Core Viewpoint - Pegasystems (PEGA) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that could lead to increased stock prices [1][3]. Earnings Estimates and Stock Price Correlation - Changes in a company's future earnings potential, as reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [4]. - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, influencing their buying and selling decisions, which in turn affects stock prices [4]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings, ensuring that only the top 5% of stocks receive a 'Strong Buy' rating [9]. Pegasystems Earnings Outlook - Pegasystems is projected to earn $3.29 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 8.6% [8]. - Over the past three months, the Zacks Consensus Estimate for Pegasystems has risen by 7.5%, indicating a positive trend in earnings estimates [8]. Investment Implications - The upgrade to Zacks Rank 1 positions Pegasystems among the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - There is a common belief that legacy tech stocks, once they stop growing, may lose their relevance permanently, but this perception may not hold true in all cases [1] Group 1 - The article discusses the challenges faced by legacy tech stocks in maintaining growth and relevance in a rapidly evolving industry [1] - Gary Alexander, with extensive experience in both Wall Street and Silicon Valley, provides insights into the current themes shaping the technology sector [1]

Pegasystems Investor Presentation Q1 2025 NASDAQ: PEGA pegainvestorrelations@pega.com April 22, 2025 © 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. Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other simil ...

Pegasystems Inc. (NASDAQ:PEGA) Q1 2025 Earnings Conference Call April 23, 2025 8:00 AM ET Company Participants Peter Welburn - Vice President, Corporate Development and Investor Relations Alan Trefler - Founder and Chief Executive Officer Ken Stillwell - Chief Operating Officer and Chief Financial Officer Conference Call Participants Raimo Lenschow - Barclays Pinjalim Bora - JPMorgan Steve Enders - Citi Patrick Walravens - Citizens JMP Devin Au - KeyBanc Mark Schappel - Loop Capital Blair Abernethy - Rosenb ...

Financial Data and Key Metrics Changes - The company reported an annual contract value (ACV) increase of $74 million, representing over 13% year-over-year growth [28] - Free cash flow for Q1 was $2 million, a significant improvement compared to $1 million for the entire year of 2023 [31] - The Pega Cloud ACV growth rate was 23%, reaching $700 million, indicating strong performance in transitioning workloads to the cloud [30] Business Line Data and Key Metrics Changes - PegaGen AI Blueprint has become a central focus, enhancing client engagement and sales confidence, leading to a more efficient demonstration of Pega's capabilities [28] - The introduction of Blueprint for Government Efficiency Toolkit has expanded offerings for public sector clients [15] Market Data and Key Metrics Changes - The company noted a significant increase in the number of blueprints created, now exceeding 1,000 per week, more than double the previous months [14] - The current remaining performance obligation (RPO) growth was highlighted as a healthy indicator of long-term client commitments [85] Company Strategy and Development Direction - The company aims to leverage its unique architecture and AI capabilities to maintain a competitive advantage in the market [26] - Pega is focused on driving workloads onto Pega Cloud, with a strategic growth target of 20% or higher for Pega Cloud ACV [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for digital and legacy transformation solutions, despite macroeconomic uncertainties [55] - The company believes it is well-positioned to capitalize on the growing interest in AI-driven solutions while maintaining predictability and governance in its offerings [19][20] Other Important Information - The company achieved debt-free status by repaying $468 million in convertible notes, marking a significant milestone in its transformation journey [33] - PegaWorld is scheduled for June 1, showcasing innovations and product demonstrations [24] Q&A Session Summary Question: Factors behind term license outperformance and Pega Cloud revenue discrepancies - Management clarified that term license revenue can fluctuate significantly due to seasonality and accounting practices, and that ACV does not immediately convert to revenue [41][43] Question: Customer behavior in light of macroeconomic uncertainties - Management noted that while there is some anxiety, engagement levels with clients remain high, particularly around digital transformation initiatives [49][55] Question: Impact of Blueprint on ACV results - Management confirmed that Blueprint has influenced every piece of business, facilitating better collaboration between business and technical teams [80] Question: Changes in contract term lengths - Management indicated that the increase in term license revenue was due to timing rather than changes in contract durations [101] Question: Sales and marketing capacity for new customer opportunities - The company is planning to selectively invest in sales capacity to enhance engagement with new clients, leveraging the efficiencies gained from Blueprint [103]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________ FORM 10-Q _____________________________________ ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2025 OR ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 1-11859 ____________________________ PEGASYSTEMS INC. (Exact name of Registrant as specified in its charter) ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) Pegasystems Inc. reported accelerated Q1 2025 results, driven by Pega GenAI and its subscription model, with significant growth in key financial metrics and positive commentary from leadership [Q1 2025 Highlights](index=1&type=section&id=Q1%202025%20Highlights) Pegasystems Inc. reported accelerated Q1 2025 results, driven by Pega GenAI and the benefits of its subscription model, with significant growth across key financial indicators - Operating cash flow grew to **$204 million** and free cash flow grew to **$202 million** in Q1 2025, both increasing by **13% year over year**[7](index=7&type=chunk)[34](index=34&type=chunk) - Annual Contract Value (ACV) growth exceeded **13% year over year**, reaching **$1,445 million**[7](index=7&type=chunk)[6](index=6&type=chunk) - Pega Cloud ACV grew **23% year over year**, and total backlog grew **21% year over year**[7](index=7&type=chunk)[37](index=37&type=chunk)[43](index=43&type=chunk) [CEO and CFO Commentary](index=1&type=section&id=CEO%20and%20CFO%20Commentary) CEO Alan Trefler highlighted Pega GenAI's transformative impact on client engagement, while COO & CFO Ken Stillwell emphasized accelerated ACV growth and record free cash flow - Pega GenAI has dramatically transformed client engagement and enables clients to accelerate digital and legacy transformation goals[2](index=2&type=chunk) - The company accelerated ACV growth and delivered record free cash flow in Q1 2025, reflecting the benefits of the subscription model[2](index=2&type=chunk) - Operating as a 'Rule of 40' company allows a focus on accelerating profitable growth while thoughtfully returning capital to shareholders[2](index=2&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Pegasystems achieved substantial revenue growth, returned to GAAP net income, and saw significant increases in ACV and backlog in Q1 2025, reflecting strong operational performance [Key Financial Metrics](index=3&type=section&id=Key%20Financial%20Metrics) Pegasystems reported a significant increase in total revenue and a return to GAAP net income and diluted EPS in Q1 2025, alongside substantial growth in non-GAAP net income and EPS compared to Q1 2024 **Q1 2025 Key Financial Metrics (YoY Change):** | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :-------------------------------- | :-------- | :-------- | :----- | | Total revenue | $475,633 | $330,147 | 44 % | | Net income (loss) - GAAP | $85,422 | $(12,124) | * | | Net income - non-GAAP | $140,542 | $42,154 | 233 % | | Diluted earnings (loss) per share - GAAP (per share) | $0.91 | $(0.14) | * | | Diluted earnings per share - non-GAAP (per share) | $1.53 | $0.48 | 219 % | [Revenue Breakdown](index=4&type=section&id=Revenue%20Breakdown) Total revenue for Q1 2025 increased by 44% year-over-year, primarily driven by a 195% surge in subscription license revenue and a 15% increase in Pega Cloud revenue **Q1 2025 Revenue by Type (YoY Change):** | Revenue Type | Q1 2025 (in thousands) | % of Total (2025) | Q1 2024 (in thousands) | % of Total (2024) | Change (in thousands) | % Change | | :------------------ | :--------------------- | :---------------- | :--------------------- | :---------------- | :-------------------- | :------- | | Pega Cloud | $151,123 | 32 % | $130,902 | 40 % | $20,221 | 15 % | | Maintenance | $76,368 | 16 % | $81,001 | 24 % | $(4,633) | (6)% | | Subscription services | $227,491 | 48 % | $211,903 | 64 % | $15,588 | 7 % | | Subscription license | $186,555 | 39 % | $63,338 | 19 % | $123,217 | 195 % | | **Subscription (Total)** | **$414,046** | **87 %** | **$275,241** | **83 %** | **$138,805** | **50 %** | | Consulting | $60,421 | 13 % | $54,047 | 17 % | $6,374 | 12 % | | Perpetual license | $1,166 | — % | $859 | — % | $307 | 36 % | | **Total revenue** | **$475,633** | **100 %** | **$330,147** | **100 %** | **$145,486** | **44 %** | [Annual Contract Value (ACV)](index=1&type=section&id=Annual%20Contract%20Value%20(ACV)) Total Annual Contract Value (ACV) grew by 13% year-over-year to $1,445 million as of March 31, 2025, primarily driven by a 23% increase in Pega Cloud ACV **Annual Contract Value (ACV) (YoY Change):** | Metric | March 31, 2025 (in millions) | March 31, 2024 (in millions) | 1-Year Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------ | | ACV | $1,445 | $1,273 | 13 % | | Constant currency ACV | $1,445 | $1,273 | 13 % | **ACV by Type (YoY Change):** | ACV Type | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | % Change | Constant Currency % Change | | :------------------ | :---------------------------- | :---------------------------- | :-------------------- | :------- | :------------------------- | | Pega Cloud | $701,311 | $570,356 | $130,955 | 23 % | 23 % | | Maintenance | $298,422 | $313,550 | $(15,128) | (5)% | (5)% | | Subscription services | $999,733 | $883,906 | $115,827 | 13 % | 13 % | | Subscription license | $445,677 | $389,431 | $56,246 | 14 % | 14 % | | **Total ACV** | **$1,445,410** | **$1,273,337** | **$172,073** | **13 %** | **13 %** | - ACV represents the annualized value of active contracts as of the measurement date, calculated by dividing the contract's total value by its duration in years[36](index=36&type=chunk) [Backlog](index=12&type=section&id=Backlog) Total remaining performance obligations (backlog) increased by 21% year-over-year to $1,728 million as of March 31, 2025, with Pega Cloud constituting the largest portion **Total Backlog (YoY Change):** | Metric | March 31, 2025 (in millions) | March 31, 2024 (in millions) | 1 Year Growth Rate | | :-------------------- | :--------------------------- | :--------------------------- | :----------------- | | Backlog - GAAP | $1,728 | $1,425 | 21 % | | Constant currency backlog | $1,723 | $1,425 | 21 % | **Backlog by Type and Duration (March 31, 2025):** | Duration | Pega Cloud (in thousands) | Maintenance (in thousands) | Subscription license (in thousands) | Perpetual license (in thousands) | Consulting (in thousands) | Total (in thousands) | % of Total | | :--------------- | :--------- | :---------- | :------------------- | :---------------- | :--------- | :---------- | :--------- | | 1 year or less | $572,341 | $229,180 | $33,202 | $317 | $45,320 | $880,360 | 50 % | | 1-2 years | $331,572 | $73,500 | $3,718 | — | $2,291 | $411,081 | 24 % | | 2-3 years | $161,259 | $37,779 | $731 | — | $144 | $199,913 | 12 % | | Greater than 3 years | $185,939 | $43,939 | $7,215 | — | $52 | $237,145 | 14 % | | **Total** | **$1,251,111** | **$384,398** | **$44,866** | **$317** | **$47,807** | **$1,728,499** | **100 %** | | **% of Total** | **72 %** | **22 %** | **3 %** | **— %** | **3 %** | **100 %** | | **Backlog Change since March 31, 2024 (in thousands):** | Pega Cloud (in thousands) | Maintenance (in thousands) | Subscription license (in thousands) | Perpetual license (in thousands) | Consulting (in thousands) | Total (in thousands) | % Change | | :--------- | :---------- | :------------------- | :---------------- | :--------- | :---------- | :------- | | $259,998 | $39,238 | $(2,128) | $(2,410) | $9,059 | $303,757 | 21 % | | 26 % | 11 % | (5)% | (88)% | 23 % | 21 % | | [Consolidated Financial Statements (GAAP)](index=7&type=section&id=Consolidated%20Financial%20Statements%20(GAAP)) Pegasystems reported a strong financial turnaround in Q1 2025 with increased revenue, a return to operating and net income, and improved cash flow from operations, despite a decrease in total assets due to debt repayment [Statements of Operations](index=7&type=section&id=Statements%20of%20Operations) For Q1 2025, Pegasystems reported total revenue of $475.6 million, a gross profit of $373.2 million, and income from operations of $127.0 million, a significant improvement from an operating loss in the prior year **Condensed Consolidated Statements of Operations (Three Months Ended March 31, in thousands):** | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Total revenue | $475,633 | $330,147 | | Total cost of revenue | $102,450 | $94,658 | | Gross profit | $373,183 | $235,489 | | Total operating expenses | $246,194 | $255,901 | | Income (loss) from operations | $126,989 | $(20,412) | | Income (loss) before provision for income taxes | $126,310 | $(15,162) | | Provision for (benefit from) income taxes | $40,888 | $(3,038) | | Net income (loss) | $85,422 | $(12,124) | | Diluted earnings (loss) per share (per share) | $0.91 | $(0.14) | [Balance Sheets](index=8&type=section&id=Balance%20Sheets) As of March 31, 2025, total assets decreased to $1,322.0 million from $1,768.3 million at December 31, 2024, primarily due to a reduction in cash and marketable securities and the repayment of convertible senior notes **Condensed Consolidated Balance Sheets (as of, in thousands):** | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :--------------- | :---------------- | | Total cash, cash equivalents, and marketable securities | $371,736 | $739,973 | | Total current assets | $846,492 | $1,333,704 | | Total assets | $1,321,950 | $1,768,273 | | Convertible senior notes, net | — | $467,470 | | Total current liabilities | $609,136 | $1,086,058 | | Total liabilities | $710,681 | $1,182,793 | | Total stockholders' equity | $611,269 | $585,480 | [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) Cash provided by operating activities increased by 13% to $204.2 million in Q1 2025, though the company experienced a net decrease in cash due to significant financing activities **Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in thousands):** | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Net income (loss) | $85,422 | $(12,124) | | Cash provided by operating activities | $204,228 | $180,146 | | Cash provided by (used in) investing activities | $261,895 | $(132,399) | | Cash (used in) provided by financing activities | $(575,986) | $17,899 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(106,293) | $62,843 | | Cash, cash equivalents, and restricted cash, end of period | $235,236 | $295,670 | [Non-GAAP Financial Measures Reconciliation](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Pegasystems demonstrated significant non-GAAP net income and EPS growth in Q1 2025, providing a clearer view of core operating performance by adjusting for non-recurring and non-cash items [Net Income and EPS Reconciliation](index=9&type=section&id=Net%20Income%20and%20EPS%20Reconciliation) Non-GAAP net income increased by 233% to $140.5 million, and non-GAAP diluted EPS increased by 219% to $1.53 in Q1 2025, primarily due to adjustments for stock-based compensation and other non-recurring items **Reconciliation of GAAP and Non-GAAP Net Income and EPS (Three Months Ended March 31, in thousands, except per share amounts):** | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :--------- | :--------- | :----- | | Net income (loss) - GAAP | $85,422 | $(12,124) | * | | Stock-based compensation | $41,425 | $34,781 | | | Restructuring | $11 | $163 | | | Legal fees | $6,544 | $1,942 | | | Litigation settlement, net of recoveries | — | $32,403 | | | Amortization of intangible assets | $701 | $964 | | | Interest on convertible senior notes | $394 | $617 | | | Capped call transactions | $223 | $(3,299) | | | Foreign currency transaction loss | $5,325 | $3,262 | | | Other | $(751) | $(1,628) | | | Income taxes | $1,248 | $(14,927) | | | **Net income - non-GAAP** | **$140,542** | **$42,154** | **233 %** | | Diluted earnings (loss) per share - GAAP (per share) | $0.91 | $(0.14) | * | | non-GAAP adjustments (per share) | $0.62 | $0.62 | | | **Diluted earnings per share - non-GAAP (per share)** | **$1.53** | **$0.48** | **219 %** | [Free Cash Flow Reconciliation](index=11&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free cash flow increased by 13% year-over-year to $202.3 million in Q1 2025, calculated by subtracting investments in property and equipment from cash provided by operating activities **Reconciliation of Free Cash Flow (Three Months Ended March 31, in thousands):** | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Cash provided by operating activities | $204,228 | $180,146 | 13 % | | Investment in property and equipment | $(1,880) | $(604) | | | **Free cash flow** | **$202,348** | **$179,542** | **13 %** | [Explanation of Non-GAAP Adjustments](index=5&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) Pegasystems uses non-GAAP financial measures to provide investors with a clearer understanding of its core operating results, excluding the impact of often one-time charges and other items outside normal operations - Non-GAAP financial measures help investors understand core operating results and prospects, consistent with how management measures performance without the effect of often one-time charges and other items outside normal operations[13](index=13&type=chunk) - Key non-GAAP adjustments include stock-based compensation, restructuring, legal fees, litigation settlement, amortization of intangible assets, interest on convertible senior notes, capped call transactions, foreign currency transaction loss, and other venture investment gains/losses[30](index=30&type=chunk)[32](index=32&type=chunk) - The non-GAAP income tax rate is determined using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets, to align with the annual plan's effective income tax rate[31](index=31&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) This section provides details on the Q1 2025 conference call, outlines forward-looking statements and associated risks, offers an overview of Pegasystems' business, and lists contact information [Quarterly Conference Call](index=5&type=section&id=Quarterly%20Conference%20Call) Pegasystems will host a conference call and audio-only webcast on Wednesday, April 23, 2025, at 8:00 a.m. EDT to discuss the Q1 2025 financial results - A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Wednesday, April 23, 2025[11](index=11&type=chunk) - Participants can join by dialing 1 (800) 715-9871 (domestic) or 1 (646) 307-1963 (international) using Conference ID 5846616[12](index=12&type=chunk) - The webcast is accessible via https://events.q4inc.com/attendee/866591284 or the Investors section of www.pega.com[12](index=12&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties, and investors are cautioned not to place undue reliance on them as the company does not undertake to update these statements - Certain statements in this press release are 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995, identified by words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, projects, forecasts, guidance, likely, and usually[14](index=14&type=chunk)[15](index=15&type=chunk) - These statements represent views as of April 22, 2025, based on current expectations and assumptions, and are subject to difficult-to-predict risks and uncertainties[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - Risks include intellectual property rights, future financial performance, liquidity, AI investment execution, dividend payments, revenue recognition, demand variation, reliance on key personnel/third parties, debt obligations, foreign currency, cyber-attacks, security breaches, ongoing litigation (Appian Corp.), client retention, and growth management[16](index=16&type=chunk)[19](index=19&type=chunk) [About Pegasystems](index=6&type=section&id=About%20Pegasystems) Pegasystems Inc. is 'The Enterprise Transformation Company' that helps organizations 'Build for Change' with enterprise AI decisioning and workflow automation, serving influential businesses since 1983 - Pega is 'The Enterprise Transformation Company' that helps organizations 'Build for Change®' with enterprise AI decisioning and workflow automation[20](index=20&type=chunk) - Many influential businesses rely on Pega's platform to solve challenges from personalizing engagement to automating service and streamlining operations[20](index=20&type=chunk) - Since 1983, Pega has built a scalable and flexible architecture to help enterprises meet current customer demands while continuously transforming for tomorrow[20](index=20&type=chunk) [Contacts](index=6&type=section&id=Contacts) Contact information for press and investor relations is provided - Press contact: Lisa Pintchman, VP, Corporate Communications, lisapintchman.rogers@pega.com, 617-866-6022[21](index=21&type=chunk) - Investor contact: Peter Welburn, VP, Corporate Development & Investor Relations, PegaInvestorRelations@pega.com, 617-498-8968[21](index=21&type=chunk)

Core Viewpoint - Pegasystems (PEGA) is expected to report quarterly earnings of $0.46 per share, reflecting a 4.2% decline year-over-year, while revenues are forecasted to increase by 7.8% to $356 million [1] Earnings Estimates - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock performance [2] Key Metrics Projections - Analysts estimate 'Revenue- Subscription services' will reach $238.52 million, a 12.6% increase from the prior-year quarter [4] - 'Revenue- Subscription license' is projected at $62.49 million, indicating a 1.3% decline year-over-year [4] - Total 'Revenue- Subscription' is expected to be $301.01 million, reflecting a 9.4% increase from the previous year [4] - 'Revenue- Consulting' is estimated at $54.84 million, showing a 1.5% year-over-year increase [5] - 'Gross Profit- Subscription services' is forecasted at $196.25 million, up from $176.08 million in the same quarter last year [5] - 'Gross Profit- Subscription' is expected to be $259.15 million, compared to $238.77 million a year ago [6] - 'Gross Profit- Subscription license' is projected at $62.90 million, slightly up from $62.70 million in the same quarter last year [6] Stock Performance - Pegasystems shares have declined by 6.2% over the past month, underperforming the Zacks S&P 500 composite, which decreased by 5.6% [7] - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [7]

Core Viewpoint - The recommendation for Pegasystems (NASDAQ: PEGA) is a buy, driven by positive developments in its Blueprint and AgentX products, which are experiencing strong early adoption, alongside a transition to Pega Cloud [1]. Company Analysis - Pegasystems is positioned favorably due to its innovative products and the shift towards cloud solutions, indicating potential for scalability and long-term value creation [1]. - The investment approach emphasizes understanding the core economics of Pegasystems, including its competitive advantages, unit economics, and management quality, which are crucial for generating long-term free cash flow [1]. Investment Strategy - The focus is on fundamental research within sectors that exhibit strong secular tailwinds, suggesting a strategic alignment with growth opportunities in the technology sector [1]. - The analysis aims to provide insights that help investors concentrate on factors that drive long-term equity value, enhancing the understanding of investment opportunities in Pegasystems [1].

Financial Performance Highlights - Total Annual Contract Value (ACV) grew by 9% year-over-year, reaching $1372 million[5], or 11% in constant currency[5] - Pega Cloud ACV experienced significant growth of 18% year-over-year, reaching $652 million[5], or 21% in constant currency[6] - Operating cash flow increased by 59% to $346 million[6][9] - Free cash flow increased by 68% to $338 million[6][10] - Total revenue increased by 5% to $1497180 thousand[11] Revenue Breakdown - Pega Cloud revenue increased by 21% to $558734 thousand[11] - Subscription revenue increased by 7% to $1280140 thousand[11] Profitability - GAAP net income increased by 46% to $99189 thousand[11] - Non-GAAP net income increased by 29% to $270542 thousand[11] Backlog - Total backlog increased by 11% to $1623492 thousand[47] - Subscription services backlog increased by 17% to $1127159 thousand[47] 2025 Guidance - The company projects ACV growth of 12%[6][13] - Revenue is projected to be $1600 million[13][52] - Free cash flow is projected to be $440 million[6][13][52]