SOURCE: Pegasystems

Pegasystems

November 04, 2014 16:02 ET

Pegasystems Announces Financial Results for Third Quarter and Nine Months of 2014

GAAP License Revenue Increases 21% in the Nine Months of 2014; YTD GAAP EPS of $0.17; YTD Non-GAAP EPS of $0.41

CAMBRIDGE, MA--(Marketwired - Nov 4, 2014) - Pegasystems Inc. (NASDAQ: PEGA), the software company powering the digital enterprise, today announced results for its third quarter and nine months ended September 30, 2014.

"Our year-to-date results are very solid and reflect the increasing benefits Pega clients are achieving through the use of our technology. For the quarter, we achieved license revenue growth of 8% over last year's exceptional Q3 2013 results, bringing the first three quarters' license revenue to $155 million, or a 21% increase over last year," said Alan Trefler, Founder and CEO of Pegasystems. "This continues what has been a strong performance this year for Pegasystems, and we continue to see significant growth opportunities."

"Our business growth is benefiting from customers looking to drive strategic digital transformation initiatives, as well as from those taking pragmatic steps to improve their customer engagement and simplify their operations," said Mr. Trefler. "This quarter, we made significant progress incorporating the technologies we acquired earlier this year to provide more robust product offerings to meet our customers' evolving needs."

   
SELECTED GAAP & NON-GAAP RESULTS (1)  
   
  Three Months Ended September 30,   % Increase  
  2014   2014   2013   2013   (Decrease)  
($ in '000s) GAAP   Non-GAAP   GAAP   Non-GAAP   GAAP   Non-GAAP  
Total Revenue $ 137,631   $ 138,307   $ 122,011   $ 122,011   13 % 13 %
License Revenue $ 48,292   $ 48,814   $ 44,802   $ 44,802   8 % 9 %
Net Income $ 1,882   $ 8,368   $ 8,710   $ 12,951   (78 %) (35 %)
Diluted Earnings per share (2) $ 0.02   $ 0.11   $ 0.11   $ 0.17   (82 %) (35 %)
                                 
  Nine Months Ended September 30,   % Increase  
  2014   2014   2013   2013   (Decrease)  
($ in '000s) GAAP   Non-GAAP   GAAP   Non-GAAP   GAAP   Non-GAAP  
Total Revenue $ 421,080   $ 424,398   $ 355,572   $ 355,572   18 % 19 %
License Revenue $ 154,918   $ 156,483   $ 128,217   $ 128,217   21 % 22 %
Net Income $ 13,151   $ 32,063   $ 22,482   $ 34,384   (42 %) (7 %)
Diluted Earnings per share (2) $ 0.17   $ 0.41   $ 0.29   $ 0.44   (41 %) (7 %)
                                 
(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 the end of the quarter was $228.6 million, up 46% from 2013 year-end.

Cash generated from operations for the nine months of 2014 was $98.3 million, an increase of 18% on a year-over-year basis. Free Cash Flow, which we define as operating cash flow less Cap Ex, was $92.5 million, an increase of 17% on a year-over-year basis.

License and Cloud Backlog: The Company computes license 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)  
   
    September 30,      
($ in millions)   2014   2013   Increase  
  Total billed deferred license and cloud revenue   68.6   34.6   98 %
  Total off-balance sheet license and cloud commitments   265.3   248.4   7 %
TOTAL LICENSE AND CLOUD BACKLOG   333.9   283.0   18 %
               
(1) See historical license backlog amounts including cloud in a separate schedule at the end of this release.  
               

"We are pleased with our results for the first three quarters of 2014," said Rafe Brown, Pegasystems CFO. "In particular, it has been encouraging that our year-to-date performance has been driven by a high level of expansion within our existing clients, further evidence of the value they have found with Pega."

Quarterly Conference Call

Pegasystems will host a conference call and live 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 Web site at www.pega.com/about-us/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 5 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 in the Investors section Audio Archives link.

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 costs, and restructuring expenses. 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. The words "anticipate," "project," "expect," "plan," "intend," "believe," "estimate," "should," "target," "forecast," "could," "preliminary," "guidance" 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 and healthcare markets, reliance on third party relationships, the potential loss of vendor specific objective evidence for our professional services, the financial impact of the Antenna acquisition, 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, 2013 and other recent filings with the Securities and Exchange Commission. These documents are available on the Company's website at www.pega.com/about-us/investors/sec-filings. The forward-looking statements contained in this press release represent the Company's views as of November 4, 2014. 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 November 4, 2014.

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About Pegasystems
Pegasystems Build for Change® Platform is the heart of Better Business Software®. It delivers business agility and empowers leading organizations to rapidly close execution gaps and seize new opportunities. Pegasystems leverages its recognized leadership in Business Process Management (BPM), Multi-Channel Customer Relationship Management (CRM), Business Rules, and Adaptive Analytics to uniquely give its clients the power to engage customers, simplify operations and Build For Change®. For more information, please visit us at www.pega.com

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Pegasystems Inc.  
Unaudited Condensed Consolidated Statements of Operations  
(In thousands, except per share amounts)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
Revenue:                                
  Software license   $ 48,292     $ 44,802     $ 154,918     $ 128,217  
  Maintenance     47,281       37,979       137,555       112,238  
  Services     42,058       39,230       128,607       115,117  
    Total revenue     137,631       122,011       421,080       355,572  
Cost of revenue:                                
  Software license     1,076       1,592       3,832       4,751  
  Maintenance     5,385       3,599       15,093       11,106  
  Services     39,921       32,907       120,061       97,772  
    Total cost of revenue (1)     46,382       38,098       138,986       113,629  
Gross profit     91,249       83,913       282,094       241,943  
Operating expenses:                                
  Selling and marketing     48,623       42,663       150,772       127,279  
  Research and development     28,558       19,786       80,490       59,123  
  General and administrative     8,825       7,130       28,377       21,203  
  Acquisition-related     54       545       417       545  
  Restructuring     192       -       192       -  
    Total operating expenses (1)     86,252       70,124       260,248       208,150  
Income from operations     4,997       13,789       21,846       33,793  
Foreign currency transaction (loss) gain     (2,845 )     661       (2,527 )     (1,666 )
Interest income, net     181       123       468       376  
Other income (expense), net     19       (1,163 )     (507 )     (418 )
Income before provision for income taxes     2,352       13,410       19,280       32,085  
Provision for income taxes     470       4,700       6,129       9,603  
    Net income   $ 1,882     $ 8,710     $ 13,151     $ 22,482  
Earnings per share (2):                                
Basic   $ 0.02     $ 0.11     $ 0.17     $ 0.30  
Diluted   $ 0.02     $ 0.11     $ 0.17     $ 0.29  
Weighted-average number of common shares outstanding (2):                                
Basic     76,351       75,910       76,312       75,900  
Diluted     78,653       78,158       78,531       77,744  
                                 
Dividends declared per share (2)   $ 0.030     $ 0.015     $ 0.075     $ 0.045  
                                 
(1) Includes stock-based compensation as follows:                                
Cost of revenue   $ 1,418     $ 947     $ 3,816     $ 3,134  
Operating expenses   $ 3,850     $ 2,053     $ 9,905     $ 6,579  
                                 
(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  
   
   
   
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($in thousands, except per share data)
                                       
  Three Months Ended September 30,     % Increase
(Decrease)
  2014           2014     2013           2013                  
  GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP     GAAP       Non-GAAP    
TOTAL REVENUE $ 137,631     $ 676     $ 138,307     $ 122,011     $ -     $ 122,011     13 %     13 %  
  Software license   48,292       522       48,814       44,802       -       44,802     8 %     9 %  
  Maintenance (2)   47,281       95       47,376       37,979       -       37,979     24 %     25 %  
  Services (3)   42,058       59       42,117       39,230       -       39,230     7 %     7 %  
                                                               
TOTAL COST OF REVENUE $ 46,382     $ (2,800 )   $ 43,582     $ 38,098     $ (2,487 )   $ 35,611     22 %     22 %  
  Amortization of intangible assets (4) (5)   1,382       (1,382 )     -       1,540       (1,540 )     -                  
Stock-based compensation (5)   1,418       (1,418 )     -       947       (947 )     -                  
                                                               
GROSS MARGIN %   66 %             68 %     69 %             71 %   (248 ) bp   (232 ) bp
                                                               
TOTAL OPERATING EXPENSES $ 86,252     $ (6,171 )   $ 80,081     $ 70,124     $ (3,830 )   $ 66,294     23 %     21 %  
  Amortization of intangible assets (4) (5)   2,075       (2,075 )     -       1,232       (1,232 )     -                  
  Stock-based compensation (5)   3,850       (3,850 )     -       2,053       (2,053 )     -                  
  Acquisition-related   54       (54 )     -       545       (545 )     -                  
  Restructuring   192       (192 )     -       -       -       -                  
                                                               
INCOME FROM OPERATIONS $ 4,997     $ 9,647     $ 14,644     $ 13,789     $ 6,317     $ 20,106     (64 %)     (27 %)  
                                                               
OPERATING MARGIN %   4 %             11 %     11 %             16 %   (767 ) bp   (589 ) bp
                                                               
INCOME TAX EFFECTS (6) $ 470     $ 3,161     $ 3,631     $ 4,700     $ 2,076     $ 6,776     (90 %)     (46 %)  
                                                               
NET INCOME $ 1,882     $ 6,486     $ 8,368     $ 8,710     $ 4,241     $ 12,951     (78 %)     (35 %)  
                                                               
DILUTED EARNINGS PER SHARE (7) $ 0.02     $ 0.09     $ 0.11     $ 0.11     $ 0.06     $ 0.17     (82 %)     (35 %)  
                                                               
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING (7)   78,653       -       78,653       78,158       -       78,158     1 %     1 %  
                                                               
                                                               
                                                               
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in thousands, except per share data)
                                       
  Nine Months Ended September 30,     % Increase
(Decrease)
  2014           2014     2013           2013                  
  GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP     GAAP       Non-GAAP    
TOTAL REVENUE $ 421,080     $ 3,318     $ 424,398     $ 355,572     $ -     $ 355,572     18 %     19 %  
  Software license   154,918       1,565       156,483       128,217       -       128,217     21 %     22 %  
  Maintenance (2)   137,555       470       138,025       112,238       -       112,238     23 %     23 %  
  Services (3)   128,607       1,283       129,890       115,117       -       115,117     12 %     13 %  
                                                               
TOTAL COST OF REVENUE $ 138,986     $ (8,482 )   $ 130,504     $ 113,629     $ (7,756 )   $ 105,873     22 %     23 %  
  Amortization of intangible assets (4) (5)   4,666       (4,666 )     -       4,622       (4,622 )     -                  
  Stock-based compensation (5)   3,816       (3,816 )     -       3,134       (3,134 )     -                  
                                                               
GROSS MARGIN %   67 %             69 %     68 %             70 %   (105 ) bp   (97 ) bp
                                                               
TOTAL OPERATING EXPENSES $ 260,248     $ (16,485 )   $ 243,763     $ 208,150     $ (10,824 )   $ 197,326     25 %     24 %  
  Amortization of intangible assets (4) (5)   5,971       (5,971 )     -       3,700       (3,700 )     -                  
  Stock-based compensation (5)   9,905       (9,905 )     -       6,579       (6,579 )     -                  
  Acquisition-related   417       (417 )     -       545       (545 )     -                  
  Restructuring   192       (192 )     -       -       -       -                  
                                                               
INCOME FROM OPERATIONS $ 21,846     $ 28,285     $ 50,131     $ 33,793     $ 18,580     $ 52,373     (35 %)     (4 %)  
                                                               
OPERATING MARGIN %   5 %             12 %     10 %             15 %   (432 ) bp   (292 ) bp
                                                               
INCOME TAX EFFECTS (6) $ 6,129     $ 9,373     $ 15,502     $ 9,603     $ 6,678     $ 16,281     (36 %)     (5 %)  
                                                               
NET INCOME $ 13,151     $ 18,912     $ 32,063     $ 22,482     $ 11,902     $ 34,384     (42 %)     (7 %)  
                                                               
DILUTED EARNINGS PER SHARE (7) $ 0.17     $ 0.24     $ 0.41     $ 0.29     $ 0.15     $ 0.44     (41 %)     (7 %)  
                                                               
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING (7)   78,531       -       78,531       77,744       -       77,744     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 Antenna. 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.

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 with the Antenna, MeshLabs, and Profeatable 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.

(2) As of September 30, 2014, approximately $0.1 million in estimated revenues related to assumed software support contracts will not be recognized in the fourth quarter of 2014 due to business combination accounting rules.

(3) As of September 30, 2014, approximately $0.1 million in estimated revenues related to assumed hosting and services contracts will not be recognized in the fourth quarter of 2014 due to business combination accounting rules.

(4) Estimated future annual amortization expense related to intangible assets as of September 30, 2014 is as follows:

     
  Fiscal 2014 $ 3,149
  Fiscal 2015   12,073
  Fiscal 2016   11,386
  Fiscal 2017   9,688
  Fiscal 2018 and thereafter   11,584
    Total intangible assets subject to amortization $ 47,880

(5) Below is a reconciliation of Non-GAAP operating expenses:

                             
    Three Months Ended September 30,
    2014         2014   2013         2013
(in '000s)   GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
Selling and marketing   $ 48,623   $ (2,927 )   $ 45,696   $ 42,663   $ (2,239 )   $ 40,424
  Amortization of intangible assets     1,501     (1,501 )     -     1,232     (1,232 )     -
  Stock-based compensation     1,426     (1,426 )     -     1,007     (1,007 )     -
Research and development   $ 28,558   $ (1,452 )   $ 27,106   $ 19,786   $ (585 )   $ 19,201
  Stock-based compensation     1,452     (1,452 )     -     585     (585 )     -
General and administrative   $ 8,825   $ (1,546 )   $ 7,279   $ 7,130   $ (461 )   $ 6,669
  Amortization of intangible assets     574     (574 )     -     -     -       -
  Stock-based compensation     972     (972 )     -     461     (461 )     -
Acquisition-related   $ 54   $ (54 )   $ -   $ 545   $ (545 )   $ -
Restructuring   $ 192   $ (192 )   $ -   $ -   $ -     $ -
TOTAL OPERATING EXPENSES   $ 86,252   $ (6,171 )   $ 80,081   $ 70,124   $ (3,830 )   $ 66,294
                                         
    Nine Months Ended September 30,
    2014         2014   2013         2013
(in '000s)   GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
Selling and marketing   $ 150,772   $ (8,358 )   $ 142,414   $ 127,279   $ (6,646 )   $ 120,633
  Amortization of intangible assets     4,496     (4,496 )     -     3,696     (3,696 )     -
  Stock-based compensation     3,862     (3,862 )     -     2,950     (2,950 )     -
Research and development   $ 80,490   $ (3,201 )   $ 77,289   $ 59,123   $ (1,852 )   $ 57,271
  Stock-based compensation     3,201     (3,201 )     -     1,852     (1,852 )     -
General and administrative   $ 28,377   $ (4,317 )   $ 24,060   $ 21,203   $ (1,781 )   $ 19,422
  Amortization of intangible assets     1,475     (1,475 )     -     4     (4 )     -
  Stock-based compensation     2,842     (2,842 )     -     1,777     (1,777 )     -
Acquisition-related   $ 417   $ (417 )   $ -   $ 545   $ (545 )   $ -
Restructuring   $ 192   $ (192 )   $ -   $ -   $ -     $ -
TOTAL OPERATING EXPENSES   $ 260,248   $ (16,485 )   $ 243,763   $ 208,150   $ (10,824 )   $ 197,326
                                         
                                         

(6) The GAAP income tax effects were calculated using an effective tax rate of 20% and 32% in the third quarter and nine months of 2014, respectively, and 35% and 30% in the third quarter and nine months of 2013, respectively. The non-GAAP income tax effects were calculated using an effective tax rate of 30% and 33% in the third quarter and nine months of 2014, respectively, and 34% and 32% in the third quarter and nine months of 2013, respectively.

The differences between our GAAP and non-GAAP effective tax rates for 2014 and 2013 primarily relates to the impact of higher non-GAAP income subjected to tax in higher tax rate jurisdictions.

(7) 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.

         
         
Pegasystems Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
     
    As of   As of
    September 30, 2014   December 31, 2013
Current Assets:            
  Cash and cash equivalents   $ 136,545   $ 80,231
  Marketable securities     92,026     76,461
    Total cash, cash equivalents, and marketable securities     228,571     156,692
  Trade accounts receivable, net     103,439     165,641
  Deferred income taxes     12,328     12,336
  Income taxes receivable     11,949     4,392
  Other current assets     10,096     9,148
    Total current assets     366,383     348,209
Property and equipment, net     28,881     28,957
Long-term deferred income taxes     58,129     56,745
Long-term other assets     2,882     2,526
Intangible assets, net     47,880     56,574
Goodwill     45,009     43,469
    Total assets   $ 549,164   $ 536,480
             
Current liabilities:            
  Accounts payable   $ 8,060   $ 3,671
  Accrued expenses     35,039     31,624
  Accrued compensation and related expenses     40,462     44,401
  Deferred revenue     128,259     110,690
    Total current liabilities     211,820     190,386
Income taxes payable     20,951     21,269
Long-term deferred revenue     20,645     34,196
Other long-term liabilities     17,473     18,841
    Total liabilities     270,889     264,692
Stockholders' equity:     278,275     271,788
    Total liabilities and stockholders' equity   $ 549,164   $ 536,480
                 
                 
                 
Pegasystems Inc.  
Unaudited Condensed Consolidated Statements of Cash Flows  
(in thousands)  
    Nine Months Ended  
    September 30,  
    2014     2013  
Operating activities:                
  Net income   $ 13,151     $ 22,482  
  Adjustments to reconcile net income to cash provided by operating activities:                
    Excess tax benefits from equity awards and deferred income taxes     (5,599 )     (3,207 )
    Depreciation, amortization, foreign currency transaction loss, and other non-cash items     20,633       18,575  
    Stock-based compensation expense     13,721       9,713  
    Change in operating assets and liabilities, net     56,361       35,872  
  Cash provided by operating activities     98,267       83,435  
  Cash used in investing activities     (22,485 )     (39,674 )
  Cash used in financing activities     (17,403 )     (11,942 )
Effect of exchange rate on cash and cash equivalents     (2,065 )     (517 )
Net increase in cash and cash equivalents     56,314       31,302  
Cash and cash equivalents, beginning of period     80,231       77,525  
Cash and cash equivalents, end of period   $ 136,545     $ 108,827  
                 
                 
                 
PEGASYSTEMS INC.
Historical License and Cloud Backlog
($ in thousands)
           
  2014   2014   2014   2013   2013   2013   2013
  Q3   Q2   Q1   Q4   Q3   Q2   Q1
  Total billed deferred license and cloud revenue   68,561     54,938     62,741     64,267     34,644     37,312     31,765
  Total off-balance sheet license and cloud commitments   265,309     298,658     270,243     283,099     248,403     246,821     253,623
TOTAL LICENSE AND CLOUD BACKLOG $ 333,870   $ 353,596   $ 332,984   $ 347,366   $ 283,047   $ 284,133   $ 285,388
                                         

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