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What changed in PROGRESS SOFTWARE CORP /MA's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PROGRESS SOFTWARE CORP /MA's 2023 and 2024 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 2024 report.

+264 added−316 removedSource: 10-K (2025-01-21) vs 10-K (2024-01-26)

Top changes in PROGRESS SOFTWARE CORP /MA's 2024 10-K

264 paragraphs added · 316 removed · 196 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMaintenance 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.
Biggest changeWe provide support to customers primarily through our main regional customer support centers in Sofia, Bulgaria; San Jose, Costa Rica; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Limerick, Ireland; Rotterdam, The Netherlands; Singapore; Alpharetta, Georgia; Burlington, Massachusetts; Madison, Wisconsin; Morrisville, North Carolina and Raleigh, North Carolina. Local technical support for specific products is provided in certain other countries as well.
Our efforts to recruit and retain a diverse and inclusive workforce include providing competitive compensation and benefit packages worldwide and ensuring we listen to our employees. To that end, we regularly survey our employees to obtain their views and assess employee satisfaction. We use the views expressed in the surveys to influence our people strategy and policies.
Our efforts to recruit and retain a diverse and inclusive workforce include providing competitive compensation and benefit packages worldwide and ensuring we listen to our employees. To that end, we regularly survey our employees to obtain their views and assess employee satisfaction and engagement. We use the views expressed in the surveys to influence our people strategy and policies.
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.
Our sales efforts then focus on converting these leads into paying customers. Customer Support Our customer support staff provides telephone, email 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.
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.
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 do not believe that there is a dominant vendor in the markets in which we compete.
To match the location and learning specifics of our people, we combine various channels for personal and technical development: on-demand videos, webinars, classroom trainings, text-based resources, coaching, and more. We also believe strongly in fostering our employees’ personal growth and offer programs like tuition reimbursement.
To match the location and learning specifics of our people, we combine various channels for personal and technical development: on-demand online training including videos, webinars, classroom trainings, text-based resources, coaching, and more. We also believe strongly in fostering our employees’ personal growth and offer programs like tuition reimbursement.
We believe the relative importance of each of these factors depends upon the concerns and needs of each specific customer. We compete with multiple companies, some that have single or narrow solutions, and some that have a range of enterprise infrastructure solutions.
We believe the relative importance of each of these factors depends upon the concerns and needs of each specific customer. We compete with multiple companies, some that have single or narrow solutions, and some that have a range of software solutions.
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.
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., 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.
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.
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.
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.
Customers We sell our products globally through several channels: directly to end users and various indirect sales channels. 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 use employee survey information to gain insights into how and where we work. Flexible Work Approach The COVID‐19 pandemic significantly changed the way employees think about where and how they work. For most of our employees, productivity is no longer tied to being in an office and collaboration can happen between people anywhere.
Flexible Work Approach The COVID‐19 pandemic significantly changed the way employees think about where and how they work. For most of our employees, productivity is no longer tied to being in an office and collaboration can happen between people anywhere.
We empower our employees to drive their career aspirations and set personal development objectives in partnership with their managers. To strengthen these conversations, we train managers across the globe to partner with employees through career conversations and provide career development training for all employees so that they can successfully leverage the many tools in place to support them.
To strengthen these conversations, we train managers across the globe to partner with employees through career conversations and provide career development training for all employees so that they can successfully leverage the many tools in place to support them.
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.
Except as described below with respect to our Chef products, we primarily distribute or offer our products as a service under software license agreements that grant customers a nonexclusive license to use our products, but contain terms and conditions prohibiting the unauthorized reproduction, use or transfer of our products.
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.
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.
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. 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.
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. 5 Original Equipment Manufacturers OEMs are companies that embed our products into their own software products or devices.
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.
Item 1. Business Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides software products that enable our customers to develop, deploy and manage responsible AI-powered applications and digital experiences. 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.
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.
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.
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.
None of our U.S. employees are subject to a collective bargaining agreement. Employees in certain foreign jurisdictions are represented by local workers’ councils and/or collective bargaining agreements as may be customary or required in those jurisdictions. We have experienced no work stoppages and believe our relations with employees are good.
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.
Product Development We believe that the features and performance of our products are competitive with those of other available digital experience and infrastructure software products and that none of the current versions of our products are approaching obsolescence.
We obtain many components from software developed and released by contributors to independent open source components of our offerings. Open source licenses grant licensees broad permissions to use, copy, modify and redistribute our platform. As a result, open source development and licensing practices can limit the value of our software copyright assets.
Our Chef offerings incorporate software components licensed to the general public under open source licenses. We obtain many components from software developed and released by contributors to independent open source components of our offerings. Open source licenses grant licensees broad permissions to use, copy, modify and redistribute our platform.
We operate as one operating segment: software products to develop, deploy, and manage high-impact business applications. Our CODM evaluates financial information on a consolidated basis. As we operate as one operating segment, the required financial segment information can be found in the condensed consolidated financial statements.
We operate as one operating segment: software products for the development, deployment, and management of responsible, AI-powered applications and digital experiences. Our CODM evaluates financial information on a consolidated basis. As we operate as one operating segment, the required financial segment information can be found in the condensed consolidated financial statements.
Value Added Resellers, Systems Integrators and Distributors We enter into arrangements with VARs in which the VAR adds features or services to our products, then resells those products as an integrated product or complete "turn-key" solution .
Historically, most of our OEMs have renewed their agreements upon the expiration of the initial term. Value Added Resellers, Systems Integrators and Distributors We enter into arrangements with VARs in which the VARs add features or services to our product, then resell it as an integrated product or complete "turn-key" solution.
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.
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. We empower our employees to drive their career aspirations and set personal development objectives in partnership with their managers.
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.
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. 7 Human Capital As of November 30, 2024, we had 2,815 employees worldwide, including 975 in sales and marketing, 503 in customer support and services, 1,055 in product development and 282 in administration.
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.
We hold numerous patents covering portions of our products. 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. We also protect our trade secrets and other proprietary information through agreements with employees, consultants and channel partners.
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.
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 meeting strict compliance requirements. 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.
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.
Independent Software Vendors ISVs develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. Our ISVs cover a broad range of markets, offer an extensive library of business applications and are a source of recurring revenue.
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.
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. Our consulting organization also provides services to web-enable existing applications or to take advantage of the capabilities of new Progress product releases.
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.
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 Sofia, Bulgaria; Brno, Czech Republic; Bengaluru, India; Hyderabad, India; Limerick, Ireland; Alpharetta, Georgia; Burlington, Massachusetts; Madison, Wisconsin; Morrisville, North Carolina and Raleigh, North Carolina.
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.
Progress Developer Tools: The comprehensive software development tooling collection including .NET and JavaScript UI components for web, desktop and mobile applications, AI-prompt components, reporting and report management tools and automated testing and mocking tools. 4 Progress Flowmon : AI-powered network security and visibility product with automated response across hybrid cloud ecosystems.
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.
Progress Semaphore: Semantic AI platform that transforms data into meaningful insights, empowering organizations to leverage Retrieval Augmented Generation (RAG) for accurate, contextually relevant Gen AI responses, manage knowledge models, and to automatically extract and classify meaning from both structured and unstructured data.
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.
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. 6 Competition The software industry is intensely competitive.
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.
Nearly half of our worldwide revenue is realized through relationships with indirect channel partners, principally independent software vendors ("ISVs"), original equipment manufacturers ("OEMs"), distributors and value-added resellers ("VARs").
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.
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.
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.
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 Many of our products are sold as perpetual licenses, but certain products also use term licensing models, and our cloud-based offerings use a subscription-based model.
Progress Sitefinity: Digital Experience Platform foundation, delivering intelligent, ROI-driving tools for marketers and an extensible platform for developers to create engaging, cross-channel digital experiences. Progress Flowmon : Network security and visibility product with automated response across hybrid cloud ecosystems. Progress Corticon : Decision automation platform to transform user experiences by streamlining and automating complex business rules—without having to code.
Progress ShareFile: SaaS-native AI-powered document centric collaboration platform that includes workflow automation, client portals, file synchronization and sharing and integrated eSignature. Progress Sitefinity: Digital experience platform foundation, delivering intelligent, AI-powered, ROI-driving tools for marketers and an extensible platform for developers to create engaging, cross-channel digital experiences.
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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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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.
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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.
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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.
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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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We are pursuing a total growth strategy driven by accretive acquisitions of businesses and products that meet our strict strategic, financial, and operating criteria, which help to further our goal of providing stockholder returns.
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If any of our largest OEM customers were not to renew their agreements in the future, this could materially impact our DataDirect product line.
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In April 2019, we acquired Ipswitch; in October 2020, we acquired Chef Software; in November 2021, we acquired Kemp Technologies; in February 2023, we acquired MarkLogic; and in October 2024, we acquired ShareFile. Our capital allocation policy emphasizes accretive M&A, which we believe allows us to expand our business and drive significant stockholder returns.
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We use our inside sales teams to enhance our direct sales efforts and to generate new business and follow-on business from existing customers.
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We also utilize share repurchases to return capital to stockholders. We currently intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and may elect to conduct additional repurchases based on market conditions and other factors.
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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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Our Products In recent years, our total growth strategy, described above, has resulted in the expansion of our product portfolio. Described below are the leading products in our portfolio. Progress Chef: DevOps/DevSecOps automation software to achieve secure, continuous delivery of critical applications and infrastructure.
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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.
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Progress Corticon : Decision automation platform to transform user experiences by streamlining and automating complex business rules using AI—without having to code. Progress DataDirect : Secure data connectivity tools for Relational, NoSQL, Big Data and SaaS data sources.
Removed
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.
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Progress Kemp LoadMaster : Flexible application delivery and security product offering cloud-native, virtual and hardware load balancers. 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.
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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.
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Maintenance is generally not required with those products sold under perpetual license agreements and is purchased at the customer's option. SaaS products are sold as a subscription that includes maintenance and support.
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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 generally offer our products through various models, including perpetual, term or subscription licensing models. Our cloud or SaaS offerings are generally provided under a subscription model. We also distribute products through various channel partners, including ISVs, OEMs and systems integrators. We seek to protect the source code of our products as trade secrets and as unpublished copyrighted works.
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As a result, open source development and licensing practices can limit the value of our software copyright assets.
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We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees. Therefore, we provide our employees with competitive compensation and benefits, opportunities for equity ownership, and development programs that enable continued learning and growth.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have also been cooperating with several inquiries from domestic and foreign data privacy regulators; inquiries from several state attorneys general; as well as formal investigations from: (i) a U.S. federal law enforcement agency (as of the date of the filing of this report, the law enforcement investigation that we are cooperating with is not an enforcement action or formal governmental investigation of which we have been told that we are a target), (ii) the SEC (as further described hereafter), and (iii) the Office of the Attorney General for the District of Columbia (as further described hereafter); all of which could have adverse impacts on our business and operations and the results thereof.
Biggest changeWe have also been cooperating with inquires and investigations from: (i) several domestic and foreign data privacy regulators (as of the date of this filing, we have assisted with all inquiries and investigations, a number of which have been formally closed without regulatory action), (ii) several state attorneys general (as of the date of this filing, we have assisted with all inquiries and investigations, and are not aware of any enforcement or regulatory actions directed against Progress), (iii) a U.S. federal law enforcement agency (as of the date of this filing, we have assisted with all inquiries under this investigation and this is not an enforcement action or formal governmental investigation targeting Progress), and (iv) on December 21, 2023, we received a preservation notice from the Federal Trade Commission (the "FTC"), but have not otherwise received a request for information, nor is Progress aware of any formal FTC investigation.
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.
Even if an acquisition is successful, the 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 our 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 significant outbreak of contagious diseases and other adverse public health developments, or the fear of such events that results in a widespread health crisis could adversely affect global supply chains and the economies and financial markets of many countries.
A significant outbreak of contagious diseases, other adverse public health developments, or the fear of such events that results in a widespread health crisis could adversely affect global supply chains and the economies and financial markets of many countries.
Our stock price may also be affected by broader market trends unrelated to our performance. As a result, purchasers of our common stock may be unable at any given time to sell their shares at or above the price they paid for them.
The market price of our common stock may also be affected by broader market trends unrelated to our performance. As a result, purchasers of our common stock may be unable at any given time to sell their shares at or above the price they paid for them.
Other potential risks inherent in our international business include: • longer payment cycles; • credit risk and higher levels of payment fraud; • greater difficulties in accounts receivable collection; • varying regulatory and legal requirements; • compliance with international and local trade, labor and export control laws; • restrictions on the transfer of funds; • difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, legal impediments and language and cultural differences; • reduced or minimal protection of intellectual property rights in some countries; • laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses; • changes in U.S. or foreign trade policies or practices that increase costs or restrict the distribution of products; • seasonal reductions in business activity during the summer months in Europe and certain other parts of the world; • economic instability in emerging markets; and • potentially adverse tax consequences.
Other potential risks inherent in our international business include: • longer payment cycles; 10 • credit risk and higher levels of payment fraud; • greater difficulties in accounts receivable collection; • varying regulatory and legal requirements; • compliance with international and local trade, labor and export control laws; • restrictions on the transfer of funds; • difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, legal impediments and language and cultural differences; • reduced or minimal protection of intellectual property rights in some countries; • laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses; • changes in U.S. or foreign trade policies or practices that increase costs or restrict the distribution of products; • seasonal reductions in business activity during the summer months in Europe and certain other parts of the world; • economic instability in emerging markets; and • potentially adverse tax consequences.
This technology infrastructure may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, the outbreak of wars or other armed conflicts, the escalation of hostilities, geopolitical tensions or trade wars, acts of terrorism or “ acts of God,” particularly involving geographies in which we or third parties on whom we depend have operations, computer intrusions or other similar cyber intrusions, vulnerabilities and viruses, software errors, computer denial-of-service attacks and other similar events.
This technology infrastructure may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, the outbreak of wars or other armed conflicts, the escalation of hostilities, geopolitical tensions or trade wars, acts of terrorism or "acts of God," particularly involving geographies in which we or third parties on whom we depend have operations, computer intrusions or other similar cyber intrusions, vulnerabilities and viruses, software errors, computer denial-of-service attacks and other similar events.
Increased competition could make it more difficult for us to maintain our market presence or lead to downward pricing pressure. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, thereby increasing their ability to deliver products that better address the needs of our prospective customers.
Increased competition could make it more difficult for us to maintain our market presence or lead to downward pricing pressure. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, thereby increasing their ability to deliver products that better address the needs of our existing or prospective customers.
The use of certain of our products, including MOVEit Cloud, involves the transmission or storage of third-party data in our environment, some of which may be considered personally identifiable, confidential, or sensitive. In the ordinary course of business, we face security threats from malicious threat actors that could obtain unauthorized access to our systems, infrastructure, products, and networks.
The use of certain of our products, including MOVEit Cloud and ShareFile, involves the transmission or storage of third-party data in our environment, some of which may be considered personally identifiable, confidential, or sensitive. In the ordinary course of business, we face security threats from malicious threat actors that could obtain unauthorized access to our systems, infrastructure, products, and networks.
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.
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 11 investigations or litigation.
Factors that may cause a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in our stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in industry segments in which we participate.
Factors that may cause a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in the market price of our common stock and market capitalization, reduced future cash flow estimates, and slower growth rates in industry segments in which we participate.
The capped call transactions are generally expected to reduce the potential dilution to our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.
The capped call transactions are generally expected to reduce the potential dilution to our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/ 18 or offset subject to a cap.
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).
Moreover, 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).
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.
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.
Difficulties associated with any acquisitions we may pursue, and their integration may be complicated by factors such as: • the size of the business or entity acquired; • geographic and cultural differences; • lack of experience operating in the industry or markets of the acquired business (e.g., satisfying the requirements of public-sector customers); • potential loss of key employees and customers; • the potential for deficiencies in internal controls at the acquired or combined business, including but not limited to with regard to any weaknesses or vulnerabilities in a target company’s cybersecurity controls; • performance problems with the acquired business’s technology; • exposure to unanticipated liabilities of the acquired business, including any cybersecurity issues; • insufficient revenue to offset increased expenses associated with the acquisition; and • adverse tax consequences.
Difficulties associated with any acquisitions we may pursue, and their integration may be complicated by factors such as: • the size of the business or entity acquired; • geographic and cultural differences; • lack of experience operating in the industry or markets of the acquired business (e.g., satisfying the requirements of public-sector customers); • potential loss of key employees and customers; • the potential for deficiencies in internal controls at the acquired or combined business, including but not limited to with regard to any weaknesses or vulnerabilities in the acquired company’s cybersecurity controls; • performance problems with the acquired business’s technology; • exposure to unanticipated liabilities of the acquired business, including any cybersecurity issues; • insufficient revenue to offset increased expenses associated with the acquisition; and • adverse tax consequences.
Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits.
Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade 15 secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits.
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.
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 in which 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.
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.
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.
Thus, an unexpected reduction in our revenue, or failure to achieve the anticipated rate of growth or realize synergies from M&A activity, would have a material adverse effect on our profitability. If our operating results do not meet our publicly stated guidance or the expectations of investors or analysts, our stock price may decline.
Thus, an unexpected reduction in our revenue, or failure to achieve the anticipated rate of growth or realize synergies from M&A activity, would have a material adverse effect on our profitability. If our operating results do not meet our publicly stated guidance or the expectations of investors or analysts, the market price of our common stock may decline.
Any such litigation could also result in our being prohibited from selling one or more of our products, unanticipated royalty payments, reluctance by potential customers to purchase our products, or liability to our customers and could have a material adverse effect on our business, financial condition, operating results and cash flows.
Any such litigation could also result in our being prohibited from selling one or more of our products, unanticipated royalty payments, reluctance by potential customers to purchase our products, or liability to our customers and could have a material adverse effect on our business, financial condition, and operating results.
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").
For example, 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").
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) These principles are subject to interpretation by the SEC and various bodies formed to create and interpret appropriate accounting principles and guidance.
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") These principles are subject to interpretation by the SEC and various bodies formed to create and interpret appropriate accounting principles and guidance.
Risks Related to Our Ability to Grow Our Business Technology and customer requirements evolve rapidly in our industry, and if we do not continue to develop new products and enhance our existing products in response to these changes, our business could be harmed.
Risks Related to Our Ability to Grow Our Business Technology and customer requirements evolve rapidly in our industry, and if we do not continue to develop or acquire new products and enhance our existing products in response to these changes, our business could be harmed.
We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively affecting our results of operations.
We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, adversely affecting our results of operations.
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.
If we were to experience a cybersecurity incident related to the integration of AI capabilities into our product offerings or our use of AI applications in our operations, our business and results of operations could be adversely affected.
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.
Our indebtedness could have significant adverse 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 $360 million, due April 15, 2026, and an aggregate principal amount of $450 million, due March 1, 2030 (together, the "Notes"); and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
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.
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 malfunction, pandemic, cyber-attack or other similar interruption 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.
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 adversely affect our business, operating results and financial condition.
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 ).
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, decline renewals or upgrades, or reduce or terminate use of our products, all of which can have an adverse effect on us ).
A reduction in the sales efforts, technical capabilities or financial viability of these parties, a misalignment of interest between us and them, or a termination of our relationship with a major ISV, distributor/reseller, or OEM could have a negative effect on our sales and financial results.
A reduction in the sales efforts, technical capabilities or financial viability of these parties, a misalignment of interest between us and them, or a termination of our relationship with a major ISV, distributor/reseller, or OEM could have an adverse effect on our sales and financial results.
Following the discovery of the MOVEit Vulnerability and the various remedial actions described here, we have discovered and patched additional vulnerabilities within the MOVEit Transfer and MOVEit Cloud platforms.
Following the discovery of the MOVEit Vulnerability and the various remedial actions previously described, we have discovered and patched additional vulnerabilities within the MOVEit Transfer and MOVEit Cloud platforms.
New competitors possessing technological, marketing or other competitive advantages that develop their own open source software or hybrid proprietary and open source software offerings, may reduce the demand for, and putting price pressure on, our products enabling them to rapidly acquire market share, and limit the value of our software assets.
New competitors that develop their own open source software or hybrid proprietary and open source software offerings with technological, marketing or other competitive advantages may reduce the demand for and impose price pressure on our products, enabling them to rapidly acquire market share and limit the value of our software assets.
Our revenue and quarterly results may fluctuate, which could adversely affect our stock price. We have experienced, and may in the future experience, significant fluctuations in our quarterly operating results that may be caused by many factors.
Our revenue and quarterly results may fluctuate, which could adversely affect the market price of our common stock. We have experienced, and may in the future experience, significant fluctuations in our quarterly operating results that may be caused by many factors.
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.
We derive a significant portion of our revenue from software license and maintenance revenue attributable to our OpenEdge product set, which in fiscal year 2024 accounted for approximately 34% of our aggregate revenue on a consolidated basis. Accordingly, our future results depend on continued market acceptance of OpenEdge.
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.
Our customers and partners may seek refunds, delay implementation timelines, delay payment, fail to pay us in accordance with the terms of their agreements, decline renewals or upgrades, or reduce or terminate use of our products, all of which can have an adverse effect on us.
The steps we take to protect our proprietary rights may be inadequate to prevent misappropriation of our technology; moreover, others could independently develop similar technology. We could be subject to claims that we infringe intellectual property rights of others, which could harm our business, financial condition, results of operations or cash flows.
The steps we take to protect our proprietary rights may be inadequate to prevent misappropriation of our technology; moreover, others could independently develop similar technology. We could be subject to claims that we infringe intellectual property rights of others, which could harm our business, financial condition, and results of operations.
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.
This Credit Facility matures in March 2029, 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.
A key element of our strategy includes the acquisition of businesses that offer complementary products, services and technologies, augment our revenues and cash flows, and meet our strict financial and other criteria. We may not be able to identify suitable acquisition opportunities or consummate any such transactions.
A key element of our strategy includes the acquisition of businesses that offer complementary products, services and technologies, augment our revenues and cash flows, and meet our strict financial and other criteria. We may not be able to identify suitable acquisition opportunities or consummate any such transactions on favorable terms or at all.
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.
Given our meaningful reliance on revenue generated outside of North America (which constituted 41% of our total revenue in fiscal 2024) and our reliance on revenue generated in EMEA (which constituted 33% of our total revenue in fiscal 2024), disruption of commercial activities in these regions may materially adversely affect our financial condition and results of operations.
As our fact-gathering investigation and litigation response continues, we will continue to assess the potential impact of the MOVEit Vulnerability on our business, operations, and financial results.
As our litigation response continues, we will continue to assess the potential impact of the MOVEit Vulnerability on our business, operations, and financial results.
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.
Political and/or financial instability, oil price shocks and armed conflict in various regions of the world, including, but not limited to, Russia/Ukraine conflict and the armed conflicts involving Israel, 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.
Further, as geopolitical volatility around the world increases, there is increasing risk of the imposition of exchange or price controls, or other restrictions on the conversion of foreign currencies, which could have a material adverse effect on our business. Revenue forecasting is uncertain, and the failure to meet our forecasts could result in a decline in our stock price.
Further, as geopolitical volatility around the world increases, there is increasing risk of the imposition of exchange or price controls, or other restrictions on the conversion of foreign currencies, which could have a material adverse effect on our business, financial condition and operating results. 16 Revenue forecasting is uncertain, and the failure to meet our forecasts could result in a decline in the market price of our common stock.
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.
A catastrophic event that results in the loss, destruction, misappropriation, corruption or disruption of any of our data, our customers’ 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.
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.
Risks Related to the Operation of Our Business 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 2024 revenue was generated from sales outside North America.
Such claims and investigations may have an adverse effect on how we operate our business and our results of operations, and in the future, we may be subject to additional governmental or regulatory investigations, as well as additional litigation or indemnification claims.
The claims and investigations described above may have an adverse effect on how we operate our business and our results of operations, and in the future, we may be subject to additional governmental or regulatory investigations, as well as additional litigation or indemnification claims related to the MOVEit Vulnerability.
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.
The overall macro global economy, including ongoing military conflicts in Ukraine and the Middle East, and increasing tensions between the U.S. and China, remain 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.
Our failure to manage our relationships with these third parties effectively could impair the success of our sales, marketing and support activities.
The activities of these third parties are not within our direct control. Our failure to manage our relationships with these third parties effectively could impair the success of our sales, marketing and support activities.
Catastrophic events, including but not limited to cyber events, may disrupt our business. We rely on our network infrastructure and enterprise applications, internal technology systems and website for our development, marketing, operations, support and sales activities. In addition, we rely on third-party hosted services, and we do not control the operation of third-party data center facilities, which increases our vulnerability.
We rely on our network infrastructure and enterprise applications, internal technology systems and website for our development, marketing, operations, support and sales activities. In addition, we rely on third-party hosted services, and we do not control the operation of third-party data center facilities, which increases our vulnerability.
Our business could be damaged, and we could be subject to liability, in the event of any unauthorized access to our data or our customers’ data, including through privacy and data security breaches, such as or in addition to the MOVEit Vulnerability.
Our business could be damaged, and we could be subject to liability, in the event of any unauthorized access to our data or our customers’ data, including through privacy and data security breach.
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.
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. 13 Catastrophic events, including but not limited to cyber events, may disrupt our business.
The capped call transactions may affect the value of our common stock. In connection with the issuance of the Notes, we entered into capped call transactions with certain financial institutions (“option counterparties”).
The capped call transactions may affect the market price of our common stock. In connection with the issuance of the Notes, we entered into capped call transactions with certain financial institutions ("option counterparties").
The U.S. and other international economies continue to experience inflationary pressures, which may increase our expenses (including the cost of labor), negatively affect credit and securities markets generally, and further impact customer demand for our products and their ability to make payments. Any of these events would likely harm our business, results of operations, financial condition or cash flows.
If the U.S. and other international economies experience inflationary pressures, our expenses (including the cost of labor) may increase, credit and securities markets may be adversely affected, and customer demand for our products and their ability to make payments may be impacted. Any of these events would likely harm our business, financial condition, and results of operations.
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.
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.
Our financial liability arising from any of the foregoing will depend on many factors, including the extent to which governmental entities investigate the matter and limitations contained within our customer contracts; therefore, we are unable at this time to estimate the quantitative impact of any such liability with any reasonable degree of certainty.
Our financial liability arising from any of the foregoing will depend on many factors, including the progression of the MDL; therefore, we are unable at this time to estimate the quantitative impact of any such liability with any reasonable degree of certainty.
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 March 2024, we entered into a Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), which provides for a $900.0 million secured revolving credit facility (which may be increased if the existing or additional lenders are willing to make such increased commitments) (the "Credit Facility").
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.
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 recognize a substantial portion of our revenue from sales made through third parties, including our ISVs, distributors/resellers, and OEMs, and our future results depend in large part upon our continued successful distribution of our products through these channels. The activities of these third parties are not within our direct control.
Adverse developments in our relationships with sales channel partners could harm our revenues and results of operations. We recognize a substantial portion of our revenue from sales made through third parties, including our ISVs, distributors/resellers, and OEMs, and our future results depend in large part upon our continued successful distribution of our products through these channels.
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.
In addition, if we fail to complete an announced acquisition, the market price of our common stock could fall to the extent such price reflects an assumption that such acquisition will be completed, and we may incur significant unrecoverable costs.
Non-compliance could also result in fines, damages, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.
Compliance with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced revenue and profitability. Non-compliance could also result in fines, damages, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.
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.
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. 17 We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes in the U.S. and various foreign jurisdictions.
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.
Although we cannot predict what the impacts may be, our global operations and reliance on interconnected technology increase the risk to our 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.
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.
Such changes could have a material adverse impact on our financial results. Risks Related to our Indebtedness and Convertible Senior Notes Our indebtedness and liabilities could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.
These and related actions, responses, and consequences may contribute to world-wide economic downturns. In addition, prolonged unrest, military activities, or broad-based sanctions could have a material adverse effect on our operations and business outlook.
Prolonged unrest, military activities, or broad-based sanctions could have a material adverse effect on our operations and business outlook.
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.
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.
On October 2, 2023, we received a subpoena from the SEC seeking various documents and information relating to the MOVEit Vulnerability.
In addition to the above, and as disclosed in prior filings, we received a subpoena from the SEC’s Division of Enforcement on October 2, 2023, as part of a fact-finding inquiry seeking various documents and information relating to the MOVEit Vulnerability.
We may become subject to legal proceedings relating to the acquisition and the integration of acquired businesses may not be successful.
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.
While we devote a significant amount of resources to cyber security related matters in the operation of our business, we may fail to detect the existence of a breach and be unable to prevent unauthorized access to user and company content across our systems, infrastructure, products, and networks.
While we endeavor to continue mitigating security risks for our products, malicious threat actors might use techniques to exploit other zero-day vulnerabilities or use other means that we are unable to defend against, in order to compromise and infiltrate our systems, infrastructure, networks, and products, including, but not limited to, MOVEit, ShareFile or other products. 12 While we devote significant resources to cyber security related matters in the operation of our business, we may fail to detect the existence of a breach and be unable to prevent unauthorized access to user and company content across our systems, infrastructure, products, and networks.
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.
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. 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.
The application of these laws and regulations to our business is often unclear and may at times conflict on a domestic or international basis. For example, in many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by U.S. regulations applicable to us, including the Foreign Corrupt Practices Act.
The application of these laws and regulations to our business is often unclear and may at times conflict on a domestic or international basis. For example, data privacy and AI regulations are evolving rapidly in many jurisdictions, often with extremely punitive penalties.
We may also incur additional indebtedness to meet future financing needs.
As of November 30, 2024, we had approximately $1.5 billion of consolidated indebtedness. We may also incur additional indebtedness to meet future financing needs.
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).
As previously disclosed, on the evening of May 28, 2023, we learned that our MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer) products were attacked via a "zero-day vulnerability" that could provide for unauthorized escalated privileges and access to the customer’s underlying environment (the "MOVEit Vulnerability").
As of the date of the filing of this report on Form 10-K, (i) we have received formal letters from 31 customers and others that claim to have been impacted by the MOVEit Vulnerability, some of which have indicated that they intend to seek indemnification from us related to the MOVEit Vulnerability, (ii) we have received a letter from an insurer providing notice of a subrogation claim (where the insurer is seeking recovery for all expenses incurred in connection with the MOVEit Vulnerability), which has resulted in the filing of a lawsuit in the United States District Court for the District of Massachusetts ("District of Massachusetts"), and (iii) we are party to approximately 118 class action lawsuits filed by individuals who claim to have been impacted by exfiltration of data from the environments of our MOVEit Transfer customers, which the Judicial Panel on Multidistrict Litigation transferred to the District of Massachusetts for coordinated and consolidated proceedings.
As a result of the MOVEit Vulnerability, we are party to certain class action lawsuits filed by individuals who claim to have been impacted by the exfiltration of data from the environments of our MOVEit Transfer customers, which the Judicial Panel on Multidistrict Litigation transferred to the District of Massachusetts for coordinated and consolidated proceedings (the "MDL").
These laws and regulations relate to a number of aspects of our business, including trade protection, import and export control, data and transaction processing security, payment card industry data security standards, records management, user-generated content hosted on websites we operate, data privacy or related privacy practices, data residency, corporate governance, anti-trust and competition, employee and third-party complaints, anti-corruption, gift policies, conflicts of interest, securities regulations and other regulatory requirements affecting trade and investment.
These laws and regulations relate to many core aspects of our business, including data privacy or related privacy practices, AI, corporate governance, securities regulations, anti-trust and competition, anti-corruption, sanctions and trade protection, and import and export control.
In addition, our future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws or their interpretation. Such changes could have a material adverse impact on our financial results.
In addition, our future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws including Pillar Two legislation adopted as part of the Organization for Economic Cooperation and Development (“OECD”) inclusion Framework, which established a global minimum corporate tax rate of 15% for certain multinational enterprises, or the interpretation of such laws.
For example, the California Consumer Privacy Act (as amended by the California Privacy Rights Act) took effect on January 1, 2023 and expanded the consumer`s privacy rights and the obligations to the organizations doing business in California.
For example, U.S. states like Texas and Oregon enacted data privacy laws that took effect in 2024, both of which expanded the consumer's privacy rights and the obligations to the organizations doing business in those states.
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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.
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Any prolonged economic disruption could affect demand for our products and services and adversely impact our business, financial condition and results of operations.
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Risks Related to the Operation of Our Business Our realignment initiatives may disrupt our operations and we may not achieve the expected benefits from our efforts.
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Individual and groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, continuously undertake attacks that pose threats to our customers and our software products, and we have experienced cybersecurity incidents in which such actors have gained unauthorized access to our IT systems and data, including customer systems and data.
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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.
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A "zero-day vulnerability" is a vulnerability that has been publicly disclosed and/or exploited (e.g., by an independent researcher or threat actor) before the software vendor has an opportunity to patch it. We continue to monitor the impact of the MOVEit Vulnerability on our business, operations, and financial results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe 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.
Biggest changeWe 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 and Raleigh, North Carolina, Alpharetta, Georgia, Vienna, Virginia and outside North America, including Sofia, Bulgaria, Limerick, Ireland, Brno, Czech Republic, Bengaluru and Hyderabad, India, Singapore, Singapore and Rotterdam, the Netherlands.
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.
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, 2024, we have not terminated any significant lease arrangements. We believe our facilities are adequate for the conduct of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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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Legal Proceedings Please refer to Note 19: Cyber Related Matters to our Consolidated Financial Statements included in Part II Item 8 of this Form 10-K for a discussion of legal proceedings related to the MOVEit Vulnerability. 20 We are also subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business.
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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 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 changeOur 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.
Biggest changeDuring the fourth quarter of fiscal year 2024, our Board of Directors suspended our quarterly dividend in connection with the ShareFile acquisition and plans to redirect such capital toward the repayment of debt to increase liquidity for future M&A and for share repurchases, both of which are prioritized in our capital allocation policy. 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, 2024, 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, 2018 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, 2019 in stock or index, including reinvestment of dividends.
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.
Recent Sales of Unregistered Equity Securities and Use of Proceeds All issuances of unregistered securities during fiscal year 2024, if any, have previously been disclosed in filings with the SEC.
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.
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, 2024, our common stock was held by approximately 111 stockholders of record.
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.
Stock Repurchases and Dividends Repurchases of our common stock by month in the fourth quarter of fiscal year 2024 were as follows: (in thousands, except per share and share data) 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 Period September 2024 — $ — — $ 107,220 October 2024 — — — 107,220 November 2024 — — — 107,220 Total — $ — — $ 107,220 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.
We 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.
We have declared aggregate per share quarterly cash dividends totaling $0.53 for the year ended November 30, 2024 and $0.70 for the years ended November 30, 2023 and 2022. We paid aggregate cash dividends totaling $31.5 million, $31.6 million and $31.1 million for the years ended November 30, 2024, 2023 and 2022, respectively.
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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]
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November 30, 2019 2020 2021 2022 2023 2024 Progress Software Corporation $ 100.00 $ 97.50 $ 117.80 $ 129.64 $ 130.95 $ 166.08 NASDAQ Composite 100.00 142.38 181.35 133.85 166.04 226.47 NASDAQ Computer 100.00 151.46 215.66 155.04 224.69 316.73 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

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

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Biggest changeGeneral 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.
Biggest changeProduct Development Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 Change Product development $ 146,342 $ 132,401 $ 13,941 11 % As a percentage of total revenue 19 % 19 % Components of product development costs: Personnel related costs $ 139,646 $ 126,680 $ 12,966 10 % Contractors and outside services 5,651 4,743 908 19 % Other product development costs 1,045 978 67 7 % Total product developments costs $ 146,342 $ 132,401 $ 13,941 11 % Product development expenses increased in fiscal year 2024 primarily due to increased personnel related costs associated with our acquisitions of MarkLogic and ShareFile, as well as an increase in contractors and outside services costs. 26 General and Administrative Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 Change General and administrative $ 89,518 $ 83,157 $ 6,361 8 % As a percentage of total revenue 12 % 12 % Components of general and administrative: Personnel Related Costs $ 72,911 $ 65,858 $ 7,053 11 % Contractors and Outside Services 12,186 12,888 (702) (5) % Other general and administrative costs 4,421 4,411 10 — % Total cost of general and administrative $ 89,518 $ 83,157 $ 6,361 8 % General and administrative expenses include the costs of our finance, human resources, legal, information systems and administrative departments.
However, based on our current business plan, 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 through at least the next twelve months.
However, based on our current business plan, we believe that existing cash balances, together with funds generated from operations and amounts available under our revolving credit facility, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next twelve months.
We use the residual approach to allocate the transaction price to our software license performance obligations because, due to the pricing of our licenses being highly variable, they do not have an observable SSP. Maintenance revenue is recognized ratably over the contract period.
We generally use the residual approach to allocate the transaction price to our software license performance obligations because, due to the pricing of our licenses being highly variable, they do not have an observable SSP. Maintenance revenue is recognized ratably over the contract period.
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.
For a discussion of the year ended November 30, 2023 compared to the year ended November 30, 2022, 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, 2023. 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.
Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of November 30, 2023. The Company could incur judgments or enter into settlements regarding the outcome of these claims and proceedings, which could have a material effect on the estimated amount of the liability in the period in which the effect becomes probable and reasonably estimable.
Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of November 30, 2024. The Company could incur judgments or enter into settlements regarding the outcome of these claims and proceedings, which could have a material effect on the estimated amount of the liability in the period in which the effect becomes probable and reasonably estimable.
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.
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, 2024 compared to the year ended November 30, 2023.
We have incurred expenses related to our efforts to investigate and remediate the MOVEit Vulnerability, as well as legal and other professional services related thereto. Expenses are recognized as the expenses are incurred and are provided net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses.
We have incurred expenses related to our efforts to investigate and remediate the MOVEit Vulnerability, as well as legal and other professional services related thereto. Expenses are recognized as they are incurred and are recognized net of expected insurance recoveries, although the timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses.
Important information about the bases for these plans and assumptions and factors that may cause our actual results to differ materially from these statements is contained below and in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K.
Important information about the bases for these plans and assumptions and factors that may cause our actual results to differ materially from these statements is contained below and in Part I, Item 1A. "Risk Factors" of this Annual Report on Form 10-K.
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”).
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").
We incurred expenses of $1.5 million, net, related to the MOVEit Vulnerability for the fiscal year ended November 30, 2023. During the period when the MOVEit Vulnerability occurred, we maintained $15.0 million of cybersecurity insurance coverage, which is expected to reduce our exposure to expenses and liabilities arising from these events.
We incurred expenses of $5.6 million and $1.5 million, net, related to the MOVEit Vulnerability for the fiscal years ended November 30, 2024 and 2023, respectively. During the period when the MOVEit Vulnerability occurred, we maintained $15.0 million of cybersecurity insurance coverage, which is expected to reduce our exposure to expenses and liabilities arising from these events.
Because the proceedings remain in the early stages, alleged damages have not been specified, there is uncertainty as to the likelihood of a class or classes being certified or the ultimate size of any class if certified, and there are significant factual and legal issues to be resolved, we are currently unable to develop an estimate of the losses or range of losses incurred (if any).
Since the MDL remains in the early stages; and alleged damages have not been specified, there is uncertainty as to the likelihood of a class or classes being certified or the ultimate size of any class if certified, and there are significant factual and legal issues to be resolved, we are currently unable to develop an estimate of the losses or range of losses incurred (if any).
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.
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.
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.
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 2024 were primarily related to the acquisition of ShareFile, as well as our pursuit of other acquisition opportunities.
Acquisition-Related Expenses Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Acquisition-related expenses $ 4,704 $ 4,603 2 % 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.
Acquisition-Related Expenses Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Acquisition-related expenses $ 17,109 $ 4,704 264 % As a percentage of total revenue 2 % 1 % Acquisition-related costs are expensed as incurred and include those costs incurred as a result of a business combination.
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.
Amortization of Intangibles Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Amortization of intangibles $ 65,290 $ 66,430 (2) % As a percentage of total revenue 9 % 10 % 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 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.
Amortization of Acquired Intangibles Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Amortization of acquired intangibles $ 29,222 $ 30,169 (3) % As a percentage of total revenue 4 % 4 % 25 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.
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.
Liquidity Outlook Cash from operations in fiscal year 2025 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", including increased disruption and volatility in capital markets and credit markets that could adversely affect our liquidity and capital resources in the future.
We generally value the identifiable intangible assets acquired using a discounted cash flow model. The significant estimates used in valuing certain of the intangible assets include, but are not limited to: future expected cash flows of the asset, discount rates to determine the present value of the future cash flows, attrition rates of customers, and expected technology life cycles.
The significant estimates used in valuing certain of the intangible assets include, but are not limited to: future expected cash flows of the asset, discount rates to determine the present value of the future cash flows, attrition rates of customers, and expected technology life cycles.
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.
Income from Operations Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Income from operations $ 124,003 $ 110,523 12 % As a percentage of total revenue 16 % 16 % Income from operations increased year over year due to an increase in revenue, offset by an increase in costs of revenue and operating expenses, as shown above.
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.
General and administrative expenses increased in fiscal year 2024 primarily due to higher personnel related costs associated with our acquisitions of MarkLogic and ShareFile, partially offset by a decrease in contractors and outside services costs.
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.
Net retention rate is not calculated in accordance with GAAP. 29 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.
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.
Provision for Income Taxes Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Provision for income taxes $ 25,826 $ 9,460 173 % As a percentage of income before income taxes 27 % 12 % Our effective income tax rate was 27% and 12% for fiscal years 2024 and 2023, respectively.
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.
Cost of Software Licenses Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 Change Cost of software licenses $ 10,942 $ 11,153 $ (211) (2) % As a percentage of software license revenue 4 % 5 % Cost of software licenses consists primarily of royalties, electronic software distribution, duplication, and packaging.
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.
Software License Revenue Fiscal Year Ended Percentage Change (in thousands) November 30, 2024 November 30, 2023 As Reported Constant Currency License $ 249,331 $ 220,789 13 % 13 % As a percentage of total revenue 33 % 32 % Software license revenue increased in fiscal year 2024 primarily due to the acquisition of MarkLogic, as well as increases in license sales in OpenEdge.
The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand, or discontinue the repurchase program at any time.
As of November 30, 2024, there was $107.2 million remaining under the current share repurchase authorization. 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.
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.
Our ARR was $842.0 million and $578.0 million as of November 30, 2024 and 2023, respectively, which is an increase of 46% year-over-year. The growth in ARR was primarily driven by the acquisition of ShareFile.
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. The SSP of SaaS performance obligations is determined based upon observable prices in stand-alone SaaS transactions.
As of November 30, 2023, we have recorded approximately $3.7 million in insurance recoveries, and we have $8.8 million of additional cybersecurity insurance coverage (which is subject to a $0.5 million retention per claim). We will pursue recoveries to the maximum extent available under our insurance policies.
As of November 30, 2024, we have recorded approximately $5.8 million in insurance recoveries, and we have $6.7 million of additional cybersecurity insurance coverage (which is subject to a $0.5 million retention per claim).
Revenue Recognition Our contracts with customers typically include promises to license one or more products and services to a customer. Determining whether products and services are distinct performance obligations that should be accounted for separately requires significant judgment. Significant judgment is also required to determine the stand-alone selling price ("SSP") of each distinct performance obligation.
Determining whether products and services are distinct performance obligations that should be accounted for separately requires significant judgment. Significant judgment is also required to determine the stand-alone selling price ("SSP") of each distinct performance obligation.
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.
Included in investing activities in fiscal years 2024 and 2023 were the acquisitions of ShareFile and MarkLogic for a net cash paid amount of $852.7 million and $355.3 million, respectively. In fiscal year 2022 we received $26.0 million net proceeds from the sale of long-lived assets.
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).
We received proceeds from the issuance of debt of $195.0 million in fiscal year 2023. 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).
There is complexity in applying this accounting framework for the potential losses arising from the MOVEit Vulnerability and in determining whether a loss is probable and estimable as these claims and proceedings are subject to inherent uncertainties and unascertainable damages. Further, the outcome of these matters may not be known for prolonged periods of time.
There is complexity in applying this accounting framework for the potential losses arising from the MOVEit Vulnerability and in determining whether a loss is probable and estimable as these claims and proceedings are subject to inherent uncertainties and potential damages for which we are unable to arrive at a reasonable estimate.
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.
Total revenue generated in markets outside North America represented 41% of total revenue in fiscal year 2024 and fiscal year 2023.
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.
Maintenance and Services Revenue Fiscal Year Ended Percentage Change (in thousands) November 30, 2024 November 30, 2023 As Reported Constant Currency Maintenance $ 410,556 $ 401,501 2 % 2 % As a percentage of total revenue 55 % 58 % Services $ 93,522 $ 72,149 30 % 29 % As a percentage of total revenue 12 % 10 % Total maintenance and services revenue $ 504,078 $ 473,650 6 % 6 % As a percentage of total revenue 67 % 68 % Maintenance revenue increased in fiscal year 2024 primarily due to the acquisition of MarkLogic, as well as an increase in maintenance revenue from our OpenEdge product offerings.
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.
Gross Profit Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Gross profit $ 622,927 $ 567,862 10 % As a percentage of total revenue 83 % 82 % Our gross profit increased primarily due to the increase in revenue, partially offset by the increase in costs of maintenance and services.
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.
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. We do not have any material revenue arrangements that include estimates for variable consideration.
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.
Our foreseeable cash needs include capital expenditures, acquisitions, debt repayments, share repurchases, lease commitments, restructuring obligations and other long-term obligations. 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 do not have any material revenue arrangements that include estimates for variable consideration. Loss Contingencies and the MOVEit Vulnerability The Company recognizes a liability for loss contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable.
Loss Contingencies and the MOVEit Vulnerability The Company recognizes a liability for loss contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable. The Company has not incurred any significant litigation costs or entered into large settlements in recent history.
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.
Our gross accounts receivable as of November 30, 2024, increased by $37.6 million from the end of fiscal year 2023. Days sales outstanding ("DSO") in accounts receivable increased to 67 days as compared to 62 days in fiscal year 2023 due to the timing of billings and collections.
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.
We offer our products and tools to both new customers and partners, as well as our existing partner and customer ecosystems. 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.
Sales 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.
Sales and Marketing Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 Change Sales and marketing $ 164,570 $ 156,076 $ 8,494 5 % As a percentage of total revenue 22 % 22 % Components of sales and marketing: Personnel related costs $ 142,479 $ 134,820 $ 7,659 6 % Contractors and outside services 3,456 3,890 (434) (11) % Marketing programs and other 18,635 17,366 1,269 7 % Total sales and marketing $ 164,570 $ 156,076 $ 8,494 5 % Sales and marketing expenses increased in fiscal year 2024 due to increased personnel related, marketing, and sales events costs associated with our acquisitions of MarkLogic and ShareFile, partially offset by decreases in contractors and outside services costs.
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.
Services revenue increased primarily due to our acquisition of ShareFile. 24 Revenue by Region Fiscal Year Ended Percentage Change (in thousands) November 30, 2024 November 30, 2023 As Reported Constant Currency North America $ 446,995 $ 411,670 9 % 9 % As a percentage of total revenue 59 % 59 % EMEA $ 245,287 $ 222,862 10 % 9 % As a percentage of total revenue 33 % 32 % Latin America $ 20,305 $ 21,112 (4) % — % As a percentage of total revenue 3 % 3 % Asia Pacific $ 40,822 $ 38,795 5 % 6 % As a percentage of total revenue 5 % 6 % Total revenue generated in North America increased $35.3 million, and total revenue generated outside North America increased $23.6 million, in fiscal year 2024.
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.
Cost of Maintenance and Services Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 Change Cost of maintenance and services $ 90,318 $ 85,255 $ 5,063 6 % As a percentage of maintenance and services revenue 18 % 18 % Components of cost of maintenance and services: Personnel Related Costs $ 67,732 $ 63,471 $ 4,261 7 % Contractors and Outside Services 12,827 13,969 (1,142) (8) % Hosting and Other 9,759 7,815 1,944 25 % Total cost of maintenance and services $ 90,318 $ 85,255 $ 5,063 6 % Cost of maintenance and services consists primarily of costs of hosting, personnel costs for providing customer support, consulting, and education.
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.
Share Repurchases In fiscal years 2024, 2023 and 2022, we repurchased and retired 1.6 million, 0.6 million and 1.7 million shares of our common stock for $86.8 million, $34.0 million and $77.0 million, respectively. 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.
These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. We have identified the following critical accounting estimates that require the use of significant judgments and estimates in the preparation of our consolidated financial statements.
These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
For indemnification claims related to the MOVEit Vulnerability. Please see Recent Developments: MOVEit Vulnerability below for further details.
For indemnification claims related to the MOVEit Vulnerability. Please see Note 19: Cyber Related Matters to the consolidated financial statements for further details.
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.
The increases in North America and EMEA were primarily due to the acquisitions of MarkLogic and ShareFile, as well as growth in sales of our OpenEdge product offerings. Revenue from Latin America decreased slightly due to the negative impact of foreign exchange. Revenue from Asia Pacific increased due to contributions from multiple products.
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.
Liquidity and Capital Resources Cash and Cash Equivalents (in thousands) November 30, 2024 November 30, 2023 Cash and cash equivalents $ 118,077 $ 126,958 The decrease in cash and cash equivalents of $8.9 million from the end of fiscal year 2023 was primarily due to cash outflows of $852.7 million to acquire ShareFile, $261.3 million to pay off the balance of the term loan, $110.0 million to pay off the revolving line of credit, repurchases of common stock of $86.8 million, dividend payments of $31.5 million, payment of debt issuance costs of $6.8 million, purchases of property and equipment of $5.2 million, and the effect of exchange rates on cash of $3.2 million.
Business Combinations We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The estimates used to value the net assets acquired are based in part on historical experience and information obtained from the management of the acquired company.
The estimates used to value the net assets acquired are based in part on historical experience and information obtained from the management of the acquired company. We generally value the identifiable intangible assets acquired using a discounted cash flow model.
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.
Restructuring Expenses Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Restructuring expenses $ 10,454 $ 8,407 24 % As a percentage of total revenue 1 % 1 % Restructuring expenses recorded in fiscal year 2024 primarily relate to headcount reductions in connection with the restructuring action related to the ShareFile acquisition in November 2024 and to a facility closure in connection with the restructuring action related to the MarkLogic acquisition.
ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. We define ARR as the annual recurring revenue of term-based contracts from all customers at a point in time.
ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
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.
Overview Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides software products that enable our customers to develop, deploy and manage responsible AI-powered applications and digital experiences. 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.
ARR represents the annualized contract value for all active and contractually binding term-based contracts at the end of a period. ARR includes maintenance, software upgrade rights, public cloud and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS.
We define ARR as the annualized revenue of all active and contractually binding term-based contracts from all customers at a point in time. ARR includes revenue from maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services.
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.
Refer to Note 8: Debt, for further discussion. Foreign currency loss decreased year over year due to rate volatility and timing of intercompany and hedge settlement activities.
Additionally, the MOVEit Vulnerability has resulted in informal government inquiries, three formal government investigations, and private litigation, which may result in adverse judgments, settlements, fines, penalties, or other resolutions, the amount, scope and timing of which could be material, but which the Company is currently unable to predict.
As more fully discussed in Note 19: Cyber Related Matters to the consolidated financial statements, in May 2023, the Company discovered a zero-day vulnerability in its MOVEit Transfer and MOVEit Cloud software product offerings ("the MOVEit Vulnerability"), which resulted in government inquiries and investigations, and private litigation that the Judicial Panel on Multidistrict Litigation transferred to the District of Massachusetts for coordinated and consolidated proceedings (the "MDL"), which may result in adverse judgments, settlements, fines, penalties, or other resolutions, the amount, scope and timing of which could be material, but which the Company is currently unable to predict.
ARR is not calculated in accordance with GAAP. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items.
Rather, ARR generally aligns to billings (as opposed to GAAP revenue which aligns to the transfer of control of each performance obligation). ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies.
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.
The increase year-over-year was primarily due to increased headcount and hosting costs resulting from our acquisitions of MarkLogic and ShareFile, partially offset by decreased contractors and outside services costs.
Other (Expense) Income Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Interest expense $ (30,780) $ (15,790) 95 % Interest income and other, net 2,538 1,414 79 % Foreign currency loss, net (2,624) (500) 425 % Total other expense, net $ (30,866) $ (14,876) 107 % As a percentage of total revenue (4) % (2) % Total other expense, net, increased in fiscal year 2023 due to increased interest expense on our term loan, due to higher interest costs, and the interest costs associated with drawing on our revolving line of credit to acquire MarkLogic.
Other (Expense) Income Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Interest expense $ (32,012) $ (30,780) 4 % Interest income and other, net 4,734 2,538 87 % Foreign currency loss, net (2,461) (2,624) (6) % Total other expense, net $ (29,739) $ (30,866) 4 % As a percentage of total revenue (4) % (4) % Total other expense, net, decreased in fiscal year 2024 due to increases in interest income and other, net, resulting from higher interest rates on our invested cash balance.
These metrics are periodically reviewed and revised to reflect changes in our business. Annual Recurring Revenue (ARR) We are providing an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years.
Annualized Recurring Revenue ("ARR") We disclose ARR as a performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources currently represents the substantial majority of our revenues and is expected to continue in the future.
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.
Indemnification Obligations We include standard intellectual property indemnification provisions in our licensing agreements in the ordinary course of business.
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.
In addition, our net deferred revenue as of November 30, 2024, increased by $109.4 million from the end of fiscal year 2023, primarily due to the acquisition of ShareFile in November 2024.
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.
The increase in maintenance revenue was partially offset by a decrease in Kemp LoadMaster and Chef maintenance revenue.
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.
We also utilize share repurchases to return capital to stockholders. We currently intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and may elect to conduct additional repurchases based on market conditions and other factors.
If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result.
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.
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.
The Company recorded a liability of $13.7 million related to the taxes expected to be imposed upon the repatriation of unremitted foreign earnings that are not considered indefinitely reinvested. 28 Net Income Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Net income $ 68,438 $ 70,197 (3) % As a percentage of total revenue 9 % 10 % Select Performance Metrics: Management evaluates our financial performance using a number of financial and operating metrics.
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.
Cash Flows (used in) from Investing Activities 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.
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.
These cash outflows were partially offset by $730 million in proceeds from our revolving line of credit to partially fund the acquisition of ShareFile, the issuance of convertible senior notes of $396.5 million (net of purchases of capped calls in connection with the convertible notes offering of $42.2 million and issuance costs of $11.2 million), cash inflows from operations of $211.5 million, and $10.6 million in cash received from the issuance of common stock.
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.
In April 2019, we acquired Ipswitch; in October 2020, we acquired Chef Software; in November 2021, we acquired Kemp Technologies; in February 2023, we acquired MarkLogic; and in October 2024, we acquired ShareFile. Our capital allocation policy emphasizes accretive M&A, which we believe allows us to expand our business and drive significant stockholder returns.
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.
Prior to the suspension of the quarterly dividend in the fourth fiscal quarter of 2024, we had paid aggregate cash dividends totaling $31.5 million, $31.6 million and $31.1 million for the years ended November 30, 2024, 2023, and 2022, respectively. Convertible Senior Notes and Long-Term Debt See Note 8: Debt to the consolidated financial statements.
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.
Cash and cash equivalents held by our foreign subsidiaries were $69.2 million at November 30, 2024. As a result of the ShareFile acquisition, in the fourth quarter of fiscal 2024 we determined that a substantial portion of unremitted foreign earnings are no longer indefinitely reinvested.
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.
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 stock repurchases to Progress stockholders, through at least the next twelve months. 23 Results of Operations Business Development On October 31, 2024, we acquired certain assets and liabilities that comprise the ShareFile Business ("ShareFile") from Cloud Software Group, Inc. and its subsidiaries ("Cloud") for an aggregate purchase price of $875.0 million in cash, subject to a $25.0 million working capital credit and certain customary adjustments.
Cyber Incident and Vulnerability Response Expenses, Net Fiscal Year Ended (In thousands) November 30, 2023 November 30, 2022 % Change Cyber incident and vulnerability responses expenses, net $ 6,164 $ 602 * As a percentage of total revenue 1 % — % *Not meaningful Expenses include costs to investigate and remediate the November 2022 Cyber Incident and MOVEit Vulnerability, as well as legal and other professional services related thereto.
Acquisition-related expenses in fiscal year 2023 were primarily related to our acquisition of MarkLogic. 27 Cyber Incident and Vulnerability Response Expenses, Net Fiscal Year Ended (in thousands) November 30, 2024 November 30, 2023 % Change Cyber incident and vulnerability responses expenses, net $ 5,641 $ 6,164 (8) % As a percentage of total revenue 1 % 1 % As previously disclosed, following (i) the detection of irregular activity on certain portions of our corporate network that was disclosed on December 19, 2022 ("November 2022 Cyber Incident"), and (ii) the discovery of the MOVEit Vulnerability that was disclosed on June 5, 2023, in each instance, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of these matters.
See Note 19: Cyber Related Matters to Consolidated Financial Statements included in Item 8, Financial Statements.
See Note 19: Cyber Related Matters for further discussion.
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.
In addition, in fiscal year 2024, we received $27.8 million from the exercise of stock options and the issuance of shares under our employee stock purchase plan as compared to $26.0 million in fiscal year 2023.
Removed
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 .
Added
We are pursuing a total growth strategy driven by accretive acquisitions of businesses and products that meet our strict strategic, financial, and operating criteria, which help to further our goal of providing stockholder returns.
Removed
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.
Added
The transaction was funded through $730.0 million in borrowings under our existing $900.0 million revolving credit facility and cash on hand, resulting in a payment at closing of $852.7 million. As a result of this acquisition, we recorded $96.2 million of deferred revenue and $465.0 million of intangible assets, as further described in Note 7: Business Combinations.
Removed
Changes in prices from fiscal year 2022 to 2023 did not have a significant impact on our revenue.
Added
The Company expects to recognize additional services revenue, as well as increased amortization expense and interest expense, in future periods as a result of this acquisition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+3 added−4 removed2 unchanged
Biggest changeNovember 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.
Biggest changeForeign Currency Risk We generally use forward contracts that are not designated as hedging instruments to economically hedge the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies. We generally do not hedge the net assets of our international subsidiaries.
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.
Based on a hypothetical 10% adverse movement in all foreign currency exchange rates, our revenue would be adversely affected by approximately 2%, or $18.3 million, and our net income would be adversely affected by approximately 2%, or $1.3 million (excluding any offsetting positive impact from our ongoing hedging programs), although the actual effects may differ materially from the hypothetical analysis. 33
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.
In fiscal year 2024, we recognized realized and unrealized gains of $1.5 million from our forward contracts 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.
We generally do not hedge the net assets of our international subsidiaries. All forward contracts are recorded at fair value in other current assets, other assets, other accrued liabilities, or other noncurrent liabilities on the consolidated balance sheets at the end of each reporting period and expire between 30 days and 2 years from the date the contract was entered.
All forward contracts are recorded at fair value in other current assets, other assets, other accrued liabilities, or other noncurrent liabilities on the consolidated balance sheets at the end of each reporting period and expire between 30 days and 3 years from the date the contract was entered.
The rates range from 1.00% to 2.00% above the term benchmark rate or from 0.00% to 1.00% above the defined base rate for base rate borrowings, in each case based upon our leverage ratio. Additionally, we may borrow certain foreign currencies at rates set in the same range above the respective term benchmark rates for those currencies.
The rates range from 1.50% to 3.00% above the Term Benchmark Rate or from 0.50% to 2.00% above the defined base rate for base rate borrowings, in each case based upon our consolidated total net leverage ratio.
Removed
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.
Added
Additionally, we may borrow certain foreign currencies at rates set in the same range above the respective Term Benchmark Rates for those currencies, based on our consolidated total net leverage ratio.
Removed
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.
Added
A quarterly commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.150% to 0.400% per annum, based upon our consolidated total net leverage ratio. As of November 30, 2024, there was $730.0 million outstanding under the revolving credit facility at a borrowing rate of 6.67%.
Removed
Under 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.
Added
A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.
Removed
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

Other PRGS 10-K year-over-year comparisons