Progress Software Corporation (PRGS)’s 4th Quarter 2014 Earnings Conference Call Transcript

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Next, as SaaS applications grow exponentially, ISVs and direct end users require access to not only other SaaS applications but also on-premise data. Again the requirement here is for high-speed data access that also eliminates the need to understand the structure of that data and the complexities of data security. DataDirect Cloud solves those problems. In particular, we are very pleased with the strong interest shown by our large DataDirect OEM customers in DataDirect Cloud and we expect DataDirect Cloud to continue to gain momentum in 2015.

Finally, preparing data to be used by analytic tools such as the data can be relied upon has always been a critical element of data analysis. However, this has never been easy – understanding the location and structure and cleanliness of the data has previously required lengthy work by data analysts. Given our strength in data access, we can now offer analysts a very powerful tool called Easel that significantly reduces the time and complexity of data preparation. More and more of our data connectivity and integration solutions are being consumed as a subscription, enabling us to have greater visibility into future revenues and also reducing the volatility in our quarterly performance.

In summary, 2014 was a pivotal year for us as we continue to lay the foundation for future growth. We enter 2015 with great momentum, intense focus and unrivaled appeal to the millions of application developers who are seeking a comprehensive set of solutions to not only make their life easier but also by using Progress Solutions enable them to become more competitive. I will now turn it over to Chris to review in more detail our 4th Quarter performance as well as our expectations for the 1st Quarter and for the full year of 2015. Chris.

Chris Perkins , Chief Financial Officer

Thank you Phil and good afternoon everyone. As a reminder, in consistent with our previous earnings calls, all the financial metrics I will talk about today are related to our continuing operations and excludes results from product lines that were divested in prior years, which are reflected in the press release as discontinued operations for all periods presented.

Total revenue for the quarter was $98 million compared to $91 million in Q-4 2013, an increase of 8% at actual exchange rates and 10% on a constant currency basis. Our 4th Quarter non-GAAP EPS was $0.47 compared to $0.43 in the 4th Quarter of 2013, an increase of 9%. This was at the high end of our guidance range of $0.44 to $0.47. 4th Quarter revenues included negative impact from currency translation of approximately $900,000 as the U.S. dollar strengthened significantly during the 4th Quarter compared to other currencies and also includes incremental revenue of approximately $3 million associated with the acquisition of BravePoint, the professional services firm we acquired in October. Excluding the negative impact of currency translation and the incremental revenue associated with BravePoint, revenue would have been approximately $96 million which was at the low end of our guidance range.

For the full year, total revenue was $333 million flat to last year on both an actual and constant currency basis. Full-year non-GAAP EPS was $1.51 per share compared to $1.19 for 2013, an increase of 27%. This was above our guidance range of $1.47 to a $1.50. The year-over-year revenue increase in the 4th Quarter was due to growth in both license and maintenance and services revenue. License revenue was $41 million in the 4th Quarter, up 10% from Q-4 2013 at actual exchange rates and up 12% on a constant currency basis. License revenue increase was primarily in APJ, which grew by 127% and also in EMEA and Latin America, all at constant currency. The increase in APJ was due to a large multi-year deal with two affiliated OpenEdge end users.

Maintenance and services revenue was $57 million for the quarter, up 6% from last year at actual exchange rates and 8% on a constant currency basis. The maintenance and services revenue increase was due in large part to the incremental professional services revenue associated with the BravePoint acquisition. Our maintenance renewals were in line with our expectations and we remain confident that we will continue to deliver renewal rates above 90%. For the full-year, license revenue was $118 million, down 4% from last year at actual exchange rates and down 3% on a constant currency basis. As we have discussed in previous quarters, the license revenue decline year-over-year was due in part to $9 million of revenue included in the first two quarters of 2013 related to open orders that did not meet revenue recognition requirements at the end of 2012. Otherwise, we showed solid license bookings growth for 2014, particularly in OpenEdge. Maintenance and services revenue for the full-year was $215 million, up 1% from last year on both an actual and constant currency basis. The increase in maintenance and services revenue was due in large part to the increase in professional services revenue from the BravePoint acquisition.

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