Slide 1: Pegasystems Investor Presentation Q1 2022
Pegasystems Investor Presentation Q1 2022 NASDAQ: PEGA pegainvestorrelations@pega.com April 28, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this presentation may be construed as “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, str
Slide 3: Pega Overview
Pega Overview © Pegasystems Inc. 3
Slide 4: Our Vision and Mission
OUR VISION To change the way the world builds software. OUR MISSION To deliver innovative software that crushes business complexity so our clients can solve problems today and transform for tomorrow. © Pegasystems Inc. 4
Slide 5: Pega Crushes Business Complexity
What we do PEGA CRUSHES BUSINESS COMPLEXITY How we do it with a powerful LOW-CODE PLATFORM FOR WORKFLOW AUTOMATION AND AI-POWERED DECISIONING 1:1 Customer Customer Intelligent Our Solutions Engagement Service Automation are organized AUTOMATE & SAVE TIME MAXIMIZE VALUE ADAPT WITH EASE into 3 Resolve
Slide 6: Leading Digital Transformation
Leading Digital Transformation Founded: 1983 HQ: Cambridge, MA Employees: 6,000+ 21% 21% ACV Growth Q1 2022 Subscription as reported* Y/Y Revenue Growth $376M 82% Q1 2022 Subscription Q1 2022 Revenue Revenue as % of Total *Foreign currency exchange rate changes were a 1% to 2% headwind to ACV growth
Slide 7: And trusted by the world's leading brands
And trusted by the world’s leading brands 10 of the top 10 healthcare payers 7 of the top 10 insurance companies 18 of the top 25 global banks 9 of the top 10 telecommunications companies © Pegasystems Inc. 7
Slide 8: Corporate Social Responsibility at Pega
Corporate Social Responsibility at Pega E S G ENVIRONMENTAL SOCIAL GOVERNANCE We are committed to We strive to be a responsible We believe that corporate reducing the environmental corporate citizen and active governance is important to impact of our operations contributor in communities ensure that
Slide 9: Key Investment Highlights
Key Investment Highlights • Rapidly growing enterprise software company, with a view towards a $50B+ digital transformation market opportunity • Large enterprise client base in key verticals: financial services, insurance, telecommunications, health care, manufacturing, and public sector • A proven
Slide 10: Solution Overview
Solution Overview SO® PEGA
Slide 11: 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 Making customer and employee- Customer Service or KY
Slide 12: Pega Infinity
Pega Infinity™ 1:1 Customer Engagement Customer Service Intelligent Automation MAKE GET WORK DECISIONS DONE REAL-TIME, END-TO-END MICROJOURNEY- SITUATIONAL SOFTWARE THAT CLOUD OMNI-CHANNEL AUTOMATION & CENTRIC RAPID LAYER CAKE™ WRITES YOUR CHOICE AI ROBOTICS DELIVERY SOFTWARE™ Industry-leading techn
Slide 13: Crushing business complexity
Crushing business complexity Solving the problems no one else can. Delivering value, fast. One-to-one 489% ROI customer Maximize customer lifetime value engagement < 6 months payback Customer 298% ROI service Simplify service and reduce costs < 6 months payback Intelligent 186% – 598% ROI automation
Slide 14: 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. 14
Slide 15: Together, we're redefining the technology industry
Customer engagement Digital process automation Together, we’re redefining the technology industry Q2 2019 Unified, market-leading technology Changing the way organizations work and engage Real-time decisions & AI End-to-end work management We’ve built the #1 real-time interaction management #1 digit
Slide 16: Business Overview
Business Overview SO® PEGA
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 Maximize top-line growth with a centralized, Robert 1:1 Customer real-time AI-powered customer decision hub Chief Customer Engagement that delivers next-best-actions at every Officer customer inter
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 1:1 Customer Retain delivered 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 SO® PEGA
Slide 21: Financial Highlights
Financial Highlights Massive Market Opportunity Transition to Cloud Underway High Growth, Recurring Revenue Model Scale to Drive Margin Expansion © Pegasystems Inc. 21
Slide 22: Pursuing a Massive Market Opportunity in Platform & CRM
Pursuing a Massive Market Opportunity in Platform & CRM FY 25 $110B+ FY 21 $65B+ © Pegasystems Inc. 22
Slide 23: Transition to Subscription Well Underway
Transition to Subscription Well Underway From… To… Perpetual Recurring Less Predictable More Predictable Lagging Growth Rule of 40 & Margins 2017 SUBSCRIPTION TRANSITION TIMELINE 2023 TODAY © Pegasystems Inc. 23
Slide 24: High Growth, Recurring Subscription Model
High Growth, Recurring Subscription Model Q1 2022 Growth vs Q1 2021 ACV Growth is the Best Indicator of Growth During the Subscription Transition Total ACV: 21% $1,100M $1,034M $1,003M $1,000M $948M $899M $900M $853M $800M $700M Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 ($M) ACV represents the annualized value
Slide 25: Subscription Revenue
Subscription Revenue* Grew 21 percent year over year +21% $308M $255M ($M) Q1 2021 Q1 2022 *Subscription revenue equals subscription services revenue (Pega Cloud revenue plus maintenance revenue) plus subscription li cense revenue, which represents revenue from the sale of term licenses. © Pegasyste
Slide 26: Remaining Performance Obligation (RPO) / Backlog is Growing
Remaining Performance Obligation (RPO) / Backlog is Growing Total RPO/Backlog Up 20% ($M) +20% $1,176M >1 Year ≤1 Year $980M $522M $436M $654M $544M 3/31/2021 3/31/2022 © Pegasystems Inc. 26
Slide 27: What Does this All Mean?
What Does this All Mean? Strive to build a growing, recurring business to drive increased value Through To drive Sustain higher transition shareholder growth to recurring value With a view towards: • Capitalizing on • Driving ACV growth • Balancing growth & margin high-growth markets • Leveraging Cl
Slide 28: 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. 28
Slide 29: High Growth, Recurring Revenue Model
High Growth, Recurring Revenue Model Q1 2022 Growth vs Q1 2021 ACV Growth is the Best Indicator of Growth During the Subscription Transition $1,034M Total ACV: $1,003M 21% Pega Cloud $948M $899M Client Cloud $853M $835M $364M $402M $777M $738M $321M Pega Cloud $693M $711M $307M ACV: 42% $267M $282M
Slide 30: High Growth, Recurring Revenue Model
High Growth, Recurring Revenue Model ACV Growth is the Best Indicator of Growth During the Subscription Transition Q1 2022 Growth $1,034M vs. Q1 2021 $1,003M $948M Total ACV (+21%) $899M $853M $835M $364M $402M $777M $321M Pega Cloud (+42%) $738M $711M $307M $693M $282M $267M $634M $232M $613M $211M
Slide 31: Fastest Growing Revenue Stream is Pega Cloud
Fastest Growing Revenue Stream is Pega Cloud Trailing 12 Months Pega GAAP Pega Cloud Revenue $323M $301M $281M $257M $233M $208M $186M $167M $149M $134M Cloud $119M Transition Begins $106M $95M $83M $73M $64M $51M $56M Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1
Slide 32: Remaining Performance Obligation (RPO) / Backlog is Growing
Remaining Performance Obligation (RPO) / Backlog is Growing Pega Cloud RPO/Backlog up 22%, Total RPO/Backlog Up 20% ($ in millions) +20% >1 Year $1,176M ≤1 Year $980M +22% $522M $689M $436M $564M $359M $312M $654M $544M $330M $252M 3/31/2021 3/31/2022 3/31/2021 3/31/2022 Pega Cloud RPO/Backlog Total
Slide 33: Gross Profit Dollars: Client Cloud vs Pega Cloud
Gross Profit Dollars: Client Cloud vs Pega Cloud Client Cloud and Pega Cloud deals generate similar gross profit dollars in a timeless illustrative model Client Cloud Pega Cloud 3-Year Deal; ACV = $1M 3-Year Deal; ACV = $1.25M $3.75M $3.00M $2.85M $2.81M Revenue Gross Profit1 Revenue Gross Profit2 1