Pegasystems Announces Record Revenue of $51.1 million for Second Quarter and $99.6 million for First Six Months of 2008

CAMBRIDGE, Mass. – August 7, 2008 – Pegasystems Inc. (NASDAQ: PEGA), the leader in Business Process Management (BPM) software, today announced financial results for the second quarter and six months ended June 30, 2008. Total revenue for the second quarter of 2008 was $51.1 million, an increase of 43%, compared to $35.7 million for the second quarter of 2007. Net income for the second quarter of 2008 was $2.9 million, compared to $0.6 million for the second quarter of 2007. The Company generated $16.5 million and $30.5 million in cash flow from operations in the second quarter and six months ended June 30, 2008, respectively, and ended the quarter with $176.8 million in cash and short-term investments.

The following table presents selected financial information for the second quarter and six months ended June 30, 2008 and 2007:

Pegasystems Q2 2008 Earnings
Fig. 1 Selected Financial Information for the Second Quarter and Six Months Ended June 30, 2008 and 2007 (click for details)

Business Perspective
"The business agility delivered by our unique Build for Change® technology and solution frameworks continues to drive our growth. Customers affirm that Pega technology creates process backbones that span organizational silos, eliminating manual handoffs and automating non-value added work. Results include increased revenue, improved customer experiences, cost-saving automation, reduced operational risk and improved compliance," said Alan Trefler, Pegasystems' chairman and CEO.

"Customer wins in the quarter included a large telecommunications company and multiple successes in both the Financial Services and Insurance industries. We had a record 19 systems go live in Q2, powered by our customer enablement philosophy, which teams client business and IT staff with our growing partner ecosystem to deliver iterative benefit and continuous improvement of business operations."

"Our Q2 announcements included the release of our Internet Application Composer that facilitates multi-channel process automation and injects agile business change into preexisting customer web environments. We also deepened our Insurance Industry offerings with enhanced Customer Process Manager and Claims Servicing Backbone frameworks that improve customer experiences and reduce operational costs. Our products continue to receive strong reviews from industry experts, most recently a key CRM excellence award from Customer Interaction Solutions magazine," concluded Mr. Trefler.

Craig Dynes, Pegasystems' CFO, added, "We remain concerned about the uncertainties associated with the current economic times and the impact on corporate buying behaviors. To date, the value proposition of our technology is driving our growth in revenue, gross profit and net income. In addition to achieving a new record in quarterly revenue, we generated $16.5 million in cash flow from operations in the quarter and $30.5 million year-to-date."

Messrs. Trefler and Dynes will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. ET on August 8, 2008. Dial-in information is as follows:

(877) 604-9671 (domestic)

(719) 325-4870 (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.

To view all financial schedules and a complete copy of the press release, see the PDF version.

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," "forecasting," "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 credit market turmoil and of 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, 2007 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 7, 2008. 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 7, 2008.

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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Media Contacts

Lisa Pintchman Rogers
VP, Corporate Communications
[email protected]
+1 617-866-6022

North America:
Sean Audet
Director, Corporate Communications
[email protected]
+1 617-528-5230

Ilena Ryan
Sr. Manager, Public Relations
[email protected]
+1 617-866-6722

Europe:
Joanna Richardson
Director, Corporate Communications
[email protected]
+44 (0) 118 9651 660

Jon Brigden
PR & Communications Manager
[email protected]
+44 (0) 118 9398 584

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