Pegasystems (PEGA) investor relations material

Executive summary

• Total ACV reached $1,653M, up 6% reported and 7% in constant currency; Pega Cloud ACV grew 20% to $976M, or 59% of total ACV.

• Q3 ACV additions were the strongest of 2026 so far, but execution challenges and client spending scrutiny held growth below plan.

• Strategy focuses on governed AI for workflow automation and decisioning, with predictable outcomes, cost control, security, and execution improvements to accelerate adoption.

Financial highlights

• Q3 revenue rose 3% YoY to $393.359M; gross profit was $289.513M and operating income was $14.861M.

• Q3 GAAP net income fell to $14.092M from $43.364M; adjusted non-GAAP net income rose 8% to $59.8M. Diluted EPS was $0.08 GAAP and $0.35 non-GAAP.

• Nine-month revenue was $1,244.048M versus $1,241M; GAAP net income was $60.190M versus $158.863M, including a $16M litigation settlement expense.

• Nine-month operating cash flow was $304.299M and free cash flow was $289.825M, versus $346.796M and $338.311M, respectively, in 2025.

Outlook and guidance

• FY2026 ACV growth is expected between the current rate and 10%; Q4 should accelerate, but not enough to meet the full H2 plan.

• Growth is expected to build from Q3 and Q4 levels into 2027, with 2027 ACV growth currently expected to be less back-end-loaded than in 2026.

• Adjusted free cash flow is expected to exceed $600M in 2027 and reach $700M or more in 2028; stronger ACV growth and cost discipline are required.

• Headcount is expected to be ~5,000 in Q1 2027, down a few hundred; execution-model improvements are expected in early to mid-2027.

• Available liquidity and borrowing capacity are expected to fund operations, buybacks, and dividends for at least 12 months.