Progre Reports 06 Fiscal ird Quarter Results

September 28, 2016

Progress Reports 2016 Fiscal Third Quarter Results BEDFORD, Mass.--(BUSINESS WIRE)-- Progress (NASDAQ: PRGS) today announced results for its fiscal third quarter ended August 31, 2016.

Revenue was $102.0 million during the quarter compared to $94.6 million in the same quarter last year, a year over year increase of 8% on an actual currency basis and 9% on a constant currency basis. On a non-GAAP basis, revenue was $102.4 million during the quarter compared to $100.7 million in the same quarter last year, an increase of 2% on an actual currency basis and 3% on a constant currency basis.

Additional financial highlights included:

On a GAAP basis in the fiscal third quarter of 2016:

Revenue was $102.0 million compared to $94.6 million in the same quarter in fiscal year 2015;

Income from operations was $13.6 million compared to $8.6 million in the same quarter last year;

Net income was $7.6 million compared to a net loss of $4.1 million in the same quarter last year;

Diluted earnings per share was $0.15 compared to a diluted loss per share of $0.08 in the same quarter last year; and

Cash from operations was $19.7 million compared to $19.3 million in the same quarter last year.

On a non-GAAP basis in the fiscal third quarter of 2016:

Revenue was $102.4 million compared to $100.7 million in the same quarter last year;

Income from operations was $32.0 million compared to $31.7 million in the same quarter last year;

Operating margin was 31%, unchanged from the same quarter last year;

Net income was $21.6 million compared to $20.0 million in the same quarter last year;

Diluted earnings per share was $0.44 compared to $0.39 in the same quarter last year; and

Adjusted free cash flow was $19.1 million compared to $18.8 million in the same quarter last year.

Phil Pead, CEO at Progress, said, Our third quarter was highlighted by a strong performance from our Data Connectivity and Integration segment, along with healthy maintenance renewals for both OpenEdge and our Telerik solutions, and solid cash flows. Were looking forward to a strong fourth quarter, and the upcoming release of our DigitalFactory solutions will provide us with additional growth opportunities for the future.

Other fiscal third quarter 2016 metrics and recent results included:

Cash, cash equivalents and short-term investments were $232.7 million at the end of the quarter;

DSO was 49 days, compared to 54 days in the fiscal third quarter of 2015; and

Under the previously announced authorization by the Board of Directors to repurchase up to $200 million of shares of common stock, Progress repurchased 0.4 million shares for $11.5 million during the fiscal third quarter of 2016.

Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2016 and the fourth fiscal quarter ending November 30, 2016:

(In millions, except percentages and per share amounts)

FY 2016

GAAP

FY 2016

Non-GAAP

Q4 2016

GAAP

Q4 2016

Non-GAAP

Revenue $410 - $413 $412 - $415 $122 - $125 $123 - $126

Diluted earnings per share $0.61 - $0.63 $1.57 - $1.60 $0.25 - $0.28 $0.55 - $0.58

Operating margin 15% 30% * *

Adjusted free cash flow $88 - $93 $85 - $90 * *

Effective tax rate 45% 32% * *

*We do not provide guidance for this financial measure.

Progress fiscal 2016 financial guidance is based on current exchange rates. The negative currency translation impact on Progress fiscal year 2016 business outlook compared to 2015 exchange rates is approximately $5.0 million on GAAP and non-GAAP revenue and $0.04 on GAAP and non-GAAP diluted earnings per share. The negative currency translation impact on Progress fiscal Q4 2016 business outlook compared to 2015 exchange rates is approximately $0.3 million on GAAP and non-GAAP revenue and $0.01 on GAAP and non-GAAP diluted earnings per share. To the extent that there are further changes in exchange rates versus the current environment, this may have an additional impact on Progress business outlook.

Conference Call

The Progress quarterly investor conference call to review its fiscal third quarter of 2016 will be broadcast live at 5:00 p.m. ET on Wednesday, September 28, 2016 and can be accessed on the investor relations section of the companys website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-877-591-4951, pass code 4374563. The conference call will include brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Non-GAAP Financial Information

Progress provides non-GAAP supplemental information to its financial results.

We use this non-GAAP information to evaluate our period-over-period operating performance because our management believes the information helps illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as a greater understanding of the results from the primary operations of our business, by excluding the effects of certain items that do not reflect the ordinary earnings of our operations. Management also uses this non-GAAP financial information to establish budgets and operational goals, which are communicated internally and externally, evaluate performance, and allocate resources. In addition, compensation of our executives and non-executive employees is based in part on the performance of our business evaluated using this same non-GAAP information.

However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP) and should be consid

LINK:	http://investors.progress.com/releasedetail.cfm?ReleaseID=991343...
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