Progress Software Corp (PRGS) 2022 Q4 法說會逐字稿

Good day, and welcome to the Progress Software's Corporation Q4 2022 Earnings Call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，歡迎來到 Progress Software Corporation 2022 年第四季度財報電話會議。 （操作員說明）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your speaker, Mr. Mike Micciche, Vice President of Investor Relations. Please go ahead.

我現在想把會議交給您的發言人，投資者關係副總裁 Mike Micciche 先生。請繼續。

Okay. Great. Thank you, Cherie. Good afternoon, everyone, and thanks for joining us for Progress Software's Fourth Fiscal Quarter 2022 Financial Results Conference Call. With us today is Yogesh Gupta, President and Chief Executive Officer; and Anthony Folger, our Chief Financial Officer. Before we get started, I'd like to remind you that during this call, we will discuss our outlook for future financial operating performance, corporate strategies, product plans, cost initiatives, our proposed acquisition of MarkLogic and other information that might be considered forward-looking. This forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. For a description of the factors that may affect our results, please refer to the sections captioned Risk Factors in our most recent Form 10-K and subsequent 10-Qs.

好的。偉大的。謝謝你，切麗。大家下午好，感謝您參加 Progress Software 的 2022 財年第四季度財務業績電話會議。今天和我們在一起的是總裁兼首席執行官 Yogesh Gupta；和我們的首席財務官 Anthony Folger。在我們開始之前，我想提醒您，在本次電話會議中，我們將討論我們對未來財務運營業績的展望、公司戰略、產品計劃、成本計劃、我們對 MarkLogic 的擬議收購以及其他可能考慮的信息-看著。該前瞻性信息僅代表 Progress Software 截至今日的展望和指南，並受風險和不確定因素的影響。有關可能影響我們結果的因素的說明，請參閱我們最新的 10-K 表格和後續的 10-Q 中標題為“風險因素”的部分。

Progress Software assumes no obligation to update the forward-looking statements included in this call, whether as result of new developments, or otherwise. Additionally, on this call, all the financial figures we discuss are non-GAAP measures, unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our financial results press release, which was issued after the market closed today. This document contains the full details of our financial results for the fiscal fourth quarter of 2022, and I recommend you reference it for specific details. We have also prepared a presentation that contains supplemental data for our fourth quarter 2022 results, providing highlights and additional financial metrics. Both the earnings release and the supplemental presentation are available in the Investor Relations section of our website at investors.progress.com.

Progress Software 不承擔更新本次電話會議中包含的前瞻性陳述的義務，無論是由於新開發還是其他原因。此外，在本次電話會議上，除非另有說明，否則我們討論的所有財務數據都是非 GAAP 指標。您可以在我們今天收市後發布的財務業績新聞稿中找到這些非 GAAP 財務指標與最直接可比的 GAAP 數字的對賬。本文件包含我們 2022 財年第四季度財務業績的全部細節，我建議您參考它以了解具體細節。我們還準備了一份演示文稿，其中包含我們 2022 年第四季度業績的補充數據，提供亮點和其他財務指標。收益發布和補充介紹均可在我們網站 investors.progress.com 的投資者關係部分獲得。

As Cherie said, today's call will be recorded in its entirety and it will also be available via replay on the Investor Relations section of our website. So with that out of the way, let me turn it over to Yogesh.

正如 Cherie 所說，今天的電話會議將被完整記錄下來，也可以在我們網站的投資者關係部分通過重播獲得。因此，讓我把它交給 Yogesh。

Thank you, Mike. Good evening, everyone, and thank you for joining us on our call today. We're happy to be back with you to talk about the results of our fourth quarter and full year fiscal '22 and to look ahead to fiscal year '23. And we're excited that we can provide you with much more detail about our pending acquisition of MarkLogic. Anthony will discuss the financial results from FY '22, provide guidance for FY '23, and he'll also walk us through the financial benefits, impact and timing of the MarkLogic deal. It's a lot to cover, so let's jump right in.

謝謝你，邁克。大家晚上好，感謝您今天加入我們的電話會議。我們很高興能與您一起討論我們第四季度和全年 22 財年的結果，並展望 23 財年。我們很高興能夠為您提供有關我們即將收購 MarkLogic 的更多詳細信息。安東尼將討論 22 財年的財務結果，為 23 財年提供指導，他還將向我們介紹 MarkLogic 交易的財務收益、影響和時機。要涵蓋的內容很多，所以讓我們直接進入。

Fiscal '22 was another outstanding and eventful year for Progress during which we saw steady demand for virtually every product in every geography and exceptional execution from all of our teams in the field throughout the year. Our ongoing efforts to invest in our products and in customer success continue to bear fruit and led to exceptionally high net retention rate of over 101%. We saw customers expand their use and recommit to our products across the board. In FY '22, many of our large Chef, OpenEdge and DataDirect customers significantly increased their annual spend with us. Our DevTools products continue to see best-in-class retention rates and products such as Sitefinity cloud and MOVEit Cloud saw many new wins around the globe.

22 財年對於 Progress 來說又是一個傑出而多事的一年，在此期間，我們看到每個地區對幾乎所有產品的穩定需求，以及全年我們在該領域的所有團隊的出色執行。我們不斷努力投資於我們的產品和客戶的成功繼續取得成果，並導致超過 101% 的異常高的淨保留率。我們看到客戶擴大了他們的使用範圍並全面重新使用我們的產品。在 22 財年，我們的許多大型 Chef、OpenEdge 和 DataDirect 客戶顯著增加了他們在我們這裡的年度支出。我們的 DevTools 產品繼續保持一流的保留率，並且 Sitefinity 雲和 MOVEit Cloud 等產品在全球範圍內取得了許多新勝利。

Operationally, we fully integrated Kemp and folded the business into our existing sales, support, engineering and customer success platforms as planned. Our workhorse products, OpenEdge and DataDirect continues to perform solidly above plan, along with Sitefinity, DevTools, Chef, Loadmaster and Flowmon as customers continue to rely on our portfolio to run their mission-critical applications and manage their digital transformation efforts. All of this resulted in our finishing the fourth quarter on a very positive note, most notably with ARR coming in at $497 million, up 3.5% year-over-year.

在運營方面，我們完全整合了 Kemp，並按計劃將業務整合到我們現有的銷售、支持、工程和客戶成功平台中。我們的主力產品 OpenEdge 和 DataDirect 以及 Sitefinity、DevTools、Chef、Loadmaster 和 Flowmon 繼續穩步超出計劃，因為客戶繼續依賴我們的產品組合來運行他們的關鍵任務應用程序並管理他們的數字化轉型工作。所有這些使我們以非常積極的方式結束了第四季度，最引人注目的是 ARR 達到 4.97 億美元，同比增長 3.5%。

As you know, we consistently beat estimates and raised guidance this year with strong revenues, world-class operating margins and increasing earnings while maintaining a solid balance sheet. We navigated the tough and rapidly changing economic environment following the outbreak of war in Ukraine, a brief but dramatically resurgence of COVID, the onset of rapid inflation, and we overcame significant FX headwinds. We managed our cost structure very effectively in FY '22. We sold our headquarters and were able to shed the associated burdens of owning real estate. Our employees love our flexible work from anywhere model and our lease space in Burlington, which we inherited from Ipswitch is working perfectly as our new headquarters. We also continued to manage our variable expense as well throughout the year, even as we reunited more employees and customers in person, in some cases, for the first time since March of 2020. And even more importantly, we maintained high employee engagement and retention rates throughout the year, well above the industry averages. We consider employee retention to be critical to our success because retaining employees build institutional knowledge and is much more cost effective. We have continued to create and nurture a culture geared towards teamwork, respect for all, accountability, trust and innovation, which is why Progress continues to win awards year after year in the U.S. and abroad, as one of the best companies to work for. We're very proud of the success we've had in hiring and retaining a great team, and I believe it shows directly on both the top and the bottom lines of our business.

如您所知，今年我們憑藉強勁的收入、世界一流的營業利潤率和不斷增長的收益，同時保持穩健的資產負債表，持續超出預期並提高了指引。在烏克蘭戰爭爆發、COVID 短暫但急劇復甦、快速通貨膨脹開始後，我們度過了艱難且瞬息萬變的經濟環境，並克服了重大的外匯逆風。我們在 22 財年非常有效地管理了我們的成本結構。我們賣掉了總部，從而擺脫了擁有房地產的相關負擔。我們的員工喜歡我們從任何地方靈活工作的模式，以及我們從 Ipswitch 繼承的伯靈頓租賃空間作為我們的新總部完美運作。我們還在全年繼續管理我們的可變費用，即使我們讓更多的員工和客戶親自團聚，在某些情況下，這是自 2020 年 3 月以來的第一次。更重要的是，我們保持了較高的員工敬業度和保留率全年利率遠高於行業平均水平。我們認為留住員工對我們的成功至關重要，因為留住員工可以積累制度知識並且更具成本效益。我們繼續創造和培養一種面向團隊合作、尊重所有人、問責制、信任和創新的文化，這就是為什麼 Progress 年復一年地在美國和國外贏得獎項，成為最適合工作的公司之一。我們為我們在聘用和留住一支優秀團隊方面取得的成功感到非常自豪，我相信這直接體現在我們業務的頂線和底線。

So all in all, we're very pleased with the fourth quarter and full year '22. I couldn't be more proud of our team or more grateful to our customers and partners. We culminated calendar 2022 by finalizing the terms to acquire MarkLogic, allowing us to kick off 2023 by announcing the signing of a definitive agreement for our largest acquisition yet on January 3. We announced our total growth -- when we announced our Total Growth Strategy in 2019, we made a pledge to shareholders that we would be disciplined, patient and extremely selective in how we deployed our capital. We have kept that promise, and our criteria and commitment have not changed, even as the market and the environment around us has. We believe the M&A market will continue to evolve and that our ability to compete will increase as we keep adding infrastructure software acquisitions that create meaningful shareholder returns and generate durable cash flows, making Progress the acquirer of choice for target company employees, customers and sellers.

所以總而言之，我們對第四季度和 22 年全年感到非常滿意。我為我們的團隊感到無比自豪，也為我們的客戶和合作夥伴感激不盡。我們最終敲定了收購 MarkLogic 的條款，從而在 2022 日曆年達到高潮，這使我們能夠通過在 1 月 3 日宣布簽署我們迄今為止最大的收購的最終協議來啟動 2023 年。我們宣布了我們的總體增長——當我們在2019 年，我們向股東承諾，我們將在如何部署資本方面保持紀律、耐心和極其謹慎。我們信守承諾，我們的標準和承諾沒有改變，即使我們周圍的市場和環境發生了變化。我們相信併購市場將繼續發展，隨著我們不斷增加基礎設施軟件收購，創造有意義的股東回報並產生持久的現金流，我們的競爭能力將增強，使 Progress 成為目標公司員工、客戶和賣家的首選收購方。

As we said on the call announcing the MarkLogic deal 2 weeks ago, we think that this acquisition hits the target on every metric, from the ability to create synergies that provide strong recurring revenues, margins, cash flows and earnings to a great cultural and technology fit. We look forward to serving MarkLogic's impressive customer list of over 300 companies once the deal closes. From a technology perspective, MarkLogic's multimodel data platform and its capabilities for data integration and semantic analysis of structured and unstructured data will allow progress to deepen our data offerings and enable customers to consume data, grounded in superior analytics, informed search and fact-based intelligence. MarkLogic products will also extend data capabilities for our data direct customers from structured data integration to natively manipulating storing and managing nonrelational data such as grass data, triples and other unstructured data as well as gleaning insights by performing semantic metadata analysis and applying AI capabilities to all types of data.

正如我們在 2 週前宣布 MarkLogic 交易的電話會議上所說，我們認為此次收購在每個指標上都達到了目標，從創造協同效應以提供強大的經常性收入、利潤、現金流和收益的能力，到偉大的文化和技術合身。我們期待在交易完成後為 MarkLogic 令人印象深刻的 300 多家公司客戶名單提供服務。從技術角度來看，MarkLogic 的多模型數據平台及其對結構化和非結構化數據進行數據集成和語義分析的能力將有助於深化我們的數據產品，並使客戶能夠以卓越的分析、知情搜索和基於事實的情報為基礎來消費數據. MarkLogic 產品還將為我們的數據直接客戶擴展數據功能，從結構化數據集成到本地操作存儲和管理非關係數據，例如草數據、三元組和其他非結構化數據，以及通過執行語義元數據分析和將 AI 功能應用於所有數據收集洞察力數據類型。

Now let's talk a little bit about our FY '23 expectations, including the expected impact of MarkLogic. We expect demand for our products to remain steady in FY '23 and our ARR to continue to grow modestly. Once MarkLogic is fully integrated, Progress will scale to over $700 million in revenue. Speaking of MarkLogic financial impact, which Anthony will explain in more detail in a minute, we expect MarkLogic to add approximately $75 million in annual recurring revenue with high retention rates, over $100 million to the top line on a full year basis and expect operating margins to improve as we integrate its sales, go-to-market engineering and support functions into the Progress platform. It is important to note a few things regarding the timing of the deal and the seasonality of the MarkLogic business. We currently anticipate closing the acquisition in early February and expect MarkLogic to be accretive starting with the first full quarter of our ownership. More importantly, MarkLogic has a January fiscal year end, and about 1/3 of its revenue is recorded in December and January. Because MarkLogic's 2 biggest revenue months would have occurred just before the acquisition closes and our fiscal year ends in November, we will only be able to benefit from about 2/3 of their annual revenue in our fiscal year '23. And we'll only see the full year impact on revenue in FY '24. The deal closing in February also gives us only a few weeks of contribution in our Q1 '23. As you'll see in our guidance from Anthony, we expect the integration and synergies from this acquisition to take place through FY '23 with the first full year of revenue and margin impact coming next year.

現在讓我們談談我們對 23 財年的預期，包括 MarkLogic 的預期影響。我們預計 23 財年對我們產品的需求將保持穩定，我們的 ARR 將繼續適度增長。一旦 MarkLogic 完全整合，Progress 的收入將超過 7 億美元。談到 MarkLogic 的財務影響，Anthony 將在稍後詳細解釋，我們預計 MarkLogic 將以高保留率增加約 7500 萬美元的年度經常性收入，全年收入超過 1 億美元，並預計營業利潤率在我們將其銷售、上市工程和支持功能集成到 Progress 平台時進行改進。重要的是要注意有關交易時間和 MarkLogic 業務季節性的幾件事。我們目前預計在 2 月初完成收購，並預計 MarkLogic 將從我們所有權的第一個完整季度開始增值。更重要的是，MarkLogic 的財政年度截止日期為 1 月，其約 1/3 的收入記錄在 12 月和 1 月。由於 MarkLogic 的 2 個最大收入月份將發生在收購結束之前，我們的財政年度將於 11 月結束，因此我們只能從他們 23 財政年度的年收入的 2/3 中受益。而且我們只會在 24 財年看到全年對收入的影響。 2 月份完成的交易也只給了我們在 23 年第一季度的幾週時間。正如您將在 Anthony 的指導中看到的那樣，我們預計此次收購的整合和協同效應將在 23 財年實現，明年將出現第一個全年的收入和利潤影響。

So speaking of M&A more broadly, our Total Growth Strategy is playing out as planned. We're sticking to our disciplined approach, finding great companies and adding great customers, employees and products to our portfolio. Our capital structure and ability to finance new transactions is in excellent shape. We're selective, we are patient, and we are ready to find the next good deal. We're also executing our integration playbook well, once we make acquisitions. We learn from each acquisition and continually incorporate better strategies and tactics, and we use our significant corporate development experience as well as our ability to walk away from transactions that don't fit our model to seek out good deals in a challenging M&A landscape. Most of all, we remain committed to our goal of providing strong returns to shareholders and allocating our capital in the most efficient and productive manner. And as you can see, as good as fiscal '22 was, we're even more excited for fiscal '23.

因此，更廣泛地說併購，我們的總體增長戰略正在按計劃進行。我們堅持我們有紀律的方法，尋找優秀的公司，並將優秀的客戶、員工和產品添加到我們的產品組合中。我們的資本結構和為新交易融資的能力狀況良好。我們是有選擇性的，我們有耐心，我們已經準備好尋找下一筆划算的交易。一旦我們進行收購，我們也會很好地執行我們的整合劇本。我們從每次收購中學習並不斷整合更好的戰略和戰術，我們利用我們豐富的企業發展經驗以及我們擺脫不符合我們模式的交易的能力，在充滿挑戰的併購環境中尋找好的交易。最重要的是，我們仍然致力於為股東提供豐厚回報並以最高效和富有成效的方式分配資本的目標。正如你所看到的，與 22 財年一樣好，我們對 23 財年更加興奮。

With that, I'll turn it over to Anthony to go over the numbers. Anthony?

有了這個，我會把它交給安東尼來檢查這些數字。安東尼？

Thanks, Yogesh. Good afternoon, everyone, and thanks for joining our call. As I'm sure you heard in Yogesh's remarks, we're very pleased with our performance in the fourth quarter and the full fiscal year 2022, and we're also delighted to have signed a definitive agreement to acquire MarkLogic, which met all our M&A criteria and provides a larger scale opportunity for significant value creation.

謝謝，約格甚。大家下午好，感謝您加入我們的電話會議。正如我確定您在 Yogesh 的發言中聽到的那樣，我們對我們在第四季度和整個 2022 財年的表現感到非常滿意，我們也很高興簽署了收購 MarkLogic 的最終協議，這滿足了我們所有的要求併購標準，並為重要的價值創造提供了更大規模的機會。

Turning to the numbers. We'll start on the top line with ARR, which we believe provides the best view into our underlying performance. As a reminder, our calculation of ARR is presented on a pro forma basis to include the results of acquired businesses in all periods presented and in constant currency, with all periods presented at our current year budgeted exchange rates. ARR at the end of Q4 was $497 million, representing approximately 3.5% organic growth on a year-over-year constant currency basis. The growth in ARR was driven by multiple products, including OpenEdge, DataDirect, Sitefinity, Chef, DevTools and file transfer. A consistent trend that continues to fuel our ARR growth is strong net retention with rates remaining at a record high in Q4, again, exceeding 101%.

轉向數字。我們將從 ARR 的頂線開始，我們相信它可以最好地了解我們的基本業績。提醒一下，我們對 ARR 的計算是在備考基礎上進行的，以包括所收購業務在所有期間內以固定貨幣呈現的結果，所有期間均以我們當年的預算匯率呈現。第四季度末的 ARR 為 4.97 億美元，按固定匯率計算同比有機增長約 3.5%。 ARR 的增長是由多種產品推動的，包括 OpenEdge、DataDirect、Sitefinity、Chef、DevTools 和文件傳輸。繼續推動我們的 ARR 增長的一貫趨勢是強勁的淨保留率，第四季度的利率保持在創紀錄的高位，再次超過 101%。

Revenue for the quarter was $159.2 million and represents 11% growth over the prior year, reflecting an incremental contribution from Kemp, which we acquired in Q4 of 2021, coupled with strong sales of our OpenEdge, DataDirect, Sitefinity, DevTtools and file transfer products. It's also worth highlighting that on a constant currency basis, our year-over-year revenue growth for the fourth quarter increased from 11% to 15%. For the full year, revenue of $610.6 million represents 10% growth compared to 2021. This year-over-year growth is comprised of a full year revenue contribution from Kemp and growth across multiple other product lines, most notably OpenEdge, DataDirect and DevTools. Again, worth highlighting is the impact of exchange rates, because revenue growth for the full year at constant currency would have increased from 10% to 12.5%, an approximately $17 million headwind from foreign exchange for the year. With customer retention rates remaining consistently strong throughout 2022, and with a strong demand environment fueling growth across our portfolio, we're thrilled with our top line results for the year.

本季度收入為 1.592 億美元，比上年增長 11%，反映了我們在 2021 年第四季度收購的 Kemp 的增量貢獻，以及我們的 OpenEdge、DataDirect、Sitefinity、DevTtools 和文件傳輸產品的強勁銷售。還值得強調的是，在固定匯率的基礎上，我們第四季度的收入同比增長從 11% 增加到 15%。全年收入為 6.106 億美元，與 2021 年相比增長了 10%。這一同比增長包括 Kemp 的全年收入貢獻和其他多個產品線的增長，其中最著名的是 OpenEdge、DataDirect 和 DevTools。同樣，值得強調的是匯率的影響，因為按固定匯率計算，全年收入增長將從 10% 增加到 12.5%，全年外匯逆風約 1700 萬美元。由於整個 2022 年客戶保留率一直保持強勁，並且強勁的需求環境推動了我們產品組合的增長，我們對今年的最高業績感到非常興奮。

Turning to expenses. Total costs and operating expenses were $97 million for the quarter, up 6% over the year ago quarter and $369 million for the full year, up 12% compared to the full year 2021. For the quarter and the full year, the increase in cost and operating expenses was driven by an increase in our cost base resulting from the acquisition of Kemp. Operating income for the quarter was $62 million for an operating margin of 39% compared to $52 million or 36% in the year ago quarter. For the full year, operating income was $242 million for an operating margin of 40% compared to $229 million or 41% in 2021. Earnings per share were $1.12 for the quarter, an improvement of $0.20 compared to the year ago quarter. And for the full year, earnings per share was $4.13, an increase of $0.26 compared to 2021.

談到開支。本季度總成本和運營費用為 9700 萬美元，比去年同期增長 6%，全年為 3.69 億美元，比 2021 年全年增長 12%。對於本季度和全年，成本增加和運營費用是由於收購 Kemp 導致我們的成本基礎增加所致。本季度營業收入為 6200 萬美元，營業利潤率為 39%，而去年同期為 5200 萬美元或 36%。全年營業收入為 2.42 億美元，營業利潤率為 40%，而 2021 年為 2.29 億美元或 41%。本季度每股收益為 1.12 美元，比去年同期增加 0.20 美元。全年每股收益為 4.13 美元，比 2021 年增加 0.26 美元。

Moving on now to a few balance sheet and cash flow items. We ended the year with $252 million in cash, cash equivalents and short-term investments and approximately $300 million in untapped capacity under our revolving line of credit for a total liquidity of $552 million. In addition, we had a debt balance of $628 million, which is comprised of our term loan in the amount of $268 million and $360 million in convertible notes. DSO for the quarter was 62 days compared to 60 days in the fourth quarter of 2021. The increase in DSO was driven by the timing of billings with much of our billings overperformance coming very late in the quarter. Deferred revenue was $282 million at the end of the fourth quarter, up $30 million from a year ago, a reflection of our strong year-over-year top line performance. Adjusted free cash flow was $37 million for the quarter and $189 million for the full year. We repurchased $1.5 million worth of stock during the fourth quarter, bringing our total for the year to $77 million. As a result, at the end of Q4, we had $78 million remaining under our current share repurchase authorization. But as you've no doubt seen in today's press release, we've increased the amount available by $150 million, or a total of $228 million now available under our plan.

現在轉到一些資產負債表和現金流量項目。到年底，我們擁有 2.52 億美元的現金、現金等價物和短期投資，以及循環信貸額度下約 3 億美元的未開發產能，流動資金總額為 5.52 億美元。此外，我們的債務餘額為 6.28 億美元，其中包括 2.68 億美元的定期貸款和 3.6 億美元的可轉換票據。本季度的 DSO 為 62 天，而 2021 年第四季度為 60 天。DSO 的增加是由計費時間推動的，我們的大部分計費表現都在本季度末期出現。第四季度末遞延收入為 2.82 億美元，比去年同期增加 3000 萬美元，反映出我們強勁的同比收入表現。本季度調整後的自由現金流為 3700 萬美元，全年為 1.89 億美元。我們在第四季度回購了價值 150 萬美元的股票，使我們全年的回購總額達到 7700 萬美元。因此，在第四季度末，我們目前的股票回購授權還剩下 7800 萬美元。但是，正如您在今天的新聞稿中看到的那樣，我們已經將可用金額增加了 1.5 億美元，即我們的計劃中現在可用的總金額為 2.28 億美元。

Now I'd like to turn to our outlook for Q1 and the full year 2023. When considering our outlook, it's important to keep in mind the following: First, 2022 was a year of top line growth in constant currency across many of our product lines. In 2023, we expect stability in the demand environment for our products. And as a result, our top line guidance range reflects a relatively flat top line for our non-MarkLogic product lines. Next, our expectations for MarkLogic and MarkLogic's contribution to 2023 are driven off an assumption that the deal will close during February 2023, thereby contributing less than 10 months of MarkLogic activity. Once integrated, we expect MarkLogic to contribute more than $100 million to our top line annually. It's important to understand that MarkLogic has a revenue model driven by term base license agreements, which can result in uneven recognition of revenue. It's also very important to understand that MarkLogic has a January 31 fiscal year-end and seasonality in the business results in roughly 1/3 of all MarkLogic activity being booked in December and January of any given year. Because of this seasonality, we expect MarkLogic to contribute approximately $70 million of revenue through our fiscal 2023 and to deliver an operating margin of approximately 25%.

現在我想談談我們對第一季度和 2023 年全年的展望。在考慮我們的展望時，重要的是要記住以下幾點：首先，2022 年是我們許多產品的固定匯率收入增長的一年線。 2023年，我們預計產品需求環境穩定。因此，我們的頂線指導範圍反映了我們非 MarkLogic 產品線的頂線相對平坦。接下來，我們對 MarkLogic 和 MarkLogic 對 2023 年貢獻的預期是基於交易將在 2023 年 2 月完成的假設，從而貢獻不到 10 個月的 MarkLogic 活動。一旦整合，我們預計 MarkLogic 每年將為我們的收入貢獻超過 1 億美元。重要的是要了解 MarkLogic 的收入模型由基於條款的許可協議驅動，這可能導致收入確認不均衡。同樣重要的是要了解 MarkLogic 的財政年度截止日期為 1 月 31 日，業務的季節性導致大約 1/3 的所有 MarkLogic 活動在任何給定年份的 12 月和 1 月被預訂。由於這種季節性，我們預計 MarkLogic 將在 2023 財年貢獻約 7000 萬美元的收入，並實現約 25% 的營業利潤率。

As previously mentioned, we expect the integration of MarkLogic to continue throughout 2023, therefore, we expect to recognize cost synergies gradually during the year and to exit the year with an operating margin of MarkLogic of more than 40%. We anticipate drawing on our revolving credit to finance a portion of the MarkLogic purchase price. And while our pro forma net leverage levels are expected to remain modest, increased interest rates will impact our borrowing costs, resulting in interest expense of roughly $0.20 per share associated with the MarkLogic revolver drawdown and another increase in interest expense of $0.11 per share on our existing Term Loan A.

如前所述，我們預計 MarkLogic 的整合將在整個 2023 年繼續進行，因此，我們預計年內將逐漸認識到成本協同效應，並以 MarkLogic 超過 40% 的營業利潤率結束這一年。我們預計利用我們的循環信貸為 MarkLogic 購買價格的一部分提供資金。雖然我們的備考淨槓桿水平預計將保持適度，但利率上升將影響我們的借貸成本，導致與 MarkLogic 左輪手槍提款相關的每股利息支出約為 0.20 美元，我們的利息支出將再次增加 0.11 美元。現有定期貸款 A.

The final point I'd like to highlight relates to Section 174 of the U.S. tax code and its anticipated impact on our 2023 cash flows. As most of you are probably aware, Section 174 of the code was introduced in the Tax Cuts and Jobs Act of 2017 and is effective for progress beginning in fiscal 2023. Section 174 requires us to capitalize certain R&D expenses for tax purposes, which previously would have been expensed as incurred. Although we don't expect any meaningful change in our effective tax rate, we do expect to make $15.2 million of cash tax payments in 2023, specifically associated with the capitalization requirements of Section 174, unless it's again deferred, repealed, or otherwise modified.

我想強調的最後一點與美國稅法第 174 條及其對我們 2023 年現金流量的預期影響有關。你們大多數人可能都知道，該法典的第 174 條是在 2017 年的《減稅和就業法案》中引入的，並且對 2023 財年開始的進展有效。第 174 條要求我們將某些研發費用資本化用於稅收目的，這在以前會已在發生時計入費用。儘管我們預計我們的實際稅率不會發生任何有意義的變化，但我們確實預計 2023 年將支付 1520 萬美元的現金稅款，特別是與第 174 條的資本化要求相關，除非它再次被推遲、廢除或以其他方式修改。

With that, for the first quarter 2023, we expect revenue between $157 million and $161 million. This includes less than 1 month of a contribution from MarkLogic. We also expect earnings per share of between $1.04 and $1.08. For the full year 2023, we expect revenue of between $675 million and $685 million, representing 11% to 12% growth over 2022. We anticipate an operating margin for the year of approximately 38% and with a headwind from the MarkLogic integration, which will improve through the course of the year, as I've previously mentioned. We're projecting adjusted free cash flow of between $175 million and $185 million, which includes the $15.2 million in incremental tax payments associated with Section 174 of the U.S. tax code, and we expect earnings per share to be between $4.09 and $4.17. Again, this range reflects the previously mentioned negative impact from increasing interest rates of $0.11 per share on our existing credit facilities and $0.20 per share on the facilities we anticipate tapping into for the MarkLogic acquisition. Our guidance for the full year earnings per share assumes a tax rate of 20% to 21%, the repurchase of $30 million in progress shares and approximately 44.4 million shares outstanding. Our share buyback activity in 2023 is meant to address dilution from our equity plans. And while we believe that share buybacks and dividends can provide shareholders with a good return, our M&A track record over the past 3 years has delivered superior returns for our shareholders and for that reason, disciplined accretive M&A continues to be the top capital allocation priority of our Total Growth Strategy.

因此，我們預計 2023 年第一季度的收入將在 1.57 億美元至 1.61 億美元之間。這包括 MarkLogic 不到 1 個月的貢獻。我們還預計每股收益在 1.04 美元至 1.08 美元之間。對於 2023 年全年，我們預計收入在 6.75 億美元至 6.85 億美元之間，比 2022 年增長 11% 至 12%。我們預計全年的營業利潤率約為 38%，並且受到 MarkLogic 整合的不利影響，這將正如我之前提到的，在這一年中有所改善。我們預計調整後的自由現金流在 1.75 億美元至 1.85 億美元之間，其中包括與美國稅法第 174 條相關的 1,520 萬美元增量稅款，我們預計每股收益在 4.09 美元至 4.17 美元之間。同樣，這個範圍反映了前面提到的對我們現有信貸額度的每股利率增加 0.11 美元和我們預計為收購 MarkLogic 而利用的額度每股利率增加 0.20 美元的負面影響。我們對全年每股收益的指導假設稅率為 20% 至 21%，回購 3000 萬美元的在建股份和約 4440 萬股已發行股份。我們 2023 年的股票回購活動旨在解決我們股權計劃的稀釋問題。雖然我們相信股票回購和派息可以為股東提供良好的回報，但我們過去 3 年的併購記錄為我們的股東帶來了豐厚的回報，因此，有紀律的增值併購仍然是資本配置的首要任務我們的總體增長戰略。

In closing, I'd like to reiterate that we're thrilled with our Q4 performance, the announced acquisition of MarkLogic and our outlook for 2023. As Yogesh outlined, we believe we're well positioned operationally and financially to continue executing our Total Growth Strategy to create meaningful value for our shareholders.

最後，我想重申，我們對第四季度的業績、宣布的對 MarkLogic 的收購以及我們對 2023 年的展望感到興奮。正如 Yogesh 概述的那樣，我們相信我們在運營和財務上處於有利地位，可以繼續執行我們的總體增長為股東創造有意義價值的戰略。

With that, I'd like to open the call for questions.

有了這個，我想打開問題的電話。

Cherie, it's Mike. And everybody, I know Anthony's audio is breaking up while he was giving the MarkLogic guidance. Cherie, if it's okay with you can -- Anthony, do you mind reading the part again what I sent, it's in your chat and also it's the paragraph that begins, next, our expectations for MarkLogic, and it ends with the paragraph where we -- where the last words are the comments about the Term Loan A.

切麗，我是邁克。大家好，我知道 Anthony 在提供 MarkLogic 指導時音頻中斷了。 Cherie，如果可以的話，你可以 -- Anthony，你介意再讀一遍我發送的那部分嗎，它在你的聊天中，也是開始的段落，接下來是我們對 MarkLogic 的期望，它以我們的段落結束-- 最後一句話是關於定期貸款 A 的評論。

Yes, sure. And which one was that 1, Mike?

是的，當然。邁克，那個 1 是哪一個？

Yes. So we're going to start again and just go through the MarkLogic guidance with the paragraph that starts, Next, our expectations for MarkLogic and MarkLogic contributions and then go right to the end where we talk about Term Loan A.

是的。因此，我們將重新開始，通過 MarkLogic 指南的開頭段落，下一步，我們對 MarkLogic 和 MarkLogic 貢獻的期望，然後一直到我們談論定期貸款 A 的結尾。

Yes. Okay. All right. So I will -- we'll go a take 2. And next, our expectations for MarkLogic and MarkLogic contribution to 2023 are driven off an assumption that the deal will close during February 2023, thereby contributing less than 10 months of MarkLogic activity. Once integrated, we expect MarkLogic to contribute more than $100 million to our top line annually. It's important to understand that MarkLogic has a revenue model driven by term-based license agreements, which can result in uneven recognition of revenue. It's also very important to understand that MarkLogic has a January 31 fiscal year-end, and seasonality in the business results in roughly 1/3 of all MarkLogic activity being booked in December and January of any given year. Because of this seasonality, we expect MarkLogic to contribute approximately $70 million of revenue to our fiscal 2023 and to deliver an operating margin of approximately 25%. As previously mentioned, we expect the integration of MarkLogic to continue throughout 2023, therefore, we expect to recognize cost synergies gradually during the year and to exit the year with an operating margin from MarkLogic of more than 40%. We anticipate drawing on our revolving line of credit to finance a portion of the MarkLogic purchase price. And while our pro forma net leverage levels are expected to remain modest, increased interest rates will impact our borrowing costs, resulting in interest expense of roughly $0.20 per share associated with the MarkLogic revolver drawdown and another increase in interest expense of $0.11 per share on our existing Term Loan A.

是的。好的。好的。所以我會 - 我們將採取 2。接下來，我們對 MarkLogic 和 MarkLogic 對 2023 年貢獻的預期是基於交易將在 2023 年 2 月完成的假設，從而貢獻不到 10 個月的 MarkLogic 活動。一旦整合，我們預計 MarkLogic 每年將為我們的收入貢獻超過 1 億美元。重要的是要了解 MarkLogic 的收入模型由基於期限的許可協議驅動，這可能導致收入確認不均衡。同樣重要的是要了解 MarkLogic 的財政年度截止日期為 1 月 31 日，業務的季節性導致大約 1/3 的所有 MarkLogic 活動在任何給定年份的 12 月和 1 月被預訂。由於這種季節性，我們預計 MarkLogic 將為我們的 2023 財年貢獻約 7000 萬美元的收入，並實現約 25% 的營業利潤率。如前所述，我們預計 MarkLogic 的整合將在整個 2023 年繼續進行，因此，我們預計年內將逐漸認識到成本協同效應，並以 MarkLogic 超過 40% 的營業利潤率結束這一年。我們預計利用我們的循環信貸額度為 MarkLogic 購買價格的一部分提供資金。雖然我們的備考淨槓桿水平預計將保持適度，但利率上升將影響我們的借貸成本，導致與 MarkLogic 左輪手槍提款相關的每股利息支出約為 0.20 美元，我們的利息支出將再次增加 0.11 美元。現有定期貸款 A.

Hopefully, that one was a lot more clear.

希望那個更清楚。

It was. Thank you, Anthony, sorry to throw that on you in the last second now. I think if you guys are good, Anthony and Yogesh can open up to Q&A.

它是。謝謝你，安東尼，很抱歉在最後一秒把它扔給你。我想如果你們很好，Anthony 和 Yogesh 可以開放問答。

Sounds good.

聽起來不錯。

(Operator Instructions) And today's first question will come from the line of Pinjalim Bora with JPMorgan.

（操作員說明）今天的第一個問題將來自摩根大通的 Pinjalim Bora。

1 question for Anthony first on MarkLogic. The seasonality that you're talking about with 1/3 bookings in, I think you said, December and January. How does the rest of the year flows? Is it very minimal in Q1 and kind of goes through the year?

Anthony 首先在 MarkLogic 上有 1 個問題。你所說的 1/3 預訂的季節性，我想你說過，12 月和 1 月。今年剩下的時間如何流動？它在第一季度非常小並且貫穿了一年嗎？

Yes -- and Pinjalim, are you talking from a revenue perspective or just overall on the business?

是的——還有 Pinjalim，你是從收入角度還是從整體業務角度談的？

Yes from a revenue perspective. I'm just trying to think how to model it next year, quarterly.

是的，從收入的角度來看。我只是想考慮如何在明年每季度對其進行建模。

Yes, I would say you're going to pick up. What we would see in the first quarter as a contribution is going to be minimal. And certainly, because we closed during February, end of February as our Q1 and because so much activity gets booked in December and January. So I think spreading things relatively evenly over the remaining 3 quarters is pretty much a safe bet.

是的，我會說你會去接。我們在第一季度看到的貢獻將微乎其微。當然，因為我們在 2 月關閉，2 月底作為我們的第一季度，並且因為在 12 月和 1 月預訂了很多活動。所以我認為在剩下的 3 個季度中相對均勻地分配東西是一個安全的選擇。

I see. Okay. Got it. 1 question for Yogesh. I checked the MarkLogic's website, they were talking about an OEM partnership as well. What portion of the business is OEM related? And it seems like they have a general SI channel. And now with Kemp, I guess you have 2 companies with a broader SI channel. I would love to hear what -- you were talking about the plans of kind of developing that broadly across the business. Where do we stand today? Maybe help us give us an update on that. That's all from my side.

我懂了。好的。知道了。 Yogesh 有 1 個問題。我查看了 MarkLogic 的網站，他們也在談論 OEM 合作夥伴關係。哪部分業務與 OEM 相關？而且他們似乎有一個通用的 SI 頻道。現在有了 Kemp，我猜你有 2 家公司擁有更廣泛的 SI 渠道。我很想听聽 - 你在談論在整個企業範圍內廣泛發展的計劃。我們今天站在哪裡？也許可以幫助我們提供最新信息。這就是我的全部。

Happy to do so, Pinjalim. Thank you. The OEM business is relatively small for MarkLogic. As you know that in our DataDirect business, the OEM business is the lion's share. That's not the case in MarkLogic. MarkLogic does have an OEM business, but rather small. The SI part is really interesting because our relationships with SI started actually also increasing with Chef. Chef was sort of the first one where SIs have been playing a very important role in winning customers and helping customers be successful. And then that further expanded with Kemp as you rightly recall, and then now it further helps expand that channel for us with MarkLogic. So it is, to me, a really important channel. As you're aware, system integrators do enormous amount of work in terms of making customers successful, having trusted partnerships with system integrators who are well-versed products who have certified folks on their teams who know the products and can do wonderful things for the customers with them, who actually have a practice around products is truly beneficial. And so we are happy that we are able to expand that relationship, Pinjalim. And again, the opportunity in my mind is really the key opportunities to be able to go to somebody who is an SI for a particular product and have them do some work for another product. Just as an SI, by the way, we also have -- and we don't call them Sis because these are -- these guys do more than system integration work. We have a digital agency ecosystem around our Sitefinity and the whole online presence product portfolio, around building and developing and targeting and doing the online analytics for online customers. Then those digital agencies they play a big role in the success of Sitefinity as well, which includes a part of those digital agencies also have some system integration capabilities as well. So we actually are building a really solid SI ecosystem in addition to our standard go-to-market with our own business as well as the sort of the channel business, which is much more reseller distributor 2-tier channel. So we're really excited about that as well.

很高興這樣做，Pinjalim。謝謝。 OEM 業務對於 MarkLogic 來說相對較小。如您所知，在我們的 DataDirect 業務中，OEM 業務是最大的份額。在 MarkLogic 中情況並非如此。 MarkLogic 確實有 OEM 業務，但規模很小。 SI 部分非常有趣，因為我們與 SI 的關係實際上也隨著 Chef 而開始增加。 Chef 是第一個 SI 在贏得客戶和幫助客戶成功方面發揮非常重要作用的公司。然後，正如您正確記得的那樣，通過 Kemp 進一步擴展，然後現在它進一步幫助我們通過 MarkLogic 擴展該渠道。所以，對我來說，這是一個非常重要的渠道。如您所知，系統集成商在使客戶成功方面做了大量工作，與精通產品的系統集成商建立了可信賴的合作夥伴關係，他們的團隊中有經過認證的人員，他們了解產品並且可以為客戶做一些很棒的事情與他們一起實際圍繞產品進行實踐的客戶是真正有益的。所以我們很高興我們能夠擴大這種關係，Pinjalim。再一次，在我看來，這個機會真的是能夠找到某個特定產品的 SI 並讓他們為另一個產品做一些工作的關鍵機會。順便說一下，作為 SI，我們也有——我們不稱他們為 Sis，因為他們是——這些人做的不僅僅是系統集成工作。我們有一個圍繞我們的 Sitefinity 和整個在線展示產品組合的數字代理生態系統，圍繞構建和開發以及針對在線客戶進行在線分析。然後那些數字代理他們在Sitefinity的成功中也發揮了很大的作用，其中包括一部分這些數字代理也具有一些系統集成能力。因此，除了我們自己的業務以及渠道業務的標准上市之外，我們實際上正在建立一個真正穩固的 SI 生態系統，這是更多的經銷商分銷商 2 層渠道。所以我們對此也很興奮。

Our next question will come from the line of Ray McDonough with Guggenheim Partners.

我們的下一個問題將來自 Ray McDonough 與 Guggenheim Partners 的合作。

This is Ray McDonough on for John DiFucci. Yogesh, maybe to start, you mentioned that business was strong across all business lines, and I was hoping you could parse that out a bit. Was there anything in the portfolio that was a little softer than another? I'm thinking OpenEdge is probably more stable in this environment and maybe you're seeing more softness or even cracks in something like Chef perhaps. I'm just trying to get a sense for how the portfolio performed relative to each other, if that makes sense?

我是約翰·迪富奇的雷·麥克唐納 (Ray McDonough)。 Yogesh，也許首先，您提到所有業務線的業務都很強勁，我希望您能對此進行一些分析。投資組合中有沒有比另一個更軟的東西？我認為 OpenEdge 在這種環境中可能更穩定，也許您會看到 Chef 之類的軟件更加柔軟甚至出現裂縫。我只是想了解投資組合相對於彼此的表現如何，如果這有意義的話？

Yes. So thanks for asking Ray. Actually, if you look at our business, and again, FX makes the business looks different than really in constant currency it was. I mean there was a significant amount of outperformance throughout the year. And it did come across pretty much the entire portfolio. When you think about the -- whether it is Chef, whether it is OpenEdge or whether it is DataDirect or Sitefinity and DevTools, there's it's one product, which I would say didn't show same level of outperformance, it's our network management product, WhatsUp Gold. And I think that's because in 2021, there was a significant tailwind in the market because of what had happened to SolarWinds at the end of 2020. And as everybody knows, 2021 was a really turbulent year for SolarWinds and I think a lot of SolarWinds' customers went looking for alternatives in 2021, which led to some additional outperformance on our part with WhatsUp Gold. And I think it's back to sort of more of its regular cadence that it had before that happened. So I think that will be the only area where I would say we did not see the level of performance -- really outperformance and strength that we saw across everything else.

是的。所以謝謝你問雷。事實上，如果你看看我們的業務，再一次，FX 使業務看起來與真正的固定貨幣不同。我的意思是全年都有大量出色的表現。它確實涉及幾乎整個投資組合。當你想到——無論是 Chef、OpenEdge 還是 DataDirect 或 Sitefinity 和 DevTools，它都是一種產品，我想說它沒有表現出相同水平的出色表現，它是我們的網絡管理產品， WhatsUp 黃金。我認為這是因為在 2021 年，由於 SolarWinds 在 2020 年底發生的事情，市場出現了明顯的順風。眾所周知，2021 年對 SolarWinds 來說是非常動蕩的一年，我認為很多 SolarWinds'客戶在 2021 年開始尋找替代品，這導致我們在 WhatsUp Gold 方面取得了一些額外的優異表現。而且我認為它又回到了在那之前的更多常規節奏。所以我認為這將是我要說的唯一一個我們沒有看到性能水平的領域——我們在其他所有方面都看到了真正出色的表現和實力。

Great. And then maybe for Anthony. As I think about you taking on more leverage for MarkLogic, how should we think about the use of capital going forward to either pay down debt? And where -- what levels are you comfortable at in terms of your net leverage if you see an attractive M&A opportunity in the next 6 to 12 months where you really feel like you should be pulling the trigger? Where do you think you feel comfortable bringing that leverage in light of a rising interest rate environment here?

偉大的。然後也許是為了安東尼。當我考慮你為 MarkLogic 增加槓桿時，我們應該如何考慮未來使用資本來償還債務？如果您在未來 6 到 12 個月內看到有吸引力的併購機會，並且您真的覺得自己應該扣動扳機，那麼您對淨槓桿率處於什麼水平感到滿意？鑑於這裡利率上升的環境，你認為你在哪裡感到舒服？

Yes, Ray, it's a good question. And I talked a little bit about the impact of increasing rates on the outlook for the year. But even having said that, I think with what we will draw down or what we anticipate drawing down from MarkLogic, I would expect the leverage level sort of on a pro forma basis to remain well under 3. I would expect that probably debt repayment will come into the calculus on capital allocation during the year. We'll do some -- a little bit of calculus on rates and other potential uses of capital, but I suspect we're going to want to pay down. And like I said, the drawdown is not so much. So if we were to go up to say 2.5x leverage on a pro forma basis, you'd probably see that under 2 as we go into 2024. So I would expect that we start to delever from this one pretty quickly. And I think we'd be comfortable at -- to do a deal maybe up at 3x net. But again, that's at a point in time to get a deal done and similar to what we would do with a deal like MarkLogic, we'd probably look to delever in a rate environment like this pretty quickly.

是的，雷，這是個好問題。我談到了加息對今年前景的影響。但即便如此，我認為根據我們將從 MarkLogic 中提取的資金或我們預期從 MarkLogic 中提取的資金，我預計槓桿水平在備考基礎上仍將遠低於 3。我預計債務償還可能會計算年內的資本配置。我們會做一些 - 對利率和其他潛在的資本用途進行一些微積分，但我懷疑我們會想要償還。就像我說的那樣，縮編並沒有那麼多。因此，如果我們在備考基礎上說 2.5 倍的槓桿率，到 2024 年你可能會看到槓桿率低於 2 倍。所以我預計我們會很快開始從這個槓桿中去槓桿化。而且我認為我們會很樂意——以 3 倍的淨價達成交易。但同樣，這是在某個時間點完成交易，類似於我們對 MarkLogic 等交易所做的事情，我們可能會很快在這樣的利率環境中尋求去槓桿化。

Our next question will come from the line of Fatima Boolani with Citi.

我們的下一個問題將來自 Fatima Boolani 與花旗的合作。

Yogesh, I'll start with you. There was a cyber incident at the firm, and I understand you're taking a couple of charges just with respect to that incident. So I'm curious if you could just expand upon that a little bit. And to the extent that (inaudible) margins may be creating a little bit more -- maybe a little less stability, if you will, in terms of growth expectations for the non-MarkLogic portfolio? And then I have a follow-up for Anthony, if I could, please.

Yogesh，我將從你開始。公司發生了一起網絡事件，據我所知，您僅就該事件提出了多項指控。所以我很好奇你是否可以稍微擴展一下。就非 MarkLogic 投資組合的增長預期而言，（聽不清）利潤率可能會創造更多 - 如果您願意的話，穩定性可能會降低一些？然後，如果可以的話，請對安東尼進行跟進。

So as you are aware, and I think as we have mentioned before, the investigation into the incident is still open and ongoing. So we really can't comment on it any further other than basically we said before, and we can reiterate that we do not expect any material impact to our business, operational, financial results, et cetera. From a product specific perspective, I don't see the -- this causing a product-specific impact. Otherwise, we would have talked about it, right? So I don't think that the growth aspects of our projections for FY '23 are related to that. As Anthony mentioned, right, we're expecting stable revenues this year from the base products. Obviously, 2020 and 2020 -- sorry, 2021 and 2022 saw some phenomenally wonderful demand for us. And I think the overall macro is slightly different or may be hugely different, depending on what you think, right? And so, we are being very straightforward about the fact that, yes, we expect there to be stability in our business this year rather than significant growth. We do expect ARR to grow by the way, Fatima, right? And we said that we do, and we'll expect it to grow modestly and we think that our core business is truly solid across the board.

所以正如你所知，我認為正如我們之前提到的那樣，對該事件的調查仍在進行中。因此，除了我們之前說過的基本內容之外，我們真的無法對此發表任何進一步評論，我們可以重申，我們預計不會對我們的業務、運營、財務業績等產生任何實質性影響。從特定產品的角度來看，我沒有看到 - 這會導致特定產品的影響。否則，我們會談論它，對嗎？因此，我認為我們對 23 財年預測的增長方面與此無關。正如安東尼提到的那樣，我們預計今年基本產品的收入會穩定。顯然，2020 年和 2020 年——抱歉，2021 年和 2022 年對我們有一些非常好的需求。而且我認為整體宏觀略有不同或者可能有很大不同，這取決於你的想法，對吧？因此，我們非常直截了當地說，是的，我們預計今年我們的業務將保持穩定，而不是顯著增長。我們確實希望 ARR 順便增長，Fatima，對嗎？我們說我們做到了，我們預計它會適度增長，我們認為我們的核心業務將真正全面穩固。

Fair enough. Anthony just shifting gears to the cash flow. Appreciate some of the commentary you've shared about some of the tax and regulation changes on R&D expensing. But I wanted to ask about potentially other impacts to cash flow, inclusive of, if there is a linearity or collections consideration for MarkLogic? And then just generally, I think you called out sort of back-end loaded performance. So just curious as to why you did see linearity shift to the back end of the quarter and how that should feather into our cash flow expectations, considering the R&D expensing dynamic and potentially what we need to stay mindful on MarkLogic impact to the cash flow? That's it for me.

很公平。安東尼只是轉向現金流。感謝您分享的一些關於研發費用的稅收和法規變化的評論。但我想問一下對現金流的其他潛在影響，包括是否對 MarkLogic 有線性或收款考慮？然後一般來說，我認為你提到了某種後端加載性能。所以很好奇為什麼你確實看到線性轉移到季度末，以及這應該如何影響我們的現金流預期，考慮到研發支出動態以及我們可能需要注意 MarkLogic 對現金流的影響？對我來說就是這樣。

All right. Yes. So there's a lot there, sort of packed into that question. And I guess the largest item in terms of the '23 cash flow to call out really is that $15 million in incremental cash payments that we'll make under Section 174. And like I said, that doesn't affect our rate in any meaningful way. So it really just is an acceleration of cash out to the IRS. So that has an impact in '23. I think MarkLogic, for sure, when they're booking, let's say, 1/3 of the business in December and January, that certainly will impact sort of the linearity or seasonality of cash flow. We won't realize the benefit of that, I think, until we roll into next year into our fiscal '24. But certainly, along with the top line seasonality and the amount of activity that's packed into December and January, we should see something similar from a cash flow standpoint. And then the last comment, I think that you were sort of driving at was the (inaudible) DSO year-over-year for the fourth quarter. And we had a pretty good (inaudible) So hopefully that provides the context you're looking for.

好的。是的。所以那裡有很多東西，有點像那個問題。我想就 23 年現金流量而言，最大的項目是我們將根據第 174 條進行的 1500 萬美元增量現金支付。就像我說的，這不會對我們的利率產生任何有意義的影響方式。因此，這實際上只是加速向美國國稅局支付現金。所以這對 23 年產生了影響。我認為 MarkLogic，當然，當他們預訂時，比方說，12 月和 1 月 1/3 的業務，這肯定會影響現金流的線性或季節性。我認為，在我們進入明年的 24 財年之前，我們不會意識到這樣做的好處。但可以肯定的是，除了頂線季節性和 12 月和 1 月的活動量外，我們應該從現金流的角度看到類似的情況。然後是最後一條評論，我認為你有點推動的是第四季度的（聽不清）DSO 同比。我們有一個很好的（聽不清）所以希望這提供了你正在尋找的背景。

Our next question will come from the line of Harshil Thakkar with Oppenheimer.

我們的下一個問題將來自 Harshil Thakkar 與 Oppenheimer 的對話。

This is Harshil on for Ittai. Can you hear me?

這是 Ittai 的 Harshil。你能聽到我嗎？

Yes.

是的。

Yes, we can.

我們可以。

Great. So Yogesh, you've talked about previously how there are parts of the portfolio that kind of operate in these price competitive markets where you're a bit careful on conducting price increases and then there are other parts where you'll be a bit more proactive. Can you just describe where you think MarkLogic fits within that spectrum and how we should be thinking about price increases for that business going forward? And then as you look at the renewal pipeline for 2023, how are you thinking about price increases there?

偉大的。所以 Yogesh，你之前談到過在這些價格競爭激烈的市場中，投資組合的某些部分是如何運作的，在這些市場中，你在進行價格上漲時會有點謹慎，然後在其他部分你會更加謹慎積極主動的。您能否描述一下您認為 MarkLogic 在該範圍內的位置以及我們應該如何考慮該業務未來的價格上漲？然後，當您查看 2023 年的更新管道時，您如何看待那裡的價格上漲？

Yes, absolutely, Harshil, so happy to do that. So Harshil, again, MarkLogic has, by and large, a business that, as Anthony mentioned, is a multiyear term licenses that renew, let's say, 3 years such a time or somewhere in that range. And so you end up with, again, only about 1/3 of the business coming up for renewal in any given year. So that's point #1. Point #2, based on what we know and our due diligence, not every one of their contracts has the ability to have meaningful price increases in it. As you know, they have a significant government business, and there are limits to how much you can do in terms of price changes with the government -- federal government contracts. So it is -- again, it is, I would say, given the fact that it is only about 3/4 of the business in terms of 3 calendar -- 3 fiscal quarters given the fact it's only about 70 or even slightly less than 70% of the overall business and the 1/3 of the business doesn't come in in FY '23. And given the fact that only about 1/3 of the business would be up for renewal. I don't think it is a very large number. I would say, maybe on an annualized basis, it would be about 20% of their revenue for MarkLogic, where I think there's an opportunity to do some price increases. The product is very strong and it's excellent. So I think in those cases, we may be able to do some reasonable price increases. Again, the goal Harshil for us is customer retention matters more than the actual price increases. So that's our philosophy has always been, and we will continue to focus on that. Going back to the rest of our portfolio, again, gosh, about -- I keep going back to this, right, that more than 1/3 of the business -- of the core business, pre-Marklogic business that progress has, is such that it's OEM and -- or it is based on sort of royalties or revenue sharing, et cetera. So those things, there are really no price increases that are in our control, where there is price increase opportunity, obviously, across 2/3 of the portfolio, as you yourself said, right? There are some products that are extremely competitive markets where we don't see much either -- much opportunity either. So that leaves probably about half our business. And in about half our business, maybe somewhat less of our original business. Again, you're looking at sort of 3-year renewal cycles. So you can do the math yourself and you end up with, again, less than sort of 20% of our overall revenue can have some price increases. So overall, by the way, Harshil, price increases are not a big component of our business stability. Our business stability is primarily driven by the fact that we have very, very high and increasing, by the way, right, gross retention rates. Every single acquisition we do or we have done so far, we have increased the gross retention rate and thereby increase the net dollar retention rate as well. And so, to me, that's sort of what drives the stability in the business.

是的，當然，Harshil，很高興這樣做。所以 Harshil，MarkLogic 總的來說，正如 Anthony 提到的那樣，是一項多年期許可的業務，可以續簽 3 年這樣的時間或該範圍內的某個時間。因此，在任何給定的年份中，您最終也只有大約 1/3 的業務需要續約。這就是第一點。第 2 點，根據我們所知道的和我們的盡職調查，並非他們的每一份合同都有能力在其中進行有意義的價格上漲。如你所知，他們有一項重要的政府業務，在與政府——聯邦政府合同——的價格變化方面，你能做的事情是有限的。所以它 - 再次，我想說，鑑於它僅佔業務的 3/4 就 3 個日曆而言 - 3 個財政季度，因為它只有大約 70 甚至略低於70% 的整體業務和 1/3 的業務在 23 財年沒有出現。考慮到只有約 1/3 的業務需要更新。我不認為這是一個很大的數字。我會說，也許按年計算，這將佔 MarkLogic 收入的 20% 左右，我認為這裡有機會進行一些提價。該產品非常強大而且非常好。所以我認為在這些情況下，我們可以進行一些合理的提價。同樣，Harshil 對我們來說的目標是客戶保留比實際價格上漲更重要。所以這就是我們一直以來的理念，我們將繼續專注於此。再次回到我們的其他投資組合，天哪，關於 - 我一直回到這個，對，超過 1/3 的業務 - 核心業務的 Marklogic 前業務取得進展，是這樣它是 OEM 和 - 或者它基於某種特許權使用費或收入分享等。所以那些事情，真的沒有我們控制的價格上漲，顯然，在 2/3 的投資組合中有價格上漲的機會，正如你自己所說的，對嗎？有些產品是競爭極為激烈的市場，我們也看不到太多機會。所以這可能剩下我們一半的業務。在我們大約一半的業務中，我們原來的業務可能會少一些。同樣，您正在查看大約 3 年的續訂週期。所以你可以自己算一下，你最終會再次得到，不到我們總收入的 20% 可以有一些價格上漲。所以總的來說，Harshil，價格上漲並不是我們業務穩定的重要組成部分。我們的業務穩定性主要是由這樣一個事實驅動的，即我們擁有非常非常高且不斷增加的總保留率。我們所做或迄今為止所做的每一次收購，我們都提高了總保留率，從而也提高了淨美元保留率。因此，對我來說，這就是推動業務穩定的原因。

Our next question will come from the line of Anja Soderstrom with Sidoti.

我們的下一個問題將來自 Anja Soderstrom 與 Sidoti 的對話。

A lot of my questions have been addressed already, but I'm just curious, after sort of beating your guidance throughout the year, you're coming in at the lower end. Was there anything in the first quarter that sort of surprised you?

我的很多問題已經得到解決，但我只是很好奇，在全年超過你的指導之後，你進入了低端。第一季度有什麼讓你感到驚訝的事情嗎？

Not really. We had a solid fourth quarter. We were within our guidance for revenue. We were above our guidance for EPS. I think Anja, we had a solid quarter. I do think that we executed well. Again, Anthony, I don't know, if you have something you want to add?

並不真地。我們有一個穩定的第四季度。我們在我們的收入指導範圍內。我們高於我們對 EPS 的指導。我認為 Anja，我們有一個穩定的季度。我確實認為我們執行得很好。再一次，安東尼，我不知道你是否有什麼要補充的？

Yes. I would just say that we -- coming into the fourth quarter, we probably left our range on the top line a little wider than we might otherwise. And the reason for that was because we were just whipsawed on foreign exchange rates last year like a lot of companies were. And so there was a bit of uncertainty going into the fourth quarter about how that would all land. So the range might have been a little bit wider than would have ordinarily been the case, but to Yogesh's point, otherwise, it was, from our perspective, just solid across the board.

是的。我只想說我們 - 進入第四季度，我們可能將我們的範圍留在頂線，而不是我們可能的範圍。這樣做的原因是因為去年我們就像很多公司一樣在匯率問題上受到了打擊。因此，進入第四季度時，關於這一切將如何落地存在一些不確定性。因此，範圍可能比通常情況下要寬一些，但就 Yogesh 的觀點而言，否則，從我們的角度來看，它只是全面穩定。

Okay. And I'm just also curious for the MarkLogic with the term by based licenses. How long are the duration of those? Are those 1-year contracts or --

好的。我也很好奇 MarkLogic 的術語是基於許可。這些持續時間有多長？那些一年期合同還是——

A lot of multiyear. So I'd say yes, a lot of 3-year contracts, some longer than that. But by and large, we end up with a lot of multiyear term-based license deals.

很多多年。所以我會說是的，很多 3 年期合同，有些比這更長。但總的來說，我們最終達成了許多基於期限的多年許可交易。

Our next question will come from the line of Brent Thill with Jefferies.

我們的下一個問題將來自 Brent Thill 與 Jefferies 的合作。

It's Antonio on for Brent here. About 20% of your revenue is invested back in R&D. I was just wondering if you could talk a little bit about where those investment dollars are going, how many that you guys are working on now? And then maybe some key points you'd like to highlight for us?

這裡是安東尼奧替補布倫特。大約 20% 的收入用於研發投資。我只是想知道你是否可以談談這些投資資金的去向，你們現在有多少？然後也許您想為我們強調一些要點？

Yes. So Antonio, as we've said before, right, that our -- we have a tremendous emphasis on customer retention. And so the question becomes, what can you do to drive net dollar retention of your customers and retain them and expand business with them and continue to grow with them, right? And so we actually basically spend and invest more in R&D to make sure that our products stay ahead of the curve that -- and this is across the board, right? This is across our portfolio to make sure that our customers stay with us because it's much, much easier, much, much cheaper for us to retain customers that way than to win new ones. And so -- and of course, we spent significantly less -- again, relatively speaking, on sales and marketing, which is why if you look at our overall operating margins, they truly are world class, right? Accompanying our size and scale in the software industry just doesn't have the percentage operating margin that we do and the kind of cash flow generation that we do. So I think that, to me, it becomes, and to us, it becomes very much a question of where do you put in your dollar for the best with shareholders? And we believe that investing in the product side is much better than trying to not invest on the product side and then try to clean up with all the other efforts that would be needed. And so that's where we invest. And we continue to look for the right level of investments to continue to make sure that our products are leading edge and it really is across our entire portfolio.

是的。所以安東尼奧，正如我們之前所說的那樣，我們非常重視客戶保留。所以問題就變成了，您可以做些什麼來推動客戶的淨美元保留並留住他們並與他們一起擴展業務並繼續與他們一起成長，對嗎？所以我們實際上基本上在研發上花費和投資更多，以確保我們的產品保持領先——這是全面的，對吧？這是我們的整個產品組合，以確保我們的客戶留在我們身邊，因為我們以這種方式留住客戶比贏得新客戶要容易得多，成本也低得多。因此——當然，我們在銷售和營銷方面的花費要少得多——相對而言，這就是為什麼如果你看看我們的整體營業利潤率，它們確實是世界一流的，對吧？伴隨著我們在軟件行業的規模和規模只是沒有我們所做的營業利潤率百分比和我們所做的那種現金流生成。所以我認為，對我來說，這變成了一個問題，對我們來說，它變成了一個非常重要的問題，即你把你的美元投入哪里以獲得股東的最佳利益？我們相信，在產品方面進行投資比嘗試不在產品方面進行投資然後嘗試通過所有其他需要的努力進行清理要好得多。這就是我們投資的地方。我們將繼續尋找合適的投資水平，以繼續確保我們的產品處於領先地位，並且確實貫穿我們的整個產品組合。

Awesome. And maybe 1 quick follow-up or more of a clarification. I know you mentioned Kemp in your opening remarks, but where are we with that acquisition? I know you had to integrate Kemp and Flowmon together. Are we done with that or is there a little more work to be done?

驚人的。也許 1 個快速跟進或更多的澄清。我知道你在開場白中提到了 Kemp，但我們對這次收購的進展如何？我知道您必須將 Kemp 和 Flowmon 集成在一起。我們完成了嗎？還是還有更多工作要做？

No, no, no. Yes. I mean we are done integrating Kemp. I think I might have said that in the opening remarks as well. Our integration of the camp business, both the products, Kemp and Flowmon products and the business is complete. They are a key part of our infrastructure management portfolio, and they are -- they have been integrated on our platform, and we are now looking forward to closing the MarkLogic deal and beginning that integration.

不不不。是的。我的意思是我們已經完成了對 Kemp 的整合。我想我可能也在開場白中說過了。我們對營地業務的整合，包括產品、Kemp 和 Flowmon 的產品和業務都是完整的。它們是我們基礎設施管理產品組合的關鍵部分，它們已經集成到我們的平台上，我們現在期待著完成與 MarkLogic 的交易並開始集成。

Our next question will come from the line of Ittai Kidron with Oppenheimer.

我們的下一個問題將來自 Ittai Kidron 與 Oppenheimer 的合作。

I just want to follow up on a couple of financial things, Anthony. First, on the -- on MarkLogic, can you talk about how you're going to incorporate them in ARR since they're so lumpy? What is the financial exercise you'll do to normalize that into an ARR number?

我只想跟進一些財務方面的事情，安東尼。首先，在 MarkLogic 上，你能談談你將如何將它們合併到 ARR 中，因為它們是如此塊狀嗎？將其標準化為 ARR 數字的財務活動是什麼？

Yes, sure, Ittai. I think we would expect that once the deal closes and we get to Q1, we would incorporate all of the ARR. So we would effectively be able to provide pro forma (inaudible) from the beginning. So we will treat it exactly what we do with our other products. And as Yogesh mentioned, we were roughly where we are expecting roughly $75 million of ARR from business. So we expect to continue to see that growth but more to come on the Q1 earnings call once (inaudible) official.

是的，當然，Ittai。我認為我們希望一旦交易完成並且我們進入第一季度，我們將合併所有 ARR。因此，我們將能夠從一開始就有效地提供備考（聽不清）。所以我們會像對待其他產品一樣對待它。正如 Yogesh 所提到的，我們大致達到了我們預期從業務中獲得大約 7500 萬美元 ARR 的水平。因此，我們預計將繼續看到這種增長，但一旦（聽不清）官方公佈的第一季度財報電話會議上將會出現更多增長。

So let me try to repeat what Anthony was saying, just to see if you can hear it this time around. So basically, as you know, when we complete -- when we close the deal, then in the first reporting period, which will be at the end of Q1, we basically take the historic ARR of that business, and we do a pro forma across the history and current and we use that going forward. Of course, for multiyear term licenses, we analyze those obviously, the maintenance becomes -- or any other recurring revenue is annualized, of course. So what we would expect to do is we would expect about $75 million increase to show in the ARR once the deal closes. And then we expect ARR from MarkLogic to continue to grow. We have seen a steady growth in their ARR over the last 3 years, and we expect that trend to continue.

所以讓我試著重複一下安東尼所說的話，看看你們這次是否能聽到。所以基本上，正如你所知，當我們完成 - 當我們完成交易時，然後在第一個報告期，即第一季度末，我們基本上採用該業務的歷史 ARR，然後我們進行備考跨越歷史和當前，我們將繼續使用它。當然，對於多年期許可證，我們顯然會分析這些，維護變成 - 或者任何其他經常性收入當然是年化的。因此，我們期望做的是，一旦交易完成，我們預計 ARR 將增加約 7500 萬美元。然後我們預計 MarkLogic 的 ARR 將繼續增長。在過去 3 年中，我們看到他們的 ARR 穩步增長，我們預計這一趨勢將繼續下去。

Okay. And then last one for me. On the revenue guide for the year, when I take out MarkLogic from this exercise, and I assume that your guidance for '23 includes already the $675 million to $685 million. Does that include or does not include MarkLogic, just to be clear?

好的。然後最後一個給我。在今年的收入指南中，當我從這個練習中取出 MarkLogic 時，我假設你對 23 年的收入指南已經包括 6.75 億美元到 6.85 億美元。澄清一下，這包括還是不包括 MarkLogic？

It's included in that number.

它包含在該數字中。

So if you exclude your comments on MarkLogic from that number, you're basically guiding a shortfall of about $20 million, roughly plus/minus on the year. Can you talk about -- break that down a little bit more as to the components of that? And what is your underlying macro assumption that you've taken into account in your guide?

因此，如果你從這個數字中排除你對 MarkLogic 的評論，你基本上指導了大約 2000 萬美元的缺口，大致上是今年的正負。你能談談 - 關於它的組成部分嗎？您在指南中考慮的基本宏觀假設是什麼？

No, we're actually guiding Ittai, if you were to take out 70, I think you'd be showing. And also if you factor in, say, I think, $1.2 million in exchange rates that we mentioned, you'd be showing a little bit of growth at the midpoint, I mean it would be slight, but growing a little bit. And I think from a macro perspective, that sort of leads to the consistency we talked about in terms of what we're seeing in the demand environment.

不，我們實際上是在引導 Ittai，如果你拿出 70，我想你會展示。而且，如果你考慮到我們提到的 120 萬美元的匯率，你會在中點顯示出一點點增長，我的意思是它會很小，但會增長一點點。我認為從宏觀的角度來看，這會導致我們在需求環境中看到的一致性。

I'm showing no further questions in this queue at this time. I would now like to turn the call back over to Mr. Yogesh Gupta for closing remarks.

我現在不會在此隊列中顯示更多問題。我現在想把電話轉回給 Yogesh Gupta 先生作結束語。

Well, thank you again, everyone, for joining for this call, and we look forward to speaking to you again soon. Thank you, and have a good night.

好吧，再次感謝大家參加這次電話會議，我們期待很快再次與您交談。謝謝你，祝你有個美好的夜晚。

Thank you all for participating. This concludes today's conference call. You may now disconnect.

謝謝大家的參與。今天的電話會議到此結束。您現在可以斷開連接。