SOURCE: Pegasystems

Pegasystems

February 25, 2016 16:02 ET

Pegasystems Announces Financial Results for Fourth Quarter and Full Year 2015

GAAP License and Cloud Revenue up 23% While Achieving Record Backlog

CAMBRIDGE, MA--(Marketwired - February 25, 2016) -  Pegasystems Inc. (NASDAQ: PEGA), the software company empowering the world's leading enterprises with strategic business applications, today announced results for its fourth quarter and full year ended December 31, 2015.

"Q4 was a very strong quarter capping off a record year for Pega that included record revenue, backlog, and bookings," said Alan Trefler, Founder and CEO, Pegasystems. "For the full year, total GAAP revenue was $683 million, an increase of 16% over 2014. We grew GAAP license and cloud revenue 23% over the full year 2014 while increasing backlog 15% over the prior year-end."

"We continue to be very positive about how our value proposition is being received and about our long-term growth opportunities," continued Mr. Trefler. "We are extremely well positioned in the market as the pace of change for organizations continues to increase. We believe the need for strategic applications to help them manage and leverage that change for competitive advantage -- while gaining efficiencies and connecting their businesses from back office to front office -- will continue to be in demand."

 
SELECTED GAAP & NON-GAAP RESULTS (1)
  Three Months Ended December 31,    
($ in thousands except per share amounts) 2015   2015   2014   2014   % Increase
GAAP   Non-GAAP   GAAP   Non-GAAP   GAAP   Non-GAAP
Total Revenue $ 204,355   $ 204,355   $ 168,924   $ 169,050   21 %   21 %
License Revenue $ 95,168   $ 95,168   $ 77,418   $ 77,418   23 %   23 %
Cloud Revenue $ 8,926   $ 8,926   $ 4,468   $ 4,531   100 %   97 %
Net Income $ 20,958   $ 29,582   $ 20,104   $ 26,104   4 %   13 %
Diluted Earnings per share $ 0.26   $ 0.37   $ 0.26   $ 0.33   0 %   12 %
                                   
  Year Ended December 31,    
($ in thousands except per share amounts) 2015   2015   2014   2014   % Increase
GAAP   Non-GAAP   GAAP   Non-GAAP   GAAP   Non-GAAP
Total Revenue $ 682,695   $ 682,695   $ 590,004   $ 593,448   16 %   15 %
License Revenue $ 275,588   $ 275,588   $ 232,336   $ 233,901   19 %   18 %
Cloud Revenue $ 30,626   $ 30,626   $ 16,614   $ 17,332   84 %   77 %
Net Income $ 36,322   $ 63,960   $ 33,255   $ 58,167   9 %   10 %
Diluted Earnings per share (2) $ 0.46   $ 0.81   $ 0.42   $ 0.74   10 %   9 %
                                   
(1) See a reconciliation of our GAAP to Non-GAAP measures contained in the financial schedules at the end of this release.  
(2) The number of common shares and per share amounts have been retroactively restated for all prior periods to reflect the Company's two-for-one common stock split effected in the form of a common stock dividend distributed on April 1, 2014.  

Cash: Total cash, cash equivalents, and marketable securities at December 31, 2015 was $219.1 million, up 4% from December 31, 2014.

Cash generated from operations for the full year 2015 was $62.5 million. Free Cash Flow, which we define as operating cash flow less Cap Ex, was $51.5 million for 2015.

License and Cloud Backlog: The Company computes license and cloud backlog by adding billed deferred license and cloud revenue and off-balance sheet license and cloud commitments, which is business that is contracted, unbilled, and not recorded on the Company's balance sheet.

 
License and Cloud Backlog (1)
    December 31,    
($ in thousands)   2015   2014   % Change
  Total billed deferred license and cloud revenue   63,412   63,048   1%
  Total off-balance sheet license and cloud commitments (2)   356,388   301,409   18%
TOTAL LICENSE AND CLOUD BACKLOG   419,800   364,457   15%
             
(1) See historical quarterly license backlog amounts including cloud in a separate schedule at the end of this release.
(2) See the "Future Cash Receipts from License and Cloud Arrangements" table on page 34 of the Annual Report on Form 10-K for the period ending December 31, 2015.
             

Business Outlook: As of February 25, 2016, Pegasystems is initiating revenue and EPS guidance for the full year 2016 as follows:

Full Year 2016 Revenue: GAAP and non-GAAP revenue for the full year 2016 is projected to be approximately $780 million.

Full Year 2016 Earnings Per Share: GAAP diluted earnings per share for the full year 2016 is expected to be approximately $0.50. Non-GAAP diluted earnings per share for the full year 2016 is expected to be approximately $0.95.

See the reconciliation of our GAAP diluted EPS guidance to non-GAAP diluted EPS guidance for the full year of 2016 at the end of this release.

Quarterly Conference Call

Pegasystems will host a conference call and audio-only Webcast associated with this announcement at 5:00 p.m. EST today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company's Website at www.pega.com/about/investors. Dial-in information is as follows: 1-877-407-3982 (domestic) or 1-201-493-6780 (international). To listen to the Webcast, log onto www.pega.com at least five minutes prior to the event's broadcast and click on the Webcast icon in the Investors section. A replay of the call will also be available on www.pega.com by clicking the Earnings Calls link in the Investors section.

Discussion of Non-GAAP Financial Measures:

To supplement financial results presented in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP"), the Company provides non-GAAP measures, including in this release. Pegasystems' management utilizes a number of 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. The Company's annual financial plan is prepared both on a GAAP and non-GAAP basis, and both are approved by our board of directors. In addition and as a consequence of the importance of these measures in managing the business, the Company uses non-GAAP measures and financial performance results in the evaluation process to establish management's compensation.

The non-GAAP measures exclude the effects of certain business combination accounting entries, stock-based compensation expense, amortization of acquired intangibles, acquisition-related and restructuring expenses, and certain other adjustments. The Company believes that 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 and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the Company's GAAP to non-GAAP measures is included in the financial schedules at the end of this release.

Forward-Looking Statements

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: 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 our guidance regarding 2016 GAAP and non-GAAP revenue and diluted earnings per share. The words "expect," "anticipate," "intend," "plan," "believe," "could," "estimate," "may," "target," "strategy," "is intended to," "project," "guidance", or variations of such words 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, among others, variation in demand for our products and services and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition; the ongoing consolidation in the financial services, insurance, healthcare, and communications markets; reliance on third party relationships; the potential loss of vendor specific objective evidence for our time and materials professional services arrangements; the inherent risks associated with international operations and the continued weakness in international economies; foreign currency exchange rates; the financial impact of the Company's past acquisitions and any future acquisitions; the potential legal and financial liabilities and reputation damage due to cyber-attacks and security breaches, 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 Annual Report on Form 10-K for the year ended December 31, 2015 and other recent filings with the Securities and Exchange Commission. These documents are available on the Company's website at http://www.pega.com/about/investors. The forward-looking statements contained in this press release represent the Company's views as of February 25, 2016. 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, except as required by applicable law, 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 February 25, 2016.

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.

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Pegasystems Inc.  
Condensed Consolidated Statements of Operations  
($ in thousands, except per share amounts)  
                       
  Three Months Ended     Year Ended  
  December 31,     December 31,  
  2015     2014     2015     2014  
Revenue:                      
  Software license $ 95,168     $ 77,418     $ 275,588     $ 232,336  
  Maintenance   52,436       48,684       202,802       186,239  
  Services   56,751       42,822       204,305       171,429  
    Total revenue   204,355       168,924       682,695       590,004  
Cost of revenue:                              
  Software license   1,019       1,127       4,125       4,959  
  Maintenance   5,603       4,921       21,903       20,014  
  Services   46,543       40,060       187,418       160,121  
    Total cost of revenue (1)   53,165       46,108       213,446       185,094  
Gross profit   151,190       122,816       469,249       404,910  
Operating expenses:                              
  Selling and marketing   71,623       55,886       241,387       206,658  
  Research and development   32,126       28,101       126,374       108,591  
  General and administrative   10,600       9,065       36,738       37,442  
  Acquisition-related   50       71       89       488  
  Restructuring   -       -       -       192  
    Total operating expenses (1)   114,399       93,123       404,588       353,371  
Income from operations   36,791       29,693       64,661       51,539  
Foreign currency transaction gain (loss)   174       (1,242 )     (4,168 )     (3,769 )
Interest income, net   249       215       1,056       683  
Other (expense) income, net   (716 )     48       (1,044 )     (459 )
Income before provision for income taxes   36,498       28,714       60,505       47,994  
Provision for income taxes   15,540       8,610       24,183       14,739  
    Net income $ 20,958     $ 20,104     $ 36,322     $ 33,255  
Earnings per share :                              
Basic $ 0.27     $ 0.27     $ 0.47     $ 0.44  
Diluted $ 0.26     $ 0.26     $ 0.46     $ 0.42  
Weighted-average number of common shares outstanding:                              
Basic   76,466       76,369       76,507       76,327  
Diluted   79,456       78,531       79,043       78,531  
                               
Dividends declared per share $ 0.03     $ 0.03     $ 0.12     $ 0.105  
                               
(1) Includes stock-based compensation as follows:                              
Cost of revenue $ 2,253     $ 1,519     $ 8,772     $ 5,335  
Operating expenses $ 4,796     $ 3,965     $ 21,282     $ 13,870  
                               
   
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($in thousands, except per share amounts)
                                   
  Three Months Ended December 31,   % Increase (Decrease)
  2015 GAAP   Adj.   2015
Non-GAAP
  2014 GAAP   Adj.   2014
Non-GAAP
  GAAP     Non-GAAP  
TOTAL REVENUE $ 204,355     $ -     $ 204,355     $ 168,924     $ 126     $ 169,050     21 %     21 %  
  Software license   95,168       -       95,168       77,418       -       77,418     23 %     23 %  
  Maintenance   52,436       -       52,436       48,684       63       48,747     8 %     8 %  
  Services   56,751       -       56,751       42,822       63       42,885     33 %     32 %  
                                                               
TOTAL COST OF REVENUE $ 53,165     $ (3,604 )   $ 49,561     $ 46,108     $ (2,870 )   $ 43,238     15 %     15 %  
  Amortization of intangible assets (2)   1,351       (1,351 )     -       1,351       (1,351 )     -                  
  Stock-based compensation   2,253       (2,253 )     -       1,519       (1,519 )     -                  
                                                               
GROSS MARGIN %   74 %             76 %     73 %             74 %   128   bp   132   bp
                                                               
TOTAL OPERATING EXPENSES (3) $ 114,399     $ (6,132 )   $ 108,267     $ 93,123     $ (5,857 )   $ 87,266     23 %     24 %  
  Amortization of intangible assets (2)   1,615       (1,615 )     -       1,821       (1,821 )     -                  
  Stock-based compensation   4,796       (4,796 )     -       3,965       (3,965 )     -                  
  Other adjustments   (329 )     329       -       -       -       -                  
  Acquisition-related   50       (50 )     -       71       (71 )     -                  
                                                               
INCOME FROM OPERATIONS $ 36,791     $ 9,736     $ 46,527     $ 29,693     $ 8,853     $ 38,546     24 %     21 %  
                                                               
OPERATING MARGIN %   18 %             23 %     18 %             23 %   43   bp   (3 ) bp
                                                               
INCOME TAX EFFECTS (4) $ 15,540     $ 1,112     $ 16,652     $ 8,610     $ 2,853     $ 11,463     80 %     45 %  
                                                               
NET INCOME $ 20,958     $ 8,624     $ 29,582     $ 20,104     $ 6,000     $ 26,104     4 %     13 %  
                                                               
DILUTED EARNINGS PER SHARE $ 0.26     $ 0.11     $ 0.37     $ 0.26     $ 0.07     $ 0.33     0 %     12 %  
                                                               
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING   79,456       -       79,456       78,531       -       78,531     1 %     1 %  
                                                               
                                                               
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($in thousands, except per share amounts)
                                   
  Year Ended December 31,   % Increase
  2015 GAAP   Adj.   2015
Non-GAAP
  2014 GAAP   Adj.   2014
Non-GAAP
  GAAP     Non-GAAP  
TOTAL REVENUE $ 682,695     $ -     $ 682,695     $ 590,004     $ 3,444     $ 593,448     16 %     15 %  
  Software license   275,588       -       275,588       232,336       1,565       233,901     19 %     18 %  
  Maintenance   202,802       -       202,802       186,239       533       186,772     9 %     9 %  
  Services   204,305       -       204,305       171,429       1,346       172,775     19 %     18 %  
                                                               
TOTAL COST OF REVENUE $ 213,446     $ (14,089 )   $ 199,357     $ 185,094     $ (11,352 )   $ 173,742     15 %     15 %  
  Amortization of intangible assets (2)   5,392       (5,392 )     -       6,017       (6,017 )     -                  
  Stock-based compensation   8,772       (8,772 )     -       5,335       (5,335 )     -                  
  Other adjustments   (75 )     75       -       -       -       -                  
                                                               
GROSS MARGIN %   69 %             71 %     69 %             71 %   11   bp   8   bp
                                                               
TOTAL OPERATING EXPENSES (3) $ 404,588     $ (23,997 )   $ 380,591     $ 353,371     $ (22,342 )   $ 331,029     14 %     15 %  
  Amortization of intangible assets (2)   6,810       (6,810 )     -       7,792       (7,792 )     -                  
  Stock-based compensation   21,282       (21,282 )     -       13,870       (13,870 )     -                  
  Other adjustments   (4,184 )     4,184       -       -       -       -                  
  Acquisition-related   89       (89 )     -       488       (488 )     -                  
  Restructuring   -       -       -       192       (192 )     -                  
                                                               
INCOME FROM OPERATIONS $ 64,661     $ 38,086     $ 102,747     $ 51,539     $ 37,138     $ 88,677     25 %     16 %  
                                                               
OPERATING MARGIN %   9 %             15 %     9 %             15 %   74   bp   11   bp
                                                               
INCOME TAX EFFECTS (4) $ 24,183     $ 10,448     $ 34,631     $ 14,739     $ 12,226     $ 26,965     64 %     28 %  
                                                               
NET INCOME $ 36,322     $ 27,638     $ 63,960     $ 33,255     $ 24,912     $ 58,167     9 %     10 %  
                                                               
DILUTED EARNINGS PER SHARE $ 0.46     $ 0.35     $ 0.81     $ 0.42     $ 0.32     $ 0.74     10 %     9 %  
                                                               
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING   79,043       -       79,043       78,531       -       78,531     1 %     1 %  
                                                               
                                                               
PEGASYSTEMS INC.
FOOTNOTES FOR RECONCILIATON OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(1) This presentation includes non-GAAP measures. Our non-GAAP 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. For a detailed explanation of the adjustments made to comparable 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 disclosure under Discussion of Non-GAAP Financial Measures included earlier in this release and below. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Revenue: Business combination accounting rules require that we determine the fair value of the deferred revenue liability for contractual obligations assumed primarily from our acquisition of Antenna Software, Inc. and its subsidiaries ("Antenna") in October 2013. In post-acquisition reporting periods, we recognize revenue for the fair value of these contracts, when all the revenue recognition criteria are satisfied, instead of the revenue that would have been recognized by Antenna as an independent company. We add back the effect of the deferred revenue fair value adjustment in non-GAAP revenue to reflect the full amount of these revenues to provide a more complete comparison of the revenue guidance to peer companies. No adjustments were made to revenue for 2015. 

Amortization of intangible assets: We have excluded the amortization expense of intangible assets from our non-GAAP operating expenses and net earnings measures. Amortization of intangible assets is inconsistent 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 earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods. 

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

Acquisition-related and restructuring expenses: We have excluded the effect of acquisition-related and restructuring expenses from our non-GAAP operating expenses and net earnings measures. We incurred direct and incremental expenses associated primarily with the Antenna and 2014 acquisitions. These acquisition-related expenses were primarily professional fees to affect the acquisitions. We have also incurred restructuring expenses related to the integration of the Antenna acquisition, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Restructuring expenses consist primarily of lease exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Other adjustments: We reached an agreement with the former shareholders of Antenna to release a portion of the funds held in escrow as security for their indemnification obligations to us in settlement of the outstanding indemnification claims. The settlement resulted in a benefit to cost of revenue and operating expenses in the first quarter of 2015. In addition, we favorably settled indirect tax liabilities related to the Antenna acquisition, which resulted in a benefit to operating expenses in the first quarter of 2015. In the fourth quarter of 2015, we reduced our estimate of the additional cash consideration payable to selling shareholders of one of the three companies acquired in 2014 based on the achievement of certain performance milestones. We believe the benefits associated with these items are not representative of our ongoing business, and we have excluded the effects of these items from our non-GAAP operating results and net earnings measures.

(2) Estimated future annual amortization expense related to intangible assets as of December 31, 2015 is as follows:

   
(in thousands)    
2016 $ 11,517
2017   9,818
2018   8,819
2019   3,027
2020 and thereafter   237
  Total intangible assets subject to amortization $ 33,418
     
     

(3) Below is a reconciliation of non-GAAP operating expenses:

    Three Months Ended December 31,
    2015       2015   2014       2014
(in thousands)   GAAP   Adj.   Non-GAAP   GAAP   Adj.   Non-GAAP
Selling and marketing   $ 71,623     $ (3,824 )   $ 67,799   $ 55,886   $ (3,045 )   $ 52,841
  Amortization of intangible assets     1,525       (1,525 )     -     1,526     (1,526 )     -
  Stock-based compensation     2,628       (2,628 )     -     1,519     (1,519 )     -
  Other Adjustments     (329 )     329       -     -     -       -
Research and development   $ 32,126     $ (1,938 )   $ 30,188   $ 28,101   $ (1,640 )   $ 26,461
  Stock-based compensation     1,938       (1,938 )     -     1,640     (1,640 )     -
General and administrative   $ 10,600     $ (320 )   $ 10,280   $ 9,065   $ (1,101 )   $ 7,964
  Amortization of intangible assets     90       (90 )     -     295     (295 )     -
  Stock-based compensation     230       (230 )     -     806     (806 )     -
Acquisition-related   $ 50     $ (50 )   $ -   $ 71   $ (71 )   $ -
TOTAL OPERATING EXPENSES   $ 114,399     $ (6,132 )   $ 108,267   $ 93,123   $ (5,857 )   $ 87,266
                         
    Year Ended December 31,
    2015       2015   2014       2014
(in thousands)   GAAP   Adj.   Non-GAAP   GAAP   Adj.   Non-GAAP
Selling and marketing   $ 241,387     $ (14,702 )   $ 226,685   $ 206,658   $ (11,403 )   $ 195,255
  Amortization of intangible assets     6,127       (6,127 )     -     6,022     (6,022 )     -
  Stock-based compensation     8,911       (8,911 )     -     5,381     (5,381 )     -
  Other adjustments     (336 )     336       -     -     -       -
Research and development   $ 126,374     $ (7,676 )   $ 118,698   $ 108,591   $ (4,841 )   $ 103,750
  Stock-based compensation     8,116       (8,116 )     -     4,841     (4,841 )     -
  Other adjustments     (440 )     440       -           -       -
General and administrative   $ 36,738     $ (1,530 )   $ 35,208   $ 37,442   $ (5,418 )   $ 32,024
  Amortization of intangible assets     683       (683 )     -     1,770     (1,770 )     -
  Stock-based compensation     4,255       (4,255 )     -     3,648     (3,648 )     -
  Other adjustments     (3,408 )     3,408       -     -     -       -
Acquisition-related   $ 89     $ (89 )   $ -   $ 488   $ (488 )   $ -
Restructuring   $ -     $ -     $ -   $ 192   $ (192 )   $ -
TOTAL OPERATING EXPENSES   $ 404,588     $ (23,997 )   $ 380,591   $ 353,371   $ (22,342 )   $ 331,029
                                           

(4) The GAAP income tax effects were calculated using an effective tax rate of 42.6% and 30% for the fourth quarter of 2015 and 2014, respectively. The non-GAAP income tax effects were calculated using an effective non-GAAP tax rate of 36% and 30.5% for the fourth quarter of 2015 and 2014, respectively.

The GAAP income tax effects were calculated using an effective tax rate of 40% and 30.7% for the full year 2015 and 2014, respectively. The non-GAAP income tax effects were calculated using an effective non-GAAP tax rate of 35.1% and 31.7% for the full year 2015 and 2014, respectively.

The differences between our GAAP and non-GAAP effective tax rates for 2015 primarily relate to the favorable impact of stock-based compensation expense adjustments on non-GAAP effective tax rates. The differences between our GAAP and non-GAAP effective tax rates for 2014 primarily relate to the impact of higher non-GAAP income subjected to tax in higher tax rate jurisdictions.

         
Pegasystems Inc.
Condensed Consolidated Balance Sheets
(in thousands)
     
    As of   As of
    December 31, 2015   December 31, 2014
Current Assets:            
  Cash and cash equivalents   $ 93,026   $ 114,585
  Marketable securities     126,052     96,631
    Total cash, cash equivalents, and marketable securities     219,078     211,216
  Trade accounts receivable, net     211,846     154,844
  Deferred income taxes     12,380     12,974
  Income taxes receivable     4,770     4,502
  Other current assets     10,791     9,544
    Total current assets     458,865     393,080
Property and equipment, net     31,319     30,156
Long-term deferred income taxes     53,350     69,258
Long-term other assets     4,030     2,783
Intangible assets, net     33,418     45,664
Goodwill     46,776     46,860
    Total assets   $ 627,758   $ 587,801
             
Current liabilities:            
  Accounts payable   $ 12,675   $ 4,752
  Accrued expenses     42,768     42,958
  Accrued compensation and related expenses     55,872     47,250
  Deferred revenue     155,873     134,672
    Total current liabilities     267,188     229,632
Income taxes payable     5,618     24,896
Long-term deferred revenue     15,805     20,859
Other long-term liabilities     16,288     17,709
    Total liabilities     304,899     293,096
Stockholders' equity:     322,859     294,705
    Total liabilities and stockholders' equity   $ 627,758   $ 587,801
             
             
Pegasystems Inc.  
Condensed Consolidated Statements of Cash Flows  
(in thousands)  
    Year Ended  
    December 31,  
    2015     2014  
Operating activities:                
  Net income   $ 36,322     $ 33,255  
  Adjustments to reconcile net income to cash provided by operating activities:                
    Excess tax benefits from equity awards and deferred income taxes     (7,374 )     (17,283 )
    Depreciation, amortization, foreign currency transaction loss, and other non-cash items     30,321       28,290  
    Stock-based compensation expense     30,054       19,205  
    Change in operating assets and liabilities, net     (26,795 )     36,422  
  Cash provided by operating activities     62,528       99,889  
  Cash used in investing activities     (44,452 )     (37,657 )
  Cash used in financing activities     (35,384 )     (24,032 )
Effect of exchange rates on cash and cash equivalents     (4,251 )     (3,846 )
Net (decrease) increase in cash and cash equivalents     (21,559 )     34,354  
Cash and cash equivalents, beginning of period     114,585       80,231  
Cash and cash equivalents, end of period   $ 93,026     $ 114,585  
                 
                 
Pegasystems Inc.
Historical License and Cloud Backlog
(in thousands)
                               
  2015   2015   2015   2015   2014   2014   2014   2014
  Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1
  Total billed deferred license and cloud revenue   63,412     55,370     61,339     79,639     63,048     68,561     54,938     62,741
  Total off-balance sheet license and cloud commitments   356,388     324,340     330,043     294,412     301,409     265,309     298,658     270,243
TOTAL LICENSE AND CLOUD BACKLOG $ 419,800   $ 379,710   $ 391,382   $ 374,051   $ 364,457   $ 333,870   $ 353,596   $ 332,984
                                               
                                               
Pegasystems Inc.
FY 2016 Reconciliation of Forward-Looking Guidance
($in thousands, except per share amounts)
 
         
    Full Year 2016
             
Net Income and Diluted EPS - GAAP basis   $ 39,893   $ 0.50
             
Adjustment to exclude amortization of intangible assets, net of tax     7,688     0.10
Adjustment to exclude stock-based compensation, net of tax     27,320     0.35
             
Net Income and Diluted EPS - Non-GAAP basis   $ 74,901   $ 0.95

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