PEGA - big growth and just the beginning PEGA is trading at $37.59, up nearly 34% from Wednesday's close of $28.08. Wall Street had been expecting non-GAAP earnings of 5 cents per share on $104.87 million in revenue for the quarter. PEGA significantly beat both consensus estimates with 16 cents in non-GAAP EPS and $115.3 million in revenue. And while the company still booked a net loss for the quarter on a GAAP basis, the full-year results and positive outlook for 2012 have sent the stock on a tear.
Total revenue for the full year 2011 increased 23.8% to a record $416.7 million. The increase in revenue was driven by record license signings and a significantly larger customer base. For the year, the aggregate value of license signings was up more than 75% as compared to 2010, and the aggregate value of licenses signed with new customers grew 145% from 2010. As of year-end, PEGA is holding a total backlog of $359.8 million, an increase of 55% over the backlog at the end of last year, and $184.8 million of which the company expects to recognize as revenue in 2012.
Meanwhile, PEGA returned to profitability on a GAAP basis as well in 2011, with net income of $10.1 million, or 26 cents per diluted share, compared to a net loss of $5.9 million, and 16 cents per share, in 2010.
Yesterday on the earnings call, PEGA also provided guidance for the full year 2012.
… The changing mix between sales of perpetual licenses and term licenses from quarter to quarter (which varies based on customer needs) results in a significant degree of lumpiness if operations are viewed on a simple quarterly basis. This is because the bulk of revenue from a perpetual license is recognized immediately, while the revenue from a comparable term license is recognized monthly over the 3- or 5-year term. Adding more discontinuity to the quarterly accounting results is the fact that sales commissions on term licenses are paid and expensed at the time of signing while the corresponding revenue is recognized over time. As a result, sequential and year-over-year analysis of quarterly data does not make for meaningful comparisons.
For the full year 2012, PEGA expects revenue to exceed $500 million. Much like 2011, 2012 is also expected to be a back-end-loaded year, with revenue in the first half of the year coming in at approximately $225 million, or 45% of the full-year estimate. What's more, the firm will continue to invest heavily in sales and marketing and R&D throughout 2012 to drive strong topline growth. Given this investment, the company expects net income to ring in at $15 million, or 37 cents per share on a GAAP basis, or $36.5 million and 91 cents per share on a non-GAAP basis.
PEGA's investment will also be more heavily weighted to the first half of the year, so its profitability, like its revenue, will be back-end loaded as well. For the first half of the year, the company is expected to break even on a GAAP basis and generate earnings of about 25 cents per share on a non-GAAP basis.