The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Pegasystems whiffed on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped to a loss.
Gross margins grew, operating margins grew, net margins contracted.
Pegasystems tallied revenue of $101.7 million. The eight analysts polled by S&P Capital IQ hoped for sales of $114.0 million on the same basis. GAAP reported sales were 6.4% higher than the prior-year quarter's $95.5 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.13. The seven earnings estimates compiled by S&P Capital IQ averaged $0.19 per share. GAAP EPS were -$0.01 for Q3 versus $0.13 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 62.9%, 670 basis points better than the prior-year quarter. Operating margin was 0.4%, 270 basis points better than the prior-year quarter. Net margin was -0.3%, 550 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $134.7 million. On the bottom line, the average EPS estimate is $0.36.
Next year's average estimate for revenue is $464.7 million. The average EPS estimate is $0.87.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 162 members out of 183 rating the stock outperform, and 21 members rating it underperform. Among 51 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 44 give Pegasystems a green thumbs-up, and seven give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Pegasystems is hold, with an average price target of $31.10.
Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Pegasystems makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add Pegasystems to My Watchlist.
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 of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Pegasystems. Motley Fool newsletter services recommend 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.