What changed in this filing

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Item 1. Business

2024-01-26 compared with 2023-01-27 · 25 added, 72 removed, 165 unchanged (37% of the section changed)

Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") is the trusted provider of the best products to develop, deploy and manage high-impact business applications.

We enable our customers to develop the applications and experiences they need, deploy where and how they want, and manage it all safely and securely.

Progress helps customers drive faster cycles of innovation, fuel momentum and accelerate their path to success.

Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides enterprise software products for the development, deployment and management of high-impact business applications.

We operate in North America, Latin America, Europe, the Middle East and Africa ("EMEA"), and Asia and Australia ("Asia Pacific"), through local subsidiaries as well as independent distributors.

Our products are generally sold as perpetual licenses, but certain products also use term licensing models and our cloud-based offerings use a subscription-based model.

More than half of our worldwide license revenue is realized through relationships with indirect channel partners (principally independent software vendors ("ISVs"));

original equipment manufacturers ("OEMs");

and value-added resellers ("VARs") , s ystems integrators, and distributors.

We operate in North America and Latin America (the "Americas");

Europe, the Middle East and Africa ("EMEA");

and Asia and Australia ("Asia Pacific"), through local subsidiaries as well as independent distributors.

Strategic Plan and Operating Model

The key tenets of our strategic plan and operating model are based on our Total Growth Strategy, the three-pillar approach focused on:

investing and innovating in our current product portfolio, customer retention, and growth through accretive acquisition (“M&A”):

Be the Trusted Provider of the Best Products to Develop, Deploy and Manage High Impact Applications .

A key element of our strategy is centered on building and maintaining the best products and tools enterprises need to build, deploy, and manage modern, strategic business applications.

We offer these products and tools to both new customers and partners, as well as our existing partner and customer ecosystems.

Focus on Customer and Partner Retention to Drive Recurring Revenue and Profitability .

Our organizational philosophy and operating principles focus primarily on customer and partner retention and success, and a streamlined operating approach to drive predictable and stable recurring revenue and high levels of profitability.

Follow a Total Growth Strategy through Accretive M&A.

We focus on accretive acquisitions of businesses within the software infrastructure space, with products that appeal to both information technology ("IT") organizations and individual developers.

Potential acquisitions must meet strict financial and other criteria, which help further our goal to provide significant stockholder returns by providing scale and increased cash flows.

In April 2019, we acquired Ipswitch, Inc.;

in October 2020, we acquired Chef Software, Inc.;

and in November 2021, we acquired Kemp Technologies.

In addition, on January 3, 2023, we announced our entry into a definitive agreement with Vector Maven Holdings, Inc.

and Vector Maven Holdings, L.P.

to acquire MarkLogic Corporation ("MarkLogic"), a leader in managing complex data and metadata (subject to the satisfaction of the terms and conditions set forth in the definitive agreement).

In recent years, our total growth strategy, described above, has resulted in the rapid expansion of our product portfolio.

As our portfolio evolves, we continuously evaluate our organization for additional synergies and efficiencies.

In connection therewith, we are working to realign our go-to-market, product, and operational teams and to increase centralization of shared services and functions across our company.

We believe that these changes will improve collaboration among the teams that develop, sell, and support our

enhance our ability to integrate acquired businesses;

and lead to greater system uniformity and increased operating efficiency.

Employ a Multi-Faceted Capital Allocation Strategy .

Our capital allocation policy emphasizes accretive M&A, which allows us to expand our business and drive significant stockholder returns.

We also utilize dividends and share repurchases to return capital to stockholders.

We intend to continue to repurchase our shares in sufficient quantities to offset dilution from our equity plans and to continue to return a portion of our annual cash flows from operations to stockholders in the form of dividends.

In fiscal year 2022, we repurchased and retired 1.7 million shares of our common stock for $77.0 million.

As of November 30, 2022, there was $78.0 million remaining under the share repurchase program authorized by our Board of Directors.

On January 10, 2023, our Board of Directors increased our share repurchase authorization by $150.0 million, to an aggregate authorization of $228.0 million.

The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand or discontinue the repurchase program at any time.

We began paying quarterly cash dividends of $0.125 per share of common stock to Progress stockholders in December 2016 and have paid quarterly dividends since that time.

On September 23, 2022, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock which was paid on December 15, 2022 to stockholders of record as of the close of business on December 1, 2022.

On January 10, 2023, our Board of Directors declared a quarterly dividend of $0.175 per share of common stock that will be paid on March 15, 2023 to shareholders of record as of the close of business on March 1, 2023.

Future declarations of dividends, if any, and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

As described above, we expect to continue to pursue acquisitions meeting our financial criteria that are designed to expand our business and drive significant stockholder returns.

As a result, our expected uses of cash could change, our cash position could be reduced, and we may incur additional debt obligations to the extent we complete additional acquisitions.

However, we currently believe that existing cash balances, together with funds generated from operations and amounts available under our credit facility, will be sufficient to finance our operations and meet our foreseeable cash requirements, including quarterly cash dividends and stock repurchases to Progress stockholders, as applicable, through at least the next twelve months.

We derive a significant portion of our revenue from international operations, which are primarily conducted in foreign currencies.

As a result, changes in the value of these foreign currencies relative to the U.S.

dollar have significantly impacted our results of operations and may impact our future results of operations.

Since approximately one-third of our revenue is denominated in foreign currency, and given the recent volatility in the global economy, our revenue results in the fiscal year 2022 were impacted by fluctuations in foreign currency exchange rates.

More than half of our worldwide license revenue is realized through relationships with indirect channel partners, principally independent software vendors, original equipment manufacturers, distributors and value-added resellers.

Independent software vendors develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology.

Original equipment manufacturers are companies that embed our products into their own software products or devices.

Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution.

With Progress, businesses can automate and optimize the process by which applications are developed, deployed and managed.

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Progress MOVEit:

Managed File Transfer software for managing and controlling the movement of sensitive files, securing them both at-rest and in-transit, and ensuring strict adherence to compliance requirements.

Managed File Transfer software for managing and controlling the movement of sensitive files, providing the ability to secure them both at-rest and in-transit, and ensuring strict adherence to compliance requirements.

Progress DataDirect :

8 unchanged sentences

Decision automation platform to transform user experiences by streamlining and automating complex business rules—without having to code.

Progress MarkLogic:

Data agility platform to securely connect data and metadata, create and interpret meaning, and consume high-quality contextualized data across the enterprise software system.

Progress Semaphore:

Semantic AI platform that transforms data into meaningful insights, empowering organizations to manage knowledge models, and to automatically extract and classify meaning from both structured and unstructured data.

Product Development

Most of our products have been developed by our internal product development staff or the internal staffs of acquired companies.

We believe that the features and performance of our products are competitive with those of other available infrastructure software products and that none of the current versions of our products are approaching obsolescence.

37 unchanged sentences

North America, EMEA, Latin America, and Asia Pacific).

We believe this structure allows us to maintain direct contact with our customers and support their diverse market requirements.

We believe this structure allows us to maintain direct contact with our customers and partners, while supporting their diverse market requirements.

Our international operations provide focused local sales, support and marketing efforts and are able to respond directly to changes in local conditions.

Sales personnel are responsible for developing new direct end user accounts, recruiting new indirect channel partners and new independent distributors, managing existing channel partner relationships and servicing existing customers.

We actively seek to avoid conflict between the sales efforts of our ISVs and our own direct sales efforts.

We use our inside sales teams to enhance our direct sales efforts and to generate new business and follow-on business from existing customers.

Our marketing personnel conduct a variety of marketing engagement programs designed to create demand for our products, enhance the market readiness of our products, raise the general awareness of our company and our products, generate leads for the sales organization and promote our various products.

These programs include press relations, analyst relations, investor relations, digital/web marketing, marketing communications, participation in trade shows and industry conferences, and production of sales and marketing literature.

We also hold and participate in global events, as well as regional user events in various locations throughout the world.

Our sales and marketing efforts with respect to certain products differ from our traditional sales and marketing efforts because the target markets are different.

For these products, we have designed our marketing and sales model to be efficient for high volumes of lower-price transactions.

Our marketing efforts focus on driving traffic to our websites and on generating high quality sales leads, in many cases, consisting of developer end users who download a free evaluation of our software.

Our sales efforts then focus on converting these leads into paying customers through a high volume, short duration sales process.

Of particular importance to our target market, we enable our customers to buy our products in a manner convenient to them, whether by purchase order, online with a credit card or through our channel partners.

These programs include public relations, industry analyst relations, digital/web marketing, demand generation, participation in trade shows, industry conferences, regional user events, and production of sales and marketing literature.

Our marketing efforts focus on driving traffic to our websites, generating high quality sales leads and building visibility for our corporate and product brands.

Our sales efforts then focus on converting these leads into paying customers.

Customer Support

15 unchanged sentences

Our global professional services organization delivers business solutions for customers through a combination of products, consulting and education.

Our consulting organization offers project management, implementation services, custom development, programming and other services.

Our consulting organization also provides services to web-enable existing applications or to take advantage of the capabilities of new product releases.

Our consulting organization offers project management, implementation services, custom software development, programming and other services.

Our consulting organization also provides services to web-enable existing applications or to take advantage of the capabilities of new Progress product releases.

Our education organization offers numerous training options, from traditional instructor-led courses to advanced learning modules available via the web or on digital media.

20 unchanged sentences

We compete with multiple companies, some that have single or narrow solutions, and some that have a range of enterprise infrastructure solutions.

Many of these vendors offer platform-as-a-service, application development, data integration and other tools

in conjunction with their CRM, web services, operating systems, and relational database management systems.

Many companies offer platform-as-a-service, application development, data integration and other tools in conjunction with offerings such as customer relationship management, web services, operating systems, and relational database management systems.

We compete with software vendors that offer their products under a proprietary software license model, and various other vendors that offer their solutions in an open-source licensing or freely available distribution model.

4 unchanged sentences

We rely on a combination of contractual provisions and copyright, patent, trademark and trade secret laws to protect our proprietary rights in our products.

Except as described below with respect to our Chef products, we generally distribute our products under software license agreements that grant customers a perpetual nonexclusive license to use our products and contain terms and conditions prohibiting the unauthorized reproduction or transfer of our products.

We also distribute our products through various channel partners, including ISVs, OEMs and systems integrators.

We also license our products under term or subscription arrangements.

Except as described below with respect to our Chef products, we frequently distribute our products under software license agreements that grant customers a perpetual nonexclusive license to use our products and contain terms and conditions prohibiting the unauthorized reproduction or transfer of our products.

We also distribute products through various channel partners, including ISVs, OEMs and systems integrators.

We also license products under term or subscription arrangements.

In addition, we attempt to protect our trade secrets and other proprietary information through agreements with employees, consultants and channel partners.

Although we intend to protect our rights vigorously, and do not intend to infringe upon the intellectual property rights of other parties, there is no assurance that these measures will be successful.

Although we intend to protect our rights vigorously, and do not intend to infringe upon the intellectual property rights of other parties, there is no assurance that our efforts will be successful.

We seek to protect the source code of our products as trade secrets and as unpublished copyrighted works.

We hold numerous patents covering portions of our products.

We also have several patent applications for some of our other product technologies.

We also have several patent applications for product technologies.

Where possible, we seek to obtain protection of our product names and service offerings through trademark registration and other similar procedures throughout the world.

20 unchanged sentences

Employees in certain foreign jurisdictions are represented by local workers’ councils and/or collective bargaining agreements as may be customary or required in those jurisdictions.

We have experienced no work stoppages and believe our relations with employees are good.

We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.

21 unchanged sentences

We are committed to creating a culture of innovation and inspiration, where employees feel a strong sense of community and pride in the company and the successes they have helped to achieve.

We have an Inclusion and Diversity Advisory Committee, made up of a diverse group of Progress employees from around the globe with varying backgrounds, skill sets and viewpoints.

We have an Inclusion and Diversity Advisory Committee, made up of Progress employees from around the globe with varying backgrounds, skill sets and viewpoints.

This committee supports our Chief Inclusion and Diversity Officer in the formation and implementation of enterprise-wide Inclusion and Diversity initiatives and ensuring a clear Inclusion and Diversity vision is established and articulated in a way that is authentic for all Progress employees.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business