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Pegasystems (PEGA)
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Pegasystems (PEGA) AI Stock Analysis

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PEGA

Pegasystems

(NASDAQ:PEGA)

Rating:71Outperform
Price Target:
$58.00
▲(7.79% Upside)
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
Earnings
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.
Share Repurchase Program
Pega announced that its board authorized an additional $500 million share-repurchase program, enhancing the company’s capital-allocation strategy.
Negative Factors
Macro Economic 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.

Pegasystems (PEGA) vs. SPDR S&P 500 ETF (SPY)

Pegasystems Business Overview & Revenue Model

Company DescriptionPegasystems 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 MoneyPegasystems 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 Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Analyzes revenue from different business units or product lines, highlighting which areas are driving growth and which may need strategic adjustments.
Chart InsightsPegasystems' Cloud segment is driving robust growth, reflecting a strategic pivot towards cloud services, with a notable 28% increase in Pega Cloud ACV. Despite fluctuations in Subscription License and Consulting revenues, the company's focus on AI-powered solutions and strategic collaborations, such as with AWS, positions it well for future expansion. However, seasonal fluctuations and macro-economic uncertainties could pose challenges. The strong growth in Annual Contract Value and free cash flow highlights effective execution of their strategic initiatives, including share repurchases and partner ecosystem expansion.
Data provided by:Main Street Data

Pegasystems Earnings Call Summary

Earnings Call Date:Jul 22, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in key performance indicators such as ACV and free cash flow, driven by innovative product offerings like Pega Blueprint and strategic partnerships. Despite some expected seasonal weakness and external challenges like currency fluctuations, the company's strategic initiatives and robust financial performance point towards a positive outlook.
Q2-2025 Updates
Positive Updates
Record-High Annual Contract Value
Annual contract value grew 16% year-over-year as reported and 14% in constant currency, reflecting significant business momentum and strategic wins.
Pega Cloud ACV Growth
Pega Cloud ACV grew by 28% as reported and 25% in constant currency, marking the first time total ACV exceeded $1.5 billion.
Blueprint and Partner Collaborations
The introduction of Pega Blueprint and collaborations with major partners like Accenture, Capgemini, and AWS have increased market interest and engagement.
Strong Free Cash Flow
Free cash flow reached $286 million in the first half of 2025, driven by accelerated ACV growth and margin expansion.
Strategic Share Repurchases
Repurchased approximately $251 million worth of shares, representing over 85% of total free cash flow generated during the period.
Negative Updates
Seasonal Weakness in Q3 Projections
Q3 is historically the softest quarter for net new ACV add and free cash flow due to timing around contract renewals.
Currency Headwinds
A consistent currency tailwind of about 2 percentage points impacted growth figures in the first half of the year.
Public Sector Uncertainties
Some projects in the public sector have been reshuffled or put on hold, affecting services engagements.
Company Guidance
In the most recent earnings call for Pegasystems, the company provided several key metrics and insights regarding its performance and future guidance. The annual contract value (ACV) saw a notable increase of 16% year-over-year as reported, and 14% in constant currency. Pegasystems reported total ACV exceeding $1.5 billion for the first time, with Pega Cloud ACV growing by 28% as reported and 25% in constant currency. The net new ACV add increased by 60% year-over-year in constant currency for the first half of 2025, reflecting strong business momentum. Free cash flow reached $286 million in the first half of 2025, attributed to accelerated ACV growth and margin expansion. The company also highlighted that its total remaining performance obligation (backlog) increased by 31% as reported and 27% in constant currency year-over-year. Pegasystems indicated a strategic focus on capital allocation, with $251 million spent on share repurchases, representing over 85% of their free cash flow for the period. The guidance for the upcoming quarters includes seasonal expectations for Q3, historically the softest in terms of net new ACV add and free cash flow, due to the timing of contract renewals.

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
78
Positive
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
72
Positive
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
85
Very Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.68B1.50B1.43B1.32B1.21B1.02B
Gross Profit1.26B1.11B1.05B949.21M875.29M706.60M
EBITDA337.29M184.90M136.97M-119.28M-95.44M-84.19M
Net Income220.20M99.19M67.81M-345.58M-63.04M-61.37M
Balance Sheet
Total Assets1.32B1.77B1.51B1.36B1.59B1.60B
Cash, Cash Equivalents and Short-Term Investments411.57M739.97M423.34M297.22M362.78M465.17M
Total Debt79.02M549.67M581.27M687.74M685.53M595.80M
Total Liabilities699.88M1.18B1.16B1.23B1.18B1.06B
Stockholders Equity624.54M585.48M353.84M130.84M416.09M542.17M
Cash Flow
Free Cash Flow410.32M338.21M201.00M-13.04M28.66M-25.93M
Operating Cash Flow416.18M345.93M217.78M22.34M39.12M-563.00K
Investing Cash Flow220.12M-202.58M-50.75M13.07M72.50M-321.68M
Financing Cash Flow-699.03M-30.21M-81.96M-46.99M-121.84M423.45M

Pegasystems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price53.81
Price Trends
50DMA
53.70
Positive
100DMA
50.13
Positive
200DMA
47.14
Positive
Market Momentum
MACD
-0.06
Negative
RSI
51.77
Neutral
STOCH
87.74
Negative
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 53.81 is above the 20-day moving average (MA) of 52.59, above the 50-day MA of 53.70, and above the 200-day MA of 47.14, indicating a bullish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 51.77 is Neutral, neither overbought nor oversold. The STOCH value of 87.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PEGA.

Pegasystems Risk Analysis

Pegasystems disclosed 34 risk factors in its most recent earnings report. Pegasystems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Pegasystems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$7.95B99.8025.08%21.62%-53.99%
71
Outperform
$9.21B46.6041.55%0.14%12.47%65.19%
71
Outperform
$4.75B482.280.59%13.36%
70
Outperform
$8.75B16.2615.07%11.72%37.05%
68
Neutral
$9.00B192.75-9.65%17.42%-228.98%
68
Neutral
$9.26B246.113.80%30.24%-6.69%
61
Neutral
$35.51B8.11-11.05%1.89%8.55%-8.72%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PEGA
Pegasystems
53.81
19.57
57.16%
CVLT
CommVault Systems
177.15
37.62
26.96%
NICE
NICE
138.67
-20.47
-12.86%
ESTC
Elastic
84.71
14.57
20.77%
BILL
Bill.com Holdings
46.69
-8.37
-15.20%
MNDY
Monday.com
182.42
-58.66
-24.33%

Pegasystems Corporate Events

Shareholder MeetingsStock Split
Pegasystems Announces Two-for-One Stock Split
Neutral
Jun 23, 2025

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.

Shareholder MeetingsStock Split
Pegasystems Confirms Two-for-One Stock Split
Neutral
Jun 18, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 23, 2025