Slide 1: Form 8-K Current Report - Pegasystems Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________ FORM 8-K _________________________________ Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 2, 2025 __
Slide 2: Item 7.01 Regulation FD Disclosure
ITEM 7.01 REGULATION FD DISCLOSURE On June 2, 2025, Pegasystems Inc. (the “Company”) will present to investors. A copy of the financial information to be presented is attached as Exhibit 99.1. The information in this Form 8-K and the Exhibit attached hereto are furnished and shall not be deemed “fil
Slide 3: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Pegasystems Inc. Dated: June 2, 2025 By: /s/ KENNETH STILLWELL Kenneth Stillwell Chief Operating Officer
Slide 4: AI Investor Session - Financial Update
AIInvestorSessionKENSTILLWELLCOO&CFOJune2,20252025PETERWELBURNVP,CorporateDevelopment&InvestorRelations ©PegasystemsInc2FinancialUpdateKENSTILLWELLCOO&CFO
Slide 5: Safe Harbor Statement
©PegasystemsIncSafeHarborStatementCertainstatementsinthispresentationmaybe“forward-lookingstatements”asdefinedinthePrivateSecuritiesLitigationReformActof1995.Wordssuchasexpects,anticipates,intends,plans,believes,will,could,should,estimates,may,targets,strategies,intendsto,projects,forecasts,guidance
Slide 6: To Ask a Question...
©PegasystemsInc4ToAskaQuestion...Emailpegainvestorrelations@pega.competer.welburn@pega.comonthePHONEintheROOMRaiseyourhand1Pleasestateyournameandthefirmyouarewith3Waitforthemicrophone2??
Slide 7: Completed Multi-Year Subscription Transition & Achieved Rule of 40
©PegasystemsInc5CompletedMulti-YearSubscriptionTransition&AchievedRuleof40toBalanceGrowth&Profit(1)Ruleof40isaperformancemetriccalculatedbyaddingtheannualcontractvalue(“ACV”)growthrateandthefreecashflowmargin.WealsoprovideatableofsupplementalinformationofotheritemsthataffectedourcashflowsandRuleof40
Slide 8: Pega Cloud is the Biggest Driver of Our ACV Growth
©PegasystemsInc6PegaCloudistheBiggestDriverofOurACVGrowthAsReported$50MPegaCloudACV$700MPegaCloudACV+39%CAGRPegaCloudACVGrewfrom$50MinQ12017to$700MinQ12025
Slide 9: Our ACV Growth is Durable
©PegasystemsInc7OurACVGrowthisDurableACVIncreased13PercentYearOverYearfrom3/31/24to3/31/25(asreported)HighRetentionRates,StrongCustomerLoyaltyPegaGenAIBlueprintTMBest-in-classsolutionsTechnologyLeadershipBigMarketOpportunityEnterpriseclientsmovingtothecloudtodigitallytransformmissioncritical-usecase
Slide 10: Pega GenAI Blueprint Significant Expansion Opportunity
©PegasystemsIncPegaGenAIBlueprintSignificantExpansionOpportunityCross-sell&upsellintothebasePegaCloudMigrationsMoveexistingclientstoPegaCloudABC8NewLogosWinnewclientswithpartnerBlueprintsandlegacytransformationWeHaveSeveralLeverstoAccelerateACVGrowth
Slide 11: Long-term financial model: our margins have been improving
©PegasystemsInc9Long-termfinancialmodel(progresssincelastyear)AndOurMarginsHaveBeenImprovingOverTimeF r o m … To2027/2028Target2022%ofrevenue2023202480%74%GrossMargin176%76%30%43%Sales&Marketing135%32%17%20%Research&Development118%18%LONG-TERMMODELTIMELINE(1)Financialmetrics(otherthanrevenue)present
Slide 12: Leading to Strong Free Cash Flow Generation
©PegasystemsInc10Drivenbyourdouble-digitACVgrowthandourmarginexpansionLeadingtoStrongFreeCashFlowGeneration2022A2023A2024A($13M)$201M$338M2025F2026F2027F2028FCUMULATIVEFREECASHFLOW$2.2B+$700M+~15%to~20%FreeCashFlowGrowthYearOverYear
Slide 13: Capital Allocation Focused on Increasing Returns to Shareholders
©PegasystemsInc11CapitalAllocationFocusedonIncreasingReturnstoShareholdersOrganicReinvestmentinourBusinessM&ARepurchaseSharesPayaDividendOptimizeDebtCAPITALSTRUCTUREOPTIMIZATIONDEEPENANDEXTENDPLATFORMBUYStrategicrepurchasesthatcreatevalueforourshareholdersProperlypaydownasneededPayapredictabledivide
Slide 14: Capital Structure Optimization
©PegasystemsInc$198M~$600M$23MBUYBuyingBackStockPayingDividendPayingDownDebtCAPITALSTRUCTUREOPTIMIZATIONQ12023thruQ1202512
Slide 15: Buybacks, Dividend and Debt Paydown Q1 2023 thru Q1 2025
©PegasystemsIncQ12023thruQ12025$198M~$600M$23M13BUYBuyingBackStockPayingDividendPayingDownDebtCAPITALSTRUCTUREOPTIMIZATION~3%ofFreeCashFlow~27%ofFreeCashFlowDebtFreeasofQ12025
Slide 16: An Opportunity: Offset Dilution & Reduce Share Count
©PegasystemsInc14AnOpportunity:OffsetDilution&ReduceShareCountStock-BasedCompensationFreeCashFlow202220232024$0M$50M$100M$150M$200M$250M$300M$350M-$50M$122M$143M$201M$143M$338M($13M)202220232024
Slide 17: Keys to Driving Long-Term Value Creation
©PegasystemsInc15KeystoDrivingLong-TermValueCreationAdurableACVgrowthrate,operatingleverage,andastrategicapproachtocapitalallocationBuybacks|DilutionMarginShiftPega’sACVGrowthRateGrowthinFreeCashFlowPerShare
Slide 18: Key Takeaways
©PegasystemsInc16KeyTakeawaysPega’sGenAIBlueprintTMmomentum,coupledwithalargeandexpandingmarketandrobustACVgrowth,reinforcesthedurabilityofPega’sgrowthstory.ThecompletionofthesubscriptiontransitionanddisciplinedoperationalmanagementputPegaonastrongtrajectorytowardsustainedprofitability.Acontinuedfoc
Slide 19: Full-Year 2025 Update
©PegasystemsInc17Full-Year2025Update(inmillions,exceptpershareamounts)OriginalUpdated20252025Revenue(GAAPandNon-GAAP)1,600$1,700$NetIncome-GAAP149$224$Stock-basedcompensation147147LegalFees2525IncomeTaxes(32)(29)NetIncome-Non-GAAP289$367$Dilutedearningspershare-GAAP1.60$2.41$Non-GAAPadjustments1.501
Slide 20: Q&A
©PegasystemsInc18Q&A
Slide 21: To Ask a Question...
©PegasystemsInc19ToAskaQuestion...Emailpegainvestorrelations@pega.competer.welburn@pega.comonthePHONEintheROOMRaiseyourhand1Pleasestateyournameandthefirmyouarewith3Waitforthemicrophone2??
Slide 22: Innovation Hub Map
©PegasystemsIncHOURSOPEN20InnovationHubMapMONDAYJune211:00AM–6:00PMTUESDAYJune311:00AM–6:30PMPegaBlueprintTMWatchappsbuildthemselveswithnaturallanguageprompts.CustomerServiceSimulatorJumpintoamockcallcenterpoweredbyreal-timeautomation.1:1CustomerEngagementBlueprintTMExperienceAIthatrecommendsthenext
Slide 23: Definitions & Non-GAAP Reconciliations
©PegasystemsIncDefinitions&Non-GAAPReconciliations21
Slide 24: Definitions and Supplemental Information
©PegasystemsInc1.Ruleof40:Aperformancemetriccalculatedbyaddingtheannualcontractvalue(“ACV”)growthrateandthefreecashflowmargin.WealsoprovideatableofsupplementalinformationofotheritemsthataffectedourcashflowsandRuleof40achievementwithintheappendixofthispresentation.2.SupplementalInformation:a.Litigati
Slide 25: GAAP to Non-GAAP Margin Reconciliation
©PegasystemsIncYearEndedDecember31,Target2022202320242027/2028GrossMargin%-GAAP72%74%74%77%Stock-BasedCompensation2%2%2%3%GrossMargin%-Non-GAAP74%76%76%80%SalesandMarketing%-GAAP47%39%36%34%Stock-BasedCompensation(4)%(4)%(4)%(4)%SalesandMarketing%-Non-GAAP43%35%32%30%ResearchandDevelopment%-GAAP22%2
Slide 26: Free Cash Flow Reconciliation
©PegasystemsIncYearEndedDecember31,Target(inmillions,exceptpercentages)2022202320242028Cashflowsprovidedbyoperatingactivities$22$218$346$715Investmentinpropertyandequipment(35)(17)(8)(15)FreeCashFlow$(13)$201$338$700Margin,asapercentageofTotalRevenue:OperatingCashFlowMargin2%15%23%Investmentinproper
Slide 27: Rule of 40 Reconciliation
©PegasystemsIncYearEndedDecember31,(inmillions,exceptpercentages)202220232024GrowthGrowthGrowthACV(ConstantCurrency)$1,15315%$1,24411%$1,39511%MarginMarginMarginFreeCashFlow$(13)(1)%$20114%$33823%SupplementalInformationLitigationsettlement,netofrecoveries$ — $ — $32Restructuring — 295Legalfees421516
Slide 28: Reconciliation of ACV and ACV (Constant Currency)
©PegasystemsInc(inmillions)December31,2022December31,2023December31,2024ACV(AsReported)$1,126$1,255$1,372Impactofchangesinforeignexchangerates27(11)23ACV(ConstantCurrency)$1,153$1,244$1,395ReconciliationofACVandACV(ConstantCurrency)2631-Dec-2231-Dec-2331-Dec-24ACV(AsReported)112612551372impactofchan
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