PEGASYSTEMS INC Q1 FY2025 earnings call

• Pega GenAI Blueprint is driving significant growth, with over 1,000 new Blueprints created weekly. It enables rapid design of enterprise workflow applications, with new versions for government and CDH. • The company has a unique approach to agentic solutions, avoiding dependence on prompts like many competitors. • PegaWorld event in June will showcase innovations, with client demos from Rabobank, Unilever, and Verizon. • Achieved debt-free status by fully repaying convertible notes, and repurchased shares with an authorized $500 million share repurchase program.

Pega Cloud ACV grew 23% to $700 million in Q1 2025, representing approximately half of total ACV. Term license revenue showed seasonality, with Q1 having higher revenue. Customer Decision Hub (CDH) is a significant part of the business, complementing generative AI with statistical AI.

• Continued focus on growing Pega Cloud ACV, with a strategic target of 20% or higher. • Expect revenue and free cash flow to follow seasonality patterns, stronger in Q1 and Q4 2025. • Aim to increase free cash flow per share and return capital to shareholders through buybacks. • Acknowledged currency fluctuations may impact revenue in the next few quarters.

• Macro-economic uncertainties and volatility can impact customer spending and deal timelines. • Currency fluctuations can create noise in revenue line items. • Competitors flooding the market with undifferentiated agentic solutions pose a risk, as most lack Pega's unique workflow and governance approach.

Q: Impact of macro on closing rates and SAP's results?

A: Peter Welburn stated clients are still engaging in modernization, and varied results from vendors may be due to companies using macro as an excuse. Alan Trefler criticized other agents' dependence on prompts and lack of predictability.