Innovation Accelerates Pega’s Q4 2025 Growth

WALTHAM, Mass.--(BUSINESS WIRE)--Feb 10, 2026--

Pegasystems Inc. (NASDAQ: PEGA), the Enterprise Transformation Company™, released its financial results for the fourth quarter and full-year 2025.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20260210969541/en/

“2025 was an extraordinary year of progress and execution,” said Alan Trefler, founder and CEO, Pega. “We’re entering a transformative era with bold ideas and compelling innovation. Our approach positions us to lead the industry, deliver extraordinary value to clients, and enable clients to overcome legacy system limitations.”

“Our 2025 results reflect strong financial discipline, with top and bottom-line beats of our guidance and exceeding the Rule of 40,” Pega COO & CFO, Ken Stillwell, said. “Our recurring business model and our technology leadership position us to continue to accelerate ACV growth, expand margins, and increase free cash flow.”

Financial and performance metrics (1)

Reconciliation of ACV and Constant Currency ACV

Cash Flow Growth

2026 Guidance (1)

As of February 10, 2026, we are providing the following guidance:

Quarterly conference call

A conference call and audio-only webcast will be conducted at 8:00 a.m. EST on Wednesday, February 11, 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 6226958, or via https://events.q4inc.com/attendee/958808765 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.

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 our 2026 Guidance and the anticipated growth and development of our business.

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:

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 February 10, 2026.

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.

All trademarks are the property of their respective owners.

Our non-GAAP financial measures reflect the following adjustments:

(1) Per share amounts have been recast for all prior periods to reflect the effect of the Company’s two-for-one forward common stock split effected in the form of a stock dividend distributed on June 20, 2025.

(2) Stock-based compensation:

(3) Effective income tax rates:

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. Under GAAP we recorded a release of our valuation allowance on our net deferred tax assets in the U.S. federal and state and U.K during the fourth quarter of 2025, resulting in a $175 million non‑cash tax benefit. See "Note 18. Income Taxes" in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information. 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.

(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.

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.

Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts:

As of December 31, 2025:

As of December 31, 2024:

 

Cash Flow Growth

Total ACV Growth and Pega Cloud ACV Growth

President Donald Trump tried to put some teeth into his latest attempt to save college sports.

The threat of cutting funding to cash-starved schools that don’t comply is real, even if the stricter rules that come out of the executive order he signed Friday could take a while to figure out.

In the order signed hours before the women’s Final Four tipped off one of the biggest weekends in college sports, Trump went after eligibility rules, transfers and the spiraling costs associated with an industry that now pays its players millions of dollars per year.

He called on federal agencies to ensure schools are following the rules and threatened to choke off federal grants and funding — a similar approach his administration has taken to force universities around the country to alter policies involving diversity, equity and inclusion, transgender rights and even the kinds of classes they offer.

In some ways, forcing those changes might seem like child’s play once college sports figures this out. The NCAA, the newly created College Sports Commission, the four power conferences, dozens more smaller ones and hundreds of educational institutions all have a say here: It’s a big reason Congress, which Trump instructed to act quickly, has been stuck for more than a year on this.

“I'm glad to know the President wants Congress to pass something,” said Sen. Maria Cantwell, D-Wash., a key member of the Senate committee looking into changes, who mentioned ongoing bipartisan negotiations.

Trump’s order was his second since last July and it included a laundry list of proposed fixes, many of which lawmakers and college leaders have been pushing for since the approval of a $2.8 billion settlement changed the face of games that were once played by pure amateurs.

He called for “clear, consistent and fair eligibility limits, including a five-year participation window," and wants to limit athletes to one transfer with one more available once they get a four-year degree.

“I'm extremely supportive of the President's order,” said Cody Campbell, the Texas Tech regent and billionaire who is helping shape policy. “I'm very excited that we're making progress and look forward to continued work in the (Congress) to permanently preserve a system that's done so much for America.”

At a college sports roundtable he hosted last month, Trump said he anticipated any order he signed would trigger litigation. Athletes have largely won the freedom to transfer almost at will via the portal along with the ability to be paid by schools that are now doling out more than $20 million a year to their athletes.

Some have also been suing the NCAA about eligibility limits, and their right to do that has been a major sticking point in the Congressional deliberations.

As much as the changes he directs, Trump’s call for the Education Department, the Federal Trade Commission and the attorney general’s office to evaluate “whether violations of such rules render a university unfit for Federal grants and contracts” stands out as a way to force change.

Several universities across the country have made policy changes to comply with federal orders and avoid funding-related showdowns with the government. Yet big-named schools like Penn State and Florida State are facing huge debts.

“I haven’t read it, obviously, but I certainly appreciate his interest in the issue," NCAA President Charlie Baker said at the women's Final Four in Phoenix. "And from what I saw, some of the social media traffic, it’s pretty clear that he made clear that we need Congressional action to sort of seal the deal on a number of these things, which is good, because we do.”

Commissioners at the Atlantic Coast and Southeastern Conference released statements thanking Trump for weighing in, with the ACC's Jim Phillips saying “there continues to be significant momentum to preserve the athletic and academic opportunities for the next generation of student-athletes and we appreciate the ongoing efforts.”

Attorney Mit Winter, who follows college sports law, said the order is likely to set up a situation where the NCAA and schools have to decide whether to follow a federal court order or an executive order.

“Either way, we’re likely going to see litigation challenging the EO by athletes and third parties,” Winter said.

University of Nebraska president Jeffrey Gold said he didn't want to try to predict what the courts would do.

“But it is critical to what we must do to keep college athletics in line with what we do," Gold said. “The roundtable a few weeks ago showed there is a profound sense of urgency around this.”

AP Sports Writers Maura Carey, David Brandt and Eric Olson contributed to this report.

Get poll alerts and updates on the AP Top 25 throughout the season. Sign up here. AP college football: https://apnews.com/hub/ap-top-25-college-football-poll and https://apnews.com/hub/college-football

President Donald Trump pauses as he finishes speaking about the Iran war from the Cross Hall of the White House on Wednesday, April 1, 2026, in Washington. (AP Photo/Alex Brandon, Pool)