Pegasystems Reports Fourth Quarter and Year-End Financial Results
CAMBRIDGE, Mass., Feb. 28, 2001 — Pegasystems Inc. (NASDAQ: PEGA) today reported its preliminary unaudited financial results for the fourth quarter and year ended December 31, 2000.
Fourth quarter Financial Performance (Unaudited) (In millions, except per share data and percentages) Q4 2000 Q4 1999 Total Revenue $ 18.9 $ 19.7 License Revenue $ 5.6 $ 6.7 % of Total Revenue 30% 34% Services Revenue $ 13.3 $ 13.0 % of Total Revenue 70% 66% Net Income (Loss) ($ 5.5) $ 0.8 Diluted Net Income (Loss) Per Share ($ 0.18) $ 0.03
"The fourth quarter was challenging from a financial perspective, and we addressed those challenges by restructuring and refocusing the organization," said Rick Jones, President and COO, Pegasystems. "As we announced in early January, our fourth quarter financial results were affected by a shortfall in license revenue and a $1 million dollar charge for a strategic restructuring plan. There was also a decrease in the company's cash position during the fourth quarter of approximately $7.9 million due to increased operating expenses, the settlement of the two securities lawsuits and capital expenditures. While we are disappointed by our fourth quarter results, we are encouraged by the deepening of our pipeline, with increasing numbers of new prospects complemented by stronger relationships with existing customers. As a result, we are confident that Pegasystems enters 2001 ready to capitalize on the increasing demand for rules-driven workflow automation for CRM and rules management products."
Other Recent Corporate Achievements
Pegasystems' recent corporate achievements include:
- Signing a letter of intent to form an alliance with Accenture, formerly Andersen Consulting, to deliver leading-edge, service-fulfillment solutions to financial services organizations in North America.
- Naming Sun iForce an application provider and adopting Sun as premier hardware vendor.
- Announcing an integration between Pegasystems' eCRM solution and the claims and eligibility system for Blue Cross and Blue Shield of Massachusetts.
- Forming an alliance with Acxiom to offer companies stronger CRM cross-sell opportunities by combining general market intelligence with their customer's profiles and related data.
- Demonstrating PegaRULES to customers and partners at a successful PegaVISION user conference.
12-Month Financial Performance (Unaudited) Year ended Year ended (In millions, except per share data and percentages) December 31, December 31, 2000 1999 Total Revenue $ 80.8 $ 76.6 License Revenue $ 33.8 $ 28.1 % of Total Revenue 42% 37% Services Revenue $ 47.0 $ 48.5 % of Total Revenue 58% 63% Net Income (Loss) ($ 20.9) ($ 2.4) Diluted Net (Loss) Per Share ($ 0.71) ($ 0.08)
Commenting on Pegasystems' 12-month results, Jones said, "At the beginning of 2000, we embarked on a campaign to enhance the management team, expand our sales channels and increase customer satisfaction. I am happy with our progress toward these objectives during the year. We added new executives to our management team and Board of Directors, and we realigned our workforce to focus on the company's target vertical markets such as financial services and healthcare. We also made significant progress rolling out our new template-based project methodology. The result, we believe, is a stronger, more focused and more capable Pegasystems as we enter 2001."
"Our PegaRULES technology, announced earlier this month, is a landmark for Pegasystems and a revolutionary advancement in the way that corporations think about implementing and automating business practices across the enterprise and over the Web," said Alan Trefler, Founder and CEO, Pegasystems. "Pegasystems has provided nearly two decades of rules technology thought leadership with prominent customers, and we see exciting new market opportunities for PegaRULES ahead."
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. These statements 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 the impact of pending regulatory proceedings, material weaknesses in the Company's financial control environment, difficulty in predicting the completion of product implementations and consequently the timing of revenue recognition, the inability to attract and retain key employees, reliance on key third-party relationships, management of the Company's growth, and other risks and uncertainties. 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 quarterly report on Form 10Q for the quarter ended September 30, 2000 on file with the Securities and Exchange Commission.
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Pegasystems' Consolidated Balance Sheet and Consolidated Statements of Operations are attached.
PEGASYSTEMS INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share-related data) DECEMBER 31, Assets 2000 1999 (Unaudited) Current assets: Cash and cash equivalents $ 17,339 $ 30,004 Trade and installment accounts receivable, net of allowance for doubtful accounts of $1,037 in 2000 and $1,026 in 1999 41,416 40,716 Prepaid expenses and other current assets 2,297 1,676 Total current assets 61,052 72,396 Long-term license installments 37,401 36,744 Equipment and improvements, net 6,568 8,335 Purchased software and other, net 5,472 7,516 Total assets $ 110,493 $ 124,991 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 11,917 $ 13,643 Deferred revenue 5,065 8,765 Current portion of capital lease obligations 312 198 Total current liabilities 17,294 22,606 Commitments and Contingencies Deferred income taxes 1,000 1,000 Capital lease obligations, net of current portion 84 253 Other long-term liabilities 52 87 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; 32,570,094 shares and 28,995,821 shares issued and Outstanding in 2000 and 1999, respectively 326 290 Additional paid-in capital 100,886 88,941 Deferred compensation -- (18) Stock warrant 2,897 2,897 Retained (deficit)earnings (11,777) 9,079 Accumulated other comprehensive loss (269) (144) Total stockholders' equity 92,063 101,045 Total liabilities and stockholders' equity $ 110,493 $ 124,991 PEGASYSTEMS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) YEARS ENDED DECEMBER 31, 2000 1999 1998 (Unaudited) Revenue: Software license $ 33,806 $ 28,123 $ 29,259 Services 47,000 48,506 32,510 Total revenue 80,806 76,629 61,769 Cost of revenue: Cost of software license 2,383 3,018 1,555 Cost of services 39,005 31,928 28,544 Total cost of revenue 41,388 34,946 30,099 Gross profit 39,418 41,683 31,670 Operating expenses: Research and development 15,073 19,810 23,809 Selling and marketing 24,142 19,115 18,980 General and administrative 10,334 8,678 11,678 Litigation Settlement and Restructuring 15,821 -- -- Total operating expenses 65,370 47,603 54,467 Loss from operations (25,952) (5,920) (22,797) Installment receivable interest income 4,015 3,772 2,662 Other interest income, net 1,667 900 2,059 Other (expense) income, net (286) 338 47 Loss before provision (benefit) for Income taxes (20,556) (910) (18,029) Provision (benefit) for income taxes 300 1,500 (6,411) Net loss $(20,856) $ (2,410) $(11,618) Loss per share: Basic $ (0.71) $ (0.08) $ (0.41) Diluted $ (0.71) $ (0.08) $ (0.41) Weighted average number of common shares outstanding: Basic 29,206 28,947 28,604 Diluted 29,206 28,947 28,604
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
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