Pegasystems Inc. · NASDAQ:PEGA
Pegasystems — PegaWorld 2018
22 slides from Pegasystems's conference presentation, Jun 4, 2018
Slide 1: Pega's Path to 40
Pega’s Path to 40 PegaWorld 2018 Ken Stillwell | Chief Administrative Officer, Chief Financial Officer, and SVP Exhibit 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this presentation may be construed as “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about
Slide 3: Adoption of ASC 606
All financial information, post 2015 on an annual basis and post 2016 on a quarterly basis, has been prepared in accordance with the new revenue recognition standard (ASC 606). All previous periods shown were prepared in accordance with the legacy revenue recognition standards that predated ASC 606.
Slide 4: Continuing to Execute Against a Large and Growing Market
Total Addressable Market 10 Year CAGR – 12% Customer Service 10 Year CAGR – 14% Marketing 10 Year CAGR – 13% Sales 10 Year CAGR – 10% Continuing to Execute Against a Large and Growing Market FY 13 $18B FY 16 $26B FY 18 $32B FY 22 $50B Data source: IDC Semiannual Software Tracker Publication Date: Ma
Slide 5: Continuing Top Line Growth
Continuing Top Line Growth Total GAAP Revenues (millions) *Includes $35M Renewal Revenue for years 2016-2018 are under ASC 606, all other periods are under ASC 605 © 2018 Pegasystems Inc $853 $888
Slide 6: 2017 GAAP Revenue – Recast Under ASC 606
2017 GAAP Revenue – Recast Under ASC 606 Term revenue represents the most significant change between 606 and 605 (In millions) Q1 Q2 Q3 Q4 FY 17 Perpetual $38 $31 $13 $51 $133 Term 89 20 40 57 206 Cloud 10 13 13 15 51 Maintenance 59 59 62 62 242 Consulting & Training 60 63 63 70 256 Total GAAP Reven
Slide 7: Tracking with Market movement to recurring over the Next Years
Tracking with Market movement to recurring over the Next 5 Years Total Revenues (millions) *Includes $35M Renewal Recurring Revenue Non-Recurring Revenue ~1,600 Actual Estimate Revenue for years 2016-2018 are under ASC 606, all other periods are under ASC 605 © 2018 Pegasystems Inc. 57% 54% 50% 50%
Slide 8: Continuing ACV Growth – Q1 Compare
Continuing ACV Growth – Q1 Compare In Millions *2016 Maintenance ACV is calculated using ASC 605 Maintenance Revenue ~$1,300 ~$850 ~$450 * © 2018 Pegasystems Inc.
Slide 9: Q1 ACV Equivalent Growth
Q1 ACV Equivalent Growth In millions Q1 17 Q1 18 YoY Change in Term and Cloud ACV $8 $20 132% Perpetual ACV Equivalent Growth $11 $7 (39%) ACV Equivalent Growth* $19 $27 36% Change in Term and Cloud ACV – For a given quarter, the increase in ACV as of the end of such quarter as compared to ACV at th
Slide 10: Growing Recurring Contribution Mix of ACV Equivalents
Growing Recurring Contribution Mix of ACV Equivalents Years 2016-2018 are under ASC 606, all other periods are under ASC 605 © 2018 Pegasystems Inc.
Slide 11: Growing Cloud Business – Full Year and Q1 Compares
Growing Cloud Business – Full Year and Q1 Compares Revenues (millions) Years 2016-2018, and Quarters 1Q17 and 1Q18 are under ASC 606, all other periods are under ASC 605 © 2018 Pegasystems Inc.
Slide 12: Still Tracking to "Rule of 40"
Still Tracking to “Rule of 40” 2017 2022 Target Revenue Growth 16% ~15-17% GAAP Operating Margin 10% Non-GAAP Operating Margin 18% ~23-25% Cloud Revenue Growth ~25% ~35% Cloud Margin ~50% ~70% Rule of 40”: Trailing Twelve Month Non-GAAP Operating Margin excluding GAAP Depreciation expense plus Trail
Slide 13: New Revenue Standard (ASC 606)
New Revenue Standard (ASC 606) Principles-based model Identify the contract with the customer Identify the separate performance obligations in the contract Determine the transaction price Allocate the transaction price to the separate performance obligations Recognize revenue when (or as) the entity
Slide 14: Revenue and Sales Commission Treatment Comparison
Revenue and Sales Commission Treatment Comparison ASC 605 ASC 606 Perpetual Upfront Upfront Term As Invoices Due Upfront Cloud Ratable Ratable Sales Commission Upfront Over time © 2018 Pegasystems Inc.
Slide 15: Example: Three Year Term License – $1M per Year
Example: Three Year Term License – $1M per Year © 2018 Pegasystems Inc.
Slide 16: Mix Impact Example
Mix Impact Example Total Contract Deal values $300, assumes 3 year duration for term and cloud deals Impact of Cloud Shift 33% 50% © 2018 Pegasystems Inc.
Slide 17: Appendix
APPENDIX SS ale PEGA Gtange
Slide 18: Definitions: Recurring Revenue, ACV, ACV Equivalent Growth
Recurring Revenue: Includes Term License, Maintenance and Cloud Revenue Non-Recurring Revenue: Includes Perpetual License, Consulting and Training Revenue ACV, as of a given date, is the sum of the following two components: The sum of the annual value of each term and cloud contract in effect on suc
Slide 19: Appendix - ASC 606 Recast Results
Appendix - ASC 606 Recast Results (millions) Three Months Ended: Previously Reported Adjustments As Adjusted Previously Reported Adjustments As Adjusted March 31, 2017 June 30, 2017 Perpetual $38,680 ($781 ) $37,899 $30,255 $1,042 $31,297 Term 53,710 35,399 89,109 30,782 (10,929 ) 19,853 Maintenance
Slide 20: Appendix - ASC 606 Recast Results (Twelve Months)
Twelve Months Ended: Previously Reported Adjustments As Adjusted Previously Reported Adjustments As Adjusted December 31, 2017 December 31, 2016 Perpetual $141,819 ($8,936 ) $132,883 $147,529 ($2,476 ) $145,053 Term 146,515 59,896 206,411 132,466 19,765 152,231 Maintenance 244,347 (2,027 ) 242,320 2
Slide 21: Reconciliation of Selected GAAP Measures to Non-GAAP Measures
FY 2017 GAAP revenue $888 Large term license renewal (35 ) Revenue excluding large renewal (Non-GAAP) $853 Appendix - Reconciliation of Selected GAAP Measures to Non-GAAP Measures (millions) To supplement our financial results presented in accordance with generally accepted accounting principles in
Slide 22: Build for Change
Build for Change