Core Insights - ServiceNow (NOW) and Pegasystems (PEGA) are key players in the workflow automation sector, leveraging automation and AI to enhance business processes [1][2] - The workflow automation market is projected to grow from $23.77 billion in 2025 to $37.45 billion by 2030, with a CAGR of 9.52% [2] ServiceNow (NOW) Overview - ServiceNow is experiencing increased adoption of its workflows as enterprises undergo digital transformation [3] - The company reported 72 transactions exceeding $1 million in net new annual contract value (ACV) in Q1 2025, with a total of 508 customers having more than $5 million in ACV, reflecting a 20% year-over-year growth [4] - In May 2025, ServiceNow launched its Core Business Suite, an AI-powered solution aimed at streamlining core business operations across various departments [5] - A strong partner ecosystem, including major companies like Amazon and Microsoft, is a significant driver for ServiceNow's future growth [6] Pegasystems (PEGA) Overview - Pegasystems is benefiting from the demand for its GenAI Blueprint solution, which utilizes AI to enhance enterprise workflow applications, with over 1,000 new Blueprints created weekly [7][10] - PEGA has expanded its platform with advanced AI capabilities to modernize legacy systems into cloud-ready applications [8] - The company introduced the Powered by Pega Blueprint solution, allowing system integrators to incorporate their expertise into Pega's AI-driven workflow designer [9] - PEGA reported a 13% year-over-year increase in ACV to $1.45 billion in Q1 2025, driven by the strong demand for its GenAI Blueprint [10] Stock Performance and Valuation - Year-to-date, NOW shares have decreased by 4.5%, while PEGA shares have increased by 4% [12] - NOW has a forward Price/Sales ratio of 14.95X, significantly higher than PEGA's 5.04X [11][15] - The Zacks Consensus Estimate for NOW's 2025 earnings is $16.51 per share, indicating an 18.61% year-over-year increase, while PEGA's estimate is $3.30 per share, reflecting an 8.91% increase [17] Conclusion - Both NOW and PEGA are positioned to benefit from the growing workflow automation market, but PEGA shows greater upside potential due to its rising adoption of GenAI Blueprint and strong partner engagement [19]

Core Viewpoint - Pegasystems has demonstrated strong performance in Q1 2025, with significant growth in sales and adjusted earnings, driven by its GenAI product and cloud migration strategy [1][2][3]. Financial Performance - In Q1 2025, Pegasystems reported sales of nearly $476 million, exceeding expectations by $119 million [2]. - Adjusted earnings per share (EPS) were $1.53, beating estimates by $0.50 [2]. - Free cash flow reached a record of $202 million [2]. Annual Contract Value (ACV) Growth - The company's ACV increased by 13% in the quarter, which is considered its most important business indicator [3]. - Pega Cloud's ACV grew by 23%, significantly outpacing the growth of its client-managed offering, Client Cloud [3]. - Pega Cloud currently accounts for approximately 48% of total ACV, indicating potential for margin growth as more clients transition to this higher-margin service [3]. Product Innovation: GenAI Blueprint - Pega GenAI Blueprint is designed to enhance legacy workflows and create AI-centric applications, automating previously manual processes [4][5]. - The product is gaining traction, with over 1,000 new blueprints created weekly, doubling engagement from the previous month [6]. - GenAI Blueprint is seen as a key driver of strong ACV growth and is influencing customer relationships positively [7]. Market Potential and Stock Forecast - The market opportunity for GenAI Blueprint is substantial, with Pegasystems valued at under $8 billion as of April 28 [8]. - Analysts project a 12-month stock price forecast of $100.27, indicating a potential upside of 10% from the current price of $91.16 [7]. - Updated price targets suggest an average upside of approximately 17% over the next 12 months [9].