Progress Software Reports 2011 Fiscal Fourth Quarter and Year End Results

Progress Software Corporation (NASDAQ: PRGS), a leading software provider that enables enterprises to be operationally responsive, announced today results for its fiscal fourth quarter and year ended November 30, 2011.

On a GAAP basis in the fiscal fourth quarter of 2011:

• Revenue was $136.3 million, a decrease of 6% compared to $145.2 million in the fiscal fourth quarter of 2010;
• Income from operations was $19.2 million, a decrease of 42% compared to $32.8 million in the same quarter last year;
• Net income was $11.7 million, a decrease of 45% compared to $21.3 million in the same quarter last year; and
• Diluted earnings per share were $0.18, a decrease of 42% compared to $0.31 in the same quarter last year.

On a non-GAAP basis in the fiscal fourth quarter of 2011:

• Revenue was $136.3 million, a decrease of 6% compared to $145.3 million in the same period a year ago;
• Income from operations was $32.8 million, a decrease of 32% compared to $48.3 million in the same quarter last year;
• Net income was $21.5 million, a decrease of 33% compared to $32.2 million in the same quarter last year; and
• Diluted earnings per share were $0.34, a decrease of 28% compared to $0.47 in the same quarter last year.

On a GAAP basis in fiscal year 2011:

• Revenue was $533.6 million, an increase of 1% compared to $529.1 million in fiscal 2010;
• Income from operations was $88.2 million, an increase of 30% compared to $67.7 million in fiscal 2010;
• Net income was $58.8 million, an increase of 21% compared to $48.6 million in fiscal 2010; and
• Diluted earnings per share were $0.87, an increase of 19% compared to $0.73 in fiscal 2010.

On a non-GAAP basis in fiscal year 2011:

• Revenue was $533.7 million, an increase of 1% compared to $530.3 million in fiscal 2010;
• Income from operations was $144.4 million, a decrease of 8% compared to $156.6 million in fiscal 2010;
• Non-GAAP net income was $98.2 million, a decrease of 7% compared to $106.1 million in fiscal 2010; and
• Non-GAAP diluted earnings per share were $1.45, a decrease of 9% compared to $1.60 in fiscal 2010.

Jay Bhatt, president and chief executive officer of Progress Software, said: "The results for the fourth quarter met expectations, but they reflect challenges the company is facing in its ongoing transformation. We are building capabilities as an enterprise solutions provider through investments in our field organization, product integration and creating greater market awareness of the Progress Responsive Process Management (RPM) suite. Even with these significant changes, our Enterprise Business Solutions (EBS) segment grew 12% for the year. We continue our investments in the EBS business segment as we enter 2012, and are optimistic about our growth potential in the second half of the year as more and more business leaders see how our offerings can increase their operational responsiveness. Progress is well positioned to be the leader in the emerging intelligent business operations segment.”

Bhatt also noted: "While the Application Development Platforms (ADP) segment declined slightly for the year, our OpenEdge revenues were stable due to growth in our indirect channel. Our application partners (ISVs) are excited about the recently released OpenEdge 11, which includes patent-pending multi-tenancy built in to the database along with enhanced integration with our Progress Arcade Portal and enhanced support for mobile devices – all of which respond to the heavy demand of our partners to test and deliver their solutions in a multi-tenant Cloud environment and through mobile devices. In addition, OpenEdge 11 includes tighter integration with our Business Process Management (or BPM) functionality – allowing our partners to modernize their applications with the latest agile business-focused technology. With these enhancements and our partners’ enthusiasm for the opportunities they create, we are optimistic about OpenEdge’s prospects in 2012.”

During the fourth quarter, the company completed the acquisition of Corticon Technologies, Inc., a leading Business Rules Management System (BRMS) vendor that enables organizations to make better, faster decisions by automating business rules. The Corticon solution, which will be integrated into the Progress RPM suite, reinforces Progress’ commitment to deliver operational responsiveness by helping customers build highly agile, responsive business systems.

Cash flows from operations for the quarter were $9.7 million, down from $25.7 million in the same quarter in fiscal 2010. During the fourth quarter, the company purchased $65.1 million of its common stock. Cash and short-term investments decreased to $261.4 million from $346.5 million at the end of the fiscal third quarter 2011, primarily as a result of share repurchases and the Corticon acquisition.

Business Outlook

Progress Software provides the following non-GAAP guidance for the fiscal first quarter ending February 29, 2012:

• Revenue is expected to be approximately $120 million, representing a decrease of approximately 10% year over year.
• Diluted earnings per share are expected to be approximately $0.25, representing a decrease of approximately 40% year over year.

The non-GAAP guidance excludes approximately $5.6 million of amortization of acquired intangibles and approximately $5.3 million of stock-based compensation, as well as any restructuring, transition and acquisition-related expenses, and the respective income tax effects of these items.

Conference Call

The Progress Software quarterly investor conference call to review its fiscal fourth quarter 2011 and fiscal year results and business outlook will be broadcast live at 9:00 a.m. (ET) on Wednesday, January 4, 2012 on the investor relations section of the company's website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-800-915-4836, passcode 9464931. The conference call will include only brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress Software website within the investor relations section after the live conference call.

Note to Editors

Progress Software is providing, in advance, a copy of prepared remarks for its conference call. These prepared remarks will not be read on the call. The press release, the prepared remarks, and additional financial disclosures are available on the Progress website www.progress.com within the investor relations section.

Progress Software Corporation

Progress Software Corporation (NASDAQ: PRGS) is a global software company that enables enterprises to be operationally responsive to changing conditions and customer interactions as they occur – to capitalize on new opportunities, drive greater efficiencies and reduce risk. The company offers a comprehensive portfolio of best-in-class infrastructure software spanning event-driven visibility and real-time response, open integration, data access and integration, and application development and deployment – all supporting on-premises and SaaS/Cloud deployments. Progress Software maximizes the benefits of operational responsiveness while minimizing IT complexity and total cost of ownership. Progress Software can be reached at www.progress.com or +1-781-280-4000.

Legal Notice Regarding Non-GAAP Financial Information

Progress Software provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress Software believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company's performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below. Additional information regarding the company’s non-GAAP financial information is contained in the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission in connection with this press release, which is available on the Progress website www.progress.com within the investor relations section.

Note Regarding Forward-Looking Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which include statements regarding the company’s business outlook for its fiscal first quarter in 2012, and strategic plans, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including but not limited to the following: the receipt and shipment of new orders; the timely release of enhancements to the company’s products; the growth rates of certain market segments; the positioning of the company’s products in those market segments; the customer demand and acceptance of our new product initiatives, the Progress RPM suite; variations in the demand for professional services and technical support; pricing pressures and the competitive environment in the software industry; continuing uncertainty in the U.S. and international economies, which could result in fewer sales of the company’s products and may otherwise harm the company’s business; the company’s ability to complete and integrate acquisitions; the company’s ability to realize the expected benefits and anticipated synergies from acquired businesses; the company's ability to penetrate international markets and manage its international operations; and changes in exchange rates. The company undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with the company's business, please refer to the company's filings with the Securities and Exchange Commission.

Progress is a trademark or registered trademark of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.