Progress Software Corporation (NASDAQ:PRGS) Q2 2023 Earnings Call Transcript

Yogesh Gupta: So at this point, Ray, the — because the issue is limited to MOVEit, we really have not had other customers come to us and raise concerns. One of the state of things in the software industry is that the vulnerabilities that show up all the time. I think somebody was telling me that more than 10,000 vulnerabilities have been highlighted by software vendors in this last six months alone. So it is in some way, unfortunately, it is the state of the world that basically you have cybercriminals going out there and doing what they do. So, no, we have not had customers of other products raise any issues at this point.

Ray McDonough: That makes sense. And then maybe a follow-up for you, Anthony. You guys beat non-GAAP operating margin guidance by a significant margin here and you’re maintaining your full year guidance as it relates to margins. Do you expect to ramp spending in terms of OpEx in the back half of the year? And should we be thinking about incremental spending on cybersecurity for instance to move the needle in terms of OpEx spending? Any color there would be helpful.

Anthony Folger: Yeah. Sure, Ray. I don’t think that we had I would say pretty significant investments in cyber coming into the year and we have for a couple of years ongoing now. And so I think with the top line beat if there is an opportunity to invest more where necessary, obviously, we would. But there are other costs in the business. Wage inflation continues to run and we talked about that from time-to-time and inflation generally seems to be pretty persistent. And so I think we are trying to give ourselves a little bit of latitude around the margin, on the operating margin as some of those costs may continue to escalate as the year goes on. I think that’s really it.

Ray McDonough: Great. Thanks for taking the questions.

Operator: Thank you. One moment for our next question and that will come from the line of Pinjalim Bora with JPMorgan. Your line is open.

Pinjalim Bora: Great. Thank you so much and congrats on a great quarter. Yogesh on the MOVEit point or the issue, I guess, I’m wondering if you can actually take any proactive steps or are you taking any kind of proactive steps to look at the rest of the product portfolio, mainly the new acquisitions to Ipswitch kind of the customers from those using those products?

Yogesh Gupta: So, Pinjalim, that is a really, really good question, right? So we, of course, have had a very robust security program at Progress. We take product security extremely seriously. I’m sure you can imagine being a provider of software to the wide range of customers that we are. We have — we are basically investigating. So right now, by the way, first, in the last four weeks, it has been all hands on deck for our customers. So I just I don’t want to imply that we are going around doing other things. But we are looking to sort of see are there other areas of our products where we need to do better in the area of security. We also I think maybe need to look at whether we are going to improve our M&A process around security of the products we acquire.