Core Insights - Pegasystems (PEGA) reported strong third-quarter 2025 results with non-GAAP earnings of $0.30 per share, exceeding the Zacks Consensus Estimate by 66.67% and reflecting a 58% year-over-year increase [1][7] - Revenues reached $381.35 million, surpassing the Zacks Consensus Estimate by 7.42% and showing a 17% year-over-year growth [1][7] Financial Performance - Subscription services revenues, including Pega Cloud and Maintenance, totaled $264.2 million, accounting for 69% of total revenues and increasing 18% year-over-year [2] - Subscription license revenues, which represent 16% of total revenues, were $60.6 million, marking a 33% year-over-year growth [3] - Total subscription revenues, combining subscription services and licenses, rose 20% year-over-year to $324.8 million, contributing 85% to total revenues [3] - Consulting revenues, making up 15% of total revenues, were $56.4 million, up 4% year-over-year [3] - Perpetual license revenues, which accounted for 41.4% of total revenues, declined 65% year-over-year to $158 million [4] Growth Metrics - Pega Cloud's Annual Contract Value (ACV) increased 27% year-over-year to $815 million [4] - Total ACV rose 14% year-over-year, reaching $1.557 billion [5] - The company's backlog grew 19% year-over-year, indicating strong demand for its services and products [5] Operating Results - Gross margin expanded by 190 basis points year-over-year to 72.3% [6] - Total operating expenses increased by 8.7% year-over-year to $261 million, with operating expenses as a percentage of revenues decreasing by 550 basis points [6] Cash Flow and Shareholder Returns - As of September 30, 2025, cash and cash equivalents and marketable securities stood at $351.3 million, down from $411.6 million as of June 30, 2025 [9] - Operating cash flow increased by over 38% year-over-year to $347 million, while free cash flow also grew by 38% to approximately $338 million [9] - The company repurchased 8.7 million shares for $393 million in the year-to-date period [9]

Core Insights - Pegasystems (PEGA) reported strong second-quarter 2025 results with non-GAAP earnings of 28 cents per share, exceeding the Zacks Consensus Estimate by 16.67% and reflecting a year-over-year increase of 7.7% [1][8] - Revenues reached $384.5 million, surpassing the Zacks Consensus Estimate by 4.27% and showing a year-over-year growth of 9.5% [1][8] Performance Highlights - The company's performance was driven by its AI strategy, particularly the Pega Blueprint platform, which enhanced AI-integrated workflows and cloud subscriptions, leading to higher Annual Contract Value (ACV), backlog, and margin gains [2] - Subscription services revenues, including Pega Cloud and Maintenance, totaled $246 million, accounting for 64% of total revenues and increasing by 14.7% year over year [4] - Total Subscription revenues rose 9% year over year to $326 million, contributing 84.8% to total revenues [4] Revenue Breakdown - Subscription license revenues were $80 million, representing 20.8% of total revenues, but declined by 5.5% year over year [4] - Consulting revenues increased by 11.1% year over year to $57.8 million, making up 15% of total revenues [5] - Perpetual license revenues surged 1,875% year over year to $0.7 million, although this segment remains a minor contributor [5] Growth Metrics - Pega Cloud's ACV increased by 28% year over year to $761 million, while Client Cloud ACV rose 6% year over year to $753 million [5] - Total ACV grew 16% year over year, reaching $1.514 billion, with backlog increasing by 31% year over year, indicating strong demand for services [6][8] Operating Results - Gross margin contracted by 90 basis points year over year to 71.5%, while total operating expenses rose by 6.8% year over year to $257.7 million [7] - Operating income increased by 33.3% year over year to $17.3 million, with the operating margin expanding by 80 basis points to 4.5% [9] Financial Position - As of June 30, 2025, cash and cash equivalents and marketable securities stood at $411.6 million, up from $371.7 million as of March 31, 2025 [10] - Year-to-date operating cash flow rose over 32% year over year to $290 million, while free cash flow grew by 31% to approximately $286 million [10] Market Position - Pegasystems currently holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence [11]