Bud Robertson –SVP Finance and Administration, CFO Rick Reidy – EVP Joe Alsop – Co-Founder, CEO Dave Ireland – EVP

Brent Williams –Benchmark Capital Richard Davis – Needham & Company Eugene Fox – Cardinal Capital Management

Good day and welcome to the Progress Software Corporation first quarter earnings conference call. At this time I would like to turn the conference over to Mr. Bud Robertson, please go ahead sir.

Good morning, this is Bud Robertson, Senior Vice President of Finance and Administration and Chief Financial Officer for Progress Software Corporation. Joining me today are Joe Alsop, Co-Founder and CEO and members of the senior management team. We’ve prepared a slide presentation to view during this call. The slide presentation can be found on the investor relations section of the Progress website by clicking on the live webcast icon. The matters we’ll be discussing today other than historical financial information consist of forward looking statements that involve certain risks and uncertainties. Statements indicating that we expect, estimate, believe, are planning or plan to are forward looking as are other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important risk factors which could cause actual results or events to differ materially from those anticipated by the forward looking statements contained in our discussion today. Information on these risk factors is included in our Securities and Exchange Commission report. We reserve the right to change our budget, product focus, product release dates, plans and financial projections from time to time as circumstances warrant. We shall have no obligation to update or modify the information contained in our discussion in the future when such changes occur. With respect to any non GAAP financial measures discussed in this call, we have provided on our website a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non GAAP financial measure to the most directly comparable GAAP financial measure. You can access this information which is included in our earnings release at www.progress.com. We reported this morning the following results for our first fiscal quarter of 2008 which are reflected in the first few slides of the online presentation. Revenue for the quarter increased 6% from $115 million in Q1 of fiscal 2007 to $122 million. On a GAAP basis, we reported the following: operating income for the quarter increased 39% from $12.4 million in Q1 of fiscal 2007 to $17.1 million. Net income increased 47% from $8.7 million in Q1 of fiscal 2007 to $12.8 million and diluted earnings per share increased 45% from $0.20 in Q1 of fiscal 2007 to $0.29 this quarter. On a non GAAP basis, we reported the following: non GAAP operating income for the quarter increased 8% from $23.5 million in Q1 of fiscal 2007 to $25.5 million. Non GAAP net income increased 14% from $16.2 million in Q1 of fiscal 2007 to $18.6 million. And non GAAP diluted earnings per share increased 14% from $0.37 in Q1 of fiscal 2007 to $0.42 this quarter. The non GAAP results in the first quarter of fiscal 2008 exclude after tax charges of $3 million for stock based compensation, $2.5 million for amortization of acquired intangibles and $0.2 for professional services fees associated with the investigation and shareholder derivative lawsuits related to the company’s historical stock option grant practices. Non GAAP results in the first quarter of 2007 exclude after tax charges of $3.4 million for stock based compensation, $3 million for amortization of acquired intangibles and $1.1 million for professional services fees associated with the investigation and shareholder derivative lawsuits related to the company’s historical stock option grant practices. In reviewing the fiscal 2008 first quarter, within the year over year total revenue increase of 6%, software license revenue was up 1%, maintenance revenue increased 10% and professional services revenue increased 2%. With regard to the impact of changes in foreign exchange rates on the quarter, total revenue in the first quarter of fiscal 2008 would have been flat on a constant currency basis versus the 6% increase reported. Software license revenue would have decreased 3% on a constant currency basis versus the 1% increase recorded. Maintenance service revenue would have increased 3% on a constant currency basis versus the 8% increase reported. As noted on slide 8, international business was 59% of the quarterly total as compared to 56% in Q1 of fiscal 2007. Revenue from the open edge product line increased 1% to $83 million this quarter from $81.8 million in Q1 of fiscal 2007 and represented approximately 68% of total revenue this quarter as compared to 71% of total revenue in Q1 of fiscal 2007. Revenue from the data direct product line increased 5% to $17.1 million from $16.3 million in Q1 of fiscal 2007. Revenue from the enterprise infrastructure product line increased 25% to $21.1 million from $17.1 million in Q1 of fiscal 2007. Revenue from channel partners, including application partners and OEMs accounted for 58% of our total license business this quarter as compared to 57% in Q1 of fiscal 2007. Within open edge product line, partners accounted for 74% of our license business this quarter as compared to 68% in Q1 of fiscal 2007. Our aggregate revenue backlog at the end of the first quarter of fiscal 2008 was approximately $187 million of which $163 million is included on our balance sheet as deferred revenue, primarily related to unexpired maintenance and support contracts. The remaining amount of backlog of approximately $24 million was composed of multi year license arrangements of approximately $21 million and open software license orders received but not shipped of approximately $3 million. Our aggregate revenue backlog at the end of the first quarter fiscal 2007 was approximately $171 million of which approximately $146 million was included on our balance sheet as deferred revenue primarily related to unexpired maintenance and support contracts. The remaining amount of backlog of approximately $25 million was composed of multi year license arrangements of approximately $23 million and open software license orders received but not shipped of approximately $2 million. We do not believe that backlog at of any particular date is indicative of future results. Order and headcount of 1,679 was up 1% with one year ago. Looking at slide 10, highlighting balance sheet information, our cash balance was approximately $224 million at the end of the quarter. In addition, we had approximately $95 million in investments related to municipal and student loan auction rate securities that we classified as noncurrent on our balance sheet because these securities failed to clear at auction and we are currently unable to sell these securities in the market. The failed auctions have resulted in higher interest rates being earned on these securities but the investments currently lack short term liquidity. Based on discussions with our outside investment advisors, we anticipate that many of these securities will be called by the issuers in the next six to 12 months but there can be no assurance that such events will occur. Our accounts receivable days sales outstanding or DSO was 68 days at the end of the first quarter, down 4 days from one year ago and up 6 days from year end. During the first quarter of fiscal 2008 we repurchased approximately 1.5 million shares of our stock at a cost of $46.2 million. At the end of the first quarter, there were approximately 7.9 million shares available for repurchase under our Board authorized repurchase program that expires on September 30th, 2008. A summary of our historical share buybacks is reflected in slide 11. During the past few months there have been several significant announcements and developments. We announced that the Progress Actional products family has been positioned in the leaders quadrant of the Gartner 2007 magic quadrant for integrated SOA governance technology sets. According to the report, good governance of service oriented architecture is becoming a core competency underscoring the important of robust management capabilities across SOA deployment. This recognition from Gartner follows a recent Forrester [Ware] report which can be viewed at www.actionals.com/forresterwave that named actional the top current offering amongst stand alone SOA and web services management solutions. The actional SOA management products family provides best in class policy based visibility, security and control for services, middle ware and business processes. Earlier this week, Data Direct announced its plans to support the rapidly emergent data services objects or SDO standard within its family of data connectivity and mainframe integration products. The SDO standard developed by a diverse group of leading technology vendors participating in the Oasis SDO working group is designed to simplify and unify the way applications use data within a service oriented architecture. In order to enhance our ability to execute on these plans, we also announced the recent acquisition of Xcalia, a leader in the development and adoption of the SDO standard in data integration technologies. Xcalia is now part of the data direct technologies. In February we also announced that IDC has named Progress Software as the largest pure play imbedded database management systems or DBMS vendor in IDC’s December 2007 report entitled “Worldwide imbedded DBMS 2007, 2011 forecast and 2006 vendor shares.” The IDC report defines imbedded DBMS as database management systems sold to independent software vendors or ISVs for inclusion in their software products. More information on these announcements and other announcements and upcoming events can be found on our website at www.progress.com. And looking to the remainder of fiscal 2008 and the second quarter, we are providing the following guidance. One, for fiscal 2008 we expect revenue to be in the range of $520 million to $530 million. Software license revenue is expected to be in the range of $198 million to $206 million. Two, we expect revenue from the Progress open edge product line to be in the range of $340 million to $345 million representing year over year growth of approximately 1-3%. Three, we expect revenue from the data direct product line to be in the range of $81 million to $85 million representing year over year growth of approximately 10-15%. Four, we expect revenue from the enterprise infrastructure product lines to be in the range of $95 million to $104 million representing year over year growth of approximately 15-25%. Five, we expect GAAP operating income to be between $85 million and $88 million including a charge of approximately $17 million for stock based compensation, approximately $17 million for amortization of acquired intangibles and approximately $1 million for professional services associated with our ongoing stock option investigation and derivative lawsuits. Six, we expect non GAAP operating income, which excludes stock based compensation, amortization of acquired intangibles and professional services fees associated with our ongoing stock option investigation and derivative lawsuits to be between $120 million and $123 million. Seven, we estimate that non operating income will be around $2 million for each remaining quarter of fiscal 2008, while this may vary depending on interest rates, potential stock repurchases, fluctuations in foreign exchange rates and our cash balances. Eight, we expect our effective tax rate to be around 36% for GAAP purposes and around 35% for non GAAP purposes. The difference primarily relating to tax treatment of stock based compensation. Nine, estimated future weighted average share counts for earnings per share depends on future option activity, future share repurchases, share prices and other factors. For now, we think using a share count of between 43 million and 44 million for each of the remaining quarters of fiscal 2008 for diluted earnings per share seems reasonable. Ten, we expect diluted earnings per share on a GAAP basis to be in the range of $1.35 to $1.40. On a non GAAP basis, which excludes a total charge of approximately $0.57 per share for stock based compensation, amortization of acquired intangibles and professional services fees associated with our ongoing stock option investigation derivative lawsuits, we expect non GAAP diluted earnings per share to be in the range of $1.92 to $1.97. Eleven, for the second quarter of fiscal 2008, we expect revenue to be between $127 million and $129 million with software license revenue between $46 million and $48 million. We expect diluted earnings per share on a GAAP basis to be in the range of $0.31 to $0.33. On a non GAAP basis, which excludes a total charge of $0.14 per share for stock based compensation, amortization of acquired intangibles and professional services fees associated with our ongoing stock option investigation and derivative lawsuits, we expect non GAAP diluted earnings per share to be in the range of $0.45 to $0.47. Twelve, we are utilizing an average Euro exchange rate of $1.53 in preparing this guidance for the second quarter. This guidance is built on the continued success of our partners, successful implementation of our new go to market strategy, including continuing to improve on our ability to generate new business and end user accounts, continued strong performance from our professional growth, higher growth product line, especially the enterprise infrastructure product line and direct product [unintelligible]. Let me go back again. This guidance is build on the continued success of our partners, successful implementation of our new go to market strategy, including continuing to improve on our ability to generate new business and end user accounts, continued strong performance from our higher growth product lines, especially the enterprise infrastructure product lines and data direct product lines and no significant strengthening of the US dollar against currencies form which we derive a significant portion of our business. As we were advised, these and a number of additional factors may affect future results and actual results may differ materially. Consequently, there can be no assurance that we will achieve results consistent with these comments. We plan on releasing financial results for our second quarter on Thursday, June 19th, and holding the usually conference call that morning at 9:00 AM. This conference call will be recorded in its entirety and be available on our website at www.progress.com in the investor relations section. I’d now like to open up the call to your questions. We’ll first take questions from the analysts that publish research on Progress Software and then questions from anyone on the call.

(Operator instructions). And we’ll take our first question from Brent Williams with Benchmark Capital. Brent Williams –Benchmark Capital: Hi guys, thanks for taking my question. First off particular standouts in the various products in the enterprise infrastructure division like I don’t know, what do I traditionally ask about, oh yeah, Apama.

What’s the question? What’s the question Brent, this is Rick. Brent Williams –Benchmark Capital: Hi Rick, just any particular standouts or things worthy of note in terms of momentum for various EID products like Apama perhaps or others?

Well with respect to Apama, Apama had a very good quarter and the outlook for the year remains very, very bring and although we don’t actually break out those numbers as part of the EID thing, we’re pretty excited about where it’s going and the current prospects and the current pipeline. We did publicly announce a couple of deals, one in particular was Turquoise which is the multilateral trading exchange being developed as an alternative to the London Stock Exchange, has adopted Apama’s CEP engine as their regulatory compliance and fraud detection infrastructure software. So we’re pretty excited about that. And so it had a very, very good quarter. The outlook looks bright. Brent Williams –Benchmark Capital: Great, let’s see, this one might be for either Dave or Bud. The Americas did about a less percent of growth and the mix within open edge of the partner business jumped a lot more towards indirect than it was a year ago. Were those related and was that anything, is there anything going on there?

Well let me start off and then Dave or Joe can jump in. The percentage of the 74%, if you look historically over the last eight quarters you know it runs between 63-74, so it’s in the historical ranges although it’s at the high end. You know and as we’ve stated in our Q4 conference call you know we have restructured our sales force to gain efficiencies in the direct sales force and one of the things that has impacted the Q1 particularly in North America is as that sales force rolls out.

Yeah Brent, this is Joe, just to expand a bit on what Bud said. And perhaps we’ll get a question from Richard later on or his partner in crime at Needham, but I remember reading a report, I don’t know, a year ago that said something like buy the stock of a software company a year after a sales re-org. And so we made some decisions late last year that we think are going to substantially enhance our ability to close direct business. I think we’re further along in that transformation in [amia] than we are in North America. I think we’ve made very substantial progress in [amia] under new leadership there. We’re working through it in North America and I think that based on you know the outlook, we feel pretty good about it but that certainly contributed to relative strength, particularly in direct business in [amia] vis-à-vis North America. Brent Williams –Benchmark Capital: Okay and then last question, how is shadow doing within data direct? Either relative to you know the last couple of quarters or relative to data direct as a whole? [Unknown Executive]: Yeah, Shadow in Q1, shadow was flat year over year which contributed somewhat to our lower growth rates than we anticipated. However, in terms of the pipeline and the outlook, it’s as strong as I’ve ever seen. I think part of it is frankly a really good quarter we had a year ago, the year over year comparisons, a little bit of pipeline drain but also a transitional issue we’re going through right now with a brand new product that we launched, a complete refresh of the entire shadow product line. As a result we’ve got more paid or more POCs right now than we’ve had in a very long time. So we think going forward it’s going to significantly ramp up. Brent Williams –Benchmark Capital: Great and then last question, you know one of the interest developments at the analyst day a month ago was the whole notion of the suite for SOA, is it still too early to look at any changes in the sort of pipeline fill rate as a result of that message sinking in or have you any experience with you know quantitative results from hanging that message out there?

Brent I think it’s, what that was four weeks ago or something like that, I can’t quite remember. Brent Williams –Benchmark Capital: It was about six weeks ago, time flies when you’re having fun.

Well, I’ve been to a lot of places in those six weeks, but any rate. I think it’s too early to translate what I think is a very solid message and positioning and good reaction from industry analysts into comments on the pipeline that are based on that conference and the way we positioned it. So I think it’s, you know the positive feeling we have about Q2 I would not attribute to you know some presentations that we made, whatever it is, five or six weeks ago. Brent Williams –Benchmark Capital: Okay you know I thought I might very well be too early but I just, no points off for trying I hope. Anyway, thanks for taking my questions.

And we’ll take our next question from Richard Davis with Needham & Company. Richard Davis – Needham & Company: Hey, thanks. So when you think about like the open edge side of the business, I mean everyone knows it’s a great cash machine and it doesn’t grow super fast. Is there a way to boost the growth of that or I know you’re adding features and functionality but is it just, it’s such a big ocean liner, it’s hard to get the thing to get up to you know 15 knots you know, 8 knots is the normal pace of this thing or could you just kind of talk about that?

This is Dave, it’s not so much it’s a big giant ocean liner. A large percentage of the business as you know is through the application partners. So our energy has been focused on growing the application partners and that fuels our growth. So there is another party in the equation here that drives growth. Richard Davis – Needham & Company: Got it. So you just got get those guys to do better?

Yeah and that’s a lot of our focus and energy is to make sure they modernize the applications and they’re equipped to compete and we’re seeing good results from that. But obviously we’re working our way through the partner base. Richard Davis – Needham & Company: Got it.

Richard, Joe here, just to add to that, as an example of one of the things that we’ve done is over quite a few years now, we’ve put a lot of emphasis on SAS and SAS enabling the partners. And encouraging them to go SAS including changing our business model which is doable because we have a close relationship with these people where essentially we’re on a POA or percentage of application. And that obviously does very little for the license revenue line in the short to medium term but we think it’s got a long, you know a lot of long term potential and the SAS business has grown at much higher rates than the overall license business in open edge. So I think there’s a lot of potential there but you know you quoted yourself about talking about the ocean liner because I remember that in one of your reports. You know that’s both a positive from the point of view of the stability of the business but it does hold back the growth rate because it is a substantial business with a lot of recurring revenue and Dave’s point about you know that the third party is involved so as we put new stuff into the product they have to then work it into their applications and you know as well as continuing enhancing the functionality of this application before they see benefits in the marketplace from the work that we’ve jointly done. Richard Davis – Needham & Company: Got it. Hey I one of the questions is you know if you listen to the guys over in San Francisco area you know and they’re beating the shoe on the desk and things like that, they would tell you that we’re not there, we’re about to be there, the death of the independent software vendor. In your experience are these kind of highly focused customers, I mean they seem to be not disappearing either at the face of Oracle or at the face of Net-suite which is supposed to roll up the entire software space. Do you have any point of view on that? [Unknown Executive]: Yeah our view on that is a little bit like the success of Soviet central planning for Moscow. You know that the business world is infinitely complex. I mean heck listening to the radio coming in this morning about the subprime meltdown, not that we’re affected by that in any direct way, people were just on the commentary just hit me because people were saying we created this thing that’s so bloody complex nobody can figure it out. Well that’s a comment that’s true of the economy as a whole. There are so many segments and so many opportunities that we have a lot of partners that you know seldom to never see competition from those big general purpose suites. And they, some of them are seeing you know very dramatic growth. That’s offset of course by ones that may compete more with those people. But I really think the analogy to the success or lack of success of Soviet central planning is pretty appropriate. Richard Davis – Needham & Company: And then the last question with regard to the software development tool side of your business you know again if you kind of back out the rough approximate contribution from open edge in terms of profits it feels like that 25% of your revenue is still losing a bit of money, not wildly so but some at least. What do you need to do to kind of get that to a black number on the bottom line, is it just a matter of scale and it just comes with time or again if you could comment on that, that’d be great.

Rich, it’s Bud, yeah no it is just what you said. It is a matter of time and scale, we have the infrastructure in place to grow that business a lot higher than it is now, obviously, other than potential direct sales force that’s required as quoted us, get to the point you have to add another sales person in that loop but it’s leverage on the revenue line, it’s growing as you stated, rapidly at 25% and as we’ve stated before we expect that group to be breaking even by 09. Which is we said this year we’d be getting there and it’s certainly on the path at 25% growth to get to the point of positive contribution. Richard Davis – Needham & Company: Got it, okay, those were my questions, thanks.

(Operator instructions). And we do have a question from Eugene Fox with Cardinal Capital Management. Eugene Fox – Cardinal Capital Management: Want to congratulate you guys on what was a very good quarter and very difficult circumstances and really want to acknowledge the large amount of stock you all bought, thank you. I presume the acquisition, the $5.7 million [unintelligible].

Eugene, this is Joe, we can’t, you kind of tailed off at the end you were talking about the acquisition of Xcalia? Eugene Fox – Cardinal Capital Management: Yeah, I presume the $5.7 million that’s in the cash flow statement was the acquisition that you were referencing?

Yes. Eugene Fox – Cardinal Capital Management: Okay, other than that everything looked good and I just wanted to congratulate you all on a good quarter, thank you.

(Operator instructions). And it appears we have no further questions at this time, I’d like to turn the conference back over to Mr. Robertson for any additional or closing remarks.

Okay this concludes today’s conference call, thank you all for participating.

Thank you once again that does conclude today’s conference, you may disconnect at this time.