The term "intangible asset" refers to a resource that has long-term financial value to a company and has no physical substance but still provides real value. Identifiable intangible assets are those that may be sold by the corporation and can be separated from other assets. Identifiable intangible assets include intellectual property such as patents, trademarks, copyrights, or even non-cash government grants like landing rights at airports or broadcasting licenses. These assets are being straight-line-amortized over their respective expected useful lifetimes at their estimated fair values that were recorded at the acquisition date.
The gross value of intangible assets of Pegasystems increased by 3.55% from $64.84 million in FY2020 to $67.14 million in FY2021. The company's intangible assets had a net value of $14.06 million in FY2021. Based on the company's valuation of the fair value of identified intangible assets, Client-related and Technology amounted to $63.16 million and $67.14 million, respectively. Intangible asset amortization costs for the business came to $3.99 million in FY2021.
The company is restructuring its business model such that it would offer software primarily through subscription plans. As revenue is reported differently for subscription services than for license sales, this move has influenced revenue growth. While revenue from license sales is recognized when the license rights become effective, revenue from Pegan Cloud and maintenance agreements is often realized throughout the contract.
The growth of maintenance revenue increased by $17.1 million in 2021, whereas the growth of subscription license revenue decreased by $4 million as a result of multi-year committed maintenance. The rise in continuous revenue was mostly caused by license rights associated with many sizable software license contracts taken into prior years becoming effective in 2021. As Pega Cloud expands and scales as a result of its subscription transition, the increase in gross profit in 2021 was primarily driven by overall revenue growth and cost-efficiency benefits.
Pegasystems Inc (Pega) develops, markets, licenses, and supports enterprise software applications. Through Pega Infinity, the company offers customer engagement, digital process automation, robotic process automation, business rule management services, decision management, low code application development platforms, and vertical-specific software. Pega serves healthcare, insurance, transportation, hospitality, financial services, government, automotive, communications, media and entertainment, life sciences, manufacturing and high technology, energy and utilities, and retail industries. The company markets its solutions through a direct sales force, system integrators, and consulting firms on a partnership basis. It operates in the Americas, Europe, the Middle East, Africa, and Asia-Pacific.
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