Progress Software Tops View

Progress Software Corp. (PRGS - Snapshot Report) reported fiscal 2010 first quarter results after the closing bell on Tuesday. The company recorded a GAAP net loss of $1.0 million during the quarter, compared to a GAAP net income of $3.6 million in the year-ago period. Excluding special items, earnings per share came in at 52 cents, beating the Zacks Consensus Estimate by a significant margin of 14 cents.
 
The company reported a 5.5% growth in total revenue to $103.5 million, compared to $96.5 million in the year-ago period. The increase was driven by a 2.8% growth in software license revenue to $47.1 million coupled with a 7.2% increase in maintenance and services revenues to $80.4 million.
 
Progress Software, however, swung to an operating loss of $4.4 million from an operating income of $4.7 million in the prior-year period. The loss was primarily attributable to restructuring expenses, which swelled to $25.8 million from $5.5 million in the year-ago quarter as a result of management initiatives to optimize operations and improve productivity and efficiency, including a 13% reduction in workforce.
 
Excluding the restructuring expense, Progress Software’s operating income more than doubled year-over-year to $21.4 million as growth in revenues was further helped by a 3%, 6% and 12% reduction in sales and marketing, product development, and general and administrative expenses.
 
At the end of the quarter, Progress Software had cash and short-term investments of $210.6 million, compared to $123.8 million in the year-ago period. During the quarter, the company generated $34.2 million of cash from operations. Major uses of cash included $49.1 million towards the acquisition of Savvion Inc., a business enterprise software company based in Santa Clara, CA and $1.5 million towards capital expenditure.
 
Looking ahead, Progress Software expects fiscal 2010 second quarter adjusted revenue to range between $129 million and $133 million and adjusted earnings to range from 51 cents to 54 cents per share. The guidance is higher than the Zacks Consensus Estimate of 45 cents per share, which moved up a penny over the past week.
 
For the entire fiscal 2010, Progress Software now anticipates adjusted earnings to range from $2.20 to $2.32 per share and affirmed adjusted revenue between $540 million and $550 million. The company earlier predicted adjusted earnings of $2.16 to $2.28 per share. Currently, the Zacks Consensus Estimate is pegged at $1.95 per share, which jumped 7 cents over the past week.

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