Pegasystems Reports Revenue of $35.7 Million and a Net Profit for the Second Quarter

CAMBRIDGE, Mass. – August 7, 2007Pegasystems Inc. (NASDAQ: PEGA) today announced its second quarter 2007 results. Total revenue for the quarter was $35.7 million, up 30% from the second quarter of 2006. License revenue increased $3.5 million, or 52%, from the second quarter of 2006. Services revenue increased $4.8 million, or 23%, from the second quarter of 2006. 
Net income for the second quarter of 2007 was $0.6 million, compared to a net loss of $0.3 million in the second quarter of 2006. During the second quarter, the Company generated $4.3 million in cash flow from operations and ended the period with $141.1 million in cash and short-term investments.
The following table shows selected financial information for the three and six months ended June 30, 2007 and 2006:

                    (In millions, except per share data and percentages)




Three months ended June 30,

Six months ended June 30,

















Total Revenue


 $  35.7

 $  27.3


 $  73.2

 $  56.5

License Revenue


 $  10.3

 $    6.8


 $  22.4

 $  13.8

                % of Total Revenue







Services Revenue


 $  25.3

 $  20.5


 $  50.7

 $  42.7

                % of Total Revenue







Gross Profit


 $  21.3

 $  16.3


 $  43.3

 $  31.4

Loss from Operations


 $   (0.9)

 $   (3.0)


 $   (1.2)

 $   (5.7)

Net Income (Loss)


 $    0.6

 $   (0.3)


 $    1.7

 $   (1.2)

Earnings (Loss) per Share, Basic


 $  0.02

 $ (0.01)


 $  0.05

 $ (0.03)

Earnings (Loss) per Share, Diluted


 $  0.02

 $ (0.01)


 $  0.04

 $ (0.03)

Alan Trefler, chairman and CEO, Pegasystems commented, "We made strong progress on a number of fronts in the second quarter.  The majority of our license signings in the quarter came from existing customers, consistent with our target account strategy.   New customers include an international insurer with operations in 50 countries; a financial services company serving three million customers in the western U.S.; and an east coast health insurer serving over three million members.  
Mr. Trefler continued, “Eighteen of our customers’ BPM project implementations were completed and went live.  We released a new version of our Customer Process Manager (CPM) solution framework used in call centers and multi-channel customer experience management.  Analysts continue to laud our product capabilities.  CPM is recognized by analysts as a leading offering in process-centric customer service, and the industry analyst firm Forrester Research once again highlighted Pegasystems as a leader in Human-Centric Business Process Management.”
Craig Dynes, CFO, commented, “Our current financial statements show steady improvement from 2006.  License revenue, services revenue and gross profit all show growth for the first six months of the year when compared to the first half of last year.  Our cash position continues to set new records and we have been profitable for each of the first and second quarters.  However, there is still much work to be done to accomplish our annual objectives.” 
Messrs. Trefler and Dynes will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. ET on August 8, 2007. Dial-in information is as follows: (877) 704-5385 (domestic) or (913) 312-1303 (international).
If interested in listening to the Webcast, 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 call will also be available on in the Investor Relations section, Audio Archives link.
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, including, without limitation, our expected revenue, profitability and cash flow from operations in 2007. The words "anticipate", "continue," "expect," "will," 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, without limitation, variation in demand and the difficulty in predicting the


completion of product acceptance and other factors affecting the timing of our license revenue recognition, the level of software renewals, our ability to develop new products and evolve existing ones, the impact on our business of the ongoing consolidation in the financial services and healthcare markets, our ability to attract and retain key personnel, reliance on key third party relationships 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 Quarterly Report on Form 10-Q for the second quarter of 2007 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 August 7, 2007. 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 August 7, 2007.

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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Pegasystems Inc.
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Phone +1 617-374-9600
Fax +1 617-374-9620