Pegasystems Announces Thirteenth Consecutive Quarter of Record Revenue
CAMBRIDGE, Mass. – November 9, 2010 – Pegasystems Inc. (NASDAQ: PEGA) today announced financial results for the third quarter and nine months ended September 30, 2010. These results include the operations of Chordiant Software, Inc. from the April 21, 2010 acquisition date. GAAP revenue for the third quarter of 2010 increased 39% to $90 million compared to the third quarter of 2009, and for the first nine months of 2010 increased 29% to $247 million compared to first nine months of 2009. Non-GAAP revenue for the third quarter of 2010 increased 47% to $95.4 million compared to the third quarter of 2009, and for the first nine months of 2010 increased 34% to $256.4 million compared to first nine months of 2009. GAAP net income for the third quarter of 2010 was $3.1 million or $0.08 per share (diluted), compared to GAAP net income of $6.0 million, or $0.16 per share (diluted), for the third quarter of 2009. Non-GAAP net income for the third quarter of 2010 was $9.9 million or $0.26 per share (diluted), compared to Non-GAAP net income of $6.7 million, or $0.17 per share (diluted), for the third quarter of 2009. GAAP net loss for the first nine months of 2010 was ($1.2) million, or ($0.03) per share, compared to GAAP net income of $25.9 million, or $0.68 per share (diluted) for the first nine months of 2009. Non-GAAP net income for the first nine months of 2010 was $19.9 million, or $0.51 per share (diluted), compared to Non-GAAP net income of $28.4 million, or $0.75 per share (diluted) for the first nine months of 2009.
"During the third quarter of 2010, we were recognized by the two leading industry analyst firms as a market-leader in the category of business process management," said Alan Trefler, Founder and CEO of Pegasystems. "This recognition reflects the sustained success our clients are having with our software. They have achieved rapid returns on their investments and are beginning to see transformational opportunities across their organizations. We were also pleased to be recognized by Fortune Magazine as number eight on their list of 'Fastest-Growing Companies' for 2010."
"We have continued our efforts and investments to drive further innovation across a broadening portfolio of industry leading solutions. During the third quarter, we announced the latest release of our CRM solution, which is focused on helping organizations deliver a superior customer experience to their clients. We also released solutions that expanded our capabilities in the financial services and insurance industries, which provide opportunities for growth within our existing customers and fuel engagement with new clients," concluded Mr. Trefler.
Craig Dynes, Pegasystems' CFO, added, "During the third quarter, we set a new record for quarterly revenue with GAAP revenue totaling $90 million. Our financial results for the third quarter demonstrate that so far, 2010 is very back-end loaded. In fact, Q3 non-GAAP license revenue of $36.5 million was 25% higher than Q2, and Q3 non-GAAP net income of $9.9 million was almost equal to non-GAAP net income for the first six months of 2010. Our pipeline for Q4 and 2011 is both substantial and encouraging as we believe it reflects a continuing increase in both the BPM market and our market share."
Messrs. Trefler and Dynes will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. EDT on November 10, 2010. 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 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.
These 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 measures 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 and pipeline. The words "anticipate," "project," "expect," "plan," "intend," "believe," "estimate," "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, the Company's ability to successfully integrate the operations of Chordiant Software, Inc., 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 weak global economy 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, 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, 2009 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, 2010. 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, 2010
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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