Pega’s cloud contracts grow 20% as execution problems weigh on overall momentum

Pegasystems ($PEGA) reported total annual contract value of $1.653 billion, up 6% as reported and 7% at constant currency. Pega Cloud annual contract value increased 20% and represented 59% of the total. Quarterly revenue grew 3% to $393.4 million, but GAAP net income fell to $14.1 million from $43.4 million a year earlier, underscoring a divergence between cloud expansion and reported profit.

Management highlighted go-to-market execution challenges and closer customer scrutiny of AI spending, warning that these issues could continue to affect contract growth and cash flow. The company retained a target of at least $700 million in free cash flow for 2028, which is a longer-term objective rather than current cash generation. Annual contract value is also a contractual operating metric, not the same as revenue recognized during the quarter.

Sources:

• Pegasystems — issuer results and commentary