Press Release

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

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

Additional financial highlights included:

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

• Revenue was $94.6 million compared to $79.3 million in the same quarter in fiscal year 2014;
• Income from operations was $8.6 million compared to $19.4 million in the same quarter last year;
• Net loss was $4.1 million compared to net income of $11.1 million in the same quarter last year; and
• Diluted loss per share was $0.08 compared to diluted earnings per share of $0.22 in the same quarter last year.

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

• Revenue was $100.7 million compared to $79.3 million in the same quarter last year;
• Income from operations was $31.7 million compared to $29.6 million in the same quarter last year;
• Operating margin was 31% compared to 37% in the same quarter last year;
• Net income was $20.0 million, unchanged from the same quarter last year;
• Diluted earnings per share was $0.39, unchanged from the same quarter last year; and
• Free cash flow was $17.3 million compared to $23.8 million in the same quarter last year.

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

Other fiscal third quarter 2015 metrics and recent results included:

• Cash, cash equivalents and short-term investments were $218.3 million;
• Cash flows from operations were $19.3 million compared to $25.9 million in the same quarter in fiscal year 2014; and
• DSO was 54 days, compared to 50 days in the fiscal second quarter of 2015.

Business Outlook

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

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

• Non-GAAP revenue is expected to be between $410 million and $415 million (previously $415-$425 million);
• Non-GAAP earnings per share is expected to be between $1.51 and $1.55 (previously $1.45-$1.52);
• Non-GAAP operating margin is expected to be approximately 29% (previously 28%);
• Free cash flow is expected to be between $92 million and $95 million (unchanged); and
• Non-GAAP effective tax rate is expected to be approximately 33% (unchanged).

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

• Non-GAAP revenue is expected to be between $113 million and $118 million; and
• Non-GAAP earnings per share is expected to be between $0.47 and $0.51.

Share Repurchase Program

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

Conference Call

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

Legal Notice Regarding Non-GAAP Financial Information

Progress provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company's performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K furnished to the Securities and Exchange Commission in connection with this press release, which is available on the Progress website at www.progress.com within the investor relations section.

Note Regarding Forward-Looking Statements

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

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

(1) Market acceptance of Progress's strategy and product development initiatives; (2) pricing pressures and the competitive environment in the software industry and Platform-as-a-Service market; (3) Progress's ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and subscription strategy; (4) uncertainties relating to Progress' acquisition of Telerik, including whether Progress will be able to realize expected benefits and anticipated synergies of the acquisition and whether Telerik's business will be successfully integrated with Progress Software's business; (5) Progress's ability to make acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (6) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (7) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (8) Progress's ability to expand its relationships with channel partners; (9) the timely release of enhancements to Progress's products and customer acceptance of new products; (10) the positioning of Progress's products in its existing and new markets; (11) variations in the demand for professional services and technical support; (12) Progress's ability to penetrate international markets and manage its international operations; and (13) changes in exchange rates. For further information regarding risks and uncertainties associated with Progress's business, please refer to Progress's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2014. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Progress Software Corporation

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

Progress is a trademark or registered trademarks of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

					Three Months Ended												Nine Months Ended
(In thousands, except per share data)					August 31, 2015				August 31, 2014				% Change				August 31, 2015				August 31, 2014				% Change
Revenue:
Software licenses					$	31,840			$	26,393			21	%			$	85,794			$	76,645			12	%
Maintenance and services					62,797				52,881				19	%			179,042				157,994				13	%
Total revenue					94,637				79,274				19	%			264,836				234,639				13	%
Costs of revenue:
Cost of software licenses					1,441				1,805				(20	)%			4,526				4,951				(9	)%
Cost of maintenance and services					9,612				5,222				84	%			31,174				16,276				92	%
Amortization of acquired intangibles					4,079				834				389	%			12,805				1,893				576	%
Total costs of revenue					15,132				7,861				92	%			48,505				23,120				110	%
Gross profit					79,505				71,413				11	%			216,331				211,519				2	%
Operating expenses:
Sales and marketing					30,004				22,477				33	%			92,607				71,425				30	%
Product development					20,422				14,975				36	%			65,533				45,568				44	%
General and administrative					14,076				12,162				16	%			42,065				35,236				19	%
Amortization of acquired intangibles					3,186				116				2,647	%			9,559				428				2,133	%
Restructuring expenses					2,561				1,680				52	%			8,715				2,001				336	%
Acquisition-related expenses					662				572				16	%			3,180				3,148				1	%
Total operating expenses					70,911				51,982				36	%			221,659				157,806				40	%
Income (loss) from operations					8,594				19,431				(56	)%			(5,328		)		53,713				(110	)%
Other (expense) income, net					(1,165		)		(2,457		)		(53	)%			(1,258		)		(2,581		)		(51	)%
Income (loss) before income taxes					7,429				16,974				(56	)%			(6,586		)		51,132				(113	)%
Provision (benefit) for income taxes					11,555				5,879				97	%			(7,256		)		16,138				(145	)%
Net (loss) income					(4,126		)		11,095				(137	)%			670				34,994				(98	)%
Earnings per share:
Basic					$	(0.08	)		$	0.22			(136	)%			$	0.01			$	0.69			(99	)%
Diluted					$	(0.08	)		$	0.22			(136	)%			$	0.01			$	0.68			(99	)%
Weighted average shares outstanding:
Basic					50,120				50,383				(1	)%			50,377				50,975				(1	)%
Diluted					50,120				50,931				(2	)%			51,117				51,590				(1	)%

CONDENSED CONSOLIDATED BALANCE SHEETS

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

RESULTS OF OPERATIONS BY SEGMENT

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

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

SUPPLEMENTAL INFORMATION

Revenue by Type
(In thousands)					Q3 2014					Q4 2014					Q1 2015					Q2 2015					Q3 2015
License					$	26,393				$	41,154				$	25,231				$	28,722				$	31,840
Maintenance					50,746					51,268					49,239					52,656					55,365
Services					2,135					5,472					6,911					7,439					7,432
Total revenue					$	79,274				$	97,894				$	81,381				$	88,817				$	94,637
Revenue by Region
(In thousands)					Q3 2014					Q4 2014					Q1 2015					Q2 2015					Q3 2015
North America					$	35,654				$	43,654				$	42,125				$	47,520				$	49,810
EMEA					32,995					35,327					27,863					31,146					30,656
Latin America					5,695					8,406					4,967					4,388					4,621
Asia Pacific					4,930					10,507					6,426					5,763					9,550
Total revenue					$	79,274				$	97,894				$	81,381				$	88,817				$	94,637
Revenue by Segment
(In thousands)					Q3 2014					Q4 2014					Q1 2015					Q2 2015					Q3 2015
OpenEdge					$	71,847				$	84,948				$	69,471				$	71,906				$	73,398
Data Connectivity and Integration					7,175					12,551					7,113					7,275					8,281
Application Development and Deployment					252					395					4,797					9,636					12,958
Total revenue					$	79,274				$	97,894				$	81,381				$	88,817				$	94,637

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

					Three Months Ended August 31,																										% Change
					2015													2014
(In thousands, except per share data)					GAAP				Adj.				Non-GAAP					GAAP				Adj.				Non-GAAP					Non-GAAP
TOTAL REVENUE					$	94,637			$	6,086			$	100,723				$	79,274			$	—			$	79,274				27	%
Software licenses (1)					31,840				1,418				33,258					26,393				—				26,393					26	%
Maintenance and services (1)					62,797				4,668				67,465					52,881				—				52,881					28	%
TOTAL COSTS OF REVENUE					$	15,132			$	(4,223	)		$	10,909				$	7,861			$	(975	)		$	6,886				58	%
Amortization of acquired intangibles					4,079				(4,079		)		—					834				(834		)		—
Stock-based compensation (2)					144				(144		)		—					141				(141		)		—
GROSS MARGIN %					84		%						89		%			90		%						91		%			(2	)%
TOTAL OPERATING EXPENSES					$	70,911			$	(12,803	)		$	58,108				$	51,982			$	(9,167	)		$	42,815				36	%
Amortization of acquired intangibles					3,186				(3,186		)		—					116				(116		)		—
Restructuring expenses					2,561				(2,561		)		—					1,680				(1,680		)		—
Acquisition-related expenses					662				(662		)		—					572				(572		)		—
Stock-based compensation (2)					6,394				(6,394		)		—					6,799				(6,799		)		—
INCOME FROM OPERATIONS					$	8,594			$	23,112			$	31,706				$	19,431			$	10,142			$	29,573				7	%
OPERATING MARGIN					9		%						31		%			25		%						37		%			(7	)%
TOTAL OTHER (EXPENSE) INCOME, NET					$	(1,165	)		$	—			$	(1,165	)			$	(2,457	)		$	2,554			$	97				1,301	%
PROVISION FOR INCOME TAXES					$	11,555			$	(1,034	)		$	10,521				$	5,879			$	3,748			$	9,627				9	%
NET (LOSS) INCOME					$	(4,126	)		$	24,146			$	20,020				$	11,095			$	8,948			$	20,043				—	%
DILUTED EARNINGS PER SHARE					$	(0.08	)		$	0.47			$	0.39				$	0.22			$	0.17			$	0.39				—	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED					50,120				784				50,904					50,931				—				50,931					—	%
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:
Cost of revenue					144													141
Sales and marketing					1,604													1,546
Product development					912													1,407
General and administrative					3,878													3,846
Total					$	6,538												$	6,940

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

					Nine Months Ended August 31,																										% Change
					2015													2014
(In thousands, except per share data)					GAAP				Adj.				Non-GAAP					GAAP				Adj.				Non-GAAP					Non-GAAP
TOTAL REVENUE					$	264,836			$	32,193			$	297,029				$	234,639			$	—			$	234,639				27	%
Software licenses (1)					85,794				8,181				93,975					76,645				—				76,645					23	%
Maintenance and services (1)					179,042				24,012				203,054					157,994				—				157,994					29	%
TOTAL COSTS OF REVENUE					$	48,505			$	(13,267	)		$	35,238				$	23,120			$	(2,332	)		$	20,788				70	%
Amortization of acquired intangibles					12,805				(12,805		)		—					1,893				(1,893		)		—
Stock-based compensation (2)					462				(462		)		—					439				(439		)		—
GROSS MARGIN %					82		%						88		%			90		%						91		%			(3	)%
TOTAL OPERATING EXPENSES					$	221,659			$	(39,804	)		$	181,855				$	157,806			$	(23,332	)		$	134,474				35	%
Amortization of acquired intangibles					9,559				(9,559		)		—					428				(428		)		—
Restructuring expenses					8,715				(8,715		)		—					2,001				(2,001		)		—
Acquisition-related expenses					3,180				(3,180		)		—					3,148				(3,148		)		—
Stock-based compensation (2)					18,350				(18,350		)		—					17,755				(17,755		)		—
(LOSS) INCOME FROM OPERATIONS					$	(5,328	)		$	85,264			$	79,936				$	53,713			$	25,664			$	79,377				1	%
OPERATING MARGIN					(2		)%						27		%			23		%						34		%			(7	)%
TOTAL OTHER (EXPENSE) INCOME, NET (3)					$	(1,258	)		$	266			$	(992	)			$	(2,581	)		$	2,554			$	(27	)			(3,574	)%
(BENEFIT) PROVISION FOR INCOME TAXES					$	(7,256	)		$	32,916			$	25,660				$	16,138			$	9,387			$	25,525				1	%
NET INCOME					$	670			$	52,614			$	53,284				$	34,994			$	18,831			$	53,825				(1	)%
DILUTED EARNINGS PER SHARE					$	0.01			$	1.03			$	1.04				$	0.68			$	0.36			$	1.04				—	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED					51,117				—				51,117					51,590				—				51,590					(1	)%
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
(2) Stock-based compensation is included in the GAAP statements of income, as follows:
Cost of revenue					462													439
Sales and marketing					4,328													3,736
Product development					3,476													4,186
General and administrative					10,546													9,833
Total					$	18,812												$	18,194
(3) Adjustment to other income (expense), net relates to the termination of Progress' prior revolving credit facility with JPMorgan Chase Bank, N.A. and the other lenders party to the credit facility in connection with entering into the new credit facility, which was used to partially fund the acquisition of Telerik. Upon termination, the outstanding debt issuance costs related to the prior revolving credit facility were written off to other income (expense) in the GAAP statements of income.

OTHER NON-GAAP FINANCIAL MEASURES - QTD

Revenue by Type
(In thousands)					Q3 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
License					$	31,840				$	1,418				$	33,258
Maintenance					55,365					4,668					60,033
Services					7,432					—					7,432
Total revenue					$	94,637				$	6,086				$	100,723
Revenue by Region
(In thousands)					Q3 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
North America					$	49,810				$	5,775				$	55,585
EMEA					30,656					246					30,902
Latin America					4,621					8					4,629
Asia Pacific					9,550					57					9,607
Total revenue					$	94,637				$	6,086				$	100,723
Revenue by Segment
(In thousands)					Q3 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
OpenEdge					$	73,398				$	—				$	73,398
Data Connectivity and Integration					$	8,281				$	—				$	8,281
Application Development and Deployment					$	12,958				$	6,086				$	19,044
Total revenue					$	94,637				$	6,086				$	100,723
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
Free Cash Flow
(In thousands)					Q3 2015					Q3 2014					% Change
Cash flows from operations					$	19,257				$	25,928				(26		)%
Purchases of property and equipment					$	(1,673	)			$	(1,084	)			(54		)%
Capitalized software development costs					$	(279	)			$	(1,070	)			74		%
Free cash flow					$	17,305				$	23,774				(27		)%

OTHER NON-GAAP FINANCIAL MEASURES - YTD

Revenue by Type
(In thousands)					YTD 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
License					$	85,794				$	8,181				$	93,975
Maintenance					157,259					24,012					181,271
Services					21,783					—					21,783
Total revenue					$	264,836				$	32,193				$	297,029
Revenue by Region
(In thousands)					YTD 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
North America					$	139,454				$	27,795				$	167,249
EMEA					89,667					3,275					92,942
Latin America					13,977					195					14,172
Asia Pacific					21,738					928					22,666
Total revenue					$	264,836				$	32,193				$	297,029
Revenue by Segment
(In thousands)					YTD 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
OpenEdge					$	214,775				$	—				$	214,775
Data Connectivity and Integration					$	22,669				$	—				$	22,669
Application Development and Deployment					$	27,392				$	32,193				$	59,585
Total revenue					$	264,836				$	32,193				$	297,029
(1) Adjustments to revenue relate to acquisition-related revenue, which constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Note that acquisition-related revenue adjustments entirely relate to Progress' Application Development and Deployment business unit.
Free Cash Flow
(In thousands)					YTD 2015					YTD Q3 2014					% Change
Cash flows from operations					$	77,188				$	68,469				13		%
Purchases of property and equipment					$	(6,079	)			$	(7,183	)			15		%
Capitalized software development costs					$	(1,661	)			$	(3,008	)			45		%
Free cash flow					$	69,448				$	58,278				19		%

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

Fiscal Year 2015 Revenue Growth Guidance
					Fiscal Year Ended					Fiscal Year Ending
					November 30, 2014					November 30, 2015
(In millions)										Low				% Change			High				% Change
GAAP revenue					$	332.5				$	375.0			13	%		$	380.0			14	%
Acquisition-related adjustments - revenue (1)					$	—				$	35.0			100	%		$	35.0			100	%
Non-GAAP revenue					$	332.5				$	410.0			23	%		$	415.0			25	%
(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

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

Fiscal Year 2015 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
					Fiscal Year Ending November 30, 2015
(In millions, except per share data)					Low					High
GAAP net income					$	6.4				$	7.9
Adjustments (from previous table)					105.7					105.7
Income tax adjustment (2)					(34.7		)			(34.0		)
Non-GAAP net income					$	77.4				$	79.6
GAAP diluted earnings per share					$	0.13				$	0.15
Non-GAAP diluted earnings per share					$	1.51				$	1.55
Diluted weighted average shares outstanding					51.4					51.4
(2) Tax adjustment is based on a non-GAAP effective tax rate of 33% for both Low and High, calculated as follows:
Non-GAAP income from operations					$	118.1				$	120.4
Other income (expense)					(2.2		)			(2.2		)
Non-GAAP income from continuing operations before income taxes					115.9					118.2
Non-GAAP net income					77.4					79.6
Tax provision					$	38.5				$	38.6
Non-GAAP tax rate					33		%			33		%

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

Q4 2015 Revenue Growth Guidance
					Three Months Ended				Three Months Ending
					November 30, 2014				November 30, 2015
(In millions)									Low				% Change			High				% Change
GAAP revenue					$	97.9			$	110.0			12	%		$	115.0			17	%
Acquisition-related adjustments - revenue (1)					$	—			$	3.0			100	%		$	3.0			100	%
Non-GAAP revenue					$	97.9			$	113.0			15	%		$	118.0			21	%
(1) Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue by Telerik that would otherwise have been recognized but for the purchase accounting treatment of the acquisition of Telerik. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities.

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

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

Source: Progress Software

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