Progress Software Investor Overview - SWNetwork · 23 © 2016 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. SaaS/Cloud Adoption by the

Progress Software

Investor OverviewJuly 2016

© 2016 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved.2

Forward Looking Statements

This presentation 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 presentation include, but are not limited to, statements regarding Progress’s strategy;

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: (1) Economic,

geopolitical and market conditions, including the uncertain economic environment in Europe as a result of the recent Brexit vote, and the continued difficult

economic environment in Brazil and other parts of the world, can adversely affect our business, results of operations and financial condition, including our

revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as

delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, or a decline in our renewal

rates for contracts. (3) Our ability to successfully manage transitions to new business models and markets, including an increased emphasis on a cloud and

subscription strategy, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve

our existing products and services in a timely manner to meet market demand, partners and customers may not purchase new software licenses or

subscriptions or purchase or renew support contracts. (5) We depend upon our extensive partner channel and we may not be successful in retaining or

expanding our relationships with channel partners. (6) Our international sales and operations subject us to additional risks that can adversely affect our

operating results, including risks relating to foreign currency gains and losses. (7) If the security measures for our software, services or other offerings are

compromised or subject to a successful cyber-attack, or if such offerings contain significant coding or configuration errors, we may experience reputational

harm, legal claims and financial exposure. (8) We may make acquisitions in the future and those acquisitions may not be successful, may involve unanticipated

costs or other integration issues or may disrupt our existing operations.

For further information regarding risks and uncertainties associated with Progress’s business, please refer to Progress’s filings with the Securities and

Exchange Commission. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this presentation,

except for statements relating to Progress' projected results for the fiscal year ended November 30, 2016 and quarter ended August 31, 2016, which speak only

as of June 29, 2016.

This presentation is not a commitment to deliver any specified code or functionality and should not be relied upon in making purchasing decisions. The

development, release and timing of features or functionality described for our products remains at the sole discretion of Progress.


Progress at a Glance

EMPLOYEES ~ 1,850

FY15 REVENUES$412 million~ 64% recurring revenue

90%+ renewal rates

STRONG FREE CASH FLOWS $102 million in FY15*

FY15 Non-GAAP OPERATING MARGIN 29%

GLOBAL REVENUE STREAMS ~ 42% international

CUSTOMER DIVERSIFICATION140,000 customers in

over 180 countries

* Note: After adjustments for restructuring payments


Diverse

requirements

Demand for

flexibility

“Consumer”

expectations

Developers Need to Keep Pace with the Speed of Business


Our Mission:

Become the destination site for the largest developer population

on the planet


Let’s Put This in Perspective

18.5

millionsoftware developers

globally (IDC)

.NET 8 million

Java 11 million

JavaScript 10.5 million

Most Popular Technologies – 2015


Progress Addressable MarketB

illi

on

s $

US

$0

$5

$10

$15

$20

$25

2011 YR 2012 YR 2013 YR 2014 YR 2015 YR 2016 YR 2017 YR 2018 YR

Application Development: CAGR5.2%

Project and PortfolioManagement: CAGR 9.3%

Enterprise Content Management:CAGR 11.9%

CAGR values represent 2013-2018

Source: Gartner, “Forecast: Enterprise Software Markets, Worldwide, 2011-2018, 2Q14 Update,” (billions of dollars)


What We Do for Developers

We help all developers create amazing apps.







Better looking.Less time.Do more.

Delight users.

Developers1.9 MILLION


Let’s Look Closer at Our Business


OpenEdge


Progress OpenEdge: Powerful Pedigree of Powering Application Development

4th Largest embedded

RDBMS

19th most popular

language in the

world today

1st to deliver multi-

tenant database in

the industry

OpenEdgePlatform

Customers (3,500)

Application Partners (1,400)

APs

Customers of APs (55,000)

End Users of Apps (5M+)


FINANCIAL

SERVICES

BUSINESS

SERVICESCONSTRUCTION HEALTHCARE MANUFACTURING RETAIL GOVERNMENT

The Global Application Partner Community – “Niche” Vertical Players/Leaders

LEADING ISVs ACROSS INDUSTRY SECTORS

http://www.broadridge.com/

http://www.broadridge.com/

http://www.unit4agresso.com/

http://www.unit4agresso.com/

http://images.google.com/imgres?imgurl=http://www.radiusplc.co.uk/intro/computer_services/images/civica logo.jpg&imgrefurl=http://www.radiusplc.co.uk/intro/computer_services/news&events/universityseminars2005.htm&h=411&w=954&sz=126&hl=en&start=1&sig2=K6NYjTKk-kyfYxMyG2nVHA&tbnid=Gzsl5jQzUzRY2M:&tbnh=64&tbnw=148&ei=cWiwR9HDGJSUeIzeibEM&prev=/images?q=civica+logo&gbv=2&hl=en&sa=G

http://images.google.com/imgres?imgurl=http://www.radiusplc.co.uk/intro/computer_services/images/civica logo.jpg&imgrefurl=http://www.radiusplc.co.uk/intro/computer_services/news&events/universityseminars2005.htm&h=411&w=954&sz=126&hl=en&start=1&sig2=K6NYjTKk-kyfYxMyG2nVHA&tbnid=Gzsl5jQzUzRY2M:&tbnh=64&tbnw=148&ei=cWiwR9HDGJSUeIzeibEM&prev=/images?q=civica+logo&gbv=2&hl=en&sa=G

http://www.bcpsoftware.com/

http://www.bcpsoftware.com/

http://www.discoveryts.com/default.php

http://www.discoveryts.com/default.php

http://www.sanderson.com/

http://www.sanderson.com/


SaaS/Cloud Adoption by the OpenEdge Application Partners

SaaS has proven to be

a significant growth

model for our partners

New markets

New geographies

Expanding market

opportunities for additional

services

Progress strategy focused on

SaaS/Cloud enablement,

adding to the recurring/annuity

nature of OpenEdge revenue

% of our Partner new license

business in 2015 was SaaS

% of our top partners are now

offering SaaS as an optional

business model

10years

30+

45


Rules


Progress Corticon: Why Rules Engines?

Debugging rules is a

major issue with

traditional rule

development

Corticon identifies

logical errors during

requirements

specification

Most Errors

Introduced

Most Errors

Detected

Customer Satisfaction

issues


26 U.S. States Use Progress Corticon

• Health Care Exchanges

• Pension Administration

• Medicaid Management

• Vehicle Emissions


CHALLENGE

With more than 150–200 million

transactions per day, eBay required

a millisecond response from a rule

service to ensure a responsive

customer experience

SOLUTION

The Progress Corticon rules

engine could rapidly stand up to

eBay’s demanding production needs

BENEFIT

Increased performance, scalability,

accuracy, integrity and agility


Data


Progress DataDirect and DataDirect Cloud:Data Connectivity and Integration – Trusted by Everyone

10,000+ Enterprises in 160+ countries

350+ OEMs that embed DataDirect, including most major

software vendors

2000+ Applications have been built by ISVs using DataDirect

25+ Years in the making, co-founders of ODBC, JDBC, OData.

Undisputed leader in premium data access market

25


Market Trends Driving Growth for Data Access

Explosion of

Databases

• Rise of Big

Data/NoSQL

databases

• Other specialty

databases

Analytics

Everywhere

• Booming growth

of analytics

• Reporting must

be in the box

Speed, Scale,

Reliability, Features

• The never-ending

quest for speed

• Desires continue to

outpace “free”

SaaS Siloes

• Every SaaS

Application is a

custom database

• Issues of bridging

data between on-

premise to cloud


PACKAGED SOFTWARE

VENDORS

APPLICATION DEVELOPMENT

& DEPLOYMENT

SYSTEM INFRASTRUCTURE

VENDORSBUSINESS APPLICATIONS BUSINESS INTELLIGENCE

Unparalleled OEM Channel for Progress DataDirect Connect

http://www.microstrategy.com/

http://www.microstrategy.com/

http://www.ca.com/

http://www.ca.com/

http://www.actuate.com/home/index.asp

http://www.actuate.com/home/index.asp

http://www.teradata.com/

http://www.teradata.com/

http://www.pervasive.com/

http://www.pervasive.com/

http://www.lgc.com/default1.htm

http://www.lgc.com/default1.htm

http://www.serena.com/home.asp

http://www.serena.com/home.asp


Mobile

Achieving App Success Is Elusive

65%Enterprise mobile apps get

deleted or under-utilized

by users (B2C)

50%Of all enterprise mobile

apps will be rewritten by

2017 (Gartner)


Why Is Mobile So Hard?

Enterprise Mobility Today: CIO Research

#1

Everyone wants to

build fast without

adding resources

#3

Cost and complexity

of cross-platform

development

#2

High UI/UX

expectations


Telerik Platform

Turn JavaScript

into cross-

platform apps.

Quickly create

stunning UI for

your app.

Leverage your

data or our cloud

services.

Learn how your

app is being

used.

Control who has

access to your

app.

Run automated

tests against

mobile devices.

Deploy to

public or

private app

stores.


Testing is harder than ever.


Magic Quadrant for

Mobile Application

Development Platforms

(MADP)


Digital Enterprise


Digital Transformation

Constantly evolving digital experiences to keep

customers engaged and returning

Required to remain competitive and relevant

Core business models are being redefined


From Content Management to Customer Engagement

2005 2015

• Basic online presence

• Extension of offline engagement

• Static, disconnected

• Online is becoming the primary venue of engagement

• Continuous, contextualized, omni-channel interaction


CMS System Is the Cornerstone for Digital Customer Experience

CMS System of Engagement

Ultimately, WCM tools are no longer just about managing web content.

Instead, they have evolved to become the cornerstone of an ecosystem of

tools that support digital experiences for customers.

CRM

Marketing Automation

Analytics

Mobility

E-Commerce

ERP


Competitive Space

Magic Quadrant for

Web Content Management

July 2015


Customers and Success Stories

15,000+Websites

300+Solution Partners

2,000+ Customers


In Summary

1.9 Million Developers

Building Amazing Apps

With Engaging User Experiences

All Enabled with Progress


Progress Financial Performance


Historical Financial Performance

Actual Actual

FY2013 FY2014

Revenues $334 5% $333 0%

Expenses $234 $215

Operating Income $100 1% $117 17%

30% 35%

EPS $1.19 12% $1.51 27%

Shares Outstanding 55.4 51.5

Adjusted Free Cash Flow $74 $99

Actual

FY2015

$412

$292

$120

29%

$1.58

51.1

$102

24%

3%

5%

31%

10%

13%

($ Millions, Actual Exch Rates)

NOTE FY 2015 includes negative impact of currency translation ($25M Revenues, $0.14 EPS compared to 2014 rates)


Historical Revenue by Segment

($ Millions, Actual Exch Rates)Organic

Actual Actual Actual Actual

FY2013 FY2014 FY2015 FY2015(Constant

Currency)

Total Revenues $334 5% $333 0% $412 24% 3%

31%

Segment Revenue

Growth Const Currency

OpenEdge 7% 1% 8% 3%

OpenEdge 5% 2% 8% 3%

Corticon 46% -13% -1% -1%

Data & Integration -5% -13% 10% 10%

Application Dev & Deploy na na na 86%

NOTE FY 2015 includes negative impact of currency translation ($25M Revenue vs. 2014 rates)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OpenEdge DCI AD&D Total

60%

29%

70%

59%1%

5%

1%

6% 5%

9%

1%

1%

6%

25%

69%

24%29%

License

Services

SaaS & Related

SaaS/Subcription

Maintenance

Revenue by Type and Recurring Revenue

FY14 Revenue % by Stream FY15 Revenue % by Stream

64% Recurring

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OpenEdge DCI AD&D Total

64%

33%

2%

61%

82%

0%

6%5%

4%

1%

6%

4%

26%

66%

10%

30%

License

Services

SaaS & Related

SaaS/Subcription

Maintenance


Revenue by Region

55% Revenues International 42% Revenues International

67% Revenues invoiced in USD (Telerik all USD)

FY14 Revenue % by Region FY15 Revenue % by Region

NA 45%

CALA7%

EMEA 40%

APJ 8%

NA

CALA

EMEA

APJNA 58%

CALA 4%

EMEA 31%

APJ 7%


FY 2016 Financial Guidance *

* Note: Per guidance issued on June 29, 2016

Full Year FY16 Q3 FY16

Non-GAAP Revenue $412 - $418M $103 - $106M

Non-GAAP EPS $1.57 - $1.63 $0.43 - $0.46

Non-GAAP Operating Margin 29% - 30% ----

Adjusted Free Cash Flow $80 - $85M ----

Non-GAAP Effective Tax Rate 32% - 33% ----

Negative impact of foreign currency translation relative to strengthening USD:

Full Year: $6 - $7 million on revenue, $0.03 - $0.04 cents on non-GAAP EPS

Q3: ~ $1.5 million on revenue, ~ $0.01 cent on non-GAAP EPS


Capital Deployment FY12 – FY16 ($M)

Capital Deployment FY12 FY13 FY14 FY15 FY16 Q2 Total

Share repurchases $88.0 $270.0 $53.0 $33.0 $60.0 $504.0

Rollbase acquisition 9.5 9.5

Modulus acquisition 12.5 12.5

BravePoint acquisition 12.0 12.0

Telerik acquisition* 262.5 262.5

Total capital deployed $88.0 $279.5 $77.5 $295.5 $60.0 $800.5

• Additional $100M of share repurchases authorized in March 2016, increasing total authorization to $203M

• $229M of Cash and ST investments as of 5/31/16

• $139M of debt (5-year term notes)… Gross leverage ~1.1 X

• $150M revolving credit facility (currently undrawn) through December 2019

* Note: Telerik acquisition funded with $102M of cash, $150M term loan financing (part of a new 5-year $300M term and revolving

credit facility), and $10.5 million of equity.


LT Earnings and Cash Flow Objectives (2-3 Year Horizon)

Revenues 7% to 10% Growth

Operating Margin (Non-GAAP) ~30%

• Stable OpenEdge business with high contribution

• Growth in ratable and SaaS/subscription bookings

• Leverage infrastructure and ongoing performance improvement

• Evaluate investments in growth strategy

Earnings Per Share 10% to 15% Growth

• Operating Income performance

• Effective capital allocation

Free Cash Flow 10% to 15% Growth

• Stable OpenEdge business with high cash flow contribution

• Cash velocity Application Development & Deployment business model

(Excludes impact of exchange rates)


Why Invest in Progress – Strong, Stable Business, Opportunity for Growth

Significant base of customers and partners who continue

to grow and thrive

Stable and growing business with ~ 64% recurring revenues

Well-positioned in new application development with

high growth potential

Strong operating margins and cash flows

Capital allocation opportunities to enhance growth and

shareholder returns

OP

PO

RT

UN

ITY

Documents

Progress Software Investor Overview - SWNetwork · 23 © 2016 Progress Software Corporation and/or its subsidiaries or affiliates. All rights reserved. SaaS/Cloud Adoption by the