Pegasystems Announces Financial Results for First Quarter of 2014
GAAP License Revenue increases 22% in the First Quarter of 2014; Q1’14 GAAP EPS of $0.12; Q1’14 Non-GAAP EPS of $0.20 increases 18% over Q1’13
CAMBRIDGE, Mass. – May 6, 2014 – Pegasystems Inc. (NASDAQ: PEGA), the software company powering the digital enterprise with Better Business Software®, today announced results for its first quarter ended March 31, 2014.
“Pegasystems kicked off 2014 with a strong first quarter,” said Alan Trefler, Founder and CEO of Pegasystems. “With license revenue growing at 22% on a year-over-year basis, it is clear that the Pega 7 Build for Change® platform is continuing to gain adoption as our clients realize the value of improved customer engagements, simplified processes, and the ability to adapt and change their businesses to meet the needs of today’s dynamic and challenging business world.”
Mr. Trefler continued, “Throughout the world and across business sectors, our clients are utilizing Pega for both tactical and transformative engagements. With continued accolades from many leading industry analysts reinforcing what our clients already know about the strength of Pega solutions, we are thrilled to invite our clients, partners, and investors to join us at PegaWORLD 2014, June 8-10 in Washington, D.C., to learn more from this vibrant and active community about how they are addressing business challenges by transforming into digital enterprises that are better able to adapt and respond to change.”
Cash: Total cash, cash equivalents, and marketable securities at the end of the quarter was $221 million, up 41% from 2013 year-end.
Cash generated from operations for the quarter was $72.9 million, an increase of 10% on a year-over-year basis. Free Cash Flow, which we define as operating cash flow less Cap Ex, was $71.6 million, an increase of 10% on a year-over-year basis.
License Backlog: The Company computes license backlog by adding billed deferred license and cloud revenue and off-balance sheet license and cloud commitments, which is business that is contracted, unbilled and not recorded on the Company’s balance sheet.
Total billed deferred license and cloud revenue on the balance sheet as of March 31, 2014 was $62.7 million, an increase of 98% on a year-over-year basis. Off-balance sheet license and cloud commitments as of March 31, 2014 totaled $270.2 million, an increase of 7% on a year-over-year basis.
“With strong revenue and EPS performance and growth in year-over-year license backlog, we are executing well against our plan for 2014. Our Insurance vertical led the way in Q1, and we had a particularly strong quarter in Europe,” said Rafe Brown, Pegasystems CFO. “Our client momentum is encouraging as we look forward to the remainder of the year. We are also pleased to have recently been recognized by Forbes Magazine as one of ‘America’s Most Trustworthy Companies,’ adding to the recent accolades we have received in numerous industry analyst reports.”
Quarterly Conference Call
Pegasystems will host a conference call and live Webcast associated with this announcement at 6:00 p.m. EDT today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company's Web site at www.pega.com/about-us/investors. Dial-in information is as follows: 1 (877) 348-9349 (domestic) or 1 (678) 809-1046 (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 Investors section. A replay of the call will also be available on www.pega.com in the Investors section Audio Archives link.
Discussion of Non-GAAP Financial Measures:
To supplement financial results presented in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP"), the Company provides non-GAAP measures, including in this release. Pegasystems' management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions, and for forecasting and planning for future periods. The Company's annual financial plan is prepared both on a GAAP and non-GAAP basis, and both are approved by our board of directors. In addition and as a consequence of the importance of these measures in managing the business, the Company uses non-GAAP measures and financial performance results in the evaluation process to establish management's compensation.
The non-GAAP measures exclude the effects of certain business combination accounting entries, stock-based compensation expense, amortization of acquired intangibles, acquisition-related costs, and restructuring costs. The Company believes that these Non-GAAP measures are helpful in understanding its past financial performance and its anticipated future results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of the Company's GAAP to non-GAAP measures is included in the financial schedules at the end of this release.
“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: 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,” “should,” “target,” “forecast,” “could,” “preliminary,” “guidance” 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, among others, variation in demand for our products and services and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition, the ongoing consolidation in the financial services and healthcare markets, reliance on third party relationships, the potential loss of vendor specific objective evidence for our professional services, the financial impact of the Antenna acquisition, 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, 2013 and other recent filings with the Securities and Exchange Commission. These documents are available on the Company’s website at www.pega.com/about-us/investors/sec-filings. The forward-looking statements contained in this press release represent the Company's views as of May 6, 2014. 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 May 6, 2014.
Pegasystems (NASDAQ: PEGA) develops strategic applications for marketing, sales, service, and operations. Pega’s applications streamline critical business operations, connect enterprises to their customers seamlessly in real-time across channels, and adapt to meet rapidly changing requirements. Pega’s Global 3000 customers include many of the world’s most sophisticated and successful enterprises. Pega’s applications, available in the cloud or on-premises, are built on its unified Pega 7 platform, which uses visual tools to easily extend and change applications to meet clients’ strategic business needs. Pega’s clients report that Pega gives them the fastest time to value, extremely rapid deployment, efficient re-use, and global scale. For more information, please visit us at www.pega.com.
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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.
Lisa Pintchman Rogers
VP, Corporate Communications
Director, Corporate Communications
Sr. Manager, Public Relations
Director, Corporate Communications
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