Pegasystems (PEGA) AI Stock Analysis

• Market Cap: $9.92B
• Dividend Yield: 0.18%
• Average Volume (3M): 1.68M
• Price to Earnings (P/E): 50.2
• Beta (1Y): 1.33
• Revenue Growth: 12.47%
• EPS Growth: 65.19%
• Country: US
• Employees: 5,443
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Application
• EPS (TTM): 0.28
• Shares Outstanding: 171,080,660
• 10 Day Avg. Volume: 1,905,687
• 30 Day Avg. Volume: 1,682,128
• PEG Ratio: 10.20
• Price to Book (P/B): 15.77
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 24.05
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 3.54
• Enterprise Value/Gross Profit: 22.23
• Enterprise Value/Ebitda: 27.63
• 1Y Price Target: $64.82
• Price Target Upside: 11.60% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

• Rating: 79 Outperform
• Price Target: $66.00 ▲(13.64%Upside)

Pegasystems demonstrates strong financial performance and technical momentum, supported by strategic growth in cloud services and collaborations. High valuation and macro-economic uncertainties present some risks, but overall, the company's strategic initiatives and financial health position it well for future growth.

Positive Factors

Financial Performance

Pega reported strong second-quarter results that outperformed consensus estimates on all key metrics.

Market Expansion

Management highlighted that its target market now includes over 10,000 companies, up from its prior target of 1,000 companies.

Strategic Initiatives

The company announced new products and provided updates on its opportunity with Blueprint, which are helping to expand the company’s addressable market.

Negative Factors

Macro Risks

Bears will argue the uncertain macro could still emerge as a headwind and impact 2025 results at some point with risk still on the table.

Market Uncertainty

Recent headwinds from DOGE and tariffs have created some uncertainty in the market.

Mixed Financial Results

Pega reported mixed fourth-quarter results as constant-currency ACV growth of 11% came in below consensus expectations.

Pegasystems Business Overview & Revenue Model

Company Description

Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software applications in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific. It provides Pega Platform, an application development product for clients; and Pega Infinity, a software platform that unifies customer engagement and digital process automation. The company also offers customer engagement applications, including Pega Customer Decision Hub that enable enterprises to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Sales Automation to automate and manage the sales process; and Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity. In addition, it provides intelligent automation software; Pega Cloud that allows clients to develop, test, and deploy applications and the Pega Platform using an Internet-based infrastructure; Pega Academy, which offers instructor-led and online training to its employees, clients, and partners; and guidance, implementation, and technical support services. The company primarily markets its software and services to financial services, life sciences, healthcare, communications and media, government, insurance, manufacturing and high tech, and consumer services markets through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.

How the Company Makes Money

Pegasystems generates revenue primarily through the sale of software licenses, cloud-based services, and maintenance and support services. The company employs a subscription-based model for its software offerings, providing clients with both on-premise and cloud deployment options. Revenue streams include software license fees, which are typically recognized upfront, and recurring subscription fees for its cloud services. Additionally, Pegasystems offers professional services, such as consulting and training, to assist clients in implementing and optimizing their software solutions. Key partnerships with technology and consulting firms, such as Accenture and Capgemini, help expand its market reach and contribute to its earnings by facilitating more extensive deployment of its solutions among large enterprises.

Pegasystems Financial Statement Overview

Summary

Pegasystems exhibits strong financial performance with robust revenue growth, improved profitability, and impressive cash flow generation. The balance sheet remains stable, although Return on Equity could improve for enhanced 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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.50B	1.43B	1.32B	1.21B	1.02B
Gross Profit	1.11B	1.05B	949.21M	875.29M	706.60M
EBITDA	167.06M	121.06M	-119.28M	-94.73M	-67.94M
Net Income	99.19M	67.81M	-345.58M	-63.04M	-61.37M
Balance Sheet
Total Assets	1.77B	1.51B	1.36B	1.59B	1.60B
Cash, Cash Equivalents and Short-Term Investments	739.97M	423.34M	297.22M	362.78M	465.17M
Total Debt	549.67M	581.27M	687.74M	678.54M	518.20M
Total Liabilities	1.18B	1.16B	1.23B	1.18B	1.06B
Stockholders Equity	585.48M	353.84M	130.84M	416.09M	542.17M
Cash Flow
Free Cash Flow	338.21M	201.00M	-13.04M	28.66M	-25.93M
Operating Cash Flow	345.93M	217.78M	22.34M	39.12M	-563.00K
Investing Cash Flow	-202.58M	-50.75M	13.07M	72.50M	-321.68M
Financing Cash Flow	-30.21M	-81.96M	-46.99M	-121.84M	423.45M

Pegasystems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 58.08
• 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 58.08 is above the 20-day moving average (MA) of 52.73, above the 50-day MA of 50.98, and above the 200-day MA of 44.90, indicating a bullish trend. The MACD of 1.13 indicates Negative momentum. The RSI at 69.39 is Neutral, neither overbought nor oversold. The STOCH value of 75.48 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
PEGA	79 Outperform	$9.92B	50.18	41.55%	0.18%	12.47%	65.19%
CWAN	78 Outperform	$6.03B	12.79	58.14%	―	23.21%	―
QXO	78 Outperform	$14.83B	―	1.44%	―	0.22%	48.10%
CVLT	74 Outperform	$7.44B	99.07	25.23%	―	18.63%	-55.09%
BILL	69 Neutral	$4.79B	482.28	0.97%	―	14.52%	―
VERX	66 Neutral	$5.69B	235.54	-19.65%	―	15.20%	-666.94%
Sector *	63 Neutral	$34.70B	4.89	-11.39%	1.66%	5.53%	-19.00%

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.

The most recent analyst rating on (PEGA) stock is a Buy with a $112.00 price target. To see the full list of analyst forecasts on Pegasystems stock, see the PEGA Stock Forecast page.

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.

The most recent analyst rating on (PEGA) stock is a Buy with a $112.00 price target. To see the full list of analyst forecasts on Pegasystems stock, see the PEGA Stock Forecast page.

Pegasystems Reports Strong Growth in Pega Cloud ACV

On June 2, 2025, Pegasystems Inc. presented its financial update, highlighting significant growth in its Annual Contract Value (ACV) driven by Pega Cloud, which grew from $50 million in 2017 to $700 million in 2025. The company has completed its multi-year subscription transition and achieved the Rule of 40, balancing growth and profitability. Pegasystems is on a strong trajectory toward sustained profitability, supported by its strategic focus on generating free cash flow and capital allocation, including share repurchases and dividend payments. The company’s GenAI Blueprint and large market opportunities are expected to drive further growth.

The most recent analyst rating on (PEGA) stock is a Buy with a $78.00 price target. To see the full list of analyst forecasts on Pegasystems stock, see the PEGA Stock Forecast page.