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“Pega’s Blueprint AI helps enterprises reimagine their businesses while Pega’s powerful workflow engine provides the harness that ensures predictable outcomes,” said Alan Trefler, founder and CEO, Pegasystems. “We continue to be differentiated in the market and of great value as enterprises recognize the need for a sustainable AI architecture.”

“As enterprises move past the experimental phase of AI and demand real ROI, Pega's proven ability to generate measurable value allows us to showcase the financial impact we provide to our clients," said Ken Stillwell, COO and CFO, Pegasystems. "This positions us well to drive ACV growth and expand cash flow margins.”


(Dollars in thousands, except per share amounts)	Three Months Ended March 31,
		2026		2025		Change
Total revenue		$	429,973	$	475,633	(10)	%
Net income - GAAP		$	32,764	$	85,422	(62)	%
Net income - non-GAAP		$	83,068	$	140,542	(41)	%
Diluted earnings per share - GAAP		$	0.18	$	0.46	(61)	%
Diluted earnings per share - non-GAAP		$	0.46	$	0.76	(39)	%


(Dollars in thousands)	Three Months Ended March 31,					Change
		2026	2025
Pega Cloud				$	205,031	48	%	$	151,123	32	%	$	53,908	36	%
Maintenance				75,317		17	%	76,368		16	%	(1,051)		(1)	%
Subscription services				280,348		65	%	227,491		48	%	52,857		23	%
Subscription license				94,852		22	%	187,721		39	%	(92,869)		(49)	%
Subscription				375,200		87	%	415,212		87	%	(40,012)		(10)	%
Consulting				54,773		13	%	60,421		13	%	(5,648)		(9)	%
Total revenue				$	429,973	100	%	$	475,633	100	%	$	(45,660)	(10)	%

Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (800) 715-9871 (domestic) or 1 (646) 307-1963 (international) and using Conference ID 9410633, or via https://events.q4inc.com/attendee/156449953 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.

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.

Certain statements in this press release may be "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, including statements about the growth and development of our business and market.

Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, positions, 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.

•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;

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, 2025, and other filings we make with the 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.

Pega provides the leading AI-powered platform for enterprise transformation. The world’s most influential organizations trust our technology to reimagine how work gets done by automating workflows, personalizing customer experiences, and modernizing legacy systems. Since 1983, our scalable, flexible architecture has fueled continuous innovation, helping clients accelerate their path to the autonomous enterprise. Ready to Build for Change®? Visit www.pega.com.

(in thousands, except per share amounts)


	Three Months Ended March 31,
		2026		2025
Revenue
Subscription services		$	280,348	$	227,491
Subscription license		94,852		187,721
Consulting		54,773		60,421
Total revenue		429,973		475,633
Cost of revenue
Subscription services		49,449		38,128
Subscription license		471		388
Consulting		56,834		63,934
Total cost of revenue		106,754		102,450
Gross profit		323,219		373,183
Operating expenses
Selling and marketing		155,603		138,069
Research and development		82,047		74,286
General and administrative		48,573		33,828

Restructuring		(153)		11
Total operating expenses		286,070		246,194
Income from operations		37,149		126,989
Foreign currency transaction gain (loss)		1,850		(5,325)
Interest income		2,954		5,335
Interest expense		(44)		(1,027)
(Loss) on capped call transactions		—		(223)
Other (loss) income, net		(2,204)		561
Income before provision for income taxes		39,705		126,310
Provision for income taxes		6,941		40,888
Net income		$	32,764	$	85,422
Earnings per share
Basic		$	0.19	$	0.50
Diluted		$	0.18	$	0.46
Weighted-average number of common shares outstanding
Basic		168,817		171,804
Diluted		178,841		188,826

(in thousands)


	March 31, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	269,962	$	212,447
Marketable securities	203,992		213,352
Total cash, cash equivalents, and marketable securities	473,954		425,799
Accounts receivable, net	173,856		264,713
Unbilled receivables, net	142,057		166,478
Other current assets	114,010		121,305
Total current assets	903,877		978,295
Long-term unbilled receivables, net	87,459		102,544
Goodwill	81,380		81,506
Long-term deferred income taxes	174,251		175,472
Other long-term assets	304,031		294,027
Total assets	$	1,550,998	$	1,631,844
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,206	$	12,924
Accrued expenses	79,464		44,847
Accrued compensation and related expenses	67,222		148,797
Deferred revenue	557,449		509,275

Other current liabilities	25,061		21,935
Total current liabilities	743,402		737,778

Long-term operating lease liabilities	57,075		60,825
Other long-term liabilities	44,606		45,860
Total liabilities	845,083		844,463






Total stockholders’ equity	705,915		787,381
Total liabilities and stockholders’ equity	$	1,550,998	$	1,631,844

(in thousands)


	Three Months Ended March 31,
	2026		2025
Net income	$	32,764	$	85,422
Adjustments to reconcile net income to cash provided by operating activities
Non-cash items	68,681		70,409
Change in operating assets and liabilities, net	110,806		48,397
Cash provided by operating activities	212,251		204,228
Cash provided by investing activities	2,760		261,895
Cash (used in) financing activities	(154,163)		(575,986)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(2,898)		3,570
Net increase (decrease) in cash, cash equivalents, and restricted cash	57,950		(106,293)
Cash, cash equivalents, and restricted cash, beginning of period	216,360		341,529
Cash, cash equivalents, and restricted cash, end of period	$	274,310	$	235,236


	Three Months Ended March 31,
		2026		2025		Change
Net income - GAAP		$	32,764	$	85,422	(62)	%
Stock-based compensation (1)		45,815		41,425
Legal fees		19,964		6,544

Amortization of intangible assets		783		701
Restructuring		(153)		11
Foreign currency transaction (gain) loss		(1,850)		5,325
Interest on convertible senior notes		—		394
Capped call transactions		—		223

Other		2,233		(751)
Income taxes (2)		(16,488)		1,248
Net income - non-GAAP		$	83,068	$	140,542	(41)	%

Diluted earnings per share - GAAP		$	0.18	$	0.46	(61)	%
non-GAAP adjustments		0.28		0.30
Diluted earnings per share - non-GAAP		$	0.46	$	0.76	(39)	%

Diluted weighted-average number of common shares outstanding - GAAP		178,841		188,826		(5)	%
Capped call transactions		—		(4,850)

Diluted weighted-average number of common shares outstanding - non-GAAP		178,841		183,976		(3)	%

•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.

•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.

•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.

•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.

•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.

•Interest on convertible senior notes: In February 2020, we issued convertible senior notes (the “Notes”), due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity. 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 were 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 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.

•Other: We have excluded gains and losses from our venture investments. 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.

•Capped call transactions: In periods of GAAP net income, the shares calculated by applying the if-converted method related to our Notes are included in the diluted weighted-average shares outstanding if they are dilutive. The capped call transactions were 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 Notes. We believe that including the expected impact of the capped call transactions in our non-GAAP financial measures provides a useful comparison of our operational performance in different periods.


	Three Months Ended March 31,
(Dollars in thousands)		2026		2025
Cost of revenue		$	7,876	$	7,823
Selling and marketing		18,454		15,781
Research and development		10,019		8,385
General and administrative		9,466		9,436
		$	45,815	$	41,425
Income tax benefit		$	(9,164)	$	(587)

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, 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.


	Three Months Ended March 31,				Change
	2026		2025
Cash provided by operating activities	$	212,251	204,228		4	%
Investment in property and equipment	(5,726)		(1,880)
Free cash flow (1)	$	206,525	$	202,348	2	%

Supplemental information (2)

Legal fees	$	2,801	$	2,413
Restructuring	6,711		1,184
Interest paid on convertible senior notes	—		1,754

Income taxes, net of refunds	5,233		4,102
	$	14,745	$	9,453

(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 and equipment. 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.

•Interest paid on convertible senior notes: In February 2020, we issued the Notes, due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity.

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.


	March 31, 2026		March 31, 2025		Change				Constant Currency Change
Pega Cloud	$	906,652	$	701,311	$	205,341	29	%	27	%
Maintenance	276,834		298,422		(21,588)		(7)	%	(8)	%
Subscription services	1,183,486		999,733		183,753		18	%	16	%
Subscription license	438,514		445,677		(7,163)		(2)	%	(2)	%
	$	1,622,000	$	1,445,410	$	176,590	12	%	11	%

As of March 31, 2026:


	Subscription services						Subscription license			Consulting			Total
	Pega Cloud			Maintenance
1 year or less	$	709,105		$	212,262		$	64,878		$	42,884		$	1,029,129		51	%
1-2 years	384,966			77,207			1,402			3,758			467,333			23	%
2-3 years	213,496			53,806			11,150			1,378			279,830			14	%
Greater than 3 years	204,057			28,945			1,013			430			234,445			12	%
	$	1,511,624		$	372,220		$	78,443		$	48,450		$	2,010,737		100	%
% of Total	75		%	19		%	4		%	2		%	100		%
Change since March 31, 2025
	$	260,513		$	(12,178)		$	33,260		$	643		$	282,238
	21		%	(3)		%	74		%	1		%	16		%


	Subscription services						Subscription license			Consulting			Total
	Pega Cloud			Maintenance
1 year or less	$	572,341		$	229,180		$	33,519		$	45,320		$	880,360		50	%
1-2 years	331,572			73,500			3,718			2,291			411,081			24	%
2-3 years	161,259			37,779			731			144			199,913			12	%
Greater than 3 years	185,939			43,939			7,215			52			237,145			14	%
	$	1,251,111		$	384,398		$	45,183		$	47,807		$	1,728,499		100	%
% of Total	72		%	22		%	3		%	3		%	100		%


(in millions, except percentages)	March 31, 2025		March 31, 2026		1-Year Change
ACV	$	1,445	$	1,622	12	%
Impact of changes in foreign exchange rates	—		(24)
Constant currency ACV	$	1,445	$	1,598	11	%


	March 31, 2025		March 31, 2026		1 Year Growth Rate
Backlog - GAAP	$	1,728	$	2,011	16	%
Impact of changes in foreign exchange rates	—		(38)
Constant currency backlog	$	1,728	$	1,973	14	%