1013857--2/22/2010--PEGASYSTEMS

related topics

{customer, product, revenue}

{system, service, information}

{product, market, service}

{operation, international, foreign}

{financial, litigation, operation}

{condition, economic, financial}

{regulation, change, law}

{regulation, government, change}

{stock, price, operating}

{property, intellectual, protect}

{personnel, key, retain}

{competitive, industry, competition}

{acquisition, growth, future}

Factors relating to our revenues The number of our license arrangements has been increasing, and we may not be able to sustain this growth unless we can provide sufficient high quality professional services, training, and maintenance resources to enable our customers to realize significant business value from our software. We frequently enter into limited scope initial licenses with new customers, which could adversely affect our financial performance if we are not successful in obtaining follow-on business from these customers. Our professional services revenue is dependent to a significant extent on closing new license transactions with customers. If we are unable to maintain vendor specific objective evidence ( VSOE ) of fair value of our professional services arrangements, we may be required to delay a portion of our revenue to future periods Factors relating to fluctuations in our financial results The timing of our license revenue is difficult to predict accurately, which may cause our quarterly operating results to vary considerably. Our financial results may be adversely affected if we are required to change certain estimates, judgments, and positions relative to our income taxes. We are investing heavily in sales and marketing and professional services in anticipation of a continued increase in license arrangements, and we may experience decreased profitability or losses if we are unsuccessful in increasing the value of our license arrangements in the future. Factors relating to our products and markets The adverse changes in the global capital markets and economy may negatively impact our sales to, and the collection of receivables from, our financial services and insurance customers and possibly our customers in other industries. We will need to acquire or develop new products, evolve existing ones, and adapt to technology change The market for our offerings is increasingly and intensely competitive, rapidly changing, and highly fragmented. We have historically sold to the financial services, insurance and healthcare markets, and rapid changes or consolidation in these markets could affect the level of demand for our products. We rely on certain third-party relationships. We face risks from operations and customers based outside of the U.S. We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows. Factors relating to our internal operations and potential liabilities We depend on certain key personnel, and must be able to attract and retain qualified personnel in the future. We may experience significant errors or security flaws in our product and services, and could face privacy, product liability and warranty claims as a result. We face risks related to intellectual property claims or appropriation of our intellectual property rights. The acquisition of other businesses and technologies may present new risks. Ongoing medical and dental claims expenses could significantly affect our earnings and cash flows.

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1013857--2/22/2010--PEGASYSTEMS_INC