Progress Software Q4 revenue, profits up

Source: Progress Software

Progress Software Corporation (Nasdaq: PRGS), a global supplier of application infrastructure software used to develop, deploy, integrate and manage business applications, today announced results for its fourth quarter ended November 30, 2005.

Revenue for the quarter was a record $108.0 million, up 12 percent (13 percent at constant currency) from $96.2 million in the fourth quarter of fiscal 2004. Software license revenue increased 20 percent (same percent at constant currency) to $44.1 million from $36.8 million in the same quarter last year.

On a generally accepted accounting principles (GAAP) basis, operating income increased 21 percent to $19.2 million from $15.9 million in the fourth quarter of fiscal 2004. Net income increased 29 percent to $14.0 million from $10.9 million in the same quarter last year. Diluted earnings per share increased 18 percent to 33 cents from 28 cents in the fourth quarter of fiscal 2004.

On a pro forma basis, operating income increased 27 percent to $22.6 million from $17.7 million in the fourth quarter of fiscal 2004. Pro forma net income increased 34 percent to $16.3 million from $12.1 million in the same quarter last year. Pro forma diluted earnings per share increased 23 percent to 38 cents from 31 cents in the fourth quarter of fiscal 2004.

The pro forma results in the fourth quarter of fiscal 2005 exclude after-tax charges for amortization of acquired intangibles of $1.7 million, certain other acquisition-related expenses for retention bonuses for key employees of acquired companies of $0.4 million and stock-based compensation related to issuance of restricted stock of $0.1 million. The pro forma results in the fourth quarter of fiscal 2004 exclude an after-tax charge for amortization of acquired intangibles of $1.3 million.

For the 12 months ended November 30, 2005, revenue increased 12 percent (10 percent at constant currency) to $405 million from $363 million in fiscal 2004. On a GAAP basis, operating income increased 38 percent to $63.8 million from $46.4 million in fiscal 2004. Net income increased 52 percent to $48.9 million from $32.1 million in fiscal 2004 and diluted earnings per share increased 44 percent to $1.18 from 82 cents in fiscal 2004.

On a pro forma basis, operating income increased 42 percent to $79.5 million from $56.0 million in fiscal 2004. Pro forma net income increased 44 percent to $55.8 million from $38.7 million in fiscal 2004. Pro forma diluted earnings per share increased 35 percent to $1.34 from 99 cents in fiscal 2004.

The pro forma results in fiscal 2005 exclude after-tax charges for amortization of acquired intangibles of $6.3 million, certain other acquisition-related expenses of $2.3 million, compensation expense from repurchase of subsidiary stock of $1.9 million, stock-based compensation of $0.1 million and a tax benefit of $3.8 million. The pro forma results in fiscal 2004 exclude after-tax charges for amortization of acquired intangibles of $4.8 million and certain other acquisition-related expenses of $1.8 million.

The company's cash and short-term investments at the end of the quarter totaled $266 million. During the fourth quarter, the company purchased 81,000 shares of its stock at a cost of $2.4 million. The company's existing repurchase authorization, under which approximately 9.9 million shares remain available for repurchase, expires on September 30, 2006.

"All Progress product lines contributed to a successful fourth quarter and a record 2005 fiscal year. Our newer operating units - Sonic Software, Progress Real Time and DataDirect Technologies - delivered excellent revenue growth of 33 percent in fiscal 2005 and now account for 36 percent of our software license revenue," stated Joseph Alsop, co-founder and chief executive officer of PSC. "Revenue from the OpenEdge Division continues to grow and deliver very substantial profitability. We are also pleased to have Neon Systems join us, per the companion press release."

Highlights

The Progress OpenEdge Division introduced Progress OpenEdge 10.1. Included in this latest release of OpenEdge is a new Eclipse-based integrated development environment (IDE), as well as auditing services designed to address the compliance needs of finance, healthcare, and other industries traditionally affected by audit and compliance requirements.

The Progress OpenEdge Division announced new additions to its award-winning partner program designed to help both existing and prospective application partners learn how to enhance their business applications with the latest technology advances using Progress OpenEdge technology. Based on its highly successful Application Transformation Approach (ATA), the new Accelerator Program combines products, services and best practices to bring new partners and their non-Progress-based applications through the SOA-enablement process.

Sonic Software joined forces with AmberPoint and Systinet to create and publish a new Service-Oriented Architecture (SOA) Maturity Model (SOA MM) to assess, guide and establish a vision for maximizing the strategic benefits of SOA investments. The three firms publicly presented the SOA Maturity Model to senior IT decision managers during a 10-city Management Forum Seminar Series designed to educate managers on the strategic business value of SOA.

The Progress Real Time Division introduced the Progress DataXtend product line, which provides enterprises with key capabilities to efficiently deliver data to applications. The new DataXtend product line includes Progress DataXtend RE (Replication Engine) for mobile users and others with inconsistent network reliability, and Progress DataXtend CE (Cache Engine) to enable high performance distributed applications.

DataDirect Technologies announced the release of DataDirect XQuery, the first embeddable component for XQuery that is modeled after the XQuery API for Java (XQJ). DataDirect XQuery simplifies XML and relational data integration by providing developers with an XQuery implementation that offers greater productivity, performance and interoperability for building standards-based data integration applications.

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

Significant new partners and customers adopting technology from PSC operating companies, or deploying solutions using PSC technology, include: Abinet Holdings, Adlog BV, Aina Group Oyj, Amdocs Inc., Artesano Moveis Ltda., Atlas Copco Holding GmbH, AutoTrader.com, Bank for International Settlements, Bank of Canada, Blue Cross of Idaho, Blue River Software, City College Manchester, Community Transit, Configure One LLC, DDBC, Inc., Dundee Securities Corporation, Edward C. Levy Company, Evans Company, Fasttrack, First Southwest, Company, Fleet and Industrial Supply Center, Fox Run Solutions, Georgia State University, Gevity, Granite State Software, Highbridge Capital Management, Innovations Group Inc., ITE Solutions, Inc., Jordan School District, JCM American Corporation, JD Alpha, Lombard North Central, Motorola, Netezza Corporation, Nexstar, Occidental College, Oxford Instruments, Paypal, Inc., Politiezon Buggenhout-Lebbeke, Pryor Consulting Services, Paul Hastings Research Technology Inc., Shands Healthcare, Standford Graduate School of Business, South Carolina Department of Education, Teracruz, Inc., The TJX Companies, Theodor Rietmann GmbH, Ultra Electronics Airport Systems, University of Wales Swanea, VBM Software LLC and Winterhur Insurance.

Significant existing partners and customers adopting technology from PSC operating companies, or making substantial additional deployments of PSC technology, include: Airfoil Technologies International, Ameritrade Holding Inc., American Medical Security, Banc of America Securities, Banco Comafi, Bank of America, Barclays Capital, Black & Decker, Blue Cross Blue Shield Corporation, Boehringer Ingelheim Pharmaceutial, Bristol Meyers, BT Global Services, Bundeswehr, CACI, ChoicePoint, CIGNA, CitiGroup Inc., eBay, Inc., Elections Canada, Fiserv Lending Solutions, Federal Trade Commission, General Electric Company, Goldman Sachs & Company, Healthplan Services, Homeserve, ING-Comercial America, IRS (Department of Treasury), JP Morgan, Kaiser Permaente, Lockheed Martin, Pacific Blue Cross, Mercury Interactive, Mitsubishi UFJ Securities, Nationwide Appraisal Services, NCR Corporation, Northrop Grumman, NRI, Pueblo County Government, State of Michigan, Tarrant County Auditors Office, Technische Universitaet Berlin, Telecom Italia Mobile, Total Systems, Inc., Universal Forest Products Inc. and Verizon Data Services.

Business Outlook

The company is providing the following guidance for the first fiscal quarter ending February 28, 2006:

Revenue is expected to be in the range of $103 million to $105 million. GAAP operating income is expected to be in the range of $9 million to $10 million, including amortization of acquired intangibles, stock-based compensation expense
(including amounts associated with FASB No. 123, "Share-Based Payments," which the company will adopt in the first quarter of fiscal 2006), and certain other acquisition-related expenses of approximately $9 million.

GAAP diluted earnings per share are expected to be in the range of 15 cents to 17 cents.

On a pro forma basis, operating income is expected to be in the range of $18 million to $19 million, excluding amortization of acquired intangibles, stock-based compensation and certain other acquisition-related expenses of approximately $9 million.

On a pro forma basis, diluted earnings per share are expected to be in the range of 29 cents to 31 cents, excluding approximately 14 cents per share for amortization of acquired intangibles, stock-based compensation and certain other acquisition-related expenses.

The company is providing the following guidance for the fiscal year ending November 30, 2006:

Revenue is expected to be in the range of $435 million to $445 million. GAAP operating income is expected to be in the range of $51 million to $54 million, including amortization of acquired intangibles, stock-based compensation and certain other acquisition-related expenses of approximately $37 million.

GAAP diluted earnings per share are expected to be in the range of 85 cents to 91 cents.

On a pro forma basis, operating income is expected to be in the range of $88 million to $91 million, excluding amortization of acquired intangibles, stock-based compensation and certain other acquisition-related expenses of approximately $37 million.

On a pro forma basis, diluted earnings per share are expected to be in the range of $1.45 to $1.51, excluding approximately 60 cents per share for amortization of acquired intangibles, stock-based compensation and certain other acquisition-related expenses.

The above guidance includes an estimate for the impact of the acquisition of Neon, which is expected to be completed in January 2006. Any delays in the completion of this transaction could have a material effect on this guidance.» Download the document now 42.6 kb (Adobe Acrobat Document)

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