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Pegasystems (NASDAQ: PEGA) Q1 2026 cloud ACV jumps 29%

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Pegasystems Inc. reported softer results for Q1 2026, with total revenue of $429.973 million, down 10% from $475.633 million a year earlier. GAAP net income fell to $32.764 million from $85.422 million, and GAAP diluted EPS declined to $0.18 from $0.46.

Despite lower revenue and earnings, the company’s subscription engine remains strong. Total annual contract value (ACV) increased 12% year over year to $1.622 billion, led by Pega Cloud ACV growth of 29%. Cash flow from operations reached $212.251 million and free cash flow was $206.525 million, both above $200 million.

Positive

  • Pega Cloud ACV strength: Pega Cloud annual contract value grew 29% year over year to $906.652M, demonstrating robust demand for the company’s cloud-based offerings.
  • Solid cash generation: Cash provided by operating activities reached $212.251M and free cash flow was $206.525M in Q1 2026, both exceeding $200M and slightly above the prior-year quarter.

Negative

  • Revenue and profit decline: Total revenue fell 10% year over year to $429.973M, while GAAP net income dropped 62% to $32.764M and non-GAAP net income declined 41% to $83.068M.
  • EPS under pressure: GAAP diluted EPS decreased from $0.46 to $0.18 and non-GAAP diluted EPS fell from $0.76 to $0.46, reflecting significantly lower profitability versus Q1 2025.

Insights

Q1 shows weaker revenue and profit, offset by strong cloud ACV and cash flow.

Pegasystems delivered a mixed Q1 2026. Total revenue declined 10% year over year to $429.973M, and GAAP net income dropped 62% to $32.764M. Non-GAAP net income fell 41% to $83.068M, highlighting meaningful margin pressure versus last year.

Underneath, recurring metrics are healthier. Overall ACV grew 12% to $1.622B, with Pega Cloud ACV up 29%, signaling strong demand for cloud offerings even as subscription license revenue fell 49%. Backlog reached $2.011B, up 16%, supporting forward visibility.

Cash generation remains a bright spot. Cash provided by operating activities was $212.251M and free cash flow was $206.525M, both slightly above prior year. The investment case now balances solid cloud growth and cash flow against near-term revenue and earnings declines and elevated stock-based compensation and legal costs disclosed in non-GAAP reconciliations.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Total revenue $429.973M Three months ended March 31, 2026; down 10% year over year
GAAP net income $32.764M Q1 2026 vs $85.422M in Q1 2025 (62% decline)
GAAP diluted EPS $0.18/share Q1 2026; previously $0.46/share in Q1 2025
Non-GAAP net income $83.068M Three months ended March 31, 2026; down 41% year over year
Total ACV $1.622B As of March 31, 2026; 12% year-over-year increase
Pega Cloud ACV $906.652M As of March 31, 2026; 29% year-over-year growth
Free cash flow $206.525M Q1 2026; slightly above $202.348M in Q1 2025
Backlog (GAAP) $2.011B Remaining performance obligations as of March 31, 2026; up 16% YoY
Annual contract value (ACV) financial
"Annual contract value (“ACV”) - ACV represents the annualized value of our active contracts as of the measurement date."
Annual Contract Value (ACV) shows how much money a company expects to earn in one year from a single customer’s contract. It helps businesses understand the size and value of their customer relationships, much like knowing how much a subscription or membership costs each year. This metric is important for measuring growth and planning future sales.
free cash flow financial
"Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment."
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
constant currency financial
"Constant currency ACV | $ | 1,445 | | $ | 1,598 | | 11 | %"
Constant currency is a way of measuring financial results that removes the effects of changes in currency exchange rates. It allows for a clearer comparison of a company's performance over time by showing what the numbers would look like if exchange rates had stayed the same. This helps investors understand whether growth comes from actual business improvements or just currency fluctuations.
non-GAAP financial
"Net income - non-GAAP | | | | | | | $ | 83,068 | | | $ | 140,542"
Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.
Remaining performance obligations financial
"Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
Revenue $429.973M -10% YoY
GAAP net income $32.764M -62% YoY
Non-GAAP net income $83.068M -41% YoY
GAAP diluted EPS $0.18 -61% YoY
Non-GAAP diluted EPS $0.46 -39% YoY
Understanding 8-K Material Events →
false000101385700010138572026-04-212026-04-21

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): April 21, 2026
____________________
PEGASYSTEMS INC.
(Exact name of Registrant as specified in its charter)
_________________________________
Massachusetts
1-11859
04-2787865
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
225 Wyman Street, Waltham, MA 02451
(Address of principal executive offices, including zip code)

(617) 374-9600
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☒
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $.01 par value per sharePEGANASDAQ Global Select Market
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).                         
                                                Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 21, 2026, Pegasystems Inc. issued a press release announcing its financial results for the first quarter of 2026. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.
The information in this Item 2.02 and the Exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No.Description
99.1
Press release issued by Pegasystems Inc.
104
Cover Page Interactive Data File (formatted as Inline XBRL)



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:April 21, 2026By:/s/ KENNETH STILLWELL
Kenneth Stillwell
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)


EXHIBIT 99.1
q42019pegalogo.jpg
Blueprint AI Drives Pega Cloud Momentum in Q1 2026
•Pega Cloud Annual Contract Value (ACV) increases 29% year over year (27% in constant currency)
•ACV grows 12% year over year (11% in constant currency)
•Cash flow from operations and free cash flow both exceed $200M

WALTHAM, Mass. — April 21, 2026 — Pegasystems Inc. (NASDAQ: PEGA), the Enterprise Transformation Company™, released its financial results for the first quarter of 2026.
“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)
chart-36436527051f4715a9b.jpg
Reconciliation of ACV and Constant Currency ACV
(in millions, except percentages)March 31, 2025March 31, 2026
1-Year Change
ACV$1,445$1,62212 %
Impact of changes in foreign exchange rates— (24)
Constant currency ACV
$1,445$1,59811 %
Note: Constant currency ACV is calculated by applying the March 31, 2025 foreign exchange rates to current period shown.

(1) Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures.
1
EXHIBIT 99.1
(continued)
Cash Flow Growth
chart-d011e01220414df1851.jpgchart-f762781706a84a689b1.jpg
(Dollars in thousands,
except per share amounts)		Three Months Ended
March 31,
20262025Change
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
20262025
Pega Cloud$205,031 48 %$151,123 32 %$53,908 36 %
Maintenance75,317 17 %76,368 16 %(1,051)(1)%
Subscription services280,348 65 %227,491 48 %52,857 23 %
Subscription license94,852 22 %187,721 39 %(92,869)(49)%
Subscription375,200 87 %415,212 87 %(40,012)(10)%
Consulting54,773 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.
2

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:
•our future financial performance and business plans;
•the adequacy of our liquidity and capital resources;
•the successful execution of investments in artificial intelligence;
•the timing of revenue recognition;
•variation in demand for our products and services;
•reliance on key personnel;
•potential legal and financial liabilities, as well as 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. and associated legal proceedings;
•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, 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.
3

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.
Press contact:
Lisa Pintchman
VP, Corporate Communications
lisapintchman.rogers@pega.com
617-866-6022

Investor contact:
Peter Welburn
VP, Corporate Development & Investor Relations
PegaInvestorRelations@pega.com
617-498-8968
All trademarks are the property of their respective owners.
4


PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
March 31,
20262025
Revenue
Subscription services$280,348 $227,491 
Subscription license94,852 187,721 
Consulting54,773 60,421 
Total revenue429,973 475,633 
Cost of revenue
Subscription services49,449 38,128 
Subscription license471 388 
Consulting56,834 63,934 
Total cost of revenue106,754 102,450 
Gross profit323,219 373,183 
Operating expenses
Selling and marketing155,603 138,069 
Research and development82,047 74,286 
General and administrative48,573 33,828 
Restructuring(153)11 
Total operating expenses286,070 246,194 
Income from operations37,149 126,989 
Foreign currency transaction gain (loss)1,850 (5,325)
Interest income2,954 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 taxes39,705 126,310 
Provision for income taxes6,941 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
Basic168,817 171,804 
Diluted178,841 188,826 
5

PEGASYSTEMS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, 2026December 31, 2025
Assets
Current assets:
Cash and cash equivalents$269,962 $212,447 
Marketable securities203,992 213,352 
Total cash, cash equivalents, and marketable securities473,954 425,799 
Accounts receivable, net173,856 264,713 
Unbilled receivables, net142,057 166,478 
Other current assets114,010 121,305 
Total current assets903,877 978,295 
Long-term unbilled receivables, net87,459 102,544 
Goodwill81,380 81,506 
Long-term deferred income taxes
174,251 175,472 
Other long-term assets304,031 294,027 
Total assets$1,550,998 $1,631,844 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$14,206 $12,924 
Accrued expenses79,464 44,847 
Accrued compensation and related expenses67,222 148,797 
Deferred revenue557,449 509,275 
Other current liabilities25,061 21,935 
Total current liabilities743,402 737,778 
Long-term operating lease liabilities57,075 60,825 
Other long-term liabilities44,606 45,860 
Total liabilities845,083 844,463 
Total stockholders’ equity705,915 787,381 
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,
20262025
Net income$32,764 $85,422 
Adjustments to reconcile net income to cash provided by operating activities
Non-cash items68,681 70,409 
Change in operating assets and liabilities, net110,806 48,397 
Cash provided by operating activities212,251 204,228 
Cash provided by investing activities2,760 261,895 
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 cash57,950 (106,293)
Cash, cash equivalents, and restricted cash, beginning of period216,360 341,529 
Cash, cash equivalents, and restricted cash, end of period$274,310 $235,236 
6

PEGASYSTEMS INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES
(in thousands, except percentages and per share amounts)
Three Months Ended
March 31,
20262025Change
Net income - GAAP$32,764 $85,422 (62)%
Stock-based compensation (1)
45,815 41,425 
Legal fees19,964 6,544 
Amortization of intangible assets783 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 adjustments0.28 0.30 
Diluted earnings per share - non-GAAP$0.46 $0.76 (39)%
Diluted weighted-average number of common shares outstanding - GAAP178,841 188,826 (5)%
Capped call transactions— (4,850)
Diluted weighted-average number of common shares outstanding - non-GAAP178,841 183,976 (3)%

Our non-GAAP financial measures reflect the following adjustments:
•Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance, excluding stock-based compensation.
•Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
•Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
•Restructuring: We have excluded restructuring from our non-GAAP financial measures. Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as these amounts are not representative of our core business operations and ongoing operational performance.
•Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods.
•Interest on convertible senior notes: In February 2020, we issued convertible senior notes (the “Notes”), due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity. We believe that excluding the amortization of issuance costs provides a useful comparison of our operational performance in different periods.
•Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
7

•Other: We have excluded gains and losses from our venture investments. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance.
•Diluted weighted-average number of common shares outstanding:
•Capped call transactions: In periods of GAAP net income, the shares calculated by applying the if-converted method related to our Notes are included in the diluted weighted-average shares outstanding if they are dilutive. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe that including the expected impact of the capped call transactions in our non-GAAP financial measures provides a useful comparison of our operational performance in different periods.
(1) Stock-based compensation:

Three Months Ended
March 31,
(Dollars in thousands)
20262025
Cost of revenue$7,876 $7,823 
Selling and marketing18,454 15,781 
Research and development10,019 8,385 
General and administrative9,466 9,436 
$45,815 $41,425 
Income tax benefit$(9,164)$(587)
(2) Effective income tax rates:
Three Months Ended
March 31,
20262025
GAAP17 %32 %
non-GAAP22 %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.
8

PEGASYSTEMS INC.
RECONCILIATION OF FREE CASH FLOW (1) AND OTHER METRICS
(in thousands, except percentages)

Three Months Ended
March 31,
Change
20262025
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 
Restructuring6,711 1,184 
Interest paid on convertible senior notes— 1,754 
Income taxes, net of refunds5,233 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.
•Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
•Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
•Interest paid on convertible senior notes: In February 2020, we issued the Notes, due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity.
•Income taxes, net of refunds: Direct income taxes paid net of refunds received.
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, 2026March 31, 2025Change
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 %
9

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 servicesSubscription licenseConsultingTotal
Pega CloudMaintenance
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 Total75 %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 servicesSubscription licenseConsultingTotal
Pega CloudMaintenance
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 Total72 %22 %3 %3 %100 %

PEGASYSTEMS INC.
RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG
(in millions, except percentages)
March 31, 2025March 31, 20261 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.

10

Source: View Original Filing on SEC EDGAR

FAQ

How did Pegasystems (PEGA) revenue perform in Q1 2026?

Pegasystems’ Q1 2026 revenue was $429.973 million, down 10% from $475.633 million in Q1 2025. The decline was driven by lower subscription license and consulting revenue, partly offset by growth in Pega Cloud and subscription services.

What were Pegasystems (PEGA) Q1 2026 earnings and EPS?

Pegasystems reported Q1 2026 GAAP net income of $32.764 million and GAAP diluted EPS of $0.18, down from $85.422 million and $0.46 a year earlier. Non-GAAP net income was $83.068 million with non-GAAP diluted EPS of $0.46.

How fast did Pegasystems (PEGA) ACV grow in Q1 2026?

Total annual contract value (ACV) at Pegasystems reached $1.622 billion as of March 31, 2026, up 12% from $1.445 billion a year earlier. Pega Cloud ACV was particularly strong, rising 29% year over year to $906.652 million.

What was Pegasystems (PEGA) free cash flow in Q1 2026?

Pegasystems generated Q1 2026 free cash flow of $206.525 million, calculated as $212.251 million of cash provided by operating activities minus $5.726 million of property and equipment investments. This was a modest increase over $202.348 million in free cash flow a year earlier.

How did Pegasystems’ (PEGA) backlog change by March 31, 2026?

Pegasystems’ backlog, or remaining performance obligations, was $2.011 billion as of March 31, 2026, up 16% from $1.728 billion a year earlier. Constant currency backlog was $1.973 billion, reflecting 14% year-over-year growth after adjusting for foreign exchange effects.

What portion of Pegasystems (PEGA) revenue came from subscriptions in Q1 2026?

In Q1 2026, Pegasystems generated $375.200 million from subscription revenue, representing 87% of total revenue. Subscription services contributed $280.348 million and subscription license $94.852 million, underscoring the company’s shift toward recurring subscription-based business.

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