Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Progress Software (NASDAQ:PRGS)
Q2 2020 Earnings Call
Jun 25, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day and welcome to the Progress Software Corporation Q2 2020 investor relations conference call. At this time, I'd like to turn the conference over to Mr. Brian Flanagan, vice president of investor relations. Please go ahead, sir.

Brian Flanagan -- Vice President of Investor Relations

Thank you, Nadia. Good afternoon, everyone, and thanks for joining us for Progress Software's fiscal second-quarter 2020 earnings call. With me today is Yogesh Gupta, president and chief executive officer; and Anthony Folger, our 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 and operating performance, corporate strategies, product plans, cost initiatives, the impact of the COVID-19 crisis 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. Please review our safe harbor statement regarding this information, which is available in today's earnings release as well as in the Investor Relations section of our website at progress.com. 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, the revenue, operating margin, diluted earnings per share and adjusted free cash flow amounts we refer to are on a non-GAAP basis.

You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our earnings release issued today. Today, we published our financial press release on our website. This document contains the full details of our financial results for the fiscal second-quarter 2020, and I recommend you reference it for specific details. We have also published a presentation that contains supplemental data for our second-quarter 2020 results, providing highlights and additional financial metrics.

This presentation is 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 our website in the Investor Relations section. And with that, I'll now turn it over to Yogesh.

Yogesh Gupta -- President and Chief Executive Officer

Thank you, Brian. Good afternoon, everyone, and thank you for attending our Q2 earnings call. Let me start by saying that I'm thrilled with our results for the second quarter, especially in light of the ongoing macroeconomic disruption caused by COVID-19. Progress' business has proven to be incredibly durable, and I'd like to expand a bit on how we are continuing to execute through this unprecedented crisis.

Our entire global workforce has been working from home for over three months now without missing a beat. The infrastructure and systems we've had in place have enabled us to effectively run our business remotely, and our employees continue to exhibit great flexibility and dedication, working diligently to provide the high levels of product, support and relationship management that our customers and partners need and expect. Keeping our employees healthy and safe and preventing the spread of the virus in our communities is a much higher priority for us than returning to the office, so our plan is to continue to work remotely for the foreseeable future. One of the reasons our business has been so durable, even in the face of the economic upheaval caused by COVID-19, is our long-standing partner relationships.

This includes the ISVs that built their applications on top of OpenEdge and the OEMs that embed DCI into their products. We've been in frequent contact with many of our ISVs and OEMs, and we believe that their businesses share many of the same characteristics that make Progress so strong. The products they have built that utilize Progress technology have large, established customer base. These customers provide them with high levels of recurring revenue and a measure of stability during these uncertain times.

With our own high percentage of recurring revenue and the mission-critical nature of our offerings and the applications they power, we were able to deliver solid results in Q2, and we are well-positioned for the remainder of 2020. Revenue for Q2 was above the high end of our guidance range with EPS near the high end, and we achieved strong cash flows despite the headwinds of COVID-19. Some of the revenue overachievement was due to favorable FX impacts during the quarter, but all of our businesses performed well relative to expectations, giving us even more confidence in our outlook for the year. During the quarter, we signed two new important customers for DCI: one, a major U.S.-based financial media and publishing firm; and the other, one of the world's largest global e-commerce companies.

Both deals provide further evidence of the mission-critical nature of our offerings and of DCI's position as the industry standard for data connectivity featuring best-in-class security, scalability and support. One of the ways we keep our business healthy and strong is by continuing to advance our technology through product investment. Despite working from home, our product road maps and release plans remain on schedule with our engineering organizations continuing to work diligently on features and enhancements across our portfolio, helping to support our strong retention rates. During the quarter, we released OpenEdge 12.2, which features improved availability and security; and MOVEit 2020, which further improves secure data file transfer for remote workforces.

These product enhancements are particularly important and timely, providing features that companies need right now given the worldwide shift to working from home. We also launched new releases of our DevTools products, extending our lead and providing the first and most comprehensive set of native development tools for Microsoft Blazor and of Sitefinity, our market-leading digital experience platform. One of our Sitefinity customers is the World Health Organization, which is a definitive resource for information on COVID-19. Sitefinity underpins all the information that the WHO is currently providing on their website, which has seen a dramatic increase in traffic during the current pandemic.

Based on our Q2 performance, the visibility we have into the rest of the year and ongoing feedback from our customers and partner base, our expectations for the full year have improved. We are raising our revenue guidance largely to reflect the recent foreign exchange fluctuations. We're also increasing our outlook for EPS, partially due to the favorable FX impact I just mentioned, but also due to lower anticipated spending as a result of COVID-19 and other efforts to operate our business more efficiently. Anthony will provide more details on our guidance changes in his remarks.

There's still a lot of uncertainty in the market that we will continue to monitor closely. But now more than ever, we remain confident in the long-term opportunity ahead of us. So let's now turn to a discussion of that long-term opportunity. As you know, our strategic focus is to complement our stable businesses with accretive M&A in the infrastructure software space.

We are targeting businesses that are complementary to ours in terms of product, audience and growth profile and which also meet the following financial criteria: one, they have high levels of recurring revenue with excellent renewal rates; two, which, after synergies, will deliver operating margins consistent with our margin structure; and most importantly, we generate a return on invested capital that is above our weighted average cost of capital. The potential pool of target companies in the sub-$100 million revenue market range -- revenue range is large enough to support our accretive acquisition strategy for many years, making this a viable path to delivering long-term value. And we are well-positioned, both financially and operationally, to execution on acquisitions of this type with strong free cash flow generation, capacity for additional debt and the ability to leverage our own operational and back-office infrastructure to achieve meaningful cost synergies. Using last year's successful acquisition of Ipswitch as a repeatable template, I am more encouraged than ever that we can achieve our goal of doubling the size of our company in five years through accretive M&A.

The current disruption in global markets has favorably impacted our M&A outlook in multiple ways. First, we have begun to see a decline in valuation expectations from companies considering a sale. This should provide a greater opportunity for us to find the right assets at the right valuation. Second, more investors are now faced with the decision of whether to invest more heavily in their portfolio of companies during these uncertain economic times, or, alternatively, whether to explore a sale.

While each business will consider unique circumstances, we expect to see more deals come to market during this time of uncertainty. Finally, we believe the increased economic uncertainty may result in fewer competitors who can match our financial strength, making Progress a more attractive and credible acquirer for these assets. As we navigate these developing trends in the M&A environment, we're also taking steps to strengthen our internal capabilities to identify and integrate target companies. We took an important step in this direction in Q2 when we hired Jeremy Segal, our new senior vice president of corporate development.

Jeremy brings with him more than 20 years of experience in leading M&A functions at several technology companies, and he has completed more than 35 software transactions during his career, delivering significant revenue growth and increased shareholder value. With Jeremy's addition, we have expanded our internal capabilities. And with our strong balance sheet and consistent cash flows, we will continue to be aggressive and disciplined as we execute on our accretive M&A strategy. Before I close, I'd also like to comment on another issue facing us.

Over the past month, it has become increasingly apparent that our country has long-standing systemic issues with racial and economic inequality that must be addressed. The recent demonstrations and protests have highlighted that it's time for all of us, individuals, communities, businesses and governments, to step up and help to eliminate these long-standing racial biases. At Progress, I pledge that we will do our part to do what is right and begin to effect the real changes that are long overdue in our society. For us, our efforts will include providing greater opportunities for racial minorities and other underrepresented groups in our hiring, promotion and retention practices.

This starts with changing attitudes and behaviors and a concerted effort with dedicated resources. To that end, we have committed to hiring a chief diversity officer to help me and our management team in moving these efforts forward. We've also committed to charitable giving to fight racial inequality and injustice, and we will encourage our employees to contribute as well and match their donations, amplifying the financial impact that we can have on these causes. These are just a few of the several actions we are taking at Progress to fight racial injustice.

I strongly believe that a more inclusive world benefits us all. And inclusion and diversity, which has been an important area of focus at Progress, will be of even greater importance as we move forward. In closing, I'd like to reiterate that I'm thrilled with our Q2 performance, and our business remains healthy and strong. Even as economies begin to function again, the future course of the pandemic is still largely unknown.

So we will continue to manage carefully and prudently through the current environment. We remain confident that our business is durable and diverse enough to continue to perform well, even in this unprecedented environment, and we are well-positioned to execute on our goal of doubling the size of our company in five years through accretive M&A which will deliver real shareholder value. I'd like to now turn the call over to Anthony to review our Q2 performance and the outlook for Q3 and the full year in more detail. Anthony?

Anthony Folger -- Chief Financial Officer

Thanks, Yogesh. Thanks, Brian. Good afternoon, everyone, and thank you all for joining the call. Total revenue for the second quarter was $102.5 million, $1.5 million above the high end of our guidance range we provided back in March.

As Yogesh mentioned, while much of this overperformance was driven by favorable exchange rates relative to those contemplated in our Q2 guidance, we also saw a slightly better-than-anticipated performance across our product lines as our teams executed well during the quarter. Overall, our top line is proving to be extremely durable and stable, even in the face of the current macroeconomic downturn caused by COVID-19. This is, in large part, due to the high level of recurring revenue in our business, which has been largely unaffected by the recent economic downturn. Our net revenue retention rate on maintenance remains well over 90%, and the SaaS-related revenue from our OpenEdge ISVs who have deployed their applications in the cloud continues to be solid and steady.

On a year-over-year basis, total revenue decreased by 1% but increased by 1% on a constant-currency basis. A few things to keep in mind when comparing our Q2 results on a year-over-year basis are the recent anniversary of the Ipswitch acquisition. We have a full quarter of Ipswitch revenue in our Q2 2020 results as compared to only one month in Q2 of 2019. This positive impact from Ipswitch is partially offset by the second item, which is a year-over-year decline in DCI revenue, which is consistent with the expectations we outlined during our January and March earnings calls.

As a reminder, the timing of DCI contract renewals with certain OEM partners can significantly impact our top line in any given quarter. ASC 606 generally requires immediate revenue recognition of our multiyear term license agreements with the OEM partners who embed our DCI product into their solutions. As a result, our quarterly revenues can fluctuate materially depending on when these contracts renew. This timing benefited us in fiscal year 2019 and again in the first quarter of 2020 have caused our DCI revenue to decline year over year by $9 million in Q2.

We expect this accounting impact on recognized revenue to result in year-over-year declines in DCI revenue in the second half of the year, as well driven by fewer scheduled renewals of multiyear contracts during the remainder of 2020. This obviously makes year-over-year comparisons for DCI more challenging and is the reason we believe annual contract value remains the most effective way to evaluate our DCI business. We continue to expect ACV to be $32 million to $33 million for the full-year 2020, consistent with our actual performance in 2019. Turning now to expenses.

Our total costs and operating expenses were $62.9 million for the quarter, down $1.7 million compared to Q2 of 2019. This year-over-year decline is the result of several factors. First is the reduction in travel and in-person events, both of which were driven by restrictions put in place to combat the spread of COVID-19; next, our cost reductions we made in the second half of 2019 aimed at driving greater operating efficiency and margin expansion. And finally, both of these factors were partially offset by an increase in spend driven by a full quarter of Ipswitch activity in our Q2 2020 results compared to only one month in Q2 of 2019.

Operating income was $40 million for the quarter, up slightly compared to Q2 2019, and our operating margin was 39%, an increase of 100 basis points on a year-over-year basis as we continue to maintain best-in-class margins. On the bottom line, our earnings per share of $0.63 for the quarter was near the high end of our guidance range but down slightly from last year, primarily due to the low DCI revenue I mentioned earlier. Moving on now to a few balance sheet and cash flow metrics. We ended the quarter with cash, cash equivalents and short-term investments of $204 million and debt of $293 million.

DSO for the quarter was 47 days, an improvement of two days sequentially but up five days compared to Q2 of last year. This year-over-year increase was primarily due to the impact of COVID-19, which were in line with our expectations. Deferred revenue was $173 million at the end of the second quarter, down slightly compared to Q2 of 2019, reflecting typical seasonality. Adjusted free cash flow was $38 million for the quarter, down $3 million from Q2 of last year with the decrease in free cash flow driven primarily by the timing of collections.

We did not repurchase any stock during the second quarter as we paused to assess the potential impact to our business from COVID-19. At the end of the second quarter, however, we still had $230 million remaining under our current share repurchase authorization. I would now like to turn to our outlook for Q3 and for the full-year 2020. First, let me reiterate that, thus far, the impact of the COVID-19 crisis on our business has been largely in line with what we laid out during our last update in March.

And as a result, I remain confident that we can achieve our financial goals for 2020. That said, we recognize that the current challenging economic environment is likely to continue through the end of our fiscal year, and that overhang continues to be reflected in our 2020 outlook. With that, for the third quarter of 2020, we expect revenue between $104 million and $109 million. This contemplates a $4 million impact from the COVID-19 crisis, as well as a widening of our typical quarterly guidance range to account for greater uncertainty, consistent with the guidance methodology we utilized for Q2, earnings per share of between $0.69 and $0.71.

The year-over-year impact of exchange rates on both our Q3 revenue and earnings per share is expected to be immaterial. For the full-year 2020, we are increasing our revenue guidance to be between $433 million and $443 million with the increase largely due to a smaller foreign exchange headwind than what was contemplated in our guidance last quarter. When comparing our current revenue guidance to our 2019 results, it's important to highlight that we've included the same $10 million to $13 million impact for the COVID-19 crisis that we contemplated on our last call, a $2 million reduction for the anticipated negative impact of foreign exchange and a wider guidance range than we have historically provided at the midpoint of the year to account for greater uncertainty. We are raising our operating margin outlook to be approximately 40%, an increase of 100 basis points from our prior guidance.

We are projecting adjusted free cash flow to be between $125 million and $135 million, unchanged from our prior outlook. And we are increasing our guidance for earnings per share to be between $2.82 and $2.86 with the increase driven by less spend across the business and a smaller foreign exchange headwind than what was contemplated in our guidance last quarter. When comparing our current EPS guidance to 2019 results, it's again important to note that we've included a $0.02 reduction for the anticipated negative impact of foreign exchange on a year-over-year basis. Our annual EPS estimate contemplates a tax rate of 21%, approximately 45 million shares outstanding and the impact of 60 million in share repurchases we're targeting to complete by the end of 2020.

In closing, I'd like to reiterate that we are thrilled with our Q2 results and the durability and strength our business has displayed. We'll continue to monitor our operations and the external environment closely, and we remain confident that we can deliver solid results for Q3 and for the full year. With that, I'd like to open the call for Q&A.

Questions & Answers:


Operator

Thank you [Operator instructions] We'll take our first question from Steve Koenig from Wedbush Securities. Please go ahead.

Steven Koenig -- Wedbush Securities -- Analyst

Great. Thank you. Yogesh, Anthony, I hope you're doing well.

Yogesh Gupta -- President and Chief Executive Officer

Thanks, Steve. I hope you're well, too.

Steven Koenig -- Wedbush Securities -- Analyst

Yes, hanging in there. Thanks, Yogesh. Just wondering on OpenEdge. First off, as you look to renew some of your OpenEdge agreements and both in ISVs, but I was also thinking in terms of the direct sales as well as you have -- and in chunky renewals coming up this year, what are you doing to manage any risk around those renewals getting done, around maintenance not being too impacted by COVID? And what are you seeing out there with regards to those issues?

Yogesh Gupta -- President and Chief Executive Officer

So Steve, actually, the OpenEdge business is running really solid. We are seeing our renewals staying in the same renewal rates on maintenance, both for direct and indirect, in the same range that they have been prior to COVID-19. So really, really, a solid business. Obviously, if there were some opportunities to maybe do the deal and renew something a bit earlier, those may not happen.

So we might have the timing differences for us in terms of exactly when the renewals happen, but we don't expect renewals to be any different in terms of -- going forward. And the reason very simply, as you know, Steve, is that our OpenEdge platform is used both by ISVs as well as by our direct customers in mission-critical applications, and these mission-critical applications are ones that maintenance is something that is considered critical for them to have. It is their ability to reach out to us and ask for help when needed. It provides them with all of the updates and fixes and all kinds of things.

So there's tremendous value in what we deliver in our maintenance in addition to the upgrades that they get that even in the ongoing support but fixes and help. So we feel very good about the maintenance aspect of OE and not just OE. Actually, the entire portfolio, we continue to see solid maintenance renewal.

Steven Koenig -- Wedbush Securities -- Analyst

Cool. Thanks for that, Yogesh. If I may ask one follow-up. Would love to get color on the $10 million to $13 million COVID impact for the full year, which is unchanged.

Can you give us some color on a little -- maybe a little granularity on that? What -- is that mostly license? And are you seeing -- your ISVs from OpenEdge are -- they have -- they sell into the kind of a lot of the SMB markets in manufacturing but in other verticals. Kind of -- maybe just some color on where is the bulk of that impact coming from. And kind of geographically in your businesses, just where does it show up as well? When I say geographical, I'm kind of thinking more around product lines as well.

Anthony Folger -- Chief Financial Officer

Yes. And I can answer that one, Steve.

Steven Koenig -- Wedbush Securities -- Analyst

Great. Thank you.

Anthony Folger -- Chief Financial Officer

When we did the -- our assessment last quarter, we started with sort of the vertical analysis, and we really wanted to understand if we had exposure to any industry that might be hit unusually hard. And I think the answer to that is, no, there was no exposure to travel leisure, oil and gas, things like that. And so we do run through on a product-by-product basis and really made an assessment of how we're making money on these products. Is it through retention and expansion? Or do we have to continue to sell a lot of net new licenses? And for businesses like OpenEdge and even DCI, to an extent, it's about retention and expansion.

We do sell some net new deals, but it's largely retention and expansion. And I think based on the relationships we have with the partners and the OEMs that are selling those products and building applications on top of those products, I think we got comfortable that there was not quite as much impact there. And so we looked at a lot of the other product lines, those that tend to be more transactional and maybe slightly lower price point, especially those that rely on a lot of or more net new license sales. And that's really where we make the assessment to take the bookings and revenue down -- bookings and revenue assumptions down for the year.

Geographically, it was predominantly U.S. and EMEA where we play. I would say it was -- for the non-OpenEdge and DCI product lines, it was both direct and indirect. I don't think we felt that there was no risk in either channel.

And it probably will spread -- maybe weighted a little more heavily toward license sales, but we also contemplated a little bit of impact on maintenance, and that was probably across the board. So that's how we put it. And I guess I would say that in the second quarter, the results were probably a little better than we anticipated. I think the -- all the product lines held out very well.

And so the outlook, I think, remains largely the same for the potential impact, and we'll just have to continue to monitor as we move through the year.

Steven Koenig -- Wedbush Securities -- Analyst

Got it. That's super helpful, Anthony, and thanks a lot for your answers.

Anthony Folger -- Chief Financial Officer

Thanks, Steve.

Operator

Thank you for your questions. We're now going next to Anja Soderstrom from Sidoti & Company. Please go ahead.

Anja Soderstrom -- Sidoti and Company -- Analyst

Hi, Yogesh and Anthony, and congratulations on a good quarter. I hope you guys are doing well. If you can -- I mean, acquisition is going to be a strong driver, and you touched on the pipeline. Can you just maybe speak a little bit about how the environment has changed since we last spoke? It's maybe like three months, I think, since the COVID broke out.

So how has that affected the environment?

Yogesh Gupta -- President and Chief Executive Officer

So, Anja, thank you. As I alluded to a little bit, the -- I think the environment is more favorable to Progress, right? And it's more favorable to us on three different points the way we see it. I do think that a lot of the investors out there who have been looking at their businesses and saying which of their companies they want to continue to invest in and which they should maybe decide to sell, I think that is creating a bit of an opportunity for more opportunities to come to market. We have also secondly seen a decline in the valuation expectations from companies that are considering a sale.

And so again, that creates additional opportunity for us to find assets at the right value from our perspective. And lastly, we continue to be financially strong. And because we continue to be financially strong, we believe that we are a more attractive and credible acquirer during these times with the cash that we have, with the balance sheet that we have than some of our other folks that might be in the market looking to acquire businesses. So we see a healthy market.

We see opportunities, and we continue to be optimistic about our ability to execute in the current environment.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. And do you think -- do you expect valuations to come down further? Or -- so what are you waiting for to execute on something right now?

Yogesh Gupta -- President and Chief Executive Officer

What are you waiting for, that's a good question, Anja. It's always we continue to look at opportunities, right? And really, to us, it isn't whether the valuations in a broad basis need to come down further or not, right? It is asset by asset, right? What is it that an asset is available at? What is it that we can do with it? And as you know, we have very strict financial criteria regarding our deals, right? So we want to make sure that any deal we do has high levels of recurring revenue, has excellent renewal rates that we can take out enough costs so that the post synergies, their margins are going to be consistent with our margin structure. And of course, the most important aspect is we want to make sure that we generate a ROIC that is above our WACC. And to me, all those things mean that we look at each opportunity carefully.

And when it is right, we participate. And when it is not, we're also happy to move on, right? And so I don't see us waiting, so to speak, for valuations to come down further. I don't think that's sort of what it is. I think it is just identifying the right assets and making sure that we do our hard work and make sure that it does fit us.

So -- and again, we've said this all along, Anja, right? We are very aggressive about this, but at the same time, we're also very disciplined. And I have said this over and over, right, I'd like to do one deal a year, maybe 10% to 20% of our revenue. And if we can do that consistently, do some $100 million deals, we can actually, in five years, double the size of the company, and we feel confident that we can do that.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. Thank you for that additional color. And just curious for your recurring revenue. How long does those contracts tend to be? And how sticky is that?

Yogesh Gupta -- President and Chief Executive Officer

So that sort of varies a little bit by portfolio. So let me share with you. The DCI portfolio has probably the longest contracts, in fact, definitely the longest contracts on the average. Many of the ISVs that OEM, DCI will sign five-year contracts.

That's not unusual. Three years to five years is the vast majority of them. OpenEdge is a bit less, but OpenEdge is different, right? OpenEdge, the ISV business, is really -- it isn't renewal in the same sense. The ISV business is an ongoing relationship that basically is a revenue share model for the vast majority of them, and so it's more about they basically collect their maintenance revenue from their customers, and they pay us a piece of that.

Or if they expand their footprint at a customer and sell additional licenses that they sell -- give us a piece of that as our revenue. So there, it is actually -- really, they are quite long terms as well. I mean, these are not short-term agreements because these people have built their business applications on top of our platform, and these are mission critical to their customers, and they are business critical to these businesses because they are bread and butter for their businesses. The direct side of OE, again, I would say three years is probably the most common term there.

But when you come to the DevTools side and our Ipswitch product portfolio, WhatsUp Gold and MOVEit, those are typically shorter agreements. Many of them are one-year agreements. Some are two- and three-year agreements, but many of them are one-year agreements. So again, it varies with our portfolio.

And as we've said before, right, our maintenance renewal rates are above 90% for the whole business. And with products like OpenEdge, they are well into the 90s.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. Thank you. And then I'm also curious. You being a tech company, I assume you have a lot of foreign workforce.

And now with this executive order on foreign visas, how do you anticipate that impacting your business? Do you have a lot of [Inaudible]

Yogesh Gupta -- President and Chief Executive Officer

No. We -- actually, we -- yes. So Anja, interestingly enough, we don't really have a lot of employees that come to the U.S. from abroad that are on the kind of visas of -- the extended work here type of visas, right? They -- we have -- our international employees actually work out of India office and Bulgaria office, as well as other European and Asia Pacific as well, as well as CALA offices, right, the Central and Latin American offices.

So these folks primarily come from -- for business visits. Of course, none of those business visits are taking place right now. We're working from home. We're not doing any travel.

But those visas are very different than the work visas that have been put on hold, so we don't really see a meaningful impact for us actually because of this.

Anja Soderstrom -- Sidoti and Company -- Analyst

OK. Thank you. That was good color, and that was all for me. Thank you so much.

Yogesh Gupta -- President and Chief Executive Officer

Thank you, Anja.

Operator

Thank you. That concludes today's question-and-answer session. We'll go ahead and hand it back to the speakers. And before that, we have Mark Schappel from Benchmark who would like to ask one last question.

Mark Schappel -- The Benchmark Company -- Analyst

Hi. Good evening. Thank you for taking my question, and nice job on the quarter in this difficult environment here. Yogesh, a question for you.

Just a question on the share buyback program. With such a strong balance sheet, why suspend the buyback? If I recall correctly, you spent about $20 million last quarter on share repurchases. But maybe just give us a little bit of the thought process on suspending the buyback this quarter.

Yogesh Gupta -- President and Chief Executive Officer

Sure. So I -- and I'll let Anthony add as well. But from our perspective, it was purely prudence around making sure -- I mean, Mark, as you know, right, in March, the world was looking very uncertain, right? And we felt very confident about our business. But at the same time, right, it made sense to be prudent and not go ahead and do buybacks and preserve cash for the time being.

We did remarkably well in the quarter. I'm truly excited about it. Thank you for your compliments, but we just -- we were just prudent in the quarter and being cautious, just to make sure that we didn't go out and do something that we would later on regret. As simple as that.

No other reason.

Mark Schappel -- The Benchmark Company -- Analyst

OK, great. That's fair. And then just a follow-up on your DCI business. You've had some really nice wins over the last year or so in DCI, which is a pleasant surprise for renewal business.

Just -- if you can just give us a few additional details, if you could, on two new DCI deals this quarter.

Yogesh Gupta -- President and Chief Executive Officer

Yes. So, Mark, thank you. It's actually an interesting business, right? In general, it is a -- as you said, it's a maintain, renew business. That really is what it is in the vast, vast majority of it, right? What these two deals are, are basically -- so let me talk about them separately.

There's a large U.S. financial and media company that needed to connect its analytics information in their front-end applications to some of their data that they really were challenged in doing. They did not want to build the bridges themselves. They, of course, looked at everything else that was out there, being a financial institution.

Security and reliability were at the top of the list, and so we turned out to be the winners. And we're really happy about that, right? Similarly, the global e-commerce company, there also is an interesting case. They are also a user of Salesforce. They are -- they also have some other technologies, and they wanted to again access data, both from on-prem and cloud data, into one place for their own internal business reporting and business analysis.

And again, they found that we were the best solution for them as well. Their scale and performance were probably the bigger drivers, not that security is ever not a driver. Everybody wants something to be secure, but their actually scale and performance was the more key thing. So it's a -- we're really proud that we win these.

But at the same time, Mark, we win one or two a year. So I actually tell people that this -- it is great when we win one or two, but that's the way it goes. And it helps us with a little bit of churn we have on the -- it helps us with a little bit of churn we have with our other parts of this business.

Mark Schappel -- The Benchmark Company -- Analyst

Look, I remember a period of five-plus years where I don't think the company won a single DCI deal. So one or two a year is a very nice business here but on DCI, Yogesh.

Yogesh Gupta -- President and Chief Executive Officer

Well, I think -- thank you, Mark. Thank you. Yes.

Mark Schappel -- The Benchmark Company -- Analyst

Is this an outbound outreach that you're trying to generate this business? Or are these companies coming to you in DCI?

Yogesh Gupta -- President and Chief Executive Officer

I think it's a little bit of both. We are doing a little bit of online demand gen stuff through email marketing and so on. And then that's how the leads show up, and then we engage. It's primarily an inside sales effort to begin with.

And then with some of these large ones, we might even have a meeting. But of course, in these current last 90 days, there were no meetings. What's interesting about this, Mark, is I think, actually, what has been driving the few deals that we've been able to pick up over the last couple of years is really that the investment was made in R&D, right? If you think about it, right, we have now expanded our DCI capabilities to both do cloud and ground to cloud applications, data from cloud applications, data from cloud databases, data from on-prem applications, data from on-prem databases and availability of that data, connectivity of that data to cloud applications and to on-prem systems, so both ways, right? And I think that has tremendously been useful. We've actually added things like REST APIs and so on.

And plus, we have a very broad portfolio of technologies we connect to. So these are few and far between. But yes, we are truly happy that, over the last couple of years, we have made a few new wins.

Operator

Thank you very much. That concludes today's question-and-answer session. I'd like to give the conference back over to Mr. Brian Flanagan.

Please go ahead, sir.

Brian Flanagan -- Vice President of Investor Relations

Thank you all for joining the call today. As a note, we plan on releasing financial results for our fiscal third quarter of 2020 on Tuesday, September 29, 2020, after the financial markets close and holding the conference call the same day at 5 p.m. Eastern Time. I'll now turn the call over to Yogesh for his closing remarks.

Yogesh Gupta -- President and Chief Executive Officer

Thank you, Brian. With a solid Q2 behind us and despite the current level of uncertainty, we look forward to continued strong performance in the second half of 2020. Our company is financially strong and healthy, and we continue to execute aggressively on our strategy to drive long-term value through accretive M&A in the infrastructure software space. I want to thank all of you for joining us today, and I look forward to speaking with you again during our next quarter's conference call.

Stay healthy and safe.

Operator

[Operator signoff]

Duration: 55 minutes

Call participants:

Brian Flanagan -- Vice President of Investor Relations

Yogesh Gupta -- President and Chief Executive Officer

Anthony Folger -- Chief Financial Officer

Steven Koenig -- Wedbush Securities -- Analyst

Anja Soderstrom -- Sidoti and Company -- Analyst

Mark Schappel -- The Benchmark Company -- Analyst

More PRGS analysis

All earnings call transcripts