1013857--3/10/2008--PEGASYSTEMS

related topics

{customer, product, revenue}

{system, service, information}

{product, market, service}

{condition, economic, financial}

{regulation, change, law}

{stock, price, operating}

{property, intellectual, protect}

{personnel, key, retain}

{competitive, industry, competition}

{financial, litigation, operation}

{operation, international, foreign}

Factors relating to our revenues The volume of our license signings has been increasing, and we may not be able to sustain this increased volume of license signings 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 are increasingly entering into smaller 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 license transactions with new customers. 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 signings, and we may experience decreased profitability or losses if we are unsuccessful in increasing the value of license signings in the future. Factors relating to our products and markets We will need to 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 and healthcare markets, and rapid changes or consolidation in these markets could affect the level of demand for our products. The recent credit market turmoil may impact our sales to our financial services customers. We rely on certain third-party relationships. We face risks from operations and customers based outside of the U.S. 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 product liability and warranty claims as a result. We face risks related to intellectual property claims or appropriation of our intellectual property rights.

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1013857--3/10/2008--PEGASYSTEMS_INC