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Progress Software Q1 Profit Soars, Yet Misses View

3/27/2013 9:20 PM ET

Business software maker Progress Software Corp. (PRGS: Quote) reported Wednesday a profit for the first quarter that sharply increased from last year, reflecting hefty gains from discontinued operations. Meanwhile, adjusted earnings from continuing operations missed analysts' expectations by a penny. The company also provided revenue growth guidance for the

"Our performance in the quarter reflects continued momentum as we execute on our strategic plan. Our initiatives to improve our operating margin are well under way and I am pleased with our early progress," President and CEO Phil Pead said in a statement.

The Bedford, Massachusetts-based company, which competes with the likes of Tibco Software, reported net income of $31.12 million or $0.53 per share for the first quarter, sharply higher than $7.49 million or $0.12 per share in the prior-year quarter.

Results for the latest quarter include gains of $35.1 million on the divestitures of the Actional, Artix, DataXtend, ObjectStore, Orbacus, Orbix, Savvion and Sonic product lines.

Income from continuing operations for the quarter declined to $9.12 million or $0.16 per share from $11.95 million or $0.19 per share in the year-ago quarter.

Excluding items, adjusted income from continuing operations for the quarter was $13.54 million or $0.23 per share, compared to $18.42 million or $0.29 per share last year.

On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.24 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenues for the quarter grew 2 percent to $89.27 million from $87.21 million in the same quarter last year. Five Wall Street analysts had a consensus revenue estimate of $86.30 million for the quarter. Revenues on a constant currency basis increased 3 percent.

Software licenses revenues for the quarter grew 2 percent to $32.67 million, as well as maintenance and services revenues increased 2 percent to $56.60 million in the prior-year quarter.

Operating margin contracted 600 basis points to 16 percent and adjusted operating margin declined 700 basis points to 24 percent from last year.

Looking ahead to the second quarter, the company expects revenues on a constant currency basis to remain essentially flat with the year-ago second quarter. Adjusted operating margin is also projected in the range of 21 to 24 percent. Street is looking for second-quarter revenues of $82.15 million.

"In addition, we have begun to focus on building our foundation for future revenue growth by releasing new and innovative functionality across our solution suites and significantly increasing our customer engagement," Pead added.

PRGS closed Wednesday's regular trading session at $22.28, down $0.23 or 1.02% on a volume of 0.62 million shares.

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by RTT Staff Writer

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