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.

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“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

TRENTON, N.J. (AP) — Former congressman Tom Malinowski conceded on Tuesday to Analilia Mejia, a longtime progressive activist and former political director for Sen. Bernie Sanders, in the crowded Democratic primary in New Jersey’s U.S. House special election.

The race attracted national attention as Democrats sparred over the best way to win over voters in this year's midterm elections. Mejia showcased an aggressive progressive platform in a suburban district that normally favors more moderate candidates.

During a news conference Tuesday, Mejia credited her experience as an organizer as key to her success.

“In this moment, what we want are real representatives: real representatives who will listen to the people, who will ask questions about what is keeping you up at night, who will prioritize your interest over special interests,” she said.

The special election is being held to fill the seat vacated when Mikie Sherrill stepped down to become governor. The Associated Press has not yet called Thursday’s race.

There was friction over the role of the American Israel Public Affairs Committee, whose affiliated super PAC tried to thwart Malinowski after he questioned unconditional aid to the Israeli government. However, their efforts appeared to backfire. Mejia, who said she agreed Israel committed genocide in Gaza, overtook Malinowski with a narrow lead on election night.

“The outcome of this race cannot be understood without taking into account the massive flood of dark money that AIPAC spent on dishonest ads during the last three weeks,” Malinowski said in a statement.

He threw his support behind Mejia, who has been consolidating backing from her Democratic rivals. U.S. Sen. Andy Kim, who had backed Malinowski, also endorsed Mejia, as did Sherrill on Tuesday.

Matt Bennett, co-founder of the centrist Democratic organization Third Way, said AIPAC had made “a catastrophic error” and “there's a lot of anger about that.”

He expressed concern that Mejia's victory would nudge the party too far to the left ahead of the midterms.

“This idea that there’s a demand either among the Democratic electorate, primary or the general electorate for radical candidates, is baloney,” he said. “It’s just not true.”

Mejia criticized AIPAC but said that wasn't the reason that she was coming out on top.

“What they didn’t do was win this for us. How we won — it was people power,” Mejia said.

The district covers parts of Essex, Morris and Passaic counties in northern New Jersey, including some of New York City’s wealthier suburbs. All three counties in the district report some mail-in ballots yet to be processed. Additionally, mail-in ballots postmarked by Election Day can arrive as late as Wednesday and still be counted.

The race was so close that the Democratic National Committee prematurely congratulated Malinowski on election night. On Tuesday, it issued another statement backing Mejia, saying, “New Jersey deserves a fighter and not a spineless Trump lackey.”

A former director of the Working Families Alliance in New Jersey, Mejia, 48, is a well-known figure in state politics, advocating for progressive causes. She was Sanders’ political director during his 2020 presidential run and served as deputy director of the Labor Department’s Women’s Bureau under President Joe Biden.

She was endorsed by noted progressives, including Sanders and U.S. Rep. Alexandria Ocasio-Cortez of New York, and she campaigned around the district by saying she was running against billionaires and their influence.

Mejia would face Republican Joe Hathaway, who was unopposed in his primary, in the special general election on April 16. The outcome will determine who serves the remainder of Sherrill's term until next January. There will also be a regular primary on June 2 and a general election on Nov 3.

Republicans are already taking aim at Mejia, saying she wants to “turn New Jersey into a socialist hellscape,” according to National Republican Congressional Committee spokesperson Maureen O'Toole.

Malinowski’s concession caps an effort to recapture a seat in Congress after he was defeated by a Republican in a different district in 2022.

Other leading Democrats who sought the nomination were Brendan Gill, an elected commissioner in Essex County, and Tahesha Way, who was lieutenant governor and secretary of state for two terms until last month.

Also on the ballot were John Bartlett, Zach Beecher, J-L Cauvin, Marc Chaaban, Cammie Croft, Dean Dafis, Jeff Grayzel, Justin Strickland and Anna Lee Williams.

Sherrill represented the district for four terms after her 2018 election. She won despite the region’s historical loyalty to the Republican Party, a dynamic that began to shift during President Donald Trump’s first term.

Steve Peoples contributed to this report.

FILE - New Jersey Gov. Mikie Sherrill waves during her inauguration ceremony in Newark, N.J., Tuesday, Jan. 20, 2026. (AP Photo/Seth Wenig, File)

FILE - Analilia Mejia, center, speaks during a rally calling for SCOTUS ethics reform, May 2, 2023, in Washington. (Joy Asico/AP Images for Center for Popular Democracy Action, File)

FILE - Democratic Congressman Tom Malinowski speaks during his election night party in Garwood, N.J., Nov. 8, 2022. (AP Photo/Andres Kudacki, File)