Pegasystems Beats on EPS but GAAP Results Lag

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Pegasystems (NAS: PEGA) reported earnings on May 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Pegasystems met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved and GAAP earnings per share dropped.


Gross margins grew, operating margins contracted, and net margins contracted.

Revenue details
Pegasystems recorded revenue of $111.2 million. The six analysts polled by S&P Capital IQ predicted revenue of $112.3 million on the same basis. GAAP reported sales were 8.6% higher than the prior-year quarter's $102.4 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.23. The five earnings estimates compiled by S&P Capital IQ forecast $0.15 per share. GAAP EPS of $0.10 for Q1 were 17% lower than the prior-year quarter's $0.12 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 62.6%, 170 basis points better than the prior-year quarter. Operating margin was 5.3%, 60 basis points worse than the prior-year quarter. Net margin was 3.6%, 100 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $114.2 million. On the bottom line, the average EPS estimate is $0.14.

Next year's average estimate for revenue is $498.5 million. The average EPS estimate is $0.91.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 163 members out of 185 rating the stock outperform, and 22 members rating it underperform. Among 58 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 50 give Pegasystems a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Pegasystems is outperform, with an average price target of $37.40.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Pegasystems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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