Progress Software (PRGS) 17 Jan 232022 Q4 Earnings call transcript

Good day, and welcome to the Progress Software Corporation Q4 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

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

is everyone, Okay, joining for XXXX and results us Anthony afternoon, Executive Chief and fourth great. you, Sherry. financial today With call. Officer. Thank Folger, and conference Gupta, us Officer; quarter President Chief thanks fiscal Good Yogesh Financial for our Software's Progress

proposed operating call, discuss as our our outlook Before we to of is like cost will I'd acquisition strategies, subject remind you plans, future to represents and guidance other we might financial performance, Software's and get started, that corporate product only during This outlook and today information this considered be MarkLogic, for Progress forward-looking initiatives, and risks of that information forward-looking. uncertainties.

that to a call please our update in obligation otherwise. factors may the subsequent Risk XX-K Factors no statements For affect the this new most captioned Progress included a refer whether recent Form developments XX-Qs. to or result forward-looking our of and of results, section assumes description Software the in

this the unless financial measures discuss non-GAAP are indicated. otherwise all on call, figures we Additionally,

specific can GAAP You financial and of in of recommend a close market press measures XXXX, I non-GAAP document after financial the details. today. for our results for you issued which the numbers release, was our fourth results of directly quarter most This find to the details reference fiscal financial contains reconciliation comparable these full it the

investors.progress.com. are prepared the results, release metrics. Relations also earnings available a contain Both data XXXX financial presentation website of providing the our Investor have We additional quarter that in supplemental at section and our and supplemental for presentation highlights fourth the

also and via be its entirety, be on Investor of our call recorded As the Sherry it today's section will Relations available said, website. replay in will

way, the turn Yogesh. out over me with that it to of let So,

joining on Mike. you, Good today. for our everyone, you thank call evening, us Thank and

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

execution the Progress, steady 'XX Fiscal every for product during outstanding teams for all the field in from throughout saw exceptional our demand eventful was another we in virtually and year of and geography, which every year.

Our We our XXX%. customer ongoing their in retention to products exceptionally continued and saw re-commit to in rate the products across customers of our Board. led efforts bear invest fruit to expand to and use and high net success over

Chef, our FY In DataDirect and us. OpenEdge with their customers many of 'XX, significantly spend increased large annual

support, products see Kemp best-in-class business sales, engineering, and DevTools success globe. planned. fully the and saw to many cloud wins as we and Operationally, around continued Sitefinity products our into cloud as Our MOVEit such integrated platforms the and folded new customer retention existing rates

efforts. DataDirect, their continued customers to Our above to portfolio Sitefinity, manage solidly transformation rely and our continued workhorse products, and DevTools, Flowmon applications Chef, OpenEdge along to run Loadmaster as plan, digital their and on with perform mission-critical

with on quarter this in finishing most All positive coming X.X% year-over-year. resulted at $XXX of a our ARR million, notably very in note, up the fourth

FX inflation, the headwinds. a economic resurgence COVID, and operating increasing a in with of estimates know, you margins, onset rapidly of of dramatic environment raised rapid significant outbreak revenues, and brief As consistently the tough war sheet. maintaining world-class while we strong solid and balance Ukraine, earnings this and the We guidance changing beat following overcame we year but navigated

very our We to real our the in and of managed headquarters 'XX. cost owning We associated estate. effectively burdens able structure shed sold were FY

model space our our which leased love headquarters. from employees work-from-anywhere Our in new and flexible Ipswitch, our working is Burlington, we perfectly as inherited

We expenses retention person, as XXXX. year manage for industry our variable throughout since reunited customers March and first above the some more high well in employees even averages. throughout year engagement maintained employee to and the the importantly, more the time, also continued in even And well cases, of we and we rates

builds is employee more consider critical success much to institutional retention We employees and cost-effective. our because to be retaining knowledge

in companies Progress innovation, have And a the abroad continued towards after to nurture best teamwork had to respect of the directly one accountability, our is in we've believe as team. on a win the retaining the to why of hiring top continues awards success proud great work cultural and gear bottom the business. for. I both it year and and of We lines very which and create with shows year all trust, We're and for U.S.

quarter finalizing So, with by full year be of to fourth more more agreement definitive team very of customers our for a MarkLogic, the kick allowing our pleased couldn't partners. largest announcing by acquire January to and the all and I we're We yet signing all, XXXX calendar culminated X. the acquisition to proud or us terms off on in XXXX our 'XX. grateful

how growth a disciplined, total and that we would pledge our patient, our XXXX, deployed be strategy in selective extremely made capital. announced to we we in We shareholders

returns criteria create M&A and has. market even environment the infrastructure for target flows, of making evolve the We have choice us ability software and progress compete the that meaningful we and kept company cash that sellers. employees, customers, keep that around changed to will acquirer continue the as and believe and will increase promise durable have to adding shareholder our and We market generate commitment as not our acquisitions

deal target to great on list this that over the from every impressive companies provides weeks As XXX and the a hits earnings, deal that flows, we said call create the metric, we two recurring once the technology to ago, the MarkLogic fit. closes. acquisition announcing on think ability to MarkLogic's forward and look cultural strong of revenues, customer We cash serving synergies margins,

customers, gaining also AI data semantic integration non-relational well extend unstructured managing of our data data, and metadata and and Progress as and superior platform unstructured other grass to enable data. deepen MarkLogic's analytics, triples informed and capabilities and semantic capabilities customers in perspective, intelligence. search for MarkLogic technology analysis by to from consume to allow integration structured offerings and DataDirect manipulating, as data performing all capabilities structured and as its for data insights data, grounded will data, to our will data types storing, fact-based applying data data of a natively multi-model analysis products From such

about talk expected including let's bit FY expectations, our MarkLogic. little Now, 'XX the a impact of

continue for to modestly. We steady integrated, remain expect products Once ARR will our demand our Progress and is scale 'XX fully revenue. over FY grow to to $XXX in in MarkLogic million to

minute, support which will to to in engineering, in financial over more full-year go-to-market, high the $XXX sales, Progress retention on expect revenue a we of Speaking and into operating functions approximately in impact, add expect the basis, $XX top platform. million line its integrate million improve as rates, explain we to a Anthony detail MarkLogic's MarkLogic annual recurring with margins and

regarding MarkLogic first the full to business. It with ownership. the is in important of of currently accretive of the MarkLogic timing We closing and the and be starting a anticipate things acquisition quarter early seasonality note few expect the our deal the to February

January has MarkLogic recorded fiscal importantly, and is January. one-third and its in More year-end revenue about a December of

and able only would MarkLogic's in be Because we'll have the QX November, 'XX. gives 'XX. months before their in 'XX on also revenue weeks see will ends The two closing our in fiscal revenue only year of closes we year us impact about just full-year of from acquisition in to biggest our in fiscal few the occurred a two-thirds deal and revenue February our contribution only annual benefit FY

and guidance you expect see with full year. from margin place acquisition Anthony, from impact year take revenue 'XX As to integration through in next will FY first this and synergies the we coming our of the

We're adding growth employees, great to great as is to M&A our portfolio. products Speaking customers, playing our disciplined and strategy broadly, more total finding out and of companies approach, planned. our sticking

structure good find we're ready We're finance capital Our shape. in we're selective, excellent next and to is ability to new and deal. the transactions patient,

once excited We're We goal continually 'XX. acquisitions. experience efficient good and our we we're acquisition from to our a as remain productive even of the in see to strong allocating returns can as as fiscal you our well and most playbook manner. ability well shareholders model. landscape. all, tactics. incorporate away our of fit capital And fiscal transactions more corporate committed we challenging deals also and better as providing as was, for And learn make our from in M&A out Most 'XX we walk We good each strategies integration to use development executing our seek don't that significant and

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

thanks our joining Yogesh. Thanks, call. everyone, and Good for afternoon,

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

numbers, which underlying our we'll start the provides performance. we the the top-line ARR, with on into best Turning view to believe

current with periods year is reminder, constant ARR constant results a presented, X.X% a all the a was the growth include approximately all of organic presented year-over-year end pro acquired in of budgeted exchange presented to in rates. As at at of representing basis periods million, our $XXX on basis. currency, our currency QX forma calculation businesses on ARR and

It's DevTools, in represents Transfer. with ARR growth exceeding A strong quarter by driven $XXX.X net high year-over-year Chef, we million the was basis, that ARR is over Sitefinity, growth an remaining strong QX, a of to at of currency coupled and rates The File products. on fuel which in QX prior products was revenue our to File for DataDirect, retention consistent and XX% that again, DataDirect, highlighting growth Revenue acquired record growth XXX%. the OpenEdge, with from including quarter fourth OpenEdge, and Sitefinity, trend Kemp, multiple XX% sales for our continues a the in incremental XX%. also reflecting DevTools, worth our increased constant Transfer year, XXXX, contribution from

product and year, full contribution revenue revenue is the of Kemp DataDirect, XX% growth other DevTools. most For year-over-year represents multiple across notably XXXX. growth million OpenEdge, full-year This growth comprised a compared from of and lines, $XXX.X to

customer XXXX the growth our we're the for With rates year an XX% fueling Again, exchange XX.X%, from portfolio, worth impact foreign throughout full year. approximately rates of increased have highlighting thrilled year. results at the strong environment for remaining top-line the because strong exchange for headwind $XX with would revenue constant million growth our demand across currency consistently retention is to from the due to

million $XXX for expenses expenses. up full full-year XX% quarter, and Turning the were X% costs year, the to up over the for to and Total XXXX. million year-ago the compared operating $XX quarter,

For from cost in the acquisition driven by and in an the expenses base was year, operating the the of resulting Kemp. quarter full increase costs our and increase

the was an XX%, for $XX million $XX compared Operating million income the quarter of operating for year-ago quarter. to or XX% in margin

of XXXX. for an compared to And the the $X.XX the million $XXX year, per to operating share in an $X.XX was year, Earnings increase the XX% were was quarter, operating an million, year-ago earnings full improvement quarter. $X.XX, per XXXX. For for for or full income margin to compared $X.XX compared $XXX of share XX%, of

our in now items. to cash million million. total cash the investments short-term $XXX untapped equivalents, of line flow and capacity year sheet ended and $XXX for with approximately cash, million on and in liquidity under few of $XXX credit a Moving balance revolving a We

notes. addition, million debt the $XXX of is for days quarter which million, a to the quarter was fourth DSO and days loan $XXX our comprised In $XXX the in had compared million of term of convertible XXXX. balance in amount XX in we XX of

very quarter, in strong billings' driven The our million top-line revenue much timing of was Deferred from quarter. a end reflection performance. the of year with fourth ago, the at our coming of late a up in of $XX increase the billings, was the $XXX year-over-year DSO by overperformance million

the for fourth flow quarter, cash the total for $X.X during to million the million. for and free bringing $XX repurchased Adjusted year. $XX stock quarter million We full our worth the of year million was $XXX

remaining for today's release, increased million as As of $XXX result, share $XX now repurchase million, authorization. amount in no our But under at plan. of had seen the current available total a our the end we've we by $XXX available press million a QX, you've doubt under

turn When to the QX following. like I'd considering XXXX. and Now keep in outlook outlook, for to year our important it's mind our to full the

the lines. non-MarkLogic currency First, a XXXX year a stability top-line our relatively product lines. growth was demand And we many top-line as result, product flat in range reflects of expect top-line guidance for in our environment our for a In products. of constant XXXX, across our

MarkLogic assumption of of XX%. from a by our MarkLogic's of understand our to can results which contributing expect MarkLogic activity [technical all [technical approximately that approximately close has [technical revenue. to to result important than will during of more integrated, MarkLogic XXXX are and is January, Next, of also XXXX in driven to important expect [technical It difficulty] our than difficulty] the fiscal understand MarkLogic model as contribute contribution February involved months an one-third roughly to for be expectations off contributing of margin difficulty] deal and difficulty] that It $XX private to driven our XX XX that is revenue we we in that business, activity. annually. million thereby deliver Once very is top-line MarkLogic's less XXXX, to $XXX million MarkLogic revenue

mentioned, and resulting to [technical A. associated margin MarkLogic roughly continue cost per increase anticipate purchase revolving difficulty] the credit and term gradually previously expected difficulty] finance with rates of MarkLogic of synergies loan a our borrowing XX%. interest portion of of the will to drawdown, from than and with existing levels throughout revolver on our interest while expect [technical modest, we our year in during the more year the increased to expect our therefore, $X.XX cost $X.XX from another and of costs, As in to share remain line will MarkLogic integration a fair We share of exit recognize per impact the expense expense MarkLogic interest are leverage XXXX,

U.S. its anticipated Code on final to the The relates Tax point highlight like Section of I'd impact and XXXX cash to our XXX flows.

you us for to introduced Tax as aware, would As in effective XXX Progress tax capitalize of XXXX. of Section certain Section the expenses R&D beginning in XXXX, the it's previously expensed probably code purposes, which and of Jobs requires Act most are been and Cuts for was fiscal have incurred. XXX

change associated XXX, effective repealed, Section in capitalization cash unless any of $XX.X don't expect of meaningful XXXX, make tax to tax with we in deferred, it's, otherwise expect or we the payments Although, our requirements do rate, modified. million specifically again,

less With $XXX contribution than quarter that, we between month and XXXX, of a expect This for one MarkLogic. the first from million revenue million. $XXX includes

$X.XX per We also expect $X.XX. and earnings share between of

of and to XX% For the full XX% $XXX XXXX. between over million, million year XXXX, representing we expect growth $XXX revenue

course anticipate MarkLogic as operating $XX.X with of We which between the and incremental Tax of flow XXX free We're with margin approximately $XXX for of adjusted will the cash payments associated an the mentioned. XX% through I've which U.S. tax includes integration year a the Section year headwind $XXX the million in million, the previously improve million of projecting from Code.

existing earnings acquisition. tapping expect on per anticipate the mentioned share our facilities facilities into and credit the this on we be share rates to of $X.XX previously $X.XX And the $X.XX for per reflects range we between negative MarkLogic share from $X.XX. interest increasing impact per Again, and

Our assumes shares, the per of $XX a earnings guidance million and shares outstanding. share XX.X XX%, in for million rate tax the to repurchase XX% approximately full-year Progress of

share buyback Our our address meant XXXX in to dilution equity is activity plans. from

delivered has we three over our believe while dividends continues disciplined our with strategy. to record allocation a of total reason, our shareholders, the the past capital can provide that for M&A track superior years share and return, for And M&A growth priority be and buybacks good top shareholders accretive that returns

QX for that MarkLogic, we're announced I'd of like XXXX. the with closing, reiterate our our and performance, thrilled In outlook acquisition to

strategy believe executing our and to continue we're shareholders. meaningful our we financially create to for outlined, well-positioned Yogesh growth value operationally total As

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

it's our paragraph everybody, giving words with the loan with - next it where the Mike, was expectations paragraph Anthony, are, about sent? begins we Hi, okay it's It's mind the also, - I you where chat term in I guidance. the was to MarkLogic, again, audio and can Sherry, comments up the what Sheri, MarkLogic for reading and know A. and Anthony's the breaking while the your last part, you, it's ends he if do

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

Yes.

through right with start and our guidance, and So, the from to the we're end where MarkLogic contributions, expectations to go the again then the to next paragraph talk A. about going to MarkLogic and MarkLogic's loan starts just go we term

Yes.

right. All Okay.

It's deal are So, I MarkLogic months close million And less in contribution than expect our which to by an from we XX will more XXXX annually. uneven driven the important can a integrated, revenue term-based Once MarkLogic assumption driven revenue. MarkLogic MarkLogic go to February that next, take of to model that thereby contribute of to two. XXXX, MarkLogic's agreements, our $XXX and than recognition a during expectations will off top-line understand license has activity. result contributing

understand the fiscal XX It's MarkLogic Because seasonality January also approximately year. very XXXX, to of of to given deliver that and any contribute fiscal booked December all a operating million being of to our business activity in we and roughly in MarkLogic important approximately this an margin results one-third MarkLogic of year-end, revenue has seasonality, and to January XX%. expect in of $XX

with expect the to integration cost a recognize continue year the Therefore, of credit synergies expect we from gradually line XX%. finance As exit MarkLogic We of revolving MarkLogic price. anticipate MarkLogic XXXX. we our on than during previously of an to and to more operating throughout the purchase to year drawing margin portion mentioned, the of

A. the per with loan share expense And to another interest interest while interest of in will are share $X.XX existing our modest, increase of $X.XX term leverage associated and in on resulting our rates remain impact costs, MarkLogic borrowing expense increased revolver our drawdown levels pro forma expected per net roughly

lot that clear. more was a Hopefully, one

you, It Anthony. was. Thank

at on throw last second. the you that Sorry to

you I Anthony, Now, think are Yogesh, we up can Q&A? if guys open good, to

Sounds good.

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

open. is line Your

question. taking bookings does it minimal for QX year? Hi, for question The the I kind said on guys, goes the and seasonality thank January, One flow? through December that you think of with MarkLogic. in very rest the how you, in, one-third Anthony you're year Is talking it first about and of the

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

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

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

I see.

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

MarkLogic. business in to you. lion's business share. small. OEM for OEM MarkLogic have so the business, an our relatively but business, you not in Happy OEM MarkLogic, the know is the case Pinjalim. that does as do That's is The rather Thank DataDirect small

of with been our first with was The with helping the now SI customers then that really in us also because actually channel a it with customers interesting very where SI started connection have likely expanded as recalled, one role be expand sort and playing SIs Chef. part And then Chef Kemp, important you is in successful. MarkLogic. and helps further that winning further relationships for

making So, successful, them, is aware, on certified have of the truly it in for their products to with enormous partnerships customers who have are me folks is a do things amount with teams, the system trusted you're terms customers can a as do having important products, really well-versed work practice integrators beneficial. who with who products wonderful integrators of channel actually around and system know who

And And do we're expand on to so, a able go relationship, and opportunity we is mind have other key the to Pinjalim. product be SI my them who particular are work again, able to in opportunity somebody is for is the product. that to some really happy an that

because more the big by don't portfolio our and do these whole aside, digital these the those Sitefinity and doing the an includes around - system building as online and digital and online around analytics the - product agency call we I integration also with way, for as - of success SIs developing capabilities our Just which Then ecosystem presence work, have we digital have they play have and Sitefinity we than a are customers. well. agencies them online integration of system targeting part agencies, also some in as the role well, guys those

solid actually business channel. standard our we reseller sort channel much our are is business, more which of market SI a building own distributor addition ecosystem the as the two-tier with go well So, to really as in to

So, we're well. excited really that as about

back queue. Thank you. I'll in get the

our with go from Thank ahead. next Please of you. line Ray for moment McDonough Guggenheim question. That Partners. the will One come

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

Yes.

of across in mean, did the DevTools, business it - if was thanks portfolio. pretty again, FX our was, year. you throughout outperformance whether the is constant it amount different for mean, a the look Chef business significant Actually, you And OpenEdge there I than or network XXXX, entire WhatsUp was Ray. is I and outperformance, really much think come of of if about in there makes the is look I significant of at it currency And didn't at same management product, show had the I So, because asking, one tailwind which and - - look it DataDirect happened market our there's to product whether or it's Sitefinity would or the say it because in think whether what end XXXX. that's level Gold. SolarWinds

And as everybody knows, WhatsUp XXXX was to a customers our XXXX, really happened. turbulent sort SolarWinds in year some had that of outperformance for which back that led regular SolarWinds with and part of went And to I it its think before more additional of a lot it's alternatives for I on Gold. cadence think looking

I only level where of outperformance everything say did and I performance would strength would the So, see we else. the area be we - think really saw that not that across

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

the pay bit of anticipate the it's talked think on And rates three. impact I the what do of or I leverage on under the a I said, even the little to we We'll year. I increasing debt we not down to a question. a that, But like well rates bit on capital will from what the for probably sort a so during remain the come calculus expect And drawdown about outlook and down to basis want other allocation would Yes. levels little forma pro with draw would we're MarkLogic, capital. uses repayment of suspect good of I drawing year. going some But into I potential said on that having down. is expect Ray, much. will calculus

up XXXX. to to forma under pro that a were go see probably as you'd X.X we if basis, we say go So, leverage into two times on

in deal I So, to a get a done at be again, look three to with to like we'd in one we'd maybe up what would probably rate I But, expect that's that a deal and point pretty time comfortable MarkLogic, quickly. bit, pretty like And would times from to to a we net. quickly. we this similar start a do a this at de-lever deal environment think do de-lever

Great. That's for helpful. Thanks taking the questions.

One Boolani Citi. you. the go come moment Please, That for our from next will Fatima ahead. question. Thank line of with

you're incident taking for to incident. you charges just afternoon. of couple And Thank understand my firm, Year. Good I with Hi. that taking New questions. with was and cyber a a at start respect the Happy Yogesh, I'll you. There

if to maybe terms bit and upon expectations lead the little have you stability, follow-up in could of margins So, expand maybe you if less I'm that Anthony, if I portfolio. could, bit for - then little will, please. for just and a growth you up the extent - And curious the that a non-MarkLogic a little a creating I more

So, as incident is into you I are think have we the investigation and aware, before, ongoing. open and mentioned still as the

talked operational, on see it perspective, a From business, than results, I material have can't about right? further can and don't impact basically reiterate expect financial product-specific we product-specific it, to a would really said we comment - our etc. any So, before, other this do that causing there any we not otherwise we we've impact,

related don't I FY think 'XX for that to our are growth projections So, the of that. aspects

we're is different hugely wonderful macro As the us. depending XXXX maybe stable base Anthony you XXXX some think, from on overall expecting And different think phenomenally slightly year I or products. the demand right? mentioned, right, revenues saw the what for Obviously, - and this

that And expect We straightforward rather year truly across to significant And in said this we so, very to we our there we board. is expect yes, and core we are think - So stability being fact we'll be do right? Fatima, do. grow, ARR way, our than about that modestly. business the business the it solid by we growth. to that, the grow expect And

potentially or just end loaded changes generally, wanted flow the and cash some consideration I tax shifting flow. gears back of some commentary And then enough. called Anthony, Fair shared But you've cash to of, other ask about on out is inclusive expensing. linearity sort the think if there just to of MarkLogic. a for performance. I you about of I regulation appreciate the R&D the impacts collections of

So, into you mindful linearity the that you. did shift And to to MarkLogic's Thank stay we the just end dynamic on flow impact it need and curious cash our how as of to me. back what considering and cash to that's flow. for of expense and expectations, the quarter see sever should R&D potentially the why

All right. Yes.

there's So, that a cash million into out, Section our way. I the flow largest item any 'XX incremental under affect I guess, $XX sort the cash question. it in And is make like in meaningful we'll doesn't packed of XXX. that in lot that And call of terms payments there said, to really rate

cash of So, an really the to is acceleration IRS. it out just

an So, impact in that has 'XX.

year that, think, impact of third won't into sure, when a to sort of in for realize seasonality the next benefit fiscal linearity flow. say, of I think business roll let's and will they're we our I the until We certainly December January, MarkLogic, that the 'XX. into of or booking, cash

difficulty] you for the driving I similar December looking But the of the we've activity the seasonality for. the and packed January, then certainly, and and [technical that's sort think, we from should [technical amount with was standpoint. that good now something into pretty And see a comment, fourth were year-over-year quarter of last had difficulty] at flow cash along top-line

Thank you.

our Thank And you. One moment for will Thakkar line the that come with next question. from Harshil Oppenheimer. of

line is Your open.

Hi, guys. is you This for me? Ittai. Harshil Can a on hear

Yes.

Yes, we can.

taking for Thanks Great. the questions.

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

Yes. do Absolutely, to Harshil. that. Happy

mentioned, MarkLogic time So, and somewhere that a by of licenses as at Anthony three years again, Harshil, a range. that term business that, large has is renew, let's multi-year in say,

again, so, for about of up business you only in with, any end And third year. the given a renewal up coming

point So, one. number that's

the every increases one - we Point it. number our to ability contracts know, meaningful their on two, has based price have of and not diligence, in the due what

of As contract. significant you changes government do to terms can you know, they much federal with in limits how have business price government are government there a and the -

than in, business for less or is, of FY of one of that number. is would come only will and again, a in quarters I fact about the third it only their quarters, business about the slightly given is terms up overall only renewal, fiscal a business it's given and doesn't fact the don't part of even it - is say, the So, be that given that three about think three it I of the XX% business XX% fact it the large 'XX, the very in

their an strong there's think The I to where it would XX% would is MarkLogic, say, product and about increases. I excellent. maybe revenue of basis, an price some for on do opportunity is annualized very be

do able in the So, us retention those is Again, we than increases. increases. actual price reasonable be the price more customer some to goal, cases, I think matters for Harshil, may

So, we will always And focus that. has to been. on It continue our philosophy. that's

oh, back right, think to it's on Going that - back business a etc. going than it business sort is that about, the again, has, revenue-sharing, or the third of I and of that this, of portfolio, of Progress - such royalties more business, our OEM gosh, rest is core to based the pre-MarkLogic or

price opportunity is some things, portfolio those increases are see extremely are either, Where competitive so - across that in in products So, opportunity, no two-thirds as our there right, increase where either. said, obviously, there much are yourself much are that price we you there markets the really of don't control.

cycles. probably renewal original somewhat less So, half business, in our sort our maybe of business, business. half about And of looking about three-year that our at you're again, leaves

revenue, do sort have and our you again, So, less overall of end can price of you XX% the can yourself math than some you increase. up with,

So, overall, price business by stability. our increases a not are of the component way, Harshil, big

so acquisition primarily the business and way, the do, driven increased far, is retention thereby - stability rates. very very, dollar we well. done by Our by net that gross rate retention the have the We we have increasing, have fact or we as we retention rate, gross and every high - right, single increased an

that's me, to the drives in of what business. stability the so, And sort

you. it. Got Thank

You're welcome.

Soderstrom for will moment Anja And one with from Sidoti. the question. And our come line next of that

is open. line Your

been in for at my I'm end. sort after of the you your fourth bidding my addressed year, of quarter guidance Was But sort you? taking Thank the already. for there have that Lot in the curious coming just questions Hi. questions. lower of anything surprised you're

solid guidance our fourth above quarter. EPS. Not guidance We revenue. our We really. a for for We had were within were

solid Anja, don't Again, executed think, to we I I we well. something I had a have you you if that think Anthony, add. want know quarter. do

of little for foreign Yes. year, I were fourth the range we top on would wider say the was the on quarter, rates last And coming might into we line our a probably were. that otherwise. just than left that - because like reason companies just a whipsawed we we lot exchange

uncertainty land. a that fourth bit all of how going was And there into quarter the about would so,

perspective, was, wider So, just than the bit have ordinarily would board. case. to the might Yogesh's from otherwise, our have point, been solid across the range little But it a been

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

Yes, a lot multi-year. of

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

you. me. from That was Thank all Okay.

will Thank moment question. that you. Thill line next the with our Jefferies. come for from Brent One of And

line Your open. is

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

Yes.

said a before, we've tremendous as that our - we the right, - customer have emphasis Antonio, on retention. So,

question you retain And and that, what customers becomes, right? retention so, expand of continue build with do can business your and them and the them to drive with to net dollar

of to that make our that invest is and across stay we to curve - and in spend right, more this sure products ahead actually for And board, ones. so, is retain much customers basically the this R&D the cheaper with our across stay new than win it's portfolio, customers make because our sure to that way to us us easier, that much much, much,

kind we and cash truly that why spend at just speaking, sales we - significantly on doesn't software And you margin if and do. operating overall operating of the they our our and flow do so of look we company A relatively which the percentage that right? generation again, world-class, the margins, less, in course size and marketing, have are scale industry is

shareholders. becomes your - much question believe to So, invest and in of I And to in that, the invest to that with effort be very than would side put to not where it product think side the try needed. all we then investing dollar do me, us, better you up clean that the much is with product becomes trying to a it other and in

we that look sure the leading And continue And continue really so, products edge. to that's right investments where we for our across to make to is our level it entire are portfolio. of invest, and

one a Awesome. that. quick And more of for maybe follow-up clarification. Thanks or

mentioned Are remarks. you a with I that little done are is But or to still be more to Kemp in with opening work done? that integrate together. we have I we Kemp think where you acquisition? your there know and Flowmon

No, yes. Kemp. are I mean, integrating done we

think I remarks that I opening in as said the well. have might

Our closing beginning and - and the key complete. integration. the deal our our they And business integration a Kemp MarkLogic portfolio, of now platform. they that to products, and is integrated the part the both management we're of on infrastructure been They looking Kemp business, have Flowmon forward products, are and are

Awesome. integrating... Well, thank on you, guys, good luck and

much. so you Thank

come next question. our with One line moment for Oppenheimer. And that from will Ittai Thank of you. the Kidron

open. is Your line

I follow a Hi, to of on just couple guys. want things, financial up Anthony.

the normalize MarkLogic. you're into in the incorporate on they're - an What exercise how to you'll about that talk to on so lumpy? going them financial is you ARR ARR since Can First number? do

Ittai. Yes. Sure,

get would we QX, all once I think we would expect we that closes ARR. the of incorporate to and deal the

be difficulty] to effectively [technical So, provide able we would

- hear Ittai, around. just what to you try So, let Anthony if time was to this me can see repeat saying, it so

a So, we period at ARR the basically, would which and then - that in we that the QX, going close history be first the forma as deal, use complete the we the I and you of forward. business know, and we when historic reporting of basically we mean, across end do take pro when current,

the we revenues becomes is annualized, - any term those. or course. multi-year analyze other for course, maintenance licenses, of recurring Obviously, Of

about then expect would the ARR continue to we what deal from the closes. we to we increase MarkLogic grow. ARR in is $XX do So, And would the expect once expect million show to to

steady to and seen expect years, over growth that the a have we ARR continue. in the We last three trend

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

It's included that in number.

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

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

Okay. Very good. you. Thank

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

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

call. you for today's Thank This participating. conference all concludes

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