PEGA Pegasystems Inc

• 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

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

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240724234135/en/

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,

 

 

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

2024

 

2023

 

 

2024

 

2023

 

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

 

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

 

 

 

 

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

 

 

 

 

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