Pegasystems Announces Financial Results for Second Quarter and First Six Months of 2011

CAMBRIDGE, Mass. – August 9, 2011 – Pegasystems Inc. (NASDAQ: PEGA) today announced financial results for the second quarter and six months ended June 30, 2011. GAAP revenue for the second quarter of 2011 increased 26% to $103.5 million compared to the second quarter of 2010. GAAP net income for the second quarter of 2011 was $2.3 million, or $0.06 per diluted share, compared to GAAP net loss of ($8.2) million, or ($0.22) per diluted share, for the second quarter of 2010. Non-GAAP net income for the second quarter of 2011 was $6.3 million, or $0.16 per diluted share, compared to Non-GAAP net income of $3.8 million, or $0.10 per diluted share, for the second quarter of 2010.

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Business Perspective

“We continue to expand Pega’s role with clients, helping them become more customer-centric, eliminate operational silos, and seize opportunities more rapidly,” said Alan Trefler, Founder and CEO of Pegasystems. “At our PegaWORLD conference in June, dozens of customer speakers shared their successes with more than 1,600 attendees. We also announced a significant new release of our core Pega BPM solution at PegaWORLD, featuring increased power and ease of use. This offering is the first BPM solution to seamlessly enable unified predictive decisioning and analytics, empowering organizations to optimize the overall customer experience for revenue growth and retention.”

“The power of Pega BPM is driving increased adoption in new industries and creating major new relationships with the world’s leading Systems Integrators. We continued to increase our portfolio of industry-specific customer service solutions throughout the quarter, which enable our clients and partners to achieve rapid time-to-value while leveraging the agility of our unique Build for Change® technology. We are pleased at the expansive use of Pega BPM by both our new and existing clients, and see that Pega’s ability to improve both customer service and operational efficiency is a winning combination,” concluded Mr. Trefler.

Craig Dynes, Pegasystems’ CFO, added, “The pace of our business continues to increase as the value of license arrangements executed in Q2, 2011 increased compared to Q1, 2011 and was significantly higher compared to Q2, 2010. We are pleased that we exceeded $100 million in quarterly revenue again while also building significant backlog and increasing our pipeline. We’ve had a great start to 2011, and are focused on driving business growth for the rest of the year and 2012.”

Messrs. Trefler and Dynes will host a conference call and live Webcast associated with this announcement at 6:00 p.m. EDT on August 9, 2011. Dial-in information is as follows: 1 (866) 393-1604 (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 Investor Relations section. A replay of the call will also be available on www.pega.com in the Investor Relations section Audio Archives link.

Discussion of Non-GAAP Measures

To supplement financial results presented on a GAAP basis, the Company provides Non-GAAP measures included in this release, including the tables contained herein. 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 the Non-GAAP annual financial plan is 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 results in the evaluation process to establish management’s compensation.

The Non-GAAP measures exclude certain business combination accounting entries and expenses related to our acquisition of Chordiant, as well as other significant expenses including stock-based compensation. The Company believes that these Non-GAAP measures are helpful in understanding our past financial performance and our 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 our 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 the release.

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, including those relating to our revenue, net income and earnings per share. 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 mix of perpetual and term licenses and the level of term license renewals, our ability to develop new products and evolve existing ones, 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, 2010 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 August 9, 2011. 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 August 9, 2011.

For Information, contact:

Craig Dynes,
Chief Financial Officer
617-866-6020
[email protected]

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About Pegasystems

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.

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.

 

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Lisa Pintchman Rogers
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+1 617-866-6022

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Jon Brigden
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Pegasystems Inc.
One Rogers St.
Cambridge, MA 02142
U.S.A.
Phone +1 617-374-9600
Fax +1 617-374-9620