PEGA(US:PEGA)2026-02-11 14:02Financial Data and Key Metrics Changes - Total ACV grew 17% year-over-year, as reported, and 14% in constant currency, exceeding guidance [7] - Pega Cloud ACV increased 33% year-over-year as reported, and 28% in constant currency, a significant acceleration from last year's growth [7][10] - Free cash flow rose 45% year-over-year to $491 million, surpassing guidance by $51 million [10] - Contractually committed backlog grew 28% year-over-year, exceeding $2 billion for the first time in Pega's history [11] Business Line Data and Key Metrics Changes - Pega Cloud backlog now represents 74% of total backlog, indicating strong growth in cloud services [12] - Net new ACV increased by 37% year-over-year in constant currency, driven by strong demand for Pega's Predictable AI agents [9] Market Data and Key Metrics Changes - The company reported a strong demand for its services, particularly in the context of digital transformation and legacy system modernization [43][66] - The competitive landscape is shifting, with a focus on AI and automation, which Pega is well-positioned to leverage [19][86] Company Strategy and Development Direction - Pega's strategy emphasizes a cloud-first approach and the integration of AI into its platform, particularly through the Blueprint experiential sales approach [8][10] - The company aims to achieve $2 billion in total revenue for 2026, marking a significant milestone [12] - Pega is focused on organic growth, product innovation, and maintaining a strong balance sheet while returning capital to shareholders [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of ACV growth due to Pega's deep integration into clients' core operations [9] - The company anticipates continued growth in Pega Cloud revenue, expected to accelerate above 30% in 2026 [15] - Management highlighted the importance of transforming customer engagement from experimentation to execution [37] Other Important Information - Pega achieved ISO 42001 certification across its cloud services and AI solutions, enhancing its compliance credibility [9] - The company is actively working on app modernization, leveraging partnerships with firms like Accenture and AWS [66] Q&A Session Summary Question: What is the current deal environment and macroeconomic outlook? - Management noted that the Blueprint approach reduces friction in client engagement, leading to an exciting pipeline [41] Question: What gives confidence in achieving the 15% ACV growth target? - Management highlighted an expanding net retention rate and successful targeting of new logos as key factors [46] Question: How is Blueprint impacting sales cycles and deployment times? - Early signs indicate faster pipeline build and progression, with a significant reduction in training time for new staff [58][61] Question: What is the status of app modernization efforts? - Management reported strong interest from clients in app modernization, with capabilities to modernize both legacy and old Pega systems [66] Question: How is the partnership with AWS evolving? - The partnership focuses on transforming legacy workflows using Blueprint, aligning both companies' selling strategies [78]