Press Release

Pegasystems Announces Record Revenues of $212 Million for 2008 and $59 Million for Fourth Quarter

 

Annual Revenue Grows 31%; Annual License Revenue Grows 50%; 2009 Revenue Expected to Exceed $250 Million

 

CAMBRIDGE, Mass. – March 9, 2009 –Pegasystems Inc. (NASDAQ: PEGA), the leader in Business Process Management (BPM) software, today announced financial results for the year and the fourth quarter ended December 31, 2008. Total revenue for the year ended December 31, 2008 increased 31% to $211.6 million, compared to $161.9 million in 2007. License revenue for the year increased 50% to $76.6 million, compared to $51.1 million in 2007. Net income for 2008 was $11 million, compared to $6.6 million in 2007. During 2008, the Company generated $38.4 million in cash flow from operations and ended the year with $167.2 million in cash and marketable securities.

The following table presents selected financial information for the fourth quarters and years ended December 31, 2008 and 2007:

Fig.1) Selected Financial Information for the Fourth Quarter, 2008 (click for details)

Business  Perspective

“Our record business results continue to  be driven by the substantial returns our customers achieve by applying Pegasystems  “Build for Change®” technology.   Client successes in 2008 included both transformational programs to improve  revenue, customer service and productivity, as well as targeted implementations  to rapidly “wrap and renew” legacy applications by adding new business  functionality,” said Alan Trefler, Pegasystems’ Chairman and CEO.

“2008 yielded significant client successes  across many business operations, including banking, credit cards, lending, property  and casualty insurance, life insurance, health payers, care providers, telecom,  manufacturing, hospitality, government, and business process outsourcing. We  are also pleased with the BPM awards our customers and products have received  from respected industry analysts.  Our  increasing footprint is facilitating deeper relationships with major consulting  partners who are further growing their already significant Pegasystems  practices.  These successes demonstrate  how our “Build for Change®” technology can be compelling even in  today’s tough economic environment,” concluded Mr. Trefler.

Craig Dynes, Pegasystems’ CFO, added, “We  achieved record revenues and record new license signings in extremely difficult  economic conditions. Though we expect that these challenging conditions will  continue for much of 2009, we are forecasting further expansion of our business.  We currently expect revenue in 2009 to surpass  $250 million, which we estimate will result in net income that may exceed $17  million on a GAAP basis.  Cash flow from  operations is forecasted to be approximately $25 million in 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 March 10, 2009. Dial-in information is as follows: 877-719-9788  (domestic) or 719-325-4838 (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.

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” 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 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 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 March 9, 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 March 9, 2009.

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About Pegasystems

Pegasystems, the leader in business process management and a leading provider of CRM solutions, helps organizations enhance customer loyalty, generate new business, and improve productivity. Our patented Build for Change® technology speeds the delivery of critical business solutions by directly capturing business objectives and eliminating manual programming. Pegasystems enables clients to quickly adapt to changing business conditions in order to outperform the competition. For more information, please visit us at www.pega.com.

All trademarks are the property of their respective owners.

The information contained in this press release is not a commitment, promise, or legal obligation to deliver any material, code or functionality. The development, release and timing of any features or functionality described remains at the sole discretion of Pegasystems, Pegasystems specifically disclaims any liability with respect to this information.

US Press Contacts
Brian Callahan
Director of Corporate Communications
Brian.Callahan@pega.com
617-866-6364

Frank Tutalo
PR Manager
Frank.Tutalo@Pega.com
617-866-6906

EMEA Press Contact
Joanna Richardson
PR and Communication Manager - Europe
Joanna.Richardson@Pega.com
0118 965 1660

Pegasystems Inc.
101 Main Street, 7th Floor
Cambridge, MA
02142-1590
U.S.A.
Phone 617-374-9600
Fax 617-374-9620