Progress Reports 2017 Fiscal Second Quarter Results

June 28, 2017

Progress Reports 2017 Fiscal Second Quarter Results Raises Annual Guidance for Earnings per Share, Operating Margin and Adjusted Free Cash Flow

BEDFORD, Mass.--(BUSINESS WIRE)-- Progress (NASDAQ: PRGS) today announced results for its fiscal second quarter ended May 31, 2017.

Revenue was $93.2 million during the quarter compared to $96.1 million in the same quarter last year, a year-over-year decrease of 3% on an actual currency basis and 2% on a constant currency basis. On a non-GAAP basis, revenue was $93.4 million during the quarter compared to $96.7 million in the same quarter last year, a decrease of 3% on an actual currency basis and 2% on a constant currency basis.

Additional financial highlights included:

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

Revenue was $93.2 million compared to $96.1 million in the same quarter in fiscal year 2016;

Income from operations was $20.3 million compared to $12.3 million in the same quarter last year;

Net income was $10.3 million compared to $7.3 million in the same quarter last year;

Diluted earnings per share was $0.21 compared to $0.14 in the same quarter last year; and

Cash from operations was $22.4 million compared to $26.8 million in the same quarter last year.

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

Revenue was $93.4 million compared to $96.7 million in the same quarter last year;

Income from operations was $32.6 million compared to $27.0 million in the same quarter last year;

Operating margin was 35% compared to 28% in the same quarter last year;

Net income was $20.5 million compared to $16.4 million in the same quarter last year;

Diluted earnings per share was $0.42 compared to $0.33 in the same quarter last year; and

Adjusted free cash flow was $27.9 million compared to $26.4 million in the same quarter last year.

Im pleased that our Q2 revenue and earnings per share were above our expectations, and we continued to strengthen our core businesses with several key product releases during the quarter, said Yogesh Gupta, CEO at Progress. And Im excited about our future prospects as we focus on the very large and growing market opportunity for development platforms. Our recent acquisition of Kinvey, the top-ranked leader in The Forrester Wave for Mobile Development Platforms, combined with our unique mobile and web development tools, machine learning capabilities, and unmatched data connectivity products, offer the best-of-breed product portfolio for building and running modern mission-critical business applications.

Paul Jalbert, CFO at Progress, said: The financial performance of our core business in the first-half, coupled with our continued strong cash flow generation, has enabled us to meaningfully raise our annual guidance for earnings per share, operating margin and free cash flow. We remain confident in our strategy and financial strength, and look forward to a solid second-half of the year.

Other fiscal second quarter 2017 metrics and recent results included:

Cash, cash equivalents and short-term investments were $245.1 million at the end of the quarter;

DSO was 42 days, compared to 45 days in the fiscal second quarter of 2016;

Under the previously announced authorization by the Board of Directors to repurchase up to $200 million of shares of common stock, Progress repurchased 0.2 million shares for $6.9 million during the fiscal second quarter of 2017. As of May 31, 2017, there was $110.4 million remaining under this authorization; and

On June 21, 2017, our Board of Directors declared a quarterly dividend of $0.125 per share of common stock that will be paid on September 15, 2017 to shareholders of record as of the close of business on September 1, 2017.

Business Outlook

Progress provides the following updated guidance for the fiscal year ending November 30, 2017 and the third fiscal quarter ending August 31, 2017:

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

GAAP

FY 2017

Non-GAAP

Q3 2017

GAAP

Q3 2017

Non-GAAP

Revenue $390 - $395 $391 - $396 $93 - $96 $93 - $96

Diluted earnings per share $0.66 - $0.73 $1.73 - $1.78 $0.17 - $0.19 $0.41 - $0.43

Operating margin 16% - 17% 33% - 34% * *

Adjusted free cash flow $86 - $91 $100 - $105 * *

Effective tax rate 43% 33% * *

*We do not provide guidance for this financial measure.

Progress fiscal 2017 financial guidance is based on current exchange rates. The negative currency translation impact on Progress fiscal year 2017 business outlook compared to 2016 exchange rates is approximately $2.0 million on non-GAAP revenue and $0.02 on non-GAAP earnings per share. The negative currency translation impact on Progress fiscal Q3 2017 business outlook compared to 2016 exchange rates on both non-GAAP revenue and non-GAAP earnings per share is not meaningful. 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 2017 will be broadcast live at 5:00 p.m. ET on Wednesday, June 28, 2017 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 1-877-340-7912, pass code 2708560. 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 informat

LINK:	http://investors.progress.com/releasedetail.cfm?ReleaseID=1031694...
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