Progress Software guidance misses, shares drop

SAN FRANCISCO (AP) -- Progress Software Corp.'s latest quarterly earnings were in line with what Wall Street expected, but the business software maker noted a shortfall in the company's data-management division and offered a weaker-than-expected forecast. The shares fell 6 percent in extended trading.
The company, whose software helps companies monitor their operations, makes most of its money from supporting software it has already sold. New software licenses typically make up only a third of Progress's overall revenue. Such "maintenance" models can provide stability in unsteady economic times, by providing a predictable stream of future income, but problems eventually arise when new sales stumble, since it chokes off growth.
Progress's revenue from new software licenses rose just 3 percent in the latest fiscal quarter, while maintenance support rose 7 percent. In a statement, the company's CEO, Richard Reidy, said the "performance did not meet our expectations" primarily because of weakness in the "data solutions" business.
While the results for the just-passed quarter were in line with analyst forecasts, the guidance was not, and shares fell $1.45, or 6.2 percent, to $21.83, in extended trading, after the results were reported.
For the three months ended May 31, net income fell 6 percent to $18.0 million, or 26 cents per share, versus $19.1 million, or 29 cents per share, a year ago. On an adjusted basis, the company earned 38 cents per share, in line with the average forecast of analysts surveyed by FactSet.
Revenue rose 6 percent to $134.7 million, slightly ahead of the $134.1 million that analysts expected.
But in coming months, Progress is predicting tougher times than analysts had expected.
For the current quarter, the company expects adjusted earnings of 34 cents per share to 36 cents per share, below projections for 41 cents per share, and revenue of $133 million to $136 million, lower than the $137.3 million that analysts expected.
For the full fiscal year, the company expects earnings of $1.60 per share to $1.65 per share, lower than the $1.71 per share that analysts expected, and revenue of $550 million to $560 million, which at the high point would be in line with the $560 million analysts expected.
The stock had closed up 4 cents, or 0.2 percent, to $23.28, before the results were released.