Pegasystems Reports Third-Quarter Financial Results

CAMBRIDGE, Mass., Nov. 9, 2000 — Pegasystems Inc. (NASDAQ: PEGA) today announced its third-quarter 2000 financial results. Total revenues were $22.7 million for the third quarter ended September 30, 2000, compared with $21.3 million recorded in the second quarter of 2000 and $20.5 million recorded in the third quarter of 1999. License revenues totaled $12.9 million in the most recent quarter, compared with $9.2 million in the previous quarter and $6.3 million for the comparable period last year. Services revenues for the quarter were $9.7 million, compared with $12.1 million for the second quarter of 2000 and $14.2 million for the third quarter of 1999.

The Company reported a $246,000 net loss for the third quarter of 2000, or $0.01 per share. This compares with a net loss of $13.7 million, or $0.47 per share, in the second quarter of 2000 and net income of $2.4 million, or $0.08 per diluted share, in the third quarter of 1999. The Company ended the quarter with $25.3 million in cash and cash equivalents.

"In the third quarter, we reported record revenues," said Rick Jones, President and COO, Pegasystems. "The Company continued to gain traction with customers and prospects. Our level of customer satisfaction has reached an all-time high as evidenced by the repeat business that we are winning. Pegasystems made good progress during the third quarter toward our long-term target of a 60% license and 40% services revenue mix. We are increasingly pleased with the strong activity at partners such as First Data and Carreker. With the help of Pegasystems' technologies, our private label partners are enabling companies worldwide to build and maintain successful relationships with their customers."

Alan Trefler, Founder and CEO, Pegasystems, stated, "We deepened our leadership team, including enhancing our Board of Directors with the addition of three knowledgeable and visionary executives. We have grown our business, extended our relationships with partners and deepened our connection to our global base of more than 100 customers. We are excited about new implementations of our innovative rules-based technology included in new products that will be introduced starting at PegaVISION 2000, our users' conference in December."

Market Outlook/Strategy

"Our market analysis confirms our strategic direction in bringing rules-based, workflow-enabled eCRM solutions to the financial services, healthcare and telecommunications industries," stated Trefler. "In addition to expanding our direct sales force, we have increased our efforts to expand our network of partners, systems integrators and resellers. We have invested in enhancing our products to improve attractiveness to partners."

"Pegasystems' award-winning eCRM Foundation Template is a collection of best practice rules that drives workflow-enabled customer service interactions," continued Trefler. "It has been enthusiastically embraced by customers and prospects for its ability to give business users visibility and access to their business rules. This solution provides companies with a system that supports multiple product lines and business units; that is customer-focused; that provides multi-channel capabilities; and, that creates smart systems through the use of rules-based technology."

Company Achievements

Pegasystems' recent corporate highlights include:

  • Expanding an agreement with America Online Inc. (AOL) to utilize Pegasystems' eCRM solution to help improve customer service delivery to more than 23 million AOL subscribers;

  • Signing an alliance agreement with Systor AG, a leading systems integrator based in Germany and Switzerland. Systor became a licensed systems integrator and value-added reseller of Pegasystems' eCRM and workflow solutions. The relationship has positioned Pegasystems strongly within the growing European marketplace;

  • Announcing Credit Suisse's use of Pegasystems' eCRM technology to automate the processing of payments investigations and related customer service requests throughout Switzerland;

  • Providing through Corvis a Pegasystems eCRM solution for Internet banking on an ASP platform to the New Zealand Association of Credit Unions to improve services for its customers and member organizations; and

  • Electing Alexander V. d'Arbeloff, William H. Keough, and William W. Wyman to the Company's Board of Directors. All three add an impressive breadth of industry knowledge and depth of experience to the Board.

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. Such statements include those regarding the Company's ability to: deliver vertically focused solutions, continue its organic growth, sign additional partnerships and attain profitability. Risks and uncertainties include the resolution and impact of pending litigation and 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 report on Form 10-Q for the quarter ended June 30, 2000 on file with the Securities and Exchange Commission.

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.
One Rogers St.
Cambridge, MA 02142
Phone +1 617-374-9600
Fax +1 617-374-9620