Pegasystems Reports First-Quarter Financial Results

CAMBRIDGE, Mass.--May 15, 2000--Pegasystems Inc. (NASDAQ: PEGA), a leading provider of rules-based, Internet-architected electronic Customer Relationship Management (eCRM) software and solutions, today announced its first quarter 2000 financial results.


Total revenues were $18.0 million for the first fiscal quarter ended March 31, 2000, an increase of 20 percent from the $15.1 million recorded for the same period of 1999. License revenues totaled $6.1 million in the most recent quarter compared with $6.0 million for the same period last year. Services revenues for the quarter were $11.9 million, up 32 percent from $9.1 million for the first quarter of 1999. The Company reported that its net loss for the first quarter decreased to $1.4 million, or $0.05 per diluted share, versus a net loss of $6.7 million, or $0.23 per diluted share in the comparable period of 1999. The Company ended the quarter with $30.5 million of cash and cash equivalents.


"The fundamentals of our business remain strong and have resulted in another quarter with a net cash increase," stated James O'Halloran, Pegasystems' Chief Financial Officer.


Pegasystems President and COO Rick Jones said, "We made good progress during the quarter in improving the level of customer satisfaction, redoubling our efforts to meet our customers' needs. I believe that these efforts will lead to continued improvements in our business performance."


"During the first quarter, we made significant progress through internal research and development programs in creating an enhanced suite of Internet empowering capabilities that will allow customers to simplify time-consuming and complex Web-based interactions," said Alan Trefler, Pegasystems' Chairman and CEO. "With our vision of enterprise rules management, we intend to do for business process management what relational databases did for data management. The focus of our next generation technology will be to provide a framework for enterprise-wide rules management and decision-making through a series of rules-server products that we will be announcing shortly."


Partnership Growth


Pegasystems continues to deepen its relationship with its partners, including Broadvision, Management Data, EDS and Carreker-Antinori. Recently the Company:


-- Delivered a joint enterprise-wide exception management solution with Carreker-Antinori for Firstar Corporation. The CheckFlow Suite joint solution assists companies in combining traditional functions such as exception management with the new e-payment business model.


-- Held an e-Business seminar series with Broadvision, Tower Technology and PricewaterhouseCoopers.


-- Sponsored the "Rule Your Markets" executive conference with BroadVision and Palm, Inc. in April, which gave Fortune 1000 and dot-com senior executives an inside view about the business opportunities offered by the technological changes in the Internet economy.


-- Hosted a thought leadership symposium for Blue Cross Blue Shield plans with EDS.


-- Worked with BroadVision to demonstrate their integrated eCRM solution at the seventh International Call Center Summit.


Recent Highlights


Pegasystems continues to report success with customers and market recognition. Recently the Company:


-- Announced that its Internet-architected CRM solution had doubled the sales volume for Riggs Bank Call Center, which had installed Pegasystems' technology a year earlier.


-- Presented the success of Pegasystems' CRM solution for Guardian Life Services' three customer response call centers nationwide at the LOMA Systems Forum held in San Diego. Pegasystems' rules-based CRM solution handles more than 3,000 calls daily for Guardian.


-- Was recognized by TMC, a leading CRM publisher, with a CRM Excellence Award for Pegasystems' eCRM Foundation Template.


-- Strengthened the Company's recruiting and human resources efforts with the appointment of Carmelina Procaccini, a 20-year industry veteran, as Vice President of Human Resources.


Pegasystems' Consolidated Statement of Operations and Consolidated Balance Sheet are attached.



                           PEGASYSTEMS INC.
                 Condensed Consolidated Balance Sheets
             (in thousands, except share-related amounts)

                                               March 31,  December 31,
                                                 2000          1999

Assets

Current assets:
Cash and cash equivalents                     $  30,545     $  30,004
Trade and installment accounts receivable,
 net of allowance for doubtful accounts
 of $1,178 in 2000 and $1,026 in 1999            32,130        40,716
Prepaid expenses and other current assets         1,997         1,676
Total current assets                             64,672        72,396

Long-term license installments, net              40,646        36,744
Equipment and improvements, net                   7,533         8,335
Purchased software and other assets, net          6,925         7,516
Total assets                                  $ 119,776     $ 124,991

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable and accrued expenses         $  12,021     $  13,643
Deferred revenue                                  5,711         8,765
Current portion of capital lease obligations        202           198
Total current liabilities                        17,934        22,606

Commitments and contingencies
Deferred income taxes                             1,000         1,000
Capital lease obligations,
 net of current portion                             201           253
Other long-term liabilities                          78            87
Total liabilities                                19,213        23,946

Stockholders' Equity:
Preferred stock, $.01 par value,
 1,000,000 shares authorized;
 no shares issued and outstanding                  --            --
Common stock, $.01 par value,
 45,000,000 shares authorized;
 29,108,776 shares and 28,995,821
 shares issued and outstanding
 in 2000 and 1999, respectively                     291           290
Additional paid-in capital                       89,849        88,941
Deferred compensation                               (14)          (18)
Stock warrant                                     2,897         2,897
Retained earnings                                 7,701         9,079
Other comprehensive income                         (161)         (144)
Total stockholders' equity                      100,563       101,045
Total liabilities and
 stockholders' equity                         $ 119,776     $ 124,991


                           PEGASYSTEMS INC.
                  Condensed Statements of Operations
               (in thousands, except per share amounts)

                                                 Three Months Ended
                                                      March 31,
                                                  2000        1999

Revenue:
 Software license                               $  6,095     $  6,020
 Services                                         11,911        9,045
   Total revenue                                  18,006       15,065

Cost of revenue:
 Cost of software license                            585          586
 Cost of services                                  8,582        8,798
   Total cost of revenue                           9,167        9,384

Gross profit                                       8,839        5,681

Operating expenses:
 Research and development                          3,934        5,204
 Selling and marketing                             5,036        5,524
 General and administrative                        2,597        2,569
   Total operating expenses                       11,567       13,297

Loss from operations                              (2,728)      (7,616)

Installment receivable interest income               943          828
Other interest income, net                           403          166
Other income (expense), net                           28          (88)
Income (loss) before provision  for               (1,354)      (6,710)
   Income taxes
Provision for income taxes                            23         --
Net income (loss)                               ($ 1,377)    ($ 6,710)

Earnings (loss) per share:
  Basic                                         ($  0.05)    ($  0.23)
  Diluted                                       ($  0.05)    ($  0.23)

Weighted average number of common
and common equivalent shares outstanding:

  Basic                                           29,079       28,711
  Diluted                                         29,079       28,711

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.

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