Summary
Progress closed fiscal 2021 with a stronger top line but weaker GAAP profit. Fourth-quarter revenue rose 14.5% to $140.1 million. Gross profit rose 14.3% to $119.0 million. Operating income rose 10.0% to $20.4 million. Net income fell 15.5% to $14.9 million. Gross margin was 85.0%, down 0.1 percentage point, and operating margin was 14.5%, down 0.6 percentage point. The GAAP profit decline came despite operating income growth, with higher other expense weighing on the bottom line. Non-GAAP results looked firmer: non-GAAP revenue was $143.7 million, up 11%, non-GAAP operating margin was 36%, and non-GAAP diluted EPS was $0.92, up 1%. Annualized recurring revenue reached $486 million, up 12% year over year on a constant currency basis. Operating cash flow was $43.9 million, up 2.7%, and capital expenditures were $1.9 million, down 38.3%. Adjusted free cash flow was $42.4 million, up 4%.
For the full fiscal year, revenue rose 20.2% to $531.3 million. Gross profit rose 19.2% to $452.9 million. Operating income rose 7.8% to $116.1 million. Net income fell 1.6% to $78.4 million. Diluted EPS was $1.76, flat with the prior fiscal year. Full-year gross margin was 85.2%, down 0.7 percentage point, and operating margin was 21.9%, down 2.5 percentage points. Operating cash flow rose 23.3% to $178.5 million, while capital expenditures fell 28.6% to $4.7 million. Deferred revenue ended the year at $252.4 million, up 30.6%. Remaining performance obligations were $213.7 million, up 0.7%. Non-GAAP revenue was $557.3 million, up 22%, non-GAAP operating margin was 41%, non-GAAP net income was $172.9 million, up 23%, and non-GAAP diluted EPS was $3.87, up 25%. Adjusted free cash flow was $179.4 million, up 26%, a different measure from the $178.5 million in operating cash flow. The company said the revenue increase was driven by the Chef acquisition, demand for OpenEdge and Ipswitch, and to a lesser extent the Kemp acquisition. Progress operates as one segment.
The Kemp acquisition closed on November 1, 2021. Progress paid $258 million in cash for the Application Experience company. Management said the integration is on target and that customer response has been strong. ARR growth was driven primarily by Kemp. Net dollar retention has ranged between 98% and 101% for all periods presented, which points to a durable recurring revenue base. Days sales outstanding was 60 days, up from 54 days a year earlier and 54 days in the prior quarter. Progress declared a quarterly dividend of $0.175 per share, payable March 15, 2022 to shareholders of record on March 1, 2022. In January 2022, the company amended its credit facility into a $275 million term loan and a $300 million revolving credit facility maturing January 25, 2027. It also has $325 million of convertible senior notes due April 15, 2026, issued in April 2021 with total proceeds of $360 million including the additional notes. The company has $155 million remaining under its share repurchase authorization.
For fiscal 2022, management guided non-GAAP revenue to $605 million to $615 million, non-GAAP diluted EPS to $3.95 to $4.05, and non-GAAP operating margin to 39%. For the first quarter of fiscal 2022, non-GAAP revenue guidance is $139 million to $142 million, and non-GAAP diluted EPS guidance is $0.83 to $0.85. The company expects currency translation to reduce fiscal 2022 revenue by about $7.5 million and diluted EPS by about $0.03, and first-quarter revenue by about $2.5 million and diluted EPS by about $0.01. The main risks include economic and geopolitical conditions, delays or smaller transactions, fewer large deals, currency fluctuations, lower renewal rates, the shift to cloud and subscription models, product development execution, dependence on the partner channel, international operations, cybersecurity breaches, acquisition integration, Kemp synergy realization, and COVID-19. The company also faces integration and restructuring work from the Chef and Kemp deals, with additional expenses expected in fiscal 2022. Even with those risks, the recurring revenue base and Kemp addition give management a path to higher non-GAAP revenue and earnings in fiscal 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $140.1M | $147.4M | -4.9% | $122.4M | +14.5% |
| Gross profit | $119.0M | $127.3M | -6.5% | $104.2M | +14.3% |
| Gross margin | 85.0% | 86.4% | -1.4 pp | 85.1% | -0.1 pp |
| Sales & marketing | $37.4M | $29.7M | +25.8% | $32.0M | +16.9% |
| General & administrative | $18.8M | $16.5M | +14.2% | $15.3M | +22.8% |
| Total operating expenses | $98.7M | $81.3M | +21.4% | $85.6M | +15.2% |
| Operating income (loss) | $20.4M | $46.0M | -55.8% | $18.5M | +10.0% |
| Operating margin | 14.5% | 31.2% | -16.7 pp | 15.1% | -0.6 pp |
| Net income (loss) | $14.9M | $31.0M | -51.8% | $17.7M | -15.5% |
| Net margin | 10.7% | 21.0% | -10.4 pp | 14.4% | -3.8 pp |
| Diluted EPS | $0.33 | — | — | $0.39 | -$0.06 |
| Net retention rate | 98.0% | 98.0% | ±0.0 pp | — | — |
Risks
As of November 30, 2021, the company had approximately $560 million of consolidated indebtedness, and net income declined 15.5% in the current quarter and 1.6% year to date while interest expense increased 97% in fiscal year 2021 due to the April 2021 convertible senior notes. The January 2022 amended credit facility adds a $275.0 million term loan and a $300.0 million revolver with financial covenants, and failure to comply could accelerate repayment.
Progress completed the $258 million Kemp acquisition in November 2021 and continues integrating Chef, with restructuring expenses of $2.0 million for Kemp and $4.1 million for Chef in fiscal year 2021. Integration risks include failure to realize expected synergies, product disruptions, loss of key employees, and impairment of acquired assets.
Goodwill and net intangible assets were $958.3 million at November 30, 2021, and the company now tests goodwill at the entity level as one reporting unit. A decline in stock price, reduced cash flow estimates, or slower growth could require a significant impairment charge.
A significant portion of revenue comes from software license and maintenance revenue tied to OpenEdge, and MD&A attributes fiscal year 2021 revenue growth partly to increased OpenEdge demand. If OpenEdge loses market acceptance or faces superior technologies, business and operating results could be materially harmed.
The ongoing COVID-19 pandemic could cause sales-cycle delays, renewal failures, payment term deferrals, and pricing or bundling concessions, though it did not have a material adverse impact on financial results for the fiscal year ended November 30, 2021. MD&A states the full impact remains unpredictable and could affect liquidity, operations, and financial results.
Revenue forecasting is uncertain because pipeline conversion requires management judgment, a high percentage of revenue is generated in the third month of each fiscal quarter, and COVID-19 could delay sales cycles. Missing forecasts or quarterly revenue targets could cause the stock price to decline.
The software industry is intensely competitive, and open source software can create downward pricing pressure. Chef products incorporate open source components, and competitors could develop competing open source or hybrid offerings, reducing demand and putting price pressure on Progress products.
Approximately 41% of total revenue is generated from sales outside North America and about one-third of revenue is denominated in foreign currencies. Foreign currency fluctuations and global economic or political instability could adversely affect international operations, revenue, and net income.
There is significant competition for skilled technical, managerial, sales, and marketing personnel, and periodic workforce restructurings can be disruptive. Fiscal year 2021 included restructuring related to Chef and Kemp, with additional expenses expected in fiscal year 2022.
Privacy regulation risks include the invalidation of the EU-U.S. Privacy Shield, new EU standard contractual clauses, GDPR penalties of up to 4% of worldwide revenue, CCPA, and Brazil's LGPD. Noncompliance or European customer reluctance could increase costs or restrict business.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Adjusted Free Cash Flow
Annualized Recurring Revenue (ARR)
Net Retention Rate
Summary, forecast, risks and KPIs are extracted from PROGRESS SOFTWARE CORP /MA's SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.