Progress Software Reports Third Quarter Financial Information; Revenue Up 12% Year-Over-Year

"Our Progress OpenEdge business performed as anticipated, and ourDataDirect Technologies product line, which includes the recentlyacquired Shadow mainframe integration products, had an extremelystrong quarter. Overall, we achieved double-digit growth in softwarelicense revenue and total revenue," stated Joseph Alsop, co-founderand chief executive officer of Progress Software. "Our EnterpriseInfrastructure product lines, formerly Sonic and Real-Time, alsoachieved double-digit software license revenue and total revenuegrowth, with Data Services products performing less than anticipatedand Sonic and Apama demonstrating solid growth."

The company's cash and short-term investments at the end of thequarter totaled $237 million. During the third quarter, the companydid not purchase any shares of its stock. On September 13, 2006, theboard of directors authorized, effective as of the company's filing ofits restated financial reports, the repurchase of up to 10 millionshares of the company's outstanding common stock, at such times whenthe company deems such purchases to be an effective use of cash,during the period from October 1, 2006, through September 30, 2007.The company's existing repurchase authorization, under which 9.5million shares remain available for repurchase, expires on September30, 2006.

A Special Committee of the Company's board of directors iscontinuing the review commenced by the Audit Committee with respect tothe Company's historical practices regarding its stock option program.The Special Committee is being assisted by both the Company's outsidelegal counsel and independent legal counsel. On August 29, 2006, thecompany announced that:

-- it will restate its previously issued financial statements in order to correct errors relating to its accounting for stock-based compensation;

-- it expects to record additional non-cash charges in the range of $20 million to $30 million for stock-based compensation over the period from December 1, 1995 to February 28, 2006; and

-- it expects that it will be unable to announce its financial results for the third quarter of fiscal 2006 or file its related Quarterly Report on Form 10-Q until a final determination of the appropriate stock-based compensation expense has been made.

For these reasons, this release does not include the usualearnings-related information, and the company will not provideinformation about financial measures such as operating expense,operating income, net income or earnings per share, or any guidanceabout such measures, in its regularly scheduled conference call onTuesday, September 19, 2006.

Highlights

Volvo Cars (Belgium) deployed the XDMS Dealer Management System(DMS) from Progress Application Partner XPower Automotive Software.This service-oriented architecture (SOA) enabled system, based on theProgress(R) OpenEdge business application platform and Progress SonicESB(R), was deployed across all 65 dealers in Belgium in arecord-breaking eight months. The system enables dealers to offer anenhanced purchase, support and service experience for their customersand ensures that 98 percent of Volvo parts are delivered overnight.View press release: www.progress.com/volvo

Progress announced that its Progress Sonic ESB product rankedfirst in the Enterprise Service Bus (ESB) segment of GartnerDataquest's latest report on the worldwide application integration andmiddleware (AIM) market. The report, "Market Share: AIM and PortalSoftware, Worldwide, 2005," published June 9, 2006, provides marketshare results for the AIM market in seven worldwide regions. Overall,the Gartner Dataquest report noted that the ESB market expanded moresignificantly in 2005 than any other AIM segment with 160.7 percentrevenue growth. Revenues for Sonic ESB increased from $8.7 million in2004 to $18.5 million in 2005, increasing by over 113%. View pressrelease: www.progress.com/dataquest

Progress Software announced that it has been named an enterpriseservice bus (ESB) market leader by Forrester Research, an independentmarket research company, for its Sonic ESB product family. The reporttitled "The Forrester Wave(TM): Enterprise Service Bus, Q2 2006,"published June 30, 2006 states: "Progress (Sonic) has a strong andcredible corporate strategy" and "claims a significant number ofcustomers and provided good reference accounts." While the evaluationconsidered the Progress Sonic ESB and Actional(R) products that wereavailable through March 2006, a new version of Sonic ESB(www.sonicsoftware.com/ESB7) was made available in April that deliverspowerful new capabilities. View press release:www.progress.com/esbwave

Two Progress customers have been named in the prestigious "2006InfoWorld CTO 25" in the June 2006 issue of InfoWorld. Of the hundredsof entries received, InfoWorld selected the 25 leaders who exemplifythe best in IT management and innovation, including Progress customersRoland Whitehead from the elite auction house Bonhams and Suzanne Peckfrom the city government of Washington, DC. The article is availableonline at http://www.infoworld.com/reports/23SRcto2006.html. Viewpress release: www.progress.com/infoworld

Progress Software announced that Redcats (http://www.redcats.com)will significantly expand its use of Progress EasyAsk(R) advancedsearch, navigation and dynamic merchandising technology to power 21leading international e-commerce web sites. A global leader in homeshopping, with 17 brands across 26 countries, Redcats offers aportfolio of some of the world's most popular catalog, web and retailstore brands. View press release: www.progress.com/redcat

DataDirect Technologies released version 2.0 of DataDirectXQuery(TM), the industry's first embeddable, database-independentcomponent for processing and aggregating XML, relational and legacydata formats such as EDI and CSV. DataDirect XQuery v. 2.0 is anenterprise-grade XQuery engine that supports the latest working draftof the XQuery specification. This new release includes performanceenhancements for large XML documents, added functionality for optimalquery performance in any environment, and support for legacy dataformats. View press release: www.progress.com/Xquery

Significant New Customer and Partner Wins, New TechnologyAdoptions and Major Deployments

Significant new partners and customers adopting technology fromProgress Software, or deploying solutions using Progress Softwaretechnology, include: Abbey Corrugated, A.C. Nielsen Company, Agrencodo Brasil, American Greetings, American Society of Clinical Pathology,ARVAL Service Lease, Banca Intesa, Baptist Health System, BaudirektionKanton Zurich, Brit Insurance UK Ltd., Caribou Systems, Inc., CitibankN.A Shanghai, Cloverdale Paint, Inc., Cordell and Cordell, County ofVentura, Creation Financial Services, eBuyer Ltd., European FundServices, Fairfax County Public Schools, Flowserve Corporation,Fountain Beek, Icelandic Meteorological Office, Initiate Systems,Intech, Integro Insurance Brokers, Iveg Hoboken, Keysecurity AG, KingTeleservices, LGS Group, M-Qube Inc., MobileOne Pte Ltd, Peak6,Recreational Finance, Rockford Park District, Sayal Electronics,Softworks Group, Sun Hung Kai Securities Ltd., University of Chicago,VT Vehicle Solutions Ltd, WWF Paper Sales UK Ltd, Wyse Technology andYellow Jacket Software, Inc.

Significant existing partners and customers adopting newtechnology from Progress Software, or making substantial additionaldeployments of Progress Software technology, include:AllianceBernstein Investments, Alltel Information Services, AmericanHome Mortgage Investment Corporation, Amtrak, Bank of AmericaCorporation, Blackmont Capital, Blue Cross Blue Shield NortheasternPA, Bull Ltda., Canaccord Capital Corporation, Cargill Meat Solutions,Cooperativa Mista Agraria, Dietrich Industries, Digital Insight, ElCid Resorts, Fairfax County Public Schools, FARA Business Services,Federal Home Loan Bank of Dallas, First Data Corporation, FoxBroadcasting Company, Grupo Cometra, Mips Computer AG, HospitalityTechnologies, IBM, Initiate Systems, Lumec Inc., Northrop Grumman,Publishers Clearing House, Robeco Investment Management, Rockford ParkDistrict, Safety Insurance Public Company, Samcil, Sepsa, Texas A&MUniversity, Textron Financial Corporation, Thrivent Financial forLutherans, Universidad Autonoma de Yucatan, University of Chicago,Usina Alta Mogiana, Vector Casa de Bolsa and Wayne Dalton Corporation.

Business Outlook

The company is providing the following revenue guidance:

-- Revenue is expected to be in the range of $115 million to $118 million for the fourth quarter ended November 30, 2006.

-- Revenue is expected to be in the range of $440 million to $443 million for the fiscal year ended November 30, 2006.

About Progress Software Corporation

Progress Software Corporation (Nasdaq: PRGS) is a global industryleader providing application infrastructure software for all aspectsof the development, deployment, integration and management of businessapplications. Headquartered in Bedford, Mass., Progress can be reachedat www.progress.com or +1-781-280-4000.

Conference Call

A conference call to discuss the company's third quarter financialinformation will be webcast live Tuesday, September 19, 2006 at 9:00a.m. Eastern Standard Time via CCBN on the company's Web site, locatedat www.progress.com/investors. The call will also be webcast live viaYahoo (www.yahoo.com), Motley Fool (www.fool.com), Streetevents(www.streetevents.com), TD Waterhouse (www.tdwaterhouse.com) andFidelity.com (www.fidelity.com). An archived version of the conferencecall will be available for replay on the Progress Web site.

Safe Harbor Statement

Except for the historical information and discussions containedherein, statements contained in this release may constitute"forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements involve anumber of risks, uncertainties and other factors that could causeactual results to differ materially, including but not limited to thefollowing: the receipt and shipment of new orders, the timely releaseof enhancements to the company's products, the growth rates of certainmarket segments, the positioning of the company's products in thosemarket segments, variations in the demand for customer service andtechnical support, pricing pressures and the competitive environmentin the software industry, and the company's ability to penetrateinternational markets and manage its international operations. Thecompany undertakes no obligation to update information contained inthis release. For further information regarding risks anduncertainties associated with the company's business, please refer tothe company's filings with the Securities and Exchange Commission.

Progress, OpenEdge, Sonic ESB, DataDirect, DataDirect XQuery,EasyAsk, Actional, and Progress OpenEdge are trademarks or registeredtrademarks of Progress Software Corporation or one of its subsidiariesor affiliates in the U.S. and other countries. Any other trademarks orservice marks contained herein are the property of their respectiveowners.