As a percentage of total revenue 82 % 84 % Our gross profit increased primarily due to the increase in revenue, partially offset by the increases of costs of licenses, costs of maintenance and services, and the amortization of intangibles, each as described above.
A key element of our strategy is centered on providing the platform and tools enterprises need to build, deploy, and manage 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. Focus on Customer and Partner Retention to Drive Recurring Revenue and Profitability .
A key element of our strategy is centered on the goal of building and maintaining leading products and tools enterprises need to build, deploy, and manage modern, strategic business applications. We offer our products and tools to both new customers and partners, as well as our existing partner and customer ecosystems.
We received proceeds from the issuance of debt of $7.5 million in fiscal year 2022 and $98.5 million in fiscal year 2020.
We received proceeds from the issuance of 31 debt of $195.0 million in fiscal year 2023 and $7.5 million in fiscal year 2022.
See Item 8, Note 20: Subsequent Events for further discussion. 32 Critical Accounting Estimates Management’s discussion and analysis of financial condition and results of operations are based on our consolidated financial statements which have been prepared in accordance with GAAP.
Critical Accounting Estimates Management’s discussion and analysis of financial condition and results of operations are based on our consolidated financial statements which have been prepared in accordance with GAAP.
We also sold $0.9 million of intangible assets in the fourth quarter of fiscal year 2020. 31 Cash Flows (used in) from Financing Activities Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 November 30, 2020 Proceeds from stock-based compensation plans $ 16,165 $ 15,033 $ 11,099 Repurchases of common stock (77,041) (35,000) (60,000) Dividend payment to stockholders (31,063) (31,561) (29,900) Proceeds from issuance of convertible senior notes, net of issuance costs of $9.9 million — 350,100 — Purchase of capped calls — (43,056) — Proceeds from the issuance of debt, net of payments of principal and debt issuance costs (1,660) (118,217) 87,212 Other financing activities (7,824) (5,186) (5,331) Net cash flows (used in) from financing activities $ (101,423) $ 132,113 $ 3,080 During fiscal year 2022, we received $16.2 million from the exercise of stock options and the issuance of shares under our employee stock purchase plan as compared to $15.0 million in fiscal year 2021 and $11.1 million in fiscal year 2020.
Cash Flows from (used in) Financing Activities Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 November 30, 2021 Proceeds from stock-based compensation plans $ 25,956 $ 16,165 $ 15,033 Repurchases of common stock (33,962) (77,041) (35,000) Dividend payment to stockholders (31,554) (31,063) (31,561) Proceeds from issuance of convertible senior notes, net of issuance costs of $9.9 million — — 350,100 Purchase of capped calls — — (43,056) Proceeds from the issuance of debt, net of payments of long term debt and debt issuance costs 103,125 (1,660) (118,217) Other financing activities (12,377) (7,824) (5,186) Net cash flows (used in) from financing activities $ 51,188 $ (101,423) $ 132,113 During fiscal year 2023, we received $26.0 million from the exercise of stock options and the issuance of shares under our employee stock purchase plan as compared to $16.2 million in fiscal year 2022, and $15.0 million in fiscal year 2021.
The increases in North America and EMEA were primarily due to the acquisition of Kemp and increases in license revenue from our DataDirect product offerings and maintenance revenue from our Ipswitch product offerings. Revenue from Latin America increased due to the acquisition of Kemp, and an increase in Sitefinity license and maintenance revenue.
The increases in North America and EMEA were primarily due to the acquisition of MarkLogic and increases in license revenue from OpenEdge and Kemp LoadMaster. Revenue from Latin America increased due to an increase in OpenEdge license and maintenance revenue. Revenue from Asia Pacific increased due to the acquisition of MarkLogic, as well as increases in our Chef product offerings.
Days sales outstanding ("DSO") in accounts receivable increased to 62 days at the end of fiscal year 2022 compared to 60 days at the end of fiscal year 2021, due to the timing of billings and collections. In addition, our net deferred revenue as of November 30, 2022 increased by $30.1 million from the end of fiscal year 2021.
Days sales outstanding ("DSO") in accounts receivable remained flat at 62 days in fiscal year 2023 as compared to fiscal year 2022. In addition, our net deferred revenue as of November 30, 2023 increased by $12.6 million from the end of fiscal year 2022.
We calculate ARR by taking monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage and monthly subscriptions.
We calculate ARR by taking monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage and monthly subscriptions. The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented.
We intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and to continue to return a portion of our annual cash flows from operations to stockholders in the form of dividends. In fiscal year 2022, we repurchased and retired 1.7 million shares of our common stock for $77.0 million.
We currently intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and to continue to return a portion of our annual cash flows from operations to stockholders in the form of dividends.
Provision for Income Taxes Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Provision for income taxes $ 22,186 $ 17,114 30 % As a percentage of total revenue 4 % 3 % Our effective income tax rate was 19% and 18% for fiscal years 2022 and 2021 respectively.
Provision for Income Taxes Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Provision for income taxes $ 9,460 $ 22,186 (57) % As a percentage of income before income taxes 12 % 19 % Our effective income tax rate was 12% and 19% for fiscal years 2023 and 2022 respectively.
The SSP of services is based upon observable prices in similar transactions using the hourly rates sold in stand-alone services transactions. Services are either sold on a time and materials basis or prepaid upfront. Revenue related to software-as-a-service ("SaaS") offerings is recognized ratably over the contract period.
Services are either sold on a time and materials basis or prepaid upfront. Revenue related to software-as-a-service ("SaaS") offerings is recognized ratably over the contract period.
General and Administrative Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 Change General and administrative $ 77,876 $ 65,128 $ 12,748 20 % As a percentage of total revenue 13 % 12 % Components of general and administrative: Personnel Related Costs $ 61,330 $ 51,601 $ 9,729 19 % Contractors and Outside Services 9,763 9,299 464 5 % Other general and administrative costs 6,783 4,228 2,555 60 % Total cost of general and administrative $ 77,876 $ 65,128 $ 12,748 20 % General and administrative expenses include the costs of our finance, human resources, legal, information systems and administrative departments.
General and Administrative Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 Change General and administrative $ 83,157 $ 77,876 $ 5,281 7 % As a percentage of total revenue 12 % 13 % Components of general and administrative: Personnel Related Costs $ 65,858 $ 61,330 $ 4,528 7 % Contractors and Outside Services 12,888 9,763 3,125 32 % Other general and administrative costs 4,411 6,783 (2,372) (35) % Total cost of general and administrative $ 83,157 $ 77,876 $ 5,281 7 % 26 General and administrative expenses include the costs of our finance, human resources, legal, information systems and administrative departments.
Revenue by Region Fiscal Year Ended Percentage Change (In thousands) November 30, 2022 November 30, 2021 As Reported Constant Currency North America $ 341,154 $ 317,814 7 % 7 % As a percentage of total revenue 57 % 60 % EMEA $ 207,707 $ 169,335 23 % 32 % As a percentage of total revenue 35 % 32 % Latin America $ 18,053 $ 17,036 6 % 4 % As a percentage of total revenue 3 % 3 % Asia Pacific $ 35,099 $ 27,128 29 % 33 % As a percentage of total revenue 5 % 5 % Total revenue generated in North America increased $23.3 million, and total revenue generated outside North America increased $47.4 million, in fiscal year 2022.
Revenue by Region Fiscal Year Ended Percentage Change (In thousands) November 30, 2023 November 30, 2022 As Reported Constant Currency North America $ 411,670 $ 341,154 21 % 21 % As a percentage of total revenue 59 % 57 % EMEA $ 222,862 $ 207,707 7 % 6 % As a percentage of total revenue 32 % 35 % Latin America $ 21,112 $ 18,053 17 % 14 % As a percentage of total revenue 3 % 3 % Asia Pacific $ 38,795 $ 35,099 11 % 12 % As a percentage of total revenue 6 % 5 % 24 Total revenue generated in North America increased $70.5 million, and total revenue generated outside North America increased $21.9 million, in fiscal year 2023.
See Note 9: Debt for further discussion. 30 Cash Flows from Operating Activities Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 November 30, 2020 Net income $ 95,069 $ 78,420 $ 79,722 Non-cash reconciling items included in net income 104,121 100,666 64,534 Changes in operating assets and liabilities (7,030) (556) 591 Net cash flows from operating activities $ 192,160 $ 178,530 $ 144,847 The increase in cash generated from operations in fiscal year 2022 as compared to fiscal year 2021 was primarily due to increased collections resulting from the acquisition of Kemp, as well as particularly strong collections generated from the rest of the business, partially offset by higher compensation related payments as compared to the same period in 2021.
See Note 8: Debt for further discussion. 30 Cash Flows from Operating Activities Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 November 30, 2021 Net income $ 70,197 $ 95,069 $ 78,420 Non-cash reconciling items included in net income 127,063 104,121 100,666 Changes in operating assets and liabilities (23,340) (7,030) (556) Net cash flows from operating activities $ 173,920 $ 192,160 $ 178,530 The decrease in cash generated from operations in fiscal year 2023 as compared to fiscal year 2022 was primarily due to higher interest expense on debt and an increase in cash paid for income taxes, partially offset by higher billings and collections.
Accordingly, the minimal balance of the restructuring reserve is included in other accrued liabilities on the consolidated balance sheet at November 30, 2022. Credit Facility On January 25, 2022, we entered into the Credit Agreement providing for a $275.0 million secured term loan and a $300.0 million secured revolving credit facility.
Credit Facility On January 25, 2022, we entered into the Credit Agreement providing for a $275.0 million secured term loan and a $300.0 million secured revolving Credit Facility.
Refer to Note 9: Debt, for further details on the impact of the amendment. Interest income and other, net, was higher in fiscal year 2022, resulting from the recognition of grant income during the first quarter of the year. Foreign currency loss decreased year over year.
Refer to Note 8: Debt, for further details on the impact of the amendment. Interest income and other, net, was higher in fiscal year 2023, resulting from higher interest rates worldwide. Foreign currency loss increased year over year due to rate volatility and timing of intercompany and hedge settlement activities.
The SSP of maintenance services is a percentage of the net selling price of the related software license. Professional services revenue is generally recognized as the services are delivered to the customer. We apply the practical expedient of recognizing revenue upon invoicing for time and materials-based arrangements.
The SSP of maintenance services is a percentage of the net selling price of the related software license. Professional services revenue is generally recognized as the services are delivered to the customer. The SSP of services is based upon observable prices in similar transactions using the hourly rates sold in stand-alone services transactions.
We have paid aggregate cash dividends totaling $31.1 million, $31.6 million and $29.9 million for the years ended November 30, 2022, November 30, 2021 and November 30, 2020, respectively.
We have paid aggregate cash dividends totaling $31.6 million, $31.1 million and $31.6 million for the years ended November 30, 2023, 2022, and 2021, respectively. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.
The year over year increase is due to our acquisition of Kemp in the fourth quarter of fiscal year 2021. 24 Cost of Maintenance and Services Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 Change Cost of maintenance and services $ 62,177 $ 58,242 $ 3,935 7 % As a percentage of maintenance and services revenue 15 % 16 % As a percentage of total revenue 10 % 11 % Components of cost of maintenance and services: Personnel Related Costs $ 44,049 $ 40,015 $ 4,034 10 % Contractors and Outside Services 12,286 13,087 (801) (6) % Hosting and Other 5,842 5,140 702 14 % Total cost of maintenance and services $ 62,177 $ 58,242 $ 3,935 7 % Cost of maintenance and services consists primarily of costs of providing customer support, consulting, and education.
Cost of Maintenance and Services Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 Change Cost of maintenance and services $ 85,255 $ 62,177 $ 23,078 37 % As a percentage of maintenance and services revenue 18 % 15 % As a percentage of total revenue 12 % 10 % Components of cost of maintenance and services: Personnel Related Costs $ 63,471 $ 44,049 $ 19,422 44 % Contractors and Outside Services 13,969 12,286 1,683 14 % Hosting and Other 7,815 5,842 1,973 34 % Total cost of maintenance and services $ 85,255 $ 62,177 $ 23,078 37 % Cost of maintenance and services consists primarily of costs of providing customer support, consulting, and education.
Net Income Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Net income $ 95,069 $ 78,420 21 % As a percentage of total revenue 16 % 15 % Select Performance Metrics: Management evaluates our financial performance using a number of financial and operating metrics.
The primary reason for the decrease in the effective rate was due to more favorable tax benefits related to stock-based compensation during 2023 compared to 2022. 28 Net Income Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Net income $ 70,197 $ 95,069 (26) % As a percentage of total revenue 10 % 16 % Select Performance Metrics: Management evaluates our financial performance using a number of financial and operating metrics.
See Note 16: Restructuring to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional details, including types of expenses incurred and the timing of future expenses and cash payments. 26 Acquisition-Related Expenses Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Acquisition-related expenses $ 4,603 $ 4,102 12 % As a percentage of total revenue 1 % 1 % Acquisition-related costs are expensed as incurred and include those costs incurred as a result of a business combination.
See Note 15: Restructuring to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional details, including types of expenses incurred and the timing of future expenses and cash payments.
These increases were partially offset by the negative impact of foreign exchange on license and maintenance revenue in our EMEA region. Changes in prices from fiscal year 2021 to 2022 did not have a significant impact on our revenue.
Changes in prices from fiscal year 2022 to 2023 did not have a significant impact on our revenue.
Software License Revenue Fiscal Year Ended Percentage Change (In thousands) November 30, 2022 November 30, 2021 As Reported Constant Currency License $ 188,336 $ 156,590 20 % 24 % As a percentage of total revenue 31 % 29 % Software license revenue increased in fiscal year 2022 primarily due to the acquisition of Kemp, as well as increases in license sales in our DataDirect and Corticon product offerings, which was partially offset by the negative impact of foreign exchange. 23 Maintenance and Services Revenue Fiscal Year Ended Percentage Change (In thousands) November 30, 2022 November 30, 2021 As Reported Constant Currency Maintenance $ 362,335 $ 325,863 11 % 14 % As a percentage of total revenue 60 % 61 % Professional services $ 51,342 $ 48,860 5 % 7 % As a percentage of total revenue 9 % 10 % Total maintenance and services revenue $ 413,677 $ 374,723 10 % 13 % As a percentage of total revenue 69 % 71 % Maintenance revenue increased in fiscal year 2022 primarily due to the acquisition of Kemp, as well as an increase in maintenance revenue from our Chef, Ipswitch and DevTools product offerings, partially offset by the negative impact of foreign exchange in our EMEA region .
Maintenance and Services Revenue Fiscal Year Ended Percentage Change (In thousands) November 30, 2023 November 30, 2022 As Reported Constant Currency Maintenance $ 401,501 $ 362,335 11 % 10 % As a percentage of total revenue 58 % 60 % Professional services $ 72,149 $ 51,342 41 % 40 % As a percentage of total revenue 10 % 9 % Total maintenance and services revenue $ 473,650 $ 413,677 14 % 14 % As a percentage of total revenue 68 % 69 % Maintenance revenue increased in fiscal year 2023 primarily due to the acquisition of MarkLogic, as well as an increase in maintenance revenue from our OpenEdge, Chef, and DevTools product offerings.
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.
However, we currently 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. 23 Results of Operations Fiscal Year 2023 Compared to Fiscal Year 2022 Revenue Fiscal Year Ended Percentage Change (In thousands) November 30, 2023 November 30, 2022 As Reported Constant Currency Revenue $ 694,439 $ 602,013 15 % 15 % The increase in revenue in fiscal year 2023 was driven by the acquisition of MarkLogic, which closed during the first quarter of fiscal year 2023, as well as increases in our OpenEdge, Kemp LoadMaster, Sitefinity, Ipswitch, DevTools, Corticon, and Chef product offerings.
Revenue from Asia Pacific increased due to the acquisition of Kemp as well as increases in our OpenEdge, DevTools, and Sitefinity product offerings. Total revenue generated in markets outside North America represented 43% of total revenue in fiscal year 2022 compared to 40% of total revenue in the same period last year.
Total revenue generated in markets outside North America represented 41% of total revenue in fiscal year 2023 compared to 43% of total revenue in the same period last year.
Progress helps customers drive faster cycles of innovation, fuel momentum and accelerate their path to success. The key tenets of our strategic plan and operating model are as follows: Be the Trusted Provider of the Best Products to Develop, Deploy and Manage High Impact Applications .
Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides enterprise software products for the development, deployment and management of high-impact business applications. The key tenets of our strategic plan and operating model are as follows: Be a Trusted Provider of Products to Develop, Deploy and Manage High Impact Applications .
We are pursuing a total growth strategy driven by accretive acquisitions of businesses within the infrastructure software space, with products that appeal to both IT organizations and individual developers. These acquisitions must meet strict financial and other criteria, which help further our goal to provide significant stockholder returns by providing scale and increased cash flows.
We are pursuing a total growth strategy driven by accretive acquisitions of businesses within the infrastructure software space, with products that appeal to both IT organizations and individual developers. In April 2019, we acquired Ipswitch, Inc.; in October 2020, we acquired Chef Software, Inc.; in November 2021, we acquired Kemp Technologies; and in February 2023, we acquired MarkLogic.
Income from Operations Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Income from operations $ 132,131 $ 116,102 14 % As a percentage of total revenue 22 % 22 % Income from operations increased year over year due to an increase in revenue, offset by increases in costs of revenue and operating expenses as shown above. 27 Other (Expense) Income Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Interest expense $ (15,790) $ (20,045) (21) % Interest income and other, net 1,414 777 82 % Foreign currency loss, net (500) (1,300) (62) % Total other expense, net $ (14,876) $ (20,568) (28) % As a percentage of total revenue (2) % (4) % Total other expense, net, decreased in fiscal year 2022 due to decreased interest expense on our convertible senior notes resulting from the adoption of ASU 2020-06.
Income from Operations Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Income from operations $ 110,523 $ 132,131 (16) % As a percentage of total revenue 16 % 22 % Income from operations decreased year over year due to an increase in costs of revenue and operating expenses, offset by an increase in revenue, as shown above.
If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result. Recent Accounting Pronouncements Refer to Note 1: Nature of Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. 33
If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result.
These cash inflows were offset by repurchases of common stock of $77.0 million, dividend payments of $31.1 million, the effect of exchange rates on cash of $11.9 million, payments of debt obligations of $6.9 million, purchases of property and equipment of $6.1 million, and payments of issuance costs for long-term debt of $2.3 million.
These cash outflows were offset by proceeds from the issuance of debt of $195.0 million to partially fund the acquisition of MarkLogic, cash inflows from operations of $173.9 million, $13.6 million in cash received from the issuance of common stock, and the effect of exchange rates on cash of $6.0 million.
Cyber Incident Fiscal Year Ended (In thousands) November 30, 2022 November 30, 2021 % Change Cyber incident $ 602 $ — * As a percentage of total revenue — % — % *Not meaningful As previously disclosed on December 19, 2022, following the detection of irregular activity on certain portions of our corporate network, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of the cyber incident.
MOVEit Transfer and MOVEit Cloud represented less than 4% in aggregate of the Company’s revenue for the fiscal year ended November 30, 2023. Progress engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of the MOVEit Vulnerability.
The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented. 28 Our ARR was $497.0 million and $480.0 million as of November 30, 2022 and 2021, respectively, which is an increase of 3.5% year-over-year. The growth in ARR was driven by multiple products including OpenEdge, DataDirect, Sitefinity, Chef, DevTools and FileTransfer.
Our ARR was $574.0 million and $490.0 million as of November 30, 2023 and 2022, respectively, which is an increase of 17.1% year-over-year. The growth in ARR was primarily driven by the acquisition of MarkLogic.
Net dollar retention rate is not calculated in accordance with GAAP. Our net dollar retention rates have generally ranged between 98% and 101% for all periods presented. Our high net dollar retention rates illustrate our predictable and durable top line performance.
Our net retention rates have generally ranged between 100% and 102% for all periods presented. We believe net retention rates can be a helpful indicator of the durability of top line performance.
Liquidity and Capital Resources Cash, Cash Equivalents and Short-Term Investments (In thousands) November 30, 2022 November 30, 2021 Cash and cash equivalents $ 256,277 $ 155,406 Short-term investments — 1,967 Total cash, cash equivalents and short-term investments $ 256,277 $ 157,373 The increase in cash, cash equivalents and short-term investments of $98.9 million from the end of fiscal year 2021 was primarily due to cash inflows from operations of $192.2 million, proceeds from the sale of long-lived assets of $26.0 million, $8.3 million in cash received from the issuance of common stock, and proceeds from the issuance of debt of $7.5 million.
Liquidity and Capital Resources Cash and Cash Equivalents (In thousands) November 30, 2023 November 30, 2022 Cash and cash equivalents $ 126,958 $ 256,277 The decrease in cash and cash equivalents of $129.3 million from the end of fiscal year 2022 was primarily due to cash outflows of $355.3 million for cash paid for acquisitions, net of cash acquired, repayment of the revolving line of credit of $85.0 million, repurchases of common stock of $34.0 million, dividend payments of $31.6 million, payments of debt obligations of $6.9 million, and purchases of property and equipment of $5.6 million.
Professional services revenue increased primarily due to increased services revenue from our Sitefinity, Ipswitch, and DevTools product offerings.
The increase in maintenance revenue was partially offset by a decrease in Kemp LoadMaster maintenance revenue. Professional services revenue increased primarily due to our acquisition of MarkLogic, as well as an increase in professional services revenue from our Sitefinity product offerings. The increase in professional services revenue was partially offset by a decrease in professional services revenue of Chef.
Removed
Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") is the trusted provider of the best products to develop, deploy and manage high-impact business applications. We enable our customers to develop the applications and experiences they need, deploy where and how they want, and manage it all safely and securely.
Added
Software License Revenue Fiscal Year Ended Percentage Change (In thousands) November 30, 2023 November 30, 2022 As Reported Constant Currency License $ 220,789 $ 188,336 17 % 17 % As a percentage of total revenue 32 % 31 % Software license revenue increased in fiscal year 2023 primarily due to the acquisition of MarkLogic, as well as increases in license sales in Kemp LoadMaster and OpenEdge.
Removed
In April 2019, we acquired Ipswitch, Inc.; in October 2020, we acquired Chef Software, Inc.; and in November 2021, we acquired Kemp Technologies. These acquisitions met our strict financial criteria.
Added
As a percentage of total revenue, gross profit decreased due to higher costs of maintenance and services, as described above.
Removed
In addition, on January 3, 2023, we announced our entry into a definitive agreement with Vector Maven Holdings, Inc. and Vector Maven Holdings, L.P. to acquire MarkLogic, a leader in managing complex data and metadata (subject to the satisfaction of the terms and conditions set forth in the definitive agreement).
Added
Product Development Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 Change Product development $ 132,401 $ 114,568 $ 17,833 16 % As a percentage of total revenue 19 % 19 % Components of product development costs: Personnel related costs $ 126,680 $ 111,009 $ 15,671 14 % Contractors and outside services 4,743 2,699 2,044 76 % Other product development costs 978 860 118 14 % Total product developments costs $ 132,401 $ 114,568 $ 17,833 16 % Product development expenses increased in fiscal year 2023 primarily due to increased personnel related costs associated with our acquisition of MarkLogic and increased contractors and outside services costs.
Removed
In recent years, our total growth strategy described above has resulted in the rapid expansion of our product portfolio. As our portfolio evolves, we continuously evaluate our organization for additional synergies and efficiencies. Therefore, we are working to realign our go-to-market, product, and operational teams and to increase centralization of shared services and functions across our company.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−2 removed3 unchanged
Biggest changeThe contract matures on April 30, 2024 and requires periodic interest rate settlements. Under this interest rate swap contract, we receive a floating rate based on the greater of 1-month LIBOR or 0.00% and pay a fixed rate of 1.855% on the outstanding notional amount. As of November 30, 2022, the notional value of the hedge was $120.0 million.
Biggest changeUnder the agreement, we receive a floating rate based on the greater of 1-month SOFR or 0.00% and pay a fixed rate of 1.855% on the outstanding notional amount. W e were previously exposed to market risk due to variable interest rates based on LIBOR and are now exposed to market risk due to variable interest rates based on SOFR.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to a variety of risks, including changes in interest rates affecting the return on our investments and borrowing activities and foreign currency fluctuations. We have established policies and procedures to manage our exposure to fluctuations in interest rates and foreign currency exchange rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to a variety of risks, including changes in interest rates affecting the return on our invested cash and borrowing activities and foreign currency fluctuations. We have established policies and procedures to manage our exposure to fluctuations in interest rates and foreign currency exchange rates.
Based on a hypothetical 10% adverse movement in all foreign currency exchange rates, our revenue would be adversely affected by approximately 3%, or $17 million, and our net income would be adversely affected by approximately 6%, or $6 million (excluding any offsetting positive impact from our ongoing hedging programs), although the actual effects may differ materially from the hypothetical analysis.
Based on a hypothetical 10% adverse movement in all foreign currency exchange rates, our revenue would be adversely affected by approximately 3%, or $18 million, and our net income would be adversely affected by approximately 11%, or $8 million (excluding any offsetting positive impact from our ongoing hedging programs), although the actual effects may differ materially from the hypothetical analysis.
The outstanding balance of the term loan as of November 30, 2022 was $268.1 million. On July 9, 2019, we entered into an interest rate swap contract with an initial notional amount of $150.0 million to manage the variability of cash flows associated with approximately one-half of our variable rate debt.
The outstanding balance of the term loan as of November 30, 2023 was $261.3 million. On July 9, 2019, we entered into an interest rate swap contract with an initial notional amount of $150.0 million to manage the variability of cash flows associated with approximately one-half of our variable rate debt.
November 30, 2022 November 30, 2021 Notional Value Fair Value Notional Value Fair Value Interest rate swap contracts designated as cash flow hedges $ 120,000 $ 4,407 $ 133,125 $ (3,078) Foreign Currency Risk We generally use forward contracts that are not designated as hedging instruments to hedge economically the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies.
November 30, 2023 November 30, 2022 Notional Value Fair Value Notional Value Fair Value Interest rate swap contracts designated as cash flow hedges $ 103,125 $ 1,495 $ 120,000 $ 4,407 Foreign Currency Risk We generally use forward contracts that are not designated as hedging instruments to hedge economically the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies.
In fiscal year 2022, realized and unrealized losses of $7.7 million from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations. These losses were substantially offset by realized and unrealized gains and losses on the offsetting positions.
In fiscal year 2023, realized and unrealized gains of $2.3 million from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations. These losses were substantially offset by realized and unrealized gains and losses on the offsetting positions.
The table below details outstanding foreign currency forward contracts at November 30, 2022 and 2021 where the notional amount is determined using contract exchange rates (in thousands): November 30, 2022 November 30, 2021 Notional Value Fair Value Notional Value Fair Value Forward contracts to sell U.S. dollars $ 74,578 $ (2,995) $ 79,777 $ (371) Forward contracts to purchase U.S. dollars 544 (5) 119 (1) Total $ 75,122 $ (3,000) $ 79,896 $ (372) 34
The table below details outstanding foreign currency forward contracts at November 30, 2023 and 2022 where the notional amount is determined using contract exchange rates (in thousands): November 30, 2023 November 30, 2022 Notional Value Fair Value Notional Value Fair Value Forward contracts to sell U.S. dollars $ 102,229 $ (2,526) $ 74,578 $ (2,995) Forward contracts to purchase U.S. dollars 844 (4) 544 (5) Total $ 103,073 $ (2,530) $ 75,122 $ (3,000) 36
Removed
As of November 30, 2022, the fair value of the hedge was a gain of $4.4 million and was included in other assets on our consolidated balance sheets.
Added
The contract matures on April 30, 2024 and requires periodic interest rate settlements. In June 2023, the interest rate swap agreement was amended to implement certain changes in the reference rate from LIBOR to SOFR.
Removed
Foreign currency translation exposure from a 10% movement of currency exchange rates would have a material impact on our reported revenue and net income.

Other PRGS 10-K year-over-year comparisons