Pegasystems Reports Profitability and Record Revenues in the First Quarter of 2001

CAMBRIDGE, Mass., May 7 — Pegasystems Inc. (Nasdaq: PEGA) today reported its unaudited financial results for the first quarter of 2001.

First-quarter Financial Performance (Unaudited)
(In millions, except per share data and percentages)   
                      Q1, 2001       Q1, 2000
Total Revenue         $22.8          $18.0

License Revenue       $10.9           $6.1
% of Total Revenue      48%            34%
Services Revenue      $11.9          $11.9
% of Total Revenue      52%            66%
Net Income (Loss)      $1.1         ($1.4)
Diluted Net Income 
(Loss) Per Share      $0.03        ($0.05)

"We are excited to begin 2001 by delivering improved financial results," stated Rick Jones, President and COO, Pegasystems. "Our successful reorganization and our continued focus on customer satisfaction resulted in firm demand for our rules-driven CRM solutions, despite the economic conditions plaguing much of the CRM software industry. Our sales force continued to generate sales from both new and existing customers, which we believe is a clear reflection of the value of our process automation and management technology for CRM. For the quarter just ended, revenue increased from the same quarter a year ago and, importantly, the company was profitable. As a result of continuing improvement in our financial controls, the quarterly results were enhanced by approximately $0.8 million from improved estimates of the inflation indexing provisions of our software license agreements and installment interest income. These enhancements will continue to benefit the remaining quarters of 2001."


Pegasystems' other recent corporate achievements include:


  • Announcing that Societe Generale implemented Pegasystems' PegaCRM solution to automate the processing of payment investigations.

  • Re-branding the Company's award-winning eCRM Foundation Template as PegaCRM, a rules-based solution for automated customer care.

  • Collaborating with Sun Microsystems to implement an enhanced CRM solution at Blue Cross Blue Shield of Massachusetts (BCBSMA) to manage its member services.

  • Announcing the PegaRULES Process Commander to support rapid deployment of rules-driven business process automation and management systems across the enterprise and over the Web.

  • Signing Hawaii Medical Service Association to an enterprise license for Pegasystems' CRM solutions to help enhance customer service to its more than 600,000 member network.

  • Forming a strategic technology alliance with Alcatel, a leader in voice data networking, to provide solutions to automate telephone-based customer interactions such as service inquiries, telemarketing and sales.

Pegasystems Market Position


"We are encouraged by our performance in the first quarter and how PegaCRM technology can help companies maximize their CRM investments," said Alan Trefler, Founder and CEO, Pegasystems. "PegaCRM's rules-based process automation and management technology can help a company get greater value by integrating workflows for sales force, customer service and marketing functions. By intelligently driving the fulfillment of service-related work through the enterprise, PegaCRM helps companies improve the performance of their service operations by reducing manual steps and guiding customer interactions."


Trefler continued, "The PegaRULES Process Commander is a powerful tool for the development and deployment of process automation and management systems for diverse business functions. The PegaRULES Process Commander enables businesspeople to use business rules to strategically and dynamically manage the flow of work across the enterprise and over the Web with customers and partners."


First-Quarter Conference Call


In conjunction with this news release, Pegasystems Inc. plans to Webcast its quarterly conference call live at 9:00 a.m. ET today, May 7, 2001. On the call, Pegasystems management will discuss the Company's financial results as well as its strategy for growth. The call will be broadcast live over the Internet. If interested in listening to the Webcast, log onto www.pegasystems.com at least 15 minutes prior to the event's broadcast, and click on the Webcast icon in the "Investors" section.


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. 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, 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 Annual Report on Form 10K for the year ended December 31, 2000 on file with the Securities and Exchange Commission.


NOTE: Pegasystems is a registered trademark of Pegasystems Inc. Other product and company names may be trademarks of their respective owners.>/p>

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

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

                                                   March 31,    December 31,
                                                      2001          2000
    Assets
    Current assets:
    Cash and cash equivalents                        $20,136        $17,339
    Trade and installment accounts
     receivable, net of
     allowance for doubtful accounts
     of $1,031 in
     2001 and $1,037 in 2000                          42,226         41,416
    Prepaid expenses and other current assets          2,955          2,297
      Total current assets                            65,317         61,052

    Long-term license installments, net               36,488         37,401
    Equipment and improvements, net                    5,816          6,568
    Purchased software and other assets, net           4,770          5,472
      Total assets                                  $112,391       $110,493

    Liabilities and Stockholders' Equity
    Current liabilities:
    Accounts payable and accrued expenses            $11,206        $11,917
    Deferred revenue                                   6,708          5,065
    Current portion of capital lease obligations         289            312
      Total current liabilities                       18,203         17,294

    Commitments and contingencies
    Deferred income taxes                              1,000          1,000
    Capital lease obligations, net of current portion     27             84
    Other long-term liabilities                           43             52
      Total liabilities                               19,273         18,430

    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; 32,613,692 shares and
     32,570,094 shares issued and outstanding
     in 2001 and 2000, respectively                      326            326
    Additional paid-in capital                       100,939        100,886
    Stock warrant                                      2,897          2,897
    Deficit                                         (10,683)       (11,777)
    Accumulated other comprehensive loss               (361)          (269)
     Total stockholders' equity                       93,118         92,063
      Total liabilities and
        stockholders' equity                        $112,391       $110,493


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


                                                      Three Months Ended
                                                             March 31,
                                                     2001             2000

    Revenue:
     Software license                                $10,882         $6,095
     Services                                         11,935         11,911
       Total revenue                                  22,817         18,006

    Cost of revenue:
     Cost of software license                            648            585
     Cost of services                                  9,456          8,582
       Total cost of revenue                          10,104          9,167

    Gross profit                                      12,713          8,839

    Operating expenses:
     Research and development                          4,991          3,934
     Selling and marketing                             4,909          5,036
     General and administrative                        2,990          2,597
       Total operating expenses                       12,890         11,567

    Loss from operations                               (177)        (2,728)

    Installment receivable interest income             1,450            943
    Other interest income, net                           214            403
    Other (expense) income, net                        (143)             28
    Income (loss) before provision for income taxes    1,344        (1,354)
    Provision for income taxes                           250             23
    Net income (loss)                                 $1,094       ($1,377)

    Earnings (loss) per share:
      Basic                                            $0.03        ($0.05)
      Diluted                                          $0.03        ($0.05)

    Weighted average number of common and common
     equivalent shares outstanding:
      Basic                                           32,595         29,079
      Diluted                                         33,462         29,079

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