PEGASYSTEMS INC, 10-Q filed on 27 Jul 22
v3.22.2
COVER PAGE - shares
6 Months Ended
Jun. 30, 2022
Jul. 19, 2022
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 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 Q2  
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, $.01 par value per share  
Trading Symbol PEGA  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   81,952,276
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 109,275 $ 159,965
Marketable securities 187,613 202,814
Total cash, cash equivalents, and marketable securities 296,888 362,779
Accounts receivable 171,556 182,717
Unbilled receivables 201,130 226,714
Other current assets 70,633 68,008
Total current assets 740,207 840,218
Unbilled receivables 115,901 129,789
Goodwill 81,717 81,923
Other long-term assets 320,557 541,601
Total assets 1,258,382 1,593,531
Current liabilities:    
Accounts payable 21,465 15,281
Accrued expenses 63,120 63,890
Accrued compensation and related expenses 73,945 120,946
Deferred revenue 269,121 275,844
Other current liabilities 7,800 9,443
Total current liabilities 435,451 485,404
Convertible senior notes, net 592,161 590,722
Operating lease liabilities 84,170 87,818
Other long-term liabilities 12,821 13,499
Total liabilities 1,124,603 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; 81,940 and 81,712 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 819 817
Additional paid-in capital 170,251 145,810
(Accumulated deficit) retained earnings (15,140) 276,449
Accumulated other comprehensive (loss) (22,151) (6,988)
Total stockholders’ equity 133,779 416,088
Total liabilities and stockholders’ equity $ 1,258,382 $ 1,593,531
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
shares in Thousands
Jun. 30, 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) 81,940 81,712
Common stock, shares outstanding (in shares) 81,940 81,712
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Revenue        
Total revenue $ 274,337 $ 325,702 $ 650,644 $ 639,201
Cost of revenue        
Total cost of revenue 95,115 84,531 183,312 166,978
Gross profit 179,222 241,171 467,332 472,223
Operating expenses        
Selling and marketing 157,198 156,423 319,434 305,162
Research and development 74,341 64,395 145,831 126,837
General and administrative 32,723 19,161 68,487 37,431
Total operating expenses 264,262 239,979 533,752 469,430
(Loss) income from operations (85,040) 1,192 (66,420) 2,793
Foreign currency transaction gain (loss) 1,713 (403) 4,589 (5,501)
Interest income 309 236 516 389
Interest expense (1,944) (1,959) (3,890) (3,839)
(Loss) income on capped call transactions (18,945) 26,309 (49,505) 7,192
Other income, net 3,785 0 6,526 106
(Loss) income before provision for (benefit from) income taxes (100,122) 25,375 (108,184) 1,140
Provision for (benefit from) income taxes 186,174 (11,916) 178,491 (29,534)
Net (loss) income $ (286,296) $ 37,291 $ (286,675) $ 30,674
(Loss) earnings per share        
Basic (in dollars per share) $ (3.50) $ 0.46 $ (3.51) $ 0.38
Diluted (in dollars per share) $ (3.50) $ 0.43 $ (3.51) $ 0.36
Weighted-average number of common shares outstanding        
Basic (in shares) 81,847 81,316 81,764 81,161
Diluted (in shares) 81,847 90,320 81,764 86,006
Subscription services        
Revenue        
Total revenue $ 171,832 $ 152,075 $ 341,865 $ 295,494
Cost of revenue        
Total cost of revenue 36,533 29,046 68,563 57,389
Subscription license        
Revenue        
Total revenue 41,600 104,296 179,133 215,805
Cost of revenue        
Total cost of revenue 673 585 1,295 1,205
Perpetual license        
Revenue        
Total revenue 2,266 12,596 9,706 18,048
Cost of revenue        
Total cost of revenue 36 71 70 101
Consulting        
Revenue        
Total revenue 58,639 56,735 119,940 109,854
Cost of revenue        
Total cost of revenue $ 57,873 $ 54,829 $ 113,384 $ 108,283
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Statement of Comprehensive Income [Abstract]        
Net (loss) income $ (286,296) $ 37,291 $ (286,675) $ 30,674
Other comprehensive (loss) income, net of tax        
Unrealized (loss) gain on available-for-sale securities (1,149) 121 (927) 1,131
Foreign currency translation adjustments (11,466) 1,461 (14,236) 731
Total other comprehensive (loss) income, net of tax (12,615) 1,582 (15,163) 1,862
Comprehensive (loss) income $ (298,911) $ 38,873 $ (301,838) $ 32,536
v3.22.2
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 Capital
Cumulative Effect, Period of Adoption, Adjustment
Retained Earnings (Accumulated Deficit)
Retained Earnings (Accumulated Deficit)
Cumulative 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) income (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, 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]                
Other comprehensive income (loss) 1,862              
Net (loss) income 30,674              
Balance, end of period (in shares) at Jun. 30, 2021     81,456          
Balance, end of period at Jun. 30, 2021 522,468   $ 815 147,670   375,069   (1,086)
Balance, beginning of period (in shares) at Mar. 31, 2021     81,246          
Balance, beginning of period at Mar. 31, 2021 478,925   $ 812 140,558   340,223   (2,668)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Repurchase of common stock (in shares)     (81)          
Repurchase of common stock (10,246)   $ (1) (10,245)        
Issuance of common stock for share-based compensation plans (in shares)     267          
Issuance of common stock for stock compensation plans (16,196)   $ 3 (16,199)        
Issuance of common stock under the employee stock purchase plan (in shares)     24          
Issuance of common stock under the employee stock purchase plan 2,859   $ 1 2,858        
Stock-based compensation 30,698     30,698        
Cash dividends declared ($0.03 per share) (2,445)         (2,445)    
Other comprehensive income (loss) 1,582             1,582
Net (loss) income 37,291         37,291    
Balance, end of period (in shares) at Jun. 30, 2021     81,456          
Balance, end of period at Jun. 30, 2021 $ 522,468   $ 815 147,670   375,069   (1,086)
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) income (379)         (379)    
Balance, end of period (in shares) at Mar. 31, 2022     81,802          
Balance, end of period at Mar. 31, 2022 $ 406,668   $ 818 141,771   273,615   (9,536)
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]                
Other comprehensive income (loss) (15,163)              
Net (loss) income $ (286,675)              
Balance, end of period (in shares) at Jun. 30, 2022 81,940   81,940          
Balance, end of period at Jun. 30, 2022 $ 133,779   $ 819 170,251   (15,140)   (22,151)
Balance, beginning of period (in shares) at Mar. 31, 2022     81,802          
Balance, beginning of period at Mar. 31, 2022 406,668   $ 818 141,771   273,615   (9,536)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Repurchase of common stock (in shares)     (38)          
Repurchase of common stock (1,925)   $ 0 (1,925)        
Issuance of common stock for share-based compensation plans (in shares)     117          
Issuance of common stock for stock compensation plans (3,251)   $ 1 (3,252)        
Issuance of common stock under the employee stock purchase plan (in shares)     59          
Issuance of common stock under the employee stock purchase plan 2,357     2,357        
Stock-based compensation 31,300     31,300        
Cash dividends declared ($0.03 per share) (2,459)         (2,459)    
Other comprehensive income (loss) (12,615)             (12,615)
Net (loss) income $ (286,296)         (286,296)    
Balance, end of period (in shares) at Jun. 30, 2022 81,940   81,940          
Balance, end of period at Jun. 30, 2022 $ 133,779   $ 819 $ 170,251   $ (15,140)   $ (22,151)
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares
3 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2021
Mar. 31, 2021
Statement of Stockholders' Equity [Abstract]        
Cash dividend declared (in dollars per share) $ 0.03 $ 0.03 $ 0.03 $ 0.03
v3.22.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Operating activities        
Net (loss) income $ (286,296) $ 37,291 $ (286,675) $ 30,674
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities        
Stock-based compensation 31,300 30,688 59,527 60,788
Deferred income taxes     169,105 (28,232)
Loss (gain) on capped call transactions 18,945 (26,309) 49,505 (7,192)
Amortization of deferred commissions 10,934 9,706 28,155 21,202
Lease expense     7,832 5,792
Amortization of intangible assets and depreciation     8,175 15,504
Foreign currency transaction (gain) loss (1,713) 403 (4,589) 5,501
Other non-cash     (3,479) 3,543
Change in operating assets and liabilities, net     (32,625) (88,170)
Cash (used in) provided by operating activities     (5,069) 19,410
Investing activities        
Purchases of investments     (38,489) (51,601)
Proceeds from maturities and called investments     34,912 68,798
Sales of investments     14,839 2,450
Payments for acquisitions, net of cash acquired     (922) (4,993)
Investment in property and equipment     (11,863) (4,161)
Cash (used in) provided by investing activities     (1,523) 10,493
Financing activities        
Proceeds from employee stock purchase plan     4,803 5,146
Dividend payments to stockholders     (4,908) (4,865)
Common stock repurchases     (41,086) (60,998)
Cash (used in) financing activities     (41,191) (60,717)
Effect of exchange rate changes on cash and cash equivalents     (2,907) (1,207)
Net (decrease) in cash and cash equivalents     (50,690) (32,021)
Cash and cash equivalents, beginning of period     159,965 171,899
Cash and cash equivalents, end of period $ 109,275 $ 139,878 $ 109,275 $ 139,878
v3.22.2
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 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’s presentation. Such reclassifications did not affect total revenues, operating income, or net income.
v3.22.2
MARKETABLE SECURITIES
6 Months Ended
Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES
NOTE 2. MARKETABLE SECURITIES
June 30, 2022December 31, 2021
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair Value
Government debt$2,989 $— $(60)$2,929 $2,000 $— $(10)$1,990 
Corporate debt188,350 — (3,666)184,684 201,659 (837)200,824 
$191,339 $— $(3,726)$187,613 $203,659 $$(847)$202,814 
As of June 30, 2022, marketable securities’ maturities ranged from July 2022 to November 2024, with a weighted-average remaining maturity of 0.9 years.
v3.22.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
Receivables
(in thousands)
June 30, 2022December 31, 2021
Accounts receivable$171,556 $182,717 
Unbilled receivables201,130 226,714 
Long-term unbilled receivables115,901 129,789 
$488,587 $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)
June 30, 2022
1 year or less$201,130 63 %
1-2 years78,813 25 %
2-5 years37,088 12 %
$317,031 100 %
Unbilled receivables by contract effective date:
(Dollars in thousands)
June 30, 2022
2022$81,887 26 %
2021142,578 45 %
202056,283 18 %
201919,928 %
2018 and prior16,355 %
$317,031 100 %
Major clients
Clients accounting for 10% or more of the Company’s total receivables:
June 30, 2022December 31, 2021
Client A
Accounts receivable*%
Unbilled receivables*15 %
Total receivables*10 %
* Client accounted for less than 10% of receivables
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)
June 30, 2022December 31, 2021
Contract assets (1)
$12,149 $12,530 
Long-term contract assets (2)
12,983 10,643 
$25,132 $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)
June 30, 2022December 31, 2021
Deferred revenue$269,121 $275,844 
Long-term deferred revenue (1)
5,417 5,655 
$274,538 $281,499 
(1) Included in other long-term liabilities.
The change in deferred revenue in the six months ended June 30, 2022 was primarily due to new billings in advance of revenue recognition offset by $205.0 million of revenue recognized during the period that was included in deferred revenue as of December 31, 2021.
v3.22.2
DEFERRED COMMISSIONS
6 Months Ended
Jun. 30, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
DEFERRED COMMISSIONS
NOTE 4. DEFERRED COMMISSIONS
(in thousands)
June 30, 2022December 31, 2021
Deferred commissions (1)
$123,067 $135,911 
(1) Included in other long-term assets.
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Amortization of deferred commissions (1)
$10,934 $9,706 $28,155 $21,202 
(1) Included in selling and marketing expense.
v3.22.2
GOODWILL AND OTHER INTANGIBLES
6 Months Ended
Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLES
NOTE 5. GOODWILL AND OTHER INTANGIBLES
Goodwill
Change in goodwill:
Six Months Ended
June 30,
(in thousands)
20222021
January 1,$81,923 $79,231 
Acquisition— 2,701 
Currency translation adjustments(206)241 
June 30,$81,717 $82,173 
Intangibles
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
June 30, 2022
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value (1)
Client-related
4-10 years
$63,082 $(57,944)$5,138 
Technology
2-10 years
68,064 (60,211)7,853 
Other
1-5 years
5,361 (5,361)— 
$136,507 $(123,516)$12,991 
(1) Included in other long-term assets.
December 31, 2021
(in thousands)Useful LivesCostAccumulated 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
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Cost of revenue
$683 $629 $1,312 $1,258 
Selling and marketing
342 373 685 746 
$1,025 $1,002 $1,997 $2,004 
Future estimated intangibles assets amortization:
(in thousands)
June 30, 2022
Remainder of 2022$2,098 
20233,925 
20243,156 
20252,611 
2026874 
2027327 
$12,991 
v3.22.2
OTHER ASSETS AND LIABILITIES
6 Months Ended
Jun. 30, 2022
Other Assets and Liabilities [Abstract]  
OTHER ASSETS AND LIABILITIES
NOTE 6. OTHER ASSETS AND LIABILITIES
Other current assets
(in thousands)June 30, 2022December 31, 2021
Income tax receivables$22,982 $25,691 
Contract assets12,149 12,530 
Other35,502 29,787 
$70,633 $68,008 
Other long-term assets
(in thousands)June 30, 2022December 31, 2021
Deferred income taxes$6,092 $180,656 
Deferred commissions123,067 135,911 
Right of use assets80,646 87,521 
Capped call transactions10,459 59,964 
Property and equipment34,886 26,837 
Venture investments16,073 7,648 
Intangible assets12,991 14,063 
Contract assets12,983 10,643 
Other23,360 18,358 
$320,557 $541,601 
Other current liabilities
(in thousands)June 30, 2022December 31, 2021
Operating lease liabilities$5,341 $6,989 
Dividends payable2,459 2,454 
$7,800 $9,443 
Other long-term liabilities
(in thousands)June 30, 2022December 31, 2021
Deferred revenue$5,417 $5,655 
Other7,404 7,844 
$12,821 $13,499 
v3.22.2
LEASES
6 Months Ended
Jun. 30, 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
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Fixed lease costs (1)
$4,965 $(3,972)$10,059 $(3,672)
Short-term lease costs787 515 1,594 974 
Variable lease costs727 1,340 1,491 2,727 
$6,479 $(2,117)$13,144 $29 
(1) The lower fixed lease costs in the six months ended June 30, 2021 was due to the modification of the corporate headquarters lease.
Right of use assets and lease liabilities
(in thousands)June 30, 2022December 31, 2021
Right of use assets (1)
$80,646 $87,521 
Operating lease liabilities (2)
$5,341 $6,989 
Long-term operating lease liabilities$84,170 $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:
June 30, 2022December 31, 2021
Weighted-average remaining lease term7.5 years7.7 years
Weighted-average discount rate (1)
4.2 %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)June 30, 2022
Remainder of 2022$(401)
202318,837 
202416,290 
202514,118 
202610,507 
2027 and thereafter47,910 
Total lease payments107,261 
Less: imputed interest (1)
(17,750)
$89,511 
(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
Six Months Ended
June 30,
(in thousands)20222021
Cash paid for leases$7,296 $11,605 
Right of use assets recognized for new leases and amendments (non-cash)$2,223 $10,160 
v3.22.2
DEBT
6 Months Ended
Jun. 30, 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 June 30, 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)June 30, 2022December 31, 2021
Principal$600,000 $600,000 
Unamortized issuance costs(7,839)(9,278)
Convertible senior notes, net$592,161 $590,722 

Interest expense related to the Notes:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Contractual interest expense (0.75% coupon)
$1,125 $1,125 $2,250 $2,250 
Amortization of issuance costs
720 675 1,439 1,348 
$1,845 $1,800 $3,689 $3,598 
The effective interest rate for the Notes:
Six Months Ended
June 30,
20222021
Weighted-average effective interest rate1.2 %1.2 %
Future payments of principal and contractual interest:
June 30, 2022
(in thousands)PrincipalInterestTotal
Remainder of 2022$— $2,250 $2,250 
2023— 4,500 4,500 
2024— 4,500 4,500 
2025600,000 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:
Six Months Ended
June 30,
(in thousands)20222021
January 1,$59,964 $83,597 
Fair value adjustment(49,505)7,192 
June 30,$10,459 $90,789 
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 June 30, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Credit Facility.
v3.22.2
FAIR VALUE MEASUREMENTS
6 Months Ended
Jun. 30, 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 uses 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:
June 30, 2022December 31, 2021
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents$1,127 $— $— $1,127 $3,216 $— $— $3,216 
Marketable securities $— $187,613 $— $187,613 $— $202,814 $— $202,814 
Capped Call Transactions (1)
$— $10,459 $— $10,459 $— $59,964 $— $59,964 
Venture investments (1) (2)
$— $— $16,073 $16,073 $— $— $7,648 $7,648 
(1) Included in other long-term assets. (2) Investments in privately-held companies.
Changes in venture investments:
Six Months Ended
June 30,
(in thousands)20222021
January 1,$7,648 $8,345 
New investments400 500 
Sales of investments(165)(400)
Changes in foreign exchange rates(290)14 
Changes in fair value:
included in other income5,978 100 
included in other comprehensive income2,502 1,220 
June 30,$16,073 $9,779 
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 $482.5 million as of June 30, 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.
v3.22.2
REVENUE
6 Months Ended
Jun. 30, 2022
Revenue from Contract with Customer [Abstract]  
REVENUE
NOTE 10. REVENUE
Geographic revenue
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)
2022202120222021
U.S.$147,725 54 %$189,297 58 %$364,997 55 %$383,865 60 %
Other Americas16,261 %14,058 %62,012 10 %25,959 %
United Kingdom (“U.K.”)28,831 11 %32,553 10 %59,763 %60,765 10 %
Europe (excluding U.K.), Middle East, and Africa 45,238 16 %45,798 14 %94,374 15 %97,457 15 %
Asia-Pacific36,282 13 %43,996 14 %69,498 11 %71,155 11 %
$274,337 100 %$325,702 100 %$650,644 100 %$639,201 100 %
Revenue streams
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)
2022202120222021
Perpetual license2,266 12,596 $9,706 $18,048 
Subscription license41,600 104,296 179,133 215,805 
Revenue recognized at a point in time43,866 116,892 188,839 233,853 
Maintenance78,326 78,782 158,042 154,343 
Pega Cloud93,506 73,293 183,823 141,151 
Consulting58,639 56,735 119,940 109,854 
Revenue recognized over time230,471 208,810 461,805 405,348 
Total revenue$274,337 $325,702 $650,644 $639,201 
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Pega Cloud93,506 73,293 $183,823 $141,151 
Maintenance78,326 78,782 158,042 154,343 
Subscription services171,832 152,075 341,865 295,494 
Subscription license41,600 104,296 179,133 215,805 
Subscription213,432 256,371 520,998 511,299 
Perpetual license2,266 12,596 9,706 18,048 
Consulting58,639 56,735 119,940 109,854 
274,337 325,702 $650,644 $639,201 
Remaining performance obligations ("Backlog")
Expected future revenue from existing non-cancellable contracts:
As of June 30, 2022:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$204,974 $320,102 $46,810 $6,681 $32,159 $610,726 54 %
1-2 years
57,862 200,135 10,711 4,505 7,919 281,132 25 %
2-3 years
28,403 96,861 2,126 2,252 2,574 132,216 12 %
Greater than 3 years
18,447 81,069 1,680 — 424 101,620 %
$309,686 $698,167 $61,327 $13,438 $43,076 $1,125,694 100 %
As of June 30, 2021:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$214,645 $281,793 $46,146 $6,707 $17,863 $567,154 56 %
1-2 years
59,164 194,841 15,708 234 2,675 272,622 26 %
2-3 years
36,076 88,855 909 — 762 126,602 12 %
Greater than 3 years
26,564 37,246 255 — 693 64,758 %
$336,449 $602,735 $63,018 $6,941 $21,993 $1,031,136 100 %
Major clients
Clients accounting for 10% or more of the Company’s total revenue:
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)2022202120222021
Total revenue$274,337 $325,702 $650,644 $639,201 
Client A*13 %**
v3.22.2
STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION
NOTE 11. STOCK-BASED COMPENSATION
Expense
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Cost of revenue
$6,579 $5,849 $12,957 $11,774 
Selling and marketing
12,633 14,748 23,591 28,468 
Research and development
7,355 6,343 14,701 13,113 
General and administrative
4,733 3,748 8,278 7,433 
$31,300 $30,688 $59,527 $60,788 
Income tax benefit
$(543)$(6,192)$(905)$(12,183)
As of June 30, 2022, the Company had $195.7 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 2.1 years.
Grants
Six Months Ended
June 30, 2022
(in thousands)SharesTotal Fair Value
Restricted stock units
1,237 $104,059 
Non-qualified stock options
4,351 $99,506 
v3.22.2
INCOME TAXES
6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 12. INCOME TAXES
Effective income tax rate
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)2022202120222021
Provision for (benefit from) income taxes$186,174 $(11,916)$178,491 $(29,534)
Effective income tax rate (benefit rate)165 %(2,591)%
The change in the effective income tax rate (benefit rate) in the six months ended June 30, 2022 was primarily due to the recognition of a $191.9 million valuation allowance on the Company’s deferred tax assets.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. Future realization of deferred tax assets ultimately depends on sufficient taxable income within the available carryback or carryforward periods. The Company’s deferred tax valuation allowance requires significant judgment and uncertainties, including assumptions about future taxable income based on historical and projected information. On a quarterly basis, the Company reassess the need for a valuation allowance on its existing net deferred tax assets by tax-paying jurisdiction, weighing positive and negative evidence to assess its recoverability. In making such a determination, the Company considers all available and objectively verifiable negative and positive evidence, including future reversals of existing taxable temporary differences, committed contractual backlog (“Backlog”), projected future taxable income inclusive of the impact of enacted legislation, tax-planning strategies, and results of recent operations. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.
As of June 30, 2022, the Company’s Backlog balance was not sufficient to recover our net deferred tax assets. The Backlog balance and other unsettled circumstances, impacting the Company’s operations, reduced the Backlog’s weight as objectively verifiable positive evidence to generate sufficient taxable income to recover its net deferred tax assets. These unsettled circumstances include growing and extended geopolitical turmoil, increasing inflation, and an uncertain global economic outlook.
As of June 30, 2022 the combination of the above factors caused the Company to conclude there is no longer sufficient objectively verifiable positive evidence to support that it is more likely than not the Company will generate sufficient future taxable income to recover the Company’s net deferred tax assets. Accordingly, the Company recorded a valuation allowance of $191.9 million in income tax expense during the three months ended June 30, 2022.
v3.22.2
(LOSS) EARNINGS PER SHARE
6 Months Ended
Jun. 30, 2022
Earnings Per Share [Abstract]  
(LOSS) EARNINGS PER SHARE
NOTE 13. (LOSS) EARNINGS PER SHARE
Basic (loss) earnings per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted (loss) earnings per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and convertible senior notes.
Calculation of (loss) earnings per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share amounts)2022202120222021
Net (loss) income$(286,296)$37,291 $(286,675)$30,674 
Weighted-average common shares outstanding81,847 81,316 81,764 81,161 
(Loss) earnings per share, basic$(3.50)$0.46 $(3.51)$0.38 
Net (loss) income$(286,296)$37,291 $(286,675)$30,674 
Interest expense associated with convertible debt instruments, net of tax— 1,351 — — 
Numerator for diluted EPS $(286,296)$38,642 $(286,675)$30,674 
Weighted-average effect of dilutive securities:
Convertible debt— 4,443 — — 
Stock options— 3,266 — 3,416 
RSUs— 1,295 — 1,429 
Effect of dilutive securities— 9,004 — 4,845 
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)
81,847 90,320 81,764 86,006 
(Loss) earnings per share, diluted$(3.50)$0.43 $(3.51)$0.36 
Outstanding anti-dilutive stock options and RSUs (4)
3,569 19 3,873 22 
(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) earnings per share. These awards may be dilutive in the future.
v3.22.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 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 June 30, 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. These motions were heard on July 15, 2022 and no decision has been rendered as of the date of this filing. 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 in the Circuit Court of Fairfax County, Virginia (the “Court”) titled Appian Corp. v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 9, 2022, the jury rendered its verdict finding that the Company had misappropriated one or more of Appian’s trade secrets, that the Company had violated the Virginia Computer Crimes Act, and that the trade secret misappropriation was willful and malicious. The jury awarded damages in the amount of $2,036,860,045 for trade secret misappropriation and $1.00 for the violation of the Virginia Computer Crimes Act. Since the jury rendering its verdict, the Company and Appian have filed post-trial motions with the court. On May 26, 2022, the Company filed a motion for judicial investigation of juror misconduct. Appian filed its opposition on June 17, 2022. A hearing on that motion is scheduled for July 28, 2022. On June 8, 2022, the Company filed a motion to set aside the verdict, Appian filed a response with the court on July 8, 2022, and the Company filed a reply to Appian’s filing on July 22, 2022. Also on June 8, 2022, Appian filed a motion for attorneys’ fees and costs and for post-judgment interest, seeking an award of attorneys’ fees in the amount of approximately $22.6 million, costs in the amount of approximately $4.2 million, and post-judgment interest at the rate of 6% per annum. The Company filed its opposition to that motion on July 8, 2022. Appian filed a reply brief on July 22, 2022. The Court has not yet set a date for a hearing on the motions filed on June 8, 2022. As of the date of this Quarterly Report on Form 10-Q, the court has not yet ruled on the post-trial motions or entered a judgment in this matter. The Company intends to appeal any judgment against it, if such a judgment is entered. The Company continues to believe that it did not misappropriate any alleged trade secrets and that its sales of the Company’s products at issue were not caused by, or the result of, any alleged misappropriation of trade secrets. The Company is unable to reasonably estimate possible damages because of, among other things, uncertainty as to the outcome of post-trial motions, any appellate proceedings, and/or any potential new trial resulting from the post-trial motions or the appellate proceedings.
City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell
On May 19, 2022, a lawsuit was filed against the Company, the Company’s chief executive officer and the Company’s chief operating and financial officer in the United States District Court for the Eastern District of Virginia Alexandria Division, captioned City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:22-cv-00578-LMB-IDD). The complaint generally alleges, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder and that the individual defendants violated Section 20(a) of the Exchange Act, in each case by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices. The complaint seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between May 29, 2020 and May 9, 2022. The Company believes the claims brought against the defendants are without merit, and intends to vigorously defend against these claims. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit, the Company’s belief that the claims are without merit, and there being no specified quantum of damages sought in the complaint.
v3.22.2
BASIS OF PRESENTATION (Policies)
6 Months Ended
Jun. 30, 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 financi