Pega's Focus on Client Success Drives Strong Results in Q1 2023

• Annual contract value (ACV) grows 15% year over year (constant currency)
• Focus on profitable growth leads to significant cash generation
• Pega Cloud gross margin reaches 72%

CAMBRIDGE, Mass. — April 26, 2023 — Pegasystems Inc., the low-code platform provider empowering the world’s leading enterprises to Build for Change®, released its financial results for the first quarter of 2023.

“I’m pleased with our strong start to the year and progress against our 2023 goals,” said Alan Trefler, Pega founder and CEO. “Our commitment to deep client engagement is perfectly suited to our clients and the times, and we continue to see tremendous opportunity for growth.”

“Our team delivered well on our three most important financial metrics of ACV growth, free cash flow, and backlog,” said Ken Stillwell, Pega COO and CFO. “There’s great excitement throughout our team on our journey to becoming a Rule of 40 company.”

Financial and performance metrics ⁽¹⁾

¹ See the schedules at the end of this release for additional information, including a reconciliation of our GAAP to non-GAAP measures.

Note: Constant currency ACV and Backlog are calculated by applying the Q1 2022 foreign exchange rates to all periods shown.

View full press release with financials

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EDT on Wednesday, April 26, 2023. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-877-407-9039 (domestic), 1-201-689-8470 (international), or via webcast (https://viavid.webcasts.com/starthere.jsp?ei=1606804&tp_key=1167d38249) 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

We believe that non-GAAP financial measures help investors understand our core operating results and prospects, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. The supplementary non-GAAP financial measures are not meant to be superior to or a substitute for financial measures prepared under U.S. GAAP.

Reconciliations of our non-GAAP and GAAP measures are at the end of this release.

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.

Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, projects, forecasts, guidance, likely, and usually, or variations of such words and other similar expressions identify forward-looking statements, which 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:

• our future financial performance and business plans;
• the adequacy of our liquidity and capital resources;
• the continued payment of our quarterly dividends;
• the timing of revenue recognition;
• management of our transition to a more subscription-based business model;
• variation in demand for our products and services, including among clients in the public sector;
• reliance on key personnel;
• global economic and political conditions and uncertainty, including impacts from public health emergencies and the war in Ukraine;
• reliance on third-party service providers, including hosting providers;
• compliance with our debt obligations and covenants;
• the potential impact of our convertible senior notes and Capped Call Transactions;
• foreign currency exchange rates;
• the potential legal and financial liabilities and damage to our reputation due to cyber-attacks;
• security breaches and security flaws;
• our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims, and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us;
• our ongoing litigation with Appian Corp.;
• our client retention rate; and
• management of our growth.

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, 2022, and other filings we make with the U.S. Securities and Exchange Commission (“SEC”).

Except as required by applicable law, we do not undertake and expressly disclaim any obligation to update or revise these forward-looking statements publicly, whether due to new information, future events, or otherwise.

The forward-looking statements in this press release represent our views as of April 26, 2023.