Pegasystems (PEGA)
NASDAQ:PEGA
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Pegasystems
(NASDAQ:PEGA)
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Rating:71Outperform
Price Target:
$44.00
▲(6.72% Upside)
Action:ReiteratedDate:02/13/26
Score is driven primarily by strong financial performance (profitability and free-cash-flow inflection plus reduced leverage) and a supportive earnings-call outlook (solid 2026 growth/FCF guidance and expanding backlog). This is tempered by clearly bearish technicals (price below major moving averages with negative MACD) and only middling valuation support (P/E ~28 with a minimal dividend).
Positive Factors
Free Cash Flow Strength
Sustained, large positive free cash flow (~$505M in 2025) gives the company durable financial flexibility: funds buybacks, debt paydown, product investment and partner programs, and supports capital returns while enabling reinvestment in cloud and AI initiatives without relying on new external financing.
Negative Factors
Earnings Volatility
Historical swings from losses to profits indicate underlying operating volatility. While recent results improved, the multi‑year variability suggests earnings can be sensitive to contract timing, one‑offs, and migration dynamics, complicating long‑term forecasting and consistent margin expansion.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Strength
Sustained, large positive free cash flow (~$505M in 2025) gives the company durable financial flexibility: funds buybacks, debt paydown, product investment and partner programs, and supports capital returns while enabling reinvestment in cloud and AI initiatives without relying on new external financing.
Read all positive factors
Pegasystems (PEGA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.03B
Dividend Yield0.16%
Average Volume (3M)1.96M
Price to Earnings (P/E)25.9
Beta (1Y)1.28
Revenue Growth17.00%
EPS Growth120.21%
CountryUS
Employees5,443
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.76
Shares Outstanding169,043,720
10 Day Avg. Volume1,768,803
30 Day Avg. Volume1,958,283
Financial Highlights & Ratios
PEG Ratio0.09
Price to Book (P/B)12.95
Price to Sales (P/S)5.84
P/FCF Ratio20.78
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue4.08
Enterprise Value/Gross Profit5.38
Enterprise Value/Ebitda23.13
Forecast
1Y Price Target
$60.88Price Target Upside47.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)2.71
Revenue Forecast (FY)$1.99B
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 Plat...
How the Company Makes Money
Pegasystems primarily generates revenue by licensing and providing access to its enterprise software platform and related services. A major portion of revenue comes from subscription-based software arrangements (often delivered as cloud services),...
Pegasystems Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyPegasystems Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 21, 2026
Earnings Call Sentiment Positive
The call emphasized strong top‑line and cash generation momentum driven by Pega Cloud and Blueprint adoption, with significant improvements in ACV, net new ACV, free cash flow (+45% to $491M), backlog (now >$2B), and a clear 2026 growth and cash‑return plan (15% ACV growth, ~$2.0B revenue, $575M FCF). Management acknowledged operational shifts (reduced professional services headcount, greater partner reliance), seasonality/back‑end loading risk in 2026, and some investor concern about quarter‑to‑quarter ACV acceleration. On balance the company presented measurable progress, strong financials, and constructive guidance, while flagging execution and timing risks tied to delivery model changes and seasonal contract patterns.Positive Updates
Strong ACV Growth
Total ACV grew 17% year‑over‑year as reported and 14% in constant currency, beating guidance; net new ACV increased 37% year‑over‑year in constant currency.
Negative Updates
Investor Concerns over Q4 ACV Acceleration
Some investors expressed disappointment that the expected stronger sequential ACV acceleration in Q4 did not meet hopes; management reiterated a steady ~14% constant currency growth across the year and pointed to back‑loading/seasonality in 2026 net new ACV.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong ACV Growth
Total ACV grew 17% year‑over‑year as reported and 14% in constant currency, beating guidance; net new ACV increased 37% year‑over‑year in constant currency.
Read all positive updates
Company Guidance
For fiscal 2026 Pega gave annual guidance calling for total ACV growth of 15% (constant currency), total revenue of $2.0 billion (≈ +15%), and free cash flow of $575 million (≈ +17% vs. 2025), and said Pega Cloud ACV should accelerate to about 30% growth (Pega Cloud ACV is already >50% of total ACV); the company expects professional services to be roughly 10% of the $2B revenue (~$200M) and warned net new ACV and subscription license revenue will be back‑end loaded (concentrated in H2/Q3). Management cited supporting 2025 metrics when giving the guide: total ACV +17% (14% CCY), net new ACV +37% CCY, free cash flow $491M (+45% YoY, beating guidance by $51M), contractually committed backlog >$2B (+28% reported / +23% CCY) with Pega Cloud backlog +36% reported (74% of backlog), cash & investments $426M, $468M of debt repaid, $498M of shares repurchased, and a board authorization for an additional $1B buyback capacity.Pegasystems Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.75B | 1.50B | 1.43B | 1.32B | 1.21B |
| Gross Profit | 1.32B | 1.11B | 1.05B | 949.21M | 875.29M |
| EBITDA | 307.82M | 184.90M | 136.97M | -119.28M | -95.44M |
| Net Income | 393.44M | 99.19M | 67.81M | -345.58M | -63.04M |
Balance Sheet | |||||
| Total Assets | 1.63B | 1.77B | 1.51B | 1.36B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 425.80M | 739.97M | 423.34M | 297.22M | 362.78M |
| Total Debt | 75.97M | 549.67M | 581.27M | 687.74M | 685.53M |
| Total Liabilities | 844.46M | 1.18B | 1.16B | 1.23B | 1.18B |
| Stockholders Equity | 787.38M | 585.48M | 353.84M | 130.84M | 416.09M |
Cash Flow | |||||
| Free Cash Flow | 490.72M | 338.21M | 201.00M | -13.04M | 28.66M |
| Operating Cash Flow | 505.23M | 345.93M | 217.78M | 22.34M | 39.12M |
| Investing Cash Flow | 197.25M | -202.58M | -50.75M | 13.07M | 72.50M |
| Financing Cash Flow | -834.63M | -30.21M | -81.96M | -46.99M | -121.84M |
Pegasystems Technical Analysis
Negative
41.23
Price Trends
42.73
Negative
49.48
Negative
52.88
Negative
Market Momentum
-0.88
Positive
45.04
Neutral
39.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PEGA, the sentiment is Negative. The current price of 41.23 is below the 20-day moving average (MA) of 41.95, below the 50-day MA of 42.73, and below the 200-day MA of 52.88, indicating a bearish trend. The MACD of -0.88 indicates Positive momentum. The RSI at 45.04 is Neutral, neither overbought nor oversold. The STOCH value of 39.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PEGA.
Pegasystems Risk Analysis
Pegasystems disclosed 30 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $6.06B | 11.53 | 16.44% | ― | 9.46% | 34.09% | |
71 Outperform | $7.03B | 25.92 | 60.07% | 0.16% | 17.00% | 120.21% | |
67 Neutral | $3.25B | 63.93 | 9.88% | ― | 28.62% | 186.67% | |
63 Neutral | $4.72B | 224.68 | -9.44% | ― | 16.98% | -265.85% | |
63 Neutral | $3.64B | -533.32 | -0.63% | ― | 11.63% | 50.72% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $3.94B | 77.74 | 31.15% | ― | 22.02% | -55.25% |
* Technology Sector Average
PEGA
Pegasystems
41.23
7.30
21.53%
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Pegasystems Corporate Events
Business Operations and StrategyExecutive/Board Changes
Pegasystems Adopts 2026 Executive Incentive Compensation Plan
Positive
Feb 12, 2026
On February 9, 2026, Pegasystems Inc.’s Compensation Committee approved the 2026 Section 16 Officer/ALT Member Corporate Incentive Compensation Plan for its executive officers, covering the period from January 1 to December 31, 2026. The pla...
Business Operations and StrategyStock BuybackFinancial Disclosures
Pegasystems Raises 2026 Outlook and Boosts Buyback Plan
Positive
Feb 10, 2026
Pegasystems Inc. reported that 2025 was a year of strong execution, with annual contract value rising 17% year on year to $1.61 billion and Pega Cloud ACV jumping 33%, alongside a 17% increase in total revenue and a 45% surge in cash flow from ope...
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.