Why Pegasystems Inc. Stock Flew Higher Today

By Markets Fool.com

Image source: Pegasystems Inc.

Continue Reading Below

What happened

Shares ofPegasystems Inc.(NASDAQ: PEGA)were up 14.4% as of 11:30 a.m. EDT after the customer relationship management software specialist released stronger-than-expected third-quarter 2016 earnings.

So what

Adjusted quarterly revenue climbed 13% year over year, to $183.5 million, including 17% growth in software license sales, to $68.8 million, a 5% increase in maintenance revenue, to $55.7 million, and a 15% increase in services revenue, to $59 million. Further breaking those results down, Pegasystems' cloud revenue increased an encouraging 32% year over year, to $10.9 million.

On the bottom line, that translated to a 1% decline in adjusted net income, to $13.2 million, while adjusted earnings per diluted share remained flat from the same year-ago period, at $0.17.

Continue Reading Below

Pegasystems doesn't provide quarterly financial guidance. But for perspective -- and while we don't typically pay close attention to Wall Street's expectations -- analysts' consensus estimates predicted the company would announce slightly higher adjusted revenue of $185.9 million but lower adjusted earnings of $0.16 per share.

Now what

CEO Ken Stillwell added, "We are pleased with our year-to-date results through the third quarter of 2016. Our ability to grow GAAP and non-GAAP revenue by 15% in the face of currency headwinds and a significant shift to term license arrangements is a great indicator of our business momentum."

I think investors are rightly celebrating that their company is more profitable than expected. And this is especially evident as it continues to invest heavily to leverage its most promising growth opportunities, even as its results are held back by a combination of currency headwinds and the ongoing shift to term license agreements. In the end, and with that in mind, it's no surprise to see shares of Pegasystems trading higher today.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends 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.