Despite Progress Software’s Weak Outlook The Business Software Company Is Undeterred

Progress Software has had a tough go of it in recent days as a lower outlook for its first quarter shook investors.

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After all, uncertainty looms large with the ongoing trade war with China and the protracted government shutdown weighing on business confidence. While Progress Software didn’t cite those reasons for its lowered forecast for the first quarter, investors are looking for any signs of future pain. If confidence on the part of businesses weakens, then spending on software and SaaS platforms could decline as well.

For the first quarter Progress now expects revenue in the $85 million to $88 million range, lower than its past target for first-quarter revenue of $94.7 million. That comes on the heels of a 4% decline in fourth-quarter revenue on a year-over-year basis. It was able to post earnings per share of $0.41, which is 21% higher than the EPS of $0.34 it lodged in the year-earlier fourth quarter. The mixed results have weighed on shares, which are down since the start of the New Year.

Progress Software provides developers with a platform and tools to make business-critical apps. With data exploding and the digital devices proliferating, companies need to be able to make apps on the fly and Progress Software aims to be the platform they do that with.

Despite the wavering confidence on the part of investors, Bedford, Massachusetts-based Progress Software isn’t deterred. In the January conference call to discuss earnings results with Wall Street, Chief Executive Yogesh Gupta said he is “excited about the opportunities” that lie ahead and that the SaaS company plans to focus on keeping its current business running, expanding its sales reach to increase its pipeline and bookings for its new platform and to pursue acquisitions of complementary businesses that it thinks it can operate more efficiently.

“While we are focused operationally on strengthening our business and growing our new platform, we also continue to execute on our capital allocation strategy in 2019, utilizing both share repurchases and dividends to return significant capital to shareholders,” Gupta said during the conference call with analysts. “Executing on our M&A strategy remains a top priority for 2019 as well.” The CEO noted Progress Software has built a “pipeline of opportunities” that meet the company’s financial criteria and would provide scale and increased cash flows. “I am confident that we have the financial resources, the management team and the correct approach to execute and integrate such acquisitions in 2019,” he said.

Outside of deal making the company is focusing on its modern application development platform which will help it win new customers and provide a future technology path for its existing customers. Emphasizing that the company is still confident in its core business, Gupta said that modern application development continues to evolve and so does Progress Software. “Businesses are under great pressure to be agile and to deliver these new apps at an ever-increasing pace with a great omni-channel experience, including mobile, web, chat, AR, VR, and more,” he said on the call.