• | Total ACV up 22% to $693 million, powered by Pega Cloud Choice™ |
• | Pega Cloud Backlog up 41% to $422 million |
• | Pega Cloud Revenue up 62% to $134 million |
• | 2020 Guidance: Revenue $1.1 billion |
(Dollars in thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Total revenue | $ | 276,542 | $ | 256,357 | 8 | % | $ | 911,383 | $ | 891,581 | 2 | % | |||||||||
Subscription revenue (2) | $ | 189,486 | $ | 142,273 | 33 | % | $ | 613,759 | $ | 524,758 | 17 | % | |||||||||
Net income (loss) - GAAP | $ | 918 | $ | 16,413 | (94 | )% | $ | (90,433 | ) | $ | 10,617 | * | |||||||||
Net income (loss) - Non-GAAP | $ | 15,682 | $ | 26,480 | (41 | )% | $ | (35,082 | ) | $ | 46,006 | * | |||||||||
Diluted earnings (loss) per share - GAAP | $ | 0.01 | $ | 0.20 | (95 | )% | $ | (1.14 | ) | $ | 0.13 | * | |||||||||
Diluted earnings (loss) per share - Non-GAAP | $ | 0.19 | $ | 0.32 | (41 | )% | $ | (0.44 | ) | $ | 0.55 | * |
(Dollars in thousands) | Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||||||||||||||
Cloud | $ | 39,136 | 14 | % | $ | 24,660 | 10 | % | $ | 14,476 | 59 | % | $ | 133,746 | 15 | % | $ | 82,627 | 9 | % | $ | 51,119 | 62 | % | |||||||||||
Term license | 77,176 | 28 | % | 50,186 | 20 | % | 26,990 | 54 | % | 199,433 | 22 | % | 178,256 | 20 | % | 21,177 | 12 | % | |||||||||||||||||
Maintenance | 73,174 | 27 | % | 67,427 | 25 | % | 5,747 | 9 | % | 280,580 | 30 | % | 263,875 | 30 | % | 16,705 | 6 | % | |||||||||||||||||
Subscription | 189,486 | 69 | % | 142,273 | 55 | % | 47,213 | 33 | % | 613,759 | 67 | % | 524,758 | 59 | % | 89,001 | 17 | % | |||||||||||||||||
Perpetual license | 36,729 | 13 | % | 53,034 | 21 | % | (16,305 | ) | (31 | )% | 80,015 | 9 | % | 109,863 | 12 | % | (29,848 | ) | (27 | )% | |||||||||||||||
Consulting | 50,327 | 18 | % | 61,050 | 24 | % | (10,723 | ) | (18 | )% | 217,609 | 24 | % | 256,960 | 29 | % | (39,351 | ) | (15 | )% | |||||||||||||||
Total revenue | $ | 276,542 | 100 | % | $ | 256,357 | 100 | % | $ | 20,185 | 8 | % | $ | 911,383 | 100 | % | $ | 891,581 | 100 | % | $ | 19,802 | 2 | % |
December 31, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term license | Maintenance | Cloud | Consulting | Total | |||||||||||||||||||
1 year or less | $ | 2,305 | $ | 97,826 | $ | 206,882 | $ | 165,571 | $ | 20,798 | $ | 493,382 | 58 | % | |||||||||||
1-2 years | 2,179 | 12,014 | 30,291 | 128,109 | 1,439 | 174,032 | 21 | % | |||||||||||||||||
2-3 years | — | 3,132 | 17,844 | 84,788 | 132 | 105,896 | 13 | % | |||||||||||||||||
Greater than 3 years | — | 3,861 | 13,277 | 43,702 | 1,993 | 62,833 | 8 | % | |||||||||||||||||
$ | 4,484 | $ | 116,833 | $ | 268,294 | $ | 422,170 | $ | 24,362 | $ | 836,143 | 100 | % | ||||||||||||
Change in Backlog Since December 31, 2018 | |||||||||||||||||||||||||
$ | (14,185 | ) | $ | 32,453 | $ | 60,380 | $ | 123,353 | $ | 3,169 | $ | 205,170 | |||||||||||||
(76 | )% | 38 | % | 29 | % | 41 | % | 15 | % | 33 | % |
December 31, 2018 | |||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term license | Maintenance | Cloud | Consulting | Total | |||||||||||||||||||
1 year or less | $ | 14,665 | $ | 72,378 | $ | 192,274 | $ | 103,354 | $ | 17,235 | $ | 399,906 | 63 | % | |||||||||||
1-2 years | 2,343 | 10,355 | 10,436 | 80,214 | 2,810 | 106,158 | 17 | % | |||||||||||||||||
2-3 years | 1,661 | 1,414 | 3,644 | 61,906 | 940 | 69,565 | 11 | % | |||||||||||||||||
Greater than 3 years | — | 233 | 1,560 | 53,343 | 208 | 55,344 | 9 | % | |||||||||||||||||
$ | 18,669 | $ | 84,380 | $ | 207,914 | $ | 298,817 | $ | 21,193 | $ | 630,973 | 100 | % |
Year Ended December 31, 2020 | |||||||
(in millions, except per share amounts) | GAAP | Non-GAAP (1) | |||||
Revenue | $ | 1,100 | $ | 1,100 | |||
Net income (loss) | $ | (70.5 | ) | $ | 16.7 | ||
Diluted earnings (loss) per share | $ | (0.89 | ) | $ | 0.20 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
Software license | $ | 113,905 | $ | 103,220 | $ | 279,448 | $ | 288,119 | |||||||
Maintenance | 73,174 | 67,427 | 280,580 | 263,875 | |||||||||||
Services | 89,463 | 85,710 | 351,355 | 339,587 | |||||||||||
Total revenue | 276,542 | 256,357 | 911,383 | 891,581 | |||||||||||
Cost of revenue | |||||||||||||||
Software license | 674 | 1,397 | 3,656 | 5,169 | |||||||||||
Maintenance | 6,341 | 6,530 | 25,656 | 24,565 | |||||||||||
Services | 70,592 | 69,984 | 280,710 | 272,031 | |||||||||||
Total cost of revenue | 77,607 | 77,911 | 310,022 | 301,765 | |||||||||||
Gross profit | 198,935 | 178,446 | 601,361 | 589,816 | |||||||||||
Operating expenses | |||||||||||||||
Selling and marketing | 133,395 | 103,650 | 474,459 | 373,495 | |||||||||||
Research and development | 52,408 | 46,449 | 205,210 | 181,710 | |||||||||||
General and administrative | 14,877 | 12,894 | 56,570 | 51,643 | |||||||||||
Total operating expenses | 200,680 | 162,993 | 736,239 | 606,848 | |||||||||||
(Loss) income from operations | (1,745 | ) | 15,453 | (134,878 | ) | (17,032 | ) | ||||||||
Foreign currency transaction gain (loss) | 1,242 | 1,863 | (2,335 | ) | 2,421 | ||||||||||
Interest (loss) income, net | (15 | ) | 629 | 1,808 | 2,705 | ||||||||||
Other income, net | 181 | — | 559 | 363 | |||||||||||
(Loss) income before (benefit from) provision for income taxes | (337 | ) | 17,945 | (134,846 | ) | (11,543 | ) | ||||||||
(Benefit from) provision for income taxes | (1,255 | ) | 1,532 | (44,413 | ) | (22,160 | ) | ||||||||
Net income (loss) | $ | 918 | $ | 16,413 | $ | (90,433 | ) | $ | 10,617 | ||||||
Earnings (loss) per share | |||||||||||||||
Basic | $ | 0.01 | $ | 0.21 | $ | (1.14 | ) | $ | 0.14 | ||||||
Diluted | $ | 0.01 | $ | 0.20 | $ | (1.14 | ) | $ | 0.13 | ||||||
Weighted-average number of common shares outstanding | |||||||||||||||
Basic | 79,430 | 78,680 | 79,055 | 78,564 | |||||||||||
Diluted | 83,624 | 82,536 | 79,055 | 83,064 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Total revenue - GAAP and Non-GAAP | $ | 276,542 | $ | 256,357 | 8 | % | $ | 911,383 | $ | 891,581 | 2 | % | |||||||||
Net income (loss) - GAAP | $ | 918 | $ | 16,413 | (94 | )% | $ | (90,433 | ) | $ | 10,617 | * | |||||||||
Amortization of intangible assets | 1,018 | 2,935 | 6,625 | 11,443 | |||||||||||||||||
Stock-based compensation (2) | 20,666 | 16,289 | 80,909 | 63,862 | |||||||||||||||||
Foreign currency transaction (gain) loss | (1,242 | ) | (1,863 | ) | 2,335 | (2,421 | ) | ||||||||||||||
Income tax effects (3) | (5,678 | ) | (7,294 | ) | (34,518 | ) | (37,495 | ) | |||||||||||||
Net income (loss) - Non-GAAP | $ | 15,682 | $ | 26,480 | (41 | )% | $ | (35,082 | ) | $ | 46,006 | * | |||||||||
Diluted earnings (loss) per share - GAAP | $ | 0.01 | $ | 0.20 | (95 | )% | $ | (1.14 | ) | $ | 0.13 | * | |||||||||
Non-GAAP adjustments | 0.18 | 0.12 | 0.70 | 0.42 | |||||||||||||||||
Diluted earnings (loss) per share - Non-GAAP | $ | 0.19 | $ | 0.32 | (41 | )% | $ | (0.44 | ) | $ | 0.55 | * | |||||||||
Diluted weighted-average number of common shares outstanding - GAAP | 83,624 | 82,536 | 1 | % | 79,055 | 83,064 | (5 | )% | |||||||||||||
Incremental dilutive shares for Non-GAAP | — | — | — | — | |||||||||||||||||
Diluted weighted-average number of common shares outstanding - Non-GAAP | 83,624 | 82,536 | 1 | % | 79,055 | 83,064 | (5 | )% |
• | 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 our acquisitions. Investors should note that the use of intangible assets contributed to our revenues recognized during the periods presented and is expected to contribute to our future period revenues as well. Amortization of intangible assets is likely to recur in future periods. |
• | 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 period revenues, we continue to evaluate our business performance excluding stock-based compensation. |
• | 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 changes in foreign exchange market rates. Foreign currency transaction gains and losses will recur in future periods. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cost of revenues | $ | 4,605 | $ | 4,585 | $ | 18,822 | $ | 16,862 | |||||||
Selling and marketing | 8,610 | 6,342 | 32,665 | 23,237 | |||||||||||
Research and development | 4,948 | 3,919 | 18,938 | 15,274 | |||||||||||
General and administrative | 2,503 | 1,443 | 10,484 | 8,489 | |||||||||||
$ | 20,666 | $ | 16,289 | $ | 80,909 | $ | 63,862 | ||||||||
Income tax benefit | $ | (4,166 | ) | $ | (3,346 | ) | $ | (16,392 | ) | $ | (13,383 | ) |
Year Ended December 31, | |||||
2019 | 2018 | ||||
GAAP | 33 | % | 192 | % | |
Non-GAAP | 22 | % | 25 | % |
December 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Cash, cash equivalents, and marketable securities | $ | 68,363 | $ | 207,423 | |||
Receivables (billed and unbilled) | 501,675 | 504,765 | |||||
Goodwill | 79,039 | 72,858 | |||||
Other assets | 335,735 | 197,507 | |||||
Total assets | $ | 984,812 | $ | 982,553 | |||
Liabilities and stockholders’ equity | |||||||
Accrued expenses, including compensation and related expenses | $ | 152,127 | $ | 127,814 | |||
Deferred revenue, current | 190,080 | 185,145 | |||||
Other liabilities | 103,595 | 48,063 | |||||
Stockholders’ equity | 539,010 | 621,531 | |||||
Total liabilities and stockholders’ equity | $ | 984,812 | $ | 982,553 |
Year Ended December 31, | |||||||
2019 | 2018 | ||||||
Net (loss) income | $ | (90,433 | ) | $ | 10,617 | ||
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities | |||||||
Non-cash items | 99,251 | 73,027 | |||||
Change in operating assets and liabilities, net | (50,983 | ) | 20,712 | ||||
Cash (used in) provided by operating activities | (42,165 | ) | 104,356 | ||||
Cash provided by (used in) investing activities | 70,074 | (48,196 | ) | ||||
Cash (used in) financing activities | (74,258 | ) | (101,460 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 290 | (2,557 | ) | ||||
Net (decrease) in cash and cash equivalents | (46,059 | ) | (47,857 | ) | |||
Cash and cash equivalents, beginning of period | 114,422 | 162,279 | |||||
Cash and cash equivalents, end of period | $ | 68,363 | $ | 114,422 |
December 31, | Change | |||||||||||||||
2019 | 2018 | Reported | Constant currency | |||||||||||||
Maintenance | $ | 292,696 | $ | 269,708 | $ | 22,988 | 9 | % | 8 | % | ||||||
Term | 231,267 | 190,349 | 40,918 | 21 | % | 21 | % | |||||||||
Client Cloud | 523,963 | 460,057 | 63,906 | 14 | % | 14 | % | |||||||||
Pega Cloud | 169,329 | 109,973 | 59,356 | 54 | % | 54 | % | |||||||||
Total ACV | $ | 693,292 | $ | 570,030 | $ | 123,262 | 22 | % | 22 | % |
• | Client Cloud: the sum of (1) the annual value of each term license contract in effect on such date, which is equal to its total license value divided by the total number of years and (2) maintenance revenue reported for the quarter ended on such date, multiplied by four. We do not provide hosting services for Client Cloud arrangements. |
• | Pega Cloud: the sum of the annual value of each cloud contract in effect on such date, which is equal to its total value divided by the total number of years. |
Year Ended December 31, 2020 | |||
Revenue (GAAP and Non-GAAP) | $ | 1,100.0 | |
Net loss (GAAP) | $ | (70.5 | ) |
Amortization of intangible assets | 4.0 | ||
Stock-based compensation | 101.6 | ||
Income tax effects | (18.4 | ) | |
Net income (Non-GAAP) | $ | 16.7 | |
Diluted loss per share (GAAP) | $ | (0.89 | ) |
Non-GAAP adjustments | 1.09 | ||
Diluted income per share (Non-GAAP) | $ | 0.20 | |
Diluted weighted-average number of common shares outstanding - GAAP | 79.2 | ||
Incremental dilutive shares for Non-GAAP | 5.8 | ||
Diluted weighted-average number of common shares outstanding - Non-GAAP | 85.0 |