Progress Software Reports Big Fourth Quarter

Progress Software Corp. today reported a 32% increase in fourth-quarter revenue and a 124% rise in net income, fueled by expanding sales of the Bedford, Mass., vendor's application development and deployment software.

"Profitability was driven by the pretty hefty increase in sales, year over year," says Bud Robertson, Progress' chief financial officer. Sales of Progress' products through independent software vendors to midsize companies were particularly strong--critical, given that third-party sales account for 70% of Progress' revenue. That growth, combined with controls on general and administrative costs, led to the healthy increase in the company's operating margins.

For the fourth quarter ended Nov. 30, Progress reported operating income of $11.3 million and net income of $8.4 million on sales of $69.2 million.

For all of fiscal 1998, revenue increased 27% to $239.9 million, from $188.3 million in 1997. The company reported operating income of $30 million and net income of $22.8 million for the year, up 222% and 135%, respectively, from 1997.

Robertson says Progress' sales growth should continue in 1999, given that the company is embarking on a new product cycle. Version 3 of the Progress Apptivity Java-based application server and development environment was released in November, and Progress 9.0, the latest release of the company's flagship application development and deployment environment, began shipping this month. "We're looking at 20% growth [in 1999] and operating margins doing even better than that," Robertson says.