Pegasystems Inc. (NASDAQ:PEGA), the leader in software for customer
engagement and operational excellence, today announced its
financial results for the third quarter and first nine months of
2017.
“We continue to increase our penetration in the CRM market and
see an increasing number of new organizations adopting our software
to support their strategic business goals,” said Alan Trefler,
founder and CEO, Pegasystems. “We are working to aggressively
evolve our go-to-market strategy. I remain confident in our
long-term strategy and ability to execute, which is reinforced by
many of the positive trends we are seeing, not just in this
quarter, but over the last nine months.”
“Our movement to recurring commitments further accelerated in
the third quarter of 2017 with a significant increase in our cloud
offering,” said Ken Stillwell, CFO, Pegasystems. “This mix shift
has contributed to the year over year growth of $65 million in ACV
and $104 million in Term license and Cloud backlog. This faster
than expected shift to recurring has led to a headwind of over $40
million in revenue and $0.33 in diluted EPS year to date.
Nonetheless, we are pleased by this transition to recurring and
that our clients are increasing their move to cloud and
subscription licensing.”
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Select GAAP and Non-GAAP Financial Metrics
(1) |
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|
($ in
thousands except per share amounts) |
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
2017 |
|
2016 |
|
Change |
|
2017 |
|
2016 |
|
Change |
Total revenue
(GAAP) |
$ |
179,815 |
|
|
$ |
182,802 |
|
|
(2 |
%) |
|
$ |
601,042 |
|
|
$ |
550,656 |
|
|
9 |
% |
Total revenue
(Non-GAAP) |
179,815 |
|
|
183,460 |
|
|
(2 |
%) |
|
601,042 |
|
|
552,164 |
|
|
9 |
% |
Net (loss)/income
(GAAP) |
(1,812 |
) |
|
3,301 |
|
|
(155 |
%) |
|
36,615 |
|
|
18,237 |
|
|
101 |
% |
Net income/(loss)
(Non-GAAP) |
4,191 |
|
|
13,056 |
|
|
(68 |
%) |
|
48,398 |
|
|
45,504 |
|
|
6 |
% |
Diluted (loss)/earnings
per share (GAAP) |
(0.03 |
) |
|
0.04 |
|
|
(175 |
%) |
|
0.44 |
|
|
0.23 |
|
|
91 |
% |
Diluted earnings/(loss)
per share (Non-GAAP) |
0.05 |
|
|
0.16 |
|
|
(69 |
%) |
|
0.59 |
|
|
0.57 |
|
|
4 |
% |
|
(1) A
reconciliation of our GAAP to Non-GAAP measures is contained in the
financial schedules at the end of this release. |
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Impact of New Revenue Standard
Historically, Recurring Revenue and License and Cloud Backlog
have been our primary performance metrics. However, due to the
change in the revenue recognition patterns of term license
arrangements as a result of the expected implementation of the new
revenue accounting standard (See Note 2 of our Form 10-Q for the
quarter ended September 30, 2017) in the first quarter of
2018, we have started tracking Annual Contract Value (“ACV”), a new
performance measure.
Select Performance Metrics
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|
Annual Contract Value
(ACV) (1) |
|
|
|
|
|
|
|
|
September 30, |
|
|
(in thousands) |
2017 |
|
2016 |
|
Change |
Term License and Cloud
ACV |
$ |
200,180 |
|
|
$ |
163,408 |
|
|
23 |
% |
Maintenance ACV |
248,816 |
|
|
220,152 |
|
|
13 |
% |
Term License, Cloud and
Maintenance ACV |
$ |
448,996 |
|
|
$ |
383,560 |
|
|
17 |
% |
|
(1) ACV is the sum of the following two components:
- Term and Cloud contract value divided by the number of
committed contract years
- Quarterly Maintenance revenue reported for the current three
months ended period multiplied by 4.
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An infographic accompanying this release is available
at http://www.globenewswire.com/NewsRoom/AttachmentNg/9490dffd-77b7-40be-af7a-a668d18fb17d
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Recurring
Revenue |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
($ in thousands) |
2017 |
|
2016 |
|
Change |
|
2017 |
|
2016 |
|
Change |
Term license(1) |
$ |
21,678 |
|
|
$ |
28,919 |
|
|
(25 |
%) |
|
$ |
106,170 |
|
|
$ |
102,115 |
|
|
4 |
% |
Cloud |
13,354 |
|
|
10,873 |
|
|
23 |
% |
|
36,914 |
|
|
30,640 |
|
|
20 |
% |
Maintenance |
62,204 |
|
|
55,038 |
|
|
13 |
% |
|
180,759 |
|
|
163,174 |
|
|
11 |
% |
Total recurring
revenue |
$ |
97,236 |
|
|
$ |
94,830 |
|
|
3 |
% |
|
$ |
323,843 |
|
|
$ |
295,929 |
|
|
9 |
% |
Recurring revenue as a
percent of total revenue |
54 |
% |
|
52 |
% |
|
|
|
54 |
% |
|
54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1)The
decrease in term license revenue in the three months ended
September 30, 2017 was primarily due to a large term license
renewal for which the second year of the term which was recognized
as revenue in the three months ended September 30, 2016. |
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License
and Cloud Backlog (1) |
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|
|
|
|
September 30, |
|
|
($ in thousands) |
2017 |
|
2016 |
|
Change |
Deferred license and
cloud revenue on the balance sheet: |
|
|
|
|
|
|
|
Term
license and cloud |
$ |
25,658 |
|
51 |
% |
|
$ |
19,627 |
|
42 |
% |
|
31 |
% |
Perpetual
license |
24,929 |
|
49 |
% |
|
27,653 |
|
58 |
% |
|
(10 |
%) |
Total
deferred license and cloud revenue |
$ |
50,587 |
|
100 |
% |
|
$ |
47,280 |
|
100 |
% |
|
7 |
% |
License and cloud
contractual commitments not on the balance sheet: |
|
|
|
|
|
|
|
Term
license and cloud |
$ |
450,535 |
|
91 |
% |
|
$ |
352,804 |
|
94 |
% |
|
28 |
% |
Perpetual
license |
46,459 |
|
9 |
% |
|
23,483 |
|
6 |
% |
|
98 |
% |
Total
license and cloud commitments |
$ |
496,994 |
|
100 |
% |
|
$ |
376,287 |
|
100 |
% |
|
32 |
% |
Total
license (term and perpetual) and cloud backlog |
$ |
547,581 |
|
|
|
$ |
423,567 |
|
|
|
29 |
% |
Total
term license and cloud backlog |
$ |
476,193 |
|
87 |
% |
|
$ |
372,431 |
|
88 |
% |
|
28 |
% |
|
(1)
License and Cloud Backlog is the sum of the following two
components:
- Deferred license and cloud revenue as recorded on the Company’s
balance sheet (See Note 9. “Deferred Revenue” contained in Item 1
of the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017.)
- License and cloud contractual commitments, which are not
recorded on our balance sheet because we have not yet invoiced our
clients, nor have we recognized the associated revenue. (See
“Future Cash Receipts from Committed License and Cloud
Arrangements“ contained in Item 2 of the Quarterly Report on Form
10-Q for the quarter ended September 30, 2017.)
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|
A second infographic accompanying this release is available
at http://www.globenewswire.com/NewsRoom/AttachmentNg/cd5d6b91-53e1-4471-905e-28b2b863344e
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: 1-888-428-9470 (domestic) or 1-719-457-2701
(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 on both 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
Certain statements contained in this press release may be
construed as “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements are based on current
expectations, estimates, forecasts, and projections about the
industry and markets in which we operate, and management’s beliefs
and assumptions. In addition, other written or oral statements that
constitute forward-looking statements may be made by us or on our
behalf. Words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “could,” “estimate,” “may,” “target,” “strategy,” “is
intended to,” “project,” “guidance,” “likely,” “usually,” or
variations of such words and similar expressions are intended to
identify such forward-looking statements.
These statements are not guarantees of future performance and
involve certain risks, uncertainties, and assumptions that are
difficult to predict. Important factors that could cause
actual future activities and results to differ materially from
those expressed in such forward-looking statements include, among
others, variation in demand for our products and services and the
difficulty in predicting the completion of product acceptance and
other factors affecting the timing of license revenue recognition;
reliance on third party relationships; the potential loss of vendor
specific objective evidence for our consulting services; the
inherent risks associated with international operations and the
continued uncertainties in international economies; the Company’s
continued effort to market and sell both domestically and
internationally; foreign currency exchange rates; the financial
impact of 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.
These risks, and other factors that could cause actual results to
differ materially from those expressed in such forward-looking
statements, are described more completely in Part I of the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2016 as well as other filings we make 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 November 8, 2017.
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 November 8, 2017.
About Pegasystems
Pegasystems Inc. is the leader in software for customer
engagement and operational excellence. Pega’s adaptive,
cloud-architected software – built on its unified Pega®Platform –
empowers people to rapidly deploy, and easily extend and change
applications to meet strategic business needs. Over its
30-year history, Pega has delivered award-winning capabilities in
CRM and BPM, powered by advanced artificial intelligence and
robotic automation, to help the world’s leading brands achieve
breakthrough business results. For more information on
Pegasystems (NASDAQ:PEGA) visit www.pega.com.
Press Contact:
Lisa PintchmanPegasystems Inc.lisa.pintchman@pega.com(617)
866-6022Twitter: @pega
Investor Contact:
Garo ToomajanianICR for
PegasystemsPegaInvestorRelations@pega.com(617) 866-6077
All trademarks are the property of their respective owners.
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|
PEGASYSTEMS INC.UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in
thousands, except per share amounts) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue: |
|
|
|
|
|
|
|
Software
license |
$ |
41,793 |
|
|
$ |
68,833 |
|
|
$ |
195,220 |
|
|
$ |
207,849 |
|
Maintenance |
62,204 |
|
|
55,038 |
|
|
180,759 |
|
|
163,174 |
|
Services |
75,818 |
|
|
58,931 |
|
|
225,063 |
|
|
179,633 |
|
Total
revenue |
179,815 |
|
|
182,802 |
|
|
601,042 |
|
|
550,656 |
|
Cost of
revenue: |
|
|
|
|
|
|
|
Software
license |
1,276 |
|
|
1,313 |
|
|
3,826 |
|
|
3,646 |
|
Maintenance |
6,716 |
|
|
6,659 |
|
|
20,945 |
|
|
18,889 |
|
Services |
61,739 |
|
|
52,465 |
|
|
180,925 |
|
|
154,512 |
|
Total
cost of revenue |
69,731 |
|
|
60,437 |
|
|
205,696 |
|
|
177,047 |
|
Gross profit |
110,084 |
|
|
122,365 |
|
|
395,346 |
|
|
373,609 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling
and marketing |
70,209 |
|
|
67,032 |
|
|
217,384 |
|
|
202,126 |
|
Research
and development |
41,031 |
|
|
38,036 |
|
|
121,089 |
|
|
108,530 |
|
General
and administrative |
13,133 |
|
|
11,725 |
|
|
38,174 |
|
|
34,067 |
|
Acquisition-related |
— |
|
|
74 |
|
|
— |
|
|
2,903 |
|
Total
operating expenses |
124,373 |
|
|
116,867 |
|
|
376,647 |
|
|
347,626 |
|
(Loss)/income from
operations |
(14,289 |
) |
|
5,498 |
|
|
18,699 |
|
|
25,983 |
|
Foreign currency
transaction (loss)/gain |
(552 |
) |
|
1,082 |
|
|
(793 |
) |
|
2,764 |
|
Interest income,
net |
144 |
|
|
172 |
|
|
470 |
|
|
650 |
|
Other income/(expense),
net |
— |
|
|
(1,237 |
) |
|
287 |
|
|
(4,891 |
) |
(Loss)/income before
(benefit)/provision for income taxes |
(14,697 |
) |
|
5,515 |
|
|
18,663 |
|
|
24,506 |
|
(Benefit)/provision for
income taxes |
(12,885 |
) |
|
2,214 |
|
|
(17,952 |
) |
|
6,269 |
|
Net
(loss)/income |
$ |
(1,812 |
) |
|
$ |
3,301 |
|
|
$ |
36,615 |
|
|
$ |
18,237 |
|
(Loss)/earnings
per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
$ |
0.47 |
|
|
$ |
0.24 |
|
Diluted |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
$ |
0.44 |
|
|
$ |
0.23 |
|
Weighted-average number of common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
77,691 |
|
|
76,278 |
|
|
77,258 |
|
|
76,323 |
|
Diluted |
77,691 |
|
|
79,548 |
|
|
82,717 |
|
|
79,401 |
|
Cash dividends declared
per share |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
PEGASYSTEMS INC.UNAUDITED
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(1)(in thousands, except % and per share
amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
2016 |
|
Change |
|
2017 |
|
2016 |
|
Change |
GAAP total
revenue |
$ |
179,815 |
|
|
$ |
182,802 |
|
|
(2 |
%) |
|
$ |
601,042 |
|
|
$ |
550,656 |
|
|
9 |
% |
Deferred
revenue purchase accounting |
— |
|
|
658 |
|
|
|
|
— |
|
|
1,508 |
|
|
|
Non-GAAP total
revenue |
$ |
179,815 |
|
|
$ |
183,460 |
|
|
(2 |
%) |
|
$ |
601,042 |
|
|
$ |
552,164 |
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit |
$ |
110,084 |
|
|
$ |
122,365 |
|
|
(10 |
%) |
|
$ |
395,346 |
|
|
$ |
373,609 |
|
|
6 |
% |
Deferred
revenue purchase accounting |
— |
|
|
658 |
|
|
|
|
— |
|
|
1,508 |
|
|
|
Amortization of intangible assets |
1,232 |
|
|
1,642 |
|
|
|
|
3,871 |
|
|
4,626 |
|
|
|
Stock-based compensation (2) |
3,613 |
|
|
3,117 |
|
|
|
|
10,913 |
|
|
8,711 |
|
|
|
Non-GAAP gross
profit |
$ |
114,929 |
|
|
$ |
127,782 |
|
|
(10 |
%) |
|
$ |
410,130 |
|
|
$ |
388,454 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
(loss)/income from operations |
$ |
(14,289 |
) |
|
$ |
5,498 |
|
|
(360 |
%) |
|
$ |
18,699 |
|
|
$ |
25,983 |
|
|
(28 |
%) |
Deferred
revenue purchase accounting |
— |
|
|
658 |
|
|
|
|
— |
|
|
1,508 |
|
|
|
Amortization of intangible assets |
3,105 |
|
|
3,599 |
|
|
|
|
9,479 |
|
|
10,168 |
|
|
|
Stock-based compensation (2) |
13,489 |
|
|
10,818 |
|
|
|
|
39,929 |
|
|
30,634 |
|
|
|
Other |
— |
|
|
84 |
|
|
|
|
— |
|
|
2,341 |
|
|
|
Non-GAAP income/(loss)
from operations |
$ |
2,305 |
|
|
$ |
20,657 |
|
|
(89 |
%) |
|
$ |
68,107 |
|
|
$ |
70,634 |
|
|
(4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net/(loss)
income |
$ |
(1,812 |
) |
|
$ |
3,301 |
|
|
(155 |
%) |
|
$ |
36,615 |
|
|
$ |
18,237 |
|
|
101 |
% |
Deferred
revenue purchase accounting |
— |
|
|
658 |
|
|
|
|
— |
|
|
1,508 |
|
|
|
Amortization of intangible assets |
3,105 |
|
|
3,599 |
|
|
|
|
9,479 |
|
|
10,168 |
|
|
|
Stock-based compensation (2) |
13,489 |
|
|
10,818 |
|
|
|
|
39,929 |
|
|
30,634 |
|
|
|
Other |
— |
|
|
84 |
|
|
|
|
— |
|
|
2,341 |
|
|
|
Income
tax effects (3) |
(10,591 |
) |
|
(5,404 |
) |
|
|
|
(37,625 |
) |
|
(17,384 |
) |
|
|
Non-GAAP net
income/(loss) |
$ |
4,191 |
|
|
$ |
13,056 |
|
|
(68 |
%) |
|
$ |
48,398 |
|
|
$ |
45,504 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
(loss) / earnings per share |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
(175 |
%) |
|
$ |
0.44 |
|
|
$ |
0.23 |
|
|
91 |
% |
Deferred
revenue purchase accounting |
— |
|
|
0.01 |
|
|
|
|
— |
|
|
0.02 |
|
|
|
Amortization of intangible assets |
0.04 |
|
|
0.05 |
|
|
|
|
0.11 |
|
|
0.13 |
|
|
|
Stock-based compensation (2) |
0.16 |
|
|
0.14 |
|
|
|
|
0.48 |
|
|
0.39 |
|
|
|
Other |
— |
|
|
— |
|
|
|
|
— |
|
|
0.03 |
|
|
|
Income
tax effects (3) |
(0.12 |
) |
|
(0.08 |
) |
|
|
|
(0.44 |
) |
|
(0.23 |
) |
|
|
Non-GAAP diluted
earnings/(loss) per share |
$ |
0.05 |
|
|
$ |
0.16 |
|
|
(69 |
%) |
|
$ |
0.59 |
|
|
$ |
0.57 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
weighted average shares outstanding |
77,691 |
|
|
79,548 |
|
|
(2 |
%) |
|
82,717 |
|
|
79,401 |
|
|
4 |
% |
Anti-dilutive awards |
5,632 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
Non-GAAP diluted
weighted average common shares outstanding |
83,323 |
|
|
79,548 |
|
|
5 |
% |
|
82,717 |
|
|
79,401 |
|
|
4 |
% |
|
(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:
• Deferred revenue purchase accounting:
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 OpenSpan in
April 2016. 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 OpenSpan 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 profitability 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 are expected to contribute to our future period
revenues as well. Amortization of intangible assets will recur in
future periods.
• Stock-based compensation: We have excluded
stock-based compensation expense from our non-GAAP operating
expenses and profitability measures. Although stock-based
compensation is a key incentive offered to our employees, and we
believe such compensation contributed to 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.
• Other:The significant components of other
are:
- Acquisition-related and restructuring
expenses: We have excluded the effect of
acquisition-related and restructuring expenses from our non-GAAP
operating expenses and profitability measures. We incurred direct
and incremental expenses associated primarily with the OpenSpan
acquisition. These acquisition related expenses were primarily
professional fees to affect the acquisition. We have also incurred
restructuring expenses for one-time employee termination benefits
related to the closure of one of our domestic offices, which we
generally would not have otherwise incurred in the periods
presented as a part of our continuing operations. We believe it is
useful for investors to understand the effects of these items on
our total operating expenses.
• Anti-dilutive awards: We have included for
purposes of non-GAAP results the dilutive impact of awards that
were excluded from our GAAP results as they would have been
anti-dilutive due to a GAAP net loss in the period.
|
|
|
|
(2)
Stock-based compensation expense was as follows: |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
(in thousands) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Cost of revenues |
$ |
3,613 |
|
|
$ |
3,117 |
|
|
$ |
10,913 |
|
|
$ |
8,711 |
|
Selling and
marketing |
3,976 |
|
|
3,468 |
|
|
11,482 |
|
|
9,395 |
|
Research and
development |
3,420 |
|
|
2,260 |
|
|
10,306 |
|
|
7,480 |
|
General and
administrative |
2,480 |
|
|
1,983 |
|
|
7,228 |
|
|
4,706 |
|
Acquisition-related |
— |
|
|
(10 |
) |
|
— |
|
|
342 |
|
Total stock-based
compensation before tax |
$ |
13,489 |
|
|
$ |
10,818 |
|
|
$ |
39,929 |
|
|
$ |
30,634 |
|
Income tax benefit |
(4,129 |
) |
|
(3,227 |
) |
|
(12,231 |
) |
|
(8,917 |
) |
|
(3) The GAAP and Non-GAAP effective tax rates were
as follows: |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Effective tax rate
(GAAP) |
88 |
% |
|
40 |
% |
|
(96 |
)% |
|
26 |
% |
Effective tax rate
(Non-GAAP) |
(121 |
)% |
|
37 |
% |
|
29 |
% |
|
34 |
% |
The differences between our GAAP and non-GAAP
effective tax rates for the three and nine months ended September
30, 2017 and 2016 primarily relate to the impact of excess tax
benefits generated by our stock compensation plans on our GAAP
effective tax rate.
|
PEGASYSTEMS INC.UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS(in
thousands) |
|
|
September 30, 2017 |
|
December 31, 2016 |
Assets: |
|
|
|
Total cash, cash
equivalents, and marketable securities |
$ |
194,380 |
|
|
$ |
133,761 |
|
Trade accounts
receivable, net |
191,161 |
|
|
265,028 |
|
Property and equipment,
net |
39,849 |
|
|
38,281 |
|
Deferred income
taxes |
73,459 |
|
|
69,898 |
|
Goodwill and Intangible
assets, net |
107,696 |
|
|
117,355 |
|
Other assets |
58,525 |
|
|
30,333 |
|
Total
assets |
$ |
665,070 |
|
|
$ |
654,656 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity: |
|
|
|
Accrued expenses,
including compensation and related expenses |
$ |
93,550 |
|
|
$ |
97,411 |
|
Deferred revenue |
167,061 |
|
|
186,636 |
|
Other liabilities |
32,758 |
|
|
34,720 |
|
Stockholders’
equity |
371,701 |
|
|
335,889 |
|
Total
liabilities and stockholders’ equity |
$ |
665,070 |
|
|
$ |
654,656 |
|
|
|
|
PEGASYSTEMS INC.UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands) |
|
|
|
Nine Months Ended September
30, |
|
2017 |
|
2016 |
Operating
activities: |
|
|
|
Net
Income |
$ |
36,615 |
|
|
$ |
18,237 |
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
Depreciation, amortization, foreign currency transaction loss, and
other non-cash items |
16,800 |
|
|
12,444 |
|
Stock-based compensation expense |
39,929 |
|
|
30,634 |
|
Change in
operating assets and liabilities, net |
20,582 |
|
|
(40,759 |
) |
Cash provided by operating activities |
113,926 |
|
|
20,556 |
|
Cash used in investing activities |
(11,966 |
) |
|
(2,859 |
) |
Cash used in financing activities |
(44,040 |
) |
|
(43,031 |
) |
Effect of exchange
rates on cash and cash equivalents |
2,054 |
|
|
(1,309 |
) |
Net increase /
(decrease) in cash and cash equivalents |
59,974 |
|
|
(26,643 |
) |
Cash and cash
equivalents, beginning of period |
70,594 |
|
|
93,026 |
|
Cash and cash
equivalents, end of period |
$ |
130,568 |
|
|
$ |
66,383 |
|
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