10-Q · July 21, 2026
Pegasystems delivered 9% year-over-year Q2 revenue growth to $420.716 million, powered by a 28% increase in Pega Cloud revenue, but revenue was down from $430 million in Q1 2026. GAAP EPS of $0.08 and a 4.0% operating…
Earnings analysis · 10-Q
PEGA earnings analysis
Filed October 20, 2026 · Our reading of the company's report
The latest report
Pegasystems delivered a weak Q3 relative to expectations, with revenue of $393.359 million versus $422.652 million expected and diluted EPS of $0.08 versus $0.43 expected. Pega Cloud growth, including 19% revenue growth…
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Pegasystems delivered a weak Q3 relative to expectations, with revenue of $393.359 million versus $422.652 million expected and diluted EPS of $0.08 versus $0.43 expected. Pega Cloud growth, including 19% revenue growth and 20% ACV growth, and a 15% increase in backlog to $2.009 billion were positive, but AI-related purchasing delays, execution challenges, and legal or restructuring costs pressured near-term results. No numeric revenue or EPS guidance was provided; management reiterated its $700 million-or-more 2028 free cash flow target.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.08
- Segment
- Pega Cloud revenue grew 19% year over year; Pega Cloud ACV increased 20% year over year.
- Segment
- Total backlog increased 15% to $2.009 billion.
What stood out
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Pega Cloud growth remained strong
Pega Cloud remained the principal growth engine, with revenue up 19% year over year and ACV up 20% year over year.
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Backlog expanded materially
Backlog increased 15% to $2.009 billion, supporting future revenue visibility despite the current-quarter revenue shortfall.
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Long-term cash-flow target reiterated
Nine-month free cash flow reached $290 million, while management reiterated a target of at least $700 million in 2028.
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Liquidity backstop was expanded
The amended revolving credit facility increased borrowing capacity from $100 million to $200 million and extended the expiration date to October 16, 2031.
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Internal controls remained effective
Disclosure controls were assessed as effective as of September 30, 2026, and the company reported no material changes to internal control over financial reporting during the quarter.
What to watch
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Material revenue and EPS miss
Q3 revenue was $393.359 million versus the $422.652 million consensus estimate, a shortfall of approximately $29.3 million. Diluted EPS was $0.08 versus the $0.43 estimate, missing by $0.35.
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Demand and currency headwinds
Management cited AI-related purchasing delays and go-to-market execution challenges. The company also reported that a hypothetical 10% strengthening of the U.S. dollar would reduce revenue by 5% and net income by 17%.
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Continued capital deployed on buybacks
The company repurchased 2.058 million shares during the quarter at an average price of $32.23, leaving approximately $810.055 million available under the repurchase program at September 30, 2026.
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No new risk-factor disclosures
Item 1A refers investors to the risk factors in the 2025 Form 10-K and does not identify new or amended risk factors in this 10-Q.
Management's outlook
No numeric revenue or EPS guidance was provided. Management reiterated its target to deliver $700 million or more of free cash flow in 2028; no comparable prior outlook was disclosed.
Earlier filings 4
10-Q · April 21, 2026
Pegasystems reported revenue of $429,973,000 for the quarter (three months ended March 31, 2026), down versus the prior year quarter and prior quarter, with gross margin compressing and operating profit falling sharply.…
10-Q · October 21, 2025
Revenue improved to $381,350,000 in Q3 2025 (+$56,300,000 vs Q3 2024) and the company returned to operating profitability with operating income of $14,469,000 and net income of $43,364,000 (diluted EPS $0.24). Cash and…
10-K · February 12, 2025
Pegasystems reports full-year 2024 revenue of $1,497,180,000 (up from $1,432,616,000 in 2023) with gross profit of $1,106,515,000 and net income of $99,189,000. The company ended 2024 with $739,973,000 of cash, cash…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.