Good day and welcome to this Progress Software Corporation Q4 Investor Relations Conference Call. At this time, I’d 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 fourth quarter 2017 earnings call. With me today is Yogesh Gupta, President and Chief Executive Officer; and Paul Jalbert, 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, the revenue, operating margin, diluted earnings per share and adjusted free cash flow amounts we refer to are on a non-GAAP basis. 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. This document contains the full details of our financial results for the fiscal fourth quarter 2017 and I recommend you reference it 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. And with that, I will now turn it over to Yogesh.

Thank you, Brian, and good afternoon, everyone. Welcome to our fourth quarter conference call. I want to first walk you through the highlights of our financial results for the quarter and for the full year and then provide an update on our business. We are very pleased with our results for the fourth quarter. As you will recall, we had raised our full year guidance for revenue, earnings per share and free cash flow in conjunction with our Q3 earnings report in September. Our strong fourth quarter performance enabled us to deliver results that are even better than that increased outlook. Specifically, our revenues for the quarter and the year were above the high end of our guidance. And we also significantly overachieved our projections for EPS, free cash flow, and operating income margin. Full year expenses for 2017 were $30 million lower than last year, and our operating margin for the year increased to 36%. We did this while stabilizing the revenue of our core products, improving customer retention, and investing in the future of our business. In addition, our strong cash generation allowed us to return more than $100 million to our shareholders during the year, consistent with our disciplined capital allocation policy. Our financial performance for the quarter and for the full year can be traced directly to three factors, one, our focus and commitment to running our business efficiently; two, our work in strengthening our relationships with our large and loyal base of partners and customers; and three, consistently delivering greater value with our products. Our goal entering 2017 was to stabilize and strengthen our core to achieve and maintain a relatively flat revenue profile while also working towards growth in other areas. As I mentioned earlier, we restructured our core operations to make them more…

Thank you, Yogesh, and good afternoon, everyone. As a reminder, all the numbers that I’ll be referring to in my remarks are on a non-GAAP basis. For our fourth quarter, total revenue was $116.3 million, which was $1.3 million above the high-end of our guidance range of $115 million. The overachievement was primarily the result of two six-figure deals that closed earlier than expected. Revenue would have been even higher if not for an unfavorable FX impact of approximately $700,000 from the stronger U.S. dollar since we provided our revenue guidance in September. Our earnings per share of $0.67 for the quarter was also well above the high end of the guidance range of $0.61. The $0.06 overachievement consisted of approximately $0.02 of higher revenue and $0.04 from lower expenses. Our strong revenue performance coupled with continued prudent expense management enabled us to achieve a 42% operating income margin in Q4 and 36% for the full year. This is 100 basis points higher than our recent annual guidance. In addition, as a result of strong collections in Q4, our adjusted free cash flow of $122 million exceeded our annual guidance by more than $10 million. Looking at our revenue for the quarter as compared to Q4 of last year. Total revenue of $116.3 million was 1% lower at actual exchange rates and 3% lower on a constant currency basis. The year-over-year impact of exchange rates on our fourth quarter revenue was a favorable $1.8 million. License revenue of $46 million decreased by 5% at actual exchange rates and 7% on a constant currency basis. Maintenance and service revenue was $70 million, an increase of 1% year-over-year at actual exchange rates and flat to last year on a constant currency basis. The declines in total revenue and license revenue for the…

Thank you, Paul. 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 your primary question and one follow-up. I will now hand over to the operator to conduct the Q&A session.

Yes, sir. [Operator Instructions] We first move to Steve Koenig with Wedbush Securities. And Steve, your line is open. Please proceed.

I am sorry. Gentlemen, can you hear me now?

Yes. Hi, Steve.

Okay. Hi. Good afternoon. Thanks for taking my questions. Maybe one follow-up as well. Let me start by asking the six-figure deals. Did you guys say what segment was that in?

Yes. Steve, it’s Paul. They were primarily the OpenEdge segment.

And were those direct or partner, Paul?

They all came through our indirect channels, the partner deals.

Got it, okay. And those were the driver of the overachievement you said?

Yes, they were. Correct.

Got it, okay. And then for the follow-up. I wanted to ask about DCI. So, Paul, you talked about deal timing as impacting the timing of renewals. When I looked at the fiscal 2017 DCI revenue, it looks like that was down 15% year-on-year, about $8 million or $9 million; and then, you expect a further mid single digit decline in fiscal 2018. Could you elaborate on how is this timing? I mean, deal slipping out of the quarter wouldn’t do that I would think. So, maybe help me there. And I guess related to that, does Progress have a plan? What’s your thought on how to arrest the decline in DCI? Which predates [ph] you guys in fairness, which is a kind of -- when I look at DCI revenue from years back, it’s been in decline. How can we turn that around and how does cognitive apps help DCI if at all?

Yes. Steve, it’s Paul. So, I’ll take part of it and then I’ll pass to Yogesh, maybe add some color on how cognitive apps will help with that. Right? So, I think, as we’ve discussed this in the past, so this business is somewhat lumpy and the revenue recognition in this segment is related to how we invoice and recognize revenue with these arrangements. If you look at the overall book of business, that has not necessarily changed. But the manner in which the agreements are structured, whether it’s three-year or five-year, revenue is recognized based on milestone billings dates. So that’s what causes the lumpiness in the revenue. But if you look at the overall health of the business, the book of business is not necessarily growing but it’s not declining as you would expect to see just by looking at the financials on the quarterly or annual basis. I hope that helps.

So, Steve on the -- as Paul said, the current business actually is stronger than it looks. But the more important thing from going forward is that when you look at DCI, it’s a key component of any modern application that people want to build. And so I mentioned for example our mobile solution which users can weigh as a backend platform, NativeScript and Kendo UI as a frontend platform and it enables people to build these great apps and they need to connect to all data. And when they need to connect to all data, that data connectivity is facilitated by DCI. Same thing is true when you look at applying the capabilities of data RPM in the CAPD solution set. And again, connecting to data that is not OpenEdge -- OpenEdge, we have directly integrated but other than OpenEdge other data sources that is also provided by DCI. So, we see there’s a potential of growing this business through the cognitive app strategy. But to underscore what Paul said, the business actually is very, very solid despite the fact that it looks the way it looks because of the way revenue has to get recognized.

Next question comes from Mark Schappel with Benchmark.

Hi. Good evening and good job on the upside quarter here. Yogesh, this question is for you. Yogesh, given the new CAPD and the mobility initiatives that you have coming up this year, what are your plans for the direct sales force, as far as hiring?

So, we are -- our goal in terms of going to market with these is to continue to run our business lean and hire folks as demand is generated. So, we continue to be prudent about the way we go to market. And we have hired some folks in these teams and we’ll continue to look at it as demand is generated as we see need.

Okay. Thank you. And then next question here, with respect to your new booking numbers for DataRPM and Kinvey that you’ll be putting out there, do you plan to start reporting those next quarter or will it be a little bit later on?

So, from our perspective, we expect to report these numbers when they become meaningful. I do not expect that to be in the coming quarter.

Okay, great. And then, Yogesh, machine learning’s an area, it’s relatively hot, it’s an area that you’re moving into. And I was wondering if you could just talk a little bit about how you’re finding as far as being able to hire up the right developer skill sets, specifically the data scientists for artificial intelligence.

We’ve actually been very successful at attracting the right individuals. We, for example, were able to very recently bring on board a tremendously strong technological -- technology person with both background in data science and in the industrial and manufacturing space, to actually manage all of our customer success efforts. And so, we’re not seeing a challenge in hiring. Of course, it takes time; of course, it is a competitive market. But, I think the fact that we have a vision that is very complete, we have a vision that is very much software centric and doesn’t have hardware and other pieces to it, allows us to attract those engineers that truly want to work on a cognitive platform that is unique in the marketplace. And I think our other products really help strengthen the position. And so, our frontend tooling, our backend data connectivity, all those are key. And so, when people see what Progress brings to the table, we’re able to find the people and get them as needed.

And then, finally here, in your prepared remarks, Yogesh, you called out two ISVs, QAD was one of them that was adopting DataRPM today. I was wondering if those are the only two ISVs today that are your beta program for lack of a better term or do you have others?

So, those are the two largest ones and the two large ones proALPHA in Europe and QAD in this country. We have engaged with lot of the smaller ones as well. But as you imagine, we are looking to identify the ones that can have the greatest impact and the fastest way possible. So, we’re starting sort of with the bigger ones now. So, today, those are two key ones that we have.

And it appears there’re no further questions in queue. At this time, I’ll turn the conference back over to management for closing remarks.

Thank you all for joining the call today. As a reminder, we plan on releasing financial results for our fiscal first quarter of 2018 on Wednesday, March 28, 2018 after the financial markets close, and holding the conference call the same day at 5 pm Eastern time. I’ll now turn the call back to Yogesh for his closing remarks.

Thanks, Brian. Our success in 2017 has really provided us with good momentum as we head into 2018 and beyond. We’re executing well on our strategy and we’ll continue to focus on building a stronger business that generates significant returns for our shareholders. I thank you again for your input and support and we look forward to further meetings, discuss our strategy, goals, and accomplishments. Thank you all.

Thank you, ladies and gentlemen. That does conclude today’s conference. We thank you for your participation and you may now disconnect.