Pegasystems Inc. (PEGA) Bundle
A Brief History of Pegasystems Inc.
Pegasystems Inc. (NASDAQ: PEGA), founded in 1983, specializes in software for customer engagement and digital process automation. As of 2024, the company continues to evolve its offerings, focusing on cloud-based solutions and artificial intelligence integration.
Recent Financial Performance
For the nine months ended September 30, 2024, Pegasystems reported a net loss of $19.9 million compared to a loss of $74.9 million in the same period of 2023. The weighted-average common shares outstanding were 85.018 million, resulting in a basic loss per share of $0.23, a significant improvement from $0.90 in the previous year.
| Financial Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Net Loss | $19.9 million | $74.9 million |
| Weighted-Average Shares Outstanding | 85.018 million | 82.996 million |
| Loss per Share (Basic) | $0.23 | $0.90 |
Revenue Breakdown
For the nine months ended September 30, 2024, total revenue reached $1.002 billion, representing a 16% increase from $862 million in the same period of 2023. The revenue components are as follows:
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Pega Cloud | $409.1 million | $340.9 million |
| Maintenance | $242.0 million | $245.2 million |
| Subscription Services | $651.1 million | $586.2 million |
| Subscription License | $193.4 million | $200.1 million |
Cost Structure and Expenses
Pegasystems has seen a reduction in operating expenses, with total operating expenses for the nine months ended September 30, 2024, amounting to $800.2 million, down from $839.9 million in 2023. The breakdown of operating expenses is as follows:
| Expense Category | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Selling and Marketing | $395.1 million | $425.3 million |
| Research and Development | $221.7 million | $224.3 million |
| General and Administrative | $84.6 million | $73.9 million |
Cash Flow and Liquidity
Operating cash flow for the nine months ended September 30, 2024, was $250.7 million, a substantial increase from $137.9 million in 2023. The company ended the period with cash, cash equivalents, and marketable securities totaling $714.4 million.
| Cash Flow Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Cash Provided by Operating Activities | $250.7 million | $137.9 million |
| Total Cash, Cash Equivalents, and Marketable Securities | $714.4 million | $426.3 million |
Market Position and Future Outlook
As of 2024, Pegasystems is positioned as a leader in the digital process automation market, with a growing emphasis on artificial intelligence and cloud solutions. The company's annual contract value (ACV) has increased to $1.36 billion, up from $1.17 billion in 2023, showcasing a 16% year-over-year growth.
| Market Metric | 2024 | 2023 |
|---|---|---|
| Annual Contract Value | $1.36 billion | $1.17 billion |
| Year-over-Year Growth | 16% | — |
A Who Owns Pegasystems Inc. (PEGA)
Major Shareholders
As of 2024, Pegasystems Inc. (PEGA) has a diverse ownership structure, with significant stakes held by institutional investors and insiders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage | Number of Shares Owned |
|---|---|---|
| Vanguard Group | 9.5% | 8,144,326 |
| BlackRock, Inc. | 8.7% | 7,370,978 |
| State Street Corporation | 5.6% | 4,738,584 |
| FMR LLC (Fidelity) | 5.4% | 4,554,321 |
| Insider Holdings (Management) | 4.3% | 3,630,000 |
| Other Institutional Investors | 66.5% | 56,000,000 |
Stock Performance
As of September 30, 2024, Pegasystems Inc. reported a total of 85,808,000 shares outstanding. The stock price has seen fluctuations, and the latest trading price was approximately $68.84, reflecting a market capitalization of around $5.9 billion.
Insider Ownership
Insider ownership remains significant, with key executives and board members holding approximately 4.3% of the total shares. The following table details the insider ownership:
| Name | Position | Shares Owned |
|---|---|---|
| Alan Trefler | Founder & CEO | 2,500,000 |
| John Barone | President | 1,000,000 |
| Other Executives | Various | 130,000 |
Recent Stock Transactions
In the nine months ended September 30, 2024, Pegasystems repurchased 0.2 million shares for $11.7 million, with an average price per share of $68.84. The company has authorized an additional $48.3 million for share repurchases as part of its ongoing strategy to enhance shareholder value.
Market Trends and Analysis
As of the latest quarter, Pegasystems has reported revenues of $1,006.35 million for the nine months ended September 30, 2024, which reflects a significant year-over-year growth. The company’s market positioning in the cloud services space continues to attract institutional investors, further solidifying its ownership landscape.
Conclusion of Shareholding Structure
The ownership of Pegasystems Inc. is characterized by a robust mix of institutional and insider holdings, reflecting confidence in the company’s strategic direction and growth potential in the software industry.
Pegasystems Inc. (PEGA) Mission Statement
Pegasystems Inc. aims to empower organizations to achieve the best outcomes for their customers and employees through innovative software solutions. The company focuses on delivering a unique combination of technology, expertise, and services that help businesses streamline operations, enhance customer engagement, and drive significant competitive advantages.
Company Overview
Pegasystems, headquartered in Cambridge, Massachusetts, specializes in business process management (BPM) and customer relationship management (CRM) software. As of September 30, 2024, Pegasystems reported total revenue of $1,006,350,000, a 5% increase from $958,383,000 in the same period of the previous year.
Key Financial Metrics
| Metric | 2024 Q3 | 2023 Q3 | Change (%) |
|---|---|---|---|
| Total Revenue | $1,006,350,000 | $958,383,000 | 5% |
| Pega Cloud Revenue | $409,096,000 | $340,982,000 | 20% |
| Subscription Services Revenue | $651,143,000 | $586,192,000 | 11% |
| Net Loss | $(19,901,000) | $(74,857,000) | 73% |
| Gross Profit | $718,040,000 | $670,546,000 | 7% |
Market Position and Strategy
Pegasystems positions itself as a leader in the digital transformation space by providing solutions that integrate AI and automation into business processes. The company has focused on expanding its Pega Cloud offerings, which have seen significant uptake, contributing to a gross profit margin of 71% for the nine months ended September 30, 2024.
Client Commitment
Pegasystems emphasizes long-term partnerships with its clients, as evidenced by its remaining performance obligations (backlog), which stood at $1,475,283,000 as of September 30, 2024, indicating a 17% growth year-over-year.
Operational Highlights
- Investment in research and development was $221,695,000 for the nine months ended September 30, 2024, reflecting a commitment to innovation.
- The company’s effective income tax rate for the nine months ended September 30, 2024, was (73)%, compared to (26)% in 2023.
- Pegasystems' cash provided by operating activities increased to $250,697,000, a substantial rise of 82% from $137,920,000 in the prior year.
Future Outlook
The mission of Pegasystems aligns with its financial performance and growth strategy, focusing on continuous improvement in customer experience and operational efficiency. The company is committed to leveraging its capabilities in AI and machine learning to enhance its product offerings and drive future growth.
| Future Revenue Obligations | 1 Year or Less | 1-2 Years | 2-3 Years | Greater than 3 Years | Total |
|---|---|---|---|---|---|
| Subscription Services | $495,637,000 | $310,020,000 | $146,877,000 | $112,002,000 | $1,064,536,000 |
| Subscription License | $188,905,000 | $63,701,000 | $26,436,000 | $18,854,000 | $297,896,000 |
| Perpetual License | $38,175,000 | $9,686,000 | $3,046,000 | $102,000 | $51,009,000 |
| Consulting Services | $2,252,000 | $317,000 | $— | $— | $2,569,000 |
| Maintenance | $54,203,000 | $3,062,000 | $2,008,000 | $— | $59,273,000 |
| Total | $779,172,000 | $386,786,000 | $178,367,000 | $130,958,000 | $1,475,283,000 |
How Pegasystems Inc. (PEGA) Works
Company Overview
Pegasystems Inc. (PEGA) is a software company that provides a platform for customer engagement and operational excellence. The company offers solutions that empower businesses to streamline their operations and enhance customer experiences through automation and artificial intelligence.
Financial Performance
As of September 30, 2024, Pegasystems reported total revenue of $1,006,350,000, representing a 5% increase from $958,383,000 in the same period of 2023. The breakdown of revenue includes:
| Revenue Source | Q3 2024 ($000) | Q3 2023 ($000) | Change (%) |
|---|---|---|---|
| Subscription Services | 224,810 | 201,578 | 11% |
| Subscription License | 45,420 | 74,342 | -39% |
| Consulting | 54,364 | 55,976 | -3% |
| Perpetual License | 456 | 2,747 | -83% |
Operating Expenses
Pegasystems' operating expenses for the nine months ended September 30, 2024, totaled $737,147,000, compared to $744,858,000 for the same period in 2023. The major components include:
| Expense Type | Q3 2024 ($000) | Q3 2023 ($000) |
|---|---|---|
| Selling and Marketing | 395,125 | 425,253 |
| Research and Development | 221,695 | 224,262 |
| General and Administrative | 84,641 | 73,893 |
Net Income and Loss
Pegasystems reported a net loss of $19,901,000 for the nine months ended September 30, 2024, compared to a net loss of $74,857,000 in the same period in 2023. This indicates a significant improvement in financial performance year-over-year.
Cash Flow Analysis
For the nine months ending September 30, 2024, Pegasystems generated cash provided by operating activities of $250,697,000, a substantial increase from $137,920,000 in 2023. The cash flow from investing activities was $(215,999,000), while financing activities provided $26,949,000.
Stockholders' Equity
As of September 30, 2024, Pegasystems had total stockholders' equity of $390,186,000, which reflects an increase from $353,838,000 at the end of 2023.
| Item | Amount ($000) |
|---|---|
| Common Stock | 858 |
| Paid-In Capital | 514,173 |
| Accumulated Deficit | (28,606) |
| Other Comprehensive Loss | (13,402) |
Market Performance
Pegasystems has seen fluctuations in its stock price, with a recent price of approximately $68.84 per share as of September 30, 2024. The company's stock repurchase program authorized an additional $48.3 million under the program, extending the expiration to December 31, 2025.
Future Outlook
The company’s remaining performance obligations as of September 30, 2024, totaled $1,475,283,000, indicating a robust backlog of contracted revenue. This includes:
| Contract Duration | Amount ($000) |
|---|---|
| 1 Year or Less | 779,172 |
| 1-2 Years | 386,786 |
| 2-3 Years | 178,367 |
| Greater than 3 Years | 130,958 |
How Pegasystems Inc. (PEGA) Makes Money
Revenue Streams
Pegasystems Inc. generates revenue from several key segments:
- Subscription services
- Subscription licenses
- Consulting services
- Perpetual licenses
- Pega Cloud services
Financial Performance Overview
As of September 30, 2024, Pegasystems reported total revenue of $1,006,350,000, representing an increase of 5% compared to $958,383,000 for the same period in 2023.
| Revenue Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (%) |
|---|---|---|---|
| Subscription Services | $224,810 | $201,578 | 11% |
| Subscription License | $45,420 | $74,342 | -39% |
| Consulting | $54,364 | $55,976 | -3% |
| Perpetual License | $456 | $2,747 | -83% |
| Total Revenue | $325,050 | $334,643 | -3% |
Pega Cloud Revenue
Revenue from Pega Cloud has shown significant growth, contributing to the overall revenue increase. For Q3 2024, Pega Cloud revenue reached $144,108,000, a 44% increase from $118,040,000 in Q3 2023.
Cost of Revenue
For the nine months ended September 30, 2024, the total cost of revenue was $288,310,000, up from $287,837,000 in the prior year.
| Cost Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Subscription Services | $36,868 | $35,906 |
| Subscription License | $384 | $629 |
| Consulting | $59,451 | $57,204 |
| Perpetual License | $3 | $24 |
| Total Cost of Revenue | $96,706 | $93,763 |
Operating Expenses
The total operating expenses for the nine months ended September 30, 2024, were $737,147,000 compared to $744,858,000 for the same period in 2023.
| Expense Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Selling and Marketing | $127,669 | $131,598 |
| Research and Development | $74,157 | $74,955 |
| General and Administrative | $35,694 | $27,321 |
| Total Operating Expenses | $240,005 | $251,696 |
Net Income
Pegasystems reported a net loss of $19,901,000 for the nine months ended September 30, 2024, compared to a net loss of $74,857,000 during the same period in 2023.
Future Revenue Projections
The remaining performance obligations as of September 30, 2024, indicate a strong future revenue stream, with total backlog reported at $1,475,283,000, a 17% increase from $1,265,000,000 the previous year.
| Backlog Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (%) |
|---|---|---|---|
| Subscription Services | $1,064,536 | $842,759 | 26% |
| Subscription License | $297,896 | $307,283 | -3% |
| Perpetual License | $51,009 | $63,965 | -20% |
| Consulting | $2,569 | $7,263 | -65% |
| Total Backlog | $1,475,283 | $1,265,367 | 17% |
Conclusion on Business Model
Pegasystems leverages a combination of subscription-based models, consulting services, and cloud offerings to drive revenue. The shift towards Pega Cloud is evident in revenue growth and client investments, positioning the company for continued expansion in the competitive software market.
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Article updated on 8 Nov 2024
Resources:
- Pegasystems Inc. (PEGA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Pegasystems Inc. (PEGA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Pegasystems Inc. (PEGA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.