Progress Software Reports 2011 Fiscal Fourth Quarter and Year End Results – Enterprise Business Solutions (EBS) segment grew 12%

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.

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