Total ACV Growth & Pega Cloud ACV Growth Cash Flow Growth
-
Annual Contract Value (ACV) grows 14% year over year
-
Pega Cloud ACV increases 27% year over year
-
Cash flow from operations and free cash flow grow 38% year over year
-
Repurchased 8.7M shares for $393M year to date
WALTHAM, Mass., October 21, 2025–(BUSINESS WIRE)–Pegasystems Inc. (NASDAQ: PEGA), the Enterprise Transformation Company™, released its financial results for the third quarter of 2025.
“Our differentiated AI strategy continues to resonate deeply with clients, prospects, and partners, unlocking new levels of speed, predictability, and scale in enterprise applications,” said Alan Trefler, founder and CEO. “The results speak for themselves as clients and partners embrace Pega Blueprint and commit to strategic transformation with Pega.”
“Our strong sales performance, powered by the momentum of Pega Blueprint, drove Q3 2025,” said Ken Stillwell, Pega COO and CFO. “Pega Cloud ACV growth accelerated again, and we’ve generated $347M in operating cash flow allowing us to have a significant year of buybacks. These outcomes reflect our financial discipline, our digital transformation leadership, and the expanding AI opportunity.”
Financial and performance metrics (1)
_________________________
1Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
Reconciliation of ACV and Constant Currency ACV
(in millions, except percentages)
September 30, 2024
September 30, 2025
1-Year Change
ACV
$
1,360
$
1,557
14
%
Impact of changes in foreign exchange rates
—
(5
)
Constant currency ACV
$
1,360
$
1,552
14
%
Note: Constant currency ACV is calculated by applying the September 30, 2024 foreign exchange rates to current period shown.
Cash Flow Growth
(Dollars in thousands,
except per share amounts) (1)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
Change
2025
2024
Change
Total revenue
$
381,350
$
325,050
17
%
$
1,241,495
$
1,006,350
23
%
Net income (loss) – GAAP
$
43,364
$
(14,390
)
*
$
158,863
$
(19,901
)
*
Net income – non-GAAP
$
55,164
$
34,594
59
%
$
245,857
$
122,589
101
%
Diluted earnings (loss) per share – GAAP
$
0.24
$
(0.08
)
*
$
0.86
$
(0.12
)
*
Diluted earnings per share – non-GAAP
$
0.30
$
0.19
58
%
$
1.34
$
0.69
94
%
* Not meaningful
(1) Per share amounts have been recast for all prior periods to reflect the effect of the Company’s two-for-one forward common stock split effected in the form of a stock dividend distributed on June 20, 2025.
(Dollars in thousands)
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
2025
2024
2025
2024
Pega Cloud
$
184,549
48
%
$
144,108
44
%
$
40,441
28
%
$
502,415
40
%
$
409,096
41
%
$
93,319
23
%
Maintenance
79,649
21
%
80,702
25
%
(1,053
)
(1
)%
235,288
20
%
242,047
24
%
(6,759
)
(3
)%
Subscription services
264,198
69
%
224,810
69
%
39,388
18
%
737,703
60
%
651,143
65
%
86,560
13
%
Subscription license
60,600
16
%
45,420
14
%
15,180
33
%
327,118
26
%
193,405
19
%
133,713
69
%
Subscription
324,798
85
%
270,230
83
%
54,568
20
%
1,064,821
86
%
844,548
84
%
220,273
26
%
Consulting
56,394
15
%
54,364
17
%
2,030
4
%
174,639
14
%
160,451
16
%
14,188
9
%
Perpetual license
158
—
%
456
—
%
(298
)
(65
)%
2,035
—
%
1,351
—
%
684
51
%
Total revenue
$
381,350
100
%
$
325,050
100
%
$
56,300
17
%
$
1,241,495
100
%
$
1,006,350
100
%
$
235,145
23
%
Quarterly conference call
A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Wednesday, October 22, 2025.
Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (800) 715-9871 (domestic) or 1 (646) 307-1963 (international) and using Conference ID 5464305, or via https://events.q4inc.com/attendee/290880287 by logging onto www.pega.com at least five minutes prior to the event’s broadcast and clicking on the webcast icon in the Investors section.
Discussion of non-GAAP financial measures
Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. Management uses these measures to assess the performance of the company’s operations and establish operational goals and incentives. They are not a substitute for financial measures prepared under U.S. GAAP. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
Forward-looking statements
Certain statements in this press release may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.
Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements. These statements represent our views only as of the date the statement was made and are based on current expectations and assumptions.
Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:
-
our future financial performance and business plans;
-
the adequacy of our liquidity and capital resources;
-
the successful execution of investments in artificial intelligence;
-
the continued payment of our quarterly dividends;
-
the timing of revenue recognition;
-
variation in demand for our products and services, including among clients in the public sector;
-
reliance on key personnel;
-
reliance on third-party service providers, including hosting providers;
-
compliance with our debt obligations and covenants;
-
foreign currency exchange rates;
-
potential legal and financial liabilities, as well as damage to our reputation, due to cyber-attacks;
-
security breaches and security flaws;
-
our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims, and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
-
our ongoing litigation with Appian Corp. and associated legal proceedings;
-
our client retention rate; and
-
management of our growth.
These risks and others that may cause actual results to differ materially from those expressed in such forward-looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, and other filings we make with the SEC.
Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included in such statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements, whether as the result of new information, future events, or otherwise.
Any forward-looking statements in this press release represent our views as of October 21, 2025.
About Pegasystems
Pega provides the leading AI-powered platform for enterprise transformation. The world’s most influential organizations trust our technology to reimagine how work gets done by automating workflows, personalizing customer experiences, and modernizing legacy systems. Since 1983, our scalable, flexible architecture has fueled continuous innovation, helping clients accelerate their path to the autonomous enterprise. Ready to Build for Change®? Visit www.pega.com.
All trademarks are the property of their respective owners.
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Revenue
Subscription services
$
264,198
$
224,810
$
737,703
$
651,143
Subscription license
60,600
45,420
327,118
193,405
Consulting
56,394
54,364
174,639
160,451
Perpetual license
158
456
2,035
1,351
Total revenue
381,350
325,050
1,241,495
1,006,350
Cost of revenue
Subscription services
42,978
36,868
122,616
108,930
Subscription license
314
384
1,060
1,504
Consulting
62,601
59,451
194,235
177,864
Perpetual license
—
3
6
12
Total cost of revenue
105,893
96,706
317,917
288,310
Gross profit
275,457
228,344
923,578
718,040
Operating expenses
Selling and marketing
140,129
127,669
425,329
395,125
Research and development
78,756
74,157
231,826
221,695
General and administrative
42,108
35,694
107,724
84,641
Litigation settlement, net of recoveries
—
—
—
32,403
Restructuring
(5
)
2,485
(38
)
3,283
Total operating expenses
260,988
240,005
764,841
737,147
Income (loss) from operations
14,469
(11,661
)
158,737
(19,107
)
Foreign currency transaction gain (loss)
7,154
(4,405
)
(12,179
)
(7,230
)
Interest income
2,660
6,769
11,243
18,835
Interest expense
(144
)
(1,639
)
(1,172
)
(5,047
)
(Loss) on capped call transactions
—
(689
)
(223
)
(667
)
Other (loss) income, net
(43
)
—
19,247
1,684
Income (loss) before (benefit from) provision for income taxes
24,096
(11,625
)
175,653
(11,532
)
(Benefit from) provision for income taxes
(19,268
)
2,765
16,790
8,369
Net income (loss)
$
43,364
$
(14,390
)
$
158,863
$
(19,901
)
Earnings (loss) per share
Basic
$
0.25
$
(0.08
)
$
0.93
$
(0.12
)
Diluted
$
0.24
$
(0.08
)
$
0.86
$
(0.12
)
Weighted-average number of common shares outstanding
Basic
170,567
171,250
171,045
170,036
Diluted
184,095
171,250
185,005
170,036
(1) The number of common shares and per share amounts have been recast for all prior periods to reflect the effect of the Company’s two-for-one forward common stock split effected in the form of a stock dividend distributed on June 20, 2025.
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2025
December 31, 2024
Assets
Current assets:
Cash and cash equivalents
$
148,699
$
337,103
Marketable securities
202,663
402,870
Total cash, cash equivalents, and marketable securities
351,362
739,973
Accounts receivable, net
160,919
305,468
Unbilled receivables, net
175,732
173,085
Other current assets
123,791
115,178
Total current assets
811,804
1,333,704
Long-term unbilled receivables, net
105,863
61,407
Goodwill
81,402
81,113
Other long-term assets
293,717
292,049
Total assets
$
1,292,786
$
1,768,273
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
8,057
$
6,226
Accrued expenses
51,857
31,544
Accrued compensation and related expenses
111,650
138,042
Deferred revenue
404,757
423,910
Convertible senior notes, net
—
467,470
Other current liabilities
21,131
18,866
Total current liabilities
597,452
1,086,058
Long-term operating lease liabilities
62,402
67,647
Other long-term liabilities
36,102
29,088
Total liabilities
695,956
1,182,793
Total stockholders’ equity
596,830
585,480
Total liabilities and stockholders’ equity
$
1,292,786
$
1,768,273
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2025
2024
Net income (loss)
$
158,863
$
(19,901
)
Adjustments to reconcile net income (loss) to cash provided by operating activities
Non-cash items
182,243
180,036
Change in operating assets and liabilities, net
5,690
90,562
Cash provided by operating activities
346,796
250,697
Cash provided by (used in) investing activities
214,897
(215,999
)
Cash (used in) provided by financing activities
(756,391
)
26,949
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
6,971
4,591
Net (decrease) increase in cash, cash equivalents, and restricted cash
(187,727
)
66,238
Cash, cash equivalents, and restricted cash, beginning of period
341,529
232,827
Cash, cash equivalents, and restricted cash, end of period
$
153,802
$
299,065
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES (1)
(in thousands, except percentages and per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
Change
2025
2024
Change
Net income (loss) – GAAP
$
43,364
$
(14,390
)
*
$
158,863
$
(19,901
)
*
Stock-based compensation (2)
43,041
37,213
121,196
108,218
Restructuring
(5
)
2,485
(38
)
3,283
Legal fees
10,024
9,863
22,977
14,214
Litigation settlement, net of recoveries
—
—
—
32,403
Amortization of intangible assets
627
700
2,003
2,453
Interest on convertible senior notes
—
621
394
1,857
Capped call transactions
—
689
223
667
Foreign currency transaction (gain) loss
(7,154
)
4,405
12,179
7,230
Other
94
—
(19,386
)
(1,628
)
Income taxes (3)
(34,827
)
(6,992
)
(52,554
)
(26,207
)
Net income – non-GAAP
$
55,164
$
34,594
59
%
$
245,857
$
122,589
101
%
Diluted earnings (loss) per share – GAAP
$
0.24
$
(0.08
)
*
$
0.86
$
(0.12
)
*
non-GAAP adjustments
0.06
0.27
0.48
0.81
Diluted earnings per share – non-GAAP
$
0.30
$
0.19
58
%
$
1.34
$
0.69
94
%
Diluted weighted-average number of common shares outstanding – GAAP
184,095
171,250
8
%
185,005
170,036
9
%
Capped call transactions
—
—
(1,599
)
—
Stock-based compensation
—
8,194
—
7,024
Diluted weighted-average number of common shares outstanding – non-GAAP
184,095
179,444
3
%
183,406
177,060
4
%
Our non-GAAP financial measures reflect the following adjustments:
-
Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance, excluding stock-based compensation.
-
Restructuring: We have excluded restructuring from our non-GAAP financial measures. Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as these amounts are not representative of our core business operations and ongoing operational performance.
-
Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
-
Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See “Note 20. Commitments And Contingencies” in Item 8 of our Annual Report filed on Form 10-K for the year ended December 31, 2024 and prior filings for further information. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
-
Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
-
Interest on convertible senior notes: In February 2020, we issued convertible senior notes (the “Notes”), due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity. We believe that excluding the amortization of issuance costs provides a useful comparison of our operational performance in different periods.
-
Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
-
Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
-
Other: We have excluded gains and losses from our venture investments. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
-
Diluted weighted-average number of common shares outstanding:
-
Capped call transactions: In periods of GAAP net income, the shares calculated by applying the if-converted method related to the Company’s Notes are included in the diluted weighted-average shares outstanding if they are dilutive. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes. We believe that including the expected impact of the capped call transactions in our non-GAAP financial measures provides a useful comparison of our operational performance in different periods.
-
Stock-based compensation: In periods of non-GAAP net income, we have included the dilutive impact of stock-based compensation in our non-GAAP weighted-average shares. In periods of GAAP net loss, these shares would have been excluded from our GAAP results as they would be anti-dilutive for GAAP. We believe including the dilutive effect of stock-based compensation in our non-GAAP financial measures in periods of net income is helpful to investors as this provides a useful comparison of our operational performance in different periods
-
(1) Per share amounts have been recast for all prior periods to reflect the effect of the Company’s two-for-one forward common stock split effected in the form of a stock dividend distributed on June 20, 2025.
(2) Stock-based compensation:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Dollars in thousands)
2025
2024
2025
2024
Cost of revenue
$
6,626
$
6,894
$
21,737
$
20,558
Selling and marketing
15,009
14,169
45,168
41,621
Research and development
7,914
7,308
23,789
22,779
General and administrative
13,492
8,842
30,502
23,260
$
43,041
$
37,213
$
121,196
$
108,218
Income tax benefit
$
(547
)
$
(512
)
$
(1,700
)
$
(1,377
)
(3) Effective income tax rates:
Nine Months Ended
September 30,
2025
2024
GAAP
10
%
(73
)%
non-GAAP
22
%
22
%
Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including our stock-based compensation plans, research and development tax credits, and the valuation allowance on our deferred tax assets in the U.S. and U.K. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP results consistent with our annual plan’s effective income tax rate as established at the beginning of each year, given tax rate volatility.
PEGASYSTEMS INC.
RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS
(in thousands, except percentages)
Nine Months Ended
September 30,
Change
2025
2024
Cash provided by operating activities
$
346,796
250,697
38
%
Investment in property and equipment
(8,485
)
(4,921
)
Free cash flow (1)
$
338,311
$
245,776
38
%
Supplemental information (2)
Litigation settlement, net of recoveries
$
—
$
32,403
Legal fees
15,022
9,232
Restructuring
1,681
4,214
Interest paid on convertible senior notes
1,754
3,767
Income taxes, net of refunds
7,993
32,246
$
26,450
$
81,862
(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities and equipment. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP.
(2) The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.
-
Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See “Note 20. Commitments And Contingencies” in Item 8 of our Annual Report filed on Form 10-K for the year ended December 31, 2024 and prior filings for further information.
-
Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
-
Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
-
Interest paid on convertible senior notes: In February 2020, we issued convertible senior notes (the “Notes”), due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity.
-
Income taxes, net of refunds: Direct income taxes paid net of refunds received.
PEGASYSTEMS INC.
ANNUAL CONTRACT VALUE
(in thousands, except percentages)
Annual contract value (“ACV”) – ACV represents the annualized value of our active contracts as of the measurement date. The contract’s total value is divided by its duration in years to calculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.
September 30, 2025
September 30, 2024
Change
Constant Currency Change
Pega Cloud
$
815,370
$
640,574
$
174,796
27
%
27
%
Maintenance
296,955
306,753
(9,798
)
(3
)%
(4
)%
Subscription services
1,112,325
947,327
164,998
17
%
17
%
Subscription license
444,601
412,678
31,923
8
%
8
%
$
1,556,926
$
1,360,005
$
196,921
14
%
14
%
PEGASYSTEMS INC.
BACKLOG
(in thousands, except percentages)
Remaining performance obligations (“Backlog”) – Expected future revenue from existing non-cancellable contracts:
As of September 30, 2025:
Subscription services
Subscription license
Perpetual license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
609,511
$
199,651
$
46,228
$
158
$
43,979
$
899,527
51
%
1-2 years
319,940
71,730
4,404
—
2,478
398,552
23
%
2-3 years
164,125
48,668
746
—
114
213,653
12
%
Greater than 3 years
195,133
40,385
7,220
—
56
242,794
14
%
$
1,288,709
$
360,434
$
58,598
$
158
$
46,627
$
1,754,526
100
%
% of Total
73
%
21
%
3
%
—
%
3
%
100
%
Change since September 30, 2024
$
224,173
$
62,538
$
7,589
$
(2,411
)
$
(12,646
)
$
279,243
21
%
21
%
15
%
(94
)%
(21
)%
19
%
As of September 30, 2024:
Subscription services
Subscription license
Perpetual license
Consulting
Total
Pega Cloud
Maintenance
1 year or less
$
495,637
$
188,905
$
38,175
$
2,252
$
54,203
$
779,172
53
%
1-2 years
310,020
63,701
9,686
317
3,062
386,786
26
%
2-3 years
146,877
26,436
3,046
—
2,008
178,367
12
%
Greater than 3 years
112,002
18,854
102
—
—
130,958
9
%
$
1,064,536
$
297,896
$
51,009
$
2,569
$
59,273
$
1,475,283
100
%
% of Total
73
%
20
%
3
%
—
%
4
%
100
%
PEGASYSTEMS INC.
RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions, except percentages)
September 30, 2024
September 30, 2025
1 Year Growth Rate
Backlog – GAAP
$
1,475
$
1,755
19
%
Impact of changes in foreign exchange rates
—
(10
)
Constant currency backlog
$
1,475
$
1,745
18
%
Note: Constant currency backlog is calculated by applying the September 30, 2024 foreign exchange rates to current period shown.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251021455058/en/
Contacts
Press contact:
Lisa Pintchman
VP, Corporate Communications
lisapintchman.rogers@pega.com
617-866-6022
Investor contact:
Peter Welburn
VP, Corporate Development & Investor Relations
PegaInvestorRelations@pega.com
617-498-8968