Market

Progress Software Corp (PRGS) Q3 2021 Earnings Call Transcript | The Motley Fool

Image source: The Motley Fool.

Progress Software Corp (NASDAQ:PRGS)
Q3 2021 Earnings Call
Sep 23, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Progress Software Corporation Q3 2021 Earnings Call. My name is Daryl, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

I will now turn the call over to Mike Micciche. Mike, you may begin.

Michael MiccicheVice President of Investor Relations

Great. Thank you, Daryl. Good afternoon, everyone, and thanks for joining us for Progress Software’s third quarter 2021 financial results conference call. With us today is Yogesh Gupta, President and Chief Executive Officer; and Anthony Folger, Chief Financial Officer.

Before we get started, I’d like to remind you that during this call, we will discuss our outlook for future financial operating performance, corporate strategies, product plans, cost initiatives, our acquisition of Kemp, the impact of the COVID-19 pandemic on our business and other information that might be considered forward-looking. This forward-looking information represents Progress Software’s outlook and guidance only as of today and is subject to risks and uncertainties. For a description of the risk factors that may affect our results, please refer to the recent SEC filings, in particular, the section captioned Risk Factors in our most recent Form 10-K. Progress Software assumes no obligation to update the forward-looking statements included in this call, whether as a result of new developments or otherwise.

Additionally, on this call, all the financial figures we discuss are in non-GAAP measures, unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our financial results press release, which was issued after the market closed today and is also available on our website. This document contains the full details of our financial results for the fiscal third quarter of 2021, and I recommend you reference it for specific details. We’ve also have prepared a presentation that contains supplemental data for our third quarter 2021 results, providing highlights and additional financial metrics.

Both the earnings release and this presentation are available in the Investor Relations section of our website at investors.progress.com. Today’s conference call will be recorded in its entirety and will be available via replay on the Investor Relations section of our website.

So with that, I’ll now turn it over to Yogesh.

Yogesh GuptaChief Executive Officer

Thank you, Mike. Hello, everyone, and welcome. I’m delighted to announce two very positive news items today. First, we delivered yet another outstanding quarter, driven by strong demand across the Board for our products, combined with excellent execution by our teams, which resulted in significant outperformance on both the top and the bottom line. We see the current demand environment for our products continuing, which is why, for the third time this year, we are again raising guidance for the full year. More on this later.

The second bit of exciting news is our acquisition of Kemp Technologies, which extends our total growth strategy. With this acquisition, which is our third in as many years, we will be that much closer to meeting our goal of doubling our size in 5 years. Most importantly, this deal checks all the boxes of our disciplined acquisition criteria, as Anthony will detail later. And we will accomplish it in the most competitive environment I have seen in many years, as a software executive.

As you are aware, our mission is to be the provider of the best products to develop, deploy and manage high-impact business applications. And the key aspect of managing these applications is to ensure high performance, an always-on availability for an amazing end-user experience. Kemp, is a leading provider of products that address this need. Kemp products monitor application performance and optimize workloads across servers in the cloud and on-prem to ensure high performance and availability. These products leverage machine learning to look for anomalies and detect IT professionals before end-users are impacted.

These capabilities complement Progress offerings, such as WhatsUp Gold, a market leader and easy to use network management, which we acquired with Ipswitch. Together, we will offer the best Application Experience solutions to our customers. Kemp has a strong two-tier go-to-market channel, that provides global reach to tens of thousands of SMBs and Progress will merge and leverage this channel for some of our other products as well. This focus on two-tier go-to-market channels has enabled Kemp to win a large and growing set of customers, ranging from mid-size to some of the largest enterprises in the world, who rely on its products to deliver great Application Experiences.

Our broader product portfolio and financial strength will enable us to serve these channel partners better. The cultures of Progress and Kemp are also very alike. Both organizations have a strong focus on the success of our customers and we dare to innovate and solve the pressing needs of the market. I look forward to bringing the Kemp team on board, once the acquisition complete and together driving to even greater success.

Financially, this acquisition meets all our disciplined criteria and will again result in meaningful value creation for our shareholders. Despite the hypercompetitive M&A landscape, we have demonstrated that we can execute our total growth strategy without compromising our disciplined approach. For the third year in a row, we will have completed an acquisition that adds significant revenue, earnings and cash flow. When this 70-plus million dollar revenue deal closes, Progress revenue run rate will be over $600 million with excellent operating margins well over our baseline of 35% and we’ll continue to generate cash flow margins over 30%. This places us well on our 5-year goal to double the size of our business, with an even greater increase in EPS and cash flow.

We expect this transaction to close around the end of October, once the regulatory and customary closing conditions are satisfied. We also see other M&A opportunities in our pipeline that can further enhance our total growth strategy. While our focus for the immediate future will be on the closing and integration of Kemp, our ongoing efforts to enhance our sourcing capabilities and to strengthen the depth of our M&A readiness, have positioned us well to tackle the next opportunity. We will remain disciplined in our approach, as Kemp is further evidence that our total growth strategy is succeeding in building sustainable long-term shareholder value.

As you may recall, disciplined accretive M&A is the first of three pillars of our total growth strategy. The second pillar is to keep our core business strong and increase customer retention. We achieved this by continuing to innovate keeping our product portfolio current by investing in R&D and by focusing on customer relationship management. And the third pillar is operational excellence. We’re proud that we have also continued to execute on these two pillars, as evidenced by the ongoing strength of our business.

So let’s talk a bit about our Q3 results and the market for our products and our expectations. We had an outstanding third quarter, where our business outperformed on every metric including revenue, operating income, earnings per cash flow — earnings per share and cash flow. Our recurring revenue continues to steadily grow and is organically 4% higher than last year. And our overall net retention rate again exceeded 100%. This outperformance has been driven by two important factors.

First, with be continuing emergence of the global economy from COVID, the demand for our products across the Board continues to be strong. As a leader in the overall DevOps cycle, with the best products to develop, deploy and manage high-impact business applications, we are winning new customers, seeing existing customers recommit to our offerings and expand their usage. Based on our performance in the first three quarters and the continuing strong appetite for our solutions across our product portfolio, we are very confident in raising our full year guidance yet again.

The second factor driving our results is the performance of our teams. Our investments in R&D, our sales, marketing and relationship management efforts, our ability to address customer needs and our our efficient operational execution, make for a potent combination. We greatly exceeded our revenue expectations and we did so while operating more efficiently than expected as well, leading to a very impressive outperformance of our bottom line.

We now expect our full year EPS to be over $0.20 higher. Our significant increases in the top line and bottom line expectations, reflect our confidence in the ongoing market demand and our team. We continue to demonstrate that we can execute well on our business, source and execute acquisitions in a tough and extremely competitive acquisition market and integrate efficiently to create great value for our shareholders through our total growth strategy.

When I joined Progress nearly 5 years ago, I could not have imagined that we would be a strong as we are today and I’m excited about our prospects ahead.

Now I’d like to turn this over to Anthony to take you through the details of our performance, our guidance, as well as details on our Kemp acquisition. Anthony?

Anthony FolgerChief Financial Officer

Great. Thanks, Yogesh and good afternoon everyone. Thanks for joining our call. As Yogesh noted, the third quarter was exceptionally strong and based on that strength and our continued confidence in the business, we’re raising our full-year outlook for revenue and earnings per share for the third time this year. In addition to outstanding financial results, we’re also very excited about the acquisition of Kemp which we also just announced. Kemp is one more step in our total growth strategy. It meets all our disciplined financial criteria and brings with it an outstanding team, an established enterprise-grade set of products and a phenomenal customer base.

I’ll speak more about Kemp in a bit, but starting with our Q3 financials, revenue for the quarter was $152.6 million, which represents 38% year-over-year growth and it’s approximately $22 million above the midpoint of the Q3 guidance range we provided in June. Let me take a minute to discuss the two primary elements driving the upside in our Q3 revenue performance, and I would encourage you all to have a look at the presentation that Mike referenced earlier, which includes supplemental data and does a good job of illustrating some of the following points.

First, approximately $12 million of the overperformance relative to our Q3 guidance was driven by better-than-expected customer and partner demand for our solutions. This improved environment resulted in better-than-expected customer retention, larger-than-expected upsell opportunities with existing customers and in some cases, longer-than-expected contract durations, as customers seem more willing to commit to our solutions for the long run. This $12 million of over performance relative to our guidance is reflected across virtually all product lines, most notably DataDirect, OpenEdge, DevTools and our Ipswitch products.

The second element of our revenue overperformance was the timing of two large contract renewals. In our June outlook, we had forecast these renewals to occur in the fourth quarter, with an expected revenue contribution of approximately $10 million. Both of these renewals closed earlier than forecasted and in doing so, accelerated the recognition of $10 million of revenue from the fourth quarter into the third. This timing element has no impact on our full-year revenue outlook, which is being raised for the third consecutive quarter.

I’ll speak more about the outlook in a bit. But for another level of detail on our Q3 top line performance, we believe ARR provides an informative view. ARR at the end of Q3 was $444 million, representing approximately 4% organic growth on a year-over-year basis. The growth in ARR is a reasonable reflection of our underlying performance in Q3 and was bolstered by net retention rates that exceeded 100% for the second consecutive quarter. In the past, we’ve talked about the investments we’ve made in our products, which are aimed at improving the customer experience and our net retention rates in Q3 illustrate the continuing benefit of those investments.

Turning now to expenses. Our total cost and operating expenses were $81.4 million for the quarter, an increase of $17.7 million compared to Q3 of 2020. The year-over-year increase is the result of two primary factors. First is the addition of Chef to our business, which makes up more than half of the year-over-year increase; and second, our variable incentive costs associated with our top line overperformance. Operating income was $71.2 million for the quarter, up approximately 51% compared to Q3 of 2020. Our operating margin was approximately 47% compared to 42% in the year ago quarter. Our revenue outperformance and the timing of revenue mentioned previously, were the primary contributors to this unusually strong performance in the quarter.

Turning to the bottom line. Our earnings per share of $1.18 for the quarter was $0.35 above the high end of our guidance range and approximately 51% above our earnings per share of $0.78 in the year ago quarter.

Moving on to a few balance sheet and cash flow metrics. The quarter with cash and short-term investments of $384 million and approximately $100 million in untapped capacity under our revolving line of credit, for total liquidity of $484 million. We intend to utilize a portion of this liquidity to fund the acquisition of Kemp during Q4. DSO for the quarter was 54 days, which is elevated somewhat due to large deals booked toward the end of the quarter. However, it’s still very much in line with our historical averages. Deferred revenue was $203 million at the end of the third quarter, up slightly from the second quarter, reflecting our strong Q3 top line performance.

Adjusted free cash flow was $35 million for the quarter, up $5 million or 16% from the year ago quarter. And we did not repurchase any stock during the third quarter. As a result, at the end of Q3, we have $155 million remaining under our current share repurchase authorization and we’re not anticipating any additional share repurchases in the fourth quarter.

Turning now to our proposed acquisition of Kemp. We expect to complete the acquisition during Q4 and will fund the $258 million purchase price with cash on hand. In terms of financial profile, Kemp is approximately $70 million in revenue, with operating margins in the low 20% range. We expect the integration of Kemp to be completed in 9 to 12 months from closing, with cost synergies from our integration driving Kemp’s operating margins above 40%.

Turning to our outlook. Starting with the full year 2021, we are increasing our revenue guidance to be between $548 million and $552 million. This includes a contribution of $4 million to $5 million from Kemp in the fourth quarter. Excluding the Kemp contribution, our revenue guidance of $544 million to $547 million represents an increase of $12 million to $15 million over the outlook we provided in June. We are increasing our outlook for operating margin for the year to approximately 40%.

We are increasing our outlook for adjusted free cash flow to be between $168 million and $172 million. And we are increasing our outlook for earnings per share to be between $3.68 and $3.70. Our guidance for full year EPS assumes a tax rate of approximately 20% and approximately 45 million shares outstanding. For the fourth quarter of 2021, we expect revenue between $134 million and $138 million. And as noted earlier, this includes a contribution of approximately $4 million to $5 million from Kemp. Earnings per share are expected to be between $0.73 and $0.75 per share, including the impact of Kemp during the quarter, which we anticipate being slightly positive.

In closing, we’re thrilled with our financial performance and our outlook for the balance of 2021. And we’re also very pleased to be reaching another milestone in the execution of our total growth strategy with the pending acquisition of Kemp.

With that, I’d like to open the call for Q&A.

Questions and Answers:

Operator

[Operator Instructions]. And our first question comes from Ken Wong from Guggenheim. Go ahead Ken.

Ken WongGuggenheim Securities — Analyst

Great. Thanks a lot guys. And really solid quarter here, lots to — lots to dig into. Maybe first on Kemp, you mentioned $70 million of revenue. When I looked on the Slide deck, it looks like you also have $70 million for Kemp in ’22, is that just kind of assuming all the write-downs are embedded in there and or is this a matter of just the business was flat and you guys will somehow get it to — get it to reaccelerate?

Anthony FolgerChief Financial Officer

We may just be referring to the — to the non-GAAP numbers Ken. So I think it’s approximately $70 million this year, we would expect going into next year that the — the business is probably a low single-digit grower and still sort of in that $70 million — low $70 million type range.

Ken WongGuggenheim Securities — Analyst

Got it. Okay. Perfect. And then as I think about that ADC business, I think kind of in some of the names that come to mind would be like a Citrix and F5, just wondering kind of how Loadmaster kind of stacks up against the peers. Is there a certain areas, verticals where where you guys see competitive advantages? And then as you incorporate it into the broader Progress business, I guess anything that would stand out from — for any benefits to that — to that incorporation?

Yogesh GuptaChief Executive Officer

So Ken, you know we actually find that you are right. Folks like F5 are some of the other folks in this — in this market. But what we found is that from a product perspective, it is a phenomenal product that Kemp brings to us. So one of the interesting things that we see, is that with our broader reach and being able to get the product out there, I think we can do a better job of competing with this product in the market.

You mentioned — you really pointed out a really good point about about how does it fit with the rest of the products, right. So we have WhatsUp Gold that we’ve acquired with Ipswitch, which does network monitoring and the combination of the load balancing and optimizing workloads with network monitoring and watching what’s going on in the infrastructure.

With Flowmon, which is another product that Kemp has, which is around monitoring the application level performance and application network flows, all of that put together create this wonderful solution to — to track, monitor and — and optimize the performance and the experience that end users get in terms of availability and performance from their business applications.

And then of course there is an opportunity potentially in the future to also take the Kemp products and based on what is needed to drive infrastructure change, to optimize things even further, leverage Chef, to make changes to the infrastructure beyond just load balancing. So I think there are multiple parts and multiple touch points Ken, that we can bring to bear. We are really excited about — about their product technology offerings. They are truly market-leading and what we have discovered is that, even in very large scale competitive situations, they win remarkably well.

In fact, one of the — one of the things that happened is about, I think this is about, less than 2 years ago actually, Kemp ended up having a very strong — building, creating a very strong channel partnership relationship with EMC, because EMC recognized that this was a great product that actually could sit in front of EMC’s object storage solution, because they need something to balance the activity that goes on across storage systems as well. So — So it’s actually a product that — and therefore now EMC resells the product as a companion product to their object storage business. So I think there are really market opportunities to compete and win with this product and the technology is extremely sound.

Ken WongGuggenheim Securities — Analyst

Got it. Great. Thanks a lot. I’ll jump back in the queue. I’m sure there is a ton of questions on a lot of topics today.

Yogesh GuptaChief Executive Officer

Thank you, Ken.

Operator

And our next question comes from Ittai Kidron from Oppenheimer. Go ahead.

Ittai KidronOppenheimer & Co. — Analyst

Thanks. Hey guys, congrats. Great quarter and a great acquisition. I’ve known Kemp for some time and I think you’ve got a fantastic asset over there. Maybe I’ll start with that, Yogesh.

Yogesh GuptaChief Executive Officer

Thank you.

Ittai KidronOppenheimer & Co. — Analyst

Maybe you can talk about — yes, it’s great. Maybe you can talk about the go-to-market overlap. Like yes, I don’t know if you had a chance already to map out channels and partners, yours versus theirs to think about how much is incremental versus overlapping.

Yogesh GuptaChief Executive Officer

I think what we have — what we have discovered is that the vast majority of the channels don’t have overlap. I mean obviously there will — there’s always some overlap, right, Ken, I don’t want to imply that there is no overlap. But — but they are much more focused on the channel for their — all their go-to-market efforts. In fact, I believe 100% of their business is through the two-tier channel model.

Even though we have a good chunk of our Ipswitch business through the two-tier channel, we don’t really leverage the two-tier channel beyond that. So I think there is — there is opportunity to continue to help be successful in that channel, both from the strength of our portfolio and our ability to support our partners, probably at a better level than — than any company the size and scale of Kemp can. So — so we feel really good about that opportunity, we feel really good about that aspect.

In terms of direct go-to-market, as I said, even though Kemp does interact with prospects directly, they actually do all the business through channel partners. So — so it is actually a very complementary go-to-market model.

Ittai KidronOppenheimer & Co. — Analyst

Got it, got it. Okay, cool. And then Anthony, a couple for you. First on the outlook for the fourth quarter. You really increased the outlook only by $1.4 million, come on, surely you can do better than that, following the performance in this third quarter, you know, especially given that fourth quarter is a year-end quarter.

Anthony FolgerChief Financial Officer

Ittai, come on, you know, my — my objective is to under-promise and over-deliver. So yes, I think we’re — we’ve got a good amount of confidence in the business right now. Obviously, Q3 was a great quarter. We — I think we’ve got enough confidence to take Q4 up a little bit. And hopefully, you know, I think we’re always looking to put numbers out that we can be very certain we can — we can achieve and hopefully exceed. So we feel good about how we’re positioned.

Ittai KidronOppenheimer & Co. — Analyst

Okay, very good. Maybe last one for me, just to make sure I understand your comments with regards to the synergies with Kemp, you talked about 9 to 10 — 9 to 12 months to complete the integration, but is that also the timeline to get the margins from the low 20%s to over 40%?

Anthony FolgerChief Financial Officer

Yes, I think that’s exactly the right way to think about it, Ittai is that, in the earlier quarters, the Kemp margins would be lower, and in the later quarters, we would expect the margin profile to get up into the 40%s. So it will be — it will be a gradual increase over that 9 to 12 months as the integration activities occur. And then let’s say by Q4 of next year as we exit the year, we’d expect as Kemp is integrated into our operating model, running at an operating margin of better than 40% and that’s how the business is going to look for us going forward.

Ittai KidronOppenheimer & Co. — Analyst

Got it. Very good. Congrats, guys. Good luck. Keep it up.

Anthony FolgerChief Financial Officer

Thank you.

Operator

And our next question comes from Tyler Radke from Citigroup. Go ahead, Tyler.

BoYoung KimCitigroup — Analyst

Hi, this is by BoYoung Kim on for Tyler Radke. Thank you for taking my question. You pointed out earlier in the call about the M&A environment being the most competitive, that you’ve seen for executives. I was hoping to get a little more color on that and how you’re thinking about the M&A pipeline going forward and how you can balance being active without compromising that disciplined approach. Thanks.

Yogesh GuptaChief Executive Officer

Absolutely. Thank you. It’s — we all know that there are a lot of folks out there looking to buy companies, private equity is very active, strategic’s are trying to be very active. I think what we have done is we have built a very strong team that is truly exceptional when it comes to identifying and sourcing opportunities. And it’s also very focused on finding opportunities that meet our potential goals, right. So I think that’s really the — the key — key thing.

And then we also have built within Progress, a phenomenal team to actually execute on these deals and integrate them. So it’s both the sourcing deal — deal sourcing team as well as an integration team. And that combined with the fact that as business comes to market, we do a really, really good job of quickly narrowing them down to the ones that are truly interesting and that truly makes sense, that fit our size profile, that fit the profile of being businesses with solid recurring revenue at good retention rates, that — basically our infrastructure software, we find assets and we’re continuing to find assets and we as a business can identify those and identify opportunities to optimize sometimes more than somebody else can, and — and then compete for them and Kemp was a competitive situation and I believe we have done a deal that is going to return wonderful rewards to our shareholders.

And I — and I think to me, the fact that we’re able to check off all of our financial criteria, the fact that it fits dramatically well with our product portfolio and going into the market with a better solution on both sides, combined I think is — is really demonstrates our ability to execute side. So I — the market is hypercompetitive, I agree, but at the same time we are seeing we more deals every quarter than we did even four quarters ago and we were seeing over 50 deals a quarter then. So we are actually — we actually see a very, very large numbers of deals every quarter. We are very thoughtful, we are very deliberate and we look for the right ones.

BoYoung KimCitigroup — Analyst

Great. Thank you. And then in some of the other companies that we cover that have this infrastructure development or developer oriented models, there has been tremendous tailwind that in some cases even seeing inflecting demand trends. So we’re wondering even though [Technical Issues] based on total growth strategy you’re executing very well on, is there any consideration to invest more either on the product or distribution to extract more of this industry tailwind? Thanks.

Yogesh GuptaChief Executive Officer

So we do actually, right, we monitor that all the time and we have actually invested in a whole host of our products over the last few years. Our revenue, which actually was declining 4 years ago, is today as you saw, right, we have organic growth in our ARR year-over-year, right. So we are seeing some change. Now we have a very large portfolio of products. Some of our products are not competitive in terms of winning new customers, even though they [Technical Issues] comes to delivering value to the customers that use them and we keep those products current and we keep them relevant in the modern world.

So I think all — given the characteristics of our product, we are continuing to invest in them appropriately. And by the way, the other part is that we are also committed to a very high margin and a very high cash flow generation for — for our investors. And so we balance that as well. And we look for opportunities. We invest where we — where we believe we can get good returns and we feel that this is the right strategy, the total growth strategy is the right strategy for our investors, for our shareholders, given what our business is today.

BoYoung KimCitigroup — Analyst

Okay. Thank you so much.

Yogesh GuptaChief Executive Officer

Thank you.

Operator

And our next question comes from Anja Soderstrom from Sidoti. Go ahead, Anja.

Anja SoderstromSidoti & Co., LLC — Analyst

Hi everyone, can you hear me?

Yogesh GuptaChief Executive Officer

Yes.

Anja SoderstromSidoti & Co., LLC — Analyst

Great. Thank you for taking my question and congratulations on the great performance and the acquisition of Kemp. So, first, [Technical Issues] you had new customers coming in and how should we think about what — what kind of customers are those? And how should we think about potentially further organic growth than in your model?

Yogesh GuptaChief Executive Officer

Yeas. Thank you. Great question, Anja. We are winning new customers across a wide range of our product portfolio, right. I mean, for example, of course Chef continues to win new customers, it is a very much a relevant product in today’s world, when it comes to DevOps and DevSecOps. We are winning new customers with — with our WhatsUp Gold and MOVEit products, which secure file transfer and — and network performance monitoring and network management products, to win new customers with Sitefinity which is used by enterprises around the globe and organizations around the globe to provide delightful web and online experiences.

We’re winning new customers with our DevTools products, which are used for building phenomenally new wonderful front ends to applications and making those user experiences truly engaging. So it’s across the Board we’re winning new customers and you know I expect this to continue, right. It is — obviously it is — it is gratifying to see the demand for our products and it is — it is exciting to be able to continue to win these new customers and — and solve problems for them and — and continue to make our business stronger as we move forward.

Anja SoderstromSidoti & Co., LLC — Analyst

Okay. Thank you for the color. And then I’m also curious, especially with the M&A pipeline, but how did Kemp come about? And how — when did you start looking at that and how long sort of the — the negotiation like go with them?

Yogesh GuptaChief Executive Officer

Yes, so Anja, the Kemp was a competitive process. At some point, the company decided and the investors of Kemp decided that they wanted to find a home for the company that would be potentially a better outcome for them and a better outcome for us and a better outcome for the company as a whole, Kemp as a whole. And so they — the — I believe we first started looking at it about 4 months ago. Usually these things take 3 to 4 months. But that’s the initial stuff and then we are really excited that we are where we are, that we — we were able to recognize the opportunity, that we were able to identify the value that it has, we were able to competitively win the deal at a — at a valuation that is, as I’ve said before, checks off all the boxes for us and it meets all of our financial criteria.

So you know it is — it is that that basically is really the most interesting part about it is, how do you make it work, can you identify the opportunity. Can you identify what you’re going to do with it. Can you plan that out and we always do a thorough job of that. We — we actually plan out the go forward plan before we sign, it isn’t as though we basically do the deal and then figure out what we’re going to do with the business afterwards, and it’s actually a very, very thorough analysis of that, and I’m really proud and happy of the work that the team has done.

And if you notice Anja, from the first and second deal, it took us about a year and a half to do that. This year from Chef to this has been about just about a year and I think we’re getting better and I think we’re getting faster and I believe — I believe that we can continue to be competitive and find additional opportunities as we move forward.

Anja SoderstromSidoti & Co., LLC — Analyst

It sounds like exciting times ahead. One last question about the talent acquisition. I’m sure you’re all suffering from the industry wide shortage of talent, how are you being affected by that and how do you work around that?

Yogesh GuptaChief Executive Officer

So I think you know, Anja, that’s a really good question. I think to me, right, talent retention is so key in today’s day and age, right. So we actually have been really happy with the way we have over the last 18 months, 2 years, worked very closely with our organization throughout. Anja, we have now just in the last 9 months, one, I think I’ve mentioned this before, been selected by Forbes as one of the best mid-sized companies to work for in the US, we ranked 170 — 170 out of about 15,000 companies. We — we were ranked number 1 by Forbes in Bulgaria, the first number one of all employers in Bulgaria. And as you know, right, we have a significant population in Bulgaria, of our employees.

Boston Business Journal recently picked us as the best place to work. And these are all awards based on how employees feel about us. Our employee engagement is running at least 10 points higher than the industry norm. And I think all of this really points to the fact that we have been very, very thoughtful about what we need to do for our employees and at the same time I think the employees recognize what we have done for them. And so because of all this, I think first of all, the need for us to go look for employees is not as high as maybe some other companies that are seeing great decline. So I think that’s the first part.

But the second part, you’re right, it is a competitive landscape and what we do is, we look for talent just like everybody else does and — and it is not easy to find great people, but we are finding great people and we are bringing them on board and what I think helps them come to Progress are several things. We have phenomenal products. We invest in those products, we have phenomenal customers. We invest in making sure that those customers are successful. So whether it is the go-to-market teams or whether it is the product and engineering team, they know that the Company is behind them for their success, right. The sales person knows that if they sell a product, we will make sure that that customer will be happy and the sales person will therefore not hear about it in the future.

And similarly, the product folks know that they get to work on exciting products and exciting things and move the ball forward. So across the Board, we are actually finding talent. We look for them around the globe. That’s another advantage we have. We don’t have to limit ourselves to one geography or one location. So we continue to do well. So Anja, long answer to your question, but it is a — it is a competitive landscape on talent and we are — not that it’s easy, but we are doing well.

Anja SoderstromSidoti & Co., LLC — Analyst

Okay. Well, congratulations again and thank you for taking my questions.

Yogesh GuptaChief Executive Officer

Thank you very much.

Operator

And we have no more questions at this time. I’d like to turn the call back to Yogesh for closing comments.

Yogesh GuptaChief Executive Officer

Thank you, Daryl. Thank you everyone for joining our call today. I am extremely proud of our outstanding performance in the third quarter and very pleased to share our confidence in the outlook for the rest of fiscal 2021. I am especially proud of the whole Progress team and their work on our acquisition of Kemp as well, and we believe this transaction to be yet another example of our execution of our total growth strategy. It will add significant size and scale to our business and it points us to a promising 2022. I look forward to talking to all of you soon. Thanks again. Bye-bye.

Operator

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.

Duration: 42 minutes

Call participants:

Michael MiccicheVice President of Investor Relations

Yogesh GuptaChief Executive Officer

Anthony FolgerChief Financial Officer

Ken WongGuggenheim Securities — Analyst

Ittai KidronOppenheimer & Co. — Analyst

BoYoung KimCitigroup — Analyst

Anja SoderstromSidoti & Co., LLC — Analyst

More PRGS analysis

All earnings call transcripts


AlphaStreet Logo

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



Most Related Links :
honestcolumnist Governmental News Finance News

Source link

Back to top button