Key Takeaways Pegasystems beat Q4 estimates with 76-cent EPS and 3% revenue growth to $504.3M.PEGA's cloud ACV jumped 33%, lifting total ACV 17% to $1.61B amid strong demand.Pegasystems saw backlog rise 28% and free cash flow climb 45% year over year.Pegasystems (PEGA) reported fourth-quarter 2025 non-GAAP earnings of 76 cents per share, which beat the Zacks Consensus Estimate by 5.56% but decreased 5% year over year.Revenues of $504.32 million beat the Zacks Consensus Estimate by 4.04% and increased 3% yea ...

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On profitability and cash generation, Stillwell said free cash flow increased 45% year-over-year to $491 million, exceeding guidance by $51 million. He said the improvement was driven by ACV growth and reflected the strength of Pegasystems’ subscription model following its subscription transition.Stillwell attributed the year’s performance to three main factors: expanded use of Blueprint as an “experiential sales process,” what he described as the strongest global sales execution the company has had, and ri ...

Financial Data and Key Metrics Changes - Total ACV grew 17% year-over-year, as reported, and 14% in constant currency, exceeding guidance [7] - Pega Cloud ACV increased 33% year-over-year as reported, and 28% in constant currency, a significant acceleration from last year's growth [7][10] - Free cash flow rose 45% year-over-year to $491 million, surpassing guidance by $51 million [10] - Contractually committed backlog grew 28% year-over-year, now exceeding $2 billion for the first time in Pega's history [11] Business Line Data and Key Metrics Changes - Pega Cloud backlog grew 36% year-over-year, now representing 74% of total backlog [11][12] - Net new ACV increased by 37% year-over-year in constant currency, driven by strong demand for Pega's AI solutions [9] Market Data and Key Metrics Changes - The company reported a strong global sales execution, with a disciplined and scalable sales cadence worldwide [8] - The demand for Pega's differentiated AI agents integrated into enterprise workflows has increased significantly [9] Company Strategy and Development Direction - The company is focused on a cloud-first strategy and the implementation of its Blueprint experiential sales approach [8] - Pega aims to sustain a balanced capital allocation strategy, prioritizing organic growth and product innovation [10] - The company is committed to leveraging AI to enhance business processes and improve customer experiences [19][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of ACV growth due to the strength of Pega's integration into clients' core operations [9] - The company anticipates total ACV growth of 15% and total revenue of $2 billion for 2026, marking a significant milestone [12][13] - Management highlighted the importance of transitioning from experimentation to execution in leveraging AI for business transformation [37] Other Important Information - The Supreme Court of Virginia affirmed the verdict related to a trade secret trial, eliminating a $2 billion liability [12] - The company has achieved ISO 42001 certification across its cloud services and AI solutions [10] Q&A Session Summary Question: Current deal environment and macro conditions - Management noted that the Blueprint approach reduces friction in client engagement, leading to an excitingly advanced pipeline [41] Question: Confidence in ACV guidance - Management indicated that the net retention rate is expanding while targeting new logos, contributing to confidence in achieving the 15% growth target [46] Question: Role of multi-agent systems in enterprises - Management emphasized Pega's structural advantages in orchestrating workflows across systems, allowing for reliable and predictable operations [55] Question: Impact of Blueprint on sales cycles - Early signs indicate faster pipeline build, progression, and close times due to the implementation of Blueprint [58] Question: App modernization journey with Blueprint - Management reported significant interest from clients in app modernization, with capabilities to modernize legacy systems [66] Question: Pega Cloud migration and growth - Management stated that Pega Cloud ACV is expected to grow over 30% in 2026, with consistent migration activity across the client base [70]

Financial Data and Key Metrics Changes - Total ACV grew 17% year-over-year, as reported, and 14% in constant currency, exceeding guidance [7] - Pega Cloud ACV increased 33% year-over-year as reported, and 28% in constant currency, a significant acceleration from last year's growth [7][10] - Free cash flow rose 45% year-over-year to $491 million, surpassing guidance by $51 million [10] - Contractually committed backlog grew 28% year-over-year, exceeding $2 billion for the first time in Pega's history [11] Business Line Data and Key Metrics Changes - Pega Cloud backlog now represents 74% of total backlog, indicating strong growth in cloud services [12] - Net new ACV increased by 37% year-over-year in constant currency, driven by strong demand for Pega's Predictable AI agents [9] Market Data and Key Metrics Changes - The company reported a strong demand for its services, particularly in the context of digital transformation and legacy system modernization [43][66] - The competitive landscape is shifting, with a focus on AI and automation, which Pega is well-positioned to leverage [19][86] Company Strategy and Development Direction - Pega's strategy emphasizes a cloud-first approach and the integration of AI into its platform, particularly through the Blueprint experiential sales approach [8][10] - The company aims to achieve $2 billion in total revenue for 2026, marking a significant milestone [12] - Pega is focused on organic growth, product innovation, and maintaining a strong balance sheet while returning capital to shareholders [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of ACV growth due to Pega's deep integration into clients' core operations [9] - The company anticipates continued growth in Pega Cloud revenue, expected to accelerate above 30% in 2026 [15] - Management highlighted the importance of transforming customer engagement from experimentation to execution [37] Other Important Information - Pega achieved ISO 42001 certification across its cloud services and AI solutions, enhancing its compliance credibility [9] - The company is actively working on app modernization, leveraging partnerships with firms like Accenture and AWS [66] Q&A Session Summary Question: What is the current deal environment and macroeconomic outlook? - Management noted that the Blueprint approach reduces friction in client engagement, leading to an exciting pipeline [41] Question: What gives confidence in achieving the 15% ACV growth target? - Management highlighted an expanding net retention rate and successful targeting of new logos as key factors [46] Question: How is Blueprint impacting sales cycles and deployment times? - Early signs indicate faster pipeline build and progression, with a significant reduction in training time for new staff [58][61] Question: What is the status of app modernization efforts? - Management reported strong interest from clients in app modernization, with capabilities to modernize both legacy and old Pega systems [66] Question: How is the partnership with AWS evolving? - The partnership focuses on transforming legacy workflows using Blueprint, aligning both companies' selling strategies [78]

Financial Data and Key Metrics Changes - Total Annual Contract Value (ACV) grew 17% year-over-year, with a 14% increase in constant currency, surpassing guidance [5][10] - Pega Cloud ACV increased by 33% year-over-year as reported, and 28% in constant currency, significantly up from last year's growth of 18% as reported and 21% in constant currency [5][10] - Free cash flow rose 45% year-over-year to $491 million, exceeding guidance by $51 million [8][10] - Contractually committed backlog grew 28% year-over-year, now exceeding $2 billion for the first time in Pega's history [9][10] Business Line Data and Key Metrics Changes - Pega Cloud backlog represented 74% of total backlog, with a 36% year-over-year increase [9][10] - Net new ACV increased by 37% year-over-year in constant currency, driven by strong demand for Pega's AI agents [7][10] Market Data and Key Metrics Changes - The company noted a strong demand for its AI solutions integrated into enterprise workflows, indicating a positive market response [6][10] - The competitive landscape is shifting, with Pega positioned as a leader in enterprise transformation through its unique offerings [16][20] Company Strategy and Development Direction - The company is focused on a cloud-first strategy and the integration of AI through its Blueprint platform, which has transformed its sales approach [6][10] - Pega aims to achieve $2 billion in total revenue for 2026, marking a significant milestone for the firm [10][11] - The company is committed to disciplined capital allocation, prioritizing organic growth and product innovation [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of ACV growth due to the strength of Pega's integration within clients' core operations [7][10] - The company anticipates continued acceleration in Pega Cloud revenue, projecting growth above 30% in 2026 [13][10] - Management highlighted the importance of transitioning from experimentation to execution in leveraging AI for business transformation [36][10] Other Important Information - The Supreme Court of Virginia affirmed a verdict that eliminated a $2 billion liability for the company, positively impacting its financial outlook [9][10] - The company has authorized an additional $1 billion in share buyback capacity, reflecting confidence in cash flow durability [11][10] Q&A Session Summary Question: What is the current deal environment and how is it affecting 2026 outlook? - Management noted that the Blueprint approach reduces friction in client engagement, leading to an advanced pipeline [40][41] Question: What gives confidence in achieving the 15% ACV growth target? - The company highlighted consistent growth rates and an expanding net retention rate, alongside successful targeting of new logos [44][45] Question: How is the app modernization journey progressing with Blueprint? - Management indicated significant interest from clients in app modernization, with expectations for success stories to emerge in the near future [66][10] Question: What is the status of the partnership with AWS? - The partnership is aligned on transforming legacy workflows, leveraging both AWS and Pega's tools for effective modernization [77][10]

Pegasystems Investor Presentation Q4 2025 NASDAQ: PEGA pegainvestorrelations@pega.com February 10, 2026 © Pegasystems Inc. Safe Harbor Statement Certain statements in this presentation may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including the size of the current and future market opportunity, growth of the business, and our 2026 guidance. Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, str ...

Product and Technology Innovation - Pega's platform for enterprise AI decisioning and workflow automation aims to enhance customer engagement and operational efficiency, targeting a market share increase through seamless integration across marketing, sales, service, operations, and IT [19]. - The introduction of Pega Customer Engagement Blueprint™, a GenAI powered tool, allows brands to visualize customer journeys and refine engagement strategies, leveraging AI for better marketing outcomes [20]. - Pega's Legacy Transformation solution helps organizations modernize operations and retire technical debt, reducing maintenance costs and accelerating time-to-value [23]. - Pega's Predictable AI™ enhances customer engagement, service, and workflow automation, resulting in improved operational efficiency and reduced costs [33]. - The company continuously expands its technology capabilities to deliver superior AI-based cloud-native solutions [52]. - The company is investing significantly in AI, including generative AI, to enhance its product offerings and maintain competitiveness [66]. Cloud Infrastructure and Services - The Pega Cloud infrastructure enables rapid development and deployment of applications, offering clients flexibility in managing their cloud architecture to meet security and budget requirements [36]. - The company emphasizes a multi-cloud approach, allowing clients to select the best cloud architecture for their specific application needs, enhancing speed-to-market and data access [36]. - Pega Cloud revenue grew by 33% year-over-year, reaching $866,612,000 in 2025 compared to $652,443,000 in 2024 [161]. - Pega Cloud revenue increased to $695.9 million in 2025, a 40% growth from $558.7 million in 2024, driven by expanded adoption by existing clients [170]. Financial Performance and Growth - The company reported a total revenue of $1,608,387,000 for the year ending December 31, 2025, representing a 17% increase from $1,371,518,000 in 2024 [161]. - The Annual Contract Value (ACV) increased to $1,608 million in 2025, up 17% from $1,372 million in 2024, with a constant currency ACV of $1,562 million reflecting a 14% increase [162]. - Subscription services revenue increased by 22% to $1,155,485,000 in 2025, up from $944,250,000 in 2024 [161]. - The company’s free cash flow for 2025 was reported at $505,227,000, reflecting a significant increase from $345,926,000 in 2024 [166]. - Total revenue for 2025 reached $1.75 billion, reflecting a 17% increase from $1.50 billion in 2024 [170]. - Gross profit for 2025 was $1.32 billion, with a gross profit margin of 76%, up from $1.11 billion and 74% in 2024 [172]. Employee and Talent Management - The company focuses on talent cultivation as a key pillar of its strategy, emphasizing continuous feedback and personalized development [59]. - The company has a competitive total rewards package designed to recognize performance and support employee well-being [57]. - The company had 5,598 employees as of January 30, 2026, distributed across the Americas (2,002), Europe (1,272), India (1,982), and Asia-Pacific (342) [54]. Market Position and Competition - The company faces intense competition from larger firms with greater resources, which may impact its market position [47]. - The company faces increased competition from major players like IBM, Microsoft, and Oracle, which have greater resources and may respond more quickly to market changes [84]. - Strategic partnerships with global systems integrators and technology firms enhance Pega's market reach and support scalable engagement through indirect channels [38]. Legal and Compliance Risks - The company is involved in ongoing litigation with Appian Corp., which could have significant financial implications depending on the outcome [87]. - The company must navigate various factors that could impede revenue from government contracts, including changes in funding and unfavorable contractual terms [106][110]. - Compliance with increasing data privacy laws globally has resulted in additional costs and challenges for the company [109][111]. - The company is subject to audits and inquiries by tax authorities, which could lead to adverse outcomes affecting financial results [112]. Cybersecurity and Data Protection - Cybersecurity risks are growing, with potential legal and financial liabilities from data breaches or cyber-attacks [91]. - The company has established a comprehensive cybersecurity program, including regular risk assessments and incident response planning [126][133]. - Pega Cloud maintains several security certifications, including FedRAMP High, ensuring compliance with government security standards [142]. - The company’s cybersecurity governance includes oversight from the Board and a dedicated Security and Quality Steering Group [143][144]. Financial Obligations and Capital Management - Total contractual obligations as of December 31, 2025, amounted to $494,013 thousand, with purchase obligations contributing $381,984 thousand [189]. - The company repaid $469.6 million in principal and interest on Notes that matured in March 2025 [184]. - A restructuring plan was initiated in 2025, resulting in a restructuring expense of approximately $13 million to align roles with an AI-first delivery model [176]. - The effective income tax rate for 2025 was -40%, primarily due to the release of the valuation allowance on net deferred tax assets [177]. Shareholder and Stock Performance - The company paid a quarterly cash dividend of $0.03 per share in 2025, equivalent to $0.06 per share prior to the stock split [152]. - A total of 2,092,000 shares were repurchased in the three months ended December 31, 2025, at an average price of $55.51 per share [153]. - The company’s stock was added to the S&P MidCap 400 Index during 2025, indicating a significant milestone in its market performance [156]. - Dividend payments to stockholders increased from $10,199 thousand in 2024 to $15,422 thousand in 2025, reflecting a significant growth [188].

EXHIBIT 99.1 EXHIBIT 99.1 (continued) "Our 2025 results reflect strong financial discipline, with top and bottom-line beats of our guidance and exceeding the Rule of 40," Pega COO & CFO, Ken Stillwell, said. "Our recurring business model and our technology leadership position us to continue to accelerate ACV growth, expand margins, and increase free cash flow." Financial and performance metrics (1) Refer to the schedules at the end of this release for additional information, including a reconciliation of GA ...

Core Insights - Pegasystems Inc. is a prominent developer of enterprise software applications for various industries, including financial services, healthcare, and government, with flagship products like Pega Platform and Pega Infinity aimed at enhancing customer engagement and digital process automation [1] Analyst Perspectives and Stock Performance - The consensus price target for Pegasystems has been revised down from $82 to $60, indicating growing caution among analysts regarding the stock's future performance [2] - Patrick Walravens from JMP Securities has an optimistic price target of $155, reflecting strong belief in the company's growth potential [2] - Despite a 34% decline in stock price, Pegasystems is approaching its Q4 earnings report, which may present a buying opportunity, although it has a Strong Sell quant rating due to valuation and momentum concerns [3] Operational Achievements and Comparative Analysis - Pegasystems has achieved ISO 9001:2015 certification for its Pega Cloud® quality management systems, demonstrating commitment to high operational standards and potentially boosting investor confidence [4] - In comparison to other technology sector companies like Unitronix, PTC, and Blackbaud, Pegasystems shows a promising growth outlook despite current market challenges [5] - The recent downward adjustment of the consensus price target reflects a cautious stance from analysts, yet some analysts still see significant growth potential for the company [5]