Financial Data and Key Metrics Changes - Pegasystems achieved total revenue of over $1 billion for the first time, growing from $911 million in 2019 to $1.02 billion in 2020, representing a 12% year-over-year increase [28][30] - Subscription revenue grew by 26% in 2020, indicating strong demand for recurring revenue models [23][27] - Pega Cloud revenue increased by 56%, from $134 million in 2018 to $208 million in 2020 [27] - The company reported a total annual contract value (ACV) growth of 21%, reaching $835 million [25] - Remaining performance obligation (backlog) grew by 28% year-over-year, exceeding $1 billion for the first time, increasing from $836 million to $1.07 billion [26] Business Line Data and Key Metrics Changes - Pega Cloud annual contract value grew by 57% year-over-year, from $169 million in 2019 to $267 million in 2020 [25] - The transition to a recurring revenue model has seen perpetual licenses decrease from about 10% of new client commitments in 2019 to about 5% in 2020 [25] - The company completed the move of Pega Cloud clients onto a next-generation cloud platform, setting the stage for long-term margin improvements [7] Market Data and Key Metrics Changes - The company noted strong demand for digital transformation solutions, which have become central to clients' strategies for survival and growth [12] - Pega's solutions are increasingly recognized by industry analysts, maintaining technology leadership in areas such as CRM and intelligent automation [10] Company Strategy and Development Direction - Pegasystems is focused on enhancing its partner ecosystem and brand awareness to drive revenue and margin growth [9] - The company is committed to a multi-year cloud transition, aiming to achieve a recurring revenue model and improve operational efficiency [22] - The introduction of new solutions and enhancements to existing products is aimed at addressing both short-term and long-term client needs [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning to support clients' digital transformation needs, emphasizing the importance of adaptability in a changing environment [18] - The company anticipates continued growth in key metrics for 2021, projecting total revenue of $1.25 billion, a 23% increase year-over-year [29] Other Important Information - Pegasystems celebrated its $1 billion revenue milestone and plans to hold its annual customer conference, PegaWorld iNspire, on May 4 [11][30] - The company has made significant investments in sales and marketing to enhance its market presence and attract top talent [9][21] Q&A Session Summary Question: Can you provide insights on cloud mix in Q4 and its impact on top-line results? - Management noted that Pega Cloud typically represents about 50% of new client commitments, but this may skew lower in Q4 due to year-end budget spending [34][36] Question: What updates can you provide on Project Phoenix and its functionalities? - Management highlighted improvements in cloud margins and the ability to innovate faster through microservices, enhancing customer options [37][38] Question: How is the partner ecosystem progressing and what new logo wins are being generated? - The company reported a significant increase in partner-sourced deals and emphasized the importance of partnerships in driving growth [42][45] Question: Can you provide updates on the process fabric and its customer feedback? - Management indicated positive reception from customers using the process fabric, which integrates work across multiple systems [50] Question: What are the expectations for future cloud gross margin expansion? - Management expects cloud gross margins to improve through scale and operational efficiencies, aiming for margins above 70% [71]

Part I [Business](index=4&type=section&id=Item%201.%20Business) Pegasystems develops enterprise software for customer engagement and digital process automation, transitioning to a subscription model - The company is transitioning its business to a subscription model, particularly Pega Cloud, which is anticipated to be substantially complete in early 2023, potentially causing lower interim revenue and operating cash flow growth[15](index=15&type=chunk) - As of December 31, 2020, the company's backlog of contracted revenue to be recognized in future periods was approximately **$1.1 billion**[50](index=50&type=chunk) - As of January 31, 2021, the company had **5,776 employees** globally, with the majority based in the Americas and India[51](index=51&type=chunk) - On February 12, 2021, the company agreed to vacate its Cambridge, MA headquarters by October 1, 2021, for a payment of **$18 million** and plans to lease a new facility in the greater Boston area[20](index=20&type=chunk) [Our Products and Capabilities](index=5&type=section&id=Our%20Products%20and%20Capabilities) Pega Infinity™ offers a software portfolio for customer engagement and intelligent automation, leveraging a unique "Center-out Business™ Architecture" - Pega Infinity™ is the latest software portfolio, designed to connect enterprises with customers in real-time and streamline business operations[23](index=23&type=chunk) - The Pega Customer Decision Hub™ acts as a real-time AI engine to predict customer behavior and recommend the 'next best action' across various channels[23](index=23&type=chunk) - The company's 'Center-out Business™ Architecture' is a key differentiator, enabling clients to centralize business logic and intelligence, separate from front-end channels and back-end systems, for greater agility and consistency[26](index=26&type=chunk) [Our Markets and Competition](index=7&type=section&id=Our%20Markets%20and%20Competition) Pegasystems targets Global 3000 and government clients in competitive markets, differentiating with its unified platform and industry expertise - Target clients are Global 3000 organizations and government agencies in industries like financial services, healthcare, insurance, and communications[37](index=37&type=chunk)[39](index=39&type=chunk)[46](index=46&type=chunk) - The company competes with some of the world's largest software companies, including Salesforce.com, Microsoft Corporation, Oracle Corporation, SAP SE, ServiceNow, and IBM[43](index=43&type=chunk) - Pega's competitive differentiation lies in its unified platform that allows business and IT users to build and evolve applications quickly, contrasting with the disjointed tools offered by many competitors[44](index=44&type=chunk) [Our People](index=9&type=section&id=Our%20People) Pegasystems employs 5,776 people globally, focusing on an inclusive, diverse culture, pay equity, and extensive employee development - The company has a strong focus on building an inclusive and diverse culture, with formal resource groups for women, veterans, and members of the black and LGBTQIA+ communities[54](index=54&type=chunk) - Pegasystems is committed to pay equity, regularly reviewing compensation practices to ensure fairness regardless of gender, race, or other personal characteristics[56](index=56&type=chunk) - In 2020, over **90% of employees** participated in a formal education program, highlighting the company's investment in employee development[57](index=57&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from its subscription model transition, intense competition, key personnel, cybersecurity, debt, and global economic uncertainties - The transition to a subscription-based business model poses risks of fluctuating revenues and cash flows, potentially decreased profitability, and challenges in maintaining client renewal rates[62](index=62&type=chunk)[64](index=64&type=chunk) - The company faces significant competition from larger rivals like Salesforce.com, Microsoft, Oracle, and IBM, which have greater financial and marketing resources[84](index=84&type=chunk) - The CEO beneficially owned **49% of outstanding common stock** as of December 31, 2020, giving him significant influence over stockholder matters, which could deter a change in control[86](index=86&type=chunk) - The company has **$600 million** in aggregate principal amount of Convertible Senior Notes due 2025, which introduces risks related to debt service, potential dilution, and financial covenants[93](index=93&type=chunk) - The global COVID-19 pandemic poses risks that could adversely affect sales cycles, client IT spending, and operational activities, with the full impact remaining uncertain[116](index=116&type=chunk)[119](index=119&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[127](index=127&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) The company operates from leased facilities globally, with its Cambridge headquarters relocating by October 2021 for an $18 million payment - All of the company's properties are leased, with principal locations in Cambridge, MA and Hyderabad, India[128](index=128&type=chunk) - The company will vacate its Cambridge, MA headquarters on October 1, 2021, in exchange for an **$18 million** payment and intends to lease a new facility in the greater Boston area[128](index=128&type=chunk) [Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, which can materially impact operations due to costs and diverted resources - The company is subject to legal proceedings from time to time in the ordinary course of business[130](index=130&type=chunk) [Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[131](index=131&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) PEGA common stock trades on NASDAQ, with 48 stockholders of record, paying a $0.03 quarterly dividend, and conducting stock repurchases - The company paid a quarterly cash dividend of **$0.03 per share** in 2020, 2019, and 2018[134](index=134&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased (in thousands) | Average Price Paid per Share | Value of Shares Remaining for Repurchase ($ in thousands) | | :--- | :--- | :--- | :--- | | Oct 2020 | 37 | $125.97 | $43,873 | | Nov 2020 | 105 | $123.82 | $41,024 | | Dec 2020 | 138 | $128.76 | $37,726 | | **Total** | **280** | **$126.54** | **$37,726** | Stock Performance Comparison (2015-2020) | Year | Pegasystems Inc. | NASDAQ Composite | S&P NA Tech Software | | :--- | :--- | :--- | :--- | | 2015 | $100.00 | $100.00 | $100.00 | | 2016 | $131.46 | $108.87 | $106.20 | | 2017 | $172.58 | $141.13 | $151.66 | | 2018 | $175.44 | $137.12 | $170.83 | | 2019 | $292.66 | $187.44 | $229.93 | | 2020 | $490.22 | $271.64 | $349.26 | [Selected Financial Data](index=24&type=section&id=Item%206.%20Selected%20Financial%20Data) The company has omitted this section, consistent with new SEC rules eliminating Item 301 of Regulation S-K - The company has elected early adoption of the SEC's elimination of Item 301 of Regulation S-K, and therefore has not presented selected financial data[141](index=141&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, emphasizing the subscription transition, 12% revenue growth to $1.02 billion, strong ACV and Backlog, an operating loss, and enhanced liquidity Key Performance Metrics (as of Dec 31, 2020) | Metric | Value/Change | Note | | :--- | :--- | :--- | | Annual Contract Value (ACV) | Increased **21%** since Dec 31, 2019 | Represents the annualized value of active contracts | | Backlog | Increased **28%** since Dec 31, 2019 | Represents contracted revenue not yet recognized | | Pega Cloud Revenue | Increased **56%** since 2019 | GAAP revenue for cloud contracts | [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenue grew 12% to $1.02 billion in 2020, driven by subscription revenue growth and Pega Cloud, while operating expenses increased due to headcount Revenue by Type (2020 vs. 2019) | Revenue Type | 2020 ($ in thousands) | 2019 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Pega Cloud | $208,268 | $133,746 | 56% | | Maintenance | $296,709 | $280,580 | 6% | | Term license | $266,352 | $199,433 | 34% | | **Subscription Total** | **$771,329** | **$613,759** | **26%** | | Perpetual license | $28,558 | $80,015 | (64)% | | Consulting | $217,630 | $217,609 | 0% | | **Total Revenue** | **$1,017,517** | **$911,383** | **12%** | Gross Profit by Segment (2020 vs. 2019) | Segment | 2020 ($ in thousands) | 2019 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Software license | $291,982 | $275,792 | 6% | | Maintenance | $274,398 | $254,924 | 8% | | Pega Cloud | $131,693 | $67,918 | 94% | | Consulting | $8,531 | $2,727 | 213% | | **Total Gross Profit** | **$706,604** | **$601,361** | **18%** | - Operating expenses increased across all categories in 2020, with Selling and marketing up **15%**, Research and development up **15%**, and General and administrative up **19%**, primarily due to increased headcount and compensation[158](index=158&type=chunk)[159](index=159&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly strengthened to $465.2 million in 2020, driven by $533.6 million from convertible notes, with minimal cash used in operations Cash Flow Summary (2020 vs. 2019) | Cash Flow Activity ($ in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Operating activities | $(563) | $(42,165) | | Investing activities | $(321,683) | $70,074 | | Financing activities | $423,448 | $(74,258) | - In February 2020, the company issued **$600 million** in convertible senior notes due 2025, receiving net proceeds of **$533.6 million** after issuance costs and the purchase of Capped Call Transactions[172](index=172&type=chunk)[298](index=298&type=chunk) Contractual Obligations as of Dec 31, 2020 | Obligation Type ($ in thousands) | Total | Payments Due in 2021 | | :--- | :--- | :--- | | Convertible senior notes | $619,488 | $4,500 | | Purchase obligations | $125,281 | $59,685 | | Operating lease obligations | $87,624 | $22,164 | | **Total** | **$837,573** | **$86,849** | [Critical Accounting Estimates and Significant Judgments](index=31&type=section&id=Critical%20Accounting%20Estimates%20and%20Significant%20Judgments) Management identifies critical accounting estimates in revenue recognition, goodwill and intangible asset impairment, income taxes, and the complex accounting for convertible senior notes - Significant judgment is required for revenue recognition, including identifying distinct performance obligations and allocating transaction prices based on relative stand-alone selling prices, for which the company often uses the residual approach for software licenses and Pega Cloud arrangements[183](index=183&type=chunk)[185](index=185&type=chunk) - Goodwill and intangible assets (**$79.2 million** and **$15.7 million** respectively as of Dec 31, 2020) are tested for impairment at least annually, requiring management to make assumptions about future performance[187](index=187&type=chunk)[189](index=189&type=chunk) - Accounting for the convertible senior notes required separating the instrument into liability and equity components and valuing the related Capped Call Transactions as derivatives, which involved significant estimates for inputs like credit spreads and volatility[196](index=196&type=chunk)[197](index=197&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is foreign currency fluctuations, impacting financial results through translation and remeasurement risks Impact of a Hypothetical 10% Strengthening in the U.S. Dollar | Impact On | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Revenue | (4)% | (4)% | (4)% | | Net Income | 12% | (7)% | (1)% | - The company is primarily exposed to remeasurement risk from monetary assets and liabilities denominated in Australian dollars, Euros, and U.S. dollars held by its U.K. subsidiary, which has a British pound functional currency[203](index=203&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2018-2020, including balance sheets, income statements, and cash flow statements, with detailed notes Consolidated Balance Sheet Highlights (as of Dec 31) | Account ($ in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $1,604,262 | $984,812 | | Total Liabilities | $1,062,090 | $445,802 | | Total Stockholders' Equity | $542,172 | $539,010 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Account ($ in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total Revenue | $1,017,517 | $911,383 | $891,581 | | Gross Profit | $706,604 | $601,361 | $589,816 | | (Loss) from Operations | $(143,527) | $(134,878) | $(17,032) | | Net (Loss) Income | $(61,373) | $(90,433) | $10,617 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[369](index=369&type=chunk) [Controls and Procedures](index=61&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[370](index=370&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[372](index=372&type=chunk) [Other Information](index=61&type=section&id=Item%209B.%20Other%20Information) The company executed a Lease Termination Agreement for its Cambridge headquarters, effective October 1, 2021, for an $18 million payment - On February 12, 2021, the company executed an agreement to terminate its Cambridge, MA headquarters lease effective October 1, 2021, in exchange for an **$18 million** payment[374](index=374&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees](index=62&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for Items 10 through 14, covering governance, compensation, and related matters, is incorporated by reference from the 2021 proxy statement - Information for Part III (Items 10-14) is incorporated by reference from the company's 2021 proxy statement[377](index=377&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=63&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits filed with the Form 10-K, with all financial statement schedules omitted - This section contains the list of financial statements and exhibits filed with the Form 10-K[384](index=384&type=chunk)[385](index=385&type=chunk) - All financial statement schedules were omitted because the required information was not present or was included in the consolidated financial statements or notes[387](index=387&type=chunk) [Form 10-K Summary](index=64&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has opted to omit the Form 10-K summary - Omitted at Registrant's option[388](index=388&type=chunk)

Pegasystems Inc. (NASDAQ:PEGA) Q3 2020 Earnings Conference Call October 28, 2020 5:00 PM ET Company Participants Ken Stillwell - CFO Alan Trefler - Founder and CEO Conference Call Participants Jack Andrews - Needham Mark Murphy - JP Morgan Mohit Gogia - Barclays Yun Kim - Capital Partners Rishi Jaluria - D.A. Davidson Steve Enders - KeyBanc Operator Good day and welcome to the Pegasystems' Third Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn t ...

Pegasystems Inc. (NASDAQ:PEGA) Q2 2020 Earnings Conference Call July 28, 2020 5:00 PM ET Corporate Participants Ken Stillwell - Chief Financial Officer Alan Trefler - Founder and Chief Executive Officer Conference Call participants Rishi Jaluria - D.A. Davidson Chris Merwin - Goldman Sachs Steve Enders - KeyBanc Mohit Gogia - Barclays Yun Kim - Rosenblatt Securities Mark Schappel - Benchmark Steve Koenig - SMBC Nikko Operator Good day ladies and gentlemen, and welcome to the Pegasystems' Second Quarter 2020 ...

Financial Data and Key Metrics Changes - Total Annual Contract Value (ACV) increased by 21% year-over-year, reaching $711 million, up from $588 million in Q1 2019 [40] - Pega Cloud ACV grew by 43%, from $127 million to $182 million [40] - Total revenue for Q1 2020 was $266 million, a 25% increase from $213 million in Q1 2019, driven by a 57% increase in cloud revenue [42] - Non-GAAP net income was $0.05 per share compared to a net loss of $0.12 per share a year ago [43] - Total cash and marketable securities at the end of Q1 2020 was $538 million [44] Business Line Data and Key Metrics Changes - Approximately 95% of new client commitments were either Pega or client cloud, with about 5% being perpetual licenses [42] - Pega Cloud backlog increased by 18% from $351 million to $414 million [41] - Total backlog increased by 19% from $633 million to $754 million [41] Market Data and Key Metrics Changes - Core verticals such as financial services, insurance, healthcare, telecommunications, and government are less exposed to the pandemic's short-term impacts compared to industries like airlines and retail [37] - The company has a strong customer base consisting of large enterprises and federal government clients, which helps mitigate exposure to economic downturns [37] Company Strategy and Development Direction - The company is focused on a shift to a recurring revenue model, which has increased from about 50% to 75% [35] - The introduction of new industry-specific solutions to help clients adapt to COVID-19 while supporting long-term business transformation initiatives [12] - The company is positioning its core architecture for future needs through Project Phoenix, anticipating increased demand for digital transformation solutions [25][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the pandemic's impact but remains confident in the company's resilience and ability to navigate challenges [32][36] - There is an expectation for increased demand for intelligent automation and digital transformation solutions in a post-COVID-19 world [47] - The company is monitoring client spending priorities and is prepared to offer flexibility in payment terms [49] Other Important Information - The company announced the appointment of Hayden Stafford as President of Global Client Engagement, effective June 1, 2020 [21] - The first virtual customer engagement summit had over 4,700 registered participants, indicating strong interest in the company's offerings [23] Q&A Session Summary Question: Thoughts on ACV growth despite potential booking declines - Management indicated that while there may be short-term impacts on professional services, the recurring revenue model provides insulation against immediate revenue declines [60][62] Question: Impact of bookings on ACV growth - Management stated that even with a reduction in bookings, ACV could still grow, but significant reductions would hinder achieving the long-term target of 20% growth [65] Question: Customer requests for extended payment terms - Management noted that while some customers may request delayed payment terms, it is not widespread among their traditional clients [71] Question: Pipeline generation and deal delays - Management reported a significant increase in new pipeline generation year-over-year, despite some deals being delayed [85] Question: Key initiatives for new leadership - The new President is expected to accelerate the company's go-to-market strategy and leverage his experience in growing businesses [88]

Pegasystems Inc. (NASDAQ:PEGA) Q4 2019 Earnings Conference Call February 12, 2020 5:00 PM ET Company Participants Kenneth Stillwell - SVP, CFO & Chief Administrative Officer Alan Trefler - Founder & CEO Conference Call Participants Rishi Jaluria - D.A. Davidson Steve Koenig - Wedbush Securities Yun Kim - Rosenblatt Securities Mark Schappel - Benchmark Steve Enders - KeyBanc Operator Good day, everyone and welcome to the Pegasystems' Fourth Quarter 2019 Earnings Results Conference Call. Today's call is being ...

Financial Data and Key Metrics Changes - Total Annual Contract Value (ACV) reached $634 million, an increase of $106 million or 20% year-over-year [27] - Pega Cloud ACV grew by 51% during the same period [27] - Revenue for the first three quarters of 2019 totaled $635 million, effectively flat compared to the same period in 2018 [32] - Pega Cloud revenue increased by 63% to $95 million, while maintenance revenue grew by 6% to $207 million [34] Business Line Data and Key Metrics Changes - Consulting revenue decreased by approximately 15% to $167 million, attributed to a strategic shift towards partners for implementation efforts [35] - Pega Cloud backlog increased by $100 million to $363 million, a 38% increase year-over-year [29] - Total Remaining Performance Obligation (RPO) rose by $86 million to $609 million, a 17% increase compared to the previous year [29] Market Data and Key Metrics Changes - The government sector is experiencing significant growth, with Pega winning new business in various government departments [15][18] - There is a notable increase in demand for digital transformation solutions, particularly in the public sector [39] Company Strategy and Development Direction - The company is focused on transitioning to a recurring revenue model, with 57% of bookings coming from Pega Cloud [28] - The strategy includes increasing sales capacity to better penetrate target accounts, with early returns showing healthy pipeline growth [25] - The company aims to establish a repeatable approach to address focused micro journeys for clients [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market opportunity and the company's capabilities to help clients succeed [23] - The company is navigating disruptions such as Brexit and trade tariffs, with clients seeking adaptable solutions [6] - Management anticipates that the fourth quarter will be the largest quarter, consistent with historical trends [39] Other Important Information - The company returned approximately $62 million to shareholders, including $7 million in dividends and $55 million in share buybacks [38] - Employee count increased by approximately 13% year-over-year, with more than half of the growth in the go-to-market organization [38] Q&A Session Summary Question: Spending growth and targets - Management indicated that go-to-market investment is on pace with initial targets, with increased investment in Pega Cloud due to higher-than-expected growth [43] Question: Project Phoenix update - Management expressed enthusiasm about Project Phoenix, highlighting positive feedback from clients and the integration of multi-tenancy capabilities [49][50] Question: Changes in customer buying behavior - Management noted a resurgence in interest in the MIA region and emphasized ongoing recruitment efforts to enhance sales coverage [58][60] Question: Sales strategy in the public sector - Management highlighted the importance of partnerships in the public sector and noted an acceleration in growth within this sector [65]

ACV Growth - Total ACV grew by $105 million in constant currency[18], reaching $613 million as of June 30, 2019, a 21% increase[19] compared to $508 million on June 30, 2018[19] - License and Cloud ACV grew by 35%[19], while Maintenance ACV grew by 7%[19] - Pega Cloud Remaining Performance Obligation (RPO)/Backlog increased by 69%[29], or $148 million, from $214 million on June 30, 2018 to $362 million on June 30, 2019[29] Cloud Adoption - Pega Cloud ACV grew by 66%[26], reaching $136 million as of June 30, 2019[26] - Client Cloud ACV grew by 12%[26], reaching $477 million as of June 30, 2019[26] Financial Performance - Total revenue was $2056 million in Q2 2019[40] - Free cash flow was $(171) million in Q2 2019[38]

Pegasystems Inc. (NASDAQ:PEGA) Q2 2019 Earnings Conference Call August 7, 2019 5:00 PM ET Company Participants Alan Trefler - Founder and Chief Executive Officer Ken Stillwell - Chief Financial Officer, Chief Administrative Officer and Senior Vice President Conference Call Participants Rishi Jaluria - D.A. Davidson Austin Williams - Wedbush Securities Operator Good day and welcome to the Pegasystems Second Quarter 2019 Earnings Conference Call. Today's conference is being recorded. At this time, I would lik ...

EXHIBIT 99.1 Pega Cloud Soars in First Quarter 2019 • Pega Cloud ACV of $129 million, up 76% • Pega and Client Cloud ACV of $591 million, up 20% powered by Pega Cloud Choice™ • Pega Cloud revenue up 78% CAMBRIDGE, Mass. — May 7, 2019 — Pegasystems Inc. (NASDAQ: PEGA), the software company empowering digital transformation at the world's leading enterprises, released its financial results for the first quarter of 2019. "We're off to a solid start for 2019," said Alan Trefler, founder and CEO, Pegasystems. "W ...