Pegasystems ((PEGA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Pegasystems’ recent earnings call reflected a robust performance, marked by significant growth in key financial metrics and strategic initiatives. The sentiment during the call was largely positive, driven by impressive annual contract value growth, a milestone in Pega Cloud ACV, and substantial free cash flow. The introduction of partner-branded Blueprints and strategic collaborations, particularly with AWS, indicate a promising trajectory. However, the company remains cautious about seasonal fluctuations, currency headwinds, and macro-economic uncertainties that could impact future performance.
Strong ACV Growth
Pegasystems reported a 16% year-over-year increase in annual contract value (ACV), with a 14% rise in constant currency. Notably, the net new ACV add surged by 60% year-over-year in constant currency during the first half of 2025, showcasing the company’s ability to drive substantial growth in its core business.
Pega Cloud ACV Milestone
For the first time, Pegasystems’ total ACV surpassed $1.5 billion, with Pega Cloud ACV experiencing a remarkable 28% growth as reported and 25% in constant currency. This milestone underscores the strong demand for Pega’s cloud solutions and its successful transition to a cloud-first strategy.
Free Cash Flow Growth
The company achieved a free cash flow of $286 million in the first half of 2025, supported by margin expansion and accelerated ACV growth. This financial strength provides Pegasystems with the flexibility to invest in strategic initiatives and enhance shareholder value.
Partner Ecosystem Expansion
Pegasystems introduced partner-branded Blueprints with major partners such as Accenture, Capgemini, and Infosys. This expansion of the partner ecosystem is expected to drive further growth and innovation, leveraging the expertise and reach of these global partners.
Strategic Collaboration with AWS
A significant highlight of the earnings call was the announcement of a 5-year strategic collaboration agreement with AWS. This partnership includes making Pega software available on the AWS marketplace, aiming to accelerate legacy transformation projects and strengthen Pegasystems’ competitive positioning.
Seasonal Fluctuations
The company acknowledged that the third quarter is typically the softest in terms of net new ACV add and free cash flow, primarily due to fewer contract renewals. This historical trend is a factor Pegasystems continues to monitor closely.
Currency Headwind
Pegasystems faced a consistent currency headwind of about 2 percentage points, affecting growth in the first two quarters. This challenge highlights the impact of foreign exchange fluctuations on the company’s financial performance.
Macro-economic Uncertainties
Despite concerns about tariffs and general economic unpredictability, Pegasystems noted that these macro-economic uncertainties have not yet posed significant headwinds. The company remains vigilant in navigating these challenges to sustain its growth trajectory.
Forward-Looking Guidance
During the earnings call, Pegasystems provided forward-looking guidance, emphasizing its strategic advancements and growth metrics. The company highlighted a 16% year-over-year growth in ACV, reaching over $1.5 billion, and a 28% increase in Pega Cloud ACV. With a 60% year-over-year rise in net new ACV add in constant currency for the first half of 2025, Pegasystems is well-positioned for continued growth. The focus on AI-powered Blueprints and strategic collaborations, particularly with AWS, is expected to drive future business activity and enhance competitive positioning.
In summary, Pegasystems’ earnings call conveyed a positive outlook, driven by strong financial performance and strategic initiatives. The company’s growth in ACV, cloud solutions, and free cash flow, coupled with strategic partnerships, positions it well for future success. However, Pegasystems remains cautious about potential challenges, including seasonal fluctuations, currency headwinds, and macro-economic uncertainties. Investors and stakeholders can look forward to the company’s continued focus on innovation and strategic growth.