Progress Software Corp, the embedded database and tools developer which is among the most committed proponents of the new application service provider (ASP) model, has posted strong year-end results, despite the fact new ASP-related revenues have yet be significant.
The Bedford, Massachusetts company Friday announced operating income up 39.8% to $16m in the fourth quarter of the year ended November 30, as revenue rose 13% to $78.1m. Net income increased 30% to $8.4m. Diluted earnings per share rose 40% to $0.60. For the 12 months Operating income increased 56% to $46.7m and revenue increased 19% to $286.1m. Net income increased 54% to $35m and diluted earnings per share increased 51% $1.78.
Commenting on the results, Progress’ president, Joseph Alsop, noted that the strengthening dollar in the fourth quarter had impacted the bottom line. On a constant currency basis, revenue in the fourth quarter grew by 19% while revenue for the full fiscal year grew by 23%.
Our financial results were driven by the fact that our Independent Software Vendors (ISVs) sold more applications than ever before, Alsop said. Additionally, between our traditional business and the recent boom in the emerging application service provider market, Progress Software has added several hundred new partners to our selling channel overall.
A company spokesperson conceded that real revenue from ASP business is still scant, and since setting up its ASPEN (ASP Enablement) program earlier this year, the company has licensed only 2,500 ASP seats worldwide. However, the prospects for next year are strong, the spokesperson said. In November, IBM joined the company’s ASPEN group, lending powerful support to the company’s claim that we’re where its happening in ASP. In the UK, the company said one its first ASP partners – the Systemscare Ltd subsidiary, Systemcare Outhosting Services (SOS) – has already received contracts for 10,000 ASP seats.
In posting its results, Progress also announced that the board of directors has approved two-for-one stock split of its common stock that will be effected as a 100% stock dividend. Shareholders of record at the close of business on January 7, 2000 will be entitled to one additional share for every share of common stock held on that date. The distribution date will be January 21, 2000.
During the fourth quarter, the company purchased approximately 33,000 shares of its stock at a cost of $1m. Since beginning its share buybacks in the first quarter of 1996, the company has purchased approximately 5.8 million shares of its common stock at a cost of $91.8m.
