Start here if you're new
what it is
Pegasystems sells software that helps big companies automate customer service, sales, and workflow tasks.
how it gets paid
Last year Pegasystems made $1.7B in revenue. Pega Cloud SaaS was the main engine at $0.95B, or 56% of sales.
why it's growing
Revenue grew 16.6% last year on a $1.7B base. Pega Cloud SaaS grew ~27% (segment row). Gross margin stayed high at 74.4% — ignore any stray “226%” revenue line; it did not match this bridge.
what just happened
Latest Q4 revenue was about $381M (see “pay attention” copy on this page), with EPS $0.86 and gross margin 74.4% on the earnings callout — not $1.2B in one quarter.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
20/100 earnings predictability — expect surprises
34.7x trailing p/e — you're paying up for this one
0.2% dividend yield — cash in your pocket every quarter
24.0% return on capital — every dollar works hard here
xvary composite: 57/100 — below average
What they do
Pegasystems sells software that helps big companies automate customer service, sales, and workflow tasks.
85% of new annual contract value (new signed dollars) now comes from Pega Cloud SaaS. That means your next dollar is more recurring than one-time. Leaving is painful because the software sits inside customer service and workflow systems that are hard to rip out.
How they make money
$1.7B
annual revenue · their business grew +16.6% last year
Pega Cloud SaaS
$0.95B
+27.0%
Software licenses
$0.33B
+4.0%
Support and maintenance
$0.25B
+2.0%
Professional services
$0.17B
+8.0%
The products that matter
workflow and low-code platform
Pega Platform
$1.7B revenue engine
it's the core platform behind the full $1.7B business. If you want the simple version of the story, start here: this is the software stack customers buy when they need messy processes to stop being messy.
core
cloud subscription delivery
Pega Cloud SaaS
27% growth · 85%+ of new ACV
over 85% of new annual contract value now comes from this business, and management said it grew 27% from a year ago. That's the engine investors are underwriting. If this keeps compounding, the rest of the model starts looking less noisy.
transition engine
generative ai workflow builder
Blueprint
under 100 days to go live
management says Blueprint can turn a business idea into a working application and get some customers live in under 100 days. That's fast enough to matter. The catch is simple: faster demos only matter if they turn into recurring contracts.
ai wedge
Key numbers
$74
target price
That is 42% above $51.99. You are paying less than the analyst crowd expects.
85%
cloud bookings
Most new signed dollars now come from cloud. That makes future revenue look less lumpy.
24.0%
return on capital
For every dollar the business uses, it turns 24 cents into profit. That is a strong setup.
34.7x
earnings multiple
You are paying 34.7 times trailing earnings. That leaves less room for disappointment.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 20 / 100
- long-term debt $62M (1% of capital)
- net profit margin ~15.3% — implied net margin if ~$9B cap ÷ 34.7x trailing P/E matches $1.7B revenue (reconciles the multiple strip)
- return on equity ~15% — ROE at the same implied net income as that P/E check (confirm equity on the 10-K)
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in PEGA 3 years ago → it's now worth $29,520.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Pegasystems posted ~$381M in Q4 revenue, with earnings per share at $0.86 and gross margin at 74.4%.
Full-year revenue on the bridge is $1.7B (+16.6% vs. prior year). The old $1.2B / 226% lines contradicted that math. Cloud ACV mix (85%+, ~27% SaaS growth in the segment row) is the cleaner growth read.
~$381M
Q4 revenue
$0.86
eps (Q)
74.4%
gross margin
the number that mattered
~$381M Q4 revenue inside a $1.7B year is the coherent print — it shows scale without pretending a single quarter was $1.2B or up 226% against the annual +16.6% story.
-
pegasystems’ financial model is shifting as cloud becomes the dominant growth engine.
-
over 85% of new annual contract value now comes from the pega cloud SaaS business, which is growing 27% vs. prior year with margins approaching 80%.management cautioned investors that this mix shift will pressure term license and maintenance revenue in the coming quarters.
-
nonetheless, revenue predictability should improve long term.the company addressed federal exposure given the government shutdown, noting that pega’s projects tend to span years, not months, and that it modernization remains a bipartisan priority.
-
generative ai technology is transforming how the company interacts with clients and partners.the platform, dubbed blueprint, has become a ‘‘game changer,’’ replacing weeks of discovery with near-real-time demonstrations. the tool lets users describe a business idea in natural language and converts it into a working application, enabling many customers to go live in under 100 days.
-
the powered by blueprint program lets firms embed their own best practices, expanding pega’s reach.
source: company earnings report, 2026
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What could go wrong
Pegasystems is not facing generic software risk. The biggest danger is specific: the cloud transition slows before the old revenue model stops making the reported numbers look uneven.
med
cloud mix slips
Over 85% of new annual contract value now comes from cloud. If that percentage stops holding or starts falling, the main proof behind the transition story weakens fast.
You're left with a 34.7x trailing p/e and less evidence that the business is actually getting better.
med
license revenue air pocket
Management already said the cloud shift can pressure term license and maintenance revenue in coming quarters. Translation: the business can improve while the reported numbers still look awkward.
That tension helps explain the 20/100 predictability score, and it gives the market a reason to punish any miss.
med
federal timing pushes revenue around
Pegasystems said its government projects run for years, not months. That's useful context, but appropriations delays still move contract timing and revenue recognition around.
The risk is less that demand disappears and more that your wait gets longer than you wanted.
med
Blueprint stays a demo story
Blueprint sounds compelling, and management says some customers can go live in under 100 days. Faster demos are helpful. They are not the same thing as durable contracts.
If the AI pitch stays mostly narrative, investors are still paying up for a transition story that has not fully proven itself.
Over 85% of new annual contract value is already tied to cloud, so the biggest risk sits inside the very engine investors are counting on to make PEGA look more predictable from here.
source: institutional data · regulatory filings · risk analysis
Pay attention to
trend
Pega Cloud SaaS growth
27% growth from a year ago is the cleanest evidence that the transition still has momentum. If that number fades materially, the story gets harder to defend.
metric
new ACV cloud mix
Annual contract value means the value of signed recurring contracts. With 85%+ of new ACV already in cloud, you want that mix holding or rising, not slipping backward.
calendar
reported revenue cadence
Q4 revenue was $381M and full-year revenue was $1.7B. Watch the next few quarters for how cleanly cloud bookings start turning into reported revenue you can actually model.
risk
federal project timing
Management framed federal exposure as timing risk, not demand collapse. That still matters if contract starts slip because of budget cycles.
Analyst rankings
short-term outlook
average
Momentum score 3 means the stock is acting roughly like the broader market right now. In human-speak, the chart is fine, not screaming.
risk profile
average
Stability score 3 means neither especially safe nor especially wild by market standards.
chart momentum
top 20%
Technical score 2 puts it in the market's better bucket. The stock action looks better than the predictability score does.
earnings predictability
20 / 100
Low predictability means quarterly results can look messy even if the long-term cloud transition is still intact. That's the catch with PEGA.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 238 buyers vs. 192 sellers in 3q2025. total institutional holdings: 97.7M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$40
$107
$52
current price
$74
target midpoint · +42% from current · 3-5yr high: $85 (+65% · 13% ann'l return)
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