Pegasystems (PEGA) Investor Update summary

Strategic vision and technology innovation

• Emphasis on transforming software development through a model-driven architecture and deep integration of AI, especially generative AI, into core products and processes.

• Blueprint, a GenAI-powered tool, is central to enabling clients to rapidly design, visualize, and iterate business applications, reducing friction and accelerating digital transformation.

• Over 30,000 blueprints have been created, with strong adoption by clients and partners, and use cases span core business processes like onboarding, customer service, and workflow automation.

• Blueprint is designed to be accessible, requiring minimal technical skills, and supports collaboration, versioning, and integration with existing assets.

• Partners and clients are actively contributing industry-specific templates, expanding Blueprint’s reach and impact.

Go-to-market and client engagement

• Blueprint is revolutionizing pre-sales, project estimation, and client engagement by enabling rapid prototyping and alignment on requirements.

• The tool is opening new frontiers for self-initiated and partner-initiated pipeline, with clients able to experiment, consolidate legacy applications, and accelerate go-lives.

• Client testimonials highlight Blueprint’s ability to democratize application design, reduce manual effort, and foster collaboration across business and IT.

• Sales teams are leveraging Blueprint to target new logos and expand within existing accounts, with increased efficiency freeing capacity for growth.

• Partners are using Blueprint to co-develop solutions and refer opportunities, driving mutual value.

Financial outlook and growth strategy

• The company has completed its subscription transition, with 85%+ of business now recurring and a strong focus on Pega Cloud, which has grown 5x in five years.

• Targeting $2 billion in ACV within 3–5 years, requiring 10–17% CAGR, driven by expanding existing clients, targeted new logos, and cloud migrations.

• Cloud migrations are expected to deliver significant ACV uplift, with most clients seeing increased value and pricing upon moving to Pega Cloud.

• Gross margins for Pega Cloud have reached high 70s% and are expected to exceed 80%, supporting a free cash flow target of $500M+ by 2027.

• The Rule of 40 mindset is deeply embedded, balancing growth and profitability, with ongoing margin expansion and disciplined investment in innovation.