COVER PAGE
COVER PAGE - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 19, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-11859 | |
Entity Registrant Name | PEGASYSTEMS INC. | |
Amendment Flag | false | |
Entity Central Index Key | 0001013857 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-2787865 | |
Entity Address, Address Line One | One Main Street | |
Entity Address, City or Town | Cambridge | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02142 | |
City Area Code | 617 | |
Local Phone Number | 374-9600 | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Trading Symbol | PEGA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 81,818,454 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 132,771 | $ 159,965 |
Marketable securities | 199,401 | 202,814 |
Total cash, cash equivalents, and marketable securities | 332,172 | 362,779 |
Accounts receivable | 171,181 | 182,717 |
Unbilled receivables | 226,052 | 226,714 |
Other current assets | 74,408 | 68,008 |
Total current assets | 803,813 | 840,218 |
Unbilled receivables | 135,975 | 129,789 |
Goodwill | 82,031 | 81,923 |
Other long-term assets | 516,661 | 541,601 |
Total assets | 1,538,480 | 1,593,531 |
Current liabilities: | ||
Accounts payable | 18,628 | 15,281 |
Accrued expenses | 63,401 | 63,890 |
Accrued compensation and related expenses | 54,804 | 120,946 |
Deferred revenue | 290,873 | 275,844 |
Other current liabilities | 7,309 | 9,443 |
Total current liabilities | 435,015 | 485,404 |
Convertible senior notes, net | 591,440 | 590,722 |
Operating lease liabilities | 90,699 | 87,818 |
Other long-term liabilities | 14,658 | 13,499 |
Total liabilities | 1,131,812 | 1,177,443 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Preferred stock, 1,000 shares authorized; none issued | 0 | 0 |
Common stock, 200,000 shares authorized; 81,802 and 81,712 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 818 | 817 |
Additional paid-in capital | 141,771 | 145,810 |
Retained earnings | 273,615 | 276,449 |
Accumulated other comprehensive (loss) | (9,536) | (6,988) |
Total stockholders’ equity | 406,668 | 416,088 |
Total liabilities and stockholders’ equity | $ 1,538,480 | $ 1,593,531 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Stockholders’ equity: | ||
Preferred stock, shares authorized (in shares) | 1,000 | 1,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 81,802 | 81,712 |
Common stock, shares outstanding (in shares) | 81,802 | 81,712 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue | ||
Total revenue | $ 376,307 | $ 313,499 |
Cost of revenue | ||
Total cost of revenue | 88,197 | 82,447 |
Gross profit | 288,110 | 231,052 |
Operating expenses | ||
Selling and marketing | 162,236 | 148,739 |
Research and development | 71,490 | 62,442 |
General and administrative | 35,764 | 18,270 |
Total operating expenses | 269,490 | 229,451 |
Income from operations | 18,620 | 1,601 |
Foreign currency transaction gain (loss) | 2,876 | (5,098) |
Interest income | 207 | 153 |
Interest expense | (1,946) | (1,880) |
(Loss) on capped call transactions | (30,560) | (19,117) |
Other income, net | 2,741 | 106 |
(Loss) before (benefit from) income taxes | (8,062) | (24,235) |
(Benefit from) income taxes | (7,683) | (17,618) |
Net (loss) | $ (379) | $ (6,617) |
(Loss) per share | ||
Basic (in dollars per share) | $ 0 | $ (0.08) |
Diluted (in dollars per share) | $ 0 | $ (0.08) |
Weighted-average number of common shares outstanding | ||
Basic (in shares) | 81,680 | 81,004 |
Diluted (in shares) | 81,680 | 81,004 |
Subscription services | ||
Revenue | ||
Total revenue | $ 170,033 | $ 143,419 |
Cost of revenue | ||
Total cost of revenue | 32,030 | 28,343 |
Subscription license | ||
Revenue | ||
Total revenue | 137,533 | 111,509 |
Cost of revenue | ||
Total cost of revenue | 622 | 620 |
Perpetual license | ||
Revenue | ||
Total revenue | 7,440 | 5,452 |
Cost of revenue | ||
Total cost of revenue | 34 | 30 |
Consulting | ||
Revenue | ||
Total revenue | 61,301 | 53,119 |
Cost of revenue | ||
Total cost of revenue | $ 55,511 | $ 53,454 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) | $ (379) | $ (6,617) |
Other comprehensive (loss) income, net of tax | ||
Unrealized gain on available-for-sale securities | 222 | 1,010 |
Foreign currency translation adjustments | (2,770) | (730) |
Total other comprehensive (loss) income, net of tax | (2,548) | 280 |
Comprehensive (loss) | $ (2,927) | $ (6,337) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Additional Paid-In CapitalCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive (Loss) |
Balance, beginning of period (in shares) at Dec. 31, 2020 | 80,890 | |||||||
Balance, beginning of period at Dec. 31, 2020 | $ 542,172 | $ (52,205) | $ 809 | $ 204,432 | $ (61,604) | $ 339,879 | $ 9,399 | $ (2,948) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (in shares) | (70) | |||||||
Repurchase of common stock | (9,146) | $ (1) | (9,145) | |||||
Issuance of common stock for share-based compensation plans (in shares) | 402 | |||||||
Issuance of common stock for stock compensation plans | (25,509) | $ 4 | (25,513) | |||||
Issuance of common stock under the employee stock purchase plan (in shares) | 24 | |||||||
Issuance of common stock under the employee stock purchase plan | 2,288 | 2,288 | ||||||
Stock-based compensation | 30,100 | 30,100 | ||||||
Cash dividends declared ($0.03 per share) | (2,438) | (2,438) | ||||||
Other comprehensive income (loss) | 280 | 280 | ||||||
Net (loss) | (6,617) | (6,617) | ||||||
Balance, end of period (in shares) at Mar. 31, 2021 | 81,246 | |||||||
Balance, end of period at Mar. 31, 2021 | $ 478,925 | $ 812 | 140,558 | 340,223 | (2,668) | |||
Balance, beginning of period (in shares) at Dec. 31, 2021 | 81,712 | 81,712 | ||||||
Balance, beginning of period at Dec. 31, 2021 | $ 416,088 | $ 817 | 145,810 | 276,449 | (6,988) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (in shares) | (242) | |||||||
Repurchase of common stock | (22,583) | $ (2) | (22,581) | |||||
Issuance of common stock for share-based compensation plans (in shares) | 297 | |||||||
Issuance of common stock for stock compensation plans | (12,128) | $ 3 | (12,131) | |||||
Issuance of common stock under the employee stock purchase plan (in shares) | 35 | |||||||
Issuance of common stock under the employee stock purchase plan | 2,446 | 2,446 | ||||||
Stock-based compensation | 28,227 | 28,227 | ||||||
Cash dividends declared ($0.03 per share) | (2,455) | (2,455) | ||||||
Other comprehensive income (loss) | (2,548) | (2,548) | ||||||
Net (loss) | $ (379) | (379) | ||||||
Balance, end of period (in shares) at Mar. 31, 2022 | 81,802 | 81,802 | ||||||
Balance, end of period at Mar. 31, 2022 | $ 406,668 | $ 818 | $ 141,771 | $ 273,615 | $ (9,536) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividend declared (in dollars per share) | $ 0.03 | $ 0.03 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities | ||
Net (loss) | $ (379) | $ (6,617) |
Adjustments to reconcile net (loss) to cash provided by operating activities | ||
Stock-based compensation | 28,227 | 30,100 |
Deferred income taxes | (9,295) | (15,068) |
Loss on capped call transactions | 30,560 | 19,117 |
Amortization of deferred commissions | 17,221 | 11,496 |
Lease expense | 3,919 | 3,238 |
Amortization of intangible assets and depreciation | 4,171 | 7,006 |
Foreign currency transaction (gain) loss | (2,876) | 5,098 |
Other non-cash | (1,100) | 1,634 |
Change in operating assets and liabilities, net | (55,332) | (34,354) |
Cash provided by operating activities | 15,116 | 21,650 |
Investing activities | ||
Purchases of investments | (33,690) | (21,051) |
Proceeds from maturities and called investments | 20,915 | 40,867 |
Sales of investments | 13,350 | 2,450 |
Payments for acquisitions, net of cash acquired | 0 | (4,993) |
Investment in property and equipment | (6,657) | (1,784) |
Cash (used in) provided by investing activities | (6,082) | 15,489 |
Financing activities | ||
Proceeds from employee stock purchase plan | 2,446 | 2,288 |
Dividend payments to stockholders | (2,454) | (2,427) |
Common stock repurchases | (35,910) | (34,655) |
Cash (used in) financing activities | (35,918) | (34,794) |
Effect of exchange rate changes on cash and cash equivalents | (310) | (1,536) |
Net (decrease) increase in cash and cash equivalents | (27,194) | 809 |
Cash and cash equivalents, beginning of period | 159,965 | 171,899 |
Cash and cash equivalents, end of period | $ 132,771 | $ 172,708 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | NOTE 1. BASIS OF PRESENTATION Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for the full year 2022. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income, or net income. |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 3 Months Ended |
Mar. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
MARKETABLE SECURITIES | NOTE 2. MARKETABLE SECURITIES March 31, 2022 December 31, 2021 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value Government debt $ 2,000 $ — $ (47) $ 1,953 $ 2,000 $ — $ (10) $ 1,990 Corporate debt 200,371 7 (2,930) 197,448 201,659 2 (837) 200,824 $ 202,371 $ 7 $ (2,977) $ 199,401 $ 203,659 $ 2 $ (847) $ 202,814 As of March 31, 2022, marketable securities’ maturities ranged from April 2022 to September 2024, with a weighted-average remaining maturity of 1.02 years. |
RECEIVABLES, CONTRACT ASSETS, A
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE | 3 Months Ended |
Mar. 31, 2022 | |
Receivables [Abstract] | |
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE | NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE Receivables (in thousands) March 31, 2022 December 31, 2021 Accounts receivable $ 171,181 $ 182,717 Unbilled receivables 226,052 226,714 Long-term unbilled receivables 135,975 129,789 $ 533,208 $ 539,220 Unbilled receivables Unbilled receivables are client-committed amounts for which revenue recognition precedes billing, and billing is solely subject to the passage of time. Unbilled receivables by expected billing date: (Dollars in thousands) March 31, 2022 1 year or less $ 226,052 62 % 1-2 years 88,003 25 % 2-5 years 47,972 13 % $ 362,027 100 % Unbilled receivables by contract effective date: (Dollars in thousands) March 31, 2022 2022 $ 72,143 20 % 2021 163,869 45 % 2020 77,585 21 % 2019 27,163 8 % 2018 and prior 21,267 6 % $ 362,027 100 % Major clients Clients accounting for 10% or more of the Company’s total receivables: March 31, 2022 December 31, 2021 Client A Accounts receivable 4 % 1 % Unbilled receivables 15 % 15 % Total receivables 11 % 10 % Contract assets Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation. (in thousands) March 31, 2022 December 31, 2021 Contract assets (1) $ 11,765 $ 12,530 Long-term contract assets (2) 10,292 10,643 $ 22,057 $ 23,173 (1) Included in other current assets. (2) Included in other long-term assets. Deferred revenue Deferred revenue consists of billings and payments received in advance of revenue recognition. (in thousands) March 31, 2022 December 31, 2021 Deferred revenue $ 290,873 $ 275,844 Long-term deferred revenue (1) 6,612 5,655 $ 297,485 $ 281,499 (1) Included in other long-term liabilities. The change in deferred revenue in the three months ended March 31, 2022 was primarily due to new billings in advance of revenue recognition and $124.9 million of revenue recognized during the period that was included in deferred revenue as of December 31, 2021. |
DEFERRED COMMISSIONS
DEFERRED COMMISSIONS | 3 Months Ended |
Mar. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
DEFERRED COMMISSIONS | NOTE 4. DEFERRED COMMISSIONS (in thousands) March 31, 2022 December 31, 2021 Deferred commissions (1) $ 125,220 $ 135,911 (1) Included in other long-term assets. Three Months Ended (in thousands) 2022 2021 Amortization of deferred commissions (1) $ 17,221 $ 11,496 (1) Included in selling and marketing expense. |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | NOTE 5. GOODWILL AND OTHER INTANGIBLES Goodwill Change in goodwill: Three Months Ended (in thousands) 2022 January 1, $ 81,923 Acquisition — Currency translation adjustments 108 March 31, $ 82,031 Intangibles Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives. March 31, 2022 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,142 $ (57,662) $ 5,480 Technology 2-10 years 67,142 (59,531) 7,611 Other 1-5 years 5,361 (5,361) — $ 135,645 $ (122,554) $ 13,091 (1) Included in other long-term assets. December 31, 2021 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,165 $ (57,342) $ 5,823 Technology 2-10 years 67,142 (58,902) 8,240 Other 1-5 years 5,361 (5,361) — $ 135,668 $ (121,605) $ 14,063 (1) Included in other long-term assets. Amortization of intangible assets: Three Months Ended (in thousands) 2022 2021 Cost of revenue $ 629 $ 629 Selling and marketing 343 373 $ 972 $ 1,002 Future estimated intangibles assets amortization: (in thousands) March 31, 2022 Remainder of 2022 $ 2,914 2023 3,618 2024 2,849 2025 2,509 2026 874 2027 327 $ 13,091 |
OTHER ASSETS AND LIABILITIES
OTHER ASSETS AND LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
Other Assets and Liabilities [Abstract] | |
OTHER ASSETS AND LIABILITIES | NOTE 6. OTHER ASSETS AND LIABILITIES Other current assets (in thousands) March 31, 2022 December 31, 2021 Income tax receivables $ 27,679 $ 25,691 Contract assets 11,765 12,530 Other 34,964 29,787 $ 74,408 $ 68,008 Other long-term assets (in thousands) March 31, 2022 December 31, 2021 Deferred income taxes $ 188,155 $ 180,656 Deferred commissions 125,220 135,911 Right of use assets 87,212 87,521 Capped call transactions 29,404 59,964 Property and equipment 28,603 26,837 Intangible assets 13,091 14,063 Contract assets 10,292 10,643 Other 34,684 26,006 $ 516,661 $ 541,601 Other current liabilities (in thousands) March 31, 2022 December 31, 2021 Operating lease liabilities $ 4,855 $ 6,989 Dividends payable 2,454 2,454 $ 7,309 $ 9,443 Other long-term liabilities (in thousands) March 31, 2022 December 31, 2021 Deferred revenue $ 6,612 $ 5,655 Other 8,046 7,844 $ 14,658 $ 13,499 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 7. LEASES Corporate headquarters In February 2021, the Company agreed to accelerate its exit from its previous corporate headquarters to October 1, 2021, in exchange for a one-time payment from its landlord of $18 million, which was amortized over the remaining lease term. The exit accelerated depreciation on the related leasehold improvements and reduced the Company’s future lease liabilities by $21.1 million and right of use assets by $20.3 million. On March 31, 2021 the Company leased office space at One Main Street, Cambridge, Massachusetts, to serve as its corporate headquarters. The 4.5 year lease includes a base rent of $2 million per year. New Waltham Office On July 6, 2021, the Company entered into an office space lease for 131 thousand square feet in Waltham, Massachusetts. The lease term of 11 years began on August 1, 2021. The annual rent equals the base rent plus a portion of building operating costs and real estate taxes. Rent first becomes payable on August 1, 2022. Base rent for the first year is approximately $6 million and will increase by 3% annually. In addition, the Company will receive an improvement allowance from the landlord of up to $11.8 million. This lease increased the Company’s lease liabilities and lease-related right of use assets by $42.1 million on August 1, 2021. Expense Three Months Ended (in thousands) 2022 2021 Fixed lease costs (1) $ 5,093 $ 300 Short-term lease costs 806 459 Variable lease costs 764 1,387 $ 6,663 $ 2,146 (1) The lower fixed lease costs in the three months ended March 31, 2021 was due to the modification of the corporate headquarters lease. Right of use assets and lease liabilities (in thousands) March 31, 2022 December 31, 2021 Right of use assets (1) $ 87,212 $ 87,521 Operating lease liabilities (2) $ 4,855 $ 6,989 Long-term operating lease liabilities $ 90,699 $ 87,818 (1) Represents the Company’s right to use the leased asset during the lease term. Included in other long-term assets. (2) Included in other current liabilities. Weighted-average remaining lease term and discount rate for the Company’s leases were: March 31, 2022 December 31, 2021 Weighted-average remaining lease term 7.5 years 7.7 years Weighted-average discount rate (1) 4.3 % 4.4 % (1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment. Maturities of lease liabilities: (in thousands) March 31, 2022 Remainder of 2022 $ 3,887 2023 20,317 2024 17,141 2025 14,352 2026 10,664 2027 and thereafter 48,381 Total lease payments 114,742 Less: imputed interest (1) (19,188) $ 95,554 (1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event. Cash flow information Three Months Ended (in thousands) 2022 2021 Cash paid for leases $ 3,650 $ 6,716 Right of use assets recognized for new leases and amendments (non-cash) $ 3,854 $ 714 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 8. DEBT Convertible senior notes and capped calls Convertible senior notes In February 2020, the Company issued Convertible Senior Notes (the "Notes") with an aggregate principal of $600 million, due March 1, 2025, in a private placement. No principal payments are due before maturity. The Notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1, beginning on September 1, 2020. Conversion rights The conversion rate is 7.4045 shares of common stock per $1,000 principal amount of the Notes, representing an initial conversion price of $135.05 per share of common stock. The Company will settle conversions by paying or delivering cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate. The conversion rate will be adjusted upon certain events, including spin-offs, tender offers, exchange offers, and certain stockholder distributions. Beginning on September 1, 2024, noteholders may convert their Notes at any time at their election. Before September 1, 2024, noteholders may convert their Notes in the following circumstances: • During any calendar quarter beginning after June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. • During the five consecutive business days immediately after any five consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day. • Upon certain corporate events or distributions or if the Company calls any Notes for redemption, noteholders may convert before the close of business on the business day immediately before the related redemption date (or, if the Company fails to pay the redemption price in full on the redemption date, until the Company pays the redemption price). As of March 31, 2022, the Notes were not eligible for conversion. Repurchase rights On or after March 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest, if the last reported sale price of the Company’s common stock exceeded 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice. If certain corporate events that constitute a “Fundamental Change” occur, each noteholder will have the right to require the Company to repurchase for cash all of such noteholder’s Notes, or any portion of the principal thereof that is equal to $1,000 or a multiple of $1,000, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. A Fundamental Change relates to mergers, changes in control of the Company, liquidation/dissolution of the Company, or the delisting of the Company’s common stock. Carrying value of the Notes: (in thousands) March 31, 2022 December 31, 2021 Principal $ 600,000 $ 600,000 Unamortized issuance costs (8,560) (9,278) Convertible senior notes, net $ 591,440 $ 590,722 Interest expense related to the Notes: Three Months Ended (in thousands) 2022 2021 Contractual interest expense (0.75% coupon) $ 1,125 $ 1,125 Amortization of issuance costs 719 673 $ 1,844 $ 1,798 The effective interest rate for the Notes: Three Months Ended 2022 2021 Weighted-average effective interest rate 1.2 % 1.2 % Future payments of principal and contractual interest: March 31, 2022 (in thousands) Principal Interest Total Remainder of 2022 $ — $ 2,250 $ 2,250 2023 — 4,500 4,500 2024 — 4,500 4,500 2025 600,000 2,250 602,250 $ 600,000 $ 13,500 $ 613,500 Capped call transactions In February 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions cover approximately 4.4 million shares (representing the number of shares for which the Notes are initially convertible) of the Company’s common stock. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The cap price of the Capped Call Transactions is subject to adjustment upon specified extraordinary events affecting the Company, including mergers and tender offers. The Capped Call Transactions are accounted for as derivative instruments and do not qualify for the Company’s own equity scope exception in ASC 815 since, in some cases of early settlement, the settlement value of the Capped Call Transactions, calculated following the governing documents, may not represent a fair value measurement. The Capped Call Transactions are classified as other long-term assets and remeasured to fair value each reporting period, resulting in a non-operating gain or loss. Change in capped call transactions: Three Months Ended (in thousands) 2022 2021 January 1, $ 59,964 $ 83,597 Fair value adjustment (30,560) (19,117) March 31, $ 29,404 $ 64,480 Credit facility In November 2019, and as since amended, the Company entered into a five-year $100 million senior secured revolving credit agreement (the “Credit Facility”) with PNC Bank, National Association. The Company may use borrowings for general corporate purposes and to finance working capital needs. Subject to specific conditions, the Credit Facility allows the Company to increase the aggregate commitment to $200 million. The commitments expire on November 4, 2024, and any outstanding loans will be payable on such date. The Credit Facility, as amended, contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. The Company is required to comply with financial covenants, including: • Beginning with the fiscal quarter ended March 31, 2022 and ending with the fiscal quarter ended December 31, 2022, Pegasystems Inc. must maintain at least $200 million in cash, investments, and availability under the Revolving Credit Loan. • Beginning with the quarter ended March 31, 2023, a maximum net consolidated leverage ratio of 3.5 to 1.0 (with a step-up for certain acquisitions) and a minimum consolidated interest coverage ratio of 3.5 to 1.0. As of March 31, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Credit Facility. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 9. FAIR VALUE MEASUREMENTS Assets and liabilities measured at fair value on a recurring basis The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows: • Level 1 - observable inputs such as quoted prices in active markets for identical assets or liabilities; • Level 2 - significant other inputs that are observable either directly or indirectly; and • Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and minimize unobservable inputs when determining fair value. The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model use various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers both historical and implied volatility levels of the underlying equity security. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds. Assets and liabilities measured at fair value on a recurring basis: March 31, 2022 December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents $ 19,626 $ — $ — $ 19,626 $ 3,216 $ — $ — $ 3,216 Marketable securities $ — $ 199,401 $ — $ 199,401 $ — $ 202,814 $ — $ 202,814 Capped Call Transactions (1) $ — $ 29,404 $ — $ 29,404 $ — $ 59,964 $ — $ 59,964 Venture investments (1) (2) $ — $ — $ 12,830 $ 12,830 $ — $ — $ 7,648 $ 7,648 (1) Included in other long-term assets. (2) Investments in privately-held companies. Changes in venture investments: Three Months Ended (in thousands) 2022 2021 January 1, $ 7,648 $ 8,345 New investments — 500 Sales of investments — (400) Changes in foreign exchange rates (61) (9) Changes in fair value: included in other income 2,741 100 included in other comprehensive income 2,502 1,220 March 31, $ 12,830 $ 9,756 The carrying value of certain other financial instruments, including receivables and accounts payable, approximates fair value due to these items’ short maturity. Fair value of the Notes The Notes’ fair value (including the conversion feature embedded in the Notes) was $573.0 million as of March 31, 2022 and $642.0 million as of December 31, 2021. The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 10. REVENUE Geographic revenue Three Months Ended (Dollars in thousands) 2022 2021 U.S. $ 217,272 58 % $ 194,568 62 % Other Americas 45,751 12 % 11,901 4 % United Kingdom (“U.K.”) 30,932 8 % 28,212 9 % Europe (excluding U.K.), Middle East, and Africa 49,136 13 % 51,659 16 % Asia-Pacific 33,216 9 % 27,159 9 % $ 376,307 100 % $ 313,499 100 % Revenue streams Three Months Ended (in thousands) 2022 2021 Perpetual license $ 7,440 $ 5,452 Subscription license 137,533 111,509 Revenue recognized at a point in time 144,973 116,961 Maintenance 79,716 75,561 Pega Cloud 90,317 67,858 Consulting 61,301 53,119 Revenue recognized over time 231,334 196,538 Total revenue $ 376,307 $ 313,499 Three Months Ended (in thousands) 2022 2021 Pega Cloud $ 90,317 $ 67,858 Maintenance 79,716 75,561 Subscription services 170,033 143,419 Subscription license 137,533 111,509 Subscription 307,566 254,928 Perpetual license 7,440 5,452 Consulting 61,301 53,119 $ 376,307 $ 313,499 Remaining performance obligations ("Backlog") Expected future revenue from existing non-cancellable contracts: As of March 31, 2022: (Dollars in thousands) Subscription services Subscription Perpetual Consulting Total Maintenance Pega Cloud 1 year or less $ 228,984 $ 329,857 $ 47,428 $ 7,281 $ 40,661 $ 654,211 55 % 1-2 years 63,870 208,875 16,111 4,505 10,955 304,316 26 % 2-3 years 33,617 106,156 2,422 2,252 3,876 148,323 13 % Greater than 3 years 22,611 44,596 1,758 — 522 69,487 6 % $ 349,082 $ 689,484 $ 67,719 $ 14,038 $ 56,014 $ 1,176,337 100 % As of March 31, 2021: (Dollars in thousands) Subscription services Subscription Perpetual Consulting Total Maintenance Pega Cloud 1 year or less $ 220,100 $ 252,104 $ 41,025 $ 9,649 $ 21,068 $ 543,946 55 % 1-2 years 52,366 187,456 9,874 629 914 251,239 26 % 2-3 years 33,337 91,861 7,055 — 1,756 134,009 14 % Greater than 3 years 16,834 32,895 377 — 510 50,616 5 % $ 322,637 $ 564,316 $ 58,331 $ 10,278 $ 24,248 $ 979,810 100 % |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 11. STOCK-BASED COMPENSATION Expense Three Months Ended (in thousands) 2022 2021 Cost of revenue $ 6,378 $ 5,925 Selling and marketing 10,958 13,720 Research and development 7,346 6,770 General and administrative 3,545 3,685 $ 28,227 $ 30,100 Income tax benefit $ (5,311) $ (5,991) As of March 31, 2022, the Company had $200.8 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 2.3 years. Grants Three Months Ended (in thousands) Shares Total Fair Value Restricted stock units 1,096 $ 94,538 Non-qualified stock options 2,212 $ 60,514 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12. INCOME TAXES Effective income tax rate Three Months Ended (Dollars in thousands) 2022 2021 (Benefit from) income taxes $ (7,683) $ (17,618) Effective income tax benefit rate 95 % 73 % The change in the effective income tax benefit rate was primarily due to the impact of discrete tax items which were proportionately larger on a lower loss before income taxes. Stock-based compensation increases the variability of our effective tax rates. The impact of stock-based compensation on a given period depends on our profitability, the attributes of the stock compensation awards the Company grants, and award holders' exercise behavior. |
(LOSS) PER SHARE
(LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
(LOSS) PER SHARE | NOTE 13. (LOSS) PER SHARE Basic (loss) per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted (loss) per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and convertible senior notes. Calculation of (loss) per share: Three Months Ended (in thousands, except per share amounts) 2022 2021 Net (loss) $ (379) $ (6,617) Weighted-average common shares outstanding 81,680 81,004 (Loss) per share, basic $ 0.00 $ (0.08) Net (loss) $ (379) $ (6,617) Weighted-average common shares outstanding, assuming dilution (1) (2) (3) 81,680 81,004 (Loss) per share, diluted $ 0.00 $ (0.08) Outstanding anti-dilutive stock options and RSUs (4) 4,178 6,465 (1) In periods of loss, all dilutive securities are excluded as their inclusion would be anti-dilutive. (2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue an additional approximately 4.4 million shares. (3) The Company’s Capped Call Transactions represent the equivalent of approximately 4.4 million shares of the Company’s common stock (representing the number of shares for which the Notes are initially convertible). The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive. (4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. COMMITMENTS AND CONTINGENCIES Commitments See "Note 7. Leases" for additional information. Legal Proceedings In addition to the matters below, the Company is, or may become, involved in a variety of claims, demands, suits, investigations, and proceedings that arise from time to time relating to matters incidental to the ordinary course of the Company’s business, including actions concerning contracts, intellectual property, employment, benefits, and securities matters. Regardless of the outcome, legal disputes can have a material effect on the Company because of defense and settlement costs, diversion of management resources, and other factors. In addition, as the Company is a party to ongoing litigation, it is at least reasonably possible that our estimates will change in the near term and the effect may be material. As of March 31, 2022 and December 31, 2021, the Company has no accrued losses for litigation. Pegasystems Inc. v. Appian Corp. & Business Process Management Inc. On July 3, 2019, the Company filed suit in Massachusetts federal court against Appian Corp. (“Appian”) and Business Process Management, Inc. (“BPM”) relating to a BPM “Market Report” that Appian had used to promote itself against the Company. Pegasystems Inc. v. Appian Corp. & Business Process Management Inc., No. 1:19-cv-11461 (D. Mass). On April 15, 2022, each of the parties filed motions for summary judgment with the court. The Company continues to believe the counterclaims brought by Appian against the Company are without merit, and the Company intends to vigorously pursue its claims against Appian and defend against the counterclaims brought against the Company in this matter. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the Company’s belief that the damages claimed by Appian fail to satisfy the required legal standard, the status of the proceeding, and due to the uncertainty as to how a jury may rule if this ultimately proceeds to trial. Appian Corp. v. Pegasystems Inc. & Youyong Zou As previously reported, the Company is a defendant in litigation brought by Appian that is currently being tried in Virginia (the “Court”) titled Appian Corp. v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). The jury trial began on March 21, 2022. On April 13, 2022, Appian withdrew its claim against the Company for tortious interference with business expectancy. On that same day, in the course of making determinations on various motions, the Court stated that if the jury finds that the Company misappropriated information that constituted Appian trade secrets and finds that the Company incorporated those trade secrets into the Company’s products or the Company’s marketing materials, the burden will then shift to the Company to prove that the sales Appian seeks as damages were not the result of the alleged misappropriation and use of the alleged trade secrets. This legal standard has not previously been adopted by the Virginia courts. The Company continues to believe that its sales of the products at issue were not caused by, or the result of, the alleged misappropriation of trade secrets, and is submitting evidence to the jury to that effect. The Company is unable to reasonably estimate possible damages because, among other things, of the uncertainty as to how a jury may decide and the parties’ existing grounds for appeal based on rulings to date in the proceeding. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for the full year 2022. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income, or net income. |
Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows: • Level 1 - observable inputs such as quoted prices in active markets for identical assets or liabilities; • Level 2 - significant other inputs that are observable either directly or indirectly; and • Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and minimize unobservable inputs when determining fair value. The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model use various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers both historical and implied volatility levels of the underlying equity security. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds. |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of marketable securities | March 31, 2022 December 31, 2021 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value Government debt $ 2,000 $ — $ (47) $ 1,953 $ 2,000 $ — $ (10) $ 1,990 Corporate debt 200,371 7 (2,930) 197,448 201,659 2 (837) 200,824 $ 202,371 $ 7 $ (2,977) $ 199,401 $ 203,659 $ 2 $ (847) $ 202,814 |
RECEIVABLES, CONTRACT ASSETS,_2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Receivables [Abstract] | |
Summary of receivables | Receivables (in thousands) March 31, 2022 December 31, 2021 Accounts receivable $ 171,181 $ 182,717 Unbilled receivables 226,052 226,714 Long-term unbilled receivables 135,975 129,789 $ 533,208 $ 539,220 |
Summary of unbilled receivables | Unbilled receivables by expected billing date: (Dollars in thousands) March 31, 2022 1 year or less $ 226,052 62 % 1-2 years 88,003 25 % 2-5 years 47,972 13 % $ 362,027 100 % |
Summary of unbilled receivables based upon contract effective date | Unbilled receivables by contract effective date: (Dollars in thousands) March 31, 2022 2022 $ 72,143 20 % 2021 163,869 45 % 2020 77,585 21 % 2019 27,163 8 % 2018 and prior 21,267 6 % $ 362,027 100 % |
Schedules of concentration of risk, by risk factor | Clients accounting for 10% or more of the Company’s total receivables: March 31, 2022 December 31, 2021 Client A Accounts receivable 4 % 1 % Unbilled receivables 15 % 15 % Total receivables 11 % 10 % |
Summary of contract assets and deferred revenue | Contract assets Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation. (in thousands) March 31, 2022 December 31, 2021 Contract assets (1) $ 11,765 $ 12,530 Long-term contract assets (2) 10,292 10,643 $ 22,057 $ 23,173 (1) Included in other current assets. (2) Included in other long-term assets. Deferred revenue Deferred revenue consists of billings and payments received in advance of revenue recognition. (in thousands) March 31, 2022 December 31, 2021 Deferred revenue $ 290,873 $ 275,844 Long-term deferred revenue (1) 6,612 5,655 $ 297,485 $ 281,499 (1) Included in other long-term liabilities. |
DEFERRED COMMISSIONS (Tables)
DEFERRED COMMISSIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of impairment of deferred contract costs | (in thousands) March 31, 2022 December 31, 2021 Deferred commissions (1) $ 125,220 $ 135,911 |
Schedule of amortization of deferred contract costs | Three Months Ended (in thousands) 2022 2021 Amortization of deferred commissions (1) $ 17,221 $ 11,496 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in carrying amount of goodwill | Change in goodwill: Three Months Ended (in thousands) 2022 January 1, $ 81,923 Acquisition — Currency translation adjustments 108 March 31, $ 82,031 |
Schedule of amortizable intangible assets | Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives. March 31, 2022 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,142 $ (57,662) $ 5,480 Technology 2-10 years 67,142 (59,531) 7,611 Other 1-5 years 5,361 (5,361) — $ 135,645 $ (122,554) $ 13,091 (1) Included in other long-term assets. December 31, 2021 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,165 $ (57,342) $ 5,823 Technology 2-10 years 67,142 (58,902) 8,240 Other 1-5 years 5,361 (5,361) — $ 135,668 $ (121,605) $ 14,063 (1) Included in other long-term assets. |
Amortization expense of acquired intangibles | Amortization of intangible assets: Three Months Ended (in thousands) 2022 2021 Cost of revenue $ 629 $ 629 Selling and marketing 343 373 $ 972 $ 1,002 |
Estimated future amortization expense related to intangible assets | Future estimated intangibles assets amortization: (in thousands) March 31, 2022 Remainder of 2022 $ 2,914 2023 3,618 2024 2,849 2025 2,509 2026 874 2027 327 $ 13,091 |
OTHER ASSETS AND LIABILITIES (T
OTHER ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Assets and Liabilities [Abstract] | |
Schedule of other assets and other liabilities | Other current assets (in thousands) March 31, 2022 December 31, 2021 Income tax receivables $ 27,679 $ 25,691 Contract assets 11,765 12,530 Other 34,964 29,787 $ 74,408 $ 68,008 Other long-term assets (in thousands) March 31, 2022 December 31, 2021 Deferred income taxes $ 188,155 $ 180,656 Deferred commissions 125,220 135,911 Right of use assets 87,212 87,521 Capped call transactions 29,404 59,964 Property and equipment 28,603 26,837 Intangible assets 13,091 14,063 Contract assets 10,292 10,643 Other 34,684 26,006 $ 516,661 $ 541,601 Other current liabilities (in thousands) March 31, 2022 December 31, 2021 Operating lease liabilities $ 4,855 $ 6,989 Dividends payable 2,454 2,454 $ 7,309 $ 9,443 Other long-term liabilities (in thousands) March 31, 2022 December 31, 2021 Deferred revenue $ 6,612 $ 5,655 Other 8,046 7,844 $ 14,658 $ 13,499 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of lease expense | Three Months Ended (in thousands) 2022 2021 Fixed lease costs (1) $ 5,093 $ 300 Short-term lease costs 806 459 Variable lease costs 764 1,387 $ 6,663 $ 2,146 |
Schedule of right of use asset and lease liabilities | (in thousands) March 31, 2022 December 31, 2021 Right of use assets (1) $ 87,212 $ 87,521 Operating lease liabilities (2) $ 4,855 $ 6,989 Long-term operating lease liabilities $ 90,699 $ 87,818 (1) Represents the Company’s right to use the leased asset during the lease term. Included in other long-term assets. (2) Included in other current liabilities. |
Schedule of weighted average and discount rate | Weighted-average remaining lease term and discount rate for the Company’s leases were: March 31, 2022 December 31, 2021 Weighted-average remaining lease term 7.5 years 7.7 years Weighted-average discount rate (1) 4.3 % 4.4 % (1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment. |
Schedule of lease maturities after adoption of 842 | Maturities of lease liabilities: (in thousands) March 31, 2022 Remainder of 2022 $ 3,887 2023 20,317 2024 17,141 2025 14,352 2026 10,664 2027 and thereafter 48,381 Total lease payments 114,742 Less: imputed interest (1) (19,188) $ 95,554 (1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event. |
Schedule of supplemental cash flow lease information | Three Months Ended (in thousands) 2022 2021 Cash paid for leases $ 3,650 $ 6,716 Right of use assets recognized for new leases and amendments (non-cash) $ 3,854 $ 714 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Contractual obligation, fiscal year maturity schedule | Carrying value of the Notes: (in thousands) March 31, 2022 December 31, 2021 Principal $ 600,000 $ 600,000 Unamortized issuance costs (8,560) (9,278) Convertible senior notes, net $ 591,440 $ 590,722 Interest expense related to the Notes: Three Months Ended (in thousands) 2022 2021 Contractual interest expense (0.75% coupon) $ 1,125 $ 1,125 Amortization of issuance costs 719 673 $ 1,844 $ 1,798 The effective interest rate for the Notes: Three Months Ended 2022 2021 Weighted-average effective interest rate 1.2 % 1.2 % Future payments of principal and contractual interest: March 31, 2022 (in thousands) Principal Interest Total Remainder of 2022 $ — $ 2,250 $ 2,250 2023 — 4,500 4,500 2024 — 4,500 4,500 2025 600,000 2,250 602,250 $ 600,000 $ 13,500 $ 613,500 |
Schedule of derivative instruments | Change in capped call transactions: Three Months Ended (in thousands) 2022 2021 January 1, $ 59,964 $ 83,597 Fair value adjustment (30,560) (19,117) March 31, $ 29,404 $ 64,480 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Assets and liabilities measured at fair value on a recurring basis: March 31, 2022 December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents $ 19,626 $ — $ — $ 19,626 $ 3,216 $ — $ — $ 3,216 Marketable securities $ — $ 199,401 $ — $ 199,401 $ — $ 202,814 $ — $ 202,814 Capped Call Transactions (1) $ — $ 29,404 $ — $ 29,404 $ — $ 59,964 $ — $ 59,964 Venture investments (1) (2) $ — $ — $ 12,830 $ 12,830 $ — $ — $ 7,648 $ 7,648 (1) Included in other long-term assets. (2) Investments in privately-held companies. |
Fair value, assets measured on recurring basis, unobservable input reconciliation | Changes in venture investments: Three Months Ended (in thousands) 2022 2021 January 1, $ 7,648 $ 8,345 New investments — 500 Sales of investments — (400) Changes in foreign exchange rates (61) (9) Changes in fair value: included in other income 2,741 100 included in other comprehensive income 2,502 1,220 March 31, $ 12,830 $ 9,756 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by geographic location | Geographic revenue Three Months Ended (Dollars in thousands) 2022 2021 U.S. $ 217,272 58 % $ 194,568 62 % Other Americas 45,751 12 % 11,901 4 % United Kingdom (“U.K.”) 30,932 8 % 28,212 9 % Europe (excluding U.K.), Middle East, and Africa 49,136 13 % 51,659 16 % Asia-Pacific 33,216 9 % 27,159 9 % $ 376,307 100 % $ 313,499 100 % |
Schedule of revenue streams | Revenue streams Three Months Ended (in thousands) 2022 2021 Perpetual license $ 7,440 $ 5,452 Subscription license 137,533 111,509 Revenue recognized at a point in time 144,973 116,961 Maintenance 79,716 75,561 Pega Cloud 90,317 67,858 Consulting 61,301 53,119 Revenue recognized over time 231,334 196,538 Total revenue $ 376,307 $ 313,499 Three Months Ended (in thousands) 2022 2021 Pega Cloud $ 90,317 $ 67,858 Maintenance 79,716 75,561 Subscription services 170,033 143,419 Subscription license 137,533 111,509 Subscription 307,566 254,928 Perpetual license 7,440 5,452 Consulting 61,301 53,119 $ 376,307 $ 313,499 |
Revenue for remaining performance obligations expected to be recognized | Expected future revenue from existing non-cancellable contracts: As of March 31, 2022: (Dollars in thousands) Subscription services Subscription Perpetual Consulting Total Maintenance Pega Cloud 1 year or less $ 228,984 $ 329,857 $ 47,428 $ 7,281 $ 40,661 $ 654,211 55 % 1-2 years 63,870 208,875 16,111 4,505 10,955 304,316 26 % 2-3 years 33,617 106,156 2,422 2,252 3,876 148,323 13 % Greater than 3 years 22,611 44,596 1,758 — 522 69,487 6 % $ 349,082 $ 689,484 $ 67,719 $ 14,038 $ 56,014 $ 1,176,337 100 % As of March 31, 2021: (Dollars in thousands) Subscription services Subscription Perpetual Consulting Total Maintenance Pega Cloud 1 year or less $ 220,100 $ 252,104 $ 41,025 $ 9,649 $ 21,068 $ 543,946 55 % 1-2 years 52,366 187,456 9,874 629 914 251,239 26 % 2-3 years 33,337 91,861 7,055 — 1,756 134,009 14 % Greater than 3 years 16,834 32,895 377 — 510 50,616 5 % $ 322,637 $ 564,316 $ 58,331 $ 10,278 $ 24,248 $ 979,810 100 % |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock based compensation expense | Expense Three Months Ended (in thousands) 2022 2021 Cost of revenue $ 6,378 $ 5,925 Selling and marketing 10,958 13,720 Research and development 7,346 6,770 General and administrative 3,545 3,685 $ 28,227 $ 30,100 Income tax benefit $ (5,311) $ (5,991) |
Summary of stock based compensation award granted | Grants Three Months Ended (in thousands) Shares Total Fair Value Restricted stock units 1,096 $ 94,538 Non-qualified stock options 2,212 $ 60,514 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Summary of benefit from income taxes and discrete tax items | Effective income tax rate Three Months Ended (Dollars in thousands) 2022 2021 (Benefit from) income taxes $ (7,683) $ (17,618) Effective income tax benefit rate 95 % 73 % |
(LOSS) PER SHARE (Tables)
(LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Summary of basic and diluted earnings per share | Calculation of (loss) per share: Three Months Ended (in thousands, except per share amounts) 2022 2021 Net (loss) $ (379) $ (6,617) Weighted-average common shares outstanding 81,680 81,004 (Loss) per share, basic $ 0.00 $ (0.08) Net (loss) $ (379) $ (6,617) Weighted-average common shares outstanding, assuming dilution (1) (2) (3) 81,680 81,004 (Loss) per share, diluted $ 0.00 $ (0.08) Outstanding anti-dilutive stock options and RSUs (4) 4,178 6,465 (1) In periods of loss, all dilutive securities are excluded as their inclusion would be anti-dilutive. (2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue an additional approximately 4.4 million shares. (3) The Company’s Capped Call Transactions represent the equivalent of approximately 4.4 million shares of the Company’s common stock (representing the number of shares for which the Notes are initially convertible). The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive. (4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future. |
MARKETABLE SECURITIES - Schedul
MARKETABLE SECURITIES - Schedule of Marketable Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Marketable Securities [Line Items] | ||
Amortized Cost | $ 202,371 | $ 203,659 |
Unrealized Gains | 7 | 2 |
Unrealized Losses | (2,977) | (847) |
Fair Value | 199,401 | 202,814 |
Government debt | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 2,000 | 2,000 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (47) | (10) |
Fair Value | 1,953 | 1,990 |
Corporate debt | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 200,371 | 201,659 |
Unrealized Gains | 7 | 2 |
Unrealized Losses | (2,930) | (837) |
Fair Value | $ 197,448 | $ 200,824 |
MARKETABLE SECURITIES - Additio
MARKETABLE SECURITIES - Additional Information (Details) | Mar. 31, 2022 |
Investments, Debt and Equity Securities [Abstract] | |
Marketable debt security weighted-average remaining maturity | 1 year 7 days |
RECEIVABLES, CONTRACT ASSETS,_3
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Accounts receivable | $ 171,181 | $ 182,717 |
Unbilled receivables | 226,052 | 226,714 |
Long-term unbilled receivables | 135,975 | 129,789 |
Total receivables | $ 533,208 | $ 539,220 |
RECEIVABLES, CONTRACT ASSETS,_4
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Unbilled Receivables (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Receivables [Abstract] | |
1 year or less | $ 226,052 |
1-2 years | 88,003 |
2-5 years | 47,972 |
Total | $ 362,027 |
Percentage of unbilled receivables, 1 year or less | 62.00% |
Percentage of unbilled receivables, 1-2 years | 25.00% |
Percentage of unbilled receivables, 2-5 years | 13.00% |
Total percentage of unbilled receivables | 100.00% |
RECEIVABLES, CONTRACT ASSETS,_5
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE- Contract Effective (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Receivables [Abstract] | |
2022 | $ 72,143 |
2021 | 163,869 |
2020 | 77,585 |
2019 | 27,163 |
2018 and prior | 21,267 |
Unbilled revenue total | $ 362,027 |
2022 | 20.00% |
2021 | 45.00% |
2020 | 21.00% |
2019 | 8.00% |
2018 and prior | 6.00% |
Total percentage of unbilled revenue | 100.00% |
RECEIVABLES, CONTRACT ASSETS,_6
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Major Clients (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Concentration Risk [Line Items] | |||
Percent of total revenue | 100.00% | 100.00% | |
Client A | Credit concentration risk | Account receivable and unbilled receivables | |||
Concentration Risk [Line Items] | |||
Percent of total revenue | 11.00% | 10.00% | |
Client A | Credit concentration risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Percent of total revenue | 4.00% | 1.00% | |
Client A | Credit concentration risk | Unbilled receivables | |||
Concentration Risk [Line Items] | |||
Percent of total revenue | 15.00% | 15.00% |
RECEIVABLES, CONTRACT ASSETS,_7
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Contract Assets and Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Contract assets | $ 11,765 | $ 12,530 |
Contract assets | 10,292 | 10,643 |
Total contract assets | 22,057 | 23,173 |
Deferred revenue | 290,873 | 275,844 |
Long-term deferred revenue | 6,612 | 5,655 |
Total deferred revenue | 297,485 | $ 281,499 |
Revenue recognized during the period that was included in deferred revenue | $ 124,900 |
DEFERRED COMMISSIONS - Schedule
DEFERRED COMMISSIONS - Schedule of Impairment of Deferred Commissions (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred commissions | $ 125,220 | $ 135,911 |
DEFERRED COMMISSIONS - Schedu_2
DEFERRED COMMISSIONS - Schedule of Amortization of Deferred Commissions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Amortization of deferred commissions | $ 17,221 | $ 11,496 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 81,923 |
Acquisition | 0 |
Currency translation adjustments | 108 |
Ending balance | $ 82,031 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES - Schedule of Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | $ 135,645 | $ 135,668 |
Accumulated Amortization | (122,554) | (121,605) |
Total | 13,091 | 14,063 |
Client-related | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | 63,142 | 63,165 |
Accumulated Amortization | (57,662) | (57,342) |
Total | 5,480 | 5,823 |
Technology | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | 67,142 | 67,142 |
Accumulated Amortization | (59,531) | (58,902) |
Total | 7,611 | 8,240 |
Other | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | 5,361 | 5,361 |
Accumulated Amortization | (5,361) | (5,361) |
Total | $ 0 | $ 0 |
Minimum | Client-related | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 4 years | 4 years |
Minimum | Technology | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 2 years | 2 years |
Minimum | Other | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 1 year | 1 year |
Maximum | Client-related | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 10 years | 10 years |
Maximum | Technology | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 10 years | 10 years |
Maximum | Other | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 5 years | 5 years |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES - Amortization Expense of Acquired Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 972 | $ 1,002 |
Cost of revenue | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | 629 | 629 |
Selling and marketing | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 343 | $ 373 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLES - Estimated Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2022 | $ 2,914 | |
2023 | 3,618 | |
2024 | 2,849 | |
2025 | 2,509 | |
2026 | 874 | |
2027 | 327 | |
Total | $ 13,091 | $ 14,063 |
OTHER ASSETS AND LIABILITIES (D
OTHER ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Other Assets and Liabilities [Abstract] | ||||
Income tax receivables | $ 27,679 | $ 25,691 | ||
Contract assets | 11,765 | 12,530 | ||
Other | 34,964 | 29,787 | ||
Other current assets | 74,408 | 68,008 | ||
Deferred income taxes | 188,155 | 180,656 | ||
Deferred commissions | 125,220 | 135,911 | ||
Right of use assets | 87,212 | 87,521 | ||
Capped call transactions | 29,404 | 59,964 | $ 64,480 | $ 83,597 |
Property and equipment | 28,603 | 26,837 | ||
Intangible assets | 13,091 | 14,063 | ||
Contract assets | 10,292 | 10,643 | ||
Other | 34,684 | 26,006 | ||
Other long-term assets | 516,661 | 541,601 | ||
Operating lease liabilities | 4,855 | 6,989 | ||
Dividends payable | 2,454 | 2,454 | ||
Other current liabilities | 7,309 | 9,443 | ||
Deferred revenue | 6,612 | 5,655 | ||
Other | 8,046 | 7,844 | ||
Other long-term liabilities | $ 14,658 | $ 13,499 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ft² in Thousands, $ in Thousands | Jul. 06, 2021USD ($)ft² | Mar. 31, 2021USD ($) | Feb. 28, 2021USD ($) | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Aug. 01, 2021USD ($) |
Lessee, Lease, Description [Line Items] | ||||||
Gain lease termination | $ 18,000 | |||||
Decrease in lease liabilities | 21,100 | |||||
Decrease in operating assets | $ 20,300 | |||||
Lessee, Operating Lease, Liability, to be Paid, Year One | $ 20,317 | |||||
Lease liabilities | 95,554 | |||||
Right of use assets | $ 87,212 | $ 87,521 | ||||
Building | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Term of contract | 11 years | 4 years 6 months | ||||
Based rent to paid (annually per year) | $ 2,000 | |||||
Area of office space lease (in square feet) | ft² | 131 | |||||
Lessee, Operating Lease, Liability, to be Paid, Year One | $ 6,000 | |||||
Base rent increase percentage | 0.03 | |||||
Improvement allowance | $ 11,800 | |||||
Lease liabilities | $ 42,100 | |||||
Right of use assets | $ 42,100 |
LEASES - Operating Lease Expens
LEASES - Operating Lease Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases [Abstract] | ||
Fixed lease costs | $ 5,093 | $ 300 |
Short-term lease costs | 806 | 459 |
Variable lease costs | 764 | 1,387 |
Operating lease expenses | $ 6,663 | $ 2,146 |
LEASES - Right of Use Assets (D
LEASES - Right of Use Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating lease, right-of-use asset, statement of financial position | Other long-term assets | Other long-term assets |
Right of use assets | $ 87,212 | $ 87,521 |
Operating lease, liability, current, statement of financial position | Other current liabilities | Other current liabilities |
Operating lease liabilities | $ 4,855 | $ 6,989 |
Long-term operating lease liabilities | $ 90,699 | $ 87,818 |
LEASES - Remaining Lease Term (
LEASES - Remaining Lease Term (Details) | Mar. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Weighted-average remaining lease term | 7 years 6 months | 7 years 8 months 12 days |
Weighted-average discount rate | 4.30% | 4.40% |
LEASES - Maturities after Adopt
LEASES - Maturities after Adoption of 842 (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Leases [Abstract] | |
Remainder of 2022 | $ 3,887 |
Lessee, Operating Lease, Liability, to be Paid, Year One | 20,317 |
2024 | 17,141 |
2025 | 14,352 |
2026 | 10,664 |
2027 and thereafter | 48,381 |
Total lease payments | 114,742 |
Less: imputed interest | (19,188) |
Total lease liability | $ 95,554 |
LEASES - Cash Flow Information
LEASES - Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases [Abstract] | ||
Cash paid for leases | $ 3,650 | $ 6,716 |
Right of use assets recognized for new leases and amendments (non-cash) | $ 3,854 | $ 714 |
DEBT - Convertible Senior Notes
DEBT - Convertible Senior Notes Narrative (Details) | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020USD ($)day$ / shares | Mar. 31, 2022 | Mar. 31, 2021 | |
Debt Instrument [Line Items] | |||
Redemption percentage | 100.00% | ||
On or after March 1, 2023 | |||
Debt Instrument [Line Items] | |||
Redemption percentage | 100.00% | ||
Convertible debt | |||
Debt Instrument [Line Items] | |||
Face amount | $ | $ 600,000,000 | ||
Interest rate | 0.75% | 0.75% | 0.75% |
Initial conversion rate | 7.4045 | ||
Debt conversion amount | $ | $ 1,000 | ||
Initial conversion price (in dollars per share) | $ / shares | $ 135.05 | ||
Convertible debt | After the calendar quarter ending on June 30, 2020 | |||
Debt Instrument [Line Items] | |||
Threshold percentage of stock price trigger | 130.00% | ||
Threshold trading days | 20 | ||
Threshold consecutive trading days | 30 | ||
Convertible debt | Measurement period | |||
Debt Instrument [Line Items] | |||
Threshold percentage of stock price trigger | 98.00% | ||
Threshold consecutive trading days | 5 | ||
Threshold consecutive business days | 5 | ||
Convertible debt | On or after March 1, 2023 | |||
Debt Instrument [Line Items] | |||
Threshold percentage of stock price trigger | 130.00% | ||
Threshold trading days | 20 | ||
Threshold consecutive trading days | 30 |
DEBT - Net Carrying Amount (Det
DEBT - Net Carrying Amount (Details) - Convertible debt - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Principal | $ 600,000 | $ 600,000 |
Unamortized issuance costs | (8,560) | (9,278) |
Convertible senior notes, net | $ 591,440 | $ 590,722 |
DEBT - Interest Expense (Detail
DEBT - Interest Expense (Details) - Convertible debt - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | |
Debt Instrument [Line Items] | |||
Interest rate | 0.75% | 0.75% | 0.75% |
Contractual interest expense (0.75% coupon) | $ 1,125 | $ 1,125 | |
Amortization of issuance costs | 719 | 673 | |
Interest expense | $ 1,844 | $ 1,798 | |
Weighted-average effective interest rate | 1.20% | 1.20% |
DEBT - Future Payments of Princ
DEBT - Future Payments of Principal and Contractual Interest (Details) - Convertible debt - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Principal | ||
Remainder of 2022 | $ 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 600,000 | |
Principal, total due | 600,000 | $ 600,000 |
Interest | ||
Remainder of 2022 | 2,250 | |
2023 | 4,500 | |
2024 | 4,500 | |
2025 | 2,250 | |
Interest expense, total due | 13,500 | |
Total | ||
Remainder of 2022 | 2,250 | |
2023 | 4,500 | |
2024 | 4,500 | |
2025 | 602,250 | |
Principal and interest, total due | $ 613,500 |
DEBT - Capped Call Transactions
DEBT - Capped Call Transactions (Details) $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020$ / derivativeshares | Mar. 31, 2022USD ($)$ / derivativeshares | Mar. 31, 2021USD ($)$ / derivativeshares | |
Debt Disclosure [Abstract] | |||
Number of shares issuable upon conversion | shares | 4.4 | 4.4 | 4.4 |
Cap price (in dollars per share) | $ / derivative | 196.44 | 196.44 | 196.44 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 59,964 | $ 83,597 | |
Fair value adjustment | (30,560) | (19,117) | |
Ending balance | $ 29,404 | $ 64,480 |
DEBT - Credit Facility (Details
DEBT - Credit Facility (Details) | Nov. 30, 2019USD ($) | Dec. 31, 2022USD ($) | Mar. 31, 2023 | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) |
Debt Instrument [Line Items] | |||||
Remaining borrowing capacity | $ 0 | $ 0 | |||
PNC bank, national association | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Minimum consolidated coverage ratio | 3.5 | ||||
Credit agreement | PNC bank, national association | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Minimum required cash and investments held | $ 200,000,000 | ||||
Maximum consolidated net leverage ratio | 3.5 | ||||
Line of Credit | PNC bank, national association | Revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit agreement term | 5 years | ||||
Senior notes | $ 100,000,000 | ||||
Increase in aggregate commitment amount | $ 200,000,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value Assets | ||
Marketable securities | $ 199,401 | $ 202,814 |
Capped call transactions | 29,404 | 59,964 |
Cash equivalents | ||
Fair Value Assets | ||
Cash equivalents | 19,626 | 3,216 |
Venture investments | ||
Fair Value Assets | ||
Venture investments | 12,830 | 7,648 |
Level 1 | ||
Fair Value Assets | ||
Marketable securities | 0 | 0 |
Capped call transactions | 0 | 0 |
Level 1 | Cash equivalents | ||
Fair Value Assets | ||
Cash equivalents | 19,626 | 3,216 |
Level 1 | Venture investments | ||
Fair Value Assets | ||
Venture investments | 0 | 0 |
Level 2 | ||
Fair Value Assets | ||
Marketable securities | 199,401 | 202,814 |
Capped call transactions | 29,404 | 59,964 |
Level 2 | Cash equivalents | ||
Fair Value Assets | ||
Cash equivalents | 0 | 0 |
Level 2 | Venture investments | ||
Fair Value Assets | ||
Venture investments | 0 | 0 |
Level 3 | ||
Fair Value Assets | ||
Marketable securities | 0 | 0 |
Capped call transactions | 0 | 0 |
Level 3 | Cash equivalents | ||
Fair Value Assets | ||
Cash equivalents | 0 | 0 |
Level 3 | Venture investments | ||
Fair Value Assets | ||
Venture investments | $ 12,830 | $ 7,648 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Change in Investment in Privately Held Companies (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Convertible debt fair value | $ 573,000 | $ 642,000 | |
Privately held investment | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 7,648 | $ 8,345 | |
New investments | 0 | 500 | |
Sales of investments | 0 | (400) | |
Changes in foreign exchange rates | (61) | (9) | |
Changes in fair value included in other income | 2,741 | 100 | |
Changes in fair value included in other comprehensive income | 2,502 | 1,220 | |
Ending balance | $ 12,830 | $ 9,756 |
REVENUE - Geographic Revenue (D
REVENUE - Geographic Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 376,307 | $ 313,499 |
Percent of total revenue | 100.00% | 100.00% |
U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 217,272 | $ 194,568 |
Other Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 45,751 | 11,901 |
United Kingdom (“U.K.”) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 30,932 | 28,212 |
Europe (excluding U.K.), Middle East, and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 49,136 | 51,659 |
Asia-Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 33,216 | $ 27,159 |
Total revenue | U.S. | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percent of total revenue | 58.00% | 62.00% |
Total revenue | Other Americas | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percent of total revenue | 12.00% | 4.00% |
Total revenue | United Kingdom (“U.K.”) | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percent of total revenue | 8.00% | 9.00% |
Total revenue | Europe (excluding U.K.), Middle East, and Africa | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percent of total revenue | 13.00% | 16.00% |
Total revenue | Asia-Pacific | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percent of total revenue | 9.00% | 9.00% |
REVENUE - Revenue Stream (Detai
REVENUE - Revenue Stream (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 376,307 | $ 313,499 |
Perpetual license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 7,440 | 5,452 |
Subscription license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 137,533 | 111,509 |
Subscription services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 170,033 | 143,419 |
Subscription | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 307,566 | 254,928 |
Consulting | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 61,301 | 53,119 |
Revenue recognized at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 144,973 | 116,961 |
Revenue recognized at a point in time | Perpetual license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 7,440 | 5,452 |
Revenue recognized at a point in time | Subscription license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 137,533 | 111,509 |
Revenue recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 231,334 | 196,538 |
Revenue recognized over time | Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 79,716 | 75,561 |
Revenue recognized over time | Pega Cloud | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 90,317 | 67,858 |
Revenue recognized over time | Consulting | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 61,301 | $ 53,119 |
REVENUE - Performance Obligatio
REVENUE - Performance Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Mar. 31, 2021 |
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 1,176,337 | $ 979,810 |
Revenue remaining performance obligation, percentage | 100.00% | 100.00% |
1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 654,211 | $ 543,946 |
Revenue remaining performance obligation, percentage | 55.00% | 55.00% |
1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 304,316 | $ 251,239 |
Revenue remaining performance obligation, percentage | 26.00% | 26.00% |
2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 148,323 | $ 134,009 |
Revenue remaining performance obligation, percentage | 13.00% | 14.00% |
Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 69,487 | $ 50,616 |
Revenue remaining performance obligation, percentage | 6.00% | 5.00% |
Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 349,082 | $ 322,637 |
Maintenance | 1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 228,984 | 220,100 |
Maintenance | 1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 63,870 | 52,366 |
Maintenance | 2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 33,617 | 33,337 |
Maintenance | Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 22,611 | 16,834 |
Pega Cloud | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 689,484 | 564,316 |
Pega Cloud | 1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 329,857 | 252,104 |
Pega Cloud | 1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 208,875 | 187,456 |
Pega Cloud | 2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 106,156 | 91,861 |
Pega Cloud | Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 44,596 | 32,895 |
Subscription license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 67,719 | 58,331 |
Subscription license | 1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 47,428 | 41,025 |
Subscription license | 1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 16,111 | 9,874 |
Subscription license | 2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 2,422 | 7,055 |
Subscription license | Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 1,758 | 377 |
Perpetual license | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 14,038 | 10,278 |
Perpetual license | 1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 7,281 | 9,649 |
Perpetual license | 1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 4,505 | 629 |
Perpetual license | 2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 2,252 | 0 |
Perpetual license | Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 0 | 0 |
Consulting | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 56,014 | 24,248 |
Consulting | 1 year or less | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 40,661 | 21,068 |
Consulting | 1-2 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 10,955 | 914 |
Consulting | 2-3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | 3,876 | 1,756 |
Consulting | Greater than 3 years | ||
Disaggregation of Revenue [Line Items] | ||
Revenue remaining performance obligation | $ 522 | $ 510 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 2 years | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 3 years | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 3 years |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation before tax | $ 28,227 | $ 30,100 |
Income tax benefit | (5,311) | (5,991) |
Cost of revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation before tax | 6,378 | 5,925 |
Selling and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation before tax | 10,958 | 13,720 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation before tax | 7,346 | 6,770 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation before tax | $ 3,545 | $ 3,685 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Share-based Payment Arrangement [Abstract] | |
Unrecognized stock-based compensation expense | $ 200.8 |
Weighted-average period of recognition of unrecognized stock-based compensation expense (in years) | 2 years 3 months 18 days |
STOCK-BASED COMPENSATION - Su_2
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Awards Granted (Details) - Employees shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)shares | |
Restricted stock units | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
Grants in period (in shares) | shares | 1,096 |
Total Fair Value | $ | $ 94,538 |
Non-qualified stock options | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
Options granted in period (in shares) | shares | 2,212 |
Total Fair Value | $ | $ 60,514 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
(Benefit from) income taxes | $ (7,683) | $ (17,618) |
Effective income tax benefit rate | 95.00% | 73.00% |
(LOSS) PER SHARE (Details)
(LOSS) PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020$ / derivativeshares | Mar. 31, 2022USD ($)$ / shares$ / derivativeshares | Mar. 31, 2021USD ($)$ / shares$ / derivativeshares | |
Earnings Per Share [Abstract] | |||
Net (loss) | $ | $ (379) | $ (6,617) | |
Weighted-average common shares outstanding (in shares) | 81,680 | 81,004 | |
(Loss) per share, basic (in dollars per share) | $ / shares | $ 0 | $ (0.08) | |
Weighted-average common shares outstanding, assuming dilution (in shares) | 81,680 | 81,004 | |
(Loss) per share, diluted (in dollars per share) | $ / shares | $ 0 | $ (0.08) | |
Outstanding anti-dilutive stock options and RSUs (in shares) | 4,178 | 6,465 | |
Convertible debt (in shares) | 4,400 | 4,400 | |
Number of shares issuable upon conversion | 4,400 | 4,400 | 4,400 |
Cap price (in dollars per share) | $ / derivative | 196.44 | 196.44 | 196.44 |
Uncategorized Items - pega-2022
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |