Pegasystems Inc (PEGA) 2018 Q3 法說會逐字稿

Good day, and welcome to the Pegasystems Third Quarter 2018 Earnings Results Call.

美好的一天，歡迎來到 Pegasystems 2018 年第三季度收益結果電話會議。

Today's conference is being recorded.

今天的會議正在錄製中。

At this time, I'd like to turn the conference over to Ken Stillwell, Chief Financial Officer.

此時，我想將會議轉交給首席財務官 Ken Stillwell。

Please go ahead.

請繼續。

Thank you.

謝謝你。

Good evening, ladies and gentlemen, and welcome to Pegasystems Q3 2018 Earnings Call.

女士們先生們，晚上好，歡迎來到 Pegasystems 2018 年第三季度財報電話會議。

Before we begin, I'd like to read our safe harbor statement.

在我們開始之前，我想閱讀一下我們的安全港聲明。

Certain statements contained in this presentation may be construed as forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

本演示文稿中包含的某些陳述可被解釋為 1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。

The words expects, anticipates, intends, plans, believes, could, should, estimates, may, targets, strategy, intends to, projects, forecasts, guidance, likely and usually or variations of such words or other similar expressions identify forward-looking statements, which speak only as of the date the statement was made and are based on current expectations and assumptions.

預期、預期、打算、計劃、相信、可能、應該、估計、可能、目標、戰略、打算、項目、預測、指導、可能和通常或此類詞語或其他類似表達的變體可識別前瞻性陳述，僅在發表聲明之日發表意見，並基於當前的預期和假設。

Because such statements deal with future events, they are subject to various risks and uncertainties.

由於此類陳述涉及未來事件，因此受到各種風險和不確定性的影響。

Actual results for fiscal year 2018 and beyond could differ materially from the company's current expectations.

2018 財年及以後的實際結果可能與公司當前的預期存在重大差異。

Factors that could cause the company's results to differ materially from those expressed in forward-looking statements are contained in the company's press release announcing its Q3 2018 earnings and in the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2017, and other recent filings with the SEC.

可能導致公司結果與前瞻性陳述中表達的結果存在重大差異的因素包含在公司宣布其 2018 年第三季度收益的新聞稿和公司向美國證券交易委員會提交的文件中，包括其表格 10 的年度報告- K 截至 2017 年 12 月 31 日的年度，以及最近向美國證券交易委員會提交的其他文件。

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.

提醒投資者不要過分依賴此類前瞻性陳述，並且無法保證此類陳述中包含的事項將會實現。

Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and specifically disclaim any obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

儘管後續事件可能導致我們的觀點發生變化，但適用法律要求的除外，我們不承擔並明確否認任何公開更新或修改這些前瞻性陳述的義務，無論是由於新信息、未來事件或其他原因。

And with that, I'll turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

有了這個，我將把電話轉給 Pegasystems 的創始人兼首席執行官 Alan Trefler。

Thank you, Ken.

謝謝你，肯。

Right now, I'm in the midst of a busy week with clients.

現在，我正忙於與客戶打交道。

I'm actually in London, dialed in remotely.

我實際上在倫敦，遠程撥入。

But if the connection goes bad, I'm sure Ken will step in until I can reconnect.

但如果連接出現問題，我相信 Ken 會介入，直到我重新連接。

In terms of some highlights, I'm pleased, really pleased with our year-to-date results.

就一些亮點而言，我很高興，對我們今年迄今為止的結果非常滿意。

They reflect our strong business momentum.

它們反映了我們強勁的業務勢頭。

And I continue to be encouraged with the progress we're making as we focus on delivering the best solutions for digital transformation.

在我們專注於為數字化轉型提供最佳解決方案的過程中，我繼續為我們所取得的進步感到鼓舞。

As I said, one of our key goals is to accelerate growth and the cloud.

正如我所說，我們的主要目標之一是加速增長和雲計算。

Our performance today is a good example of the progress we're making.

我們今天的表現很好地說明了我們正在取得的進步。

We continue to see acceleration in our move to the cloud and recurring arrangements.

我們繼續看到我們向雲和經常性安排的遷移加速。

Year-to-date, cloud represented 51% of all new deals, about double the rate from a year ago.

年初至今，雲計算佔所有新交易的 51%，大約是一年前的兩倍。

This faster-than-anticipated move to cloud arrangements is really good for our business long time.

這種比預期更快的遷移到雲安排對我們的業務長期來說確實有好處。

And our strong underlying business trends are also reflected in license and cloud ACV, which grew 36% from a year ago.

我們強大的潛在業務趨勢也反映在許可和雲 ACV 中，與一年前相比增長了 36%。

Total ACV, which includes maintenance on former types of licenses, grew a healthy 20% from a year ago as well to $537 million.

總 ACV，包括對以前類型許可證的維護，比一年前增長了 20%，達到 5.37 億美元。

As you know, it can be a lumpy business.

如您所知，這可能是一項坎坷的業務。

So I'm particularly pleased to see a strong Q3 following on a strong Q2.

因此，我特別高興看到強勁的 Q3 緊接著強勁的 Q2。

In a moment, Ken will provide additional financial details.

稍後，Ken 將提供更多財務細節。

I'd like to touch on some of our strategy and differentiators.

我想談談我們的一些戰略和差異化因素。

We continue to focus our efforts on delivering the best solutions for digital transformation.

我們繼續致力於為數字化轉型提供最佳解決方案。

And we believe that requires both effective customer engagement capabilities and the capability to do serious digital process automation.

我們認為，這既需要有效的客戶參與能力，也需要進行嚴肅的數字流程自動化的能力。

Now the strategy is driven by our 6 core differentiators: our real-time omni-channel AI; our end-to-end automation and robotics; our journey-centric rapid delivery; the Situational Layer Cake technology that promotes reuse; the -- having the ability to actually have software that writes your software in Cloud Choice.

現在，該戰略由我們的 6 個核心差異化因素驅動：我們的實時全渠道人工智能；我們的端到端自動化和機器人技術；我們以旅程為中心的快速交付；促進重用的情境層蛋糕技術； -- 能夠實際擁有在 Cloud Choice 中編寫您的軟件的軟件。

This unique combination allows us to do several things better than any of our competitors.

這種獨特的組合使我們能夠比任何競爭對手做得更好。

We help our clients make better decisions by delivering one-to-one customer engagement powered by that real-time AI.

我們通過提供由實時 AI 提供支持的一對一客戶參與，幫助我們的客戶做出更好的決策。

We help our clients get work done by making customer and employee-facing processes more efficient through that end-to-end automation.

我們通過端到端自動化使面向客戶和員工的流程更加高效，從而幫助我們的客戶完成工作。

And very often, we do both, for example, in customer service, when customer interactions involve both dealing with clients effectively and processing work to resolve request on the spot.

通常，我們會同時做這兩件事，例如，在客戶服務中，當客戶互動涉及有效地與客戶打交道和處理工作以當場解決請求時。

Now our results this quarter reflect the value of these differentiated solutions and what we're able to offer to the market.

現在，我們本季度的業績反映了這些差異化解決方案的價值以及我們能夠為市場提供的產品。

We saw a good mix of business across new and existing clients in our core verticals, our platform, our applications and across geographies.

我們在核心垂直領域、平台、應用程序和跨地區看到了新客戶和現有客戶的良好業務組合。

And we're pleased to see that we continue to win and expand our business into accounts that are already working with competitors like Salesforce.com and ServiceNow.

我們很高興看到我們繼續贏得勝利並將我們的業務擴展到已經與 Salesforce.com 和 ServiceNow 等競爭對手合作的客戶。

We believe this demonstrates the recognition of our differentiated value proposition in a whole set of settings.

我們相信，這表明了我們在一整套環境中對差異化價值主張的認可。

Now financial services continues to be a core strength for us.

現在，金融服務仍然是我們的核心優勢。

For example, Bank of Nova Scotia extended our partnership as part of their global one bank digital transformation strategy.

例如，新斯科舍銀行擴大了我們的合作夥伴關係，作為其全球單一銀行數字化轉型戰略的一部分。

They've been a customer for this goal, and Pega is helping Scotia give its customer true omni-channel experiences.

他們一直是實現這一目標的客戶，Pega 正在幫助 Scotia 為其客戶提供真正的全渠道體驗。

Customer journey is able to start and complete on any channel seamlessly and intelligently.

客戶旅程能夠在任何渠道上無縫、智能地開始和完成。

And Lloyds Banking Group, the largest retail bank here in the U.K., continues to extend its work with Pega, most recently with the new Pega Cloud solution that's helping Lloyds comply with new regulations, increase productivity and importantly, increase customer satisfaction.

英國最大的零售銀行勞埃德銀行集團 (Lloyds Banking Group) 繼續擴展與 Pega 的合作，最近推出了新的 Pega Cloud 解決方案，該解決方案幫助勞埃德銀行遵守新法規、提高生產力，更重要的是，提高了客戶滿意度。

We also see good momentum in government businesses.

我們還看到政府業務的良好勢頭。

In the U.S., we continue to expand our work within the federal government with both new and existing organizations.

在美國，我們繼續擴大我們在聯邦政府內部與新組織和現有組織的合作。

Similar to our private sector clients, government agencies are pursuing digital transformation, looking to focus on both increasing efficiency and responsiveness while improving citizen engagement.

與我們的私營部門客戶類似，政府機構也在進行數字化轉型，希望在提高公民參與度的同時提高效率和響應能力。

We're interesting -- seeing similar interest globally in governments in EMEA and Asia Pacific as well.

我們很感興趣——在全球範圍內看到歐洲、中東和非洲和亞太地區的政府也有類似的興趣。

For example, in Japan, our new client, the Ministry of Economy, Trade and Industry, chose Pega as part of the digital transformation initiative to optimize and digitize the processes they use to monitor the safety of companies working with potentially dangerous materials.

例如，在日本，我們的新客戶經濟產業省選擇 Pega 作為數字化轉型計劃的一部分，以優化和數字化他們用來監控使用潛在危險材料的公司的安全性的流程。

These are the sorts of systems that improve employee productivity and satisfaction while ensuring that the right processes are followed to comply with appropriate regulations.

這些系統可以提高員工的工作效率和滿意度，同時確保遵循正確的流程以遵守適當的法規。

We continue to see real momentum in the government sector.

我們繼續看到政府部門的真正勢頭。

I'll tell you, from just having been to a variety of industries in the field over the last 3 weeks, there is a lot of enthusiasm.

我會告訴你，在過去的 3 周里，剛去過該領域的各個行業，就充滿了熱情。

And I'm very excited about how things are going.

我對事情的進展感到非常興奮。

From the technology point of view, the customer response is enthusiastic regarding our biggest product launch when we introduced Pega Infinity at PegaWorld in June.

從技術的角度來看，我們 6 月份在 PegaWorld 推出 Pega Infinity 時，客戶對我們最大的產品發布反應熱烈。

Now we continue to enhance our product suite and last month, for the first time, released the newest versions of both our platform and applications as a single wave.

現在我們繼續增強我們的產品套件，並在上個月首次一次性發布了我們平台和應用程序的最新版本。

This release includes substantial new capabilities in the real-time omni-channel AI, the end-to-end robotics and automation and will really help our marketing, sales, service and platform clients delight their customers.

此版本包括實時全渠道人工智能、端到端機器人技術和自動化方面的大量新功能，將真正幫助我們的營銷、銷售、服務和平台客戶取悅他們的客戶。

We've made our software easier to adopt with redesigned user-focused studios.

通過重新設計的以用戶為中心的工作室，我們使我們的軟件更易於採用。

And we've made the software increasingly frictionless to deploy with advanced testing, DevOps capabilities to improve deployment, and of course, Pega Cloud.

我們通過高級測試、用於改進部署的 DevOps 功能，當然還有 Pega Cloud，使軟件的部署變得越來越順暢。

From an industry recognition point of view, we also have continued to receive awards and recognition from the leading industry analysts like Gartner, Forrester and Ovum.

從行業認可的角度來看，我們也不斷獲得來自 Gartner、Forrester 和 Ovum 等領先行業分析師的獎項和認可。

Just this quarter, Forrester named Pega the leader in digital decisioning platforms.

就在本季度，Forrester 將 Pega 評為數字決策平台的領導者。

That picture is just wonderful and available on our website.

那張照片太棒了，可以在我們的網站上找到。

Pega has the highest aggregate Critical Capabilities score in Gartner's just published Critical Capabilities for the CRM Engagement Center report.

Pega 在 Gartner 剛剛發布的 CRM Engagement Center 關鍵能力報告中的關鍵能力總分最高。

Gartner named Pega Visionary in their Magic Quadrant for Mobile App Development.

Gartner 在其移動應用開發魔力像限中將 Pega Visionary 命名為 Pega Visionary。

And Chartis Research named Pega a category leader with the highest scores among 21 solutions in the Know Your Customer space for the second year in a row.

Chartis Research 連續第二年將 Pega 評為“了解你的客戶”領域 21 個解決方案中得分最高的類別領導者。

This continued recognition, I think, is just a demonstration that Pega is relentlessly focused and committed to building our technology and making sure that we're able to attract and retain top talent, able to make Pega a great place to work and able to turn that into tangible technical and business goals.

我認為，這種持續的認可只是表明 Pega 不懈地專注並致力於構建我們的技術，並確保我們能夠吸引和留住頂尖人才，能夠使 Pega 成為一個工作的好地方，並能夠轉變將其轉化為切實的技術和業務目標。

And in closing, you may recall that last February, I filed a shareholder letter describing interest in gathering feedback on potentially creating a second class of equity.

最後，您可能還記得去年 2 月，我提交了一封股東信，描述了有興趣收集有關可能創建第二類股權的反饋。

Since then, we've had a number of interesting discussions and tonight, just filed the supplemental second letter that outlined some updated thinking and questions.

從那以後，我們進行了很多有趣的討論，今晚剛剛提交了補充的第二封信，其中概述了一些最新的想法和問題。

To ensure that we discuss possibilities with shareholders, there isn't a risk that we actually that we create a possible Reg FD issue.

為確保我們與股東討論可能性，我們實際上沒有創建可能的 Reg FD 問題的風險。

As I said in February, there aren't specific plans and I expect to continue to learn through further conversations.

正如我在二月份所說，沒有具體的計劃，我希望通過進一步的對話繼續學習。

That supplemental letter was filed tonight as an 8-K.

那封補充信是今晚作為 8-K 提交的。

And if you have questions, feel free to reach out to me or Ken.

如果您有任何疑問，請隨時與我或 Ken 聯繫。

So in summary, I'm really pleased with our performance through Q3.

所以總而言之，我對我們在第三季度的表現非常滿意。

We've seen good acceleration quarter-to-quarter in license and cloud ACV.

我們已經看到許可和雲 ACV 的季度環比加速增長。

We continue to invest appropriately in marketing and sales to reach our ambitious goals and targets.

我們繼續在營銷和銷售方面進行適當投資，以實現我們雄心勃勃的目標。

And we're very positive about how our software is being adopted by -- and our long-term growth opportunities.

我們對我們的軟件如何被採用以及我們的長期增長機會非常樂觀。

To provide more color on the financial results, I will now turn it over to Pega's CFO, Ken Stillwell.

為了提供更多關於財務結果的顏色，我現在將其轉交給 Pega 的首席財務官 Ken Stillwell。

Thanks, Alan.

謝謝，艾倫。

Year-to-date 2018 has highlighted the very positive momentum we're seeing in the business.

2018 年初至今，我們在業務中看到了非常積極的勢頭。

Not only did we have the strongest Q3 in Pega's history, we also experienced significant growth sequentially over Q2 of 2018, which by the way was a very solid quarter as well.

我們不僅擁有 Pega 歷史上最強勁的第三季度，而且我們在 2018 年第二季度也經歷了連續的顯著增長，順便說一句，這也是一個非常穩健的季度。

We experienced a continued acceleration of our ACV growth and consistent shift toward cloud commitments.

我們經歷了 ACV 增長的持續加速和向雲承諾的持續轉變。

As we've discussed in the past, our strategy has been to accelerate growth with a much higher mix of term and cloud commitments.

正如我們過去所討論的那樣，我們的戰略一直是通過更高的期限和雲承諾組合來加速增長。

Year-to-date, cloud commitments were 51% of total commitments.

年初至今，雲承諾佔總承諾的 51%。

The associated short-term revenue tradeoff that occurs with a significant movement to the cloud is, well, today, pretty well understood by the market.

如今，隨著向雲計算的重大轉移而發生的相關短期收入權衡已為市場所熟知。

Over time, we can leverage the movement to recurring contracts by expanding our margin as we gain operating leverage.

隨著時間的推移，我們可以通過擴大我們的利潤率來利用經常性合同的變動，因為我們獲得了經營槓桿。

That said, I want to reiterate that if one just looks at our reported year-to-date revenue, it would lead to an incorrect conclusion about the growth of the business.

也就是說，我想重申，如果只看我們報告的年初至今收入，就會得出關於業務增長的錯誤結論。

Our year-over-year term and cloud subscription ACV growth of 36% is more indicative of our overall business momentum.

我們的期限和雲訂閱 ACV 同比增長 36% 更能說明我們的整體業務勢頭。

Year-to-date 2018, our mix of new commitments was 90% term and cloud subscription.

2018 年初至今，我們的新承諾組合是 90% 的定期和雲訂閱。

Conversely, perpetual deals dropped to only 10% year-to-date 2018.

相反，2018 年至今，永續交易下降至僅 10%。

This confirms our belief that customers are increasingly comfortable with contracting under recurring arrangements and aided by cloud -- by Pega's Cloud Choice differentiation.

這證實了我們的信念，即通過 Pega 的 Cloud Choice 差異化，客戶越來越願意在雲的幫助下定期安排合同。

We had anticipated the cloud portion of new commitments would increase to 30% for the full year 2018 versus the actual 51% we're experiencing year-to-date.

我們曾預計 2018 年全年新承諾的雲部分將增加到 30%，而今年迄今實際為 51%。

As I've said throughout the past few quarters, it's a pretty significant shift but really welcomed.

正如我在過去幾個季度所說的那樣，這是一個非常重要的轉變，但真的很受歡迎。

The short-term revenue impact to the shift is obvious if you look at the top line revenue, impacting our year-to-date revenue by at least $40 million.

如果您查看頂線收入，這種轉變對短期收入的影響是顯而易見的，影響我們年初至今的收入至少 4000 萬美元。

Let me talk a little more about the details.

讓我再談談細節。

I'll also remind everyone that we had a very large term renewal of $35 million that occurred in the first quarter of 2017.

我還要提醒大家，我們在 2017 年第一季度進行了 3500 萬美元的非常大的續約。

If you normalize our revenue for these 2 elements, those elements being the $35 million renewal in the first quarter of 2017 and the significant movement to cloud, total revenue growth will look very different.

如果您將這兩個要素的收入標準化，這些要素是 2017 年第一季度的 3500 萬美元續訂和向雲的重大轉移，總收入增長將看起來非常不同。

Our maintenance revenue growth came in at 9%, which is slowing a bit but reflects our big acceleration away from perpetual to cloud.

我們的維護收入增長率為 9%，雖然有所放緩，但反映出我們從永久性到雲的巨大加速。

Consulting revenue grew 5% year-over-year, consistent with our strategy to increase the share of implementation work that our partners lead.

諮詢收入同比增長 5%，這與我們增加合作夥伴主導的實施工作份額的戰略一致。

Cloud revenue grew by an amazing 60% year-over-year.

雲收入同比增長驚人的 60%。

So when you look at the individual revenue elements, you can clearly see our movement to recurring and specifically cloud playing out favorably.

因此，當您查看各個收入要素時，您可以清楚地看到我們向經常性特別是雲計算的轉變取得了良好的效果。

So our strategy is working well.

所以我們的策略運作良好。

As I've mentioned, we model the full year with an estimate for cloud at 30% of new commitment versus the 51% that I mentioned previously.

正如我所提到的，我們對全年進行建模，估計雲計算佔新承諾的 30%，而我之前提到的是 51%。

Cloud momentum's been accelerating through the year and is driving -- is driven by market demand as well as improvements to our go-to-market.

雲勢頭在這一年裡一直在加速，並且正在推動——受到市場需求以及我們進入市場的改進的推動。

As we have said in the past, each 1% shift toward cloud has the potential to reduce full year 2018 revenue by over $3 million as the economic value is reflected in ACV but the revenue is taken over the length of the arrangement under a cloud agreement.

正如我們過去所說，每向雲轉移 1% 就有可能使 2018 年全年收入減少超過 300 萬美元，因為經濟價值反映在 ACV 中，但收入是在雲協議下的安排期限內收取的.

And the short-term reduction in reported revenue and EPS is exchanged for more favorable higher long-term cash flows.

報告收入和每股收益的短期減少換來了更有利的更高長期現金流。

We began disclosing annual contract value, or ACV, a couple of years ago.

幾年前，我們開始披露年度合同價值或 ACV。

With the impact of implementing the new revenue standard, we believe ACV is highly correlated to recurring and predictable cash flows.

由於實施新收入準則的影響，我們認為 ACV 與經常性和可預測的現金流高度相關。

Our term and cloud subscription ACV grew by 36% year-over-year, which highlights the growth in predictable future cash flows from license and increasingly cloud.

我們的期限和雲訂閱 ACV 同比增長 36%，這突顯了來自許可和日益增長的雲的可預測未來現金流的增長。

Including maintenance, we entered the third quarter with $537 million of total ACV, which is up 20% from a year ago and 40% over the past 8 quarters.

包括維護在內，我們以 5.37 億美元的總 ACV 進入第三季度，比去年同期增長 20%，比過去 8 個季度增長 40%。

Total ACV now equals 60% of our trailing 12-month revenue, which is up from approximately 50% of our trailing 12-month revenue just a couple of years back.

現在，ACV 總額相當於我們過去 12 個月收入的 60%，而幾年前這一比例約為我們過去 12 個月收入的 50%。

We have consciously continued our strategic investments in go-to-market capacity.

我們有意識地繼續對上市能力進行戰略投資。

And in fact, we're looking to continue investing in our capacity to capture a larger share of the growth opportunity.

事實上，我們希望繼續投資於我們的能力，以抓住更大份額的增長機會。

We finished the period with approximately 4,500 employees, up 9% from September 30, 2017.

我們在此期間擁有約 4,500 名員工，比 2017 年 9 月 30 日增加了 9%。

We're confident in the market, our product leadership, Cloud Choice and our ability to capture share and that the ACV acceleration we're seeing supports the long-term value stream that we're creating at Pega.

我們對市場、我們的產品領導地位、Cloud Choice 和我們獲取份額的能力以及我們看到的 ACV 加速支持我們在 Pega 創造的長期價值流充滿信心。

Turning to profitability.

轉向盈利能力。

On a year-to-date basis, our non-GAAP fully diluted net income and earnings per share have been materially impacted by the sharp shift to cloud and the lack of near-term revenue associated with a shift like what we're experiencing.

從年初至今，我們的非 GAAP 完全攤薄淨收入和每股收益受到向雲的急劇轉變以及與我們正在經歷的轉變相關的短期收入缺乏的重大影響。

Although the results could look confusing during such a transition, we are fully committed to continuing to drive to recurring and specifically cloud.

儘管在這種過渡期間結果可能看起來令人困惑，但我們完全致力於繼續推動經常性的，特別是雲。

Our cloud margin continues to expand as we scale our cloud business, contributing to confidence that our overall margins will improve over time.

隨著我們擴展雲業務，我們的雲利潤率繼續擴大，這有助於我們相信我們的整體利潤率會隨著時間的推移而提高。

The outcome over the next few years will result in our ability to generate a significant amount of recurring cash flow and expand our free cash flow margins.

未來幾年的結果將使我們有能力產生大量經常性現金流並擴大我們的自由現金流利潤率。

We're disclosing $522 million of commitments from customers that have not been taken to revenue as of September 30, 2018, including perpetual, term, cloud, maintenance and consulting.

我們披露了截至 2018 年 9 月 30 日尚未轉化為收入的 5.22 億美元客戶承諾，包括永久、定期、雲、維護和諮詢。

You'll note that 60% of these commitments are projected to convert to revenue in the next 12 months.

您會注意到，這些承諾中的 60% 預計將在未來 12 個月內轉化為收入。

This is commonly referred to as remaining performance obligation, or RPO.

這通常稱為剩餘履約義務或 RPO。

The absolute number will fluctuate over time based on the growth of the underlying business and also the average duration of the contracts that are in backlog.

根據基礎業務的增長以及積壓合同的平均期限，絕對數量會隨著時間的推移而波動。

However, this number is helpful to illustrate the scale of commitments made from our customers.

但是，這個數字有助於說明我們客戶做出的承諾的規模。

And I hope this helps to provide additional visibility to total commitments.

我希望這有助於提高總體承諾的可見度。

From a cash flow perspective, year-to-date, we produced $67 million of operating cash flow and finished the period with total cash and marketable securities of over $200 million.

從現金流的角度來看，年初至今，我們產生了 6700 萬美元的運營現金流，並以超過 2 億美元的總現金和有價證券結束了這一時期。

As we transition to cloud and create long-term recurring cash flow from our clients, during this transition, there will be lower free cash flow compared to under our perpetual model, which has a large upfront payment but lesser recurring payments.

隨著我們過渡到雲並從我們的客戶那裡創造長期經常性現金流，在此過渡期間，與我們的永久模型相比，自由現金流將更低，後者俱有大量預付款但經常性付款較少。

Once we're through the transition, operating cash flow will normalize and align very close to our operating margins over the long term.

一旦我們完成轉型，經營現金流將正常化並在長期內與我們的經營利潤率非常接近。

Year-to-date 2018, we returned over $71 million to shareholders through dividends, net settlements of equity and share buybacks.

2018 年初至今，我們通過股息、股權淨結算和股票回購向股東返還了超過 7100 萬美元。

In summary, we're very pleased with our year-to-date execution against our strategy and are focused on finishing what has been so far an incredible 2018.

總而言之，我們對年初至今的戰略執行情況感到非常滿意，並專注於完成迄今為止令人難以置信的 2018 年。

And with that, operator, we open the call to questions.

有了這個，接線員，我們開始提問。

(Operator Instructions) And we'll take our first question today from Rishi Jaluria with D.A. Davidson.

（操作員說明）今天我們將與 D.A. 一起回答 Rishi Jaluria 的第一個問題。戴維森。

Nice to see some continued cloud momentum.

很高興看到一些持續的雲勢頭。

Alan, let me start with you.

艾倫，讓我從你開始。

I believe in your prepared remarks, you talked about ServiceNow as a competitor.

我相信你準備好的言論，你談到 ServiceNow 作為競爭對手。

And maybe I missed it in the past.

也許我過去錯過了它。

This is the first time I've heard you talk about ServiceNow as a competitor on a conference call.

這是我第一次聽到您在電話會議上作為競爭對手談論 ServiceNow。

So maybe if you could square a little bit into -- on what angles you're competing against ServiceNow.

所以也許如果你能稍微考慮一下——你在什麼角度上與 ServiceNow 競爭。

And since it's a company a lot of us know well, how are you thinking about your differentiation versus them?

由於這是我們很多人都熟悉的公司，您如何看待您與他們的差異化？

Well, we see ServiceNow as a company that's also seeking to be a platform company, seeking to be a CRM firm and talking about digital transformation.

好吧，我們將 ServiceNow 視為一家也在尋求成為平台公司、尋求成為 CRM 公司並談論數字化轉型的公司。

And we're routinely asked by clients how we should see ourselves -- or how they should see us compared to Salesforce or ServiceNow because to some degree, we run into those folks all the time.

我們經常被客戶問到我們應該如何看待自己——或者他們應該如何看待我們與 Salesforce 或 ServiceNow 相比，因為在某種程度上，我們總是會遇到這些人。

And we recently scored some pretty major wins in organizations that had large deployments of both of those firms.

我們最近在大量部署了這兩家公司的組織中取得了一些非常重要的勝利。

And so as they grow, we are, of course, going to see them more.

因此，隨著它們的成長，我們當然會更多地看到它們。

And we do want to make sure we're alert in the market to all possible competitors.

我們確實希望確保我們在市場上對所有可能的競爭對手保持警惕。

And they have been mentioned as well.

他們也被提到了。

Got it.

知道了。

Okay.

好的。

That's helpful.

這很有幫助。

And Ken, as we look at your remaining performance obligations -- and by the way, thank you for coming up with a catchier name than committed not yet recognized revenue.

肯，當我們查看您剩餘的履約義務時 - 順便說一下，感謝您提出一個比承諾尚未確認的收入更吸引人的名字。

But since this is a new metric for us, how should we be thinking about the sequential changes at least from Q2 to Q3 here?

但由於這對我們來說是一個新指標，我們應該如何考慮至少從第二季度到第三季度的連續變化？

I mean, I think it looks like we saw about a $50 million increase in cloud performance obligations sequentially, but would just want to get some context around that number.

我的意思是，我認為看起來我們看到雲性能義務依次增加了大約 5000 萬美元，但只想了解有關該數字的一些背景信息。

So good question, Rishi.

問得好，Rishi。

So there are some things in the remaining performance obligation that are probably less relevant to look at quarter-to-quarter.

因此，剩餘履約義務中的某些內容可能與按季度查看的相關性較低。

For instance, the amount of perpetual revenue that hasn't been taken to revenue.

例如，尚未計入收入的永久收入金額。

That will move -- that will have different seasonality changes, depending on contracts, et cetera.

這將會發生變化——這將有不同的季節性變化，具體取決於合同等。

So I would say that's probably less helpful.

所以我想說這可能沒那麼有用。

But certainly, the cloud one, if you look at the next 12 months, that is really a leading indicator to the amount of commitments that are already under contract for cloud.

但可以肯定的是，雲計算，如果你看看未來 12 個月，這確實是一個領先指標，表明已經根據云合同簽訂的承諾數量。

And so as our cloud business grows, you would expect the next 12 months of cloud commitments to grow.

因此，隨著我們雲業務的增長，您會預計未來 12 個月的雲承諾會增長。

Not always in a linear fashion to our actual underlying growth because timing of renewals can be slightly less linear.

與我們實際的潛在增長並不總是線性的，因為續訂的時間可能稍微不那麼線性。

But that's a helpful one.

但這是一個有用的。

And in additional -- additionally, term is an interesting one because as you know, under 606, term commitments, when booked, largely come into revenue upfront.

此外 - 此外，術語是一個有趣的術語，因為如您所知，根據 606，術語承諾在預訂時大部分會提前進入收入。

But there are some situations when they don't like if there's usage tranches or there's things that cause that revenue to be earned over time.

但在某些情況下，他們不喜歡是否存在使用分期付款，或者是否存在導致隨著時間的推移獲得收入的因素。

So it's helpful that you can actually use that, coupled with our revenue, to be able to understand the total amount of commitments that were made to Pega in a specific time period, similar to the way that we use backlog under the old accounting standard.

因此，您可以實際使用它以及我們的收入來了解在特定時間段內對 Pega 做出的承諾總量，這很有幫助，類似於我們在舊會計準則下使用積壓的方式。

Okay.

好的。

Got it.

知道了。

That's helpful.

這很有幫助。

And then last one for me, and I'll jump off.

然後最後一個給我，我會跳下去。

But as we think about the numbers -- and I don't want to read too much into this, but if my notes are correct, you've done 51% of new sales being cloud year-to-date.

但是當我們考慮這些數字時——我不想對此讀太多，但如果我的筆記是正確的，你已經完成了今年迄今為止 51% 的新銷售額。

Last quarter, it was 54%.

上個季度，這一比例為 54%。

Q1 was 48%.

第一季度為 48%。

Does that mean that it declined sequentially from Q2 to Q3?

這是否意味著它從第二季度到第三季度依次下降？

Or am I thinking about this wrong?

還是我在想這個錯誤？

It may have declined a couple of percentage points.

它可能下降了幾個百分點。

But I would say it's still been in a fairly narrow range through the first 3 quarters of about 50%.

但我要說的是，在前 3 個季度，它仍然處於一個相當狹窄的範圍內，約為 50%。

So I certainly wouldn't suggest that a slight movement like that would indicate any market trend change.

因此，我當然不會認為像這樣的輕微波動表明任何市場趨勢發生變化。

What I would say is we're seeing about 50%.

我要說的是我們看到大約 50%。

And the conclusion I would draw from that has been largely consistent for each of the first 3 quarters.

我從中得出的結論對於前三個季度的每個季度都基本一致。

(Operator Instructions) We now have from Mark Schappel with Benchmark.

（操作員說明）我們現在有 Mark Schappel 和 Benchmark。

Alan, starting with you.

艾倫，從你開始。

Your public sector has been a big focus of the company.

您的公共部門一直是公司的重點。

Obviously, 3Q is a big public sector quarter.

顯然，第三季度是一個重要的公共部門季度。

And you referenced a couple of good deals this quarter.

你提到了本季度的幾筆好交易。

With respect to the delivery mechanism in the government and the shift to cloud, what are your -- your government customers, what's their approach to cloud versus licenses?

關於政府的交付機制和向雲的轉變，你的 - 你的政府客戶是什麼，他們對雲與許可證的方法是什麼？

Are they still hanging on to licenses?

他們還在堅持許可證嗎？

Or are you starting to see them adopt -- or starting to adopt cloud deals?

或者您是否開始看到他們採用 - 或者開始採用雲交易？

Yes, we're seeing them adopt cloud deals.

是的，我們看到他們採用了雲交易。

The interesting thing that's an option for us is the entire -- the whole question of Cloud Choice because we give them a lot of options as to whether a government customer might choose to use a cloud from Pega or whether a government customer might choose, for example, to move it to one of the AWS or Azure-type instances that they might use externally.

有趣的是，對我們來說，這是一個選擇——整個 Cloud Choice 問題，因為我們為他們提供了很多選擇，比如政府客戶是否會選擇使用 Pega 的雲，或者政府客戶是否會選擇，因為例如，將其移動到他們可能在外部使用的 AWS 或 Azure 類型的實例之一。

Or some of them actually are still focusing on having some level of private cloud.

或者他們中的一些人實際上仍然專注於擁有某種程度的私有云。

We deal with a number of agencies actually in several countries that have an extreme security expectation.

我們實際上與多個國家的許多機構打交道，這些機構對安全有著極高的期望。

And frankly, some of those agencies would never buy from an American cloud company to run on the American cloud because of some of the laws that have been passed, which could make them subject to U.S. subpoenas.

坦率地說，由於一些已經通過的法律，其中一些機構永遠不會從美國雲公司購買以在美國雲上運行，這可能使他們受到美國傳票的約束。

So in those cases, I think we're seeing the move to cloud.

所以在這些情況下，我認為我們正在看到向雲的轉變。

It just may want to be a cloud that they choose to run.

它可能只是想成為他們選擇運行的雲。

I think that's great for us from a positioning point of view.

從定位的角度來看，我認為這對我們來說很好。

It really enforces the value of that Cloud Choice proposition.

它確實體現了 Cloud Choice 主張的價值。

Great.

偉大的。

And then, Ken, in your prepared remarks, I believe you noted that the company plans to increase investment in the sales and marketing area.

然後，肯，在你準備好的發言中，我相信你注意到公司計劃增加對銷售和營銷領域的投資。

I was wondering if you could just expand on that a little bit such as where you plan to focus those investments in terms of, say, geography, sector, customer size.

我想知道你是否可以稍微擴展一下，比如你計劃在地理、行業、客戶規模方面將這些投資集中在哪裡。

So we have some primary markets, geography and also verticals, where we've been very successful over the years.

因此，我們有一些主要市場、地理區域和垂直市場，多年來我們在這些市場非常成功。

And as you can imagine, at our size, we have a lot of runway to improve our coverage of some of these very, very viable and interesting enterprise organizations.

正如您可以想像的那樣，以我們的規模，我們有很多跑道可以改善我們對其中一些非常、非常有活力和有趣的企業組織的覆蓋範圍。

So I think I would be less focused on Denver versus Boston versus the U.K and more just highlighting the fact that we have a lot of runway to really grow the business to a much bigger size than what we are right now.

所以我想我不會那麼關注丹佛、波士頓和英國，而更多地強調一個事實，即我們有很多跑道可以真正將業務發展到比我們現在更大的規模。

And naturally having customer-facing capacity is important to be able to drive that.

自然地，擁有面向客戶的能力對於能夠推動這一點很重要。

Alan, you want to add to that?

艾倫，你想補充嗎？

Yes.

是的。

I can jump in.

我可以跳進去

You're not going to see us running into slews of new geographies because we've done actually quite a bit of analysis this year.

你不會看到我們遇到大量新的地理區域，因為我們今年實際上做了很多分析。

And we've decided that what we really want to do is increase our density in a number of organizations that we might be covering with a fraction of a person or that we might be covering with an individual when the scale of the company and the scale of the opportunity in it would mean that to cover it effectively, you need to be several times just one person.

我們已經決定，我們真正想做的是增加我們在一些組織中的密度，我們可能會覆蓋一小部分人，或者我們可能會覆蓋一個人，當公司規模和規模其中的機會意味著要有效地涵蓋它，您需要多次成為一個人。

And so by taking that as a strategy, I actually feel really good that we're going to be able to improve the reliability of our selling because we're not going into experimental new places.

因此，通過將其作為一種策略，我真的很高興我們能夠提高銷售的可靠性，因為我們不會進入試驗性的新地方。

I mean, just talking about the government for a moment, to properly cover the opportunities we have in the government, we could be several times our current size in that team and still, frankly, have what I would consider only partial coverage.

我的意思是，只是暫時談論政府，為了適當地涵蓋我們在政府中擁有的機會，我們在該團隊中的規模可能是目前的幾倍，但坦率地說，我認為只有部分覆蓋。

So I feel good that we know where and how to increase that density and to increase that coverage, which should be more reliable than if we say we're running into a whole bunch of new geographies.

所以我很高興我們知道在哪里以及如何增加密度和覆蓋範圍，這應該比我們說我們正在進入一大堆新地區更可靠。

Great.

偉大的。

Then finally, Ken, again for you.

最後，肯，再次為你。

With respect to operating margins in the quarter, where do you estimate operating margins would have been if it wasn't for the aggressive shift to the cloud?

關於本季度的營業利潤率，如果不是積極轉向雲，您估計營業利潤率會在哪裡？

So if you adjust -- if you think about the cloud -- the impact of moving to a much higher cloud percentage and really have to think, Mark, not just of the 30% to the 50%, but you have to think about what our cloud percentage was last year, which was in the low 20s to where we are, which is, just call it, 50%, 51%.

因此，如果你調整 - 如果你考慮雲 - 遷移到更高雲百分比的影響並且真的必須考慮，馬克，不僅僅是 30% 到 50%，但你必須考慮什麼我們的雲百分比是去年的，比我們現在的水平低 20%，也就是 50%、51%。

If you compare that, that's a fairly significant amount of impact, which actually all hits the bottom line, to your -- which is where your question is coming from.

如果你比較它，那是相當大的影響，實際上所有影響都觸及底線，對你的 - 這就是你的問題的來源。

We've looked at it kind of in a -- to get a directional estimate of where our margin would be, then our margin would be somewhere in the high teens, right, which is slightly better than where we would have been last year.

我們已經看過它 - 以獲得我們的利潤率的方向性估計，然後我們的利潤率將處於高位，對，這比我們去年的水平略好。

But once again, we're growing at a faster pace.

但是，我們再次以更快的速度增長。

And we're actually increasing selling capacity to prepare for kind of the next year and the follow-on year growth.

我們實際上正在增加銷售能力，為明年和隨後一年的增長做準備。

And that helps to offset what would have otherwise been greater margin expansion.

這有助於抵消原本更大的利潤率擴張。

The problem with it is the accounting because of the -- pushing the revenue out under cloud arrangements really obfuscates that natural inherent margin we have because you won't see that until you have a number of cloud years kind of stacked in, which we're really only in about the first 18 months of that big shift to cloud.

它的問題在於會計，因為 - 在雲安排下推出收入確實混淆了我們擁有的自然固有利潤率，因為你不會看到這一點，直到你有一些雲年堆積起來，我們'真正只發生在向雲的重大轉變的前 18 個月。

(Operator Instructions) We do have a question from Stephen Bersey with MUFG.

（操作員說明）我們確實有來自 MUFG 的 Stephen Bersey 提出的問題。

Nice quarter.

不錯的季度。

Just wondering if you're noticing any trends as far as industry vertical and acceptance or pushback to cloud adoption.

只是想知道您是否注意到垂直行業和接受或反對雲採用的任何趨勢。

Yes, this is Alan.

是的，這是艾倫。

I'll say that -- so cloud has become truly a mainstream capability and desire across, I would say, pretty much all the verticals.

我會這麼說——所以雲已經成為真正的主流能力和願望，我想說，幾乎所有的垂直領域。

So there are specific applications where customers are not as interested for a variety of special security or other sorts of reasons.

因此，由於各種特殊的安全性或其他原因，客戶對某些特定應用不感興趣。

But the cloud has been really subject to a huge transition.

但是雲確實經歷了巨大的轉變。

With hindsight, I wish we had accelerated our transition.

事後看來，我希望我們能加快轉型速度。

And I referenced to this 3 years ago.

我在 3 年前提到過這個。

But since we've put the pedal down, we're seeing the results that we want.

但由於我們已經踩下踏板，我們看到了我們想要的結果。

And so we think that's just going to continue.

所以我們認為這只會繼續下去。

I'm, frankly, almost a little surprised that in some of the industries that folks have become so accepting.

坦率地說，我幾乎有點驚訝人們在某些行業變得如此接受。

But at this point, we're all in.

但在這一點上，我們都在。

There are no questions, sir.

沒有問題，先生。

Well, in that case, I'm just going to wrap it up.

好吧，在那種情況下，我只是要把它包起來。

It's a little bit late here in London, and it's been a long week.

在倫敦這裡有點晚了，這是漫長的一周。

But I want to thank everyone and let you know that we're working very diligently on your behalf and are really pleased with what's going on and how we think we can continue to drive success.

但我要感謝大家，並讓你們知道我們正在為你們非常勤奮地工作，並且對正在發生的事情以及我們認為我們如何能夠繼續推動成功感到非常高興。

Talk to you all soon.

很快就和大家聊聊。

That does conclude today's conference call.

這確實結束了今天的電話會議。

Thank you for your participation.

感謝您的參與。

You may now disconnect.

您現在可以斷開連接。