>>If [Pegasystems' technology] is that superior
We're comparing different technology and approaches. Pegasystems' software is designed by bankers to run banks. It's designed to interface with high-volume back-end transaction systems, and automate the front end.
>>wouldn't they have sales momentum comparable to Siebel's?
There's no software company I know that's ramping as fast as Siebel is, but that doesn't imply anything negative for Pegasystems. They're both in the first inning of their respective games, and they're playing on different fields. As far as momentum goes, Pegasystems is on fire: Y/Y license-revenue growth rates have been 1Q96 14%, 2Q96 50%, 3Q96 79%, 4Q96 83%, 1Q97 157%, 2Q97 132%. ...this with the ~six-month reporting lag.
>>The valuation already assumes substantial growth and I'm not sure the commissions point to BETTER-THAN-EXPECTED growth which is what this company would need to justify the valuation.
I really don't know what the market is expecting, obviously alot, but I don't know what would disappoint it.
>>what's your take on the First Data deal
I think it's huge. I think the companies realized after the Sears decision that each has best-of-breed products that are unstoppable in combination: First Data's back end and Pegasystems' front end. They're working together to integrate them for Sears, so why not take their act on the road? First Data is THE global behemoth in the credit-card processing space. The way I understand it, the deal is mutually exclusive. First Data (and only First Data) will sell PegaCard (and only PegaCard). First Data is dropping their own front-end product to do it.
This deal does several things for Pegasystems. Firstly it validates Pegasystems technology, and has a halo effect on their other lines. Secondly, it frees up Pegasystems marketing and sales resources to focus on their retail/merchant banking products and move into insurance and other areas. Most importantly, it opens up First Data's immense installed base for backfill sales opportunities, and makes PegaCard the defacto standard.
Pegasystems stated that they would have been able to sell the product just as effectively themselves. No way. Their former prime competitor is now their exclusive sales agent. That's why they finally came around to the "baseline" comment in the conference call.
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