Good day and welcome to the Progress Software Corporation Q1 Investor Relations Conference Call. At this time I would like to turn the conference over to Mr. Brian Flanagan. Please go ahead, sir.

Thank you, Cassandra [ph]. Good afternoon everyone and thanks for joining us for Progress Software's fiscal first quarter 2015 earnings call. With me today is Phil Pead, President and Chief Executive 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 the 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 first 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 first quarter earnings call. There is an irony in the use of technology in that making it simple is highly complex. It's that complexity that provides progress with significant opportunities. Everyone building apps or connecting to data or building a website is striving to make the user experience a simple and rewarding one. And we're not turning back from this goal. No one is seeking to make their app more difficult to use. Ask yourself this, when was the last time you had to read a manual or even call support? It is that pursuit of simplicity that draws developers to Progress. We do not dictate what language they should use or mandate their deployment platform. What we do offer is a platform that enables them to rapidly build and deploy mobile, web and on-premise applications, use incredibly intuitive user interface tools, and connect to a wide variety of data sources. Progress enables every developer the freedom to fulfill their goals of building highly intuitive applications because we reduce the complexity involved in doing so. Over the last two years we focused on building the capabilities necessary to offer a powerful way for developers to create beautiful apps without the tedium of managing the complexity. This has led us to significantly invest in our OpenEdge platform to enrich both the depth and breadth of our data connectivity and integration technologies, and to make strategic acquisitions in our app dev and deployment business. As a result of these efforts, I am very pleased with our first quarter performance. All our businesses contributed solid performances and our momentum continues to build. I will now review our individual business unit performance, starting with OpenEdge. All regions showed growth after last year…

Thank you, Phil, and good afternoon everyone. As we mentioned in our earnings release, we are very pleased that we met our revenue guidance and exceeded our EPS guidance for the quarter. Total non-GAAP revenue for the quarter was $95.5 million, compared to $74.5 million in Q1 2014. This was at the high end of our guidance range and represents an increase of 28% at actual exchange rates and 34% on a constant currency basis. Non-GAAP revenue includes acquisition-related revenue adjustments for Telerik, totaling $14 million. As I discussed in our January guidance call, 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. Revenue from BravePoint and Telerik was consistent with our expectations, with Telerik maintaining its growth trajectory of over 20%. Excluding the impact of these recent acquisitions, revenue for our base business grew by 2% at constant currency in the first quarter. Total year-over-year revenue increase was due to growth in both license, maintenance and services revenues. License revenue was $29 million in the first quarter, up 30% from Q1 2014 at actual exchange rates and 35% on a constant currency basis. In addition to the incremental license revenue from Telerik, OpenEdge license sales were strong in the first quarter, which I'll provide more detail on when I review the business unit performance. Maintenance and services revenue was $66 million for the quarter, up 27% from last year at actual exchange rates and 33% on a constant currency basis. Maintenance renewals for our base business were above 90% and generally in line with our expectations. We remain confident that we'll continue to deliver renewal rates in our base business above 90%.…

Thank you, Chris. That concludes our formal remarks for today and 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

Thank you. [Operator Instructions] And we'll take our first question from Steve Koenig of Wedbush Securities.

Hi. Thanks, gentlemen, for taking my question. Let's see. I want to focus on organic constant currency growth. And just reviewing the numbers, it looks like you guided 2% to 4% growth in Q1, you're at 2%, the kind of the low end. For Q2, Chris, I'm not sure if I got it right, did I hear you that the guidance was 1% to 2% constant currency?

That's correct, Steve.

Okay. And so for the full year you're sticking to your 6% to 7% organic constant currency growth. Can you give us some color on what gives you the confidence in the ramp that you expect to be, which should be pretty large than in the second half, what are the drivers there?

Sure. I'll make a comment from a financial perspective and Phil can add to it if he likes.

Okay.

First, I'd say, again, going just by our business units, we see good pipeline growth in our OpenEdge business unit, really for both the OpenEdge and QuarterCon [ph] product categories. So we see that that has the opportunity to contribute positively through the selling cycle in the second half of the year at a higher rate than it is in the first half of the year. We expect BravePoint will continue to contribute to that, but again we're focused on non-acquisition growth. In our data business, again we continue to build a strong backlog of multiyear revenue in our backlog versus the prior year and even in the fourth quarter. So we're seeing that pipeline grow as well as the revenue backlog grow, and we see positive momentum coming across our regions outside of North America as well. So year over year, while we expect the data business to be down in the first half of the year from a revenue -- recognized revenue point of view, we expect we will have positive growth on a full year basis, so that will contribute positively, certainly more positively in the second half of the year. And then in our app dev business, which was small prior to bringing Telerik into the business, we are seeing good interest and good buildup in our subscription pipeline. We think that that revenue base will start to -- I mean that subscription base will start to contribute more positively to the year-over-year revenue growth in the second half.

Great. Okay. And then I think for the follow-up, you know, just maybe any thoughts from Phil on that, is there anything you want to add, Phil?

Yeah. Go ahead.

Yeah. And then I would just toss, then I'll pass it to the next person, and then, Chris, maybe if you could just explain a little bit how the -- how does the -- it sounded as if the multiyear agreements will help accelerate in the second half, the recognized revenue for DataDirect, maybe could you explain a little bit how that works, if I understood that correctly?

Sure. Yeah. Again we have multiyear OEM agreements that are included in the data business and the revenue recognition is based on the timing, we're signing a multiyear agreement, it's based on certain revenue factors which could be timing of payments or other contractual deliverables that -- our revenue to be recognized once those points are hit. So --

Got it.

-- can contribute to this year in the second half, as well as to future years.

Got it.

So, Steve, this is Phil, just to add to Chris' comprehensive remarks around why we believe that the opportunity is there for us to continue to see that organic growth rate through the balance of this year ending with the guidance that we've given, this is really all about the momentum that really began towards the end of last year. We had a very strong fourth quarter. Usually that would result in, you know, a seasonally adjusted first quarter, but yet here we are again I think showing really positive momentum going into the first quarter, driven by building strong pipelines, as I've talked about from the beginning, that resonate with the market, there is a real appetite for the solutions that we have. The partnerships that we're creating, the one that I just mentioned with HP, with Salesforce, with a host of others, that are now recognizing Progress to be a leader in so many different areas, that just help us get that visibility for the growth of our business towards the balance of this year.

Terrific. Thanks very much for taking my question.

You're welcome, Steve.

And we'll go next to Mark Schappel of Benchmark.

Hi, good evening, and nice job on the quarter. Chris, starting with you, foreign exchange impact to the top line. Do I hear you correctly $4.2 million negative?

That's correct, for the first quarter, that's correct.

Okay, great. Thank you. And Telerik revenue in the quarter and BravePoint revenue in the quarter [inaudible] I know you said that expectation, do you have the exact numbers on those?

No, we really haven't broken those specific numbers out other than the metrics that we give. So we're really not providing those details specific by product category numbers.

Okay. And then shifting gears a little bit here, Phil, with respect to the early success you're seeing with the Pacific platform, is that success coming mostly from your ISP customers or are you seeing that just from some new direct guys [ph]?

It's really a combination, Mark. Obviously ISPs are really important to us. But if you look at the mix of solutions that we have and the target markets that we drive sales to, you'll see what I'm very pleased to see is a good healthy mix between ISPs and enterprises, as well as the adoption by our partners to resell our channels. I mean I'm talking specifically like service providers, that we are also targeting, along with service integrators. So it's really a combination of all four of those stakeholders that are helping us achieve that momentum.

Okay, great. And then finally, you know, Phil, with respect to the DataDirect business, if my numbers are correct, it's down four of the five past quarters. And I'm just wondering if you could just run through once again what gives you confidence why you believe this is more operationally related rather than some negative secular trends you're seeing?

Yeah, I think that, you know, clearly the numbers speak for themselves, but if you just look at the increase in our pipeline numbers, which is really what Chris targeted in his prepared remarks, I'm very confident that we're going to start to see that business begin to grow as we report out the balance of this year in the next - really not necessarily in Q2 but certainly three and four.

Okay, great. That's all for me. Nice job on the quarter. Thanks.

Thank you.

And we'll go next to Glen Mattson of Ladenburg Thalmann.

Yeah, hi. Can you hear me?

Hey, Glen.

Hi. Yes. So, curious also about DataDirect. I mean as you move towards this cloud model, do you expect it to be a less lumpy than we've seen in the past, and, you know, we're transitioning towards that period, or do you still expect kind of big fluctuations quarter to quarter?

Well, we are, as we've talked about before, we are looking and we see opportunities for more of the data license revenue to be recognized ratably. And one of the things that we're -- we see interest in and we included that is the impact on some of our guidance for this year that we see some of our data OEM agreements that come up for renewal, there will be interest in bundling DataDirect Cloud with that. And once we bundle those products together with DataConnect, we will be recognizing revenue on a ratable monthly basis. So we are eager and positive on flattening out that revenue stream. There could be quarters where renewals are signed and a client does not choose to go with the -- with bundling of DataDirect Cloud, but there could still be spikes or lumps within a period or a year. But, you know, again we're focused on making sure we get that as evened out as we can so that we, for a three-year multiyear deal, we get three years -- three separate years of revenue recognition. So we're focused on that. Some of that is up to the choice of the customer as far as what products they want and how they need their contracts structured.

Okay, great. And then just as a follow-up, on the balance sheet, the better DSOs. Is there any concerted effort on your part to improve collections? And is that sustainable or what is behind that?

Well, I think it was really attributable to two things. One, we did have a very good performance. We had a good even flow of bookings for the quarter, which helped. So we didn't have a large amount of bookings at the very end of the quarter that go into -- that get collected after the quarter. So that helped. We had great performance by our entire organization on credit and collections. They performed very well globally for us, and that we certainly noted that internally. But also the Telerik business has a better cash philosophy to it just by the nature of it. So that also impacted our DSOs. Because a meaningful amount of that business is load and no touch [ph] and the payment comes through very quickly. So that does improve the actual DSO calculation. So, you know, I think we performed very well. I think we can sustain lower than we've done historically in the DSO. But I would -- we had a lot of things happen very positively in the first quarter that actually brought it down to a lower -- a very low level.

Thank you.

Yeah.

And we'll go next to Greg McDowell of JMP Securities.

Hi. This is Richard Leary [ph] dialing in for Greg McDowell. Thanks for taking my question. A lot of my questions have been answered, but wanted to get one quick one. You did mention, if I'm not mistaken, you expect this 20% plus growth rate from Telerik, you've seen and you expect going forward for the year. Are you looking at that in constant currency terms or is that on an actual basis?

Well, historically it's on actual and constant currency. Historically Telerik is invoiced in U.S. dollars. So it is, even though -- the majority of the revenues are in North America as well. But because globally they invoice in U.S. dollars, there is not a currency translation impact on the revenue.

Okay then. How about on the expense side?

Expense side, a meaningful portion of the Telerik expenses are based in Bulgaria and linked to the euro. So we do get a benefit from exchange translation on our expenses. That's part of our natural translation hedge that we have through our cost structure. So, Telerik does benefit us with their European-based expenses.

Okay, great. And then just kind of a quick follow-up, and apologies if you've covered this before, but while you're walking through the different segments, between OpenEdge, data connectivity and app dev, is -- in terms of where BravePoint and Telerik are contributing, can you just quickly walk me through, is BravePoint going to OpenEdge and Telerik's going to app dev, or how are you thinking about it?

Yeah, BravePoint is in OpenEdge and Telerik is entirely in app dev.

Okay. Fantastic. Thank you so much.

You bet.

And we'll go next to Scott Zeller of Needham & Co. Scott Zeller - Needham & Co.: Hi, thank you. Another question on Telerik. Could you - I believe we heard previously at the time of the deal announcement that it had been growing at about 20% year on year both for bookings and GAAP revenues. Could you update us on that and tell us currently what the -- you said that it was maintaining its 20% growth rate, but could you tell us if that is also in bookings as well as GAAP revenues?

It is in both. Scott Zeller - Needham & Co.: Okay. Thank you.

And that concludes our question-and-answer session. At this time I would like to turn the call back over to Mr. Brian Flanagan for any additional or closing remarks.

Thank you all for joining the call today. As a reminder, we plan on releasing financial results for our fiscal second quarter of 2015 on Wednesday, July 1st, 2015, after the financial markets close, and holding the conference call the same day at 5:00 p.m. Eastern Time. We look forward to speaking with you again soon. Have a good day.