What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-01-21 compared with 2024-01-26 · 337 added, 359 removed, 872 unchanged (44% of the section changed)

6 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of November 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 21, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 8 to the financial statements, the Company changed its method of accounting for convertible debt effective December 1, 2021, due to the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , using the modified retrospective adoption method.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Refer to Note 14 to the Financial Statements

Critical Audit Matter Description

The Company derives revenue from multiple sources, including software licenses, maintenance, and services.

Frequently, the customer arrangements provide software licenses combined with maintenance resulting in multiple performance obligations under ASC 606, Revenue from Contracts with Customer .

The Company derives its revenue from multiple sources, including software licenses, maintenance, and services.

Frequently, the customer arrangements provide software licenses combined with maintenance resulting in multiple performance obligations under ASC 606, Revenue from Contracts with Customers .

The identification of distinct performance obligations, particularly for more complex customer arrangements, requires a detailed analysis of the contractual terms and application of more complex accounting guidance.

In addition, the allocation of the arrangement consideration to each performance obligation within an arrangement (license, maintenance, and services) requires the application of management judgment.

In addition, the allocation of the transaction price to each performance obligation within a contract (license, maintenance, and services) requires the application of management judgment.

Revenue arrangements with higher contract values frequently require more complex management judgments.

Given the accounting complexity and the management judgment necessary to identify performance obligations and determine the timing and allocation of revenue in arrangements with multiple performance obligations, auditing revenues required a high degree of auditor judgment and an increased extent of effort.

Given the accounting complexity and the management judgment necessary to identify performance obligations and determine allocation of revenue in a contract with multiple performance obligations, auditing revenues required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recognition of revenue from arrangements with multiple performance obligations included the following, among others:

• We tested the effectiveness of controls over revenue recognition, including those over the identification of distinct performance obligations and the allocation of arrangement consideration.

Our audit procedures related to the recognition of revenue from contracts with multiple performance obligations included the following, among others:

• We tested the effectiveness of controls over revenue recognition, including those over the identification of distinct performance obligations and the allocation of the transaction price.

• We evaluated the Company’s accounting policies in the context of the applicable accounting standards.

• We evaluated the appropriateness and consistency of the methods and assumptions used by management to determine the standalone selling price of distinct performance obligations.

• We selected a sample of revenue arrangements and performed the following procedures:

• We selected a sample of revenue contracts and performed the following procedures:

– We obtained and read the contracts and related contract documentation.

– We evaluated whether management properly identified the contract terms and tested management’s application of the Company’s policies, including the identification of the performance obligations and allocation of the arrangement consideration.

– We tested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements.

MOVEit Vulnerability – Refer to Note 19 to the Financial Statements

Critical Audit Matter Description

In May 2023, the Company identified a zero-day vulnerability in its MOVEit Transfer and MOVEit Cloud software product offerings (the MOVEit Vulnerability).

A number of customers and others have disclosed that they have been impacted by the MOVEit Vulnerability and certain customers have sent formal letters to the Company, some of which have indicated that they intend to seek indemnification from the Company.

Additionally, the Company has received several inquiries from data privacy regulators, state attorneys general, regulatory agencies, and a law enforcement agency seeking various documents and information relating to the MOVEit Vulnerability, which may result in adverse judgments, settlements, fines, penalties and other resolutions if enforcement actions are brought against the Company.

These claims and proceedings are subject to inherent uncertainties and unascertainable damages.

Further, the outcome of these matters may not be known for prolonged periods of time.

Given the uncertainty and inability to develop a reasonable estimate of the potential loss or range of loss incurred related to this matter, the Company has not recognized a loss accrual in respect of the MOVEit Vulnerability.

The Company could incur judgments or enter into settlements regarding the outcome of these claims and proceedings, which could have a material effect on the estimated amount of the liability in the period in which the effect becomes probable and reasonably estimable.

The Company recognizes a liability for loss contingencies for which it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount is reasonably estimable.

There is complexity in applying this accounting framework for the potential losses arising from the MOVEit Vulnerability and in determining whether a loss is probable and estimable.

Performing audit procedures to evaluate the appropriateness of the Company’s application of the accounting framework required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting for the potential losses and related disclosures related to the MOVEit Vulnerability, include the following procedures, among others:

• We tested the effectiveness of controls over the Company’s accounting for the loss contingencies and related disclosures related to the MOVEit Vulnerability.

• With the assistance of professionals in our firm having subject matter expertise in accounting for loss contingencies, we evaluated the Company’s accounting and disclosures related to the MOVEit Vulnerability for compliance with ASC 450, Contingencies.

• We inquired of the Company’s internal and external legal counsel to understand the legal merits and the basis for the Company’s conclusions specific to the likelihood of loss and the inability to estimate a potential loss or range of loss.

• We requested and received written responses from internal and external legal counsel.

• We made inquiries of management and read the letters and pleadings on a sample basis to evaluate and corroborate our understanding obtained through inquiries of internal legal counsel.

• We inspected Board of Directors meeting minutes and performed inquiries with executive management and the audit committee regarding the information discussed and presented to the Board of Directors during the relevant committee meetings.

• We performed public domain searches using relevant and reliable sources for evidence contrary to management’s analysis.

• We evaluated any events subsequent to November 30, 2023 that might impact our evaluation of loss contingencies, including any related accrual or disclosure.

• We obtained written representations from executives of the Company.

• We read the Company’s related disclosures and evaluated the disclosures for consistency with our testing.

– We tested the mathematical accuracy of management’s calculations of revenue recognized in the financial statements.

/s/ Deloitte & Touche LLP

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Cash and cash equivalents $ 118,077 $ 126,958

Accounts receivable (less allowances of $ 851 in 2023 and $ 859 in 2022)

Accounts receivable (less allowances of $ 749 and $ 851 , respectively)

163,575 125,825

14 unchanged sentences

Accounts payable 13,910 12,371

Accrued compensation and related taxes 49,559 42,467

Accrued compensation and related payroll taxes 64,672 49,559

Dividends payable to stockholders — 8,376

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Net income $ 68,438 $ 70,197 $ 95,069

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ( 2,914 ) 5,289 ( 8,468 )

Unrealized (loss) gain on hedging activity, net of tax benefit of $ 698 in 2023, and tax provision of $ 1,797 and $ 940 in 2022 and 2021, respectively

( 2,214 ) 5,688 2,837

Unrealized loss on investments, net of tax benefit of $ 4 and $ 20 in 2022 and 2021, respectively

Unrealized (loss) gain on hedging activity, net of tax benefit of $ 360 and $ 698 in 2024 and 2023, respectively and net of tax provision of $ 1,797 in 2022

( 1,135 ) ( 2,214 ) 5,688

Total other comprehensive income (loss), net of tax 3,075 ( 2,792 ) 335

Unrealized loss on investments, net of tax benefit of $ 4 in 2022

Total other comprehensive (loss) income, net of tax ( 4,049 ) 3,075 ( 2,792 )

Comprehensive income $ 64,389 $ 73,272 $ 92,277

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(in thousands) Number of Shares Amount

Balance, November 30, 2020 44,241 $ 442 $ 305,802 $ 72,547 $ ( 32,778 ) $ 346,013

Balance, December 1, 2021 44,146 $ 441 $ 354,235 $ 90,256 $ ( 32,443 ) $ 412,489

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

Issuance of stock under employee stock purchase plan 301 3 9,201 — — 9,204

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Stock-based compensation — — 37,094 — — 37,094

Equity component of Notes, net of issuance costs and tax — — 47,456 — — 47,456

Purchase of capped calls, net of tax — — ( 32,507 ) — — ( 32,507 )

Dividends declared — — — ( 31,253 ) — ( 31,253 )

1 unchanged sentence

Net income — — — 95,069 — 95,069

Other comprehensive income — — — — 335 335

Other comprehensive loss — — — — ( 2,792 ) ( 2,792 )

Balance, November 30, 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 279 2 10,287 — — 10,289

6 unchanged sentences

Net income — — — 70,197 — 70,197

Other comprehensive loss — — — — ( 2,792 ) ( 2,792 )

Other comprehensive income — — — — 3,075 3,075

Balance, November 30, 2023 43,796 $ 438 $ 370,579 $ 120,858 $ ( 32,160 ) $ 459,715

4 unchanged sentences

Stock-based compensation — — 46,756 — — 46,756

Purchase of capped calls, net of tax — — ( 32,080 ) — — ( 32,080 )

Dividends declared — — — ( 23,844 ) — ( 23,844 )

1 unchanged sentence

Net income — — — 68,438 — 68,438

Other comprehensive income — — — — 3,075 3,075

Other comprehensive loss — — — — ( 4,049 ) ( 4,049 )

Balance, November 30, 2024 43,361 $ 434 $ 354,158 $ 120,405 $ ( 36,209 ) $ 438,788

9 unchanged sentences

Amortization of acquired intangibles and other 96,618 96,802 69,730

Amortization of debt discount and issuance costs on Notes 2,147 2,112 8,195

Amortization of debt discount and issuance costs 3,525 2,147 2,112

Stock-based compensation 46,756 40,529 37,094

Non-cash lease expense 11,723 9,393 7,781

Loss on disposal of long-lived assets, net — — 7

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

22 unchanged sentences

Repurchases of common stock ( 86,777 ) ( 33,962 ) ( 77,041 )

Proceeds from issuance of senior convertible notes, net of issuance costs of $ 9.9 million

Proceeds from issuance of convertible senior notes, net of issuance costs of $ 11,200

Purchase of capped calls ( 42,210 ) — —

3 unchanged sentences

Principal payment on term loan ( 261,250 ) ( 6,875 ) ( 6,873 )

Payment of debt issuance costs — ( 2,262 ) ( 904 )

Payment of credit facility debt issuance costs ( 6,821 ) — ( 2,262 )

Net cash flows from (used in) financing activities 640,823 51,188 ( 101,423 )

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Nature of Business and Summary of Significant Accounting Policies

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.

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.

Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") provides software products that enable our customers to develop, deploy and manage responsible AI-powered applications and digital experiences.

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, which is a software-as-a-service ("SaaS") offering.

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"), distributors and value-added resellers.

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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.

In 2024, we acquired ShareFile, which has a SaaS offering.

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.

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Cash equivalents include short-term, highly liquid investments purchased with remaining maturities of three months or less.

As of November 30, 2023, all of our cash equivalents were invested in money market funds.

As of November 30, 2024 and 2023, all of our cash equivalents were invested in money market funds.

Allowances for Doubtful Accounts and Sales Credit Memos

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This allowance is determined based on an analysis of historical credit memos issued and current economic trends, and is recorded as a reduction of revenue.

A summary of activity in the allowance for doubtful accounts is as follows (in thousands):

November 30, 2023 November 30, 2022 November 30, 2021

A summary of activity in the allowance for doubtful accounts is as follows:

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Beginning balance $ 678 $ 740 $ 552

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• Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets.

Our Level 1 investments

include money market funds.

• Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar

instruments in markets that are not active, and model-based valuation techniques (e.g.

the Black-Scholes model) for which all

significant inputs are observable in the market or can be corroborated by observable market data for substantially the full

term of the assets or liabilities.

Where applicable, these models project future cash flows and discount the future amounts to a

present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and

forward and spot prices for currencies.

Our Level 2 derivative assets and liabilities include certain over-the-counter forward

and swap contracts.

Our Level 1 investments include money market funds.

• Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g.

the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies.

Our Level 2 derivative assets and liabilities include certain over-the-counter forward and swap contracts, In addition, our disclosures related to the fair value of our 2026 Notes and 2030 Notes (together referred to as "the Notes") are Level 2 measurements.

• Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

10 unchanged sentences

We entered into an interest rate swap contract in July 2019 to manage the variability of cash flows associated with approximately one-half of our variable rate debt.

We have designated the interes t rate swap as a cash flow hedge and we assessed the hedge's 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 consolidated balance sheets.

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.

The interest rate swap, which matured on April 30, 2024, was designated as a cash flow hedge and the effectiveness of the hedge was assessed both at the onset of the hedge and at regular intervals throughout the life of the derivative.

As the interest rate swap was highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative were included as a component of accumulated other comprehensive loss on our consolidated balance sheets until the debt was retired and the swap matured.

Forward Contracts

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We periodically monitor our foreign currency exposures to enhance the overall economic effectiveness of our foreign currency hedge positions.

Principal currencies hedged include the euro, British pound, Brazilian real, Indian rupee, and Australian dollar.

Principal currencies hedged include the euro, British pound, and Indian rupee.

We do not enter into derivative instruments for speculative purposes, nor do we hold or issue any derivative instruments for trading purposes.

2 unchanged sentences

The gains or losses from changes in the fair value of such derivative instruments that are not accounted for as hedges are recognized in earnings in foreign currency loss, net in the consolidated statements of operations.

In fiscal year 2023, we recognized realized and unrealized gains of $ 2.3 million from our forward contracts.

In fiscal year 2024, we recognized realized and unrealized losses of $ 1.5 million from our forward contracts.

Property and Equipment

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All of our intangible assets are amortized using the straight-line method over their estimated useful life.

Refer to Note 7:

Business Combinations for further information.

We periodically review long-lived assets (primarily property and equipment) and intangible assets with finite lives for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate.

We review long-lived assets (primarily property and equipment) and intangible assets with finite lives for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate.

We base each impairment test on a comparison of the undiscounted cash flows to the carrying value of the asset or asset group.

If impairment is indicated, we write down the asset to its estimated fair value.

We did no t recognize any intangible asset impairment charges in the years presented.

We did no t recognize any asset impairment charges in the years presented.

Comprehensive (Loss) Income

The components of comprehensive loss include, in addition to net income, foreign currency translation adjustments and unrealized gains and losses on investments and hedging activity.

Accumulated other comprehensive loss by components, net of tax (in thousands):

Foreign Currency Translation Adjustment Unrealized Losses on Investments Unrealized (Losses) Gains on Hedging Activity Total

Balance, December 1, 2021 $ ( 30,055 ) $ ( 49 ) $ ( 2,339 ) $ ( 32,443 )

Other comprehensive (loss) income ( 8,468 ) ( 12 ) 5,688 ( 2,792 )

Accumulated other comprehensive loss by components, net of tax:

(in thousands) Foreign Currency Translation Adjustment Unrealized Losses on Investments Unrealized Gains (Losses) on Hedging Activity Total

Balance, December 1, 2022 $ ( 38,523 ) $ ( 61 ) $ 3,349 $ ( 35,235 )

Other comprehensive income (loss) 5,289 — ( 2,214 ) 3,075

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

Other comprehensive loss ( 2,914 ) — ( 689 ) ( 3,603 )

Amounts reclassified from accumulated other comprehensive loss into net income, net of tax ( 61 ) 61 ( 446 ) ( 446 )

Balance, November 30, 2024 $ ( 36,209 ) $ — $ — $ ( 36,209 )

The tax effect on accumulated unrealized (losses) gains on hedging activity and unrealized losses on investments was a tax provision of $ 0.4 million and $ 1.1 million as of November 30, 2023 and November 30, 2022, respectively, and a tax benefit of $ 0.7 million as of November 30, 2021.

The tax effect on accumulated unrealized gains on hedging activity was a deferred tax liability of $ 0.4 million and $ 1.1 million as of November 30, 2023 and 2022, respectively.

Revenue Recognition

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Software Licenses

Software licenses are on-premise or cloud-based and fully functional when made available to the customer.

Software licenses are on-premise and fully functional when made available to the customer.

As the customer can use and benefit from the license on its own, on-premise software licenses represent distinct performance obligations.

1 unchanged sentence

Our licenses are sold as perpetual or term licenses, and the arrangements typically contain various combinations of maintenance and services, which are generally accounted for as separate performance obligations.

We use the residual approach to allocate the transaction price to our software license performance obligations because, due to the pricing of our licenses being highly variable, they do not have an observable stand-alone selling price ("SSP").

We generally use the residual approach to allocate the transaction price to our software license performance obligations because, due to the pricing of our licenses being highly variable, we do not have an observable stand-alone selling price ("SSP") for licenses.

As required, we evaluate the residual approach estimate compared to all available observable data in order to conclude the estimate is representative of its SSP.

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Services are either sold on a time and materials basis or prepaid upfront.

We also offer products via a software-as-a-service ("SaaS") model, which is a subscription-based model.

We also offer products via a SaaS model, which is a subscription-based model.

Our customers can use hosted software over the contract period without taking possession of it and the cloud services are available to them throughout the entire term, even if they do not use the service.

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We incurred $ 17.1 million, $ 4.7 million, and $ 4.6 million of acquisition-related costs, which are included in acquisition-related expenses in our consolidated statement of operations, for the fiscal years ended November 30, 2024, 2023, and 2022, respectively.

Restructuring Charges

Our restructuring charges are comprised primarily of costs related to property abandonment, including future lease commitments, net of any sublease income, and associated leasehold improvements;

and employee termination costs related to headcount reductions.

We recognize and measure restructuring liabilities initially at fair value when the liability is incurred.

We incurred $ 8.4 million, $ 0.9

million, and $ 6.3 million of restructuring related costs, which are included in restructuring expenses in our consolidated statement of operations, for the fiscal years ended November 30, 2023, 2022, and 2021, respectively.

Restructuring Expenses

We record restructuring expense when management commits to and approves a restructuring plan, the restructuring plan identifies all significant actions, the period of time to complete the restructuring plan indicates that significant changes to the restructuring plan are not likely to occur, and employees who are impacted have been notified of the pending involuntary termination.

Restructuring expense is comprised primarily of costs related to employee-related severance and benefits and property abandonment, including future lease commitments, net of any sublease income, and associated leasehold improvements.

We provide for deferred income taxes resulting from temporary differences between financial and taxable income.

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Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (“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

Segment Reporting

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

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No.

2023-07, Segment Reporting (Topic 280):

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The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.

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 2024, the FASB issued Accounting Standards Update No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) :

Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued Accounting Standards Update No.

2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date ("ASU 2025-01").

ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement.

ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis.

Both early adoption and retrospective application are permitted.

The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.

Cash and Cash Equivalents

A summary of our cash and cash equivalents at November 30, 2023 is as follows (in thousands):

Amortized Cost Basis Unrealized

A summary of our cash and cash equivalents at November 30, 2024 is as follows:

(in thousands) Amortized Cost Basis Unrealized

Gains Unrealized

1 unchanged sentence

Cash $ 116,254 $ — $ — $ 116,254

A summary of our cash and cash equivalents at November 30, 2022 is as follows (in thousands):

Amortized Cost Basis Unrealized

Money market funds 1,823 — — 1,823

Total $ 118,077 $ — $ — $ 118,077

A summary of our cash and cash equivalents at November 30, 2023 is as follows:

(in thousands) Amortized Cost Basis Unrealized

Gains Unrealized

1 unchanged sentence

Cash $ 126,958 $ — $ — $ 126,958

Money market funds 27,254 — — 27,254

Total $ 256,277 $ — $ — $ 256,277

Derivative Instruments

Cash Flow Hedge

On July 9, 2019, we entered into an interest rate swap contract with an initial notional amount of $ 150.0 million to manage the variability of cash flows associated with approximately one-half of our variable rate debt.

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

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 assessed the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative.

As of November 30, 2023 and 2022 , the fair value of the hedge was a gain of $ 1.5 million and $ 4.4 million, respectively, and was included in other assets on our consolidated balance sheets.

The net amount of accumulated other comprehensive loss was reclassified to interest expense during fiscal years 2023, 2022, and 2021 and resulted in income of $ 3.6 million, and expense of $ 0.7 million, and $ 2.5 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):

Our interest rate swap contract with an initial notional amount of $ 150.0 million matured on April 30, 2024.

We entered into the contract to manage the variability of cash flows associated with approximately one-half of our variable rate debt.

The contract required periodic interest rate settlements, and we received a floating rate based on the greater of 1-month SOFR or 0.00 % and paid a fixed rate of 1.855 % on the outstanding notional amount.

The interest rate swap was designated as a cash flow hedge and the effectiveness of the hedge was assessed both at the onset of the hedge and at regular intervals throughout the life of the derivative.

As the interest rate swap was highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative were included as a component of other comprehensive loss on our condensed consolidated balance sheets through the first quarter of fiscal year 2024.

On March 1, 2024, we repaid our variable rate debt in full and concurrently reclassified an unrealized gain of $ 0.6 million from accumulated other comprehensive loss to interest expense in our condensed consolidated statements of operations upon the maturity of the interest rate swap.

As of November 30, 2023, the fair value of the hedge was a gain of $ 1.5 million, and was included in other assets on our consolidated balance sheets.

The net amount of accumulated other comprehensive loss reclassified to interest expense during fiscal years 2024, 2023, and 2022 resulted in income of $ 1.5 million and $ 3.6 million, and expense of $ 0.7 million, respectively.

The fair value of the derivative represented 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:

November 30, 2024 November 30, 2023

Notional Value Fair Value Notional Value Fair Value

(in thousands) Notional Value Fair Value Notional Value Fair Value

Interest rate swap contracts designated as cash flow hedges $ — $ — $ 103,125 $ 1,495

3 unchanged sentences

All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and expire between 30 days and 3 years from the date the contract was entered.

At November 30, 2024, $ 0.2 million and $ 0.8 million was recorded in other current assets and other noncurrent liabilities on the consolidated balance sheets, respectively.

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

In fiscal year 2023, realized and unrealized gains of $ 2.3 million from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations.

In fiscal year 2022 and 2021, realized and unrealized losses of $ 7.7 million and $ 2.1 million, respectively, from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations.

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

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

In fiscal years 2024, 2023 and 2022, net realized and unrealized losses of $ 1.5 million, gains of $ 2.3 million and losses of $ 7.7 million respectively, from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations.

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

November 30, 2024 November 30, 2023

Notional Value Fair Value Notional Value Fair Value

(in thousands) Notional Value Fair Value Notional Value Fair Value

Forward contracts to sell U.S.

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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 November 30, 2023 (in thousands):

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2024:

Fair Value Measurements Using

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

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

Money market funds $ 1,823 $ 1,823 $ — $ —

Foreign exchange derivatives $ ( 624 ) $ — $ ( 624 ) $ —

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2022 (in thousands):

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2023:

Fair Value Measurements Using

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

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

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

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Fair Value of the Convertible Senior Notes

The fair value of our Convertible Senior Notes, with a carrying value of $ 354.8 million and $ 352.6 million, was $ 377.1 million and $ 376.0 million as of November 30, 2023 and November 30, 2022, 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 1 in the fair value hierarchy.

The following table details the fair value and carrying value of the Notes:

November 30, 2024 November 30, 2023

(in thousands) Carrying Value Fair Value Carrying Value Fair Value

Convertible senior notes due 2026 (1)

$ 356,946 $ 449,094 $ 354,772 $ 377,125

Convertible senior notes due 2030 (2)

439,321 550,827 — —

Total $ 796,267 $ 999,921 $ 354,772 $ 377,125

(1) The carrying value of the 2026 Notes are reflected net of $ 3.1 million and $ 5.2 million of unamortized debt issuance costs as of November 30, 2024 and November 30, 2023, respectively.

(2) The carrying value of the 2030 Notes are reflected net of $ 10.7 million of unamortized debt issuance costs as of November 30, 2024.

The fair value of the Notes is based on the quoted prices 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 Financial Assets and Liabilities

The carrying amounts of other financial assets and liabilities including cash, accounts receivable, unbilled accounts receivable, accounts payable, and accrued liabilities approximate their respective fair values because of the relatively short period of time between their origination and their expected realization or settlement.

The carrying amounts of other financial assets and liabilities including cash and cash equivalents, accounts receivable, unbilled accounts receivable, accounts payable, and accrued liabilities approximate their respective fair values due to their immediate or short-term maturities.

Property and Equipment

Property and equipment consists of the following (in thousands):

November 30, 2023 November 30, 2022

Property and equipment consists of the following:

(in thousands) November 30, 2024 November 30, 2023

Computer equipment and software $ 45,451 $ 46,405

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Intangible Assets

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

Intangible assets are comprised of the following significant classes:

November 30, 2024 November 30, 2023

(in thousands) Gross

Amount Accumulated

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Trademarks and trade names 77,111 ( 37,500 ) 39,611 50,111 ( 32,034 ) 18,077

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

Total $ 1,253,719 $ ( 530,148 ) $ 723,571 $ 788,719 $ ( 434,441 ) $ 354,278

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Amortization expense related to these intangible assets was $ 94.5 million, $ 96.6 million, and $ 68.9 million in fiscal years 2024, 2023, and 2022, respectively.

Future amortization expense for intangible assets as of November 30, 2023 is as follows (in thousands):

Future amortization expense for intangible assets as of November 30, 2024 is as follows:

(in thousands)

2025 $ 145,188

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Total $ 723,571

Changes in the carrying amount of goodwill for fiscal years 2023 and 2022 are as follows (in thousands):

November 30, 2023 November 30, 2022

Changes in the carrying amount of goodwill for fiscal years 2024 and 2023 are as follows:

(in thousands) November 30, 2024 November 30, 2023

Balance, beginning of year $ 832,101 $ 671,037

Additions (1)

459,459 161,070

Measurement period adjustments (2)

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Balance, end of year $ 1,292,177 $ 832,101

(1) The addition to goodwill during fiscal year 2023 is related to the acquisition of MarkLogic.

(1) The additions to goodwill during fiscal years 2024 and 2023 are related to the acquisition of ShareFile and MarkLogic, respectively.

Refer to Note 7:

Business Combinations for further information.

(2) Represents final measurement period adjustments related to Kemp during fiscal year 2022.

(2) Represents final measurement period adjustments related to MarkLogic during fiscal year 2024.

Refer to Note 7:

Business Combinations for further information.

During fiscal year 2023, we performed a quantitative assessment as of October 31, 2023 and concluded that there was no impairment since it was not more likely than not that the fair value of our reporting unit was less than its carrying value.

During fiscal year 2024, we performed a quantitative assessment as of October 31, 2024 and concluded that there was no impairment.

We did no t recognize any goodwill impairment charges during the years presented.

Business Combinations

MarkLogic Acquisition

On February 7, 2023, we completed the acquisition of the parent company of MarkLogic Corporation ("MarkLogic"), pursuant to the Stock Purchase Agreement (the "Purchase Agreement"), dated as of January 3, 2023.

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

We funded the acquisition through a combination of existing cash resources and by drawing down $ 195.0 million from our then-existing revolving credit facility.

ShareFile Acquisition

On October 31, 2024, we completed the acquisition of ShareFile from Cloud for an aggregate purchase price of $ 875.0 million in cash, subject to a $ 25.0 million working capital credit and certain customary adjustments.

We funded the acquisition through $ 730.0 million in borrowings under our existing $ 900.0 million revolving credit facility and cash on hand.

Refer to Note 8:

Debt for further information.

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

Preliminary Purchase Price Allocation Life

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

The preliminary allocation of the purchase price is as follows:

(in thousands) Preliminary Purchase Price Allocation Life

Net working capital $ 892

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Customer relationships 319,000 7 years

Other assets, including long-term unbilled receivables 4,789

Deferred taxes 23,456

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

We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $ 161.1 million of goodwill, which is not deductible for tax purposes.

We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $ 459.5 million of goodwill, of which a portion is deductible for tax purposes.

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 fiscal year ended November 30, 2024, we incurred approximately $ 15.6 million 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 fiscal year ended November 30, 2023, was approximately $ 72.5 million.

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 ShareFile included in our consolidated statement of operations during the fiscal year ended November 30, 2024, was approximately $ 21.1 million.

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

In connection and concurrent with the ShareFile acquisition, we entered into a Transition Services Agreement ("TSA") with Cloud for a period of six months from the date of acquisition, with the option to extend the TSA beyond this period for certain services.

Expenses related to the TSA are not expected to be significant.

Pro Forma Information

The following pro forma financial information presents the combined results of operations of Progress and MarkLogic as if the acquisition had occurred on December 1, 2021, after giving effect to certain pro forma adjustments.

The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the MarkLogic acquisition and factually supportable.

The following pro forma financial information presents the combined results of operations of Progress and ShareFile as if the acquisition had occurred on December 1, 2022, after giving effect to certain pro forma adjustments.

The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the ShareFile acquisition and factually supportable.

These pro forma adjustments include:

(i) a net increase in amortization expense to record amortization expense relating to the $ 232.1 million of acquired identifiable intangible assets, (ii) an increase in interest expense to record interest for the period presented as a result of drawing down our revolving line of credit in connection with the acquisition, and (iii) the income tax effect of the adjustments made at the statutory tax rate of the U.S.

(i) a net increase in amortization expense to record amortization expense relating to the $ 465.0 million of acquired identifiable intangible assets, (ii) an increase in interest expense to record interest for the periods presented as a result of drawing down our revolving line of credit in connection with the acquisition, (iii) an increase in acquisition-related expenses in connection with the acquisition that were not included in the purchase price, (iv) additional expense related to the TSA entered into between Progress and Cloud, and (v) the income tax effect of the adjustments made at the statutory tax rate of the U.S.

(approximately 24.0%).

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Net income per diluted share $ 0.80 $ 0.06

Kemp Acquisition

On November 1, 2021, we completed the acquisition of the parent company of Kemp Technologies, Inc.

MarkLogic Acquisition

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

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

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

We recorded measurement period adjustments based on our valuation and purchase price allocation procedures.

The measurement period adjustments were completed during the fourth quarter of fiscal year 2022.

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

Final Purchase Price Allocation Life

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 first fiscal quarter of 2024, the measurement period adjustments were completed, which resulted in a $ 0.7 million increase in goodwill primarily related to net working capital adjustments, as compared to the amounts previously reported.

The purchase price allocation is now complete.

The allocation of the purchase price is as follows:

(in thousands) Purchase Price Allocation Life

Net working capital $ 46,335

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Customer relationships 152,300 7 years

Other assets 197

Other noncurrent liabilities ( 1,404 )

Other assets, including long-term unbilled receivables 4,477

Deferred taxes ( 24,478 )

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

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

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.

2 unchanged sentences

Pro Forma Information

The following pro forma financial information presents the combined results of operations of Progress and Kemp as if the acquisition had occurred on December 1, 2019, after giving effect to certain pro forma adjustments.

The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Kemp acquisition and factually supportable.

The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the MarkLogic acquisition and factually supportable.

These pro forma adjustments include:

(i) an increase in revenue from Kemp as a result of the application of Topic 606 to recognize and measure contract assets and contract liabilities in the business combination, (ii) a net increase in amortization expense to record amortization expense relating to the $ 122.1 million of acquired identifiable intangible assets, (iii) a decrease in interest expense to remove the interest expense associated with Kemp’s debt obligations, and (iv) the income tax effect of the adjustments made at the statutory tax rate of the U.S.

(approximately 24.5%).

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.

These results are prepared in accordance with ASC 606.

(In thousands, except per share data) Pro Forma Fiscal Year Ended November 30, 2021

(in thousands, except per share data) Pro Forma Fiscal Year Ended November 30, 2023 Pro Forma Fiscal Year Ended November 30, 2022

Revenue $ 733,289 $ 712,170

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Net income per diluted share $ 1.78 $ 1.74

As of November 30, 2023, future maturities of the Company's long-term debt were as follows:

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

2024 $ — $ — $ 13,750 $ 13,750

2025 — — 20,625 20,625

2026 360,000 — 20,625 380,625

2027 — 110,000 206,250 316,250

Total face value of long-term debt 360,000 110,000 261,250 731,250

Unamortized discount and issuance costs ( 5,228 ) — ( 2,030 ) ( 7,258 )

Less current portion of long-term debt, net — — ( 13,109 ) ( 13,109 )

Long-term debt $ 354,772 $ 110,000 $ 246,111 $ 710,883

During February 2023, we partially funded our acquisition of MarkLogic by drawing down $ 195.0 million under the revolving line of credit.

As of November 30, 2023, there was $ 110.0 million outstanding under the revolving line of credit.

In March of 2024, the Company refinanced its debt by issuing the 2030 Notes 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 as described below.

Notes Payable

2030 Convertible Senior Notes

In April 2021, the Company issued, in a private placement, Convertible Senior Notes (the "Notes") with an aggregate principal amount of $ 360 million, due April 15, 2026, unless earlier repurchased, redeemed or converted.

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, unless earlier repurchased, redeemed or converted.

The proceeds from the 2030 Notes were used in part to enter into the 2024 Capped Call Transactions, described below, for working capital, and for 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 Notes.

The 2030 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 $ 12.0 million in issuance costs for the issuance of the 2030 Notes.

Conversion Rights

Before November 1, 2029, Noteholders may convert their 2030 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 2030 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 2030 Notes for redemption, then the Noteholder of any Note may convert such Note.

From and after November 1, 2029, Noteholders may convert their 2030 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 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 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 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 twenty trading days (whether or not consecutive) during any thirty 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 Notes unless at least $ 100.0 million aggregate principal amount of 2030 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 (e.g., 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) occur at any time, holders may, subject to certain exceptions, require the Company to purchase their 2030 Notes in whole or in part for cash at a price equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date.

2024 Capped Call Transactions

On February 27, 2024, in connection with the pricing of the 2030 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 of the Company’s common stock, which represent the number of shares of common stock initially underlying the 2030 Notes.

The 2024 Capped Call Transactions are generally expected to reduce potential dilution to our common stock upon any conversion of the 2030 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 was initially $ 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.

Accounting for the 2030 Notes

The 2030 Notes are classified as a non-current liability on our condensed consolidated balance sheets and the conversion option does not require bifurcation as an embedded derivative.

Issuance costs of $ 12.0 million were recorded as a reduction to the principal balance of the 2030 Notes and will be amortized as interest expense using the effective interest method over the contractual term.

Fiscal Year Ended

(in thousands) November 30, 2024

Contractual interest expense ( 3.5 % coupon)

Amortization of debt discount and issuance costs (1)

(1) Amortization based upon an effective interest rate of 4.0 % .

2026 Convertible Senior Notes

In April 2021, the Company issued, in a private placement, convertible senior notes with an aggregate principal amount of $ 360 million, due April 15, 2026, unless earlier repurchased, redeemed or converted.

There are no required principal payments prior to the maturity of the 2026 Notes.

The 2026 Notes bear interest at an annual rate of 1 %, payable semi-annually in arrears on April 15 and October 15 of each year.

The Company incurred approximately $ 10.8 million in issuance costs for the issuance of the Convertible Notes.

The Company incurred approximately $ 10.8 million in issuance costs for the issuance of the 2026 Notes.

Conversion Rights

13 unchanged sentences

The 2021 Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Notes, approximately 6.3 million shares (representing the number of shares of common stock initially underlying the 2026 Notes) of the Company’s common stock.

The Capped Call Transactions are generally expected to reduce potential dilution to our common stock upon any conversion of 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 2021 Capped Call Transactions are generally expected to reduce potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2026 Notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the 2021 Capped Call Transactions will initially be $ 89.88 per share of common stock, which represents a premium of 100 % over the last reported sale price of the common stock of $ 44.94 per share on April 8, 2021, and is subject to certain adjustments under the terms of the 2021 Capped Call Transactions.

The cost of the purchased capped calls of $ 43.1 million was recorded as a reduction to additional paid-in-capital.

The cost of the purchased capped calls of $ 43.1 million was recorded as a reduction to additional paid-in-capital upon settlement in April 2021.

We elected to integrate the 2021 capped call options with the applicable 2026 Notes for federal income tax purposes pursuant to applicable U.S.

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Further, the standard requires the use of the if converted method to calculate diluted earnings per share.

Refer to Note 17:

Earnings Per Share for further discussion about the impact of the adoption of ASU 2020-06 on diluted earnings per share upon adoption and as of the fiscal year ended November 30, 2023.

Fiscal Year Ended

8 unchanged sentences

Credit Facility

On January 25, 2022, the Company entered into the Credit Agreement, which provides for a $ 275.0 million secured term loan and a $ 300.0 million secured revolving line of credit.

The revolving line of credit 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.

Interest rates for the Credit Agreement are determined by reference to a term benchmark rate or a base rate at our option and would range from 1.00 % to 2.00 % above the term benchmark rate or would range from 0.00 % to 1.00 % above the defined base rate for base rate borrowings, in each case based upon our 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 leverage ratio.

We will incur a quarterly commitment fee on the undrawn portion of the revolving credit facility, ranging from 0.125 % to 0.275 % per annum, based on our leverage ratio.

The average interest rate of the credit facility during the fiscal year ended November 30, 2023 was 6.68 %, and the interest rate as of November 30, 2023 was 7.20 %.

The credit facility matures on the earlier of (i) January 25, 2027, and (ii) the date that is 181 days prior to the maturity date of our Notes subject to certain conditions as set forth in the Credit Agreement, including the repayment of the Notes, the refinancing of the Notes including a maturity date that is at least 181 days after January 25, 2027 and compliance with a liquidity test when all amounts outstanding will be due and payable in full.

The revolving line of credit does not require amortization of principal.

The term loan requires repayment of principal at the end of each fiscal quarter, beginning with the fiscal quarter ended February 28, 2022.

The principal repayment amounts are in accordance with the following schedule:

(i) eight payments of $ 1.7 million each, (ii) four payments of $ 3.4 million each, (iii) eight payments of $ 5.2 million each, and (iv) the last payment is of the remaining principal amount.

Any amounts outstanding under the term loan thereafter would be due on the maturity date.

The term loan may be prepaid before maturity in whole or in part at our option without penalty or premium.

Costs incurred to obtain our long-term debt of $ 3.2 million, including $ 1.1 million of unamortized debt issuance costs related to the previous credit agreement, are recorded as debt issuance costs as a direct deduction from the carrying value of the long-term debt liability on our consolidated balance sheets as of November 30, 2023.

These costs are being amortized over the term of the Credit Agreement using the effective interest rate method.

Amortization expense related to the debt issuance costs was $ 0.6 million for the fiscal years ended November 30, 2023, 2022 and 2021 and is recorded in interest expense on our consolidated statements of operations.

Revolving loans may be borrowed, repaid, and reborrowed until January 25, 2027, at which time all amounts outstanding must be repaid.

As of November 30, 2023, there was $ 110.0 million outstanding amounts under the revolving line of credit and $ 2.5 million of letters of credit.

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 such material domestic subsidiaries, as well as 100 % of the capital stock of our domestic subsidiaries and 65 % of the capital stock of our first-tier foreign subsidiaries, in each case, subject to certain exceptions as described in the Credit Agreement.

Future material domestic subsidiaries will be required to guaranty our obligations under the Credit Agreement, and to grant security interests in substantially all of their assets to secure such obligations.

The Credit Agreement generally prohibits, with certain exceptions, any other liens on our assets and the assets of our subsidiaries, subject to certain exceptions as described in the Credit Agreement.

On March 7, 2024, the Company entered into 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.

The 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.

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 average interest rate of the revolving credit facility during the fiscal year ended November 30, 2024 was 6.80 %, and the interest rate as of November 30, 2024 was 6.67 %.

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.

During October 2024, we partially funded our acquisition of ShareFile by drawing down $ 730.0 million under the revolving line of credit.

As of November 30, 2024, there was $ 730.0 million outstanding under the revolving credit facility and $ 2.6 million of letters of credit.

Costs incurred to obtain our long-term debt of $ 6.0 million, along with $ 1.0 million of unamortized debt issuance costs related to the previous credit agreement, were recorded as debt issuance costs and will be amortized over the term of the debt agreement using the effective interest method.

Unamortized debt issuance costs related to the repaid term loan were expensed.

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.

The Company has operating leases for facilities, vehicles, and equipment under various non-cancelable lease agreements.

6 unchanged sentences

The Company makes variable payments on certain of its leases related to taxes, insurance, common area maintenance, and utilities, among other things.

We sublease certain facilities to third parties, which have remaining lease terms of up to three years .

The components of net operating lease cost for the years ended November 30, 2023, 2022 and 2021 were as follows (in thousands):

We sublease certain facilities to third parties, which have remaining lease terms of up to two years .

The components of net operating lease cost for the years ended November 30, 2024, 2023 and 2022 were as follows:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Lease costs under long-term operating leases $ 8,463 $ 8,935 $ 7,079

5 unchanged sentences

(1) Lease costs that are not fixed at lease commencement.

The table below presents supplemental cash flow information related to leases during the years ended November 30, 2023, 2022 and 2021 (in thousands):

The table below presents supplemental cash flow information related to leases during the years ended November 30, 2024, 2023 and 2022:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Cash paid for leases $ 11,556 $ 10,472 $ 8,571

4 unchanged sentences

Weighted average discount rate 5.8 % 4.6 %

Future payments under non-cancellable leases at November 30, 2023 are as follows (in thousands):

Future payments under non-cancelable leases at November 30, 2024 are as follows:

(in thousands)

2025 $ 11,140

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Accordingly, the estimated fair value of these indemnification provisions is immaterial.

Purchase Obligations

In connection with our acquisition of ShareFile, we assumed an existing agreement for cloud-based hosting services through May 2029 with a third-party provider that was entered into by Cloud in the ordinary course of business.

The agreement requires a purchase obligation of $ 130.0 million throughout the term of the agreement.

As of November 30, 2024, we had $ 114.2 million of remaining obligations under this agreement.

For the twelve months ended November 30, 2024, the total expense related to this purchase obligation was $ 2.5 million and is recorded in cost of maintenance and services.

Legal Proceedings

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Each DSU represents one share of our common stock and all DSU grants have been made to non-employee members of our Board of Directors.

DSUs do not have voting rights and can only be converted into common stock when the recipient ceases to be a member of the Board of Directors or a change in control of the Company occurs.

DSUs do not have voting rights and

can only be converted into common stock when the recipient ceases to be a member of the Board of Directors or a change in control of the Company occurs.

Common Stock Repurchases

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A total of 6,048,610 shares were available for issuance as of November 30, 2024.

We have previously adopted two stock plans for which the approval of stockholders was not required:

We had previously adopted two stock plans for which the approval of stockholders is not required:

the 2002 Nonqualified Stock Plan ("2002 Plan") and the 2004 Inducement Stock Plan ("2004 Plan").

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Awards under the 2002 Plan may include nonqualified stock options, grants of conditioned or restricted stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals and stock appreciation rights.

of 93,064 shares were available for issuance under the 2002 Plan as of November 30, 2023.

Additional shares cannot be added to the 2002 Plan without stockholder approval.

The 2004 Plan is reserved for persons to whom we may issue securities as an inducement to become employed by us pursuant to the rules and regulations of the NASDAQ Stock Market.

Awards under the 2004 Plan may include nonqualified stock options, grants of conditioned or restricted stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals and stock appreciation rights.

A total of 102,482 shares were available for issuance under the 2002 Plan as of November 30, 2024.

Additional shares cannot be added to the 2002 Plan without stockholder approval.

During the fiscal year ended November 30, 2024, we terminated the 2004 Plan.

Under all of our plans, the awards granted generally begin to vest within one year of the grant.

A summary of stock option activity under all the plans is as follows:

Shares Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Value

(in thousands) Exercise Price (in years) (in thousands)

(in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term

(in years) Aggregate Intrinsic Value

(in thousands)

Options outstanding, December 1, 2023 2,052 $ 44.09

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Vested or expected to vest, November 30, 2024 1,826 $ 45.89 3.8 $ 40,435

A summary of restricted stock units' activity is as follows (in thousands, except per share data):

Number of Shares Weighted Average Fair Value

A summary of restricted stock units' activity is as follows:

(in thousands, except per share data) Number of Shares Weighted Average Fair Value

Restricted stock units outstanding, December 1, 2023 1,307 $ 49.27

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The fair value of stock awards, restricted stock units and DSUs is equal to the closing price of our common stock on the date of grant, less the present value of expected dividends when applicable.

Restricted stock units have forfeitable dividend equivalent rights equal to the dividend paid on our common stock.

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

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The expected annual dividend yield is based on the weighted-average of the dividend yield assumptions used for options granted during the applicable period.

For each ESPP award, the expected life in years is based on the period of time between the beginning of the offering period and the date of purchase, plus an additional holding period of three months .

For each ESPP award, the

expected life in years is based on the period of time between the beginning of the offering period and the date of purchase, plus an additional holding period of three months .

Based on the above assumptions, the weighted average estimated fair value of stock options granted in fiscal years 2024, 2023, and 2022 was $ 15.79 , $ 14.40 , and $ 10.95 per share, respectively.

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These costs are expected to be recognized over a weighted average period of two years .

The following additional activity occurred under our plans (in thousands):

The following additional activity occurred under our plans:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Total intrinsic value of stock options on date exercised $ 7,471 $ 12,171 $ 1,717

1 unchanged sentence

Total fair value of restricted stock units on date vested $ 47,145 $ 33,402 $ 25,597

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

The following table provides the classification of stock-based compensation as reflected in our consolidated statements of operations:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Cost of maintenance and services $ 3,540 $ 2,976 $ 1,969

10 unchanged sentences

Timing of Revenue Recognition

Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, and consulting and education.

Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, SaaS and consulting and education.

Information relating to revenue from external customers by revenue type is as follows:

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Our multi-year term license arrangements, which are typically billed annually, result in revenue recognition in advance of billing and the recognition of unbilled receivables.

As of November 30, 2023, billing of our long-term unbilled receivables is expected to occur as follows (in thousands):

As of November 30, 2024, billing of our long-term unbilled receivables is expected to occur as follows:

(in thousands)

2026 $ 24,708

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Contract assets arise when revenue is recognized in excess of billings and the right to the amount due from customers is conditioned on something other than the passage of time, such as the completion of a related performance obligation.

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 November 30, 2023 or November 30, 2022.

These amounts are included in unbilled receivables and contract assets, net or long-term unbilled receivables and contract assets, net on our consolidated balance sheets.

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

Deferred Revenue

Deferred revenue is recorded when revenue is recognized subsequent to customer invoicing.

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

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.

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

As of November 30, 2023, the changes in net deferred revenue were as follows (in thousands):

Our net deferred revenue balance is primarily made up of deferred maintenance and deferred revenue related to our SaaS offerings.

As of November 30, 2024, the changes in net deferred revenue were as follows:

(in thousands)

Balance, December 1, 2022 $ 282,440

Billings and other 673,919

Acquired from business combinations 33,116

Revenue recognized ( 694,439 )

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Acquired from business combinations 96,159

Revenue recognized ( 694,439 )

Revenue recognized that was deferred in prior periods ( 270,965 )

Revenue recognized from current period arrangements ( 482,444 )

Balance, November 30, 2024 $ 404,412

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Restructuring

The following table provides a summary of activity for all of the restructuring actions, with material actions detailed further below (in thousands):

Excess Facilities and Other Costs Employee Severance and Related Benefits Total

The following table provides a summary of activity for all of the restructuring actions, with material actions detailed further below:

(in thousands) Excess Facilities and Other Costs Employee Severance and Related Benefits Total

Balance, December 1, 2021 $ 4,483 $ 1,889 $ 6,372

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2024 Restructurings

During the fourth quarter of fiscal year 2023, we restructured our operations to realign our business and strategic priorities.

In connection with this restructuring, we reduced our global workforce by 2 %.

These workforce reductions occurred within all functions and across most geographies in which we operate.

Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation).

For the fiscal year ended November 30, 2023, we incurred expenses of $ 1.7 million, which are recorded as restructuring expenses in the consolidated statements of operations.

During the fourth quarter of fiscal year 2024, we restructured our operations in connection with the acquisition of ShareFile and to streamline our organization to better align with our strategy.

This restructuring resulted in a reduction in redundant positions and occurred within all functions and across most geographies in which we operate.

Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services.

For the fiscal year ended November 30, 2024, we incurred expenses of $ 5.7 million.

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through the fourth quarter of fiscal year 2025.

The restructuring reserve is included in other accrued liabilities on the consolidated balance sheets as of November 30, 2023.

We do not expect to incur additional material expenses in connection with this restructuring.

A summary of activity for this restructuring action is as follows (in thousands):

Excess Facilities and Other Costs Employee Severance and Related Benefits Total

Accordingly, the balance of the restructuring reserve is included in other accrued liabilities on the consolidated balance sheets at November 30, 2024.

We expect to incur additional expenses as part of this action during fiscal year 2025, but we do not expect these costs to be material.

A summary of activity for this restructuring action is as follows:

(in thousands) Excess Facilities and Other Costs Employee Severance and Related Benefits Total

Balance, December 1, 2023 $ — $ — $ —

3 unchanged sentences

Balance, November 30, 2024 $ — $ 5,206 $ 5,206

2023 Restructurings

During the fourth quarter of fiscal year 2023, we restructured our operations to realign our business and strategic priorities.

In connection with this restructuring, we reduced our global workforce by 2 %.

These workforce reductions occurred within all functions and across most geographies in which we operate.

Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation).

For the fiscal years ended November 30, 2024 and 2023, we incurred expenses of $ 0.9 million and $ 1.7 million, respectively.

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2025.

The restructuring reserve is included in other accrued liabilities on the consolidated balance sheets as of November 30, 2024.

We do not expect to incur additional material expenses in connection with this restructuring.

During the first quarter of fiscal year 2023, we restructured our operations in connection with the acquisition of MarkLogic.

Refer to Note 7:

Business Combinations for further discussion.

This restructuring resulted in a reduction in redundant positions, primarily within administrative functions of MarkLogic.

For the fiscal year ended November 30, 2023, we incurred expenses of $ 5.7 million, which are recorded as restructuring expenses in the consolidated statements of operations.

Additionally, in 2024, we terminated MarkLogic leases.

For the fiscal years ended November 30, 2024 and 2023, we incurred expenses of $ 2.9 million and $ 5.7 million, respectively.

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2027.

The restructuring reserve is included in other accrued liabilities on the consolidated balance sheets as of November 30, 2023.

Accordingly, the balance of the restructuring reserve is included in short-term and long-term operating lease liabilities on the consolidated balance sheets at November 30, 2024.

We expect to incur additional expenses as part of this action related to facility closures as we consolidate offices during fiscal year 2025.

A summary of activity for this restructuring action is as follows (in thousands):

Excess Facilities and Other Costs Employee Severance and Related Benefits Total

Balance, December 1, 2022 $ — $ — $ —

Costs incurred 186 5,542 5,728

Cash disbursements ( 81 ) ( 5,265 ) ( 5,346 )

Translation adjustments and other — ( 29 ) ( 29 )

Balance, November 30, 2023 $ 105 $ 248 $ 353

2020 Restructurings

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This restructuring resulted in a reduction in redundant positions, primarily within the administrative functions of Chef.

For the fiscal years ended November 30, 2023, 2022 and 2021, we incurred expenses of $ 0.9 million, $ 0.4 million and $ 4.1 million, respectively, which are recorded as restructuring expenses in the consolidated statements of operations.

For the fiscal years ended November 30, 2024, 2023 and 2022, we incurred expenses of $ 0.9 million, $ 0.9 million and $ 0.4 million, respectively.

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2027.

1 unchanged sentence

We expect to incur additional expenses as part of this action related to facility closures as we consolidate offices in various locations during fiscal year 2025, but we do not expect these costs to be material.

A summary of activity for this restructuring action is as follows (in thousands):

Excess Facilities and Other Costs Employee Severance and Related Benefits Total

Balance, December 1, 2020 $ — $ 3,523 $ 3,523

Costs incurred 3,323 826 4,149

Cash disbursements ( 455 ) ( 4,350 ) ( 4,805 )

Translation adjustments and other 1,615 8 1,623

Balance, November 30, 2021 $ 4,483 $ 7 $ 4,490

Costs incurred 414 — 414

Cash disbursements ( 1,027 ) ( 7 ) ( 1,034 )

Balance, November 30, 2022 $ 3,870 $ — $ 3,870

Costs incurred 897 — 897

Cash disbursements ( 1,575 ) — ( 1,575 )

Balance, November 30, 2023 $ 3,192 $ — $ 3,192

The components of income before income taxes are as follows (in thousands):

The components of income before income taxes are as follows:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

$ 73,746 $ 70,659 $ 103,917

1 unchanged sentence

Total $ 94,264 $ 79,657 $ 117,255

The provision for income taxes is comprised of the following (in thousands):

The provision for income taxes is comprised of the following:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Federal $ 23,768 $ 28,905 $ 20,118

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A reconciliation of the income taxes incurred at the U.S.

Federal statutory rate compared to the effective tax rate is as follows (in thousands):

federal statutory rate compared to the effective tax rate is as follows:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

federal statutory rate $ 19,795 $ 16,728 $ 24,624

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Foreign derived intangible deduction ( 10,218 ) ( 8,297 ) ( 7,769 )

Tax on unremitted earnings 13,889 — —

Other ( 115 ) ( 412 ) ( 77 )

Total $ 25,826 $ 9,460 $ 22,186

The components of deferred tax assets and liabilities are as follows (in thousands):

November 30, 2023 November 30, 2022

The components of deferred tax assets and liabilities are as follows:

(in thousands) November 30, 2024 November 30, 2023

Deferred tax assets:

15 unchanged sentences

Depreciation and amortization ( 34,385 ) ( 55,962 )

Unremitted earnings of foreign subsidiaries ( 13,674 ) —

Prepaid expenses ( 4,646 ) ( 4,083 )

6 unchanged sentences

At November 30, 2024, we have federal and foreign net operating loss carryforwards of $ 35.2 million expiring on various dates through 2035 and $ 36.7 million that do not expire.

In addition, we have state net operating loss carryforwards of $ 69.0 million expiring on various dates through 2043 and a minimal amount that does not expire.

In addition, we have state net operating loss carryforwards of $ 39.9 million expiring on various dates through 2043 and $ 15.6 million that do not expire.

At November 30, 2024, we have state tax credit carryforwards of approximately $ 1.7 million expiring on various dates through 2039 and $ 3.2 million that may be carried forward indefinitely.

In addition, we have federal tax credit carryforwards of approximately $ 5.9 million expiring on various dates through 2039.

It is our intention to indefinitely reinvest the earnings of our non-U.S.

subsidiaries.

Provisions have not been made for non-U.S.

withholding taxes or other applicable taxes on $ 105.6 million of undistributed earnings as of November 30, 2023, as these earnings have been indefinitely reinvested.

It is not practicable to determine the amount of the unrecognized deferred tax liability if the undistributed earnings were to be repatriated due to the complexity of the income tax laws and regulations.

These earnings could be subject to non-U.S.

withholding taxes and other federal, state and/or foreign taxes if they were remitted to the U.S.

During the fourth quarter of 2024, we made the determination that a substantial portion of unremitted foreign earnings are no longer indefinitely reinvested.

We made the decision as a direct result of changes in business needs related to the acquisition of ShareFile.

As a result of the acquisition, the Company plans to utilize worldwide cash based on the needs of the parent entity.

These amounts will be repatriated as needed.

At November 30, 2024 we maintain a deferred tax liability of $ 13.7 million for the U.S.

federal, state and foreign withholding taxes expected to be imposed upon the repatriation of unremitted foreign earnings that are not considered indefinitely reinvested.

There is approximately $ 30.0 million of unremitted foreign earnings which are deemed to be indefinitely reinvested to support the working capital requirements of our foreign subsidiaries.

A determination of the deferred tax liability on this amount is not practicable due to the complexities, variables and assumptions inherent in the hypothetical calculations.

As of November 30, 2024, the total amount of unrecognized tax benefits was $ 5.2 million, of which $ 1.3 million was recorded in other noncurrent liabilities on the consolidated balance sheet and $ 3.9 million as a reduction of deferred tax assets, principally related to U.S net operating loss carry-forwards and federal and state research and development tax credits.

A reconciliation of the balance of our unrecognized tax benefits is as follows (in thousands):

A reconciliation of the balance of our unrecognized tax benefits is as follows:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

(in thousands) November 30, 2024 November 30, 2023 November 30, 2022

Balance, beginning of year $ 5,172 $ 5,276 $ 5,471

Tax positions related to current period — — 71

Tax positions related to a prior period 416 19 —

5 unchanged sentences

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes.

In fiscal year 2023 a net benefit of $ 0.8 million was recorded to the provision for income taxes related to interest and penalties.

In fiscal year 2022 there was a minimal amount of estimated interest and penalties recorded in the provision for income taxes.

In fiscal year 2021 a net expense of $ 0.8 million was recorded to the provision for income taxes related to estimated interest and penalties.

There was a minimal amount of estimated interest and penalties recorded in the provision for income taxes in the periods presented.

We have accrued $ 0.3 million and $ 0.5 million of estimated interest and penalties at November 30, 2024 and 2023, respectively.

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We compute basic earnings per share using the weighted average number of common shares outstanding.

We compute diluted earnings per share using the weighted average number of common shares outstanding plus the effect of outstanding dilutive stock options, restricted stock units and deferred stock units, using the treasury stock method.

The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, expect per share data):

The following table sets forth the calculation of basic and diluted earnings per share from continuing operations:

Fiscal Year Ended

November 30, 2023 November 30, 2022 November 30, 2021

Net income $ 70,197 $ 95,069 $ 78,420

Weighted average shares outstanding 43,456 43,475 43,916

Basic earnings per common share $ 1.62 $ 2.19 $ 1.79

Diluted earnings per common share:

(in thousands, except per share data) November 30, 2024 November 30, 2023 November 30, 2022

Net income $ 68,438 $ 70,197 $ 95,069

1 unchanged sentence

Effect of dilution from common stock equivalents 992 1,158 772

Effect of dilution from if-converted Convertible Senior Notes 44 — —

Effect of dilution from if-converted convertible notes 167 44 —

Diluted weighted average shares outstanding 44,427 44,658 44,247

Diluted earnings per share $ 1.57 $ 2.15 $ 1.76

Earnings per share:

Basic $ 1.58 $ 1.62 $ 2.19

Diluted $ 1.54 $ 1.57 $ 2.15

We excluded stock awards representing approximately 699,000 shares, 297,000 shares, and 1,751,000 shares of common stock from the calculation of diluted earnings per share in the fiscal years ended November 30, 2024, 2023 and 2022, respectively, because these awards were anti-dilutive.

As a result of our adoption of ASU 2020-06 on December 1, 2021, the dilutive impact of the Notes on our calculation of diluted earnings per share is considered using the if-converted method.

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 fiscal year ended November 30, 2023, we included the Notes in our diluted earnings per share calculation.

During the fiscal year ended November 30, 2022, 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.

For periods prior to our December 1, 2021 adoption of ASU 2020-06, we applied the treasury stock method to account for the dilutive impact of the Notes for diluted earnings per share purposes.

The dilutive impact of the convertible debt on diluted earnings per share is measured using the if-converted method.

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

During the fiscal years ended November 30, 2024 and 2023, we included the 2026 Notes in our diluted earnings per share calculation.

During the fiscal year ended November 30, 2022, we excluded the 2026 Notes in our diluted earnings per share calculation because the conversion feature in the 2026 Notes was out of the money.

During the fiscal year ended November 30, 2024, we excluded the 2030 Notes in our diluted earnings per share calculation because the conversion feature in the 2030 Notes was out of the money.

Business Segments and International Operations

2 unchanged sentences

We operate as one operating segment:

software products to develop, deploy, and manage high-impact applications.

software products for the development, deployment, and management of responsible, AI-powered applications and digital experiences.

Our CODM evaluates financial information on a consolidated basis.

As we operate as one operating segment, the required financial segment information can be found in the condensed consolidated financial statements.

Long-lived assets, comprised of our property and equipment, totaled $ 8.2 million, $ 7.6 million and $ 22.1 million in the U.S.

and $ 7.0 million, $ 7.3 million and $ 7.5 million outside of the U.S.

at the end of fiscal years 2023, 2022, and 2021, respectively.

During the fiscal year ended November 30, 2023, India accounted for more than 10% of our consolidated long-lived assets.

During the fiscal year ended November 30, 2022, India and Bulgaria accounted for more than 10% of our consolidated long-lived assets.

No individual country outside of the U.S.

accounted for more than 10% of our consolidated long-lived assets in 2021.

Long-lived assets, comprised of our property and equipment, totaled $ 7.9 million and $ 8.2 million in the U.S.

and $ 5.8 million and $ 7.0 million outside of the U.S.

at November 30, 2024 and 2023, respectively.

At November 30, 2024, Bulgaria accounted for more than 10% of our consolidated long-lived assets.

At November 30, 2023, India accounted for more than 10% of our consolidated long-lived assets.

Cyber Related Matters

2 unchanged sentences

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

the fiscal year ended November 30, 2023, we incurred $ 4.7 million of costs related to this incident.

Costs are provided net of insurance recoveries of $ 2.5 million.

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

We did not incur costs related to this incident during fiscal year 2024 and do not expect to incur additional costs as the investigation is closed.

For the fiscal year ended November 30, 2023, we incurred expenses of $ 4.7 million, net of insurance reimbursements, related to this incident.

MOVEit Vulnerability

On the evening of May 28, 2023, our MOVEit technical support team received an initial customer support call indicating unusual activity within their MOVEit Transfer instance.

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).

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 fiscal year ended November 30, 2023.

Litigation and Governmental Investigations

As of the date of the filing of this report on Form 10-K, (i) we have received formal letters from 31 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 118 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 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), (ii) the SEC (as further described hereafter), and (iii) the Office of the Attorney General for the District of Columbia (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.

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 intends to cooperate fully with the Office of the Attorney General for the District of Columbia in its investigation.

Description of Event

As previously disclosed, on the evening of May 28, 2023, we learned that our MOVEit Transfer (the on-premise version) and MOVEit Cloud (a cloud-hosted version of MOVEit Transfer) products were attacked via a "zero-day vulnerability" that could provide for unauthorized escalated privileges and access to the customer’s underlying environment (the "MOVEit Vulnerability").

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

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

MOVEit Transfer and MOVEit Cloud represented less than 4 % of our revenue in the periods presented.

Litigation and Governmental Investigations Arising from the MOVEit Vulnerability

As a result of the MOVEit Vulnerability, we are party to certain 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 (the "MDL").

The MDL has also consolidated the previously disclosed insurance subrogation claims (where an insurer is seeking recovery for expenses incurred on behalf of its insured in connection with the MOVEit Vulnerability) and, as of the date of this filing, one customer cross-claim.

We have also been cooperating with inquires and investigations from:

(i) several domestic and foreign data privacy regulators (as of the date of this filing, we have assisted with all inquires and investigations, a number of which have been formally closed without regulatory action), (ii) several state attorneys general (as of the date of this filing, we have assisted with all inquires and investigations, and are not aware of any enforcement or regulatory actions directed against Progress), (iii) a U.S.

federal law enforcement agency (as of the date of this filing, we have assisted with all inquiries under this investigation and this is not an enforcement action or formal governmental investigation targeting Progress), and (iv) on December 21, 2023, we received a preservation notice from the Federal Trade Commission (the "FTC"), but have not otherwise received a request for information, nor are we aware of any formal FTC investigation.

Such claims and investigations may have an adverse effect on how we operate our business and our results of operations, and in the future, we may be subject to additional governmental or regulatory investigations, as well as additional litigation or indemnification claims.

Our financial liability arising from any of the foregoing will depend on many factors, including the extent to which governmental entities investigate the matter and limitations contained within our customer contracts;

therefore, we are unable at this time to estimate the quantitative impact of any such liability with any reasonable degree of certainty.

As our litigation response continues, we will continue to assess the potential impact of the MOVEit Vulnerability on our business, operations, and financial results.

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

Expenses Incurred and Future Costs

For the fiscal year ended November 30, 2023, we incurred $ 1.5 million of costs related to the MOVEit Vulnerability.

The costs recognized are net of received and expected insurance recoveries of approximately $ 3.7 million.

For the fiscal years ended November 30, 2024 and 2023, we incurred net costs of $ 5.6 million and $ 1.5 million, respectively, related to the MOVEit Vulnerability.

The costs recognized are net of insurance recoveries of $ 2.1 million and $ 3.7 million, respectively.

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 expect to continue 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 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.

Furthermore, with respect to the MDL, 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.

Therefore, we have not recorded a loss contingency liability for the MOVEit Vulnerability as of November 30, 2024.

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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 November 30, 2023, we have recorded approximately $ 6.2 million in insurance recoveries, of which $ 2.5 million was related to the November 2022 Cyber Incident and $ 3.7 million was related to the May 2023 MOVEit Vulnerability, providing us with $ 8.8 million of additional cybersecurity insurance coverage (which is subject to a $ 0.5 million retention per claim).

As of November 30, 2024, we have recorded approximately $ 8.3 million in insurance recoveries, of which $ 2.5 million was related to the

November 2022 Cyber Incident and $ 5.8 million was related to the May 2023 MOVEit Vulnerability, providing us with approximately $ 6.7 million of additional cybersecurity insurance coverage under the applicable policy (which is subject to a $ 0.5 million retention per claim).

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

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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 8. Financial Statements and Supplementary Data