Tuesday, Progress Software Corp. (PRGS), a provider of application infrastructure software, reported a decline in profit for the third quarter, reflecting a drop in software license revenue and higher amortization costs related to the acquisition of IONA Technologies. However, adjusted earnings for the quarter came in ahead of analysts' consensus, but revenues fell short of Street view. The company also lowered its earnings and revenue outlook for the full year.
Net income for the third quarter came down by 56% to $5.52 million from $12.54 million a year earlier and earnings per share dropped 57% to $0.13 from $0.30 for the same period last year. Income from operations halved to $9.09 million from $18.11 million a year-ago.
Non-GAAP net income declined 11% year-over-year to $16.45 million or $0.40 per share from $18.97 million or $0.45 per share. On average, four analysts polled by Thomson Reuters expected Progress Software to report earnings of $0.39 per share for the third quarter. Analysts' estimates typically exclude one-time items.
Quarterly total revenue declined 6% to $119.43 million from $126.62 million a year-ago. Analysts had a consensus revenue estimate of $120.07 million for the quarter.
Software license revenues dropped 15% to $39.17 million from $45.00 million last year. Revenues from maintenance and services dropped marginally to $80.26 million from $80.62 million for the year-ago period.
Total costs of revenue declined by a percent to $22.53 million from $22.73 million a year earlier. Amortization costs of purchased technology grew by 63% to $4.81 million from the same period last year.
Total operating expenses increased by 2% to $87.81 million from $85.78 million a year-ago despite a 6% drop in sales and marketing expenses to $45.51 million, reflecting a 6% rise in product development expenses to $22.38 million and a 18% year-over-year increase in general and administrative expenses to $17.72 million.
For the nine months, net income declined 60% year-over-year to $16.08 million from $39.84 million. Earnings per share dropped to $0.39 from $0.92 a year earlier. Revenues were $357.34 million, down 5% from $376.13 million last year.
Looking ahead, for the fourth quarter, the company expects GAAP earnings to be in the range of $0.33 to $0.35 per share and non-GAAP earnings in the range of $0.54 to $0.56 per share. The company expects fourth-quarter revenue to be in the range of $130 million to $133 million.
Analysts currently expect the company to post earnings of $0.56 per share on revenues of $134.63 million for the fourth quarter.
Further, Progress Software lowered its full year earnings guidance and revenue guidance. The company now expects GAAP revenue to be in the range of $487 million to $490 million and non-GAAP revenue to be in the range of $490 million to $493 million. Earnings, on GAAP basis, is expected to be in the range of $0.69 to $0.71 per share and on non-GAAP basis to be in the range of $1.72 to $1.74 per share.
Earlier, the company expected GAAP revenue to be in the range of $492 million to $502 million and non-GAAP revenue to be in the range of $495 million to $505 million. Earnings, on GAAP basis, were expected earlier to be in the range of $0.77 to $0.86 per share and on non-GAAP basis to be in the range of $1.72 to $1.81 per share.
Wall Street analysts expect the company to earn $1.73 per share on revenues of $493.90 million for the full year 2009.
PRGS is currently trading at $23.01, up 1.32% on Nasdaq.
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