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Pegasystems Inc. (PEGA) Presents at Citi's 2026 Global TMT Conference Transcript

AXQ Capital LP purchased a new position in shares of Pegasystems Inc. (NASDAQ:PEGA – Free Report) during the 2nd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The institutional investor purchased 197,535 shares of the technology company’s stock, valued at approximately $5,920,000. Pegasystems accounts for 0.6% of AXQ Capital LP’s investment portfolio, making the stock its 10th biggest position. AXQ Capital LP owned approximately 0.12% of Pegasystems as of its most recent SEC filing.

A number of other hedge funds also recently bought and sold shares of the stock. Nykredit A S purchased a new stake in shares of Pegasystems during the 2nd quarter worth $91,000. Hsbc Holdings PLC boosted its position in shares of Pegasystems by 280.8% during the 2nd quarter. Hsbc Holdings PLC now owns 49,030 shares of the technology company’s stock worth $1,460,000 after acquiring an additional 36,155 shares in the last quarter. Empowered Funds LLC purchased a new position in shares of Pegasystems in the 2nd quarter valued at about $2,235,000. Caitlin John LLC purchased a new position in shares of Pegasystems in the 2nd quarter valued at about $399,000. Finally, Jefferies Financial Group Inc. acquired a new stake in shares of Pegasystems during the 2nd quarter worth about $950,000. Institutional investors and hedge funds own 46.89% of the company’s stock.

Insider Activity at Pegasystems In related news, insider Kerim Akgonul sold 3,000 shares of Pegasystems stock in a transaction that occurred on Tuesday, August 25th. The stock was sold at an average price of $33.99, for a total value of $101,970.00. Following the sale, the insider directly owned 108,049 shares in the company, valued at $3,672,585.51. The trade was a 2.70% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, CAO Efstathios Kouninis sold 1,063 shares of the company’s stock in a transaction on Thursday, September 3rd. The stock was sold at an average price of $38.75, for a total value of $41,191.25. Following the transaction, the chief accounting officer directly owned 1,164 shares in the company, valued at $45,105. This represents a 47.73% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold a total of 4,813 shares of company stock valued at $167,394 over the last three months. Insiders own 48.40% of the company’s stock.

Wall Street Analysts Forecast Growth A number of analysts have weighed in on the stock. Weiss Ratings reissued a “hold (c)” rating on shares of Pegasystems in a report on Tuesday. Royal Bank Of Canada set a $35.00 target price on shares of Pegasystems and gave the company an “outperform” rating in a report on Thursday, July 23rd. Rosenblatt Securities dropped their target price on shares of Pegasystems from $58.00 to $47.00 and set a “buy” rating on the stock in a research report on Thursday, July 23rd. Citigroup lowered shares of Pegasystems from a “market outperform” rating to a “market perform” rating in a research note on Wednesday, July 22nd. Finally, DA Davidson set a $32.00 price target on shares of Pegasystems and gave the company a “buy” rating in a research report on Friday, July 24th. Six analysts have rated the stock with a Buy rating, six have issued a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the company presently has a consensus rating of “Hold” and a consensus target price of $50.10. Get Our Latest Research Report on PEGA

Pegasystems Trading Up 1.1% Shares of PEGA stock opened at $37.72 on Friday. The company has a market capitalization of $6.20 billion, a P/E ratio of 21.31 and a beta of 0.89. The business’s 50 day moving average is $32.07 and its two-hundred day moving average is $36.37. Pegasystems Inc. has a twelve month low of $25.10 and a twelve month high of $68.10.

Pegasystems (NASDAQ:PEGA – Get Free Report) last issued its quarterly earnings results on Tuesday, July 21st. The technology company reported $0.35 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.43 by ($0.08). Pegasystems had a return on equity of 32.21% and a net margin of 18.66%.The firm had revenue of $420.72 million for the quarter, compared to analyst estimates of $427.38 million. During the same quarter last year, the firm earned $0.28 earnings per share. The company’s revenue was up 9.4% compared to the same quarter last year. As a group, equities analysts predict that Pegasystems Inc. will post 1.71 earnings per share for the current fiscal year.

Pegasystems Announces Dividend The firm also recently declared a quarterly dividend, which was paid on Wednesday, July 15th. Stockholders of record on Wednesday, July 1st were issued a $0.03 dividend. This represents a $0.12 annualized dividend and a dividend yield of 0.3%. The ex-dividend date of this dividend was Wednesday, July 1st. Pegasystems’s dividend payout ratio (DPR) is currently 6.78%.

Pegasystems Company Profile (Free Report)

Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.

The core of Pegasystems’ offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.

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NEW YORK, Sept. 01, 2026 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Pegasystems Inc. (“Pegasystems” or the “Company”) (NASDAQ: PEGA). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether Pegasystems and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On July 21, 2026, Pegasystems reported its financial results for the second quarter of 2026. Among other items, Pegasystems reported earnings per share and total revenue that significantly missed consensus expectations, as well as a decline in year-over-year total Annual Contract Value growth relative to the previous quarter. Pegasystem’s management acknowledged that rapid shifts in the broader AI market had caused enterprise clients to elongate decision cycles and delay software purchases, a headwind expected to weigh on growth through the rest of 2026. 

On this news, Pegasystem’s stock price fell $4.95 per share, or 16%, to close at $25.99 per share on July 22, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

NEW YORK, Aug. 25, 2026 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Pegasystems Inc. (“Pegasystems” or the “Company”) (NASDAQ: PEGA). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether Pegasystems and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.

[Click here for information about joining the class action]

On July 21, 2026, Pegasystems reported its financial results for the second quarter of 2026. Among other items, Pegasystems reported earnings per share and total revenue that significantly missed consensus expectations, as well as a decline in year-over-year total Annual Contract Value growth relative to the previous quarter. Pegasystem’s management acknowledged that rapid shifts in the broader AI market had caused enterprise clients to elongate decision cycles and delay software purchases, a headwind expected to weigh on growth through the rest of 2026. 

On this news, Pegasystem’s stock price fell $4.95 per share, or 16%, to close at $25.99 per share on July 22, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

, /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Pegasystems Inc. ("Pegasystems" or the "Company") (NASDAQ: PEGA). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether Pegasystems and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On July 21, 2026, Pegasystems reported its financial results for the second quarter of 2026. Among other items, Pegasystems reported earnings per share and total revenue that significantly missed consensus expectations, as well as a decline in year-over-year total Annual Contract Value growth relative to the previous quarter. Pegasystem's management acknowledged that rapid shifts in the broader AI market had caused enterprise clients to elongate decision cycles and delay software purchases, a headwind expected to weigh on growth through the rest of 2026. 

On this news, Pegasystem's stock price fell $4.95 per share, or 16%, to close at $25.99 per share on July 22, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes. 

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP

PEGA Investors Have Opportunity to Join Pegasystems Inc. Fraud Investigation with SBS Law Schall, Brown & Schwartz LLP (“SBS”), a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of Pegasystems Inc. (“Pegasystems” or “the Company”) (NASDAQ: PEGA) for violations of the securities laws.

INVESTIGATION DETAILS: The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. Pegasystems reported its Q2 2026 financial results on July 21, 2026. The Company significantly missed analyst estimates on revenue and earnings per share. The Company claimed that customers were delaying software purchases, creating headwinds for the rest of the year. Based on this news, shares of Pegasystems fell by 16% on the next day.

If you are a shareholder who suffered a loss, click here to participate.

We also encourage you to contact Brian Schall or David Schwartz of Schall, Brown & Schwartz LLP, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at www.schallfirm.com, or by email at [email protected].

WHY SBS? Schall, Brown & Schwartz LLP represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation. Bringing together the extensive experience and diverse skillsets of founding partners Brian Schall, Andrew Brown, and David Schwartz, SBS is dedicated to aggressively advocating for every investor.

This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260823238745/en/

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

It has been about a month since the last earnings report for Pegasystems (PEGA - Free Report) . Shares have added about 30.2% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Pegasystems due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Pegasystems Inc. before we dive into how investors and analysts have reacted as of late.

Pegasystems Q2 Earnings Miss Estimates, Revenues Increase Y/YPegasystems reported second-quarter 2026 non-GAAP earnings of 35 cents per share, missing the Zacks Consensus Estimate by 18.61%. Earnings rose 25% year over year.

Revenues rose 9.4% year over year to $420.72 million but missed the consensus mark by 1.84%. The shortfalls came despite continued cloud momentum. Pega Cloud annual contract value rose 22% year over year, while total annual contract value increased 7% or 8% in constant currency.

Backlog grew year over year, supporting longer-term revenue visibility. Total backlog increased 10% year over year to $2.02 billion as of June 30, 2026 or 11% in constant currency. Pega Cloud backlog rose 18% to $1.56 billion and accounted for 77% of total backlog, up from 72% a year earlier.

PEGA’s Cloud Growth Supports Revenue ExpansionPega Cloud revenues climbed 28% year over year to $213.93 million and represented 51% of quarterly revenues, up from 43% a year earlier. Maintenance revenues declined 6% to $74.53 million.

Together, subscription services revenues advanced 17% to $288.46 million. Subscription license revenues rose 2% to $82.03 million, taking total subscription revenues up 13% to $370.49 million.

PEGA’s Revenue Mix Shows Subscription StrengthConsulting revenues declined 13% year over year to $50.23 million and accounted for 12% of total revenues compared with 15% in the prior-year quarter. The decline partly offset gains across the subscription business.

Subscription revenues represented 88% of quarterly revenues, up from 85% a year earlier. The higher recurring-revenue mix supported the top-line increase, but higher operating costs and delayed client decisions limited the benefit to profitability.

Pegasystems Faces Slower ACV GrowthTotal annual contract value (ACV) reached $1.62 billion at June 30, 2026, compared with $1.51 billion a year earlier. Pega Cloud ACV increased to $926.29 million from $761.05 million, highlighting the continued shift toward cloud contracts.

However, management said unprecedented changes in the AI market prompted clients to delay purchasing decisions. The company added that ACV growth slowed in the first half and warned that these factors may continue to pressure growth for the rest of the year.

PEGA’s Operating DetailsGross profit rose 13.7% year over year to $312.69 million. The gross margin expanded about 280 basis points to 74.3%, driven by revenue growth and a slight decline in total cost of revenues.

Operating expenses increased 14.9% to $296.05 million. Selling and marketing expenses rose 12.4%, research and development expenses increased 6.8%, and general and administrative expenses jumped 37.6%.

GAAP operating income slipped 3.7% year over year to $16.64 million. The operating margin contracted roughly 50 basis points to 4% as expense growth outpaced revenues.

PEGA’s Balance Sheet & Cash FlowAs of June 30, 2026, cash and cash equivalents and marketable securities totaled $361.9 million, down from $474 million as of March 31, 2026.

For the first six months of 2026, cash provided by operating activities increased 2.7% year over year to $298.23 million. Free cash flow rose 0.6% to $288.26 million, even as the company cautioned that slower ACV growth could weigh on cash generation for the remainder of the year.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -24.31% due to these changes.

VGM ScoresAt this time, Pegasystems has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Pegasystems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

NEW YORK, Aug. 18, 2026 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Pegasystems Inc. (“Pegasystems” or the “Company”) (NASDAQ: PEGA).  Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.

The investigation concerns whether Pegasystems and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]

On July 21, 2026, Pegasystems reported its financial results for the second quarter of 2026.  Among other items, Pegasystems reported earnings per share and total revenue that significantly missed consensus expectations, as well as a decline in year-over-year total Annual Contract Value growth relative to the previous quarter.  Pegasystem’s management acknowledged that rapid shifts in the broader AI market had caused enterprise clients to elongate decision cycles and delay software purchases, a headwind expected to weigh on growth through the rest of 2026. 

On this news, Pegasystem’s stock price fell $4.95 per share, or 16%, to close at $25.99 per share on July 22, 2026.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising. Prior results do not guarantee similar outcomes.  

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

-

New responsible AI features bring enhanced transparency and governance to AI-powered marketing, while a new partnership with Gryphon unites responsible AI with compliance assurance

WALTHAM, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced new responsible AI advancements that accelerate AI-powered customer engagement while reducing risk. The first is the general availability of Pega Customer Engagement StudioTM, a set of new agentic and automation capabilities within Pega Customer Decision Hub™ that enable the rapid design of customer engagement strategies using natural language, embedded best practices, and built-in governance to confidently optimize campaign effectiveness.

Pega also announced a partnership with Gryphon, a leading contact governance platform that provides omnichannel governance, continual auditability, and reach recovery for enterprises across highly regulated industries, including financial services, insurance, healthcare, retail, and communications, to meet TCPA, TRS, DNC, and FDCPA requirements. Together with Pega’s newest capabilities, these advancements reinforce that AI speed and responsibility must go hand in hand.

Market Context: Rising Pressure on Responsible AI

As regulatory scrutiny intensifies, businesses are simultaneously expected to operationalize AI and scale customer engagement. According to EY, organizations are struggling to find this balance, noting “Only a third of companies have responsible controls for current AI models despite nearly three-quarters having AI integrated into initiatives across the organization.”

Governance should not constrain customer engagement but rather serve as the foundation for safe, sustainable AI adoption. Enterprises that embed transparency and compliance into AI systems can scale with confidence while reducing reputational and regulatory risk.

A Closer Look: Governed AI at Scale

New responsible AI enhancements for Pega Customer Decision Hub help ensure AI-powered marketing is fast, auditable, and accountable. These enhancements are a part of Pega Customer Engagement Studio, a new Customer Decision Hub agentic experience announced at PegaWorld® 2026 that unifies Pega and third-party agents so marketers can move from brief to live, personalized actions in minutes.

Benefits include:

Get campaigns right the first time: Enables users to design campaigns conversationally while the embedded AI assistant captures intent, asks clarifying questions, and generates strategy logic. It also automatically validates against best practices, translates intent into executable rules, and enforces approval workflows with audit history, escalation, and re-approval controls. Simplify policy creation and reduce training needs: Helps users build advanced engagement policies for always-on actions without expert training. An AI assistant reuses approved logic, guides policy configuration (eligibility, suitability, applicability, and contact rules), and leverages existing data models to improve consistency and reduce build time. Reduce risk with intelligent validation and monitoring: Prevents misconfiguration with an eligibility criteria builder that validates targeting rules, while compliance monitoring detects changes (such as opt-outs) in connected systems and flags issues before execution. These features complement existing Customer Decision Hub offerings including Customer Profile Viewer for clearer decision transparency and Pega T-SwitchTM for configurable AI explainability. Additionally, Ethical Bias Check ensures fairness by identifying and mitigating bias before deployment, enabling more responsible, transparent customer engagement. Together, users gain a more responsible approach to their AI usage to get customer engagement right, every time.

Pega and Gryphon: A New Strategic Partnership

Pega is partnering with Gryphon to further advance its responsible AI strategy. Pega Customer Decision Hub governs AI behavior through transparent, unbiased models and clearly defined engagement logic focused on decision quality and fairness, while Gryphon complements this by governing outreach legality as a discrete compliance layer. Together, the partnership introduces two key capabilities for joint clients:

Optimization: While Customer Decision Hub intentionally suppresses audiences based on engagement policies, organizations often over-suppress out of caution. The Gryphon ONE platform recovers audiences by identifying legally valid exemptions and state-specific rules. Revenue calculator: Gryphon ONE quantifies the financial impact of over-suppression and legal exposure, enabling data-driven executive and sales conversations not natively addressed in Customer Decision Hub. By combining Customer Decision Hub and Gryphon ONE, organizations can move faster than those retrofitting compliance, creating an end-to-end approach that links responsible decisioning with trusted customer engagement.

Availability

Organizations can visit Pega’s Responsible AI page to better understand real-world examples of AI risk within their industries and how to address them. Pega’s new agentic capabilities and Pega Customer Engagement Studio are now available at no additional cost to existing Pega Customer Decision Hub clients as part of the Pega InfinityTM 26 release.

Quotes & Commentary

“Enterprises can’t afford to treat AI governance as an afterthought,” said Rob Walker, general manager, 1:1 customer engagement, Pega. “This expansion of our responsible AI capabilities – from our new agentic AI offerings to our partnership with Gryphon – gives our clients the ability to move faster with AI while helping ensure every decision is transparent, compliant, and accountable.”

"Pega and Gryphon share a foundational belief: that AI-powered customer engagement must be both intelligent and responsible, all the way through to delivery," said Clay McNaught, CEO, Gryphon. "We're giving our joint customers a clear, trusted path from AI decision to compliant contact."

Supporting Resources

Product page: Pega Customer Decision Hub Pega’s approach to AI-powered marketing Learn more about Gryphon Background: Responsible AI at Pega About Pega

Pega delivers the platform to reimagine, run, and evolve the processes and decisions an enterprise can't afford to get wrong. We combine AI with proven architecture to keep mission-critical operations governed, scalable, and continuously adaptable. Since 1983, the world's largest organizations have trusted Pega to turn transformation ambition into durable results. Learn more at pega.com.

All trademarks are the property of their respective owners.

More News From Pegasystems Inc.

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Pegasystems Inc. (PEGA) Rosenblatt's 6th Annual Technology Summit: The Age of AI (Part II) August 17, 2026 11:00 AM EDT

Company Participants

Don Schuerman - CTO and VP of Marketing & Technology Strategy

Conference Call Participants

Blair Abernethy - Rosenblatt Securities Inc., Research Division

Presentation

Blair Abernethy
Rosenblatt Securities Inc., Research Division

Good morning. It's Blair Abernethy, software analyst here at Rosenblatt. Thanks for joining us. With us for this session is Pegasystems. We have Don Schuerman, who has been a long time CTO of Pega. Welcome, Don.

Don Schuerman
CTO and VP of Marketing & Technology Strategy

Nice to be here.

Question-and-Answer Session

Blair Abernethy
Rosenblatt Securities Inc., Research Division

We've put out some prepared questions that I'll walk us through, but if anyone in the audience has questions, they can feed them to me through their -- the button in the upper right corner of the screen.

Let me just start, Don, for just to set some context for the discussion for some people on the call that might not be as familiar with Pegasystems. Maybe just give a brief overview of your business, sort of, the core end markets that Pega addresses? Just a little bit about your role.

Don Schuerman
CTO and VP of Marketing & Technology Strategy

Certainly. So Pega is in the workflow and decision space. So we drive, what I would call, mission-critical workflows and decisions for pretty global firms across industries like financial services, federal and regional governments, insurance, health care, et cetera. So an example of some of this would be Verizon uses Pega's AI technology, which is, sort of, a decisioning statistical AI technology to figure out what the right conversation to have with every client is when they interact with a client.

We do similar things for folks like

Amid the "SaaS Apocalypse," These 3 Names Are Boosting BuybacksPegasystems NASDAQ: PEGA COO and CFO Ken Stillwell said the company is positioning its platform around enterprise workflows that require consistent, governed and predictable outcomes, particularly in regulated or control-heavy environments.

Speaking at Oppenheimer’s 29th Annual Technology Conference, Stillwell described Pega’s core market as large organizations that need to configure specialized workflows rather than rely on off-the-shelf applications. He said the company has historically competed with internally developed software, arguing that custom code can create sustainability and change-management challenges over time.

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3 AI and Cloud Stocks With Analyst Conviction and Long Runways“Our tagline has been build for change,” Stillwell said. “It’s not just that you can actually build the workflow on Pega, it’s that Pega’s built to be able to evolve the workflow in a way that’s very business-friendly, that’s very user interactive.”

AI, Workflow Governance and Predictability Stillwell said Pega has incorporated artificial intelligence into application design, development, maintenance and workflow execution. The company’s approach allows customers to use Pega’s AI capabilities, their own agents, or their own gateways within workflows, he said.

Time to Take Notice: PEGA’s GenAI Blueprint Delivers Huge Q3 BeatHe emphasized that generative AI alone is not suited to every enterprise task. Using bank loan origination as an example, Stillwell said the process can involve credit ratings, appraisals, underwriting, disclosure requirements and fair-lending rules. Those workflows must be applied consistently in order for banks to demonstrate compliance with regulations, he said.

According to Stillwell, generative AI produces a unique response each time and therefore cannot by itself provide the deterministic outcomes needed for highly governed processes. He also cautioned that using AI agents to create a company’s own workflow systems could produce expanding and difficult-to-manage code bases.

Stillwell said Pega uses agentic engineering in its own research and development work and has seen the need for careful human oversight. He said agents may attempt shortcuts when instructed to accomplish a task, potentially creating bugs or other unintended code behavior.

AI Costs and Pega’s Pricing Approach Stillwell also discussed the growing focus on AI computing costs, including token usage. He said organizations should consider both when AI is necessary and which model is most appropriate for a given task, rather than automatically relying on the most expensive frontier models.

Pega’s commitment, he said, is that customers do not pay separately for tokens used within Pega. Instead, the company seeks to manage those costs internally by using AI only where appropriate, selecting suitable models and relying on workflows where they are more effective.

“We are telling you on the back end, we will manage the token cost because we will only use AI when it should be used,” Stillwell said.

He said customers have been interested in that approach because other vendors may charge for AI agents while passing token costs on to customers.

Product Feedback and Sales Execution Stillwell said customer response to Pega GenAI Blueprint has been positive, particularly because clients can use it to define a business problem, develop a workflow and visualize the eventual application. However, he said some customers wanted to move directly from Blueprint into application development before Pega had released its newer Infinity Studio experience.

He said the release of Pega’s 2026 platform and Infinity Studio helps connect the Blueprint experience with application building. Pega worked with about 25 early-stage customers before the broader availability of the product, receiving user-experience feedback and identifying bugs, according to Stillwell. He said broader customer feedback on the 2026 experience should emerge in coming months.

Addressing the company’s first-half performance, Stillwell said several factors contributed to disappointing annual contract value growth. He cited a lack of sufficient pipeline backup early in the year, a need to engage clients more quickly with Pega’s AI message, and a market that was highly interested but still confused about AI.

Stillwell said Pega is responding by strengthening its pipeline and increasing sales activity, including an emphasis on a “hunter mentality” for new customers and new workflows. The company is using compensation structures with potentially stronger accelerators and lower quotas for teams pursuing new logos, he said, while also requiring outbound activity as a baseline expectation.

Outlook for Customers and Capital Allocation Stillwell said Pega sees substantial opportunity beyond its existing base of roughly 700 to 750 customers, although building brand awareness, partner-sourced leads and a repeatable new-logo motion will take time. Existing customers may provide faster opportunities because they already have relationships, contracting arrangements and familiarity with Pega’s security requirements, he said.

He said the company’s pipeline, improved engagement activity and more normalized customer conversations give him confidence in the second half. Stillwell said customers have become more knowledgeable about AI and are increasingly distinguishing between applications that could be replaced by AI and those where AI can augment established systems.

On financial discipline, Stillwell said Pega aims to remain a company with free-cash-flow margins above 30% and a “rule of 40-plus” profile. He described profitability and cash generation as measures of operational discipline and sound investment decisions.

Stillwell said the company evaluates share repurchases and acquisitions through a similar return-on-investment lens. While Pega continues to look at acquisition opportunities, he said management does not believe the company has a major portfolio gap and expects it can build most capabilities organically.

About Pegasystems (NASDAQ:PEGA)Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.

The core of Pegasystems' offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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[url="]Pegasystems Inc.[/url] (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced a per-share rate of approximately $0

Pegasystems is downgraded to "Sell" due to poor execution, slowing growth, and intensifying competition in core software categories. PEGA's ACV growth has slowed to single digits despite a claimed $183 billion 2030 TAM, raising concerns about execution and market positioning. Operating margins are compressing as opex rises faster than revenue, with no compensating cost discipline amid revenue headwinds.

Pegasystems Inc. (PEGA) Oppenheimer 29th Annual Technology, Internet & Communications Conference August 12, 2026 9:05 AM EDT

Company Participants

Kenneth Stillwell - COO & CFO

Conference Call Participants

Paramveer Singh - Oppenheimer & Co. Inc., Research Division

Presentation

Paramveer Singh
Oppenheimer & Co. Inc., Research Division

Good morning, everyone, and thank you for joining us on the second day of Oppenheimer's 29th Annual Technology Conference. I am Param Singh, the senior analyst covering storage and infra software. And we have with us today Ken Stillwell, Pegasystems COO and CFO. Ken, thank you for joining us today.

And before we begin, just for the audience, we have a question bar for you that you can send in questions or you can separately e-mail me at [email protected], and I can ask the question on your behalf.

So again, Ken, thank you for joining us today.

Kenneth Stillwell
COO & CFO

Thanks for having me.

Paramveer Singh
Oppenheimer & Co. Inc., Research Division

Great. So I want to start at a very high level, right, because maybe some of the audience may not be as familiar with the Pega story. So you've been a public company for, say, 30 years. Maybe you can kind of take us on a very high level, what Pega does? How is it positioned from the next wave of benefit on the enterprise software and some of these AI dynamics that we're seeing in the market today?

Kenneth Stillwell
COO & CFO

Sure. Pega -- to maybe hit at a reasonably high level, what Pega does is there's a lot of use cases that large companies have that tend to be either regulated or high internal control heavy things where you need to execute work in a very deterministic, consistent, predictable way. There are not off-the-shelf, so to speak, or out-of-the-box type solutions for many of

[url="]Pegasystems Inc.[/url] (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced Forrester Research named Pega a Lead

WALTHAM, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced Forrester Research named Pega a Leader in The Forrester WaveTM: AI Platforms, Q3 2026 (1). Pega received the highest scores possible in eight of the 19 total evaluation criteria. The report explains, “Pegasystems offers a comprehensive AI Platform with roots in workflow automation, customer offer personalization using machine learning, and sophisticated.

WALTHAM, Mass.--(BUSINESS WIRE)---- $PEGA #AI--Pegasystems Inc. (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced it has expanded the FedRAMP Class D Certified capabilities available within Pega Cloud® for Government. This latest certification (formerly known as FedRAMP High Authorized) adds a broad set of Pega's AI-powered workflow automation, decisioning, and process optimization capabilities to Pega Cloud for Government, enabling federal agencies to streamline o.

-

WALTHAM, Mass.--(BUSINESS WIRE)--Pegasystems Inc. (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, today announced that Alan Trefler, founder and CEO; Ken Stillwell, COO and CFO; and Don Schuerman, CTO, will be presenting at the following upcoming investor conferences:

Oppenheimer 29th Annual Technology, Internet & Communications Conference
(https://event.summitcast.com/view/2na8Ek6QZtsJoeqs2JckGv/WWdubAqLaah7MMfQw6BgHe).
Ken Stillwell will host a virtual Pega presentation, scheduled for Wednesday, August 12, 2026, at 9:05 a.m. EDT (6:05 a.m. PDT).
Canaccord Genuity 46th Annual Growth Conference
(https://event.summitcast.com/view/WuFmFdTcA9mVsUGHZJFU62/nC2vsMhGDwfaxz6SicrByf).
Alan Trefler and Ken Stillwell will host an in-person Pega presentation, scheduled for Wednesday, August 12, 2026, at 2:00 p.m. EDT (11:00 a.m. PDT) in Boston, MA.
Rosenblatt 6th Annual Technology Summit: The Age of AI
(https://event.summitcast.com/view/UwudndjQDVnspUEzk3piXK/6bcKLucorWAPGXJUDWYiHx).
Don Schuerman will host a virtual Pega presentation, scheduled for Monday, August 17, 2026, at 11:00 a.m. EDT (8:00 a.m. PDT). Archives of the presentations will be available from the Investors page of Pega’s website for a limited time.

About Pega

Pega delivers the platform to reimagine, run, and evolve the processes and decisions an enterprise can't afford to get wrong. We combine AI with proven architecture to keep mission-critical operations governed, scalable, and continuously adaptable. Since 1983, the world's largest organizations have trusted Pega to turn transformation ambition into durable results. Learn more at pega.com.

All trademarks are the property of their respective owners.

More News From Pegasystems Inc.

Back to Newsroom

Posted by Defense World Staff on Jul 25th, 2026

Fifth Third Bancorp boosted its position in Pegasystems Inc. (NASDAQ:PEGA – Free Report) by 5,116.2% during the 1st quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 32,184 shares of the technology company’s stock after purchasing an additional 31,567 shares during the quarter. Fifth Third Bancorp’s holdings in Pegasystems were worth $1,370,000 as of its most recent filing with the Securities and Exchange Commission (SEC).

Several other hedge funds have also added to or reduced their stakes in PEGA. International Assets Investment Management LLC purchased a new stake in shares of Pegasystems in the 4th quarter worth about $28,000. EFG International AG bought a new stake in shares of Pegasystems in the fourth quarter worth $32,000. Bayforest Capital Ltd lifted its stake in shares of Pegasystems by 316.6% in the 4th quarter. Bayforest Capital Ltd now owns 704 shares of the technology company’s stock worth $42,000 after purchasing an additional 535 shares during the period. Brown Brothers Harriman & Co. boosted its stake in shares of Pegasystems by 386.3% during the 4th quarter. Brown Brothers Harriman & Co. now owns 710 shares of the technology company’s stock worth $42,000 after acquiring an additional 564 shares during the last quarter. Finally, Flagship Harbor Advisors LLC bought a new stake in Pegasystems during the fourth quarter valued at about $44,000. 46.89% of the stock is owned by institutional investors.

Analyst Ratings Changes Several equities research analysts have recently issued reports on PEGA shares. KeyCorp cut shares of Pegasystems from an “overweight” rating to a “sector weight” rating in a research report on Wednesday. Rosenblatt Securities dropped their price objective on shares of Pegasystems from $58.00 to $47.00 and set a “buy” rating for the company in a research note on Thursday. Weiss Ratings downgraded Pegasystems from a “hold (c+)” rating to a “hold (c)” rating in a report on Thursday, June 4th. Royal Bank Of Canada set a $35.00 target price on shares of Pegasystems and gave the stock an “outperform” rating in a research note on Thursday. Finally, Loop Capital lowered Pegasystems from a “buy” rating to a “hold” rating and cut their price target for the company from $55.00 to $25.00 in a research note on Thursday. Six equities research analysts have rated the stock with a Buy rating and seven have issued a Hold rating to the company’s stock. Based on data from MarketBeat, Pegasystems has an average rating of “Hold” and a consensus price target of $50.10.

Get Our Latest Research Report on Pegasystems

Pegasystems Trading Up 3.1% NASDAQ:PEGA opened at $26.82 on Friday. The stock has a fifty day moving average price of $32.13 and a 200 day moving average price of $39.70. The firm has a market cap of $4.41 billion, a PE ratio of 15.15 and a beta of 0.87. Pegasystems Inc. has a 12-month low of $25.10 and a 12-month high of $68.10.

Pegasystems (NASDAQ:PEGA – Get Free Report) last issued its earnings results on Tuesday, July 21st. The technology company reported $0.35 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.43 by ($0.08). Pegasystems had a net margin of 18.66% and a return on equity of 32.21%. The company had revenue of $420.72 million during the quarter, compared to analyst estimates of $427.38 million. During the same quarter in the previous year, the company posted $0.28 EPS. The company’s quarterly revenue was up 9.4% on a year-over-year basis. Equities analysts forecast that Pegasystems Inc. will post 1.93 EPS for the current year.

Pegasystems Dividend Announcement The firm also recently announced a quarterly dividend, which was paid on Wednesday, July 15th. Investors of record on Wednesday, July 1st were given a dividend of $0.03 per share. The ex-dividend date was Wednesday, July 1st. This represents a $0.12 annualized dividend and a yield of 0.4%. Pegasystems’s dividend payout ratio is 6.45%.

Insiders Place Their Bets In other Pegasystems news, CAO Efstathios A. Kouninis sold 750 shares of the business’s stock in a transaction on Monday, June 1st. The shares were sold at an average price of $36.99, for a total value of $27,742.50. Following the transaction, the chief accounting officer owned 2,144 shares in the company, valued at $79,306.56. The trade was a 25.92% decrease in their position. The sale was disclosed in a filing with the SEC, which is available through the SEC website. Also, insider Rifat Kerim Akgonul sold 4,545 shares of the stock in a transaction that occurred on Tuesday, May 19th. The shares were sold at an average price of $33.35, for a total value of $151,575.75. Following the transaction, the insider owned 107,070 shares of the company’s stock, valued at approximately $3,570,784.50. This trade represents a 4.07% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last 90 days, insiders have sold 6,795 shares of company stock valued at $229,613. Insiders own 48.40% of the company’s stock.

Pegasystems Company Profile (Free Report)

Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.

The core of Pegasystems’ offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.

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Pegasystems (NASDAQ:PEGA) executives said the company faced a challenging first half of 2026 as customer uncertainty around artificial intelligence, a back-half-weighted renewal portfolio and go-to-market execution issues weighed on annual contract value growth.

On the company’s second-quarter earnings call, Founder and CEO Alan Trefler said the software market is undergoing a “fundamental transformation driven by AI,” but that the shift has also created confusion for enterprise buyers. He said organizations are reassessing how software should be designed, built and operated as AI pricing models evolve from low-cost or free access toward usage-based token pricing.

“This cost uncertainty is leading many organizations to sort of freeze and try to figure out what’s going on and take a more deliberate approach to technology investments,” Trefler said. He added that decision cycles have lengthened as customers seek clarity on AI strategies and the potential variability of token costs.

ACV Growth Slows as Customers Delay Decisions COO and CFO Ken Stillwell said annual contract value, or ACV, remains one of Pegasystems’ most important operating metrics because it provides a clearer view of business momentum in a subscription model.

Pega Cloud ACV increased by $165 million year over year, growing 22% both as reported and in constant currency. Stillwell said the cloud business remains the fastest-growing and most important part of the company’s subscription model, although growth moderated from 27% in constant currency at the end of the prior quarter.

Total ACV grew 7% as reported and 8% in constant currency year over year, with gains in Pega Cloud offset by decreases in maintenance ACV and subscription license ACV. Stillwell said Pega Cloud now represents 57% of total ACV and could ultimately reach approximately 75% of the total over time.

Stillwell identified three primary reasons for the slower first-half performance:

A renewal portfolio that is significantly weighted toward the second half of the year, limiting first-half expansion opportunities. Customer uncertainty caused by rapid changes in the software market and AI economics. Slower-than-expected execution on go-to-market changes intended to deepen engagement with clients and prospects. Because a meaningful portion of Pegasystems’ net new ACV comes from cross-selling and upselling into its existing customer base, fewer renewal opportunities in the first half naturally resulted in fewer expansion opportunities, Stillwell said.

Executives Say Pipeline Remains Active Despite Longer Sales Cycles In response to analyst questions, Stillwell said Pegasystems is not seeing customers abandon transformation projects or disengage from the company. Instead, he said many opportunities have elongated rather than disappeared.

“A lot of those pipeline deals in Q2 just didn’t close,” Stillwell said. “They elongated.” He said the company’s pipeline is growing and that late-stage pipeline is “very strong” compared with last year, but acknowledged that the duration of customer uncertainty is difficult to predict.

Trefler said the company saw “movement” in customer conversations after a period of heightened uncertainty in the second quarter. He said customers are still trying to determine how AI fits into their future technology plans, but added that many have “serious things they need to get done.”

Stillwell said Pegasystems had assumed that one-third of its full-year net new ACV additions would occur in the first half of 2026 and two-thirds in the second half. He said the company underachieved that first-half expectation and will work to recover as much of the shortfall as possible, though he described that task as “very difficult.”

Pegasystems Emphasizes AI Cost Predictability A central theme of the call was Pegasystems’ positioning around AI costs. Trefler argued that enterprises are becoming more concerned about opaque token consumption, particularly “reasoning tokens” used internally by large language models. He said these costs can become unexpectedly expensive when AI agents reason through processes repeatedly at runtime.

Pegasystems is emphasizing an alternative approach that uses AI heavily at design time through Pega Blueprint AI, then runs structured workflows predictably at scale with selective AI use at runtime. Trefler compared the approach to a restaurant that designs recipes in advance rather than reinventing every dish for each customer.

“Our goal is simple,” Trefler said. “Help our clients avoid AI chaos and the mess that comes from it by delivering predictable outcomes at predictable costs.”

Stillwell said Pegasystems does not charge customers per token. Instead, he said the company’s AI monetization strategy is based on business value created on the Pega platform. Blueprint is intended to make it faster for customers to create and deploy applications, while advanced AI-powered runtime capabilities can carry a case price uplift.

New Infinity Studio Release Extends Blueprint Trefler highlighted the release of Pega Infinity 2026 and the introduction of Infinity Studio, which he said extends Blueprint AI from design into application development, deployment and ongoing evolution. He said the release allows Pega Cloud and client cloud customers to use Blueprint AI to deploy new applications and improve existing ones.

He said Pegasystems initially focused Blueprint on new customers and new applications, but Infinity 2026 makes the technology available to help existing customers reimagine and modernize current Pega applications. Trefler called Infinity Studio “a really big deal” and said the company will roll it out aggressively through the rest of the year.

Executives also discussed the company’s use of Model Context Protocol, or MCP. Trefler said every workflow in Pega is automatically available through MCP in Infinity 2026, allowing agents built on other platforms to find and invoke Pega workflows.

Free Cash Flow, Buybacks and 2028 Target Despite slower ACV growth, Stillwell emphasized Pegasystems’ cash generation. The company generated $288 million of free cash flow in the first half of 2026, which he described as a record. He said strong cash generation provides flexibility for capital allocation.

In the first half, Pegasystems repurchased 9 million shares for more than $360 million under prior authorizations. Stillwell said the cash spent on repurchases represented well over 100% of free cash flow generated during the period, and that total common shares were reduced by 6 million in the first half.

The company reiterated its expectation to generate more than $700 million of free cash flow in 2028. Stillwell said slower ACV growth in the first half of 2026 does not change that objective, but it will require the company to reevaluate certain investment priorities. He cited cloud scale, mix shift, sales productivity, gross margin improvement and disciplined investment prioritization as levers supporting the target.

Asked about the company’s free cash flow outlook for 2026, Stillwell said any ACV shortfall would put pressure on the company’s ability to reach its $575 million free cash flow outlook for the year, though he said Pegasystems continues to see cash flow durability in the business.

Trefler closed the call by acknowledging the challenging environment but said the company has navigated major technology and market shifts before. “We have a really good understanding of how to react strongly but smartly,” he said.

About Pegasystems (NASDAQ:PEGA) Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.

The core of Pegasystems’ offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.

Pegasystems (NASDAQ:PEGA) shares fell about 15% following the release of its second quarter 2026 results, after the enterprise software company missed Wall Street expectations on both earnings and revenue.

The company reported adjusted earnings per share of $0.35 for the quarter, below analyst estimates of $0.43.

Revenue came in at $420.7 million, compared with consensus expectations of $427.4 million.

Revenue increased 9% year over year from $384.5 million, driven by growth in subscription-related businesses. Pega Cloud revenue rose 28% year over year to $213.9 million, while subscription services revenue increased 17% to $288.5 million. Consulting revenue declined 13% to $50.2 million.

Pegasystems highlighted growth in annual contract value (ACV), with total ACV increasing 7% year over year to $1.62 billion, or 8% on a constant currency basis. Pega Cloud ACV grew 22% year over year.

The company also reported strong cash generation during the first half of the year, with operating cash flow reaching $298 million and free cash flow totaling $288 million.

“Pega generated record first-half cash flow and returned substantial capital to shareholders,” Pegasystems’ chief operating officer and chief financial officer Ken Stillwell said in a statement.

“As the market shifts from AI experimentation to tokenomics and reliable business outcomes, that evolution plays directly to Pega’s strengths, and we remain confident in our strategy to capitalize on the opportunity ahead.”

Pegasystems CEO Alan Trefler highlighted the company’s AI-focused product developments, including the release of Pega Infinity 26, which the company said is designed to help enterprises deploy AI with more predictable costs and outcomes.

“Pega Infinity 26 uniquely deploys the power of AI with predictable outcomes and predictable costs by applying agents at design time to optimize run-time token use,” Trefler wrote.

Pegasystems noted that changes in the artificial intelligence market have caused some customers to delay purchasing decisions, impacting ACV growth during the first half of the year. The company warned that these factors could continue to weigh on ACV growth for the remainder of 2026.

Pegasystems Inc. (PEGA) Q2 2026 Earnings Call July 22, 2026 8:00 AM EDT

Company Participants

Peter Welburn - Vice President of Investor Relations
Alan Trefler - Founder, CEO & Chairman of the Board
Kenneth Stillwell - COO & CFO

Conference Call Participants

Steven Enders - Citigroup Inc., Research Division
Raimo Lenschow - Barclays Bank PLC, Research Division
Devin Au - KeyBanc Capital Markets Inc., Research Division
Patrick Walravens - Citizens JMP Securities, LLC, Research Division
Mark Schappel - Loop Capital Markets LLC, Research Division
Patrick McIlwee - William Blair & Company L.L.C., Research Division

Presentation

Operator

Hello, everyone. Thank you for joining us, and welcome to the Pegasystems Second Quarter 2026 Earnings Call and Webcast.

[Operator Instructions] I will now hand the conference over to Peter Welburn, Vice President of Corporate Development and Investor Relations. Please go ahead.

Peter Welburn
Vice President of Investor Relations

Good morning, everyone, and welcome to Pegasystems Q2 '26 Earnings Call. Before we begin, I'd like to read our safe harbor statement. Certain statements contained in this presentation may be construed as 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, forecasts and similar expressions are intended to identify these forward-looking statements.

These statements speak only as of the date the statement was made and are based on current expectations and assumptions. Because these statements relate to future events, they are subject to certain risks and uncertainties that could cause actual results to differ materially from our current expectations for fiscal year 2026 and beyond. Factors that could cause such differences are described in the company's press release announcing our Q2 2026 results and in our filings with the Securities and Exchange Commission including our annual report on Form 10-K for the year ended December 31, 2025, as

Pegasystems (NASDAQ:PEGA) shares fell about 15% following the release of its second quarter 2026 results, after the enterprise software company missed Wall Street expectations on both earnings and revenue.

The company reported adjusted earnings per share of $0.35 for the quarter, below analyst estimates of $0.43.

Revenue came in at $420.7 million, compared with consensus expectations of $427.4 million.

Revenue increased 9% year over year from $384.5 million, driven by growth in subscription-related businesses. Pega Cloud revenue rose 28% year over year to $213.9 million, while subscription services revenue increased 17% to $288.5 million. Consulting revenue declined 13% to $50.2 million.

Pegasystems highlighted growth in annual contract value (ACV), with total ACV increasing 7% year over year to $1.62 billion, or 8% on a constant currency basis. Pega Cloud ACV grew 22% year over year.

The company also reported strong cash generation during the first half of the year, with operating cash flow reaching $298 million and free cash flow totaling $288 million.

“Pega generated record first-half cash flow and returned substantial capital to shareholders,” Pegasystems’ chief operating officer and chief financial officer Ken Stillwell said in a statement.

“As the market shifts from AI experimentation to tokenomics and reliable business outcomes, that evolution plays directly to Pega’s strengths, and we remain confident in our strategy to capitalize on the opportunity ahead.”

Pegasystems CEO Alan Trefler highlighted the company’s AI-focused product developments, including the release of Pega Infinity 26, which the company said is designed to help enterprises deploy AI with more predictable costs and outcomes.

“Pega Infinity 26 uniquely deploys the power of AI with predictable outcomes and predictable costs by applying agents at design time to optimize run-time token use,” Trefler wrote.

Pegasystems noted that changes in the artificial intelligence market have caused some customers to delay purchasing decisions, impacting ACV growth during the first half of the year. The company warned that these factors could continue to weigh on ACV growth for the remainder of 2026.

Amid the "SaaS Apocalypse," These 3 Names Are Boosting BuybacksPegasystems NASDAQ: PEGA executives said the company faced a challenging first half of 2026 as customer uncertainty around artificial intelligence, a back-half-weighted renewal portfolio and go-to-market execution issues weighed on annual contract value growth.

On the company’s second-quarter earnings call, Founder and CEO Alan Trefler said the software market is undergoing a “fundamental transformation driven by AI,” but that the shift has also created confusion for enterprise buyers. He said organizations are reassessing how software should be designed, built and operated as AI pricing models evolve from low-cost or free access toward usage-based token pricing.

Get Pegasystems alerts:

3 AI and Cloud Stocks With Analyst Conviction and Long Runways“This cost uncertainty is leading many organizations to sort of freeze and try to figure out what’s going on and take a more deliberate approach to technology investments,” Trefler said. He added that decision cycles have lengthened as customers seek clarity on AI strategies and the potential variability of token costs.

ACV Growth Slows as Customers Delay Decisions COO and CFO Ken Stillwell said annual contract value, or ACV, remains one of Pegasystems’ most important operating metrics because it provides a clearer view of business momentum in a subscription model.

Time to Take Notice: PEGA’s GenAI Blueprint Delivers Huge Q3 BeatPega Cloud ACV increased by $165 million year over year, growing 22% both as reported and in constant currency. Stillwell said the cloud business remains the fastest-growing and most important part of the company’s subscription model, although growth moderated from 27% in constant currency at the end of the prior quarter.

Total ACV grew 7% as reported and 8% in constant currency year over year, with gains in Pega Cloud offset by decreases in maintenance ACV and subscription license ACV. Stillwell said Pega Cloud now represents 57% of total ACV and could ultimately reach approximately 75% of the total over time.

Stillwell identified three primary reasons for the slower first-half performance:

A renewal portfolio that is significantly weighted toward the second half of the year, limiting first-half expansion opportunities. Customer uncertainty caused by rapid changes in the software market and AI economics. Slower-than-expected execution on go-to-market changes intended to deepen engagement with clients and prospects. Because a meaningful portion of Pegasystems’ net new ACV comes from cross-selling and upselling into its existing customer base, fewer renewal opportunities in the first half naturally resulted in fewer expansion opportunities, Stillwell said.

Executives Say Pipeline Remains Active Despite Longer Sales Cycles In response to analyst questions, Stillwell said Pegasystems is not seeing customers abandon transformation projects or disengage from the company. Instead, he said many opportunities have elongated rather than disappeared.

“A lot of those pipeline deals in Q2 just didn’t close,” Stillwell said. “They elongated.” He said the company’s pipeline is growing and that late-stage pipeline is “very strong” compared with last year, but acknowledged that the duration of customer uncertainty is difficult to predict.

Trefler said the company saw “movement” in customer conversations after a period of heightened uncertainty in the second quarter. He said customers are still trying to determine how AI fits into their future technology plans, but added that many have “serious things they need to get done.”

Stillwell said Pegasystems had assumed that one-third of its full-year net new ACV additions would occur in the first half of 2026 and two-thirds in the second half. He said the company underachieved that first-half expectation and will work to recover as much of the shortfall as possible, though he described that task as “very difficult.”

Pegasystems Emphasizes AI Cost Predictability A central theme of the call was Pegasystems’ positioning around AI costs. Trefler argued that enterprises are becoming more concerned about opaque token consumption, particularly “reasoning tokens” used internally by large language models. He said these costs can become unexpectedly expensive when AI agents reason through processes repeatedly at runtime.

Pegasystems is emphasizing an alternative approach that uses AI heavily at design time through Pega Blueprint AI, then runs structured workflows predictably at scale with selective AI use at runtime. Trefler compared the approach to a restaurant that designs recipes in advance rather than reinventing every dish for each customer.

“Our goal is simple,” Trefler said. “Help our clients avoid AI chaos and the mess that comes from it by delivering predictable outcomes at predictable costs.”

Stillwell said Pegasystems does not charge customers per token. Instead, he said the company’s AI monetization strategy is based on business value created on the Pega platform. Blueprint is intended to make it faster for customers to create and deploy applications, while advanced AI-powered runtime capabilities can carry a case price uplift.

New Infinity Studio Release Extends Blueprint Trefler highlighted the release of Pega Infinity 2026 and the introduction of Infinity Studio, which he said extends Blueprint AI from design into application development, deployment and ongoing evolution. He said the release allows Pega Cloud and client cloud customers to use Blueprint AI to deploy new applications and improve existing ones.

He said Pegasystems initially focused Blueprint on new customers and new applications, but Infinity 2026 makes the technology available to help existing customers reimagine and modernize current Pega applications. Trefler called Infinity Studio “a really big deal” and said the company will roll it out aggressively through the rest of the year.

Executives also discussed the company’s use of Model Context Protocol, or MCP. Trefler said every workflow in Pega is automatically available through MCP in Infinity 2026, allowing agents built on other platforms to find and invoke Pega workflows.

Free Cash Flow, Buybacks and 2028 Target Despite slower ACV growth, Stillwell emphasized Pegasystems’ cash generation. The company generated $288 million of free cash flow in the first half of 2026, which he described as a record. He said strong cash generation provides flexibility for capital allocation.

In the first half, Pegasystems repurchased 9 million shares for more than $360 million under prior authorizations. Stillwell said the cash spent on repurchases represented well over 100% of free cash flow generated during the period, and that total common shares were reduced by 6 million in the first half.

The company reiterated its expectation to generate more than $700 million of free cash flow in 2028. Stillwell said slower ACV growth in the first half of 2026 does not change that objective, but it will require the company to reevaluate certain investment priorities. He cited cloud scale, mix shift, sales productivity, gross margin improvement and disciplined investment prioritization as levers supporting the target.

Asked about the company’s free cash flow outlook for 2026, Stillwell said any ACV shortfall would put pressure on the company’s ability to reach its $575 million free cash flow outlook for the year, though he said Pegasystems continues to see cash flow durability in the business.

Trefler closed the call by acknowledging the challenging environment but said the company has navigated major technology and market shifts before. “We have a really good understanding of how to react strongly but smartly,” he said.

About Pegasystems (NASDAQ:PEGA)Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.

The core of Pegasystems' offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.

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Pegasystems (PEGA - Free Report) came out with quarterly earnings of $0.35 per share, missing the Zacks Consensus Estimate of $0.43 per share. This compares to earnings of $0.28 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -18.61%. A quarter ago, it was expected that this business software company would post earnings of $0.76 per share when it actually produced earnings of $0.46, delivering a surprise of -39.47%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Pegasystems, which belongs to the Zacks Computer - Software industry, posted revenues of $420.72 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.84%. This compares to year-ago revenues of $384.51 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Pegasystems shares have lost about 46.9% since the beginning of the year versus the S&P 500's gain of 8.7%.

What's Next for Pegasystems?While Pegasystems has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Pegasystems was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.62 on $484.54 million in revenues for the coming quarter and $2.73 on $1.98 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer - Software is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, OptimizeRx Corp. (OPRX - Free Report) , is yet to report results for the quarter ended June 2026.

This company is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of -54.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

OptimizeRx Corp.'s revenues are expected to be $20.48 million, down 29.8% from the year-ago quarter.