While many companies are reporting lackluster earnings and withdrawing guidance, Pegasystems (PEGA) goes: “Hold my beer.”
The enterprise software firm, which specializes in AI decision-making and workflow automation, reported a blowout first quarter, highlighting how its GenAI strategy is translating into rapid growth.
Revenue surged 44% year over year to $475.6 million, including a staggering 195% jump in subscription license sales. Net income came in at $85.4 million, a turnaround from a $12.1 million loss a year earlier.
Meanwhile, annual contract value climbed 13% to $1.445 billion and Pega Cloud contract value rose 23% to $701 million.
Operating cash flow totaled $204 million, and free cash flow reached $202 million, both up 13% year over year.
The company also said its backlog expanded 21%, pointing to a strong pipeline in the months ahead.
Shares of PEGA soared 28.8% on Wednesday following the results, though the stock slightly pulled back yesterday. It’s up 49.3% over the past year.
Betting on transformation
Executives credited the company’s growth to rising demand for its Pega GenAI platform, which blends large language models with automation tools designed to streamline complex workflows.
"When you have times of uncertainty, clients have to rethink their priorities and initiatives," said COO and CFO Ken Stillwell on the earnings call.
"Legacy transformations and digital transformations are at the top of everyone's list."
Stillwell said the shift in enterprise priorities plays directly to Pega’s strengths and that customers aren’t pulling back on mission-critical upgrades.
“We have not seen that level of anxiety around the solutions we're providing,” he added.
Stillwell also dismissed concerns that federal spending cuts by Elon Musk’s Department of Government Efficiency (DOGE) would affect the company’s public sector bottom line.
“One of the primary initiatives around DOGE is to streamline and modernize lots of the technology that the federal government has that is very old. That fits squarely into what we do,” he said.
“This is a time of opportunity for us.”
Cutting through AI noise
CEO Alan Trefler said the key to maintaining momentum lies in helping customers navigate an increasingly crowded and hype-filled AI landscape.
"Customers have been subject to AI hype for a couple of years now," Trefler said. "The level of skepticism is pretty high in the customer base, which is a pretty sophisticated customer base."
Pega’s edge, he added, lies in combining AI with real operational change. “A mix of language models and workflows is the ideal combination,” he said.
Moving forward, Trefler remains optimistic about the agentic revolution.
"There is as much opportunity as risk, but I see more of the former for Pega. I really love the runway of where this is going to go in the agentic world,” he said.
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