Attached files

file filename
8-K - FORM 8-K - PEGASYSTEMS INCd8k.htm

Exhibit 99.1

LOGO

For Information, contact:

Craig Dynes

Chief Financial Officer

617-866-6020

CDynes@pega.com

Pegasystems Announces Record Revenue of $64.8 Million and Net Income of

$6.0 Million for Third Quarter of 2009;

Provides Guidance for Continued Growth in 2010

CAMBRIDGE, Mass. – November 3, 2009 – Pegasystems Inc. (NASDAQ: PEGA), the leader in Business Process Management (BPM) software solutions, today announced financial results for the third quarter and first nine months of 2009. Total revenue for the third quarter of 2009 increased 23% to $64.8 million compared to the third quarter of 2008. Net income for the third quarter of 2009 was $6.0 million compared to $2.4 million for the third quarter of 2008.

Total revenue for the first nine months of 2009 increased 25% to $191.1 million and net income increased to $25.9 million from $8.1 million compared to the same period last year. The Company generated $38.8 million in cash from operations during the first nine months of 2009 and had $198.4 million in cash, cash equivalents, and marketable securities as of September 30, 2009.

The following table presents selected financial information for the third quarter and first nine months of 2009 and 2008:

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2009    2008    2009    2008
     (In thousands, except per share amounts)

Software license

   $ 28,358    $ 17,910    $ 82,045    $ 51,214

Maintenance

     12,489      10,045      36,608      29,027

Professional services

     23,974      24,743      72,413      72,054
                           

Total revenue

   $ 64,821    $ 52,698    $ 191,066    $ 152,295

Gross profit

   $ 40,761    $ 32,142    $ 124,883    $ 91,414

Income from operations

   $ 7,465    $ 3,441    $ 31,630    $ 8,191

Net income

   $ 6,001    $ 2,351    $ 25,884    $ 8,147
                           

Earnings per share, basic

   $ 0.16    $ 0.06    $ 0.72    $ 0.23
                           

Earnings per share, diluted

   $ 0.16    $ 0.06    $ 0.68    $ 0.22
                           


LOGO

 

Business Perspective

“Our 60% license revenue growth for the first nine months of 2009 was driven by the rapid benefits our clients are achieving in automating their customer acquisition, service, case management, and customer experience processes,” said Alan Trefler, Chairman and CEO of Pegasystems. “Our ongoing investment in Build for Change® technology and industry frameworks continues to add capabilities that deliver pragmatic returns for clients in only a few months, an advantage in today’s economic environment.”

“Clients tell us that Pega’s unique ability to directly capture business objectives into our software enables highly efficient collaboration between business and IT that yields exceptional quality, speed to market and continuous improvement of business processes. We are seeing increased investment and commitment from our alliance partners, as they are growing practices to address the increased market adoption of our Build for Change® technology in both new and traditional markets,” concluded Mr. Trefler.

“In spite of the economy, we increased license signings and backlog,” added Craig Dynes, Pegasystems’ CFO. “This is the ninth consecutive quarter that we have set new records for quarterly revenue. We expect that in 2010 we will surpass another milestone with revenue in excess of $300 million. This is preliminary guidance that will be refined when we are able to evaluate business conditions at the end of 2009.”

Messrs. Trefler and Dynes will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. ET on November 4, 2009. Dial-in information is as follows: (866) 882-0470 (domestic) or (703) 639-1476 (international).

To listen to the Webcast log onto www.pega.com at least 5 minutes prior to the event’s broadcast and click on the Webcast icon in the Investor Relations section. A replay of the call will also be available on www.pega.com in the Investor Relations section Audio Archives link.


LOGO

 

Forward-Looking Statements

Certain statements contained in this press release may be construed as “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “project,” “expect,” “plan,” “intend,” “believe,” “estimate,” “target,” “forecast,” “could”, “preliminary” and similar expressions, among others, identify forward-looking statements, which speak only as of the date the statement was made. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause the Company’s actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties include, without limitation, variation in demand and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition, the mix of perpetual and term licenses and the level of term license renewals, our ability to develop new products and evolve existing ones, the impact on our business of the recent financial crisis in the global capital markets, the negative global economic trends and the ongoing consolidation in the financial services and healthcare markets, our ability to attract and retain key personnel, reliance on key third party relationships, the potential loss of vendor specific objective evidence for our professional services, and management of the Company’s growth. Further information regarding these and other factors which could cause the Company’s actual results to differ materially from any forward-looking statements contained in this press release is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and other recent filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release represent the Company’s views as of November 3, 2009. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause the Company’s view to change, the Company does not undertake and specifically disclaims any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events or otherwise. The statements should therefore not be relied upon as representing the Company’s view as of any date subsequent to November 3, 2009.

About Pegasystems

Pegasystems (NASDAQ: PEGA), the leader in Business Process Management, provides software to drive revenue growth, productivity and agility for the world’s most sophisticated organizations. Customers use our award-winning SmartBPM® suite to improve customer service, reach new markets and boost operational effectiveness.

Our patented SmartBPM® technology makes enterprise applications easy to build and change by directly capturing business objectives and eliminating manual programming. SmartBPM® unifies business rules and processes into composite applications that leverage existing systems — empowering businesspeople and IT staff to Build for Change®, deliver value quickly and outperform their competitors.

Pegasystems’ suite is complemented by best-practice frameworks designed for leaders in financial services, insurance, healthcare, government, life sciences, communications, manufacturing and other industries.

Headquartered in Cambridge, MA, Pegasystems has offices in North America, Europe and Asia Pacific. Visit us at www.pega.com.

All trademarks are the property of their respective owners.


LOGO

 

Pegasystems Inc.

Unaudited Condensed Consolidated Balance Sheets

 

     As of September 30,
2009
   As of December 31,
2008
     (in thousands)

Current Assets:

     

Cash and cash equivalents

   $ 56,419    $ 36,087

Marketable securities

     141,936      131,142
             

Total cash, cash equivalents, and marketable securities

     198,355      167,229

Trade accounts receivable, net

     27,708      42,801

Short-term license installments

     2,951      5,445

Deferred income taxes

     4,338      4,351

Income taxes receivable and other current assets

     10,729      4,151
             

Total current assets

     244,081      223,977

Long-term license installments, net

     3,321      5,413

Property and equipment, net

     7,487      5,723

Long-term deferred income taxes and other assets

     8,536      8,117

Intangible assets, net

     372      479

Goodwill

     2,391      2,141
             

Total assets

   $ 266,188    $ 245,850
             

Current liabilities:

     

Accounts payable

   $ 5,333    $ 4,726

Accrued expenses

     6,605      9,925

Accrued compensation and related expenses

     18,123      18,015

Deferred revenue

     27,818      32,231
             

Total current liabilities

     57,879      64,897

Income taxes payable

     5,274      5,665

Other long-term liabilities

     1,909      2,174
             

Total liabilities

     65,062      72,736

Stockholders’ equity:

     201,126      173,114
             

Total liabilities and stockholders’ equity

   $ 266,188    $ 245,850
             


LOGO

 

Pegasystems Inc.

Unaudited Condensed Consolidated Statements of Income

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2009    2008     2009    2008  
     (in thousands, except per share amounts)  

Revenue:

          

Software license

   $ 28,358    $ 17,910      $ 82,045    $ 51,214   

Maintenance

     12,489      10,045        36,608      29,027   

Professional services

     23,974      24,743        72,413      72,054   
                              

Total Revenue

     64,821      52,698        191,066      152,295   
                              

Cost of revenue:

          

Cost of software license

     28      30        90      64   

Cost of maintenance

     1,558      1,454        4,452      4,006   

Cost of professional services

     22,474      19,072        61,641      56,811   
                              

Total cost of revenue (1)

     24,060      20,556        66,183      60,881   
                              

Gross Profit

     40,761      32,142        124,883      91,414   
                              

Operating expenses:

          

Selling and marketing

     19,568      15,698        51,663      45,036   

Research and development

     9,930      7,936        28,198      22,832   

General and administrative

     3,798      5,067        13,392      15,355   
                              

Total operating expenses (1)

     33,296      28,701        93,253      83,223   
                              

Income from operations

     7,465      3,441        31,630      8,191   

Installment receivable interest income

     74      95        224      248   

Other interest income, net

     721      1,151        2,404      4,104   

Foreign currency transaction gain (loss)

     266      (2,010     2,377      (1,759

Other income, net

     —        40        17      139   
                              

Income before provision for income taxes

     8,526      2,717        36,652      10,923   

Provision for income taxes

     2,525      366        10,768      2,776   
                              

Net income

   $ 6,001    $ 2,351      $ 25,884    $ 8,147   
                              

Earnings per share

          

Basic

   $ 0.16    $ 0.06      $ 0.72    $ 0.23   
                              

Diluted

   $ 0.16    $ 0.06      $ 0.68    $ 0.22   
                              

Weighted-average number of common shares outstanding

          

Basic

     36,462      36,419        36,035      36,201   

Diluted

     38,441      38,212        37,955      37,668   

Cash dividends declared per share

   $ 0.03    $ 0.03      $ 0.09    $ 0.09   
                              

(1) Includes stock-based compensation as follows:

          

Cost of revenue

   $ 250    $ 238      $ 884    $ 703   

Operating expenses

   $ 715    $ 591      $ 2,639    $ 1,849   


LOGO

 

Pegasystems Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

 

     Nine Months Ended
September 30,
 
     2009     2008  
     (in thousands)  

Operating activities:

    

Net income

   $ 25,884      $ 8,147   

Adjustments to reconcile net income to cash provided by operating activities:

    

Excess tax benefit from stock options and deferred income taxes

     (15,310     (4,046

Depreciation, amortization, and other non-cash items

     4,984        2,668   

Stock-based compensation expense

     3,523        2,552   

Change in operating assets and liabilities, and other, net

     19,758        23,550   
                

Cash provided by operating activities

     38,839        32,871   
                

Cash used in investing activities

     (17,650     (12,318
                

Cash used in financing activities

     (2,071     (5,526
                

Effect of exchange rate on cash and cash equivalents

     1,214        (560
                

Net increase in cash and cash equivalents

     20,332        14,467   

Cash and cash equivalents, beginning of period

     36,087        26,710   
                

Cash and cash equivalents, end of period

   $ 56,419      $ 41,177