Progress Reports 2017 Fiscal Fourth Quarter and Year End Results

January 10, 2018

Progress Reports 2017 Fiscal Fourth Quarter and Year End Results Exceeds Expectations for Revenue, Earnings Per Share, Operating Margin and Cash Flow

BEDFORD, Mass.--(BUSINESS WIRE)-- Progress (NASDAQ: PRGS) today announced results for its fiscal fourth quarter and fiscal year ended November 30, 2017.

Revenue was $116.1 million during the quarter compared to $117.7 million in the same quarter last year, a year-over-year decrease of 1% on an actual currency basis and 3% on a constant currency basis. On a non-GAAP basis, revenue was $116.3 million during the quarter compared to $118.0 million in the same quarter last year, a decrease of 1% on an actual currency basis and 3% on a constant currency basis.

On a GAAP basis, diluted earnings per share was $0.34 compared to a diluted loss per share of $1.52 in the same quarter last year. On a non-GAAP basis, diluted earnings per share was $0.67 compared to $0.62 in the same quarter last year.

Yogesh Gupta, CEO at Progress, said: Our strong Q4 performance allowed us to achieve better-than-expected revenue, earnings per share, operating margins and cash flow for 2017. We have strengthened our core operations, and now offer the best platform for building next-generation, mission-critical, cognitive-first business applications as well. We look forward to continued momentum in 2018, as we execute on a strategic plan that will drive sustainable, long-term value for all shareholders.

Additional financial highlights included:

On a GAAP basis in the fiscal fourth quarter of 2017:

Revenue was $116.1 million compared to $117.7 million in the same quarter in fiscal year 2016;

Income from operations was $28.8 million compared to a loss from operations of $62.4 million in the same quarter last year;

Net income was $16.4 million compared to a net loss of $73.8 million in the same quarter last year;

Diluted earnings per share was $0.34 compared to a diluted loss per share of $1.52 in the same quarter last year; and

Cash from operations was $32.5 million compared to $33.9 million in the same quarter last year.

On a non-GAAP basis in the fiscal fourth quarter of 2017:

Revenue was $116.3 million compared to $118.0 million in the same quarter last year;

Income from operations was $49.1 million compared to $42.6 million in the same quarter last year;

Operating margin was 42% compared to 36% in the same quarter last year;

Net income was $32.1 million compared to $30.5 million in the same quarter last year;

Diluted earnings per share was $0.67 compared to $0.62 in the same quarter last year; and

Adjusted free cash flow was $32.4 million compared to $32.4 million in the same quarter last year.

Paul Jalbert, CFO, said: We are pleased with our financial performance for Q4 and for the full year. We delivered on our commitment to operate our business efficiently, exceeding our cost-savings targets by reducing our total expenses by over $30 million. We are confident in our ability to generate continued strong operating margins and cash flows, and are well-positioned to achieve our financial goals in 2018.

Other fiscal fourth quarter and 2017 metrics and recent results included:

Cash, cash equivalents and short-term investments were $183.6 million at the end of the quarter;

DSO was 47 days, compared to 48 days in the fiscal third quarter of 2017 and 50 days in the fiscal fourth quarter of 2016;

Pursuant to the $250 million share authorization of the Board of Directors, Progress repurchased 0.8 million shares for $30.0 million during the fiscal fourth quarter of 2017. For the full fiscal year, Progress repurchased 2.2 million shares for $73.9 million; and

On January 5, 2018, our Board of Directors declared a quarterly dividend of $0.14 per share of common stock that will be paid on March 15, 2018 to shareholders of record as of the close of business on March 1, 2018.

Full Year Results

On a GAAP basis in the fiscal year 2017:

Revenue was $397.6 million compared to $405.3 million in fiscal year 2016, a year-over-year decrease of 2% on both an actual and constant currency basis;

Income from operations was $70.6 million compared to a loss from operations of $29.7 million in the prior fiscal year;

Net income was $37.4 million compared to a net loss of $55.7 million in the prior fiscal year;

Diluted earnings per share was $0.77 compared to a diluted loss per share of $1.13 in the prior fiscal year; and

Cash from operations was $105.7 million compared to $102.8 million in the prior fiscal year.

On a non-GAAP basis in the fiscal year 2017:

Revenue was $398.6 million compared to $407.4 million in fiscal year 2016, a year-over-year decrease of 2% on both an actual and constant currency basis;

Income from operations was $144.5 million compared to $123.1 million in the prior fiscal year;

Operating margin was 36% compared to 30% in the prior fiscal year;

Net income was $92.5 million compared to $82.3 million in the prior fiscal year;

Diluted earnings per share was $1.91 compared to $1.65 in the prior fiscal year; and

Adjusted free cash flow was $121.5 million compared to $100.6 million in the prior fiscal year.

2018 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2018 and the first fiscal quarter ending February 28, 2018:

(In millions, except percentages and per share amounts) FY 2018 GAAP

FY 2018 Non-GAAP

Q1 2018 GAAP

Q1 2018 Non-GAAP

Revenue $398 - $404 $399 - $404 $90 - $93 $90 - $93

Diluted earnings per share $1.14 - $1.21 $2.29 - $2.35 $0.15 - $0.19 $0.46 - $0.48

Operating margin 19% - 20% 35% - 36% * *

Adjusted free cash flow $115 - $121 $115 - $120 * *

Effective tax rate 26% 22% * *

*We do not provide guidance for this financial measure.

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LINK:	http://investors.progress.com/releasedetail.cfm?ReleaseID=1054007...
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