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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pegasystems Inc | NASDAQ:PEGA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.25 | 0.44% | 57.50 | 57.56 | 64.00 | 422 | 12:20:25 |
Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, released its financial results for the first quarter of 2024.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240424708388/en/
Backlog Growth (Graphic: Business Wire)
“In Q1, we released Pega GenAI BlueprintTM, a revolutionary technology that massively changes the way we engage with our clients to help them re-imagine and evolve their business,” said Alan Trefler, founder and CEO. “Hundreds of clients and partners have generated thousands of Blueprints, and those numbers are increasing every day. Blueprint highlights how Pega is uniquely leveraging GenAI to drive digital transformation for our clients.”
“The strong cash generation in Q1 demonstrates the power of a SaaS business,” said Ken Stillwell, Pega COO and CFO. “Given our financial strength and differentiated GenAI capabilities, we are in a great position to accelerate profitable growth.”
Financial and performance metrics (1)
Reconciliation of ACV and ACV (constant currency)
(in millions, except percentages)
March 31, 2023
March 31, 2024
1-Year Change
ACV
$
1,174
$
1,273
9
%
Impact of changes in foreign exchange rates
—
4
Constant currency ACV
$
1,174
$
1,277
9
%
Note: ACV (constant currency) is calculated by applying the March 31, 2023 foreign exchange rates to all periods shown.
1 Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
(Dollars in thousands,
except per share amounts)
Three Months Ended
March 31,
2024
2023
Change
Total revenue
$
330,147
$
325,472
1
%
Net (loss) - GAAP
$
(12,124
)
$
(20,774
)
42
%
Net income - non-GAAP
$
42,154
$
19,220
119
%
Diluted (loss) per share - GAAP
$
(0.14
)
$
(0.25
)
44
%
Diluted earnings per share - non-GAAP
$
0.48
$
0.23
109
%
(Dollars in thousands)
Three Months Ended
March 31,
Change
2024
2023
Pega Cloud
$
130,902
40
%
$
107,879
33
%
$
23,023
21
%
Maintenance
81,001
24
%
79,630
25
%
1,371
2
%
Subscription services
211,903
64
%
187,509
58
%
24,394
13
%
Subscription license
63,338
19
%
84,527
26
%
(21,189
)
(25
)%
Subscription
275,241
83
%
272,036
84
%
3,205
1
%
Consulting
54,047
17
%
53,033
16
%
1,014
2
%
Perpetual license
859
—
%
403
—
%
456
113
%
$
330,147
100
%
$
325,472
100
%
$
4,675
1
%
Quarterly conference call
A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Thursday, April 25, 2024. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (888) 596-4144 (domestic) or 1 (646) 968-2525 (international) and using conference ID 1559653, or via https://events.q4inc.com/attendee/436307495 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.
Discussion of non-GAAP financial measures
Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. They are not a substitute for financial measures prepared under U.S. GAAP. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
Forward-looking statements
Certain statements in this press release may be "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.
Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements. These statements represent our views only as of the date the statement was made and are based on current expectations and assumptions.
Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:
These risks and others that may cause actual results to differ materially from those expressed in such forward-looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2023, and other filings we make with the U.S. Securities and Exchange Commission (“SEC”).
Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included in such statements will be achieved. Although subsequent events may cause our view to change, 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.
Any forward-looking statements in this press release represent our views as of April 24, 2024.
About Pegasystems
Pega provides a powerful platform that empowers the world's leading organizations to unlock business-transforming outcomes with real-time optimization. Clients use our enterprise AI decisioning and workflow automation to solve their most pressing business challenges - from personalizing engagement to automating service to streamlining operations. Since 1983, we've built our scalable and flexible architecture to help enterprises meet today's customer demands while continuously transforming for tomorrow. For more information on how Pega (NASDAQ: PEGA) empowers its clients to Build for Change®, visit www.pega.com.
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
March 31,
2024
2023
Revenue
Subscription services
$
211,903
$
187,509
Subscription license
63,338
84,527
Consulting
54,047
53,033
Perpetual license
859
403
Total revenue
330,147
325,472
Cost of revenue
Subscription services
35,824
36,864
Subscription license
643
719
Consulting
58,182
60,348
Perpetual license
9
3
Total cost of revenue
94,658
97,934
Gross profit
235,489
227,538
Operating expenses
Selling and marketing
127,695
149,797
Research and development
72,113
75,376
General and administrative
23,527
23,110
Litigation settlement, net of recoveries
32,403
—
Restructuring
163
1,461
Total operating expenses
255,901
249,744
(Loss) from operations
(20,412
)
(22,206
)
Foreign currency transaction (loss)
(3,262
)
(2,675
)
Interest income
5,281
1,485
Interest expense
(1,752
)
(1,918
)
Gain on capped call transactions
3,299
3,206
Other income, net
1,684
6,583
(Loss) before (benefit from) provision for income taxes
(15,162
)
(15,525
)
(Benefit from) provision for income taxes
(3,038
)
5,249
Net (loss)
$
(12,124
)
$
(20,774
)
(Loss) per share
Basic
$
(0.14
)
$
(0.25
)
Diluted
$
(0.14
)
$
(0.25
)
Weighted-average number of common shares outstanding
Basic
84,266
82,604
Diluted
84,266
82,604
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
291,905
$
229,902
Marketable securities
327,044
193,436
Total cash, cash equivalents, and marketable securities
618,949
423,338
Accounts receivable, net
191,987
300,173
Unbilled receivables, net
170,458
237,379
Other current assets
78,193
68,137
Total current assets
1,059,587
1,029,027
Long-term unbilled receivables, net
72,814
85,402
Goodwill
81,467
81,611
Other long-term assets
297,860
314,696
Total assets
$
1,511,728
$
1,510,736
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
6,353
$
11,290
Accrued expenses
80,642
39,941
Accrued compensation and related expenses
55,438
126,640
Deferred revenue
382,765
377,845
Convertible senior notes, net
499,985
—
Other current liabilities
19,096
21,343
Total current liabilities
1,044,279
577,059
Long-term convertible senior notes, net
—
499,368
Long-term operating lease liabilities
63,645
66,901
Other long-term liabilities
13,618
13,570
Total liabilities
1,121,542
1,156,898
Total stockholders’ equity
390,186
353,838
Total liabilities and stockholders’ equity
$
1,511,728
$
1,510,736
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
2024
2023
Net (loss)
$
(12,124
)
$
(20,774
)
Adjustments to reconcile net (loss) to cash provided by operating activities
Non-cash items
55,592
59,766
Change in operating assets and liabilities, net
136,678
29,115
Cash provided by operating activities
180,146
68,107
Cash (used in) investing activities
(132,399
)
(14,413
)
Cash provided by (used in) financing activities
17,899
(29,372
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(2,803
)
782
Net increase in cash, cash equivalents, and restricted cash
62,843
25,104
Cash, cash equivalents, and restricted cash, beginning of period
232,827
145,054
Cash, cash equivalents, and restricted cash, end of period
$
295,670
$
170,158
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES
(in thousands, except percentages and per share amounts)
Three Months Ended
March 31,
2024
2023
Change
Net (loss) - GAAP
$
(12,124
)
$
(20,774
)
42
%
Stock-based compensation (1)
34,781
42,557
Restructuring
163
1,461
Legal fees
1,942
1,476
Litigation settlement, net of recoveries
32,403
—
Amortization of intangible assets
964
1,049
Interest on convertible senior notes
617
728
Capped call transactions
(3,299
)
(3,206
)
Repurchases of convertible senior notes
—
(2,781
)
Foreign currency transaction loss
3,262
2,675
Other
(1,628
)
(3,793
)
Income taxes (2)
(14,927
)
(172
)
Net income - non-GAAP
$
42,154
$
19,220
119
%
Diluted (loss) per share - GAAP
$
(0.14
)
$
(0.25
)
44
%
non-GAAP adjustments
0.62
0.48
Diluted earnings per share - non-GAAP
$
0.48
$
0.23
109
%
Diluted weighted-average number of common shares outstanding - GAAP
84,266
82,604
2
%
Stock-based compensation
3,094
762
Diluted weighted-average number of common shares outstanding - non-GAAP
87,360
83,366
5
%
Our non-GAAP financial measures reflect the following adjustments:
(1) Stock-based compensation:
Three Months Ended
March 31,
2024
2023
Cost of revenue
$
6,572
$
8,912
Selling and marketing
13,888
17,661
Research and development
7,646
9,060
General and administrative
6,675
6,924
$
34,781
$
42,557
Income tax benefit
$
(311
)
$
(672
)
(2) Effective income tax rates:
Three Months Ended
March 31,
2024
2023
GAAP
20%
(34)%
non-GAAP
22%
22%
Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including our stock-based compensation plans, research and development tax credits, gains and losses on our capped call transactions, and the valuation allowance on our deferred tax assets in the U.S. and U.K. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP results consistent with our annual plan's effective income tax rate as established at the beginning of each year, given tax rate volatility.
PEGASYSTEMS INC.
RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS
(in thousands, except percentages)
Three Months Ended
March 31,
2024
2023
Cash provided by operating activities
$
180,146
$
68,107
Investment in property and equipment
(604
)
(11,487
)
Free cash flow
$
179,542
$
56,620
Supplemental information (2)
Restructuring
$
3,347
$
14,458
Legal fees
2,739
1,515
Interest on convertible senior notes
1,884
2,250
Income taxes
8,163
2,825
$
16,133
$
21,048
(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP.
(2) The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.
PEGASYSTEMS INC. ANNUAL CONTRACT VALUE (in thousands, except percentages)
Annual contract value (“ACV”) - ACV represents the annualized value of our active contracts as of the measurement date. The contract's total value is divided by its duration in years to calculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.
March 31, 2024
March 31, 2023
Change
Pega Cloud
$
570,356
$
490,568
$
79,788
16
%
Maintenance
313,550
323,760
(10,210
)
(3
)%
Subscription services
883,906
814,328
69,578
9
%
Subscription license
389,431
359,323
30,108
8
%
$
1,273,337
$
1,173,651
$
99,686
9
%
PEGASYSTEMS INC. BACKLOG (in thousands, except percentages)
Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts:
As of March 31, 2024:
Subscription services
Subscription
license
Perpetual
license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
461,928
$
225,598
$
33,985
$
2,727
$
34,716
$
758,954
53
%
1-2 years
292,787
65,605
10,008
—
1,604
370,004
26
%
2-3 years
149,797
32,307
2,903
—
2,428
187,435
13
%
Greater than 3 years
86,601
21,650
98
—
—
108,349
8
%
$
991,113
$
345,160
$
46,994
$
2,727
$
38,748
$
1,424,742
100
%
% of Total
70
%
24
%
3
%
—
%
3
%
100
%
Change since March 31, 2023
$
124,390
$
6,799
$
1,656
$
(4,787
)
$
(11,400
)
$
116,658
14
%
2
%
4
%
(64
)%
(23
)%
9
%
As of March 31, 2023:
Subscription services
Subscription
license
Perpetual
license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
389,632
$
235,315
$
35,346
$
5,262
$
41,203
$
706,758
54
%
1-2 years
239,228
66,272
3,215
2,252
6,653
317,620
24
%
2-3 years
131,085
29,295
6,777
—
2,292
169,449
13
%
Greater than 3 years
106,778
7,479
—
—
—
114,257
9
%
$
866,723
$
338,361
$
45,338
$
7,514
$
50,148
$
1,308,084
100
%
% of Total
66
%
26
%
3
%
1
%
4
%
100
%
PEGASYSTEMS INC.
RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions, except percentages)
March 31, 2023
March 31, 2024
1 Year Growth Rate
Backlog - GAAP
$
1,308
$
1,425
9
%
Impact of changes in foreign exchange rates
—
4
Constant currency backlog
$
1,308
$
1,429
9
%
Note: Constant currency Backlog is calculated by applying the Q1 2023 foreign exchange rates to all periods shown.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240424708388/en/
Press contact: Lisa Pintchman VP, Corporate Communications lisapintchman.rogers@pega.com 617-866-6022 Twitter: @pega
Investor contact: Peter Welburn VP, Corporate Development & Investor Relations PegaInvestorRelations@pega.com 617-498-8968
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