Pegasystems Inc. · NASDAQ:PEGA

Pegasystems — Investor Day (June 2025)

26 slides from Pegasystems's investor day presentation, Jun 2, 2025

  1. Slide 1: AI Investor Session

    AI Investor Session KEN STILLWELL COO & CFO June 2, 2025 2025 PETER WELBURN VP, Corporate Development & Investor Relations

  2. Slide 2: Financial Update

    © Pegasystems Inc 2 Financial Update KEN STILLWELL COO & CFO

  3. Slide 3: Safe Harbor Statement

    © Pegasystems Inc Safe Harbor Statement Certain statements in this presentation 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, strategi

  4. Slide 4: To Ask a Question...

    © Pegasystems Inc 4 To Ask a Question... Email pegainvestorrelations@pega.com peter.welburn@pega.com on the PHONE in the ROOM Raise your hand1 Please state your name and the firm you are with3 Wait for the microphone2 ? ?

  5. Slide 5: Completed Multi-Year Subscription Transition & Achieved Rule of 40

    © Pegasystems Inc 5 Completed Multi-Year Subscription Transition & Achieved Rule of 40 to Balance Growth & Profit (1) Rule of 40 is a performance metric calculated by adding the annual contract value (“ACV”) growth rate and the free cash flow margin. We also provide a table of supplemental informati

  6. Slide 6: Pega Cloud is the Biggest Driver of Our ACV Growth

    © Pegasystems Inc 6 Pega Cloud is the Biggest Driver of Our ACV Growth As Reported $50M Pega Cloud ACV $700M Pega Cloud ACV +39% CAGR Pega Cloud ACV Grew from $50M in Q1 2017 to $700M in Q1 2025

  7. Slide 7: Our ACV Growth is Durable

    © Pegasystems Inc 7 Our ACV Growth is Durable ACV Increased 13 Percent Year Over Year from 3/31/24 to 3/31/25 (as reported) High Retention Rates, Strong Customer Loyalty Pega GenAI BlueprintTM Best-in-class solutions Technology Leadership Big Market Opportunity Enterprise clients moving to the cloud

  8. Slide 8: Several Levers to Accelerate ACV Growth

    © Pegasystems Inc Pega GenAI Blueprint Significant Expansion Opportunity Cross-sell & upsell into the base Pega Cloud Migrations Move existing clients to Pega Cloud A B C 8 New Logos Win new clients with partner Blueprints and legacy transformation We Have Several Levers to Accelerate ACV Growth

  9. Slide 9: Long-term financial model: margins improving over time

    © Pegasystems Inc 9 Long-term financial model (progress since last year) And Our Margins Have Been Improving Over Time From… To 2027/ 2028 Target 2022 % of revenue 2023 2024 80%74%Gross Margin 1 76% 76% 30%43%Sales & Marketing 1 35% 32% 17%20% Research & Development 1 18% 18% LONG-TERM MODEL TIMELIN

  10. Slide 10: Strong Free Cash Flow Generation

    © Pegasystems Inc 10 Driven by our double-digit ACV growth and our margin expansion Leading to Strong Free Cash Flow Generation 2022A 2023A 2024A ($13M) $201M $338M 2025F 2026F 2027F 2028F CUMULATIVE FREE CASH FLOW $2.2B+ $700M+ ~15% to ~20% Free Cash Flow Growth Year Over Year

  11. Slide 11: Capital Allocation Focused on Increasing Returns to Shareholders

    © Pegasystems Inc 11 Capital Allocation Focused on Increasing Returns to Shareholders Organic Reinvestment in our Business M&ARepurchase Shares Pay a Dividend Optimize Debt CAPITAL STRUCTURE OPTIMIZATION DEEPEN AND EXTEND PLATFORM BUY Strategic repurchases that create value for our shareholders Prop

  12. Slide 12: Capital Structure Optimization

    © Pegasystems Inc $198M~$600M$23M BUY Buying Back Stock Paying Dividend Paying Down Debt CAPITAL STRUCTURE OPTIMIZATION Q1 2023 thru Q1 2025 12

  13. Slide 13: Capital Structure Optimization: Debt Free as of Q1 2025

    © Pegasystems Inc Q1 2023 thru Q1 2025 $198M~$600M$23M 13 BUY Buying Back Stock Paying Dividend Paying Down Debt CAPITAL STRUCTURE OPTIMIZATION ~3% of Free Cash Flow ~27% of Free Cash Flow Debt Free as of Q1 2025

  14. Slide 14: An Opportunity: Offset Dilution & Reduce Share Count

    © Pegasystems Inc 14 An Opportunity: Offset Dilution & Reduce Share Count Stock-Based Compensation Free Cash Flow 2022 2023 2024 $0M $50M $100M $150M $200M $250M $300M $350M -$50M $122M $143M $201M $143M $338M ($13M) 2022 2023 2024

  15. Slide 15: Keys to Driving Long-Term Value Creation

    © Pegasystems Inc 15 Keys to Driving Long- Term Value Creation A durable ACV growth rate, operating leverage, and a strategic approach to capital allocation Buybacks | Dilution Margin Shift Pega’s ACV Growth Rate Growth in Free Cash Flow Per Share

  16. Slide 16: Key Takeaways

    © Pegasystems Inc 16 Key Takeaways Pega’s GenAI BlueprintTM momentum, coupled with a large and expanding market and robust ACV growth, reinforces the durability of Pega’s growth story. The completion of the subscription transition and disciplined operational management put Pega on a strong trajector

  17. Slide 17: Full-Year 2025 Update

    © Pegasystems Inc 17 Full-Year 2025 Update (in millions, except per share amounts) Original Updated 2025 2025 Revenue (GAAP and Non-GAAP) 1,600$ 1,700$ Net Income - GAAP 149$ 224$ Stock-based compensation 147 147 Legal Fees 25 25 Income Taxes (32) (29) Net Income - Non-GAAP 289$ 367$ Diluted earning

  18. Slide 18: Q&A

    © Pegasystems Inc 18 Q&A

  19. Slide 19: To Ask a Question...

    © Pegasystems Inc 19 To Ask a Question... Email pegainvestorrelations@pega.com peter.welburn@pega.com on the PHONE in the ROOM Raise your hand1 Please state your name and the firm you are with3 Wait for the microphone2 ? ?

  20. Slide 20: Innovation Hub Map: Top 5 Must-See Attractions

    © Pegasystems Inc HOURS OPEN 20 Innovation Hub Map MONDAY June 2 11:00 AM – 6:00 PM TUESDAY June 3 11:00 AM – 6:30 PM Pega BlueprintTM Watch apps build themselves with natural language prompts. Customer Service Simulator Jump into a mock call center powered by real-time automation. 1:1 Customer Enga

  21. Slide 21: Definitions & Non-GAAP Reconciliations

    © Pegasystems Inc Definitions & Non- GAAP Reconciliations 21

  22. Slide 22: Definitions: Rule of 40 and Supplemental Information

    © Pegasystems Inc 1. Rule of 40: A performance metric calculated by adding the annual contract value (“ACV”) growth rate and the free cash flow margin. We also provide a table of supplemental information of other items that affected our cash flows and Rule of 40 achievement within the appendix of th

  23. Slide 23: GAAP to Non-GAAP Margin Reconciliation

    © Pegasystems Inc Year Ended December 31, Target 2022 2023 2024 2027/2028 Gross Margin % - GAAP 72% 74% 74% 77% Stock-Based Compensation 2% 2% 2% 3% Gross Margin % - Non-GAAP 74% 76% 76% 80% Sales and Marketing % - GAAP 47% 39% 36% 34% Stock-Based Compensation (4)% (4)% (4)% (4)% Sales and Marketing

  24. Slide 24: Free Cash Flow Reconciliation

    © Pegasystems Inc Year Ended December 31, Target (in millions, except percentages) 2022 2023 2024 2028 Cash flows provided by operating activities $ 22 $ 218 $ 346 $ 715 Investment in property and equipment (35) (17) (8) (15) Free Cash Flow $ (13) $ 201 $ 338 $ 700 Margin, as a percentage of Total R

  25. Slide 25: Rule of 40 Reconciliation

    © Pegasystems Inc Year Ended December 31, (in millions, except percentages) 2022 2023 2024 Growth Growth Growth ACV (Constant Currency) $ 1,153 15% $ 1,244 11% $ 1,395 11% Margin Margin Margin Free Cash Flow $ (13) (1)% $ 201 14% $ 338 23% Supplemental Information Litigation settlement, net of recov

  26. Slide 26: Reconciliation of ACV and ACV (Constant Currency)

    © Pegasystems Inc (in millions) December 31, 2022 December 31, 2023 December 31, 2024 ACV (As Reported) $ 1,126 $ 1,255 $ 1,372 Impact of changes in foreign exchange rates 27 (11) 23 ACV (Constant Currency) $ 1,153 $ 1,244 $ 1,395 Reconciliation of ACV and ACV (Constant Currency) 26 31-Dec-22 31-Dec

Pegasystems — Investor Day (June 2025) on 6ix