Company Quick10K Filing
Progress Software
Price40.59 EPS1
Shares45 P/E35
MCap1,838 P/FCF21
Net Debt172 EBIT70
TEV2,011 TEV/EBIT29
TTM 2019-05-31, in MM, except price, ratios
10-Q 2020-05-31 Filed 2020-07-08
10-Q 2020-02-29 Filed 2020-04-07
10-K 2019-11-30 Filed 2020-01-27
10-Q 2019-08-31 Filed 2019-10-07
10-Q 2019-05-31 Filed 2019-07-09
10-Q 2019-02-28 Filed 2019-04-05
10-K 2018-11-30 Filed 2019-01-28
10-Q 2018-08-31 Filed 2018-10-05
10-Q 2018-05-31 Filed 2018-07-06
10-Q 2018-02-28 Filed 2018-04-06
10-K 2017-11-30 Filed 2018-01-26
10-Q 2017-08-31 Filed 2017-10-10
10-Q 2017-05-31 Filed 2017-07-07
10-Q 2017-02-28 Filed 2017-04-07
10-K 2016-11-30 Filed 2017-01-30
10-Q 2016-08-31 Filed 2016-10-07
10-Q 2016-05-31 Filed 2016-07-08
10-Q 2016-02-29 Filed 2016-04-08
10-K 2015-11-30 Filed 2016-01-29
10-Q 2015-08-31 Filed 2015-10-07
10-Q 2015-05-31 Filed 2015-07-08
10-Q 2015-02-28 Filed 2015-04-07
10-K 2014-11-30 Filed 2015-01-29
10-Q 2014-08-31 Filed 2014-10-09
10-Q 2014-05-31 Filed 2014-07-08
10-Q 2014-02-28 Filed 2014-04-09
10-K 2013-11-30 Filed 2014-01-29
10-Q 2013-08-31 Filed 2013-10-09
10-Q 2013-02-28 Filed 2013-04-09
10-K 2012-11-30 Filed 2013-01-29
10-Q 2012-08-31 Filed 2012-10-10
10-Q 2012-05-31 Filed 2012-07-10
10-Q 2012-02-29 Filed 2012-04-09
10-K 2011-11-30 Filed 2012-01-30
10-Q 2011-08-31 Filed 2011-10-11
10-Q 2011-05-31 Filed 2011-07-08
10-Q 2011-02-28 Filed 2011-04-11
10-K 2010-11-30 Filed 2011-01-31
10-Q 2010-08-31 Filed 2010-10-12
10-Q 2010-05-31 Filed 2010-07-09
10-Q 2010-02-28 Filed 2010-04-09
10-K 2009-11-30 Filed 2010-01-29
8-K 2020-06-25
8-K 2020-05-14
8-K 2020-03-26
8-K 2020-01-16
8-K 2020-01-16
8-K 2019-10-24
8-K 2019-10-04
8-K 2019-09-26
8-K 2019-06-27
8-K 2019-06-21
8-K 2019-05-09
8-K 2019-04-30
8-K 2019-03-28
8-K 2019-03-28
8-K 2019-03-19
8-K 2019-01-17
8-K 2018-09-27
8-K 2018-06-27
8-K 2018-05-17
8-K 2018-04-13
8-K 2018-03-28
8-K 2018-03-06
8-K 2018-02-20
8-K 2018-01-10

PRGS 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Note 1: Basis of Presentation
Note 2: Cash, Cash Equivalents and Investments
Note 3: Derivative Instruments
Note 4: Fair Value Measurements
Note 5: Intangible Assets and Goodwill
Note 6: Business Combinations
Note 7: Term Loan and Line of Credit
Note 8: Leases
Note 9: Common Stock Repurchases
Note 10: Stock - Based Compensation
Note 11: Accumulated Other Comprehensive Loss
Note 12: Revenue Recognition
Note 13: Restructuring Charges
Note 14: Income Taxes
Note 15: Earnings per Share
Note 16: Business Segments and International Operations
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 exhibit311-q22020.htm
EX-31.2 exhibit312-q22020.htm
EX-32.1 exhibit321-q22020.htm

Progress Software Earnings 2020-05-31

Balance SheetIncome StatementCash Flow
0.90.70.50.40.20.02012201420172020
Assets, Equity
0.20.10.10.0-0.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____.
Commission File Number: 0-19417
 
PROGRESS SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
 

Delaware
 
04-2746201
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

14 Oak Park
Bedford, Massachusetts 01730
(Address of principal executive offices) (Zip code)

(781280-4000
(Registrant’s telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report.)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
PRGS
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
Non-accelerated filer
 
(Do not check if a smaller reporting company)
Smaller reporting company
 
Emerging growth company
 
 
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
As of June 26, 2020, there were 45,035,856 shares of the registrant’s common stock, $.01 par value per share, outstanding.



PROGRESS SOFTWARE CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MAY 31, 2020
INDEX

 
 
 
PART I
 
 
 
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
PART II
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.
 
 
 
 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

(In thousands, except share data)
May 31,
2020
 
November 30,
2019
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
193,222

 
$
154,259

Short-term investments
10,423

 
19,426

Total cash, cash equivalents and short-term investments
203,645

 
173,685

Accounts receivable (less allowances of $881 and $825, respectively)
54,527

 
72,820

Unbilled receivables and contract assets
12,540

 
10,880

Other current assets
20,686

 
27,280

Total current assets
291,398

 
284,665

Long-term unbilled receivables and contract assets
10,194

 
12,492

Property and equipment, net
27,693

 
29,765

Intangible assets, net
87,774

 
99,392

Goodwill
431,869

 
432,824

Deferred tax assets
17,995

 
18,601

Operating lease right-of-use assets
24,681

 

Other assets
3,998

 
3,532

Total assets
$
895,602

 
$
881,271

Liabilities and shareholders’ equity
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt, net
$
14,480

 
$
10,717

Accounts payable
8,815

 
10,603

Accrued compensation and related taxes
21,549

 
34,444

Dividends payable to shareholders
7,539

 
7,498

Short-term operating lease liabilities
6,618

 

Income taxes payable
2,443

 
1,444

Other accrued liabilities
10,179

 
18,685

Short-term deferred revenue
153,549

 
157,494

Total current liabilities
225,172

 
240,885

Long-term debt, net
276,762

 
284,002

Long-term operating lease liabilities
19,896

 

Long-term deferred revenue
19,741

 
19,752

Other noncurrent liabilities
14,070

 
6,350

Commitments and contingencies

 

Shareholders’ equity:
 
 
 
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none

 

Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 45,033,417 shares in 2020 and 45,036,441 shares in 2019
304,282

 
295,953

Retained earnings
73,923

 
64,303

Accumulated other comprehensive loss
(38,244
)
 
(29,974
)
Total shareholders’ equity
339,961

 
330,282

Total liabilities and shareholders’ equity
$
895,602

 
$
881,271

See notes to unaudited condensed consolidated financial statements.

3


Condensed Consolidated Statements of Operations
 
 
Three Months Ended
 
Six Months Ended
(In thousands, except per share data)
May 31,
2020
 
May 31,
2019
 
May 31,
2020
 
May 31,
2019
Revenue:
 
 
 
 
 
 
 
Software licenses
$
19,663

 
$
29,728

 
$
50,292

 
$
52,530

Maintenance and services
80,720

 
70,267

 
159,774

 
137,014

Total revenue
100,383

 
99,995

 
210,066

 
189,544

Costs of revenue:
 
 
 
 
 
 
 
Cost of software licenses
810

 
925

 
2,199

 
2,092

Cost of maintenance and services
11,785

 
10,580

 
23,636

 
20,019

Amortization of acquired intangibles
1,664

 
6,106

 
3,310

 
11,539

Total costs of revenue
14,259

 
17,611

 
29,145

 
33,650

Gross profit
86,124

 
82,384

 
180,921

 
155,894

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
21,716

 
24,832

 
45,914

 
47,155

Product development
21,787

 
21,688

 
43,441

 
41,578

General and administrative
12,440

 
12,654

 
25,188

 
24,939

Amortization of acquired intangibles
4,177

 
4,585

 
8,308

 
7,773

Restructuring expenses
695

 
2,777

 
1,735

 
3,192

Acquisition-related expenses

 
1,107

 
314

 
1,107

Total operating expenses
60,815

 
67,643

 
124,900

 
125,744

Income from operations
25,309

 
14,741

 
56,021

 
30,150

Other (expense) income:
 
 
 
 
 
 
 
Interest expense
(2,598
)
 
(2,210
)
 
(5,390
)
 
(3,599
)
Interest income and other, net
122

 
344

 
333

 
573

Foreign currency loss, net
(371
)
 
(451
)
 
(1,187
)
 
(1,294
)
Total other expense, net
(2,847
)
 
(2,317
)
 
(6,244
)
 
(4,320
)
Income before income taxes
22,462

 
12,424

 
49,777

 
25,830

Provision for income taxes
5,494

 
4,243

 
11,693

 
8,247

Net income
$
16,968

 
$
8,181

 
$
38,084

 
$
17,583

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.38

 
$
0.18

 
$
0.85

 
$
0.39

Diluted
$
0.37

 
$
0.18

 
$
0.84

 
$
0.39

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
44,889

 
44,611

 
44,893

 
44,784

Diluted
45,267

 
45,287

 
45,391

 
45,287

 
 
 
 
 
 
 
 
Cash dividends declared per common share
$
0.165

 
$
0.155

 
$
0.330

 
$
0.310

See notes to unaudited condensed consolidated financial statements.

4


Condensed Consolidated Statements of Comprehensive Income

 
Three Months Ended
 
Six Months Ended
(In thousands)
May 31, 2020
 
May 31, 2019
 
May 31, 2020
 
May 31, 2019
Net income
$
16,968

 
$
8,181

 
$
38,084

 
$
17,583

Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(2,982
)
 
(2,030
)
 
(4,190
)
 
(551
)
Unrealized loss on hedging activity, net of tax benefit of $760 and $1,468 for the second quarter and first six months of 2020, respectively
(2,058
)
 

 
(4,164
)
 

Unrealized gain on investments, net of tax provision of $41 and $45 for the second quarter and first six months of 2020, respectively, and $18 and $48 for the second quarter and first six months of 2019, respectively
13

 
54

 
84

 
137

Total other comprehensive loss, net of tax
(5,027
)
 
(1,976
)
 
(8,270
)
 
(414
)
Comprehensive income
$
11,941

 
$
6,205

 
$
29,814

 
$
17,169


See notes to unaudited condensed consolidated financial statements.


5


Condensed Consolidated Statements of Shareholders’ Equity
 
 
Six Months Ended May 31, 2020
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Total Shareholders' Equity
(in thousands)
Number of Shares
 
Amount
 
 
 
 
Balance, December 1, 2019
45,037

 
$
450

 
$
295,503

 
$
64,303

 
$
(29,974
)
 
$
330,282

Issuance of stock under employee stock purchase plan
124

 
1

 
3,512

 

 

 
3,513

Exercise of stock options
113

 
1

 
3,527

 

 

 
3,528

Vesting of restricted stock units and release of deferred stock units
185

 
2

 
(2
)
 

 

 

Withholding tax payments related to net issuance of restricted stock units

 

 
(3,895
)
 

 

 
(3,895
)
Stock-based compensation

 

 
11,674

 

 

 
11,674

Dividends declared

 

 

 
(14,955
)
 

 
(14,955
)
Treasury stock repurchases and retirements
(426
)
 
(4
)
 
(6,487
)
 
(13,509
)
 

 
(20,000
)
Net income

 

 

 
38,084

 

 
38,084

Other comprehensive loss

 

 

 

 
(8,270
)
 
(8,270
)
Balance, May 31, 2020
45,033

 
$
450

 
$
303,832

 
$
73,923

 
$
(38,244
)
 
$
339,961

 
Three Months Ended May 31, 2020
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Total Shareholders' Equity
(in thousands)
Number of Shares
 
Amount
 
 
 
 
Balance, March 1, 2020
44,769

 
$
448

 
$
296,251

 
$
64,475

 
$
(33,217
)
 
$
327,957

Issuance of stock under employee stock purchase plan
85

 
1

 
2,318

 

 

 
2,319

Exercise of stock options
51

 

 
1,587

 

 

 
1,587

Vesting of restricted stock units and release of deferred stock units
128

 
1

 
(1
)
 

 

 

Withholding tax payments related to net issuance of restricted stock units

 

 
(1,946
)
 

 

 
(1,946
)
Stock-based compensation

 

 
5,623

 

 

 
5,623

Dividends declared

 

 

 
(7,520
)
 

 
(7,520
)
Net income

 

 

 
16,968

 

 
16,968

Other comprehensive loss

 

 

 

 
(5,027
)
 
(5,027
)
Balance, May 31, 2020
45,033

 
$
450

 
$
303,832

 
$
73,923

 
$
(38,244
)
 
$
339,961






6


Condensed Consolidated Statements of Shareholders’ Equity (cont.) 
 
Six Months Ended May 31, 2019
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Total Shareholders' Equity
(in thousands)
Number of Shares
 
Amount
 
 
 
 
Balance, December 1, 2018
45,115

 
$
451

 
$
266,602

 
$
85,125

 
$
(28,176
)
 
$
324,002

Issuance of stock under employee stock purchase plan
99

 
1

 
2,802

 

 

 
2,803

Exercise of stock options
44

 

 
1,317

 

 

 
1,317

Vesting of restricted stock units and release of deferred stock units
146

 
1

 
(1
)
 

 

 

Withholding tax payments related to net issuance of restricted stock units
(37
)
 

 
(1,637
)
 

 

 
(1,637
)
Stock-based compensation

 

 
11,922

 

 

 
11,922

Issuance of shares related to non-compete agreement (Note 6)
44

 

 
2,000

 

 

 
2,000

Adjustment due to adoption of ASU 2016-09

 

 

 
(3,397
)
 

 
(3,397
)
Dividends declared

 

 

 
(13,832
)
 

 
(13,832
)
Treasury stock repurchases and retirements
(688
)
 
(5
)
 
(1,260
)
 
(23,735
)
 

 
(25,000
)
Net income

 

 

 
17,583

 

 
17,583

Other comprehensive income

 

 

 

 
(414
)
 
(414
)
Balance, May 31, 2019
44,723

 
$
448

 
$
281,745

 
$
61,744

 
$
(28,590
)
 
$
315,347

 
Three Months Ended May 31, 2019
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Total Shareholders' Equity
(in thousands)
Number of Shares
 
Amount
 
 
 
 
Balance, March 1, 2019
44,474

 
$
446

 
$
272,408

 
$
60,462

 
$
(26,614
)
 
$
306,702

Issuance of stock under employee stock purchase plan
61

 
1

 
1,805

 

 

 
1,806

Exercise of stock options
35

 

 
1,049

 

 

 
1,049

Vesting of restricted stock units and release of deferred stock units
146

 
1

 
(1
)
 

 

 

Withholding tax payments related to net issuance of restricted stock units
(37
)
 

 
(1,632
)
 

 

 
(1,632
)
Stock-based compensation

 

 
6,116

 

 

 
6,116

Issuance of shares related to non-compete agreement (Note 6)
44

 

 
2,000

 
 
 
 
 
2,000

Dividends declared

 

 

 
(6,899
)
 

 
(6,899
)
Net income

 

 

 
8,181

 

 
8,181

Other comprehensive income

 

 

 

 
(1,976
)
 
(1,976
)
Balance, May 31, 2019
44,723

 
$
448

 
$
281,745

 
$
61,744

 
$
(28,590
)
 
$
315,347


7


Condensed Consolidated Statements of Cash Flows
 
 
Six Months Ended
(In thousands)
May 31,
2020
 
May 31,
2019
Cash flows from operating activities:
 
 
 
Net income
$
38,084

 
$
17,583

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization of property and equipment
3,248

 
3,438

Amortization of acquired intangibles and other
11,993

 
19,900

Stock-based compensation
11,674

 
11,922

Non-cash lease expense
4,907

 

Loss on disposal of property and equipment
531

 
(18
)
Deferred income taxes
1,944

 
(6,707
)
Allowances for bad debt and sales credits
274

 
287

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
18,369

 
10,859

Other assets
4,968

 
7,722

Accounts payable and accrued liabilities
(18,664
)
 
(4,627
)
Lease liabilities
(4,076
)
 

Income taxes payable
940

 
1,937

Deferred revenue
(3,219
)
 
2,822

Net cash flows from operating activities
70,973

 
65,118

Cash flows from (used in) investing activities:
 
 
 
Purchases of investments
(5,009
)
 
(5,750
)
Sales and maturities of investments
14,051

 
14,709

Purchases of property and equipment
(1,757
)
 
(1,080
)
Payments for acquisitions, net of cash acquired

 
(225,298
)
Proceeds from sale of property, plant and equipment, net

 
6,146

Net cash flows from (used in) investing activities
7,285

 
(211,273
)
Cash flows (used in) from financing activities:
 
 
 
Proceeds from stock-based compensation plans
7,308

 
4,303

Payments for taxes related to net share settlements of equity awards
(3,895
)
 
(1,637
)
Repurchases of common stock
(20,000
)
 
(25,000
)
Dividend payments to shareholders
(14,906
)
 
(13,886
)
Proceeds from the issuance of debt

 
184,984

Payment of principle on long-term debt
(3,762
)
 
(1,547
)
Payment of issuance costs for long-term debt

 
(1,611
)
Net cash flows (used in) from financing activities
(35,255
)
 
145,606

Effect of exchange rate changes on cash
(4,040
)
 
(1,328
)
Net increase (decrease) in cash and cash equivalents
38,963

 
(1,877
)
Cash and cash equivalents, beginning of period
154,259

 
105,126

Cash and cash equivalents, end of period
$
193,222

 
$
103,249


8


Condensed Consolidated Statements of Cash Flows, continued
 
Six Months Ended
 
May 31,
2020
 
May 31,
2019
Supplemental disclosure:
 
 
 
Cash paid for income taxes, net of refunds of $239 in 2020 and $176 in 2019
$
4,587

 
$
4,242

Cash paid for interest
$
4,898

 
$
2,990

Non-cash investing and financing activities:
 
 
 
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested
$
12,090

 
$
8,063

Dividends declared
$
7,539

 
$
6,944

See notes to unaudited condensed consolidated financial statements.

9


Notes to Condensed Consolidated Financial Statements

Note 1: Basis of Presentation

Company Overview - Progress Software Corporation ("Progress," the "Company," "we," "us," or "our") offers the leading platform for developing and deploying strategic business applications. We enable customers and partners to deliver modern, high-impact digital experiences with a fraction of the effort, time and cost. Progress offers powerful tools for easily building adaptive user experiences across any type of device or touchpoint, the flexibility of a cloud-native app dev platform to deliver modern apps, leading data connectivity technology, web content management, business rules, secure file transfer and network monitoring. Over 1,700 independent software vendors ("ISVs"), 100,000 enterprise customers, and 2 million developers rely on Progress to power their 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. More than half of our worldwide license revenue is realized through relationships with indirect channel partners, principally application partners, original equipment manufacturers ("OEMs"), distributors and value-added resellers. Application partners are ISVs that develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology. OEMs are companies that embed our products into their own software products or devices. Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution.

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

Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019 ("Annual Report on Form 10-K for the fiscal year ended November 30, 2019").

We made no material changes in the application of our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019. We have prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an on-going basis, management evaluates its estimates and records changes in estimates in the period in which they become known. These estimates are based on historical data and experience, as well as various other assumptions that management believes to be reasonable under the circumstances. The most significant estimates relate to: the timing and amount of revenue recognition, including the determination of the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and the transaction price allocated to performance obligations; the realization of tax assets and estimates of tax liabilities; fair values of investments in marketable securities; assets held for sale; intangible assets and goodwill valuations; the recognition and disclosure of contingent liabilities; the collectability of accounts receivable; and assumptions used to determine the fair value of stock-based compensation. Actual results could differ from those estimates.


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Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements
In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. We adopted this standard at the beginning of the first quarter of fiscal year 2020; however, our existing accounting aligned with the guidance of ASU 2017-12 and therefore there was no impact to our financial statements from adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASC 842"). ASC 842 supersedes the requirements in Topic 840, Leases, and requires lessees to recognize right-of-use ("ROU") assets and liabilities for leases with lease terms of more than twelve months. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. We adopted ASC 842 effective December 1, 2019 using the modified retrospective transition method of applying the new standard at the adoption date. Results for reporting periods beginning on or after December 1, 2019 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Disclosures required under the new standard will not be provided for dates and periods before December 1, 2019.

The new standard provided a number of optional practical expedients in transition. We elected the transition package of practical expedients available in the standard, which allowed the carry forward of historical assessments of whether a contract contains a lease, lease classification and initial direct costs. We also elected the practical expedient provided in ASC 842 to not separate lease components from non-lease components for each material underlying asset class: office leases, vehicle leases and equipment leases. For each lease, the non-lease components and related lease components are accounted for as a single lease component. Items or activities that do not transfer goods or services to the lessee, such as administrative tasks to set up the contract and reimbursement or payment of lessor costs, are not components of the contract and therefore no contract consideration is allocated to such items or activities. We did not elect the hindsight practical expedient to determine the lease term for existing leases. The adoption of the new standard also resulted in significant additional disclosures regarding our leasing activities. Refer to Note 8 for further details.

Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement. The guidance in ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in ASU 2018-15.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 amends Topic 350 to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This update requires the performance of an annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance in ASU 2017-04 is required for annual reporting periods beginning after December 15, 2019, with early adoption permitted. Upon adoption, we do not expect this update to have a material effect on our consolidated financial position and results of operations.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"). The amendment changes the impairment model for most financial assets and certain other instruments. Entities will be required to use a model that will result in the earlier recognition of allowances for losses for trade and other receivables, contract assets, held-to-maturity debt securities, loans, and other instruments. ASU 2016-13 is effective for annual

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periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of ASU 2016-13 on our consolidated financial statements.

Note 2: Cash, Cash Equivalents and Investments

A summary of our cash, cash equivalents and available-for-sale investments at May 31, 2020 is as follows (in thousands):
 
 
Amortized Cost Basis
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
Cash
$
187,573

 
$

 
$

 
$
187,573

Money market funds
5,649

 

 

 
5,649

U.S. treasury bonds
4,994

 
89

 

 
5,083

Corporate bonds
5,277

 
63

 

 
5,340

Total
$
203,493

 
$
152

 
$

 
$
203,645


A summary of our cash, cash equivalents and available-for-sale investments at November 30, 2019 is as follows (in thousands):
 
 
Amortized Cost Basis
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
Cash
$
144,346

 
$

 
$

 
$
144,346

Money market funds
9,913

 

 

 
9,913

State and municipal bond obligations
7,036

 
1

 

 
7,037

U.S. treasury bonds
7,221

 
10

 

 
7,231

Corporate bonds
5,146

 
12

 

 
5,158

Total
$
173,662

 
$
23

 
$

 
$
173,685



Such amounts are classified on our condensed consolidated balance sheets as follows (in thousands):