PEGA(US:PEGA)2025-07-23 13:00Financial Data and Key Metrics Changes - Annual contract value (ACV) grew 16% year over year, with a 14% increase in constant currency [28] - Net new ACV added increased by 60% year over year in constant currency [28] - Total ACV exceeded $1.5 billion for the first time in company history, with Pega Cloud ACV growth of 28% reported and 25% in constant currency [29] - Free cash flow growth reached $286 million in the first half of 2025, driven by accelerated ACV growth and margin expansion [30][31] - Total remaining performance obligation increased by 31% reported and 27% in constant currency year over year [31] Business Line Data and Key Metrics Changes - Pega's GenAI Blueprint is transforming the go-to-market strategy, leading to significant business activity in Q2 [28][29] - Pega Cloud bookings primarily contribute to backlog, creating a predictable future revenue stream [32] Market Data and Key Metrics Changes - The company is experiencing increased engagement and interest in its offerings, particularly in the context of AI and legacy transformation [50][72] - The public sector is showing strong demand for cloud and digital transformation solutions, with significant projects ongoing [71][72] Company Strategy and Development Direction - The company emphasizes a unique AI-driven approach that combines creativity during the design phase with predictability during production [12][15] - Pega Blueprint is positioned as a key differentiator, allowing users to design applications quickly and effectively [10][19] - The company is focusing on expanding its partner ecosystem and enhancing collaboration with global systems integrators [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a level of unpredictability in the market but does not see significant headwinds affecting business [49] - The focus on AI and legacy transformation is expected to drive growth in the coming years [50][59] - The company aims to maintain momentum in ACV growth and free cash flow generation throughout the year [52][39] Other Important Information - The company has launched partner-branded Blueprints, attracting interest from major systems integrators [19] - A five-year strategic collaboration agreement with AWS was announced, enhancing the accessibility of Pega's software [20] Q&A Session Summary Question: Inquiry about Pega Cloud's ACV growth - Management indicated that Blueprint is a significant driver of business activity and is engaged in every sales campaign [43] Question: Discussion on renewal cycles - Management noted that Q1 had a higher renewal cycle compared to Q2, but Q2 was not unusual [45] Question: Deal environment and customer focus - Management observed a trend of increased interest in legacy transformation and AI adoption among clients [50] Question: Impact of ACV strength on future expectations - Management aims to maintain momentum and not view strong first-half performance as a substitute for second-half results [52] Question: Public sector deal elongation - Management noted some projects may have been reshuffled but sees potential tailwinds from government efficiency initiatives [70][72] Question: Competition for Blueprint - Management stated that Blueprint does not have direct competitors but faces competition from other software vendors like Salesforce and ServiceNow [99]