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 Progress Reports 2017 Fiscal Fourth Quarter and Year End Results
   Wednesday, January 10, 2018 4:15:01 PM ET

Progress (PRGS ) today announced results for its fiscal fourth quarter and fiscal year ended November 30, 2017.

Revenue was $116.1 million during the quarter compared to $117.7 million in the same quarter last year, a year-over-year decrease of 1% on an actual currency basis and 3% on a constant currency basis. On a non-GAAP basis, revenue was $116.3 million during the quarter compared to $118.0 million in the same quarter last year, a decrease of 1% on an actual currency basis and 3% on a constant currency basis.

On a GAAP basis, diluted earnings per share was $0.34 compared to a diluted loss per share of $1.52 in the same quarter last year. On a non-GAAP basis, diluted earnings per share was $0.67 compared to $0.62 in the same quarter last year.



Yogesh Gupta, CEO at Progress, said: "Our strong Q4 performance allowed us to achieve better-than-expected revenue, earnings per share, operating margins and cash flow for 2017. We have strengthened our core operations, and now offer the best platform for building next-generation, mission-critical, cognitive-first business applications as well. We look forward to continued momentum in 2018, as we execute on a strategic plan that will drive sustainable, long-term value for all shareholders."

Additional financial highlights included:

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

-- Revenue was $116.1 million compared to $117.7 million in the same quarter in fiscal year 2016;

-- Income from operations was $28.8 million compared to a loss from operations of $62.4 million in the same quarter last year;

-- Net income was $16.4 million compared to a net loss of $73.8 million in the same quarter last year;

-- Diluted earnings per share was $0.34 compared to a diluted loss per share of $1.52 in the same quarter last year; and

-- Cash from operations was $32.5 million compared to $33.9 million in the same quarter last year.

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

-- Revenue was $116.3 million compared to $118.0 million in the same quarter last year;

-- Income from operations was $49.1 million compared to $42.6 million in the same quarter last year;

-- Operating margin was 42% compared to 36% in the same quarter last year;

-- Net income was $32.1 million compared to $30.5 million in the same quarter last year;

-- Diluted earnings per share was $0.67 compared to $0.62 in the same quarter last year; and

-- Adjusted free cash flow was $32.4 million compared to $32.4 million in the same quarter last year.

Paul Jalbert, CFO, said: "We are pleased with our financial performance for Q4 and for the full year. We delivered on our commitment to operate our business efficiently, exceeding our cost-savings targets by reducing our total expenses by over $30 million. We are confident in our ability to generate continued strong operating margins and cash flows, and are well-positioned to achieve our financial goals in 2018."

Other fiscal fourth quarter and 2017 metrics and recent results included:

-- Cash, cash equivalents and short-term investments were $183.6 million at the end of the quarter;

-- DSO was 47 days, compared to 48 days in the fiscal third quarter of 2017 and 50 days in the fiscal fourth quarter of 2016;

-- Pursuant to the $250 million share authorization of the Board of Directors, Progress repurchased 0.8 million shares for $30.0 million during the fiscal fourth quarter of 2017. For the full fiscal year, Progress repurchased 2.2 million shares for $73.9 million; and

-- On January 5, 2018, our Board of Directors declared a quarterly dividend of $0.14 per share of common stock that will be paid on March 15, 2018 to shareholders of record as of the close of business on March 1, 2018.

Full Year Results

On a GAAP basis in the fiscal year 2017:

-- Revenue was $397.6 million compared to $405.3 million in fiscal year 2016, a year-over-year decrease of 2% on both an actual and constant currency basis;

-- Income from operations was $70.6 million compared to a loss from operations of $29.7 million in the prior fiscal year;

-- Net income was $37.4 million compared to a net loss of $55.7 million in the prior fiscal year;

-- Diluted earnings per share was $0.77 compared to a diluted loss per share of $1.13 in the prior fiscal year; and

-- Cash from operations was $105.7 million compared to $102.8 million in the prior fiscal year.

On a non-GAAP basis in the fiscal year 2017:

-- Revenue was $398.6 million compared to $407.4 million in fiscal year 2016, a year-over-year decrease of 2% on both an actual and constant currency basis;

-- Income from operations was $144.5 million compared to $123.1 million in the prior fiscal year;

-- Operating margin was 36% compared to 30% in the prior fiscal year;

-- Net income was $92.5 million compared to $82.3 million in the prior fiscal year;

-- Diluted earnings per share was $1.91 compared to $1.65 in the prior fiscal year; and

-- Adjusted free cash flow was $121.5 million compared to $100.6 million in the prior fiscal year.

2018 Business Outlook

Progress provides the following guidance for the fiscal year ending November 30, 2018 and the first fiscal quarter ending February 28, 2018:

                                                                                                         
(In millions, except percentages and per share amounts)                          FY 2018                            FY 2018                            Q1 2018                               Q1 2018
                                                                                  GAAP                             Non-GAAP                             GAAP                                Non-GAAP
                                                                             -------------                      -------------                      -------------                      --------------------
Revenue                                                                        $398 - $404                        $399 - $404                          $90 - $93                                 $90 - $93
Diluted earnings per share                                                   $1.14 - $1.21                      $2.29 - $2.35                      $0.15 - $0.19                             $0.46 - $0.48
Operating margin                                                                 19% - 20%                          35% - 36%                                  *                                         *
Adjusted free cash flow                                                        $115 - $121                        $115 - $120                                  *                                         *
Effective tax rate                                                                     26%                                22%                                  *                                         *
*We do not provide guidance for this financial measure.
                                                                                                                                                                                       

Progress’ fiscal 2018 financial guidance is based on current exchange rates. The positive currency translation impact on Progress’ fiscal year 2018 business outlook compared to 2017 exchange rates is approximately $4.0 million on GAAP and non-GAAP revenue. The currency translation impact on the fiscal 2018 GAAP and non-GAAP diluted earnings per share guidance is approximately $0.01. The positive currency translation impact on Progress’ fiscal Q1 2018 business outlook compared to 2017 exchange rates is approximately $2.0 million on GAAP and non-GAAP revenue. The currency translation impact on Progress’ fiscal Q1 2018 GAAP and non-GAAP diluted earnings per share guidance is approximately $0.01. 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 fourth quarter of 2017 will be broadcast live at 5:00 p.m. ET on Wednesday, January 10, 2018 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 1-800-967-7134, pass code 7064924. 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, impairment of acquired intangible assets, stock-based compensation expense, fees related to shareholder activist, 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 goodwill and acquired intangibles - In fiscal year 2016, we exclude impairment charges applicable to goodwill and acquired intangible assets because such expenses distort trends and are 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.

-- Fees related to shareholder activist - In September 2017, Praesidium Investment Management, one of our largest shareholders, publicly announced in a Schedule 13D filed with the Securities and Exchange Commission its disagreement with our strategy and stated that it was seeking changes in the composition of our Board of Directors. In fiscal year 2017, we have incurred, and in fiscal year 2018 we expect to incur, professional and other fees relating to Praesidium’s actions. We exclude these fees because they distort trends and are not part of our core operating results.

-- 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. In addition, in fiscal year 2016, we adjusted our income tax provision to remove from non-GAAP income the positive impact of an out-of-period adjustment recorded to the income tax provision during the fiscal second quarter of 2016.

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. (9) Our business could be negatively affected by the actions of stockholder activists. 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 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 28, 2017, May 31, 2017 and August 31, 2017. 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
(Unaudited)
                                                                                                                 Three Months Ended                                                                                                                                  Fiscal Year Ended
                                                                      ----------------------------------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                             November 30,                           November 30,                        % Change                                          November 30,                           November 30,                           % Change
                                                                                      2017                                                      2016                                                                                                     2017                                                      2016
                                                                      ----------------------------------                        ----------------------------------                        ------------------------                       ----------------------------------                        ----------------------------------                        ------------------------------
Revenue:
    Software licenses                                                       $  45,963                                                 $  48,497                                             (5 )%                                              $ 124,406                                                 $ 134,863                                                   (8 )%
    Maintenance and services                                                   70,116                                 69,227                           1                                273,166                                270,478                                 1  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
          Total revenue                                                       116,079                                117,724                          (1 )                                                 397,572                                405,341                                (2 )
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Costs of revenue:
    Cost of software licenses                                                   1,405                                                     1,317                                              7                                                     5,752                                                     5,456                                                    5
    Cost of maintenance and services                                           10,575                                                    11,543                                             (8 )                                                  43,299                                                    44,760                                                   (3 )
    Amortization of acquired intangibles                                        5,979                                  3,678                          63                                 20,108                                 15,496                                30  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
          Total costs of revenue                                               17,959                                 16,538                           9                                 69,159                                 65,712                                 5  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Gross profit                                                                   98,120                                101,186                          (3 )                                                 328,413                                339,629                                (3 )
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Operating expenses:
    Sales and marketing                                                        26,229                                                    32,853                                            (20 )                                                  96,345                                                   121,501                                                  (21 )
    Product development                                                        21,243                                                    22,786                                             (7 )                                                  76,988                                                    88,587                                                  (13 )
    General and administrative                                                 12,401                                                    10,478                                             18                                                    45,739                                                    46,532                                                   (2 )
    Impairment of goodwill and intangible assets                       --                                                    92,000                                           (100 )                                          --                                                    97,051                                                 (100 )
    Amortization of acquired intangibles                                        3,318                                                     3,179                                              4                                                    13,039                                                    12,735                                                    2
    Fees related to shareholder activist                                        2,020                                            --                                            100                                                     2,020                                            --                                                  100
    Restructuring expenses                                                      3,486                                                     1,463                                            138                                                    22,210                                                     1,692                                                1,213
    Acquisition-related expenses                                                  614                                    791                         (22 )                                                   1,458                                  1,240                                18  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
          Total operating expenses                                             69,311                                163,550                         (58 )                                                 257,799                                369,338                               (30 )
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Income (loss) from operations                                                  28,809                                (62,364 )                                          146                                 70,614                                (29,709 )                                                338  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Other (expense) income, net                                                      (728 )                                                  (1,097 )                                           34                                 (5,027 )                                                  (5,571 )                                                 10  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Income (loss) before income taxes                                              28,081                                (63,461 )                                          144                                 65,587                                (35,280 )                                                286  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Provision for income taxes                                                     11,652                                 10,332                          13                                 28,170                                 20,446                                38  
                                                                      ------------------------------------                      ------------------------------------                      ---- --------------------                      ------------------------------------                      ------------------------------------                      ---------- --------------------
Net income (loss)                                                           $  16,429                              $ (73,793 )                                          122 %                                               $  37,417                              $ (55,726 )                                                167 %
                                                                      ======= ======= ====================                      ======= ======= ====================                      ==== ====================                      ======= ======= ====================                      ======= ======= ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                                              
Earnings (loss) per share:
    Basic                                                                   $    0.35                                                 $   (1.52 )                                          123 %                                               $    0.78                                                 $   (1.13 )                                                169 %
    Diluted                                                                 $    0.34                                                 $   (1.52 )                                          122 %                                               $    0.77                                                 $   (1.13 )                                                168 %
Weighted average shares outstanding:
    Basic                                                                      47,489                                                    48,631                                             (2 )%                                                 48,129                                                    49,481                                                   (3 )%
    Diluted                                                                    48,171                                                    48,631                                             (1 )%                                                 48,516                                                    49,481                                                   (2 )%
                                                                                                                                                                                                                                                                                                                                                              
Cash dividends declared per common share                                    $   0.140                                                 $   0.125                                             12 %                                               $   0.515                                                 $   0.125                                                  312 %
                                                                                                                                                                                                                                                                                                                                                                         
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)                                                                               November 30,                     November 30,
                                                                                                                    2017                                                2016
                                                                                                     -------------------------------                        --------------------------
Assets
Current assets:
    Cash, cash equivalents and short-term investments                                                   $ 183,609                                                $              249,754
    Accounts receivable, net                                                                               61,210                                                                65,678
    Other current assets                                                                                   18,588                                             20,621
                                                                                                     ---------------------------------                      ----------------------------
          Total current assets                                                                            263,407                                            336,053
                                                                                                     ---------------------------------                      ----------------------------
Property and equipment, net                                                                                42,261                                                                50,105
Goodwill and intangible assets, net                                                                       409,935                                                               358,894
Other assets                                                                                                3,115                                              9,775
                                                                                                     ---------------------------------                      ----------------------------
          Total assets                                                                                  $ 718,718                             $              754,827
                                                                                                     ==== ======= ====================                      ====== ====================
Liabilities and shareholders’ equity
Current liabilities:
    Accounts payable and other current liabilities                                                      $  69,661                                                $               59,778
    Current portion of long-term debt                                                                       5,819                                                                15,000
    Short-term deferred revenue                                                                           132,538                                            128,960
                                                                                                     ---------------------------------                      ----------------------------
          Total current liabilities                                                                       208,018                                            203,738
                                                                                                     ---------------------------------                      ----------------------------
Long-term deferred revenue                                                                                  9,750                                                                 8,801
Long-term debt                                                                                            116,090                                                               120,000
Other long-term liabilities                                                                                 8,776                                                                15,659
Shareholders’ equity:
    Common stock and additional paid-in capital                                                           249,836                                                               239,496
    Retained earnings                                                                                     126,248                                            167,133
                                                                                                     ---------------------------------                      ----------------------------
          Total shareholders’ equity                                           376,084                                            406,629
                                                                                                     ---------------------------------                      ----------------------------
          Total liabilities and shareholders’ equity                         $ 718,718                             $              754,827
                                                                                                     ==== ======= ====================                      ====== ====================
                                                                                                                                                                    
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
                                                                                                         Three Months Ended                                                                               Fiscal Year Ended
                                                                                      -----------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------
(In thousands)                                                                                    November 30,                           November 30,                                             November 30,                         November 30,
                                                                                                      2017                                                      2016                                                     2017                                                    2016
                                                                                      ----------------------------------                        ----------------------------------                        -------------------------------                        ----------------------------------
Cash flows from operating activities:
    Net income (loss)                                                                       $  16,429                                                 $ (73,793 )                                            $  37,417                                                 $ (55,726 )
        Depreciation and amortization                                                          11,572                                                     9,525                                                 42,896                                                    39,321
        Stock-based compensation                                                                4,594                                                     3,531                                                 14,153                                                    22,541
        Other non-cash adjustments                                                             (2,792 )                                                  94,033                                                     32                                                    97,813
        Changes in operating assets and liabilities                                             2,712                                    638                              11,188                                 (1,104 )
                                                                                      ------------------------------------                      ------------------------------------                      ---------------------------------                      ------------------------------------
              Net cash flows from operating activities                                         32,515                                 33,934                             105,686                                102,845  
                                                                                      ------------------------------------                      ------------------------------------                      ---------------------------------                      ------------------------------------
Capital expenditures                                                                           (2,512 )                                                  (2,042 )                                               (3,377 )                                                  (5,786 )
Repurchases of common stock, net of issuances                                                 (27,222 )                                                  (5,930 )                                              (63,913 )                                                 (69,270 )
Dividend payments to shareholders                                                              (5,975 )                                          --                                                (24,126 )                                          --
Payments for acquisitions, net of cash acquired                                        --                                            --                                                (77,150 )                                          --
Payments of principal on long-term debt and debt issuance costs                                (1,174 )                                                  (1,875 )                                              (12,424 )                                                  (9,375 )
Other                                                                                          (3,339 )                                                  (7,017 )                                                9,159                                 (9,939 )
                                                                                      ------------------------------------                      ------------------------------------                      ---------------------------------                      ------------------------------------
Net change in cash, cash equivalents and short-term investments                                (7,707 )                                                  17,070                             (66,145 )                                                   8,475  
                                                                                      ------------------------------------                      ------------------------------------                      ---------------------------------                      ------------------------------------
Cash, cash equivalents and short-term investments, beginning of                               191,316                                232,684                             249,754                                241,279  
period
                                                                                      --------------  --------------------                      --------------  --------------------                      -----------  --------------------                      --------------  --------------------
Cash, cash equivalents and short-term investments, end of period                            $ 183,609                              $ 249,754                           $ 183,609                              $ 249,754  
                                                                                      ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                  
 
RESULTS OF OPERATIONS BY SEGMENT
(Unaudited)
 
                                                                                                                         Three Months Ended                                                                                                                                   Fiscal Year Ended
                                                                             -------------------------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                         November 30,                        November 30,                           % Change                                              November 30,                        November 30,                           % Change
                                                                                           2017                                                   2016                                                                                                            2017                                                   2016
                                                                             ------------------------------                        -------------------------------                        ----------------------------------                       -------------------------------                        -------------------------------                        ----------------------------------
Segment revenue:
    OpenEdge                                                                    $ 77,639                                              $  77,672                                           -- %                                            $ 276,172                                              $ 276,267                                           -- %
    Data Connectivity and Integration                                             18,044                                                 17,157                                                        5                                                 40,955                                                 48,009                                                      (15 )
    Application Development and Deployment                                        20,396                              22,895                                   (11 )                                               80,445                              81,065                                    (1 )
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
          Total revenue                                                          116,079                             117,724                                    (1 )                                              397,572                             405,341                                    (2 )
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
Segment costs of revenue and operating expenses:
    OpenEdge                                                                      19,959                                                 19,399                                                        3                                                 72,497                                                 72,938                                                       (1 )
    Data Connectivity and Integration                                              2,798                                                  3,896                                                      (28 )                                                9,329                                                 12,760                                                      (27 )
    Application Development and Deployment                                         6,749                              10,625                                   (36 )                                               26,645                              40,180                                   (34 )
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
          Total costs of revenue and operating expenses                           29,506                              33,920                                   (13 )                                              108,471                             125,878                                   (14 )
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
Segment contribution:
    OpenEdge                                                                      57,680                                                 58,273                                                       (1 )                                              203,675                                                203,329                                           --
    Data Connectivity and Integration                                             15,246                                                 13,261                                                       15                                                 31,626                                                 35,249                                                      (10 )
    Application Development and Deployment                                        13,647                              12,270                                    11                              53,800                              40,885                                    32  
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
          Total contribution                                                      86,573                              83,804                                     3                             289,101                             279,463                                     3  
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
Other unallocated expenses (1)                                                    57,764                             146,168                                   (60 )                                              218,487                             309,172                                   (29 )
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
Income (loss) from operations                                                     28,809                             (62,364 )                                                    146                              70,614                             (29,709 )                                                    338  
                                                                             ================================                      =================================                      ============== ====================                      =================================                      =================================                      ============== ====================
Other (expense) income, net                                                         (728 )                                               (1,097 )                                                     34                              (5,027 )                                               (5,571 )                                                     10  
                                                                             --------------------------------                      ---------------------------------                      -------------- --------------------                      ---------------------------------                      ---------------------------------                      -------------- --------------------
Income (loss) before provision for income taxes                                 $ 28,081                           $ (63,461 )                                                    144 %                                            $  65,587                           $ (35,280 )                                                    286 %
                                                                             ==== ====== ====================                      ==== ======= ====================                      ============== ====================                      ==== ======= ====================                      ==== ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                                                                  

(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: certain product development and corporate sales and marketing expenses, customer support, administration, amortization and impairment of acquired intangibles, impairment of goodwill, stock-based compensation, fees related to shareholder activist, restructuring, and acquisition-related expenses.

 
SUPPLEMENTAL INFORMATION
(Unaudited)
 
Revenue by Type                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                              
(In thousands)                                                           Q4 2016                                               Q1 2017                                              Q2 2017                                              Q3 2017                                              Q4 2017                                               FY 2017                                               FY 2016
                                                            ---------------------------------                     --------------------------------                     --------------------------------                     --------------------------------                     ---------------------------------                     ---------------------------------                     --------------------------------
License                                                       $  48,497                                             $ 24,322                                             $ 25,592                                             $ 28,529                                             $  45,963                                             $ 124,406                                                    $              134,863
Maintenance                                                      60,188                                               59,138                                               59,898                                               60,536                                                61,826                                               241,398                                                                   238,377
Professional services                                             9,039                             7,510                             7,723                             8,245                              8,290                             31,768                                                 32,101
                                                            --------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------                      --------------------------------                      --------------------------------
Total revenue                                                 $ 117,724                          $ 90,970                          $ 93,213                          $ 97,310                          $ 116,079                          $ 397,572                                 $              405,341
                                                            === ======= ====================                      === ====== ====================                      === ====== ====================                      === ====== ====================                      === ======= ====================                      === ======= ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                              
Revenue by Region
                                                                                                                                                                                                                                                                                                                                                                                              
(In thousands)                                                           Q4 2016                                               Q1 2017                                              Q2 2017                                              Q3 2017                                              Q4 2017                                               FY 2017                                               FY 2016
                                                            ---------------------------------                     --------------------------------                     --------------------------------                     --------------------------------                     ---------------------------------                     ---------------------------------                     --------------------------------
North America                                                 $  68,471                                             $ 50,305                                             $ 51,430                                             $ 55,703                                             $  66,504                                             $ 223,942                                                    $              229,203
EMEA                                                             35,301                                               29,844                                               30,646                                               31,830                                                38,039                                               130,359                                                                   130,818
Latin America                                                     8,407                                                5,023                                                5,637                                                5,009                                                 5,489                                                21,158                                                                    21,156
Asia Pacific                                                      5,545                             5,798                             5,500                             4,768                              6,047                             22,113                                                 24,164
                                                            --------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------                      --------------------------------                      --------------------------------
Total revenue                                                 $ 117,724                          $ 90,970                          $ 93,213                          $ 97,310                          $ 116,079                          $ 397,572                                 $              405,341
                                                            === ======= ====================                      === ====== ====================                      === ====== ====================                      === ====== ====================                      === ======= ====================                      === ======= ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                              
Revenue by Segment
                                                                                                                                                                                                                                                                                                                                                                                              
(In thousands)                                                           Q4 2016                                               Q1 2017                                              Q2 2017                                              Q3 2017                                              Q4 2017                                               FY 2017                                               FY 2016
                                                            ---------------------------------                     --------------------------------                     --------------------------------                     --------------------------------                     ---------------------------------                     ---------------------------------                     --------------------------------
OpenEdge                                                      $  77,672                                             $ 64,508                                             $ 65,890                                             $ 68,135                                             $  77,639                                             $ 276,172                                                    $              276,267
Data Connectivity and Integration                                17,157                                                6,828                                                7,096                                                8,987                                                18,044                                                40,955                                                                    48,009
Application Development and Deployment                           22,895                            19,634                            20,227                            20,188                             20,396                             80,445                                                 81,065
                                                            --------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------                      --------------------------------                      --------------------------------
Total revenue                                                 $ 117,724                          $ 90,970                          $ 93,213                          $ 97,310                          $ 116,079                          $ 397,572                                 $              405,341
                                                            === ======= ====================                      === ====== ====================                      === ====== ====================                      === ====== ====================                      === ======= ====================                      === ======= ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                         
 
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- FOURTH QUARTER
(Unaudited)
 
                                                                                                                                                         Three Months Ended                                                                                                        % Change
                                                                             -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                               November 30, 2017                                                                               November 30, 2016                                                                 Non-GAAP
                                                                             ----------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------                     ---------------------
Adjusted revenue:                                                                                                                                                                                                  
    GAAP revenue                                                                   $ 116,079                                                                                                          $ 117,724
    Acquisition-related revenue (1)                                                      256                                                                          288                         
                                                                             ------------------------------------                      ------------------------------------                     ------------------------------------                      ------------------------------------
        Non-GAAP revenue                                                           $ 116,335                                   100 %                                               $ 118,012                                   100 %                                                 (1 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted gross margin:
    GAAP gross margin                                                              $  98,120                                                       85 %                                               $ 101,186                                                       86 %
    Amortization of acquired intangibles                                               5,979                                                        5                                                     3,678                                                        3
    Stock-based compensation (2)                                                         226                                           --                                                       299                                           --
    Acquisition-related revenue (1)                                                      256                        --                                    288                        --  
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP gross margin                                                      $ 104,581                                    90 %                                               $ 105,451                                    89 %                                                 (1 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted operating expenses:
    GAAP operating expenses                                                        $  69,311                                                       60 %                                               $ 163,550                                                      139 %
    Amortization and impairment of acquired intangibles                               (3,318 )                                                     (3 )                                                  (3,179 )                                                     (3 )
    Impairment of goodwill                                                    --                                           --                                                   (92,000 )                                                    (78 )
    Fees related to shareholder activist                                              (2,020 )                                                     (2 )                                          --                                           --
    Restructuring expenses and other                                                  (3,486 )                                                     (3 )                                                  (1,463 )                                                     (1 )
    Acquisition-related expenses                                                        (614 )                                         --                                                      (791 )                                                     (1 )
    Stock-based compensation (2)                                                      (4,368 )                                                     (4 )                                                  (3,232 )                                                     (3 )
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP operating expenses                                                $  55,505                                    48 %                                               $  62,885                                    53 %                                                (12 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted income (loss) from operations:
    GAAP operating income (loss)                                                   $  28,809                                                       25 %                                               $ (62,364 )                                                    (53 )%
    Amortization and impairment of acquired intangibles                                9,297                                                        8                                                     6,857                                                        6
    Impairment of goodwill                                                    --                                           --                                                    92,000                                                       78
    Fees related to shareholder activist                                               2,020                                                        2                                            --                                           --
    Restructuring expenses and other                                                   3,486                                                        3                                                     1,463                                                        1
    Stock-based compensation (2)                                                       4,594                                                        4                                                     3,531                                                        3
    Acquisition-related                                                                  870                        --                                  1,079                                     1  
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP income from operations                                            $  49,076                                    42 %                                               $  42,566                                    36 %                                                 15 %
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted diluted earnings (loss) per share:
    GAAP diluted earnings (loss) per share                                         $    0.34                                                                                                          $   (1.52 )
    Amortization and impairment of acquired intangibles                                 0.20                                                                                                               0.14
    Impairment of goodwill                                                    --                                                                                                               1.87
    Fees related to shareholder activist                                                0.04                                                                                                     --
    Restructuring expenses and other                                                    0.07                                                                                                               0.03
    Stock-based compensation (2)                                                        0.10                                                                                                               0.08
    Acquisition-related                                                                 0.02                                                                                                               0.03
    Provision for income taxes                                                         (0.10 )                                                                                                            (0.01 )
                                                                             ------------------------------------                                                                               ------------------------------------
        Non-GAAP diluted earnings per share                                        $    0.67                                                                                       $    0.62                                                                                          8 %
                                                                             ======= ======= ====================                                                                               ======= ======= ====================
                                                                                                                                                                                                                                                                                                                    
Non-GAAP weighted avg shares outstanding - diluted                                    48,171                                                                                                             49,229                                                                                                            (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                                                                    $     226                                                                                                          $     299
Operating expenses                                                                     4,368                                                                                           3,232  
                                                                             ------------------------------------                                                                               ------------------------------------
        Total                                                                      $   4,594                                                                                       $   3,531  
                                                                             ======= ======= ====================                                                                               ======= ======= ====================
                                                                                                                                                                                                                                                                                                                    
 
RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES
- FISCAL YEAR
(Unaudited)
 
                                                                                                                                                          Fiscal Year Ended                                                                                                        % Change
                                                                             -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                               November 30, 2017                                                                               November 30, 2016                                                                 Non-GAAP
                                                                             ----------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------                     ---------------------
Adjusted revenue:                                                                                                                                                                                                  
    GAAP revenue                                                                   $ 397,572                                                                                                          $ 405,341
    Acquisition-related revenue (1)                                                    1,015                                                                        2,014                         
                                                                             ------------------------------------                      ------------------------------------                     ------------------------------------                      ------------------------------------
        Non-GAAP revenue                                                           $ 398,587                                   100 %                                               $ 407,355                                   100 %                                                 (2 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted gross margin:
    GAAP gross margin                                                              $ 328,413                                                       83 %                                               $ 339,629                                                       84 %
    Amortization of acquired intangibles                                              20,108                                                        5                                                    15,496                                                        4
    Stock-based compensation (2)                                                       1,016                                           --                                                       899                                           --
    Acquisition-related revenue (1)                                                    1,015                        --                                  2,014                        --  
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP gross margin                                                      $ 350,552                                    88 %                                               $ 358,038                                    88 %                                                 (2 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted operating expenses:
    GAAP operating expenses                                                        $ 257,799                                                       65 %                                               $ 369,338                                                       91 %
    Amortization and impairment of acquired intangibles                              (13,039 )                                                     (3 )                                                 (17,786 )                                                     (4 )
    Impairment of goodwill                                                    --                                           --                                                   (92,000 )                                                    (23 )
    Fees related to shareholder activist                                              (2,020 )                                                     (1 )                                          --                                           --
    Restructuring expenses and other                                                 (22,046 )                                                     (6 )                                                  (1,692 )                                                     (1 )
    Acquisition-related expenses                                                      (1,458 )                                         --                                                    (1,240 )                                         --
    Stock-based compensation (2)                                                     (13,137 )                                                     (3 )                                                 (21,642 )                                                     (5 )
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP operating expenses                                                $ 206,099                                    52 %                                               $ 234,978                                    58 %                                                (12 )%
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted income (loss) from operations:
    GAAP operating (loss)                                                          $  70,614                                                       18 %                                               $ (29,709 )                                                     (7 )%
    Amortization and impairment of acquired intangibles                               33,147                                                        8                                                    33,282                                                        8
    Impairment of goodwill                                                    --                                           --                                                    92,000                                                       23
    Fees related to shareholder activist                                               2,020                                           --                                            --                                           --
    Restructuring expenses and other                                                  22,046                                                        5                                                     1,692                                           --
    Stock-based compensation (2)                                                      14,153                                                        4                                                    22,541                                                        5
    Acquisition-related                                                                2,473                                     1                                  3,254                                     1  
                                                                             ------------------------------------                      -------------- --------------------                      ------------------------------------                      -------------- --------------------
        Non-GAAP income from operations                                            $ 144,453                                    36 %                                               $ 123,060                                    30 %                                                 17 %
                                                                             ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ============== ====================
                                                                                                                                                                                                                                                                                                                    
Adjusted diluted earnings per share:
    GAAP diluted earnings (loss) per share                                         $    0.77                                                                                                          $   (1.13 )
    Amortization and impairment of acquired intangibles                                 0.68                                                                                                               0.67
    Impairment of goodwill                                                    --                                                                                                               1.85
    Fees related to shareholder activist                                                0.04                                                                                                     --
    Restructuring expenses and other                                                    0.46                                                                                                               0.03
    Stock-based compensation (2)                                                        0.29                                                                                                               0.45
    Acquisition-related                                                                 0.05                                                                                                               0.07
    Provision for income taxes                                                         (0.38 )                                                                                                            (0.29 )
                                                                             ------------------------------------                                                                               ------------------------------------
        Non-GAAP diluted earnings per share                                        $    1.91                                                                                       $    1.65                                                                                         16 %
                                                                             ======= ======= ====================                                                                               ======= ======= ====================
                                                                                                                                                                                                                                                                                                                    
Non-GAAP weighted avg shares outstanding - diluted                                    48,516                                                                                                             50,039                                                                                                            (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                                                                    $   1,016                                                                                                          $     899
Operating expenses                                                                    13,137                                                                                          21,642  
                                                                             ------------------------------------                                                                               ------------------------------------
        Total                                                                      $  14,153                                                                                       $  22,541  
                                                                             ======= ======= ====================                                                                               ======= ======= ====================
                                                                                                                                                                                                                                                                                                                    
 
OTHER NON-GAAP FINANCIAL MEASURES - FOURTH QUARTER
(Unaudited)
 
Revenue by Type                                                                                                     
                                                                                                                                                                               
(In thousands)                                                            Q4 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ----------------------------------
License                                                         $  45,963                                                 $      26                                                 $  45,989
Maintenance                                                        61,826                                                        62                                                    61,888
Services                                                            8,290                                    168                                  8,458  
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Total revenue                                                   $ 116,079                              $     256                              $ 116,335  
                                                            ===== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                               
Revenue by Region
                                                                                                                                                                               
(In thousands)                                                            Q4 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ----------------------------------
North America                                                   $  66,504                                                 $     256                                                 $  66,760
EMEA                                                               38,039                                            --                                                    38,039
Latin America                                                       5,489                                            --                                                     5,489
Asia Pacific                                                        6,047                         --                                  6,047  
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Total revenue                                                   $ 116,079                              $     256                              $ 116,335  
                                                            ===== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                               
Revenue by Segment
                                                                                                                                                                               
(In thousands)                                                            Q4 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ----------------------------------
OpenEdge                                                        $  77,639                                                 $     168                                                 $  77,807
Data Connectivity and Integration                                  18,044                                            --                                                    18,044
Application Development and Deployment                             20,396                                     88                                 20,484  
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Total revenue                                                   $ 116,079                              $     256                              $ 116,335  
                                                            ===== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                               
(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)                                                            Q4 2017                                                  Q4 2016                                                  % Change
                                                            -----------------------------------                     -------------------------------------                     -------------------------------------
Cash flows from operations                                      $  32,515                                                 $  33,934                                                        (4 )%
Purchases of property and equipment                                (2,512 )                                                  (2,042 )                                                      23  
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Free cash flow                                                     30,003                                 31,892                                     (6 )
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Add back: restructuring payments                                    2,362                                    515                                    359  
                                                            ----------------------------------                      ------------------------------------                      ------------------------------------
Adjusted free cash flow                                         $  32,365                              $  32,407                         -- %
                                                            ===== ======= ====================                      ======= ======= ====================                      ====================================
                                                                                                                                                                                               
 
OTHER NON-GAAP FINANCIAL MEASURES - FISCAL YEAR
(Unaudited)
 
Revenue by Type                                                                                                     
                                                                                                                                                                               
(In thousands)                                                            FY 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ---------------------------------
License                                                         $ 124,406                                                 $     163                                                $ 124,569
Maintenance                                                       241,398                                                       525                                                  241,923
Services                                                           31,768                                    327                                32,095  
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Total revenue                                                   $ 397,572                              $   1,015                             $ 398,587  
                                                            ===== ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                               
Revenue by Region
                                                                                                                                                                               
(In thousands)                                                            FY 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ---------------------------------
North America                                                   $ 223,942                                                 $   1,015                                                $ 224,957
EMEA                                                              130,359                                            --                                                  130,359
Latin America                                                      21,158                                            --                                                   21,158
Asia Pacific                                                       22,113                         --                                22,113  
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Total revenue                                                   $ 397,572                              $   1,015                             $ 398,587  
                                                            ===== ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                               
Revenue by Segment
                                                                                                                                                                               
(In thousands)                                                            FY 2017                                                 Non-GAAP                                              Non-GAAP Revenue
                                                                                                                               Adjustment (1)
                                                            --------------------------------                        ----------------------------------                        ---------------------------------
OpenEdge                                                        $ 276,172                                                 $     327                                                $ 276,499
Data Connectivity and Integration                                  40,955                                            --                                                   40,955
Application Development and Deployment                             80,445                                    688                                81,133  
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Total revenue                                                   $ 397,572                              $   1,015                             $ 398,587  
                                                            ===== ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                               
(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)                                                            FY 2017                                                  FY 2016                                                  % Change
                                                            -----------------------------------                     -------------------------------------                     ------------------------------------
Cash flows from operations                                      $ 105,686                                                 $ 102,845                                                        3 %
Purchases of property and equipment                                (3,377 )                                                  (5,786 )                                                    (42 )
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Free cash flow                                                    102,309                                 97,059                                     5  
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Add back: restructuring payments                                   19,234                                  3,539                                   443  
                                                            ----------------------------------                      ------------------------------------                      -----------------------------------
Adjusted free cash flow                                         $ 121,543                              $ 100,598                                    21 %
                                                            ===== ======= ====================                      ======= ======= ====================                      ===================================
                                                                                                                                                                                              
 
Non-GAAP Bookings from Application Development and Deployment
Segment
(Unaudited)
 
(In thousands)                                 Q1 2016                           Q2 2016                           Q3 2016                           Q4 2016                           FY 2016
                                                     --------------------------------                     --------------------------------                     --------------------------------                     --------------------------------                     --------------------------------
GAAP revenue                                           $ 18,752                          $ 19,185                          $ 20,233                          $ 22,895                                 $               81,065
                                                     --- ------ --------------------                      --- ------ --------------------                      --- ------ --------------------                      --- ------ --------------------                      ---------- --------------------
Add: change in deferred revenue
    Beginning balance                                    49,252                                               49,237                                               51,693                                               51,736                                                                    49,252
    Ending balance                                       49,237                            51,693                            51,736                            52,971                                                 52,971
                                                     -------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
Change in deferred revenue                                  (15 )                                              2,456                                43                             1,235                                                  3,719
                                                     -------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
        Non-GAAP bookings                              $ 18,737                          $ 21,641                          $ 20,276                          $ 24,130                                 $               84,784
                                                     === ====== ====================                      === ====== ====================                      === ====== ====================                      === ====== ====================                      ========== ====================
                                                                                                                                                                                                                                                                          
(In thousands)                                                    Q1 2017                                              Q2 2017                                              Q3 2017                                              Q4 2017                                              FY 2017
                                                     --------------------------------                     --------------------------------                     --------------------------------                     --------------------------------                     --------------------------------
GAAP revenue                                           $ 19,634                          $ 20,227                          $ 20,188                          $ 20,396                                 $               80,445
                                                     --- ------ --------------------                      --- ------ --------------------                      --- ------ --------------------                      --- ------ --------------------                      ---------- --------------------
Add: change in deferred revenue
    Beginning balance                                    52,971                                               51,298                                               52,400                                               52,615                                                                    52,971
    Ending balance                                       51,298                            52,400                            52,615                            53,794                                                 53,794
                                                     -------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
Change in deferred revenue                               (1,673 )                                              1,102                               215                             1,179                                                    823
                                                     -------------------------------                      -------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
        Non-GAAP bookings                              $ 17,961                          $ 21,329                          $ 20,403                          $ 21,575                                 $               81,268
                                                     === ====== ====================                      === ====== ====================                      === ====== ====================                      === ====== ====================                      ========== ====================
                                                                                                                                                                                                                                                                                     
 
SaaS Revenue (Hosted Services) from Application Development and
Deployment Segment
(Unaudited)
 
(In thousands)                                                      Q1 2016                          Q2 2016                          Q3 2016                          Q4 2016                           FY 2016
                                                                           -------------------------------                     -------------------------------                     -------------------------------                     -------------------------------                     --------------------------------
SaaS Revenue - Application Development and Deployment                        $ 1,071                          $ 1,079                          $ 1,160                          $ 1,163                                 $                4,473
                                                                           --- ----- --------------------                      --- ----- --------------------                      --- ----- --------------------                      --- ----- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                            
(In thousands)                                                                         Q1 2017                                             Q2 2017                                             Q3 2017                                             Q4 2017                                              FY 2017
                                                                           -------------------------------                     -------------------------------                     -------------------------------                     -------------------------------                     --------------------------------
SaaS Revenue - Application Development and Deployment                        $   963                          $   854                          $   799                          $   741                                 $                3,357
                                                                           --- ----- --------------------                      --- ----- --------------------                      --- ----- --------------------                      --- ----- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                                       
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2018 GUIDANCE
(Unaudited)
 
Fiscal Year 2018 Non-GAAP Revenue Guidance
                                                        Fiscal Year Ended                                                                                    Fiscal Year Ending
                                                                   ---------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           November 30, 2017                                                                                                        November 30, 2018
                                                                   ---------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In millions)                                                                                                                          Low                      % Change                     High                      % Change
GAAP revenue                                                           $ 397.6                                             $ 398.3                                           -- %                           $ 403.7                                                    2 %
Acquisition-related adjustments - revenue (1)                              1.0                              0.3                                   (70 )                               0.3                               (70 )
                                                                   --------------------------------                      ------------------------------                      -------------- ----                      ------------------------------                      ---------- ---------
Non-GAAP revenue                                                       $ 398.6                          $ 398.6                        -- %                           $ 404.0                                 1 %
                                                                   ===== ===== ====================                      === ===== ====================                      ============== ====                      === ===== ====================                      ========== =========
                                                                                                                                                                                                                                                                           

(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 2018 Non-GAAP Operating Margin Guidance
                                                                    Fiscal Year Ending November 30, 2018
                                                              ---------------------------------------------------------------------------------------
(In millions)                                                                Low                               High
                                                              ---------------------------------                     ---------------------------------
GAAP income from operations                                       $  76.8                                               $  81.7
GAAP operating margins                                                 19 %                                                  20 %
    Acquisition-related revenue                                       0.3                                                   0.3
    Acquisition-related expense                                       0.2                                                   0.2
    Restructuring expense                                             3.0                                                   2.0
    Stock-based compensation                                         22.0                                                  22.0
    Amortization of intangibles                                      36.4                                                  36.4
    Fees related to shareholder activist                              2.8                                2.8  
                                                              --------------------------------                      --------------------------------
        Total adjustments                                            64.7                               63.7  
                                                              --------------------------------                      --------------------------------
Non-GAAP income from operations                                   $ 141.5                            $ 145.4  
                                                              ===== ===== ====================                      ===== ===== ====================
Non-GAAP operating margin                                              35 %                                                  36 %
 
Fiscal Year 2018 Non-GAAP Earnings per Share and Effective Tax
Rate Guidance
                                                                                              Fiscal Year Ending November 30, 2018
                                                                                    -----------------------------------------------------------------------------------------------
(In millions, except per share data)                                                                 Low                                   High
                                                                                    -------------------------------------                     -------------------------------------
GAAP net income                                                                           $    52.6                                                 $    56.2
    Adjustments (from previous table)                                                          64.7                                                      63.7
    Income tax adjustment (2)                                                                 (11.4 )                                                   (11.0 )
                                                                                    ------------------------------------                      ------------------------------------
Non-GAAP net income                                                                       $   105.9                              $   108.9  
                                                                                    ======= ======= ====================                      ======= ======= ====================
                                                                                                                                               
GAAP diluted earnings per share                                                           $    1.14                                                 $    1.21
Non-GAAP diluted earnings per share                                                       $    2.29                                                 $    2.35
                                                                                                                                               
Diluted weighted average shares outstanding                                                    46.3                                                      46.3
                                                                                                                                               
(2) Tax adjustment is based on a non-GAAP effective tax rate of
approximately 22% for Low and High, calculated as follows:
Non-GAAP income from operations                                                           $   141.5                                                 $   145.4
    Other (expense) income                                                                     (5.7 )                                                    (5.7 )
                                                                                    ------------------------------------                      ------------------------------------
Non-GAAP income from continuing operations before income taxes                                135.8                                  139.7  
                                                                                    ------------------------------------                      ------------------------------------
    Non-GAAP net income                                                                       105.9                                  108.9  
                                                                                    ------------------------------------                      ------------------------------------
Tax provision                                                                             $    29.9                              $    30.8  
                                                                                    ======= ======= ====================                      ======= ======= ====================
Non-GAAP tax rate                                                                                22 %                                                      22 %
                                                                                                                                                               
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR
FISCAL YEAR 2018 GUIDANCE
(Unaudited)
 
Fiscal Year 2018 Adjusted Free Cash Flow Guidance
                                                                 Fiscal Year Ending November 30, 2018
                                                         -------------------------------------------------------------------------------------------
(In millions)                                                            Low                                 High
                                                         -----------------------------------                     -----------------------------------
Cash flows from operations (GAAP)                             $    115                                                $    121
Purchases of property and equipment                                 (7 )                                                    (7 )
Add back: restructuring payments                                     7                                    6  
                                                         ----------------------------------                      ----------------------------------
Adjusted free cash flow (non-GAAP)                            $    115                             $    120  
                                                         ====== ====== ====================                      ====== ====== ====================
                                                                                                                                
 
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1
2018 GUIDANCE
(Unaudited)
 
Q1 2018 Non-GAAP Revenue Guidance
                                                          Three Months                                                                                 Three Months Ending
                                                                                 Ended
                                                                   ------------------------------                        ---------------------------------------------------------------------------------------------------------------------------------------------
                                                                           February 28, 2017                                                                                                  February 28, 2018
                                                                   ---------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------------
(In millions)                                                                                                                          Low                % Change                High                     % Change
GAAP revenue                                                           $  91.0                                             $ 89.9                                             (1 )%                          $ 92.9                                                    2 %
Acquisition-related adjustments - revenue (1)                              0.2                             0.1                         (50 )                              0.1                               (50 )
                                                                   --------------------------------                      -----------------------------                      ---- ----                      -----------------------------                      ---------- ---------
Non-GAAP revenue                                                       $  91.2                          $ 90.0                          (1 )%                          $ 93.0                                 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.

 
Q1 2018 Non-GAAP Earnings per Share Guidance
                                                                          February 28, 2018
                                                            -----------------------------------------------------------------------------------
                                                                          Low                             High
                                                            -------------------------------                     -------------------------------
GAAP diluted earnings per share                                $ 0.15                                              $ 0.19
  Restructuring expense                                          0.04                                                0.02
  Stock-based compensation                                       0.12                                                0.12
  Amortization of intangibles                                    0.20                                                0.20
  Fees related to shareholder activist                           0.03                             0.03  
                                                            ------------------------------                      ------------------------------
    Total adjustments                                            0.39                             0.37  
                                                            ------------------------------                      ------------------------------
  Income tax adjustment                                         (0.08 )                                             (0.08 )
                                                            ------------------------------                      ------------------------------
Non-GAAP diluted earnings per share                            $ 0.46                           $ 0.48  
                                                            ==== ==== ====================                      ==== ==== ====================

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180110006169r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180110006169/en/

SOURCE: Progress Software

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


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