PROGRESS SOFTWARE CORP /MA - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - PROGRESS SOFTWARE CORP /MA	form8-kxq32015.htm



		Exhibit 99.1

P R E S S A N N O U N C E M E N T



Investor Contact:		Press Contact:
Brian Flanagan		Erica Burns
Progress Software		Progress Software
+1 781 280 4817		+1 888 365 2779 (x3135)
flanagan@progress.com		erica.burns@progress.com

Progress Reports 2015 Fiscal Third Quarter Results

BEDFORD, MA, October 1, 2015 (BUSINESSWIRE) — Progress (NASDAQ: PRGS), a global software company that simplifies and enables the development, deployment and management of business applications, today announced results for its fiscal third quarter ended August 31, 2015.

Revenue in the quarter was $94.6 million compared to $79.3 million in the same quarter last year, a year over year increase of 19% on an actual currency basis and 29% on a constant currency basis. On a non-GAAP basis, revenue was $100.7 million compared to $79.3 million in the same quarter last year.

Additional financial highlights included:

On a GAAP basis in the fiscal third quarter of 2015:


•	Revenue was $94.6 million compared to $79.3 million in the same quarter in fiscal year 2014;


•	Income from operations was $8.6 million compared to $19.4 million in the same quarter last year;


•	Net loss was $4.1 million compared to net income of $11.1 million in the same quarter last year; and


•	Diluted loss per share was $0.08 compared to diluted earnings per share of $0.22 in the same quarter last year.

On a non-GAAP basis in the fiscal third quarter of 2015:


•	Revenue was $100.7 million compared to $79.3 million in the same quarter last year;


•	Income from operations was $31.7 million compared to $29.6 million in the same quarter last year;


•	Operating margin was 31% compared to 37% in the same quarter last year;


•	Net income was $20.0 million, unchanged from the same quarter last year;


•	Diluted earnings per share was $0.39, unchanged from the same quarter last year; and


•	Free cash flow was $17.3 million compared to $23.8 million in the same quarter last year.

“We achieved continued positive momentum in key areas of our business in the third quarter," said Phil Pead, President and CEO of Progress. “OpenEdge continued to grow, with significant strength in enterprise sales. We achieved growth in our data business, and several of our Telerik solutions achieved record bookings for the quarter.”

Other fiscal third quarter 2015 metrics and recent results included:


•	Cash, cash equivalents and short-term investments were $218.3 million;


•	Cash flows from operations were $19.3 million compared to $25.9 million in the same quarter in fiscal year 2014; and


•	DSO was 54 days, compared to 50 days in the fiscal second quarter of 2015.

Business Outlook

Progress's fiscal 2015 financial guidance includes the impact of the significant strengthening of the US dollar that began in late 2014 and is based on current exchange rates. The negative currency translation impact on Progress's 2015 business outlook compared to 2014 exchange rates is $25 - $26 million on non-GAAP revenue and $0.14 - $0.15 on non-GAAP earnings per share. To the extent that there are further changes in exchange rates versus the current environment, this may have an additional impact on Progress's business outlook.

Progress provides the following revised guidance for the fiscal year ending November 30, 2015:


•	Non-GAAP revenue is expected to be between $410 million and $415 million (previously $415-$425 million);


•	Non-GAAP earnings per share is expected to be between $1.51 and $1.55 (previously $1.45-$1.52);


•	Non-GAAP operating margin is expected to be approximately 29% (previously 28%);


•	Free cash flow is expected to be between $92 million and $95 million (unchanged); and


•	Non-GAAP effective tax rate is expected to be approximately 33% (unchanged).

Progress provides the following guidance for the fiscal fourth quarter ending November 30, 2015:


•	Non-GAAP revenue is expected to be between $113 million and $118 million; and


•	Non-GAAP earnings per share is expected to be between $0.47 and $0.51.

Share Repurchase Program

Progress also announced today that its Board of Directors has authorized a new $100 million share repurchase program. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors, and the Board of Directors may choose to suspend, expand or discontinue the repurchase program at any time.

Conference Call

The Progress quarterly investor conference call to review its fiscal third quarter of 2015 will be broadcast live at 5:00 p.m. ET on Thursday, October 1, 2015 and can be accessed on the investor relations section of the company’s website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-888-401-4669, pass code 2038969. The conference call will include brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress 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. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is available on the Progress website at www.progress.com within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “should,”“expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding Progress's business outlook and financial guidance. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Market acceptance of Progress’s strategy and product development initiatives; (2) pricing pressures and the competitive

environment in the software industry and Platform-as-a-Service market; (3) Progress's ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy; (4) uncertainties relating to Progress’ acquisition of Telerik, including whether Progress will be able to realize expected benefits and anticipated synergies of the acquisition and whether Telerik’s business will be successfully integrated with Progress Software's business; (5) Progress's ability to make acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (6) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (7) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (8) Progress's ability to expand its relationships with channel partners; (9) the timely release of enhancements to Progress's products and customer acceptance of new products; (10) the positioning of Progress's products in its existing and new markets; (11) variations in the demand for professional services and technical support; (12) Progress's ability to penetrate international markets and manage its international operations; and (13) changes in exchange rates. For further information regarding risks and uncertainties associated with Progress's business, please refer to Progress's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2014. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Progress Software Corporation

Progress Software Corporation (NASDAQ: PRGS) is a global software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source, with enhanced performance, minimal IT complexity and low total cost of ownership. Progress can be reached at www.progress.com or 1-781-280-4000.

Progress is a trademark 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.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



	Three Months Ended								Nine Months Ended
(In thousands, except per share data)	August 31, 2015			August 31, 2014			% Change		August 31, 2015			August 31, 2014			% Change
Revenue:
Software licenses	$	31,840		$	26,393		21	%	$	85,794		$	76,645		12	%
Maintenance and services	62,797			52,881			19	%	179,042			157,994			13	%
Total revenue	94,637			79,274			19	%	264,836			234,639			13	%
Costs of revenue:
Cost of software licenses	1,441			1,805			(20	)%	4,526			4,951			(9	)%
Cost of maintenance and services	9,612			5,222			84	%	31,174			16,276			92	%
Amortization of acquired intangibles	4,079			834			389	%	12,805			1,893			576	%
Total costs of revenue	15,132			7,861			92	%	48,505			23,120			110	%
Gross profit	79,505			71,413			11	%	216,331			211,519			2	%
Operating expenses:
Sales and marketing	30,004			22,477			33	%	92,607			71,425			30	%
Product development	20,422			14,975			36	%	65,533			45,568			44	%
General and administrative	14,076			12,162			16	%	42,065			35,236			19	%
Amortization of acquired intangibles	3,186			116			2,647	%	9,559			428			2,133	%
Restructuring expenses	2,561			1,680			52	%	8,715			2,001			336	%
Acquisition-related expenses	662			572			16	%	3,180			3,148			1	%
Total operating expenses	70,911			51,982			36	%	221,659			157,806			40	%
Income (loss) from operations	8,594			19,431			(56	)%	(5,328		)	53,713			(110	)%
Other (expense) income, net	(1,165		)	(2,457		)	(53	)%	(1,258		)	(2,581		)	(51	)%
Income (loss) before income taxes	7,429			16,974			(56	)%	(6,586		)	51,132			(113	)%
Provision (benefit) for income taxes	11,555			5,879			97	%	(7,256		)	16,138			(145	)%
Net (loss) income	(4,126		)	11,095			(137	)%	670			34,994			(98	)%

Earnings per share:
Basic	$	(0.08	)	$	0.22		(136	)%	$	0.01		$	0.69		(99	)%
Diluted	$	(0.08	)	$	0.22		(136	)%	$	0.01		$	0.68		(99	)%
Weighted average shares outstanding:
Basic	50,120			50,383			(1	)%	50,377			50,975			(1	)%
Diluted	50,120			50,931			(2	)%	51,117			51,590			(1	)%

CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)	August 31, 2015		November 30, 2014
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	218,304	$	283,268
Accounts receivable, net	60,335		68,311
Other current assets	51,728		34,094
Total current assets	330,367		385,673
Property and equipment, net	56,825		59,351
Goodwill and intangible assets, net	491,788		253,414
Other assets	7,654		4,623
Total assets	$	886,634	$	703,061
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and other current liabilities	$	65,606	$	60,746
Current portion of long-term debt	7,500		—
Short-term deferred revenue	124,285		92,557
Total current liabilities	197,391		153,303
Long-term deferred revenue	6,711		3,683
Long-term debt	136,875		—
Other long-term liabilities	15,915		2,830
Shareholders’ equity:
Common stock and additional paid-in capital	223,299		209,778
Retained earnings	306,443		333,467
Total shareholders’ equity	529,742		543,245
Total liabilities and shareholders’ equity	$	886,634	$	703,061

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



	Three Months Ended						Nine Months Ended
(In thousands)	August 31, 2015			August 31, 2014			August 31, 2015			August 31, 2014
Cash flows from operating activities:
Net (loss) income	$	(4,128	)	$	11,095		$	670		$	34,994
Depreciation and amortization	10,115			3,938			31,610			10,985
Stock-based compensation	6,537			6,940			18,812			18,194
Other non-cash adjustments	5,608			1,856			(19,800		)	2,232
Changes in operating assets and liabilities	1,125			2,099			45,896			2,064
Net cash flows from operating activities	19,257			25,928			77,188			68,469
Capital expenditures	(1,952		)	(2,154		)	(7,740		)	(10,191		)
Issuances of common stock, net of repurchases	4,103			(13,795		)	(22,409		)	(41,890		)
Payments for acquisitions	—			—			(246,275		)	(12,493		)
Proceeds from the issuance of debt, net of payments of principle and debt issuance costs	(1,955		)	—			142,588			—
Proceeds from divestitures, net	—			—			4,500			3,300
Other	(270		)	24,737			(12,816		)	22,657
Net change in cash, cash equivalents and short-term investments	19,183			34,716			(64,964		)	29,852
Cash, cash equivalents and short-term investments, beginning of period	199,121			226,576			283,268			231,440
Cash, cash equivalents and short-term investments, end of period	$	218,304		$	261,292		$	218,304		$	261,292

RESULTS OF OPERATIONS BY SEGMENT



	Three Months Ended								Nine Months Ended
(In thousands)	August 31, 2015			August 31, 2014			% Change		August 31, 2015			August 31, 2014			% Change
Segment revenue:
OpenEdge	$	73,398		$	71,847		2	%	$	214,775		$	211,773		1	%
Data Connectivity and Integration	8,281			7,175			15	%	22,669			22,221			2	%
Application Development and Deployment	12,958			252			5,042	%	27,392			645			4,147	%
Total revenue	94,637			79,274			19	%	264,836			234,639			13	%
Segment costs of revenue and operating expenses:
OpenEdge	18,550			15,524			19	%	56,529			48,770			16	%
Data Connectivity and Integration	3,180			2,515			26	%	9,563			7,913			21	%
Application Development and Deployment	9,933			2,446			306	%	30,169			5,762			424	%
Total costs of revenue and operating expenses	31,663			20,485			55	%	96,261			62,445			54	%
Segment contribution:
OpenEdge	54,848			56,323			(3	)%	158,246			163,003			(3	)%
Data Connectivity and Integration	5,101			4,660			9	%	13,106			14,308			(8	)%
Application Development and Deployment	3,025			(2,194		)	238	%	(2,777		)	(5,117		)	46	%
Total contribution	62,974			58,789			7	%	168,575			172,194			(2	)%
Other unallocated expenses (1)	54,380			39,358			38	%	173,903			118,481			47	%
Income (loss) from operations	8,594			19,431			(56	)%	(5,328		)	53,713			(110	)%
Other (expense) income, net	(1,165		)	(2,457		)	(53	)%	(1,258		)	(2,581		)	(51	)%
Income (loss) before provision for income taxes	7,429			16,974			(56	)%	(6,586		)	51,132			(113	)%

(1) The following expenses are not allocated to our segments as we manage and report our business in these functional areas on a consolidated basis only: product development, corporate marketing, administration, amortization of acquired intangibles, stock-based compensation, restructuring, and acquisition related expenses.

SUPPLEMENTAL INFORMATION



Revenue by Type

(In thousands)	Q3 2014		Q4 2014		Q1 2015		Q2 2015		Q3 2015
License	$	26,393	$	41,154	$	25,231	$	28,722	$	31,840
Maintenance	50,746		51,268		49,239		52,656		55,365
Services	2,135		5,472		6,911		7,439		7,432
Total revenue	$	79,274	$	97,894	$	81,381	$	88,817	$	94,637

Revenue by Region

(In thousands)	Q3 2014		Q4 2014		Q1 2015		Q2 2015		Q3 2015
North America	$	35,654	$	43,654	$	42,125	$	47,520	$	49,810
EMEA	32,995		35,327		27,863		31,146		30,656
Latin America	5,695		8,406		4,967		4,388		4,621
Asia Pacific	4,930		10,507		6,426		5,763		9,550
Total revenue	$	79,274	$	97,894	$	81,381	$	88,817	$	94,637

Revenue by Segment

(In thousands)	Q3 2014		Q4 2014		Q1 2015		Q2 2015		Q3 2015
OpenEdge	$	71,847	$	84,948	$	69,471	$	71,906	$	73,398
Data Connectivity and Integration	7,175		12,551		7,113		7,275		8,281
Application Development and Deployment	252		395		4,797		9,636		12,958
Total revenue	$	79,274	$	97,894	$	81,381	$	88,817	$	94,637

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - QTD



	Three Months Ended August 31,																		% Change
	2015									2014
(In thousands, except per share data)	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			Non-GAAP
TOTAL REVENUE	$	94,637		$	6,086		$	100,723		$	79,274		$	—		$	79,274		27	%
Software licenses (1)	31,840			1,418			33,258			26,393			—			26,393			26	%
Maintenance and services (1)	62,797			4,668			67,465			52,881			—			52,881			28	%

TOTAL COSTS OF REVENUE	$	15,132		$	(4,223	)	$	10,909		$	7,861		$	(975	)	$	6,886		58	%
Amortization of acquired intangibles	4,079			(4,079		)	—			834			(834		)	—
Stock-based compensation (2)	144			(144		)	—			141			(141		)	—

GROSS MARGIN %	84		%				89		%	90		%				91		%	(2	)%

TOTAL OPERATING EXPENSES	$	70,911		$	(12,803	)	$	58,108		$	51,982		$	(9,167	)	$	42,815		36	%
Amortization of acquired intangibles	3,186			(3,186		)	—			116			(116		)	—
Restructuring expenses	2,561			(2,561		)	—			1,680			(1,680		)	—
Acquisition-related expenses	662			(662		)	—			572			(572		)	—
Stock-based compensation (2)	6,394			(6,394		)	—			6,799			(6,799		)	—

INCOME FROM OPERATIONS	$	8,594		$	23,112		$	31,706		$	19,431		$	10,142		$	29,573		7	%

OPERATING MARGIN	9		%				31		%	25		%				37		%	(7	)%

TOTAL OTHER (EXPENSE) INCOME, NET	$	(1,165	)	$	—		$	(1,165	)	$	(2,457	)	$	2,554		$	97		1,301	%

PROVISION FOR INCOME TAXES	$	11,555		$	(1,034	)	$	10,521		$	5,879		$	3,748		$	9,627		9	%

NET (LOSS) INCOME	$	(4,126	)	$	24,146		$	20,020		$	11,095		$	8,948		$	20,043		—	%

DILUTED EARNINGS PER SHARE	$	(0.08	)	$	0.47		$	0.39		$	0.22		$	0.17		$	0.39		—	%

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED	50,120			784			50,904			50,931			—			50,931			—	%
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:

Cost of revenue	144									141
Sales and marketing	1,604									1,546
Product development	912									1,407
General and administrative	3,878									3,846
Total	$	6,538								$	6,940

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - YTD



	Nine Months Ended August 31,																		% Change
	2015									2014
(In thousands, except per share data)	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			Non-GAAP
TOTAL REVENUE	$	264,836		$	32,193		$	297,029		$	234,639		$	—		$	234,639		27	%
Software licenses (1)	85,794			8,181			93,975			76,645			—			76,645			23	%
Maintenance and services (1)	179,042			24,012			203,054			157,994			—			157,994			29	%

TOTAL COSTS OF REVENUE	$	48,505		$	(13,267	)	$	35,238		$	23,120		$	(2,332	)	$	20,788		70	%
Amortization of acquired intangibles	12,805			(12,805		)	—			1,893			(1,893		)	—
Stock-based compensation (2)	462			(462		)	—			439			(439		)	—

GROSS MARGIN %	82		%				88		%	90		%				91		%	(3	)%

TOTAL OPERATING EXPENSES	$	221,659		$	(39,804	)	$	181,855		$	157,806		$	(23,332	)	$	134,474		35	%
Amortization of acquired intangibles	9,559			(9,559		)	—			428			(428		)	—
Restructuring expenses	8,715			(8,715		)	—			2,001			(2,001		)	—
Acquisition-related expenses	3,180			(3,180		)	—			3,148			(3,148		)	—
Stock-based compensation (2)	18,350			(18,350		)	—			17,755			(17,755		)	—

(LOSS) INCOME FROM OPERATIONS	$	(5,328	)	$	85,264		$	79,936		$	53,713		$	25,664		$	79,377		1	%

OPERATING MARGIN	(2		)%				27		%	23		%				34		%	(7	)%

TOTAL OTHER (EXPENSE) INCOME, NET (3)	$	(1,258	)	$	266		$	(992	)	$	(2,581	)	$	2,554		$	(27	)	(3,574	)%

(BENEFIT) PROVISION FOR INCOME TAXES	$	(7,256	)	$	32,916		$	25,660		$	16,138		$	9,387		$	25,525		1	%

NET INCOME	$	670		$	52,614		$	53,284		$	34,994		$	18,831		$	53,825		(1	)%

DILUTED EARNINGS PER SHARE	$	0.01		$	1.03		$	1.04		$	0.68		$	0.36		$	1.04		—	%

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED	51,117			—			51,117			51,590			—			51,590			(1	)%
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:

Cost of revenue	462									439
Sales and marketing	4,328									3,736
Product development	3,476									4,186
General and administrative	10,546									9,833
Total	$	18,812								$	18,194
(3) Adjustment to other income (expense), net relates to the termination of Progress' prior revolving credit facility with JPMorgan Chase Bank, N.A. and the other lenders party to the credit facility in connection with entering into the new credit facility, which was used to partially fund the acquisition of Telerik. Upon termination, the outstanding debt issuance costs related to the prior revolving credit facility were written off to other income (expense) in the GAAP statements of income.

OTHER NON-GAAP FINANCIAL MEASURES - QTD



Revenue by Type

(In thousands)	Q3 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
License	$	31,840		$	1,418		$	33,258
Maintenance	55,365			4,668			60,033
Services	7,432			—			7,432
Total revenue	$	94,637		$	6,086		$	100,723

Revenue by Region

(In thousands)	Q3 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
North America	$	49,810		$	5,775		$	55,585
EMEA	30,656			246			30,902
Latin America	4,621			8			4,629
Asia Pacific	9,550			57			9,607
Total revenue	$	94,637		$	6,086		$	100,723

Revenue by Segment

(In thousands)	Q3 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
OpenEdge	$	73,398		$	—		$	73,398
Data Connectivity and Integration	$	8,281		$	—		$	8,281
Application Development and Deployment	$	12,958		$	6,086		$	19,044
Total revenue	$	94,637		$	6,086		$	100,723

(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.

Free Cash Flow

(In thousands)	Q3 2015			Q3 2014			% Change
Cash flows from operations	$	19,257		$	25,928		(26		)%
Purchases of property and equipment	$	(1,673	)	$	(1,084	)	(54		)%
Capitalized software development costs	$	(279	)	$	(1,070	)	74		%
Free cash flow	$	17,305		$	23,774		(27		)%

OTHER NON-GAAP FINANCIAL MEASURES - YTD



Revenue by Type

(In thousands)	YTD 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
License	$	85,794		$	8,181		$	93,975
Maintenance	157,259			24,012			181,271
Services	21,783			—			21,783
Total revenue	$	264,836		$	32,193		$	297,029

Revenue by Region

(In thousands)	YTD 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
North America	$	139,454		$	27,795		$	167,249
EMEA	89,667			3,275			92,942
Latin America	13,977			195			14,172
Asia Pacific	21,738			928			22,666
Total revenue	$	264,836		$	32,193		$	297,029

Revenue by Segment

(In thousands)	YTD 2015			Non-GAAP Adjustment (1)			Non-GAAP Revenue
OpenEdge	$	214,775		$	—		$	214,775
Data Connectivity and Integration	$	22,669		$	—		$	22,669
Application Development and Deployment	$	27,392		$	32,193		$	59,585
Total revenue	$	264,836		$	32,193		$	297,029

(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.

Free Cash Flow

(In thousands)	YTD 2015			YTD Q3 2014			% Change
Cash flows from operations	$	77,188		$	68,469		13		%
Purchases of property and equipment	$	(6,079	)	$	(7,183	)	15		%
Capitalized software development costs	$	(1,661	)	$	(3,008	)	45		%
Free cash flow	$	69,448		$	58,278		19		%

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2015 GUIDANCE

(Unaudited)



Fiscal Year 2015 Revenue Growth Guidance
	Fiscal Year Ended		Fiscal Year Ending
	November 30, 2014		November 30, 2015
(In millions)			Low		% Change		High		% Change
GAAP revenue	$	332.5	$	375.0	13	%	$	380.0	14	%
Acquisition-related adjustments - revenue (1)	$	—	$	35.0	100	%	$	35.0	100	%
Non-GAAP revenue	$	332.5	$	410.0	23	%	$	415.0	25	%

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.



Fiscal Year 2015 Non-GAAP Operating Margin Guidance
	Fiscal Year Ending November 30, 2015
(In millions)	Low			High
GAAP income from operations	$	12.4		$	14.7
GAAP operating margins	3		%	4		%
Acquisition-related revenue	35.0			35.0
Restructuring expense	11.2			11.2
Stock-based compensation	25.9			25.9
Acquisition related expense	4.0			4.0
Amortization of intangibles	29.6			29.6
Total adjustments	105.7			105.7
Non-GAAP income from operations	$	118.1		$	120.4
Non-GAAP operating margin	29		%	29		%



Fiscal Year 2015 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
	Fiscal Year Ending November 30, 2015
(In millions, except per share data)	Low			High
GAAP net income	$	6.4		$	7.9
Adjustments (from previous table)	105.7			105.7
Income tax adjustment (2)	(34.7		)	(34.0		)
Non-GAAP net income	$	77.4		$	79.6

GAAP diluted earnings per share	$	0.13		$	0.15
Non-GAAP diluted earnings per share	$	1.51		$	1.55

Diluted weighted average shares outstanding	51.4			51.4

(2) Tax adjustment is based on a non-GAAP effective tax rate of 33% for both Low and High, calculated as follows:
Non-GAAP income from operations	$	118.1		$	120.4
Other income (expense)	(2.2		)	(2.2		)
Non-GAAP income from continuing operations before income taxes	115.9			118.2
Non-GAAP net income	77.4			79.6
Tax provision	$	38.5		$	38.6
Non-GAAP tax rate	33		%	33		%

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q4 2015 GUIDANCE

(Unaudited)



Q4 2015 Revenue Growth Guidance
	Three Months Ended		Three Months Ending
	November 30, 2014		November 30, 2015
(In millions)			Low		% Change		High		% Change
GAAP revenue	$	97.9	$	110.0	12	%	$	115.0	17	%
Acquisition-related adjustments - revenue (1)	$	—	$	3.0	100	%	$	3.0	100	%
Non-GAAP revenue	$	97.9	$	113.0	15	%	$	118.0	21	%

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.



Q4 2015 Non-GAAP Earnings per Share Guidance
	Three Months Ending November 30, 2015
	Low			High
GAAP diluted earnings per share	$	(0.20	)	$	(0.16	)
Acquisition-related revenue	0.05			0.05
Restructuring expense	0.05			0.05
Stock-based compensation	0.14			0.14
Acquisition related expense	0.01			0.01
Amortization of intangibles	0.14			0.14
Total adjustments	0.39			0.39
Income tax adjustment	$	0.28		$	0.28
Non-GAAP diluted earnings per share	$	0.47		$	0.51

PROGRESS SOFTWARE CORP /MA - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 1, 2015

Attached files

PROGRESS SOFTWARE CORP /MA Reports