Pegasystems Announces Financial Results for Third Quarter and First Nine Months of 2011
CAMBRIDGE, Mass. – November 9, 2011 – Pegasystems Inc. (NASDAQ: PEGA) today announced financial results for the third quarter and nine months ended September 30, 2011. GAAP revenue for the third quarter of 2011 increased 6% to $95.5 million compared to the third quarter of 2010. GAAP net income for the third quarter of 2011 was $5 million, or $0.13 per diluted share, compared to GAAP net income of $3.1 million, or $0.08 per diluted share, for the third quarter of 2010. Non-GAAP net income for the third quarter of 2011 was $6 million, or $0.15 per diluted share, compared to Non-GAAP net income of $9.9 million, or $0.26 per diluted share, for the third quarter of 2010.
“We continue to see our core value propositions resonating strongly with clients, prospects, and partners,” said Alan Trefler, Founder and CEO of Pegasystems. “Significant Q3 customer wins included a major electronics manufacturing services company, the distribution unit of a top entertainment organization, as well as increased adoption at global leaders in banking, healthcare and insurance.”
“In the third quarter, we expanded our industry-leading customer service, dynamic case management, and cloud solutions. We were also recognized as a ‘Top Service Provider’ by the leading mortgage banking publication. Premier partner organizations have significantly increased their executive-level commitment, bolstering our ability to meet client needs as well as generating significant year-over-year growth in our number of partner-sourced deals.”
“While our business can be lumpy from quarter to quarter, the activity level remains intense and both our direct and partner sourced pipelines are at record levels. We plan to continue to invest in sales capacity and market-leading products, with a goal of breaking through a half-billion dollars in revenue for 2012,” concluded Mr. Trefler.
Craig Dynes, Pegasystems’ CFO, added, “While license signings for Q3, 2011 were lower compared to Q3, 2010, year to date, our new license signings are up significantly from the same period last year despite the slow economy. Based on license signings to date and our pipeline, we see the license mix shifting in favor of term licenses versus perpetual licenses. Since we recognize term license revenue over the 3 to 5 year term, this shift will have the effect of deferring more revenue into future periods.”
“Accordingly, we now expect revenue for 2011 to be approximately $405 million on a GAAP basis, $410 million on a Non-GAAP basis, and to exceed $500 million on a GAAP basis for 2012. This is preliminary, revenue only, guidance for 2012 that will be refined when we are able to evaluate business conditions at the end of 2011. There should be no meaningful difference between GAAP and Non-GAAP revenue for 2012 because of small remaining Non-GAAP business combination adjustments for the acquired deferred revenue from our 2010 Chordiant acquisition. We estimate that our GAAP diluted earnings per share will be approximately $0.15 per share for 2011 and $0.61 per share on a Non-GAAP basis.”
Messrs. Trefler and Dynes will host a conference call and live Webcast associated with this announcement at 6:00 p.m. EST on November 9, 2011. 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 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, 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 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.
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, earnings per share and the mix of term versus perpetual licenses. 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 November 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 November 9, 2011.
Pegasystems, the leader in business process management and software for customer centricity, 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.
For Information, contact:
Craig Dynes, Chief Financial Officer
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.
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