Progress Software Announces Strategic Plan to Increase Growth

The new strategic plan is the result of a five-month comprehensive evaluation of the Company’s product portfolio, business model, capital allocation strategy, customer base and future opportunities. The evaluation was led by Progress’ President and Chief Executive Officer, Jay Bhatt, who joined Progress in December 2011. Upon joining the Company, Bhatt suddenly began the planning process with the Board of Directors, management team and external advisors, including J.P. Morgan.

The new plan

In commenting on the new plan, Bhatt said: “Progress pioneered the creation of application development and deployment infrastructure tools, research and software. Our new strategic plan is firmly rooted in this foundation and is designed to significantly improve Progress’ growth and performance. With our refined focus on providing advanced, leading-edge application development products and services to clients, we are confident that we will enhance value for all shareholders.”

Bhatt continued: “Over the past five months, members of my executive management team and I met with clients, partners and shareholders, collaborated with employees and worked with the Board of Directors and our independent advisors to determine the best plan for growth and profitability. Valuable analysis, market feedback and lessons learned from previous product strategies helped inform our view and we fully intend to evolve Progress into a leaner company that will help to lead the computing evolution from on-premise to the Cloud. The Board and I are confident that Progress has the right DNA, scale and experience to make this transformation successful for the benefit of all stakeholders,” added Bhatt.

According to a report by a leading independent IT technology and advisory company, by 2015 most enterprises will have part of their business software running in the Cloud, and Cloud-based solutions will be growing at a faster rate than on-premise solutions. The same report as well noted that less than 15% of Fortune 500 organizations are effectively collecting and analyzing Big Data in real time. Progress’ focus on a singular, unified product offering will enable partners and clients to deploy, access and analyze applications on any platform, any device and any Cloud with the industry’s fastest time-to-value.

1. Divest Non-core Product Lines. Progress will divest ten non-core product lines: Actional, Artix, DataXtend, FuseSource, ObjectStore, Orbacus, Orbix, Savvion, Shadow and Sonic. Each of these product lines are strong and viable, but, they no longer fit into the Company’s core portfolio. Fiscal 2011 revenue for these products totaled $172 million. The Company expects to complete the divestitures by the middle to end of FY 2013.

OutlookBeginning with its fiscal second quarter, the Company intends to separately report on a non-GAAP basis its core and non-core operations. FY 2011 revenue for core products was $361 million, and for non-core products was $172 million. The Company intends to have additional non-GAAP information available for investors outlining operating costs and margins, as then as allocated and unallocated costs in its fiscal second quarter revenues release.

For its core products, the Company expects to achieve a revenue growth rate of 5% in FY 2013 and 7%+ in FY 2014 and beyond and in broad outline 35% operating margins by FY 2013. Additionally, Progress’ participation in the high-growth aPaaS market creates upside potential in FY 2014 and beyond.

About Progress Software CorporationProgress Software Corporation is a global software company that simplifies the development, deployment and management of business applications on-premise or on any Cloud, on any platform and on any device with minimal IT complexity and low total cost of ownership. Progress Software can be reached at www.progress.com or 1-781-280-4000.

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, nevertheless are not limited to, statements regarding Progress’s strategic plan and the expected timing for completion; the elements of that plan including operational restructuring, product divestitures and return of capital to shareholders; acquisitions; future revenue growth, operating margin and cost savings; product development, strategic partnering and marketing initiatives; the growth rates of certain markets; and other statements regarding the future operation, direction and success of Progress’s business. 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: Progress’s ability to realize the expected benefits and cost savings from its strategic plan; market acceptance of Progress’s strategic plan and product development initiatives; disruption caused by implementation of the strategic plan and related restructuring and divestitures on relationships with employees, clients, vendors and other business partners; pricing pressures and the competitive environment in the software industry and Platform-as-a-Service market; Progress’s ability to complete the proposed product divestitures in a timely manner, at favorable prices or at all; Progress’s ability to make innovation acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; the continuing weakness in the U.S. and international economies, which could result in fewer sales of Progress’s products and/or delays in the implementation of Progress’s strategic plan and may if not harm Progress’s business;

(8) business and consumer use of the Internet and the continuing adoption of Cloud technologies; the receipt and shipment of new orders; Progress’s ability to expand its relationships with channel partners and to manage the interaction of channel partners with its direct sales force; the timely release of enhancements to Progress’s products and customer acceptance of new products; the positioning of Progress’s products in its existing and new markets; variations in the demand for professional services and technical support; Progress’s ability to penetrate international markets and manage its international operations; and changes on the oher side of the coin rates. For furthermore 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, 2011, as amended, and Quarterly Report on Form 10-Q for the fiscal quarter ended February 29, 2012. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.