Pegasystems Reports Highest-Ever License Signings and Revenue in 2006

CAMBRIDGE, Mass., May 03, 2007 — Pegasystems (Nasdaq: PEGA) today announced its results for the fourth quarter and full year 2006, reporting the highest annual license signings and total revenue in its history. The dollar value of license signings in 2006 increased approximately 65 percent from 2005, while total revenue of $126 million increased approximately 26 percent from 2005. Cash flow from operating activities for 2006 was $20 million. The Company ended 2006 with $128 million in total cash and investments, an increase of $13 million from the end of 2005.

       Fourth Quarter and Full Year 2006 Financial Performance
                                         Quarter ended Year ended Dec
                                            Dec 31,          31,
                                         ------------- ---------------
(In millions, except per share data and
 percentages)                            2006   2005    2006    2005
                                         ------ ------ ------- -------
Total Revenue                            $36.0  $25.8  $126.0  $100.2
License Revenue                          $13.1  $10.4  $35.4   $40.9
           % of Total Revenue             36%    40%     28%     41%
Services Revenue                         $22.9  $15.4  $90.6   $59.3
           % of Total Revenue             64%    60%     72%     59%
Gross Profit                             $22.5  $16.5  $72.3   $66.9
Income (Loss) From Operations            $0.7   $(0.5) $(7.1)   $1.2
Net Income                               $3.4   $2.2    $1.8    $5.2
Earnings per Share, Basic                $0.10  $0.06  $0.05   $0.15
Earnings per Share, Diluted              $0.09  $0.06  $0.05   $0.14

"In 2006, we saw strong demand with 64 existing and 24 new accounts selecting our award winning PegaRULES Process Commander technology," said Alan Trefler, chairman and chief executive officer. "Pegasystems enables world-class organizations to automate processes, improve customer service and bring products to market more quickly. We are honored to have been chosen for mission-critical applications that bring competitive advantage, enabling our customers to achieve significant benefits and Build for Change®."

Craig Dynes, the Company's chief financial officer, said, "Today we filed our 2006 Annual Report on Form 10-K. As a result, we are now compliant with the filing requirements for continued listing of our stock on the Nasdaq Global Select Market. We are looking forward to the opportunity to discuss our 2006 financial performance on our scheduled conference call."

The Company will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. ET on Friday, May 4, 2007. Dial-in information is as follows: 866-293-8823 (domestic) or 913-312-6668 (international). To listen to the Webcast, please log onto 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 teleconference will be available at in the Investor Relations section, Audio Archives link.

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

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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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Lisa Pintchman Rogers
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Ilena Ryan
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Joanna Richardson
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Jon Brigden
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Pegasystems Inc.
One Rogers St.
Cambridge, MA 02142
Phone +1 617-374-9600
Fax +1 617-374-9620