(Source: Business Wire)
Progress
Software Corporation (NASDAQ: PRGS), a leading software provider
that enables enterprises to be operationally responsive announced today
results for its third quarter ended August 31, 2009. On a generally
accepted accounting principles (GAAP) basis, revenue for the quarter was
$119.4 million, down 6 percent (flat at constant currency) from $126.6
million in the third quarter of fiscal 2008. On a non-GAAP basis,
revenue totaled $119.7 million, down 5 percent (flat at constant
currency) from the year ago period. The non-GAAP adjustment to revenue
was to add back the purchase accounting adjustment for the reduction in
deferred maintenance revenue related to the acquisition of IONA
Technologies. Software license revenue decreased 15 percent (down 11
percent at constant currency) to $39.2 million from $46.0 million in the
same quarter last year.
On a GAAP basis, operating income decreased 50 percent to $9.1 million
from $18.1 million in the third quarter of fiscal 2008. Net income
decreased 56 percent to $5.5 million from $12.5 million in the same
quarter last year. Diluted earnings per share decreased 57 percent to 13
cents from 30 cents in the third quarter of fiscal 2008.
On a non-GAAP basis, operating income decreased 8 percent to $24.9
million from $27.2 million in the same quarter last year. Non-GAAP net
income decreased 13 percent to $16.5 million from $19.0 million in the
same quarter last year and non-GAAP diluted earnings per share decreased
11 percent to 40 cents per share from 45 cents in the third quarter of
fiscal 2008.
Non-GAAP amounts primarily exclude the amortization of acquired
intangibles, stock-based compensation, restructuring and
acquisition-related costs and purchase accounting adjustments for
deferred revenue.
The non-GAAP results noted above and the non-GAAP financial outlook for
2009 discussed below represent non-GAAP financial measures. A
reconciliation of these measures to the appropriate GAAP measures for
the three months ended August 31, 2009 and August 31, 2008, and the 2009
outlook, as well as further information regarding these measures, is
included in the condensed financial information provided with this
release.
Progress Software's cash and short-term investments at the end of the
third quarter totaled $186.5 million. Progress Software repurchased
approximately 67,000 shares at a cost of $1.4 million in the third
quarter of fiscal 2009. The existing re-purchase authorization, under
which approximately 9.6 million shares remain available for repurchase,
expires on September 30, 2009.
Rick Reidy, president and chief executive officer of Progress Software,
stated: "Our financial results reflect the difficult economic
environment and unfavorable year-over-year currency rates present during
this third quarter. However, we continue to be well positioned with our
emerging products and have received strong validation and top ratings
from independent analyst firms."
Quarterly Highlights
The Federal Aviation Administration (FAA) selected Progress®
FUSE products to provide the open
source integration underpinnings for their System Wide Information
Management (SWIM) Program. The selection of FUSE open source products
allows the SWIM program to interoperate with many other existing
vendor technologies already in use by the FAA. (http://tinyurl.com/Progress-FAA)
UniCredit has deployed the Progress® Apama® FX
Aggregation Accelerator for its FX desks. UniCredit's FX traders
are now using the Progress
Apama platform along with its customized dashboards to connect to
a number of liquidity venues and gain an aggregated view of liquidity
in the FX market. In addition to using the Apama FX Aggregator to get
a single unified view of the fragmented global FX market place,
UniCredit's FX traders are harnessing the power of the FX Aggregation
Accelerator to publish FX prices to its eFX downstream channels. (http://tinyurl.com/unicredit-and-progress)
Foxwoods Resort Casino is now using Progress DataDirect Connect®
for ODBC database drivers within its Hospitality Systems' applications
to connect business analytics data on UNIX to Windows-based data
sources. With secure, reliable and stable access to heterogeneous data
sources, Foxwoods has gained immediate visibility into the non-gaming
activity of its guests to aid with marketing efforts, special events
and promotions. (http://tinyurl.com/Progress-Foxwoods)
BondDesk Group, a leading fixed income trading platform and one of the
largest market destinations for trading odd-lot fixed income in the
U.S., will use the industry-leading Progress®
Apama® Complex
Event Processing (CEP) platform within the BondDesk Alternative
Trading System (ATS). The BondDesk ATS provides 2,000 broker-dealers
with access to 35,000 live and executable offerings from 120 premier
fixed income dealers. BondDesk delivers analytics and decision-support
to traders' desktops more quickly and efficiently than ever before
using the Apama CEP platform. (http://tinyurl.com/BondDesk-Progress)
Progress Software announced the appointment of Christopher Larsen as
the company's Senior Vice President, Global Field Operations. His
appointment in this new executive role is part of Progress' goal to
provide a single integrated and customer focused enterprise level
sales, services, and support organization globally. Reporting to Rick
Reidy, president and chief executive officer, Larsen will be
responsible for all company-wide sales, pre-sales, alliance, technical
support and consulting services. (http://tinyurl.com/Christopher-Larsen)
The company announced the general availability of version 3.3
of its Progress®
DataDirect Connect® for ADO.NET data providers featuring Entity
Framework support for Oracle. (http://tinyurl.com/Progress-Oracle-Connectivity)
Progress released the latest version of its popular Apama
Market Surveillance and Monitoring Accelerator. This release adds
new abuse pattern detection capabilities and enhances current
real-time monitoring and alerting features with new market operational
controls. In addition, the Apama Market Surveillance and Monitoring
Accelerator includes enhanced dashboards and a more sophisticated
underlying data infrastructure that reduces time to market for a broad
range of surveillance use cases. (http://tinyurl.com/Apama-market-surveillance)
Forrester Research, Inc. named the Progress®
Apama® complex
event processing (CEP) platform as a standout leader in "The
Forrester Wave: Complex Event Processing Platforms, Q3 2009"(August
2009) Report. In this detailed review of products, the Progress® Apama®
platform received the top score in current offering and market presence.
According to the report: "Progress Apama earned high marks for its event
processing features, its development tools, and its business end-user
tools, propelling it into its position as a leader." (http://tinyurl.com/Forrester-Progress)
Additional highlights can be found at: http://web.progress.com/inthenews/pressreleases.html.
Business Outlook
Progress Software is providing the following guidance for the fiscal
year ending November 30, 2009:
GAAP revenue is expected to be in the range of $487 million to $490
million.
On a non-GAAP basis, revenue is expected to be in the range of $490
million to $493 million.
GAAP diluted earnings per share are expected to be in the range of 69
cents to 71 cents.
On a non-GAAP basis, diluted earnings per share are expected to be in
the range of $1.72 to $1.74.
Progress Software is providing the following guidance for the fourth
fiscal quarter ending November 30, 2009:
On both a GAAP and non-GAAP basis, revenue is expected to be in the
range of $130 million to $133 million.
GAAP diluted earnings per share are expected to be in the range of 33
cents to 35 cents.
On a non-GAAP basis, diluted earnings per share are expected to be in
the range of 54 cents to 56 cents.
The outlook for the non-GAAP amounts excludes the amortization of
acquired intangibles, stock-based compensation, purchase accounting
adjustments for deferred revenue, restructuring expenses and
acquisition-related expenses.
Legal Notice Regarding Non-GAAP Financial Information
Progress Software provides non-GAAP revenue, operating income, net
income and earnings per share as additional information for investors.
These measures are not in accordance with, or an alternative to,
generally accepted accounting principles in the United States (GAAP).
Such measures are intended to supplement GAAP and may be different from
non-GAAP measures used by other companies. 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.
Conference Call
The Progress Software conference call to discuss its fiscal third
quarter 2009 results and business outlook will be Webcast live today at
9:00 a.m. Eastern Daylight Time on the company's Web site, located at www.progress.com/investors.
The call will also be Webcast live via Yahoo (www.yahoo.com),
Motley Fool (www.fool.com),
Streetevents (www.streetevents.com),
TD Waterhouse (www.tdwaterhouse.com)
and Fidelity.com (www.fidelity.com).
An archived version of the conference call will be available for replay
on the Progress website (www.progress.com),
together with the slide presentation for the call, under the investor
relations page.
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 maximizes the benefits of operational
responsiveness while minimizing IT complexity and total cost of
ownership. Progress can be reached at www.progress.com
or +1-781-280-4000.
Safe Harbor Statement
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
Progress Software's business outlook and competitive position, 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 our products; the growth rates of certain market
segments; the positioning of our products in those market segments;
variations in the demand for professional services and technical
support; pricing pressures and the competitive environment in the
software industry; the continuing weakness in the U.S. and international
economies, which could result in fewer sales of our products and may
otherwise harm our business; business and consumer use of the Internet;
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.
Actional, Apama, DataDirect, DataDirect Connect, DataXtend, FUSE,
OpenEdge, Progress, Sonic, and Sonic ESB are trademarks or registered
trademarks 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.
Progress Software Corporation
GAAP Condensed Consolidated Statements of Income
Three Months Ended
August 31, August 31, Percent
(In thousands except per share data) 2009 2008 Change
Revenue:
Software licenses $ 39,173 $ 45,998 (15 ) %
Maintenance and services 80,260 80,622 0 %
Total revenue 119,433 126,620 (6 ) %
Costs of revenue:
Cost of software licenses 1,758 3,219 (45 ) %
Cost of maintenance and services 15,957 16,558 (4 ) %
Amortization of purchased technology 4,811 2,958 63 %
Total costs of revenue 22,526 22,735 (1 ) %
Gross profit 96,907 103,885 (7 ) %
Operating expenses:
Sales and marketing 45,511 48,367 (6 ) %
Product development 22,378 21,076 6 %
General and administrative 17,717 14,966 18 %
Amortization of other acquired intangibles 2,310 1,369 69 %
Acquisition-related expenses 110 -
Restructuring expense (211 ) -
Total operating expenses 87,815 85,778 2 %
Income from operations 9,092 18,107 (50 ) %
Other income (expense), net (187 ) 2,640 (107 ) %
Income before provision for income taxes 8,905 20,747 (57 ) %
Provision for income taxes 3,384 8,210 (59 ) %
Net income $ 5,521 $ 12,537 (56 ) %
Earnings per share:
Basic $ 0.14 $ 0.31 (55 ) %
Diluted $ 0.13 $ 0.30 (57 ) %
Weighted average shares outstanding:
Basic 40,117 40,528 (1 ) %
Diluted 41,261 42,156 (2 ) %
Nine Months Ended
August 31, August 31, Percent
2009 2008 Change
Revenue:
Software licenses $ 123,538 $ 136,115 (9 ) %
Maintenance and services 233,802 240,014 (3 ) %
Total revenue 357,340 376,129 (5 ) %
Costs of revenue:
Cost of software licenses 5,602 7,679 (27 ) %
Cost of maintenance and services 49,287 51,914 (5 ) %
Amortization of purchased technology 14,609 8,448 73 %
Total costs of revenue 69,498 68,041 2 %
Gross profit 287,842 308,088 (7 ) %
Operating expenses:
Sales and marketing 133,331 142,366 (6 ) %
Product development 70,320 62,299 13 %
General and administrative 46,123 43,472 6 %
Amortization of other acquired intangibles 7,149 4,092 75 %
Acquisition-related expenses 330 -
Restructuring expense 5,237 -
Total operating expenses 262,490 252,229 4 %
Income from operations 25,352 55,859 (55 ) %
Other income, net 582 7,892 (93 ) %
Income before provision for income taxes 25,934 63,751 (59 ) %
Provision for income taxes 9,855 23,907 (59 ) %
Net income $ 16,079 $ 39,844 (60 ) %
Earnings per share:
Basic $ 0.40 $ 0.96 (58 ) %
Diluted $ 0.39 $ 0.92 (58 ) %
Weighted average shares outstanding:
Basic 40,018 41,416 (3 ) %
Diluted 40,826 43,189 (5 ) %
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Progress Software Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended August 31, 2009 Three Months Ended August 31, 2008
As As Percent
(In thousands except per share data) Reported Adjustments Non-GAAP Reported Adjustments Non-GAAP Change
Total revenue $ 119,433 $ 286 $ 119,719 $ 126,620 $ - $ 126,620 (5 )%
Purchase accounting adjustments for deferred revenue (1) (286 ) 286 - -
Income from operations $ 9,092 $ 15,834 $ 24,926 $ 18,107 $ 9,129 $ 27,236 (8 )%
Purchase accounting adjustments for deferred revenue (1) (286 ) 286 - -
Amortization of acquired intangibles (7,121 ) 7,121 - (4,327 ) 4,327 -
Acquisition-related expenses (110 ) 110 - -
Restructuring expense 211 (211 ) - -
Stock option investigation (2) 321 (321 ) - (1,270 ) 1,270 -
Stock-based compensation (3) (8,849 ) 8,849 - (3,532 ) 3,532 -
Operating margin percentage 7.6 % 20.8 % 14.3 % 21.5 %
Other income (expense), net $ (187 ) $ - $ (187 ) $ 2,640 $ - $ 2,640 (107 )%
Provision for income taxes (4) $ 3,384 $ 4,903 $ 8,287 $ 8,210 $ 2,695 $ 10,905 (24 )%
Net income $ 5,521 $ 10,931 $ 16,452 $ 12,537 $ 6,434 $ 18,971 (13 )%
Earnings per share - diluted $ 0.13 $ 0.40 $ 0.30 $ 0.45 (11 )%
Weighted average shares outstanding - diluted 41,261 41,261 42,156 42,156 (2 )%
Nine Months Ended August 31, 2009 Nine Months Ended August 31, 2008
As As Percent
Reported Adjustments Non-GAAP Reported Adjustments Non-GAAP Change
Total revenue $ 357,340 $ 2,529 $ 359,869 $ 376,129 - $ 376,129 (4 )%
Purchase accounting adjustments for deferred revenue (1) (2,529 ) 2,529 - -
Income from operations $ 25,352 $ 46,648 $ 72,000 $ 55,859 $ 26,018 $ 81,877 (12 )%
Purchase accounting adjustments for deferred revenue (1) (2,529 ) 2,529 - -
Amortization of acquired intangibles (21,758 ) 21,758 - (12,540 ) 12,540 -
Acquisition-related expenses (330 ) 330 - -
Restructuring expense (5,237 ) 5,237 - -
Stock option investigation (2) 120 (120 ) - (1,866 ) 1,866 -
Stock-based compensation (3) (16,914 ) 16,914 - (11,612 ) 11,612 -
Operating margin percentage 7.1 % 20.0 % 14.9 % 21.8 % (8 )%
Other income, net $ 582 $ - $ 582 $ 7,892 $ - $ 7,892 (93 )%
Provision for income taxes (4) $ 9,855 $ 14,459 $ 24,314 $ 23,907 $ 7,961 $ 31,868 (24 )%
Net income $ 16,079 $ 32,189 $ 48,268 $ 39,844 $ 18,057 $ 57,901 (17 )%
Earnings per share - diluted $ 0.39 $ 1.18 $ 0.92 $ 1.34 (12 )%
Weighted average shares outstanding - diluted 40,826 40,826 43,189 43,189 (5 )%
(1) The purchase accounting adjustment for deferred revenue is included within maintenance and services revenue and represents the write-down to fair value of the deferred maintenance revenue of Iona Technologies at the date of the acquisition.
(2) Stock option investigation expenses are included within general and administrative expenses and primarily represent professional services fees associated with the SEC's investigation and shareholder derivative lawsuits related to the company's historical stock option grant practices. The credit amount in the third quarter of fiscal 2009 relates to insurance reimbursements in excess of previously estimated amounts.
(3) Stock-based compensation expense, representing the fair value of equity awards under SFAS 123R, is included in the following GAAP operating expenses:
Three Months Ended August 31, 2009 Three Months Ended August 31, 2008
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of software licenses $ 8 $ (8 ) $ - $ 12 $ (12 ) $ -
Cost of maintenance and services 238 (238 ) - 212 (212 ) -
Sales and marketing 1,445 (1,445 ) - 1,335 (1,335 ) -
Product development 1,037 (1,037 ) - 881 (881 ) -
General and administrative 6,121 (6,121 ) - 1,092 (1,092 ) -
$ 8,849 $ (8,849 ) $ - $ 3,532 $ (3,532 ) $ -
Nine Months Ended August 31, 2009 Nine Months Ended August 31, 2008
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of software licenses $ 28 $ (28 ) $ - $ 48 $ (48 ) $ -
Cost of maintenance and services 706 (706 ) - 705 (705 ) -
Sales and marketing 4,331 (4,331 ) - 4,184 (4,184 ) -
Product development 2,984 (2,984 ) - 2,737 (2,737 ) - A service of YellowBrix, Inc.
