Slide 1: Pegasystems Investor Presentation Q1 2025
Pegasystems Investor Presentation Q1 2025 NASDAQ: PEGA pegainvestorrelations@pega.com April 22, 2025 © Pegasystems Inc.
Slide 2: Safe Harbor Statement and Non-GAAP Financial Measures
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, strategies, intends to, pr
Slide 3: Pega Overview
Pega Overview © Pegasystems Inc. 3
Slide 4: Our vision, software and what we do
OUR VISION To change the way the world builds software to unleash enterprise potential OUR SOFTWARE Enterprise AI decisioning and workflow automation platform WHAT WE DO Unlock business-transforming outcomes © Pegasystems Inc. 4
Slide 5: Unlock Business-Transforming Outcomes
What we do UNLOCK BUSINESS-TRANSFORMING OUTCOMES How we do it with a powerful LOW-CODE PLATFORM FOR WORKFLOW AUTOMATION AND AI-POWERED DECISIONING 1:1 Customer Customer Workflow Our Solutions are Engagement Service Automation organized into 3 AUTOMATE & SAVE TIME MAXIMIZE VALUE ADAPT WITH EASE Engag
Slide 6: Leading enterprises use Pega across the customer lifecycle
Personalize Automate Streamline Engagement Customer Service Operations The world’s leading enterprise-scale organizations are using Pega to connect workflows and interactions across the customer lifecycle: Communications Financial Government Healthcare Insurance Manufacturing service providers servi
Slide 7: Driving Growth and Free Cash Flow
Driving Growth and Free Cash Flow Founded: 1983 HQ: Waltham, MA Employees: 5,000+ Q1 2025 13% 23% ACV Growth Pega Cloud ACV Growth $202M (1) Q1 2025 Free Cash Flow (1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investmen
Slide 8: Key Investment Highlights
Key Investment Highlights • Growing enterprise software company, with a view towards a $90B+ market opportunity • Large enterprise client base in key verticals: financial services, insurance, telecommunications, health care, manufacturing, and public sector • A proven technology leader in customer e
Slide 9: Solution Overview
Solution Overview 9 © Pegasystems Inc.
Slide 10: What are the Business Problems We Solve?
What are the Business Problems We Solve? Pega drives better business outcomes by… Making Decisions Delivering 1:1 customer engagement powered by real-time, omni-channel AI …and very often we do both Getting work done For example, in the context of Customer Making customer and employee-facing Service
Slide 11: Pega Infinity
Pega Infinity™ 1:1 Customer Engagement Customer Service Workflow Automation MAKE GET WORK DECISIONS DONE REAL-TIME, OMNI- END-TO-END MICROJOURNEY- SITUATIONAL SOFTWARE THAT CLOUD CHOICE ™ CHANNEL AI AUTOMATION & CENTRIC RAPID LAYER CAKE WRITES YOUR ROBOTICS DELIVERY SOFTWARE Industry-leading technol
Slide 12: Unlock Business-Transforming Outcomes
Unlock Business-Transforming Outcomes Solving the problems no one else can. Delivering value, fast. One-to-one customer Maximize customer lifetime value engagement Customer service Simplify service and reduce costs Intelligent automation Boost efficiency © Pegasystems Inc. 12
Slide 13: So How Do We Do It?
So How Do We Do It? Our software can handle quick fixes, lasting transformation, and everything in between Intelligent Scalable Rapid technology architecture innovation © Pegasystems Inc. 13
Slide 14: Pega's Technology Difference
Pega’s Technology Difference Architected differently to maximize revenue and efficiency at enterprise scale Put decisions and Build layers of reuse Personalize experiences workflow at the center and variation and optimize workflows With Pega’s Center-out With Pega’s patented With Pega’s real-time AI
Slide 15: Analysts recognize Pega as a leader
Analysts recognize #1 The Forrester Wave: Real-Time Interaction Management, Q1, 2024 Pega as a leader Gartner MQ: #1 CRM Customer Engagement Center, Q4, 2023 for our enterprise AI decisioning and workflow #1 The Forrester Wave: automation platform Robotic Process Automation, Q1, 2023 © Pegasystems I
Slide 16: Business Overview
Business Overview © Pegasystems Inc. 16
Slide 17: Why Pega Wins
WHY PEGA WINS Differentiated Ease of Depth of Platform Architecture Integration Functionality Strong Deep Vertical Robust Team Expertise ROI © Pegasystems Inc. 17
Slide 18: Selling High-Value Use Cases to Some of the World's Largest Companies
Selling High-Value Use Cases to Some of the World’s Largest Companies BUYER OFFERING VALUE PROPOSITION Robert 1:1 Customer Maximize top-line growth with a centralized, real-time Chief Customer Engagement AI-powered customer decision hub that delivers next- Officer best-actions at every customer inte
Slide 19: How Do Our Clients Drive Value Using Pega?
How Do Our Clients Drive Value Using Pega? ILLUSTRATIVE CLIENT USE CASE IMPACT AND RESULT • 50 million next best action conversations delivered 1:1 Customer Retain across 18 channels Engagement customers • +12 lead in NPS over the competition Read more | https://www.pega.com/customers/cba-marketing
Slide 20: Financial Details
Financial Details © Pegasystems Inc. 20
Slide 21: Financial Outlook
Financial Outlook Massive Market Opportunity Subscription Journey Recurring Model Margin Expansion Opportunities © Pegasystems Inc. 21
Slide 22: Pursuing a Massive Market Opportunity in Platform & CRM
Pursuing a Massive Market Opportunity in Platform & CRM FY 27 $130B+ FY 24 $90B+ Source: IDC Worldwide ICT Spending Guide (Feb. 2024) © Pegasystems Inc. 22
Slide 23: Evolution of our Subscription Journey
Evolution of our Subscription Journey From… To… Perpetual Recurring Less Predictable More Predictable Lagging Growth & Margins Rule of 40 Driven SUBSCRIPTION TRANSITION 2017 2023 TIMELINE © Pegasystems Inc. 23
Slide 24: Recurring Subscription Model
Recurring Subscription Model Annual Contract Value (ACV) as Reported Growth since March 31, 2024 ACV: 13% 1,500M $1,445M 1,400M 1,300M $1,273M 1,200M 1,100M 1,000M 900M March 31, 2024 March 31, 2025 ACV represents the annualized value of our active contracts as of the measurement date. The contract'
Slide 25: Cash Flow Growth
Cash Flow Growth Operating Cash Flow Free Cash Flow 250M 250M $204M $202M 200M 200M $180M $180M 150M 150M 100M 100M 50M 50M 0M 0M March 31, 2024 March 31, 2025 March 31, 2024 March 31, 2025 Note: For additional information refer to explanatory notes on slide 34 © Pegasystems Inc. 25 25
Slide 26: What Does this All Mean?
What Does this All Mean? Strive to build a growing, recurring business to drive increased value With a view towards: • Continuing our technology • Driving ACV growth • Balancing growth & margin leadership • Leveraging Pega Cloud • Returning capital to shareholders • Improving sales productivity • Ru
Slide 27: Trademark notice
Pegasystems, Pega, and other Pega products and services mentioned herein are trademarks of Pegasystems Inc. All other company, product, or service names are trademarks or service marks of their respective owners.
Slide 28: Corporate Social Responsibility at Pega
Corporate Social Responsibility at Pega E S G ENVIRONMENTAL SOCIAL GOVERNANCE We are committed to reducing the We strive to be a responsible We believe that corporate environmental impact of our corporate citizen and active governance is important to ensure operations on air, land, and water contrib
Slide 29: Reported ACV
Reported ACV Pega Cloud ACV Up 23% as Reported Growth since March 31, 2024 Total ACV: 13% $1,445M Pega Cloud ACV: 23% $1,273M $701M $570M Client Cloud ACV: 6% $703M $744M March 31, 2024 March 31, 2025 Pega Cloud Client Cloud ACV represents the annualized value of our active contracts as of the measu
Slide 30: Reported ACV
Reported ACV Pega Cloud, Maintenance, and Subscription License (Term) as Reported Growth since March 31, 2024 Total ACV: 13% $1,445M Pega Cloud ACV: 23% $1,273M $701M $570M $298M $314M Client Cloud ACV: 6% $389M $446M March 31, 2024 March 31, 2025 Pega Cloud Maintenance Subscription License (Term) A
Slide 31: Pega Cloud Revenue
Pega Cloud Revenue Trailing 12 Months $579M $559M $529M $503M $484M $461M $444M $423M $402M $384M $363M $344M $323M $301M $281M $257M $233M $208M Cloud $186M Transition $167M Begins $149M $134M $119M $106M $95M $83M $64M $73M $51M $56M Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 32: Backlog
Backlog Growth since Total Backlog Up 21% as Reported March 31, 2024 $2,000M $1,728M $1,500M $1,425M 16% Current $880 $1,000M $759 $500M $848 27% Long-term $666 $0M March 31, 2024 March 31, 2025 Current Long-term © Pegasystems Inc. 32 32
Slide 33: Pega Cloud Gross Margin
Pega Cloud Gross Margin At or above a 75% gross margin, Pega Cloud generates higher gross profit dollars than Client Cloud in a timeless illustrative model 78% 78% 80% Pega Cloud Gross Margin (%) 75% = 74% Gross Profit Dollars Breakeven 70% Between Pega 67% Cloud and Client 63% Cloud 55% 53% 51% 201
Slide 34: Operating and Free Cash Flow Reconciliation
Operating and Free Cash Flow Reconciliation Three Months Ended March 31, Change (dollars in thousands) 2025 2024 Cash provided by operating activities $ 204,228 $ 180,146 13 % Investment in property and equipment (1,880) (604) (1) Free cash flow $ 202,348 $ 179,542 13 % Supplemental information (2)