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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 | |
---|---|---|---|---|---|---|---|---|---|---|
1.50 | 2.39% | 64.35 | 64.00 | 64.35 | 62.78 | 60.93 | 61.48 | 896,319 | 00:59:30 |
Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, released its financial results for the second quarter of 2024.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240724234135/en/
ACV Growth (Graphic: Business Wire)
“Our approach to statistical AI and generative AI continues to be a significant differentiator,” said Alan Trefler, founder and CEO. “The offerings we’ve introduced, especially Pega GenAI Blueprint™, have captured the imagination of clients, prospects, and partners, allowing them to identify new possibilities and helping us drive deeper engagement. With tens of thousands of blueprints created over the last few months, we’re identifying opportunities to accelerate growth and creating additional momentum for Pega Cloud®.”
"I'm really proud to see how our team is improving profitability while driving ACV growth,” said Ken Stillwell, COO and CFO. “Our strong execution and our AI innovation put us in a fantastic position to pursue the massive digital transformation opportunity in front of us.”
Financial and performance metrics (1)
Reconciliation of ACV and Constant Currency ACV
(in millions, except percentages)
June 30, 2023
June 30, 2024
1-Year Change
ACV
$
1,164
$
1,305
12
%
Impact of changes in foreign exchange rates
—
5
Constant currency ACV
$
1,164
$
1,310
13
%
Note: Constant currency ACV is calculated by applying the June 30, 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
June 30,
Six Months Ended
June 30,
2024
2023
Change
2024
2023
Change
Total revenue
$
351,153
$
298,268
18
%
$
681,300
$
623,740
9
%
Net income (loss) - GAAP
$
6,613
$
(46,804
)
*
$
(5,511
)
$
(67,578
)
92
%
Net income - non-GAAP
$
45,841
$
1,203
3711
%
$
87,995
$
20,423
331
%
Diluted earnings (loss) per share - GAAP
$
0.07
$
(0.56
)
*
$
(0.07
)
$
(0.82
)
91
%
Diluted earnings per share - non-GAAP
$
0.52
$
0.01
5100
%
$
1.00
$
0.24
317
%
(Dollars in thousands)
Three Months Ended
June 30,
Change
Six Months Ended
June 30,
Change
2024
2023
2024
2023
Pega Cloud
$
134,086
38
%
$
115,063
39
%
$
19,023
17
%
$
264,988
39
%
$
222,942
36
%
$
42,046
19
%
Maintenance
80,344
23
%
82,042
27
%
(1,698
)
(2
)%
161,345
23
%
161,672
26
%
(327
)
—
%
Subscription services
214,430
61
%
197,105
66
%
17,325
9
%
426,333
62
%
384,614
62
%
41,719
11
%
Subscription license
84,647
24
%
41,197
14
%
43,450
105
%
147,985
22
%
125,724
20
%
22,261
18
%
Subscription
299,077
85
%
238,302
80
%
60,775
26
%
574,318
84
%
510,338
82
%
63,980
13
%
Consulting
52,040
15
%
58,387
19
%
(6,347
)
(11
)%
106,087
16
%
111,420
18
%
(5,333
)
(5
)%
Perpetual license
36
—
%
1,579
1
%
(1,543
)
(98
)%
895
—
%
1,982
—
%
(1,087
)
(55
)%
$
351,153
100
%
$
298,268
100
%
$
52,885
18
%
$
681,300
100
%
$
623,740
100
%
$
57,560
9
%
Quarterly conference call
A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Thursday, July 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) 415-4305 (domestic) or 1 (646) 960-0336 (international) and using Conference ID 1559653, or via https://events.q4inc.com/attendee/610142887 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. Management uses these measures to assess the performance of the company's operations and establish operational goals and incentives. 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 July 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®, https://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
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue
Subscription services
$
214,430
$
197,105
$
426,333
$
384,614
Subscription license
84,647
41,197
147,985
125,724
Consulting
52,040
58,387
106,087
111,420
Perpetual license
36
1,579
895
1,982
Total revenue
351,153
298,268
681,300
623,740
Cost of revenue
Subscription services
36,238
36,783
72,062
73,647
Subscription license
477
623
1,120
1,342
Consulting
60,231
58,710
118,413
119,058
Perpetual license
—
24
9
27
Total cost of revenue
96,946
96,140
191,604
194,074
Gross profit
254,207
202,128
489,696
429,666
Operating expenses
Selling and marketing
139,761
143,858
267,456
293,655
Research and development
75,425
73,931
147,538
149,307
General and administrative
25,420
23,462
48,947
46,572
Litigation settlement, net of recoveries
—
—
32,403
—
Restructuring
635
2,167
798
3,628
Total operating expenses
241,241
243,418
497,142
493,162
Income (loss) from operations
12,966
(41,290
)
(7,446
)
(63,496
)
Foreign currency transaction gain (loss)
437
(3,290
)
(2,825
)
(5,965
)
Interest income
6,785
1,814
12,066
3,299
Interest expense
(1,656
)
(1,778
)
(3,408
)
(3,696
)
(Loss) income on capped call transactions
(3,277
)
(1,361
)
22
1,845
Other income, net
—
5,702
1,684
12,285
Income (loss) before provision for income taxes
15,255
(40,203
)
93
(55,728
)
Provision for income taxes
8,642
6,601
5,604
11,850
Net income (loss)
$
6,613
$
(46,804
)
$
(5,511
)
$
(67,578
)
Earnings (loss) per share
Basic
$
0.08
$
(0.56
)
$
(0.07
)
$
(0.82
)
Diluted
$
0.07
$
(0.56
)
$
(0.07
)
$
(0.82
)
Weighted-average number of common shares outstanding
Basic
85,157
83,039
84,712
82,823
Diluted
88,500
83,039
84,712
82,823
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
258,257
$
229,902
Marketable securities
406,819
193,436
Total cash, cash equivalents, and marketable securities
665,076
423,338
Accounts receivable, net
165,723
300,173
Unbilled receivables, net
164,533
237,379
Other current assets
76,323
68,137
Total current assets
1,071,655
1,029,027
Long-term unbilled receivables, net
81,218
85,402
Goodwill
81,410
81,611
Other long-term assets
302,249
314,696
Total assets
$
1,536,532
$
1,510,736
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
16,682
$
11,290
Accrued expenses
44,875
39,941
Accrued compensation and related expenses
81,110
126,640
Deferred revenue
352,618
377,845
Convertible senior notes, net
500,604
—
Other current liabilities
20,677
21,343
Total current liabilities
1,016,566
577,059
Long-term convertible senior notes, net
—
499,368
Long-term operating lease liabilities
70,202
66,901
Other long-term liabilities
14,362
13,570
Total liabilities
1,101,130
1,156,898
Total stockholders’ equity
435,402
353,838
Total liabilities and stockholders’ equity
$
1,536,532
$
1,510,736
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2024
2023
Net (loss)
$
(5,511
)
$
(67,578
)
Adjustments to reconcile net (loss) to cash provided by operating activities
Non-cash items
116,288
119,371
Change in operating assets and liabilities, net
109,466
61,959
Cash provided by operating activities
220,243
113,752
Cash (used in) provided by investing activities
(209,700
)
15,979
Cash provided by (used in) financing activities
22,503
(86,988
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(2,842
)
1,010
Net increase in cash, cash equivalents, and restricted cash
30,204
43,753
Cash, cash equivalents, and restricted cash, beginning of period
232,827
145,054
Cash, cash equivalents, and restricted cash, end of period
$
263,031
$
188,807
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES
(in thousands, except percentages and per share amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
Change
2024
2023
Change
Net income (loss) - GAAP
$
6,613
$
(46,804
)
*
$
(5,511
)
$
(67,578
)
92
%
Stock-based compensation (1)
36,224
36,227
71,005
78,784
Restructuring
635
2,167
798
3,628
Legal fees
2,409
2,842
4,351
4,318
Litigation settlement, net of recoveries
—
—
32,403
—
Amortization of intangible assets
789
963
1,753
2,012
Interest on convertible senior notes
619
647
1,236
1,375
Capped call transactions
3,277
1,361
(22
)
(1,845
)
Repurchases of convertible senior notes
—
(5,074
)
—
(7,855
)
Foreign currency transaction (gain) loss
(437
)
3,290
2,825
5,965
Other
—
(678
)
(1,628
)
(4,471
)
Income taxes (2)
(4,288
)
6,262
(19,215
)
6,090
Net income - non-GAAP
$
45,841
$
1,203
3,711
%
$
87,995
$
20,423
331
%
Diluted earnings (loss) per share - GAAP
$
0.07
$
(0.56
)
*
$
(0.07
)
$
(0.82
)
91
%
non-GAAP adjustments
0.45
0.57
1.07
1.06
Diluted earnings per share - non-GAAP
$
0.52
$
0.01
5,100
%
$
1.00
$
0.24
317
%
Diluted weighted-average number of common shares outstanding - GAAP
88,500
83,039
7
%
84,712
82,823
2
%
Stock-based compensation
—
1,289
3,218
1,026
Diluted weighted-average number of common shares outstanding - non-GAAP
88,500
84,328
5
%
87,930
83,849
5
%
* not meaningful
Our non-GAAP financial measures reflect the following adjustments:
(1) Stock-based compensation:
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Cost of revenue
$
7,092
$
7,174
$
13,664
$
16,087
Selling and marketing
13,564
15,349
27,452
33,009
Research and development
7,825
7,851
15,471
16,911
General and administrative
7,743
5,853
14,418
12,777
$
36,224
$
36,227
$
71,005
$
78,784
Income tax benefit
$
(554
)
$
(581
)
$
(865
)
$
(1,253
)
(2) Effective income tax rates:
Six Months Ended
June 30,
2024
2023
GAAP
*
(21
)%
non-GAAP
22
%
22
%
* not meaningful.
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. See Note 13. Income Taxes in our Quarterly Report for the three months ended June 30, 2024 for additional information.
PEGASYSTEMS INC.
RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS
(in thousands, except percentages)
Six Months Ended
June 30,
Change
2024
2023
Cash provided by operating activities
$
220,243
$
113,752
94
%
Investment in property and equipment
(1,857
)
(13,933
)
Free cash flow (1)
$
218,386
$
99,819
119
%
Supplemental information (2)
Litigation settlement, net of recoveries
$
32,403
$
—
Legal fees
2,701
2,950
Restructuring
3,852
17,521
Interest on convertible senior notes
1,884
2,250
Income taxes
25,560
6,627
$
66,400
$
29,348
(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.
June 30, 2024
June 30, 2023
Change
Pega Cloud
$
593,752
$
498,860
$
94,892
19
%
Maintenance
310,608
315,231
(4,623
)
(1
)%
Subscription services
904,360
814,091
90,269
11
%
Subscription license
400,949
349,713
51,236
15
%
$
1,305,309
$
1,163,804
$
141,505
12
%
PEGASYSTEMS INC. BACKLOG (in thousands, except percentages)
Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts:
As of June 30, 2024:
Subscription services
Subscription license
Perpetual license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
470,379
$
209,655
$
23,931
$
2,696
$
25,953
$
732,614
52
%
1-2 years
301,070
63,266
10,078
—
2,469
376,883
27
%
2-3 years
152,839
30,032
2,884
—
2,473
188,228
13
%
Greater than 3 years
90,474
17,953
97
—
—
108,524
8
%
$
1,014,762
$
320,906
$
36,990
$
2,696
$
30,895
$
1,406,249
100
%
% of Total
72
%
23
%
3
%
—
%
2
%
100
%
Change since June 30, 2023
$
152,778
$
15,081
$
(8,416
)
$
(4,535
)
$
(14,755
)
$
140,153
18
%
5
%
(19
)%
(63
)%
(32
)%
11
%
As of June 30, 2023:
Subscription services
Subscription license
Perpetual license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
397,183
$
214,579
$
35,616
$
4,979
$
37,355
$
689,712
55
%
1-2 years
238,691
58,551
3,026
2,252
6,772
309,292
24
%
2-3 years
124,616
25,103
6,764
—
1,523
158,006
12
%
Greater than 3 years
101,494
7,592
—
—
—
109,086
9
%
$
861,984
$
305,825
$
45,406
$
7,231
$
45,650
$
1,266,096
100
%
% of Total
67
%
24
%
4
%
1
%
4
%
100
%
PEGASYSTEMS INC.
RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions, except percentages)
June 30, 2023
June 30, 2024
1 Year Growth Rate
Backlog - GAAP
$
1,266
$
1,406
11
%
Impact of changes in foreign exchange rates
—
7
Constant currency backlog
$
1,266
$
1,413
12
%
Note: Constant currency Backlog is calculated by applying the June 30, 2023 foreign exchange rates to all periods shown.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240724234135/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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