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Pegasystems (PEGA)
NASDAQ:PEGA

Pegasystems (PEGA) AI Stock Analysis

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Pegasystems

(NASDAQ:PEGA)

Rating:80Outperform
Price Target:
$112.00
â–²(10.53%Upside)
Pegasystems' robust financial performance and strategic advancements, particularly the transition to profitability and debt-free status, are the most significant contributors to its strong stock score. The positive earnings call, highlighting growth in key areas and strategic success, further enhances confidence in the company's future prospects. Technical indicators and valuation metrics suggest moderate risk, with high growth expectations already priced in.
Positive Factors
Financial Performance
Free cash flow continues to improve; TTM unadjusted FCF is up 11% Y/Y and a now debt-free balance sheet unlocks what we anticipate will be significant repurchases under a $500M authorization.
Innovation
The announcement of the Pega Agent Experience, incorporating AI agents, demonstrates innovation and potential for future growth.
Market Expansion
Management highlighted that its target market now includes over 10,000 companies, up from its prior target of 1,000 companies.
Product Expansion
The company announced new products and provided updates on its opportunity with Blueprint, which are helping to expand the company’s addressable market.
Negative Factors
Growth Concerns
Pega Cloud ACV growth slowed down and missed consensus expectations, impacting overall sentiment.
Macroeconomic Uncertainty
Recent headwinds from DOGE and tariffs have created some uncertainty in the market.

Pegasystems (PEGA) vs. SPDR S&P 500 ETF (SPY)

Pegasystems Business Overview & Revenue Model

Company DescriptionPegasystems Inc. (PEGA) is a leading global software company that specializes in developing customer relationship management (CRM) and business process management (BPM) solutions. Headquartered in Cambridge, Massachusetts, Pegasystems provides cutting-edge software applications to help organizations optimize their customer engagement and automate complex business processes. The company's core products include the Pega Platform, Pega Customer Service, Pega Sales Automation, and Pega Marketing, which are designed to enhance operational efficiency and improve customer experiences across various industries.
How the Company Makes MoneyPegasystems generates revenue primarily through the sale of software licenses, cloud-based services, and maintenance and support services. The company employs a subscription-based model for its software offerings, providing clients with both on-premise and cloud deployment options. Revenue streams include software license fees, which are typically recognized upfront, and recurring subscription fees for its cloud services. Additionally, Pegasystems offers professional services, such as consulting and training, to assist clients in implementing and optimizing their software solutions. Key partnerships with technology and consulting firms, such as Accenture and Capgemini, help expand its market reach and contribute to its earnings by facilitating more extensive deployment of its solutions among large enterprises.

Pegasystems Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Analyzes revenue from different business units or product lines, highlighting which areas are driving growth and which may need strategic adjustments.
Chart InsightsPegasystems' Cloud segment shows strong growth momentum, with recent earnings highlighting a 23% rise in Pega Cloud ACV, driven by effective cross-selling and upselling. The Subscription License segment remains volatile, reflecting macroeconomic uncertainties and currency impacts noted in the earnings call. Meanwhile, the company's strategic focus on Pega GenAI Blueprint is expected to drive further digital transformation, despite challenges in the Consulting and Maintenance segments. Achieving a debt-free status and robust free cash flow underscores financial resilience, positioning Pegasystems well for future growth.
Data provided by:Main Street Data

Pegasystems Earnings Call Summary

Earnings Call Date:Apr 22, 2025
(Q1-2025)
|
% Change Since: 47.37%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted a strong start to the fiscal year with significant growth in key metrics such as ACV and free cash flow. The success of Pega GenAI Blueprint and achieving a debt-free status were notable achievements. However, currency impacts and macro-economic uncertainties were areas of concern. Overall, the positive aspects and optimism for future growth outweigh the challenges, indicating a robust performance.
Q1-2025 Updates
Positive Updates
Strong Start in 2025
Annual Contract Value (ACV) increased by $74 million, marking a 13% year-over-year growth. Pega Cloud ACV grew by 23% to $700 million, showing strong cross-selling and upselling efforts.
Record Free Cash Flow
Achieved $202 million in free cash flow in Q1, significantly surpassing the total free cash flow of $201 million for the entire year of 2023.
Pega GenAI Blueprint Success
Pega GenAI Blueprint is now influencing every single piece of business, accelerating client engagement and showcasing Pega's platform capabilities effectively.
Debt-Free Status Achieved
Fully repaid remaining convertible note balances of $468 million, achieving debt-free status as an important milestone in the company's transformation journey.
Positive Reception to Innovations
Overwhelmingly positive response to innovations like Pega GenAI Blueprint, with more than 1,000 new Blueprints created every week, more than double from months ago.
Negative Updates
Currency Impact on Pega Cloud Revenue
Currency fluctuations impacted Pega Cloud revenue, creating noise in the revenue line items of the P&L.
Macro-Economic Uncertainty
Higher levels of uncertainty and anxiety in the macro-environment, especially in European countries.
Company Guidance
In the first quarter of fiscal year 2025, Pegasystems reported robust financial performance and strategic progress, with notable highlights including a substantial increase in annual contract value (ACV) by $74 million, reflecting a year-over-year growth of over 13%. The company also achieved a Pega Cloud ACV growth rate of 23%, reaching $700 million, demonstrating effective cross-selling and upselling strategies. Pegasystems generated $202 million in free cash flow, a significant leap from the previous year's figures, and repurchased approximately 1.5 million shares for $120 million, further strengthening its capital allocation strategy. Additionally, the company achieved a debt-free status after fully repaying $468 million in convertible notes, marking an important milestone in its transformation journey. Despite the macroeconomic uncertainties, Pegasystems remained confident in its strategic initiatives, particularly emphasizing the transformative role of Pega GenAI Blueprint in driving digital and legacy transformations for clients worldwide.

Pegasystems Financial Statement Overview

Summary
Pegasystems has shown significant improvements in profitability, revenue growth, and operational efficiency. It transitioned from losses to profitability with strong cash flow generation and a solid balance sheet, although asset shrinkage and cash flow volatility warrant monitoring.
Income Statement
85
Very Positive
Pegasystems demonstrates strong revenue growth with a 9.74% increase from the previous year and a healthy gross profit margin of 75.73% in TTM. The net profit margin has significantly improved to 11.98% from previous losses, indicating enhanced profitability. EBIT and EBITDA margins of 16.55% and 19.34% respectively, show strong operational efficiency.
Balance Sheet
75
Positive
The balance sheet shows a stable financial position with a debt-to-equity ratio of 0.11, indicating low leverage. The equity ratio is 46.23%, reflecting a strong equity base. Return on Equity (ROE) has improved to 32.17%, showcasing effective utilization of shareholders' equity. However, the decrease in total assets over the years may pose a potential risk.
Cash Flow
78
Positive
Operating cash flow to net income ratio is robust at 1.88, indicating strong cash generation relative to net income. Free cash flow has seen substantial growth, and the free cash flow to net income ratio is 1.85, highlighting efficient cash usage. However, fluctuations in investing and financing cash flows suggest potential volatility.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.64B1.50B1.43B1.32B1.21B1.02B
Gross Profit
1.24B1.11B1.05B949.21M875.29M706.60M
EBIT
271.92M123.88M80.95M-87.66M-94.73M-143.53M
EBITDA
321.22M167.06M121.06M-119.28M-94.73M-67.94M
Net Income Common Stockholders
196.74M99.19M67.81M-345.58M-63.04M-61.37M
Balance SheetCash, Cash Equivalents and Short-Term Investments
68.36M739.97M423.34M297.22M362.78M465.17M
Total Assets
984.81M1.77B1.51B1.36B1.59B1.60B
Total Debt
52.61M549.67M581.27M687.74M678.54M518.20M
Net Debt
-15.75M212.56M351.37M542.68M518.58M346.30M
Total Liabilities
445.80M1.18B1.16B1.23B1.18B1.06B
Stockholders Equity
539.01M585.48M353.84M130.84M416.09M542.17M
Cash FlowFree Cash Flow
361.02M338.21M201.00M-13.04M28.66M-25.93M
Operating Cash Flow
370.01M345.93M217.78M22.34M39.12M-563.00K
Investing Cash Flow
191.72M-202.58M-50.75M13.07M72.50M-321.68M
Financing Cash Flow
-624.10M-30.21M-81.96M-46.99M-121.84M423.45M

Pegasystems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price101.33
Price Trends
50DMA
87.20
Positive
100DMA
87.44
Positive
200DMA
84.62
Positive
Market Momentum
MACD
3.40
Positive
RSI
64.36
Neutral
STOCH
83.57
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PEGA, the sentiment is Positive. The current price of 101.33 is above the 20-day moving average (MA) of 99.18, above the 50-day MA of 87.20, and above the 200-day MA of 84.62, indicating a bullish trend. The MACD of 3.40 indicates Positive momentum. The RSI at 64.36 is Neutral, neither overbought nor oversold. The STOCH value of 83.57 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PEGA.

Pegasystems Risk Analysis

Pegasystems disclosed 34 risk factors in its most recent earnings report. Pegasystems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Pegasystems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$6.77B14.5458.14%―23.21%―
80
Outperform
$8.77B49.8239.29%0.12%14.29%151.38%
75
Outperform
$8.32B113.2125.23%―18.63%-55.09%
QXQXO
75
Outperform
$10.99B―1.44%―0.22%48.10%
69
Neutral
$4.70B482.280.97%―14.52%―
65
Neutral
$6.51B235.54-19.65%―15.20%-666.94%
62
Neutral
$11.90B10.64-7.50%2.90%7.41%-8.19%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PEGA
Pegasystems
101.33
43.07
73.93%
CVLT
CommVault Systems
187.16
74.13
65.58%
QXO
QXO Inc
20.16
-152.83
-88.35%
BILL
Bill.com Holdings
45.37
-6.40
-12.36%
VERX
Vertex
38.09
3.68
10.69%
CWAN
Clearwater Analytics Holdings
24.75
4.65
23.13%

Pegasystems Corporate Events

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Pegasystems Reports Strong Growth in Pega Cloud ACV
Positive
Jun 2, 2025

On June 2, 2025, Pegasystems Inc. presented its financial update, highlighting significant growth in its Annual Contract Value (ACV) driven by Pega Cloud, which grew from $50 million in 2017 to $700 million in 2025. The company has completed its multi-year subscription transition and achieved the Rule of 40, balancing growth and profitability. Pegasystems is on a strong trajectory toward sustained profitability, supported by its strategic focus on generating free cash flow and capital allocation, including share repurchases and dividend payments. The company’s GenAI Blueprint and large market opportunities are expected to drive further growth.

The most recent analyst rating on (PEGA) stock is a Buy with a $78.00 price target. To see the full list of analyst forecasts on Pegasystems stock, see the PEGA Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.