Progre Reports 06 Fiscal Second Quarter Results

June 29, 2016

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

Revenue was $96.1 million during the quarter compared to $88.8 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 $96.7 million during the quarter compared to $100.9 million in the same quarter last year, a decrease of 4% on an actual currency basis and 3% on a constant currency basis.

Additional financial highlights included:

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

Revenue was $96.1 million compared to $88.8 million in the same quarter in fiscal year 2015;

Income from operations was $12.3 million compared to a loss from operations of $2.7 million in the same quarter last year;

Net income was $7.3 million compared to $5.8 million in the same quarter last year;

Diluted earnings per share was $0.14 compared to $0.11 in the same quarter last year; and

Cash from operations was $26.8 million compared to $20.8 million in the same quarter last year.

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

Revenue was $96.7 million compared to $100.9 million in the same quarter last year;

Income from operations was $27.0 million compared to $27.8 million in the same quarter last year;

Operating margin was 28% compared to 28% in the same quarter last year;

Net income was $16.4 million compared to $18.1 million in the same quarter last year;

Diluted earnings per share was $0.33 compared to $0.35 in the same quarter last year; and

Adjusted free cash flow was $26.4 million compared to $18.8 million in the same quarter last year.

Phil Pead, CEO at Progress, said, We are pleased with our second quarter performance. We had another solid quarter from our OpenEdge partners, strong growth from our data products and increased momentum in our Telerik bookings. We also announced our Digital Factory solutions during the quarter, which will enable us to take advantage of the longer-term growth opportunities available in the digital transformation market.

Other fiscal second quarter 2016 metrics and recent results included:

Cash, cash equivalents and short-term investments were $229.1 million at the end of the quarter;

DSO was 45 days, compared to 50 days in the fiscal second 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 1.9 million shares for $48.3 million during the fiscal second quarter of 2016.

Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2016 and the third fiscal quarter ending August 31, 2016:

(In millions, except percentages and per share amounts) FY 2016

GAAP

FY 2016

Non-GAAP

Q3 2016

GAAP

Q3 2016

Non-GAAP

Revenue $410 - $416 $412 - $418 $103 - $106 $103 - $106

Earnings per share $0.63 - $0.68 $1.57 - $1.63 $0.17 - $0.20 $0.43 - $0.46

Operating margin 15% - 16% 29% - 30% * *

Adjusted free cash flow * $80 - $85 * *

Effective tax rate 45% 32% - 33% * *

*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 $6.0 million to $7.0 million on non-GAAP revenue and $0.03 to $0.04 on non-GAAP earnings per share. The negative currency translation impact on Progress fiscal Q3 2016 business outlook compared to 2015 exchange rates is approximately $1.5 million on non-GAAP revenue and $0.01 on non-GAAP 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 second quarter of 2016 will be broadcast live at 5:00 p.m. ET on Wednesday, June 29, 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 1-877-440-5788, pass code 1530142. 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 considered in conjunction with our GAAP results as the ite

LINK:	http://investors.progress.com/releasedetail.cfm?ReleaseID=977683...
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