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 fourth quarter and fiscal year ended November 30, 2015.

Revenue in the quarter was $112.7 million compared to $97.9 million in the same quarter last year, a year over year increase of 15% on an actual currency basis and 21% on a constant currency basis. On a non-GAAP basis, revenue was $115.4 million compared to $97.9 million in the same quarter last year, an increase of 18% on an actual currency basis and 24% on a constant currency basis.

Additional financial highlights included:

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

• Revenue was $112.7 million compared to $97.9 million in the same quarter in fiscal year 2014;
• Income from operations was $20.1 million compared to $27.0 million in the same quarter last year;
• Net loss was $9.5 million compared to net income of $14.5 million in the same quarter last year;
• Diluted loss per share was $0.19 compared to diluted earnings per share of $0.28 in the same quarter last year; and
• Cash from operations was $27.6 million compared to $39.2 million in the same quarter in fiscal year 2014.

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

• Revenue was $115.4 million compared to $97.9 million in the same quarter last year;
• Income from operations was $40.5 million compared to $38.0 million in the same quarter last year;
• Operating margin was 35% compared to 39% in the same quarter last year;
• Net income was $27.3 million compared to $24.1 million in the same quarter last year;
• Diluted earnings per share was $0.53 compared to $0.47 in the same quarter last year; and
• Adjusted free cash flow was $28.7 million compared to $38.3 million in the same quarter last year.

"In FY2015 we achieved revenue growth in every business segment," said Phil Pead, President and CEO of Progress. "In the fourth quarter, we achieved record bookings for our Telerik products, positioning us well for FY2016, and both OpenEdge and our data business showed solid growth."

Other fiscal fourth quarter 2015 metrics and recent results included:

• Cash, cash equivalents and short-term investments were $241.3 million; and
• DSO from continuing operations was 52 days, compared to 54 days in the fiscal third quarter of 2015 and 63 days in the fiscal fourth quarter of 2014.

Full Year Results

On a GAAP basis in the fiscal year 2015:

• Revenue was $377.6 million compared to $332.5 million in fiscal year 2014;
• Income from operations was $14.8 million compared to $80.7 million in the prior fiscal year;
• Net loss was $8.8 million compared to net income of $49.5 million in the prior fiscal year;
• Diluted loss per share was $0.17 compared to diluted earnings per share of $0.96 in the prior fiscal year; and
• Cash from operations was $104.5 million compared to $107.7 million in the prior fiscal year.

On a non-GAAP basis in the fiscal year 2015:

• Revenue was $412.4 million compared to $332.5 million in fiscal year 2014;
• Income from operations was $120.4 million compared to $117.4 million in fiscal year 2014;
• Operating margin was 29% compared to 35% in the prior fiscal year;
• Net income was $80.6 million compared to $77.9 million in the prior fiscal year;
• Diluted earnings per share was $1.58 compared to $1.51 in the prior fiscal year; and
• Adjusted free cash flow was $102.0 million compared to $99.0 million in the prior fiscal year.

2016 Business Outlook

Progress's fiscal 2016 financial guidance is based on current exchange rates. The negative currency translation impact on Progress's fiscal year 2016 business outlook compared to 2015 exchange rates is approximately $7.0 million on non-GAAP revenue and $0.02 to $0.03 on non-GAAP earnings per share. The negative currency translation impact on Progress's fiscal Q1 2016 business outlook compared to 2015 exchange rates is approximately $3.0 million to $4.0 million on non-GAAP revenue and $0.01 to $0.02 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 Software provides the following guidance for the fiscal year ending November 30, 2016:

• Non-GAAP revenue is expected to be between $427 million and $433 million;
• Non-GAAP earnings per share is expected to be between $1.59 and $1.65;
• Non-GAAP operating margin is expected to be between 29% and 30%;
• Adjusted free cash flow is expected to be between $97 million and $102 million; and
• Non-GAAP effective tax rate is expected to be approximately 33%.

Progress Software provides the following guidance for the first fiscal quarter ending February 29, 2016:

• Non-GAAP revenue is expected to be between $92 million and $94 million; and
• Non-GAAP earnings per share is expected to be between $0.27 and $0.29.

Conference Call

The Progress quarterly investor conference call to review its fiscal fourth quarter of 2015 will be broadcast live at 5:00 p.m. ET on Tuesday, January 12, 2016 and can be accessed on the investor relations section of the company's website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-877-719-9799, pass code 242101. 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 and is available on the Progress website at www.progress.com within the investor relations section. 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 also available on the Progress website 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) Economic, geopolitical and market conditions, including the continued slow economic recovery in Europe, parts of the U.S. 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 may make acquisitions in the future and those acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. For further information regarding risks and uncertainties associated with Progress'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 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 28, 2015, May 31, 2015 and August 31, 2015. 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 Software 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																Fiscal Year Ended
(In thousands, except per share data)					November 30, 2015					November 30, 2014					% Change						November 30, 2015					November 30, 2014					% Change
Revenue:
Software licenses					$	44,457				$	41,154				8	%					$	130,250				$	117,801				11	%
Maintenance and services					68,261					56,740					20	%					247,304					214,732					15	%
Total revenue					112,718					97,894					15	%					377,554					332,533					14	%
Costs of revenue:
Cost of software licenses					1,453					1,445					1	%					5,979					6,396					(7	)%
Cost of maintenance and services					9,758					8,574					14	%					40,933					24,864					65	%
Amortization of acquired intangibles					4,025					1,106					264	%					16,830					2,999					461	%
Total costs of revenue					15,236					11,125					37	%					63,742					34,259					86	%
Gross profit					97,482					86,769					12	%					313,812					298,274					5	%
Operating expenses:
Sales and marketing					32,259					30,085					7	%					124,867					101,496					23	%
Product development					21,391					13,397					60	%					86,924					58,965					47	%
General and administrative					15,229					13,056					17	%					57,294					48,292					19	%
Amortization of acquired intangibles					3,186					225					1,316	%					12,745					653					1,852	%
Restructuring expenses					4,274					265					1,513	%					12,989					2,266					473	%
Acquisition-related expenses					1,059					2,714					(61	)%					4,239					5,862					(28	)%
Total operating expenses					77,398					59,742					30	%					299,058					217,534					37	%
Income from operations					20,084					27,027					(26	)%					14,754					80,740					(82	)%
Other (expense) income, net					(1,142		)			(357		)			(220	)%					(2,400		)			(2,936		)			(18	)%
Income before income taxes					18,942					26,670					(29	)%					12,354					77,804					(84	)%
Provision for income taxes					28,412					12,207					133	%					21,155					28,346					(25	)%
Net (loss) income					$	(9,470	)			$	14,463				(165	)%					$	(8,801	)			$	49,458				(118	)%
Earnings per share:
Basic					$	(0.19	)			$	0.29				(166	)%					$	(0.17	)			$	0.97				(118	)%
Diluted					$	(0.19	)			$	0.28				(168	)%					$	(0.17	)			$	0.96				(118	)%
Weighted average shares outstanding:
Basic					50,435					50,432					—	%					50,391					50,840					(1	)%
Diluted					50,435					51,121					(1	)%					50,391					51,466					(2	)%

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)					November 30, 2015					November 30, 2014
Assets
Current assets:
Cash, cash equivalents and short-term investments					$	241,279				$		283,268
Accounts receivable, net					66,459					68,311
Other current assets					15,671					24,028
Total current assets					323,409					375,607
Property and equipment, net					54,226					59,351
Goodwill and intangible assets, net					484,098					253,414
Other assets					15,390					14,384
Total assets					$	877,123				$		702,756
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other current liabilities					$	65,314				$		60,746
Current portion of long-term debt					9,375					—
Short-term deferred revenue					125,227					92,557
Total current liabilities					199,916					153,303
Long-term deferred revenue					8,844					3,683
Long-term debt					135,000					—
Other long-term liabilities					10,899					2,525
Shareholders' equity:
Common stock and additional paid-in capital					227,930					209,778
Retained earnings					294,534					333,467
Total shareholders' equity					522,464					543,245
Total liabilities and shareholders' equity					$	877,123				$		702,756

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
					Three Months Ended												Fiscal Year Ended
(In thousands)					November 30, 2015					November 30, 2014							November 30, 2015					November 30, 2014
Cash flows from operating activities:
Net income					$	(9,470	)			$	14,464						$	(8,801	)			$	49,458
Depreciation and amortization					10,069					4,311							41,680					15,296
Stock-based compensation					5,192					6,679							24,004					24,873
Net gains on sales of dispositions					—					—							—					—
Other non-cash adjustments					21,776					15,131							2,000					17,363
Changes in operating assets and liabilities					(10		)			(1,360		)					45,657					704
Net cash flows from operating activities					27,557					39,225							104,540					107,694
Capital expenditures					(1,126		)			(1,610		)					(8,845		)			(11,801		)
Proceeds from the issuance of debt, net of payments of principle and debt issuance costs					—					—							142,588					—
Issuances of common stock, net of repurchases					2,610					5,774							(19,799		)			(36,116		)
Payments for acquisitions, net of cash acquired					—					(12,000		)					(246,275		)			(24,493		)
Proceeds from divestitures, net					—					—							4,500					3,300
Other					(6,066		)			(9,413		)					(18,698		)			13,244
Net change in cash, cash equivalents and short-term investments					22,975					21,976							(41,989		)			51,828
Cash, cash equivalents and short-term investments, beginning of period					218,304					261,292							283,268					231,440
Cash, cash equivalents and short-term investments, end of period					$	241,279				$	283,268						$	241,279				$	283,268

RESULTS OF OPERATIONS BY SEGMENT
					Three Months Ended																Fiscal Year Ended
(In thousands)					November 30, 2015					November 30, 2014					% Change						November 30, 2015					November 30, 2014					% Change
Segment revenue:
OpenEdge					$	81,159				$	84,948				(4	)%					$	295,934				$	296,721				—	%
Data Connectivity and Integration					15,257					12,551					22	%					37,926					34,772					9	%
Application Development and Deployment					16,302					395					4,027	%					43,694					1,040					4,101	%
Total revenue					112,718					97,894					15	%					377,554					332,533					14	%
Segment costs of revenue and operating expenses:
OpenEdge					20,556					22,041					(7	)%					77,085					70,811					9	%
Data Connectivity and Integration					4,256					4,395					(3	)%					13,819					12,308					12	%
Application Development and Deployment					9,217					3,592					157	%					39,386					9,354					321	%
Total costs of revenue and operating expenses					34,029					30,028					13	%					130,290					92,473					41	%
Segment contribution:
OpenEdge					60,603					62,907					(4	)%					218,849					225,910					(3	)%
Data Connectivity and Integration					11,001					8,156					35	%					24,107					22,464					7	%
Application Development and Deployment					7,085					(3,197		)			322	%					4,308					(8,314		)			152	%
Total contribution					78,689					67,866					16	%					247,264					240,060					3	%
Other unallocated expenses (1)					58,605					40,839					44	%					232,510					159,320					46	%
Income (loss) from operations					20,084					27,027					(26	)%					14,754					80,740					(82	)%
Other (expense) income, net					(1,142		)			(357		)			220	%					(2,400		)			(2,936		)			(18	)%
Income (loss) before provision for income taxes					18,942					26,670					(29	)%					12,354					77,804					(84	)%

(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)					Q4 2014					Q1 2015					Q2 2015					Q3 2015					Q4 2015					FY 2015					FY 2014
License					$	41,154				$	25,231				$	28,722				$	31,840				$	44,457				$	130,250				$	117,801
Maintenance					51,268					49,239					52,656					55,365					60,458					217,718					202,496
Professional services					5,472					6,911					7,439					7,432					7,803					29,585					12,236
Total revenue					$	97,894				$	81,381				$	88,817				$	94,637				$	112,718				$	377,553				$	332,533
Revenue by Region
(In thousands)					Q4 2014					Q1 2015					Q2 2015					Q3 2015					Q4 2015					FY 2015					FY 2014
North America					$	43,654				$	42,125				$	47,520				$	49,810				$	68,112				$	207,567				$	150,716
EMEA					35,327					27,863					31,146					30,656					34,504					124,169					131,335
Latin America					8,406					4,967					4,388					4,621					3,617					17,593					24,917
Asia Pacific					10,507					6,426					5,763					9,550					6,485					28,224					25,565
Total revenue					$	97,894				$	81,381				$	88,817				$	94,637				$	112,718				$	377,553				$	332,533
Revenue by Segment
(In thousands)					Q4 2014					Q1 2015					Q2 2015					Q3 2015					Q4 2015					FY 2015					FY 2014
OpenEdge					$	84,948				$	69,471				$	71,906				$	73,398				$	81,159				$	295,934				$	296,721
Data Connectivity and Integration					12,551					7,113					7,275					8,281					15,257					37,926					34,772
Application Development and Deployment					395					4,797					9,636					12,958					16,302					43,693					1,040
Total revenue					$	97,894				$	81,381				$	88,817				$	94,637				$	112,718				$	377,553				$	332,533

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FOURTH QUARTER
					Three Months Ended November 30,																																		% Change
					2015																	2014
(In thousands, except per share data)					GAAP					Adj.					Non-GAAP							GAAP					Adj.					Non-GAAP							Non-GAAP
TOTAL REVENUE					$	112,718				$	2,660				$	115,378						$	97,894				$	—				$	97,894						18	%
Software licenses (1)					44,457					571					45,028							41,154					—					41,154							9	%
Maintenance and services (1)					68,261					2,089					70,350							56,740					—					56,740							24	%
TOTAL COSTS OF REVENUE					$	15,236				$	(4,180	)			$	11,056						$	11,125				$	(1,279	)			$	9,846						12	%
Amortization of acquired intangibles					4,025					(4,025		)			—							1,106					(1,106		)			—
Stock-based compensation (2)					155					(155		)			—							173					(173		)			—
GROSS MARGIN %					86		%								90		%					89		%								90		%					—	%
TOTAL OPERATING EXPENSES					$	77,398				$	(13,556	)			$	63,842						$	59,742				$	(9,710	)			$	50,032						28	%
Amortization of acquired intangibles					3,186					(3,186		)			—							225					(225		)			—
Restructuring expenses					4,274					(4,274		)			—							265					(265		)			—
Acquisition-related expenses					1,059					(1,059		)			—							2,714					(2,714		)			—
Stock-based compensation (2)					5,037					(5,037		)			—							6,506					(6,506		)			—
INCOME FROM OPERATIONS					$	20,084				$	20,396				$	40,480						$	27,027				$	10,989				$	38,016						6	%
OPERATING MARGIN					18		%								35		%					28		%								39		%					(4	)%
TOTAL OTHER (EXPENSE) INCOME, NET					$	(1,142	)			$	—				$	(1,142	)					$	(357	)			$	—				$	(357	)					(220	)%
PROVISION FOR INCOME TAXES					$	28,412				$	(16,342	)			$	12,070						$	12,207				$	1,383				$	13,590						(11	)%
NET (LOSS) INCOME					$	(9,470	)			$	36,738				$	27,268						$	14,463				$	9,606				$	24,069						13	%
DILUTED EARNINGS PER SHARE					$	(0.19	)			$	0.72				$	0.53						$	0.28				$	0.19				$	0.47						13	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED					50,435					691					51,126							51,121					—					51,121							—	%
(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					155																	173
Sales and marketing					477																	907
Product development					1,957																	1,103
General and administrative					2,603																	4,496
Total					$	5,192																$	6,679

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES - FISCAL YEAR
					Fiscal Year Ended November 30,																																		% Change
					2015																	2014
(In thousands, except per share data)					GAAP					Adj.					Non-GAAP							GAAP					Adj.					Non-GAAP							Non-GAAP
TOTAL REVENUE					$	377,554				$	34,852				$	412,406						$	332,533				$	—				$	332,533						24	%
Software licenses (1)					130,250					8,751					139,001							117,801					—					117,801							18	%
Maintenance and services (1)					247,304					26,101					273,405							214,732					—					214,732							27	%
TOTAL COSTS OF REVENUE					$	63,742				$	(17,447	)			$	46,295						$	34,259				$	(3,611	)			$	30,648						51	%
Amortization of acquired intangibles					16,830					(16,830		)			—							2,999					(2,999		)			—
Stock-based compensation (2)					617					(617		)			—							612					(612		)			—
GROSS MARGIN %					83		%								89		%					90		%								91		%					(2	)%
TOTAL OPERATING EXPENSES					$	299,058				$	(53,360	)			$	245,698						$	217,534				$	(33,042	)			$	184,492						33	%
Amortization of acquired intangibles					12,745					(12,745		)			—							653					(653		)			—
Restructuring expenses					12,989					(12,989		)			—							2,266					(2,266		)			—
Acquisition-related expenses					4,239					(4,239		)			—							5,862					(5,862		)			—
Stock-based compensation (2)					23,387					(23,387		)			—							24,261					(24,261		)			—
(LOSS) INCOME FROM OPERATIONS					$	14,754				$	105,659				$	120,413						$	80,740				$	36,653				$	117,393						3	%
OPERATING MARGIN					4		%								29		%					24		%								35		%					(6	)%
TOTAL OTHER (EXPENSE) INCOME, NET (3)					$	(2,400	)			$	266				$	(2,134	)					$	(2,936	)			$	2,554				$	(382	)					(459	)%
(BENEFIT) PROVISION FOR INCOME TAXES					$	21,155				$	16,574				$	37,729						$	28,346				$	10,768				$	39,114						(4	)%
NET INCOME					$	(8,801	)			$	89,351				$	80,550						$	49,458				$	28,439				$	77,897						3	%
DILUTED EARNINGS PER SHARE					$	(0.17	)			$	1.75				$	1.58						$	0.96				$	0.55				$	1.51						5	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED					50,391					729					51,120							51,466					—					51,466							(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					617																	612
Sales and marketing					4,805																	4,642
Product development					5,433																	5,289
General and administrative					13,149																	14,330
Total					$	24,004																$	24,873
(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 - FOURTH QUARTER
Revenue by Type
(In thousands)					Q4 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
License					$	44,457				$	571				$	45,028
Maintenance					60,458					2,089					62,547
Services					7,803					—					7,803
Total revenue					$	112,718				$	2,660				$	115,378
Revenue by Region
(In thousands)					Q4 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
North America					$	68,112				$	2,506				$	70,618
EMEA					34,504					126					34,630
Latin America					3,617					4					3,621
Asia Pacific					6,485					24					6,509
Total revenue					$	112,718				$	2,660				$	115,378
Revenue by Segment
(In thousands)					Q4 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
OpenEdge					$	81,159				$	—				$	81,159
Data Connectivity and Integration					$	15,257				$	—				$	15,257
Application Development and Deployment					$	16,302				$	2,660				$	18,962
Total revenue					$	112,718				$	2,660				$	115,378
(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.
Adjusted Free Cash Flow
(In thousands)					Q4 2015					Q4 2014					% Change
Cash flows from operations					$	27,557				$	39,225				(30		)%
Purchases of property and equipment					$	(1,126	)			$	(802	)			(40		)%
Capitalized software development costs					$	—				$	(808	)			100		%
Free cash flow					$	26,431				$	37,615				(30		)%
Add back: restructuring payments					$	2,246				$	714				215		%
Adjusted free cash flow					$	28,677				$	38,329				(25		)%

OTHER NON-GAAP FINANCIAL MEASURES - FISCAL YEAR
Revenue by Type
(In thousands)					FY 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
License					$	130,250				$	8,751				$	139,001
Maintenance					217,718					26,101					243,819
Services					29,586					—					29,586
Total revenue					$	377,554				$	34,852				$	412,406
Revenue by Region
(In thousands)					FY 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
North America					$	207,566				$	30,301				$	237,867
EMEA					124,171					3,400					127,571
Latin America					17,594					199					17,793
Asia Pacific					28,223					952					29,175
Total revenue					$	377,554				$	34,852				$	412,406
Revenue by Segment
(In thousands)					FY 2015					Non-GAAP Adjustment (1)					Non-GAAP Revenue
OpenEdge					$	295,935				$	—				$	295,935
Data Connectivity and Integration					$	37,926				$	—				$	37,926
Application Development and Deployment					$	43,693				$	34,852				$	78,545
Total revenue					$	377,554				$	34,852				$	412,406
(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.
Adjusted Free Cash Flow
(In thousands)					FY 2015					FY 2014					% Change
Cash flows from operations					$	104,540				$	107,694				(3		)%
Purchases of property and equipment					$	(7,184	)			$	(7,985	)			10		%
Capitalized software development costs					$	(1,661	)			$	(3,816	)			56		%
Free cash flow					$	95,695				$	95,893				—		%
Add back: restructuring payments					$	6,343				$	3,122				103		%
Adjusted free cash flow					$	102,038				$	99,015				3		%

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR FISCAL YEAR 2016 GUIDANCE (Unaudited)
Fiscal Year 2016 Revenue Growth Guidance
	Fiscal Year Ended				Fiscal Year Ending
	November 30, 2015				November 30, 2016
(In millions)					Low				% Change			High				% Change
GAAP revenue	$	377.6			$	425.0			13	%		$	431.0			14	%
Acquisition-related adjustments - revenue (1)	$	34.8			$	2.0			(94	)%		$	2.0			(94	)%
Non-GAAP revenue	$	412.4			$	427.0			4	%		$	433.0			5	%

(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 2016 Non-GAAP Operating Margin Guidance
					Fiscal Year Ending November 30, 2016
(In millions)					Low					High
GAAP income from operations					$	67.2				$	71.5
GAAP operating margins					16		%			17		%
Acquisition-related revenue					2.0					2.0
Stock-based compensation					27.0					27.0
Amortization of intangibles					28.5					28.5
Total adjustments					57.5					57.5
Non-GAAP income from operations					$	124.7				$	129.0
Non-GAAP operating margin					29		%			30		%

Fiscal Year 2016 Non-GAAP Earnings per Share and Effective Tax Rate Guidance
					Fiscal Year Ending November 30, 2016
(In millions, except per share data)					Low					High
GAAP net income					$	34.8				$	37.3
Adjustments (from above)					57.5					57.5
Income tax adjustment (2)					(10.1		)			(10.0		)
Non-GAAP net income					$	82.2				$	84.8
GAAP diluted earnings per share					$	0.67				$	0.72
Non-GAAP diluted earnings per share					$	1.59				$	1.65
Diluted weighted average shares outstanding					51.8					51.5
(2) Tax adjustment is based on a non-GAAP effective tax rate of approximately 33% for Low and High, calculated as follows:
Non-GAAP income from operations					$	124.7				$	129.0
Other (expense) income					(2.8		)			(2.5		)
Non-GAAP income from continuing operations before income taxes					121.9					126.5
Non-GAAP net income					82.2					84.8
Tax provision					39.7					41.7
Non-GAAP tax rate					33		%			33		%

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR Q1 2016 GUIDANCE (Unaudited)
Q1 2016 Revenue Growth Guidance
					Three Months Ended							Three Months Ending
					February 28, 2015							February 29, 2016
(In millions)												Low					% Change				High					% Change
GAAP revenue					$	81.4						$	91.2				12	%			$	93.2				14	%
Acquisition-related adjustments - revenue (1)					$	14.1						$	0.8				(94	)%			$	0.8				(94	)%
Non-GAAP revenue					$	95.5						$	92.0				(4	)%			$	94.0				(2	)%

(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.

Q1 2016 Non-GAAP Earnings per Share Guidance
					Three Months Ending February 29, 2016
					Low					High
GAAP diluted earnings per share					$	0.06				$	0.08
Acquisition-related revenue					0.01					0.01
Stock-based compensation					0.13					0.13
Amortization of intangibles					0.14					0.14
Total adjustments					0.28					0.28
Income tax adjustment					$	(0.07	)			$	(0.07	)
Non-GAAP diluted earnings per share					$	0.27				$	0.29

View source version on businesswire.com: http://www.businesswire.com/news/home/20160112006546/en/

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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