Progress Software can help you make significant headway when managing and deploying business applications. The company's platform-as-a-service PaaS) software is used for tasks such as business process management, application integration, data management and analysis, and application development and deployment. Progress' products encompass desktops, servers, mainframes, and data centers, and can be implemented in a variety of computing environments such as Linux, Unix, and Windows. Progress serves about 140,000 organizations in more than 180 countries, with clients coming from industries such as financial services, health care, manufacturing, and technology.
The OpenEdge unit, which provides product improvements and marketing support for customers, accounts for more than two-thirds of Progress' revenue. Application Development and Deployment, which focuses on developing new customers for the company's application development efforts, supplies about a fifth of revenue with the rest generated by Data Connectivity and Integration, which provides data integration services.
Progress Software maintains US offices in California, Illinois, Massachusetts, and North Carolina. International offices are in Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Denmark, Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, the Netherlands, Norway, Poland, Singapore, Spain, Sweden, Switzerland, and the UK. Customers in North America account for about 60% of revenue.
Sales and Marketing
Progress uses both a direct sales force and a network of independent distributors in another 45 countries where it doesn't have a sales office. It markets its products directly to IT managers and software developers, the end users of its products. It also goes through ISVs, OEMs, and system integrators that embed Progress products into their own products. About half of its sales come from indirect channels. Customers include Sungard, eBay, Unisys, Toyota, the BBC, and the Arkansas Department of Education.
Progress posted a 7% revenue increase in 2016 (ended November), hitting $405 million for the year. Showing its age, the OpenEdge segment's revenue dropped 7%, but the other two segments more than made up for it. Application Development & Deployment grew at a 20% rate, adding about $37 million in sales. An early renewal from a big customer drove the unusual revenue bump for the segment. The Data Connectivity & Integration unit chipped in a $10 million sales increase, a 12% growth rate.
The company's net loss grew to about $56 million in 2016 from a net loss of $8 million in 2015. The company wrote off more than $90 million because of reduced revenue expectations in the Application Development & Deployment segment related to Telerik.
Cash flow from operations was steady year-to-year at about $103 million. In 2016, the company's cash flow was hit by a $92 million write down related to the Telerik acquisition, higher taxes, and decreased accounts receivable.
Progress Software's new focus is to provide the platform and tools that customers can use to build what it calls Cognitive Applications. The company is shifting its product core toward a platform for applications that learn as they gather more information. Progress identified the cognitive market after assessing its current businesses and determining that robust growth would be difficult. In fact, the company stopped working on its Digital Factory product suite that was released in the fourth quarter of 2016. Part of the reason is that the product faced established competitors in a market in which Progress was new. With cognitive applications, Progress can develop products using its core strengths for the developer community, a market with which it has credibility.
To carry out its new strategy, Progress streamlined its management for increased focus and better communication. The company eliminated business unit presidents and consolidated most of those responsibilities under a chief product officer. That officer is to work with teams across the company to ensure integration in its product portfolio.
Mergers and Acquisitions
In 2014, Progress acquired Telerik AD, a provider of application development tools that had gathered a community of close to two million developers. The company changed direction in 2016, however, and took a $92 million write down on the Telerik business.