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 Progress Reports 2017 Fiscal Third Quarter Results and Increases Annual Guidance
   Wednesday, September 27, 2017 4:15:00 PM ET

Progress (PRGS ) today announced results for its fiscal third quarter ended August 31, 2017, which are consistent with the preliminary results it announced on September 12, 2017.

Revenue was $97.3 million during the quarter compared to $102.0 million in the same quarter last year, a year-over-year decrease of 5% on an actual currency basis and a constant currency basis. On a non-GAAP basis, revenue was $97.6 million during the quarter compared to $102.4 million in the same quarter last year, a decrease of 5% on an actual currency basis and a constant currency basis.

Additional financial highlights included:

On a GAAP basis in the fiscal third quarter of 2017:



-- Revenue was $97.3 million compared to $102.0 million in the same quarter in fiscal year 2016;

-- Income from operations was $20.3 million compared to $13.6 million in the same quarter last year;

-- Net income was $11.2 million compared to $7.6 million in the same quarter last year;

-- Diluted earnings per share was $0.23 compared to $0.15 in the same quarter last year; and

-- Cash from operations was $13.4 million compared to $19.7 million in the same quarter last year.

On a non-GAAP basis in the fiscal third quarter of 2017:

-- Revenue was $97.6 million compared to $102.4 million in the same quarter last year;

-- Income from operations was $35.7 million compared to $32.0 million in the same quarter last year;

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

-- Net income was $23.0 million compared to $21.6 million in the same quarter last year;

-- Diluted earnings per share was $0.48 compared to $0.44 in the same quarter last year; and

-- Adjusted free cash flow was $18.3 million compared to $19.1 million in the same quarter last year.

Yogesh Gupta, CEO at Progress, said: "We are pleased with our better-than-expected revenue and earnings per share for the third quarter. Our strong financial performance can be traced directly to our continuing commitment to customer retention and to managing our business efficiently and profitably. Over the past nine months, our new management team has made excellent strides in executing on our business strategy, which we believe will create even greater value for all shareholders."

Paul Jalbert, CFO at Progress, said: "Our Q3 and year-to-date results have enabled us to again increase our full-year estimates for revenue, operating margin, earnings per share and adjusted free cash flow. Going forward, we will continue to manage our business efficiently, strengthening and optimizing our core business. Through our recently increased dividend and share repurchase authorization, we have also enhanced our capital allocation strategy to return more operating cash flow to shareholders."

Other fiscal third quarter 2017 metrics and recent results included:

-- Cash, cash equivalents and short-term investments were $191.3 million at the end of the quarter;

-- DSO was 48 days, compared to 49 days in the fiscal third quarter of 2016 and 42 days in the fiscal second quarter of 2017;

-- Progress repurchased 0.6 million shares for $19.0 million during the fiscal third quarter of 2017; and

-- On September 6, 2017, our Board of Directors declared a quarterly dividend of $0.14 per share of common stock that will be paid on December 15, 2017 to shareholders of record as of the close of business on December 1, 2017. This represents an increase of 12% to our quarterly dividend.

Share Repurchase Program

Progress also announced today that its Board of Directors has increased the total share repurchase authorization from the $91 million remaining on the previous authorization to $250 million. Progress’ intent is to utilize $150 million of this authorization by the end of fiscal year 2018, and the total amount by the end of fiscal year 2019.

Business Outlook

Progress provides the following updated guidance for the fiscal year ending November 30, 2017 and the fourth fiscal quarter ending November 30, 2017:

                                                                                                                   
(In millions, except percentages and per share amounts)                                               FY 2017                                                                      FY 2017                                                 Q4 2017                                                 Q4 2017
                                                                                                       GAAP                                                                       Non-GAAP                                                  GAAP                                                  Non-GAAP
                                                                                                  ------------                                                                 -------------                                           -------------                                           -------------
Revenue                                                                                             $393 - $396                                                                  $394 - $397                                             $112 - $115                                             $112 - $115
Diluted earnings per share                                                                        $0.74 - $0.78                                                                $1.82 - $1.85                                           $0.33 - $0.36                                           $0.58 - $0.61
Operating margin                                                                                            18%                                                                          35%                                                       *                                                       *
Operating cash flows / adjusted free cash flow                                                        $89 - $94                                                                  $105 - $110                                                       *                                                       *
Effective tax rate                                                                                          44%                                                                    33% - 34%                                                       *                                                       *

*We do not provide guidance for this financial measure.

Progress’ fiscal 2017 financial guidance is based on current exchange rates. The positive currency translation impact on Progress’ fiscal year 2017 business outlook compared to 2016 exchange rates is approximately $1.0 million on non-GAAP revenue. The currency translation impact on the fiscal 2017 non-GAAP earnings per share guidance is not meaningful. The positive currency translation impact on Progress’ fiscal Q4 2017 business outlook compared to 2016 exchange rates on non-GAAP revenue and non-GAAP earnings per share is approximately $2.0 million to $3.0 million and $0.01, respectively. To the extent that there are further changes in exchange rates versus the current environment, this may have an additional impact on Progress’ business outlook.

Conference Call

The Progress quarterly investor conference call to review its fiscal third quarter of 2017 will be broadcast live at 5:00 p.m. ET on Wednesday, September 27, 2017 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 1-877-741-4248, pass code 3051139. The conference call will include 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.

Non-GAAP Financial Information

Progress provides non-GAAP supplemental information to its financial results.

We use this non-GAAP information to evaluate our period-over-period operating performance because our management believes the information helps illustrate underlying trends in our business and provides us with a more comparable measure of our continuing business, as well as a greater understanding of the results from the primary operations of our business, by excluding the effects of certain items that do not reflect the ordinary earnings of our operations. Management also uses this non-GAAP financial information to establish budgets and operational goals, which are communicated internally and externally, evaluate performance, and allocate resources. In addition, compensation of our executives and non-executive employees is based in part on the performance of our business evaluated using this same non-GAAP information.

However, this non-GAAP information is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP) and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information often have a material impact on Progress’ financial results. A reconciliation of non-GAAP adjustments to Progress’ GAAP financial results is included in the tables below and is available on the Progress website at www.progress.com within the investor relations section.

As described in more detail below, non-GAAP revenue, non-GAAP costs of sales and operating expenses, non-GAAP income from operations and operating margin, non-GAAP net income, and non-GAAP diluted earnings per share exclude the effect of purchase accounting on the fair value of acquired deferred revenue, amortization of acquired intangible assets, stock-based compensation expense, restructuring charges, acquisition-related expenses, certain identified non-operating gains and losses, and the related tax effects of the preceding items. We also provide guidance on adjusted free cash flow, which is equal to cash flows from operating activities less purchases of property and equipment and capitalized software development costs, plus restructuring payments.

In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures:

-- Acquisition-related revenue - In all periods presented, we include acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. The acquisition-related revenue relates to Telerik, which we acquired on December 2, 2014, and Kinvey, which we acquired on June 1, 2017. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. We believe these adjustments are useful to management and investors as a measure of the ongoing performance of the business because, although we cannot be certain that customers will renew their contracts, we have historically experienced high renewal rates on maintenance and support agreements and other customer contracts. Additionally, although acquisition-related revenue adjustments are non-recurring with respect to past acquisitions, we expect to incur these adjustments in connection with any future acquisitions.

-- Amortization of acquired intangibles - In all periods presented, we exclude amortization of acquired intangibles because those expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired.

-- Impairment of acquired intangibles - In the third quarter of fiscal year 2016, we exclude an impairment charge applicable to acquired intangible assets because such expense distorts trends and is not part of our core operating results. Such impairment charges are inconsistent in amount and frequency and we believe that eliminating these amounts, when significant and not reflective of ongoing business and operating results, facilitates a more meaningful evaluation of our current operating performance and comparisons to our operating performance in other periods.

-- Stock-based compensation - In all periods presented, we exclude stock-based compensation to be consistent with the way management and the financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include these charges in operating plans. Stock-based compensation will continue in future periods.

-- Restructuring expenses - In all periods presented, we exclude restructuring expenses incurred because those expenses distort trends and are not part of our core operating results.

-- Acquisition-related and transition expenses - In all periods presented, we exclude acquisition-related expenses because those expenses distort trends and are not part of our core operating results. In recent years, we have completed a number of acquisitions, which result in our incurring operating expenses which would not otherwise have been incurred. By excluding certain transition, integration and other acquisition-related expense items in connection with acquisitions, this provides more meaningful comparisons of the financial results to our historical operations and forward looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition related costs, may not be indicative of the size, complexity and/or volume of future acquisitions.

-- Income tax adjustment - In all periods presented, we adjust our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above.

Constant Currency

Revenue from our international operations has historically represented a substantial portion of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, if the local currencies of our foreign subsidiaries strengthen, our consolidated results stated in U.S. dollars are positively impacted.

As exchange rates are an important factor in understanding period to period comparisons, we present revenue growth rates on a constant currency basis, which helps improve the understanding of our revenue results and our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.

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’ 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) Economic, geopolitical and market conditions, including the uncertain economic environment in Europe as a result of the Brexit vote, and the continued difficult economic environment in Brazil and other parts of the world, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services or other offerings are compromised or subject to a successful cyber-attack, or if such offerings contain significant coding or configuration errors, we may experience reputational harm, legal claims and financial exposure. (8) We have made acquisitions, and may make acquisitions in the future, and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. For further information regarding risks and uncertainties associated with Progress’ business, please refer to Progress’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2016. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

About Progress

Progress (PRGS ) offers the leading platform for developing and deploying mission-critical business applications. Progress empowers enterprises and ISVs to build and deliver cognitive-first applications that harness big data to derive business insights and competitive advantage. Progress offers leading technologies for easily building powerful user interfaces across any type of device, a reliable, scalable and secure backend platform to deploy modern applications, leading data connectivity to all sources, and award-winning predictive analytics that brings the power of machine learning to any organization. Over 1,700 independent software vendors, 100,000 enterprise customers, and 2 million developers rely on Progress to power their applications. Learn about Progress at www.progress.com or +1-800-477-6473.

Progress and Progress Software are trademarks or registered trademarks of Progress Software Corporation and/or its subsidiaries or affiliates in the U.S. and other countries. Any other names contained herein may be trademarks of their respective owners.

                                                                                                                                                                                                                            
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                Three Months Ended                                                                                                                                                                                                               Nine Months Ended
                                                                                   ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                           August 31,                                 August 31,                    % Change                                                         August 31,                                 August 31,                               % Change
                                                                                                   2017                                                                             2016                                                                                                                                 2017                                                                             2016
                                                                                   ----------------------------------                                             -------------------------------------                                             ---------                                            ----------------------------------                                             -------------------------------------                                             ------------------------------
Revenue:
    Software licenses                                                                    $  28,529                                                                  $         33,624                                                                  (15 )%                                                   $  78,443                                                                  $         86,366                                                                        (9 )%
    Maintenance and services                                                                68,781                                                         68,394                                                 1 %                                                      203,050                                                        201,251                                                      1 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
        Total revenue                                                                       97,310                                                        102,018                                                (5 )%                                                     281,493                                                        287,617                                                     (2 )%
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Costs of revenue:
    Cost of software licenses                                                                1,337                                                                             1,424                                                                   (6 )%                                                       4,347                                                                             4,139                                                                         5 %
    Cost of maintenance and services                                                        10,970                                                                            11,825                                                                   (7 )%                                                      32,724                                                                            33,217                                                                        (1 )%
    Amortization of acquired intangibles                                                     5,768                                                          3,940                                                46 %                                                       14,129                                                         11,818                                                     20 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
        Total costs of revenue                                                              18,075                                                         17,189                                                 5 %                                                       51,200                                                         49,174                                                      4 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Gross profit                                                                                79,235                                                         84,829                                                (7 )%                                                     230,293                                                        238,443                                                     (3 )%
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Operating expenses:
                                                                                            23,159                                                                            29,852                                                                  (22 )%                                                      70,116                                                                            88,648                                                                       (21 )%
    Sales and marketing
    Product development                                                                     19,620                                                                            21,706                                                                  (10 )%                                                      55,745                                                                            65,800                                                                       (15 )%
    General and administrative                                                              11,164                                                                            11,411                                                                   (2 )%                                                      33,338                                                                            36,055                                                                        (8 )%
    Amortization of acquired intangibles                                                     3,319                                                                             3,186                                                                    4 %                                                        9,721                                                                             9,556                                                                         2 %
    Impairment of intangible assets                                                 --                                                                             5,051                                                                 (100 )%                                              --                                                                             5,051                                                                      (100 )%
    Restructuring expenses                                                                     923                                                                               (36 )                                                              2,664 %                                                       18,724                                                                               229                                                                     8,076 %
    Acquisition-related expenses                                                               751                                                             53                                             1,317 %                                                          844                                                            449                                                     88 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
        Total operating expenses                                                            58,936                                                         71,223                                               (17 )%                                                     188,488                                                        205,788                                                     (8 )%
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Income from operations                                                                      20,299                                                         13,606                                                49 %                                                       41,805                                                         32,655                                                     28 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Other (expense) income, net                                                                 (1,400 )                                                                          (1,288 )                                                                 (9 )%                                                      (4,299 )                                                                          (4,474 )                                                                       4 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Income before income taxes                                                                  18,899                                                         12,318                                                53 %                                                       37,506                                                         28,181                                                     33 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Provision for income taxes                                                                   7,727                                                          4,742                                                63 %                                                       16,518                                                         10,114                                                     63 %
                                                                                   ------------------------------------                                           ---------------------------------------                                           ----- ----                                           ------------------------------------                                           ---------------------------------------                                           ---------- --------------------
Net income                                                                               $  11,172                                               $          7,576                                                47 %                                                    $  20,988                                               $         18,067                                                     16 %
                                                                                   ======= ======= ====================                                           === ============== ====================                                           ===== ====                                           ======= ======= ====================                                           === ============== ====================                                           ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Earnings per share:
    Basic                                                                                $    0.23                                                                  $           0.16                                                                   44 %                                                    $    0.43                                                                  $           0.36                                                                        19 %
    Diluted                                                                              $    0.23                                                                  $           0.15                                                                   53 %                                                    $    0.43                                                                  $           0.36                                                                        19 %
Weighted average shares outstanding:
    Basic                                                                                   48,071                                                                            48,611                                                                   (1 )%                                                      48,342                                                                            49,765                                                                        (3 )%
    Diluted                                                                                 48,370                                                                            49,135                                                                   (2 )%                                                      48,631                                                                            50,310                                                                        (3 )%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Cash dividends declared per common share                                                 $   0.125                                                                  $ --                                                                  100 %                                                    $   0.250                                                                  $ --                                                                       100 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                      
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                                                                                    
(In thousands)                                                                                                                     August 31,                                                                November 30,
                                                                                                                                      2017                                                                       2016
                                                                                                                        ------------------------------                                             ------------------------------
Assets
Current assets:
    Cash, cash equivalents and short-term investments                                                                     $ 191,316                                                                         $              249,754
    Accounts receivable, net                                                                                                 51,860                                                                                         65,678
    Other current assets                                                                                                     18,451                                                                      20,621
                                                                                                                        --------------------------------                                           --------------------------------
        Total current assets                                                                                                261,627                                                                     336,053
                                                                                                                        --------------------------------                                           --------------------------------
Property and equipment, net                                                                                                  43,283                                                                                         50,105
Goodwill and intangible assets, net                                                                                         417,690                                                                                        358,894
Other assets                                                                                                                  3,216                                                                       9,775
                                                                                                                        --------------------------------                                           --------------------------------
        Total assets                                                                                                      $ 725,816                                                      $              754,827
                                                                                                                        === ======= ====================                                           ========== ====================
Liabilities and shareholders’ equity
Current liabilities:
    Accounts payable and other current liabilities                                                                        $  59,530                                                                         $               59,778
    Current portion of long-term debt                                                                                        14,643                                                                                         15,000
    Short-term deferred revenue                                                                                             131,932                                                                     128,960
                                                                                                                        --------------------------------                                           --------------------------------
        Total current liabilities                                                                                           206,105                                                                     203,738
                                                                                                                        --------------------------------                                           --------------------------------
Long-term deferred revenue                                                                                                    8,774                                                                                          8,801
Long-term debt                                                                                                              108,303                                                                                        120,000
Other long-term liabilities                                                                                                  11,032                                                                                         15,659
Shareholders’ equity:
    Common stock and additional paid-in capital                                                                             246,628                                                                                        239,496
    Retained earnings                                                                                                       144,974                                                                     167,133
                                                                                                                        --------------------------------                                           --------------------------------
        Total shareholders’ equity                                                               391,602                                                                     406,629
                                                                                                                        --------------------------------                                           --------------------------------
        Total liabilities and shareholders’ equity                                             $ 725,816                                                      $              754,827
                                                                                                                        === ======= ====================                                           ========== ====================
                                                                                                                                                                                                               
                                                                                                                                                                                        
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                                                                                                                                                      
                                                                                                                                                          Three Months Ended                                                                                                                                         Nine Months Ended
                                                                                                           ----------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------
(In thousands)                                                                                                        August 31,                             August 31,                                                                   August 31,                             August 31,
                                                                                                                         2017                                                                         2016                                                                         2017                                                                         2016
                                                                                                           ------------------------------                                             ----------------------------------                                             ------------------------------                                             ----------------------------------
Cash flows from operating activities:
                                                                                                             $  11,172                                                                      $   7,576                                                                  $  20,988                                                                      $  18,067
    Net income
        Depreciation and amortization                                                                           11,476                                                                          9,887                                                                     31,324                                                                         29,796
        Stock-based compensation                                                                                 4,296                                                                          5,779                                                                      9,559                                                                         19,009
        Other non-cash adjustments                                                                              (1,217 )                                                                        2,803                                                                      3,354                                                                          3,780
        Changes in operating assets and liabilities                                                            (12,285 )                                                                       (6,397 )                                                                    7,946                                                      (1,742 )
                                                                                                           --------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
            Net cash flows from operating activities                                                            13,442                                                      19,648                                                  73,171                                                      68,910  
                                                                                                           --------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
Capital expenditures                                                                                              (342 )                                                                       (1,130 )                                                                     (865 )                                                                       (3,747 )
Repurchases of common stock, net of issuances                                                                  (16,768 )                                                                      (10,832 )                                                                  (36,691 )                                                                      (63,341 )
Dividend payments to shareholders                                                                               (6,035 )                                                               --                                                                    (18,151 )                                                               --
Payments for acquisitions, net of cash acquired                                                                (48,879 )                                                               --                                                                    (77,149 )                                                               --
Payment of long-term debt                                                                                       (3,750 )                                                                       (1,875 )                                                                  (11,250 )                                                                       (7,500 )
Other                                                                                                            8,566                                                      (2,236 )                                                                   12,497                                                      (2,917 )
                                                                                                           --------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
Net change in cash, cash equivalents and short-term investments                                                (53,766 )                                                                        3,575                                                 (58,438 )                                                                       (8,595 )
                                                                                                           --------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
Cash, cash equivalents and short-term investments, beginning of                                                245,082                                                     229,109                                                 249,754                                                     241,279  
period
                                                                                                           ----------  --------------------                                           --------------  --------------------                                           ----------  --------------------                                           --------------  --------------------
Cash, cash equivalents and short-term investments, end of period                                             $ 191,316                                                   $ 232,684                                               $ 191,316                                                   $ 232,684  
                                                                                                           === ======= ====================                                           ======= ======= ====================                                           === ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                    
RESULTS OF OPERATIONS BY SEGMENT
                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                          Three Months Ended                                                                                                                                                                                                  Nine Months Ended
                                                                                                -----------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                                             August 31,                          August 31,                        %                                                              August 31,                           August 31,                          %
                                                                                                              2017                                                                      2016                                                              Change                                                               2017                                                                       2016                                                                Change
                                                                                                -----------------------------                                             -----------------------------                                             -----------------                                            ------------------------------                                             ------------------------------                                             -------------------
Segment revenue:
    OpenEdge                                                                                      $ 68,135                                                                  $ 67,534                                                                             1 %                                               $ 198,533                                                                  $ 198,595                                                                -- %
    Data Connectivity and Integration                                                                8,987                                                                    14,251                                                                           (37 )%                                                 22,911                                                                     30,852                                                                           (26 )%
    Application Development and Deployment                                                          20,188                                                 20,233                                             -- %                                                  60,049                                                  58,170                                                          3 %
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
        Total revenue                                                                               97,310                                                102,018                                                         (5 )%                                                281,493                                                 287,617                                                         (2 )%
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
Segment costs of revenue and operating expenses:
    OpenEdge                                                                                        18,374                                                                    18,180                                                                             1 %                                                  52,538                                                                     53,539                                                                            (2 )%
    Data Connectivity and Integration                                                                2,200                                                                     2,828                                                                           (22 )%                                                  6,531                                                                      8,863                                                                           (26 )%
    Application Development and Deployment                                                           6,369                                                 11,021                                                        (42 )%                                                 19,896                                                  29,555                                                        (33 )%
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
        Total costs of revenue and operating expenses                                               26,943                                                 32,029                                                        (16 )%                                                 78,965                                                  91,957                                                        (14 )%
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
Segment contribution:
    OpenEdge                                                                                        49,761                                                                    49,354                                                                             1 %                                                 145,995                                                                    145,056                                                                             1 %
    Data Connectivity and Integration                                                                6,787                                                                    11,423                                                                           (41 )%                                                 16,380                                                                     21,989                                                                           (26 )%
    Application Development and Deployment                                                          13,819                                                  9,212                                                         50 %                                                  40,153                                                  28,615                                                         40 %
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
        Total contribution                                                                          70,367                                                 69,989                                                          1 %                                                 202,528                                                 195,660                                                          4 %
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
Other unallocated expenses (1)                                                                      50,068                                                 56,383                                                        (11 )%                                                160,723                                                 163,005                                                         (1 )%
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
Income from operations                                                                              20,299                                                 13,606                                                         49 %                                                  41,805                                                  32,655                                                         28 %
                                                                                                ===============================                                           ===============================                                           ============== ===                                           ================================                                           ================================                                           ============== =====
Other (expense) income, net                                                                         (1,400 )                                                                  (1,288 )                                                                          (9 )%                                                 (4,299 )                                                                   (4,474 )                                                                           4 %
                                                                                                -------------------------------                                           -------------------------------                                           -------------- ---                                           --------------------------------                                           --------------------------------                                           -------------- -----
Income before provision for income taxes                                                          $ 18,899                                               $ 12,318                                                         53 %                                               $  37,506                                               $  28,181                                                         33 %
                                                                                                === ====== ====================                                           === ====== ====================                                           ============== ===                                           === ======= ====================                                           === ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

(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 2016                                                                    Q4 2016                                                                    Q1 2017                                                                   Q2 2017                                                                   Q3 2017
                                                                                 ---------------------------------                                          ---------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------
License                                                                            $  33,624                                                                  $  48,497                                                                  $ 24,322                                                                  $ 25,592                                                                         $               28,529
Maintenance                                                                           60,368                                                                     60,188                                                                    59,138                                                                    59,898                                                                                         60,536
Services                                                                               8,026                                                   9,039                                                  7,510                                                  7,723                                                                       8,245
                                                                                 --------------------------------                                           --------------------------------                                           -------------------------------                                           -------------------------------                                           --------------------------------
Total revenue                                                                      $ 102,018                                               $ 117,724                                               $ 90,970                                               $ 93,213                                                      $               97,310
                                                                                 === ======= ====================                                           === ======= ====================                                           === ====== ====================                                           === ====== ====================                                           ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                            
Revenue by Region
                                                                                                                                                                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2016                                                                    Q4 2016                                                                    Q1 2017                                                                   Q2 2017                                                                   Q3 2017
                                                                                 ---------------------------------                                          ---------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------
North America                                                                      $  58,275                                                                  $  68,471                                                                  $ 50,305                                                                  $ 51,430                                                                         $               55,703
EMEA                                                                                  32,719                                                                     35,301                                                                    29,844                                                                    30,646                                                                                         31,830
Latin America                                                                          4,667                                                                      8,407                                                                     5,023                                                                     5,637                                                                                          5,009
Asia Pacific                                                                           6,357                                                   5,545                                                  5,798                                                  5,500                                                                       4,768
                                                                                 --------------------------------                                           --------------------------------                                           -------------------------------                                           -------------------------------                                           --------------------------------
Total revenue                                                                      $ 102,018                                               $ 117,724                                               $ 90,970                                               $ 93,213                                                      $               97,310
                                                                                 === ======= ====================                                           === ======= ====================                                           === ====== ====================                                           === ====== ====================                                           ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                            
Revenue by Segment
                                                                                                                                                                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2016                                                                    Q4 2016                                                                    Q1 2017                                                                   Q2 2017                                                                   Q3 2017
                                                                                 ---------------------------------                                          ---------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------
OpenEdge                                                                           $  67,534                                                                  $  77,672                                                                  $ 64,508                                                                  $ 65,890                                                                         $               68,135
Data Connectivity and Integration                                                     14,251                                                                     17,157                                                                     6,828                                                                     7,096                                                                                          8,987
Application Development and Deployment                                                20,233                                                  22,895                                                 19,634                                                 20,227                                                                      20,188
                                                                                 --------------------------------                                           --------------------------------                                           -------------------------------                                           -------------------------------                                           --------------------------------
Total revenue                                                                      $ 102,018                                               $ 117,724                                               $ 90,970                                               $ 93,213                                                      $               97,310
                                                                                 === ======= ====================                                           === ======= ====================                                           === ====== ====================                                           === ====== ====================                                           ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                    
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- QTD
                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                         Three Months Ended                                                                                                                                                                        % Change
                                                                                                  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                                                               August 31, 2017                                                                                                 August 31, 2016                                                                                          Non-GAAP
                                                                                                  -------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------                                          ---------------------
Adjusted revenue:                                                                                                                                                                                                                                                
    GAAP revenue                                                                                   $   97,310                                                                                                                                     $ 102,018
    Acquisition-related revenue (1)                                                                                          313                                                                                                     405                                              
                                                                                                  ---------------------------------------------------                                           ---------------------                                          ------------------------------------                                           ---------------------
                                                                                                   $   97,623                                                        100 %                                                     $ 102,423                                                        100 %                                                       (5 )%
        Non-GAAP revenue
                                                                                                  == ==================== ====== ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                                              
Adjusted gross margin:
    GAAP gross margin                                                                              $                      79,235                                                                            81 %                                                     $  84,829                                                                            83 %
    Amortization of acquired intangibles                                                                                   5,768                                                                             7 %                                                         3,940                                                                             4 %
    Stock-based compensation (2)                                                                                             239                                                                -- %                                                           223                                                                -- %
    Acquisition-related revenue (1)                                                                                          313                                             -- %                                                           405                                             -- %
                                                                                                  ---------------------------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
                                                                                                   $   85,555                                                         88 %                                                     $  89,397                                                         87 %                                                       (4 )%
        Non-GAAP gross margin
                                                                                                  == ==================== ====== ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                                              
Adjusted operating expenses:
    GAAP operating expenses                                                                        $                      58,936                                                                            61 %                                                     $  71,223                                                                            70 %
    Amortization and impairment of acquired intangibles                                                                   (3,319 )                                                                          (3 )%                                                       (8,237 )                                                                          (8 )%
    Restructuring expenses and other                                                                                        (923 )                                                                          (1 )%                                                           36                                                                -- %
    Acquisition-related expenses                                                                                            (751 )                                                                          (1 )%                                                          (53 )                                                              -- %
    Stock-based compensation (2)                                                                                          (4,057 )                                                                          (5 )%                                                       (5,556 )                                                                          (6 )%
                                                                                                  ---------------------------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
        Non-GAAP operating expenses                                                                $   49,886                                                         51 %                                                     $  57,413                                                         56 %                                                      (13 )%
                                                                                                  == ==================== ====== ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                                              
Adjusted income from operations:
    GAAP operating income                                                                          $                      20,299                                                                            21 %                                                     $  13,606                                                                            13 %
    Amortization and impairment of acquired intangibles                                                                    9,087                                                                            10 %                                                        12,177                                                                            12 %
    Restructuring expenses and other                                                                                         923                                                                             1 %                                                           (36 )                                                              -- %
    Stock-based compensation (2)                                                                                           4,296                                                                             4 %                                                         5,779                                                                             6 %
    Acquisition-related                                                                                                    1,064                                                          1 %                                                           458                                             -- %
                                                                                                  ---------------------------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
        Non-GAAP income from operations                                                            $   35,669                                                         37 %                                                     $  31,984                                                         31 %                                                       12 %
                                                                                                  == ==================== ====== ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                                              
Adjusted diluted earnings per share:
    GAAP diluted earnings per share                                                                $                        0.23                                                                                                                                     $    0.15
    Amortization and impairment of acquired intangibles                                                                     0.19                                                                                                                                          0.25
    Restructuring expenses and other                                                                                        0.02                                                                                                                                --
    Stock-based compensation (2)                                                                                            0.09                                                                                                                                          0.12
    Acquisition-related                                                                                                     0.02                                                                                                                                          0.01
    Provision for income taxes                                                                                             (0.07 )                                                                                                                                       (0.09 )
                                                                                                  ---------------------------------------------------                                                                                                          ------------------------------------
        Non-GAAP diluted earnings per share                                                        $     0.48                                                                                                                  $    0.44                                                                                                                     9 %
                                                                                                  == ==================== ====== ====================                                                                                                          ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                              
Non-GAAP weighted avg shares outstanding - diluted                                                                        48,370                                                                                                                                        49,135                                                                                                                                       (2 )%
                                                                                                                                                                                                                                                                                                                                                                                                              
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue that would otherwise have been
recognized
but for the purchase accounting treatment of
acquisitions. 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 relate to Progress’ OpenEdge and
Application
Development and Deployment business segments for Kinvey and
Telerik, respectively.
(2) Stock-based compensation is included in the GAAP statements of
income, as follows:
                                                                                                                                                                                                                                                                                                                                                                                                              
Cost of revenue                                                                                    $                         239                                                                                                                  $     223  
                                                                                                  --                      ------ --------------------                                                                                                          ------- ------- --------------------
    Sales and marketing                                                                                                      808                                                                                                                                           751
    Product development                                                                                                    1,645                                                                                                                                         2,524
    General and administrative                                                                                             1,604                                                                                                                      2,281  
                                                                                                  ---------------------------------------------------                                                                                                          ------------------------------------
Operating Expenses                                                                                                         4,057                                                                                                                      5,556  
                                                                                                  ---------------------------------------------------                                                                                                          ------------------------------------
        Total                                                                                      $                       4,296                                                                                                                  $   5,779  
                                                                                                  ==                      ====== ====================                                                                                                          ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                    
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- YTD
                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                 Nine Months Ended                                                                                                                                                              % Change
                                                                                                  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                                                      August 31, 2017                                                                                       August 31, 2016                                                                                          Non-GAAP
                                                                                                  ------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------                                          ---------------------
Adjusted revenue:                                                                                                                                                                                                                             
    GAAP revenue                                                                                    $ 281,493                                                                                                                                     $ 287,617
    Acquisition-related revenue (1)                                                                       759                                                                                                   1,726                                              
                                                                                                  --------------------------------                                           ---------------------                                          ------------------------------------                                           ---------------------
        Non-GAAP revenue                                                                            $ 282,252                                                        100 %                                                     $ 289,343                                                        100 %                                                       (2 )%
                                                                                                  === ======= ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted gross margin:
    GAAP gross margin                                                                               $ 230,293                                                                            82 %                                                     $ 238,443                                                                            83 %
    Amortization of acquired intangibles                                                               14,129                                                                             5 %                                                        11,818                                                                             4 %
    Stock-based compensation (2)                                                                          790                                                                -- %                                                           599                                                                -- %
    Acquisition-related revenue (1)                                                                       759                                             -- %                                                         1,726                                             -- %
                                                                                                  --------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
        Non-GAAP gross margin                                                                       $ 245,971                                                         87 %                                                     $ 252,586                                                         87 %                                                       (3 )%
                                                                                                  === ======= ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted operating expenses:
    GAAP operating expenses                                                                         $ 188,488                                                                            67 %                                                     $ 205,788                                                                            71 %
    Amortization and impairment of acquired intangibles                                                (9,721 )                                                                          (3 )%                                                      (14,607 )                                                                          (6 )%
    Restructuring expenses and other                                                                  (18,560 )                                                                          (8 )%                                                         (229 )                                                              -- %
    Acquisition-related expenses                                                                         (844 )                                                              -- %                                                          (449 )                                                              -- %
    Stock-based compensation (2)                                                                       (8,769 )                                                                          (3 )%                                                      (18,410 )                                                                          (6 )%
                                                                                                  --------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
        Non-GAAP operating expenses                                                                 $ 150,594                                                         53 %                                                     $ 172,093                                                         59 %                                                      (12 )%
                                                                                                  === ======= ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted income from operations:
    GAAP operating income                                                                           $  41,805                                                                            15 %                                                     $  32,655                                                                            11 %
    Amortization and impairment of acquired intangibles                                                23,850                                                                             8 %                                                        26,425                                                                             9 %
    Restructuring expenses and other                                                                   18,560                                                                             7 %                                                           229                                                                -- %
    Stock-based compensation (2)                                                                        9,559                                                                             3 %                                                        19,009                                                                             7 %
    Acquisition-related                                                                                 1,603                                                          1 %                                                         2,175                                                          1 %
                                                                                                  --------------------------------                                           -------------- -----                                           ------------------------------------                                           -------------- -----
        Non-GAAP income from operations                                                             $  95,377                                                         34 %                                                     $  80,493                                                         28 %                                                       18 %
                                                                                                  === ======= ====================                                           ============== =====                                           ======= ======= ====================                                           ============== =====
                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted diluted earnings per share:
    GAAP diluted earnings per share                                                                 $    0.43                                                                                                                                     $    0.36
    Amortization and impairment of acquired intangibles                                                  0.49                                                                                                                                          0.53
    Restructuring expenses and other                                                                     0.38                                                                                                                                --
    Stock-based compensation (2)                                                                         0.20                                                                                                                                          0.38
    Acquisition-related                                                                                  0.03                                                                                                                                          0.04
    Provision for income taxes                                                                          (0.29 )                                                                                                                                       (0.28 )
                                                                                                  --------------------------------                                                                                                          ------------------------------------
        Non-GAAP diluted earnings per share                                                         $    1.24                                                                                                                  $    1.03                                                                                                                    20 %
                                                                                                  === ======= ====================                                                                                                          ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                           
Non-GAAP weighted avg shares outstanding - diluted                                                     48,631                                                                                                                                        50,310                                                                                                                                       (3 )%
                                                                                                                                                                                                                                                                                                                                                                                           
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue that would otherwise have been
recognized
but for the purchase accounting treatment of
acquisitions. 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 relate to Progress’ OpenEdge and
Application
Development and Deployment business segments for Kinvey and
Telerik, respectively.
(2) Stock-based compensation is included in the GAAP statements of
income, as follows:
                                                                                                                                                                                                                                                                                                                                                                                           
Cost of revenue                                                                                     $     790                                                                                                                  $     599  
                                                                                                  --- ------- --------------------                                                                                                          ------- ------- --------------------
    Sales and marketing                                                                                 1,371                                                                                                                                         2,792
    Product development                                                                                 2,699                                                                                                                                         7,600
    General and administrative                                                                          4,699                                                                                                                      8,018  
                                                                                                  --------------------------------                                                                                                          ------------------------------------
Operating Expenses                                                                                      8,769                                                                                                                     18,410  
                                                                                                  --------------------------------                                                                                                          ------------------------------------
        Total                                                                                       $   9,559                                                                                                                  $  19,009  
                                                                                                  === ======= ====================                                                                                                          ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                        
OTHER NON-GAAP FINANCIAL MEASURES - QTD
                                                                                                                                                                                                                                            
Revenue by Type
                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2017                                                                     Non-GAAP                                                                      Non-GAAP
                                                                                                                                                                       Adjustment (1)                                                                    Revenue
                                                                                 ------------------------------                                             ----------------------------------                                             --------------------------------
License                                                                             $ 28,529                                                                      $      38                                                                     $ 28,567
Maintenance                                                                           60,536                                                                            116                                                                       60,652
Services                                                                               8,245                                                         159                                                     8,404  
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Total revenue                                                                       $ 97,310                                                   $     313                                                  $ 97,623  
                                                                                 ==== ====== ====================                                           ======= ======= ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                            
Revenue by Region
                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2017                                                                     Non-GAAP                                                                      Non-GAAP
                                                                                                                                                                       Adjustment (1)                                                                    Revenue
                                                                                 ------------------------------                                             ----------------------------------                                             --------------------------------
North America                                                                       $ 55,703                                                                      $     313                                                                     $ 56,016
EMEA                                                                                  31,830                                                                 --                                                                       31,830
Latin America                                                                          5,009                                                                 --                                                                        5,009
Asia Pacific                                                                           4,768                                              --                                                     4,768  
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Total revenue                                                                       $ 97,310                                                   $     313                                                  $ 97,623  
                                                                                 ==== ====== ====================                                           ======= ======= ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                            
Revenue by Segment
                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2017                                                                     Non-GAAP                                                                      Non-GAAP
                                                                                                                                                                       Adjustment (1)                                                                    Revenue
                                                                                 ------------------------------                                             ----------------------------------                                             --------------------------------
OpenEdge                                                                            $ 68,135                                                                      $     159                                                                     $ 68,294
Data Connectivity and Integration                                                      8,987                                                                 --                                                                        8,987
Application Development and Deployment                                                20,188                                                         154                                                    20,342  
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Total revenue                                                                       $ 97,310                                                   $     313                                                  $ 97,623  
                                                                                 ==== ====== ====================                                           ======= ======= ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                            
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue that would otherwise have been
recognized
but for the purchase accounting treatment of
acquisitions. 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 relate to Progress’ OpenEdge and
Application
Development and Deployment business segments for Kinvey and
Telerik, respectively.
                                                                                                                                                                                                                                            
Adjusted Free Cash Flow
                                                                                                                                                                                                                                            
(In thousands)                                                                                Q3 2017                                                                      Q3 2016                                                                      % Change
                                                                                 ---------------------------------                                          -------------------------------------                                          -----------------------------------
Cash flows from operations                                                          $ 13,442                                                                      $  19,648                                                                          (32 )%
Purchases of property and equipment                                                     (342 )                                                                       (1,130 )                                                                        (70 )%
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Free cash flow                                                                        13,100                                                      18,518                                                       (29 )%
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Add back: restructuring payments                                                       5,241                                                         542                                                       867 %
                                                                                 --------------------------------                                           ------------------------------------                                           ----------------------------------
Adjusted free cash flow                                                             $ 18,341                                                   $  19,060                                                        (4 )%
                                                                                 ==== ====== ====================                                           ======= ======= ====================                                           ==================================
                                                                                                                                                                                                                                                          
                                                                                                                         
OTHER NON-GAAP FINANCIAL MEASURES - YTD
                                                                                                                                                                                                                                             
Revenue by Type
                                                                                                                                                                                                                                             
(In thousands)                                                                                YTD 2017                                                                     Non-GAAP                                                                       Non-GAAP
                                                                                                                                                                        Adjustment (1)                                                                     Revenue
                                                                                 -------------------------------                                             ----------------------------------                                             ---------------------------------
License                                                                             $  78,443                                                                      $     137                                                                     $  78,580
Maintenance                                                                           179,572                                                                            463                                                                       180,035
Services                                                                               23,478                                                         159                                                     23,637  
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Total revenue                                                                       $ 281,493                                                   $     759                                                  $ 282,252  
                                                                                 ==== ======= ====================                                           ======= ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                                             
Revenue by Region
                                                                                                                                                                                                                                             
(In thousands)                                                                                YTD 2017                                                                     Non-GAAP                                                                       Non-GAAP
                                                                                                                                                                        Adjustment (1)                                                                     Revenue
                                                                                 -------------------------------                                             ----------------------------------                                             ---------------------------------
North America                                                                       $ 157,438                                                                      $     759                                                                     $ 158,197
EMEA                                                                                   92,320                                                                 --                                                                        92,320
Latin America                                                                          15,669                                                                 --                                                                        15,669
Asia Pacific                                                                           16,066                                              --                                                     16,066  
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Total revenue                                                                       $ 281,493                                                   $     759                                                  $ 282,252  
                                                                                 ==== ======= ====================                                           ======= ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                                             
Revenue by Segment
                                                                                                                                                                                                                                             
(In thousands)                                                                                YTD 2017                                                                     Non-GAAP                                                                       Non-GAAP
                                                                                                                                                                        Adjustment (1)                                                                     Revenue
                                                                                 -------------------------------                                             ----------------------------------                                             ---------------------------------
OpenEdge                                                                            $ 198,533                                                                      $     159                                                                     $ 198,692
Data Connectivity and Integration                                                      22,911                                                                 --                                                                        22,911
Application Development and Deployment                                                 60,049                                                         600                                                     60,649  
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Total revenue                                                                       $ 281,493                                                   $     759                                                  $ 282,252  
                                                                                 ==== ======= ====================                                           ======= ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                                             
(1) Acquisition-related revenue constitutes revenue reflected as
pre-acquisition deferred revenue that would otherwise have been
recognized
but for the purchase accounting treatment of
acquisitions. 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 relate to Progress’ OpenEdge and
Application
Development and Deployment business segments for Kinvey and
Telerik, respectively.
                                                                                                                                                                                                                                             
Adjusted Free Cash Flow
                                                                                                                                                                                                                                             
(In thousands)                                                                                YTD 2017                                                                    YTD Q3 2016                                                                     % Change
                                                                                 ----------------------------------                                          -------------------------------------                                          ------------------------------------
Cash flows from operations                                                          $  73,171                                                                      $  68,910                                                                             6 %
Purchases of property and equipment                                                      (865 )                                                                       (3,747 )                                                                         (77 )%
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Free cash flow                                                                         72,306                                                      65,163                                                         11 %
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Add back: restructuring payments                                                       16,871                                                       3,024                                                        458 %
                                                                                 ---------------------------------                                           ------------------------------------                                           -----------------------------------
Adjusted free cash flow                                                             $  89,177                                                   $  68,187                                                         31 %
                                                                                 ==== ======= ====================                                           ======= ======= ====================                                           ===================================
                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                               
Non-GAAP Bookings from Application Development and Deployment
Segment
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
(In thousands)                                                                         Q1 2016                                                                   Q2 2016                                                                   Q3 2016                                                                   Q4 2016                                                                   FY 2016                                                                   Q1 2017                                                                   Q2 2017                                                                   Q3 2017
                                                                          --------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------                                          --------------------------------
GAAP revenue                                                                $ 18,752                                               $ 19,185                                               $ 20,233                                               $ 22,895                                               $ 81,065                                               $ 19,634                                               $ 20,226                                                      $               20,185
                                                                          --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           ---------- --------------------
Add: change in deferred revenue
    Beginning balance                                                         49,252                                                                    49,237                                                                    51,693                                                                    51,736                                                                    49,252                                                                    52,971                                                                    51,298                                                                                         52,400
    Ending balance                                                            49,237                                                 51,693                                                 51,736                                                 52,971                                                 52,971                                                 51,298                                                 52,400                                                                      52,615
                                                                          -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           --------------------------------
Change in deferred revenue                                                       (15 )                                                                   2,456                                                     43                                                  1,235                                                  3,719                                                 (1,673 )                                                                   1,102                                                                         215
                                                                          -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           -------------------------------                                           --------------------------------
        Non-GAAP bookings                                                   $ 18,737                                               $ 21,641                                               $ 20,276                                               $ 24,130                                               $ 84,784                                               $ 17,961                                               $ 21,328                                                      $               20,400
                                                                          === ====== ====================                                           === ====== ====================                                           === ====== ====================                                           === ====== ====================                                           === ====== ====================                                           === ====== ====================                                           === ====== ====================                                           ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                   
SaaS Revenue (Hosted Services) from Application Development and
Deployment Segment
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
(In thousands)                                                                                              Q1 2016                                                                 Q2 2016                                                                 Q3 2016                                                                 Q4 2016                                                                 FY 2016                                                                Q1 2017                                                               Q2 2017                                                                 Q3 2017
                                                                                                ------------------------------                                          ------------------------------                                          ------------------------------                                          ------------------------------                                          ------------------------------                                          ----------------------------                                          ----------------------------                                          --------------------------------
SaaS Revenue - Application Development and Deployment                                            $ 1,071                                              $ 1,079                                              $ 1,160                                              $ 1,163                                              $ 4,473                                              $ 963                                              $ 854                                                      $                  799
                                                                                                -- ----- --------------------                                           -- ----- --------------------                                           -- ----- --------------------                                           -- ----- --------------------                                           -- ----- --------------------                                           -- --- --------------------                                           -- --- --------------------                                           ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2017 GUIDANCE
(Unaudited)
 
Fiscal Year 2017 Revenue Growth Guidance
                                                          Fiscal Year Ended                                                                                                               Fiscal Year Ending
                                                                                        ---------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                November 30, 2016                                                                                                                                                      November 30, 2017
                                                                                        ---------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In millions)                                                                                                                                                                    Low                  % Change                  High                       % Change
GAAP revenue                                                                                $ 405.3                                                                 $ 393.0                                                                  (3 )%                                              $ 396.0                                                                        (2 )%
Acquisition-related adjustments - revenue (1)                                                   2.1                                                  1.0                                              (52 )%                                                  1.0                                                    (52 )%
                                                                                        --------------------------------                                           -----------------------------                                           ---- ----                                           -----------------------------                                           ---------- ---------
Non-GAAP revenue                                                                            $ 407.4                                              $ 394.0                                               (3 )%                                              $ 397.0                                                     (3 )%
                                                                                        ===== ===== ====================                                           == ===== ====================                                           ==== ====                                           == ===== ====================                                           ========== =========
                                                                                                                                                                                                                                                                                                                                                                        

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. 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 relate to Progress’ OpenEdge and Application Development and Deployment business segments for Kinvey and Telerik, respectively.

 
Fiscal Year 2017 Non-GAAP Operating Margin Guidance
 
                                                                           Fiscal Year Ending November 30, 2017
                                                                              ----------------------------------------------------------------------------------------------------------
(In millions)                                                                                Low                                High
                                                                              --------------------------------                                          --------------------------------
GAAP income from operations                                                      $  70.1                                                                   $  72.8
GAAP operating margins                                                                18 %                                                                      18 %
    Acquisition-related revenue                                                      1.0                                                                       1.0
    Acquisition-related expense                                                      0.8                                                                       0.8
    Stock-based compensation                                                        14.3                                                                      14.3
    Restructuring expense and other                                                 19.5                                                                      18.7
    Amortization of intangibles                                                     33.0                                                   33.0  
                                                                              -------------------------------                                           -------------------------------
        Total adjustments                                                           68.6                                                   67.8  
                                                                              -------------------------------                                           -------------------------------
Non-GAAP income from operations                                                  $ 138.7                                                $ 140.6  
                                                                              ==== ===== ====================                                           ==== ===== ====================
Non-GAAP operating margin                                                             35 %                                                                      35 %
                                                                                                                                                                    
 
Fiscal Year 2017 Non-GAAP Earnings per Share and Effective Tax
Rate Guidance
 
                                                                                                         Fiscal Year Ending November 30, 2017
                                                                                                         ----------------------------------------------------------------------------------------------------------------
(In millions, except per share data)                                                                                     Low                                   High
                                                                                                         -----------------------------------                                          -----------------------------------
GAAP net income                                                                                               $   36.1                                                                     $   37.6
    Adjustments (from previous table)                                                                             68.6                                                                         67.8
    Income tax adjustment (2)                                                                                    (16.3 )                                                                      (15.5 )
                                                                                                         ----------------------------------                                           ----------------------------------
Non-GAAP net income                                                                                           $   88.4                                                  $   89.9  
                                                                                                         ====== ====== ====================                                           ====== ====== ====================
                                                                                                                                                                                       
GAAP diluted earnings per share                                                                               $   0.74                                                                     $   0.78
Non-GAAP diluted earnings per share                                                                           $   1.82                                                                     $   1.85
                                                                                                                                                                                       
Diluted weighted average shares outstanding                                                                       48.5                                                                         48.5
                                                                                                                                                                                       
(2) Tax adjustment is based on a non-GAAP effective tax rate of 34%
for Low and 33% for High, calculated as follows:
Non-GAAP income from operations                                                                               $  138.7                                                                     $  140.6
    Other (expense) income, net                                                                                   (5.6 )                                                                       (5.6 )
                                                                                                         ----------------------------------                                           ----------------------------------
Non-GAAP income from continuing operations before income taxes                                                   133.1                                                     135.0  
                                                                                                         ----------------------------------                                           ----------------------------------
    Non-GAAP net income                                                                                           88.4                                                      89.9  
                                                                                                         ----------------------------------                                           ----------------------------------
Tax provision                                                                                                 $   44.7                                                  $   45.1  
                                                                                                         ====== ====== ====================                                           ====== ====== ====================
Non-GAAP tax rate                                                                                                   34 %                                                                         33 %
                                                                                                                                                                                                     
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2017 GUIDANCE
(Unaudited)
 
Fiscal Year 2017 Adjusted Free Cash Flow Guidance
                                                                            Fiscal Year Ending November 30, 2017
                                                                              ------------------------------------------------------------------------------------------------------------
(In millions)                                                                                Low                                 High
                                                                              ---------------------------------                                          ---------------------------------
Cash flows from operations (GAAP)                                                 $    89                                                                    $    94
Purchases of property and equipment                                                    (3 )                                                                       (2 )
Add back: restructuring payments                                                       19                                                      18  
                                                                              --------------------------------                                           --------------------------------
Adjusted free cash flow (non-GAAP)                                                $   105                                                 $   110  
                                                                              ===== ===== ====================                                           ===== ===== ====================
                                                                                                                                                                      
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q4
2017 GUIDANCE
(Unaudited)
 
Q4 2017 Revenue Growth Guidance
                                                          Three Months Ended                                                                                                                Three Months Ending
                                                                                        -----------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 November 30, 2016                                                                                                                                                       November 30, 2017
                                                                                        -----------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In millions)                                                                                                                                                                      Low                  % Change                  High                       % Change
GAAP revenue                                                                                 $  117.7                                                                 $ 111.8                                                                  (5 )%                                              $ 114.8                                                                        (2 )%
Acquisition-related adjustments - revenue (1)                                                     0.3                                                  0.2                                              (33 )%                                                  0.2                                                    (33 )%
                                                                                        ----------------------------------                                           -----------------------------                                           ---- ----                                           -----------------------------                                           ---------- ---------
Non-GAAP revenue                                                                             $  118.0                                              $ 112.0                                               (5 )%                                              $ 115.0                                                     (3 )%
                                                                                        ====== ====== ====================                                           == ===== ====================                                           ==== ====                                           == ===== ====================                                           ========== =========
                                                                                                                                                                                                                                                                                                                                                                          

(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. 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 relate to Progress’ OpenEdge and Application Development and Deployment business segments for Kinvey and Telerik, respectively.

 
Q4 2017 Non-GAAP Earnings per Share Guidance
                                                                          Three Months Ending November 30, 2017
                                                                              --------------------------------------------------------------------------------------------------------
                                                                                            Low                               High
                                                                              -------------------------------                                          -------------------------------
GAAP diluted earnings per share                                                  $ 0.33                                                $ 0.36  
                                                                              ---- ---- --------------------                                           ---- ---- --------------------
    Acquisition-related revenue                                                    0.01                                                                     0.01
    Stock-based compensation                                                       0.10                                                                     0.10
    Amortization of intangibles                                                    0.19                                                  0.19  
                                                                              ------------------------------                                           ------------------------------
        Total adjustments                                                          0.30                                                  0.30  
                                                                              ------------------------------                                           ------------------------------
    Income tax adjustment                                                         (0.05 )                                                                  (0.05 )
                                                                              ------------------------------                                           ------------------------------
Non-GAAP diluted earnings per share                                              $ 0.58                                                $ 0.61  
                                                                              ==== ==== ====================                                           ==== ==== ====================
                                                                                                                                                                  

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170927006065r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170927006065/en/

SOURCE: Progress

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


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