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Exam Code: PEGAPCDC80V1 Practice exam 2022 by Killexams.com team
PEGAPCDC80V1 Pega Certified Decisioning Consultant

Exam syllabus (% of exam)
Next-Best-Action Concepts (8%)
Customer Decision Hub overview
Optimizing customer value in the contact center
Next-Best-Action Designer (15%)
Defining and managing propositions
Authoring Next-Best-Action decisions
Configuring Next-Best-Action designer for real-life scenarios
Decision Strategies (47%)
Using propositions in a decision strategy canvas
Calculating dynamic prices
Selecting the most profitable proposition
Selecting the target audience
Defining proposition eligibility rules
Learning from historical interactions
Using aggregated data to select the best offer
Designing decision strategies for real-life scenarios
Testing strategies en masse with simulations
Understanding decision strategy execution
Arbitrating between propositions
Evaluating customer credit score
Avoiding redundant product offerings
AI Powered 1-to-1 Customer Engagement (30%)
Predicting customer behavior
Using third party predictive models
Predicting customer behavior using real-time data
Utilizing text analytics to Strengthen business performance

Pega Certified Decisioning Consultant
Pegasystems Decisioning basics
Killexams : Pegasystems Decisioning basics - BingNews https://killexams.com/pass4sure/exam-detail/PEGAPCDC80V1 Search results Killexams : Pegasystems Decisioning basics - BingNews https://killexams.com/pass4sure/exam-detail/PEGAPCDC80V1 https://killexams.com/exam_list/Pegasystems Killexams : Pega Named 2022 Partner of the Year by Virtusa

Press release content from PR Newswire. The AP news staff was not involved in its creation.

Pega recognized for its client-first, partner-centric strategy demonstrating pipeline growth and value delivery for clients

CAMBRIDGE, Mass., Aug. 3, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world’s leading organizations, today announced it has received the Partner of the Year Award from Virtusa. Pega was named the top partner for its accomplishments, including joint technology, industry solutions, and influential revenue contribution.

Virtusa’s 2022 Partner of the Year Award program evaluated its top partners in categories such as year-over-year growth of partner-led solution pipeline, value delivered to mutual clients, relationship tier, go-to-market offerings, and more.

Together, Pega and Virtusa deliver client solutions built on Pega PlatformTM, Pega’s low-code platform for AI-powered decisioning and workflow automation. Their joint work spans industries including financial services, insurance, healthcare, communications service providers, and manufacturing. Pega and Virtusa’s partnership began in 2002 and continues to drive innovative solutions to solve customer challenges, many of which can be found within Pega Marketplace.

Quotes & Commentary
“Our clients need the right teams, at the right time, in the right place to achieve their business objectives. Having a robust partner strategy is instrumental in how we provide just that,” said John Higgins, chief of client and partner success, Pega. “This recognition from Virtusa is a testament to our collaborative work to offer differentiated solutions, provide technical expertise and deep vertical knowledge, and deliver successful client outcomes.”

“Our Pega relationship is over 20 years old,” said John Gillis, co-founder and EVP, Virtusa. “Pega was one of the founding partners that played a major role in Virtusa’s growth and continues to play a critical role in the company’s rapid global growth strategy.”

Supporting Resources

About Pegasystems
Pega provides a powerful low-code platform that builds agility into the world’s leading organizations so they can adapt to change. Clients use our AI-powered 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 Pegasystems (NASDAQ: PEGA), please visit  www.pega.com.

Press Contact:
Ilena Ryan
Pegasystems Inc.
Ilena.ryan@pega.com
(617) 866-6722
Twitter: @pega

All trademarks are the property of their respective owners.

View original content to obtain multimedia: https://www.prnewswire.com/news-releases/pega-named-2022-partner-of-the-year-by-virtusa-301598275.html

SOURCE Pegasystems Inc.

Wed, 03 Aug 2022 01:18:00 -0500 en text/html https://apnews.com/press-release/PRNewswire/pegasystems-inc-8eba8047246944257fafa0110849eb0a
Killexams : Management Decision Solutions Market To Expand with Significant CAGR During 2020-2030

Global Management Decision Solutions Market: Overview

The global management decision solutions market is estimated to expand at a CAGR of 11% during the forecast period from 2020 to 2030. Thus, the market is expected to gain a valuation of US$ 11.5 Bn by 2030. The market is projected to be driven by a surge in the need to enhance decision making and operational efficiency with the help of intelligent platforms in order to monitor and control complete enterprise risks.

A review by Transparency Market Research (TMR) delivers thorough assessment of major factors shaping the growth curve of the management decision solutions market. Hence, this document provides comprehensive evaluation of key facets such growth drivers, restraints, key regions, challenges, demand-supply ratio, and competition analysis of the market for management decision solutions. Moreover, the report also enlightens readers on historical and current market trends.

Grab an Exclusive PDF Brochure of this Report –https://www.transparencymarketresearch.com/sample/sample.php?flag=B&rep_id=43916

Analysts at TMR have performed the segmentation of the global management decision solutions market on the basis of many crucial parameters including component, deployment, enterprise size, industry, application, and region. Based on component, the market is divided into software and service. In terms of deployment, the market for management decision solutions is classified into on premise and cloud. On the basis of enterprise size, the management decision solutions market is bifurcated into small & medium enterprises and large enterprises.

Varied Advantages of Management Decision Solutions Boost Adoption

Management decision solutions are gaining traction across a wide range of end-use industries such as BFSI, healthcare, manufacturing, government, and retail & wholesale owing to their ability to assist in keeping track of key information including performance assessment, basic employee information, financials, and social security numbers. Moreover, the software offers tailored solutions according to the present workforce dynamics. Owing to these advantages, there is notable growth in the demand for management decision solutions, which in turn, is offering promising business prospects in the market.

Rise in the use of Management decision solutions for varied purposes such as risk management, fraud detection, marketing management, and pricing management is creating revenue-generation opportunities in the global management decision solutions market.

How Management Decision Solutions Market will recover after covid19 –https://www.transparencymarketresearch.com/sample/sample.php?flag=covid19&rep_id=43916

North America to Maintain Leading Position in Management Decision Solutions Market

Some of the key regions supporting the growth of the global management decision solutions market include North America, Europe, Asia Pacific, South America, and Middle East and Africa. Of them, North America is one of the dominating regions in the management decision solutions market. The market growth in North America is expected to be driven due to rise in the adoption of cloud-based technologies by regional medium and small enterprises and surge in focus on the cost optimization by these companies.

Companies Focus on Acquisitions and New Product Launches to Gain Dominating Market Position

Players in the global management decision solutions market are using organic and inorganic strategies including acquisitions, collaborations, and partnerships in order to strengthen their market positions and expanding their businesses.

Several enterprises are increasing focus on the development and launch of next-gen products. Many players are increasing efforts to develop easy-to-use interfaces to attract new customers. Moreover, they are also concentrated on the expansion of their services portfolio for providing training to users in order to successfully implement management decision software in different organizations. These efforts are estimated to help in the expansion of the management decision solutions market.

Delivering excellent customer service, Enquiry before Buying –https://www.transparencymarketresearch.com/sample/sample.php?flag=EB&rep_id=43916

Some key players operating in the management decision solutions market include Decision Management Solutions, ACTICO GmbH, Equifax, Decision Time Ltd, Fair Isaac Corporation (FICO), Experian Information Solutions, Inc., OpenRules, Oracle Corporation, IBM Corporation, Pegasystems, Parmenides, RIB Datapine GmbH, SAP SE, RapidGen Software Ltd, SAS Institute, Inc., Sapiens International Corporation, Sparkling Logic, TIBCO Software Inc., and Scorto, Inc.

The emergence of the COVID-19 pandemic has impacted negatively on the growth of the management decision solutions industry. Thus, market players are developing and executing new policies in order to deal with the unfavorable conditions occurred owing this pandemic.

Management Decision Solutions Market – Segmentation

TMR’s research study assesses the management decision solutions market on the basis of component, deployment, application, enterprise size, industry, and region. The report presents extensive market dynamics and progressive trends associated with different segments, and how they influence the growth prospects of the management decision solutions market.

Browse Latest IT & Telecom Industry Research Reports by TMR

About Transparency Market Research:

Transparency Market Research is a Global Market Research Report company providing business information reports and services. Our exclusive blend of quantitative forecasting and trends analysis provides forward-looking insights for thousands of decision makers. Our experienced team of Analysts, Researchers, and Consultants use proprietary data sources and various tools & techniques to gather and analyze information.

Our data repository is continuously updated and revised by a team of research experts, so that it always reflects the latest trends and information. With a broad research and analysis capability, Transparency Market Research employs rigorous primary and secondary research techniques in developing distinctive data sets and research material for business reports.

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Thu, 23 Jun 2022 21:44:00 -0500 Transparency Market Research en-US text/html https://www.digitaljournal.com/pr/management-decision-solutions-market-to-expand-with-significant-cagr-during-2020-2030
Killexams : Pegasystems Inc. (PEGA) CEO Alan Trefler on Q2 2022 Results - Earnings Call Transcript

Pegasystems Inc. (NASDAQ:PEGA) Q2 2022 Earnings Conference Call July 27, 2022 5:00 PM ET

Company Participants

Alan Trefler - Founder and CEO

Kenneth Stillwell - CFO

Conference Call Participants

Rishi Jaluria - RBC

Steve Koenig - SMBC Nikko

Vinod Srinivasaraghavan - Barclays

Kevin Kumar - Goldman Sachs

Joseph Meares - Truist

Mark Schappel - Loop Capital

Joey Marincek - JMP Securities

Operator

Good day, and welcome to the Pega Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Kenneth Stillwell, CFO. Please go ahead, sir.

Kenneth Stillwell

Thank you. Good evening, ladies and gentlemen, and welcome to Pegasystems Q2 2022 Earnings Call. Before we begin, I'd like to read our safe harbor statement. Certain statements contained in this presentation may be construed as forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, projects, forecasts, guidance, likely and usually or variations of such words and other similar expressions identify forward-looking statements, which speak only as of the date the statement was made and are based on current expectations and assumptions. Because such statements deal with future events, they are subject to various risks and uncertainties. actual results for fiscal year 2022 and beyond could differ materially from the company's current expectations. Factors that could cause the company's results to differ materially from those expressed in forward-looking statements are contained in the company's press release announcing its Q2 2022 earnings in the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2021, and other exact filings with the SEC.

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 our view to change, except as required by applicable law, we do not undertake and specifically disclaim any obligation to publicly update or revise these forward-looking statements whether as a result of new information, future events or otherwise.

And with that, I'll turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

Alan Trefler

Thank you, Ken, and thank you to everyone who has joined today's call.

This year has turned out to be an extremely volatile business environment. Our clients faced challenges related to the pandemic, labor shortages, the war in Europe, everything is causing global disruptions as well as, of course, rising inflation, high oil prices, supply chain challenges, economic and security and most recently, currency exchange headwinds.

Some of these trends actually make the need for our software even more pronounced. In fact, we believe Pega is uniquely suited to help enterprises manage through such uncertainty. However, it does impact the market. And with the threat of recession looming, we've pivoted to lean more heavily on our Build for Change messaging.

We've been updating our marketing and sales positioning, which you can see on pega.com. In an environment where efficiency and productivity of paramount our low-code software platform for AI power decisioning and workflow automation helps demanding enterprises work smarter, unify experiences and adapt instantly. So they can tackle what's next.

At Pega, we're taking the volatility in macroeconomic environment seriously. We're making cost management as much of a priority for us as it is for our clients with us having a focus on operational efficiency and limiting increases to our cost structure. We've paid and staffs to make sure we're staying close to our clients by removing some of the layers that have crept in over the last few years. And by ensuring our talent is directly connected to clients, we believe will both Strengthen outcomes and our long-term relationships.

At the same time, we continue to focus on innovation to ensure we're able to provide the most advanced technology platform for our clients' needs today and into tomorrow. Ken will talk about some of the financial impacts on our business in a few moments.

Now I'll turn to some highlights. Since we last spoke, we've continued to enhance our software and drive strategic partnerships to make it easier for clients to be productive and address their customers' needs with our market-leading Pega Infinity software. For example, we launched an updated component that makes it easy to embed Pega into sales force environments to further automate customer service workflow. Called Pega Process extended for salesforce, it's now available on the Salesforce app exchange and allows organizations an easy way to drag and drop Pega Infinity workflow automation and AI-powered decisioning directly into existing salesforce lighting deployments.

That makes the whole of experience operate within users' familiar Salesforce desktop even as Pega drives the business logic and workflows .And we're also very excited about the low-code app factory concept. We're pleased to see our clients adopt our governed approach to low-code development. The goal is to have clients get the benefit of speed and collaboration capabilities of our development platform, while at the same time, ensuring they're building apps that can evolve scale and deliver value well into the future. It's very important that the governance capabilities because over the years, people have often tried to drop in little systems to do an improvement here, an improvement there. And frankly, large sophisticated organizations realize that, that leads to just the next generation of technical debt, and they find themselves trying to rip out all the LOTUS notes apps or all the SharePoint apps.

By us having a governed approach, we can share best practices and make sure that the right capabilities are baked into every low-code project and have them all hang together with this Pega app factory concept that brings business and IT together in support of organization-wide deployments. This is coupled with our Pega Process Fabric that makes distributed workflow applications tie together to create a single view of work that might be done for a specific purpose or that might be related to a specific customer relationship.

The case study that Ford Motor Company presented at our exact Pega world is a great example of this approach. They have embraced best practices to deploy the Pega has factory, which enables is developers to create applications while following governance guidelines with support from an IT coach. Ports created a center of excellence and shared platform teams have joined forces to deploy the factory apps while working with Pega to develop best practices and alleviate IT backlog.

Now another exciting development is that we've extended our cloud choice offering by expanding our multifaceted partnership with Google Cloud to help our joint customers accelerate their digital transformation. And we've also made the Google cloud environment available on Pega Cloud as a fully managed as a service offering. We acquired Everflow, an innovative process mining software company whose intuitive software will enable pet clients to uncover and finish in process inefficiencies. These can often back down organizations and making them visible is key to improvement, combined with Pega's market-leading AI power decisioning and workflow automation capabilities, this will involve process mining beyond traditional static modeling to deliver real-time process optimization, what we sometimes refer to as true hyperautomation on an enterprise scale that will Strengthen operational efficiency and customer experiences.

And finally, we continue to really receive industry recognition from leading analyst firms. In late May, Forrester named Pega a leader in the Forrester Wave for real-time interaction management. This is how you use AI to make decisions to provide the next best action to the customers and one of our clients. Out of 14 of the most significant players in this fraud category, Pega received top scores in the current offering and strategy categories and the highest score possible in 25 or 28 criteria, including the highest possible score in the market presence categories.

Pega sets the gold standard for sophisticated enterprise deployments, its value-based approach and innovation track record burn Pega near-perfect marks across our strategy criteria. I'm also really pleased that just today, Forrester released its core CRM solutions report in which Pega receives the top score in the current offering category as well as our highest score possible in 16 of 35 criteria.

Out of four companies that were considered leaders Pega received top scores in categories, including CRM user productivity, assistance, guidance, next best action, digital sales, customer success, actionable insights and omnichannel engagement. The report states, Pegasystems offers exceptional automation and process management within the CRM. Pegasystems Vision is one of an autonomous CRM, where automation offloads were petite work and AI assist users, increasing their efficiency and the customer experience.

Pega uses real-time customer context and journey data to anticipate customer needs and proactively even pre-emptively engage. Reference clients stated that Pega provided "a one-shop stop for our frontline team and praise the products configurability. " Really pleased to hear that sort of assessment.

I'm also very proud of the work our team continues to do to ensure Pega's creating and maintaining a diverse and equitable culture. Most recently, we were recognized as the best place to work for disability inclusion, scoring the highest possible score of 100 on the disability of Quality Index, which is recognized as one of the most robust disability inclusion assessment to tools.

Very proud of this recognition, Row Pega supports its people and communities by providing a safe and inclusive work environment. Congratulations to the many in Pega and around the world responsible for this recognition.

Now you may have noticed that we put out a second press release and I'll just talk for a moment about it. When you've noted interest in our technology over the years. From organizations interested in leveraging our workflow capabilities to launch their own workflow-based applications into the market.

And to address this need, we today we announced a new product called Pega [indiscernible], a cloud-based, low-code application development platform that won't power anyone to efficiently build and launch B2B software as a software-as-a-service application for commercialization. This is a long-term strategy that will be run as a separate commercialization unit giving Pega new routes to market through an expanded third-party ecosystem and without requiring the involvement of our sales force.

We'll be working with a select group of early adopters for the remainder of 2022 as we prepare to roll out more generally in 2023. Once application providers are ready to bring new products to market, we'll work together through a revenue-sharing model that we expect.

Now, I'm going to circle back to Pega Wolf for a moment. I hope you're able to join Pega Wolf in May. If you missed it live, I encourage you to watch the replay on pega.com. And there are terrific sessions available, especially the inspiring client stories hold in their own words.

Through our virtual PegaWorld amounts, we have been successful over the last several years. And nonetheless, I'm very excited to bring our live event in Las Vegas back in play next year as we get back to a more normal cadence of in-person meetings with clients and prospects. There's been a lot of change on that front.

I attended Davos this past May in-person was able to see many of our most senior client contacts in person. And I mentioned a new briefing center being built on our last call. It's now -- some of you saw that on Investor Day, it's now fully open and has been booked with client and prospect meetings and has gotten a great reception and we're excited about the customers coming to visit us.

So, in summary, we're operating in an environment of significant volatility. One that our software is uniquely suited to address but one that obviously -- that's lots of pressure on. We continue to structure our business and evolve our software to both address the needs of our clients to maximize our ability to respond quickly to changes in the market.

Our transition to a subscription business and our loyal and stable client base are meaningful contributors to our ability to remain successful in today's business climate. And we continue to be very excited about the significant opportunity in front of us. and confident in our team to deliver on that opportunity.

To provide more color on the financial results, let me turn it over to Ken Stillwell.

Kenneth Stillwell

Thanks, Alan. To begin a few reflections on our first half results and our outlook for the rest of the year. Pega Cloud mix and the strengthening of the U.S. dollar are negatively impacted our reported revenue and earnings per share. As a result, I'll speak a little more about currency this call than usual.

As the U.S. dollar gets stronger, our recurring annual contract value, ACV and our back balance denominated in other currencies, decreases in value and translated into U.S. dollars and revenue from other countries become smaller as well.

A very big highlight for the quarter is Pega Cloud. Pega Cloud continues to be extremely popular. As a result, the Pega Cloud mix was much higher than planned, impacting our reported revenue and our earnings per share. Pega Cloud mix in the first half of 2022 was the highest it's ever been.

For the first half of the year, Pega Cloud was 70% of new client commitments. We're focusing on operating leverage with an even greater amount of discipline to ensure our rule of 40 target is achieved in 2024. As you review our financial results, you'll see that we've clearly been making progress on operating leverage primarily by slowing overall headcount growth in 2022.

Although our constant currency ACV growth was 19% in Q2, we expect economic headwinds and crosswinds to negatively impact ACV growth for the full year. During our subscription transition, the most important metric to measure our success continues to be growth in ACV. ACV grew 19% in constant currency and 14% as reported year-over-year to $1.028 billion.

The strength of the U.S. dollar significantly impacted year-over-year ACV growth as reported from Q2 2021 to Q2 2022. The currency impact of that year-over-year strengthening of the dollar on our ACV was approximately $40 million, with the majority of that impact hitting in Q2 of 2022.

In fact, as dollar strengthened so much that our recurring ACV balance decreased from Q1 2022 to 2000 -- Q2 2022 on an as-reported basis solely due to the strengthening U.S. dollar. It's important when measuring our business to look at a longer time horizon than one quarter.

We've said we focus on total ACV growth for a full year and we're really in the 2022 cycle. That said, to date, our team has demonstrated over our history that it can produce ACV growth during difficult and uncertain times. It's important to point out that we do see economic uncertainty which could reduce incremental ACV growth in 2022, and we're managing the business accordingly.

More on that later. Moving to backlog. We ended the quarter with $1.126 billion of backlog. The strength of the U.S. dollar was approximately a $57 million impact on our total backlog balance when looking at year-over-year growth.

Turning to revenue. Revenue for the first half of 2022 reached $651 million. Total subscription revenue reached $521 million. Subscription revenue is about 80% of our total revenue for the first half of 2022. Pega Cloud revenue is our fastest grower and reached just under $184 million for the first half of 2022.

Total revenue growth in the first half of '22 does face a tough compare, as many of you are aware. You may recall that we recognized over $30 million of revenue from one large deal in the first half of 2021. And the Pega Cloud mix was 15 percentage points lower. Therefore, year-over-year revenue comparisons are not as meaningful for the first half of 2022 because of those two items.

We are currently in the final phase of our subscription transition, which we expect to complete in 2023 with the financial results normalizing for the full year 2024. Our Q2 results, like our Q1 results showed additional signs of improving operating leverage and management of cost.

Total gross margin was 72% for the first half of 2022. As I mentioned a few minutes ago, we plan to focus on cost management, ensuring that we reach the Rule 40 target in 2024. Like all enterprise software companies, we're navigating through a high inflation environment, a global pandemic or in Europe and growing concerns of a global recession.

In the face of these challenges, we've continued to grow ACV at a respectable pace to date. However, given the significant and unpredictable macroeconomic factors that I just outlined, we're going to provide a little more clarity on our view for the second half of 2022.

We believe ACV growth for the full year will slow to around 16% in constant currency, about 5% less than we had planned for the full year. We want to make it clear this adjustment is to our 2022 outlook only.

Moving to our revenue outlook. We see 3 three key factors negatively impacting our revenue growth for the full year 2022. First, as we described in our investor session in June, our plan assumed Pega Cloud would represent a little more than half of our new client commitments in 2022. However, Pega Cloud has represented 70% of new client commitments in the first half of 2022.

I know many of you will view this mix shift positively but as we've said, a 20% or so increase in Pega Cloud could lower 2022 revenue by $80 million. And a higher-than-expected Pega Cloud mix would also cause ACV growth and revenue growth to diverge in 2022. That's because Pega Cloud revenue is recognized ratably typically over the contract period, which approximates 3 years.

Second, the strength of the U.S. dollar is expected to negatively impact our full year revenue results. And third, we anticipate that the increasing economic uncertainty may license sales cycles and pushed some deals into 2023.

If ACV growth slows as a result of this dynamic to the 16%, as I mentioned, in constant currency in 2022, that would have an impact on total revenue as well. In total, we believe these three factors taken together could negatively impact full year revenue by approximately $120 million to $130 million.

We do not expect a proportionate impact on earnings per share due to the cost-saving initiatives that I spoke about, where we expect to mitigate the revenue impact of -- by over $100 million of that revenue shortfall by achieving significant cost savings.

Naturally, there are a lot of moving parts in what I just said, which make it hard to forecast precisely. So, what are we doing to respond through all this? We will manage the business in a way to address the potential ACV growth slowdown and make up for more than half of the impact of our Pega Cloud mix shift.

And that's -- I think that's a pretty impressive statement that we're making that we actually are going to end up being more efficient with the business based on the revenue and the ACV that we will achieve.

Let me explain what I mean. We don't need to grow the size of the organization at the pace that we have in the last few years. We've added some pretty significant go-to-market capacity in 2020, 2021 and 2022.

And we're going to focus the rest of 2022 on execution. We think this is the right time for us to reap the benefits of the significant investments we've made in hiring over the last few years. To remind everyone, we're targeting the rule 40 in 2024, and we will attempt to achieve the highest growth rate possible in getting the rule 40.

Our business is resilient, and I remain confident in our ability to deliver on our long-term strategy to be the leader in digital transformation. Let me remind you of some of the reasons that I feel that way. First, about 80% of our revenue is now subscription, thanks to our successful execution of the ongoing and near completion of the subscription transition.

Our recurring revenue is supported by very high net retention rates. Second, if you look back to 2000, Pega has grown through every recession before, including some tough ones. And we've seen what clients stick with and what they invest in. Third, we serve the world's largest clients in core verticals such as financial services, insurance, health care, telecommunications and government.

In challenging economic times, unfortunately, small and medium-sized businesses are often the ones that struggle the most in the near term when compared to larger enterprises that have strong financial profiles to withstand short-term shocks. Last, our digital transformation solutions feature unique capabilities and provide benefits that are critical to our clients going through transformation.

Our core value proposition has proven important to our clients and it helps Pega to grow through uncertain economic times. In summary, we've built a resilient business, and we will continue to provide best-in-class solutions to the world's largest clients even during tougher times.

Despite the uncertain global economic outlook, it's an exciting time in Pega's history. We're wrapping up our subscription transition that we started in late 2017 and we're entering our next phase of growth as a company.

As we wrap up the transition in the next year or so, we're confident that we will exit the transition as a much stronger business with more predictable revenue and back to cash flow levels that are even in excess of what we achieved before the transition. And as a rule of 40 company, we'll be capable of generating free cash flow each and every year because of the dependency and the reliability of the relationships that we have with our clients.

Winning companies invest time and resources into reimagining their business model to unlock higher growth and greater profitability. The best companies successfully execute to make that imagination reality.

Now I'm really proud of the work our team and our over 6,000 employees have done over the last 5 years to transform Pega's business and unlock the company's potential. Thank you to everyone at Pega. As always, I'll be on the road and excited to see everyone face-to-face at a number of conferences over the next 45 days or so. I hope to get a chance to see many of you during the upcoming events.

And one additional point, very excited to reiterate what Alan said, which is I can't wait to see everyone at PegaWorld live next year. It's been too long. And with that, operator, please open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll now take our first question from Rishi Jaluria from RBC. Your line is open. Please go ahead.

Rishi Jaluria

Well, wonderful. I'm here again, thanks very much for taking my question. Maybe a few here to clarify and then you know, appreciate all the details, especially around and what you're seeing. Maybe I want to start by talking about macro and a two-parter here. Number one, we would love to know what are you assuming Ken, when you're talking about getting to 16% ACV growth exiting the year you know, are you assuming macro stable with what you're seeing right now? Or are you assuming some level of deterioration further from what things you're seeing?

And then maybe the second part of that, there's obviously a macro impact numbers already of constant currency from Q1 to Q2 on the ACV side. Some of your large cap peers that have already kind of reported and talked about –

Alan Trefler

Could you repeat your last like 10 seconds because you --

Kenneth Stillwell

Because you broke up a little bit, Rishi.

Rishi Jaluria

I apologize. Let me get off that. Okay. So yes, I was just -- maybe just starting with the macro side, right? What do you see -- what are you assuming in terms of further macro deterioration or is it going to be stable? And the second part, given the detail we've seen on the ACV side in constant currency as a result of macro that you've seen so far. Can you maybe be a little bit more specific about how it's manifested itself be that in longer sales cycles, smaller ACV lands, pushed out deals, anything like that? And then I've got a follow-up.

Kenneth Stillwell

Sure. I'll take the first part of that, and then Alan, you can add some color to that. So, we are not assuming that the market will stay exactly as we've seen in the first half. We are assuming that sales cycles will elongate from where they are, that the buying cycles will be tighter.

We are assuming that as you get closer to the end of the year that companies will be responding to cost management initiatives, some of which will help us because we can be a solution, some of which may put pressure on just general buying patterns.

So, I wouldn't suggest that we think everything is going to stay as it is now. We do see that there's some further decline and the economic landscape between now and the end of the year. We're also not seeing this as an elongated process, but we don't know what to expect through the end of the year as people start budgeting for next year.

So that's why we thought about providing a little bit more clarity around what we think is a risk, which is our ACV growth for the full year. ACV growth dropping from one last point that ACV growth declining from 21% to 16%. Just to kind of deliver you directionally what that means. It kind of means that our AC -- our incremental ACV growth year-over-year in dollars would be somewhat flat year-over-year, meaning the growth in incremental ACV dollars would be relatively consistent with what we grew in 2021. Still growth, but as you can imagine, growth on a bigger number is a slightly smaller percentage. So that's kind of how we see it manifesting itself through the year.

Alan thoughts on some of the discussions that you mentioned about customer buying.

Alan Trefler

Yes. So, I think Ken's right, there is some elongation of sales cycle. But also, I think a lot of this -- the impact, I believe, is and will continue to be significantly related to the companies you're dealing with and the types of companies you're dealing with.

The large sophisticated traditional buyers that for many years, were our only buyers and let us grow at a 20% ACV growth rate. I think that those are much less susceptible to the many pressures and a willingness to go forward than companies you think of as midsized or certainly smaller.

And so, we have an opportunity and we are recalibrating our energies to really focus on those deep and really important relationships with organizations who based on everything I've seen are going to be looking to themselves save money, Strengthen their workflows, continue to invest.

And I think that focus makes it easier for us to operate within some of the spend envelopes that Ken is talking about, which we're taking very, very seriously then frankly, when we were trying to really jump up our growth rate to some degree, regardless of cost.

We're not in that business with the second half of this year and going forward because frankly, I think the market will respond exactly what we're doing. We have a big chance to influence what happens. We're not just subject to what's going on in the back growth market.

Rishi Jaluria

All right. Great. That's really helpful. And then on the business. Maybe, I wanted to drill specifically into cloud CRPO. So, we saw that decelerate from 31% growth in Q1 to 14% into and even if we add back in six points of FX, that still gets us from a decel of 31% to 20%. Maybe can you walk us through what's going typically on cloud CRPO and maybe why we shouldn't be worried about that too much as a leading indicator of future cloud growth slowing down? And then one more follow-up, and I promise that's it.

Kenneth Stillwell

Sure. So, the one thing that we are seeing and we've seen it probably for a couple of quarters, but I think it's -- we're starting to realize that clients really are transitioning into more leaning more towards consumption-based buying patterns, right, which means that they're looking at like kind of almost we like a minimum commit with variable usage as they drive additional usage.

And what that does lead to is it does lead to -- the net effect of that is a slight decline in the duration of our cloud RPO. Just a slight, not like going from say, three years to maybe 2.75. Some of the optics of RPO is driven by that. You can kind of see that if you look over the last few quarters.

Also, to add to that, we -- in 2022, the first half of the year was not a big renewal year, right, in terms of Pega Cloud contract renewals, it tends to be towards the back end of the year in general. Every once in a while, you'll have a quarter where you may have a few clients.

So, those two factors, I think, make the optics look a little bit confusing to your question. Some of it is just buying patterns. People clients are not committing necessarily a three or five year contracts all the time they might be committing to a three year contract with a with a slightly lower minimum and then having consumption buying patterns above that. And that results in less going into RPO in some of those contracts, if you follow me.

Rishi Jaluria

Got it. Helpful. And then last one, just on cloud gross margins. obviously been on a nice upward trajectory for the past really two years. But this is the first time we've seen a decline like this sequential in a meaningful way into Q2, right, going from 70% to a little bit up 7%. I guess, was that FX? Or were there other factors that led to cloud gross margin declining sequentially? And how should we think about that going forward? Thank you.

Kenneth Stillwell

Yes, that's a great question. That's because the majority of our costs for Pega Cloud are in the U.S. in U.S. dollars. And so there is -- so you do have currency -- more currency impact on the top line than you do on the bottom line. In a lot of the other aspects of our business, we have natural hedges because we have the cost in the currency where the dollars are. We are more -- we are -- our costs are more skewed to the U.S. because our AWS contract is in U.S. dollars.

Operator

We'll take our next question from Steve Koenig from SMBC Nikko. Your line is open. Please go ahead.

Steve Koenig

Thanks for taking my questions. I'll stick to one question and one follow-up here. I wanted to -- by the way, congratulate you on the Forrester evaluation. It sounds like a great validation of the technology leadership. So first question is on the financial side. A couple of moving parts here. And maybe it relates to your prior answer. But on Pega Cloud revenue, the sequential revenue growth in cloud was very light. And so I'm wondering if you can square that with the higher cloud mix. And then maybe also related to that, more broadly, RPO bookings were down pretty hard year-on-year. And I'm wondering like how much of that was a surprise in terms of weakness in new client commitments relative to your internal expectations? And how much of that was a lighter renewal schedule if you could just parse that out? And then just one follow-up for Alan. Thanks.

Kenneth Stillwell

Yes, Q2 was a very light renewal schedule and Pega Cloud -- the mix of Pega Cloud was impacted by currency by approximately the same as our overall revenue. So the mix of revenue by geography isn't exact, but directionally close to our overall revenue in terms of the currency impact. The RPO -- currency impact for a lower renewal quarter in Q2 in the first half, but also our net ACV growth in Q2 was not as strong as well. So the combination of our ACV growth in Q2 was not as strong as Q1, not a big renewal quarter plus currency. That's kind of what's happening in RPO.

Steve Koenig

Okay. Sounds good. Maybe we'll follow up a little bit more on the call back. Alan, Pega launch pad. So that's really interesting. I know you've been you've been working on a lot of the stuff for some time as part of the Phoenix initiative. I'm wondering if you could deliver us some color on -- what are kind of the milestones, both maybe technically and business-wise on establishing a vibrant third-party marketplace. Any thoughts on monetization, does Pega pricing need to become more transparent? Are there any early alpha customers or partners you can talk about? Thanks very much and that concludes my questions.

Alan Trefler

Sure. So, we have been working on a lot of these pieces for some time as part of the Phoenix initiative, which obviously feeds a lot of the technology that we bring forward and bring to market here. The launch pad concept is that we know that there are organizations that themselves want to develop IP, bring it to market that have sort of a workflow flavor to them. And to be candid, the platforms that we saw out there were not remotely well suited to being able to do that we thought. And we've talked to a number of people and companies about that.

We wanted to begin having discussions on this. And thought the best way to do that was to just publicly say, yes, we got this. We're going to begin talking with early adopters, but I'll be able to answer those questions with much greater clarity and specificity after we're another 90 or 120 days into this. So I'm going to put -- take up a little pass on that, but it's not the lack of enthusiasm. I think this is a very exciting place to be.

Operator

We will now take the next question from Pinjalim Bora from JPMorgan.

Unidentified Analyst

This is Noah on for Pinjalim. Thank you for taking the question. Can you explain what you're seeing in terms of demand from public sector customers? And just any color on the rate of new IT engagements within public sector would be helpful. Thanks.

Alan Trefler

Yes, I can talk to that. I think that public sector has been pretty shaken by the pandemic. And a lot of the solutions that have gone into public sector to just make them work, particularly at some of the large organizations, governmental organizations we do business with. We are widely seeing to be scotch tape and bailing wire. So there is a, I think, a healthy appetite in large agencies to continue and even accelerate the workflow automation that we already do for a number of them going forward.

So I think the demand in public sector will continue to be strong. Having said that, as we all know, public sector is not a place that tends to buy rapidly, and they tend to want to buy very much on a consumption cell basis.

So you don't get the big multiyear deals with lots of things sort of on the come based on expectations. It really is a line of business that I described it as sort of building an engine of success that as you go when you -- as you develop greater confidence and a greater footprint, it builds on itself.

But the market opportunity there is huge, we are very much going to focus on what I would describe as federal and large states here. I think that plays to our strength and that also plays to the people will be buying.

Operator

We will now take the next question from Vinod Srinivasaraghavan from Barclays. Your line is open. Please go ahead.

Vinod Srinivasaraghavan

Thanks for taking my questions. I just want to -- maybe look to the past a little bit, talk about buying patterns going into the COVID period and the second quarter 2020. I just want to get a sense of are things kind of similar than right now or back then? And kind of at what point did you see sales cycles Strengthen and customers reengage more meaningfully then? And are you seeing any early signals of that where maybe a similar pattern might play out? Thanks.

Kenneth Stillwell

So I can start on that one. So because unfortunately remember those days well. I think the difference between Q2 2020 and Q2 2022 is noticeable because of the following. When we were in Q2 of 2020, we didn't know what future look like. I think there was a question about was this going to be like the shutdown of world economies. We're going to -- people couldn't get food and paper towel with tiller. I mean, it was we were scrambling. We didn't know how long it was going to be. And it was -- I think there was a lot of angst about just what was this thing we were dealing with.

So I think the level of uncertainty and confusion and stress was high. I remember looking at the unemployment drop of -- or increased, excuse me, I don't know, whatever it was, like x million people that went into that filed claims in one week. In today's environment, what I see is people more going through a typical economic reset, right? They're saying we know what's coming. We've got to manage our budgets. We need to slow hiring. We need to think about projects that will help us optimize our business. This happens every whatever, five to 10 years, whatever the recession cycle happens to be I don't view it as being comparative to Q2 because of the level of just general mass confusion in the market that happened for a few months in the middle of 2020. That's my perspective. I think this is much more -- I do feel like people know what's coming. They may not know how bad it's going to be or how long it's going to last, but we've been through recessions before. So I kind of -- that's my perspective. Alan?

Alan Trefler

Yes, I would agree that the atmosphere back then was much more of confusion, who knows what's going to be, how long it's going to be for, we'll be able to get the right staff to support the business at all. There were a little burst of, Oh, my God, we've got to automate something, but there was an incentive to it that people said, I've got to do it in 10 days. or a week.

And by the way, we've delivered some pretty amazing systems in that time to support things like the paycheck, the Paycheck Protection Act. I was just talking to one of our very large banking customers who said that they'll never forget what they were able to do in a week with our system when they were just trying to hold on there. The time now is just a lot more rational, right? People expect dimensions are going to fall into just how long is it going to be tight. People are extremely interested in the low-code piece is Eric very valuable because people are extremely interested in being able to continue to run their systems without necessarily the same, frankly, depth of engineering talent that some of those end companies have been able to depend on or in some cases, not even, depending on what's happening with the cost.

So I would describe this as a much more, frankly, reassuring time than if you go back to the point where every week was a new terror.

Vinod Srinivasaraghavan

Got it. I appreciate some of the color on that. And then just one follow-up for me. Can you maybe speak to just kind of the sales execution during the quarter, how you kind of feel about that? And also, are you seeing any customers ask for like more pricing concessions or more flexible payment terms given kind of the macro environment? Thank you.

Alan Trefler

So I'll answer the second one first. Our bread and butter customers are the ones that we're particularly focused on going forward are not the ones who need payment concessions, candidly. Now people always like to ask for things, but they're just not. That's not the part of the market that we are going to focus on go through.

From a sales execution point of view, as I think a lot of you know, we've undergone a lot of change from a go-to-market management perspective. And a lot of that change happened during Q2. We're right in the middle of it all. And I'm sure that didn't help us getting things together. I believe we're now largely through the -- what I describe as Phase 1 of change management, which is understanding what we want to do from a structure and a positioning point of view, et cetera, we still have a lot of work to do. as we go through the next couple of quarters.

But the reset, I would say, of our business to being a cost-effective grower, really worrying about cost, et cetera, that is, I think, taken whole of the psyche of the organization as a whole and in the go-to-market organization. And now I believe we have a plan that we can execute on a strategy that makes enormous sense having done this for a long time. And we know that there is the demand there in our customers. There's no doubt that customers appreciate, particularly the ones we're talking about, the way our software can really uniquely help them deal with their own pressures and their own confusion.

So I'm feeling good about that. Obviously, the first half of this year was pretty volatile. I mean we know that there were some management changes that were quite significant that happened -- all of that happened in the last five months. So unquestionably, that would have some impact on Q2. And by the way, we're not happy with what the outcomes were. We're committed to changing it, and we're not happy that 16% is a good number going forward. It just might be the realistic one to think in terms of from where we are this year.

Kenneth Stillwell

I'll add one piece of color. Clients, I have not seen -- I see a lot of the client interactions, as you might imagine. I don't see clients deciding to try to get the same amount of value out of Pega for a lower amount. I do see clients trying to manage cost increases as a result of inflation. Right? Like naturally, CPI is a much higher number. And there's an expectation in the market that technology companies will receive some increase in the annual clients are more focusing on trying to manage that as we are trying to manage that as well because we expect to get increases to help offset our cost increases of our team members, et cetera. That, I think, is a focus area, but not general spend reduction. That's not something we've seen.

Operator

We will now take the next questions from Kevin Kumar from Goldman Sachs. Your line is open. Please go ahead.

Kevin Kumar

Hi, thanks for taking my questions. Alan, given the macro environment, are there any changes in the types of use cases across the customer base whether that's customer engagement or customer service, other areas of automation, curious where you're seeing the most appetite.

Alan Trefler

Yes. So in the real-time interaction management space, which is -- think about as AI-powered decisioning. There is -- when the economy goes to the sort of change we've seen in the last 90 days, we shift our emphasis from cross-sell upsell to retention. And we have and we do a lot of very, I think, effective work in the areas of retention. Certain use cases, sometimes referred to as compassionate, hopefully, collections, which is where you try to figure out how to be the smartest about if you're a business getting paid. Those are examples of use cases that accompany the sort of recessionary push that, once again, we've seen before, we see the same thing happening now. Those discussions get a lot of a lot of attention as well.

On the workflow space, automation and transparency, being able to handle a workforce that's distributed and not likely to ever come together again, but you want to be able to manage them. those once again are the apps what we sometimes refer to, and you'll hear us talking more and more about what we call the process fabric as a way to leave an organization together. Those are the types of use cases that go with these times.

And the other thing I'll say about all of those is those systems tend to be pretty big systems, not all at once necessarily, but over time, those become very, very meaningful.

Kevin Kumar

That's helpful. Thank you. And then as you integrate the Everflow acquisition, how has customer traction been there? And how should we think about ACV uplift on deals where process mining is used?

Alan Trefler

I think process mining is primarily a vehicle to be able to make the customer more effective at deploying your software. I think that more than a very significant increase in ACV on the deal, I think you will see an acceleration of consumption and use. And that leads to, in effect, larger parts of the business being in a position to cost justify and rationalize the purchase. So I view it as contributing to ACV, more by helping promote volume than by kicking the prices up 20%, right? It's discovering the opportunity and optimizing the opportunity, which lets you go bigger, particularly these big companies.

Kenneth Stillwell

And just to clarify, just to make sure that's crystal clear, we are not in the business of selling user-based licenses as our exclusive go-to-market where you keep price up ticking every single feature function. What Alan is talking about is clients put get more value by putting more automated transactions through our system, and that's the way the ACV goes up because they're paying on kind of a consumption type model. That's kind of the connection there just to make sure that's clear.

Alan Trefler

Yes. Per user pricing, we think, in this world is sort of an anachronism because everybody wants to move from one form or another of nonuser activity right, whether it's customers doing work themselves, whether it's parts of the system landscape actually doing fully autonomous work, that's a hyper automation.

So our standard approaches tend to talk about how many units of work get done by the customer. And that's where process mining can accelerate as opposed to like a more user model. So I know some other people do that. I don't think that's a very forward-looking model for companies that do automation.

Operator

We will now take the next question from Joseph Meares from Truist. Your line is open. Please go ahead.

Joseph Meares

Thanks for taking my question. The first question, I was if you had already said this in the prepared remarks, but could you just deliver us some clarity on the cost initiatives that you're talking about? I think you said it would be more than half of the decline caused by the Pega Cloud. But could you just clarify that?

Kenneth Stillwell

Yes, sure. So I know, Mike, the wording is tough sometimes to get through clearly. So we're -- we anticipate that the combination of the three factors, Pega Cloud mix currency, which is the smallest of the three. And the impact of our ACV target will reduce revenue from where we kind of initially thought it would be by about $120 million to $130 million.

We might say, Oh, well, that means there's an impact to EPS by that same amount? No. To the contrary, we're actually maintaining, we believe we have the staff that we need to get through 2022 and quite frankly, to hit our 2023 objectives well. And that efficiency that we would get by maintaining our cost structure consistent with where we are now, will get us over $100 million of that $120 million to $130 million revenue decline.

So we won't get all the way there. We might, but we're signaling that we think we can get all the way there, but we will get almost all the way there. When I was saying, Joe, as I was saying, we'll make up the ACV, drop or make up the currency and we'll get more than half of the way there on the cloud mix. And that's the -- all of those three add up to over the $100 million of mitigation.

Joseph Meares

That's perfect. Super helpful, Ken. I appreciate it. And then just as a follow-up. Last quarter, you spoke about several new products, including enhancements to the Pega Customer Decision Hub and voice AI and messaging solutions for customer service. Just curious if you have any early customer feedback on those? Any positive stuff you can point to there? Thanks so much for taking the questions.

Alan Trefler

Yes. So we continue to get excellent feedback on the Customer Decision Hub, that's the real-time interaction management piece that I was talking about that Forrester just landed. And that continues, I would say, to be by far the industry-leading product in that segment. And the new capabilities are used in being I think being widely enjoyed.

The voice AI is rolling out slowly. We've got some pilot work that we've been doing. I think it's enormously exciting. But to be candid, I think that a lot of organizations are just trying to stabilize that part of their business. And they're -- if things get a little more normal, I think that's going to pick up. But right now, there's just an enormous amount of what I described as contact center exhaustion, where people have just -- who are running those things are just trying to deal with making sure they've got the staff and that they're able to just keep them running. So it's probably going a little slower than I'd like, but that was never going to be a big part of a number of ours for this year.

Operator

We will now do the next question from Mark Schappel from Loop Capital. Your line is open. Please go ahead.

Mark Schappel

Hi, thanks for taking my question. Ken, starting with you, with respect to the macro, just to be clear here, are you saying you're seeing lengthening sales cycles and project delays in your business today? Or are you just trying to get ahead of the curve with your comments?

Kenneth Stillwell

question. I would say I am a little bit of lengthening sales cycles, but nothing I would say material to lead me to a an absolute conclusion. I am more trying to get ahead of where I think the market will be for the rest of the year.

Mark Schappel

Okay, great. And then, you know, with respect to the sales cycles, are you seeing that in any particular geography more so than others?

Kenneth Stillwell

Europe, I can get out and speak to but certainly Europe is much closer to the frontlines of the conflict. And in Ukraine, Russia, Ukraine, and that they are seeing things like energy or resources, food, they are much more disrupted than certainly the United States is and even a bit even APJ. So I personally I think Europe is in a tough place right now.

Alan Trefler

I just going to say customer mood and some of those countries just hard to get their attention.

Mark Schappel

I understand. And then Alan final question here. It's around the launch pad. I believe in your prepared remarks, you mentioned that the product would be run as a separate commercialization effort. I was wondering if you just go into a little bit more details of what exactly that means?

Alan Trefler

Well, it means that we were able to take a couple of very entrepreneurial people who we already had on staff. And we're going to create a largely virtual team, but we're not going to commingle that at all, with the kind of go-to-market and the current messaging, you know, we see that as a separate product, using experience, obviously, that we've had for many, many years to inform it, that will go to market through a separate channel as a partner sold channel -- sold by actual organizations that have the IP that they want to sell.

So I'm really, really looking to insulate the core business from any sort of disruption. So we can really focus on doing as well as we collectively can do this here on.

Operator

We will take the next question from Joey Marincek from JMP Securities. Your line is open. Please go ahead.

Joey Marincek

Thanks so much for the question. Alan, would love to hear more about Google Cloud? I know it's early. But how is that partnership progressing thus far? And maybe what are your early learning? And then one for Ken? Can you deliver us an update on net retention. How is that metric trended? And maybe how would you think about it on a go forward basis? Thank you so much.

Alan Trefler

Sure. So the Google relationship, I would say is terrific. You know, we work with them. And we've been able to work with them to stand up this capability, I think, and just being able to offer customers the ability to use Amazon credits or Google credits, up that they may have committed to also I think, at certain customers, get customers excited.

So that relationship is deep and very, very positive. And, you know, I'm also pleased to say that Google is a client, which is wonderful when a company like that decides that they want to use your stuff and internally, so now, I believe it's going to work out very, very well.

You know, Amazon has been a terrific partner, and we love working with them also. But the reality is, as they move into, say, the medical field as they recently have done in a greater quantity, and as they move into, or they obviously deep in retail, that means that certain of the very large clients that we want to sell to have, well, less attraction to using them as a platform, it doesn't actually impact visible to a customer, whether they're running the Pega Cloud on Amazon, or on Google, but some companies have their own standards and their objectives in that regard. And now we're just in a position to deliver that extra dimension of client choice, which is always good. Ken want to talk about --

Kenneth Stillwell

So our net retention so, that's a really good finish to the questions, because it's one that we haven't really touched on. Directionally, I've always talked about, if we have 20% ACV growth that 15% of that 20% would be with existing clients and the other 5% would be net new logos, that is a directional number. But that is not far off.

When you think about us, our ACV growth declining by some percentage, the majority of that decline would be our expectation of getting ACV from net new logos, right? Because so I think our net retention number is not going to decline much of our overall ACV declines, because that is our bread and butter. That is actually where we're going to put our capacity. That's where we've always got the majority of our bookings. And so our focus is going to be really heavy there, especially in any type of less than certain economic environment, you should always stay close to your clients, because they're going to deepen their relationship with existing vendors, that is just the trend.

So I think our net retention rate will hold pretty steady to what it's historically been maybe like dropped by a percent or so. But not much. And what will happen is we will probably, you know, just being pragmatic, we will chase new logos less.

Alan Trefler

And with that, I think we're at time, I'd like to thank all the folks who participated or listened to the call. You should know that we're working very hard. We're taking the needs of our shareholders very seriously. And I'm hopeful that we'll be able to report some good things in a quarter. Thank you very much.

Operator

This concludes today's call. Thank you for your participation. You may now disconnect.

Wed, 27 Jul 2022 16:45:00 -0500 en text/html https://seekingalpha.com/article/4526724-pegasystems-inc-pega-ceo-alan-trefler-on-q2-2022-results-earnings-call-transcript
Killexams : Pega to Present at Upcoming Investor Conferences

Press release content from PR Newswire. The AP news staff was not involved in its creation.

CAMBRIDGE, Mass., July 25, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world’s leading organizations, today announced that Ken Stillwell, COO and CFO, Pega, will present at the following upcoming investor conferences:

Archives of the presentations will be available from the Investors page of Pega’s website for a limited time.

About Pegasystems
Pega provides a powerful low-code platform that builds agility into the world’s leading organizations so they can adapt to change. Clients use our AI-powered 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 Pegasystems (NASDAQ: PEGA), visit www.pega.com.

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

All trademarks are the property of their respective owners.

View original content to obtain multimedia: https://www.prnewswire.com/news-releases/pega-to-present-at-upcoming-investor-conferences-301592568.html

SOURCE Pegasystems Inc.

Mon, 25 Jul 2022 08:09:00 -0500 en text/html https://apnews.com/press-release/pr-newswire/pegasystems-inc-7c781dd39822c0736acb7264740597e9
Killexams : Client Adoption Drives Pega Cloud to 70% of New Client Commitments in First Half of 2022
  • Total revenue increases to $651 million in first six months of 2022
  • Annual contract value grows 14 percent (19 percent in constant currency)
  • Total backlog of $1.1 billion as of June 30, 2022

CAMBRIDGE, Mass., July 27, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world's leading organizations, released its financial results for the second quarter of 2022.

"This year has turned out to be an extremely volatile business environment," said Alan Trefler, founder and CEO, Pegasystems. "The ongoing uncertainty will continue to put pressure on our clients. But this is an environment for which Pega is uniquely suited, as our low-code platform allows these same organizations to more easily adapt to change."

"In the first half of 2022, we've grown annual contract value ("ACV") 19 percent year-over-year in constant currency while showing additional signs of improving profitability," said Ken Stillwell, COO and CFO, Pegasystems. "We're doubling down on our work to become a Rule of 40 company in 2024."

Financial and performance metrics (1)
(Dollars in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Total revenue $             274,337 $             325,702 (16) % $             650,644 $             639,201 2 %
Net (loss) income - GAAP $            (286,296) $               37,291 * $            (286,675) $               30,674 *
Net (loss) income - non-GAAP $              (31,406) $               21,792 * $               18,768 $               45,433 (59) %
Diluted (loss) earnings per share - GAAP $                  (3.50) $                   0.43 * $                  (3.51) $                   0.36 *
Diluted (loss) earnings per share - non-GAAP $                  (0.38) $                   0.25 * $                   0.22 $                   0.53 (58) %

 

(Dollars in thousands) Three Months Ended June 30, Change Six Months Ended June 30, Change
2022 2021 2022 2021
Pega Cloud $     93,506 34 % $     73,293 23 % $     20,213 28 % $   183,823 28 % $   141,151 22 % $     42,672 30 %
Maintenance 78,326 29 % 78,782 24 % (456) (1) % 158,042 24 % 154,343 24 % 3,699 2 %
Subscription services 171,832 63 % 152,075 47 % 19,757 13 % 341,865 52 % 295,494 46 % 46,371 16 %
Subscription license 41,600 15 % 104,296 32 % (62,696) (60) % 179,133 28 % 215,805 34 % (36,672) (17) %
Subscription 213,432 78 % 256,371 79 % (42,939) (17) % 520,998 80 % 511,299 80 % 9,699 2 %
Perpetual license 2,266 1 % 12,596 4 % (10,330) (82) % 9,706 1 % 18,048 3 % (8,342) (46) %
Consulting 58,639 21 % 56,735 17 % 1,904 3 % 119,940 19 % 109,854 17 % 10,086 9 %
$   274,337 100 % $   325,702 100 % $    (51,365) (16) % $   650,644 100 % $   639,201 100 % $     11,443 2 %
(1) See the Schedules at the end of this release for additional information, including a reconciliation of our non-GAAP and GAAP measures

 

1 Pega Q2 2022 ACV (in millions)

2 Pega Q2 2022 backlog growth (in millions)

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EDT on Wednesday, July 27, 2022. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-888-394-8218 (domestic), 1-323-794-2588 (international), or via webcast (https://viavid.webcasts.com/starthere.jsp?ei=1558139&tp_key=0cc6605362) 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

We believe that non-GAAP financial measures help investors understand our core operating results and prospects, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. The supplementary non-GAAP financial measures are not meant to be superior to or a substitute for financial measures prepared under U.S. GAAP.

Reconciliations of our non-GAAP and GAAP measures are at the end of this release.

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, projects, forecasts, guidance, likely, and usually, or variations of such words and other similar expressions identify forward-looking statements, which 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:

  • our future financial performance and business plans;
  • the adequacy of our liquidity and capital resources;
  • the continued payment of our quarterly dividends;
  • the timing of revenue recognition;
  • management of our transition to a more subscription-based business model;
  • variation in demand for our products and services, including among clients in the public sector;
  • reliance on key personnel;
  • global economic and political conditions and uncertainty, including continued impacts from the ongoing COVID-19 pandemic and the war in Ukraine;
  • reliance on third-party service providers, including hosting providers;
  • compliance with our debt obligations and covenants;
  • the potential impact of our convertible senior notes and Capped Call Transactions;
  • foreign currency exchange rates;
  • the potential legal and financial liabilities and damage to our reputation due to cyber-attacks;
  • • security breaches and security flaws;
  • our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
  • our client retention rate; and
  • management of our growth.

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, 2021, Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and other filings we make with the U.S. Securities and Exchange Commission ("SEC").

Except as required by applicable law, we do not undertake and expressly disclaim any obligation to update or revise these forward-looking statements publicly, whether due to new information, future events, or otherwise.

The forward-looking statements in this press release represent our views as of July 27, 2022.

About Pegasystems

Pega provides a powerful low-code platform that builds agility into the world's leading organizations so they can adapt to change. Clients use our AI-powered 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 Pegasystems (NASDAQ: PEGA), visit www.pega.com.

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

All trademarks are the property of their respective owners.

 

PEGASYSTEMS INC.
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenue
Subscription services $             171,832 $             152,075 $             341,865 $             295,494
Subscription license 41,600 104,296 179,133 215,805
Perpetual license 2,266 12,596 9,706 18,048
Consulting 58,639 56,735 119,940 109,854
Total revenue 274,337 325,702 650,644 639,201
Cost of revenue
Subscription services 36,533 29,046 68,563 57,389
Subscription license 673 585 1,295 1,205
Perpetual license 36 71 70 101
Consulting 57,873 54,829 113,384 108,283
Total cost of revenue 95,115 84,531 183,312 166,978
Gross profit 179,222 241,171 467,332 472,223
Operating expenses
Selling and marketing 157,198 156,423 319,434 305,162
Research and development 74,341 64,395 145,831 126,837
General and administrative 32,723 19,161 68,487 37,431
Total operating expenses 264,262 239,979 533,752 469,430
(Loss) income from operations (85,040) 1,192 (66,420) 2,793
Foreign currency transaction gain (loss) 1,713 (403) 4,589 (5,501)
Interest income 309 236 516 389
Interest expense (1,944) (1,959) (3,890) (3,839)
(Loss) income on capped call transactions (18,945) 26,309 (49,505) 7,192
Other income, net 3,785 6,526 106
(Loss) income before provision for (benefit from) income taxes (100,122) 25,375 (108,184) 1,140
Provision for (benefit from) income taxes 186,174 (11,916) 178,491 (29,534)
Net (loss) income $            (286,296) $               37,291 $            (286,675) $               30,674
(Loss) earnings per share
Basic $                  (3.50) $                   0.46 $                  (3.51) $                   0.38
Diluted $                  (3.50) $                   0.43 $                  (3.51) $                   0.36
Weighted-average number of common shares outstanding
Basic 81,847 81,316 81,764 81,161
Diluted 81,847 90,320 81,764 86,006

 

PEGASYSTEMS INC.
UNAUDITED RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except percentages and per share amounts) Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Net (loss) income - GAAP $       (286,296) $      37,291 * $       (286,675) $      30,674 *
Stock-based compensation 31,300 30,688 59,527 60,788
Capped call transactions 18,945 (26,309) 49,505 (7,192)
Litigation 10,582 2,369 27,950 4,329
Convertible senior notes 720 675 1,439 1,348
Headquarters lease (6,266) (9,683)
Amortization of intangible assets 1,025 1,002 1,997 2,004
Foreign currency transaction (gain) loss (1,713) 403 (4,589) 5,501
Other (1,001) (3,583) 12
Income tax effects 195,032 (18,061) 173,197 (42,348)
Net (loss) income - non-GAAP $          (31,406) $       21,792 * $           18,768 $       45,433 (59) %
Diluted (loss) earnings per share - GAAP $             (3.50) $           0.43 * $             (3.51) $           0.36 *
non-GAAP adjustments 3.12 (0.18) 3.73 0.17
Diluted (loss) earnings per share - non-GAAP $              (0.38) $           0.25 * $               0.22 $           0.53 (58) %
Diluted weighted-average number of common shares
outstanding - GAAP
81,847 90,320 (9) % 81,764 86,006 (5) %
non-GAAP Adjustments (4,443) 2,063
Diluted weighted-average number of common shares 81,847 85,877 (5) % 83,827 86,006 (3) %
* not meaningful

 

Our non-GAAP financial measures reflect the following adjustments:

  • Stock-based compensation: We have excluded stock-based compensation 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 our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance excluding stock-based compensation.
  • Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance. In addition, we reflect the effect of the capped call transactions on the weighted-average number of common shares outstanding in our non-GAAP financial measures as we believe it provides investors with useful information when evaluating our financial performance on a per-share basis.
  • Litigation: Includes legal fees and related expenses arising from proceedings outside of the ordinary course of business. We believe excluding these expenses from our non-GAAP financial measures is useful to investors as the disputes giving rise to them are not representative of our core business operations and ongoing operating performance.
  • Convertible senior notes: In February 2020, we issued convertible senior notes with an aggregate principal amount of $600 million, due March 1, 2025, in a private placement. We believe excluding the amortization of debt discounts and issuance costs provides a useful comparison of our operational performance in different periods.
  • Headquarters lease: In February 2021, we agreed to accelerate our exit from our then Cambridge, Massachusetts headquarters to October 1, 2021, in exchange for a one-time payment from our landlord of $18 million, which was received in October 2021. We believe excluding the impact from our non-GAAP financial measures is useful to investors as the modified lease, including the $18 million payment, is not representative of our core business operations and ongoing operating performance.
  • Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods.
  • Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods.
  • Other: We have excluded gains and losses from our venture investments, capital advisory expenses, and incremental expenses incurred integrating acquisitions and evaluating potential acquisitions. In addition, incremental fees were incurred in the three and six months ended June 30, 2021 due to the cancellation of in-person sales and marketing events due to the COVID-19 pandemic. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance.

 

(1) Stock-based compensation:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Cost of revenue $                      6,579 $                      5,849 $                    12,957 $                  11,774
Selling and marketing 12,633 14,748 23,591 28,468
Research and development 7,355 6,343 14,701 13,113
General and administrative 4,733 3,748 8,278 7,433
$                    31,300 $                    30,688 $                    59,527 $                  60,788
Income tax benefit $                        (543) $                     (6,192) $                        (905) $                 (12,183)

 

(2) Effective income tax rates:
Six Months Ended June 30,
2022 2021
GAAP 165 % (2,591) %
non-GAAP 22 % 22 %

Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including excess tax benefits generated by our stock-based compensation plans, gains and losses on our capped call transactions, tax credits for stock-based compensation awards to research and development employees, and unfavorable foreign stock-based compensation adjustments. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including our historical and forecasted earnings by jurisdiction, discrete items, and our ability to realize tax assets. Under GAAP we recorded a valuation allowance on our deferred tax assets of $192 million in the three months ended June 30, 2022. See "Note 12. Income Taxes" in Part I, Item 1 of our Quarterly Report on Form 10-Q for the three months ended June 30, 2022 for additional information. 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.
June 30, 2022 December 31, 2021
Assets
Current assets:
Cash and cash equivalents $                         109,275 $                        159,965
Marketable securities 187,613 202,814
Total cash, cash equivalents, and marketable securities 296,888 362,779
Accounts receivable 171,556 182,717
Unbilled receivables 201,130 226,714
Other current assets 70,633 68,008
Total current assets 740,207 840,218
Unbilled receivables 115,901 129,789
Goodwill 81,717 81,923
Other long-term assets 320,557 541,601
Total assets $                      1,258,382 $                     1,593,531
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $                           21,465 $                          15,281
Accrued expenses 63,120 63,890
Accrued compensation and related expenses 73,945 120,946
Deferred revenue 269,121 275,844
Other current liabilities 7,800 9,443
Total current liabilities 435,451 485,404
Convertible senior notes, net 592,161 590,722
Operating lease liabilities 84,170 87,818
Other long-term liabilities 12,821 13,499
Total liabilities 1,124,603 1,177,443
Total stockholders' equity 133,779 416,088
Total liabilities and stockholders' equity $                      1,258,382 $                     1,593,531

 

PEGASYSTEMS INC.
Six Months Ended June 30,
2022 2021
Net (loss) income $                        (286,675) $                          30,674
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities
Non-cash items 314,231 76,906
Change in operating assets and liabilities, net (32,625) (88,170)
Cash (used in) provided by operating activities (5,069) 19,410
Cash (used in) provided by investing activities (1,523) 10,493
Cash (used in) financing activities (41,191) (60,717)
Effect of exchange rate changes on cash and cash equivalents (2,907) (1,207)
Net (decrease) in cash and cash equivalents (50,690) (32,021)
Cash and cash equivalents, beginning of period 159,965 171,899
Cash and cash equivalents, end of period $                         109,275 $                        139,878

 

PEGASYSTEMS INC.
Annual contract value ("ACV")
June 30, 2022 June 30, 2021 Change
Pega Cloud $                      404,109 $                      306,919 $                        97,190 32 %
Maintenance 313,304 315,128 (1,824) (1) %
Subscription services 717,413 622,047 95,366 15 %
Subscription license 310,139 277,388 32,751 12 %
$                    1,027,552 $                      899,435 $                      128,117 14 %

 

PEGASYSTEMS INC.
Remaining performance obligations ("Backlog")
As of June 30, 2022:
Subscription services Subscription license Perpetual license Consulting Total
Maintenance Pega Cloud
1 year or less $          204,974 $          320,102 $            46,810 $              6,681 $            32,159 $          610,726 54 %
1-2 years 57,862 200,135 10,711 4,505 7,919 281,132 25 %
2-3 years 28,403 96,861 2,126 2,252 2,574 132,216 12 %
Greater than 3 years 18,447 81,069 1,680 424 101,620 9 %
$          309,686 $          698,167 $            61,327 $            13,438 $            43,076 $       1,125,694 100 %
% of Total 28 % 62 % 5 % 1 % 4 % 100 %
Change since June 30, 2021
$           (26,763) $            95,432 $             (1,691) $              6,497 $            21,083 $            94,558
(8) % 16 % (3) % 94 % 96 % 9 %

 

As of June 30, 2021:
Subscription services Subscription license Perpetual license Consulting Total
Maintenance Pega Cloud
1 year or less $          214,645 $          281,793 $            46,146 $              6,707 $            17,863 $          567,154 56 %
1-2 years 59,164 194,841 15,708 234 2,675 272,622 26 %
2-3 years 36,076 88,855 909 762 126,602 12 %
Greater than 3 years 26,564 37,246 255 693 64,758 6 %
$          336,449 $          602,735 $            63,018 $              6,941 $            21,993 $       1,031,136 100 %
% of Total 33 % 58 % 6 % 1 % 2 % 100 %

 

RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions) Q2 2022 1 Year Growth Rate
Backlog - GAAP $                         1,126 9 %
Impact of changes in foreign exchange rates 57 6 %
Backlog - Constant Currency $                         1,183 15 %

 

Note: Constant currency Backlog is calculated by applying foreign exchange rates for the earliest period shown to all periods. The above constant currency measures reflect foreign exchange rates applicable as of Q2 2021.

The corporate logo for Pega (PRNewsfoto/Pegasystems Inc.)

Cision View original content to obtain multimedia:https://www.prnewswire.com/news-releases/client-adoption-drives-pega-cloud-to-70-of-new-client-commitments-in-first-half-of-2022-301594707.html

SOURCE Pegasystems Inc.

Wed, 27 Jul 2022 08:11:00 -0500 en text/html https://markets.businessinsider.com/news/stocks/client-adoption-drives-pega-cloud-to-70-of-new-client-commitments-in-first-half-of-2022-1031622138
Killexams : Pega Named a Leader in Core CRM Solutions by Independent Research Firm

Pega receives top score out of 11 vendors in current offering category

CAMBRIDGE, Mass., July 27, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world's leading organizations, today announced Forrester Research has named Pega a Leader in The Forrester Wave™: Core CRM Solutions, Q3 2022 report (1). Pega received the top score in the current offering category as well as the highest score possible in 16 of 35 criteria.

The corporate logo for Pega (PRNewsfoto/Pegasystems Inc.)

In its report, Forrester evaluated the 11 most significant CRM providers. Among the criteria, Pega received the highest possible score in CRM user productivity, CRM user assistance, CRM user guidance, next best action, digital sales, customer success, customer service agent, customer service operations, actionable insights, customer profile, omnichannel engagement, conversational intelligence, process management, certifications, developer tooling and extensibility, and execution roadmap.

"Pegasystems offers exceptional automation and process management within its CRM," the report states. "Pegasystems' vision is one of an 'autonomous' CRM where automation offloads repetitive work and AI assists users, increasing their efficiency and the delivered customer experience. The CRM combines workflow automation, real-time decisioning, and a low-code platform with the goal of achieving this vision. Pegasystems uses real-time customer context and journey data to anticipate their needs and proactively – even preemptively – engage; for example, understanding a customer's intent, guiding users through adaptive workflows, proposing an offer that is most likely to be accepted, and adjusting follow-on steps based on customer feedback. CRM users seamlessly transition interactions from human-assisted to self-service with the aid of chatbots and RPA. The CRM has a complete customer profile that is updated in real time and has consistent business and developer tooling and broad industry compliance."

The Forrester report evaluated Pega's CRM solutions built on Pega Platform, including Pega Customer Decision Hub™, Pega Customer Service, and Pega Sales Automation. Together, our powerful solutions help automate work and increase efficiency on the back end, while enabling users to make better decisions in real time, achieve faster resolution, and optimize every customer interaction on the front end.

This report is the latest in exact analyst firm recognitions of Pega's low-code platform for AI-powered decisioning and workflow automation. Recognitions include being named a Leader in The Forrester Wave: Real-Time Interaction Management, Q2 2022 (2), The Forrester Wave: Digital Process Automation Software, Q4 2021 (3) report, and in the Gartner Magic Quadrant for the CRM Customer Engagement Center (4) report.

Quotes & Commentary

"For a CRM strategy to achieve meaningful customer relationships, brands need to take into consideration processes across an entire organization – not just those in the front office," said Don Schuerman, chief technology officer, Pega. "To us, this recognition exemplifies how Pega's low-code platform for AI-powered decisioning and workflow automation helps our clients to Strengthen customer and employee experiences across the entire scope of the customer journey – from back-end processes to sales and service front-end interactions –  while also giving enterprises the tools to offer customers relevant, helpful interactions. We believe this continued recognition exemplifies how Pega is continuing to provide clients with powerful and flexible CRM solutions to work smarter, stay ahead of the competition, and most importantly – keep customers happy."

Supporting Resources

  1. Forrester Research, "The Forrester Wave: Core CRM Solutions, Q3 2022" by Kate Leggett, July 27, 2022

  2. Forrester Research, "The Forrester Wave: Real-Time Interaction Management, Q2 2022" by  Rusty Warner, May 25, 2021

  3. Forrester Research, "The Forrester Wave: Digital Process Automation Software, Q4 2021" by Rob Koplowitz, December 14, 2021

  4. Gartner, Inc., "Magic Quadrant for the CRM Customer Engagement Center" by Nadine LeBlanc, Jim Davies, Varun Agarwal, June 15, 2021

About Pegasystems

Pega provides a powerful low-code platform that builds agility into the world's leading organizations so they can adapt to change. Clients use our AI-powered 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 so people can meet today's customer demands while continuously transforming for tomorrow. For more information on Pega (NASDAQ: PEGA), visit www.pega.com.

Press Contact:
Sean Audet
Pegasystems Inc.
sean.audet@pega.com    
Twitter: @pega

All trademarks are the property of their respective owners.

Cision

View original content to obtain multimedia:https://www.prnewswire.com/news-releases/pega-named-a-leader-in-core-crm-solutions-by-independent-research-firm-301594513.html

SOURCE Pegasystems Inc.

Thu, 28 Jul 2022 11:43:00 -0500 en-AU text/html https://au.finance.yahoo.com/news/pega-named-leader-core-crm-155400285.html
Killexams : Pegasystems (NASDAQ:PEGA) adds US$142m to market cap in the past 7 days, though investors from a year ago are still down 65%

Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that Pegasystems Inc. (NASDAQ:PEGA) stock has had a really bad year. The share price is down a hefty 65% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 38% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days.

On a more encouraging note the company has added US$142m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Pegasystems

Pegasystems isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Pegasystems increased its revenue by 20%. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 65% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth

Pegasystems is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Pegasystems in this interactive graph of future profit estimates.

We regret to report that Pegasystems shareholders are down 65% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Pegasystems you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Tue, 26 Jul 2022 03:51:00 -0500 en-AU text/html https://au.finance.yahoo.com/news/pegasystems-nasdaq-pega-adds-us-131743142.html
Killexams : Client Adoption Drives Pega Cloud to 70% of New Client Commitments in First Half of 2022 Client Adoption Drives Pega Cloud to 70% of New Client Commitments in First Half of 2022

PR Newswire

CAMBRIDGE, Mass., July 27, 2022

  • Total revenue increases to $651 million in first six months of 2022
  • Annual contract value grows 14 percent (19 percent in constant currency)
  • Total backlog of $1.1 billion as of June 30, 2022

CAMBRIDGE, Mass., July 27, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world's leading organizations, released its financial results for the second quarter of 2022.

"This year has turned out to be an extremely volatile business environment," said Alan Trefler, founder and CEO, Pegasystems. "The ongoing uncertainty will continue to put pressure on our clients. But this is an environment for which Pega is uniquely suited, as our low-code platform allows these same organizations to more easily adapt to change."

"In the first half of 2022, we've grown annual contract value ("ACV") 19 percent year-over-year in constant currency while showing additional signs of improving profitability," said Ken Stillwell, COO and CFO, Pegasystems. "We're doubling down on our work to become a Rule of 40 company in 2024."

Financial and performance metrics (1)


(Dollars in thousands,

except per share amounts)

Three Months Ended

June 30,




Six Months Ended

June 30,



2022


2021


Change


2022


2021


Change

Total revenue

$             274,337


$             325,702


(16) %


$             650,644


$             639,201


2 %

Net (loss) income - GAAP

$            (286,296)


$               37,291


*


$            (286,675)


$               30,674


*

Net (loss) income - non-GAAP

$              (31,406)


$               21,792


*


$               18,768


$               45,433


(59) %

Diluted (loss) earnings per share - GAAP

$                  (3.50)


$                   0.43


*


$                  (3.51)


$                   0.36


*

Diluted (loss) earnings per share - non-GAAP

$                  (0.38)


$                   0.25


*


$                   0.22


$                   0.53


(58) %

 

(Dollars in thousands)

Three Months Ended

June 30,


Change


Six Months Ended

June 30,


Change

2022


2021



2022


2021


Pega Cloud

$     93,506

34 %


$     73,293

23 %


$     20,213

28 %


$   183,823

28 %


$   141,151

22 %


$     42,672

30 %

Maintenance

78,326

29 %


78,782

24 %


(456)

(1) %


158,042

24 %


154,343

24 %


3,699

2 %

Subscription services

171,832

63 %


152,075

47 %


19,757

13 %


341,865

52 %


295,494

46 %


46,371

16 %

Subscription license

41,600

15 %


104,296

32 %


(62,696)

(60) %


179,133

28 %


215,805

34 %


(36,672)

(17) %

Subscription

213,432

78 %


256,371

79 %


(42,939)

(17) %


520,998

80 %


511,299

80 %


9,699

2 %

Perpetual license

2,266

1 %


12,596

4 %


(10,330)

(82) %


9,706

1 %


18,048

3 %


(8,342)

(46) %

Consulting

58,639

21 %


56,735

17 %


1,904

3 %


119,940

19 %


109,854

17 %


10,086

9 %


$   274,337

100 %


$   325,702

100 %


$    (51,365)

(16) %


$   650,644

100 %


$   639,201

100 %


$     11,443

2 %



(1) 

See the Schedules at the end of this release for additional information, including a reconciliation of our non-GAAP and GAAP measures

 

1 Pega Q2 2022 ACV (in millions)

2 Pega Q2 2022 backlog growth (in millions)

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EDT on Wednesday, July 27, 2022. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-888-394-8218 (domestic), 1-323-794-2588 (international), or via webcast (https://viavid.webcasts.com/starthere.jsp?ei=1558139&tp_key=0cc6605362) 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

We believe that non-GAAP financial measures help investors understand our core operating results and prospects, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. The supplementary non-GAAP financial measures are not meant to be superior to or a substitute for financial measures prepared under U.S. GAAP.

Reconciliations of our non-GAAP and GAAP measures are at the end of this release.

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, projects, forecasts, guidance, likely, and usually, or variations of such words and other similar expressions identify forward-looking statements, which 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:

  • our future financial performance and business plans;
  • the adequacy of our liquidity and capital resources;
  • the continued payment of our quarterly dividends;
  • the timing of revenue recognition;
  • management of our transition to a more subscription-based business model;
  • variation in demand for our products and services, including among clients in the public sector;
  • reliance on key personnel;
  • global economic and political conditions and uncertainty, including continued impacts from the ongoing COVID-19 pandemic and the war in Ukraine;
  • reliance on third-party service providers, including hosting providers;
  • compliance with our debt obligations and covenants;
  • the potential impact of our convertible senior notes and Capped Call Transactions;
  • foreign currency exchange rates;
  • the potential legal and financial liabilities and damage to our reputation due to cyber-attacks;
  • • security breaches and security flaws;
  • our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
  • our client retention rate; and
  • management of our growth.

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, 2021, Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and other filings we make with the U.S. Securities and Exchange Commission ("SEC").

Except as required by applicable law, we do not undertake and expressly disclaim any obligation to update or revise these forward-looking statements publicly, whether due to new information, future events, or otherwise.

The forward-looking statements in this press release represent our views as of July 27, 2022.

About Pegasystems

Pega provides a powerful low-code platform that builds agility into the world's leading organizations so they can adapt to change. Clients use our AI-powered 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 Pegasystems (NASDAQ: PEGA), visit www.pega.com.

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

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,


2022


2021


2022


2021

Revenue








Subscription services

$             171,832


$             152,075


$             341,865


$             295,494

Subscription license

41,600


104,296


179,133


215,805

Perpetual license

2,266


12,596


9,706


18,048

Consulting

58,639


56,735


119,940


109,854

Total revenue

274,337


325,702


650,644


639,201

Cost of revenue








Subscription services

36,533


29,046


68,563


57,389

Subscription license

673


585


1,295


1,205

Perpetual license

36


71


70


101

Consulting

57,873


54,829


113,384


108,283

Total cost of revenue

95,115


84,531


183,312


166,978

Gross profit

179,222


241,171


467,332


472,223

Operating expenses








Selling and marketing

157,198


156,423


319,434


305,162

Research and development

74,341


64,395


145,831


126,837

General and administrative

32,723


19,161


68,487


37,431

Total operating expenses

264,262


239,979


533,752


469,430

(Loss) income from operations

(85,040)


1,192


(66,420)


2,793

Foreign currency transaction gain (loss)

1,713


(403)


4,589


(5,501)

Interest income

309


236


516


389

Interest expense

(1,944)


(1,959)


(3,890)


(3,839)

(Loss) income on capped call transactions

(18,945)


26,309


(49,505)


7,192

Other income, net

3,785



6,526


106

(Loss) income before provision for (benefit from) income taxes

(100,122)


25,375


(108,184)


1,140

Provision for (benefit from) income taxes

186,174


(11,916)


178,491


(29,534)

Net (loss) income

$            (286,296)


$               37,291


$            (286,675)


$               30,674

(Loss) earnings per share








Basic

$                  (3.50)


$                   0.46


$                  (3.51)


$                   0.38

Diluted

$                  (3.50)


$                   0.43


$                  (3.51)


$                   0.36

Weighted-average number of common shares outstanding








Basic

81,847


81,316


81,764


81,161

Diluted

81,847


90,320


81,764


86,006

 

PEGASYSTEMS INC.
UNAUDITED RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES


(in thousands, except percentages and per share amounts)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

Change

2022

2021

Change

Net (loss) income - GAAP

$       (286,296)

$      37,291

*

$       (286,675)

$      30,674

*

Stock-based compensation (1)

31,300

30,688


59,527

60,788


Capped call transactions

18,945

(26,309)


49,505

(7,192)


Litigation

10,582

2,369


27,950

4,329


Convertible senior notes

720

675


1,439

1,348


Headquarters lease

(6,266)


(9,683)


Amortization of intangible assets

1,025

1,002


1,997

2,004


Foreign currency transaction (gain) loss

(1,713)

403


(4,589)

5,501


Other

(1,001)


(3,583)

12


Income tax effects (2)

195,032

(18,061)


173,197

(42,348)


Net (loss) income - non-GAAP

$          (31,406)

$       21,792

*

$           18,768

$       45,433

(59) %








Diluted (loss) earnings per share - GAAP

$             (3.50)

$           0.43

*

$             (3.51)

$           0.36

*

non-GAAP adjustments

3.12

(0.18)


3.73

0.17


Diluted (loss) earnings per share - non-GAAP

$              (0.38)

$           0.25

*

$               0.22

$           0.53

(58) %








Diluted weighted-average number of common shares
outstanding - GAAP

81,847

90,320

(9) %

81,764

86,006

(5) %

non-GAAP Adjustments

(4,443)


2,063


Diluted weighted-average number of common shares
outstanding - non-GAAP

81,847

85,877

(5) %

83,827

86,006

(3) %


* not meaningful

 

Our non-GAAP financial measures reflect the following adjustments:

  • Stock-based compensation: We have excluded stock-based compensation 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 our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance excluding stock-based compensation.
  • Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance. In addition, we reflect the effect of the capped call transactions on the weighted-average number of common shares outstanding in our non-GAAP financial measures as we believe it provides investors with useful information when evaluating our financial performance on a per-share basis.
  • Litigation: Includes legal fees and related expenses arising from proceedings outside of the ordinary course of business. We believe excluding these expenses from our non-GAAP financial measures is useful to investors as the disputes giving rise to them are not representative of our core business operations and ongoing operating performance.
  • Convertible senior notes: In February 2020, we issued convertible senior notes with an aggregate principal amount of $600 million, due March 1, 2025, in a private placement. We believe excluding the amortization of debt discounts and issuance costs provides a useful comparison of our operational performance in different periods.
  • Headquarters lease: In February 2021, we agreed to accelerate our exit from our then Cambridge, Massachusetts headquarters to October 1, 2021, in exchange for a one-time payment from our landlord of $18 million, which was received in October 2021. We believe excluding the impact from our non-GAAP financial measures is useful to investors as the modified lease, including the $18 million payment, is not representative of our core business operations and ongoing operating performance.
  • Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods.
  • Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods.
  • Other: We have excluded gains and losses from our venture investments, capital advisory expenses, and incremental expenses incurred integrating acquisitions and evaluating potential acquisitions. In addition, incremental fees were incurred in the three and six months ended June 30, 2021 due to the cancellation of in-person sales and marketing events due to the COVID-19 pandemic. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance.

 

(1) Stock-based compensation:



Three Months Ended

June 30,


Six Months Ended

June 30,

(in thousands)

2022


2021


2022


2021

Cost of revenue

$                      6,579


$                      5,849


$                    12,957


$                  11,774

Selling and marketing

12,633


14,748


23,591


28,468

Research and development

7,355


6,343


14,701


13,113

General and administrative

4,733


3,748


8,278


7,433


$                    31,300


$                    30,688


$                    59,527


$                  60,788

Income tax benefit

$                        (543)


$                     (6,192)


$                        (905)


$                 (12,183)

 

(2) Effective income tax rates:



Six Months Ended

June 30,


2022


2021

GAAP

165 %


(2,591) %

non-GAAP

22 %


22 %

Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including excess tax benefits generated by our stock-based compensation plans, gains and losses on our capped call transactions, tax credits for stock-based compensation awards to research and development employees, and unfavorable foreign stock-based compensation adjustments. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including our historical and forecasted earnings by jurisdiction, discrete items, and our ability to realize tax assets. Under GAAP we recorded a valuation allowance on our deferred tax assets of $192 million in the three months ended June 30, 2022. See "Note 12. Income Taxes" in Part I, Item 1 of our Quarterly Report on Form 10-Q for the three months ended June 30, 2022 for additional information. 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.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)



June 30, 2022


December 31, 2021

Assets




Current assets:




Cash and cash equivalents

$                         109,275


$                        159,965

Marketable securities

187,613


202,814

Total cash, cash equivalents, and marketable securities

296,888


362,779

Accounts receivable

171,556


182,717

Unbilled receivables

201,130


226,714

Other current assets

70,633


68,008

Total current assets

740,207


840,218

Unbilled receivables

115,901


129,789

Goodwill

81,717


81,923

Other long-term assets

320,557


541,601

Total assets

$                      1,258,382


$                     1,593,531

Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$                           21,465


$                          15,281

Accrued expenses

63,120


63,890

Accrued compensation and related expenses

73,945


120,946

Deferred revenue

269,121


275,844

Other current liabilities

7,800


9,443

Total current liabilities

435,451


485,404

Convertible senior notes, net

592,161


590,722

Operating lease liabilities

84,170


87,818

Other long-term liabilities

12,821


13,499

Total liabilities

1,124,603


1,177,443

Total stockholders' equity

133,779


416,088

Total liabilities and stockholders' equity

$                      1,258,382


$                     1,593,531

 

PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)



Six Months Ended

June 30,


2022


2021

Net (loss) income

$                        (286,675)


$                          30,674

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities




Non-cash items

314,231


76,906

Change in operating assets and liabilities, net

(32,625)


(88,170)

Cash (used in) provided by operating activities

(5,069)


19,410

Cash (used in) provided by investing activities

(1,523)


10,493

Cash (used in) financing activities

(41,191)


(60,717)

Effect of exchange rate changes on cash and cash equivalents

(2,907)


(1,207)

Net (decrease) in cash and cash equivalents

(50,690)


(32,021)

Cash and cash equivalents, beginning of period

159,965


171,899

Cash and cash equivalents, end of period

$                         109,275


$                        139,878

 

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 for subscription license and Pega Cloud
contracts. Maintenance revenue for the quarter then ended is multiplied by four to calculate ACV for maintenance. ACV is
a performance measure that we believe provides useful information to our management and investors, particularly during
our subscription transition.



June 30, 2022


June 30, 2021


Change

Pega Cloud

$                      404,109


$                      306,919


$                        97,190

32 %

Maintenance

313,304


315,128


(1,824)

(1) %

Subscription services

717,413


622,047


95,366

15 %

Subscription license

310,139


277,388


32,751

12 %


$                    1,027,552


$                      899,435


$                      128,117

14 %

 

PEGASYSTEMS INC.
BACKLOG
(in thousands, except percentages)


Remaining performance obligations ("Backlog") - Expected future revenue from existing non-cancellable contracts:

As of June 30, 2022:



Subscription services


Subscription license


Perpetual license


Consulting


Total

Maintenance


Pega Cloud





1 year or less

$          204,974


$          320,102


$            46,810


$              6,681


$            32,159


$          610,726

54 %

1-2 years

57,862


200,135


10,711


4,505


7,919


281,132

25 %

2-3 years

28,403


96,861


2,126


2,252


2,574


132,216

12 %

Greater than 3 years

18,447


81,069


1,680



424


101,620

9 %


$          309,686


$          698,167


$            61,327


$            13,438


$            43,076


$       1,125,694

100 %

% of Total

28 %


62 %


5 %


1 %


4 %


100 %


Change since June 30, 2021













$           (26,763)


$            95,432


$             (1,691)


$              6,497


$            21,083


$            94,558



(8) %


16 %


(3) %


94 %


96 %


9 %


 

As of June 30, 2021:



Subscription services


Subscription license


Perpetual license


Consulting


Total

Maintenance


Pega Cloud





1 year or less

$          214,645


$          281,793


$            46,146


$              6,707


$            17,863


$          567,154

56 %

1-2 years

59,164


194,841


15,708


234


2,675


272,622

26 %

2-3 years

36,076


88,855


909



762


126,602

12 %

Greater than 3 years

26,564


37,246


255



693


64,758

6 %


$          336,449


$          602,735


$            63,018


$              6,941


$            21,993


$       1,031,136

100 %

% of Total

33 %


58 %


6 %


1 %


2 %


100 %


 

RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG


(in millions)

Q2 2022


1 Year Growth Rate

Backlog - GAAP

$                         1,126


9 %

Impact of changes in foreign exchange rates

57


6 %

Backlog - Constant Currency

$                         1,183


15 %

 

Note: Constant currency Backlog is calculated by applying foreign exchange rates for the earliest period shown to all periods. The above constant currency measures reflect foreign exchange rates applicable as of Q2 2021.

The corporate logo for Pega (PRNewsfoto/Pegasystems Inc.)

Cision View original content to obtain multimedia:https://www.prnewswire.com/news-releases/client-adoption-drives-pega-cloud-to-70-of-new-client-commitments-in-first-half-of-2022-301594707.html

SOURCE Pegasystems Inc.

Wed, 27 Jul 2022 08:30:00 -0500 en text/html https://www.morningstar.com/news/pr-newswire/20220727ne28701/client-adoption-drives-pega-cloud-to-70-of-new-client-commitments-in-first-half-of-2022
Killexams : Client Adoption Drives Pega Cloud to 70% of New Client Commitments in First Half of 2022
  • Total revenue increases to $651 million in first six months of 2022
  • Annual contract value grows 14 percent (19 percent in constant currency)
  • Total backlog of $1.1 billion as of June 30, 2022

CAMBRIDGE, Mass., July 27, 2022 /PRNewswire/ -- Pegasystems Inc. (NASDAQ: PEGA), the low-code platform provider that builds agility into the world's leading organizations, released its financial results for the second quarter of 2022.

"This year has turned out to be an extremely volatile business environment," said Alan Trefler, founder and CEO, Pegasystems. "The ongoing uncertainty will continue to put pressure on our clients. But this is an environment for which Pega is uniquely suited, as our low-code platform allows these same organizations to more easily adapt to change."

"In the first half of 2022, we've grown annual contract value ("ACV") 19 percent year-over-year in constant currency while showing additional signs of improving profitability," said Ken Stillwell, COO and CFO, Pegasystems. "We're doubling down on our work to become a Rule of 40 company in 2024."

Financial and performance metrics (1)


(Dollars in thousands,

except per share amounts)

Three Months Ended

June 30,




Six Months Ended

June 30,



2022


2021


Change


2022


2021


Change

Total revenue

$ 274,337


$ 325,702


(16) %


$ 650,644


$ 639,201


2 %

Net (loss) income - GAAP

$ (286,296)


$ 37,291


*


$ (286,675)


$ 30,674


*

Net (loss) income - non-GAAP

$ (31,406)


$ 21,792


*


$ 18,768


$ 45,433


(59) %

Diluted (loss) earnings per share - GAAP

$ (3.50)


$ 0.43


*


$ (3.51)


$ 0.36


*

Diluted (loss) earnings per share - non-GAAP

$ (0.38)


$ 0.25


*


$ 0.22


$ 0.53


(58) %

(Dollars in thousands)

Three Months Ended

June 30,


Change


Six Months Ended

June 30,


Change

2022


2021



2022


2021


Pega Cloud

$ 93,506

34 %


$ 73,293

23 %


$ 20,213

28 %


$ 183,823

28 %


$ 141,151

22 %


$ 42,672

30 %

Maintenance

78,326

29 %


78,782

24 %


(456)

(1) %


158,042

24 %


154,343

24 %


3,699

2 %

Subscription services

171,832

63 %


152,075

47 %


19,757

13 %


341,865

52 %


295,494

46 %


46,371

16 %

Subscription license

41,600

15 %


104,296

32 %


(62,696)

(60) %


179,133

28 %


215,805

34 %


(36,672)

(17) %

Subscription

213,432

78 %


256,371

79 %


(42,939)

(17) %


520,998

80 %


511,299

80 %


9,699

2 %

Perpetual license

2,266

1 %


12,596

4 %


(10,330)

(82) %


9,706

1 %


18,048

3 %


(8,342)

(46) %

Consulting

58,639

21 %


56,735

17 %


1,904

3 %


119,940

19 %


109,854

17 %


10,086

9 %


$ 274,337

100 %


$ 325,702

100 %


$ (51,365)

(16) %


$ 650,644

100 %


$ 639,201

100 %


$ 11,443

2 %



(1)

See the Schedules at the end of this release for additional information, including a reconciliation of our non-GAAP and GAAP measures

1 Pega Q2 2022 ACV (in millions)

2 Pega Q2 2022 backlog growth (in millions)

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EDT on Wednesday, July 27, 2022. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-888-394-8218 (domestic), 1-323-794-2588 (international), or via webcast (https://viavid.webcasts.com/starthere.jsp?ei=1558139&tp_key=0cc6605362) 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

We believe that non-GAAP financial measures help investors understand our core operating results and prospects, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. The supplementary non-GAAP financial measures are not meant to be superior to or a substitute for financial measures prepared under U.S. GAAP.

Reconciliations of our non-GAAP and GAAP measures are at the end of this release.

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, projects, forecasts, guidance, likely, and usually, or variations of such words and other similar expressions identify forward-looking statements, which 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:

  • our future financial performance and business plans;
  • the adequacy of our liquidity and capital resources;
  • the continued payment of our quarterly dividends;
  • the timing of revenue recognition;
  • management of our transition to a more subscription-based business model;
  • variation in demand for our products and services, including among clients in the public sector;
  • reliance on key personnel;
  • global economic and political conditions and uncertainty, including continued impacts from the ongoing COVID-19 pandemic and the war in Ukraine;
  • reliance on third-party service providers, including hosting providers;
  • compliance with our debt obligations and covenants;
  • the potential impact of our convertible senior notes and Capped Call Transactions;
  • foreign currency exchange rates;
  • the potential legal and financial liabilities and damage to our reputation due to cyber-attacks;
  • • security breaches and security flaws;
  • our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
  • our client retention rate; and
  • management of our growth.

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, 2021, Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and other filings we make with the U.S. Securities and Exchange Commission ("SEC").

Except as required by applicable law, we do not undertake and expressly disclaim any obligation to update or revise these forward-looking statements publicly, whether due to new information, future events, or otherwise.

The forward-looking statements in this press release represent our views as of July 27, 2022.

About Pegasystems

Pega provides a powerful low-code platform that builds agility into the world's leading organizations so they can adapt to change. Clients use our AI-powered 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 Pegasystems (NASDAQ: PEGA), visit www.pega.com.

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

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,


2022


2021


2022


2021

Revenue








Subscription services

$ 171,832


$ 152,075


$ 341,865


$ 295,494

Subscription license

41,600


104,296


179,133


215,805

Perpetual license

2,266


12,596


9,706


18,048

Consulting

58,639


56,735


119,940


109,854

Total revenue

274,337


325,702


650,644


639,201

Cost of revenue








Subscription services

36,533


29,046


68,563


57,389

Subscription license

673


585


1,295


1,205

Perpetual license

36


71


70


101

Consulting

57,873


54,829


113,384


108,283

Total cost of revenue

95,115


84,531


183,312


166,978

Gross profit

179,222


241,171


467,332


472,223

Operating expenses








Selling and marketing

157,198


156,423


319,434


305,162

Research and development

74,341


64,395


145,831


126,837

General and administrative

32,723


19,161


68,487


37,431

Total operating expenses

264,262


239,979


533,752


469,430

(Loss) income from operations

(85,040)


1,192


(66,420)


2,793

Foreign currency transaction gain (loss)

1,713


(403)


4,589


(5,501)

Interest income

309


236


516


389

Interest expense

(1,944)


(1,959)


(3,890)


(3,839)

(Loss) income on capped call transactions

(18,945)


26,309


(49,505)


7,192

Other income, net

3,785



6,526


106

(Loss) income before provision for (benefit from) income taxes

(100,122)


25,375


(108,184)


1,140

Provision for (benefit from) income taxes

186,174


(11,916)


178,491


(29,534)

Net (loss) income

$ (286,296)


$ 37,291


$ (286,675)


$ 30,674

(Loss) earnings per share








Basic

$ (3.50)


$ 0.46


$ (3.51)


$ 0.38

Diluted

$ (3.50)


$ 0.43


$ (3.51)


$ 0.36

Weighted-average number of common shares outstanding








Basic

81,847


81,316


81,764


81,161

Diluted

81,847


90,320


81,764


86,006

PEGASYSTEMS INC.
UNAUDITED RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES


(in thousands, except percentages and per share amounts)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

Change

2022

2021

Change

Net (loss) income - GAAP

$ (286,296)

$ 37,291

*

$ (286,675)

$ 30,674

*

Stock-based compensation (1)

31,300

30,688


59,527

60,788


Capped call transactions

18,945

(26,309)


49,505

(7,192)


Litigation

10,582

2,369


27,950

4,329


Convertible senior notes

720

675


1,439

1,348


Headquarters lease

(6,266)


(9,683)


Amortization of intangible assets

1,025

1,002


1,997

2,004


Foreign currency transaction (gain) loss

(1,713)

403


(4,589)

5,501


Other

(1,001)


(3,583)

12


Income tax effects (2)

195,032

(18,061)


173,197

(42,348)


Net (loss) income - non-GAAP

$ (31,406)

$ 21,792

*

$ 18,768

$ 45,433

(59) %








Diluted (loss) earnings per share - GAAP

$ (3.50)

$ 0.43

*

$ (3.51)

$ 0.36

*

non-GAAP adjustments

3.12

(0.18)


3.73

0.17


Diluted (loss) earnings per share - non-GAAP

$ (0.38)

$ 0.25

*

$ 0.22

$ 0.53

(58) %








Diluted weighted-average number of common shares
outstanding - GAAP

81,847

90,320

(9) %

81,764

86,006

(5) %

non-GAAP Adjustments

(4,443)


2,063


Diluted weighted-average number of common shares
outstanding - non-GAAP

81,847

85,877

(5) %

83,827

86,006

(3) %


* not meaningful

Our non-GAAP financial measures reflect the following adjustments:

  • Stock-based compensation: We have excluded stock-based compensation 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 our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance excluding stock-based compensation.
  • Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance. In addition, we reflect the effect of the capped call transactions on the weighted-average number of common shares outstanding in our non-GAAP financial measures as we believe it provides investors with useful information when evaluating our financial performance on a per-share basis.
  • Litigation: Includes legal fees and related expenses arising from proceedings outside of the ordinary course of business. We believe excluding these expenses from our non-GAAP financial measures is useful to investors as the disputes giving rise to them are not representative of our core business operations and ongoing operating performance.
  • Convertible senior notes: In February 2020, we issued convertible senior notes with an aggregate principal amount of $600 million, due March 1, 2025, in a private placement. We believe excluding the amortization of debt discounts and issuance costs provides a useful comparison of our operational performance in different periods.
  • Headquarters lease: In February 2021, we agreed to accelerate our exit from our then Cambridge, Massachusetts headquarters to October 1, 2021, in exchange for a one-time payment from our landlord of $18 million, which was received in October 2021. We believe excluding the impact from our non-GAAP financial measures is useful to investors as the modified lease, including the $18 million payment, is not representative of our core business operations and ongoing operating performance.
  • Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods.
  • Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods.
  • Other: We have excluded gains and losses from our venture investments, capital advisory expenses, and incremental expenses incurred integrating acquisitions and evaluating potential acquisitions. In addition, incremental fees were incurred in the three and six months ended June 30, 2021 due to the cancellation of in-person sales and marketing events due to the COVID-19 pandemic. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operating performance.

(1) Stock-based compensation:



Three Months Ended

June 30,


Six Months Ended

June 30,

(in thousands)

2022


2021


2022


2021

Cost of revenue

$ 6,579


$ 5,849


$ 12,957


$ 11,774

Selling and marketing

12,633


14,748


23,591


28,468

Research and development

7,355


6,343


14,701


13,113

General and administrative

4,733


3,748


8,278


7,433


$ 31,300


$ 30,688


$ 59,527


$ 60,788

Income tax benefit

$ (543)


$ (6,192)


$ (905)


$ (12,183)

(2) Effective income tax rates:



Six Months Ended

June 30,


2022


2021

GAAP

165 %


(2,591) %

non-GAAP

22 %


22 %

Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including excess tax benefits generated by our stock-based compensation plans, gains and losses on our capped call transactions, tax credits for stock-based compensation awards to research and development employees, and unfavorable foreign stock-based compensation adjustments. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including our historical and forecasted earnings by jurisdiction, discrete items, and our ability to realize tax assets. Under GAAP we recorded a valuation allowance on our deferred tax assets of $192 million in the three months ended June 30, 2022. See "Note 12. Income Taxes" in Part I, Item 1 of our Quarterly Report on Form 10-Q for the three months ended June 30, 2022 for additional information. 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.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)



June 30, 2022


December 31, 2021

Assets




Current assets:




Cash and cash equivalents

$ 109,275


$ 159,965

Marketable securities

187,613


202,814

Total cash, cash equivalents, and marketable securities

296,888


362,779

Accounts receivable

171,556


182,717

Unbilled receivables

201,130


226,714

Other current assets

70,633


68,008

Total current assets

740,207


840,218

Unbilled receivables

115,901


129,789

Goodwill

81,717


81,923

Other long-term assets

320,557


541,601

Total assets

$ 1,258,382


$ 1,593,531

Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$ 21,465


$ 15,281

Accrued expenses

63,120


63,890

Accrued compensation and related expenses

73,945


120,946

Deferred revenue

269,121


275,844

Other current liabilities

7,800


9,443

Total current liabilities

435,451


485,404

Convertible senior notes, net

592,161


590,722

Operating lease liabilities

84,170


87,818

Other long-term liabilities

12,821


13,499

Total liabilities

1,124,603


1,177,443

Total stockholders' equity

133,779


416,088

Total liabilities and stockholders' equity

$ 1,258,382


$ 1,593,531

PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)



Six Months Ended

June 30,


2022


2021

Net (loss) income

$ (286,675)


$ 30,674

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities




Non-cash items

314,231


76,906

Change in operating assets and liabilities, net

(32,625)


(88,170)

Cash (used in) provided by operating activities

(5,069)


19,410

Cash (used in) provided by investing activities

(1,523)


10,493

Cash (used in) financing activities

(41,191)


(60,717)

Effect of exchange rate changes on cash and cash equivalents

(2,907)


(1,207)

Net (decrease) in cash and cash equivalents

(50,690)


(32,021)

Cash and cash equivalents, beginning of period

159,965


171,899

Cash and cash equivalents, end of period

$ 109,275


$ 139,878

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 for subscription license and Pega Cloud
contracts. Maintenance revenue for the quarter then ended is multiplied by four to calculate ACV for maintenance. ACV is
a performance measure that we believe provides useful information to our management and investors, particularly during
our subscription transition.



June 30, 2022


June 30, 2021


Change

Pega Cloud

$ 404,109


$ 306,919


$ 97,190

32 %

Maintenance

313,304


315,128


(1,824)

(1) %

Subscription services

717,413


622,047


95,366

15 %

Subscription license

310,139


277,388


32,751

12 %


$ 1,027,552


$ 899,435


$ 128,117

14 %

PEGASYSTEMS INC.
BACKLOG
(in thousands, except percentages)


Remaining performance obligations ("Backlog") - Expected future revenue from existing non-cancellable contracts:

As of June 30, 2022:



Subscription services


Subscription license


Perpetual license


Consulting


Total

Maintenance


Pega Cloud





1 year or less

$ 204,974


$ 320,102


$ 46,810


$ 6,681


$ 32,159


$ 610,726

54 %

1-2 years

57,862


200,135


10,711


4,505


7,919


281,132

25 %

2-3 years

28,403


96,861


2,126


2,252


2,574


132,216

12 %

Greater than 3 years

18,447


81,069


1,680



424


101,620

9 %


$ 309,686


$ 698,167


$ 61,327


$ 13,438


$ 43,076


$ 1,125,694

100 %

% of Total

28 %


62 %


5 %


1 %


4 %


100 %


Change since June 30, 2021













$ (26,763)


$ 95,432


$ (1,691)


$ 6,497


$ 21,083


$ 94,558



(8) %


16 %


(3) %


94 %


96 %


9 %


As of June 30, 2021:



Subscription services


Subscription license


Perpetual license


Consulting


Total

Maintenance


Pega Cloud





1 year or less

$ 214,645


$ 281,793


$ 46,146


$ 6,707


$ 17,863


$ 567,154

56 %

1-2 years

59,164


194,841


15,708


234


2,675


272,622

26 %

2-3 years

36,076


88,855


909



762


126,602

12 %

Greater than 3 years

26,564


37,246


255



693


64,758

6 %


$ 336,449


$ 602,735


$ 63,018


$ 6,941


$ 21,993


$ 1,031,136

100 %

% of Total

33 %


58 %


6 %


1 %


2 %


100 %


RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG


(in millions)

Q2 2022


1 Year Growth Rate

Backlog - GAAP

$ 1,126


9 %

Impact of changes in foreign exchange rates

57


6 %

Backlog - Constant Currency

$ 1,183


15 %

Note: Constant currency Backlog is calculated by applying foreign exchange rates for the earliest period shown to all periods. The above constant currency measures reflect foreign exchange rates applicable as of Q2 2021.

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