0001193125-18-320872.txt : 20181107 0001193125-18-320872.hdr.sgml : 20181107 20181107160207 ACCESSION NUMBER: 0001193125-18-320872 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20181107 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20181107 DATE AS OF CHANGE: 20181107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEGASYSTEMS INC CENTRAL INDEX KEY: 0001013857 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 042787865 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11859 FILM NUMBER: 181166196 BUSINESS ADDRESS: STREET 1: ONE ROGERS STREET CITY: CAMBRIDGE STATE: MA ZIP: 02142-1209 BUSINESS PHONE: 6173749600 MAIL ADDRESS: STREET 1: ONE ROGERS STREET CITY: CAMBRIDGE STATE: MA ZIP: 02142-1209 8-K 1 d610138d8k.htm 8-K 8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2018

 

 

PEGASYSTEMS INC.

(Exact name of registrant as specified in its charter)

 

 

Commission File Number: 1-11859

 

Massachusetts   04-2787865
(State or other jurisdiction of incorporation)   (IRS Employer Identification No.)

One Rogers Street, Cambridge, MA 02142

(Address of principal executive offices, including zip code)

617-374-9600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

☐       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 2.02

    Results of Operations and Financial Condition

On November 7, 2018, Pegasystems Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2018. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

    Financial Statements and Exhibits

 

 Exhibit No. 

  

Description

99.1   Press Release issued by Pegasystems Inc. on November 7, 2018

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    Pegasystems Inc.
Dated:  November 7, 2018     By:   /s/ KENNETH STILLWELL
      Kenneth Stillwell
      Chief Financial Officer and Chief Administrative Officer
      (Principal Financial Officer)
 EX-99.1 2 d610138dex991.htm EX-99.1 EX-99.1

EXHIBIT 99.1

 

LOGO

Strong Cloud Growth Drives Pega’s Third Quarter 2018 Results

 

  •  

Year to Date Cloud revenue of $58 million, 60% growth year over year

 

  •  

Total ACV of $536.8 million, 20% growth year over year

 

  •  

Term and Cloud ACV of $272.7 million, 36% growth year over year

CAMBRIDGE, Mass. — November 7, 2018 — Pegasystems Inc. (NASDAQ: PEGA), the software company empowering digital transformation at the world’s leading enterprises, today announced its financial results for the third quarter of 2018.

“I’m pleased with our year to date results, which demonstrate our strong business momentum,” said Alan Trefler, founder and CEO, Pegasystems. “These validate our ability to deliver the best solutions for digital transformation and show the value our differentiated solutions offer the market.”

“Our continued acceleration to subscription, specifically cloud, has driven ACV growth to $537 million,” said Ken Stillwell, CFO. “ACV is the key measure of the underlying business, as our reported revenue does not fully account for our growth.”

Financial Metrics(1)

 

 (Dollars in thousands, except per share

 amounts)

     

 Three Months Ended

September 30,

  

 

    

 Nine Months Ended

September 30,

  

 

  

 

 

    

 

 

  
   2018      2017     Change     2018      2017      Change  

 Total revenue

    $     203,263      $     190,957       6%     $     635,224      $     633,862        —%  

 Subscription revenue(2)

    $ 120,267      $ 115,703       4%     $ 382,485      $ 365,729        5%  

 Net (loss) income (GAAP)

    $ (7,587)      $ 1,288       *     $ (5,796)      $ 57,953        *  

 Net income (Non-GAAP)

    $ 3,192      $ 7,635       (58)%     $ 23,147      $ 65,973        (65)%  

 Diluted (loss) earnings per share (GAAP)

    $ (0.10)      $ 0.01       *     $ (0.07)      $ 0.70        *  

 Diluted earnings per share (Non-GAAP)

    $ 0.04      $ 0.09       (56)%     $ 0.28      $ 0.80        (65)%  

 

  *

not meaningful

 

  (1) 

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform. A reconciliation of our Non-GAAP measures to GAAP is contained in the financial schedules at the end of this release.

 

  (2)

Subscription revenue reflects client arrangements (term license, cloud, and maintenance) which may be subject to a renewal.

Revenue Streams(1)

 

(Dollars in

thousands)

     

 Three Months Ended

September 30,

  

 

     

 Nine Months Ended

September 30,

  

 

  

 

 

     

 

 

  
   2018      2017      Change      2018      2017      Change  

Term license

    $ 32,066        16%      $ 40,611        21%      $ (8,545)        (21)%      $ 128,070        20%      $ 149,573        24%      $ (21,503)        (14)%  

Cloud

      22,184        11%        13,280        7%        8,904        67 %        57,967        9%        36,207        6%        21,760        60 %  

Maintenance

      66,017        32%        61,812        33%        4,205        7 %        196,448        31%        179,949        28%        16,499        9 %  
  

 

 

     

 

 

           

 

 

     

 

 

        

  Subscription(2)

      120,267        59%        115,703        61%        4,564        4 %        382,485        60%        365,729        58%        16,756        5 %  

Perpetual license

      20,276        10%        12,623        7%        7,653        61 %        56,829        9%        81,819        13%        (24,990)        (31)%  

Consulting

      62,720        31%        62,631        32%        89        — %        195,910        31%        186,314        29%        9,596        5 %  
  

 

 

     

 

 

           

 

 

     

 

 

        

  Total revenue

    $ 203,263        100%      $ 190,957        100%      $ 12,306        6 %      $ 635,224        100%      $ 633,862        100%      $ 1,362        — %  
  

 

 

     

 

 

           

 

 

     

 

 

        

 

1

  (1) 

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform.

 

  (2) 

Subscription revenue reflects client arrangements (term license, cloud, and maintenance) which may be subject to a renewal.

Annual Contract Value (ACV) (1)

The change in ACV measures the growth and predictability of future cash flows from committed term, cloud, and maintenance arrangements as of the end of the particular reporting period.

 

LOGO

  (1)

ACV, as of a given date, is the sum of the following two components:

 

  •  

The sum of the annual value of each term and cloud contract in effect on such date, with the annual value of a term or cloud contract being equal to the total value of the contract divided by the total number of years of the contract.

 

  •  

Maintenance revenue reported for the quarter ended on such date, multiplied by four.

Remaining Performance Obligations (formerly reported as “committed not yet recognized revenue”)

Revenue for the remaining performance obligations on existing contracts is expected to be recognized as follows:

 

 (Dollars in thousands)    September 30, 2018  
    Perpetual license        Term license        Maintenance        Cloud        Consulting        Total   

 1 year or less

    $         25,343       $         44,283       $         140,591       $         88,529       $         14,107       $         312,853         60 % 

 1-2 years

      6,490         10,063         8,877         70,815         1,830         98,075         19 % 

 2-3 years

      360         1,598         2,586         54,646         449         59,639         11 % 

 Greater than 3 years

      1,306         218         1,079         49,110         50         51,763         10 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $         33,499       $         56,162       $         153,133       $      263,100       $         16,436       $         522,330         100 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EST on November 7, 2018.

Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-800-289-0438 (domestic), 1-323-794-2423 (international), or via webcast 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.

A replay of the call will also be available on www.pega.com/about/investors by clicking the earnings calls link in the investors section.

Discussion of non-GAAP financial measures

To supplement our financial results presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), the Company provides non-GAAP measures, including in this release. Pegasystems’ management utilizes a number of different

 

2

financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions, and for forecasting and planning for future periods. The Company’s annual financial plan is prepared on both a GAAP and non-GAAP basis, and both are approved by our board of directors. In addition, and as a consequence of the importance of these measures in managing the business, the Company uses non-GAAP measures and financial performance results in the evaluation process to establish management’s compensation.

The non-GAAP measures exclude the effects of certain business combination accounting entries, stock-based compensation expense, amortization of intangible assets, acquisition-related and restructuring expenses, certain other adjustments, and the related income tax effects. The Company believes these non-GAAP measures are helpful in understanding its past financial performance and its anticipated future results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP.

A reconciliation of the Company’s Non-GAAP measures to GAAP is included in the financial schedules at the end of this release.

Forward-looking statements

Certain statements contained in this press release may be construed as “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on current expectations, estimates, forecasts, and projections about the industry and markets in which we operate, and management’s beliefs and assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “strategy,” “is intended to,” “project,” “guidance,” “likely,” “usually,” or variations of such words and similar expressions are intended to identify such forward-looking statements.

These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. Important factors that could cause actual future activities and results to differ materially from those expressed in such forward-looking statements include, among others, variation in demand for our products and services; reliance on third party relationships; our beliefs and the timing of the completion of our analysis regarding the impact of the Tax Cuts and Jobs Act of 2017, including its impact on income tax expense and deferred tax assets; the inherent risks associated with international operations and the continued uncertainties in the global economy; our continued effort to market and sell both domestically and internationally; foreign currency exchange rates; the financial impact of any future acquisitions; the potential legal and financial liabilities and reputation damage due to cyber-attacks and security breaches; and management of our growth. These risks and other factors that could cause actual results to differ materially from those expressed in such forward-looking statements are described more completely in Part I of our Annual Report on Form 10-K for the year ended December 31, 2017, as well as other filings we make with the U.S. Securities and Exchange Commission (“SEC”). These documents are available on the Company’s website at www.pega.com/about/investors.

The forward-looking statements contained in this press release represent the Company’s views as of November 7, 2018. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the results 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 the result of new information, future events, or otherwise. The statements should therefore not be relied upon as representing the Company’s view as of any date subsequent to November 7, 2018.

 

3

About Pegasystems

Pegasystems Inc. is the leader in software for customer engagement and operational excellence. Pega’s adaptive, cloud-architected software - built on its unified Pega Platform™ - empowers people to rapidly deploy, and easily extend and change applications to meet strategic business needs. Over its 35-year history, Pega has delivered award-winning capabilities in CRM and digital process automation (DPA), powered by advanced artificial intelligence and robotic automation, to help the world’s leading brands achieve breakthrough business results. For more information on Pegasystems (NASDAQ: PEGA) visit www.pega.com.

Press Contact:

Lisa Pintchman

Pegasystems Inc.

lisa.pintchman@pega.com

617-866-6022

Twitter: @pega

Investor Contact:

Garo Toomajanian

ICR for Pegasystems

PegaInvestorRelations@pega.com

617-866-6077

All trademarks are the property of their respective owners.

 

4

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(1)

(in thousands, except per share amounts)

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2018      2017      2018      2017  

Revenue

            

Software license

    $           52,342      $           53,234      $           184,899      $           231,392  

Maintenance

      66,017        61,812        196,448        179,949  

Services

      84,904        75,911        253,877        222,521  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

      203,263        190,957        635,224        633,862  
  

 

 

     

 

 

     

 

 

     

 

 

  

Cost of revenue

            

Software license

      1,255        1,276        3,772        3,826  

Maintenance

      6,079        6,716        18,035        20,945  

Services

      67,089        61,739        202,047        180,925  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cost of revenue

      74,423        69,731        223,854        205,696  
  

 

 

     

 

 

     

 

 

     

 

 

  

Gross profit

      128,840        121,226        411,370        428,166  
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating expenses

            

Selling and marketing

      87,490        69,363        269,845        214,244  

Research and development

      46,504        41,031        135,261        121,089  

General and administrative

      12,104        13,133        38,749        38,174  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total operating expenses

      146,098        123,527        443,855        373,507  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income from operations

      (17,258)        (2,301)        (32,485)        54,659  
  

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currency transaction gain (loss)

      399        (5,052)        558        (6,549)  

Interest income, net

      683        140        2,076        547  

Other income, net

      —        —        363        287  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income before benefit from income taxes

      (16,176)        (7,213)        (29,488)        48,944  

Benefit from income taxes

      (8,589)        (8,501)        (23,692)        (9,009)  
  

 

 

     

 

 

     

 

 

     

 

 

  

Net (loss) income

    $ (7,587)      $ 1,288      $ (5,796)      $ 57,953  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share

            

Basic

    $ (0.10)      $ 0.01      $ (0.07)      $ 0.75  

Diluted

    $ (0.10)      $ 0.01      $ (0.07)      $ 0.70  

Weighted-average number of common shares outstanding

            

Basic

      78,700        77,691        78,525        77,258  

Diluted

      78,700        83,323        78,525        82,717  

Cash dividends declared per share

    $ 0.03      $ 0.03      $ 0.09      $ 0.09  

 

(1) 

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform.

 

5

PEGASYSTEMS INC.

UNAUDITED RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1)(2)

(in thousands, except percentages and per share amounts)

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2018      2017      Change      2018      2017      Change  

Total revenue (GAAP and Non-GAAP)

    $     203,263          $       190,957           6 %      $     635,224         $     633,862           — %  

            

                  

Gross profit (GAAP)

    $ 128,840         $ 121,226           6 %      $ 411,370         $ 428,166           (4)%  

Amortization of intangible assets

      1,232           1,232              3,695           3,871        

Stock-based compensation(3)

      4,319           3,613              12,277           10,913        
  

 

 

     

 

 

        

 

 

     

 

 

     

Gross profit (Non-GAAP)

    $ 134,391         $ 126,071           7 %      $ 427,342         $ 442,950           (4)%  
  

 

 

     

 

 

        

 

 

     

 

 

     
                 

(Loss) income from operations (GAAP)

    $ (17,258)        $ (2,301)          650 %      $ (32,485)        $ 54,659          *  

Amortization of intangible assets

      2,835           3,105              8,508           9,479        

Stock-based compensation(3)

      16,408           13,489              47,573           39,929        
  

 

 

     

 

 

        

 

 

     

 

 

     

Income from operations (Non-GAAP)

    $ 1,985         $ 14,293           (86)%      $ 23,596         $ 104,067           (77)%  
  

 

 

     

 

 

        

 

 

     

 

 

     

        

                  

Net (loss) income (GAAP)

    $ (7,587)        $ 1,288           *      $ (5,796)        $ 57,953          *  

Amortization of intangible assets

      2,835           3,105              8,508           9,479        

Stock-based compensation(3)

      16,408           13,489              47,573           39,929        

Income tax effects(4)

      (8,464)          (10,247)             (27,138)          (41,388)       
  

 

 

     

 

 

        

 

 

     

 

 

     

Net income (Non-GAAP)

    $ 3,192         $ 7,635           (58)%      $ 23,147         $ 65,973           (65)%  
  

 

 

     

 

 

        

 

 

     

 

 

     
                 

Diluted (loss) earnings per share (GAAP)

    $ (0.10)        $ 0.01           *      $ (0.07)        $ 0.70           *  

Amortization of intangible assets

      0.03           0.04              0.10           0.11        

Stock-based compensation(3)

      0.20           0.16              0.57           0.48        

Income tax effects(4)

      (0.09)          (0.12)             (0.32)          (0.49)     
  

 

 

     

 

 

        

 

 

     

 

 

     

Diluted earnings per share (Non-GAAP)

    $ 0.04         $ 0.09           (56)%      $ 0.28         $ 0.80           (65)%  
  

 

 

     

 

 

        

 

 

     

 

 

     
Diluted weighted-average number of common shares outstanding (GAAP)      78,700           83,323           (6)%        78,525           82,717           (5)%  

Incremental dilutive shares for non-GAAP

      4,521           —              4,714           —        
Diluted weighted average common shares outstanding (Non-GAAP)      83,221           83,323           — %        83,239           82,717           1 %  

 

*

not meaningful

 

(1)

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform.

 

(2)

Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures, and the material limitations on the usefulness of these measures, see “Discussion of non-GAAP financial measures” included earlier in this release and below.

 

  

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

 

  •  

Amortization of intangible assets: We have excluded the amortization expense of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues 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 expense from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such

 

6

 

compensation contributed to the revenues recognized during the periods presented and will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expense.

 

  •  

Incremental dilutive shares for non-GAAP: We have included in our non-GAAP results the dilutive impact of awards that are dilutive to our non-GAAP results. We have excluded from our GAAP results the impact of those same awards, as the impact of those awards is anti-dilutive to our GAAP results due to a GAAP net loss in the period.

 

(3) 

Stock-based compensation was as follows:

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(in thousands)    2018      2017      2018      2017  

Cost of revenues

    $ 4,319       $ 3,613       $ 12,277       $ 10,913   

Selling and marketing

      6,198         3,976         16,895         11,482   

Research and development

      3,917         3,420         11,356         10,306   

General and administrative

      1,974         2,480         7,045         7,228   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $           16,408       $           13,489       $           47,573       $           39,929   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax benefit

    $ (3,555)      $ (4,129)      $ (10,037)      $ (12,231)  

 

(4) 

Effective income tax rates were as follows:

 

                         Nine Months Ended                     
September 30,		  
     2018     2017  

GAAP

      80%       (18)%  

Non-GAAP

      13%       33%  

The difference between our GAAP and non-GAAP effective income tax rates for the nine months ended September 30, 2018 and 2017 primarily related to the impact of the following items on our GAAP effective income tax rate:

 

  •  

Excess tax benefits generated by our stock-based compensation plans;

 

  •  

Tax credits for stock-based compensation awards to research and development employees; and

 

  •  

Unfavorable foreign stock-based compensation adjustments.

 

7

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (1)

(in thousands)

 

     September 30, 2018      December 31, 2017  

Assets

      

Total cash, cash equivalents, and marketable securities

    $ 205,977       $ 223,748   

Total receivables (billed and unbilled)

      475,626         542,341   

Goodwill

      72,897         72,952   

Other assets

      208,143         172,526   
  

 

 

     

 

 

  

Total assets

    $                     962,643       $                     1,011,567   
  

 

 

     

 

 

  
     

Liabilities and stockholders’ equity

      

Accrued expenses, including compensation and related expenses

    $ 111,147       $ 111,548   

Short-term deferred revenue

      158,178         166,297   

Deferred income tax liabilities

      36,166         38,463   

Other liabilities

      36,297         41,022   

Stockholders’ equity

      620,855         654,237   
  

 

 

     

 

 

  

Total liabilities and stockholders’ equity

    $ 962,643       $ 1,011,567   
  

 

 

     

 

 

  

 

(1) 

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform.

PEGASYSTEMS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)

(in thousands)

 

     Nine Months Ended
September 30,		  
     2018      2017  

Operating activities:

      

Net (loss) income

    $ (5,796)      $ 57,953   

Adjustment to reconcile net (loss) income to cash provided by operating activities:

      

Change in operating assets and liabilities, net

      8,698         (15,455)  

Stock-based compensation expense

      47,573         39,929   

Amortization of intangible assets and depreciation

      18,692         18,703   

Other non-cash

      (2,079)        12,796   
  

 

 

     

 

 

  

Cash provided by operating activities

      67,088         113,926   

Cash used in investing activities

      (49,595)        (11,966)  

Cash used in financing activities

      (71,664)        (44,040)  

Effect of exchange rates on cash and cash equivalents

      (1,913)        2,054   
  

 

 

     

 

 

  

Net (decrease) increase in cash and cash equivalents

      (56,084)        59,974   

Cash and cash equivalents, beginning of period

      162,279         70,594   
  

 

 

     

 

 

  

Cash and cash equivalents, end of period

    $                   106,195       $                   130,568   
  

 

 

     

 

 

  

 

(1) 

On January 1, 2018, we adopted the ASC 606 revenue recognition standard and have adjusted prior periods to conform.

 

8

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