Pegasystems, Inc. develops, markets, licenses, and supports software to automate complex and changing business processes in the United States and internationally. It provides Pega 7, a unified platform that enables clients to build enterprise applications; and software applications for marketing, sales and on boarding, customer service, and operations, as well as industry-specific business processes. The company also offers customer relationship management applications, including Pega Marketing to manage customer relationships across inbound and outbound channels; Pega Sales Automation to capture practices and guides sales teams through the sales and customer on boarding processes; Pega Customer Service to deliver consistent interactions across channels, improve employee productivity, and adapt changing business requirements; and operations applications to support exceptions and investigations, order fulfillment, claims processing, insurance underwriting, and product development, as well as risk, fraud, and compliance management. In addition, it provides Pega Cloud to develop, test, and deploy its software applications using an Internet-based infrastructure; consulting and implementation support, technical support, and hosting services; and instructor-led and online training courses for project leaders, system architects, and system administrators. The company primarily markets its software and services to financial services, healthcare, insurance, communications and media, public sector, manufacturing, life sciences, and other markets through a direct sales force and a network of business and technology alliances, as well as through partnerships with technology providers and application developers. Pegasystems, Inc. was founded in 1983 and is headquartered in Cambridge, Massachusetts.
(Summary) (Company) (Chart)
28 August 2016
1yr Target $31.50
Payout Ratio 24.00%
1yr Cap Gain 21.43%
1yr Tot Return 21.89%
EPS (ttm) $0.50
EPS next yr $1.10
Forward P/E 23.65
EPS next 5yr 28.00%
1yr Price Support $30.80
Market Cap $1.97 Bil
Revenues $734.60 Mil
Earnings $39.90 Mil
Profit Margin 5.43%
Quick Ratio 1.60
Current Ratio 1.60
1yr RevGR 15.71%
3yr RevGR 13.77%
5yr RevGR 15.19%
1yr EarnGR 9.52%
3yr EarnGR 17.80%
5yr EarnGR ---
1yr DivGR 22.44%
3yr DivGR 25.70%
5yr DivGR 14.86%
Alan Trefler founded Pegasystems in 1983 at the age of 28 in his hometown of Cambridge, Massachusetts, where its still located today. Trefler's background as a chess player led him to develop computer systems that could play chess in the early 1980s. He stated in an interview with Forbes that when he started Pega, he wanted to resolve the issues of heavy lifting that business people deal with and more importantly getting a computer to understand how business people wanted things to work. He commented in the same interview, "it turns out to be a fairly hard problem to solve".
During the company's early years, they focused on providing case management, namely for companies such as American Express. Pega, from its early days onwards, focused on using its own cash and returns, instead of looking for outside investment. The company went public in 1996 and began trading on NASDAQ under the symbol PEGA. This move raised millions in finance for the company, meaning they didn't have to pursue venture capital investments from that point forward. Pega entered a period of financial trouble in the late 1990s, following a dispute with its accountants, Ernst & Young. After restating their earnings, Pega faced an investigation by the SEC, which was dropped in 2002.
From 2005 onwards, revenues for the company grew strongly, when compared to the rest of the business process management market. Alan Trefler stated in an interview with Computer Weekly that other BPM companies such as Oracle and IBM, were struggling to make gains in the field at the time. Pega reported license revenues rose 34% year-over-year during 2013, with the news of the performance along with other factors, led to Pega's stock rising by 20% in November 2013.
BNY Mellon announced in 2014 that they would be integrating Pega into their operations as part of an efficiency strategy.
In 2015, the company reported an income of $162 million for the second quarter. This was following a steady rise in the company's share price, which had risen by 12 percent since the beginning of the year. The revenue for the quarter was $10 million higher than predictions and it was a 12.6 percent improvement year on year from Q2 in 2014. The Royal Bank of Scotland announced in 2015, that it was using Pega as part of its revised customer relations strategy. Sprint announced a similar solution later in 2015, with the main aim of using Pega to win back clients through a more focused customer relations strategy.
Pegasystems believes that business success requires organizations to become digital and that a new generation of strategic applications can accelerate how organizations become modern digital enterprises. They develop, market, license, and support strategic software applications for marketing, sales and onboarding, customer service, and operations, in addition to licensing their Pega 7 platform for clients that wish to build and extend their own applications. The software is designed to assist clients in building, deploying, and evolving strategic enterprise applications, creating an environment in which business and IT can collaborate to manage back office operations, front office sales, marketing, and/or customer service needs.
The company's strategic applications are built on their Pega 7 system, their unified on-cloud and on-premises platform. Pega 7 uses visual models to build applications: process models, predictive analytics, user experience designs, decision logic, etc. This visual, model-based approach is designed to be faster in building, deploying, and evolving strategic applications than traditional programming, and to empower clients to better engage their customers, simplify their processes, and turn the power of change into a competitive advantage.
The company's applications and platform intersect with and encompass several traditional software markets, including: Customer Relationship Management (CRM), Business Process Management (BPM), Business Rules Management Systems (BRMS), Dynamic Case Management (DCM), Decision Management, including Predictive and Adaptive analytics, and the Vertical Specific Software (VSS) market of industry solutions and packaged applications.
Pegasystems also provides consulting services and implementation support, training, and technical support services to help clients maximize their business value from Pegasystem's software. The company's clients include Global 3000 companies and government agencies that seek to manage complex enterprise systems and customer service issues more nimbly and cost effectively. The company's strategy is to sell a client a series of licenses, each focused on a specific purpose or area of operations.
Pega announced in 2010 that it would be acquiring their competitor, Chordiant. The deal was signed on March 15, 2010, with the purchase of the enterprise software company costing around $161.5 million. With the development of the software as a service market, it led Chordiant's growth to stagnate and forced them to look for investors. The acquisition of the company by Pegasystems came soon after, leading some experts to draw conclusions that Pegasystems had acquired the company at "a bargain price". Following the acquisition of Chordiant, Pegasystems integrated the operations of Chordiant into their existing operations.
Three and a half years after Pega acquired Chordiant, came the company's next major acquisition. The mobile application development platform vendor, Antenna Software, was acquired for $27.7 million. The company was located in New Jersey and also had bases in Kraków and Bangalore. The acquisition would allow for Pega to provide a faster time-to-market and increased flexibility in end-to-end mobile application development.
In 2014, the company announced two separate acquisitions. The first was of the Bangalore-based MeshLabs, which operated as an analytics startup. The financial details of the transaction were not disclosed. Their second acquisition of the year came when Pega acquired the Profeatable Corporation. The startup from Philadelphia, Pennsylvania was the company's first real move into the cobrowsing market. It was suggested that the software tool would be used as additional functionality for Pega.
Pega’s applications help streamline business operations, connect enterprises to their customers in real-time across channels, and adapt to meet changing requirements. Their applications can be deployed in the cloud or on-premises, providing our clients with the flexibility to operate the software according to their own preferences.
Pega 7. Pega 7 is a unified platform that enables clients to build enterprise applications in a fraction of the time it would take using traditional programming technologies. Pega 7 is engineered to support complex, global enterprises, allowing for application development and deployment on a patented, layered architecture that supports reuse across lines of business, geographies, and customer segments.
The platform features a model-driven, visual, code-free approach to application development that enables business and IT to collaborate, using a visual “language” that models the requirements and design of the application through readily understandable metaphors. This agile approach facilitates continuous improvement methodologies, such as Lean Six Sigma, to effectively manage individual projects or help drive a complete enterprise transformation. All aspects of the application are captured in the model, including business strategy mapping, business processes, data models, case definitions, rules, decisions, reporting, interfaces, intelligent work management capabilities, business activity monitoring, and the UX across both web and mobile devices.
Once defined this way, the finished application and documentation are generated and ready for use. The approach bypasses the error-prone and time- consuming process of manually translating requirements into code. The software application is created automatically and directly from the model, helping to close the costly gap between vision and execution. Changes to the code are made by changing the model, and application documentation is generated directly from the model. The Pega 7 platform is standards-based and can leverage a client’s existing technology to create new business applications that cross technology silos and bridge front and back-office.
Strategic Applications. Pegasystems also offers purpose or industry-specific software applications built on the Pega 7 platform. These applications for Marketing, Sales and Onboarding, Customer Service, and Operations provide a best-practice starting point as well as industry-specific business processes. As they are built on the Pega 7 platform, these applications deliver flexibility beyond traditional “commercial off the shelf” products. Pegasystems believes that their applications allow their clients to offer differentiated service and value to their customers. Pega 7 enables organizations to implement new processes quickly, refine customer experiences, bring new offerings to market, and provide customized or specialized processing to help meet the needs of different customers, departments, geographies, or regulatory requirements.
Pega Cloud. Pega Cloud allows clients to develop, test and deploy, on an accelerated basis, the strategic applications and Pega 7 platform using a secure, flexible Internet-based infrastructure. Pega Cloud provides production and development and testing services to accelerate the development and deployment of Pegasystems’s strategic applications and the Pega 7 platform. This allows the company's clients to minimize infrastructure cost while focusing on their core revenue generating competencies.