Progress Software Corp (PRGS) 2023 Q3 法說會逐字稿

Good day, and welcome to the Progress Software Corporation Q3 2023 Earnings Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Michael Micciche, Vice President of Investor Relations. Please go ahead, sir.

美好的一天，歡迎參加 Progress Software Corporation 2023 年第三季財報電話會議。 （操作員指示）請注意，今天的會議正在錄製中。現在我想將會議交給您的發言人，投資者關係副總裁 Michael Micciche 先生。請繼續，先生。

Okay. Great. Thank you, Sheri. Good afternoon, everybody, and thanks for joining us for Progress Software's Third Quarter 2023 Financial Results Conference Call. On the line with me this afternoon are Yogesh Gupta, President and Chief Executive Officer; and Anthony Folger, our Chief Financial Officer.

好的。偉大的。謝謝你，雪莉。大家下午好，感謝您參加 Progress Software 2023 年第三季財務業績電話會議。今天下午和我一起在線的是總裁兼首席執行官 Yogesh Gupta；和我們的財務長 Anthony Folger。

Before we get started, let's go over our safe harbor statement. During this call, we will discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives and other information that might be considered forward-looking. Such 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 risk factors that may affect our results, please refer to the Risk Factors section in our most recent Form 10-K and 10-Q for the quarter ended May 31, 2023.

在開始之前，讓我們回顧一下我們的安全港聲明。在本次電話會議中，我們將討論對未來財務和營運績效的展望、公司策略、產品計劃、成本計劃以及其他可能被視為前瞻性的資訊。此類前瞻性資訊僅代表 Progress Software 截至目前的展望和指導，並存在風險和不確定性。有關可能影響我們業績的風險因素的說明，請參閱截至 2023 年 5 月 31 日的季度的最新 10-K 和 10-Q 表格中的風險因素部分。

Progress Software assumes no obligation to update the forward-looking statements included in this call. And additionally, please note that all the financial figures that we're going to reference on this call today are non-GAAP measures unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP figures in our financial results press release, which was issued after the market close today.

Progress Software 不承擔更新本次電話會議中所包含的前瞻性聲明的義務。此外，請注意，除非另有說明，否則我們今天在本次電話會議中引用的所有財務數據均為非公認會計準則衡量標準。您可以在我們今天收盤後發布的財務業績新聞稿中找到這些非公認會計原則財務指標與最直接可比較的公認會計原則數據的調節表。

The document contains additional information related to our financial results for the third quarter of 2023, and I recommend you reference that for specific details. We've also prepared a presentation that contains supplemental data for our third quarter 2023 results, providing highlights and additional financial metrics. Both the earnings release and the supplemental presentation are available on the Investor Relations section of our website and the address is investors.progress.com. As Sheri mentioned, today's conference call will be recorded in its entirety and will be available via replay on the Investor Relations section of our website.

該文件包含與我們 2023 年第三季財務業績相關的其他信息，我建議您參考該文件以了解具體詳細資訊。我們也準備了一份演示文稿，其中包含 2023 年第三季業績的補充數據，提供亮點和其他財務指標。收益報告和補充簡報均可在我們網站的投資者關係部分獲取，地址為 Investors.progress.com。正如 Sheri 所提到的，今天的電話會議將被完整記錄，並將透過我們網站的投資者關係部分重播。

And so with that out of the way, Yogesh, I'll turn it to you.

Yogesh，既然這個問題已經解決了，我就把它交給你吧。

Thank you, Mike. Good afternoon, everyone. Thank you for joining us. We're delighted to have a chance to discuss our fiscal third quarter '23 results, share some details about our business and provide our outlook for the remainder of fiscal year '23.

謝謝你，麥克。大家下午好。感謝您加入我們。我們很高興有機會討論我們的 23 財年第三季業績，分享有關我們業務的一些細節，並提供我們對 23 財年剩餘時間的展望。

As you've probably seen, Progress delivered another excellent performance in our third quarter, during which we hit or exceeded all of our targets. And we have raised our guidance for FY '23. So let's jump right in.

正如您可能已經看到的，Progress 在第三季度再次取得了出色的業績，在此期間我們達到或超過了所有目標。我們也提高了 23 財年的指導。那麼就讓我們直接開始吧。

Our strong performance in Q3 was driven once again by sustained demand for our products across all geographies and solid execution from all of our teams. [Build-it] attention to expenses and total management of our cost structure in an environment of pervasive inflation allowed us to meet our operating margin targets. OpenEdge continued to provide significant strength as our workhorse product, while our digital experience products also performed extremely well. In addition, our digital experience products received Gartner's highest customer choice distinction in the 2023 Voice of the Customer report, evaluating digital experience platforms, which was published at the end of August.

我們在第三季的強勁表現再次得益於所有地區對我們產品的持續需求以及我們所有團隊的堅定執行力。在普遍通貨膨脹的環境下，[Build-it]對費用的關注和對成本結構的全面管理使我們能夠實現營業利潤率目標。 OpenEdge 作為我們的主力產品繼續提供強大的實力，而我們的數位體驗產品也表現得非常出色。此外，我們的數位體驗產品在 8 月底發布的評估數位體驗平台的 2023 年客戶之聲報告中獲得了 Gartner 的最高客戶選擇榮譽。

MarkLogic is performing in line with our expectations, integration of the business is on plan and going forward, we expect MarkLogic to meet the time line we laid out when the deal closed. This quarter's out performance again demonstrates that our customers continue to rely on progress technology to run their mission-critical businesses, especially as the level of economic uncertainty increases. Our employees remain highly engaged and motivated. Our ability to attract and retain top talent remains at industry-leading levels. And during this quarter, our employee retention rates improved even further.

MarkLogic 的表現符合我們的預期，業務整合正在按計劃進行，我們預計 MarkLogic 能夠滿足我們在交易結束時制定的時間表。本季的業績再次表明，我們的客戶繼續依賴進步技術來經營其關鍵任務業務，特別是在經濟不確定性增加的情況下。我們的員工保持高度敬業度和積極性。我們吸引和留住頂尖人才的能力仍然處於行業領先水平。在本季度，我們的員工留任率進一步提高。

Anthony will break out all the numbers for you in a minute, but I'm very pleased with our execution on the top and the bottom line as well as the growth in ARR and our net retention rates, which once again came above 100%.

安東尼將在一分鐘內為您列出所有數據，但我對我們在營收和利潤方面的執行情況以及 ARR 和淨保留率的增長感到非常滿意，淨保留率再次超過 100%。

Now if you recall back to January of '22 on our Q4 '21 earnings call, we listed several ways in which Progress will show strength through what was then becoming a much different environment than the prior 2 years, which were broadly dominated by super low interest rates, nonexistent inflation and pandemic-driven spending. We discussed the reliability and cost effectiveness of our products and the value they deliver to our customers, especially in more difficult economic circumstances. We also talked how the cultural progress enables market-leading employee retention, which helps us keep our high quality, highly skilled and experienced people who focus intensely on customer success and drive our high customer retention rates. Because of our continued focus on our employees, Progress once again received numerous awards in Q3, including another (inaudible) for our achievements in corporate social responsibility and recognition by B2B Media Business Awards for equality and employee care.

現在，如果您回想起22 年1 月的21 年第4 季財報電話會議，我們列出了幾種方式，透過這些方式，Progress 將透過當時與前兩年截然不同的環境來展示實力，前兩年普遍由超低價格主導。利率、不存在的通貨膨脹和流行病驅動的支出。我們討論了我們產品的可靠性和成本效益以及它們為客戶提供的價值，特別是在更困難的經濟環境下。我們也討論了文化進步如何實現市場領先的員工留任率，這有助於我們留住高素質、高技能和經驗豐富的員工，他們高度關注客戶的成功，並推動我們的高客戶保留率。由於我們對員工的持續關注，Progress 在第三季度再次獲得了許多獎項，其中包括因我們在企業社會責任方面取得的成就而獲得的另一個獎項（聽不清），以及因平等和員工關懷而獲得B2B 媒體商業獎的認可。

Driven by employees' efforts, our business has remained remarkably steady while the overall economy and market has changed significantly. We will continue to stay focused on our execution and remain extremely vigilant in managing expenses in every part of our business.

在員工努力的推動下，在整體經濟和市場發生巨大變化的情況下，我們的業務仍然保持了非常穩定的狀態。我們將繼續專注於我們的執行，並在管理業務各個部分的費用方面保持高度警覺。

As for M&A, we still believe that the market for great acquisitions is favorable and improving for us, and we're as busy as ever, sourcing and assessing potential acquisitions. Among the times in the M&A market, the number of private equity deals continued to fall in the quarter along with the valuations of the companies acquired. And with VC-backed companies, down grounds are becoming more common, capital invested is shrinking and leverage is becoming scarce. VC deal sizes have trended down hard in 2023, especially for late-stage rounds, and deal counts are even lower than they were in 2017.

至於併購，我們仍然相信大型收購市場對我們有利並且正在改善，我們一如既往地忙碌，尋找和評估潛在的收購。併購市場中，本季私募股權交易數量隨著被收購公司的估值持續下降。對於創投支持的公司來說，困境變得越來越普遍，投資的資本正在萎縮，槓桿也變得稀缺。 2023 年創投交易規模呈現大幅下降趨勢，尤其是後期融資輪次，交易數量甚至低於 2017 年。

So while infrastructure software valuations remain somewhat high, which speaks to the value of the sticky installed base and high recurring revenue that comes with good infrastructure products, our corporate development team continues to bet a very encouraging pipeline of targets. In the meantime, we continue to focus on integrating MarkLogic, paying down debt and maintaining adequate financing as we look for the next deal. We've been very active and aggressive throughout the year, and we're ready to pull the trigger again operationally and financially when we find the right asset.

因此，雖然基礎設施軟體的估值仍然較高，這說明了良好的基礎設施產品帶來的黏性安裝基礎和高經常性收入的價值，但我們的企業開發團隊繼續押註一系列非常令人鼓舞的目標。同時，在尋找下一筆交易時，我們將繼續專注於整合 MarkLogic、償還債務並保持充足的融資。我們全年都非常積極和進取，當我們找到合適的資產時，我們準備在營運和財務上再次扣動扳機。

As previously mentioned, for MarkLogic specifically, the integration remains on track and is nearing completion on our planned time line. As in every other acquisition we have done so far, we've learned some new things and had some new challenges to overcome with MarkLogic, and we're extremely satisfied with the progress we've made. So all in all, the third quarter was right where it should be, and we continue to execute on our total growth strategy. While we aren't immune to the effects of the current environment, other companies have felt more acutely, we are pleased once again to beat numbers and rate our guidance even in the face of growing macroeconomic uncertainty.

如前所述，特別是對於 MarkLogic，整合仍按計劃進行，並且即將按我們的計劃時間表完成。與迄今為止我們完成的所有其他收購一樣，我們在 MarkLogic 中學到了一些新東西，也遇到了一些需要克服的新挑戰，我們對所取得的進展感到非常滿意。總而言之，第三季是正確的，我們將繼續執行我們的整體成長策略。儘管我們無法免受當前環境的影響，但其他公司的感受更為敏銳，但我們很高興再次超越數字並評估我們的指導，即使面對日益增長的宏觀經濟不確定性。

Switching gears, after we reported our second quarter back in June, we received a number of questions on how we were using AI, which at that time was making daily headlines. As we know, AI and generative AI are technologies that capture many people's imaginations because they offer real potential for operational efficiency gains as well as opportunities for product advancement. We, at progress, have been working pragmatically to use AI, where we see potential tangible benefits to our business. AI has been actually near and dear to my own heart for decades. When I came to the U.S. many years ago to do a PhD in AI. I hold a patent in the field of newer networks. And while I was CTO at CA, we devoted significant energy to researching AI and used it in a network management product.

換個話題，在我們六月報告第二季業績後，我們收到了一些關於如何使用人工智慧的問題，當時人工智慧成了每日頭條新聞。眾所周知，人工智慧和生成式人工智慧是激發許多人想像力的技術，因為它們提供了提高營運效率的真正潛力以及產品改進的機會。我們一直在務實地使用人工智慧，我們看到了人工智慧為我們的業務帶來的潛在的實際好處。幾十年來，人工智慧其實一直是我心目中最親近的人。很多年前，當我來到美國攻讀人工智慧博士學位時。我擁有更新網路領域的專利。當我擔任 CA 的首席技術長時，我們投入了大量精力來研究人工智慧並將其應用於網路管理產品。

Many Progress products have been using the eye long before AI became the lead story on CNBC every morning. For example, Flowmon uses analytics AI to detect and predict network anomalies before they negatively impact the business of our customers. Our Sitefinity product, a key component of our digital experience offering offers AI-driven customer engagement and personalization of digital content to drive engagement and conversions.

早在人工智慧成為 CNBC 每天早上的頭條新聞之前，許多 Progress 產品就已經開始使用眼睛了。例如，Flowmon 使用分析人工智慧來偵測和預測網路異常，以免對客戶的業務產生負面影響。我們的 Sitefinity 產品是我們數位體驗產品的關鍵組成部分，提供人工智慧驅動的客戶參與和數位內容個人化，以推動參與和轉換。

And SmartLogic, which we recently acquired in our MarkLogic acquisition, performed Symantec AI analysis of data. What is new is generative AI or gen AI and larger language models or LLMs, as they are called. We view the gen AI opportunity in 2 broad categories. First, we're developing ways to use Gen AI to make progress more efficient and to be able to grow our top line on controlling costs. We have started using Gen AI to help our people do their jobs more efficiently in many functions, such as finding new customers, providing support, benefits administration, talent management and recruiting, legal and contract management, just to name a few. Second, we're leveraging market opportunities created by Gen AI.

我們最近在 MarkLogic 收購中收購的 SmartLogic 對數據進行了賽門鐵克 AI 分析。新鮮的是生成式 AI 或 gen AI 以及更大的語言模型或 LLM，正如它們所稱的那樣。我們將新一代人工智慧的機會分為兩大類。首先，我們正在開發使用 Gen AI 的方法來提高進展效率，並能夠在控製成本方面提高我們的收入。我們已經開始使用 Gen AI 來幫助我們的員工在許多職能方面更有效率地完成工作，例如尋找新客戶、提供支援、福利管理、人才管理和招募、法律和合約管理等等。其次，我們正在利用 Gen AI 創造的市場機會。

For example, one of the challenges facing businesses when using Gen AI is to augment the large language models with proprietary data in a secure manner to make the output of Gen AI specific to that business. Our data platforms, combined with MarkLogic products directly address this challenge. Our products make it possible for businesses to augment the generic LLM so their own information, so this output is contextual and relevant to their specific business while keeping their proprietary information secure.

例如，企業在使用 Gen AI 時面臨的挑戰之一是以安全的方式使用專有資料來增強大型語言模型，以使 Gen AI 的輸出特定於該企業。我們的數據平台與 MarkLogic 產品結合，直接應對這項挑戰。我們的產品使企業能夠增強通用法學碩士，從而增強他們自己的訊息，因此該輸出與他們的特定業務相關，同時保持其專有資訊的安全。

Another example is to help application developers build applications more easily. Developers in our digital experience business have been recently working on building a conversational interface tool that uses Gen AI to automatically generate fonts such as a mortgage application, say, from textural fronts. In both the operational and product categories, our efforts in AI are fueled by the excitement and creativity of our teams, but we will only invest where we believe we can drive real tangible benefits for our business, whether it is product innovation or efficiency improvement.

另一個例子是幫助應用程式開發人員更輕鬆地建立應用程式。我們數位體驗業務的開發人員最近一直致力於建立一個對話式介面工具，該工具使用 Gen AI 從紋理前端自動產生抵押貸款申請等字體。在營運和產品類別中，我們在人工智慧方面的努力都是由我們團隊的興奮和創造力推動的，但我們只會投資於我們相信能為我們的業務帶來真正切實利益的地方，無論是產品創新還是效率提升。

Lastly, let me take a moment to discuss the current status of MOVEit. As we detailed in our last earnings call, at the end of May, (inaudible) exploited a zero-day, which is a previously unknown vulnerability in MOVEit to attack the MOVEit environment of our customers. Upon learning of the attack, we quickly patched MOVEit Cloud and created a patch for our on-prem MOVEit transfer customers. Several third-party organizations, including cybersecurity experts industry and industry publications have given Progress high marks for our rapid response.

最後，讓我花點時間討論一下 MOVEit 的現況。正如我們在 5 月底的上次財報電話會議中詳細介紹的那樣，（聽不清楚）利用了 MOVEit 中以前未知的零日漏洞來攻擊我們客戶的 MOVEit 環境。得知攻擊後，我們迅速修補了 MOVEit Cloud，並為我們的本地 MOVEit 傳輸客戶創建了補丁。包括網路安全專家行業和行業出版物在內的多個第三方組織對 Progress 的快速回應給予了高度評價。

As we indicated in our 8-K filing, MOVEit Transfer and MOVEit Cloud represent less than 4% of our revenues. And while we're incurring expenses related to legal responses and the investigation of this attack, there was minimal impact to our business in the third quarter. It is too early to assess the impact of any litigation. We will continue to provide updates in our Form 10-Q filing as we did last quarter.

正如我們在 8-K 文件中指出的那樣，MOVEit Transfer 和 MOVEit Cloud 只占我們收入的不到 4%。儘管我們產生了與法律應對和此攻擊調查相關的費用，但對我們第三季業務的影響微乎其微。現在評估任何訴訟的影響還為時過早。我們將像上季度一樣繼續在 10-Q 表格備案中提供更新。

I am very proud of our teams for all their efforts in responding to the vulnerability and helping our customers while still delivering great results across the business. Going forward, as always, we will continue to focus on our customers and keep taking steps to help mitigate risks throughout the company.

我為我們的團隊在應對漏洞和幫助客戶方面所做的一切努力感到非常自豪，同時仍然在整個業務中取得了巨大的成果。展望未來，我們將一如既往地繼續專注於客戶，並繼續採取措施幫助降低整個公司的風險。

So to wrap it up, our third quarter was an excellent quarter for Progress. We're moving ahead with our total growth strategy, meeting our goals in the overall business while nearing the full integration of MarkLogic, we remain well capitalized and continue to hunt aggressively for the next right M&A deal.

總而言之，我們的第三季對於 Progress 來說是一個出色的季度。我們正在推動我們的整體成長策略，實現我們的整體業務目標，同時接近 MarkLogic 的全面整合，我們仍然資本充足，並繼續積極尋找下一個合適的併購交易。

With that, let me turn it over to Anthony for detailed financial review and outlook. Anthony?

接下來，讓我將其轉交給安東尼，以進行詳細的財務審查和展望。安東尼？

Thanks, Yogesh. Good afternoon, everyone, and thanks for joining our call. As Yogesh mentioned, the third quarter was another strong one for Progress, further demonstrating the strength and durability of our business. Jumping right into the numbers, I'd like to start with ARR, which we believe provides the best view into our underlying performance. We closed Q3 with ARR of $577 million which represents approximately 18% growth on a year-over-year basis and 2% pro forma growth on a year-over-year basis. To be clear, the pro forma results include MarkLogic in both periods.

謝謝，尤格甚。大家下午好，感謝您加入我們的通話。正如 Yogesh 所提到的，第三季度是 Progress 的另一個強勁季度，進一步證明了我們業務的實力和持久性。直接進入數字，我想從 ARR 開始，我們相信它可以最好地了解我們的基本績效。第三季末，我們的 ARR 為 5.77 億美元，年增約 18%，預計年增 2%。需要明確的是，預期結果包括兩個時期的 MarkLogic。

The growth in ARR was driven by multiple products and was again bolstered by strong net retention rates just under 101%. In the past, we've talked about our R&D investments, our focus on customer success and the strength and stability of customer demand for our products. We believe our Q3 net retention rates reflect a healthy mix of all these factors. In addition to our solid ARR performance for the quarter, revenue for the quarter of $176 million was at the high end of the Q3 guidance range we provided back in June and represents approximately 15% growth on a year-over-year basis.

ARR 的成長由多種產品推動，並再次受到略低於 101% 的強勁淨保留率的推動。過去，我們談到了我們的研發投資、我們對客戶成功的關注以及客戶對我們產品的需求的強度和穩定性。我們相信，我們第三季的淨保留率反映了所有這些因素的健康組合。除了本季穩健的 ARR 表現外，本季營收為 1.76 億美元，處於我們 6 月提供的第三季指導範圍的高端，同比增長約 15%。

Our strong revenue performance in the quarter was driven by multiple products, including OpenEdge, which continues to perform ahead of our expectations. On a year-over-year basis, our revenue growth was driven by the addition of MarkLogic and stability in the rest of our business, which again this quarter showed slight growth on a year-over-year basis.

我們本季強勁的營收表現是由多種產品推動的，其中包括 OpenEdge，它的表現繼續超越我們的預期。與去年同期相比，我們的營收成長是由 MarkLogic 的增加和我們其他業務的穩定性所推動的，本季該業務再次出現同比小幅成長。

Turning now to expenses. Our total costs and operating expenses were $107 million for the quarter, an increase of $14 million compared to Q3 of 2022. The year-over-year increase was driven entirely by the addition of MarkLogic to our business. Operating income was $68 million for the quarter, up $8 million compared to the year ago quarter, and our operating margin was 39%, the same as in the year ago quarter. On the bottom line, our earnings per share of $1.08 for the quarter were $0.06 above the high end of our guidance range. This overperformance relative to our expectations was driven by strong top line performance, coupled with solid cost management across the business.

現在轉向費用。本季我們的總成本和營運費用為 1.07 億美元，比 2022 年第三季增加了 1,400 萬美元。年成長完全是由於 MarkLogic 加入我們的業務所致。本季營業收入為 6,800 萬美元，比去年同期增加 800 萬美元，營業利潤率為 39%，與去年同期相同。總而言之，本季每股收益為 1.08 美元，比指導範圍的上限高出 0.06 美元。這種超出我們預期的表現是由強勁的營收業績以及整個業務的穩健成本管理所推動的。

Our outlook for the MarkLogic integration remains unchanged, and we continue to expect that we'll achieve all our synergy targets by the end of this fiscal year. Moving on to a few balance sheet and cash flow metrics. We ended the quarter with cash, cash equivalents and short-term investments of $138 million and debt of $763 million for a net debt position of $625 million. This represents net leverage of approximately 2.3x using our forecasted fiscal year 2023 adjusted EBITDA. I'd also like to mention that during the third quarter, we paid down $30 million against the revolving line of credit that we used to partially fund the acquisition of MarkLogic, bringing the outstanding balance on our revolving line of credit to $140 million at the end of the quarter.

我們對 MarkLogic 整合的前景保持不變，我們仍然預期到本財年末我們將實現所有協同目標。接下來討論一些資產負債表和現金流量指標。截至本季末，我們的現金、現金等價物和短期投資為 1.38 億美元，債務為 7.63 億美元，淨負債部位為 6.25 億美元。使用我們預測的 2023 財年調整後 EBITDA 計算，這意味著淨槓桿約為 2.3 倍。我還想提一下，在第三季度，我們用循環信貸額度支付了 3000 萬美元，用於部分收購 MarkLogic，使我們循環信貸額度的未償餘額達到 1.4 億美元。季度末。

Our DSO for the quarter was 49 days or approximately flat compared to the year ago quarter. Deferred revenue was $280 million at the end of the third quarter, down slightly from the second quarter, reflecting normal seasonality in our business. Adjusted free cash flow was $48 million for the quarter, an increase of over $8 million or 21% from the year ago quarter. During the third quarter, we did not repurchase any shares of Progress stock. So at the end of Q3, we had $198 million remaining under our current share repurchase authorization.

我們本季的 DSO 為 49 天，與去年同期相比基本持平。第三季末遞延收入為 2.8 億美元，較第二季略有下降，反映了我們業務的正常季節性。本季調整後自由現金流為 4,800 萬美元，比去年同期增加超過 800 萬美元，即 21%。第三季度，我們沒有回購任何 Progress 股票。因此，截至第三季末，我們目前的股票回購授權剩餘 1.98 億美元。

Okay. Now I'll turn to our outlook. Despite news of a more challenging macro environment, we continue to see strength in the demand for our solutions. With that, starting with the full year 2023, we are increasing our revenue guidance by $1 million at the midpoint and expect revenue to be between $692 million and $698 million. We're maintaining our outlook for operating margin for the year of approximately 38% to 39%, we're maintaining our outlook for adjusted free cash flow and are tightening the range to be between $177 million and $183 million, and we are increasing our outlook for earnings per share to be between $4.20 and $4.26, an increase of $0.03 at the midpoint.

好的。現在我將談談我們的前景。儘管有消息稱宏觀環境更具挑戰性，但我們仍然看到對我們解決方案的需求強勁。因此，從 2023 年全年開始，我們將收入指導中位數增加 100 萬美元，預計收入在 6.92 億美元至 6.98 億美元之間。我們維持今年營業利潤率約 38% 至 39% 的預期，維持調整後自由現金流的預期，並將範圍收窄至 1.77 億美元至 1.83 億美元之間，並且我們正在提高每股收益預期在4.20美元至4.26 美元之間，中點增加0.03 美元。

Our guidance for full year EPS assumes a tax rate of approximately 20% and approximately 45 million shares outstanding. For the fourth quarter of 2023, we expect revenue between $171 million and $177 million, and earnings per share of between $0.87 and $0.93.

我們對全年每股盈餘的指導假設稅率約為 20%，流通股數約為 4,500 萬股。對於 2023 年第四季度，我們預計營收在 1.71 億美元至 1.77 億美元之間，每股收益在 0.87 美元至 0.93 美元之間。

In closing, we're excited to deliver another strong quarter of financial results across the board, a continuation of the trend that we saw for much of 2022 and the first half of 2023. We're thrilled to see the MarkLogic integration progressing and we believe we're on track to deliver a strong Q4 and position ourselves well for our fiscal 2024.

最後，我們很高興能夠全面交付另一個強勁的季度財務業績，這是我們在 2022 年大部分時間和 2023 年上半年看到的趨勢的延續。我們很高興看到 MarkLogic 整合取得進展，我們相信我們預計將實現強勁的第四季業績，並為2024 財年做好準備。

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

至此，我想開始提問。

(Operator Instructions) Our first question will come from the line of Ray McDonough with Guggenheim Securities.

（操作員說明）我們的第一個問題將來自古根漢證券公司的雷·麥克唐納（Ray McDonough）。

Maybe Yogesh for you. Given the nature of solutions that you guys provide -- the Progress provides, it's not surprising that OpenEdge has exhibited strength throughout the weak macro environment, but it seems like the whole business, as you highlighted, has been stable. And MarkLogic, again, it makes sense, some of the other products make sense. But is there any area of your portfolio where you're actually seeing a macro-related impact? And if so, how might that be manifesting? And how should we think about the difference in buying behavior, maybe between some of your more stable installed bases?

也許尤格甚適合你。考慮到你們提供的解決方案的性質（Progress 提供的），OpenEdge 在疲軟的宏觀環境中表現出實力並不奇怪，但正如你們所強調的那樣，整個業務似乎一直很穩定。 MarkLogic 再次強調，這是有道理的，其他一些產品也是有道理的。但是，您的投資組合中是否有任何領域確實看到了與宏觀相關的影響？如果是這樣，這會如何體現？我們應該如何考慮購買行為的差異，也許是一些更穩定的安裝基礎之間的差異？

Ray. Thanks, good question. It's -- we're actually not seeing challenges in any aspect of our business, on the product lines, to be honest. We are hearing from our field organization that they're noticing that large projects that maybe customers were looking at, they might be looking at them more closely. But really, from our perspective, our business continues to be strong. We're seeing strength across the board. And that is really delightful and wonderful to see.

射線。謝謝，好問題。老實說，我們實際上在業務的任何方面、產品線上都沒有看到挑戰。我們從現場組織得知，他們注意到客戶可能正在關注的大型項目，他們可能會更仔細地關注它們。但實際上，從我們的角度來看，我們的業務仍然強勁。我們看到了全面的實力。看到這一點真是令人高興又美妙。

As you know, Ray, right, our products are truly about making organizations more effective, more efficient, run their business better, they underpin mission-critical environments. So it just -- it is a wonderful business to be in. And I think the strength of the Progress business comes through in our results.

如你所知，雷，我們的產品確實是為了讓組織更有效、更有效率、更好地經營業務，它們支撐關鍵任務環境。所以，這是一個很棒的行業。我認為 Progress 業務的實力體現在我們的業績中。

That all makes sense. And I guess you were pretty clear, Yogesh, that you're kind of on the hunt for your next acquisition or your next target. If we kind of think through the size of targets or the size of an acquisition that you might be willing to do, should we be thinking that there's probably room to do a larger acquisition, maybe like MarkLogic or a couple of more smaller acquisitions? I guess the question is, how should we be thinking about the size of future acquisitions? And then in the light of the increasing cost of capital, just with interest rates rising, how do you think about the hurdle rate for a future acquisition in terms of the returns? I know you guys are very focused on return on invested capital. So I'm assuming your weighted average cost of capital is changing a little bit as interest rates rise. But just wondering how you're thinking about those 2 things together?

這一切都是有道理的。我想你很清楚，Yogesh，你正在尋找下一個收購或下一個目標。如果我們考慮您可能願意進行的目標規模或收購規模，我們是否應該考慮可能有空間進行更大的收購，例如 MarkLogic 或一些較小的收購？我想問題是，我們該如何考慮未來收購的規模？然後，鑑於資金成本不斷增加，利率不斷上升，您如何看待未來收購的回報率？我知道你們非常注重投資資本報酬率。因此，我假設隨著利率上升，您的加權平均資本成本會發生一些變化。但只是想知道您如何同時考慮這兩件事？

Absolutely. Happy to answer those. And maybe Anthony can help with the second part of the -- second aspect of the question with respect to hurdle rates. On the first part, Ray, as we have said, right, we -- our ideal sweet spot is to buy companies that are, let's say, in the 10% to 20%, 25% of our revenue size, right? And that goes up every time we buy another company because our overall -- our base goes up, right? So our goal is, over the long haul is to double the business in 5 years. And so effectively, we might find a business that is 10% in which case, we might find 2 of them or maybe even slightly less than 10%, and we might find 2 of them. We might find something that is closer to 20% or even 25%.

絕對地。很高興回答這些問題。也許安東尼可以幫助解決問題的第二部分——關於最低迴報率的問題。首先，雷，正如我們所說的，我們理想的最佳選擇是購買那些占我們收入規模 10% 到 20%、25% 的公司，對吧？每次我們收購另一家公司時，這個數字都會上升，因為我們的整體基礎會上升，對嗎？所以我們的目標是，從長遠來看，是在 5 年內將業務翻倍。因此，實際上，我們可能會找到一個佔 10% 的企業，在這種情況下，我們可能會找到其中的 2 個，甚至可能略低於 10%，我們可能會找到其中的 2 個。我們可能會發現接近 20% 甚至 25% 的值。

Some of it is -- in fact, a lot of it depends on what comes to market, right? So the size of assets coming to market often range from even sub-$50 million, which we look at sometimes not as much as we used to, given our current size. But really the $50 million to $150 million right now is our sweet spot so -- in terms of revenue of the target. But that doesn't mean that we don't look at somewhat smaller, that doesn't mean that we don't look at somewhat bigger. The goal there, Ray, is more operational rather than the financial side from my perspective. Can we bring in a business and integrate it easily? Can we do it in a way that our culture survives? Can we do it in a way that people realize that we're going to do things the Progress way going forward, which becomes really hard if you do like whatever it's called merger of equals or some nonsense like that. So to me, acquisitions, from my perspective, like there has to be some go-forward plan that has been consistent before and continues to be consistent going forward. So that's the rationale for the size limitation.

其中一些 - 事實上，很大程度上取決於市場上的產品，對嗎？因此，進入市場的資產規模通常甚至低於 5,000 萬美元，考慮到我們目前的規模，我們有時會不像以前那樣關注這一規模。但實際上，就目標收入而言，目前 5,000 萬至 1.5 億美元是我們的最佳選擇。但這並不意味著我們不關注更小的項目，也不代表我們不關注更大的項目。雷，從我的角度來看，那裡的目標更具操作性，而不是財務方面。我們可以輕鬆引入業務並整合它嗎？我們能以一種讓我們的文化得以延續的方式做到這一點嗎？我們能否以一種讓人們意識到我們將按照進步的方式做事的方式來做到這一點，如果你確實喜歡所謂的平等合併或類似的廢話，那就變得非常困難。因此，對我來說，從我的角度來看，收購就像必須有一些先前一致的前進計劃，並且在未來繼續保持一致。這就是大小限制的理由。

Anthony, do you want to speak to financing constraints or return of investment?

安東尼，您想談談融資限制還是投資回報？

Yes, sure. In terms of the hurdle rate, yes, as interest rates continue to move up, it will affect our weighted average cost of capital a little bit and it has. But I think our WACC has stayed reasonably in check probably 8.5%, somewhere in that range. And I think we've been able to hit deals from a return perspective, probably in double digits over the past several years. So it certainly -- it pushes the envelope a bit and I think as rates go up, the math will tell you that multiples are going to need to come down a little bit. And that's the way our models work and probably a lot of other folks as well. So yes, I think the hurdle rates or the return rates may creep up, and I think they're going to need to creep up as long as rates stay high, and it looks like that's where they're staying.

是的，當然。就最低門檻利率而言，是的，隨著利率繼續上升，它將對我們的加權平均資本成本產生一些影響，而且確實如此。但我認為我們的 WACC 已經合理地控制在 8.5% 左右，在這個範圍內。我認為，從回報率的角度來看，我們已經能夠達成交易，在過去幾年中可能達到兩位數。所以它確實——它有點突破了極限，我認為隨著利率的上升，數學會告訴你，倍數需要稍微下降。這就是我們的模型的工作方式，也可能是許多其他人的工作方式。所以，是的，我認為門檻利率或回報率可能會上升，而且我認為只要利率保持在高位，它們就需要上升，而且看起來這就是他們所停留的地方。

And that will come from the line of Pinjalim Bora with JPMorgan.

這將來自 Pinjalim Bora 與摩根大通的血統。

This is Rachit on for Pinjalim. Can you help us understand the gross retention dynamics in the quarter?

這是 Pinjalim 的 Rachit。您能幫助我們了解本季的總保留動態嗎？

Sorry, were you asking about gross retention dynamics in what?

抱歉，您是在問什麼方面的總保留動態？

In the quarter -- in Q3.

在本季——第三季。

In the quarter? Yes. So the overall gross retention of our products has been strong and continued to stay strong. There was no real difference between the gross retention in Q3 versus Q2 or Q1. We continue to see strong gross retention because without that, it would be tough to have net retention above 100%, right? As I've said many times, on many of these calls, right, our target is to sustain 100-plus percent net retention rates. And to do that, we need really solid gross retention rate. So we've had solid gross retention rates this quarter as well, no real news there, to be honest.

在本季？是的。因此，我們產品的整體毛保留率一直很高，並將繼續保持強勁。第三季的總留存率與第二季或第一季相比沒有真正的差異。我們繼續看到強勁的毛留存率，因為如果沒有這一點，淨留存率就很難超過 100%，對嗎？正如我多次說過的，在許多這樣的電話會議上，我們的目標是維持 100% 以上的淨保留率。為此，我們需要真正穩定的總保留率。因此，本季我們的毛保留率也很穩定，老實說，沒有真正的消息。

And that will come from the line of Brent Thill with Jefferies.

這將來自布倫特·希爾（Brent Thill）和杰弗里斯（Jefferies）的血統。

Awesome. It's Antonio Venturim for Brent Thill. I had a quick question on head count on both the operational side and maybe the product development side. Can you just provide us with any color on plans for head count growth this year and sort of where you've been focusing your investments in? And then on the product side, are there any particular ones you want to call out in terms of having a disproportionate amount of engineering our resources?

驚人的。我是布倫特·希爾的安東尼奧·文圖里姆。我有一個關於營運方面和產品開發方面的人員數量的快速問題。您能否向我們提供有關今年員工人數成長計劃以及您的投資重點的資訊？然後在產品方面，您是否有任何特別需要指出的問題，即我們對工程資源的投入過多？

Sure. So a couple of things, right? We -- our head count this year, of course, went up when we acquired MarkLogic, right? I mean that was an acquisition. They came with a bunch of employees. We didn't, of course, bring everybody on board, but a significant number of employees joining Progress because of the MarkLogic acquisition. In general, our head count is flat, and we are not really hiring aggressively except for replacing people that turn over, right? Fundamentally, we keep our head count approximately flat.

當然。有幾件事，對吧？當然，當我們收購 MarkLogic 後，我們今年的員工人數就增加了，對吧？我的意思是那是一次收購。他們帶著一群員工來了。當然，我們並沒有讓所有人都加入進來，但由於收購了 MarkLogic，大量員工加入了 Progress。總的來說，我們的員工人數持平，除了更換離職人員外，我們並沒有真正積極招聘，對嗎？從根本上來說，我們的員工數量基本上持平。

And Anthony, if you want, feel free to add to that. I don't think that from a product investment perspective in the R&D side and engineering side, we were a lean organization overall and one of the ways we sustain the retention of our customers, whether it is gross retention as well as net retention, which is really remarkable, is by investing in the products so that the products continue to get better, continue to stay competitive and stay relevant. And we don't -- but we're very, very careful, right?

安東尼，如果你願意的話，請隨意補充。我不認為從研發方面和工程方面的產品投資角度來看，我們總體上不是一個精益組織，也是我們維持客戶保留的方式之一，無論是毛保留還是淨保留，這真正引人注目的是透過對產品進行投資，使產品不斷變得更好，繼續保持競爭力並保持相關性。我們沒有——但我們非常非常小心，對吧？

We -- it isn't as though we've got people sitting around and the engineering team not doing real productive work that is helping move the needle on our retention and expansion efforts as well as winning some new customers. So it is all -- we measure it. We track it. We measure performance. And so we are continuing to invest appropriately for the profiles of those businesses. And just a little bit more color on that.

我們——並不是說我們的人員坐在那裡，工程團隊沒有做真正有成效的工作，這有助於推動我們的保留和擴張工作，並贏得一些新客戶。就是這樣——我們測量它。我們追蹤它。我們衡量績效。因此，我們將繼續針對這些企業的情況進行適當的投資。並在上面多一點顏色。

Some people say, well, what percentage of revenue you might invest on a particular product, right? It is a combination of things. If it's a very large revenue number, right, the percentage revenue invested in the engineering side on the product is less because of a larger denominator. But -- so the question really is what work do we need to do to keep our products competitive in the market to make sure that they continue to be relevant, to make sure that our customers are happy and that's what drives our engineering investment.

有人說，那麼，您可能會在特定產品上投資多少百分比的收入，對嗎？這是多種事物的結合。如果這是一個非常大的收入數字，對吧，由於分母較大，投資於產品工程方面的收入百分比會較少。但是，真正的問題是，我們需要做哪些工作來保持我們的產品在市場上的競爭力，以確保它們繼續具有相關性，確保我們的客戶滿意，這就是推動我們工程投資的動力。

Awesome. Great. And then maybe just a quick follow-up. I think you sort of alluded to it, but can you drill down on the go-to-market strategy with MarkLogic and how you're approaching that? And sort of what the realignment of the go-to-market looks like?

驚人的。偉大的。然後也許只是快速跟進。我認為您有點提到了這一點，但是您能否深入了解 MarkLogic 的上市策略以及您是如何實現這一目標的？上市的重新調整是什麼樣的？

Sure. So we -- as you might be aware, we have had a very strong internally portfolio of a relational database and data integration technologies between OpenEdge and DataDirect, right? And these -- these 2 products are a significant part of our business in terms of revenue. And MarkLogic is a no SQL database. So it complements our OpenEdge database, and some of our product does semantic analysis of data across all types of data. And so really, the go-to-market is to bring -- efforts have been to bring together these go-to-market organizations.

當然。因此，正如您可能知道的那樣，我們在 OpenEdge 和 DataDirect 之間擁有非常強大的關聯式資料庫和資料整合技術的內部產品組合，對吧？就收入而言，這兩種產品是我們業務的重要組成部分。而MarkLogic是一個無SQL資料庫。因此，它補充了我們的 OpenEdge 資料庫，並且我們的一些產品對所有類型的資料進行語義分析。事實上，進入市場就是要努力將這些進入市場的組織聚集在一起。

So they are one organization now for all of our data platform business. So our application and data platform business, which is -- which includes these products, it's all one and together. It's completely integrated. It's under one general manager and so that makes for opportunities to potentially, if something arises to take products in from one portfolio to another, but it also means that we have strong relationships and relationship management skills and progress, and we bring those to bear in terms of retention and expansion skills as well.

因此，他們現在是我們所有數據平台業務的一個組織。因此，我們的應用程式和數據平台業務包括這些產品，它們是一體的。它是完全整合的。它由一位總經理領導，因此，如果出現問題，就有可能將產品從一個產品組合轉移到另一個產品組合，但這也意味著我們擁有強大的關係和關係管理技能和進步，我們將這些運用到保留和擴展技能也是如此。

So I hope that answers your question. It is now combined with our application and data management go-to-market efforts.

所以我希望這能回答你的問題。現在它與我們的應用程式和數據管理上市工作相結合。

I'm showing no further questions in the queue at this time. I'll turn the call back over to Mr. Yogesh Gupta for any closing remarks. Actually, we did have a question come from Ittai Kidron with Oppenheimer.

目前我在隊列中沒有顯示任何其他問題。我會將電話轉回 Yogesh Gupta 先生以供結束發言。事實上，我們確實有一個問題來自 Ittai Kidron 和奧本海默。

3 questions from me, Yogesh. First of all, can you comment on MOVEit in a little bit more detail, more specifically -- it seems like the impact of this continues to be unraveled almost on a weekly basis here. How many customers have already got off the platform? How many do you think more might be coming. And is there -- I'm trying to think about the liability exposure here. Is there anything that can come back to you because of this? And is there -- do you have cyber insurance because -- for that? I don't know if I'm asking the right questions, but I'm trying to really understand more -- the lasting impact of this on your business?

我有 3 個問題，Yogesh。首先，您能更詳細、更具體地對 MOVEit 發表評論嗎？似乎這一事件的影響幾乎每週都會被揭示。有多少客戶已經離開該平台？您認為還會有多少。我正在嘗試考慮這裡的責任風險。有什麼可以因此而回到身邊的嗎？你們有網路保險嗎？因為——為此？我不知道我問的問題是否正確，但我試圖真正了解更多——這對您的業務有何持久影響？

So, Lee, sorry, Ittai, thanks for your questions. Ittai, I will try to answer as many of these as I can. As you know, we do have an ongoing investigation, we do have ongoing legal efforts around this. So most of communication happens through our filings. But let me share some of the things that you were asking. So from the perspective of our customers, actually, our customers have been extremely positive about what we've been doing for them, as we mentioned that there was minimal impact on our business in Q3. As you noticed that in Q4 and for the year, right? We are still confident about our outcome. So we're not really seeing what I would (inaudible) from our customers at this point.

所以，Lee，抱歉，Ittai，謝謝你的提問。 Ittai，我會盡力回答這些問題。如您所知，我們確實正在進行調查，我們確實正在為此進行法律努力。因此，大部分的溝通都是透過我們的文件進行。但讓我分享一下您所問的一些事情。因此，從我們客戶的角度來看，實際上，我們的客戶對我們為他們所做的事情非常積極，正如我們所提到的，這對我們第三季的業務影響很小。正如您在第四季度和今年註意到的那樣，對嗎？我們對我們的結果仍然充滿信心。因此，目前我們還沒有真正從客戶那裡看到我想要的（聽不清楚）什麼。

As far as litigation expense, it is way too early to try to do any kind of an estimate as to what it would be. I think we had shared that we have cyber insurance to the tune of $15 million. That's 15. And we report -- I mean, we reported in our press release -- basically sort of the approximate expense in this area, and we will continue to report that and in our 10-Qs. And we just don't know what the future litigation impact might be because it is so early. But in general, customers have been, to be honest, really happy with our response.

就訴訟費用而言，現在嘗試對其進行任何估計還為時過早。我想我們已經分享過我們擁有價值 1500 萬美元的網路保險。那是 15。我們報告——我的意思是，我們在新聞稿中報告了——基本上是該領域的大致費用，我們將繼續在我們的 10-Q 中報告這一點。我們只是不知道未來的訴訟可能會產生什麼影響，因為現在還為時過早。但總的來說，老實說，客戶對我們的回應非常滿意。

Okay. Anthony, a couple of financial questions. First of all, U.S. dollar is making a move. Can you remind us what, if anything, is -- how this influences your financial statements?

好的。安東尼，有幾個財務問題。首先，美元正在出動。您能否提醒我們，這對您的財務報表有何影響（如果有的話）？

Yes, sure, Ittai. I think we would say that we're north of 70% of our top line, of our billings and revenue were done in dollars. And from an expense perspective, I think we're in the high 60s. And most of the foreign currency billings are sort of -- I would say it's euro or pound or dollars that are closely -- moved closely in concert with those 2. So I think to the extent that the dollar weakens, we may see a little bit of benefit from that. But there's a pretty decent natural hedge built in. So it can move the top line a little bit, but generally speaking, on the margin, we have a reasonable natural hedge in place.

是的，當然，伊泰。我想我們會說，我們的營收、帳單和收入中有 70% 以上都是以美元計算的。從費用角度來看，我認為我們處於 60 多歲的水平。大多數外幣帳單——我想說的是歐元、英鎊或美元——與這兩者密切相關。所以我認為，就美元疲軟而言，我們可能會看到一點點從中受益匪淺。但內建了相當不錯的自然對沖。因此它可以稍微移動收入，但總的來說，在邊際上，我們有合理的自然對沖。

Got it. Okay. And then lastly, on your guidance for the fourth quarter, you haven't really moved it at all. Whatever the upside was in the quarter, you kind of rolled it over into the mix, into your annual guide, and you did not really change your fourth quarter number. And I'm just kind of wondering -- your guide is short for [consensus] is, both on the top line and the bottom line. And trying to think with the solid execution that you have with the environment being stable and with the fourth quarter being kind of year-end quarter, why aren't you a bit more upbeat and willing to commit to a higher set of numbers?

知道了。好的。最後，根據您對第四季度的指導，您根本沒有真正改變它。無論本季有什麼好處，你都將其納入到你的年度指南中，並且你並沒有真正改變你的第四季數字。我只是有點想知道——你的指南在頂線和底線都是[共識]的縮寫。並試著思考一下，在環境穩定且第四季相當於年終季度的情況下，您擁有紮實的執行力，為什麼您不更加樂觀一點並願意承諾更高的數字呢？

Yes. No, I think we're pretty upbeat, Ittai. I think revenue is up $1 million at the mid and I think EPS is up $0.03 at the mid. And that's been a pretty consistent theme each quarter this year. So I think we feel pretty good in terms of the demand environment, in terms of our ability to manage costs, in terms of the integration of MarkLogic. And so we felt like going into Q4, taking numbers up a little bit was a pretty positive sign and not sure what others are doing out there in this market. But certainly taking numbers up into Q4 felt like a pretty positive thing to do. And to the extent we can over perform those numbers, I think even better.

是的。不，我認為我們非常樂觀，Ittai。我認為中期收入成長了 100 萬美元，每股收益中期成長了 0.03 美元。這是今年每季相當一致的主題。因此，我認為我們在需求環境、管理成本的能力以及 MarkLogic 的整合方面感覺非常好。因此，我們覺得進入第四季度，數字略有上升是一個非常積極的信號，並且不確定其他人在這個市場上正在做什麼。但毫無疑問，將數字納入第四季度感覺是一件非常積極的事情。如果我們能夠超越這些數字，我認為甚至更好。

And as I'm showing no further questions in the queue at this time. I'll turn the call back over to Mr. Yogesh Gupta for any closing remarks.

因為此時我在隊列中沒有顯示任何其他問題。我會將電話轉回 Yogesh Gupta 先生以供結束發言。

Well, thank you, Sheri, and thanks again, everyone, for joining us. We look forward to talking to you again soon. Have a good night.

好吧，謝謝你，Sheri，再次感謝大家加入我們。我們期待很快再次與您交談。祝你晚安。

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

感謝大家的參與。今天的節目到此結束。您現在可以斷開連線。

Thank you, Sheri.

謝謝你，雪莉。