☒ | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Massachusetts | 04-2787865 | ||||||||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||||||||||||||||||||
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $.01 par value per share | PEGA | NASDAQ Global Select Market |
Large accelerated filer | x | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
Page | |||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. | |||||
Unaudited Condensed Consolidated Balance Sheets as of September 30, | |||||
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, | |||||
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) for the three and nine months ended September 30, | |||||
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, | |||||
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, | |||||
Notes to Unaudited Condensed Consolidated Financial Statements | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||||
Item 4. Controls and Procedures | |||||
PART II - OTHER INFORMATION | |||||
Item 1A. Risk Factors | |||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
Item | |||||
Signature |
September 30, 2020 | December 31, 2019 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 281,218 | $ | 68,363 | |||||||
Marketable securities | 186,810 | 0 | |||||||||
Total cash, cash equivalents, and marketable securities | 468,028 | 68,363 | |||||||||
Accounts receivable | 137,953 | 199,720 | |||||||||
Unbilled receivables | 208,823 | 180,219 | |||||||||
Other current assets | 89,406 | 57,308 | |||||||||
Total current assets | 904,210 | 505,610 | |||||||||
Unbilled receivables | 108,456 | 121,736 | |||||||||
Goodwill | 78,864 | 79,039 | |||||||||
Other long-term assets | 395,797 | 278,427 | |||||||||
Total assets | $ | 1,487,327 | $ | 984,812 | |||||||
Liabilities and stockholders�� equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 20,443 | $ | 17,475 | |||||||
Accrued expenses | 43,447 | 48,001 | |||||||||
Accrued compensation and related expenses | 90,836 | 104,126 | |||||||||
Deferred revenue | 181,680 | 190,080 | |||||||||
Other current liabilities | 19,916 | 18,273 | |||||||||
Total current liabilities | 356,322 | 377,955 | |||||||||
Convertible senior notes, net | 513,794 | 0 | |||||||||
Operating lease liabilities | 62,544 | 52,610 | |||||||||
Other long-term liabilities | 25,345 | 15,237 | |||||||||
Total liabilities | 958,005 | 445,802 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, 1,000 shares authorized; NaN issued | 0 | 0 | |||||||||
Common stock, 200,000 shares authorized; 80,697 and 79,599 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 807 | 796 | |||||||||
Additional paid-in capital | 201,882 | 140,523 | |||||||||
Retained earnings | 338,300 | 410,919 | |||||||||
Accumulated other comprehensive (loss) | (11,667) | (13,228) | |||||||||
Total stockholders’ equity | 529,322 | 539,010 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,487,327 | $ | 984,812 |
September 30, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 92,104 | $ | 114,422 | |||
Marketable securities | 20,465 | 93,001 | |||||
Total cash, cash equivalents, and marketable securities | 112,569 | 207,423 | |||||
Accounts receivable | 123,268 | 180,872 | |||||
Unbilled receivables | 172,090 | 172,656 | |||||
Other current assets | 58,204 | 49,684 | |||||
Total current assets | 466,131 | 610,635 | |||||
Long-term unbilled receivables | 123,962 | 151,237 | |||||
Goodwill | 78,862 | 72,858 | |||||
Other long-term assets | 248,069 | 147,823 | |||||
Total assets | $ | 917,024 | $ | 982,553 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 15,435 | $ | 16,487 | |||
Accrued expenses | 41,520 | 45,506 | |||||
Accrued compensation and related expenses | 88,349 | 84,671 | |||||
Deferred revenue | 159,849 | 185,145 | |||||
Other current liabilities | 15,742 | — | |||||
Total current liabilities | 320,895 | 331,809 | |||||
Operating lease liabilities | 56,904 | — | |||||
Other long-term liabilities | 10,393 | 29,213 | |||||
Total liabilities | 388,192 | 361,022 | |||||
Stockholders’ equity: | |||||||
Preferred stock, 1,000 shares authorized; none issued | — | — | |||||
Common stock, 200,000 shares authorized; 79,324 and 78,526 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 793 | 785 | |||||
Additional paid-in capital | 129,559 | 123,205 | |||||
Retained earnings | 412,389 | 510,863 | |||||
Accumulated other comprehensive (loss) | (13,909 | ) | (13,322 | ) | |||
Total stockholders’ equity | 528,832 | 621,531 | |||||
Total liabilities and stockholders’ equity | $ | 917,024 | $ | 982,553 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Software license | $ | 39,784 | $ | 58,005 | $ | 187,023 | $ | 165,543 | |||||||||||||||
Maintenance | 74,670 | 70,371 | 220,587 | 207,406 | |||||||||||||||||||
Pega Cloud | 54,776 | 35,153 | 147,080 | 94,610 | |||||||||||||||||||
Consulting | 56,721 | 53,174 | 164,227 | 167,282 | |||||||||||||||||||
Total revenue | 225,951 | 216,703 | 718,917 | 634,841 | |||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Software license | 691 | 676 | 2,354 | 2,982 | |||||||||||||||||||
Maintenance | 5,478 | 6,688 | 16,645 | 19,315 | |||||||||||||||||||
Pega Cloud | 19,717 | 17,824 | 56,238 | 47,769 | |||||||||||||||||||
Consulting | 51,913 | 55,710 | 158,781 | 162,349 | |||||||||||||||||||
Total cost of revenue | 77,799 | 80,898 | 234,018 | 232,415 | |||||||||||||||||||
Gross profit | 148,152 | 135,805 | 484,899 | 402,426 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Selling and marketing | 132,053 | 115,237 | 395,684 | 341,064 | |||||||||||||||||||
Research and development | 60,024 | 52,492 | 177,620 | 152,802 | |||||||||||||||||||
General and administrative | 17,907 | 14,843 | 49,192 | 41,693 | |||||||||||||||||||
Total operating expenses | 209,984 | 182,572 | 622,496 | 535,559 | |||||||||||||||||||
(Loss) from operations | (61,832) | (46,767) | (137,597) | (133,133) | |||||||||||||||||||
Foreign currency transaction gain (loss) | 4,236 | (1,970) | 2,545 | (3,577) | |||||||||||||||||||
Interest income | 243 | 598 | 1,092 | 1,865 | |||||||||||||||||||
Interest expense | (5,956) | (42) | (13,791) | (42) | |||||||||||||||||||
Gain on capped call transactions | 18,989 | 0 | 19,816 | 0 | |||||||||||||||||||
Other income, net | 0 | 323 | 1,374 | 378 | |||||||||||||||||||
(Loss) before (benefit from) income taxes | (44,320) | (47,858) | (126,561) | (134,509) | |||||||||||||||||||
(Benefit from) income taxes | (25,053) | (17,520) | (61,182) | (43,158) | |||||||||||||||||||
Net (loss) | $ | (19,267) | $ | (30,338) | $ | (65,379) | $ | (91,351) | |||||||||||||||
(Loss) per share | |||||||||||||||||||||||
Basic | $ | (0.24) | $ | (0.38) | $ | (0.82) | $ | (1.16) | |||||||||||||||
Diluted | $ | (0.24) | $ | (0.38) | $ | (0.82) | $ | (1.16) | |||||||||||||||
Weighted-average number of common shares outstanding | |||||||||||||||||||||||
Basic | 80,537 | 79,200 | 80,191 | 78,928 | |||||||||||||||||||
Diluted | 80,537 | 79,200 | 80,191 | 78,928 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
Software license | $ | 58,005 | $ | 52,342 | $ | 165,543 | $ | 184,899 | |||||||
Maintenance | 70,371 | 66,017 | 207,406 | 196,448 | |||||||||||
Services | 88,327 | 84,904 | 261,892 | 253,877 | |||||||||||
Total revenue | 216,703 | 203,263 | 634,841 | 635,224 | |||||||||||
Cost of revenue | |||||||||||||||
Software license | 676 | 1,255 | 2,982 | 3,772 | |||||||||||
Maintenance | 6,688 | 6,079 | 19,315 | 18,035 | |||||||||||
Services | 73,534 | 67,089 | 210,118 | 202,047 | |||||||||||
Total cost of revenue | 80,898 | 74,423 | 232,415 | 223,854 | |||||||||||
Gross profit | 135,805 | 128,840 | 402,426 | 411,370 | |||||||||||
Operating expenses | |||||||||||||||
Selling and marketing | 115,237 | 87,490 | 341,064 | 269,845 | |||||||||||
Research and development | 52,492 | 46,504 | 152,802 | 135,261 | |||||||||||
General and administrative | 14,843 | 12,104 | 41,693 | 38,749 | |||||||||||
Total operating expenses | 182,572 | 146,098 | 535,559 | 443,855 | |||||||||||
(Loss) from operations | (46,767 | ) | (17,258 | ) | (133,133 | ) | (32,485 | ) | |||||||
Foreign currency transaction (loss) gain | (1,970 | ) | 399 | (3,577 | ) | 558 | |||||||||
Interest income, net | 556 | 683 | 1,823 | 2,076 | |||||||||||
Other income, net | 323 | — | 378 | 363 | |||||||||||
(Loss) before (benefit from) income taxes | (47,858 | ) | (16,176 | ) | (134,509 | ) | (29,488 | ) | |||||||
(Benefit from) income taxes | (17,520 | ) | (8,589 | ) | (43,158 | ) | (23,692 | ) | |||||||
Net (loss) | $ | (30,338 | ) | $ | (7,587 | ) | $ | (91,351 | ) | $ | (5,796 | ) | |||
(Loss) per share | |||||||||||||||
Basic | $ | (0.38 | ) | $ | (0.10 | ) | $ | (1.16 | ) | $ | (0.07 | ) | |||
Diluted | $ | (0.38 | ) | $ | (0.10 | ) | $ | (1.16 | ) | $ | (0.07 | ) | |||
Weighted-average number of common shares outstanding | |||||||||||||||
Basic | 79,200 | 78,700 | 78,928 | 78,525 | |||||||||||
Diluted | 79,200 | 78,700 | 78,928 | 78,525 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net (loss) | $ | (19,267) | $ | (30,338) | $ | (65,379) | $ | (91,351) | |||||||||||||||
Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
Unrealized (loss) gain on available-for-sale securities | (166) | (216) | (66) | 396 | |||||||||||||||||||
Foreign currency translation adjustments | 113 | (2,201) | 1,627 | (983) | |||||||||||||||||||
Total other comprehensive (loss) income, net of tax | $ | (53) | $ | (2,417) | $ | 1,561 | $ | (587) | |||||||||||||||
Comprehensive (loss) | $ | (19,320) | $ | (32,755) | $ | (63,818) | $ | (91,938) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net (loss) | $ | (30,338 | ) | $ | (7,587 | ) | $ | (91,351 | ) | $ | (5,796 | ) | |||
Other comprehensive (loss), net of tax | |||||||||||||||
Unrealized (loss) gain on available-for-sale marketable securities | (216 | ) | (162 | ) | 396 | (277 | ) | ||||||||
Foreign currency translation adjustments | (2,201 | ) | (1,934 | ) | (983 | ) | (4,898 | ) | |||||||
Total other comprehensive (loss), net of tax | (2,417 | ) | (2,096 | ) | (587 | ) | (5,175 | ) | |||||||
Comprehensive (loss) | $ | (32,755 | ) | $ | (9,683 | ) | $ | (91,938 | ) | $ | (10,971 | ) |
PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Number of Shares | Amount | ||||||||||||||||||||||||||||||||||
December 31, 2018 | 78,526 | $ | 785 | $ | 123,205 | $ | 510,863 | $ | (13,322) | $ | 621,531 | ||||||||||||||||||||||||
Repurchase of common stock | (144) | (1) | (7,586) | — | — | (7,587) | |||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 514 | 5 | (14,843) | — | — | (14,838) | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 18,406 | — | — | 18,406 | |||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | — | — | — | (2,367) | — | (2,367) | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 2,001 | 2,001 | |||||||||||||||||||||||||||||
Net (loss) | — | — | — | (28,717) | — | (28,717) | |||||||||||||||||||||||||||||
March 31, 2019 | 78,896 | $ | 789 | $ | 119,182 | $ | 479,779 | $ | (11,321) | $ | 588,429 | ||||||||||||||||||||||||
Repurchase of common stock | (88) | (1) | (6,301) | — | — | (6,302) | |||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 320 | 3 | (11,217) | — | — | (11,214) | |||||||||||||||||||||||||||||
Issuance of common stock under the employee stock purchase plan | 16 | — | 1,103 | — | — | 1,103 | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 20,113 | — | — | 20,113 | |||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | — | — | — | (2,375) | — | (2,375) | |||||||||||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | (171) | (171) | |||||||||||||||||||||||||||||
Net (loss) | — | — | — | (32,296) | — | (32,296) | |||||||||||||||||||||||||||||
June 30, 2019 | 79,144 | $ | 791 | $ | 122,880 | $ | 445,108 | $ | (11,492) | $ | 557,287 | ||||||||||||||||||||||||
Repurchase of common stock | (88) | (1) | (6,396) | — | — | (6,397) | |||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 268 | 3 | (8,804) | — | — | (8,801) | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 21,879 | — | — | 21,879 | |||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | — | — | — | (2,381) | — | (2,381) | |||||||||||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | (2,417) | (2,417) | |||||||||||||||||||||||||||||
Net (loss) | — | — | — | (30,338) | — | (30,338) | |||||||||||||||||||||||||||||
September 30, 2019 | 79,324 | $ | 793 | $ | 129,559 | $ | 412,389 | $ | (13,909) | $ | 528,832 | ||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements. |
PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) | PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) | PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders’ Equity | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | 78,081 | $ | 781 | $ | 152,097 | $ | 509,697 | $ | (6,705 | ) | $ | 655,870 | |||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | December 31, 2019 | 79,599 | $ | 796 | $ | 140,523 | $ | 410,919 | $ | (13,228) | $ | 539,010 | |||||||||||||||||||||||||||||||||||||||||||||
Equity component of convertible senior notes, net | Equity component of convertible senior notes, net | — | — | 61,604 | — | — | 61,604 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (101 | ) | (1 | ) | (5,688 | ) | — | — | (5,689 | ) | Repurchase of common stock | (87) | (1) | (5,999) | — | — | (6,000) | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 566 | 5 | (15,556 | ) | — | — | (15,551 | ) | Issuance of common stock for share-based compensation plans | 564 | 6 | (23,017) | — | — | (23,011) | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 15,109 | — | — | 15,109 | Stock-based compensation | — | — | 23,199 | — | — | 23,199 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,355 | ) | — | (2,355 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 4,262 | 4,262 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 12,200 | — | 12,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2018 | 78,546 | 785 | 145,962 | 519,542 | (2,443 | ) | 663,846 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | Cash dividends declared ($0.03 per share) | — | — | — | (2,405) | — | (2,405) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) | Other comprehensive (loss) | — | — | — | — | (414) | (414) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) | Net (loss) | — | — | — | (25,372) | — | (25,372) | ||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2020 | March 31, 2020 | 80,076 | $ | 801 | $ | 196,310 | $ | 383,142 | $ | (13,642) | $ | 566,611 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (171 | ) | (2 | ) | (10,179 | ) | — | — | (10,181 | ) | Repurchase of common stock | (23) | 0 | (2,199) | — | — | (2,199) | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 358 | 4 | (11,395 | ) | — | — | (11,391 | ) | Issuance of common stock for share-based compensation plans | 349 | 3 | (14,085) | — | — | (14,082) | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | 15 | — | 849 | — | — | 849 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under the employee stock purchase plan | Issuance of common stock under the employee stock purchase plan | 18 | — | 1,403 | — | — | 1,403 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 16,163 | — | — | 16,163 | Stock-based compensation | — | — | 25,674 | — | — | 25,674 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,364 | ) | — | (2,364 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | (7,341 | ) | (7,341 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | Cash dividends declared ($0.03 per share) | — | — | — | (2,413) | — | (2,413) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | 2,028 | 2,028 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) | — | — | — | (10,409 | ) | — | (10,409 | ) | Net (loss) | — | — | — | (20,740) | — | (20,740) | ||||||||||||||||||||||||||||||||||||||||||
June 30, 2018 | 78,748 | 787 | 141,400 | 506,769 | (9,784 | ) | 639,172 | ||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | June 30, 2020 | 80,420 | $ | 804 | $ | 207,103 | $ | 359,989 | $ | (11,614) | $ | 556,282 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (242 | ) | (2 | ) | (14,277 | ) | — | — | (14,279 | ) | Repurchase of common stock | (94) | (1) | (10,628) | — | — | (10,629) | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for share-based compensation plans | 310 | 3 | (8,399 | ) | — | — | (8,396 | ) | Issuance of common stock for share-based compensation plans | 371 | 4 | (22,524) | — | — | (22,520) | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 16,408 | — | 16,408 | Stock-based compensation | — | — | 27,931 | — | — | 27,931 | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,367 | ) | — | (2,367 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.03 per share) | Cash dividends declared ($0.03 per share) | — | — | — | (2,422) | — | (2,422) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | (2,096 | ) | (2,096 | ) | Other comprehensive (loss) | — | — | — | — | (53) | (53) | ||||||||||||||||||||||||||||||||||||||||||
Net (loss) | — | — | — | (7,587 | ) | — | (7,587 | ) | Net (loss) | — | — | — | (19,267) | — | (19,267) | ||||||||||||||||||||||||||||||||||||||||||
September 30, 2018 | 78,816 | $ | 788 | $ | 135,132 | $ | 496,815 | $ | (11,880 | ) | $ | 620,855 | |||||||||||||||||||||||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | September 30, 2020 | 80,697 | $ | 807 | $ | 201,882 | $ | 338,300 | $ | (11,667) | $ | 529,322 |
PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) | ||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders’ Equity | ||||||||||||||||||
Number of Shares | Amount | |||||||||||||||||||||
December 31, 2018 | 78,526 | $ | 785 | $ | 123,205 | $ | 510,863 | $ | (13,322 | ) | $ | 621,531 | ||||||||||
Repurchase of common stock | (144 | ) | (1 | ) | (7,586 | ) | — | — | (7,587 | ) | ||||||||||||
Issuance of common stock for share-based compensation plans | 514 | 5 | (14,843 | ) | — | — | (14,838 | ) | ||||||||||||||
Stock-based compensation | — | — | 18,406 | — | — | 18,406 | ||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,367 | ) | — | (2,367 | ) | ||||||||||||||
Other comprehensive income | — | — | — | — | 2,001 | 2,001 | ||||||||||||||||
Net (loss) | — | — | — | (28,717 | ) | — | (28,717 | ) | ||||||||||||||
March 31, 2019 | 78,896 | 789 | 119,182 | 479,779 | (11,321 | ) | 588,429 | |||||||||||||||
Repurchase of common stock | (88 | ) | (1 | ) | (6,301 | ) | — | — | (6,302 | ) | ||||||||||||
Issuance of common stock for share-based compensation plans | 320 | 3 | (11,217 | ) | — | — | (11,214 | ) | ||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | 16 | — | 1,103 | — | — | 1,103 | ||||||||||||||||
Stock-based compensation | — | — | 20,113 | — | — | 20,113 | ||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,375 | ) | — | (2,375 | ) | ||||||||||||||
Other comprehensive (loss) | — | — | — | — | (171 | ) | (171 | ) | ||||||||||||||
Net (loss) | — | — | — | (32,296 | ) | — | (32,296 | ) | ||||||||||||||
June 30, 2019 | 79,144 | 791 | 122,880 | 445,108 | (11,492 | ) | 557,287 | |||||||||||||||
Repurchase of common stock | (88 | ) | (1 | ) | (6,396 | ) | — | — | (6,397 | ) | ||||||||||||
Issuance of common stock for share-based compensation plans | 268 | 3 | (8,804 | ) | — | — | (8,801 | ) | ||||||||||||||
Stock-based compensation | — | — | 21,879 | — | — | 21,879 | ||||||||||||||||
Cash dividends declared ($0.12 per share) | — | — | — | (2,381 | ) | — | (2,381 | ) | ||||||||||||||
Other comprehensive (loss) | — | — | — | — | (2,417 | ) | (2,417 | ) | ||||||||||||||
Net (loss) | — | — | — | (30,338 | ) | — | (30,338 | ) | ||||||||||||||
September 30, 2019 | 79,324 | $ | 793 | $ | 129,559 | $ | 412,389 | $ | (13,909 | ) | $ | 528,832 |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Operating activities | |||||||||||
Net (loss) | $ | (65,379) | $ | (91,351) | |||||||
Adjustments to reconcile net (loss) to cash (used in) operating activities | |||||||||||
Stock-based compensation | 76,755 | 60,242 | |||||||||
(Gain) on capped call transactions | (19,816) | 0 | |||||||||
Deferred income taxes | (43,476) | (40,531) | |||||||||
Amortization of deferred commissions | 24,922 | 22,372 | |||||||||
Lease expense | 11,997 | 10,454 | |||||||||
Amortization of debt discount and issuance costs | 10,405 | 0 | |||||||||
Amortization of intangible assets and depreciation | 15,677 | 16,998 | |||||||||
Amortization of investments | 252 | 798 | |||||||||
Foreign currency transaction (gain) loss | (2,545) | 3,577 | |||||||||
Other non-cash | (1,374) | (363) | |||||||||
Change in operating assets and liabilities, net | (33,675) | 4,342 | |||||||||
Cash (used in) operating activities | (26,257) | (13,462) | |||||||||
Investing activities | |||||||||||
Purchases of investments | (190,319) | (11,182) | |||||||||
Proceeds from maturities and called investments | 0 | 13,066 | |||||||||
Sales of investments | 1,424 | 68,937 | |||||||||
Payments for acquisitions, net of cash acquired | 0 | (10,934) | |||||||||
Investment in property and equipment | (21,806) | (6,439) | |||||||||
Cash (used in) provided by investing activities | (210,701) | 53,448 | |||||||||
Financing activities | |||||||||||
Proceeds from issuance of convertible senior notes | 600,000 | 0 | |||||||||
Purchase of capped calls related to convertible senior notes | (51,900) | 0 | |||||||||
Payment of debt issuance costs | (14,527) | 0 | |||||||||
Dividend payments to shareholders | (7,206) | (7,105) | |||||||||
Common stock repurchases | (76,737) | (54,836) | |||||||||
Cash provided by (used in) financing activities | 449,630 | (61,941) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 183 | (363) | |||||||||
Net increase (decrease) in cash and cash equivalents | 212,855 | (22,318) | |||||||||
Cash and cash equivalents, beginning of period | 68,363 | 114,422 | |||||||||
Cash and cash equivalents, end of period | $ | 281,218 | $ | 92,104 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Operating activities | |||||||
Net (loss) | $ | (91,351 | ) | $ | (5,796 | ) | |
Adjustments to reconcile net (loss) to cash (used in) provided by operating activities | |||||||
Stock-based compensation | 60,242 | 47,573 | |||||
Amortization and depreciation | 50,622 | 31,742 | |||||
Deferred income taxes | (40,531 | ) | (1,388 | ) | |||
Foreign currency transaction loss (gain) | 3,577 | (558 | ) | ||||
Other non-cash | (363 | ) | (1,377 | ) | |||
Change in operating assets and liabilities, net | 4,342 | (3,108 | ) | ||||
Cash (used in) provided by operating activities | (13,462 | ) | 67,088 | ||||
Investing activities | |||||||
Purchases of investments | (11,182 | ) | (68,177 | ) | |||
Proceeds from maturities and called investments | 13,066 | 26,456 | |||||
Sales of investments | 68,937 | — | |||||
Payments for acquisitions, net of cash acquired | (10,934 | ) | — | ||||
Investment in property and equipment | (6,439 | ) | (7,874 | ) | |||
Cash provided by (used in) investing activities | 53,448 | (49,595 | ) | ||||
Financing activities | |||||||
Dividend payments to shareholders | (7,105 | ) | (7,067 | ) | |||
Common stock repurchases | (54,836 | ) | (64,597 | ) | |||
Cash (used in) financing activities | (61,941 | ) | (71,664 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (363 | ) | (1,913 | ) | |||
Net (decrease) in cash and cash equivalents | (22,318 | ) | (56,084 | ) | |||
Cash and cash equivalents, beginning of period | 114,422 | 162,279 | |||||
Cash and cash equivalents, end of period | $ | 92,104 | $ | 106,195 |
September 30, 2019 | |||||||||||||||
(in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||
Municipal bonds | $ | 10,680 | $ | 69 | $ | — | $ | 10,749 | |||||||
Corporate bonds | 9,611 | 105 | — | 9,716 | |||||||||||
$ | 20,291 | $ | 174 | $ | — | $ | 20,465 |
December 31, 2018 | |||||||||||||||
(in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||
Municipal bonds | $ | 44,802 | $ | 13 | $ | (110 | ) | $ | 44,705 | ||||||
Corporate bonds | 48,499 | 23 | (226 | ) | 48,296 | ||||||||||
$ | 93,301 | $ | 36 | $ | (336 | ) | $ | 93,001 |
September 30, 2020 | |||||||||||||||||||||||
(in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||||||||
Government debt | $ | 50,987 | $ | 0 | $ | (11) | $ | 50,976 | |||||||||||||||
Corporate debt | 136,045 | 1 | (212) | 135,834 | |||||||||||||||||||
$ | 187,032 | $ | 1 | $ | (223) | $ | 186,810 |
(in thousands) | September 30, 2019 | December 31, 2018 | |||||
Accounts receivable | $ | 123,268 | $ | 180,872 | |||
Unbilled receivables | 172,090 | 172,656 | |||||
Long-term unbilled receivables | 123,962 | 151,237 | |||||
$ | 419,320 | $ | 504,765 |
(in thousands) | September 30, 2020 | December 31, 2019 | |||||||||
Accounts receivable | $ | 137,953 | $ | 199,720 | |||||||
Unbilled receivables | 208,823 | 180,219 | |||||||||
Long-term unbilled receivables | 108,456 | 121,736 | |||||||||
$ | 455,232 | $ | 501,675 |
(Dollars in thousands) | September 30, 2019 | ||||
1 year or less | $ | 172,090 | 59 | % | |
1-2 years | 84,045 | 28 | % | ||
2-5 years | 39,917 | 13 | % | ||
$ | 296,052 | 100 | % |
(Dollars in thousands) | September 30, 2020 | |||||||
1 year or less | $ | 208,823 | 66 | % | ||||
1-2 years | 91,325 | 29 | % | |||||
2-5 years | 17,131 | 5 | % | |||||
$ | 317,279 | 100 | % |
(Dollars in thousands) | September 30, 2020 | |||||||
2020 | $ | 105,380 | 33 | % | ||||
2019 | 99,875 | 32 | % | |||||
2018 | 39,281 | 12 | % | |||||
2017 | 37,824 | 12 | % | |||||
2016 and prior | 34,919 | 11 | % | |||||
$ | 317,279 | 100 | % |
September 30, 2020 | December 31, 2019 | ||||||||||
Client A | 11 | % | * |
(in thousands) | September 30, 2019 | December 31, 2018 | (in thousands) | September 30, 2020 | December 31, 2019 | |||||||||||||
Contract assets (1) | $ | 5,046 | $ | 3,711 | Contract assets (1) | $ | 8,104 | $ | 5,558 | |||||||||
Long-term contract assets (2) | 2,381 | 2,543 | Long-term contract assets (2) | 5,579 | 5,420 | |||||||||||||
$ | 7,427 | $ | 6,254 | 13,683 | 10,978 | |||||||||||||
Deferred revenue | Deferred revenue | 181,680 | 190,080 | |||||||||||||||
Long-term deferred revenue (3) | Long-term deferred revenue (3) | 6,673 | 5,407 | |||||||||||||||
$ | 188,353 | $ | 195,487 |
(in thousands) | September 30, 2019 | December 31, 2018 | |||||
Deferred revenue | $ | 159,849 | $ | 185,145 | |||
Long-term deferred revenue (1) | 4,029 | 5,344 | |||||
$ | 163,878 | $ | 190,489 |
(in thousands) | September 30, 2020 | December 31, 2019 | |||||||||
Deferred commissions (1) | $ | 87,992 | $ | 85,314 |
(in thousands) | September 30, 2019 | December 31, 2018 | |||||
Deferred contract costs (1) | $ | 67,182 | $ | 64,367 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Amortization of deferred contract costs (1) | $ | 8,193 | $ | 4,208 | $ | 22,372 | $ | 11,806 |
(in thousands) | Nine Months Ended September 30, 2019 | ||
Balance as of January 1, | $ | 72,858 | |
Acquisition (1) | 6,179 | ||
Currency translation adjustments | (175 | ) | |
Balance as of September 30, | $ | 78,862 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Amortization of deferred commissions (1) | $ | 8,861 | $ | 8,193 | $ | 24,922 | $ | 22,372 |
(in thousands) | Amount | |||||||
Principal | $ | 600,000 | ||||||
Less: issuance costs | (14,527) | |||||||
Less: Capped Call Transactions | (51,900) | |||||||
$ | 533,573 |
September 30, 2019 | |||||||||||||
(in thousands) | Useful Lives | Cost | Accumulated Amortization | Net Book Value (1) | |||||||||
Client-related | 4-10 years | $ | 63,089 | $ | (53,960 | ) | $ | 9,129 | |||||
Technology | 2-10 years | 64,843 | (53,252 | ) | 11,591 | ||||||||
Other | 1 - 5 years | 5,361 | (5,361 | ) | — | ||||||||
$ | 133,293 | $ | (112,573 | ) | $ | 20,720 |
December 31, 2018 | |||||||||||||
(in thousands) | Useful Lives | Cost | Accumulated Amortization | Net Book Value (1) | |||||||||
Client-related | 4-10 years | $ | 63,115 | $ | (51,224 | ) | $ | 11,891 | |||||
Technology | 2-10 years | 59,742 | (50,398 | ) | 9,344 | ||||||||
Other | 1 - 5 years | 5,361 | (5,361 | ) | — | ||||||||
$ | 128,218 | $ | (106,983 | ) | $ | 21,235 |
(in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of revenue | $ | 647 | $ | 1,232 | $ | 2,854 | $ | 3,695 | |||||||
Selling and marketing | 370 | 1,603 | 2,754 | 4,813 | |||||||||||
$ | 1,017 | $ | 2,835 | $ | 5,608 | $ | 8,508 |
(in thousands) | September 30, 2019 | December 31, 2018 | |||||
Outside professional services expenses | $ | 8,568 | $ | 10,367 | |||
Income and other taxes | 5,418 | 10,387 | |||||
Marketing and sales program expenses | 5,969 | 5,860 | |||||
Dividends payable | 2,381 | 2,363 | |||||
Employee-related expenses | 4,785 | 3,536 | |||||
Cloud hosting expenses | 10,158 | 4,604 | |||||
Other | 4,241 | 8,389 | |||||
$ | 41,520 | $ | 45,506 |
(in thousands) | September 30, 2020 | ||||||||||
Principal | $ | 600,000 | |||||||||
Unamortized debt discount | (75,061) | ||||||||||
Unamortized issuance costs | (11,145) | ||||||||||
$ | 513,794 |
(in thousands) | September 30, 2020 | ||||||||||
Conversion options (1) | $ | 61,604 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Contractual interest expense (0.75% coupon) | $ | 1,125 | $ | 0 | $ | 2,700 | $ | 0 | |||||||||||||||
Amortization of debt discount (1) | 3,807 | 0 | 9,060 | 0 | |||||||||||||||||||
Amortization of issuance costs (1) | 565 | 0 | 1,345 | 0 | |||||||||||||||||||
$ | 5,497 | $ | 0 | $ | 13,105 | $ | 0 |
September 30, 2020 | |||||||||||||||||
(in thousands) | Principal | Interest | Total | ||||||||||||||
2020 | $ | 0 | $ | 0 | $ | 0 | |||||||||||
2021 | 0 | 4,500 | 4,500 | ||||||||||||||
2022 | 0 | 4,500 | 4,500 | ||||||||||||||
2023 | 0 | 4,500 | 4,500 | ||||||||||||||
2024 | 0 | 4,500 | 4,500 | ||||||||||||||
2025 | 600,000 | 1,488 | 601,488 | ||||||||||||||
$ | 600,000 | $ | 19,488 | $ | 619,488 |
(in thousands) | Nine Months Ended September 30, 2020 | ||||
Value at issuance | $ | 51,900 | |||
Fair value adjustment | 19,816 | ||||
Balance as of September 30, | $ | 71,716 |
September 30, 2019 | |||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash equivalents | $ | 88 | $ | — | $ | — | $ | 88 | |||||||
Marketable securities: | |||||||||||||||
Municipal bonds | $ | — | $ | 10,749 | $ | — | $ | 10,749 | |||||||
Corporate bonds | — | 9,716 | — | 9,716 | |||||||||||
Total marketable securities | $ | — | $ | 20,465 | $ | — | $ | 20,465 | |||||||
Investments in privately-held companies (1) | $ | — | $ | — | $ | 4,583 | $ | 4,583 |
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
Cash equivalents (1) | $ | 212,917 | $ | 0 | $ | 0 | $ | 212,917 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||||||||
Marketable securities | $ | 0 | $ | 186,810 | $ | 0 | $ | 186,810 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||||||||
Capped Call Transactions (2) (3) | $ | 0 | $ | 71,716 | $ | 0 | $ | 71,716 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||||||||
Venture investments (2) (4) | $ | 0 | $ | 0 | $ | 7,927 | $ | 7,927 | $ | 0 | $ | 0 | $ | 4,871 | $ | 4,871 |
December 31, 2018 | |||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash equivalents | $ | 10,155 | $ | 10,000 | $ | — | $ | 20,155 | |||||||
Marketable securities: | |||||||||||||||
Municipal bonds | $ | — | $ | 44,705 | $ | — | $ | 44,705 | |||||||
Corporate bonds | — | 48,296 | — | 48,296 | |||||||||||
Total marketable securities | $ | — | $ | 93,001 | $ | — | $ | 93,001 | |||||||
Investments in privately-held companies (1) | $ | — | $ | — | $ | 3,390 | $ | 3,390 |
(in thousands) | Nine Months Ended September 30, 2020 | ||||
December 31, 2019 | $ | 4,871 | |||
New investments | 3,006 | ||||
Sales of investments | (1,424) | ||||
Fair value adjustment | 1,474 | ||||
September 30, 2020 | $ | 7,927 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
U.S. | $ | 120,971 | 53 | % | $ | 123,447 | 57 | % | $ | 436,199 | 61 | % | $ | 347,120 | 55 | % | |||||||||||||||||||
Other Americas | 10,737 | 5 | % | 11,748 | 5 | % | 35,009 | 5 | % | 49,450 | 8 | % | |||||||||||||||||||||||
United Kingdom (“U.K.”) | 25,150 | 11 | % | 23,034 | 11 | % | 68,246 | 9 | % | 64,269 | 10 | % | |||||||||||||||||||||||
Europe (excluding U.K.), Middle East, and Africa | 39,656 | 18 | % | 34,761 | 16 | % | 106,472 | 15 | % | 102,342 | 16 | % | |||||||||||||||||||||||
Asia-Pacific | 29,437 | 13 | % | 23,713 | 11 | % | 72,991 | 10 | % | 71,660 | 11 | % | |||||||||||||||||||||||
$ | 225,951 | 100 | % | $ | 216,703 | 100 | % | $ | 718,917 | 100 | % | $ | 634,841 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Perpetual license | $ | 3,852 | $ | 9,016 | $ | 16,568 | $ | 43,286 | |||||||||||||||
Term license | 35,932 | 48,989 | 170,455 | 122,257 | |||||||||||||||||||
Revenue recognized at a point in time | 39,784 | 58,005 | 187,023 | 165,543 | |||||||||||||||||||
Maintenance | 74,670 | 70,371 | 220,587 | 207,406 | |||||||||||||||||||
Pega Cloud | 54,776 | 35,153 | 147,080 | 94,610 | |||||||||||||||||||
Consulting | 56,721 | 53,174 | 164,227 | 167,282 | |||||||||||||||||||
Revenue recognized over time | 186,167 | 158,698 | 531,894 | 469,298 | |||||||||||||||||||
$ | 225,951 | $ | 216,703 | $ | 718,917 | $ | 634,841 |
(in thousands) | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||
Fixed lease costs | $ | 4,763 | $ | 13,344 | |||
Variable lease costs | 1,470 | 4,153 | |||||
$ | 6,233 | $ | 17,497 |
(in thousands) | September 30, 2019 | ||
Right of use assets (1) | $ | 62,296 | |
Lease liabilities (2) | $ | 15,742 | |
Long-term lease liabilities | $ | 56,904 |
(in thousands) | September 30, 2019 | ||
Remainder of 2019 | $ | 3,402 | |
2020 | 21,061 | ||
2021 | 18,800 | ||
2022 | 17,642 | ||
2023 and thereafter | 21,375 | ||
Total lease payments | 82,280 | ||
Less: imputed interest (1) | (9,634 | ) | |
Total short and long-term lease liabilities | $ | 72,646 |
(in thousands) | Operating Leases (1) | ||
2019 | $ | 15,993 | |
2020 | 14,807 | ||
2021 | 13,262 | ||
2022 | 12,279 | ||
2023 | 11,084 | ||
$ | 67,425 |
September 30, 2019 | ||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
U.S. | $ | 123,447 | 57 | % | $ | 103,075 | 51 | % | $ | 347,120 | 55 | % | $ | 327,409 | 51 | % | |||||||
Other Americas | 11,748 | 5 | % | 10,424 | 5 | % | 49,450 | 8 | % | 37,766 | 6 | % | |||||||||||
United Kingdom (“U.K.”) | 23,034 | 11 | % | 19,277 | 9 | % | 64,269 | 10 | % | 68,450 | 11 | % | |||||||||||
Europe (excluding U.K.), Middle East, and Africa | 34,761 | 16 | % | 42,254 | 21 | % | 102,342 | 16 | % | 101,150 | 16 | % | |||||||||||
Asia-Pacific | 23,713 | 11 | % | 28,233 | 14 | % | 71,660 | 11 | % | 100,449 | 16 | % | |||||||||||
$ | 216,703 | 100 | % | $ | 203,263 | 100 | % | $ | 634,841 | 100 | % | $ | 635,224 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Perpetual license | $ | 9,016 | $ | 20,276 | $ | 43,286 | $ | 56,829 | |||||||
Term license | 48,989 | 32,066 | 122,257 | 128,070 | |||||||||||
Revenue recognized at a point in time | 58,005 | 52,342 | 165,543 | 184,899 | |||||||||||
Maintenance | 70,371 | 66,017 | 207,406 | 196,448 | |||||||||||
Cloud | 35,153 | 22,184 | 94,610 | 57,967 | |||||||||||
Consulting | 53,174 | 62,720 | 167,282 | 195,910 | |||||||||||
Revenue recognized over time | 158,698 | 150,921 | 469,298 | 450,325 | |||||||||||
$ | 216,703 | $ | 203,263 | $ | 634,841 | $ | 635,224 |
(in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Term license | $ | 48,989 | $ | 32,066 | $ | 122,257 | $ | 128,070 | |||||||
Cloud | 35,153 | 22,184 | 94,610 | 57,967 | |||||||||||
Maintenance | 70,371 | 66,017 | 207,406 | 196,448 | |||||||||||
Subscription (1) | 154,513 | 120,267 | 424,273 | 382,485 | |||||||||||
Perpetual license | 9,016 | 20,276 | 43,286 | 56,829 | |||||||||||
Consulting | 53,174 | 62,720 | 167,282 | 195,910 | |||||||||||
$ | 216,703 | $ | 203,263 | $ | 634,841 | $ | 635,224 |
(in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Pega Cloud | $ | 54,776 | $ | 35,153 | $ | 147,080 | $ | 94,610 | |||||||||||||||
Maintenance | 74,670 | 70,371 | 220,587 | 207,406 | |||||||||||||||||||
Term license | 35,932 | 48,989 | 170,455 | 122,257 | |||||||||||||||||||
Subscription (1) | 165,378 | 154,513 | 538,122 | 424,273 | |||||||||||||||||||
Perpetual license | 3,852 | 9,016 | 16,568 | 43,286 | |||||||||||||||||||
Consulting | 56,721 | 53,174 | 164,227 | 167,282 | |||||||||||||||||||
$ | 225,951 | $ | 216,703 | $ | 718,917 | $ | 634,841 |
September 30, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term license | Maintenance | Cloud | Consulting | Total | |||||||||||||||||||
1 year or less | $ | 7,689 | $ | 25,948 | $ | 158,220 | $ | 133,785 | $ | 13,145 | $ | 338,787 | 56 | % | |||||||||||
1-2 years | 853 | 3,798 | 18,590 | 105,081 | 863 | 129,185 | 21 | % | |||||||||||||||||
2-3 years | 1,306 | 591 | 8,323 | 72,915 | 841 | 83,976 | 14 | % | |||||||||||||||||
Greater than 3 years | — | 85 | 4,959 | 51,591 | — | 56,635 | 9 | % | |||||||||||||||||
$ | 9,848 | $ | 30,422 | $ | 190,092 | $ | 363,372 | $ | 14,849 | $ | 608,583 | 100 | % |
September 30, 2018 | September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term License | Maintenance | Cloud | Consulting | Total | (Dollars in thousands) | Perpetual license | Term license | Maintenance | Pega Cloud | Consulting | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
1 year or less | $ | 25,343 | $ | 44,283 | $ | 140,591 | $ | 88,529 | $ | 14,107 | $ | 312,853 | 60 | % | 1 year or less | $ | 8,708 | $ | 50,788 | $ | 170,643 | $ | 211,661 | $ | 14,977 | $ | 456,777 | 54 | % | ||||||||||||||||||||||||||||||||||
1-2 years | 6,490 | 10,063 | 8,877 | 70,815 | 1,830 | 98,075 | 19 | % | 1-2 years | 1,700 | 5,341 | 40,631 | 157,500 | 2,042 | 207,214 | 25 | % | ||||||||||||||||||||||||||||||||||||||||||||||
2-3 years | 360 | 1,598 | 2,586 | 54,646 | 449 | 59,639 | 11 | % | 2-3 years | 0 | 7,052 | 18,277 | 93,283 | 770 | 119,382 | 14 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Greater than 3 years | 1,306 | 218 | 1,079 | 49,110 | 50 | 51,763 | 10 | % | Greater than 3 years | 0 | 4 | 9,597 | 44,363 | 653 | 54,617 | 7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
$ | 33,499 | $ | 56,162 | $ | 153,133 | $ | 263,100 | $ | 16,436 | $ | 522,330 | 100 | % | $ | 10,408 | $ | 63,185 | $ | 239,148 | $ | 506,807 | $ | 18,442 | $ | 837,990 | 100 | % |
September 30, 2019 | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term license | Maintenance | Pega Cloud | Consulting | Total | ||||||||||||||||||||||||||||||||
1 year or less | $ | 7,689 | $ | 25,948 | $ | 158,220 | $ | 133,785 | $ | 13,145 | $ | 338,787 | 56 | % | ||||||||||||||||||||||||
1-2 years | 853 | 3,798 | 18,590 | 105,081 | 863 | 129,185 | 21 | % | ||||||||||||||||||||||||||||||
2-3 years | 1,306 | 591 | 8,323 | 72,915 | 841 | 83,976 | 14 | % | ||||||||||||||||||||||||||||||
Greater than 3 years | 0 | 85 | 4,959 | 51,591 | 0 | 56,635 | 9 | % | ||||||||||||||||||||||||||||||
$ | 9,848 | $ | 30,422 | $ | 190,092 | $ | 363,372 | $ | 14,849 | $ | 608,583 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Total revenue | $ | 216,703 | $ | 203,263 | $ | 634,841 | $ | 635,224 | |||||||
Client A | * | 10 | % | * | * |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cost of revenues | $ | 4,787 | $ | 4,319 | $ | 14,216 | $ | 12,277 | |||||||
Selling and marketing | 8,317 | 6,198 | 24,055 | 16,895 | |||||||||||
Research and development | 4,858 | 3,917 | 13,990 | 11,356 | |||||||||||
General and administrative | 3,884 | 1,974 | 7,981 | 7,045 | |||||||||||
$ | 21,846 | $ | 16,408 | $ | 60,242 | $ | 47,573 | ||||||||
Income tax benefit | $ | (4,430 | ) | $ | (3,555 | ) | $ | (12,226 | ) | $ | (10,037 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Cost of revenue | $ | 5,100 | $ | 4,787 | $ | 15,636 | $ | 14,216 | |||||||||||||||
Selling and marketing | 12,658 | 8,317 | 33,968 | 24,055 | |||||||||||||||||||
Research and development | 5,765 | 4,858 | 17,066 | 13,990 | |||||||||||||||||||
General and administrative | 4,402 | 3,884 | 10,085 | 7,981 | |||||||||||||||||||
$ | 27,925 | $ | 21,846 | $ | 76,755 | $ | 60,242 | ||||||||||||||||
Income tax benefit | $ | (5,604) | $ | (4,430) | $ | (15,293) | $ | (12,226) |
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2020 | ||||||||||||||||
(in thousands) | Shares | Total Fair Value | (in thousands) | Shares | Total Fair Value | ||||||||||||
RSUs | 1,153 | $ | 75,510 | RSUs | 1,026 | $ | 92,456 | ||||||||||
Non-qualified stock options | 2,165 | $ | 41,260 | Non-qualified stock options | 1,886 | $ | 44,505 | ||||||||||
Common stock | 11 | $ | 800 | Common stock | 6 | $ | 701 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
(Benefit from) income taxes | $ | (25,053) | $ | (17,520) | $ | (61,182) | $ | (43,158) | |||||||||||||||
Effective income tax rate | 48 | % | 32 | % |
Nine Months Ended September 30, | |||||||
(Dollars in thousands) | 2019 | 2018 | |||||
(Benefit from) income taxes | $ | (43,158 | ) | $ | (23,692 | ) | |
Effective income tax rate | 32 | % | 80 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net (loss) | $ | (19,267) | $ | (30,338) | $ | (65,379) | $ | (91,351) | |||||||||||||||
Weighted-average common shares outstanding | 80,537 | 79,200 | 80,191 | 78,928 | |||||||||||||||||||
(Loss) per share, basic | $ | (0.24) | $ | (0.38) | $ | (0.82) | $ | (1.16) | |||||||||||||||
Net (loss) | $ | (19,267) | $ | (30,338) | $ | (65,379) | $ | (91,351) | |||||||||||||||
Weighted-average common shares outstanding, assuming dilution (1) (2) | 80,537 | 79,200 | 80,191 | 78,928 | |||||||||||||||||||
(Loss) per share, diluted | $ | (0.24) | $ | (0.38) | $ | (0.82) | $ | (1.16) | |||||||||||||||
Outstanding anti-dilutive stock options and RSUs (3) | 6,622 | 5,953 | 6,166 | 5,923 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Basic | |||||||||||||||
Net (loss) | $ | (30,338 | ) | $ | (7,587 | ) | $ | (91,351 | ) | $ | (5,796 | ) | |||
Weighted-average common shares outstanding | 79,200 | 78,700 | 78,928 | 78,525 | |||||||||||
(Loss) per share, basic | $ | (0.38 | ) | $ | (0.10 | ) | $ | (1.16 | ) | $ | (0.07 | ) | |||
Diluted | |||||||||||||||
Net (loss) | $ | (30,338 | ) | $ | (7,587 | ) | $ | (91,351 | ) | $ | (5,796 | ) | |||
Weighted-average effect of dilutive securities: | |||||||||||||||
Stock options | — | — | — | — | |||||||||||
RSUs | — | — | — | — | |||||||||||
Effect of dilutive securities | — | — | — | — | |||||||||||
Weighted-average common shares outstanding, assuming dilution | 79,200 | 78,700 | 78,928 | 78,525 | |||||||||||
(Loss) per share, diluted | $ | (0.38 | ) | $ | (0.10 | ) | $ | (1.16 | ) | $ | (0.07 | ) | |||
Outstanding anti-dilutive stock options and RSUs (1) | 5,953 | 6,119 | 5,923 | 6,380 |
(Dollars in thousands, except per share amounts) | Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
Total revenue | $ | 216,703 | $ | 203,263 | $ | 13,440 | 7 | % | $ | 634,841 | $ | 635,224 | $ | (383 | ) | — | % | ||||||||||
Subscription revenue (1) | $ | 154,513 | $ | 120,267 | $ | 34,246 | 28 | % | $ | 424,273 | $ | 382,485 | $ | 41,788 | 11 | % | |||||||||||
Net (loss) | $ | (30,338 | ) | $ | (7,587 | ) | $ | (22,751 | ) | (300 | )% | $ | (91,351 | ) | $ | (5,796 | ) | $ | (85,555 | ) | (1,476 | )% | |||||
(Loss) per share, diluted | $ | (0.38 | ) | $ | (0.10 | ) | $ | (0.28 | ) | (280 | )% | $ | (1.16 | ) | $ | (0.07 | ) | $ | (1.09 | ) | (1,557 | )% |
September 30, | Change | Constant Currency Change | ||||||||||||||
(Dollars in thousands) | 2019 | 2018 | ||||||||||||||
Maintenance | $ | 281,484 | $ | 264,068 | $ | 17,416 | 7 | % | 9 | % | ||||||
Term | 207,317 | 174,320 | $ | 32,997 | 19 | % | 20 | % | ||||||||
Client Cloud | 488,801 | 438,388 | $ | 50,413 | 11 | % | 13 | % | ||||||||
Pega Cloud | 145,549 | 98,373 | 47,176 | 48 | % | 51 | % | |||||||||
Total ACV | $ | 634,350 | $ | 536,761 | $ | 97,589 | 18 | % | 20 | % |
September 30, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Perpetual license | Term license | Maintenance | Cloud | Consulting | Total | |||||||||||||||||||
1 year or less | $ | 7,689 | $ | 25,948 | $ | 158,220 | $ | 133,785 | $ | 13,145 | $ | 338,787 | 56 | % | |||||||||||
1-2 years | 853 | 3,798 | 18,590 | 105,081 | 863 | 129,185 | 21 | % | |||||||||||||||||
2-3 years | 1,306 | 591 | 8,323 | 72,915 | 841 | 83,976 | 14 | % | |||||||||||||||||
Greater than 3 years | — | 85 | 4,959 | 51,591 | — | 56,635 | 9 | % | |||||||||||||||||
$ | 9,848 | $ | 30,422 | $ | 190,092 | $ | 363,372 | $ | 14,849 | $ | 608,583 | 100 | % | ||||||||||||
Change in RPO Since September 30, 2018 | |||||||||||||||||||||||||
$ | (23,651 | ) | $ | (25,740 | ) | $ | 36,959 | $ | 100,272 | $ | (1,587 | ) | $ | 86,253 | |||||||||||
(71 | )% | (46 | )% | 24 | % | 38 | % | (10 | )% | 17 | % |
September 30, 2018 | |||||||||||||||||||||||||
(Dollars in thousands) | 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 | % |
(Dollars in thousands) | Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
Cloud | $ | 35,153 | 16 | % | $ | 22,184 | 11 | % | $ | 12,969 | 58 | % | $ | 94,610 | 15 | % | $ | 57,967 | 9 | % | $ | 36,643 | 63 | % | |||||||||||
Term license | 48,989 | 23 | % | 32,066 | 16 | % | 16,923 | 53 | % | 122,257 | 19 | % | 128,070 | 20 | % | (5,813 | ) | (5 | )% | ||||||||||||||||
Maintenance | 70,371 | 32 | % | 66,017 | 32 | % | 4,354 | 7 | % | 207,406 | 33 | % | 196,448 | 31 | % | 10,958 | 6 | % | |||||||||||||||||
Subscription (1) | 154,513 | 71 | % | 120,267 | 59 | % | 34,246 | 28 | % | 424,273 | 67 | % | 382,485 | 60 | % | 41,788 | 11 | % | |||||||||||||||||
Perpetual license | 9,016 | 4 | % | 20,276 | 10 | % | (11,260 | ) | (56 | )% | 43,286 | 7 | % | 56,829 | 9 | % | (13,543 | ) | (24 | )% | |||||||||||||||
Consulting | 53,174 | 25 | % | 62,720 | 31 | % | (9,546 | ) | (15 | )% | 167,282 | 26 | % | 195,910 | 31 | % | (28,628 | ) | (15 | )% | |||||||||||||||
$ | 216,703 | 100 | % | $ | 203,263 | 100 | % | $ | 13,440 | 7 | % | $ | 634,841 | 100 | % | $ | 635,224 | 100 | % | $ | (383 | ) | — | % |
(Dollars in thousands) | Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pega Cloud | $ | 54,776 | 24 | % | $ | 35,153 | 16 | % | $ | 19,623 | 56 | % | $ | 147,080 | 20 | % | $ | 94,610 | 15 | % | $ | 52,470 | 55 | % | |||||||||||||||||||||||||||||
Maintenance | 74,670 | 33 | % | 70,371 | 32 | % | 4,299 | 6 | % | 220,587 | 31 | % | 207,406 | 33 | % | 13,181 | 6 | % | |||||||||||||||||||||||||||||||||||
Term license | 35,932 | 16 | % | 48,989 | 23 | % | (13,057) | (27) | % | 170,455 | 24 | % | 122,257 | 19 | % | 48,198 | 39 | % | |||||||||||||||||||||||||||||||||||
Subscription (1) | $ | 165,378 | 73 | % | $ | 154,513 | 71 | % | 10,865 | 7 | % | $ | 538,122 | 75 | % | $ | 424,273 | 67 | % | 113,849 | 27 | % | |||||||||||||||||||||||||||||||
Perpetual license | 3,852 | 2 | % | 9,016 | 4 | % | (5,164) | (57) | % | 16,568 | 2 | % | 43,286 | 7 | % | (26,718) | (62) | % | |||||||||||||||||||||||||||||||||||
Consulting | 56,721 | 25 | % | 53,174 | 25 | % | 3,547 | 7 | % | 164,227 | 23 | % | 167,282 | 26 | % | (3,055) | (2) | % | |||||||||||||||||||||||||||||||||||
$ | 225,951 | 100 | % | $ | 216,703 | 100 | % | $ | 9,248 | 4 | % | $ | 718,917 | 100 | % | $ | 634,841 | 100 | % | $ | 84,076 | 13 | % |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Software license | $ | 39,093 | 98 | % | $ | 57,329 | 99 | % | $ | (18,236) | (32) | % | $ | 184,669 | 99 | % | $ | 162,561 | 98 | % | $ | 22,108 | 14 | % | |||||||||||||||||||||||||||||
Maintenance | 69,192 | 93 | % | 63,683 | 90 | % | 5,509 | 9 | % | 203,942 | 92 | % | 188,091 | 91 | % | 15,851 | 8 | % | |||||||||||||||||||||||||||||||||||
Pega Cloud | 35,059 | 64 | % | 17,329 | 49 | % | 17,730 | 102 | % | 90,842 | 62 | % | 46,841 | 50 | % | 44,001 | 94 | % | |||||||||||||||||||||||||||||||||||
Consulting | 4,808 | 8 | % | (2,536) | (5) | % | 7,344 | * | 5,446 | 3 | % | 4,933 | 3 | % | 513 | 10 | % | ||||||||||||||||||||||||||||||||||||
$ | 148,152 | 66 | % | $ | 135,805 | 63 | % | $ | 12,347 | 9 | % | $ | 484,899 | 67 | % | $ | 402,426 | 63 | % | $ | 82,473 | 20 | % |
(Dollars in thousands) | Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
% of Revenue | % of Revenue | % of Revenue | % of Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
Selling and marketing | $ | 132,053 | 58 | % | $ | 115,237 | 53 | % | $ | 16,816 | 15 | % | $ | 395,684 | 55 | % | $ | 341,064 | 54 | % | $ | 54,620 | 16 | % | |||||||||||||||||||||||||||||
Research and development | $ | 60,024 | 27 | % | $ | 52,492 | 24 | % | $ | 7,532 | 14 | % | $ | 177,620 | 25 | % | $ | 152,802 | 24 | % | $ | 24,818 | 16 | % | |||||||||||||||||||||||||||||
General and administrative | $ | 17,907 | 8 | % | $ | 14,843 | 7 | % | $ | 3,064 | 21 | % | $ | 49,192 | 7 | % | $ | 41,693 | 7 | % | $ | 7,499 | 18 | % |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Software license | $ | 57,329 | 99 | % | $ | 51,087 | 98 | % | $ | 6,242 | 12 | % | $ | 162,561 | 98 | % | $ | 181,127 | 98 | % | $ | (18,566 | ) | (10 | )% | ||||||||||
Maintenance | 63,683 | 90 | % | 59,938 | 91 | % | 3,745 | 6 | % | 188,091 | 91 | % | 178,413 | 91 | % | 9,678 | 5 | % | |||||||||||||||||
Cloud | 17,329 | 49 | % | 12,569 | 57 | % | 4,760 | 38 | % | 46,841 | 50 | % | 31,853 | 55 | % | 14,988 | 47 | % | |||||||||||||||||
Consulting | (2,536 | ) | (5 | )% | 5,246 | 8 | % | (7,782 | ) | * | 4,933 | 3 | % | 19,977 | 10 | % | (15,044 | ) | (75 | )% | |||||||||||||||
$ | 135,805 | 63 | % | $ | 128,840 | 63 | % | $ | 6,965 | 5 | % | $ | 402,426 | 63 | % | $ | 411,370 | 65 | % | $ | (8,944 | ) | (2 | )% |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Selling and marketing (1) | $ | 115,237 | $ | 87,490 | $ | 27,747 | 32 | % | $ | 341,064 | $ | 269,845 | $ | 71,219 | 26 | % | |||||||||||
As a percent of total revenue | 53 | % | 43 | % | 54 | % | 42 | % | |||||||||||||||||||
Selling and marketing headcount, end of period | 1,532 | 1,194 | 338 | 28 | % |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Research and development (1) | $ | 52,492 | $ | 46,504 | $ | 5,988 | 13 | % | $ | 152,802 | $ | 135,261 | $ | 17,541 | 13 | % | |||||||||||
As a percent of total revenue | 24 | % | 23 | % | 24 | % | 21 | % | |||||||||||||||||||
Research and development headcount, end of period | 1,631 | 1,595 | 36 | 2 | % |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
General and administrative (1) | $ | 14,843 | $ | 12,104 | $ | 2,739 | 23 | % | $ | 41,693 | $ | 38,749 | $ | 2,944 | 8 | % | |||||||||||
As a percent of total revenue | 7 | % | 6 | % | 7 | % | 6 | % | |||||||||||||||||||
General and administrative headcount, end of period (2) | 420 | 326 | 94 | 29 | % |
(Dollars in thousands) | Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||
Foreign currency transaction gain (loss) | $ | 4,236 | $ | (1,970) | $ | 6,206 | * | $ | 2,545 | $ | (3,577) | $ | 6,122 | * | |||||||||||||||||||||||||||
Interest income | 243 | 598 | (355) | (59) | % | 1,092 | 1,865 | (773) | (41) | % | |||||||||||||||||||||||||||||||
Interest expense | (5,956) | (42) | (5,914) | (14,081) | % | (13,791) | (42) | (13,749) | (32,736) | % | |||||||||||||||||||||||||||||||
Gain on capped call transactions | 18,989 | — | 18,989 | * | 19,816 | — | 19,816 | * | |||||||||||||||||||||||||||||||||
Other income, net | — | 323 | (323) | (100) | % | 1,374 | 378 | 996 | 263 | % | |||||||||||||||||||||||||||||||
$ | 17,512 | $ | (1,091) | $ | 18,603 | * | $ | 11,036 | $ | (1,376) | $ | 12,412 | * |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Cost of revenues | $ | 4,787 | $ | 4,319 | $ | 468 | 11 | % | $ | 14,216 | $ | 12,277 | $ | 1,939 | 16 | % | |||||||||||
Selling and marketing | 8,317 | 6,198 | 2,119 | 34 | % | 24,055 | 16,895 | 7,160 | 42 | % | |||||||||||||||||
Research and development | 4,858 | 3,917 | 941 | 24 | % | 13,990 | 11,356 | 2,634 | 23 | % | |||||||||||||||||
General and administrative | 3,884 | 1,974 | 1,910 | 97 | % | 7,981 | 7,045 | 936 | 13 | % | |||||||||||||||||
$ | 21,846 | $ | 16,408 | $ | 5,438 | 33 | % | $ | 60,242 | $ | 47,573 | $ | 12,669 | 27 | % |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Foreign currency transaction (loss) gain | $ | (1,970 | ) | $ | 399 | $ | (2,369 | ) | * | $ | (3,577 | ) | $ | 558 | $ | (4,135 | ) | * | |||||||||
Interest income, net | 556 | 683 | (127 | ) | (19 | )% | 1,823 | 2,076 | (253 | ) | (12 | )% | |||||||||||||||
Other income, net | 323 | — | 323 | * | 378 | 363 | 15 | 4 | % | ||||||||||||||||||
$ | (1,091 | ) | $ | 1,082 | $ | (2,173 | ) | * | $ | (1,376 | ) | $ | 2,997 | $ | (4,373 | ) | * |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
Contractual interest expense (0.75% coupon) | $ | 1,125 | $ | — | $ | 1,125 | $ | 2,700 | $ | — | $ | 2,700 | |||||||||||||||||||||||
Amortization of debt discount | 3,807 | — | 3,807 | 9,060 | — | 9,060 | |||||||||||||||||||||||||||||
Amortization of issuance costs | 565 | — | 565 | 1,345 | — | 1,345 | |||||||||||||||||||||||||||||
$ | 5,497 | $ | — | $ | 5,497 | $ | 13,105 | $ | — | $ | 13,105 |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
(Benefit from) income taxes | $ | (17,520 | ) | $ | (8,589 | ) | $ | (43,158 | ) | $ | (23,692 | ) | (Benefit from) income taxes | $ | (25,053) | $ | (17,520) | $ | (61,182) | $ | (43,158) | |||||||||||||||||
Effective income tax rate | 32 | % | 80 | % | Effective income tax rate | 48 | % | 32 | % |
Nine Months Ended September 30, | |||||||
(in thousands) | 2019 | 2018 | |||||
Cash provided by (used in): | |||||||
Operating activities | $ | (13,462 | ) | $ | 67,088 | ||
Investing activities | 53,448 | (49,595 | ) | ||||
Financing activities | (61,941 | ) | (71,664 | ) | |||
Effect of exchange rates on cash and cash equivalents | (363 | ) | (1,913 | ) | |||
Net (decrease) in cash and cash equivalents | $ | (22,318 | ) | $ | (56,084 | ) |
(in thousands) | September 30, 2019 | December 31, 2018 | |||||
Held by U.S. entities | $ | 41,484 | $ | 143,533 | |||
Held by foreign entities | 71,085 | 63,890 | |||||
Total cash, cash equivalents, and marketable securities | $ | 112,569 | $ | 207,423 |
Nine Months Ended September 30, | |||||||||||
(in thousands) | 2020 | 2019 | |||||||||
Cash provided by (used in): | |||||||||||
Operating activities | $ | (26,257) | $ | (13,462) | |||||||
Investing activities | (210,701) | 53,448 | |||||||||
Financing activities | 449,630 | (61,941) | |||||||||
Effect of exchange rates on cash and cash equivalents | 183 | (363) | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 212,855 | $ | (22,318) |
(in thousands) | September 30, 2020 | December 31, 2019 | |||||||||
Held by U.S. entities | $ | 415,358 | $ | 23,437 | |||||||
Held by foreign entities | 52,670 | 44,926 | |||||||||
Total cash, cash equivalents, and marketable securities | $ | 468,028 | $ | 68,363 |
(in thousands) | Amount | |||||||
Principal | $ | 600,000 | ||||||
Less: issuance costs | (14,527) | |||||||
Less: Capped Call Transactions | (51,900) | |||||||
$ | 533,573 |
Nine Months Ended September 30, | |||
(in thousands) | 2019 | ||
January 1, | $ | 6,620 | |
Authorizations (2) | 60,000 | ||
Repurchases | (20,286 | ) | |
September 30, | $ | 46,334 |
(in thousands) | Nine Months Ended September 30, 2020 | ||||
December 31, 2019 | $ | 45,484 | |||
Authorizations (2) | 20,516 | ||||
Repurchases | (18,828) | ||||
September 30, 2020 | $ | 47,172 |
Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | ||||||||||||
(in thousands) | Shares | Amount | Shares | Amount | |||||||||
Tax withholdings for net settlement of equity awards | 514 | $ | 34,871 | 591 | $ | 35,530 | |||||||
Stock repurchase program (1) | |||||||||||||
Repurchases paid | 318 | 20,086 | 512 | 29,949 | |||||||||
Repurchases unsettled at period end | 3 | 200 | 3 | 200 | |||||||||
Activity in period (2) | 835 | $ | 55,157 | 1,106 | $ | 65,679 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
(in thousands) | Shares | Amount | Shares | Amount | |||||||||||||||||||
Tax withholdings for net settlement of equity awards | 599 | $ | 59,613 | 514 | $ | 34,871 | |||||||||||||||||
Stock repurchase program | 204 | 18,828 | 321 | 20,286 | |||||||||||||||||||
803 | $ | 78,441 | 835 | $ | 55,157 |
Nine Months Ended September 30, | |||||||
(in thousands) | 2019 | 2018 | |||||
Dividend payments to shareholders | $ | 7,105 | $ | 7,067 |
Nine Months Ended September 30, | |||||||||||
(in thousands) | 2020 | 2019 | |||||||||
Dividend payments to shareholders | $ | 7,206 | $ | 7,105 |
Payments due by period | |||||||||||||||||||||||||||||||||||||||||
(in thousands) | 2020 | 2021 | 2022-2023 | 2024-2025 | 2026 and thereafter | Other | Total | ||||||||||||||||||||||||||||||||||
Purchase obligations (1) | $ | 21,627 | $ | 56,689 | $ | 61,117 | $ | 173 | $ | — | $ | — | $ | 139,606 | |||||||||||||||||||||||||||
Investment commitments (2) | 300 | 500 | — | — | — | — | 800 | ||||||||||||||||||||||||||||||||||
Liability for uncertain tax positions (3) | — | — | — | — | — | 5,441 | 5,441 | ||||||||||||||||||||||||||||||||||
Operating lease obligations | 5,490 | 22,887 | 43,888 | 13,187 | 9,959 | — | 95,411 | ||||||||||||||||||||||||||||||||||
$ | 27,417 | $ | 80,076 | $ | 105,005 | $ | 13,360 | $ | 9,959 | $ | 5,441 | $ | 241,258 |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
(Decrease) increase in revenue | (4) | % | (4) | % | |||||||
(Decrease) increase in net (loss) | (13) | % | (6) | % |
(in thousands, except per share amounts) | Total Number of Shares Purchased (1) (2) | Average Price Paid per Share (1) (2) | Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Program (2) | Approximate Dollar Value of Shares That May Yet Be Purchased at Period End Under Publicly Announced Share Repurchase Programs (2) | |||||||||||||||||||
July 1, 2020 - July 31, 2020 | 135 | $ | 109.36 | 42 | $ | 53,470 | |||||||||||||||||
August 1, 2020 - August 31, 2020 | 162 | $ | 120.08 | 26 | $ | 50,321 | |||||||||||||||||
September 1, 2020 - September 30, 2020 | 138 | $ | 124.88 | 26 | $ | 47,172 | |||||||||||||||||
435 | $ | 118.29 | 94 |
(in thousands, except per share amounts) | Total Number of Shares Purchased (1) (2) | Average Price Paid per Share (1) (2) | Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Program (2) | Approximate Dollar Value of Shares That May Yet Be Purchased at Period End Under Publicly Announced Share Repurchase Programs (2) | |||||||||
July 1, 2019 - July 31, 2019 | 37 | $ | 75.30 | 29 | $ | 50,532 | |||||||
August 1, 2019 - August 31, 2019 | 94 | $ | 72.06 | 31 | $ | 48,333 | |||||||
September 1, 2019 - September 30, 2019 | 199 | $ | 71.12 | 28 | $ | 46,334 | |||||||
330 | $ | 71.86 |
Exhibit No. | Description | |||||||
31.1+ | ||||||||
32++ | ||||||||
10.2+ | ||||||||
10.3+ | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document. | |||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Pegasystems Inc. | |||||||||||
Dated: | October 28, 2020 | ||||||||||
By: | |||||||||||
/s/ KENNETH STILLWELL | |||||||||||
Kenneth Stillwell | |||||||||||
Chief Financial Officer and Chief Administrative Officer | |||||||||||
(Principal Financial Officer) |