Progress Software’s latest set of results show a company in the midst of transition and that rarely makes for comfortable reading. Revenue for the company who provides software to smooth the development, deployment and management of business applications, was down 15% in Q2 (ending May 31 2012), to $114.6m and the company reported a net loss of $1.9m compared to a net income of $18m in the year ago quarter.
In April this year, following a five month strategic review initiated by incoming CEO Jay Bhatt (appointed in November 2011) Progress Software started work on the result, which involves selling off 10 non-core products, cutting headcount by up to 15%, while increasing its investment in its core products (OpenEdge platform, DataDirect Connect and Decision Analytics portfolio), and its emerging PaaS initiative. It is too early for the plan to have had much of an impact – indeed revenue from the core products was down 14% to $78.7m – but it is acting quickly and has announced the divestment of FuseSource to Red Hat.
Q3 will be another uncomfortable quarter but the company has confidence that by Q4 the situation will be starting to improve and is guiding for core revenue to be up to $90m - $95m, heading in the right direction.
Progress Software will be divesting itself of several of its acquired products and will have a vastly slimmed down portfolio at the end of the process ,which is a sound strategy. Among the retained core products it is keeping hold of its in-house built OpenEdge 4GL development language (a case of sticking to its knitting), and the acquired analytics portfolio (which is a technology hot spot), as well as investing in cloud extensions and hooks (a technology must-have), so it has foundations from which to grow.