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Mar 31
Pegasystems Q1 2025 Earnings Report
Pegasystems delivered strong revenue growth and profitability in Q1 2025, driven by continued momentum in subscription and cloud segments.
Key Takeaways
Pegasystems exceeded expectations in Q1 2025 with robust revenue growth, significant improvement in profitability, and strong free cash flow. The company’s strategic shift to a subscription model and advancements in GenAI capabilities played a key role in performance.
Total revenue grew 44% year-over-year to $475,633,000
Net income turned positive, reaching $85,422,000 from a loss in the previous year
Free cash flow hit a record $202,348,000
Annual Contract Value (ACV) rose 13% to $1,445,410,000
Pegasystems
Pegasystems
Pegasystems Revenue by Segment
Revenue by Segment
Pega Cloud Revenue
CapyFin.comSubscription License Revenue
CapyFin.comConsulting Revenue
CapyFin.comPerpetual License Revenue
CapyFin.comMaintenance Revenue
CapyFin.com Forward Guidance
Pega maintains a confident outlook for continued growth through innovation in GenAI and scaling subscription services, but remains cautious of macroeconomic volatility and operational risks.
Positive Outlook
- Subscription model continues to drive growth and margin expansion
- Pega GenAI seen as a major differentiator in enterprise transformation
- Strong operating and free cash flow positions the company for strategic investments
- Backlog increased 21%, indicating strong future revenue visibility
- Non-GAAP net income and EPS surged significantly year-over-year
Challenges Ahead
- Decline in maintenance revenue reflects shift from legacy models
- Ongoing litigation with Appian Corp. poses legal and financial risks
- Foreign exchange fluctuations impacted financials
- High reliance on enterprise clients may increase sensitivity to economic downturns
- Employee-related expenses and restructuring charges remain a headwind
Revenue & Expenses
Visualization of income flow from segment revenue to net income