Pegasystems (PEGA) 8-K Pegasystems Announces Financial Results for Third Quarter and Nine Months of 2015

Exhibit 99.1

Pegasystems Announces Financial Results for Third Quarter and Nine Months of 2015

Achieved Strong License and Cloud Revenue Growth While Increasing Backlog by 14% over Q3 2014

CAMBRIDGE, Mass. – October 27, 2015 –Pegasystems Inc. (NASDAQ: PEGA), the software company empowering the world’s leading enterprises with strategic business applications, today announced results for its third quarter and nine months ended September 30, 2015.

“We are very pleased with our strong performance this quarter and through the first nine months of 2015,” said Alan Trefler, Founder and CEO of Pegasystems. “Once again, we exceeded our revenue goals while building backlog during what is often our most challenging quarter. Our strategy to reach a broader target base is bearing fruit, and we are seeing an increase in the number and size of deals from new logos, while continuing to expand our business with existing clients.”

SELECTED GAAP & NON-GAAP RESULTS (1)

	Three Months Ended September 30,
($ in thousands except per share amounts)	2015		2015		2014		2014		% Increase
	GAAP		Non-GAAP		GAAP		Non-GAAP		GAAP			Non-GAAP
Total Revenue	$	162,403	$	162,403	$	137,631	$	138,307		18	%		17	%
License Revenue	$	58,948	$	58,948	$	48,292	$	48,814		22	%		21	%
Cloud Revenue	$	8,244	$	8,244	$	4,561	$	4,620		81	%		78	%
Net Income	$	6,325	$	13,247	$	1,882	$	8,368		236	%		58	%
Diluted Earnings per share	$	0.08	$	0.17	$	0.02	$	0.11		300	%		55	%
	Nine Months Ended September 30,
($ in thousands except per share amounts)	2015		2015		2014		2014		% Increase
	GAAP		Non-GAAP		GAAP		Non-GAAP		GAAP			Non-GAAP
Total Revenue	$	478,340	$	478,340	$	421,080	$	424,398		14	%		13	%
License Revenue	$	180,420	$	180,420	$	154,918	$	156,483		16	%		15	%
Cloud Revenue	$	21,700	$	21,700	$	12,146	$	12,802		79	%		70	%
Net Income	$	15,364	$	34,378	$	13,151	$	32,063		17	%		7	%
Diluted Earnings per share	$	0.19	$	0.44	$	0.17	$	0.41		12	%		7	%

(1) See a reconciliation of our GAAP to Non-GAAP measures contained in the financial schedules at the end of this release.

Cash: Total cash, cash equivalents, and marketable securities at September 30, 2015 was $224 million, up 6% from 2014 year-end.

Cash generated from operations for the nine months of 2015 was $55 million. Free Cash Flow, which we define as operating cash flow less Cap Ex, was $45 million for the nine months of 2015.

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License and Cloud Backlog: The Company computes license and cloud backlog by adding billed deferred license and cloud revenue and off-balance sheet license and cloud commitments, which is business that is contracted, unbilled, and not recorded on the Company’s balance sheet.

License and Cloud Backlog (1)

	September 30,
($ in thousands)	2015		2014		% Change
Total billed deferred license and cloud revenue		55,370		68,561		(19	%)
Total off-balance sheet license and cloud commitments (2)		324,340		265,309		22	%
TOTAL LICENSE AND CLOUD BACKLOG		379,710		333,870		14	%

(1) See historical quarterly license backlog amounts including cloud in a separate schedule at the end of this release.

(2) See the “Future Cash Receipts from License and Cloud Arrangements” table on page 23 of the Quarterly Report on Form 10-Q for the period ending September 30, 2015.

“Our results to date demonstrate continued strong execution toward our financial goals and evidence of transaction in the market across our product offerings,” said Rafe Brown, Pegasystems CFO. “While the mix of deal types in a given quarter will significantly influence our results for that period, our growth in License and Cloud revenue, along with continued strength of our total backlog, indicates that our investments in sales, marketing, and product are paying off. We are thus continuing our investments in these areas and even accelerating some of our 2016 investments as a reflection of our confidence in the long-term prospects for the company.”

Quarterly Conference Call

Pegasystems will host a conference call and audio-only Webcast associated with this announcement at 5:00 p.m. EDT today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company’s Website atwww.pega.com/about/investors. Dial-in information is as follows: 1-877-407-3982 (domestic) or 1-201-493-6780 (international). To listen to theWebcast, log ontowww.pega.com at least five minutes prior to the event’s broadcast and click on theWebcast icon in theInvestors section. A replay of the call will also be available onwww.pega.com by clicking theEarnings Calls link in the Investors section.

Discussion of Non-GAAP Financial Measures

To supplement financial results presented in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”), the Company provides non-GAAP measures, including in this release. Pegasystems’ management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions, and for forecasting and planning for future periods. The Company’s annual financial plan is prepared both on a GAAP and non-GAAP basis, and both are approved by our board of directors. In addition and as a consequence of the importance of these measures in managing the business, the Company uses non-GAAP measures and financial performance results in the evaluation process to establish management’s compensation.

The non-GAAP measures exclude the effects of certain business combination accounting entries, stock-based compensation expense, amortization of acquired intangibles, acquisition-related and restructuring expenses, and the benefit associated with favorable settlements of certain indemnification claims and indirect tax liabilities. The Company believes that these non-GAAP measures are helpful in understanding its past financial performance and its anticipated future results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of the Company’s GAAP to non-GAAP measures is included in the financial schedules at the end of this release.

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Forward-Looking Statements

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained in this press release may be construed as “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “strategy,” “is intended to,” “project,” “guidance” and similar expressions, among others, identify forward-looking statements, which speak only as of the date the statement was made. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause the Company’s actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties include, among others, variation in demand for our products and services and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition; the ongoing consolidation in the financial services, insurance, healthcare, and communications markets; reliance on third party relationships; the potential loss of vendor specific objective evidence for our time and materials professional services arrangements; the inherent risks associated with international operations and the continued weakness in international economies; foreign currency exchange rates; the financial impact of the Company’s past acquisitions and any future acquisitions; and management of the Company’s growth. Further information regarding these and other factors which could cause the Company’s actual results to differ materially from any forward-looking statements contained in this press release is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and other recent filings with the Securities and Exchange Commission. These documents are available on the Company’s website athttp://www.pega.com/about/investors. The forward-looking statements contained in this press release represent the Company’s views as of October 27, 2015. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause the Company’s view to change, except as required by applicable law, the Company does not undertake and specifically disclaims any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events or otherwise. The statements should therefore not be relied upon as representing the Company’s view as of any date subsequent to October 27, 2015.

About Pegasystems

Pegasystems (NASDAQ: PEGA) develops strategic applications for marketing, sales, service, and operations. Pega’s applications streamline critical business operations, connect enterprises to their customers seamlessly in real-time across channels, and adapt to meet rapidly changing requirements. Pega’s Global 2000 customers include many of the world’s most sophisticated and successful enterprises. Pega’s applications, available in the cloud or on-premises, are built on its unified Pega 7 platform, which uses visual tools to easily extend and change applications to meet clients’ strategic business needs. Pega’s clients report that Pega gives them the fastest time to value, extremely rapid deployment, efficient re-use and global scale. For more information, please visit us atwww.pega.com.

Press Contacts:

Lisa Pintchman

Pegasystems Inc.

lisa.pintchman@pega.com

(617) 866-6022

Twitter:@pega

Investor Contact:

Sheila Ennis

ICR for Pegasystems

PegaInvestorRelations@pega.com

617-866-6077

All trademarks are the property of their respective owners.

3

Pegasystems Inc.

Unaudited Condensed Consolidated Statements of Operations

($ in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Revenue:
Software license	$	58,948		$	48,292		$	180,420		$	154,918
Maintenance		52,285			47,281			150,366			137,555
Services		51,170			42,058			147,554			128,607
Total revenue		162,403			137,631			478,340			421,080
Cost of revenue:
Software license		1,000			1,076			3,106			3,832
Maintenance		5,644			5,385			16,300			15,093
Services		48,797			39,921			140,875			120,061
Total cost of revenue (1)		55,441			46,382			160,281			138,986
Gross profit		106,962			91,249			318,059			282,094
Operating expenses:
Selling and marketing		53,640			48,623			169,764			150,772
Research and development		33,032			28,558			94,248			80,490
General and administrative		9,579			8,825			26,138			28,377
Acquisition-related		—			54			39			417
Restructuring		—			192			—			192
Total operating expenses (1)		96,251			86,252			290,189			260,248
Income from operations		10,711			4,997			27,870			21,846
Foreign currency transaction loss		(412	)		(2,845	)		(4,342	)		(2,527	)
Interest income, net		278			181			807			468
Other (expense) income, net		(331	)		19			(328	)		(507	)
Income before provision for income taxes		10,246			2,352			24,007			19,280
Provision for income taxes		3,921			470			8,643			6,129
Net income	$	6,325		$	1,882		$	15,364		$	13,151
Earnings per share :
Basic	$	0.08		$	0.02		$	0.20		$	0.17
Diluted	$	0.08		$	0.02		$	0.19		$	0.17
Weighted-average number of common shares outstanding:
Basic		76,543			76,351			76,521			76,312
Diluted		79,174			78,653			78,906			78,531
Dividends declared per share	$	0.03		$	0.03		$	0.09		$	0.075
(1)    Includes stock-based compensation as follows:
Cost of revenue	$	2,285		$	1,418		$	6,519		$	3,816
Operating expenses	$	5,806		$	3,850		$	16,486		$	9,905

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PEGASYSTEMS INC.

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

($ in thousands, except per share amounts)

																			% Increase
	Three Months Ended September 30,																		(Decrease)
	2015						2015			2014						2014
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			GAAP			Non-GAAP
TOTAL REVENUE	$	162,403		$	—		$	162,403		$	137,631		$	676		$	138,307			18	%		17	%
Software license		58,948			—			58,948			48,292			522			48,814			22	%		21	%
Maintenance		52,285			—			52,285			47,281			95			47,376			11	%		10	%
Services		51,170			—			51,170			42,058			59			42,117			22	%		21	%
TOTAL COST OF REVENUE	$	55,441		$	(3,636	)	$	51,805		$	46,382		$	(2,800	)	$	43,582			20	%		19	%
Amortization of intangible assets (2)		1,351			(1,351	)		—			1,382			(1,382	)		—
Stock-based compensation		2,285			(2,285	)		—			1,418			(1,418	)		—
GROSS MARGIN %		66	%					68	%		66	%					68	%		(44	) bp		(39	) bp
TOTAL OPERATING EXPENSES (3)	$	96,251		$	(7,434	)	$	88,817		$	86,252		$	(6,171	)	$	80,081			12	%		11	%
Amortization of intangible assets (2)		1,628			(1,628	)		—			2,075			(2,075	)		—
Stock-based compensation		5,806			(5,806	)		—			3,850			(3,850	)		—
Acquisition-related		—			—			—			54			(54	)		—
Restructuring		—			—			—			192			(192	)		—
INCOME FROM OPERATIONS	$	10,711		$	11,070		$	21,781		$	4,997		$	9,647		$	14,644			114	%		49	%
OPERATING MARGIN %		7	%					13	%		4	%					11	%		296	bp		282	bp
INCOME TAX EFFECTS (4)	$	3,921		$	4,148		$	8,069		$	470		$	3,161		$	3,631			734	%		122	%
NET INCOME	$	6,325		$	6,922		$	13,247		$	1,882		$	6,486		$	8,368			236	%		58	%
DILUTED EARNINGS PER SHARE	$	0.08		$	0.09		$	0.17		$	0.02		$	0.09		$	0.11			300	%		55	%
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING		79,174			—			79,174			78,653			—			78,653			1	%		1	%

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PEGASYSTEMS INC.

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

($ in thousands, except per share amounts)

	Nine Months Ended September 30,																		% Increase (Decrease)
	2015						2015			2014						2014
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			GAAP			Non-GAAP
TOTAL REVENUE	$	478,340		$	—		$	478,340		$	421,080		$	3,318		$	424,398			14	%		13	%
Software license		180,420			—			180,420			154,918			1,565			156,483			16	%		15	%
Maintenance		150,366			—			150,366			137,555			470			138,025			9	%		9	%
Services		147,554			—			147,554			128,607			1,283			129,890			15	%		14	%
TOTAL COST OF REVENUE	$	160,281		$	(10,485	)	$	149,796		$	138,986		$	(8,482	)	$	130,504			15	%		15	%
Amortization of intangible assets (2)		4,041			(4,041	)		—			4,666			(4,666	)		—
Stock-based compensation		6,519			(6,519	)		—			3,816			(3,816	)		—
Indemnification claim and indirect tax settlements		(75	)		75			—			—			—			—
GROSS MARGIN %		66	%					69	%		67	%					69	%		(50	) bp		(57	) bp
TOTAL OPERATING EXPENSES (3)	$	290,189		$	(17,865	)	$	272,324		$	260,248		$	(16,485	)	$	243,763			12	%		12	%
Amortization of intangible assets (2)		5,195			(5,195	)		—			5,971			(5,971	)		—
Stock-based compensation		16,486			(16,486	)		—			9,905			(9,905	)		—
Indemnification claim and indirect tax settlements		(3,855	)		3,855			—			—			—			—
Acquisition-related		39			(39	)		—			417			(417	)		—
Restructuring		—			—			—			192			(192	)		—
INCOME FROM OPERATIONS	$	27,870		$	28,350		$	56,220		$	21,846		$	28,285		$	50,131			28	%		12	%
OPERATING MARGIN %		6	%					12	%		5	%					12	%		64	bp		(6	) bp
INCOME TAX EFFECTS (4)	$	8,643		$	9,336		$	17,979		$	6,129		$	9,373		$	15,502			41	%		16	%
NET INCOME	$	15,364		$	19,014		$	34,378		$	13,151		$	18,912		$	32,063			17	%		7	%
DILUTED EARNINGS PER SHARE	$	0.19		$	0.25		$	0.44		$	0.17		$	0.24		$	0.41			12	%		7	%
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING		78,906			—			78,906			78,531			—			78,531			0	%		0	%

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PEGASYSTEMS INC.

FOOTNOTES FOR RECONCILIATION OF

SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures see disclosure under Discussion of Non-GAAP Financial Measures included earlier in this release and below. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Revenue: Business combination accounting rules require that we determine the fair value of the deferred revenue liability for contractual obligations assumed primarily from our acquisition of Antenna Software, Inc. and its subsidiaries (“Antenna”) in October 2013. In post-acquisition reporting periods, we recognize revenue for the fair value of these contracts, when all the revenue recognition criteria are satisfied, instead of the revenue that would have been recognized by Antenna as an independent company. We add back the effect of the deferred revenue fair value adjustment in non-GAAP revenue to reflect the full amount of these revenues to provide a more complete comparison of the revenue guidance to peer companies. No adjustments were made to revenue for the nine months of 2015.

Amortization of intangible assets: We have excluded the amortization expense of intangible assets from our non-GAAP operating expenses and net earnings measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

Stock-based compensation expense: We have excluded stock-based compensation expense from our non-GAAP operating expenses and net earnings measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expense.

Acquisition-related and restructuring expenses: We have excluded the effect of acquisition-related and restructuring expenses from our non-GAAP operating expenses and net earnings measures. We incurred direct and incremental expenses associated with the Antenna and 2014 acquisitions. These acquisition-related expenses were primarily professional fees to affect the acquisitions. We have also incurred restructuring expenses related to the integration of the Antenna acquisition, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Restructuring expenses consist primarily of lease exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Indemnification claim and indirect tax settlements: We reached an agreement with the former shareholders of Antenna to release a portion of the funds held in escrow as security for their indemnification obligations to us in settlement of the outstanding indemnification claims. The settlement resulted in a benefit to cost of revenue and operating expenses in the first quarter of 2015. In addition, we favorably settled indirect tax liabilities related to the Antenna acquisition, which resulted in a benefit to operating expenses in the first quarter of 2015. We believe the benefit associated with the settlements of the Antenna indemnification claims and indirect tax liabilities is not representative of our ongoing business, and we have excluded the effects of these items from our non-GAAP operating results and net earnings measures.

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(2) Estimated future annual amortization expense related to intangible assets as of September 30, 2015 is as follows:

(in thousands)
Remainder of 2015	$	2,972
2016		11,520
2017		9,822
2018		8,822
2019 and thereafter		3,276
Total intangible assets subject to amortization	$	36,412

(3) Below is a reconciliation of non-GAAP operating expenses:

	Three Months Ended September 30,
	2015						2015		2014					2014
(in thousands)	GAAP			Adj.			Non-GAAP		GAAP		Adj.			Non-GAAP
Selling and marketing	$	53,640		$	(3,942	)	$	49,698	$	48,623	$	(2,927	)	$	45,696
Amortization of intangible assets		1,537			(1,537	)		—		1,501		(1,501	)		—
Stock-based compensation		2,405			(2,405	)		—		1,426		(1,426	)		—
Research and development	$	33,032		$	(2,047	)	$	30,985	$	28,558	$	(1,452	)	$	27,106
Stock-based compensation		2,047			(2,047	)		—		1,452		(1,452	)		—
General and administrative	$	9,579		$	(1,445	)	$	8,134	$	8,825	$	(1,546	)	$	7,279
Amortization of intangible assets		91			(91	)		—		574		(574	)		—
Stock-based compensation		1,354			(1,354	)		—		972		(972	)		—
Acquisition-related	$	—		$	—		$	—	$	54	$	(54	)	$	—
Restructuring	$	—		$	—		$	—	$	192	$	(192	)	$	—
TOTAL OPERATING EXPENSES	$	96,251		$	(7,434	)	$	88,817	$	86,252	$	(6,171	)	$	80,081
	Nine Months Ended September 30,
	2015						2015		2014					2014
(in thousands)	GAAP			Adj.			Non-GAAP		GAAP		Adj.			Non-GAAP
Selling and marketing	$	169,764		$	(10,878	)	$	158,886	$	150,772	$	(8,358	)	$	142,414
Amortization of intangible assets		4,602			(4,602	)		—		4,496		(4,496	)		—
Stock-based compensation		6,283			(6,283	)		—		3,862		(3,862	)		—
Indemnification claim and indirect tax settlements		(7	)		7			—		—		—			—
Research and development	$	94,248		$	(5,738	)	$	88,510	$	80,490	$	(3,201	)	$	77,289
Stock-based compensation		6,178			(6,178	)		—		3,201		(3,201	)		—
Indemnification claim and indirect tax settlements		(440	)		440			—		—		—			—
General and administrative	$	26,138		$	(1,210	)	$	24,928	$	28,377	$	(4,317	)	$	24,060
Amortization of intangible assets		593			(593	)		—		1,475		(1,475	)		—
Stock-based compensation		4,025			(4,025	)		—		2,842		(2,842	)		—
Indemnification claim and indirect tax settlements		(3,408	)		3,408			—		—		—			—
Acquisition-related	$	39		$	(39	)	$	—	$	417	$	(417	)	$	—
Restructuring	$	—		$	—		$	—	$	192	$	(192	)	$	—
TOTAL OPERATING EXPENSES	$	290,189		$	(17,865	)	$	272,324	$	260,248	$	(16,485	)	$	243,763

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(4) The GAAP income tax effects were calculated using an effective tax rate of 38.3% and 20.0% for the third quarter of 2015 and 2014, respectively. The non-GAAP income tax effects were calculated using an effective non-GAAP tax rate of 37.9% and 30.3% for the third quarter of 2015 and 2014, respectively.

The GAAP income tax effects were calculated using an effective tax rate of 36.0% and 31.8% for the nine months of 2015 and 2014, respectively. The non-GAAP income tax effects were calculated using an effective non-GAAP tax rate of 34.3% and 32.6% for the nine months of 2015 and 2014, respectively.

The differences between our GAAP and non-GAAP effective tax rates in the third quarter and nine months of 2015 primarily relate to the favorable impact of stock-based compensation expense adjustments on non-GAAP effective tax rates.

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Pegasystems Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

	As of September 30, 2015		As of December 31, 2014
Current Assets:
Cash and cash equivalents	$	97,278	$	114,585
Marketable securities		126,738		96,631
Total cash, cash equivalents, and marketable securities		224,016		211,216
Trade accounts receivable, net		129,252		154,844
Deferred income taxes		12,903		12,974
Income taxes receivable		14,688		4,502
Other current assets		12,310		9,544
Total current assets		393,169		393,080
Property and equipment, net		31,830		30,156
Long-term deferred income taxes		71,998		69,258
Long-term other assets		3,715		2,783
Intangible assets, net		36,412		45,664
Goodwill		46,816		46,860
Total assets	$	583,940	$	587,801
Current liabilities:
Accounts payable	$	7,617	$	4,752
Accrued expenses		39,049		42,958
Accrued compensation and related expenses		43,386		47,250
Deferred revenue		134,075		134,672
Total current liabilities		224,127		229,632
Income taxes payable		24,562		24,896
Long-term deferred revenue		13,857		20,859
Other long-term liabilities		16,348		17,709
Total liabilities		278,894		293,096
Stockholders’ equity:		305,046		294,705
Total liabilities and stockholders’ equity	$	583,940	$	587,801

10

Pegasystems Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2015			2014
Operating activities:
Net income	$	15,364		$	13,151
Adjustments to reconcile net income to cash provided by operating activities:
Excess tax benefits from equity awards and deferred income taxes		(7,550	)		(5,599	)
Depreciation, amortization, foreign currency transaction loss, and other non-cash items		23,041			20,633
Stock-based compensation expense		23,005			13,721
Change in operating assets and liabilities, net		1,068			56,361
Cash provided by operating activities		54,928			98,267
Cash used in investing activities		(42,736	)		(22,485	)
Cash used in financing activities		(25,662	)		(17,403	)
Effect of exchange rates on cash and cash equivalents		(3,837	)		(2,065	)
Net (decrease) increase in cash and cash equivalents		(17,307	)		56,314
Cash and cash equivalents, beginning of period		114,585			80,231
Cash and cash equivalents, end of period	$	97,278		$	136,545

11

Pegasystems Inc.

Historical License and Cloud Backlog

(in thousands)

	2015		2015		2015		2014		2014		2014		2014		2013		2013
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3
Total billed deferred license and cloud revenue		55,370		61,339		79,639		63,048		68,561		54,938		62,741		64,267		34,644
Total off-balance sheet license and cloud commitments		324,340		330,043		294,412		301,409		265,309		298,658		270,243		283,099		248,403
TOTAL LICENSE AND CLOUD BACKLOG	$	379,710	$	391,382	$	374,051	$	364,457	$	333,870	$	353,596	$	332,984	$	347,366	$	283,047

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