Massachusetts-based Pegasystems says customer license signings "decreased significantly" in the first quarter of 2005 from the previous quarter and will need to improve substantially if the vendor is to achieve projected sales targets for 2005.
The vendor is reporting first quarter revenue of $24.2 million, down slightly from $24.7 in Q1 2004. First quarter net income was just above break-even at $0.1m, compared to $1.7m last year.
License revenue was up 13% over first quarter 2004 to $10.9m but services revenue was $13.3m, down 11%.
Despite this the vendor is still reiterating its 2005 guidance and anticipates full year revenue between $97 and $105 million, with revenues and earnings weighted to the latter part of 2005.
But Chris Sullivan, CFO, Pegasystems, says customer license signings will need to improve during the second and third quarters of 2005 in order for the firm to achieve 2005 projected financial results.
Sullivan says the firm expects license revenue to be driven primarily through sales of perpetual licenses, while revenue growth from term license renewals is likely to be "modest". The firm is also planning to invest more heavily in sales and marketing in 2005, which will reduce profit before tax for the year compared to 2004.
Despite reporting a record number of new license customers for the full year 2004, the vendor has been struggling and posted a three per cent slip in year-on-year revenue for 2004 at $96.5m, while net income dropped 57% to $7.6m. Pega COO Henry Ancona was forced to walk the plank in January as the company marked down revenue and earnings guidance.