Pegasystems (PEGA) came out with quarterly earnings of $0.48 per share, missing the Zacks Consensus Estimate of $0.49 per share. This compares to earnings of $0.23 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.04%. A quarter ago, it was expected that this business software company would post earnings of $1.07 per share when it actually produced earnings of $1.77, delivering a surprise of 65.42%.Over the last four quarters ...

[Q1 2024 Earnings Release](index=1&type=section&id=Q1%202024%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=financial_highlights) Pega reported a 1% increase in total revenue to $330.1 million for Q1 2024, significantly improving profitability with a GAAP net loss narrowing to $(12.1) million from $(20.8) million year-over-year, and non-GAAP net income more than doubling to $42.2 million, alongside exceptionally strong cash flow from operations at $180.1 million and Pega Cloud gross margin expansion to 77% Q1 2024 Key Financial Results vs. Q1 2023 (in millions) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $330.1 | $325.5 | +1% | | GAAP Net Loss | $(12.1) | $(20.8) | +42% | | Non-GAAP Net Income | $42.2 | $19.2 | +119% | | GAAP Diluted Loss Per Share | $(0.14) | $(0.25) | +44% | | Non-GAAP Diluted EPS | $0.48 | $0.23 | +109% | Q1 2024 Revenue Breakdown (in thousands) | Revenue Source | Q1 2024 (in thousands) | % of Total | Change vs Q1 2023 | | :--- | :--- | :--- | :--- | | Pega Cloud | $130,902 | 40% | +21% | | Subscription Services | $211,903 | 64% | +13% | | Subscription License | $63,338 | 19% | -25% | | **Total Subscription** | **$275,241** | **83%** | **+1%** | | Consulting | $54,047 | 17% | +2% | | **Total Revenue** | **$330,147** | **100%** | **+1%** | - Cash flow from operations and free cash flow both reached **$180 million** in Q1 2024[4](index=4&type=chunk) - Pega Cloud gross margin expanded to **77%**[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=management_commentary) Management highlighted the successful launch of Pega GenAI Blueprint™, a new technology designed to accelerate digital transformation for clients, emphasizing strong financial position and robust cash generation for accelerated profitable growth - CEO Alan Trefler announced the release of Pega GenAI Blueprint™, a technology changing client engagement to re-imagine and evolve their business, with thousands of Blueprints already generated by clients and partners[2](index=2&type=chunk) - COO and CFO Ken Stillwell stated that the strong cash generation in Q1 demonstrates the power of a SaaS business, positioning Pega to accelerate profitable growth[2](index=2&type=chunk) [Key Performance Metrics](index=2&type=section&id=key_performance_metrics) The company showed solid growth in its key operational metrics, with Annual Contract Value (ACV) growing 9% year-over-year to $1.27 billion, total backlog increasing by 9% to $1.42 billion, and free cash flow substantially rising to $179.5 million [Annual Contract Value (ACV)](index=11&type=section&id=annual_contract_value_acv) Annual Contract Value (ACV) as of March 31 (in thousands) | ACV Component | 2024 (in thousands) | 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Pega Cloud | $570,356 | $490,568 | +16% | | Maintenance | $313,550 | $323,760 | -3% | | **Subscription Services** | **$883,906** | **$814,328** | **+9%** | | Subscription License | $389,431 | $359,323 | +8% | | **Total ACV** | **$1,273,337** | **$1,173,651** | **+9%** | - Total ACV grew **9%** year-over-year to **$1.273 billion** On a constant currency basis, ACV also grew **9%** to **$1.277 billion**[5](index=5&type=chunk) [Backlog (Remaining Performance Obligations)](index=12&type=section&id=backlog_remaining_performance_obligations) - Total backlog (Remaining Performance Obligations) grew **9%** year-over-year to **$1.425 billion** as of March 31, 2024[36](index=36&type=chunk)[37](index=37&type=chunk) Backlog by Revenue Recognition Timing (as of March 31, 2024) (in thousands) | Timing | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | 1 year or less | $758,954 | 53% | | 1-2 years | $370,004 | 26% | | 2-3 years | $187,435 | 13% | | Greater than 3 years | $108,349 | 8% | | **Total** | **$1,424,742** | **100%** | - Pega Cloud backlog increased by **14%** YoY to **$991.1 million**, representing **70%** of the total backlog[36](index=36&type=chunk) [Free Cash Flow](index=11&type=section&id=free_cash_flow) Free Cash Flow Reconciliation (Three Months Ended March 31) (in thousands) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by operating activities | $180,146 | $68,107 | | Investment in property and equipment | $(604) | $(11,487) | | **Free cash flow** | **$179,542** | **$56,620** | [Consolidated Financial Statements (GAAP)](index=7&type=section&id=consolidated_financial_statements_gaap) The unaudited GAAP financial statements detail the company's performance for the first quarter ended March 31, 2024, showing total revenue of $330.1 million, a net loss of $(12.1) million, total assets of $1.51 billion, total liabilities of $1.12 billion, and a significant increase in cash provided by operating activities to $180.1 million [Statements of Operations](index=7&type=section&id=statements_of_operations) Unaudited Condensed Consolidated Statements of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenue | $330,147 | $325,472 | | Gross profit | $235,489 | $227,538 | | (Loss) from operations | $(20,412) | $(22,206) | | Net (loss) | $(12,124) | $(20,774) | | Diluted (loss) per share | $(0.14) | $(0.25) | [Balance Sheets](index=8&type=section&id=balance_sheets) Unaudited Condensed Consolidated Balance Sheets (in thousands) | Line Item | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total cash, cash equivalents, and marketable securities | $618,949 | $423,338 | | Total current assets | $1,059,587 | $1,029,027 | | Total assets | $1,511,728 | $1,510,736 | | Total current liabilities | $1,044,279 | $577,059 | | Total liabilities | $1,121,542 | $1,156,898 | | Total stockholders' equity | $390,186 | $353,838 | [Statements of Cash Flows](index=8&type=section&id=statements_of_cash_flows) Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (loss) | $(12,124) | $(20,774) | | Cash provided by operating activities | $180,146 | $68,107 | | Cash (used in) investing activities | $(132,399) | $(14,413) | | Cash provided by (used in) financing activities | $17,899 | $(29,372) | | Net increase in cash, cash equivalents, and restricted cash | $62,843 | $25,104 | [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=reconciliation_of_gaap_to_non-gaap_measures) Pega provides non-GAAP financial measures to help investors understand core operating results by excluding certain items, with key adjustments for Q1 2024 including stock-based compensation and a litigation settlement, reconciling a GAAP Net Loss of $(12.1) million to a Non-GAAP Net Income of $42.2 million, resulting in a Non-GAAP Diluted EPS of $0.48 Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Q1 2024, in thousands) | Description | Amount | | :--- | :--- | | **Net (loss) - GAAP** | **$(12,124)** | | Stock-based compensation | $34,781 | | Litigation settlement, net of recoveries | $32,403 | | Foreign currency transaction loss | $3,262 | | Other adjustments (net) | $(2,238) | | Income taxes adjustment | $(14,927) | | **Net income - non-GAAP** | **$42,154** | - Non-GAAP measures exclude items such as stock-based compensation, restructuring, certain legal fees, litigation settlements, and amortization of intangible assets to provide a view of core business operations[10](index=10&type=chunk)[27](index=27&type=chunk) - The non-GAAP effective tax rate for Q1 2024 was **22%**, which management believes is more consistent for reviewing results compared to the volatile GAAP rate[28](index=28&type=chunk) [Forward-Looking Statements and Risk Factors](index=5&type=section&id=forward-looking_statements_and_risk_factors) The report contains forward-looking statements based on current expectations, subject to various risks and uncertainties, including the ability to protect intellectual property, ongoing litigation with Appian Corp., reliance on key personnel and third-party service providers, and potential impacts from cyber-attacks - The press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, which represent the company's views only as of April 24, 2024[11](index=11&type=chunk)[15](index=15&type=chunk) - The company identifies several risks that could cause actual results to differ materially, including: * Ongoing litigation with Appian Corp * Ability to protect intellectual property rights * Reliance on key personnel and third-party service providers * Potential legal and financial liabilities from cyber-attacks and security breaches[13](index=13&type=chunk)[15](index=15&type=chunk)

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Pegasystems Inc.'s unaudited condensed consolidated financial statements and related notes for Q1 2024 [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at March 31, 2024, and December 31, 2023 Balance Sheet Highlights (in thousands): | Metric | March 31, 2024 | December 31, 2023 | Change | | :------------------------------------ | :------------- | :---------------- | :----- | | Total assets | $1,511,728 | $1,510,736 | +$992 | | Total current assets | $1,059,587 | $1,029,027 | +$30,560 | | Cash and cash equivalents | $291,905 | $229,902 | +$62,003 | | Marketable securities | $327,044 | $193,436 | +$133,608 | | Accounts receivable, net | $191,987 | $300,173 | -$108,186 | | Unbilled receivables, net | $170,458 | $237,379 | -$66,921 | | Total liabilities | $1,121,542 | $1,156,898 | -$35,356 | | Total current liabilities | $1,044,279 | $577,059 | +$467,220 | | Convertible senior notes, net (current) | $499,985 | — | +$499,985 | | Long-term convertible senior notes, net | — | $499,368 | -$499,368 | | Total stockholders' equity | $390,186 | $353,838 | +$36,348 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including revenue, expenses, and net loss, for Q1 2024 and Q1 2023 Statements of Operations Highlights (in thousands, except per share): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | | Subscription services revenue | $211,903 | $187,509 | +$24,394 | +13% | | Subscription license revenue | $63,338 | $84,527 | -$21,189 | -25% | | Consulting revenue | $54,047 | $53,033 | +$1,014 | +2% | | Gross profit | $235,489 | $227,538 | +$7,951 | +3% | | Total operating expenses | $255,901 | $249,744 | +$6,157 | +2% | | Litigation settlement, net of recoveries | $32,403 | — | +$32,403 | N/A | | (Loss) from operations | $(20,412) | $(22,206) | +$1,794 | +8% | | Net (loss) | $(12,124) | $(20,774) | +$8,650 | +42% | | Basic (Loss) per share | $(0.14) | $(0.25) | +$0.11 | +44% | [Unaudited Condensed Consolidated Statements of Comprehensive (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)) This section presents the company's net loss and other comprehensive income/loss for the three months ended March 31, 2024 and 2023 Comprehensive (Loss) Highlights (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Net (loss) | $(12,124) | $(20,774) | +$8,650 | | Total other comprehensive (loss) income, net of tax | $(4,173) | $1,543 | -$5,716 | | Comprehensive (loss) | $(16,297) | $(19,231) | +$2,934 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including accumulated deficit and comprehensive loss, for Q1 2024 Stockholders' Equity Highlights (in thousands): | Metric | March 31, 2024 | December 31, 2023 | Change | | :------------------------------------ | :------------- | :---------------- | :----- | | Total stockholders' equity | $390,186 | $353,838 | +$36,348 | | Additional paid-in capital | $432,217 | $379,584 | +$52,633 | | (Accumulated deficit) | $(20,829) | $(8,705) | -$12,124 | | Accumulated other comprehensive (loss) | $(22,052) | $(17,879) | -$4,173 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities for Q1 2024 and Q1 2023 Cash Flow Highlights (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Cash provided by operating activities | $180,146 | $68,107 | +$112,039 | | Cash (used in) investing activities | $(132,399) | $(14,413) | -$117,986 | | Cash provided by (used in) financing activities | $17,899 | $(29,372) | +$47,271 | | Net increase in cash, cash equivalents, and restricted cash | $62,843 | $25,104 | +$37,739 | | Cash, cash equivalents, and restricted cash, end of period | $295,670 | $170,158 | +$125,512 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements - The financial statements are prepared in accordance with SEC rules for interim reporting and U.S. GAAP, and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2023[20](index=20&type=chunk) - All intercompany transactions and balances were eliminated in consolidation, and interim results do not necessarily indicate expected full-year 2024 results[22](index=22&type=chunk) [NOTE 1. BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201.%20BASIS%20OF%20PRESENTATION) This note describes the accounting principles and presentation methods used for the interim financial statements - The unaudited condensed consolidated financial statements are prepared pursuant to SEC rules and U.S. GAAP, including only normal recurring adjustments[20](index=20&type=chunk)[21](index=21&type=chunk) - Operating results for the interim periods presented do not necessarily indicate the expected results for 2024[22](index=22&type=chunk) [NOTE 2. MARKETABLE SECURITIES](index=8&type=section&id=NOTE%202.%20MARKETABLE%20SECURITIES) This note details the composition and fair value of the company's marketable securities portfolio Marketable Securities (in thousands): | Category | March 31, 2024 Fair Value | December 31, 2023 Fair Value | | :--------------- | :------------------------ | :------------------------- | | Government debt | $15,852 | $11,503 | | Corporate debt | $311,192 | $181,933 | | Total | $327,044 | $193,436 | - As of March 31, 2024, marketable securities' maturities ranged from April 2024 to January 2026, with a weighted-average remaining maturity of **0.5 years**[23](index=23&type=chunk) [NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE](index=8&type=section&id=NOTE%203.%20RECEIVABLES,%20CONTRACT%20ASSETS,%20AND%20DEFERRED%20REVENUE) This note provides information on the company's accounts receivable, unbilled receivables, and deferred revenue balances Receivables (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Accounts receivable, net | $191,987 | $300,173 | | Unbilled receivables, net | $170,458 | $237,379 | | Long-term unbilled receivables, net | $72,814 | $85,402 | | Total receivables | $435,259 | $622,954 | - Deferred revenue increased to **$382,765 thousand** at March 31, 2024, from **$377,845 thousand** at December 31, 2023, primarily due to new billings in advance of revenue recognized[31](index=31&type=chunk)[32](index=32&type=chunk) - **$168.3 million** in revenue was recognized from deferred revenue as of December 31, 2023, during the three months ended March 31, 2024[32](index=32&type=chunk) [NOTE 4. DEFERRED COMMISSIONS](index=9&type=section&id=NOTE%204.%20DEFERRED%20COMMISSIONS) This note outlines the balances and amortization of deferred commission expenses Deferred Commissions (in thousands): | Metric | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Deferred commissions | $102,855 | $114,119 | - Amortization of deferred commissions increased by **21%** to **$17,282 thousand** for the three months ended March 31, 2024, compared to **$14,277 thousand** for the same period in 2023[33](index=33&type=chunk) [NOTE 5. GOODWILL AND OTHER INTANGIBLES](index=10&type=section&id=NOTE%205.%20GOODWILL%20AND%20OTHER%20INTANGIBLES) This note details the carrying amounts and changes in goodwill and other intangible assets - Goodwill decreased slightly to **$81,467 thousand** at March 31, 2024, from **$81,611 thousand** at January 1, 2024, due to currency translation adjustments[34](index=34&type=chunk) - Net book value of intangible assets was **$6,025 thousand** at March 31, 2024, down from **$7,002 thousand** at December 31, 2023[36](index=36&type=chunk)[37](index=37&type=chunk) - Estimated future amortization of intangible assets for the remainder of 2024 is **$2,208 thousand**[38](index=38&type=chunk) [NOTE 6. OTHER ASSETS AND LIABILITIES](index=10&type=section&id=NOTE%206.%20OTHER%20ASSETS%20AND%20LIABILITIES) This note provides a breakdown of various other current assets and accrued liabilities Other Current Assets (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Income tax receivables | $9,058 | $4,804 | | Insurance receivable | $8,305 | $1,954 | | Capped call transactions | $4,192 | — | | Total other current assets | $78,193 | $68,137 | Accrued Expenses (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Litigation settlements | $35,000 | — | | Cloud hosting | $12,736 | $1,358 | | Outside professional services | $13,352 | $10,419 | | Total accrued expenses | $80,642 | $39,941 | - Accrued expenses increased by **over 100%** primarily due to a **$35 million** litigation settlement[42](index=42&type=chunk) [NOTE 7. LEASES](index=11&type=section&id=NOTE%207.%20LEASES) This note details the company's lease costs, remaining lease terms, and discount rates Lease Costs (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Fixed lease costs | $4,262 | $5,766 | | Short-term lease costs | $543 | $781 | | Variable lease costs | $1,609 | $1,975 | | Total lease costs | $6,414 | $8,522 | - Weighted-average remaining lease term was **6.7 years** and weighted-average discount rate was **4.0%** as of March 31, 2024[47](index=47&type=chunk) [NOTE 8. DEBT](index=12&type=section&id=NOTE%208.%20DEBT) This note describes the company's outstanding convertible senior notes and revolving credit facility - **$502.3 million** in aggregate principal amount of Convertible Senior Notes are outstanding, due March 1, 2025[58](index=58&type=chunk)[60](index=60&type=chunk) - Interest expense on Convertible Senior Notes was **$1,559 thousand** for Q1 2024, with an average interest rate of **1.2%**[59](index=59&type=chunk) - The **$100 million** senior secured revolving Credit Facility's expiration date was extended to February 4, 2025, with **$27.3 million** in outstanding letters of credit but no outstanding cash borrowings as of March 31, 2024[65](index=65&type=chunk)[66](index=66&type=chunk) [NOTE 9. RESTRUCTURING](index=14&type=section&id=NOTE%209.%20RESTRUCTURING) This note outlines the accrued employee severance and restructuring expenses - Accrued employee severance and related benefits decreased to **$5,001 thousand** at March 31, 2024, from **$8,095 thousand** at January 1, 2024, due to cash disbursements[68](index=68&type=chunk) - Restructuring expense for the three months ended March 31, 2024, was **$163 thousand**, an **89% decrease** from **$1,461 thousand** in the prior year period[13](index=13&type=chunk)[125](index=125&type=chunk) [NOTE 10. FAIR VALUE MEASUREMENTS](index=14&type=section&id=NOTE%2010.%20FAIR%20VALUE%20MEASUREMENTS) This note details the fair value of financial instruments, including capped call transactions and venture investments - Capped Call Transactions, accounted for as derivative instruments, increased to **$4,192 thousand** at March 31, 2024, from **$893 thousand** at January 1, 2024, due to a **$3,299 thousand** fair value adjustment[64](index=64&type=chunk)[73](index=73&type=chunk) - Venture investments increased to **$20,946 thousand** at March 31, 2024, from **$19,450 thousand** at January 1, 2024, including a **$1,628 thousand** gain recognized in other income[73](index=73&type=chunk)[74](index=74&type=chunk) - The fair value of the Convertible Senior Notes was **$481.7 million** as of March 31, 2024, classified within Level 2 of the fair value hierarchy[75](index=75&type=chunk) [NOTE 11. REVENUE](index=15&type=section&id=NOTE%2011.%20REVENUE) This note provides a breakdown of revenue by stream and details remaining performance obligations Revenue Streams (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Pega Cloud | $130,902 | $107,879 | +$23,023 | +21% | | Maintenance | $81,001 | $79,630 | +$1,371 | +2% | | Subscription services | $211,903 | $187,509 | +$24,394 | +13% | | Subscription license | $63,338 | $84,527 | -$21,189 | -25% | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | - Remaining performance obligations (Backlog) increased by **9%** to **$1,424,742 thousand** as of March 31, 2024, from **$1,308,084 thousand** as of March 31, 2023[78](index=78&type=chunk)[79](index=79&type=chunk) - The decrease in subscription license revenue was primarily due to a large multi-year contract recognized in the three months ended March 31, 2023[122](index=122&type=chunk) [NOTE 12. STOCK-BASED COMPENSATION](index=17&type=section&id=NOTE%2012.%20STOCK-BASED%20COMPENSATION) This note details the stock-based compensation expense and unrecognized compensation - Stock-based compensation expense decreased by **18.2%** to **$34,781 thousand** for the three months ended March 31, 2024, compared to **$42,557 thousand** for the same period in 2023[81](index=81&type=chunk) - Unrecognized stock-based compensation expense was **$184.1 million** as of March 31, 2024, with a weighted-average recognition period of **1.8 years**[81](index=81&type=chunk) [NOTE 13. INCOME TAXES](index=17&type=section&id=NOTE%2013.%20INCOME%20TAXES) This note explains the income tax benefit, effective tax rate, and impact of Pillar Two regulations - The company recorded an income tax benefit of **$3,038 thousand** for Q1 2024, compared to a provision of **$5,249 thousand** in Q1 2023, resulting in an effective income tax rate of **20%**[84](index=84&type=chunk) - The effective income tax rate for Q1 2024 was primarily influenced by a valuation allowance on deferred tax assets in the U.S. and U.K., and an income tax benefit for discrete items[84](index=84&type=chunk) - The company anticipates meeting transitional safe harbors for Pillar Two global minimum tax regulations in most jurisdictions for 2024, with any remaining top-up tax being immaterial[130](index=130&type=chunk) [NOTE 14. (LOSS) PER SHARE](index=17&type=section&id=NOTE%2014.%20(LOSS)%20PER%20SHARE) This note presents the basic and diluted loss per share calculations and anti-dilutive exclusions - Basic and diluted loss per share improved to **$(0.14)** for Q1 2024, compared to **$(0.25)** for Q1 2023[88](index=88&type=chunk) - All dilutive securities, including stock options, RSUs, and convertible senior notes, were excluded from the diluted loss per share calculation because their inclusion would be anti-dilutive in periods of loss[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [NOTE 15. COMMITMENTS AND CONTINGENCIES](index=18&type=section&id=NOTE%2015.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details significant legal proceedings, including litigation settlements and ongoing appeals - The company recorded a **$32.4 million** litigation settlement, net of insurance recoveries, in Q1 2024, related to a proposed settlement of a securities class action lawsuit[95](index=95&type=chunk)[98](index=98&type=chunk) - The Appian Corp. v. Pegasystems Inc. trade secret misappropriation case, with a **$2.06 billion** judgment, is currently under appeal, and the company is unable to reasonably estimate possible damages[96](index=96&type=chunk) - The U.S. SEC has requested information regarding the accounting treatment of the Appian litigation, and the company is cooperating[100](index=100&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, results of operations, and key performance metrics for Q1 2024 - The company develops, markets, licenses, hosts, and supports enterprise software that helps organizations build agility into their business[107](index=107&type=chunk) - Its powerful, low-code platform for workflow automation and AI-powered decisioning enables hyper-personalization, streamlined customer service, and automated mission-critical business processes[107](index=107&type=chunk) - Target clients are Global 2000 organizations and government agencies[108](index=108&type=chunk) [FORWARD-LOOKING STATEMENTS](index=20&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions investors about inherent risks and uncertainties in forward-looking information - The report contains forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially[102](index=102&type=chunk)[103](index=103&type=chunk) - Investors are cautioned not to place undue reliance on such statements, and the company disclaims any obligation to publicly update or revise them[104](index=104&type=chunk) [NON-GAAP MEASURES](index=20&type=section&id=NON-GAAP%20MEASURES) This section explains the use and limitations of non-GAAP financial measures for performance evaluation - Non-GAAP financial measures are used to help investors understand core operating results and prospects, consistent with how management measures and forecasts performance[106](index=106&type=chunk) - These non-GAAP measures are not a substitute for financial measures prepared under U.S. GAAP[106](index=106&type=chunk) [BUSINESS OVERVIEW](index=20&type=section&id=BUSINESS%20OVERVIEW) This section describes Pegasystems Inc.'s enterprise software solutions, low-code platform, and target markets - Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software with a low-code platform for workflow automation and AI-powered decisioning[107](index=107&type=chunk) - Its solutions enable clients to hyper-personalize customer experiences, streamline customer service, and automate mission-critical business processes[107](index=107&type=chunk) - The company targets Global 2000 organizations and government agencies[108](index=108&type=chunk) [Performance metrics](index=22&type=section&id=Performance%20metrics) This section presents key performance indicators, including Annual Contract Value (ACV) - Annual Contract Value (ACV) is a key performance measure representing the annualized value of active contracts[109](index=109&type=chunk) ACV (in millions): | Metric | March 31, 2024 | March 31, 2023 | 1-Year Change | | :----------------------- | :------------- | :------------- | :------------ | | ACV | $1,273 | $1,174 | +9% | | Constant currency ACV | $1,277 | $1,174 | +9% | [Cash flow](index=23&type=section&id=Cash%20flow) This section analyzes the company's free cash flow and supplemental cash flow information Free Cash Flow (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Cash provided by operating activities | $180,146 | $68,107 | | Investment in property and equipment | $(604) | $(11,487) | | Free cash flow | $179,542 | $56,620 | - Free cash flow is defined as cash provided by operating activities less investment in property and equipment[113](index=113&type=chunk) - Supplemental cash flow information for Q1 2024 includes restructuring (**$3,347 thousand**), legal fees (**$2,739 thousand**), interest on convertible senior notes (**$1,884 thousand**), and income taxes (**$8,163 thousand**)[113](index=113&type=chunk) [Remaining performance obligations ("Backlog")](index=25&type=section&id=Remaining%20performance%20obligations%20(%22Backlog%22)) This section details the company's backlog, representing future revenue from existing contracts Backlog (in millions): | Metric | March 31, 2024 | March 31, 2023 | 1-Year Growth Rate | | :----------------------- | :------------- | :------------- | :----------------- | | Backlog - GAAP | $1,425 | $1,308 | +9% | | Constant currency backlog | $1,429 | $1,308 | +9% | - Backlog represents expected future revenue from existing non-cancellable contracts[78](index=78&type=chunk)[117](index=117&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=25&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section outlines the significant accounting policies and estimates used in financial statement preparation - Financial statements are prepared following U.S. GAAP and SEC rules, requiring estimates and judgments based on historical experience, current conditions, and future expectations[119](index=119&type=chunk) - No significant changes to critical accounting policies were reported since the Annual Report on Form 10-K for the year ended December 31, 2023[120](index=120&type=chunk) [RESULTS OF OPERATIONS](index=26&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's revenue, gross profit, and operating expenses [Revenue](index=26&type=section&id=Revenue) This subsection analyzes revenue performance across different service categories Revenue Performance (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Pega Cloud | $130,902 | $107,879 | +$23,023 | +21% | | Maintenance | $81,001 | $79,630 | +$1,371 | +2% | | Subscription license | $63,338 | $84,527 | -$21,189 | -25% | | Consulting | $54,047 | $53,033 | +$1,014 | +2% | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | - The increase in Pega Cloud revenue was primarily due to the growth of the hosted client base[121](index=121&type=chunk) - The decrease in subscription license revenue was primarily due to a large multi-year contract recognized in the three months ended March 31, 2023[122](index=122&type=chunk) [Gross profit](index=26&type=section&id=Gross%20profit) This subsection examines gross profit and gross profit percentages by revenue stream Gross Profit Performance (in thousands): | Category | 2024 Gross Profit | 2024 Gross Profit % | 2023 Gross Profit | 2023 Gross Profit % | Change | % Change | | :----------------------- | :---------------- | :------------------ | :---------------- | :------------------ | :----- | :------- | | Pega Cloud | $101,305 | 77% | $77,629 | 72% | +$23,676 | +30% | | Consulting | $(4,135) | (8)% | $(7,315) | (14)% | +$3,180 | +43% | | Total gross profit | $235,489 | 71% | $227,538 | 70% | +$7,951 | +3% | - The increase in Pega Cloud gross profit percentage was primarily due to increased cost efficiency for hosting services and employee compensation[124](index=124&type=chunk) - The increase in consulting gross profit percentage was primarily due to an increase in consultant realization rates in the Americas[124](index=124&type=chunk) [Operating expenses](index=27&type=section&id=Operating%20expenses) This subsection details changes in selling and marketing, R&D, and litigation settlement expenses Operating Expenses (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Selling and marketing | $127,695 | $149,797 | -$22,102 | -15% | | Research and development | $72,113 | $75,376 | -$3,263 | -4% | | Litigation settlement, net of recoveries | $32,403 | — | +$32,403 | 100% | | Restructuring | $163 | $1,461 | -$1,298 | -89% | - The decrease in selling and marketing was primarily due to a **$17.5 million** decrease in compensation and benefits from reduced headcount as the company optimized its go-to-market strategy[125](index=125&type=chunk) - The increase in litigation settlement, net of recoveries, was due to the estimated cost to settle ongoing litigation arising from proceedings outside the ordinary course of business[125](index=125&type=chunk) [Other income and expenses](index=27&type=section&id=Other%20income%20and%20expenses) This subsection reviews foreign currency impacts, interest income, and other net income/expenses Other Income and Expenses (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Foreign currency transaction (loss) | $(3,262) | $(2,675) | $(587) | -22% | | Interest income | $5,281 | $1,485 | +$3,796 | +256% | | Other income, net | $1,684 | $6,583 | $(4,899) | -74% | | Total | $5,250 | $6,681 | $(1,431) | -21% | - The increase in interest income was primarily due to higher investment balances and market interest rates[129](index=129&type=chunk) - The decrease in other income, net, was due to a **$3.8 million** gain on venture investments and a **$2.8 million** gain from repurchases of convertible senior notes in Q1 2023[129](index=129&type=chunk) [(Benefit from) provision for income taxes](index=27&type=section&id=(Benefit%20from)%20provision%20for%20income%20taxes) This subsection discusses the income tax benefit and effective tax rate for the period - The company recorded an income tax benefit of **$3,038 thousand** for Q1 2024, compared to a provision of **$5,249 thousand** in Q1 2023, with an effective income tax rate of **20%**[128](index=128&type=chunk) - The effective income tax rate was primarily driven by the valuation allowance on deferred tax assets in the U.S. and U.K., and forecasted taxable income, offset by an income tax benefit for discrete items[128](index=128&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=28&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's cash flows, financial position, and ability to meet obligations Cash, Cash Equivalents, and Marketable Securities (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Held in U.S. entities | $491,808 | $263,453 | | Held in foreign entities | $127,141 | $159,885 | | Total cash, cash equivalents, and marketable securities | $618,949 | $423,338 | - The company believes its current cash, marketable securities, cash flow from operations, borrowing capacity, and ability to engage in capital market transactions will be sufficient to fund operations and obligations for at least the next 12 months[131](index=131&type=chunk) [Operating activities](index=28&type=section&id=Operating%20activities) This subsection details cash generated from the company's primary business operations - Cash provided by operating activities increased to **$180,146 thousand** in Q1 2024, up from **$68,107 thousand** in Q1 2023[131](index=131&type=chunk) - The change was primarily due to growth in client collections and the impact of cost-efficiency initiatives[133](index=133&type=chunk) [Investing activities](index=28&type=section&id=Investing%20activities) This subsection outlines cash flows related to the purchase and sale of investments and assets - Cash used in investing activities increased to **$132,399 thousand** in Q1 2024, from **$14,413 thousand** in Q1 2023[131](index=131&type=chunk) - This change was primarily due to increased purchases of financial instruments and reduced investment in property and equipment[134](index=134&type=chunk) [Financing activities](index=28&type=section&id=Financing%20activities) This subsection describes cash flows from debt, equity, and other financing transactions - Cash provided by financing activities was **$17,899 thousand** in Q1 2024, compared to cash used of **$29,372 thousand** in Q1 2023[131](index=131&type=chunk) - The company has **$502.3 million** in aggregate principal amount of convertible senior notes outstanding, due March 1, 2025[135](index=135&type=chunk) - The **$100 million** senior secured revolving credit agreement's expiration date was extended to February 4, 2025[136](index=136&type=chunk) [Stock repurchase program](index=29&type=section&id=Stock%20repurchase%20program) This subsection details the company's share repurchase activities and remaining authorization - The Board of Directors extended the expiration date of the current share repurchase program from June 30, 2024, to June 30, 2025[137](index=137&type=chunk)[157](index=157&type=chunk) - As of March 31, 2024, **$60 million** remained in the stock repurchase authority[137](index=137&type=chunk) [Dividends](index=29&type=section&id=Dividends) This subsection outlines the company's dividend policy and payments made - The company intends to pay a quarterly cash dividend of **$0.03 per share**[138](index=138&type=chunk) - Dividend payments to stockholders totaled **$2,515 thousand** for the three months ended March 31, 2024[139](index=139&type=chunk) [Contractual obligations](index=29&type=section&id=Contractual%20obligations) This subsection summarizes the company's future payment commitments under various contracts Contractual Obligations as of March 31, 2024 (in thousands): | Category | Total | | :------------------------------------ | :---- | | Convertible senior notes | $506,037 | | Purchase obligations | $529,220 | | Operating lease obligations | $89,517 | | Venture investment commitments | $1,000 | | Liability for uncertain tax positions | $2,175 | | Total | $1,127,949 | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risk, primarily focusing on foreign currency fluctuations, which impact both revenue (translation risk) and monetary assets/liabilities (remeasurement risk) - The company is exposed to market risk from adverse changes in financial market prices and rates[142](index=142&type=chunk) [Foreign currency exposure](index=29&type=section&id=Foreign%20currency%20exposure) This section analyzes the company's exposure to foreign currency fluctuations and their potential impact [Translation risk](index=29&type=section&id=Translation%20risk) This subsection assesses the impact of currency fluctuations on the translation of foreign subsidiary financial statements - A hypothetical **10% strengthening** in the U.S. dollar against other currencies would have resulted in a **4% decrease** in revenue and a **4% decrease** in net income for the three months ended March 31, 2024[145](index=145&type=chunk) [Remeasurement risk](index=30&type=section&id=Remeasurement%20risk) This subsection evaluates the impact of currency fluctuations on monetary assets and liabilities denominated in foreign currencies - The company is primarily exposed to changes in foreign currency exchange rates associated with the Australian dollar, Euro, and U.S. dollar-denominated cash, cash equivalents, receivables, and intercompany balances held by its U.K. subsidiary[146](index=146&type=chunk) - A hypothetical **10% strengthening** in the British pound exchange rate would have resulted in a foreign currency loss of **$14,618 thousand** for the three months ended March 31, 2024[147](index=147&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[148](index=148&type=chunk) - There have been no changes in internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected or are reasonably likely to materially affect internal control over financial reporting[149](index=149&type=chunk) [PART II - OTHER INFORMATION](index=31&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [ITEM 1. LEGAL PROCEEDINGS](index=31&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the detailed legal proceedings information from Note 15, including the Appian Corp. litigation, the securities class action lawsuit (settled in principle for $35 million), and derivative litigation - Information regarding legal proceedings is incorporated by reference from "Note 15. Commitments and Contingencies" in Part I, Item 1 of this Quarterly Report[151](index=151&type=chunk) [ITEM 1A. RISK FACTORS](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company encourages readers to review the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2023, as these could materially affect its business, financial condition, and future results - Readers are encouraged to carefully consider the risk factors identified in Item 1A. "Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2023[152](index=152&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 78 thousand shares of common stock for $61.06 per share in Q1 2024, primarily for tax withholdings related to equity awards. No shares were purchased under the publicly announced share repurchase program during this period - **78 thousand shares** of common stock were repurchased at an average price of **$61.06 per share** in Q1 2024, primarily for tax withholdings for net settlement of equity awards[137](index=137&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - No shares were purchased as part of the publicly announced share repurchase program during the three months ended March 31, 2024[153](index=153&type=chunk) [ITEM 5. OTHER INFORMATION](index=31&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q1 2024. The Credit Facility expiration date was extended to February 4, 2025, and the share repurchase program was extended to June 30, 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2024[155](index=155&type=chunk) - The expiration date of the **$100 million** senior secured revolving credit agreement (Credit Facility) was extended to February 4, 2025[156](index=156&type=chunk) - The Board of Directors extended the expiration date of the current share repurchase program from June 30, 2024, to June 30, 2025[157](index=157&type=chunk) [ITEM 6. EXHIBITS](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include organizational documents, the Seventh Amendment to Loan Documents, CEO and CFO certifications, and various Inline XBRL documents[159](index=159&type=chunk) [SIGNATURE](index=33&type=section&id=Signature) The report was signed by Kenneth Stillwell, Chief Operating Officer and Chief Financial Officer, on April 24, 2024 - The report was signed by Kenneth Stillwell, Chief Operating Officer and Chief Financial Officer, on April 24, 2024[163](index=163&type=chunk)

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, today announced a quarterly cash dividend of $0.03 per share, maintaining the company’s current dividend program. The Q2 2024 dividend will be paid on April 15, 2024, to shareholders of record as of April 1, 2024. About Pegasystems Pega provides a powerful platform that empowers the world’s leading organizations to unlock business-transforming outcomes with r ...

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, today announced Forrester Research has named Pega a Leader in The Forrester WaveTM: Customer Service Solutions, Q1 2024 (1). Across all solutions evaluated, Pega earned the top score in the ‘current offering’ category. In the report, under the headline “Pegasystems excels at automating and guiding service journeys to the best outcomes,” the report says: “Peg ...

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, today announced Forrester Research has named Pega a Leader in The Forrester WaveTM: Real-Time Interaction Management (RTIM) report, Q1 2024 (1). Pega earned the top scores in the main scoring categories of ‘current offering’ and ‘strategy,’ as well as the highest possible score in ‘market presence.’ In the report, under the headline “Pegasystems dominates en ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Even though momentum is a popular stock char ...

Key PointsPegasystems provides artificial intelligence (AI) powered tools for customer relationship management (CRM) and business process management (BPM) optimization and automation solutions.Pegasystems reported a blowout Q4 2023 EPS beat by 78 cents and raised full-year 2024 guidance.Pegasystems stock gapped up and closed 35% higher post-earnings.5 stocks we like better than PegasystemsPegasystems Inc. NASDAQ: PEGA is an enterprise software company specializing in helping companies unlock business-transf ...

Financial Data and Key Metrics - The company achieved total revenue of $1.43 billion in 2023, driven by a larger number of term renewals and longer-duration term license contracts in Q4 [131] - Cash flow from operations surged to $218 million, an 800% increase from the prior year, with free cash flow reaching $201 million, the highest in the company's history [132] - Full-year GAAP EPS was $0.73, and non-GAAP EPS was $2.48, exceeding $2 per share for the first time [133] - Pega Cloud ACV growth reaccelerated in Q4 to 21% year-over-year, with $58 million added in Q4 alone, the highest of any quarter [72] - Non-GAAP Pega Cloud margin expanded from 70% to approximately 75% [74] Business Line Performance - Pega Cloud is now the primary offering, enabling clients to focus on developing innovative business applications without managing underlying cloud infrastructure [20] - The company reduced non-GAAP sales and marketing expenses as a percentage of total revenue from 43% to 35% through operational restructuring [21] - The company introduced two new Gen AI offerings: Pega GenAI Knowledge Buddy and Pega GenAI Blueprint, aimed at improving developer productivity and enterprise innovation [12][124] Market Performance - The company's go-to-market strategy resulted in strong Q4 performance, with net new ACV additions exceeding Q4 2022 levels [112] - The company expects ACV growth to be back-end loaded in 2024, with significant renewals and cross-selling opportunities in the final quarter [22] - Pega Cloud ACV growth is expected to continue, with over 50% of ACV coming from Pega Cloud, driving a shift towards shorter-duration term license contracts [23][91] Strategy and Industry Competition - The company is leveraging Gen AI to double developer productivity, enhance client service, and maximize revenue through real-time optimization and personalization [11][63] - Pega's unique architecture, combining AI with enterprise-grade integration and controls, provides a competitive advantage in the market [62][70] - The company is focused on achieving the "rule of 40" by balancing growth and profitability, with double-digit ACV growth and robust free cash flow [24][75] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong demand for AI and the company's unique positioning to help clients leverage Gen AI effectively and safely [4][8] - The company expects total revenue of approximately $1.5 billion in 2024, with ACV growth of 11% and free cash flow increasing by 75% year-over-year to $350 million [76][81] - Management remains cautious about macroeconomic uncertainties, including interest rates and geopolitical risks, but is optimistic about the company's growth trajectory [37][79] Other Important Information - The company will host PegaWorld from June 9 to June 11 in Las Vegas, showcasing client success stories and new innovations [16][113] - The company is evaluating its debt strategy, including potential retirement or refinancing of convertible debt, given its strong cash flow position [54][105] Q&A Session Summary Question: How is Gen AI adoption impacting Pega's business model and revenue? [87] - Gen AI is expected to drive consumption rather than distinct SKU pricing, with adoption rates likely to increase over the next 1-3 years [87][88] - The primary value of Gen AI is reducing barriers to entry for clients, accelerating ACV growth, and enabling faster deployment of enterprise-grade applications [142][143] Question: How is Pega positioning itself in the competitive Gen AI landscape? [140] - Pega is integrating Gen AI into its core product lineup, focusing on enterprise-grade solutions that differentiate it from competitors [80][138] - The company's unique architecture and focus on business outcomes rather than just code generation provide a competitive edge [62][70] Question: What are the investment priorities for 2024? [149] - The company plans to continue leveraging operating expenses across all lines, with a focus on go-to-market transformation and expanding client engagement [149] - Investments in Gen AI, Launchpad, and cloud infrastructure remain key priorities [95][103] Question: How is Pega addressing the shift to shorter contract durations? [157] - Shorter contract durations reflect clients' preference for consumptive growth and more frequent renewals, providing opportunities for cross-selling and upselling [23][45] Question: How is Pega leveraging autonomous agents powered by Gen AI? [99] - Pega is integrating autonomous agents into its product roadmap, focusing on streamlining workflows and enhancing customer experiences [49][100] - The company recently rolled out voice AI capabilities, enabling real-time conversation analysis and field population for call center agents [100]

Shares of Pegasystems (PEGA 30.28%) were surging higher Thursday after the low-code software company breezed past estimates in its fourth-quarter earnings report.As of 1 p.m. ET, the stock was up 31.9%. How Pegasystems wowed the marketPegasystems' revenue growth accelerated from earlier in the year to 20%, reaching $474.2 million, which was much better than the consensus estimate of $413.6 million. Growth in annual contract value increased 11% to $1.26 billion as the company is seeing demand for AI products ...