What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-08 compared with 2023-10-10 · 186 added, 182 removed, 370 unchanged (50% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

(In thousands, except share data) August 31, 2023 November 30, 2022

(In thousands, except share data) February 29, 2024 November 30, 2023

Current assets:

43 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Nine Months Ended

(In thousands, except per share data) August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

(In thousands, except per share data) February 29, 2024 February 28, 2023

Software licenses $ 64,100 $ 57,568

15 unchanged sentences

Acquisition-related expenses 702 1,743

Gain on sale of assets held for sale — — — ( 10,770 )

Total operating expenses 116,870 102,421

17 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended Nine Months Ended

(In thousands) August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Net income $ 22,639 $ 23,674

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ( 1,546 ) 1,737

Unrealized (loss) gain on hedging activity, net of tax benefit of $ 170 and $ 465 for the three and nine month periods ended August 31, 2023, respectively and net of tax provision of $ 377 and $ 1,542 for the three and nine month periods ended August 31, 2022, respectively

( 537 ) 1,191 ( 1,476 ) 4,882

Unrealized loss on investments, net of tax benefit of $ 0 for both the three and nine month periods ended August 31, 2023, respectively and net of tax of $ 0 and a tax benefit of $ 4 for the three and nine month periods ended August 31, 2022, respectively

Unrealized loss on hedging activity, net of tax benefit of $ 218 and $ 45 for the first quarter of 2024 and 2023, respectively

( 690 ) ( 127 )

Total other comprehensive income (loss), net of tax 1,130 ( 6,442 ) 3,648 ( 6,086 )

Unrealized loss on investments, net of tax provision of $ 4 for the first quarter of 2023

Total other comprehensive (loss) income, net of tax ( 2,236 ) 1,589

Comprehensive income $ 20,403 $ 25,263

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity

Nine Months Ended August 31, 2023

Three Months Ended February 29, 2024

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

9 unchanged sentences

Net income — — — 22,639 — 22,639

Other comprehensive income — — — — 3,648 3,648

Balance, August 31, 2023 43,565 $ 438 $ 361,062 $ 115,133 $ ( 31,587 ) $ 445,046

Three Months Ended August 31, 2023

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in thousands) Number of Shares Amount

Balance, June 1, 2023 43,358 $ 436 $ 347,101 $ 103,995 $ ( 32,717 ) $ 418,815

Issuance of stock under employee stock purchase plan 67 1 2,498 — — 2,499

Exercise of stock options 140 1 1,391 — — 1,392

Stock-based compensation — — 10,072 — — 10,072

Dividends declared — — — ( 7,960 ) — ( 7,960 )

Net income — — — 19,098 — 19,098

Other comprehensive loss — — — — ( 2,236 ) ( 2,236 )

Balance, August 31, 2023 43,565 $ 438 $ 361,062 $ 115,133 $ ( 31,587 ) $ 445,046

Nine Months Ended August 31, 2022

Balance, February 29, 2024 43,689 $ 437 $ 372,273 $ 123,429 $ ( 34,396 ) $ 461,743

Three Months Ended February 28, 2023

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

1 unchanged sentence

Balance, December 1, 2022 43,257 $ 433 $ 331,650 $ 101,656 $ ( 35,235 ) $ 398,504

Cumulative effect of adoption of ASU 2020-06 — — ( 47,456 ) 4,893 — ( 42,563 )

Issuance of stock under employee stock purchase plan 50 1 1,786 — — 1,787

7 unchanged sentences

Other comprehensive income — — — — 1,589 1,589

Balance, August 31, 2022 42,998 $ 430 $ 318,559 $ 86,513 $ ( 38,529 ) $ 366,973

Three Months Ended August 31, 2022

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in thousands) Number of Shares Amount

Balance, June 1, 2022 43,454 $ 435 $ 309,913 $ 93,885 $ ( 32,087 ) $ 372,146

Issuance of stock under employee stock purchase plan 68 — 2,024 — — 2,024

Exercise of stock options 18 — 643 — — 643

Stock-based compensation — — 8,639 — — 8,639

Dividends declared — — — ( 7,783 ) — ( 7,783 )

Treasury stock repurchases and retirements ( 542 ) ( 5 ) ( 2,660 ) ( 21,386 ) — ( 24,051 )

Net income — — — 21,797 — 21,797

Other comprehensive loss — — — — ( 6,442 ) ( 6,442 )

Balance, August 31, 2022 42,998 $ 430 $ 318,559 $ 86,513 $ ( 38,529 ) $ 366,973

Balance, February 28, 2023 43,307 $ 433 $ 338,370 $ 108,286 $ ( 33,646 ) $ 413,443

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

(In thousands) August 31, 2023 August 31, 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Cash flows from operating activities:

6 unchanged sentences

Non-cash lease expense 4,259 1,959

Gain on sale of assets held for sale — ( 10,770 )

Deferred income taxes ( 3,295 ) ( 6,324 )

9 unchanged sentences

Net cash flows from operating activities 70,504 46,767

Cash flows (used in) from investing activities:

Cash flows used in investing activities:

Purchases of investments — ( 15,262 )

2 unchanged sentences

Payments for acquisitions, net of cash acquired — ( 355,821 )

Proceeds from sale of long-lived assets, net — 25,998

Other investing activities — 134

Net cash flows (used in) from investing activities ( 357,993 ) 24,246

Cash flows from (used in) financing activities:

Net cash flows used in investing activities ( 309 ) ( 371,068 )

Cash flows (used in) from financing activities:

Proceeds from stock-based compensation plans 7,583 9,357

5 unchanged sentences

Principal payment on term loan ( 3,437 ) ( 1,719 )

Payment of debt issuance costs — ( 1,957 )

Net cash flows from (used in) financing activities 93,446 ( 93,533 )

Net cash flows (used in) from financing activities ( 62,415 ) 174,798

Effect of exchange rate changes on cash and cash equivalents ( 1,516 ) 1,207

Net (decrease) increase in cash and cash equivalents ( 118,278 ) 68,709

Net increase (decrease) in cash and cash equivalents 6,264 ( 148,296 )

Cash and cash equivalents, beginning of period 126,958 256,277

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows, continued

Nine Months Ended

August 31, 2023 August 31, 2022

Three Months Ended

February 29, 2024 February 28, 2023

Supplemental disclosure:

3 unchanged sentences

Non-cash investing and financing activities:

Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested $ 23,077 $ 18,204

Dividends declared and unpaid $ 8,435 $ 8,141

21 unchanged sentences

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued Accounting Standards Update No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), as amended in December 2022 by Accounting Standards Update No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 ("ASU 2022-06").

ASU 2020-04 provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform.

The provisions apply only to those transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform.

The Company adopted ASU 2020-04 in June 2023, in connection with the amendment of its interest rate swap agreement to implement certain changes in the reference rate from LIBOR to the Secured Overnight Financing Rate ("SOFR").

The application of this expedient preserves the cash flow hedge designation of the interest rate swaps and presentation consistent with past presentation and did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 is intended to improve the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the Company beginning with the annual period ending November 30, 2026, allowing for adoption on a prospective basis or a retrospective option.

Early adoption is permitted.

The adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements.

This update is effective for the Company in the consolidated financial statements for the year ending November 30, 2025, and interim periods beginning after December 1, 2025.

The adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company’s consolidated financial statements .

Cash and Cash Equivalents

A summary of our cash and cash equivalents at August 31, 2023 is as follows (in thousands):

A summary of our cash and cash equivalents at February 29, 2024 is as follows (in thousands):

Amortized Cost Basis Unrealized Gains Unrealized Losses Fair Value

5 unchanged sentences

Cash $ 126,958 $ — $ — $ 126,958

Money market funds 27,254 — — 27,254

Total $ 256,277 $ — $ — $ 256,277

There were no debt securities by contractual maturity due after one year as of August 31, 2023.

There were no debt securities by contractual maturity due after one year as of February 29, 2024.

Derivative Instruments

2 unchanged sentences

The contract matures on April 30, 2024 and requires periodic interest rate settlements.

Under this interest rate swap contract, we receive a floating rate based on the greater of 1-month LIBOR or 0.00 %, and pay a fixed rate of 1.855 % on the outstanding notional amount .

In June 2023, the interest rate swap agreement was amended to implement certain changes in the reference rate from LIBOR to SOFR.

Under our interest rate swap contract, we receive a floating rate based on the greater of 1-month SOFR or 0.00 %, and pay a fixed rate of 1.855 % on the outstanding notional amount .

We have designated the interes t rate swap as a cash flow hedge and assess the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative.

To the extent that the interest rate swap is highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative are included as a component of other comprehensive loss on our condensed consolidated balance sheets.

Although we have determined at the onset of the hedge that the interest rate swap will be a highly effective hedge throughout the term of the contract, any portion of the fair value swap subsequently determined to be ineffective will be recognized in earnings.

As of August 31, 2023, the fair value of the hedge was a gain of $ 2.5 million, which was included in other current assets on our condensed consolidated balance sheets.

The net amount of accumulated other comprehensive loss reclassified to interest expense during the nine months ended August 31, 2023 and August 31, 2022 was a decrease of $ 2.6 million and an increase of $ 1.1 million, respectively.

The following table presents our interest rate swap contract where the notional amount reflects the quarterly amortization of the interest rate swap, which is equal to approximately one-half of the corresponding reduction in the balance of our term loan as we make scheduled principal payments.

The fair value of the derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in thousands):

August 31, 2023 November 30, 2022

Although we determined at the onset of the hedge that the interest rate swap will be a highly effective hedge throughout the term of the contract, any portion of the fair value swap subsequently determined to be ineffective will be recognized in earnings.

As of February 29, 2024, the fair value of the hedge was a gain of $ 0.6 million, which was included in other current assets on our condensed consolidated balance sheets.

The net amount of accumulated other comprehensive loss reclassified to interest expense during the three months ended February 29, 2024 and February 28, 2023 was a decrease of $ 0.9 million and $ 0.7 million, respectively.

The following table presents our interest rate swap contract where the notional amount is equal to approximately one-half of the corresponding reduction in the balance of our term loan.

The fair value of the derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the payment schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in thousands):

February 29, 2024 November 30, 2023

Notional Value Fair Value Notional Value Fair Value

3 unchanged sentences

We generally do not hedge the net assets of our international subsidiaries.

All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and generally expire between 30 days and 2 years from the date the contract was entered.

At August 31, 2023, $ 2.4 million and $ 0.2 million was recorded in other accrued liabilities and other current assets, respectively, on our condensed consolidated balance sheets.

At November 30, 2022, $ 3.1 million and $ 0.1 million were recorded in other noncurrent liabilities and other current assets, respectively, on our condensed consolidated balance sheets.

In the three and nine months ended August 31, 2023, realized and unrealized gains of $ 1.1 million and $ 2.7 million, respectively, from our forward contracts were recognized in foreign currency loss, net, on our condensed consolidated statements of operations.

In the three and nine months ended August 31, 2022, realized and unrealized losses of $ 5.4 million and $ 9.0 million, respectively, from our forward contracts were recognized in foreign currency loss, net, on our condensed consolidated statements of operations.

All forward contracts are recorded at fair value in other current assets, other assets, other accrued liabilities, or other noncurrent liabilities on the condensed consolidated balance sheets at the end of each reporting period and generally expire between 30 days and 2 years from the date the contract was entered.

At February 29, 2024 $ 2.8 million was recorded in other accrued liabilities on our condensed consolidated balance sheets.

At November 30, 2023, $ 2.5 million was recorded in other accrued liabilities on our condensed consolidated balance sheets.

In the three months ended February 29, 2024, realized and unrealized losses of $ 0.6 million from our forward contracts were recognized in foreign currency loss, net, on our condensed consolidated statements of operations.

In the three months ended February 28, 2023, realized and unrealized gains of $ 0.5 million from our forward contracts were recognized in foreign currency loss, net, on our condensed consolidated statements of operations.

These gains and losses were substantially offset by realized and unrealized gains and losses in the offsetting positions.

The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):

August 31, 2023 November 30, 2022

February 29, 2024 November 30, 2023

Notional Value Fair Value Notional Value Fair Value

6 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at August 31, 2023 (in thousands):

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at February 29, 2024 (in thousands):

Fair Value Measurements Using

6 unchanged sentences

Total Fair Value Level 1 Level 2 Level 3

Money market funds $ 27,254 $ 27,254 $ — $ —

Interest rate swap $ 1,495 $ — $ 1,495 $ —

6 unchanged sentences

Fair Value of the Convertible Senior Notes

The fair value of our Convertible Senior Notes, with a carrying value of $ 354.2 million and $ 352.6 million, was $ 411.8 million and $ 376.0 million as of August 31, 2023 and November 30, 2022, respectively.

The fair value of our Convertible Senior Notes, with a carrying value of $ 355.3 million and $ 354.8 million, was $ 378.0 million and $ 377.1 million as of February 29, 2024 and November 30, 2023, respectively.

The fair value was determined based on the quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.

Fair Value of Other Long-term Debt

The fair value of the borrowing outstanding detail in Note 7 approximates the carrying value of the debt due to variable rates that are applicable and no significant change in our credit ratings.

Fair Value of Other Financial Assets and Liabilities

3 unchanged sentences

Intangible assets are comprised of the following significant classes (in thousands):

August 31, 2023 November 30, 2022

February 29, 2024 November 30, 2023

Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value

2 unchanged sentences

Trademarks and trade names 50,111 ( 33,589 ) 16,522 50,111 ( 32,034 ) 18,077

Non-compete agreement — — — 2,000 ( 2,000 ) —

Total $ 788,719 $ ( 460,710 ) $ 328,009 $ 788,719 $ ( 434,441 ) $ 354,278

In the three and nine months ended August 31, 2023, amortization expense related to intangible assets was $ 25.7 million and $ 71.1 million, respectively.

In the three and nine months ended August 31, 2022, amortization expense related to intangible assets was $ 17.3 million and $ 51.9 million, respectively.

Future amortization expense for intangible assets as of August 31, 2023, is as follows (in thousands):

In the first quarter of fiscal years 2024 and 2023, amortization expense related to intangible assets was $ 25.2 million and $ 19.9 million, respectively.

Future amortization expense for intangible assets as of February 29, 2024, is as follows (in thousands):

Remainder of 2024 $ 63,887

1 unchanged sentence

Total $ 328,009

Changes in the carrying amount of goodwill in the nine months ended August 31, 2023 are as follows (in thousands):

Changes in the carrying amount of goodwill in the three months ended February 29, 2024 are as follows (in thousands):

Balance, December 1, 2023 $ 832,101

1 unchanged sentence

Translation adjustments 5

Balance, August 31, 2023 $ 826,048

Balance, February 29, 2024

(1) The additions to goodwill during fiscal year 2024 are related to the acquisition of MarkLogic in February 2023.

4 unchanged sentences

The acquisition was completed for a base purchase price of $ 355.0 million (subject to certain customary adjustments) in cash.

The acquisition consideration for MarkLogic has been preliminarily allocated to MarkLogic’s assets and assumed liabilities based on estimated fair values.

The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period (up to one year from the acquisition date).

The acquisition consideration for MarkLogic has been allocated to MarkLogic’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values.

The excess of total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill.

During the quarter ended February 29, 2024, the measurement period adjustments were completed, which resulted in a $ 0.7 million increase in goodwill.

The purchase price allocation is now complete.

The allocation of the purchase price is as follows (in thousands):

Initial Purchase Price Allocation Measurement Period Adjustments Adjusted Purchase Price Allocation Life

Purchase Price Allocation Life

Net working capital $ 46,335

11 unchanged sentences

The valuation assumptions take into consideration our estimates of customer attrition, technology obsolescence, and revenue growth projections.

We determined the acquisition date deferred revenue balance based on our assessment of the individual contracts acquired.

A significant portion of the deferred revenue is expected to be recognized in the 12 months following the acquisition.

Tangible assets acquired and assumed liabilities were recorded at fair value.

We determined the acquisition date deferred revenue balances based on our assessment of the individual contracts acquired.

A significant portion of the deferred revenue was recognized in the 12 months following the acquisition.

We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill.

1 unchanged sentence

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) and certain acquisition restructuring and related charges are not included as a component of consideration transferred but are required to be expensed as incurred.

During the three and nine months ended August 31, 2023, we incurred approximately $ 0.6 million and $ 4.1 million, respectively, of acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

The amount of revenue of MarkLogic included in our consolidated statement of operations during the three and nine months ended August 31, 2023, was approximately $ 20.4 million and $ 50.7 million, respectively.

We determined that disclosing the amount of MarkLogic related earnings included in the consolidated statement of operations is impracticable, as certain operations of MarkLogic were integrated into the operations of the Company from the date of acquisition.

The amount of revenue of MarkLogic included in our condensed consolidated statement of operations during the three months ended February 29, 2024 was approximately $ 31.7 million.

The amount of revenue of MarkLogic included in our condensed consolidated statement of operations during the three months ended February 28, 2023 was not material.

We determined that disclosing the amount of MarkLogic related earnings included in the condensed consolidated statements of operations is impracticable, as certain operations of MarkLogic were integrated into the operations of the Company from the date of acquisition.

Pro Forma Information

5 unchanged sentences

The pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on December 1, 2021.

(in thousands, except per share data) Pro Forma Three Months Ended August 31, 2022

Revenue $ 174,676

Net income $ 16,141

Net income per basic share $ 0.37

Net income per diluted share $ 0.37

(in thousands, except per share data) Pro Forma Nine Months Ended August 31, 2023 Pro Forma Nine Months Ended August 31, 2022

(in thousands, except per share data) Pro Forma Three Months Ended February 28, 2023

Revenue $ 203,076

2 unchanged sentences

Net income per diluted share $ 0.74

As of August 31, 2023, future maturities of the Company's long-term debt were as follows:

(In thousands) 2026 Notes Revolving Line of Credit Term Loan Total

Remainder of 2023 $ — $ — $ 1,719 $ 1,719

2024 — — 13,750 13,750

2025 — — 20,625 20,625

2026 360,000 — 20,625 380,625

2027 — 140,000 206,250 346,250

Total face value of long-term debt 360,000 140,000 262,969 762,969

Unamortized discount and issuance costs ( 5,754 ) — ( 2,191 ) ( 7,945 )

Less current portion of long-term debt, net — — ( 11,390 ) ( 11,390 )

Long-term debt $ 354,246 $ 140,000 $ 249,388 $ 743,634

The revolving line of credit has a term that ends on January 25, 2027, at which time all amounts outstanding must be repaid.

In March of 2024, the Company refinanced its debt by issuing 2030 Convertible Senior Notes (described below) and used the proceeds to pay off the outstanding balance of the term loan and revolving line of credit under our previous credit agreement.

We also entered into an amended and restated credit facility.

Accordingly, we classified the balance of the term loan on the balance sheet as long-term as of February 29, 2024.

Notes Payable

2030 Convertible Senior Notes

On March 1, 2024, the Company issued, in a private placement, Convertible Senior Notes with an aggregate principal amount of $ 450 million, due March 1, 2030 (the “2030 Convertible Notes”), unless earlier repurchased, redeemed or converted.

The proceeds from the 2030 Convertible Notes were used in part to enter into the 2024 Capped Call Transactions (described below), working capital, and other general corporate purposes, including paying off the existing term loan and revolving line of credit.

There are no required principal payments prior to the maturity of the 2030 Convertible Notes.

The 2030 Convertible Notes bear interest at an annual rate of 3.5 %, payable semi-annually in arrears on September 1 and March 1 of each year, beginning on September 1, 2024.

The Company incurred approximately $ 12.2 million in issuance costs for the issuance of the 2030 Convertible Notes.

Conversion Rights

Before November 1, 2029, Noteholders may convert their 2030 Convertible Notes in the following circumstances:

• During any fiscal quarter commencing after the fiscal quarter ending on May 31, 2024, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least twenty trading

days (whether or not consecutive) during the thirty consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter;

• During the five consecutive business days immediately after any ten consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of Company’s common stock on such trading day and the conversion rate on such trading day;

• Upon the occurrence of distributions on the Company’s common stock, which distribution per share of common stock has a value exceeding 10 % of the last reported sale price per share on the trading day immediately before the date such distribution is announced;

• Upon the occurrence of certain corporate events or if the Company calls such Notes for redemption, then the Noteholder of any Note may convert such Note.

From and after November 1, 2029, Noteholders may convert their 2030 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will satisfy its conversion obligations by paying cash up to the aggregate principal amount of 2030 Convertible Notes to be converted, by issuing shares of its common stock or a combination of cash and shares of its common stock, at its election.

The initial conversion rate is 14.7622 shares of common stock per $1,000 principal amount of the 2030 Convertible Notes, representing an initial conversion price of approximately $ 67.74 per share of common stock.

The conversion rate will be adjusted upon the occurrence of certain events, including spin-offs, tender offers, exchange offers, make-whole fundamental change and certain stockholder distributions.

Repurchase Rights

On or after March 5, 2027, and on or before the 60th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the 2030 Convertible Notes, subject to partial redemption limitation, at a repurchase price equal to the principal amount, plus accrued and unpaid interest, if the last reported sale price per share of the Company’s common stock exceeded 130 % of the conversion price on (1) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice and (2) the trading day immediately before the date the Company sends such notice.

Pursuant to the partial redemption limitation, the Company may not elect to redeem less than all of the outstanding 2030 Convertible Notes unless at least $ 100.0 million aggregate principal amount of 2030 Convertible Notes are outstanding and not subject to redemption as of the time it sends the related redemption notice.

If certain corporate events that constitute a “fundamental change” (as described below) occur at any time, holders may, subject to certain exceptions, require the Company to purchase their 2030 Convertible Notes in whole or in part for cash at a price equal to the principal amount of the 2030 Convertible Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date.

A fundamental change relates to events such as business combination transactions involving the Company, shareholder approval of liquidation or dissolution of the Company, and certain de-listing events with respect to the Company’s common stock.

2024 Capped Call Transactions

On February 27, 2024, in connection with the pricing of the 2030 Convertible Notes, the Company entered into privately negotiated capped call transactions (“2024 Capped Call Transactions”).

The 2024 Capped Call Transactions cover approximately 6.6 million shares (representing the number of shares of common stock initially underlying the Notes) of the Company’s common stock.

The 2024 Capped Call Transactions are generally expected to reduce potential dilution to our common stock upon any conversion of 2030 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the 2024 Capped Call Transactions will initially be $ 92.98 per share of common stock, which represents a premium of 75 % over the last reported sale price of the common stock of $ 53.13 per share on February 27, 2024, and is subject to certain adjustments under the terms of the 2024 Capped Call Transactions.

The cost of the purchased capped calls of $ 42.2 million was recorded as a reduction to additional paid-in-capital upon settlement in March 2024.

Credit Facility

On March 7, 2024, the Company entered into an amended and restated credit agreement (the "Credit Agreement") with certain lenders, which provides a $ 900.0 million secured revolving credit facility.

The revolving credit facility may be made available in U.S.

Dollars and certain other currencies and may be increased, and new term loan commitments may be entered into, by up to an additional $ 260.0 million if the existing or additional lenders are willing to make such increased commitments.

revolving credit facility has sublimits for swing line loans up to $ 25.0 million and for the issuance of standby letters of credit in a face amount up to $ 25.0 million.

We expect to use the revolving credit facility for general corporate purposes.

Interest rates for the revolving credit facility are determined by reference to a Term Benchmark Rate or a base rate at our option and would range from 1.50 % to 3.00 % above the Term Benchmark Rate for Term Benchmark-based borrowings or from 0.50 % to 2.00 % above the defined base rate for base rate borrowings, in each case based upon our consolidated total net leverage ratio.

Additionally, we may borrow certain foreign currencies at rates set in the same range above the respective Term Benchmark Rates for those currencies, based on our consolidated total net leverage ratio.

A quarterly commitment fee on the undrawn portion of the revolving credit facility is required, ranging from 0.150 % to 0.400 % per annum, based upon our consolidated total net leverage ratio.

The credit facility matures on March 7, 2029.

The revolving credit facility does not require amortization of principal.

Revolving loans may be borrowed, repaid and reborrowed until the maturity date, at which time all amounts outstanding must be repaid.

Accrued interest on the loans is payable quarterly in arrears.

Costs incurred to obtain our long-term debt of $ 6.0 million, along with $ 0.9 million of unamortized debt issuance costs related to the previous credit agreement, will be recorded as debt issuance costs and amortized over the term of the debt agreement using the effective interest method.

Further, unamortized debt issuance costs related to the repaid term loan will be expensed in accordance with the accounting for a debt extinguishment.

We are the sole borrower under the credit facility and our obligations under the Credit Agreement are guaranteed by each of our material domestic subsidiaries and are secured by substantially all of our assets and each of our material domestic subsidiaries.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, grant liens, make investments, make acquisitions, incur indebtedness, merge or consolidate, dispose of assets, pay dividends or make distributions, repurchase stock, change the nature of the business, enter into certain transactions with affiliates and enter into burdensome agreements, in each case subject to customary exceptions for a credit facility of this size and type.

We are also required to maintain compliance with a consolidated interest charge coverage ratio, a consolidated senior secured net leverage ratio and a consolidated total net leverage ratio.

Common Stock Repurchases

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

In the three months ended August 31, 2023, we did no t repurchase and retire any shares of our common stock.

In the three months ended August 31, 2022, we repurchased and retired 0.5 million shares for $ 24.1 million.

In the nine months ended August 31, 2023 and August 31, 2022, we repurchased and retired 0.5 million shares for $ 30.0 million and 1.7 million shares for $ 75.5 million, respectively.

The shares were repurchased in both periods as part of our Board of Directors authorized share repurchase program.

As of August 31, 2023, there was $ 198.0 million remaining under the current authorization.

In the three months ended February 29, 2024 and February 28, 2023, we repurchased and retired 0.4 million shares for $ 22.5 million and 0.3 million shares for $ 15.0 million, respectively.

As of February 29, 2024, there was $ 171.5 million remaining under the current authorization.

On March 1, 2024, the Company repurchased and retired 0.4 million shares for $ 25.0 million.

Stock-Based Compensation

Stock-based compensation expense reflects the fair value of stock-based awards, less the present value of expected dividends when applicable, measured at the grant date and recognized over the relevant service period.

We estimate the fair value of each stock-based award on the measurement date using the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model.

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant service period.

We estimate the fair value of each stock-based award on the measurement date using either the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model.

The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield.

We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally 4 or 5 years for options and 3 or 4 years for restricted stock units, and adjust the expense each period for actual forfeitures.

We recognize stock-based compensation expense related to performance stock units and our employee stock purchase plan using an accelerated attribution.

In 2022, 2023 and 2024, we granted performance-based restricted stock units that include two performance metrics under our Long-Term Incentive Plan ("LTIP") where the performance measurement period is three years .

Vesting of the LTIP awards on the 2022, 2023 and 2024 plans are based on the following:

(i) 25 % is based on our level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods, and (ii) 75 % is based on achievement of a three-year cumulative operating income target.

In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model for the market condition portion of the award, and used the closing price of our common stock on the date of grant for the portion related to the performance condition.

We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally four years for options and three years for restricted stock units.

We recognize stock-based compensation expense related to our employee stock purchase plan using an accelerated attribution method.

(i) 75 % is based on achievement of a three-year cumulative operating income, and (ii) 25 % is based on our level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods.

The vesting of LTIP awards is also subject to continued employment of the grantees through the performance period, except in the event of a qualifying termination.

In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model for the market condition portion of the award and used the closing price of our common stock on the date of grant, less the present value of expected dividends when applicable, for the portion related to the performance condition.

The following table provides the classification of stock-based compensation as reflected on our condensed consolidated statements of operations (in thousands):

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

February 29, 2024 February 28, 2023

Cost of maintenance and services $ 986 $ 620

4 unchanged sentences

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated balances of other comprehensive loss during the nine months ended August 31, 2023 (in thousands):

The following table summarizes the changes in accumulated balances of other comprehensive loss during the three months ended February 29, 2024 (in thousands):

Foreign Currency Translation Adjustment Unrealized Losses on Investments Unrealized Gain (Losses) on Hedging Activity Accumulated Other Comprehensive Loss

Balance, December 1, 2023 $ ( 33,234 ) $ ( 61 ) $ 1,135 $ ( 32,160 )

Other comprehensive income (loss) before reclassifications, net of tax 5,124 — ( 1,476 ) 3,648

Balance, August 31, 2023 $ ( 33,399 ) $ ( 61 ) $ 1,873 $ ( 31,587 )

The tax effect on accumulated unrealized gains (losses) on hedging activity and unrealized losses on investments was a tax provision of $ 0.7 million and $ 1.1 million as of August 31, 2023 and November 30, 2022, respectively.

Other comprehensive loss before reclassifications, net of tax ( 1,546 ) — ( 690 ) ( 2,236 )

Balance, February 29, 2024 $ ( 34,780 ) $ ( 61 ) $ 445 $ ( 34,396 )

The tax effect on accumulated unrealized gains (losses) on hedging activity and unrealized losses on investments was a tax provision of $ 0.2 million and $ 0.4 million as of February 29, 2024 and November 30, 2023, respectively.

Revenue Recognition

2 unchanged sentences

Information relating to revenue from external customers by revenue type is as follows (in thousands):

Three Months Ended Nine Months Ended

(In thousands) August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Performance obligations transferred at a point in time:

10 unchanged sentences

Information relating to revenue from external customers from different geographical areas is as follows (in thousands):

Three Months Ended Nine Months Ended

(In thousands) August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

North America $ 107,282 $ 98,828

4 unchanged sentences

No single customer, partner, or country outside the U.S.

has accounted for more than 10% of our total revenue for the three and nine months ended August 31, 2023 and August 31, 2022.

has accounted for more than 10% of our total revenue for the three months ended February 29, 2024 and February 28, 2023.

Contract Balances

Unbilled Receivables and Contract Assets

As of August 31, 2023, billing of our long-term unbilled receivables is expected to occur as follows (in thousands):

As of February 29, 2024, billing of our long-term unbilled receivables is expected to occur as follows (in thousands):

2025 $ 18,209

Total $ 33,641

Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

We did not have any net contract assets as of August 31, 2023 or November 30, 2022.

We did not have any net contract assets as of February 29, 2024 or November 30, 2023.

Deferred Revenue

Deferred revenue expected to be recognized as revenue more than one year subsequent to the balance sheet date is included in long-term liabilities on the consolidated balance sheets.

Deferred revenue expected to be recognized as revenue more than one year subsequent to the balance sheet date is included in long-term liabilities on the condensed consolidated balance sheets.

Our deferred revenue balance is primarily made up of deferred maintenance.

As of August 31, 2023, the changes in net deferred revenue were as follows (in thousands):

As of February 29, 2024, the changes in net deferred revenue were as follows (in thousands):

Balance, December 1, 2023 $ 295,036

1 unchanged sentence

Revenue recognized ( 184,685 )

Balance, August 31, 2023 $ 279,768

As of August 31, 2023, transaction price allocated to remaining performance obligations was $ 288 million.

Balance, February 29, 2024 $ 296,133

As of February 29, 2024, transaction price allocated to remaining performance obligations was $ 348 million.

We expect to recognize approximately 75 % of the revenue within the next year and the remainder thereafter.

4 unchanged sentences

We determined that a three to five year product life represents the period of benefit that we receive from these incremental costs based on both qualitative and quantitative factors, which include customer contracts, industry norms, and product upgrades.

Total deferred contract costs were $ 8.0 million and $ 8.8 million as of August 31, 2023 and November 30, 2022, respectively, and are included in other current assets and other assets on our condensed consolidated balance sheets.

Total deferred contract costs were $ 7.0 million and $ 7.6 million as of February 29, 2024 and November 30, 2023, respectively, and are included in other current assets and other assets on our condensed consolidated balance sheets.

Amortization of deferred contract costs is included in sales and marketing expense on our condensed consolidated statement of operations and was minimal in all periods presented.

6 unchanged sentences

Translation and other adjustments — ( 4 ) ( 4 )

Balance, August 31, 2023 $ 3,368 $ 1,799 $ 5,167

During fiscal year 2023, we restructured our operations in connection with the acquisition and subsequent integration of MarkLogic, which resulted in a reduction in redundant positions, primarily within administrative functions.

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2023.

We expect to incur additional expenses as part of these actions related to employee costs and facility closures during fiscal year 2024, but we do not expect these costs to be material.

Balance, February 29, 2024 $ 4,855 $ 668 $ 5,523

In the three months ended February 29, 2024, costs incurred primarily related to a facility closure in connection with the restructuring action from the first fiscal quarter of 2023.

We do not expect to incur additional material expenses as part of this action.

Earnings per share

2 unchanged sentences

The following table sets forth the calculation of basic and diluted earnings per share on an interim basis (in thousands, except per share data):

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended

February 29, 2024 February 28, 2023

Net income $ 22,639 $ 23,674

5 unchanged sentences

Effect of dilution from common stock equivalents 1,024 1,053

Effect of dilution from if-converted Convertible Senior Notes 176 — — —

Diluted weighted average shares outstanding 44,826 44,353

Diluted earnings per share $ 0.51 $ 0.53

We excluded stock awards representing approximately 252,000 and 286,000 shares of common stock from the calculation of diluted earnings per share in the three and nine months ended August 31, 2023, respectively, as these awards were anti-dilutive.

We excluded stock awards representing approximately 1,777,000 and 1,739,000 shares of common stock from the calculation

of diluted earnings per share in the three and nine months ended August 31, 2022, respectively, as these awards were anti-dilutive.

We excluded stock awards representing approximately 714,000 and 340,000 shares of common stock from the calculation of diluted earnings per share in the three months ended February 29, 2024 and February 28, 2023, respectively, as these awards were anti-dilutive.

The dilutive impact of the Notes on our calculation of diluted earnings per share is considered using the if-converted method.

For the three months ended August 31, 2023, the average daily closing price of the Company's common stock was greater than the conversion price for the Notes outstanding as of August 31, 2023.

Therefore, for this period, the Company applied the if-converted method for calculating diluted earnings per common share.

During the nine months ended August 31, 2023, the average daily closing price of the Company's common stock was less than the conversion price for the Notes.

Therefore, for this period, the Notes had no impact on the computation of diluted earnings per common share.

However, because the principal amount of the Notes must be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the Notes.

During the three months ended February 29, 2024, we did

not include the Notes in our diluted earnings per share calculation because the conversion feature in the Notes was out of the money.

Segment Information

7 unchanged sentences

November 2022 Cyber Incident

Following the detection of irregular activity on certain portions of our corporate network, we engaged outside cybersecurity experts and other incident response professionals to conduct a forensic investigation and assess the extent and scope of the cyber incident.

Costs for this cyber incident were primarily related to the engagement of external cybersecurity experts and other incident response professionals.

We did not incur any meaningful costs related to this cyber incident for the three months ended August 31, 2023.

For the nine months ended August 31, 2023, we incurred $ 4.2 million of costs related to this cyber incident.

Costs are provided net of received and expected insurance recoveries of approximately $ 3.0 million, which was recognized during the first quarter of fiscal year 2023.

The timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses.

We do not expect to incur additional costs related to this incident as the investigation is closed.

We incurred expenses of $ 2.7 million related this incident during the three months ended February 28, 2023.

MOVEit Vulnerability

1 unchanged sentence

An investigative team was mobilized and, on May 30, 2023, the investigative team discovered a zero-day vulnerability in MOVEit Transfer (including our cloud-hosted version of MOVEit Transfer known as MOVEit Cloud).

A "zero-day vulnerability" is a vulnerability that has been publicly disclosed (e.g., by an independent researcher or threat actor) before the software vendor has an opportunity to patch it.

The investigative team determined the zero-day vulnerability (the “MOVEit Vulnerability”) could provide for unauthorized escalated privileges and access to the customer’s underlying environment in both MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer that we deploy in both (i) a public cloud format, as well as (ii) for a small group of customers, in customer-dedicated cloud instances that are hosted, separate and apart from the public instances of our MOVEit Cloud platform).

We will continue to assess the potential impact of the MOVEit Vulnerability on our business, operations, and financial results.

MOVEit Transfer and MOVEit Cloud represented less than 4 % in aggregate of our revenue for the nine months ended August 31, 2023.

MOVEit Transfer and MOVEit Cloud represented less than 4 % in aggregate of our revenue for the three months ended February 29, 2024.

Litigation and Governmental Investigations

As of the date of the issuance of the financial statements, (i) we have received formal letters from 23 customers and others that claim to have been impacted by the MOVEit Vulnerability, some of which have indicated that they intend to seek indemnification from us related to the MOVEit Vulnerability, (ii) we have received a letter from an insurer providing for notice of a subrogation claim (where the insurer is seeking recovery for all expenses incurred in connection with the MOVEit Vulnerability), and (iii) we are party to 58 class action lawsuits filed by individuals who claim to have been impacted by the exfiltration of data from the environments of our MOVEit Transfer customers (on October 4, 2023, the Judicial Panel on Multidistrict Litigation issued an order consolidating litigation relating to the MOVEit Vulnerability where we are a party in the United States District Court, District of Massachusetts).

We have also been cooperating with several inquiries from domestic and foreign data privacy regulators, inquiries from several state attorneys general, as well as formal investigations from:

federal law enforcement agency (as of the date of the filing of this report, the law enforcement investigation that we are cooperating with is not an enforcement action or formal

governmental investigation of which we have been told that we are a target), and (ii) the SEC (as further described hereafter).

As of the date of the issuance of the financial statements, (i) we have received formal letters from 35 customers and others that claim to have been impacted by the MOVEit Vulnerability, some of which have indicated that they intend to seek indemnification from us related to the MOVEit Vulnerability, (ii) we have received a letter from an insurer providing for notice of a subrogation claim (where the insurer is seeking recovery for all expenses incurred in connection with the MOVEit Vulnerability), which has resulted in the filing of a lawsuit in the District of Massachusetts, and (iii) we are party to approximately 127 class action lawsuits filed by individuals who claim to have been impacted by the exfiltration of data from the environments of our MOVEit Transfer customers, which the Judicial Panel on Multidistrict Litigation transferred to the District of Massachusetts for coordinated and consolidated proceedings.

We have also been cooperating with;

(i) several inquiries from domestic and foreign data privacy regulators (as further described hereafter);

(ii) several inquiries and two formal investigations from state attorneys general (as further described hereafter);

(iii) a formal investigation from a U.S.

federal law enforcement agency (as of the date of the filing of this report, the law enforcement investigation that we are cooperating with is not an enforcement action or formal governmental investigation of which we have been told that we are a target);

and (iv) a formal investigation from the SEC (as further described hereafter).

On October 2, 2023, Progress received a subpoena from the SEC seeking various documents and information relating to the MOVEit Vulnerability.

As described in the cover letter accompanying the subpoena, at this stage, the SEC investigation is a fact-finding inquiry, the investigation does not mean that Progress or anyone else has violated federal securities laws, and the investigation does not mean that the SEC has a negative opinion of any person, entity, or security.

Progress intends to cooperate fully with the SEC in its investigation.

Progress is cooperating fully with the SEC in its investigation.

On December 21, 2023, Progress received a preservation notice from the Federal Trade Commission (the "FTC"), but has not otherwise received a request for information nor is Progress aware of any formal FTC investigation.

On January 18, 2024, Progress received a subpoena from the Office of the Attorney General for the District of Columbia seeking various documents and information relating to the MOVEit Vulnerability.

At this stage, the investigation is a fact-finding inquiry, and the investigation does not mean that Progress or anyone else has violated applicable laws.

Progress is cooperating fully with the Office of the Attorney General for the District of Columbia in its investigation.

On February 9, 2024, Progress received a subpoena from the Office of the Attorney General for the State of New Jersey seeking various documents and information relating to the MOVEit Vulnerability.

At this stage, the investigation is a fact-finding inquiry, and the investigation does not mean that Progress or anyone else has violated applicable laws.

Progress is cooperating fully with the Office of the Attorney General for the State of New Jersey in its investigation.

On November 3, 2023, the United Kingdom’s Information Commissioner’s Office informed Progress that based upon the information provided, the Commissioner’s Office determined that regulatory action against Progress was not required in relation to the MOVEit Vulnerability.

Additionally, on March 14, 2024, the Office of the Australian Information Commissioner’s Office informed Progress that it has closed its file investigating the MOVEit Vulnerability.

Expenses Incurred and Future Costs

For the three and nine months ended August 31, 2023, we incurred $ 1.0 million of costs related to the MOVEit Vulnerability.

The costs recognized are net of received and expected insurance recoveries of approximately $ 1.9 million, which was recognized during the third quarter of fiscal year 2023.

For the three months ended February 29, 2024, we incurred $ 1.0 million of costs related to the MOVEit Vulnerability.

The costs recognized are net of received and expected insurance recoveries of approximately $ 0.8 million.

The timing of recognizing insurance recoveries may differ from the timing of recognizing the associated expenses.

We expect to incur investigation, legal and professional services expenses associated with the MOVEit Vulnerability in future periods.

We will recognize these expenses as services are received, net of received and expected insurance recoveries.

While a loss from these matters is possible, we cannot reasonably estimate a range of possible losses at this time, particularly while the foregoing matters remain ongoing.

We will recognize these expenses as services are received, net of insurance recoveries.

While a loss from these matters is reasonably possible, we cannot reasonably estimate a range of possible losses at this time, particularly while the foregoing matters remain ongoing.

Furthermore, with respect to the litigation, the proceedings remain in the early stages, alleged damages have not been specified, there is uncertainty as to the likelihood of a class or classes being certified or the ultimate size of any class if certified, and there are significant factual and legal issues to be resolved.

Also, each of the governmental inquiries and investigations mentioned above could result in adverse judgements, settlements, fines, penalties, or other resolutions, the amount, scope and timing of which could be material, but which we are currently unable to predict.

Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of August 31, 2023.

Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of February 29, 2024.

In addition, we may accelerate or make additional investments in our information technology systems, infrastructure, software products or networks following the MOVEit Vulnerability, however, we currently do not expect such amounts to be material to any fiscal period.

Insurance Coverage

During the period when the November 2022 cyber incident and the MOVEit Vulnerability occurred, we maintained $ 15.0 million of cybersecurity insurance coverage, which is expected to reduce our exposure to expenses and liabilities arising from these events.

As of August 31, 2023, we have recorded approximately $ 4.9 million in insurance recoveries, of which $ 3.0 million was related to the November 2022 cyber incident and $ 1.9 million was related to the May 2023 MOVEit Vulnerability, providing us with $ 10.1 million of additional cybersecurity insurance coverage (which is subject to a $ 0.5 million retention per claim).

As of February 29, 2024, we have recorded approximately $ 7.0 million in insurance recoveries, of which $ 2.5 million was related to the November 2022 cyber incident and $ 4.5 million was related to the May 2023 MOVEit Vulnerability, providing us with $ 8.0 million of additional cybersecurity insurance coverage (which is subject to a $ 0.5 million retention per claim).

We will pursue recoveries to the maximum extent available under our insurance policies.

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-Q

Item 1. Financial Statements