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8-K - FORM 8-K - PEGASYSTEMS INC | d8k.htm |
Exhibit 99.1
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 | ||||
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 todays economic environment.
Clients tell us that Pegas 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 events 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.
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 Companys 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 Companys growth. Further information regarding these and other factors which could cause the Companys actual results to differ materially from any forward-looking statements contained in this press release is contained in the Companys 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 Companys 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 Companys 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 Companys 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 worlds 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.
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 | ||
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 |
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 | ||||