Progress Software Corporation (NASDAQ: PRGS), a global software company that simplifies and enables the development, deployment and management of business applications, today announced strong results for its fiscal second quarter ended May 31, 2013.
As previously announced on June 13, 2013, the company entered into a definitive purchase and sale agreement to divest the Apama product line. The sale is expected to close in July. As a result, the Apama product line results are reported in discontinued operations for all periods presented.
Revenue from continuing operations was $81.7 million compared to $74.1 million, a year over year increase of 12% on a constant currency basis, or an increase of 10% using actual exchange rates.
Additional financial highlights included:
On a GAAP basis in the fiscal second quarter of 2013:
- Income from operations was $14.4 million compared to $12.8 million in the same quarter last year;
- Income from continuing operations was $8.1 million compared to $8.9 million in the same quarter last year;
- Net income was $3.9 million compared to $(1.9) million in the same quarter last year; and
- Diluted earnings per share from continuing operations was $0.15 compared to $0.14 in the same quarter last year.
On a non-GAAP basis in the fiscal second quarter of 2013:
- Income from operations was $23.7 million compared to $25.2 million in the same quarter last year;
- Operating margin was 29% compared to 34% in the same quarter last year;
- Income from continuing operations was $15.0 million compared to $17.3 million in the same quarter last year; and
- Diluted earnings per share from continuing operations was $0.27 compared to $0.27 in the same quarter last year.
Phil Pead, President and Chief Executive Officer of Progress Software, said, “Our focus this year has been on improving the operating performance of the company and building a foundation for future revenue growth. We are pleased that we remain on track to achieve efficiencies previously outlined and that revenue growth is beginning to take hold. The second fiscal quarter results reflect our efforts to energize our customer and partner base through improved product functionality and targeted marketing activities. In addition, we benefited from closing a number of opportunities sooner than expected.”
Pead added, “We are now singularly focused on becoming a leader in the application platform as a service market and while our strong second quarter results demonstrate good progress, our opportunities for continued revenue growth in the future will be driven by increasing the investment in our business."
Other fiscal second quarter 2013 metrics and recent results included:
- Completion in May 2013 of the previously announced and implemented 10b5-1 plan to repurchase $250.0 million of common stock by June 30, 2013;
- Cash, cash equivalents and short-term investments were $255.8 million;
- Cash flows from operations were $13.6 million, a decrease from $15.2 million in the same quarter in fiscal year 2012; and
- DSO from continuing operations was 56 days, compared to 65 days in the fiscal first quarter of 2013.
Earlier this month, Progress launched its new Progress Pacific platform. As part of this, Progress acquired Saratoga, CA-based Rollbase, Inc., a privately held platform-as-a-service vendor which provides innovative technology that enables powerful applications to be built using point-and-click, drag-and-drop tools in a standard browser. Also in June, Progress announced OpenEdge 11.3, the latest version of its flagship application development platform. The new version brings together leading business process management (BPM) and business rules management system (BRMS) capabilities to dramatically streamline business processes and accelerate developer productivity.
In the financial tables at the end of this release, we have provided quarterly Condensed Consolidated Statements of Income adjusted for the classification of the Apama product line to discontinued operations for the three months ended February 29, 2012, August 31, 2012, November 30, 2012 and February 28, 2013, respectively. We have also provided Reconciliations of GAAP to Non-GAAP Financial Measures for the same time periods, also adjusted for the classification of the Apama product line to discontinued operations.
Progress Software provides the following guidance for the fiscal third quarter ending August 31, 2013:
- On a constant currency basis, revenue is expected to be between 2% and 4% growth compared to the fiscal third quarter of 2012; and
- Non-GAAP operating margin is expected to be in the range of 24% to 26%.
The non-GAAP operating margin guidance excludes the items we traditionally exclude from our non-GAAP reporting metrics: amortization of intangible assets of $0.8 million, stock-based compensation of $4.5 million to $5.0 million, and $0.7 million of acquisition related costs, for a GAAP operating margin in the range of 16% to 18%.