SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMC NEWS

TMCNET eNEWSLETTER SIGNUP

Pega Cloud ACV Grows 51%** in the First Three Quarters of 2019
[November 07, 2019]

Pega Cloud ACV Grows 51%** in the First Three Quarters of 2019


CAMBRIDGE, Mass., Nov. 7, 2019 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the software company empowering digital transformation at the world's leading enterprises, released its financial results for the third quarter of 2019.

"I'm pleased with the state of our business as we continue to make strong progress in our transition to Cloud," said Alan Trefler, founder and CEO, Pegasystems. "It's terrific to see the continued momentum in our traditional markets as well as enthusiasm in some of our newer industries.  For example, over recent weeks we've engaged more than 1,000 thought leaders from our clients and prospects in the government and healthcare industries through our customer engagement roadshow."

"Total ACV increased 20% in constant currency year over year, reaching $634 million," said Ken Stillwell, CFO, Pegasystems. "This strong ACV growth reflects solid demand worldwide for our digital transformation solutions."

Financial metrics (1) (2)





(Dollars in thousands, except per share amounts)

Three Months Ended
September 30,


Nine Months Ended
September 30,

2019


2018


Change


2019


2018


Change

Total revenue

$

216,703


$

203,263


7

%


$

634,841


$

635,224


%

Subscription revenue (3)

$

154,513


$

120,267


28

%


$

424,273


$

382,485


11

%

Net (loss) - GAAP

$

(30,338)


$

(7,587)


(300)

%


$

(91,351)


$

(5,796)


(1,476)

%

Net (loss) income - Non-GAAP

$

(17,961)


$

2,001


*


$

(50,764)


$

19,526


*

Diluted (loss) per share - GAAP

$

(0.38)


$

(0.10)


(280)

%


$

(1.16)


$

(0.07)


(1,557)

%

Diluted (loss) earnings per share - Non-GAAP

$

(0.23)


$

0.02


*


$

(0.64)


$

0.23


*





















* not meaningful

(1) A reconciliation of the GAAP measures to our Non-GAAP measures is contained in the financial schedules at the end of this release.

(2) As previously discussed, our profitability and operating cash flows have declined in the short term as we transition to cloud, and our cloud business continues to 
     grow and scale.

(3)  Reflects client arrangements (term license, cloud, and maintenance) that are subject to renewal.


 

(Dollars in thousands)

Three Months Ended
September 30,


Nine Months Ended
September 30,

2019


2018


Change


2019


2018


Change

Cloud

$

35,153


16

%


$

22,184


11

%


$

12,969


58

%


$

94,610


15

%


$

57,967


9

%


$

36,643


63

%

Term license

48,989


23

%


32,066


16

%


16,923


53

%


122,257


19

%


128,070


20

%


(5,813)


(5)

%

Maintenance

70,371


32

%


66,017


32

%


4,354


7

%


207,406


33

%


196,448


31

%


10,958


6

%

Subscription

154,513


71

%


120,267


59

%


34,246


28

%


424,273


67

%


382,485


60

%


41,788


11

%

Perpetual license

9,016


4

%


20,276


10

%


(11,260)


(56)

%


43,286


7

%


56,829


9

%


(13,543)


(24)

%

Consulting

53,174


25

%


62,720


31

%


(9,546)


(15)

%


167,282


26

%


195,910


31

%


(28,628)


(15)

%

Total revenue

$

216,703


100

%


$

203,263


100

%


$

13,440


7

%


$

634,841


100

%


$

635,224


100

%


$

(383)


%

Annual contract value ("ACV") (1) (2)

The change in ACV measures the growth and predictability of future cash flows from Pega Cloud and Client Cloud committed arrangements as of the end of the particular reporting period.

Annual contract value (“ACV”) (1) (2)
The change in ACV measures the growth and predictability of future cash flows from Pega Cloud and Client Cloud committed arrangements as of the end of the particular reporting period.

 


September 30,


Change


Constant Currency
Change

(Dollars in thousands)

2019


2018



Maintenance

$

281,484



$

264,068



$

17,416


7%


9%

Term

207,317



174,320



32,997


19%


20%

Client Cloud

488,801



438,388



50,413


11%


13%

Pega Cloud

145,549



98,373



47,176


48%


51%

Total ACV

$

634,350



$

536,761



$

97,589


18%


20%

(1)

Total ACV, as of a given date, is the sum of the following two components:




Client Cloud: the sum of (1) the annual value of each term license contract in effect on such date, which is equal to its total license value divided by the total number of years and (2) maintenance revenue reported for the quarter ended on such date, multiplied by four. We do not provide hosting services for Client Cloud arrangements.





Pega Cloud: the sum of the annual value of each cloud contract in effect on such date, which is equal to its total value divided by the total number of years.




(2)

As foreign currency exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of ACV growth rates on a constant currency basis enhances the understanding of our results and evaluation of our performance in comparison to prior periods.

Remaining performance obligations ("RPO")

Expected future revenue on existing contracts:


September 30, 2019

(Dollars in thousands)

Perpetual license


Term license


Maintenance


Cloud


Consulting


Total

1 year or less

$

7,689


$

25,948


$

158,220


$

133,785


$

13,145


$

338,787

56%

1-2 years

853


3,798


18,590


105,081


863


129,185

21%

2-3 years

1,306


591


8,323


72,915


841


83,976

14%

Greater than 3 years


85


4,959


51,591



56,635

9%


$

9,848


$

30,422


$

190,092


$

363,372


$

14,849


$

608,583

100%

Change in RPO Since September 30, 2018















$

(23,651)


$

(25,740)


$

36,959


$

100,272


$

(1,587)


$

86,253



(71)%


(46)%


24%


38%


(10)%


17%









































September 30, 2018

(Dollars in thousands)

Perpetual license


Term license


Maintenance


Cloud


Consulting


Total

1 year or less

$

25,343


$

44,283


$

140,591


$

88,529


$

14,107


$

312,853

60%

1-2 years

6,490


10,063


8,877


70,815


1,830


98,075

19%

2-3 years

360


1,598


2,586


54,646


449


59,639

11%

Greater than 3 years

1,306


218


1,079


49,110


50


51,763

10%


$

33,499


$

56,162


$

153,133


$

263,100


$

16,436


$

522,330

100%



























Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EDT on November 7, 2019.

Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-877-300-8521 (domestic), 1-412-317-6026 (international), or via webcast by logging onto www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in the Investors section.

A replay of the call will also be available on www.pega.com/about/investors by clicking the earnings calls link in the investors section.

Discussion of non-GAAP financial measures

To supplement the financial results presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide non-GAAP measures, including in this release. We utilize several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions, and for forecasting and planning for future periods. Our annual financial plan is prepared on both a GAAP and a non-GAAP basis, and both are approved by our board of directors. In addition, because of the importance of these measures in managing the business, we use non-GAAP measures, and financial performance results in the evaluation process to establish management's compensation.

The non-GAAP measures exclude the effects of stock-based compensation expense, amortization of intangible assets, and foreign currency transaction gains and losses. We believe these non-GAAP measures are helpful in understanding its past financial performance and its anticipated future results.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. They should be read-only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

A reconciliation of the GAAP measures to our Non-GAAP measures is contained in the financial schedules at the end of this release.

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 forward-looking statements are based on current expectations, estimates, forecasts, and projections about the industry and markets in which we operate and management's beliefs and assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as "expect," "anticipate," "intend," "plan," "believe," "could," "estimate," "may," "target," "strategy," "is intended to," "project," "guidance," "likely," "usually," or variations of such words and similar expressions are intended to identify such forward-looking statements.

Important factors that could cause actual future activities and results to differ materially from those expressed in such forward-looking statements include, among others, variation in demand for our products and services, reliance on third-party relationships, reliance on key personnel, the inherent risks associated with international operations and the continued uncertainties in the global economy, our continued effort to market and sell both domestically and internationally, foreign currency exchange rates, the potential legal and financial liabilities and reputation damage due to cyber-attacks and security breaches, and management of our growth. These risks and other factors that could cause actual results to differ materially from those expressed in such forward-looking statements are described more completely in Part I of our Annual Report on Form 10-K for the year ended December 31, 2018, and other filings we make with the U.S. Securities and Exchange Commission ("SEC"). These documents are available on the Company's website at www.pega.com/about/investors.

Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results contained in such statements will be achieved. Although new information, future events, or risks may cause actual results to differ materially from future results expressed or implied by such forward-looking statements, except as required by applicable law, we do not undertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events, or otherwise.

The forward-looking statements contained in this press release represent the Company's views as of November 7, 2019.

About Pegasystems

Pega is the leader in cloud software for customer engagement and operational excellence. The world's most recognized and successful brands rely on Pega's AI-powered software to optimize every customer interaction on any channel while ensuring their brand promises are kept. Pega's low-code application development platform allows enterprises to quickly build and evolve apps to meet their customer and employee needs and drive digital transformation on a global scale. For more than 35 years, Pega has enabled higher customer satisfaction, lower costs, and increased customer lifetime value. For more information on Pegasystems (NASDAQ: PEGA) visit www.pega.com.

Press contact:
Lisa Pintchman                                     
Pegasystems Inc.                                 
lisa.pintchman@pega.com
(617) 866-6022                          
Twitter: @pega

Investor contact:                           
Garo Toomajanian                                
ICR for Pegasystems Inc.   
pegainvestorrelations@pega.com
(617) 866-6077

All trademarks are the property of their respective owners.

 

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)




Three Months Ended
September 30,


Nine Months Ended
September 30,


2019


2018


2019


2018

Revenue








Software license

$

58,005



$

52,342



$

165,543



$

184,899


Maintenance

70,371



66,017



207,406



196,448


Services

88,327



84,904



261,892



253,877


Total revenue

216,703



203,263



634,841



635,224


Cost of revenue








Software license

676



1,255



2,982



3,772


Maintenance

6,688



6,079



19,315



18,035


Services

73,534



67,089



210,118



202,047


Total cost of revenue

80,898



74,423



232,415



223,854


Gross profit

135,805



128,840



402,426



411,370


Operating expenses








Selling and marketing

115,237



87,490



341,064



269,845


Research and development

52,492



46,504



152,802



135,261


General and administrative

14,843



12,104



41,693



38,749


Total operating expenses

182,572



146,098



535,559



443,855


(Loss) from operations

(46,767)



(17,258)



(133,133)



(32,485)


Foreign currency transaction (loss) gain

(1,970)



399



(3,577)



558


Interest income, net

556



683



1,823



2,076


Other income, net

323





378



363


(Loss) before (benefit from) income taxes

(47,858)



(16,176)



(134,509)



(29,488)


(Benefit from) income taxes

(17,520)



(8,589)



(43,158)



(23,692)


Net (loss)

$

(30,338)



$

(7,587)



$

(91,351)



$

(5,796)


(Loss) per share








Basic

$

(0.38)



$

(0.10)



$

(1.16)



$

(0.07)


Diluted

$

(0.38)



$

(0.10)



$

(1.16)



$

(0.07)


Weighted-average number of common shares outstanding
















Basic

79,200



78,700



78,928



78,525


Diluted

79,200



78,700



78,928



78,525


 

 

PEGASYSTEMS INC.

UNAUDITED RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

(in thousands, except percentages and per share amounts)




Three Months Ended
September 30,


Nine Months Ended
September 30,


2019


2018


Change


2019


2018


Change

Total revenue - GAAP and Non-GAAP

$

216,703


$

203,263


7%


$

634,841


$

635,224


—%













Net (loss) - GAAP

$

(30,338)


$

(7,587)


(300)%


$

(91,351)


$

(5,796)


(1,476)%

Amortization of intangible assets

1,017


2,835




5,608


8,508



Stock-based compensation (2)

21,846


16,408




60,242


47,573



Foreign currency transaction loss (gain)

1,970


(399)




3,577


(558)



Income tax effects (3)

(12,456)


(9,256)




(28,840)


(30,201)



Net (loss) income - Non-GAAP

$

(17,961)


$

2,001


*


$

(50,764)


$

19,526


*

















Diluted (loss) per share - GAAP

$

(0.38)


$

(0.10)


(280)%


$

(1.16)


$

(0.07)


(1,557)%

Non-GAAP adjustments

0.15


0.12




0.52


0.30



Diluted (loss) earnings per share - Non-GAAP

$

(0.23)


$

0.02


*


$

(0.64)


$

0.23


*













Diluted weighted-average number of
common shares outstanding - GAAP

79,200


78,700


1%


78,928


78,525


1%

Incremental dilutive shares for non-GAAP


4,521





4,714



Diluted weighted-average number of common
shares outstanding - Non-GAAP

79,200


83,221


(5)%


78,928


83,239


(5)%


* not meaningful

 


(1)

Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.






Our non-GAAP financial measures reflect adjustments based on the following items:





Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues recognized during the periods presented and is expected to contribute to our future period revenues as well. Amortization of intangible assets is likely to recur in future periods.







Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future period revenues, we continue to evaluate our business performance excluding stock-based compensation.







Foreign currency transaction loss (gain): We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by changes in foreign exchange market rates. Foreign currency transaction gains and losses will recur in future periods.






For additional information about our use of Non-GAAP measures, the reasons why management uses these measures, the usefulness of these measures, and the material limitations on the usefulness of these measures, see "Discussion of non-GAAP financial measures" included earlier in this release and below.



(2)

Stock-based compensation was:

  


Three Months Ended
September 30,


Nine Months Ended
September 30,

(in thousands)

2019


2018


2019


2018

Cost of revenues

$

4,787



$

4,319



$

14,216



$

12,277


Selling and marketing

8,317



6,198



24,055



16,895


Research and development

4,858



3,917



13,990



11,356


General and administrative

3,884



1,974



7,981



7,045



$

21,846



$

16,408



$

60,242



$

47,573


Income tax benefit

$

(4,430)



$

(3,555)



$

(12,226)



$

(10,037)


 

(3) Effective income tax rates were:

































Nine Months Ended
September 30,

















2019


2018

GAAP
















32

%


80

%

Non-GAAP
















22

%


25

%

Our effective income tax rate under GAAP is subject to significant fluctuations due to a variety of factors, including excess tax benefits generated by our stock-based compensation plans, tax credits for stock-based compensation awards to research and development employees, and unfavorable foreign stock-based compensation adjustments. We determine our non-GAAP income tax rate by using applicable rates in taxing jurisdictions and assessing certain factors, including our historical and forecast earnings by jurisdiction, discrete items, and our ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP effective income tax rate on a basis consistent with the effective income tax rate in our annual plan as established at the beginning of each year given this tax rate volatility.

 

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)




September 30, 2019


December 31, 2018

Assets




Total cash, cash equivalents, and marketable securities

$

112,569



$

207,423


Total receivables (billed and unbilled)

419,320



504,765


Goodwill

78,862



72,858


Other assets

306,273



197,507


Total assets

$

917,024



$

982,553






Liabilities and stockholders' equity




Accrued expenses, including compensation and related expenses

$

129,869



$

130,177


Deferred revenue, current

159,849



185,145


Other liabilities

98,474



45,700


Stockholders' equity

528,832



621,531


Total liabilities and stockholders' equity

$

917,024



$

982,553


 

 

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)




Nine Months Ended
September 30,


2019


2018

Net (loss)

$

(91,351)



$

(5,796)


Adjustments to reconcile net (loss) to cash (used in) provided by operating
activities




Non-cash items

73,547



75,992


Change in operating assets and liabilities, net

4,342



(3,108)


Cash (used in) provided by operating activities

(13,462)



67,088


Cash provided by (used in) investing activities

53,448



(49,595)


Cash (used in) financing activities

(61,941)



(71,664)


Effect of exchange rate changes on cash and cash equivalents

(363)



(1,913)


Net (decrease) in cash and cash equivalents

(22,318)



(56,084)


Cash and cash equivalents, beginning of period

114,422



162,279


Cash and cash equivalents, end of period

$

92,104



$

106,195


The corporate logo for Pega (PRNewsfoto/Pegasystems Inc.)

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/pega-cloud-acv-grows-51-in-the-first-three-quarters-of-2019-300954281.html

SOURCE Pegasystems Inc.


[ Back To TMCnet.com's Homepage ]









Technology Marketing Corporation

35 Nutmeg Drive Suite 340, Trumbull, Connecticut 06611 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2019 Technology Marketing Corporation. All rights reserved | Privacy Policy