Pegasystems (PEGA)
NASDAQ:PEGA
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Pegasystems
(NASDAQ:PEGA)
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Rating:69Neutral
Price Target:
$43.00
▼(-1.40% Downside)
Action:DowngradedDate:04/22/26
PEGA’s score is driven primarily by strong financial quality (low leverage, improved profitability, and robust free cash flow) and a generally positive earnings-call outlook led by accelerating Pega Cloud/ACV and heavy capital returns. These positives are tempered by weak technicals (stock in a downtrend) and a high P/E that makes valuation less forgiving if growth remains back-end loaded or revenue softness persists.
Positive Factors
Free Cash Flow Quality
FCF that closely matches net income and strong TTM operating cash flow give Pegasystems durable internal funding. That cash supports sustained R&D and cloud investment, sizable buybacks/dividends, and lowers refinancing risk — strengthening execution over the next several quarters.
Negative Factors
Revenue Growth Trend
Trailing-twelve-month top-line decline signals recent demand softness. Continued revenue contraction would limit operating leverage, constrain sustainable margin improvement, and increase reliance on FCF and buybacks to support metrics, raising execution risk over coming quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Quality
FCF that closely matches net income and strong TTM operating cash flow give Pegasystems durable internal funding. That cash supports sustained R&D and cloud investment, sizable buybacks/dividends, and lowers refinancing risk — strengthening execution over the next several quarters.
Read all positive factors
Pegasystems (PEGA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.15B
Dividend Yield0.16%
Average Volume (3M)1.94M
Price to Earnings (P/E)54.8
Beta (1Y)1.29
Revenue Growth3.50%
EPS Growth75.14%
CountryUS
Employees5,443
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.00
Shares Outstanding167,116,060
10 Day Avg. Volume2,030,175
30 Day Avg. Volume1,944,256
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 Cap0.95
Enterprise Value/Revenue3.45
Enterprise Value/Gross Profit4.60
Enterprise Value/Ebitda27.38
Forecast
1Y Price Target
$59.33Price Target Upside36.05% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)2.72
Revenue Forecast (FY)$1.98B
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
Shows the share of sales coming from different regions (North America, EMEA, APAC). Helps investors gauge market concentration, identify regions driving growth or facing headwinds, and understand how regional performance and currency moves could influence overall revenue momentum and forecasts.
Shows the share of sales coming from different regions (North America, EMEA, APAC). Helps investors gauge market concentration, identify regions driving growth or facing headwinds, and understand how regional performance and currency moves could influence overall revenue momentum and forecasts.
Data provided by:
The Fly
The FlyPegasystems Earnings Call Summary
Earnings Call Date:Apr 21, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Positive
Overall the call conveyed a positive operational and financial trajectory driven by strong Pega Cloud revenue and ACV growth, robust free cash flow and clear product momentum (Blueprint, new AI tooling and awards). Management acknowledged near-term headwinds — a tough prior-year comp, timing-driven revenue variability, pressure on term/maintenance revenue as cloud mix shifts, and macro/government/geopolitical risks — but expects pipeline conversion and renewals to accelerate in the back half of 2026.Positive Updates
Pega Cloud Revenue Growth
Pega Cloud revenue increased from $151M to $205M in Q1 2026, a +35.8% year-over-year increase; trailing 12-month Pega Cloud revenue growth was ~30%.
Negative Updates
Lower Q1 Growth vs. Tough Prior-Year Comp
Q1 2026 growth was muted versus the prior-year period; management noted a difficult comparison to Q1 2025 which included a $60M net ACV add that was an outlier. Constant-currency net ACV for Q1 was ~ $20M, a few million below internal expectations.
Read all updates
Q1-2026 Updates
Positive
Negative
Pega Cloud Revenue Growth
Pega Cloud revenue increased from $151M to $205M in Q1 2026, a +35.8% year-over-year increase; trailing 12-month Pega Cloud revenue growth was ~30%.
Read all positive updates
Company Guidance
Management reiterated full‑year guidance issued at the start of 2026 (no quarterly updates) and said Q1 was a seasonal, tougher comp to the $60M net ACV add in Q1 2025; they highlighted strong Pega Cloud momentum — Q1 Pega Cloud revenue rose from $151M to $205M (≈30% TTM growth), Pega Cloud ACV grew 29% YoY (27% in constant currency) to just over $900M (an increase of >$200M) and now represents ~56% of total ACV (with a long‑term goal of ~75%+ cloud mix); they expect term license revenue and renewals to be back‑end weighted with Blueprint‑driven pipeline converting in H2; cash generation was strong with Q1 free cash flow of $207M, >80% of FCF returned via repurchases (3.5M shares for $167M) and $5M of dividends, and shares outstanding down ~1.6M since year‑end 2025.Pegasystems Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
86
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.70B | 1.75B | 1.50B | 1.43B | 1.32B | 1.21B |
| Gross Profit | 1.27B | 1.32B | 1.11B | 1.05B | 949.21M | 875.29M |
| EBITDA | 214.23M | 307.82M | 184.90M | 136.97M | -119.28M | -95.44M |
| Net Income | 340.78M | 393.44M | 99.19M | 67.81M | -345.58M | -63.04M |
Balance Sheet | ||||||
| Total Assets | 1.55B | 1.63B | 1.77B | 1.51B | 1.36B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 473.95M | 425.80M | 739.97M | 423.34M | 297.22M | 362.78M |
| Total Debt | 57.08M | 75.97M | 549.67M | 581.27M | 687.74M | 685.53M |
| Total Liabilities | 845.08M | 844.46M | 1.18B | 1.16B | 1.23B | 1.18B |
| Stockholders Equity | 705.91M | 787.38M | 585.48M | 353.84M | 130.84M | 416.09M |
Cash Flow | ||||||
| Free Cash Flow | 494.90M | 490.72M | 338.21M | 201.00M | -13.04M | 28.66M |
| Operating Cash Flow | 513.25M | 505.23M | 345.93M | 217.78M | 22.34M | 39.12M |
| Investing Cash Flow | -61.89M | 197.25M | -202.58M | -50.75M | 13.07M | 72.50M |
| Financing Cash Flow | -412.66M | -834.63M | -30.21M | -81.96M | -46.99M | -121.84M |
Pegasystems Technical Analysis
Neutral
43.61
Price Trends
42.87
Positive
49.17
Negative
52.73
Negative
Market Momentum
-0.35
Negative
54.56
Neutral
77.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PEGA, the sentiment is Neutral. The current price of 43.61 is above the 20-day moving average (MA) of 42.01, above the 50-day MA of 42.87, and below the 200-day MA of 52.73, indicating a neutral trend. The MACD of -0.35 indicates Negative momentum. The RSI at 54.56 is Neutral, neither overbought nor oversold. The STOCH value of 77.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 | $7.39B | 11.60 | 16.44% | ― | 7.93% | 41.49% | |
69 Neutral | $6.15B | 54.82 | 50.21% | 0.16% | 3.50% | 75.14% | |
67 Neutral | $3.96B | 24.86 | 9.88% | ― | 26.75% | 256.36% | |
65 Neutral | $4.48B | 57.22 | 35.35% | ― | 18.89% | -7.44% | |
63 Neutral | $5.24B | 224.68 | -9.44% | ― | 17.29% | 38.72% | |
63 Neutral | $3.93B | -533.32 | -0.63% | ― | 11.84% | -130.23% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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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.