PEGA(US:PEGA)2025-10-21 20:07Financial Performance - Total revenue for Q3 2025 was $381.35 million, a 17% increase from $325.05 million in Q3 2024[11] - Net income (GAAP) for Q3 2025 was $43.36 million, compared to a loss of $14.39 million in Q3 2024[11] - Non-GAAP net income for Q3 2025 was $55.16 million, a 59% increase from $34.59 million in Q3 2024[11] - Net income for the nine months ended September 30, 2025, was $158,863 thousand, a significant improvement compared to a net loss of $19,901 thousand for the same period in 2024[30] - Non-GAAP net income for the nine months ended September 30, 2025, was $245,857 thousand, a 101% increase compared to $122,589 thousand in 2024[33] - Diluted earnings per share on a non-GAAP basis increased by 94%, from $0.69 in 2024 to $1.34 in 2025[33] Revenue Growth - Annual Contract Value (ACV) grew 14% year over year, reaching $1,557 million[8] - Pega Cloud ACV increased 27% year over year, contributing to strong sales performance[7] - Subscription services revenue for Q3 2025 was $264.20 million, up 18% from $224.81 million in Q3 2024[12] - Pega Cloud revenue increased to $815.37 million, a 27% growth compared to $640.57 million in the previous year[41] - Subscription services revenue rose to $1.11 billion, reflecting a 17% increase from $947.33 million year-over-year[41] - Total revenue for the company reached $1.56 billion, marking a 14% increase from $1.36 billion in the prior year[41] Cash Flow and Operations - Cash flow from operations grew 38% year over year, totaling $347 million[7] - Cash provided by operating activities increased by 38%, from $250,697 thousand in 2024 to $346,796 thousand in 2025[38] - Free cash flow for the nine months ended September 30, 2025, was $338,311 thousand, up 38% from $245,776 thousand in 2024[38] - The company reported a net decrease in cash, cash equivalents, and restricted cash of $187,727 thousand for the nine months ended September 30, 2025[30] Backlog and Future Revenue - The backlog as of September 30, 2025, was $1.75 billion, representing a 19% growth from $1.48 billion in the previous year[45] - Constant currency backlog was $1.75 billion, an 18% increase when applying prior year foreign exchange rates[45] - The backlog for contracts with a duration of one year or less accounted for 51% of total backlog, totaling $899.53 million[44] - The company reported a 21% increase in backlog for contracts lasting one year or less compared to the previous year[44] - Future revenue from existing non-cancellable contracts is expected to contribute significantly to the company's growth strategy[44] Legal and Asset Management - The company incurred legal fees of $15,022 thousand for the nine months ended September 30, 2025, compared to $9,232 thousand in 2024[38] - Total assets decreased from $1,768,273 thousand as of December 31, 2024, to $1,292,786 thousand as of September 30, 2025, representing a decline of approximately 27%[28] - Total current liabilities decreased from $1,086,058 thousand as of December 31, 2024, to $597,452 thousand as of September 30, 2025, a reduction of approximately 45%[28] Strategic Focus - Pega's strong performance reflects its leadership in digital transformation and expanding AI opportunities[3] - The company plans to continue investing in artificial intelligence and expanding its market presence[22] - The annual contract value (ACV) is a key performance measure that reflects the annualized value of active contracts, providing useful information for management and investors[40]