Pegasystems, Inc. (NASDAQ:PEGA)

CAPS Rating: 4 out of 5

The Company develops, markets, licenses and supports software to automate complex, changing business processes.


Player Avatar NetscribeTech (< 20) Submitted: 1/24/2007 8:11:31 AM : Outperform Start Price: $4.56 PEGA Score: +309.86

Pegasystems is a software supplier catering to the Business Process Management (BPM) software market. The term BPM sums up the whole processes and systems that exist in an organization. The Company is second in the sector with close to 12% of market share. The company develops, licenses, services and markets software that is used to manage complex and changing business processes in an organization. The company uses direct sales channel and associated with top notch IT consultant companies like Accenture and EDS to market its products and services. The products mostly cater to the financial and healthcare verticals and largely restricted to the U.S.

The company recognizes revenue primarily from licensing new products and services related to new products. The industry is shifting slowly in the favor of professional services for new products with more and more customers demanding it. This is true for the company too as its revenue from this area is increasing steadily and has outpaced the revenue from new license implementation. Also, the revenue recorded under the licensing segment has declined due to change in revenue recognition policy, that is, recognizing revenue only after implementation.

The BPM market is expected to reach approximately $2 billion by 2007. Trends like outsourcing, migration of more and more companies to automate their process and to align with the changing business are aiding the growth of this sector. The business environment as such is changing and companies are searching for IT infrastructure that can evolve effortlessly with these changing times. Pegasystems is well positioned to take advantage of this situation with its strong product offering and well-trained sales and service personnel. The company is also planning to expand its presence into more business verticals. The earnings growth of the company is expected to factor in these positive signals and the share price is also expected to perform well.

Member Avatar pickthis (20.64) Submitted: 3/26/2007 5:01:42 PM
Recs: 0

Want to like this company (low EV/Sales multiple, lots of cash, great end market) but I'm going off of June 2006 numbers. Lets get some updated filings please!

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