Pegasystems (PEGA) AI Stock Analysis

• Market Cap: $9.01B
• Dividend Yield: 0.23%
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 51.2
• Beta (1Y): 1.31
• Revenue Growth: 14.29%
• EPS Growth: 151.35%
• Country: US
• Employees: 5,443
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Application
• EPS (TTM): 0.77
• Shares Outstanding: 171,164,500
• 10 Day Avg. Volume: 1,899,483
• 30 Day Avg. Volume: 1,655,991
• PEG Ratio: 0.44
• Price to Book (P/B): 13.94
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.52
• Enterprise Value/Market Cap: 0.93
• Enterprise Value/Revenue: 1.36
• Enterprise Value/Gross Profit: 6.70
• Enterprise Value/Ebitda: 9.91
• 1Y Price Target: $57.95
• Price Target Upside: 10.05% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

• Rating: 80 Outperform
• Price Target: $112.00 ▲(112.69%Upside)

Pegasystems' robust financial performance and strategic advancements, particularly the transition to profitability and debt-free status, are the most significant contributors to its strong stock score. The positive earnings call, highlighting growth in key areas and strategic success, further enhances confidence in the company's future prospects. Technical indicators and valuation metrics suggest moderate risk, with high growth expectations already priced in.

Positive Factors

Capital Allocation

Pega announced that its board authorized an additional $500 million share-repurchase program, enhancing the company’s capital-allocation strategy.

Market Expansion

Management highlighted that its target market now includes over 10,000 companies, up from its prior target of 1,000 companies.

Stock Accessibility

The two-for-one stock split could potentially make the stock more accessible and attractive to a broader range of investors.

Negative Factors

Growth Concerns

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.

Performance Expectations

Pega Cloud ACV growth slowed down and missed consensus expectations, impacting overall sentiment.

Pegasystems Business Overview & Revenue Model

Company Description

Pegasystems Inc. (PEGA) is a leading global software company that specializes in developing customer relationship management (CRM) and business process management (BPM) solutions. Headquartered in Cambridge, Massachusetts, Pegasystems provides cutting-edge software applications to help organizations optimize their customer engagement and automate complex business processes. The company's core products include the Pega Platform, Pega Customer Service, Pega Sales Automation, and Pega Marketing, which are designed to enhance operational efficiency and improve customer experiences across various industries.

How the Company Makes Money

Pegasystems 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 Financial Statement Overview

Summary

Pegasystems has shown significant improvements in profitability, revenue growth, and operational efficiency. It transitioned from losses to profitability with strong cash flow generation and a solid balance sheet, although asset shrinkage and cash flow volatility warrant monitoring.

Income Statement

Pegasystems demonstrates strong revenue growth with a 9.74% increase from the previous year and a healthy gross profit margin of 75.73% in TTM. The net profit margin has significantly improved to 11.98% from previous losses, indicating enhanced profitability. EBIT and EBITDA margins of 16.55% and 19.34% respectively, show strong operational efficiency.

Balance Sheet

The balance sheet shows a stable financial position with a debt-to-equity ratio of 0.11, indicating low leverage. The equity ratio is 46.23%, reflecting a strong equity base. Return on Equity (ROE) has improved to 32.17%, showcasing effective utilization of shareholders' equity. However, the decrease in total assets over the years may pose a potential risk.

Cash Flow

Operating cash flow to net income ratio is robust at 1.88, indicating strong cash generation relative to net income. Free cash flow has seen substantial growth, and the free cash flow to net income ratio is 1.85, highlighting efficient cash usage. However, fluctuations in investing and financing cash flows suggest potential volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.64B	1.50B	1.43B	1.32B	1.21B	1.02B
Gross Profit	1.24B	1.11B	1.05B	949.21M	875.29M	706.60M
EBITDA	321.22M	167.06M	121.06M	-119.28M	-94.73M	-67.94M
Net Income	196.74M	99.19M	67.81M	-345.58M	-63.04M	-61.37M
Balance Sheet
Total Assets	1.32B	1.77B	1.51B	1.36B	1.59B	1.60B
Cash, Cash Equivalents and Short-Term Investments	371.74M	739.97M	423.34M	297.22M	362.78M	465.17M
Total Debt	79.27M	549.67M	581.27M	687.74M	678.54M	518.20M
Total Liabilities	710.68M	1.18B	1.16B	1.23B	1.18B	1.06B
Stockholders Equity	611.27M	585.48M	353.84M	130.84M	416.09M	542.17M
Cash Flow
Free Cash Flow	361.02M	338.21M	201.00M	-13.04M	28.66M	-25.93M
Operating Cash Flow	370.01M	345.93M	217.78M	22.34M	39.12M	-563.00K
Investing Cash Flow	191.72M	-202.58M	-50.75M	13.07M	72.50M	-321.68M
Financing Cash Flow	-624.10M	-30.21M	-81.96M	-46.99M	-121.84M	423.45M

Pegasystems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 52.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 52.66 is above the 20-day moving average (MA) of 51.12, above the 50-day MA of 48.77, and above the 200-day MA of 43.57, indicating a bullish trend. The MACD of 1.29 indicates Negative momentum. The RSI at 60.78 is Neutral, neither overbought nor oversold. The STOCH value of 71.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PEGA.

Pegasystems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PEGA	80 Outperform	$9.01B	51.21	39.29%	0.23%	14.29%	151.35%
CWAN	78 Outperform	$6.17B	13.07	58.14%	―	23.21%	―
QXO	78 Outperform	$14.20B	―	1.44%	―	0.22%	48.10%
CVLT	72 Outperform	$7.59B	101.06	25.23%	―	18.63%	-55.09%
BILL	63 Neutral	$4.80B	482.28	0.97%	―	14.52%	―
VERX	58 Neutral	$5.50B	235.54	-19.65%	―	15.20%	-666.94%
Sector *	57 Neutral	$1.14B	27.12	-27.06%	10.34%	10.83%	-5.57%

Pegasystems Corporate Events

Pegasystems Announces Two-for-One Stock Split

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.

Pegasystems Confirms Two-for-One Stock Split

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.

Pegasystems Reports Strong Growth in Pega Cloud ACV

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.