Mar 25, 2021
Operator
Ladies and gentlemen, good day and welcome to the Progress Software Corporation First Quarter 2021 Investor Relations Call. At this time, I would like to turn the conference over to Mr.
Michael Micciche, the Vice President of Investor Relations. Please go ahead, sir.
Michael Micciche
Great. Thank you, David.
Thank you, David. Good afternoon, everyone, and thanks for joining us for Progress Software's fiscal first quarter 2021 financial results conference call.
My name is Mike Micciche. I recently joined Progress as Vice President of Investor Relations.
Feel to be on board and I look forward to meeting all of you soon. With me 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 integration of the -- of Chef, the impact of the COVID-19 crisis on our business and other information that might be considered forward looking.
Yogesh Gupta
Yeah. Thank you, Mike and welcome.
It's great to have you on board. And thank you all for joining our Q1 2021 financial results conference call.
As I'm sure you've seen by now the first quarter was an excellent start to 2021 highlighted by better than expected performance across all metrics. Our overall performance was driven by a combination of strong execution and an improving demand environment from our customers and partners spanning virtually all of our product lines.
We benefited from improved macroeconomic conditions as more businesses reopened from COVID-19 and became more active with their IT projects. What's more, our performance of the mission critical nature of our comprehensive product portfolio, which remains as strategic as ever to our customers and partners.
As a result of our strong Q1 performance and increased confidence in our business, we have meaningfully raised our 2021 outlook for revenue, EPS, and cash flow. And Anthony will cover this in more detail as part of his comment.
Anthony Folger
Great. Thanks, Yogesh, and good afternoon, everyone.
Thanks for joining our call. As Yogesh mentioned, we're very pleased with our Q1 results and feel we're positioned well for the year ahead.
Our revenue for the quarter came in at $131.8 million, well above the high end of the guidance range we provided back in January and represents 16% growth on a year-over-year basis. Our top line results in the quarter were driven by better-than-expected performance across all of our product lines but much of the outperformance came from OpenEdge, our Ipswitch products, WhatsUp Gold, and MOVEit, and finally Chef.
I'd also like to point out that our strong Q1 performance was more than enough to offset the expected year-over-year decline of more than $8 million in our data direct products, which we mentioned as part of our outlook back in January. We've previously discussed how ASC 606 has affected revenue recognition for subscription products such as DataDirect.
With the addition of Chef to our portfolio, an increasing proportion of our revenue now comes from recurring sources whether they be on-prem subscriptions, term license agreements, or SaaS deployment models. In order to provide better insight into the underlying performance of our business, to address the potential variability in revenue recognition resulting from these different revenue models and to highlight the durability of our recurring revenue base beginning in the first quarter, we are disclosing annualized recurring revenue and net dollar retention rate.
We've provided clear definitions of these metrics in the supplemental We've provided clear definitions of these metrics in the supplemental presentation accompanying our press release and I'd like to comment briefly on both. First, our Q1 ending ARR was $432 million, an increase of 22% on a year-over-year basis with the increase largely driven by the acquisition of Chef.
It's also worth highlighting however that on a pro forma basis which would include Chef’s pre-acquisition ARR, our ARR would still reflect low-single-digit growth in the first quarter of 2021 when compared to the first quarter of 2020. That stability coupled with a net dollar retention rate that's consistently ranged between 97% and 100% provides us with confidence in the durability of our top line.
We will continue to provide these ARR and NRR metrics quarterly and we look forward to discussing them further on future calls.
Operator
Thank you. Our first questioner is Anja Soderstrom with Sidoti.
Anja Soderstrom
Hi, everyone. Thank you for taking my question and congratulations on a great quarter.
I just had a first question on the guidance. Since like for the full year increase you might be a little bit conservative considering the beat on the first quarter, can you just talk a little bit about that?
Yogesh Gupta
So, hey, Anja. Thank you first of all.
Yeah, it was a wonderful quarter. In terms of our ways, as you know historically, when we’ve beaten the top line in the first quarter by a couple of million dollars, we have usually not done any changes to our top line for the year.
And that's because that's still three quarters ahead. Because of the really strong performance and our confidence in the way that business is shaping up for the whole year, we thought that we could raise it in a meaningful way with the ways that we have now.
Anja Soderstrom
Okay. And sounds good.
And then, how about the momentum down through quarter and into the second quarter, it seems like -- it sounds like that's very strong.
Yogesh Gupta
Yeah. We've had a really good quarter.
We have provided guidance for Q2 based on what we think we expect for the second quarter. We are confident about the way business is .
And at this point, of course, through uncertainty sake, the COVID is not behind us. There is still pockets where businesses have been locked -- that basically are in lockdown mode.
But we feel confident about the trajectory of our business. We feel confident about our execution.
We feel confident about the demand for our products. And so, our guidance reflects that confidence.
Anja Soderstrom
Thank you. And one more from me in regards to M&A, you made a comment about your expansion of the sourcing channels.
Can you elaborate on that?
Yogesh Gupta
And of course, Anja so, historically we have focused of course with working closely with investment bankers, that has gotten expanded. In fact, we have many more investors -- investment banker relationships.
Once Jeremy came on board, he has been able to expand that in a meaningful way. We have also spent a significant amount of effort and time connecting with a whole host of venture capitalists who have portfolios that are in the application development, deployment, and management market segments that have products what would fit in our product portfolio.
And that basically could have opportunities that are getting to be of scale. So that's another area where Jeremy and the team have done a really good job of expanding.
We are also connecting with more founders as well for founder-led companies. If you’d recall, Ipswitch was the company that was still owned by Roger Greene, who was the Founder.
And so, we were able to do that and so expanding that channel has been another effort. And last but not least, we are also expanding our relationships with some of the larger technology companies that might have some carve-out and that's a very small universe that you know.
But still, we have begun to have conversations with them as well. So again, to us, it is trying to find all venues and all avenues for us to be able to find more opportunities and to be able to find the right ones that fit us, not only from the perspective of the business criteria, right, high levels of recurring revenue, high retention rates, but also where we believe we can generate meaningful value for our shareholders by being disciplined on the financial side.
So, that's what we've been doing. And also Anja as an aside, we also have continued to improve and strengthen our internal capabilities so that we can do multiple deals that we can have the Chef deal done.
And as we said in January, we were ready to do another one. And so, that is why we feel really confident about our ability to continue to execute on our total growth strategy, driven by M&A.
Anja Soderstrom
Okay. Thank you.
That was all for me.
Yogesh Gupta
Thank you, Anja.
Operator
Thank you. Our next question comes from Mark Schappel with Benchmark.
Mark Schappel
Hi, guys.
Yogesh Gupta
Hey, Mark.
Mark Schappel
How are you doing? So just a couple of questions to start with you.
First off, a very nice job in the quarter.
Yogesh Gupta
Thank you.
Mark Schappel
With respect to the OpenEdge ISV business, it continues to perform well. I was wondering if you could just provide any additional color with respect to what maybe your ISV partners are telling you they're seeing in the business.
Yogesh Gupta
Yeah. So absolutely, Mark.
So we, interestingly enough in this quarter, we had a strong OpenEdge ISV performance, as well as by the way OpenEdge Direct as well as some of our customers expanded their relationships with us in a meaningful way. I think what we hear from the ISVs of course is that their business -- they're becoming more confident in their own business.
And since they are the ones that of course as you know Mark, they have a very, very large reach on a global basis. I think to us that reflects a strengthening of the market and the demand for the kinds of products we offer.
And the customer is saying hey, how do we modernize, how do we expand, how do we take our application that is on OpenEdge and do more with it as far as business needs grow. So that’s really a very, very positive sign for us, and we feel really good about what is happening with our ISV base; and as I said, we are also actually seeing and we saw in Q1, were actually a pick up on some of our direct customers who ended up expanding relationships with us as well.
So, we're seeing some interesting very positive signs. We also saw signs that were positive with respect to IP projects being started for new online engagement and new customer engagement projects, and those professional services projects of course are only done when IT business is feeling a little bit better because we are not just – just add some more licenses like they are doing something more and doing something new.
So, we think that business is feeling more confident around the globe, and that's reflected in the performance of ISVs who use OpenEdge.
Mark Schappel
Okay. Thank you.
And then shifting gears a little bit with respect to the integration of Chef.
Yogesh Gupta
Yeah.
Mark Schappel
It sounds like it’s proceeding ahead of plan and that's good. I was just wondering if maybe you just give us an idea of some of the integration work that still remains to be performed out there?
Yogesh Gupta
Yes. I think -- the initial sort of the heavy lifting was all done, so which we feel really good about.
Obviously Mark for certain things like some backing systems that need to be integrated that are not related to finance but are related to let's say technical support or customer support. Those kind of things are being worked on and will continue to be worked on and which is why Anthony said some of the integration will take us towards the end of the year and − but overall we’ve actually been able to accelerate a lot of the integration and that helped us of course on the profitability.
Chef also of course outperformed on the top line as well compared to our plan. So we're really pleased with the way Chef is shaping up both on the top line and on the bottom line and the team that have come across is just absolutely phenomenal and it did fit so well with progress that they have a very much customer centric view of what they do.
They are passionate about the product. They are passionate about the open source community.
They are passionate about serving their customers and making sure that the customers are successful. We have been able to not only connect with a very large number of the large customers but we've also been able to connect with the open source community contributors and they are very engaged with us.
So all of that stuff, and it's really meshes well with our DNA progress which has always been customer centric as you know, Mark. So it has been -- so far, it has been wonderful.
It has been a really, really positive acquisition.
Mark Schappel
Okay, very good. And then bring out into the next year.
And I was wondering if you could just review some of the reasons why the companies decide to move to a single reporting structure rather than the current three segment structure?
Yogesh Gupta
Yeah. Yeah, sure, Mark.
It’s a good question. I think there was a point in time historically where I would say the company was probably very rigidly aligned around those three segments.
And it made a lot of sense in terms of how we manage the business. And I think over time, things started to shift a little bit.
And when we got Chef in, Chef in our existing segment structure fit into application development and deployment. And once we put that in there, it really became I would say its own unit.
And we started to look at the business more on a product by product level. And I would say the less so on the traditional segments.
So we were evaluating performance down at the product level, thinking about resource allocation down to the product level. And ultimately it just no longer made sense to -- with all the realignments that had gone on, to carry the three segments forward.
So, I think that that change will roll through in the second quarter. I think we'll still continue to give color on some product level performance as it's relevant to the operations overall.
But I don't think that the three segments are still going to be meaningful progress. And so I think ultimately what starts to probably become interesting I think is the annualized recurring revenue and really the stability there, the net dollar retention rates and the stability that those display as well.
And then a lot of product level detail that we can share as quarters go by and as products may or may not have a material impact on the business.
Mark Schappel
Great. Thank you.
Helpful. That's all for me.
Yogesh Gupta
Okay. Thank you.
Operator
At this time, we have no further questions. I'll turn it back to Mr.
Yogesh Gupta for closing comments.
Yogesh Gupta
Thank you, David. Thank you all for joining our call today.
I'm genuinely excited about our performance in Q1. I've got a portfolio addresses a large market opportunity and I'm especially proud of the continued hard work and dedication of our entire organization during the quarter.
This positions us really well as we continue to execute our total growth strategy. I look forward to talking to you all soon.
Thank you again. Bye-bye.
Operator
Ladies and gentlemen, that concludes today's presentation. Thank you all for your participation.
You may now disconnect.