Pegasystems (PEGA) AI Stock Analysis

• Market Cap: $9.22B
• Dividend Yield: 0.17%
• Average Volume (3M): 1.45M
• Price to Earnings (P/E): 36.8
• Beta (1Y): 1.34
• Revenue Growth: 17.00%
• EPS Growth: 120.21%
• Country: US
• Employees: 5,443
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.30
• Shares Outstanding: 169,722,780
• 10 Day Avg. Volume: 1,183,246
• 30 Day Avg. Volume: 1,453,645
• PEG Ratio: 1.90
• Price to Book (P/B): 13.57
• Price to Sales (P/S): 5.31
• P/FCF Ratio: 23.50
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 5.95
• Enterprise Value/Gross Profit: 7.86
• Enterprise Value/Ebitda: 27.62
• 1Y Price Target: $73.67
• Price Target Upside: 35.62% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 2.07
• Revenue Forecast (FY): $1.73B

• Rating: 69 Neutral
• Price Target: $57.00 ▲(4.93% Upside)

Pegasystems' strong financial performance and positive earnings call sentiment are major strengths, indicating robust growth and strategic execution. However, technical analysis reveals bearish momentum, and the high P/E ratio suggests valuation concerns. The overall score reflects a balanced view of these factors.

Positive Factors

Cloud Revenue Growth

The significant growth in Pega Cloud ACV indicates strong adoption of cloud solutions, positioning Pegasystems well in the growing cloud market.

AI Strategy

The successful execution of Pega's AI strategy enhances client engagement and differentiates its offerings, driving long-term competitive advantage.

Cash Flow and Share Repurchase

Strong cash flow growth and significant share repurchases reflect robust financial health and management's confidence in the company's future.

Negative Factors

Federal Government Impact

The federal government shutdown disrupts projects, potentially delaying revenue recognition and impacting short-term financial performance.

Decline in Term License Revenue

The shift towards cloud solutions leads to declining term license revenue, which may affect traditional revenue streams and require strategic adjustments.

Moderate Debt Reliance

Moderate reliance on debt, despite improved leverage, could limit financial flexibility and increase risk in volatile market conditions.

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 shows strong financial health with impressive revenue growth and profitability improvements. The balance sheet reflects reduced leverage and strong returns on equity, while cash flow metrics indicate efficient cash management. However, the relatively low equity ratio suggests a moderate reliance on debt financing.

Income Statement

Pegasystems has demonstrated strong revenue growth and improving profitability. The TTM gross profit margin is robust at 75.7%, and the net profit margin has improved significantly to 16.0% from previous years. The EBIT and EBITDA margins have also shown positive trends, indicating efficient cost management and operational improvements.

Balance Sheet

The company's balance sheet shows a healthy debt-to-equity ratio of 0.10 in the TTM, a significant improvement from previous years, indicating reduced leverage. The return on equity is strong at 45.98%, reflecting effective utilization of shareholder equity. However, the equity ratio is relatively low, suggesting a moderate reliance on debt financing.

Cash Flow

Pegasystems has shown strong cash flow performance with a free cash flow growth rate of 8.0% in the TTM. The free cash flow to net income ratio is slightly above 1, indicating efficient conversion of earnings into cash. The operating cash flow to net income ratio is healthy, reflecting good cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.73B	1.50B	1.43B	1.32B	1.21B	1.02B
Gross Profit	1.31B	1.11B	1.05B	949.21M	875.29M	706.60M
EBITDA	373.32M	184.90M	136.97M	-119.28M	-95.44M	-84.19M
Net Income	277.95M	99.19M	67.81M	-345.58M	-63.04M	-61.37M
Balance Sheet
Total Assets	1.29B	1.77B	1.51B	1.36B	1.59B	1.60B
Cash, Cash Equivalents and Short-Term Investments	351.36M	739.97M	423.34M	297.22M	362.78M	465.17M
Total Debt	76.83M	549.67M	581.27M	687.74M	685.53M	595.80M
Total Liabilities	695.96M	1.18B	1.16B	1.23B	1.18B	1.06B
Stockholders Equity	596.83M	585.48M	353.84M	130.84M	416.09M	542.17M
Cash Flow
Free Cash Flow	439.23M	338.21M	201.00M	-13.04M	28.66M	-25.93M
Operating Cash Flow	442.02M	345.93M	217.78M	22.34M	39.12M	-563.00K
Investing Cash Flow	228.32M	-202.58M	-50.75M	13.07M	72.50M	-321.68M
Financing Cash Flow	-813.55M	-30.21M	-81.96M	-46.99M	-121.84M	423.45M

Pegasystems Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 54.32
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 54.32 is below the 20-day moving average (MA) of 57.73, below the 50-day MA of 58.26, and above the 200-day MA of 49.88, indicating a neutral trend. The MACD of -1.52 indicates Positive momentum. The RSI at 38.32 is Neutral, neither overbought nor oversold. The STOCH value of 39.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PEGA.

Pegasystems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NICE	71 Outperform	$6.46B	11.66	15.23%	―	9.46%	34.09%
PEGA	69 Neutral	$9.22B	36.81	51.96%	0.17%	17.00%	120.21%
BILL	69 Neutral	$4.96B	-181.80	0.30%	―	11.63%	50.72%
MNDY	66 Neutral	$7.36B	118.24	5.81%	―	28.62%	186.67%
CVLT	62 Neutral	$5.44B	69.44	32.87%	―	22.02%	-55.25%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ESTC	61 Neutral	$7.37B	―	-12.84%	―	16.98%	-265.85%

Pegasystems Corporate Events

Pegasystems Shines in Q3 2025 Earnings Call

Pegasystems’ recent earnings call painted a picture of robust performance and strategic success in Q3 2025. The sentiment was overwhelmingly positive, driven by record-breaking results in Pega Cloud growth and a successful AI strategy. Despite challenges such as the federal government shutdown and a decline in term license revenue, the overall outlook remains optimistic, buoyed by strong industry recognition and strategic partnerships.

Pegasystems Reports Strong Q3 2025 Financial Performance

Pegasystems Inc., known as the Enterprise Transformation Company™, specializes in providing AI-powered platforms for enterprise transformation, focusing on automating workflows, personalizing customer experiences, and modernizing legacy systems. The company, headquartered in Waltham, Massachusetts, has been a significant player in the tech industry since 1983.