Progress Software Reports First Quarter Results

Revenue Increases 20 Percent to an All-Time High

Bedford, Mass., (PresseBox) - Progress Software Corporation (Nasdaq: PRGS), a supplier of leading technology to develop, deploy, integrate and manage business applications, today announced results for its first quarter ended February 29, 2004. Revenue for the quarter was a record $86.4 million, up 20 percent (11 percent at constant currency) from $71.8 million in the first quarter of 2003. Software license revenue increased 33 percent (24 percent at constant currency) to $33.9 million from $25.5 million in the same quarter last year.

On a generally accepted accounting principles (GAAP) basis, operating income increased 20 percent to $6.3 million from $5.3 million in the first quarter of fiscal 2003. Net income increased 9 percent to $4.6 million from $4.2 million in the same quarter last year. Diluted earnings per share were 12 cents per share, the same as in the first quarter of 2003. The results for the first quarter of fiscal 2004 included an after-tax charge of $1.8 million for in-process research and development related to the acquisition of DataDirect Technologies and an after-tax charge of $1.1 million for amortization of purchased intangibles. The results for the first quarter of fiscal 2003 included an after-tax charge of $0.1 million for in-process research and development related to the acquisition of eXcelon Corporation and an after-tax charge of $0.3 for amortization of purchased intangibles.

On a pro forma basis, operating income increased 77 percent to $10.5 million from $5.9 million in the same quarter last year. Pro forma net income increased 59 percent to $7.5 million from $4.7 million in the same quarter last year and pro forma diluted earnings per share increased 46 percent to 19 cents per share from 13 cents in the first quarter of fiscal 2003. The pro forma results for each quarter presented exclude amortization of purchased intangibles and acquisition-related charges for in-process research and development.

The company's cash and short-term investments at the end of the quarter totaled $149 million. During the first quarter, the company purchased approximately 46,000 shares of its stock at a cost of $1.0 million. The company's existing repurchase authorization, under which 9.9 million shares remain available for repurchase, expires on September 30, 2004.

"Progress Software continues to significantly outperform other major software companies, and we have demonstrated our ability to rapidly integrate new operations and leverage our growth to deliver greater operating margins and sharply increased pro forma operating income, net income and EPS," said Joseph W. Alsop, co-founder and chief executive officer of Progress Software Corporation (PSC). "We not only saw a significant revenue contribution from our new DataDirect Technologies operation, but the Progress Company, Sonic Software and ObjectStore all demonstrated solid revenue increases."

New Customers and Partners

Highlights include recent adoption of PSC technology, and solutions based on PSC technology, by new customers and partners including:

Battens Solicitors, Chick-fil-A, Inc., El Dante SA, Enraf BV, First Command Financial Services, General Parts, Groupe Go Sport, Intersperse, Inc., Interwoven, Jireh Metal Products, Kilroy Invest, Kypera Systems Africa (Pty), Lawson Software, Minacs Worldwide, Movaris, Novalab Oy, Prologic, Record Rent A Car, Snowdrop Systems, Vertex, Vivo Stockholm and Wuppermann Datenservice.

Other Recent Highlights

PSC announced the completion of the DataDirect acquisition. http://phx.corporate-ir.net/phoenix.zhtml?c=86919&p=IROL-NRText&t=Regular&id=480278&

The Progress Company announced the release of Progress® OpenEdge™ 10, the foundation for its component-based approach to building distributed applications for Service Oriented Architectures (SOA). http://www.progress.com/company_info/news_views/pressrelease_207195/pritem.ssp?

Prebon Yamane, a premier broker for worldwide financial institutions, selected SonicMQ® as its global messaging infrastructure. http://www.sonicsoftware.com/news_events/press/pressitem/pressrelease_192543/ index.ssp

PeerDirect Corporation announced PeerDirect™ Remote Office, a product suite that provides independent software vendors (ISVs) and enterprise IT departments with the ability to build applications and deploy data directly to remote offices while synchronized and managed from a single data center. http://www.peerdirect.com/news/pressitem/pressrelease_196663/index.ssp

ObjectStore announced the first EPC-compliant database technology for Radio Frequency Identification (RFID). http://www.progress.com/company_info/news_views/pressrelease_188974/pritem.ssp?

DataDirect Technologies’ SupportLink Technical Support Program won the NorthFace Award for customer service for the third year in a row. http://www.datadirect.com/news/releases/20040224/index.ssp

Business Outlook

The company is providing the following guidance for the fiscal second quarter ending May 31, 2004:

Revenue is expected to be in the range of $88 million to $90 million. GAAP operating income is expected to be in the range of $10 million to $11 million, including amortization of purchased intangibles of $1.9 million. GAAP diluted earnings per share are expected to be in the range of 19 cents to 20 cents. On a pro forma basis, operating income is expected to be in the range of $11.9 million to $12.9 million excluding amortization of purchased intangibles of $1.9 million. On a pro forma basis, diluted earnings per share are expected to be in the range of 22 cents to 23 cents excluding approximately 3 cents per share for amortization of purchased intangibles. The company is providing the following guidance for the fiscal year ended November 30, 2004:

Revenue is expected to be in the range of $360 million to $365 million. GAAP operating income is expected to be in the range of $40 million to $43 million, including amortization of purchased intangibles of $7.1 million and in-process research and development of $2.6 million. GAAP diluted earnings per share are expected to be in the range of 73 cents to 76 cents. On a pro forma basis, operating income is expected to be in the range of $49.7 million to $52.7 million excluding amortization of purchased intangibles of $7.1 million and in-process research and development of $2.6 million. On a pro forma basis, diluted earnings per share are expected to be in the range of 90 cents to 93 cents excluding approximately 12 cents per share for amortization of purchased intangibles and approximately 5 cents per share for an acquisition-related charge for in-process research and development. Legal Notice Regarding Pro Forma Financial Information

The company provides pro forma 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 pro forma measures used by other companies. The company believes that the pro forma 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 of the company uses these pro forma 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 pro forma adjustments to the company’s GAAP financial results is included in the tables below.

Conference Call

PSC’s conference call to discuss its first quarter results will be Webcast live today at 9:00 a.m. Eastern via CCBN 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.

Progress Software GmbH

Progress Software ist ein weltweiter Anbieter von Softwaretechnologie sowie Services und vereinfacht die Aufgabe, Business-Applikationen zu entwickeln, zu integrieren und zu betreiben. Die Softwareprodukte, zu der auch die weltweit führende Embedded Datenbank gehört, bilden die E-Business Plattform
Progress(r) OpenEdgeTM. Progress OpenEdge-basierte Applikationen zeichnen sich durch niedrigste Cost-of-Ownership, schnelle Implementierung und einfache Integration mit Unternehmensapplikationen innerhalb und über die Unternehmensgrenzen hinweg aus.
Die Partner von Progress Software - dazu gehören mehr als 2.000 Applikationspartner und Application Service Provider - implementieren pro Jahr Progress-basierte Applikationen und Dienstleistungen im Wert von über 5,0 Milliarden US$. Mehr als 50.000 Unternehmen in über 120 Ländern, davon 70 % der Fortune 100-Unternehmen, setzen auf Progress-basierte Applikationen. The Progress Company ist ein Unternehmen der Progress Software Corporation (NASDAQ: PRGS) mit Hauptsitz in Bedford, Mass., USA.

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