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Progress Software Corp. Reports Operating Results (10-Q)

July 09, 2010 | About:
10qk

10qk

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Progress Software Corp. (PRGS) filed Quarterly Report for the period ended 2010-05-31.

Progress Software Corp. has a market cap of $1.27 billion; its shares were traded at around $30.22 with a P/E ratio of 17.7 and P/S ratio of 2.6. Progress Software Corp. had an annual average earning growth of 9.4% over the past 10 years. GuruFocus rated Progress Software Corp. the business predictability rank of 1-star.PRGS is in the portfolios of Private Capital of Private Capital Management, John Buckingham of Al Frank Asset Management, Inc., Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

On a segment basis, revenue from our Application Development Platforms product line increased 9% from $77.8 million in the second quarter of fiscal 2009 to $84.6 million in the second quarter of fiscal 2010. Revenue from our Enterprise Business Solutions product line increased 39% from $17.9 million in the second quarter of fiscal 2009 to $24.9 million in the second quarter of fiscal 2010. Revenue for the Enterprise Business Solutions product line in the second quarter of fiscal 2010 included approximately $5 million of revenue from the product line acquired in the Savvion transaction in the first quarter of fiscal 2010. Organic growth for the Enterprise Business Solutions product line, absent the acquisition, was 13% in the second quarter of fiscal 2010. Revenue from our Enterprise Data Solutions product line decreased 15% from $22.0 million in the second quarter of fiscal 2009 to $18.8 million in the second quarter of fiscal 2010.

Cost of Maintenance and Services. Cost of maintenance and services consists primarily of costs of providing customer support, consulting and education. Cost of maintenance and services increased 15% from $16.0 million in the second quarter of fiscal 2009 to $18.3 million in the second quarter of fiscal 2010, and increased as a percentage of maintenance and services revenue from 20% to 22%. Cost of maintenance and services increased 6% from $33.3 million in the first six months of fiscal 2009 to $35.2 million in the first six months of fiscal 2010, and remained the same as a percentage of maintenance and services revenue at 22%. The total dollar amount of expense in fiscal 2010 increased due to higher usage of third-party contractors for service engagements.

acquired intangibles increased from $2.5 million in the second quarter of fiscal 2009 to $2.7 million in the second quarter of fiscal 2010. Amortization of other acquired intangibles increased from $4.8 million in the first six months of fiscal 2009 to $5.1 million in the first six months of fiscal 2010. The increase was due to amortization expense associated with the acquisition of Savvion.

Operating income from our Application Development Platforms business unit increased 32% from $41.0 million in the second quarter of fiscal 2009 to $54.2 million in the second quarter of fiscal 2010. The operating loss from our Enterprise Business Solutions business unit decreased 7% from $(16.7) million in the second quarter of fiscal 2009 to $(15.5) million in the second quarter of fiscal 2010. The operating loss from our Enterprise Data Solutions business unit increased from $(0.1) million in the second quarter of fiscal 2009 to $(2.8) million in the second quarter of fiscal 2010.

On a segment basis, operating income from our Application Development Platforms business unit increased 37% from $75.0 million in the first six months of fiscal 2009 to $102.8 million in the first six months of fiscal 2010. The operating loss from our Enterprise Business Solutions business unit decreased slightly from $(26.7) million in the first six months of fiscal 2009 to $(26.5) million in the first six months of fiscal 2010. The operating loss from our Enterprise Data Solutions business unit increased from $(1.3) million in the first six months of fiscal 2009 to $(7.6) million in the first six months of fiscal 2010. The increase in operating income in our Application Development Platforms group was due to the impact of the restructuring and re-allocation of resources, primarily sales and marketing, to the other two business units. See further discussion of segment reporting in footnote 12 of the condensed consolidated financial statements included in this report.

Other Income (Expense). Other income, primarily consisting of interest income and foreign currency gains and losses, increased from an expense of $0.5 million in the second quarter of fiscal 2009 to income of $3.9 million in the second quarter of fiscal 2010. Other income increased from $0.8 million in the first six months of fiscal 2009 to income of $6.7 million in the first six months of fiscal 2010. The increase was primarily due to an increase of $5.3 million in the value of our foreign currency average rate option contracts, which do not qualify for hedge accounting treatment and are marked-to-market each period, and an insurance settlement gain related to a pre-acquisition matter.

Read the The complete Report

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