Pegasystems Announces Record Revenues of $212 Million for 2008 and $59 Million for Fourth Quarter

Pegasystems Inc. (NASDAQ: PEGA), the leader in Business Process Management (BPM) software, today announced financial results for the year and the fourth quarter ended December 31, 2008. Total revenue for the year ended December 31, 2008 increased 31% to $211.6 million, compared to $161.9 million in 2007. License revenue for the year increased 50% to $76.6 million, compared to $51.1 million in 2007. Net income for 2008 was $11 million, compared to $6.6 million in 2007. During 2008, the Company generated $38.4 million in cash flow from operations and ended the year with $167.2 million in cash and marketable securities.

The following table presents selected financial information for the fourth quarters and years ended December 31, 2008 and 2007:

Business Perspective

"Our record business results continue to be driven by the substantial returns our customers achieve by applying Pegasystems 'Build for Change^®' technology. Client successes in 2008 included both transformational programs to improve revenue, customer service and productivity, as well as targeted implementations to rapidly 'wrap and renew' legacy applications by adding new business functionality,” said Alan Trefler, Pegasystems’ Chairman and CEO.

"2008 yielded significant client successes across many business operations including banking, credit cards, lending, property and casualty insurance, life insurance, health payers, care providers, telecom, manufacturing, hospitality, government, and business process outsourcing. We are also pleased with the BPM awards our customers and products have received from respected industry analysts. Our increasing footprint is facilitating deeper relationships with major consulting partners who are further growing their already significant Pegasystems practices. These successes demonstrate how our 'Build for Change^®' technology can be compelling even in today’s tough economic environment,” concluded Mr. Trefler.

Craig Dynes, Pegasystems’ CFO, added, "We achieved record revenues and record new license signings in extremely difficult economic conditions. Though we expect that these challenging conditions will continue for much of 2009, we are forecasting further expansion of our business. We currently expect revenue in 2009 to surpass $250 million, which we estimate will result in net income that may exceed $17 million on a GAAP basis. Cash flow from operations is forecasted to be approximately $25 million in 2009.”

Messrs. Trefler and Dynes will be hosting a conference call and live Webcast associated with this announcement at 9:00 a.m. ET on March 10, 2009. Dial-in information is as follows: 877-719-9788 (domestic) or 719-325-4838 (international).

To listen to the Webcast log onto www.pega.com at least 5 minutes prior to the event's broadcast and click on the Webcast icon in the Investor Relations section. A replay of the call will also be available on www.pega.com in the Investor Relations section Audio Archives link.

Forward-Looking Statements

Certain statements contained in this press release may be construed as "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The words "anticipate,” "project,” "expect,” "plan,” "intend,” "believe,” "estimate,” "target,” "forecast,” "could” and similar expressions, among others, identify forward-looking statements, which speak only as of the date the statement was made. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause the Company's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties include, without limitation, variation in demand and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition, the level of term license renewals, our ability to develop new products and evolve existing ones, the impact on our business of the recent financial crisis in the global capital markets, the negative global economic trends and the ongoing consolidation in the financial services and healthcare markets, our ability to attract and retain key personnel, reliance on key third party relationships and management of the Company's growth. Further information regarding these and other factors which could cause the Company's actual results to differ materially from any forward-looking statements contained in this press release is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and other recent filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release represent the Company's views as of March 9, 2009. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause the Company's view to change, the Company does not undertake and specifically disclaims any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events or otherwise. The statements should therefore not be relied upon as representing the Company's view as of any date subsequent to March 9, 2009.

About Pegasystems

Pegasystems (NASDAQ: PEGA), the leader in Business Process Management, provides software to drive revenue growth, productivity and agility for the world's most sophisticated organizations. Customers use our award-winning SmartBPM^® suite to improve customer service, reach new markets and boost operational effectiveness.

Our patented SmartBPM^® technology makes enterprise applications easy to build and change by directly capturing business objectives and eliminating manual programming. SmartBPM^® unifies business rules and processes into composite applications that leverage existing systems -- empowering businesspeople and IT staff to Build for Change^®, deliver value quickly and outperform their competitors.

Pegasystems’ suite is complemented by best-practice frameworks designed for leaders in financial services, insurance, healthcare, government, life sciences, communications, manufacturing and other industries.

Headquartered in Cambridge, MA, Pegasystems has offices in North America, Europe and Asia Pacific. Visit us at www.pega.com.

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