GlobeNewswire Inc | Jun 24, 2021 04:15PM EDT

June 24, 2021

Q2 Revenue and Earnings Per Share Exceed GuidanceFull Year Guidance Raised

BEDFORD, Mass., June 24, 2021 (GLOBE NEWSWIRE) -- Progress (NASDAQ: PRGS), the leading provider of products to develop, deploy and manage high-impact business applications, today announced financial results for its fiscal second quarter ended May31, 2021.

Second Quarter 2021 Highlights:

-- Revenue of $122.5 million increased 22% year-over-year on an actual currency basis, and 19% on a constant currency basis. -- Non-GAAP revenue of $129.2 million increased 26% on an actual currency basis, and 23% on a constant currency basis. -- Annualized Recurring Revenue (ARR) of $437 million increased 23% year-over-year on a constant currency basis. -- Operating margin was 18% and Non-GAAP operating margin was 38%. -- Diluted earnings per share was $0.30 compared to $0.37 in the same quarter last year, a decrease of 19%. -- Non-GAAP diluted earnings per share was $0.82 compared to $0.63 in the same quarter last year, an increase of 30%.

We delivered a strong second quarter, which came in well ahead of our top- and bottom-line guidance ranges, demonstrating the success of our total growth strategy, said Yogesh Gupta, CEO at Progress. Our outperformance was driven by a combination of strength in our core business coupled with our acquired DevOps products from Chef, which is achieving nearly all of the integration synergies we expected ahead of schedule. The combination of another quarter of outperformance in our core businesses along with Chef proceeding ahead of plan makes us increasingly confident in our expectations for a strong year.

Additional financial highlights included(1)

Three Months Ended GAAP Non-GAAP(Inthousands,except % %percentages May 31, 2021 May 31, 2020 Change May 31, 2021 May 31, 2020 Changeand pershareamounts)Revenue $ 122,488 $ 100,383 22 % $ 129,198 $ 102,505 26 %Income from $ 22,282 $ 25,309 (12 ) % $ 49,712 $ 39,590 26 %operationsOperating 18 % 25 % (700) 38 % 39 % (100) margin bps bpsNet income $ 13,557 $ 16,968 (20 ) % $ 36,513 $ 28,656 27 %Dilutedearnings $ 0.30 $ 0.37 (19 ) % $ 0.82 $ 0.63 30 %per shareCash fromoperations(GAAP) /Adjusted $ 54,690 $ 37,957 44 % $ 55,411 $ 38,399 44 %free cashflow(Non-GAAP)

(1)See Legal Notice Regarding Non-GAAP Financial Information

Other fiscal second quarter 2021 metrics and recent results included:

-- Cash, cash equivalents and short-term investments were $362.7 million at the end of the quarter. -- DSO was 44 days compared to 47 days in the fiscal second quarter of 2020 and 53 days in the fiscal first quarter of 2021. -- Pursuant to the $250 million share authorization by the Board of Directors, Progress repurchased 0.4 million shares for $20.0 million during the second fiscal quarter of 2021. As of May 31, 2021, there was $155.0 million remaining under this authorization. -- During the second quarter, the company completed an offering of convertible senior unsecured notes in the aggregate amount of $360,000,000, including the over allotment. To mitigate potential dilution to existing shareholders, the company privately negotiated capped call transactions that effectively doubled the conversion premium, for an effective conversion price of $89.88 per share. -- On June 22, 2021, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on September 15, 2021 to shareholders of record as of the close of business on September 1, 2021. -- During the second quarter, Progress began operating as one distinct segment to align with the way that management internally analyzes the business. Progress previously reported results based on three segments.

Anthony Folger, CFO, said: Were very pleased with the performance of our core business and our continued success integrating Chef. Our second quarter results reflect strength across all product lines and we're very pleased with the growth in ARR and the improvement in our net retention rates, both of which were introduced as key metrics last quarter. At the same time, we are achieving acquisition synergies sooner than anticipated, which contributed to our strong profitability and cash flows. These results reinforce our optimism and increase our confidence, providing us with comfort to raise our FY21 guidance again this quarter.

2021 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2021 and the fiscal third quarter ending August 31, 2021:

Updated FY 2021 Prior FY 2021 Guidance Guidance (June 24, 2021) (March 25, 2021)(In millions, except percentages GAAP Non-GAAP GAAP Non-GAAPand per share amounts)Revenue $503 - $529 - $493 - $519 - $509 $535 $501 $527Diluted earnings per share $1.51 - $3.46 - $1.56 - $3.38 - $1.55 $3.50 $1.60 $3.42Operating margin 21% 39% 20% 38%Cash from operations (GAAP) / $160 - $158 - $157 - $155 -Adjusted free cash flow (Non-GAAP) $164 $162 $162 $160Effective tax rate 20% - 20% - 21% 21% 20% 21%

Q3 2021 Guidance(In millions, except per share amounts) GAAP Non-GAAPRevenue $124 - $127 $129 - $132Diluted earnings per share $0.34 - $0.36 $0.81 - $0.83

Based on current exchange rates, the expected positive currency translation impact on Progress' fiscal year 2021 business outlook compared to 2020 exchange rates is approximately $8.4 million on GAAP and non-GAAP revenue, and approximately $0.05 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress' fiscal Q3 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $2.2 million. The expected positive impact on GAAP and non-GAAP diluted Q3 2021 earnings per share is $0.02. To the extent that there are changes in exchange rates versus the current environment, this may have an impact on Progress' business outlook.

Conference Call

Progress will hold a conference call to review its financial results for the fiscal second quarter of 2021 at 5:00 p.m. ET on Thursday, June24, 2021. The call can be accessed on the investor relations section of the companys website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 800-458-4121 or +1 773-377-9334, passcode 3588537. The conference call will include comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States ("GAAP"). Progress believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below and is available on the Progress website atwww.progress.com within the investor relations section. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is also available on the Progress website within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like believe, may, could, would, might, should, expect, intend, plan, target, anticipate and continue, the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding Progress' business outlook and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Economic, geopolitical and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services, other offerings or our internal information technology infrastructure are compromised or subject to a successful cyber-attack, or if our software offerings contain significant coding or configuration errors, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, and may make acquisitions in the future, and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (9) Delay or failure to realize the expected synergies and benefits of the Chef acquisition could negatively impact our future results of operations and financial condition. (10) The continuing impact of the coronavirus disease (COVID-19) outbreak on our employees, customers, partners, and the global financial markets could adversely affect our business, results of operations and financial condition. For further information regarding risks and uncertainties associated with Progress' business, please refer to Progress' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2020. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress(NASDAQ: PRGS) provides the best products to develop, deploy and manage high-impact business applications. Our comprehensive product stack is designed to make technology teams more productive and we have a deep commitment to the developer community, both open source and commercial alike. With Progress, organizations can accelerate the creation and delivery of strategic business applications, automate the process by which apps are configured, deployed and scaled, and make critical data and content more accessible and secureleading to competitive differentiation and business success. Over 1,700 independent software vendors, 100,000 enterprise customers, and three million developers rely onProgressto power their applications. Learn aboutProgressatwww.progress.comor +1-800-477-6473.

Progress andProgress Softwareare trademarks or registered trademarks ofProgress Software Corporationand/or its subsidiaries or affiliates in theU.S.and other countries.Any other names contained herein may be trademarks of their respective owners.

Investor Contact: Press Contact:Michael Micciche Erica McShaneProgress Software Progress Software+1 781 850 8450 +1 781 280 4000Investor-Relations@progress.com PR@progress.com

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three Months Ended Six Months Ended(In thousands, except per May 31, May 31, % May 31, May 31, %share data) 2021 2020 Change 2021 2020 ChangeRevenue: Software licenses $ 30,107 $ 19,663 53 % $ 63,424 $ 50,292 26 %Maintenance and services 92,381 80,720 14 % 180,344 159,774 13 %Total revenue 122,488 100,383 22 % 243,768 210,066 16 %Costs of revenue: Cost of software licenses 1,038 810 28 % 2,189 2,199 ? %Cost of maintenance and 14,673 11,785 25 % 27,992 23,636 18 %servicesAmortization of acquired 3,599 1,664 116 % 7,120 3,310 115 %intangiblesTotal costs of revenue 19,310 14,259 35 % 37,301 29,145 28 %Gross profit 103,178 86,124 20 % 206,467 180,921 14 %Operating expenses: Sales and marketing 29,262 21,716 35 % 58,731 45,914 28 %Product development 26,415 21,787 21 % 50,963 43,441 17 %General and administrative 16,460 12,440 32 % 29,884 25,188 19 %Amortization of acquired 7,979 4,177 91 % 14,858 8,308 79 %intangiblesRestructuring expenses (64 ) 695 (109 ) % 1,093 1,735 (37 ) %Acquisition-related expenses 844 ? ? % 1,240 314 295 %Total operating expenses 80,896 60,815 33 % 156,769 124,900 26 %Income from operations 22,282 25,309 (12 ) % 49,698 56,021 (11 ) %Other expense, net (5,218 ) (2,847 ) (83 ) % (7,870 ) (6,244 ) (26 ) %Income before income taxes 17,064 22,462 (24 ) % 41,828 49,777 (16 ) %Provision for income taxes 3,507 5,494 (36 ) % 9,310 11,693 (20 ) %Net income $ 13,557 $ 16,968 (20 ) % $ 32,518 $ 38,084 (15 ) % Earnings per share: Basic $ 0.31 $ 0.38 (18 ) % $ 0.74 $ 0.85 (13 ) %Diluted $ 0.30 $ 0.37 (19 ) % $ 0.73 $ 0.84 (13 ) %Weighted average shares outstanding:Basic 43,818 44,889 (2 ) % 43,963 44,893 (2 ) %Diluted 44,472 45,267 (2 ) % 44,562 45,391 (2 ) % Cash dividends declared per $ 0.175 $ 0.165 6 % $ 0.350 $ 0.330 6 %common share

Stock-based compensation is included in thecondensed consolidated statements of operations, as follows:Cost of $ 468 $ 338 38 % $ 860 $ 657 31 %revenueSales and 1,752 1,110 58 % 3,255 2,160 51 %marketingProduct 2,412 1,899 27 % 4,331 3,825 13 %developmentGeneral and 3,730 2,276 64 % 6,700 5,032 33 %administrativeTotal $ 8,362 $ 5,623 49 % $ 15,146 $ 11,674 30 %

CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)

(In thousands) May 31, 2021 November 30, 2020Assets Current assets: Cash, cash equivalents and short-term $ 362,660 $ 105,995 investmentsAccounts receivable, net 64,045 84,040 Unbilled receivables and contract assets 23,157 24,917 Other current assets 21,106 23,983 Total current assets 470,968 238,935 Property and equipment, net 29,333 29,817 Goodwill and intangible assets, net 682,499 704,473 Right-of-use lease assets 30,833 30,635 Long-term unbilled receivables and contract 10,742 17,133 assetsOther assets 15,619 20,789 Total assets $ 1,239,994 $ 1,041,782 Liabilities and shareholders? equity Current liabilities: Accounts payable and other current liabilities $ 61,239 $ 70,899 Current portion of long-term debt, net 22,005 18,242 Short-term operating lease liabilities 7,361 7,015 Short-term deferred revenue 175,472 166,387 Total current liabilities 266,077 262,543 Long-term debt, net 254,757 364,260 Convertible senior notes, net 288,023 ? Long-term operating lease liabilities 26,541 26,966 Long-term deferred revenue 27,158 26,908 Other long-term liabilities 11,717 15,092 Shareholders? equity: Common stock and additional paid-in capital 334,064 306,244 Retained earnings 31,657 39,769 Total shareholders? equity 365,721 346,013 Total liabilities and shareholders? equity $ 1,239,994 $ 1,041,782

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

Three Months Ended Six Months Ended(In thousands) May 31, May 31, May 31, May 31, 2021 2020 2021 2020Cash flows fromoperating activities:Net income $ 13,557 $ 16,968 $ 32,518 $ 38,084 Depreciation and 14,829 7,572 26,691 15,241 amortizationStock-based 8,362 5,623 15,146 11,674 compensationOther non-cash 708 2,309 3,123 7,656 adjustmentsChanges inoperating assets 17,234 5,485 21,900 (1,682 ) and liabilitiesNet cash flowsfrom operating 54,690 37,957 99,378 70,973 activitiesCapital (950 ) (609 ) (2,116 ) (1,757 ) expendituresIssuances ofcommon stock, net (17,185 ) 3,063 (28,700 ) (12,692 ) of repurchasesDividend payments (7,763 ) (7,438 ) (15,617 ) (14,906 ) to shareholdersPayments ofprincipal on (87,262 ) (1,880 ) (106,025 ) (3,762 ) long-term debtProceeds fromissuance of 349,196 ? 349,196 ? Notes, net ofissuance costsPurchase of (43,056 ) ? (43,056 ) ? capped callsOther 619 (4,503 ) 3,605 (7,896 ) Net change incash, cashequivalents and 248,289 26,590 256,665 29,960 short-terminvestmentsCash, cashequivalents andshort-term 114,371 177,055 105,995 173,685 investments,beginning ofperiodCash, cashequivalents andshort-term $ 362,660 $ 203,645 $ 362,660 $ 203,645 investments, endof period

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - SECOND QUARTER(Unaudited)

Three Months Ended % Change(In thousands, except per May 31, 2021 May 31, 2020 Non-GAAPshare data)Adjusted revenue: GAAP revenue $ 122,488 $ 100,383 Acquisition-related revenue 6,710 2,122 ^(1)Non-GAAP revenue $ 129,198 100 % $ 102,505 100 % 26% Adjusted income from operations:GAAP income from operations $ 22,282 18 % $ 25,309 25 % Amortization of acquired 11,578 9 % 5,841 6 % intangiblesRestructuring expenses and (64 ) ? % 695 1 % otherStock-based compensation 8,362 5 % 5,623 5 % Acquisition-related revenue 7,554 6 % 2,122 2 % ^(1) and expensesNon-GAAP income from $ 49,712 38 % $ 39,590 39 % 26%operations Adjusted net income: GAAP net income $ 13,557 11 % $ 16,968 17 % Amortization of acquired 11,578 9 % 5,841 6 % intangiblesRestructuring expenses and (64 ) ? % 695 1 % otherStock-based compensation 8,362 6 % 5,623 5 % Acquisition-related revenue 7,554 6 % 2,122 2 % ^(1) and expensesAmortization of discount on 1,480 1 % ? ? % notesProvision for income taxes (5,954 ) (5 ) % (2,593 ) (3 ) % Non-GAAP net income $ 36,513 28 % $ 28,656 28 % 27% Adjusted diluted earnings per share:GAAP diluted earnings per $ 0.30 $ 0.37 shareAmortization of acquired 0.26 0.13 intangiblesRestructuring expenses and ? 0.02 otherStock-based compensation 0.19 0.12 Acquisition-related revenue 0.17 0.05 ^(1) and expensesAmortization of discount on 0.03 ? notesProvision for income taxes (0.13 ) (0.06 ) Non-GAAP diluted earnings $ 0.82 $ 0.63 30%per share Non-GAAP weighted avgshares outstanding - 44,472 45,267 (2)%diluted (1)Acquisition-related revenue constitutes revenue reflected as pre-acquisitiondeferred revenue that would otherwise have been recognized but for the purchaseaccounting treatment of acquisitions. Since GAAP accounting requires theelimination of this revenue, GAAP results alone do not fully capture all of oureconomic activities.

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - YEAR TO DATE(Unaudited)

Six Months Ended % Change(In thousands,except per share May 31, 2021 May 31, 2020 Non-GAAPdata)Adjusted revenue: GAAP revenue $ 243,768 $ 210,066 Acquisition-related 17,214 6,201 revenue^(1)Non-GAAP revenue $ 260,982 100 % $ 216,267 100 % 21% Adjusted income from operations:GAAP income from $ 49,698 20 % $ 56,021 27 % operationsAmortization of 21,978 8 % 11,618 5 % acquired intangiblesRestructuring 1,093 ? % 1,735 ? % expenses and otherStock-based 15,146 6 % 11,674 5 % compensationAcquisition-relatedrevenue^(1) and 18,454 7 % 6,515 3 % expensesNon-GAAP income from $ 106,369 41 % $ 87,563 40 % 21%operations Adjusted net income: GAAP net income $ 32,518 13 % $ 38,084 18 % Amortization of 21,978 8 % 11,618 6 % acquired intangiblesRestructuring 1,093 ? % 1,735 1 % expenses and otherStock-based 15,146 6 % 11,674 5 % compensationAcquisition-relatedrevenue^(1) and 18,454 7 % 6,515 2 % expensesAmortization of 1,480 ? % ? ? % discount on notesProvision for income (11,652 ) (4 ) % (6,267 ) (3 ) % taxesNon-GAAP net income $ 79,017 30 % $ 63,359 29 % 25% Adjusted diluted earnings per share:GAAP diluted $ 0.73 $ 0.84 earnings per shareAmortization of 0.49 0.26 acquired intangiblesRestructuring 0.02 0.04 expenses and otherStock-based 0.35 0.26 compensationAcquisition-relatedrevenue^(1) and 0.41 0.14 expensesAmortization of 0.03 ? discount on notesProvision for income (0.26 ) (0.14 ) taxesNon-GAAP diluted $ 1.77 $ 1.40 26%earnings per share Non-GAAP weightedavg shares 44,562 45,391 (2)%outstanding -diluted (1)Acquisition-related revenue constitutes revenue reflected as pre-acquisitiondeferred revenue that would otherwise have been recognized but for the purchaseaccounting treatment of acquisitions. Since GAAP accounting requires theelimination of this revenue, GAAP results alone do not fully capture all of oureconomic activities.

OTHER NON-GAAP FINANCIAL MEASURES(Unaudited)

Quarter to Date Adjusted Free Cash Flow (In thousands) Q2 2021 Q2 2020 % ChangeCash flows from operations $ 54,690 $ 37,957 44 %Purchases of property and equipment (950 ) (609 ) 56 %Free cash flow 53,740 37,348 44 %Add back: restructuring payments 1,671 1,051 59 %Adjusted free cash flow $ 55,411 $ 38,399 44 %

Year to Date Adjusted Free Cash Flow (In thousands) Q2 2021 Q2 2020 % ChangeCash flows from operations $ 99,378 $ 70,973 40 %Purchases of property and (2,116 ) (1,757 ) 20 %equipmentFree cash flow 97,262 69,216 41 %Add back: restructuring payments 4,664 2,480 88 %Adjusted free cash flow $ 101,926 $ 71,696 42 %

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE(Unaudited)

Fiscal Year 2021 Updated Revenue Guidance Fiscal Fiscal Year Ending Year Ended November November 30, 2021 30, 2020(In millions) Low % High % Change ChangeGAAP revenue $ 442.1 $ 503.0 14 % $ 509.0 15 %Acquisition-relatedadjustments - 14.1 26.0 84 % 26.0 84 %revenue^(1)Non-GAAP revenue $ 456.2 $ 529.0 16 % $ 535.0 17 %^(1)Acquisition-related revenue constitutes revenue reflected aspre-acquisition deferred revenue that would otherwise have been recognized butfor the purchase accounting treatment of acquisitions. Since GAAP accountingrequires the elimination of this revenue, GAAP results alone do not fullycapture all of our economic activities. Acquisition-related revenue adjustmentsrelate to Ipswitch and Chef.

Fiscal Year 2021 Updated Non-GAAP Operating Margin Guidance Fiscal Year Ending November 30, 2021(In millions) Low HighGAAP income from operations $ 106.2 $ 108.4 GAAP operating margins 21 % 21 %Acquisition-related revenue 26.0 26.0 Acquisition-related expense 1.3 1.3 Restructuring expense 1.2 1.2 Stock-based compensation 28.8 28.8 Amortization of acquired intangibles 44.9 44.9 Total adjustments^(2) 102.2 102.2 Non-GAAP income from operations $ 208.4 $ 210.6 Non-GAAP operating margin 39 % 39 %^(2)Total adjustments include preliminary estimates relating to the valuationof intangible assets acquired from Chef and restructuring expenses. The finalamounts will not be available until the Company?s internal procedures andreviews are completed.

Fiscal Year 2021 Updated Non-GAAP Earnings per Share and Effective Tax RateGuidance Fiscal Year Ending November 30, 2021(In millions, except per share data) Low HighGAAP net income $ 67.3 $ 69.1 Adjustments (from previous table) 102.2 102.2 Amortization of discount on notes 7.2 7.2 Income tax adjustment^(3) (22.4 ) (22.4 ) Non-GAAP net income $ 154.3 $ 156.1 GAAP diluted earnings per share $ 1.51 $ 1.55 Non-GAAP diluted earnings per share $ 3.46 $ 3.50 Diluted weighted average shares outstanding 44.6 44.6 ^(3)Tax adjustment is based on a non-GAAP effective tax rate of approximately21% for Low and 20% for High, calculated as follows:Non-GAAP income from operations $ 208.4 $ 210.6 Other (expense) income (14.3 ) (14.3 ) Non-GAAP income from continuing operations 194.1 196.3 before income taxesNon-GAAP net income 154.3 156.1 Tax provision $ 39.8 $ 40.2 Non-GAAP tax rate 21 % 20 %

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2021 GUIDANCE(Unaudited)

Fiscal Year 2021 Adjusted Free Cash Flow Guidance Fiscal Year Ending November 30, 2021(In millions) Low HighCash flows from operations (GAAP) $ 160 $ 164 Purchases of property and equipment (7 ) (7 ) Add back: restructuring payments 5 5 Adjusted free cash flow (non-GAAP) $ 158 $ 162

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q3 2021 GUIDANCE(Unaudited)

Q3 2021 Revenue Guidance Three Months Three Months Ending Ended August 31, August 31, 2021 2020(In millions) Low % High % Change ChangeGAAP revenue $ 109.7 $ 123.8 13 % $ 126.8 16 %Acquisition-relatedadjustments - 1.2 5.2 333 % 5.2 333 %revenue^(1)Non-GAAP revenue $ 110.9 $ 129.0 16 % $ 132.0 19 %^(1)Acquisition-related revenue constitutes revenue reflected aspre-acquisition deferred revenue that would otherwise have been recognized butfor the purchase accounting treatment of acquisitions. Since GAAP accountingrequires the elimination of this revenue, GAAP results alone do not fullycapture all of our economic activities. Acquisition-related revenue adjustmentsrelate to Ipswitch and Chef.

Q3 2021 Non-GAAP Earnings per Share Guidance Three Months Ending August 31, 2021 Low HighGAAP diluted earnings per share $ 0.34 $ 0.36 Acquisition-related revenue 0.12 0.12 Stock-based compensation 0.15 0.15 Amortization of acquired intangibles 0.26 0.26 Total adjustments^(2) 0.53 0.53 Amortization of discount on notes 0.06 0.06 Income tax adjustment (0.12 ) (0.12 ) Non-GAAP diluted earnings per share $ 0.81 $ 0.83 ^(2)Total adjustments include preliminary estimates relating to the valuationof intangible assets acquired from Chef. The final amounts will not beavailable until the Company?s internal procedures and reviews are completed.