GlobeNewswire Inc | Sep 23, 2021 04:27PM EDT

September 23, 2021

Q3 Revenue and EPS Significantly Ahead of GuidanceFull Year 2021 Guidance Raised Again

BEDFORD, Mass., Sept. 23, 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 third quarter ended August31, 2021.

Third Quarter 2021 Highlights:

-- Revenue of $147.4 million increased 34% year-over-year on an actual currency basis, and 33% on a constant currency basis. -- Non-GAAP revenue of $152.6 million increased 38% on an actual currency basis, and 36% on a constant currency basis. -- Annualized Recurring Revenue (ARR) of $444 million increased 25% year-over-year on a constant currency basis. -- Operating margin was 31% and Non-GAAP operating margin was 47%. -- Diluted earnings per share was $0.70 compared to $0.53 in the same quarter last year, an increase of 32%. -- Non-GAAP diluted earnings per share was $1.18 compared to $0.78 in the same quarter last year, an increase of 51%.

Were very pleased to announce Q3 results that significantly beat our previous guidance for revenue and earnings, and were raising 2021 guidance for the third time this year, said Yogesh Gupta, CEO at Progress. We also announced the signing of a definitive agreement to acquire Kemp, a leader in the Application Experience (AX) space. Kemp meets all our acquisition criteria, fits perfectly with our total growth strategy, and brings a very talented team to Progress.

Additional financial highlights included(1)

Three Months Ended GAAP Non-GAAP(Inthousands,except August 31, August 31, % August 31, August 31, %percentages 2021 2020 Change 2021 2020 Changeand pershareamounts)Revenue $ 147,417 $ 109,699 34 % $ 152,597 $ 110,882 38 %Income from $ 46,046 $ 33,193 39 % $ 71,163 $ 47,117 51 %operationsOperating 31 % 30 % 100 47 % 42 % 500margin bps bpsNet income $ 30,976 $ 23,977 29 % $ 52,577 $ 35,605 48 %Dilutedearnings $ 0.70 $ 0.53 32 % $ 1.18 $ 0.78 51 %per shareCash fromoperations(GAAP) /Adjusted $ 35,224 $ 31,112 13 % $ 35,022 $ 30,101 16 %free cashflow(Non-GAAP)

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

Other fiscal third quarter 2021 metrics and recent results included:

-- Cash, cash equivalents and short-term investments were $383.7 million at the end of the quarter. -- DSO was 54 days compared to 49 days in the fiscal third quarter of 2020 and 44 days in the fiscal second quarter of 2021. -- On September 21, 2021, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on December 15, 2021 to shareholders of record as of the close of business on December 1, 2021. -- On September 23, 2021, we announced a definitive agreement to acquire Kemp Technologies, a leader in the Application Experience space, for $258 million in cash.

Anthony Folger, CFO, said: Q3 results were outstanding across every metric and our confidence in our business is reflected in the increased outlook for 2021. In addition to our strong financial results and outlook, we continued to execute our total growth strategy while remaining disciplined with the acquisition of Kemp, a deal that positions us exceptionally well for 2022 and beyond.

2021 Business Outlook

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

Updated FY 2021 Prior FY 2021 Guidance Guidance (September 23, 2021) (June 24, 2021)(In millions, except percentages GAAP Non-GAAP GAAP Non-GAAPand per share amounts)Revenue $520 - $548 - $503 - $529 - $524 $552 $509 $535 $1.56 - $3.68 - $1.51 $3.46 -Diluted earnings per share $1.58 $3.70 - $3.50 $1.55Operating margin 21% 40% 21% 39%Cash from operations (GAAP) / $168 - $168 - $160 - $158 -Adjusted free cash flow (Non-GAAP) $172 $172 $164 $162Effective tax rate 20% - 20% - 21% 20% - 20% - 21% 21% 21%

Q4 2021 Guidance(In millions, except per share amounts) GAAP Non-GAAPRevenue $129 - $133 $134 - $138Diluted earnings per share $0.13 - $0.15 $0.73 - $0.75

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 $6.8 million on GAAP and non-GAAP revenue, and approximately $0.04 on GAAP and non-GAAP diluted earnings per share. The expected positive currency translation impact on Progress fiscal Q4 2021 business outlook compared to 2020 exchange rates on GAAP and non-GAAP revenue is approximately $0.6 million. The expected positive impact on GAAP and non-GAAP diluted Q4 2021 earnings per share is $0.01. 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 third quarter of 2021 at 5:00 p.m. ET on Thursday, September23, 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 800-773-2954 or +1 847-413-3731, passcode 50220857. 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 companys GAAP financial results is included in the tables below and is available on the Progress website at www.progress.comwithin the investor relations section. Additional information regarding the companys 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 Kemp 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 Nine Months Ended(In thousands, August 31, August 31, % August 31, August 31, %except per share 2021 2020 Change 2021 2020 Changedata)Revenue: Software licenses $ 51,930 $ 27,514 89 % $ 115,354 $ 77,806 48 %Maintenance and 95,487 82,185 16 % 275,831 241,959 14 %servicesTotal revenue 147,417 109,699 34 % 391,185 319,765 22 %Costs of revenue: Cost of software 1,574 1,103 43 % 3,763 3,302 14 %licensesCost of maintenance 14,895 11,971 24 % 42,887 35,607 20 %and servicesAmortization ofacquired 3,599 1,664 116 % 10,719 4,974 116 %intangiblesTotal costs of 20,068 14,738 36 % 57,369 43,883 31 %revenueGross profit 127,349 94,961 34 % 333,816 275,882 21 %Operating expenses: Sales and marketing 29,737 22,186 34 % 88,468 68,100 30 %Product development 25,616 20,676 24 % 76,579 64,117 19 %General and 16,451 13,514 22 % 46,335 38,702 20 %administrativeAmortization ofacquired 7,978 4,176 91 % 22,836 12,484 83 %intangiblesRestructuring 40 91 (56 ) 1,133 1,826 (38 )%expenses %Acquisition-related 1,481 1,125 32 % 2,721 1,439 89 %expensesTotal operating 81,303 61,768 32 % 238,072 186,668 28 %expensesIncome from 46,046 33,193 39 % 95,744 89,214 7 %operationsOther expense, net (6,539 ) (2,962 ) (121 ) (14,409 ) (9,206 ) (57 )% %Income before 39,507 30,231 31 % 81,335 80,008 2 %income taxesProvision for 8,531 6,254 36 % 17,841 17,947 (1 )%income taxesNet income $ 30,976 $ 23,977 29 % $ 63,494 $ 62,061 2 % Earnings per share: Basic $ 0.71 $ 0.53 34 % $ 1.45 $ 1.38 5 %Diluted $ 0.70 $ 0.53 32 % $ 1.43 $ 1.37 4 %Weighted average shares outstanding:Basic 43,762 45,036 (3 ) 43,896 44,941 (2 )% %Diluted 44,502 45,364 (2 ) 44,542 45,382 (2 )% % Cash dividendsdeclared per common $ 0.175 $ 0.165 6 % $ 0.525 $ 0.495 6 %share

Stock-based compensation is included in thecondensed consolidated statements of operations, as follows:Cost of $ 374 $ 322 16 % $ 1,234 $ 979 26 %revenueSales and 1,424 1,035 38 % 4,679 3,195 46 %marketingProduct 1,848 1,693 9 % 6,179 5,518 12 %developmentGeneral and 3,193 2,635 21 % 9,893 7,667 29 %administrativeTotal $ 6,839 $ 5,685 20 % $ 21,985 $ 17,359 27 %

CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)

(In thousands) August 31, November 30, 2021 2020Assets Current assets: Cash, cash equivalents and short-term $ 383,677 $ 105,995 investmentsAccounts receivable, net 77,031 84,040 Unbilled receivables and contract assets 28,479 24,917 Other current assets 19,710 23,983 Total current assets 508,897 238,935 Property and equipment, net 28,724 29,817 Goodwill and intangible assets, net 670,602 704,473 Right-of-use lease assets 28,286 30,635 Long-term unbilled receivables and contract 22,225 17,133 assetsOther assets 16,753 20,789 Total assets $ 1,275,487 $ 1,041,782 Liabilities and shareholders? equity Current liabilities: Accounts payable and other current liabilities $ 70,713 $ 70,899 Current portion of long-term debt, net 23,886 18,242 Short-term operating lease liabilities 7,269 7,015 Short-term deferred revenue 169,740 166,387 Total current liabilities 271,608 262,543 Long-term debt, net 247,375 364,260 Convertible senior notes, net 291,283 ? Long-term operating lease liabilities 24,010 26,966 Long-term deferred revenue 33,280 26,908 Other long-term liabilities 11,158 15,092 Shareholders? equity: Common stock and additional paid-in capital 343,677 306,244 Retained earnings 53,096 39,769 Total shareholders? equity 396,773 346,013 Total liabilities and shareholders? equity $ 1,275,487 $ 1,041,782

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

Three Months Ended Nine Months Ended(In thousands) August 31, August 31, August 31, August 31, 2021 2020 2021 2020Cash flows from operating activities:Net income $ 30,976 $ 23,977 $ 63,494 $ 62,061 Depreciation and 16,383 7,480 43,074 22,721 amortizationStock-based compensation 6,839 5,685 21,985 17,359 Other non-cash 1,009 655 4,132 8,311 adjustmentsChanges in operating (19,983 ) (6,685 ) 1,917 (8,367 )assets and liabilitiesNet cash flows from 35,224 31,112 134,602 102,085 operating activitiesCapital expenditures (625 ) (1,662 ) (2,741 ) (3,419 )Issuances of common 2,947 1,719 (25,753 ) (10,973 )stock, net of repurchasesDividend payments to (7,755 ) (7,452 ) (23,372 ) (22,358 )shareholdersPayments of principal on (5,644 ) (3,763 ) (111,669 ) (7,525 )long-term debtProceeds from issuance ofNotes, net of issuance ? ? 349,196 ? costsPurchase of capped calls ? ? (43,056 ) ? Other (3,130 ) 6,520 475 (1,376 )Net change in cash, cashequivalents and 21,017 26,474 277,682 56,434 short-term investmentsCash, cash equivalentsand short-term 362,660 203,645 105,995 173,685 investments, beginning ofperiodCash, cash equivalentsand short-term $ 383,677 $ 230,119 $ 383,677 $ 230,119 investments, end ofperiod

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

Three Months Ended % Change(In thousands, except per August 31, 2021 August 31, 2020 Non-GAAPshare data)Adjusted revenue: GAAP revenue $ 147,417 $ 109,699 Acquisition-related revenue^ 5,180 1,183 (1)Non-GAAP revenue $ 152,597 100 % $ 110,882 100 % 38 % Adjusted income from operations:GAAP income from operations $ 46,046 31 % $ 33,193 30 % Amortization of acquired 11,577 8 % 5,840 5 % intangiblesRestructuring expenses and 40 ? % 91 ? % otherStock-based compensation 6,839 4 % 5,685 5 % Acquisition-related revenue^ 6,661 4 % 2,308 2 % (1) and expensesNon-GAAP income from $ 71,163 47 % $ 47,117 42 % 51 %operations Adjusted net income: GAAP net income $ 30,976 21 % $ 23,977 22 % Amortization of acquired 11,577 8 % 5,840 5 % intangiblesRestructuring expenses and 40 ? % 91 ? % otherStock-based compensation 6,839 3 % 5,685 5 % Acquisition-related revenue^ 6,661 4 % 2,308 2 % (1) and expensesAmortization of discount on 2,868 2 % ? ? % notesProvision for income taxes (6,384 ) (4 ) (2,296 ) (2 ) % %Non-GAAP net income $ 52,577 34 $ 35,605 32 % 48 % Adjusted diluted earnings per share:GAAP diluted earnings per $ 0.70 $ 0.53 shareAmortization of acquired 0.26 0.12 intangiblesStock-based compensation 0.15 0.13 Acquisition-related revenue^ 0.15 0.05 (1) and expensesAmortization of discount on 0.06 ? notesProvision for income taxes (0.14 ) (0.05 ) Non-GAAP diluted earnings per $ 1.18 $ 0.78 51 %share Non-GAAP weighted avg shares 44,502 45,364 (2 )%outstanding - diluted ^(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.

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

Nine Months Ended % Change(In thousands, except per August 31, 2021 August 31, 2020 Non-GAAPshare data)Adjusted revenue: GAAP revenue $ 391,185 $ 319,765 Acquisition-related revenue^ 22,394 7,384 (1)Non-GAAP revenue $ 413,579 100 % $ 327,149 100 % 26 % Adjusted income from operations:GAAP income from operations $ 95,744 24 % $ 89,214 28 % Amortization of acquired 33,555 8 % 17,458 5 % intangiblesRestructuring expenses and 1,133 ? % 1,826 ? % otherStock-based compensation 21,985 5 % 17,359 5 % Acquisition-related revenue^ 25,115 6 % 8,823 3 % (1) and expensesNon-GAAP income from $ 177,532 43 % $ 134,680 41 % 32 %operations Adjusted net income: GAAP net income $ 63,494 16 % $ 62,061 19 % Amortization of acquired 33,555 8 % 17,458 5 % intangiblesRestructuring expenses and 1,133 ? % 1,826 ? % otherStock-based compensation 21,985 5 % 17,359 5 % Acquisition-related revenue^ 25,115 6 % 8,823 3 % (1) and expensesAmortization of discount on 4,348 1 % ? ? % notesProvision for income taxes (18,036 ) (4 ) (8,563 ) (2 ) % %Non-GAAP net income $ 131,594 32 % $ 98,964 30 % 33 % Adjusted diluted earnings per share:GAAP diluted earnings per $ 1.43 $ 1.37 shareAmortization of acquired 0.75 0.38 intangiblesRestructuring expenses and 0.03 0.04 otherStock-based compensation 0.48 0.39 Acquisition-related revenue^ 0.56 0.19 (1) and expensesAmortization of discount on 0.10 ? notesProvision for income taxes (0.40 ) (0.19 ) Non-GAAP diluted earnings per $ 2.95 $ 2.18 35 %share Non-GAAP weighted avg shares 44,542 45,382 (2 )%outstanding - diluted ^(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.

OTHER NON-GAAP FINANCIAL MEASURES(Unaudited)

Quarter to Date Adjusted Free Cash Flow (In thousands) Q3 2021 Q3 2020 % ChangeCash flows from operations $ 35,224 $ 31,112 13 %Purchases of property and equipment (625 ) (1,662 ) (62 )%Free cash flow 34,599 29,450 17 %Add back: restructuring payments 423 651 (35 )%Adjusted free cash flow $ 35,022 $ 30,101 16 %

Year to Date Adjusted Free Cash Flow (In thousands) Q3 2021 Q3 2020 % ChangeCash flows from operations $ 134,602 $ 102,085 32 %Purchases of property and equipment (2,741 ) (3,419 ) (20 )%Free cash flow 131,861 98,666 34 %Add back: restructuring payments 5,087 3,131 62 %Adjusted free cash flow $ 136,948 $ 101,797 35 %

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 $ 520.4 18 % $ 524.4 19 %Acquisition-relatedadjustments - 14.1 27.6 96 % 27.6 96 %revenue^(1)Non-GAAP revenue $ 456.2 $ 548.0 20 % $ 552.0 21 %^(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, Chef, and Kemp.

Fiscal Year 2021 Updated Non-GAAP Operating Margin Guidance Fiscal Year Ending November 30, 2021(In millions) Low HighGAAP income from operations $ 108.9 $ 110.0 GAAP operating margins 21 % 21 %Acquisition-related revenue 27.6 27.6 Acquisition-related expense 3.4 3.4 Restructuring expense 4.8 4.8 Stock-based compensation 28.9 28.9 Amortization of acquired intangibles 46.9 46.9 Total adjustments^(2) 111.6 111.6 Non-GAAP income from operations $ 220.5 $ 221.6 Non-GAAP operating margin 40 % 40 %^(2)Total adjustments include preliminary estimates relating to the valuationof intangible assets acquired from Chef and Kemp and restructuring expenses.The final amounts will not be available until the Company?s internalprocedures and reviews 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 $ 69.7 $ 70.6 Adjustments (from previous table) 111.6 111.6 Amortization of discount on notes 7.2 7.2 Income tax adjustment^(3) (24.4 ) (24.3 )Non-GAAP net income $ 164.1 $ 165.1 GAAP diluted earnings per share $ 1.56 $ 1.58 Non-GAAP diluted earnings per share $ 3.68 $ 3.70 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 $ 220.5 $ 221.6 Other (expense) income (14.0 ) (14.0 )Non-GAAP income from continuing operations before 206.5 207.6 income taxesNon-GAAP net income 164.1 165.1 Tax provision $ 42.4 $ 42.5 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) $ 168 $ 172 Purchases of property and equipment (5 ) (5 )Add back: restructuring payments 5 5 Adjusted free cash flow (non-GAAP) $ 168 $ 172

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q4 2021 GUIDANCE(Unaudited)

Q4 2021 Revenue Guidance Three Months Three Months Ending Ended November November 30, 2021 30, 2020(In millions) Low % High % Change ChangeGAAP revenue $ 122.4 $ 129.2 6 % $ 133.2 9 %Acquisition-relatedadjustments - 6.7 5.2 (22 )% 5.2 (22 )%revenue^(1)Non-GAAP revenue $ 129.1 $ 134.4 4 % $ 138.4 7 %^(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, Chef, and Kemp.

Q4 2021 Non-GAAP Earnings per Share Guidance Three Months Ending November 30, 2021 Low HighGAAP diluted earnings per share $ 0.13 $ 0.15 Acquisition-related revenue 0.12 0.12 Acquisition-related expense 0.02 0.02 Restructuring expense 0.08 0.08 Stock-based compensation 0.15 0.15 Amortization of acquired intangibles 0.30 0.30 Total adjustments^(2) 0.67 0.67 Amortization of discount on notes 0.06 0.06 Income tax adjustment (0.13 ) (0.13 )Non-GAAP diluted earnings per share $ 0.73 $ 0.75 ^(2)Total adjustments include preliminary estimates relating to the valuationof intangible assets acquired from Chef and Kemp. The final amounts will not beavailable until the Company?s internal procedures and reviews are completed.