Revenue for the quarter was $115 million, up 11 percent (6 percent at constant currency) from $104 million in the first quarter of fiscal 2006. Software license revenue increased 5 percent (flat at constant currency) to $44.7 million from $42.8 million in the same quarter last year.

On a generally accepted accounting principles (GAAP) basis, operating income increased 49 percent to $12.4 million from $8.3 million in the first quarter of fiscal 2006. Net income increased 48 percent to $8.7 million from $5.9 million in the same quarter last year. Diluted earnings per share increased 43 percent to 20 cents from 14 cents in the first quarter of fiscal 2006.

On a non-GAAP basis, operating income increased 26 percent to $23.5 million from $18.7 million in the same quarter last year. Non-GAAP net income increased 25 percent to $16.2 million from $12.9 million in the same quarter last year and non-GAAP diluted earnings per share increased 23 percent to 37 cents per share from 30 cents in the first quarter of fiscal 2006.

The non-GAAP results in the first quarter of fiscal 2007 exclude after-tax charges of $3.3 million for stock-based compensation, $0.1 million for an accrual for payments to be made to current and former employees for reimbursements for excise taxes resulting from the exercise of below market options in fiscal 2007, $3.0 million for amortization of acquired intangibles and $1.1 million for professional services fees associated with our stock option accounting investigation and restatement. The non-GAAP results in the first quarter of fiscal 2006 exclude after-tax charges of $4.0 million for stock-based compensation, $2.0 million for amortization of acquired intangibles and $1.0 million for certain other acquisition-related expenses.

The company's cash and short-term investments at the end of the quarter totaled $234 million. The company purchased 695,000 shares at a cost of $19.2 million in the first quarter of fiscal 2007. The company's existing repurchase authorization, under which approximately 9.3 million shares remain available for repurchase, expires on September 30, 2007.

"We achieved double-digit growth in total revenue for the first quarter, with a 23 percent increase in non-GAAP earnings per share. Our Progress OpenEdge division and particularly our DataDirect Technologies division performed extremely well this quarter," stated Joseph Alsop, co-founder and chief executive officer of Progress Software. "Revenue in our Enterprise Infrastructure product line grew 7 percent this quarter, with our newer products comprising Sonic(TM), Apama(R) and DataXtend(R) SI (formerly Pantero) demonstrating solid combined growth exceeding 25 per cent, while our mature products were weak. Our outlook for the balance of the year remains solid."

Quarterly Highlights

Progress Software announced the appointment of industry veteran Barry Bycoff to the Board of Directors of Progress Software Corporation. Mr. Bycoff brings over 25 years of experience in the computer and software industry to Progress, and is currently a Venture Partner at Pequot Ventures.

Progress Software announced that the Maryland State Library for the Blind and Physically Handicapped (MDLBPH) has implemented the Keystone Library Automation System (KLAS) from Progress Application Partner (AP) Keystone Systems. The Software-as-a-Service (SaaS) based system helps libraries like MDLBPH fulfill thousands of requests for materials within a 24-hour period while keeping within a tight budget.

Progress Software announced the availability of its popular Progress(R) OpenEdge(R) 10.1B platform with several enhancements that help businesses become even more productive with support for large scale data management. The OpenEdge platform is the first integrated platform optimized for the development and deployment of service-oriented business applications.

Progress announced that leading Mexican broker-dealer Casa de Bolsa Finamex (Finamex) selected the Progress Apama Algorithmic Trading platform for use by its buy-side customers. The comprehensive Apama platform, Event Modeler(TM) and Dashboard Studio(TM) rapid application development tools allow Finamex to rapidly deploy innovative algorithms that meet their customers' individual needs in hours or days, rather than the months or years that would be required with alternative approaches.

Progress announced the introduction of its Progress(R) DataXtend(TM) Semantic Integrator (SI) product (formerly Pantero), which addresses the semantic data integration challenges in a service-oriented architecture (SOA). The DataXtend SI product uses industry standard models to manage the validation and transformation of data so it can be shared between applications that require different information or formats. By providing an automated, model-based approach to data integration, the DataXtend SI product helps customers reduce the cost, time and complexity of integrating systems.

DataDirect Technologies announced that Fox Network Group selected DataDirect Connect(R) for ADO.NET data providers to improve performance of its proprietary advertising sales application ensuring fast, secure and reliable connectivity between their Sybase database and the latest version of their Microsoft .NET platform.

Significant New Customer and Partner Wins, New Technology Adoptions and Major Deployments

Significant new partners and customers adopting technology from Progress Software, or deploying solutions using Progress technology, include: Abundance Technologies, Advantest Corporation, Ambassador' International, Andbanc, AON, Automated Systems, Batesville Casket Company, Brasil e Movimento, Cavalier Telephone, Central Dynamics Corporation, Cheyne Capital Management, Children's Hospital Boston, Daw Industries (Goretek), Dominos Pizza, D. Swarovski & Co., Factory Brands, First Marblehead Corporation, GCorp, Georgia Systems Operations, Graphic Technologies, IAS Administrations, Ilmailulaitos, Instituto HOC de Hemoterapia, Joint Forces Command (JFCOM), Mason Woodard Mortuary, Modata, Movensis, Municipio de Cozumel, National Institute for Land and Infrastructure Management, NIH Center for Information Technologies, Openwave Systems, Outokumpu Technology Turula, ParAccel, PJM Interconnection, Police Locale de Wavre, Pre-Mervo, Renesass Kyushu Semiconductor Corporation, S&D Coffee, Sawyer Property Management, Semotus Solutions, Suntrust, Suzano Papel e Celulose, Teknion Roy & Breton, Terawave Communications, Thetys, Telefonos de Mexico, Unitrin Business Insurance and Ville de Quebec.

Significant existing partners and customers adopting technology from different Progress Software product lines, or making substantial additional deployments of Progress technology, include: AcconSys, Aegis Analytical, Afnor, Avon Products, AXA Technology Services Switzerland, Bell Canada, Cetrel Societe Cooperative, CFS Finance, CGI Insurance Business Services, Cisco Linksys, Citicorp Management AG, Commander Australia, DATAllegro, De Reisspecialisten Groep, Department of Homeland Security, Electronic Data Systems, Ericsson Telecomunicoes, Esprit Limited, Experian Information Solutions, G4S Security Services, GE Consumer & Industrial, Genentech, GKV Informatik, Groupe Prodware, GTECH Corporation, Informazioni Editoriali, JPMorgan Chase Bank, Juriscoop Progreso Solidario, Kaiser Permanente, Metastorm, Metlife, Mitsubishi Motors France, Morgan Stanley Dean Witter, National Floor Coverings, National Library of Scotland, Netsuite, Open Integration Incorporate, Oppenheimer Funds, Pearson, PlanetOut Corporation, PPG Industries, Raytheon Company, State of New York, SunGard, Tarrant County Auditors Office, Talbots, Telvent, Trane Company, Wells Fargo & Company, and Westcoast Limited.

Business Outlook

The company is providing the following guidance for the fiscal year ending November 30, 2007:

• Revenue is expected to be in the range of $470 million to $480 million.
• GAAP diluted earnings per share are expected to be in the range of $1.07 to $1.13.
• On a non-GAAP basis, diluted earnings per share are expected to be in the range of $1.69 to $1.75.
• The non-GAAP projections exclude after-tax charges of approximately $15 million (34 cents per share) for stock-based compensation, approximately $11 million (24 cents per share) for amortization of acquired intangibles and an estimate of approximately $2 million (4 cents per share) for professional services fees associated with our stock option accounting investigation and restatement in the first half of fiscal 2007.

The company is providing the following guidance for the second fiscal quarter ending May 31, 2007:

• Revenue is expected to be in the range of $115 million to $117 million.
• GAAP diluted earnings per share are expected to be in the range of 23 cents to 25 cents.
• On a non-GAAP basis, diluted earnings per share are expected to be in the range of 40 cents to 42 cents.
• The non-GAAP projections exclude after-tax charges of approximately $3.5 million (8 cents per share) for stock-based compensation, $3 million (7 cents per share) for amortization of acquired intangibles and $1 million (2 cents per share) for professional services fees associated with our stock option accounting investigation and restatement.