Pega GenAI Excitement Accelerates Growth in Q2 2024

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Insights

Pegasystems' Q2 2024 results demonstrate strong growth and improving profitability, driven by their AI-focused strategy. The 13% year-over-year increase in Annual Contract Value (ACV) to $1.31 billion in constant currency is particularly noteworthy, indicating robust demand for Pega's solutions.

Key financial highlights include:

Total revenue up 18% year-over-year to $351.2 million
Non-GAAP net income surged to $45.8 million, a remarkable 3711% increase
Non-GAAP diluted EPS rose to $0.52, up 5100%

The shift towards a subscription-based model is evident, with subscription revenue now accounting for 85% of total revenue. Pega Cloud revenue grew 17%, while subscription license revenue saw an impressive 105% increase.

The company's focus on AI, particularly generative AI, appears to be paying off. The Pega GenAI Blueprint™ offering has generated significant interest, potentially creating a pipeline for future growth. With Pega Cloud backlog exceeding $1 billion for the first time, the company seems well-positioned for sustained growth.

However, investors should note the decline in consulting revenue (11% decrease) and the near-disappearance of perpetual license revenue, which may impact short-term top-line growth as the business model transition continues.

Pegasystems' Q2 results underscore the growing importance of AI in enterprise software. The company's strategic focus on both statistical and generative AI is proving to be a key differentiator in the competitive enterprise AI market.

The Pega GenAI Blueprint™ tool, which has facilitated the creation of tens of thousands of blueprints in just a few months, demonstrates strong market traction. This rapid adoption suggests that Pega is successfully addressing a critical need in the enterprise space for AI-driven process optimization and automation.

The 13% growth in ACV indicates that Pega's AI-centric approach is resonating with clients, potentially accelerating digital transformation initiatives across industries. The surpassing of $1 billion in Pega Cloud backlog is a significant milestone, reflecting growing enterprise comfort with cloud-based AI solutions.

However, the tech landscape is rapidly evolving, especially in the AI space. Pega will need to continue innovating to maintain its competitive edge against both established players and agile startups. The company's ability to integrate generative AI capabilities into its core offerings while ensuring scalability, security and regulatory compliance will be important for long-term success.

Overall, Pega's Q2 results suggest that its AI strategy is gaining traction, positioning the company well in the growing market for enterprise AI solutions.

07/24/2024 - 04:05 PM

Annual contract value (ACV) grows 13% year over year in constant currency
Cash flow from operations reaches $220 million and free cash flow hits $218 million in the first half of 2024
Pega Cloud backlog exceeds $1 billion for the first time

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Pegasystems Inc. (NASDAQ: PEGA), the leading enterprise AI decisioning and workflow automation platform provider, released its financial results for the second quarter of 2024.

ACV Growth (Graphic: Business Wire)

“Our approach to statistical AI and generative AI continues to be a significant differentiator,” said Alan Trefler, founder and CEO. “The offerings we’ve introduced, especially Pega GenAI Blueprint™, have captured the imagination of clients, prospects, and partners, allowing them to identify new possibilities and helping us drive deeper engagement. With tens of thousands of blueprints created over the last few months, we’re identifying opportunities to accelerate growth and creating additional momentum for Pega Cloud®.”

"I'm really proud to see how our team is improving profitability while driving ACV growth,” said Ken Stillwell, COO and CFO. “Our strong execution and our AI innovation put us in a fantastic position to pursue the massive digital transformation opportunity in front of us.”

Financial and performance metrics ⁽¹⁾

Reconciliation of ACV and Constant Currency ACV

(in millions, except percentages)	June 30, 2023		June 30, 2024		1-Year Change
ACV	$	1,164	$	1,305	12	%
Impact of changes in foreign exchange rates		—		5
Constant currency ACV	$	1,164	$	1,310	13	%
Note: Constant currency ACV is calculated by applying the June 30, 2023 foreign exchange rates to all periods shown.

^{______________________________

1} Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.

(Dollars in thousands, except per share amounts)	Three Months Ended June 30,							Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2024		2023			Change		2024			2023			Change
Total revenue	$	351,153	$	298,268		18	%	$	681,300		$	623,740		9	%
Net income (loss) - GAAP	$	6,613	$	(46,804	)	*		$	(5,511	)	$	(67,578	)	92	%
Net income - non-GAAP	$	45,841	$	1,203		3711	%	$	87,995		$	20,423		331	%
Diluted earnings (loss) per share - GAAP	$	0.07	$	(0.56	)	*		$	(0.07	)	$	(0.82	)	91	%
Diluted earnings per share - non-GAAP	$	0.52	$	0.01		5100	%	$	1.00		$	0.24		317	%

(Dollars in thousands)	Three Months Ended June 30,								Change					Six Months Ended June 30,								Change
(Dollars in thousands)	2024				2023				Change					2024				2023				Change
Pega Cloud	$	134,086	38	%	$	115,063	39	%	$	19,023		17	%	$	264,988	39	%	$	222,942	36	%	$	42,046		19	%
Maintenance		80,344	23	%		82,042	27	%		(1,698	)	(2	)%		161,345	23	%		161,672	26	%		(327	)	—	%
Subscription services		214,430	61	%		197,105	66	%		17,325		9	%		426,333	62	%		384,614	62	%		41,719		11	%
Subscription license		84,647	24	%		41,197	14	%		43,450		105	%		147,985	22	%		125,724	20	%		22,261		18	%
Subscription		299,077	85	%		238,302	80	%		60,775		26	%		574,318	84	%		510,338	82	%		63,980		13	%
Consulting		52,040	15	%		58,387	19	%		(6,347	)	(11	)%		106,087	16	%		111,420	18	%		(5,333	)	(5	)%
Perpetual license		36	—	%		1,579	1	%		(1,543	)	(98	)%		895	—	%		1,982	—	%		(1,087	)	(55	)%
	$	351,153	100	%	$	298,268	100	%	$	52,885		18	%	$	681,300	100	%	$	623,740	100	%	$	57,560		9	%

Quarterly conference call

A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Thursday, July 25, 2024.

Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (888) 415-4305 (domestic) or 1 (646) 960-0336 (international) and using Conference ID 1559653, or via https://events.q4inc.com/attendee/610142887 by logging onto www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in the Investors section.

Discussion of non-GAAP financial measures

Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. Management uses these measures to assess the performance of the company's operations and establish operational goals and incentives. They are not a substitute for financial measures prepared under U.S. GAAP. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.

Forward-looking statements

Certain statements in this press release may be "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.

Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements. These statements represent our views only as of the date the statement was made and are based on current expectations and assumptions.

Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:

our future financial performance and business plans;
the adequacy of our liquidity and capital resources;
the continued payment of our quarterly dividends;
the timing of revenue recognition;
variation in demand for our products and services, including among clients in the public sector;
reliance on key personnel;
reliance on third-party service providers, including hosting providers;
compliance with our debt obligations and covenants;
the potential impact of our convertible senior notes and Capped Call Transactions;
foreign currency exchange rates;
potential legal and financial liabilities, as well as damage to our reputation, due to cyber-attacks;
security breaches and security flaws;
our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims, and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
our ongoing litigation with Appian Corp.;
our client retention rate; and
management of our growth.

These risks and others that may cause actual results to differ materially from those expressed in such forward-looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2023, and other filings we make with the U.S. Securities and Exchange Commission (“SEC”).

Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included in such statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements, whether as the result of new information, future events, or otherwise.

Any forward-looking statements in this press release represent our views as of July 24, 2024.

About Pegasystems

Pega provides a powerful platform that empowers the world's leading organizations to unlock business-transforming outcomes with real-time optimization. Clients use our enterprise AI decisioning and workflow automation to solve their most pressing business challenges - from personalizing engagement to automating service to streamlining operations. Since 1983, we've built our scalable and flexible architecture to help enterprises meet today's customer demands while continuously transforming for tomorrow. For more information on how Pega (NASDAQ: PEGA) empowers its clients to Build for Change®, https://www.pega.com.

All trademarks are the property of their respective owners.

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue
Subscription services	$	214,430		$	197,105		$	426,333		$	384,614
Subscription license		84,647			41,197			147,985			125,724
Consulting		52,040			58,387			106,087			111,420
Perpetual license		36			1,579			895			1,982
Total revenue		351,153			298,268			681,300			623,740
Cost of revenue
Subscription services		36,238			36,783			72,062			73,647
Subscription license		477			623			1,120			1,342
Consulting		60,231			58,710			118,413			119,058
Perpetual license		—			24			9			27
Total cost of revenue		96,946			96,140			191,604			194,074
Gross profit		254,207			202,128			489,696			429,666
Operating expenses
Selling and marketing		139,761			143,858			267,456			293,655
Research and development		75,425			73,931			147,538			149,307
General and administrative		25,420			23,462			48,947			46,572
Litigation settlement, net of recoveries		—			—			32,403			—
Restructuring		635			2,167			798			3,628
Total operating expenses		241,241			243,418			497,142			493,162
Income (loss) from operations		12,966			(41,290	)		(7,446	)		(63,496	)
Foreign currency transaction gain (loss)		437			(3,290	)		(2,825	)		(5,965	)
Interest income		6,785			1,814			12,066			3,299
Interest expense		(1,656	)		(1,778	)		(3,408	)		(3,696	)
(Loss) income on capped call transactions		(3,277	)		(1,361	)		22			1,845
Other income, net		—			5,702			1,684			12,285
Income (loss) before provision for income taxes		15,255			(40,203	)		93			(55,728	)
Provision for income taxes		8,642			6,601			5,604			11,850
Net income (loss)	$	6,613		$	(46,804	)	$	(5,511	)	$	(67,578	)
Earnings (loss) per share
Basic	$	0.08		$	(0.56	)	$	(0.07	)	$	(0.82	)
Diluted	$	0.07		$	(0.56	)	$	(0.07	)	$	(0.82	)
Weighted-average number of common shares outstanding
Basic		85,157			83,039			84,712			82,823
Diluted		88,500			83,039			84,712			82,823

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	258,257	$	229,902
Marketable securities		406,819		193,436
Total cash, cash equivalents, and marketable securities		665,076		423,338
Accounts receivable, net		165,723		300,173
Unbilled receivables, net		164,533		237,379
Other current assets		76,323		68,137
Total current assets		1,071,655		1,029,027
Long-term unbilled receivables, net		81,218		85,402
Goodwill		81,410		81,611
Other long-term assets		302,249		314,696
Total assets	$	1,536,532	$	1,510,736
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	16,682	$	11,290
Accrued expenses		44,875		39,941
Accrued compensation and related expenses		81,110		126,640
Deferred revenue		352,618		377,845
Convertible senior notes, net		500,604		—
Other current liabilities		20,677		21,343
Total current liabilities		1,016,566		577,059
Long-term convertible senior notes, net		—		499,368
Long-term operating lease liabilities		70,202		66,901
Other long-term liabilities		14,362		13,570
Total liabilities		1,101,130		1,156,898
Total stockholders’ equity		435,402		353,838
Total liabilities and stockholders’ equity	$	1,536,532	$	1,510,736

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Six Months Ended June 30,
	2024			2023
Net (loss)	$	(5,511	)	$	(67,578	)
Adjustments to reconcile net (loss) to cash provided by operating activities
Non-cash items		116,288			119,371
Change in operating assets and liabilities, net		109,466			61,959
Cash provided by operating activities		220,243			113,752
Cash (used in) provided by investing activities		(209,700	)		15,979
Cash provided by (used in) financing activities		22,503			(86,988	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(2,842	)		1,010
Net increase in cash, cash equivalents, and restricted cash		30,204			43,753
Cash, cash equivalents, and restricted cash, beginning of period		232,827			145,054
Cash, cash equivalents, and restricted cash, end of period	$	263,031		$	188,807

PEGASYSTEMS INC. RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES (in thousands, except percentages and per share amounts)

	Three Months Ended June 30,								Six Months Ended June 30,
	2024			2023			Change		2024			2023			Change
Net income (loss) - GAAP	$	6,613		$	(46,804	)	*		$	(5,511	)	$	(67,578	)	92	%
Stock-based compensation ⁽¹⁾		36,224			36,227					71,005			78,784
Restructuring		635			2,167					798			3,628
Legal fees		2,409			2,842					4,351			4,318
Litigation settlement, net of recoveries		—			—					32,403			—
Amortization of intangible assets		789			963					1,753			2,012
Interest on convertible senior notes		619			647					1,236			1,375
Capped call transactions		3,277			1,361					(22	)		(1,845	)
Repurchases of convertible senior notes		—			(5,074	)				—			(7,855	)
Foreign currency transaction (gain) loss		(437	)		3,290					2,825			5,965
Other		—			(678	)				(1,628	)		(4,471	)
Income taxes ⁽²⁾		(4,288	)		6,262					(19,215	)		6,090
Net income - non-GAAP	$	45,841		$	1,203		3,711	%	$	87,995		$	20,423		331	%

Diluted earnings (loss) per share - GAAP	$	0.07		$	(0.56	)	*		$	(0.07	)	$	(0.82	)	91	%
non-GAAP adjustments		0.45			0.57					1.07			1.06
Diluted earnings per share - non-GAAP	$	0.52		$	0.01		5,100	%	$	1.00		$	0.24		317	%

Diluted weighted-average number of common shares outstanding - GAAP		88,500			83,039		7	%		84,712			82,823		2	%
Stock-based compensation		—			1,289					3,218			1,026
Diluted weighted-average number of common shares outstanding - non-GAAP		88,500			84,328		5	%		87,930			83,849		5	%
* not meaningful

Our non-GAAP financial measures reflect the following adjustments:

Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance, excluding stock-based compensation.
Restructuring: We have excluded restructuring from our non-GAAP financial measures. Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as these amounts are not representative of our core business operations and ongoing operational performance.
Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See Note 15. Commitments and Contingencies in our Quarterly Report for the three months ended June 30, 2024 for additional information. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. We believe that excluding the amortization of issuance costs provides a useful comparison of our operational performance in different periods.
Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions are expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the convertible senior notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
Repurchases of convertible senior notes: We have excluded gains from the repurchases of Convertible Senior Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
Other: We have excluded gains and losses from our venture investments, and incremental expenses incurred integrating acquisitions. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
Diluted weighted-average number of common shares outstanding:
Stock-based compensation: In periods of non-GAAP income, we have included the dilutive impact of stock-based compensation in our non-GAAP weighted-average shares. In periods of GAAP loss, these shares would have been excluded from our GAAP results as they would be anti-dilutive for GAAP. We believe including the dilutive effect of stock-based compensation in our non-GAAP financial measures in periods of income is helpful to investors as this provides a useful comparison of our operational performance in different periods.

(1) Stock-based compensation:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Cost of revenue	$	7,092		$	7,174		$	13,664		$	16,087
Selling and marketing		13,564			15,349			27,452			33,009
Research and development		7,825			7,851			15,471			16,911
General and administrative		7,743			5,853			14,418			12,777
	$	36,224		$	36,227		$	71,005		$	78,784
Income tax benefit	$	(554	)	$	(581	)	$	(865	)	$	(1,253	)

(2) Effective income tax rates:

	Six Months Ended June 30,
	2024		2023
GAAP	*		(21	)%
non-GAAP	22	%	22	%
* not meaningful.

Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including our stock-based compensation plans, research and development tax credits, gains and losses on our capped call transactions, and the valuation allowance on our deferred tax assets in the U.S. and U.K. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP results consistent with our annual plan's effective income tax rate as established at the beginning of each year, given tax rate volatility. See Note 13. Income Taxes in our Quarterly Report for the three months ended June 30, 2024 for additional information.

PEGASYSTEMS INC. RECONCILIATION OF FREE CASH FLOW ⁽¹⁾ AND OTHER METRICS (in thousands, except percentages)

	Six Months Ended June 30,						Change
	2024			2023			Change
Cash provided by operating activities	$	220,243		$	113,752		94	%
Investment in property and equipment		(1,857	)		(13,933	)
Free cash flow ⁽¹⁾	$	218,386		$	99,819		119	%

Supplemental information⁽²⁾
Litigation settlement, net of recoveries	$	32,403		$	—
Legal fees		2,701			2,950
Restructuring		3,852			17,521
Interest on convertible senior notes		1,884			2,250
Income taxes		25,560			6,627
	$	66,400		$	29,348

(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP.

(2) The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.

Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See Note 15. Commitments and Contingencies in our Quarterly Report for the three months ended June 30, 2024 for additional information.
Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. The convertible senior notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1.
Income taxes: Direct income taxes paid net of refunds received.

PEGASYSTEMS INC.
ANNUAL CONTRACT VALUE
(in thousands, except percentages)

Annual contract value (“ACV”) - ACV represents the annualized value of our active contracts as of the measurement date. The contract's total value is divided by its duration in years to calculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.

	June 30, 2024		June 30, 2023		Change
Pega Cloud	$	593,752	$	498,860	$	94,892		19	%
Maintenance		310,608		315,231		(4,623	)	(1	)%
Subscription services		904,360		814,091		90,269		11	%
Subscription license		400,949		349,713		51,236		15	%
	$	1,305,309	$	1,163,804	$	141,505		12	%

PEGASYSTEMS INC.
BACKLOG
(in thousands, except percentages)

Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts:

As of June 30, 2024:

	Subscription services						Subscription license			Perpetual license			Consulting			Total
	Pega Cloud			Maintenance			Subscription license			Perpetual license			Consulting			Total
1 year or less	$	470,379		$	209,655		$	23,931		$	2,696		$	25,953		$	732,614		52	%
1-2 years		301,070			63,266			10,078			—			2,469			376,883		27	%
2-3 years		152,839			30,032			2,884			—			2,473			188,228		13	%
Greater than 3 years		90,474			17,953			97			—			—			108,524		8	%
	$	1,014,762		$	320,906		$	36,990		$	2,696		$	30,895		$	1,406,249		100	%
% of Total		72	%		23	%		3	%		—	%		2	%		100	%
Change since June 30, 2023
	$	152,778		$	15,081		$	(8,416	)	$	(4,535	)	$	(14,755	)	$	140,153
		18	%		5	%		(19	)%		(63	)%		(32	)%		11	%

As of June 30, 2023:

	Subscription services						Subscription license			Perpetual license			Consulting			Total
	Pega Cloud			Maintenance			Subscription license			Perpetual license			Consulting			Total
1 year or less	$	397,183		$	214,579		$	35,616		$	4,979		$	37,355		$	689,712		55	%
1-2 years		238,691			58,551			3,026			2,252			6,772			309,292		24	%
2-3 years		124,616			25,103			6,764			—			1,523			158,006		12	%
Greater than 3 years		101,494			7,592			—			—			—			109,086		9	%
	$	861,984		$	305,825		$	45,406		$	7,231		$	45,650		$	1,266,096		100	%
% of Total		67	%		24	%		4	%		1	%		4	%		100	%

PEGASYSTEMS INC. RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG (in millions, except percentages)

	June 30, 2023		June 30, 2024		1 Year Growth Rate
Backlog - GAAP	$	1,266	$	1,406	11	%
Impact of changes in foreign exchange rates		—		7
Constant currency backlog	$	1,266	$	1,413	12	%
Note: Constant currency Backlog is calculated by applying the June 30, 2023 foreign exchange rates to all periods shown.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724234135/en/

Press contact:

Lisa Pintchman

VP, Corporate Communications

lisapintchman.rogers@pega.com

617-866-6022

Twitter: @pega

Investor contact:

Peter Welburn

VP, Corporate Development & Investor Relations

PegaInvestorRelations@pega.com

617-498-8968

Source: Pegasystems Inc.

FAQ

What was Pegasystems' revenue growth in Q2 2024?

Pegasystems' revenue grew by 18% YoY, reaching $351.2 million in Q2 2024.

How did Pegasystems perform in terms of ACV in Q2 2024?

Pegasystems reported a 13% YoY increase in Annual Contract Value (ACV) in constant currency.

What is the significance of Pegasystems' Pega Cloud backlog in Q2 2024?

For the first time, Pegasystems' Pega Cloud backlog exceeded $1 billion.

How did Pegasystems' net income change in Q2 2024?

Pegasystems reported a GAAP net income of $6.6 million, reversing a loss of $46.8 million in Q2 2023.

What was Pegasystems' free cash flow in H1 2024?

Pegasystems' free cash flow reached $218 million in the first half of 2024.

Pega GenAI Excitement Accelerates Growth in Q2 2024

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What was Pegasystems' revenue growth in Q2 2024?

How did Pegasystems perform in terms of ACV in Q2 2024?

What is the significance of Pegasystems' Pega Cloud backlog in Q2 2024?

How did Pegasystems' net income change in Q2 2024?

What was Pegasystems' free cash flow in H1 2024?

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Pega GenAI Excitement Accelerates Growth in Q2 2024

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What was Pegasystems' revenue growth in Q2 2024?

How did Pegasystems perform in terms of ACV in Q2 2024?

What is the significance of Pegasystems' Pega Cloud backlog in Q2 2024?

How did Pegasystems' net income change in Q2 2024?

What was Pegasystems' free cash flow in H1 2024?

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