Blueprint AI Drives Pega Cloud Momentum in Q1 2026
WALTHAM, Mass.--( BUSINESS WIRE)-- Pegasystems Inc. (NASDAQ: PEGA), the Enterprise Transformation Company™, released its financial results for the first quarter of 2026.
“We continue to be differentiated in the market and of great value as enterprises recognize the need for a sustainable AI architecture,” said Alan Trefler, founder and CEO, Pegasystems.
“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.”
Financial and performance metrics (1)
Reconciliation of ACV and Constant Currency ACV
(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
%
Note: Constant currency ACV is calculated by applying the March 31, 2025 foreign exchange rates to current period shown.
Cash Flow Growth
(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
)%
Quarterly conference call
A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Wednesday, April 22, 2026.
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.
Discussion of non-GAAP financial measures
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.
Forward-looking statements
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.
Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:
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.
Any forward-looking statements in this press release represent our views as of April 21, 2026.
About Pegasystems
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.
All trademarks are the property of their respective owners.
(1) Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(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
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(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
PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(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
PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES
(in thousands, except percentages and per share amounts)
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
)%
Our non-GAAP financial measures reflect the following adjustments:
(1) Stock-based compensation:
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
)
(2) Effective income tax rates:
Three Months Ended
March 31,
2026
2025
GAAP
17
%
32
%
non-GAAP
22
%
22
%
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.
PEGASYSTEMS INC.
RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS
(in thousands, except percentages)
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.
(2)
The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.
PEGASYSTEMS INC.
ANNUAL CONTRACT VALUE
(in thousands, except percentages)
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
%
PEGASYSTEMS INC.
BACKLOG
(in thousands, except percentages)
Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts:
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
%
As of March 31, 2025:
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
%
PEGASYSTEMS INC.
RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions, except percentages)
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
%
Note: Constant currency backlog is calculated by applying the March 31, 2025 foreign exchange rates to current period shown.