Good day and welcome to the Progress Software Corporation Q3 Investor Relations Call. At this time, I would like to turn the conference over to Brian Flanagan. Please go ahead, sir.

Thank you, Shannon. Good afternoon everyone and thanks for joining us for Progress Software's fiscal third quarter 2015 earnings call. With me today is Phil Pead, President and Chief Executive Officer; Jerry Rulli, our Chief Operating Officer; and Chris Perkins, our Chief Financial Officer. Before we get started, I'd like to remind you that during this call we may discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives, or other information that might be considered forward-looking. This forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. Please review our Safe Harbor statement regarding this information, which is available both in today's press release as well as in the Investor Relations section of our website at progress.com. Progress Software assumes no obligation to update the forward-looking statements included in this call whether as a result of new developments or otherwise. Additionally, on this call we may refer to certain non-GAAP financial measures such as revenue, operating margin and diluted earnings per share. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our earnings release issued today. Today we published our financial press release on our website and also furnished the information to the SEC in an 8-K filing. These documents contain the full details of our financial results for the fiscal third quarter 2015 and I recommend you reference these documents for specific details. Today's conference call will be recorded in its entirety and will be available via replay on our website in the Investor Relations section. With that, I'll now turn it over to Phil.

Thank you, Brian. Good afternoon everyone, and thank you for attending our third quarter earnings call. Our third quarter performance reflected continued positive momentum in key areas of our business. Bookings from Telerik platform, which is our mobile AppDev platform and Sitefinity, our content management solution grew rapidly and as expected our data products had a strong quarter and achieved year-over-year revenue growth. OpenEdge continued to see consistent growth from its ISV partners and sales to enterprise customers were particularly strong. Earnings exceeded our expectations even as we continue to invest in our future growth. Organic growth was slightly lower than we expected due to challenges in a few areas and consequently our revenues were at the low end of our guidance range. To provide further details on our operational results I’d like to introduce Jerry Rulli, who is joining the call for the first time as our Chief Operating Officer. Chris will then follow with a discussion of our financial results and I will be back after Jerry and Chris to provide more perspective on our business and the opportunities we see in our markets. Jerry?

Thank you, Phil, and good afternoon everyone. It’s a pleasure to join my first earnings call since becoming COO in July. As Phil mentioned in his remarks, we continue to see positive momentum in some key areas of our business during the third quarter, but there are also a few challenges that impacted our revenue. Let’s take a look at each of our business units beginning with OpenEdge. On a constant currency basis, revenue was $81 million up 12% for the quarter compared to last year, including revenues from our acquisition of BravePoint. Excluding BravePoint revenue, organic growth was 7%. Our partner business maintained its solid consistent growth and sales to enterprise customers were strong, particularly in APJ where we had a large license deal with an OpenEdge end user. Maintenance renewal rates continue to be above 90% The overall revenue growth from our OpenEdge product line was strong, but we did face two challenges within the OpenEdge business unit during the quarter. First, while we achieved moderate growth in Latin America on a constant currency basis, our performance was challenged in the quarter due to the difficult economic environment in Brazil, which negatively impacted our revenue. Second, sales of our Corticon product were also lower than expected. While Corticon represents only small portion of our overall revenue, this is an area where we had projected growth in the quarter. Corticon is a market leading rules solution and we still have confidence in its strategic importance to both our OpenEdge modernization efforts and in next generation application development. Corticon has had great success in the healthcare market, with 26 states utilizing Corticon technology with the complex rules required for their healthcare exchanges. However, we realize that there would be fewer new opportunities in this market, and therefore one of our…

Thank you, Jerry, and good afternoon everyone. As we mentioned in our earnings release, we are on the low end of our revenue guidance range and exceeded our EPS guidance range for the third quarter. Total non-GAAP revenue for the quarter was 101 million compared to 79 million in Q3 2014. This represents an increase of 27% at actual exchange rates and 36% on a constant currency basis. Non-GAAP revenue includes acquisition related revenue adjustments for Telerik, totaling $6 million. As I discussed in our July guidance call and consistent with previous quarters, GAAP rules require us to eliminate certain pre-acquisition revenue classified by Telerik as deferred revenue. But we include this revenue in our non-GAAP quarterly reporting to better reflect our true business performance on a normalized basis. On a year-to-date basis, our non-GAAP revenue was 32 million. Excluding the impact of BravePoint and Telerik acquisitions, third quarter revenue for our base business grew by approximately 7% at constant currency over the last year’s third quarter. This was below the range that we had expected and consequently our total revenue was at the low end of our guidance range. As Jerry mentioned in his remarks, this lower than expected revenue was primarily due to difficult economic environment in Brazil as well as lower than expected sales of our Corticon product. The total year-over-year revenue increase in the quarter was due to growth in both license and maintenance and services revenue. License revenue was 33 million in the third quarter, up 26% from Q3 2014 at actual exchange rates and 36% on a constant currency basis. In addition to the incremental license revenue from Telerik, OpenEdge license sales were strong in the quarter, and included a large new license deal to a direct end user in our APJ region. Licenses…

Thank you Chris. I’ve talked many times about our strength in on-premise application development through the OpenEdge platform. Through our modernization strategy we’ve created a path for our partners to keep their applications competitive and relevant in the markets they serve, ensuring that OpenEdge will continue to serve as our foundation going forward. The applications that are being built using OpenEdge, I’ll refer to as systems of record. These are generally back office systems like ERP applications or front office applications such as CRM and HR management. Through OpenEdge and DataDirect, we’ve been very successful in providing tools for developers to create and connect to these systems of record. These key applications house critical business information and we believe they will remain in place for years to come and we will continue to invest in these solutions. While we are confident that systems of record will continue to grow, which creates a solid foundation for us, our opportunity for accelerated growth and in acquiring net new customers lies in next generation applications development. Enterprises are shifting a large portion of their development budget from their traditional systems of record to creating what I refer to as systems of engagement and systems of insight. These next generation applications do not replace their existing systems of record; rather they operate on top of and interact with them using data from these structured systems to provide engaging experiences for their customers. Customers in prospects want to interact digitally with companies on their own terms, in their own time and using their own devices. In response, businesses are increasingly shifting their focus to redefine the way they interact with their customers, primarily through websites or mobile apps again what I refer to as systems of engagement. Enterprises also want to create systems of insight…

Thank you Phil. That concludes our formal remarks for today. I’d now like to open up the call to your questions. I ask that you keep your remarks to y our primary question and follow-up. I will now hand over to the operator to conduct the Q&A session.

[Operator Instructions]. And we’ll take our first question from Steve Koenig with WedBush Securities.

I want to dig into Telerik. Can you remind me which of the solutions are licensed and not ratable or maybe hybrid you could sell either way?

The only solution that is sold under a SaaS service model is the Telerik platform which both Jerry and Phil mentioned during the call. All of the other products are sold on a license basis that is recognized ratably. Both license and maintenance is recognized ratably over the term of the agreement, which is generally over a one year period.

So Telerik revenue was down a bit quarter-on-quarter, and I’m wondering what was behind that? Was it certain products or reason that were weak?

There was a portion of the deferred revenue that was added back it on a non-GAAP basis. A small portion in the second quarter that was related to the deliverable of a component of software technology. So there was a little bit of an uptick in Q2 which we expected in new based on the development schedule prior our acquisitions of Telerik. In their contracts they did have, in some of their agreement a commitment for future technology deliverables, so revenue under GAAP is not allowed to be recognized in that. So that we stepped it up and back down to a normal level for Q3.

If I could squeeze in one more follow-up and I will turn it over and get back in the queue. So Telerik, excluding that Q2 bump, it looks pretty flat from Q1 to Q2 to Q3, and so we are looking for growth in the order of 20%. Can you comment on seasonality or what the growth trend is here and why was it flat, I guess is the biggest single question.

Well it depends on the timing of our bookings, and again that going in to the ratable revenue recognition. So we are seeing is Phil and Jerry commented on, we are confident number one, that we will achieve the 20% growth rate for 2015 full year, and we’ve seen an improvement or an increase in our bookings in the third quarter for those product line. So I would say that there was some, I don’t want to say a pause or through the immediate point after the acquisition to rev up some of our bookings trajectory. So I expect that the booking trend will continue to be positive.

Steve, I’ll tell you that Telerik solutions had the highest booking quarter in Q3.

Can you may be give us a little color on the bookings trajectory either how it’s gone this year, how it’s comparing to prior to acquisition.

Booking are up year-over-year versus prior to acquisitions period and again the trajectory has improved in the third quarter.

And we’ll take our next question from Greg McDowell with JMP Securities.

I appreciate all the details on the change to the full year guidance, and I was hoping just breaking it down a little bit, you talked about Corticon, Brazil and some general conservatism because of the macro environment. And when I think about it, it feels like one of those three things is in your control and maybe two of the three things are a little more macro related. So may be if we could start with what’s in your control, Corticon. Does it feel like turning around that Corticon rules engine business is a short fix or what exactly needs to be done to sort of get that business back on track?

This is Jerry. We have a tremendous amount of confidence in Corticon. I think if I look at Corticon, I would say we may have been a little more aggressive than we - looking back at the original estimate; it takes longer than we expected. We are investing in a channel relationship program for Corticon. It’s taking a little bit longer than we expected. The pipeline has grown; we are starting to see some good activity in pipeline in CALA, Central and Latin America and also EMEA. But the rules business by itself is a business where you need solutions and that’s where we’ve had the most success through system integrators and that’s where this is taking us a little bit longer in some pockets, but complete confidence. We’ve also seen some new used cases in the area of Sitefinity which are pretty intriguing again through systems integrators.

The Brazil commentary, is that more macro related or progress specific. Is there something going on with the ISVs down there that maybe we are not aware about. I would just love to hear a little bit more.

Well, overall the Brazilian economy and the inflationary conditions down there have been pretty dramatic over the last couple of months I would say, and we are really starting to see it impacting the buying decisions for technology down there, which we have some very good distributor down there, very strong distributor who commands a very good market share. But overall, the buying trends for technology in that market have slowed and we were expecting some real growth. We think our business year-over-year in Brazil will be down on a full year basis, and we are certainly expecting it to be strong based on our products, our customers, and the strength of those distributors. I don’t know if Jerry --.

Yeah, actually Greg I was down there about two weeks ago to meet with our customers and our largest distributor, and I would say that it’s very disappointing given the momentum that Brazil had. We have a pretty big operation down there, and the team was excited about the solutions that we were selling. And with what’s going on with the economy is definitely going to impact us for the year, it impacted us for the quarter. Although I will say that the distributor believes that in 2016 they are confident that the business will start climbing back up. They also feel that the corruption that’s going on down there, it’s going to be really healthy for their political climate going forward. And so they were bullish on ’16, doesn’t help us with ’15, but I think it bodes well for our business down there in ’16.

I’ll squeeze one more in here. You’re hosting your first investor and analyst day in many years, and I don’t want you to preview too much. But what can we expect coming out of that analyst day in a few weeks and love to hear any commentary you are willing to share today on sort of a sneak peak in to the 2016 operating plan or atleast hear a little bit about the philosophical approach to 2016. I’ll stop there.

I think it’s going to be a great day, and I would encourage everyone to come and visit us in New York. We are going to lay out the complete solutions strategy, some of which I alluded to today on the call. I think we are also going to share with you metrics as it relates to the recurring revenues, SaaS metrics that we’ve built up over the past 18 months I would say. So you will not only get to meet the team, understand I hope in a much greater detail of what we are doing in application development, why we think we’re going to win, but also get some metrics in the business that we haven’t previously shared.

And we’ll move to our next question from Mark Schappel with Benchmark.

Phil, starting with you R&D seemed down this quarter, and I was just wondering if there, it’s seemed down pretty significantly. I was just wondering if you could go through to why that was?

Well yeah, it was down certainly on a - you are talking about sequentially it was down. I would say that’s primarily related to one, our integration activity as we’ve brought our businesses together we found opportunities to leverage the strength of different areas of our R&D team. So I think that’s coming together very well. And we’ve been able to actually drive some benefits to the organization down there. We have a meaningful amount of our development resources across the globe today. So we’ve got sizeable groups in certainly here in the United States, Sofia in India. Those teams are producing very well, and you know on an actual reported basis, we get the benefit of certainly currency movement as the dollar strengthens. So we get that as well.

Chris, also cash flow from operations down year-over-year, pretty meaningful as well. Could you remind us was there something in the year ago quarter that maybe spiked it up a little bit more than normal or was there any particular reason why cash flow was down as much as it was year-over-year?

I don’t recall anything specific from last year’s cash flow that spiked it up. And our DSOs are good. I looked at the fact that we are well ahead on a year-to-date basis of what our cash flow was on a year-to-date basis last year. So a lot of times what happens is it depends on the timing of when we have our bookings take place for perpetual license deals that have normal payment terms. So sometimes if deals are closed at the end of a quarter, there’s still in receivables versus if they are sold in an earlier period in the quarter. So it does bounce around but again I’m very pleased and confident in our cash flow. The fact that we are ahead meaningfully on a year-to-date basis versus last year, I think it’s very good.

Just one final question here, share repurchases, no buybacks in the quarter, that’s an oddity for the company, any particular reason?

Well, as you may recall, we were near the end of our 100 million authorization that was done back in January of 2014. We wanted to have a full review of our capital allocation strategy with our Board to fully assess after we had completed the acquisitions of Telerik and BravePoint. We wanted to make sure that we had the opportunity to fully review our capital allocation strategy. And I was very pleased that our Board authorized an additional 100 million share repurchase. So really there was very little left and we wanted to take the opportunity to go ahead and have that interaction and assessment with our Board before. So we paused until we had that review.

And we’ll move to our next question from Stan Berenshteyn with Sidoti and Company.

Actually just a couple, can you may be provide some color looking at growth for data connectivity specifically, may be how much of the growth was coming clients versus new clients.

It was in both areas. I think we achieved growth at both existing and new clients, but we certainly are adding new clients. I don’t know if you guys want to comment on any of those.

We definitely added new clients in every quarter, this year and it’s not only adding new clients, it’s adding existing scope to a current client. They need access to different data sources and obviously we’ve established that relationship and we upsell that. So those are two aspects; upselling and also expansion. But we are pretty happy with the increase in new accounts through the first three quarters of this year. This is Jerry by the way, sorry.

And just also from a capital allocation standpoint. You guys just announced a 100 million by you guys in doing buybacks. But is there any possibility of future acquisitions or is that kind of off the table.

No, I think like any review of our capital allocation strategy stand, we would look at opportunistic acquisitions if we feel like we’ve got gaps in our strategic plan, roadmaps and so on clearly we are always accessing the opportunity to do that, and share buybacks and other ways that we can improve shareholder value. So we still have a significant capacity to do that, but I think that you’ve seen in this management team the prudence necessary to execute on what we have. I think the assets we’ve got today are really, really competitive and I am looking forward to bringing them altogether and showing you the power of what we’ve got at our investor day.

Great, and may be just one question on FX, do you guys employ any hedges real right now and if so to what capacity?

We don’t hedge. We only hedge specific transactions, so we make sure that as we enter in to a transaction there will be currency moving - with a committed currency moving we actually do hedge that. So we don’t forward hedge or anything of that nature based on expectations. So that’s really just a policy that we have and we always hedge our inner company balances. So don’t have any exposure on those areas.

And we’ll move next to Scott Zeller with Needham & Company.

Two questions, the first, I believe I heard for geographic performance, if you back that acquisitions I believe that EMEA was down 3% year-on-year. Could you give us some color as to how that may have happened?

Sure, I will and then Jerry or Phil can join in. First, again we saw that there were some markets I would say at the beginning. So that’s not meaningfully outside of our expectations. So we saw that there’s some market that were softer as we were going in to the year. So we made those appropriate expectations on our outlook. Specifically in the market Jerry I don’t if there’s anything that you want to --.

Yeah I would say two things Scott, for the EMEA is up slightly, probably a couple of percentage points. So in the quarter I would say that OpenEdge had several transactions that actually slipped that would have made a difference in the outcome of Q2 in the quarter. So I think that in effect I think would have showed more of a flat European performance year-over-year. But again for the quarter I mean. For the year, we are up in Europe by about a couple of percentage points.

And then Chris could you help us again just reviewing the previous guidance around the acquired entities of Telerik and BravePoint. I believe there was an expectation of around $100 million for the fiscal year in the acquired revenue and how are we tracking towards that number.

Well the guidance and the discussion that we had is, the Telerik business was at a rate trailing 12 months rate of just over $60 million around. When we acquired it was 60 million when we announced and by the time we closed a month or so later. And that’s where we said, that we expected a growth rate of over 20% off of that base. And then we said the BravePoint business it adds about 6% in total to the OpenEdge business from a revenue growth perspective to just the pro forma impact of that acquisition. So it’s less than a 100, but I’d say our expectations for the growth and the performance of those business is on track and in line. But as we also talked about those businesses, we are operating in a lower margin when we acquired them in the 10% range and also we need this pro forma again putting those business together again less than a 100 but approaching a 100. That’s what brought our margins down to the high 20% level from our 35% prior. But again I’d just say that those businesses are performing from a revenue expectation and from a profitability expectation in line with our expectation.

How would we explain the services in maintenance line being down a bit Q-to-Q when renewals on maintenance remain 90% or better?

Are you looking at actual exchange rates Q-to-Q, I mean I’m --.

So if the currency - can you look out on a currency. I’m looking at as reported.

I don’t see.

Or maybe I have that wrong one.

Year-over-year it’s going to be currency, sequentially it’s right down.

Okay, I’ll take another look at that, thank you very much.

I am sorry, sequentially it is down, I apologize about 1 million bucks or so. And I would say on the maintenance side it’s going to be based on some of the timing of the renewals, on the services side it depends on when engagements are completed and engaged upon. So there can be some watch away [sums] in that period.

And one last question in data connectivity we’ve heard and seen that it’s been inconsistent yet you look very pleased with the performance this quarter and you mentioned the pipeline is something you are excited about. How has it gone from a challenged unit to suddenly being a strong performer with a great pipeline?

Well I think if Mike Benedict was here he would say it was superior leadership. But I will tell you that the discipline that his leadership has brought and the way in which the team responded, the focus that we had on the customers building out the additional data sources that Jerry mentioned for upselling and then the other part of this if you remember Scott is the upfront revenue recognition that progress took in some of the long term deals. We let those play out, and we let them go back to the way in which we had recognized that revenue in previous years, and that is allowing the term of the contract to dictate when we recognize the revenue. So if it’s a three year contract, we’d recognize it over three years instead of recognizing a bigger portion in the first year and then the lower portion in the following years. And that helped build our backlog and gave us greater consistency and visibility to our business. So it’s a combination of those things that has resulted in the growth rate that we are seeing today. I’ve always maintained I think and you’ve heard me in previous calls that I really like the data business. It’s really strategic to our company and that we were always confident that we would be able to demonstrate that to you when we got our act together essentially, and that’s what we’ve done. I want to go back there on the previous question on the maintenance. On one of the previous calls I talked about the fact that there was a piece of the deferred maintenance that was tied upon a deliverable for Telerik. So there was a piece that came through in Q2 that was based on the technology deliverables. So there was some revenue, it was being pinned up until that technology deliverables were made. So that was the bump up in Q2 and therefore it caused the maintenance revenue to go down in Q3. Sorry I missed that.

And we’ll move to our next question from Glenn Mattson with Ladenburg Thalmann.

Hi guys, I realize we are running late so I’ll try and be quick. But just trying to balance the two negative factors, the Corticon and Latin America; I guess Corticon I think, is pretty small, like 5% of revenues, so I am wondering, was it more Brazil, and then also could you remind us what percent of Latin America is coming from Brazil?

Sure. On the Corticon side, yes Corticon’s not a substantial of the overall revenue, but it is something that we were expecting some meaningful growth on a year-over-year basis from some license booking. And so again the quarter and the rest of the year we’ve softened that. So it does impact our full year growth trajectory if that growth doesn’t come in. And then on Brazil, anybody have the percentage? 5% of - of total Brazil is about 5% of our total revenue.

Was there any one-off large deals in that growth this quarter?

We always signed some large deals, by large deal it means it could be recognized over the course of a multi-year agreement. There is always some reasonable deals, but there was nothing unusual as far as the level of sizeable deals this quarter versus prior quarters.

This is Jerry. We did sign what I would call this really solid high six figure, seven figure renewals that for us is a normal course of action as we renew these large software vendors.

Did that provide a greater that usual bump in the third quarter or is that sustainable or?

No it did not. It was not an unusual bump Glenn, we are just seeing - sorry Chris.

I think again it was a very high level in the third quarter up in the high 20s on a constant currency basis. So that is not the level of growth that we are projecting that business to go on an annual, but we do think it’s a business that if we continue to execute it can be up to a 20% year-over-year growth business. So it is a little bit higher this quarter, but again kind of in line with that we expected.

It did really help add to our backlog which we talked about earlier.

That’s right.

And then a last real quick, I know you guys are talking about Telerik growing 20% again in the fourth quarter and that it had grown that fast in the past, but did we specifically say that did it grow that fast in Q3?

20% growth.

Yeah, that’s kind of the bogey mark.

Probably it may have been a little bit below 20% as far as the quarter, but again we had good bookings and we are still pretty confident in the 20% for the year. So again I talked a little bit about we had at the start of after we acquired the business, we had get the engine running and we are pleased with how the bookings are going - went in Q3 and have really gone for the whole year. But I think that this is just going to continue to be a good solid contributor.

And there are no additional questions in the queue. I’ll turn the call back to the speakers for any additional or closing remarks.

Thank you all for joining the call today. As a reminder, we plan on releasing the financial results for our fiscal fourth quarter of 2015 on Tuesday January 12, 2016 after the financial markets close, and holding the conference call on the same day at 5:00 PM Easter Time. As we announced today, we will be hosting an investor and analyst day on Tuesday, October 20, 2015 and we look forward to seeing many of you there. Have a good day.