Pegasystems (PEGA) AI Stock Analysis

• Market Cap: $10.04B
• Dividend Yield: 0.13%
• Average Volume (3M): 1.25M
• Price to Earnings (P/E): 50.4
• Beta (1Y): 1.26
• Revenue Growth: 12.47%
• EPS Growth: 65.19%
• Country: US
• Employees: 5,443
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.28
• Shares Outstanding: 171,080,660
• 10 Day Avg. Volume: 1,569,458
• 30 Day Avg. Volume: 1,249,526
• PEG Ratio: 0.73
• Price to Book (P/B): 6.79
• Price to Sales (P/S): 2.65
• P/FCF Ratio: 11.75
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 5.68
• Enterprise Value/Gross Profit: 7.53
• Enterprise Value/Ebitda: 28.25
• 1Y Price Target: $65.70
• Price Target Upside: 12.00% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

• Rating: 71 Outperform
• Price Target: $58.00 ▼(-1.13% Downside)

Pegasystems' strong financial performance and positive earnings call sentiment are significant strengths, reflecting robust revenue growth and strategic initiatives. However, the high valuation and bearish technical indicators present risks, suggesting potential overvaluation and lack of momentum. Investors should consider these factors when evaluating the stock's potential.

Positive Factors

Revenue Growth

The significant increase in annual contract value indicates strong business momentum and effective strategic initiatives, supporting long-term revenue growth.

Cash Flow Generation

Strong free cash flow generation enhances the company's ability to fund operations, invest in growth opportunities, and return capital to shareholders.

Strategic Partnerships

Strategic partnerships expand market reach and enhance product offerings, strengthening competitive positioning and driving future growth.

Negative Factors

Seasonal Weakness

Seasonal weakness in Q3 could impact short-term performance, potentially affecting investor sentiment and financial results during this period.

Currency Headwinds

Currency fluctuations can affect financial performance, posing a risk to revenue and profitability, especially in international markets.

Public Sector Uncertainties

Uncertainties in the public sector could lead to delays or cancellations of projects, impacting revenue from this segment and overall growth prospects.

Pegasystems Business Overview & Revenue Model

Company Description

Pegasystems Inc. (PEGA) is a leading provider of software solutions designed to help organizations improve customer engagement and operational efficiency. The company specializes in business process management (BPM), customer relationship management (CRM), and digital process automation. Pegasystems serves various industries including financial services, healthcare, insurance, and government, delivering core products that empower businesses to streamline their operations and enhance customer experiences through its low-code application development platform and intelligent automation technologies.

How the Company Makes Money

Pegasystems generates revenue primarily through its subscription-based software licensing model, which includes both on-premise and cloud-based offerings. Key revenue streams come from software licenses, maintenance, and support services, as well as professional services for implementation and consulting. The company also earns money through recurring revenue from its Software-as-a-Service (SaaS) products. Significant partnerships with major technology firms and system integrators enhance its market reach and contribute to its earnings by facilitating broader adoption of its solutions across various sectors.

Pegasystems Financial Statement Overview

Summary

Pegasystems exhibits a strong financial position with robust revenue growth and improving profitability. The balance sheet is stable, and cash flow generation is impressive, positioning the company well for future expansion. However, the company should continue to focus on improving its Return on Equity to enhance shareholder value.

Income Statement

Pegasystems has shown a solid improvement in its financial performance over the years. The Gross Profit Margin and Net Profit Margin for the TTM (Trailing-Twelve-Months) were healthy, indicating efficient cost management. The company achieved a positive EBIT Margin and EBITDA Margin, reflecting improved operational efficiency. Revenue growth has been strong, with a noticeable increase from the previous year, suggesting a robust demand for its software solutions.

Balance Sheet

The balance sheet of Pegasystems demonstrates a stable financial position with a manageable Debt-to-Equity Ratio. The Equity Ratio indicates a balanced approach between debt and equity financing. However, the Return on Equity (ROE) is moderate, suggesting room for more efficient capital utilization. The company's ability to maintain a healthy cash position supports its financial flexibility.

Cash Flow

Pegasystems' cash flow statements highlight strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio reflects effective conversion of earnings into cash. Free Cash Flow has shown significant growth, supporting potential reinvestment and debt reduction strategies. This solid cash flow position enhances the company's ability to fund operations and growth initiatives.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.68B	1.50B	1.43B	1.32B	1.21B	1.02B
Gross Profit	1.26B	1.11B	1.05B	949.21M	875.29M	706.60M
EBITDA	337.29M	184.90M	136.97M	-119.28M	-95.44M	-84.19M
Net Income	220.20M	99.19M	67.81M	-345.58M	-63.04M	-61.37M
Balance Sheet
Total Assets	1.32B	1.77B	1.51B	1.36B	1.59B	1.60B
Cash, Cash Equivalents and Short-Term Investments	411.57M	739.97M	423.34M	297.22M	362.78M	465.17M
Total Debt	79.02M	549.67M	581.27M	687.74M	685.53M	595.80M
Total Liabilities	699.88M	1.18B	1.16B	1.23B	1.18B	1.06B
Stockholders Equity	624.54M	585.48M	353.84M	130.84M	416.09M	542.17M
Cash Flow
Free Cash Flow	410.32M	338.21M	201.00M	-13.04M	28.66M	-25.93M
Operating Cash Flow	416.18M	345.93M	217.78M	22.34M	39.12M	-563.00K
Investing Cash Flow	220.12M	-202.58M	-50.75M	13.07M	72.50M	-321.68M
Financing Cash Flow	-699.03M	-30.21M	-81.96M	-46.99M	-121.84M	423.45M

Pegasystems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 58.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PEGA, the sentiment is Positive. The current price of 58.66 is above the 20-day moving average (MA) of 57.54, above the 50-day MA of 55.72, and above the 200-day MA of 48.13, indicating a bullish trend. The MACD of 1.41 indicates Negative momentum. The RSI at 57.41 is Neutral, neither overbought nor oversold. The STOCH value of 41.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PEGA.

Pegasystems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CVLT	78 Outperform	8.46B	106.07	22.23%	―	21.62%	-53.99%
NICE	77 Outperform	9.29B	17.26	14.40%	―	11.72%	37.05%
PEGA	71 Outperform	$10.04B	50.42	41.55%	0.13%	12.47%	65.19%
BILL	69 Neutral	5.51B	-337.78	0.61%	―	13.36%	―
MNDY	68 Neutral	10.49B	278.72	3.35%	―	30.24%	-6.69%
ESTC	65 Neutral	9.13B	-107.64	-8.60%	―	17.42%	-228.98%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Pegasystems Corporate Events

Pegasystems Announces Two-for-One Stock Split

Pegasystems Inc. announced a two-for-one forward stock split of its common stock, along with an increase in the number of authorized shares from 200 million to 400 million. The stock split was approved by shareholders on June 17, 2025, and the distribution occurred on June 20, 2025, with trading on a post-split basis beginning on June 23, 2025. This move resulted in adjustments to the company’s equity incentive plans and stock options, potentially impacting stakeholders by altering the value and distribution of shares.

Pegasystems Confirms Two-for-One Stock Split

On June 17, 2025, Pegasystems held its Annual Meeting of Shareholders where several key decisions were made. Shareholders approved amendments to the company’s Restated Articles of Organization to increase the number of authorized shares of common stock from 200 million to 400 million. Additionally, the board of directors was re-elected, executive compensation was approved, and Deloitte & Touche LLP was ratified as the independent auditor for 2025. A two-for-one forward stock split was also confirmed, with trading on a post-split basis expected to begin on June 23, 2025.