Progress Software 1Q Net Falls 64%; Finance Chief Wagner To Leave

03/28/2012| 07:47am US/Eastern

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Progress Software Corp.'s (>> Progress Software Corporation) fiscal first-quarter earnings fell 64% as software-licenses revenue continued to drop and the business-software maker said Chief Financial Officer Charles F. Wagner Jr. will leave the company immediately.

The company said Wagner's departure after 18 months on the job wasn't based on any disagreement relating to the company's accounting practices or financial statements. Progress had hired an executive search firm to find his successor and named Chief Executive Jay Bhatt interim finance chief.

Progress has seen its top line decline in recent quarters on lower software-licenses revenue. The company has been investing in its field organization, product integration and the marketing of its Responsive Process Management software suite as part of an ongoing transformation and Progress has said it is optimistic about its growth potential in the second half of the year.

Meanwhile, activist hedge fund Starboard Value LP in January reported a 5.1% stake in Progress Software, making it one of the top 10 biggest owners of the software firm, and said Progress's shares were deeply undervalued. The hedge fund claimed that Progress's Application Development Platform segment alone was worth as much or more than the whole company's market value.

For the quarter ended Feb. 29, Progress Software reported a profit of $7.49 million, or 12 cents a share, down from $20.5 million, or 29 cents, a year earlier. Excluding items such as acquisition and restructuring costs, adjusted earnings fell to 28 cents from 42 cents. Revenue fell 7.3% to $124.4 million.

Its January projection was adjusted earnings of 25 cents a share on revenue of about $120 million, below analysts' expectations at the time.

Gross margin fell to 79.6% from 82%.

Maintenance and services revenue, which makes up most of the company's top line, was essentially flat at $82.9 million, while software-licenses revenue dropped 19% to $41.5 million.

The company also named Andy Zupsic global head of field operations, effective April 2, to oversee all companywide sales, services and partners. Zupsic joins Progress from Juniper Networks Inc. (JNPR), where he was most recently senior vice president of the Americas enterprise sales group.

Shares closed Tuesday at $24.40 and were inactive premarket. The stock is up 26% so far this year.

--By Melodie Warner, Dow Jones Newswires; 212-416-2283; melodie.warner@dowjones.com

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