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    Pega's AI Innovation Drives Strong ACV Growth and Record Cash Flow in Q4 2024

    2/12/25 4:25:00 PM ET
    $PEGA
    EDP Services
    Technology
    Get the next $PEGA alert in real time by email
    • Operating cash flow grows to $346 million and free cash flow grows to $338 million in 2024
    • Annual Contract Value (ACV) grows 9% year over year (11% in constant currency)
    • Pega Cloud ACV grows 18% year over year (21% in constant currency)
    • 2025 guidance of 12% ACV growth, $455 million in cash flow from operations, and $440 million in free cash flow

    Pegasystems Inc. (NASDAQ:PEGA), the Enterprise Transformation Company™, released its financial results for the fourth quarter and full-year 2024.

    This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250212298048/en/

    Total ACV Growth and Pega Cloud ACV Growth (Graphic: Business Wire)

    Total ACV Growth and Pega Cloud ACV Growth (Graphic: Business Wire)

    "2024 was a transformative year for Pega, the industry, and our clients," said Alan Trefler, Pega founder and CEO. "Our team's impressive performance drove the introduction of the most innovative solutions in our history. The reaction from our clients and partners has been remarkable, leading to deeper engagement and new opportunities.

    "We met or exceeded our financial objectives for 2024 including becoming a Rule of 40 company," said Ken Stillwell, Pega COO and CFO. "We're committed to accelerating growth and free cash flow in 2025 and beyond."

    Financial and performance metrics (1)

    Reconciliation of ACV and Constant Currency ACV

     

    (in millions, except percentages)

    December 31, 2023

     

    December 31, 2024

     

    1-Year Change

    ACV

    $

    1,255

     

    $

    1,372

     

    9

    %

    Impact of changes in foreign exchange rates

     

    —

     

     

    23

     

     

    Constant currency ACV

    $

    1,255

     

    $

    1,395

     

    11

    %

    Note: Constant currency ACV is calculated by applying the December 31, 2023 foreign exchange rates to all periods shown.

    _____________________________

    1 Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.

    (Dollars in thousands,

    except per share amounts)

    Three Months Ended

    December 31,

     

     

     

    Year Ended

    December 31,

     

     

     

    2024

     

     

    2023

     

    Change

     

     

    2024

     

     

    2023

     

    Change

    Total revenue

    $

    490,830

     

    $

    474,233

     

    3

    %

     

    $

    1,497,180

     

    $

    1,432,616

     

    5

    %

    Net income - GAAP

    $

    119,090

     

    $

    142,665

     

    (17

    )%

     

    $

    99,189

     

    $

    67,808

     

    46

    %

    Net income - non-GAAP

    $

    147,953

     

    $

    152,141

     

    (3

    )%

     

    $

    270,542

     

    $

    210,159

     

    29

    %

    Diluted earnings per share - GAAP

    $

    1.25

     

    $

    1.61

     

    (22

    )%

     

    $

    1.11

     

    $

    0.73

     

    52

    %

    Diluted earnings per share - non-GAAP

    $

    1.61

     

    $

    1.77

     

    (9

    )%

     

    $

    3.03

     

    $

    2.48

     

    22

    %

    (Dollars in thousands)

    Three Months Ended

    December 31,

     

    Change

     

    Year Ended

    December 31,

     

    Change

    2024

     

    2023

     

     

    2024

     

    2023

     

    Pega Cloud

    $

    149,638

    30

    %

     

    $

    120,346

    25

    %

     

    $

    29,292

     

    24

    %

     

    $

    558,734

    37

    %

     

    $

    461,328

    32

    %

     

    $

    97,406

     

    21

    %

    Maintenance

     

    81,257

    17

    %

     

     

    86,646

    18

    %

     

     

    (5,389

    )

    (6

    )%

     

     

    323,304

    22

    %

     

     

    331,856

    24

    %

     

     

    (8,552

    )

    (3

    )%

    Subscription services

     

    230,895

    47

    %

     

     

    206,992

    43

    %

     

     

    23,903

     

    12

    %

     

     

    882,038

    59

    %

     

     

    793,184

    56

    %

     

     

    88,854

     

    11

    %

    Subscription license

     

    204,697

    42

    %

     

     

    207,559

    44

    %

     

     

    (2,862

    )

    (1

    )%

     

     

    398,102

    27

    %

     

     

    407,625

    28

    %

     

     

    (9,523

    )

    (2

    )%

    Subscription

     

    435,592

    89

    %

     

     

    414,551

    87

    %

     

     

    21,041

     

    5

    %

     

     

    1,280,140

    86

    %

     

     

    1,200,809

    84

    %

     

     

    79,331

     

    7

    %

    Consulting

     

    52,822

    11

    %

     

     

    54,310

    12

    %

     

     

    (1,488

    )

    (3

    )%

     

     

    213,273

    14

    %

     

     

    221,706

    15

    %

     

     

    (8,433

    )

    (4

    )%

    Perpetual license

     

    2,416

    —

    %

     

     

    5,372

    1

    %

     

     

    (2,956

    )

    (55

    )%

     

     

    3,767

    —

    %

     

     

    10,101

    1

    %

     

     

    (6,334

    )

    (63

    )%

    Total revenue

    $

    490,830

    100

    %

     

    $

    474,233

    100

    %

     

    $

    16,597

     

    3

    %

     

    $

    1,497,180

    100

    %

     

    $

    1,432,616

    100

    %

     

    $

    64,564

     

    5

    %

    2025 Guidance (1)

    As of February 12, 2025, we are providing the following guidance:

     

    2025

    Annual contract value growth

    12%

     

    2025

     

    GAAP

     

    Non-GAAP (1)

    Revenue

    $1.6 Billion

     

    $1.6 Billion

    Diluted earnings per share

    $1.60

     

    $3.10

     

    2025

    Cash provided by operating activities

    $455 million

    Free cash flow

    $440 million

     

    (1) A reconciliation of our GAAP and Non-GAAP guidance is contained in the financial schedules at the end of this release.

    Quarterly conference call

    A conference call and audio-only webcast will be conducted at 8:00 a.m. EST on Thursday, February 13, 2025.

    Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (800) 715-9871 (domestic) or 1 (646) 307-1963 (international) and using Conference ID 3830305, or via https://events.q4inc.com/attendee/343473625 by logging onto www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in the Investors section.

    Discussion of non-GAAP financial measures

    Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. Management uses these measures to assess the performance of the company's operations and establish operational goals and incentives. They are not a substitute for financial measures prepared under U.S. GAAP. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.

    Forward-looking statements

    Certain statements in this press release may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995.

    Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements. These statements represent our views only as of the date the statement was made and are based on current expectations and assumptions.

    Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:

    • our future financial performance and business plans;
    • the adequacy of our liquidity and capital resources;
    • the successful execution of investments in artificial intelligence;
    • the continued payment of our quarterly dividends;
    • the timing of revenue recognition;
    • variation in demand for our products and services, including among clients in the public sector;
    • reliance on key personnel;
    • reliance on third-party service providers, including hosting providers;
    • compliance with our debt obligations and covenants;
    • foreign currency exchange rates;
    • potential legal and financial liabilities, as well as damage to our reputation, due to cyber-attacks;
    • security breaches and security flaws;
    • our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims, and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
    • our ongoing litigation with Appian Corp.;
    • our client retention rate; and
    • management of our growth.

    These risks and others that may cause actual results to differ materially from those expressed in such forward-looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, and other filings we make with the U.S. Securities and Exchange Commission ("SEC").

    Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included in such statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements, whether as the result of new information, future events, or otherwise.

    Any forward-looking statements in this press release represent our views as of February 12, 2025.

    About Pegasystems

    Pega is The Enterprise Transformation Company that helps organizations Build for Change® with enterprise AI decisioning and workflow automation. Many of the world's most influential businesses rely on our platform to solve their most pressing challenges, from personalizing engagement to automating service to streamlining operations. Since 1983, we've built our scalable and flexible architecture to help enterprises meet today's customer demands while continuously transforming for tomorrow. For more information on Pega (NASDAQ:PEGA), visit www.pega.com.

    All trademarks are the property of their respective owners.

    PEGASYSTEMS INC.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (in thousands, except per share amounts)

     

    Three Months Ended

    December 31,

     

    Year Ended

    December 31,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Revenue

     

     

     

     

     

     

     

    Subscription services

    $

    230,895

     

     

    $

    206,992

     

     

    $

    882,038

     

     

    $

    793,184

     

    Subscription license

     

    204,697

     

     

     

    207,559

     

     

     

    398,102

     

     

     

    407,625

     

    Consulting

     

    52,822

     

     

     

    54,310

     

     

     

    213,273

     

     

     

    221,706

     

    Perpetual license

     

    2,416

     

     

     

    5,372

     

     

     

    3,767

     

     

     

    10,101

     

    Total revenue

     

    490,830

     

     

     

    474,233

     

     

     

    1,497,180

     

     

     

    1,432,616

     

    Cost of revenue

     

     

     

     

     

     

     

    Subscription services

     

    40,988

     

     

     

    34,697

     

     

     

    149,918

     

     

     

    144,250

     

    Subscription license

     

    384

     

     

     

    635

     

     

     

    1,888

     

     

     

    2,606

     

    Consulting

     

    60,978

     

     

     

    55,298

     

     

     

    238,842

     

     

     

    231,560

     

    Perpetual license

     

    5

     

     

     

    16

     

     

     

    17

     

     

     

    67

     

    Total cost of revenue

     

    102,355

     

     

     

    90,646

     

     

     

    390,665

     

     

     

    378,483

     

    Gross profit

     

    388,475

     

     

     

    383,587

     

     

     

    1,106,515

     

     

     

    1,054,133

     

    Operating expenses

     

     

     

     

     

     

     

    Selling and marketing

     

    139,655

     

     

     

    133,924

     

     

     

    534,780

     

     

     

    559,177

     

    Research and development

     

    76,379

     

     

     

    71,250

     

     

     

    298,074

     

     

     

    295,512

     

    General and administrative

     

    28,207

     

     

     

    22,850

     

     

     

    112,848

     

     

     

    96,743

     

    Litigation settlement, net of recoveries

     

    —

     

     

     

    —

     

     

     

    32,403

     

     

     

    —

     

    Restructuring

     

    1,245

     

     

     

    297

     

     

     

    4,528

     

     

     

    21,747

     

    Total operating expenses

     

    245,486

     

     

     

    228,321

     

     

     

    982,633

     

     

     

    973,179

     

    Income from operations

     

    142,989

     

     

     

    155,266

     

     

     

    123,882

     

     

     

    80,954

     

    Foreign currency transaction gain (loss)

     

    6,318

     

     

     

    (1,271

    )

     

     

    (912

    )

     

     

    (5,242

    )

    Interest income

     

    6,944

     

     

     

    3,428

     

     

     

    25,779

     

     

     

    9,259

     

    Interest expense

     

    (1,788

    )

     

     

    (1,647

    )

     

     

    (6,835

    )

     

     

    (6,876

    )

    Gain (loss) on capped call transactions

     

    4

     

     

     

    (899

    )

     

     

    (663

    )

     

     

    (1,348

    )

    Other (loss) income, net

     

    (299

    )

     

     

    25

     

     

     

    1,385

     

     

     

    18,693

     

    Income before provision for income taxes

     

    154,168

     

     

     

    154,902

     

     

     

    142,636

     

     

     

    95,440

     

    Provision for income taxes

     

    35,078

     

     

     

    12,237

     

     

     

    43,447

     

     

     

    27,632

     

    Net income

    $

    119,090

     

     

    $

    142,665

     

     

    $

    99,189

     

     

    $

    67,808

     

    Earnings per share

     

     

     

     

     

     

     

    Basic

    $

    1.38

     

     

    $

    1.71

     

     

    $

    1.16

     

     

    $

    0.82

     

    Diluted

    $

    1.25

     

     

    $

    1.61

     

     

    $

    1.11

     

     

    $

    0.73

     

    Weighted-average number of common shares outstanding

     

     

     

     

     

     

     

    Basic

     

    86,000

     

     

     

    83,654

     

     

     

    85,265

     

     

     

    83,162

     

    Diluted

     

    95,636

     

     

     

    89,447

     

     

     

    89,634

     

     

     

    84,914

     

    PEGASYSTEMS INC.

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    (in thousands)

     

    December 31, 2024

     

    December 31, 2023

    Assets

     

     

     

    Current assets:

     

     

     

    Cash and cash equivalents

    $

    337,103

     

    $

    229,902

    Marketable securities

     

    402,870

     

     

    193,436

    Total cash, cash equivalents, and marketable securities

     

    739,973

     

     

    423,338

    Accounts receivable, net

     

    305,468

     

     

    300,173

    Unbilled receivables, net

     

    173,085

     

     

    237,379

    Other current assets

     

    115,178

     

     

    68,137

    Total current assets

     

    1,333,704

     

     

    1,029,027

    Long-term unbilled receivables, net

     

    61,407

     

     

    85,402

    Goodwill

     

    81,113

     

     

    81,611

    Other long-term assets

     

    292,049

     

     

    314,696

    Total assets

    $

    1,768,273

     

    $

    1,510,736

    Liabilities and stockholders' equity

     

     

     

    Current liabilities:

     

     

     

    Accounts payable

    $

    6,226

     

    $

    11,290

    Accrued expenses

     

    31,544

     

     

    39,941

    Accrued compensation and related expenses

     

    138,042

     

     

    126,640

    Deferred revenue

     

    423,910

     

     

    377,845

    Convertible senior notes, net

     

    467,470

     

     

    —

    Other current liabilities

     

    18,866

     

     

    21,343

    Total current liabilities

     

    1,086,058

     

     

    577,059

    Long-term convertible senior notes, net

     

    —

     

     

    499,368

    Long-term operating lease liabilities

     

    67,647

     

     

    66,901

    Other long-term liabilities

     

    29,088

     

     

    13,570

    Total liabilities

     

    1,182,793

     

     

    1,156,898

    Total stockholders' equity

     

    585,480

     

     

    353,838

    Total liabilities and stockholders' equity

    $

    1,768,273

     

    $

    1,510,736

    PEGASYSTEMS INC.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (in thousands)

     

    Year Ended

    December 31,

     

     

    2024

     

     

     

    2023

     

    Net income

    $

    99,189

     

     

    $

    67,808

     

    Adjustments to reconcile net income to cash provided by operating activities

     

     

     

    Non-cash items

     

    227,582

     

     

     

    227,983

     

    Change in operating assets and liabilities, net

     

    19,155

     

     

     

    (78,006

    )

    Cash provided by operating activities

     

    345,926

     

     

     

    217,785

     

    Cash (used in) investing activities

     

    (202,576

    )

     

     

    (50,750

    )

    Cash (used in) financing activities

     

    (30,214

    )

     

     

    (81,963

    )

    Effect of exchange rate changes on cash, cash equivalents, and restricted cash

     

    (4,434

    )

     

     

    2,701

     

    Net increase in cash, cash equivalents, and restricted cash

     

    108,702

     

     

     

    87,773

     

    Cash, cash equivalents, and restricted cash, beginning of period

     

    232,827

     

     

     

    145,054

     

    Cash, cash equivalents, and restricted cash, end of period

    $

    341,529

     

     

    $

    232,827

     

    PEGASYSTEMS INC.

    RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES

    (in thousands, except percentages and per share amounts)

     

    Three Months Ended

    December 31,

     

    Year Ended

    December 31,

     

    2024

     

     

     

    2023

     

     

    Change

     

     

    2024

     

     

     

    2023

     

     

    Change

    Net income - GAAP

    $

    119,090

     

     

    $

    142,665

     

     

    (17

    )%

     

    $

    99,189

     

     

    $

    67,808

     

     

    46

    %

    Stock-based compensation (1)

     

    34,500

     

     

     

    33,269

     

     

     

     

     

    142,718

     

     

     

    143,352

     

     

     

    Restructuring

     

    1,245

     

     

     

    297

     

     

     

     

     

    4,528

     

     

     

    21,747

     

     

     

    Legal fees

     

    4,499

     

     

     

    2,817

     

     

     

     

     

    18,713

     

     

     

    13,883

     

     

     

    Litigation settlement, net of recoveries

     

    —

     

     

     

    —

     

     

     

     

     

    32,403

     

     

     

    —

     

     

     

    Amortization of intangible assets

     

    700

     

     

     

    963

     

     

     

     

     

    3,153

     

     

     

    3,940

     

     

     

    Interest on convertible senior notes

     

    594

     

     

     

    615

     

     

     

     

     

    2,451

     

     

     

    2,603

     

     

     

    Capped call transactions

     

    (4

    )

     

     

    899

     

     

     

     

     

    663

     

     

     

    1,348

     

     

     

    Repurchases of convertible senior notes

     

    (459

    )

     

     

    —

     

     

     

     

     

    (459

    )

     

     

    (7,855

    )

     

     

    Foreign currency transaction (gain) loss

     

    (6,318

    )

     

     

    1,271

     

     

     

     

     

    912

     

     

     

    5,242

     

     

     

    Other

     

    759

     

     

     

    19

     

     

     

     

     

    (869

    )

     

     

    (10,266

    )

     

     

    Income taxes (2)

     

    (6,653

    )

     

     

    (30,674

    )

     

     

     

     

    (32,860

    )

     

     

    (31,643

    )

     

     

    Net income - non-GAAP

    $

    147,953

     

     

    $

    152,141

     

     

    (3

    )%

     

    $

    270,542

     

     

    $

    210,159

     

     

    29

    %

     

     

     

     

     

     

     

     

     

     

     

     

    Diluted earnings per share - GAAP

    $

    1.25

     

     

    $

    1.61

     

     

    (22

    )%

     

    $

    1.11

     

     

    $

    0.73

     

     

    52

    %

    non-GAAP adjustments

     

    0.36

     

     

     

    0.16

     

     

     

     

     

    1.92

     

     

     

    1.75

     

     

     

    Diluted earnings per share - non-GAAP

    $

    1.61

     

     

    $

    1.77

     

     

    (9

    )%

     

    $

    3.03

     

     

    $

    2.48

     

     

    22

    %

     

     

     

     

     

     

     

     

     

     

     

     

    Diluted weighted-average number of common shares outstanding - GAAP

     

    95,636

     

     

     

    89,447

     

     

    7

    %

     

     

    89,634

     

     

     

    84,914

     

     

    6

    %

    Capped call transactions

     

    (3,553

    )

     

     

    (3,719

    )

     

     

     

     

    (214

    )

     

     

    (235

    )

     

     

    Diluted weighted-average number of common shares outstanding - non-GAAP

     

    92,083

     

     

     

    85,728

     

     

    7

    %

     

     

    89,420

     

     

     

    84,679

     

     

    6

    %

    Our non-GAAP financial measures reflect the following adjustments:

    • Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance, excluding stock-based compensation.
    • Restructuring: We have excluded restructuring from our non-GAAP financial measures. Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as these amounts are not representative of our core business operations and ongoing operational performance.
    • Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
    • Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See "Note 20. Commitments And Contingencies" in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
    • Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
    • Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. We believe that excluding the amortization of issuance costs provides a useful comparison of our operational performance in different periods.
    • Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the convertible senior notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
    • Repurchases of convertible senior notes: We have excluded gains from the repurchases of Convertible Senior Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
    • Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
    • Other: We have excluded gains and losses from our venture investments and expenses incurred due to the cancellation of in-person sales and marketing events. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
    • Diluted weighted-average number of common shares outstanding:
      • Capped call transactions: In periods of GAAP income, the shares that would be issued if the Company's Convertible Senior Notes were fully converted to common shares are included in the diluted weighted-average shares outstanding. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the convertible senior notes, with such reduction and/or offset subject to a cap of $196.44. We believe that including the expected impact of the capped call transactions in our non-GAAP financial measures provides a useful comparison of our operational performance in different periods.

    (1) Stock-based compensation:

     

    Three Months Ended

    December 31,

     

    Year Ended

    December 31,

    (Dollars in thousands)

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Cost of revenue

    $

    6,795

     

     

    $

    6,497

     

     

    $

    27,353

     

     

    $

    28,994

     

    Selling and marketing

     

    13,463

     

     

     

    14,265

     

     

     

    55,084

     

     

     

    57,675

     

    Research and development

     

    7,059

     

     

     

    6,753

     

     

     

    29,838

     

     

     

    31,039

     

    General and administrative

     

    7,183

     

     

     

    5,754

     

     

     

    30,443

     

     

     

    25,644

     

     

    $

    34,500

     

     

    $

    33,269

     

     

    $

    142,718

     

     

    $

    143,352

     

    Income tax benefit

    $

    (422

    )

     

    $

    (618

    )

     

    $

    (1,799

    )

     

    $

    (2,187

    )

    (2) Effective income tax rates:

     

    Year Ended

    December 31,

     

    2024

     

     

    2023

     

    GAAP

    30

    %

     

    29

    %

    non-GAAP

    22

    %

     

    22

    %

    Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including our stock-based compensation plans, research and development tax credits, and the valuation allowance on our deferred tax assets in the U.S. and U.K. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP results consistent with our annual plan's effective income tax rate as established at the beginning of each year, given tax rate volatility. See "Note 18. Income Taxes" in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information.

    PEGASYSTEMS INC.

    RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS

    (in thousands, except percentages)

     

    Year Ended

    December 31,

     

    Change

     

    2024

     

     

     

    2023

     

     

    Cash provided by operating activities

    $

    345,926

     

     

    $

    217,785

     

     

    59

    %

    Investment in property and equipment

     

    (7,712

    )

     

     

    (16,781

    )

     

     

    Free cash flow (1)

    $

    338,214

     

     

    $

    201,004

     

     

    68

    %

     

     

     

     

     

     

    Supplemental information (2)

     

     

     

     

     

    Litigation settlement, net of recoveries

    $

    32,403

     

     

    $

    —

     

     

     

    Legal fees

     

    16,197

     

     

     

    14,645

     

     

     

    Restructuring

     

    5,252

     

     

     

    29,401

     

     

     

    Interest on convertible senior notes

     

    3,810

     

     

     

    4,134

     

     

     

    Other

     

    —

     

     

     

    601

     

     

     

    Income taxes

     

    82,317

     

     

     

    11,664

     

     

     

     

    $

    139,979

     

     

    $

    60,445

     

     

     

    (1)

    Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP.

    (2)

    The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.
    • Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See "Note 20. Commitments And Contingencies" in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information.
    • Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
    • Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
    • Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. The convertible senior notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1.
    • Other: Fees related to canceled in-person sales and marketing events.
    • Income taxes: Direct income taxes paid net of refunds received.

    PEGASYSTEMS INC.

    ANNUAL CONTRACT VALUE

    (in thousands, except percentages)

    Annual contract value ("ACV") - Annual Contract Value ("ACV") represents the annualized value of our active contracts as of the measurement date. The contract's total value is divided by its duration in years to calculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.

     

    December 31, 2024

     

    December 31, 2023

     

    Change

     

    Constant Currency Change

    Pega Cloud

    $

    652,443

     

    $

    552,998

     

    $

    99,445

     

    18

    %

     

    21

    %

    Maintenance

     

    291,807

     

     

    324,091

     

     

    (32,284

    )

    (10

    )%

     

    (8

    )%

    Subscription services

     

    944,250

     

     

    877,089

     

     

    67,161

     

    8

    %

     

    10

    %

    Subscription license

     

    427,268

     

     

    377,794

     

     

    49,474

     

    13

    %

     

    14

    %

     

    $

    1,371,518

     

    $

    1,254,883

     

    $

    116,635

     

    9

    %

     

    11

    %

    PEGASYSTEMS INC.

    BACKLOG

    (in thousands, except percentages)

    Remaining performance obligations ("Backlog") - Expected future revenue from existing non-cancellable contracts:

    As of December 31, 2024:

     

    Subscription services

     

    Subscription license

     

    Perpetual license

     

    Consulting

     

    Total

    Pega Cloud

     

    Maintenance

     

     

     

     

    1 year or less

    $

    525,133

     

     

    $

    230,866

     

     

    $

    88,880

     

     

    $

    317

     

     

    $

    50,519

     

     

    $

    895,715

     

    56

    %

    1-2 years

     

    328,234

     

     

     

    65,461

     

     

     

    10,874

     

     

     

    —

     

     

     

    3,297

     

     

     

    407,866

     

    25

    %

    2-3 years

     

    159,536

     

     

     

    24,598

     

     

     

    733

     

     

     

    —

     

     

     

    125

     

     

     

    184,992

     

    11

    %

    Greater than 3 years

     

    114,256

     

     

     

    19,935

     

     

     

    678

     

     

     

    —

     

     

     

    50

     

     

     

    134,919

     

    8

    %

     

    $

    1,127,159

     

     

    $

    340,860

     

     

    $

    101,165

     

     

    $

    317

     

     

    $

    53,991

     

     

    $

    1,623,492

     

    100

    %

    % of Total

     

    70

    %

     

     

    21

    %

     

     

    6

    %

     

     

    —

    %

     

     

    3

    %

     

     

    100

    %

     

    Change since December 31, 2023

     

     

     

     

     

     

     

     

     

     

     

     

    $

    166,895

     

     

    $

    (33,694

    )

     

    $

    20,068

     

     

    $

    (2,410

    )

     

    $

    9,265

     

     

    $

    160,124

     

     

     

     

    17

    %

     

     

    (9

    )%

     

     

    25

    %

     

     

    (88

    )%

     

     

    21

    %

     

     

    11

    %

     

    As of December 31, 2023:

     

    Subscription services

     

    Subscription license

     

    Perpetual license

     

    Consulting

     

    Total

    Pega Cloud

     

    Maintenance

     

     

     

     

    1 year or less

    $

    446,160

     

     

    $

    245,271

     

     

    $

    62,070

     

     

    $

    2,284

     

     

    $

    39,810

     

     

    $

    795,595

     

    54

    %

    1-2 years

     

    279,474

     

     

     

    67,720

     

     

     

    9,138

     

     

     

    443

     

     

     

    2,020

     

     

     

    358,795

     

    25

    %

    2-3 years

     

    144,453

     

     

     

    37,142

     

     

     

    9,789

     

     

     

    —

     

     

     

    2,896

     

     

     

    194,280

     

    13

    %

    Greater than 3 years

     

    90,177

     

     

     

    24,421

     

     

     

    100

     

     

     

    —

     

     

     

    —

     

     

     

    114,698

     

    8

    %

     

    $

    960,264

     

     

    $

    374,554

     

     

    $

    81,097

     

     

    $

    2,727

     

     

    $

    44,726

     

     

    $

    1,463,368

     

    100

    %

    % of Total

     

    66

    %

     

     

    25

    %

     

     

    6

    %

     

     

    —

    %

     

     

    3

    %

     

     

    100

    %

     

    PEGASYSTEMS INC.

    RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG

    (in millions, except percentages)

     

    December 31, 2023

     

    December 31, 2024

     

    1 Year Growth Rate

    Backlog - GAAP

    $

    1,463

     

    $

    1,623

     

    11

    %

    Impact of changes in foreign exchange rates

     

    —

     

     

    39

     

     

    Constant currency backlog

    $

    1,463

     

    $

    1,662

     

    14

    %

    Note: Constant currency Backlog is calculated by applying the December 31, 2023 foreign exchange rates to all periods shown.

    PEGASYSTEMS INC.

    RECONCILIATION OF FORWARD-LOOKING GUIDANCE

    (in millions, except percentages and per share amounts)

     

     

    2025

     

    Annual contract value growth

     

    12

    %

     

     

    Revenue (GAAP and Non-GAAP)

    $

    1,600

     

     

     

    Net Income - GAAP

    $

    149

     

    Stock-based compensation

     

    147

     

    Legal fees

     

    25

     

    Incomes taxes

     

    (32

    )

    Net Income - Non-GAAP

    $

    289

     

     

     

    Diluted earnings per share - GAAP

    $

    1.60

     

    Non-GAAP adjustments

     

    1.50

     

    Diluted earnings per share - non-GAAP

    $

    3.10

     

     

     

    Diluted weighted-average number of common shares outstanding (GAAP and Non-GAAP)

     

    93.1

     

     

     

    2025

     

     

     

    Cash provided by operating activities

    $

    455

     

    Investment in property and equipment

     

    (15

    )

    Free cash flow

    $

    440

     

     

     

    Supplemental information

     

    Legal fees

    $

    25

     

    Income taxes (1)

     

    50

     

     

    $

    75

     

    (1) Evolving U.S. tax legislation may impact the amount of tax payments.

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20250212298048/en/

    Press contact:

    Lisa Pintchman

    VP, Corporate Communications

    [email protected]

    617-866-6022

    Twitter: @pega

    Investor contact:

    Peter Welburn

    VP, Corporate Development & Investor Relations

    [email protected]

    617-498-8968

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    • Pega Named Category Leader in CLM Solutions by Chartis Research

      Pega received highest possible scores for workflow automation and policy management Pegasystems Inc. (NASDAQ:PEGA), The Enterprise Transformation Company™, today announced that leading risk technology analyst firm Chartis Research has named Pega as a category leader in its CLM Solutions, 2025, Quadrant Update report for corporate and investment banking (CIB). The Chartis report evaluated the 15 most significant client lifecycle management (CLM) solutions in CIB across five criteria. Pega received the highest possible score in both the workflow automation and policy management categories. Chartis describes category leaders as exhibiting "strength across the broadest set of capabilities in

      5/6/25 9:00:00 AM ET
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    • Pega to Present at Upcoming Investor Conference

      Pegasystems Inc. (NASDAQ:PEGA), The Enterprise Transformation Company™, today announced that Alan Trefler, founder and CEO, and Ken Stillwell, COO and CFO, Pega, will be presenting at the following upcoming investor conference: 53rd Annual J.P. Morgan Global Technology, Media and Communications Conference (https://jpmorgan.metameetings.net/events/tmc25/sessions/313240-pegasystems-inc/webcast?gpu_only=true&kiosk=true). Alan Trefler and Ken Stillwell will host an in-person Pega presentation, scheduled for Tuesday, May 13, 2025 at 4:30 p.m. EDT (1:30 p.m. PDT) in Boston, MA. Archives of the presentations will be available from the Investors page of Pega's website for a limited time. About

      4/29/25 4:05:00 PM ET
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    • Pega GenAI Powers Accelerated Q1 2025 Results

      Operating cash flow grows to $204 million and free cash flow grows to $202 million in Q1 2025 Annual Contract Value (ACV) growth exceeds 13% year over year Pega Cloud ACV grows 23% year over year Backlog grows 21% year over year Pegasystems Inc. (NASDAQ:PEGA), the Enterprise Transformation Company ™, released its financial results for the first quarter of 2025. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250422973379/en/Total ACV Growth and Pega Cloud ACV Growth "Pega GenAI has dramatically transformed how we engage with our clients," said Alan Trefler, Pega founder and CEO. "Pega solutions and our approach to AI enab

      4/22/25 4:05:00 PM ET
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    • Amendment: SEC Form SC 13G/A filed by Pegasystems Inc.

      SC 13G/A - PEGASYSTEMS INC (0001013857) (Subject)

      11/12/24 12:54:20 PM ET
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    • Amendment: SEC Form SC 13G/A filed by Pegasystems Inc.

      SC 13G/A - PEGASYSTEMS INC (0001013857) (Subject)

      11/12/24 10:59:00 AM ET
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    • Amendment: SEC Form SC 13G/A filed by Pegasystems Inc.

      SC 13G/A - PEGASYSTEMS INC (0001013857) (Subject)

      9/10/24 3:55:43 PM ET
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    • COO, CFO Stillwell Kenneth sold $185,858 worth of shares (2,000 units at $92.93), decreasing direct ownership by 9% to 19,495 units (SEC Form 4)

      4 - PEGASYSTEMS INC (0001013857) (Issuer)

      5/5/25 5:14:32 PM ET
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    • Chief Product Officer Akgonul Rifat Kerim sold $185,948 worth of shares (2,000 units at $92.97), decreasing direct ownership by 4% to 44,640 units (SEC Form 4)

      4 - PEGASYSTEMS INC (0001013857) (Issuer)

      5/5/25 5:10:55 PM ET
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    • SVP of Finance & CAO Kouninis Efstathios A sold $46,750 worth of shares (500 units at $93.50), decreasing direct ownership by 50% to 500 units (SEC Form 4)

      4 - PEGASYSTEMS INC (0001013857) (Issuer)

      5/5/25 5:05:18 PM ET
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    • Pega GenAI Powers Accelerated Q1 2025 Results

      Operating cash flow grows to $204 million and free cash flow grows to $202 million in Q1 2025 Annual Contract Value (ACV) growth exceeds 13% year over year Pega Cloud ACV grows 23% year over year Backlog grows 21% year over year Pegasystems Inc. (NASDAQ:PEGA), the Enterprise Transformation Company ™, released its financial results for the first quarter of 2025. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250422973379/en/Total ACV Growth and Pega Cloud ACV Growth "Pega GenAI has dramatically transformed how we engage with our clients," said Alan Trefler, Pega founder and CEO. "Pega solutions and our approach to AI enab

      4/22/25 4:05:00 PM ET
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    • Pega to Announce Financial Results for the First Quarter of 2025 and Host Conference Call and Webcast

      Pegasystems Inc. (NASDAQ:PEGA), The Enterprise Transformation Company™, today announced it will report financial results for the first quarter of 2025 on Tuesday, April 22, 2025, after market close. A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Wednesday, April 23, 2025. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (800) 715-9871 (domestic) or 1 (646) 307-1963 (international) and using Conference ID 5846616, or via https://events.q4inc.com/attendee/866591284 by logging onto www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in

      4/8/25 4:05:00 PM ET
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    • Pega Announces Quarterly Cash Dividend for Second Quarter of 2025

      Pegasystems Inc. (NASDAQ:PEGA), The Enterprise Transformation Company™, today announced a quarterly cash dividend of $0.03 per share, maintaining the company's current dividend program. The Q2 2025 dividend will be paid on April 15, 2025, to shareholders of record as of April 1, 2025. About Pega Pega is The Enterprise Transformation CompanyTM that helps organizations Build for Change® with enterprise AI decisioning and workflow automation. Many of the world's most influential businesses rely on our platform to solve their most pressing challenges, from personalizing engagement to automating service to streamlining operations. Since 1983, we've built our scalable and flexible architecture t

      3/21/25 8:00:00 AM ET
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