Pegasystems Inc. Q1 FY2026 earnings call

Alan Treffler discusses the importance of using AI correctly in enterprise workflows, highlighting Blueprint's role in reimagining work, designing with AI augmented tooling, and enabling collaboration. Pega has received industry recognition, with customers like Proximus using Pega to modernize applications. Plans for PegaWorld in June and a strong product agenda with AI-driven guidance across development and support are mentioned.

Pega Cloud revenue in Q1 2026 increased from $151 million to $205 million year over year, and grew 30% on a trailing 12-month basis. PegaCloud ACV grew 29% year over year and 27% in constant currency to just over $900 million, representing about 56% of total ACV.

Pega expects a more typical seasonal business rhythm. Pega Cloud ACV growth is displacing term and maintenance ACV. Capital is allocated with a focus on long-term growth and returning cash to shareholders. AI usage is shifting to the ROI stage, aligning with Pega's outcome-based pricing model.

Risks include geopolitical disruptions like government shutdowns and wars affecting spending, potential delays in term license revenue timing due to accounting, and the changing cost dynamics of AI with reduced subsidized token usage.

Q: Ken, would you mind providing a bit more color on acceleration of ACV growth through the year?

A: Renewal cycles tipped toward the back end of 2026 and new logo focus with Blueprint contribute to back-end growth.

Q: Alan, can you talk a bit more about AI adoption disconnect?

A: Some over-rely on LLMs inappropriately, while Pega focuses on proper use of AI in workflows.

Q: Ken, how has geopolitical disruptions impacted business?

A: Government shutdowns caused term license revenue timing issues, and wars in EMEA may affect spending.