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Pegasystems (PEGA)
NASDAQ:PEGA
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Pegasystems (PEGA) AI Stock Analysis

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PEGA

Pegasystems

(NASDAQ:PEGA)

Rating:79Outperform
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 (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 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 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 shows strong growth momentum, with recent earnings highlighting a 23% rise in Pega Cloud ACV, driven by effective cross-selling and upselling. The Subscription License segment remains volatile, reflecting macroeconomic uncertainties and currency impacts noted in the earnings call. Meanwhile, the company's strategic focus on Pega GenAI Blueprint is expected to drive further digital transformation, despite challenges in the Consulting and Maintenance segments. Achieving a debt-free status and robust free cash flow underscores financial resilience, positioning Pegasystems well for future growth.
Data provided by:Main Street Data

Pegasystems Earnings Call Summary

Earnings Call Date:Jul 22, 2025
(Q2-2025)
|
% Change Since: 14.06%|
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with significant growth in annual contract value, Pega Cloud ACV, and free cash flow. The introduction of partner-branded Blueprints and strategic collaborations indicate a positive trajectory. However, there are concerns about seasonal fluctuations, currency headwinds, and macro-economic uncertainties.
Q2-2025 Updates
Positive Updates
Strong ACV Growth
Annual contract value grew 16% year-over-year as reported and 14% in constant currency. Net new ACV add increased by 60% year-over-year in constant currency in the first half of 2025.
Pega Cloud ACV Milestone
Total ACV exceeded $1.5 billion as reported for the first time, with Pega Cloud ACV growth of 28% as reported and 25% in constant currency.
Free Cash Flow Growth
Free cash flow reached $286 million in the first half of 2025, supported by margin expansion and accelerated ACV growth.
Partner Ecosystem Expansion
The introduction of partner-branded Blueprints with major partners like Accenture, Capgemini, and Infosys, among others.
Strategic Collaboration with AWS
A 5-year strategic collaboration agreement with AWS was announced, including Pega software availability on the AWS marketplace.
Negative Updates
Seasonal Fluctuations
The third quarter is historically the softest in terms of net new ACV add and free cash flow due to fewer contract renewals.
Currency Headwind
A consistent currency headwind of about 2 percentage points affected growth in the first two quarters.
Macro-economic Uncertainties
Concerns about tariffs and general economic unpredictability were noted, although they have not yet posed significant headwinds.
Company Guidance
During Pegasystems' Q2 2025 earnings call, the company highlighted significant growth metrics and strategic advancements. Annual Contract Value (ACV) grew by 16% year-over-year, reaching over $1.5 billion for the first time, with Pega Cloud ACV specifically increasing by 28%. The company also reported a 60% year-over-year increase in net new ACV add in constant currency for the first half of 2025. Free cash flow rose to $286 million, and total remaining performance obligation increased by 31%. The strategic focus on Pega's AI-powered Blueprint has been transformative, engaging in every sales campaign and driving substantial business activity. The company also emphasized its strong Rule of 40 execution and potential for future share repurchases, having already repurchased $251 million worth of shares in the first half of 2025. Pegasystems' strategic collaboration with AWS aims to accelerate legacy transformation projects, further solidifying its competitive positioning in the market.

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
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.50B1.43B1.32B1.21B1.02B
Gross Profit1.11B1.05B949.21M875.29M706.60M
EBITDA167.06M121.06M-119.28M-94.73M-67.94M
Net Income99.19M67.81M-345.58M-63.04M-61.37M
Balance Sheet
Total Assets1.77B1.51B1.36B1.59B1.60B
Cash, Cash Equivalents and Short-Term Investments739.97M423.34M297.22M362.78M465.17M
Total Debt549.67M581.27M687.74M678.54M518.20M
Total Liabilities1.18B1.16B1.23B1.18B1.06B
Stockholders Equity585.48M353.84M130.84M416.09M542.17M
Cash Flow
Free Cash Flow338.21M201.00M-13.04M28.66M-25.93M
Operating Cash Flow345.93M217.78M22.34M39.12M-563.00K
Investing Cash Flow-202.58M-50.75M13.07M72.50M-321.68M
Financing Cash Flow-30.21M-81.96M-46.99M-121.84M423.45M

Pegasystems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price58.08
Price Trends
50DMA
50.98
Positive
100DMA
44.71
Positive
200DMA
44.90
Positive
Market Momentum
MACD
1.13
Negative
RSI
69.39
Neutral
STOCH
75.48
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 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$9.92B50.1841.55%0.18%12.47%65.19%
78
Outperform
$6.03B12.7958.14%23.21%
78
Outperform
$14.83B1.44%0.22%48.10%
74
Outperform
$7.44B99.0725.23%18.63%-55.09%
69
Neutral
$4.79B482.280.97%14.52%
66
Neutral
$5.69B235.54-19.65%15.20%-666.94%
63
Neutral
$34.70B4.89-11.39%1.66%5.53%-19.00%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PEGA
Pegasystems
58.08
23.68
68.84%
CVLT
CommVault Systems
165.97
43.73
35.77%
QXO
QXO Inc
21.90
-61.93
-73.88%
BILL
Bill.com Holdings
45.24
-7.59
-14.37%
VERX
Vertex
34.78
-2.80
-7.45%
CWAN
Clearwater Analytics Holdings
21.13
0.96
4.76%

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.

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.

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.

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.

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Pegasystems Reports Strong Growth in Pega Cloud ACV
Positive
Jun 2, 2025

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.

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: Jul 25, 2025