Progress Software Announces Preliminary Financial Results for Fiscal Q3 2017; Better-Than-Expected Q3 Revenues and Diluted Earnings Per Share; Board of Directors Raises Quarterly Dividend 12%

September 12, 2017

Progress Software Announces Preliminary Financial Results for Fiscal Q3 2017; Better-Than-Expected Q3 Revenues and Diluted Earnings Per Share; Board of Directors Raises Quarterly Dividend 12% --CEO Issues Special Letter to Shareholders as One-Year Anniversary Approaches--

BEDFORD, Mass.--(BUSINESS WIRE)-- Progress (NASDAQ: PRGS) today announced that it expects to report better-than-expected revenues and diluted earnings per share for its third fiscal quarter ended August 31, 2017:

(In millions, except percentages and per share amounts) Q3 2017 GAAP

GAAP

Guidance

Issued on

June 28, 2017

Q3 2017

Non-GAAP

Non-GAAP

Guidance

Issued on

June 28, 2017

Revenue $97.3 $93 - $96 $97.6 $93 - $96

Diluted earnings per share $0.23 $0.17 - $0.19 $0.48 $0.41 - $0.43

Operating margin 20.9% * 36.5% *

Cash flows from operations/ adjusted free cash flow $13.4 * $18.3 *

*We do not provide quarterly guidance for this financial measure.

These preliminary financial results are subject to revision until the Company reports its full third quarter of fiscal year 2017 results on September 27, 2017.

Our preliminary third quarter results exceed our guidance and reflect continued strong execution of the strategy set forth by our new leadership team earlier this year, said Yogesh Gupta, the Companys CEO. These results build upon Progress second quarter revenue and earnings per share that also came in above expectations, as the team continues to strengthen our core businesses. Our strategic plan is driving solid financial performance and generating healthy cash flow, further validating the Boards commitment to building shareholder value. We look forward to closing out the fiscal year and beginning 2018 with good momentum.

Mr. Gupta added, On September 27, when we formally report our third quarter performance, we will discuss further our strategy to support and grow our developer base and to be the platform of choice for the future of business application development. At that time, we also will provide additional detail on our approach to capital allocation, including insight on the strategic and financial criteria to be used in evaluating future potential acquisitions.

Board Increases Quarterly Dividend 12%; Sets New Target Payout Ratio Based on Strong Cash Flow

Progress also announced that its Board of Directors approved a 12% increase in the Companys quarterly cash dividend from $0.125 to $0.14 per share of common stock. This increased dividend will be paid on December 15, 2017 to shareholders of record as of December 1, 2017. The Board of Directors is committed to its policy of regularly returning capital to our shareholders and this marks the first increase in the dividend since the Company began paying dividends at the beginning of fiscal 2017.

The Board of Directors also set a target dividend payout ratio of between 25-30% of the Companys annual cash flow from operations, reflecting the continued strength of the Companys cash flow generation.

Progress to Host Third Quarter Conference Call on September 27, 2017

The Company will release full results for its third fiscal quarter ended August 31, 2017, along with its updated outlook for the remainder of the year, after the market close on Wednesday, September 27, 2017. Details regarding the related conference call will be provided in a press release to be issued prior to the date.

CEO Issues Special Letter to Progress Shareholders

In addition to announcing better-than-expected preliminary revenues and diluted earnings per share for the Companys fiscal third quarter, and an increase in the quarterly dividend, Progress CEO also published an update on the Companys strategy and business in a letter to shareholders, which follows below:

Dear Fellow Progress Shareholder,

As we approach my first anniversary as CEO of Progress, I would like to provide an update on our business and the execution of our strategy. I am very pleased with the strong preliminary fiscal third quarter results we announced today, which exceeded our own expectations as set forth in the guidance we provided at the end of the second quarter. We will present our final results and our expectations for the fourth quarter on our earnings call on September 27, 2017.

As a reminder, in January 2017, three months after my appointment as CEO, I outlined our strategy to drive shareholder value. At the core of this strategy is our unwavering commitment to serving the needs of our large installed base of OpenEdge, DataDirect and Telerik customers. Customer retention is critical to our long-term success.

At the same time, we also articulated how we would leverage our inherent application development DNA to build on the capabilities of our products and address the future needs of our strong customer base. Progress has always delivered the platform and tools that organizations need to develop and deploy mission-critical business applications.

As the types of devices and interfaces on which applications run proliferate, the number of systems that need to be connected rises, and the amount of data produced skyrockets. Businesses and ISVs are looking for a platform that will enable them to quickly and easily develop modern, intelligent cloud applications - what we call Cognitive Applications. These applications will include automated machine-learning, enabling organizations to harness previously unused volumes of data to make better, faster decisions, and operate much more efficiently.

Through our acquisitions of Kinvey and DataRPM, in combination with our existing core technologies, we now offer the best platform for building and deploying tomorrows applications quickly and easily. With our focus on predictive maintenance as our target Cognitive Apps domain, we are targeting our OpenEdg

LINK:	http://investors.progress.com/releasedetail.cfm?ReleaseID=1040035...
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