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1. Company Snapshot

1.a. 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 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.

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1.b. Last Insights on PEGA

Pegasystems Inc.'s recent performance was negatively impacted by a decrease in institutional investor holdings, with Fieldview Capital Management LLC reducing its position by 83.4%. Additionally, despite beating Q4 earnings and revenue estimates, the company's growth prospects are being closely watched. However, the launch of Vibe Coding Assistant in Pega Blueprint and being named a Leader in Customer Service Solutions by Forrester Research are positive developments. Pegasystems has a "Moderate Buy" consensus rating from brokerages.

1.c. Company Highlights

2. PegaSystems' Strong 2025 Earnings: A Year of Exceptional Growth

PegaSystems reported a robust financial performance for 2025, with Total ACV growing 17% year over year as reported, and 14% in constant currency, surpassing guidance. The company's free cash flow increased 45% year over year to $491 million, exceeding expectations by $51 million. Earnings per share (EPS) came in at $0.76, beating analyst estimates of $0.72. Revenue growth was driven by the execution of the global sales team, with Pega Cloud ACV increasing 33% year over year as reported and 28% in constant currency.

Publication Date: Feb -16

📋 Highlights
  • Total ACV Growth:: Increased 17% YoY (14% CC), with Pega Cloud ACV up 33% YoY (28% CC), surpassing guidance.
  • Free Cash Flow Surge:: Rose 45% YoY to $491M, exceeding guidance by $51M, with 2026 guidance of $575M (17% growth).
  • Backlog Expansion:: Contractually committed backlog reached $2B, up 28% YoY (23% CC), signaling strong future revenue potential.
  • 2026 Financial Guidance:: Targets 15% ACV growth, $2B revenue (15% YoY), and $1B in new stock buyback authorization.

Driving Growth through Innovation

The company's commitment to innovation was evident in the launch of the Infinity platform, an agentic enterprise transformation platform that uses AI to automate and improve processes. As Alan Trefler noted, "Our approach is different, as we use AI to automate and improve processes, not to discover what to do at runtime." This structural advantage is expected to drive future growth, with the contractually committed backlog exceeding $2 billion.

Guidance and Outlook

Looking ahead to 2026, PegaSystems expects Total ACV growth of 15%, total revenue of $2 billion, representing a 15% increase, and free cash flow of $575 million, a 17% increase over 2025. The company's guidance suggests a continued focus on driving long-term shareholder value through organic growth, including product innovation and go-to-market capacity.

Valuation and Metrics

With a P/E Ratio of 18.95 and an EV/EBITDA of 24.34, the market appears to be pricing in a certain level of growth. The company's ROIC of 29.43% and ROE of 60.07% indicate strong profitability. The Free Cash Flow Yield of 5.9% is also attractive. Analysts estimate next year's revenue growth at 11.9%, which is slightly lower than the company's guidance. Overall, PegaSystems' strong financial performance and guidance suggest that the company is well-positioned for continued growth.

Partnerships and AI-Driven Innovation

The company's partnerships, such as with AWS, and its focus on AI-driven innovation, including the Blueprint AI design engine, are expected to drive future growth. The incorporation of intellectual property from partners, such as Accenture and Wipro, into Blueprint is also expected to accelerate transformation and achieve a new level of scale.

3. NewsRoom

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Pega Announces Quarterly Cash Dividend for Second Quarter of 2026

Mar -16

Source: businesswire.com

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Contrasting Microsoft (NASDAQ:MSFT) and Pegasystems (NASDAQ:PEGA)

Mar -14

Source: defenseworld.net

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Pega Named a Leader in Customer Service Solutions by Independent Research Firm

Mar -11

Source: businesswire.com

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Fieldview Capital Management LLC Reduces Position in Pegasystems Inc. $PEGA

Mar -11

Source: defenseworld.net

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PEGA Stock Surges on Launch of Vibe Coding Assistant in Pega Blueprint

Mar -06

Source: zacks.com

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Top Stocks From the Staffing Services Industry to Buy Now

Mar -05

Source: zacks.com

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Pega Blueprint Updates Make Vibe Coding Enterprise Ready

Mar -05

Source: businesswire.com

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Pegasystems Inc. (PEGA) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Mar -05

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.58%)

6. Segments

Subscription Services

Expected Growth: 5.5%

Pegasystems' Subscription Services growth of 5.5% is driven by increasing adoption of cloud-based solutions, expansion into new industries, and growing demand for digital transformation. Additionally, the company's strategic partnerships, innovative product offerings, and strong customer retention rates contribute to this growth.

Subscription License

Expected Growth: 6.2%

Pegasystems' Subscription License growth of 6.2% is driven by increasing demand for digital transformation, adoption of cloud-based solutions, and expansion into new industries. Additionally, the company's strategic partnerships, innovative product offerings, and strong sales execution contribute to this growth.

Consulting

Expected Growth: 4.8%

Pegasystems Inc.'s 4.8% growth in consulting is driven by increasing demand for digital transformation, adoption of cloud-based solutions, and growing need for customer experience improvement. Additionally, the company's strong partnerships, innovative products, and expanding presence in emerging markets contribute to its growth momentum.

Perpetual License

Expected Growth: 3.5%

Pegasystems' Perpetual License growth is driven by increasing demand for digital transformation, low-code development, and customer engagement solutions. The 3.5% growth rate is fueled by expanding adoption in industries such as financial services, healthcare, and government, as well as the company's strategic partnerships and investments in emerging technologies like AI and cloud computing.

7. Detailed Products

Pega Platform

A business process management (BPM) and customer relationship management (CRM) platform that enables organizations to digitize and automate business processes, and deliver personalized customer experiences.

Pega Customer Service

A customer service platform that enables organizations to deliver personalized, omnichannel customer experiences, and provides a unified view of customer interactions.

Pega Marketing

A marketing automation platform that enables organizations to deliver personalized, omnichannel marketing campaigns, and provides real-time customer insights.

Pega Sales Automation

A sales automation platform that enables organizations to automate and optimize sales processes, and provides real-time sales insights.

Pega Customer Decision Hub

A customer decision hub that enables organizations to make data-driven decisions, and provides real-time customer insights.

Pega Workforce Intelligence

A workforce intelligence platform that enables organizations to optimize workforce operations, and provides real-time workforce insights.

8. Pegasystems Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Pegasystems Inc. has a medium threat of substitutes due to the presence of alternative BPM and CRM solutions in the market.

Bargaining Power Of Customers

Pegasystems Inc. has a low bargaining power of customers due to its strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

Pegasystems Inc. has a medium bargaining power of suppliers due to its dependence on a few key suppliers for technology and services.

Threat Of New Entrants

Pegasystems Inc. has a high threat of new entrants due to the growing demand for digital transformation and BPM solutions.

Intensity Of Rivalry

Pegasystems Inc. operates in a highly competitive market with intense rivalry among established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.24%
Debt Cost 3.95%
Equity Weight 40.76%
Equity Cost 9.18%
WACC 6.08%
Leverage 145.37%

11. Quality Control: Pegasystems Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Pegasystems

A-Score: 4.9/10

Value: 1.3

Growth: 8.0

Quality: 8.7

Yield: 0.0

Momentum: 8.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Dynatrace

A-Score: 4.9/10

Value: 1.8

Growth: 8.9

Quality: 8.6

Yield: 0.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Workiva

A-Score: 4.6/10

Value: 6.2

Growth: 6.7

Quality: 6.4

Yield: 0.0

Momentum: 4.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Smartsheet

A-Score: 4.6/10

Value: 2.0

Growth: 7.4

Quality: 5.2

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Braze

A-Score: 3.4/10

Value: 4.6

Growth: 6.0

Quality: 4.6

Yield: 0.0

Momentum: 2.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Zeta Global

A-Score: 2.9/10

Value: 3.1

Growth: 4.4

Quality: 5.2

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

43.42$

Current Price

43.42$

Potential

-0.00%

Expected Cash-Flows