Pegasystems Q2 2025 Earnings Report

Pegasystems EPS Results

• Actual EPS: $0.28
• Consensus EPS: $0.24
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.26

Pegasystems Revenue Results

• Actual Revenue: $384.51 million
• Expected Revenue: $345.07 million
• Beat/Miss: Beat by +$39.44 million
• YoY Revenue Growth: +9.50%

Pegasystems Announcement Details

• Quarter: Q2 2025
• Date: 7/22/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 23, 2025
• Conference Call Time: 8:00AM ET

Pegasystems (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise software in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific. The company provides Pega Infinity, a software portfolio comprising of Pega Customer Decision Hub, a real-time AI-powered decision engine to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity; and Pega Platform, an intelligent automation software for increasing efficiency of clients' processes and workflows. It also offers Situational Layer Cake that organizes logic into layers that map to the unique dimensions of a client's business, such as customer types, lines of business, geographies, etc.; Pega Express Methodology and low code that connects enterprise data and systems to customer experience channels; Pega Cloud that allows clients to develop, test, and deploy applications; Pega Catalyst, which helps clients to transform and prototype their customer journeys; Pega Academy, which offers instructor-led and online training to its employees, clients, and partners; and global service assurance and client support services. It primarily markets its software and services to financial services, healthcare, communications and media, government, insurance, manufacturing and high tech, and consumer services markets through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.

Pegasystems Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company delivered a 16% year-over-year increase in annual contract value (ACV), a 60% jump in net new ACV, and $286 million in free cash flow for the first half of 2025.
• Positive Sentiment: Pega’s AI Blueprint—a low-code, model-driven design tool—enables rapid, predictable application development and is resonating with clients for faster legacy transformation.
• Positive Sentiment: More than 1,000 organizations are building Blueprints, and top systems integrators like Accenture, Capgemini, Cognizant, Infosys, TCS, and Virtusa have signed on for partner-branded versions.
• Positive Sentiment: Pega announced a five-year strategic collaboration with AWS to combine Blueprint with AWS Transform and listed its software on the AWS Marketplace to accelerate cloud adoption.
• Negative Sentiment: Pega expects a seasonal Q3 slowdown in net new ACV add-ons and term license revenue due to the timing of contract renewals and billing cycles.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Pegasystems Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. And I would now like to turn the conference over to Peter Welborn, Vice President of Corporate Development and Investor Relations for Pica Systems. Peter, you may begin.

[Peter Welburn, VP - Corporate Development & IR at Pegasystems]

Thank you, Krista. Good morning, everyone, and welcome to Pegasystems' Q2 twenty twenty five earnings call. Before we begin, I would like to read our Safe Harbor statement. Certain statements contained in this presentation may be construed as forward looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the long term opportunity for Pega and trends we expect to see in our Q3 financial results and other statements that use words like expects, intends, believes and other similar words. These forward looking statements speak only as of the date the statement was made and are based on current expectations and assumptions.

[Peter Welburn, VP - Corporate Development & IR at Pegasystems]

Because these statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year twenty twenty five and beyond could differ materially from the company's current expectations. Factors that could cause the company's results to differ materially from those expressed in forward looking statements are contained in the company's press release announcing its Q2 twenty twenty five results and in the company's filings with the Securities and Exchange Commission, including its annual report on Form 10 ks for the year ending 12/31/2024, and in other recent filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on such forward looking statements, and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause our views to change, except as required by law, we do not undertake and specifically disclaim any obligation to publicly update or revise these forward looking statements, whether as a result of new information, future events or otherwise.

[Peter Welburn, VP - Corporate Development & IR at Pegasystems]

Our non GAAP financial measures discussed in this call should only be considered in conjunction with our consolidated financial statements prepared in accordance with GAAP. They are not a substitute for financial measures prepared under U. S. GAAP. Constant currency measures are calculated by applying the 06/30/2024, foreign exchange rates to all periods shown.

[Peter Welburn, VP - Corporate Development & IR at Pegasystems]

Reconciliations of GAAP and non GAAP measures can be found in the company's press release announcing its Q2 twenty twenty five results. And with that, I turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

[Alan Trefler, Founder & CEO at Pegasystems]

Thank you, Peter, and to all who are joining today's call. It's great to see such a terrific first half of twenty twenty five. I believe it's driven by our team's excellent focus, execution and our smart and differentiated AI strategy that I see resonating with clients, prospects, and partners. Ken will walk you through the first half financial highlights in a few minutes, but I'm going to spend a little time explaining a little more about our AI and why we think our AI transformation approach is much faster, easier, and safer than alternatives. Now since we last spoke, I've continued to spend a lot of times with senior executives around the world, including at PegaWorld last month.

[Alan Trefler, Founder & CEO at Pegasystems]

And our value proposition and competitive differentiation have resonated clearly with them and and are really getting their attention. We're addressing one of the most challenging and voiced questions clients have, how to effectively develop and deploy AI and agents with the proper controls to create mission critical applications with speed and accuracy at scale. We believe this requires a dramatically different approach than other companies are advocating. Our competitive advantage is based on our long standing structural difference, which we've been building and improving for more than four decades. The architecture is unique to us, and our platform is inherently model based, which means that applications are defined through models rather than alternative hand coded approaches.

[Alan Trefler, Founder & CEO at Pegasystems]

We put business logic and process logic at the heart of each application. So applications are designed and built once to work in any channel and across any data source or back end. The Pega Infinity platform, our low code cloud native decisioning and process automation platform, translates those application designs or models into production ready enterprise grade applications without any coding. This architecture allows for a more intuitive and streamlined development process with business logic workflows, user interfaces, data structures are all configured through reusable design components. We believe that this is the right architecture for a world where change is constant and one that expects ubiquitous self-service and enchanted automation.

[Alan Trefler, Founder & CEO at Pegasystems]

It also maximizes the potential for automation. And the AI driven optimization allows us and our clients to more easily and quickly leverage AI. Now let's talk a little more about Blueprint. It is a unique solution. It's a unique architecture, actually, that provides the foundation for everything we do.

[Alan Trefler, Founder & CEO at Pegasystems]

With Pega Blueprint, our users simply describe their business in plain language with within minutes. Blueprint uses generated AI agents to transform and put that design into Pega's best practices and industry standards. We do this by giving Blueprint access to Pega knowledge gained over our forty year history as well as the ability to access the vast resources of the Internet to supplement anything we don't have. From there, users can easily refine key elements of the application design and then deploy it to run directly on the Pega platform. But I wanna be clear that speed alone is not close to the most important benefit of Blueprint.

[Alan Trefler, Founder & CEO at Pegasystems]

Blueprint brings the power of AI easily and quickly into the design process to enable collaboration, to help generate new insights and innovation, and to help businesses improve their businesses. It massively reduces the upfront work of trying to design a system. This combination of power plus speed helps reduce time to value and accelerates meaningful enterprise transformation. This is just part of why we think our approach to GenAI is a game changer. Now what what I was talking about at PegaWorld, if you've joined us there, is how we combine the power of AI and the predictability of workflows to give enterprises what we call predictable AI, and then we've trademarked that term.

[Alan Trefler, Founder & CEO at Pegasystems]

We don't believe that any other company can really offer this because it's only possible because of our architectural differences. The same characteristics that makes generative AI exciting for creative applications, for example, that it will generate different responses to identical inputs, becomes a fundamental problem for enterprise operations that require predictable, consistent outcomes. However, this variability is perfect for design thinking and innovation. It's precisely what makes the prompt based AI agents our competitors are offering unsuitable for processing mission critical transactions where consistency isn't just preferred, it's mandatory. In contrast, HEGA's approach acknowledges this duality by strategically deploying AI's creativity during the design phase.

[Alan Trefler, Founder & CEO at Pegasystems]

When you're figuring out what you want your application to do, how you want your business to work, with different perspectives and innovative solutions add tremendous value. But then we ensure production operations run through the structured workflows that eliminate unpredictability. And so rather than fighting AI's inherent variability or trying to engineer it away through complex prompt management or prompt studios, we embrace it where it helps at design time and then we control where consistency matters at runtime. Application designs generated by Blueprint are not just conceptual, they are fully executable in Pega Infinity. This tight alignment between design and execution leads to faster development cycles and greater agility in responding to change and creates a more collaborative relationship between business and IT stakeholders.

[Alan Trefler, Founder & CEO at Pegasystems]

The result is AI that accelerates innovation during development while delivering the reliable auditable results enterprises need in production. Now other companies are flooding the market with thousands of agents and proposing control towers to manage them. Our competitors, they're creating prompt studios and suggesting that clients are trying to manage these agents with free text prompts that will be interpreted differently every time they run. We think that's a little mad. We believe that our clients and partners are recognizing the advantages of our predictable AI approach.

[Alan Trefler, Founder & CEO at Pegasystems]

We get the creativity when you want it, and you get reliability when it really matters to run your business hour to hour and day to day. And when we demonstrate how we bring structure and governance to AI deployment and and how we uniquely combine the power of AI agents to do the design with the predictability of workflows, we get real moments of understanding that are really exciting and that serve to validate our vision. Now the impact of Blueprint is significant. It it makes it incredibly fast and easy for a user to leverage all the power of Pagot to participate in transformational initiatives in in speeding time to value and and helping organizations get rid of a lot of the legacy that that is slowing them down. In fact, we have lots of stories about people with little or no technical peg of knowledge creating amazing blueprints from frontline employees to business line leaders.

[Alan Trefler, Founder & CEO at Pegasystems]

During a keynote last night last month at PegaWorld, Vodafone spoke about how they're using blueprint to start every new development project and we're able to take their budget process from ideation to a delivered production app in under forty hours. Just hours. But it's it's not just the speed. It's the power and creativity and thoughtfulness of the app driven by AI powered by, well, extremely capable workflow execution in Vagra. And last month, we launched partner branded Blueprints, and Blueprint has captured the imagination of a number of our key partners.

[Alan Trefler, Founder & CEO at Pegasystems]

They want to infuse their own intellectual property and knowledge repositories directly into a branded version of Blueprint that has their name on the cover so they can feel good about it and they can get the credit for their thinking and how we've been able to add that into our font of knowledge from, our history here. This allows them to showcase their unique IP and domain knowledge, and, I think it extends our reach further into our partners, customer base, and sellers. In the forty days or so since we announced this concept, we've had many of the world's largest systems integrators sign up to develop their own branded blueprints to use directly with their clients, including Accenture, Capgemini, Cognizant, Infosys, TCS, and Virtusa with, more in the works. We believe this speaks volumes about their interest and commitment into leveraging Blueprint in their own practices. And Blueprint gives them a powerful tool that they can use to collaborate and ideate with their clients around their IP while providing a much bigger potential customer base with visibility into the power of Pega.

[Alan Trefler, Founder & CEO at Pegasystems]

Now you may have seen that we recently hired Dan Kason from AWS as our Head of Global Partner Ecosystem to lead the strategic evolution of Pega's partner ecosystem. This includes strengthening alliances with global systems integrators and hyperscalers, accelerating the adoption of PegaGen AI and Pega Blueprint. And we think this will really expand partner influenced revenue. Just last week, we announced a five year strategic collaboration agreement with AWS And the agreement combines the power of Pega Blueprint with AWS' transform product, which is designed to accelerate legacy transformation projects without disrupting critical business functions. We think having Pegasoftware available on the AWS market space marketplace also makes it easier and faster for clients to access our software and benefit from the associated capabilities.

[Alan Trefler, Founder & CEO at Pegasystems]

Now a moment on how Blueprint is evolving. You know, the interest and use of Blueprint continues to rise. And and today, more than a thousand organizations around the world are building Blueprints. And this is driving increased awareness, engagement, and we think it's a long term opportunity for Pega to to get its familiarity increased and for the values of our offerings to be better understood. Now we've continued to enhance its functionality to support enterprise transformation, whether you're building a new app or reimagining a legacy application.

[Alan Trefler, Founder & CEO at Pegasystems]

For example, in June, we announced new features that help clients address their most pressing legacy transformation initiatives with ease and speed. You know, because business transformation is often held back by legacy technologies that each resources, budget, and time, and hampers innovation. Now I'm sure you've seen the same reports I have about the costs associated with technical debt. Forrester estimates that legacy systems will account for two thirds of global tech spending in 2025, And this isn't an easy problem to solve, but we believe Pega Blueprint creates a new approach to legacy transformation, and the one that is important, powerful, and and an enormous opportunity. We've added powerful AgenTic AI that ingests, analyzes, and converts a wide array of legacy system assets into new modern application models.

[Alan Trefler, Founder & CEO at Pegasystems]

And you could feed in everything from requirements documents to user manuals to screenshots to to video, pretty much anything that describes an application. If you were at PegaWorld, you would have seen an incredibly powerful demo from Kareem Akronov, and I highly recommend you go and watch the replay at pega.com, PegaWorld, if you're once there. In real time, Karim showed how Blueprint was able to adjust a video of a user walking through an old, ugly COBAL application and an AWS transform analysis of that application, featuring a it's, you know, a review of its thousands of lines of code. And in minutes, Blueprint provided a recommended application design, showed how it could be modernized. Pega show, with the press of a button, a preview of what the application would look like and how it would work on multiple channels complete with a conversational agent that users could talk to in pretty much any language.

[Alan Trefler, Founder & CEO at Pegasystems]

Keep in mind this was demonstrated live on stage in just minutes after the video and document were imported. As with any blueprint, usually, you can iterate and improve the initial design just ensure it will support current and future needs. And what's final and they imported it to Infinity with the actual app, they gain real productivity gains, and they're able to put on more advanced AI capabilities that are throughout Infinity to work as well. We see no other company doing this, and we think it's a massive opportunity for us. And, we think it's gonna be an area of focus for our partners.

[Alan Trefler, Founder & CEO at Pegasystems]

So we believe we are building the future of enterprise transformation, how it will be designed, how it will be sold, how it will be delivered, and where ideas are able to move seamlessly from minds to models to market. You can tell I'm excited about this and what Blueprint is doing for our client, our partners, our business. And, you know, it's interesting because Blueprint, it was put a new release of its capabilities app about every two weeks. So if you haven't seen it in a month, you are behind. And that also, I think, gives us, an avenue to really increase the pace of innovation with our customers and with our partners.

[Alan Trefler, Founder & CEO at Pegasystems]

So I would recommend that each of you try it out for yourself by fifteen minutes and go to pega.com blueprint, sign in, and imagine any type of business you'd like to build. I particularly like showing demos of the llama rental business, which is something that actually is a lot more sophisticated than you might imagine. But any business and, of course, you can always do the serious stuff like, like, your customer onboarding and collections. I think you'll have some fun, but I guarantee you'll see why it's so powerful and why it plays to Pega's unique strength. We're working hard on it, and we think it's going to lead to good results.

[Alan Trefler, Founder & CEO at Pegasystems]

And to provide some more color on the financial results for the first half, let me turn it over to Ken. Ken?

[Kenneth Stillwell, COO & CFO at Pegasystems]

Thank you, Alan. I am so excited for businesses at the midpoint of 2025. We're seeing the outcomes we had hoped to see as our team delivered spectacular results in the first half of twenty twenty five, demonstrating the power of our aligned strategy, innovation and execution. Annual contract value, our key business performance metric, grew 16% year over year as reported 14% in constant currency. To bring our business momentum into focus, our net new ACV add increased by 60% year over year in constant currency in the 2025 versus the first half of twenty twenty four, a significant acceleration that reflects multiple strategic wins.

[Kenneth Stillwell, COO & CFO at Pegasystems]

This growth reflects that Pega's GenAI blueprint is transforming our go to market motion. Our value proposition is resonating with our clients, and we're expanding our footprint in key verticals. It's also a clear indicator that we're not only winning more deals, but also higher quality long term client commitments, which ultimately fuels durable growth. It's also to see total ACV exceed $1,500,000,000 as reported for the first time in Pega's history, powered by Pega Cloud ACV growth of 28% as reported and 25% in constant currency. And I'm especially excited to see our team deliver such robust ACV growth in a market that continues to be uncertain.

[Kenneth Stillwell, COO & CFO at Pegasystems]

Our Rule of 40 mindset is not only delivering strong ACV growth, but also strong free cash flow growth. Free cash flow growth reached $286,000,000 in the first half of twenty twenty five. Our free cash flow performance is no accident. It's the outcome of two powerful Rule 40 forces coming together. First, our accelerated growth in ACV.

[Kenneth Stillwell, COO & CFO at Pegasystems]

And it's important to remember that our financial model ACV is a proxy for subscription billings. As a result, each incremental dollar of ACV roughly translates to an incremental dollar of subscription billings, which in turn drives cash flow. The second powerful force is margin expansion. We continue to grow cash expenses at a slower rate than ACV, expanding margins, driving free cash flow growth and supporting increased profitability. Total remaining performance obligation or backlog increased by 31% as reported and 27% in constant currency year over year.

[Kenneth Stillwell, COO & CFO at Pegasystems]

As a reminder, represents client commitments not yet recognized as revenue, but provides good visibility into our future performance. Pega Cloud current backlog, which is backlog that's expected to come into revenue within twelve months, increased by 28% as reported and 25% in constant currency in the same period. The majority of Pega Cloud bookings go into backlog, creating a more predictable future revenue stream, the benefit of our subscription transition. Last month,

[Kenneth Stillwell, COO & CFO at Pegasystems]

I outlined our capital allocation strategy and emphasized that our strong free cash flow generation provides us with significant financial flexibility. That financial strength opens up a number of options for us as we evaluate how to best deploy capital to create long term shareholder value. One of the options we discussed at our annual investor session at PegaWorld last month was the potential to allocate from time to time a greater portion of our free cash flow towards share repurchases. To be clear, it's great to have this flexibility available for us to do so under the right circumstances. Now that Pega's significant cash flow generator with no debt, returning cash to shareholders via buyback could make sense for several reasons.

[Kenneth Stillwell, COO & CFO at Pegasystems]

First, periodic share repurchases when done responsibly can help mitigate the dilutive impact of stock based compensation. Second, buying back shares at attractive valuations can lead to improved per share valuation over time. And third, we view share buybacks as a strategic lever that reinforces our confidence in Panga's long term vision and our belief in the firm's durable cash flow generation capabilities and is also significantly accretive to shareholders as we execute on our strategy. So in the first half of twenty twenty five, we repurchased about $6,000,000 of our shares for $251,000,000 representing over 85% of our total free cash flow generated during the period. While we've not made firm commitments regarding the scale or timing of future repurchases, we plan to continue to take a disciplined and balanced approach to buybacks going forward.

[Kenneth Stillwell, COO & CFO at Pegasystems]

Our first priority, of course, is to invest in the core business to drive sustainable growth and innovation. Beyond that, we will continue to evaluate our capital allocation options through the lens of long term value creation. Given our significant cash flow generation, repurchases of our shares is a great investment opportunity. I've heard from several of you that it's valuable when I provide a few thoughts to help frame how we model our business. And I want to take a moment to share two important points as we head into Q3.

[Kenneth Stillwell, COO & CFO at Pegasystems]

First, it's important to recognize that the third quarter has historically been our softness in terms of net new ACV, add and free cash flow. This is fairly consistent seasonal pattern that reflects the timing around contract renewal dates. Contract renewals are more than just administrative milestones. They are key drivers of business activity. Fewer renewals in a quarter typically means fewer opportunities to engage and drive expansion and generate near term billings.

[Kenneth Stillwell, COO & CFO at Pegasystems]

It's also worth remembering that we typically bill our clients one year in advance tied to the contract renewal date. That's why in quarters with fewer scheduled renewals, we typically see a corresponding slowdown in free cash flow. Second, as you refine your Q3 revenue expectations, please keep in mind that our term license revenue trends to be tends to be at the lowest point also in Q3. This is another predictable seasonal trend driven by the timing of term license renewals. Understanding these dynamics are important when modeling third quarter term license revenue and also free cash flow, especially to avoid over projecting in what's typically a lighter quarter.

[Kenneth Stillwell, COO & CFO at Pegasystems]

In conclusion, it's great to see our continued business momentum. We're doing what we said we were going to do. We're capitalizing on major market trends such as artificial intelligence, legacy transformation and the move to cloud and by leveraging Pega Gen AI Blueprint. It's fantastic to see such solid ACV growth, continued momentum around trailing twelve months free cash flow. We're on an amazing trajectory and consistent execution over the long term sets us up well to significantly accelerate growth in free cash flow per share over time.

[Kenneth Stillwell, COO & CFO at Pegasystems]

I'm looking forward to seeing many of you on the road as we meet investors in the coming weeks at a number of the investment banking conferences around The United States. And with that, operator, please open the line for questions.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from Raimo Lenschow with Barclays. Please go ahead.

[Raimo Lenschow, Managing Director at Barclays]

Congratulations for me on an amazing quarter. Just a quick question on Pega Cloud. If I'm looking at my math, just basically had like a record ad on ACV. Is that already the blueprint or is that just kind of the normal, you know, momentum in terms of, you know, more customers coming from from the client cloud over to you, like overall general market? Can you speak to that number because it's very strong, obviously, and good indicator.

[Kenneth Stillwell, COO & CFO at Pegasystems]

I I so I think you will see, some incremental, Pega Cloud ACV when clients decide to move to Pega Cloud. But I would I would comment that Blueprint is engaged in every one of our sales campaigns now and has been a significant driver for business activity in Q2. If you just look at the total ACV growth that we have, it's really quite an amazing quarter, the strongest Q2 we've ever had. And I think Pega Cloud is the SKU that tends to be where that business goes when it comes off of Pega Blueprint. So although there always will be some migrations here and there, the majority of our business is coming from, you know, expansion with clients, and Blueprint is central to that.

[Raimo Lenschow, Managing Director at Barclays]

Okay. Perfect. That's really helpful. And then on on term, obviously, you had good renewals. Q one looks like q two looks good as well.

[Raimo Lenschow, Managing Director at Barclays]

Can you is that like kind of was that like if you think about the shape of the year, was that like like this year, the core renewals were kind of more first half focused? Or how do I think about the rest of the year there? Thank you. Congrats for me.

[Kenneth Stillwell, COO & CFO at Pegasystems]

No. I don't I don't I think that q one definitely had a higher renewal cycle in the first quarter. I think that you you q two was not anything unusual, and I don't think that you're going to see a lot of anomalies through Q3 and Q4. Q1 just happened to be a bigger quarter.

[Raimo Lenschow, Managing Director at Barclays]

Okay, perfect. Thank you.

[Kenneth Stillwell, COO & CFO at Pegasystems]

Yes.

[Operator]

Your next question comes from the line of Steve Enders with Citigroup. Please go ahead.

[Steve Enders, Equity Research Analyst at Citigroup]

Okay, great. Thanks for taking the questions this morning. I guess I just want to start asking just on, I guess, what you are seeing in the deal environment. I I guess, numbers kind of speak for themselves. But yeah, I guess, what do you what are customers focused on?

[Steve Enders, Equity Research Analyst at Citigroup]

I think we keep hearing questions on like, doge impact and tariffs, and it it I guess doesn't look like you're seeing anything there, but just, yeah, what what impact have you seen or how does that kind of discussion play out the customers that you're, you're having right now from those those factors?

[Alan Trefler, Founder & CEO at Pegasystems]

So look, there is a a level of anxiety in some customers because, let's face it, the the world has a little bit of unpredictability into it, and we have all that same visibility. We don't have anything specific around tariffs lift, to this point have have affected us or have unreasonably affected our our our our clients. And, happily, we're not in the parts of the government where Doge has really targeted in terms of, like, closing down. So we we we feel that we need to be alert to what's gonna change, and and things are changing all the time. But we're not seeing anything that I would describe as a real headwind.

[Kenneth Stillwell, COO & CFO at Pegasystems]

We we are seeing I I think one one trend we are seeing, Steve, is that, with Gen AI being central to every company strategy to figure out how you can how you can, you know, adopt it and where the value is, it is driving the legacy transformation discussion at a very accelerated pace, more than we've seen in years in terms of clients really looking at not just leveraging Jet dot ai, but how do I modernize my applications? How do I get to the cloud so I can leverage all of this new technology? That definitely is a trend that is accelerated.

[Steve Enders, Equity Research Analyst at Citigroup]

Okay. Got you. That's helpful. And then just on, I guess, the ACV strength here. I guess, does that change maybe how you would think about the pace of ACV through the year?

[Steve Enders, Equity Research Analyst at Citigroup]

Or maybe how you think about the numbers exiting the year? And I guess what was the impact of FX quarter over quarter on the ACV number in 2Q?

[Kenneth Stillwell, COO & CFO at Pegasystems]

So question the first part of your question was how do we view the ACV trend through the year given the very, very strong start in the first half of the year? I think, look, when you have a start like we have, you wanna keep that momentum going. And we're not viewing the fact that we did really well in the first half as being a substitute for how we perform in the second half. We want to take this momentum and continue to drive accelerated growth and, you know, and achieve what we can achieve for the year. You know, kind of we're not we're not certainly not, like, viewing it as, oh oh, great.

[Kenneth Stillwell, COO & CFO at Pegasystems]

We're further along so we can take, you know, our foot off the pedal in the back half of the year. In terms of currency, there is the dollar is has weakened. And we have a we have a currency, you know, headwind, so to speak, on growth. And it's been about two percentage points in each of the quarters. So it's been kind of been about a consistent currency tailwind for the first two quarters.

[Steve Enders, Equity Research Analyst at Citigroup]

Okay. All right. Thanks. That's helpful. Thanks for taking the questions.

[Alan Trefler, Founder & CEO at Pegasystems]

Thanks, Steve.

[Operator]

Your next question comes from the line of Jake Roberge with William Blair. Please go ahead.

[Jake Roberge, Equity Research Analyst at William Blair & Company, L.L.C]

Yes. Thanks for taking the questions. Really impressive growth in net new ATV. If you had to parse out the growth acceleration between Blueprint opening up new deals, I know you talked about rising interest in digital transformation. So, obviously, that that bumps up TEGR cloud migrations or maybe just broader AI AI tailwinds.

[Jake Roberge, Equity Research Analyst at William Blair & Company, L.L.C]

What would you point us to as maybe the the one or two largest factors driving that acceleration?

[Alan Trefler, Founder & CEO at Pegasystems]

Well, first of all, the the idea of legacy transformation is really mostly it's not starting with Pegas, the system you're transforming. I mean, you're typically transforming you know, somebody's got it's not uncommon for somebody to have, like, three or four or five, like, onboarding systems or systems that do some business function. And first, they they really don't like any of them. And two, they'd like to fold them all together. And with Blueprint, which is really cool, you can you can put the documentation of all of them in, and the AI will propose how to do it right and how to do it better and then give you a a canvas on which to collaborate.

[Alan Trefler, Founder & CEO at Pegasystems]

The collaboration part of this is super important. If you try it out, I think it will become clear. So I think legacy transformation is really 98 of it is things that didn't start on Pega being transformed, but things that were their existing COBOL or your God forbid Lotus Notes or database or there's a lot of old stuff out there that just can't move to the cloud and organizations know about anchors and being able to clean that up. There's a lot of interest in that. Blueprint feathers into that perfectly because Blueprint isn't limited to legacy transformation.

[Alan Trefler, Founder & CEO at Pegasystems]

But the fact that it feeds on it and that it can incorporate things like, AWS transform, which, you know, does code analysis, but it doesn't just depend on code analysis. I think code analysis is inherently limited in terms of what it does for transformation because all you're doing is replicating the sense of past. What it lets you do is is take that analysis and use it for data structures and other types of things, but then really augment it. But, hey. How do we want to do this business function?

[Alan Trefler, Founder & CEO at Pegasystems]

If I put in the best practices, how do I actually get the system to recommend and to to do it in a way that will be conversational and agentic as well as through traditional ways? So I think transformation, writ large, is going to be a really important avenue for our growth in the next two or three years, and Blueprint is right at the heart of it.

[Kenneth Stillwell, COO & CFO at Pegasystems]

Jake, one additional piece of information that kind of goes kind of maybe under under the under the covers of one of your one, you know, one of your questions. We are we are seeing, momentum around engaging with both existing and new clients on new workflows. When I say new workflows, remember what Alan said, new to Pega. It could be something that the client has done for decades on another provider, but they're new to Pega. And that is where Blueprint really helps us break in.

[Kenneth Stillwell, COO & CFO at Pegasystems]

And you can see the momentum in the new activity, and that's very exciting because that's not just increasing the volume of an existing solution that Pega has or migrating the Pega cloud. We're seeing opportunities to put new solutions for both our existing clients and new divisions of existing clients and new logos. So there's a noticeable change in that happening through the first half of the year.

[Jake Roberge, Equity Research Analyst at William Blair & Company, L.L.C]

Okay. That's helpful. And then just on that new logo topic, I I know you've been investing more in that motion over the the past few quarters just given the success with Blueprint. Can you talk about how that push has gone thus far? And if there have been any any learnings for that motion as as you as you started to invest more in it?

[Kenneth Stillwell, COO & CFO at Pegasystems]

Yeah. Let me let me let me clarify one thing, and then I'll I'll kick out on the learnings. I think we we have to think about new logos, but we have to think about new work, new workflows because our clients have massive divisions and locations around the world of their business. They're not clients of ours right now. So to us, that is a new logo as well.

[Kenneth Stillwell, COO & CFO at Pegasystems]

We don't characterize them as new logos in our in how we talk to investors, but it is a brand new opportunity, a new engagement. So I just want to be clear that that is a really important opportunity for us as well as well as brand new companies. So Alan, the the kind of observations or learnings around as we try to go deeper into our existing and new logos was the

[Alan Trefler, Founder & CEO at Pegasystems]

Yeah. I think I I think the interesting development there, which is a little hard to predict exactly how it's gonna go, but I think it's gonna go quite well, is what this movement to create these partner branded blueprints is going to do in terms of opening up Pega to be way more visible to our partners' customers. Because what what we're really seeking to do between now and the end of the year as we continue to enhance this and work with our partners on it is that Pega become a tool not just for a partner to sell Pega, but for a partner to basically sell what they themselves are doing. Know, there are a lot of consulting firms who are under a of pressure these days and need to be able to make better pitches to customers. And if you see the pitch made on the back of Blueprint, it's pretty amazing.

[Alan Trefler, Founder & CEO at Pegasystems]

I mean, the customer can see and touch and feel something that, otherwise, they can't. If we can be successful at getting our partners to really understand how this can help their business outside of Pega and how we can continue to enhance it to make that possible, I I think that that just opens up the the amazingly large stream of prospects that are customers of our partners, but are not customers of ours. So that's that's candidly is gonna be the trick from our point of view for the upcoming six to twelve months.

[Jake Roberge, Equity Research Analyst at William Blair & Company, L.L.C]

Very helpful. Congrats again on the great results.

[Alan Trefler, Founder & CEO at Pegasystems]

Thanks, Jake.

[Operator]

Your next question comes from the line of Devin Oh with KeyBanc Capital Markets. Please go ahead.

[Devin Au, AVP - Associate Analyst at KeyBanc Capital Markets]

Hey, good morning. Thanks for taking my questions. I know you've kind of responded to this question, Steve's question on macro. It seems like there's nothing too material to point out. But I want to drill down on public sector just given how topical of a subject that is and especially after, I think, SAP kind of calling out deal elongation in The U.

[Devin Au, AVP - Associate Analyst at KeyBanc Capital Markets]

S. Public sector. Have you seen any similar elongation within public sector business? Just curious how the conversation has been with your customers in that specific market.

[Alan Trefler, Founder & CEO at Pegasystems]

Interestingly, I'm going down to DC tomorrow on Friday. So we are engaged. I I I think that some projects got reshuffled and put on hold. So I think there's some services implications. You know, services is obviously not the most critical part of our business here as well.

[Alan Trefler, Founder & CEO at Pegasystems]

As I as I said, I I think it's gonna vary a lot by company here. But as businesses are looking to become more efficient and then the government wants to become more efficient, that's gotta be good for us. I mean, it's my my view is that being being able to engage with the government around streamlining workflows, being able to make things more efficient, those are all things that play to our strength and our history. So it's it's unquestionably there's gonna be disruptions in that space, but this is something that I think directionally, should be a a a tailwind, not a headwind.

[Kenneth Stillwell, COO & CFO at Pegasystems]

I mean, the the public sector, certainly in the in The US, has been very vocal around get to the cloud, digitally transform, and ingest and ingest AI into, into their infrastructure and leverage it. And we just you may have seen our announcement of having Fed ramp high. We're perfectly positioned. I mean, that is our value proposition.

[Alan Trefler, Founder & CEO at Pegasystems]

Yes. I think you should take these comments as being primarily about The US just to clarify on on on on what Ken pointed out. I mean, our work with governments globally has been strong and continues to be strong, and year to date has been incredibly strong. We announced the the major win in the in The UK where we were selected to do the, recruitment system for the military, the the UK Army. And we already do the air force and the navy.

[Alan Trefler, Founder & CEO at Pegasystems]

So, you know, this is a revolutionary system for them, which is gonna do all of their recruitment in in a set of integrated, very sophisticated workforce. And so we're seeing those types of interests in other governments as well. And as as some of these company some of these, governments spend more on defense, I I expect we'll see more things like that that there could be opportunities.

[Devin Au, AVP - Associate Analyst at KeyBanc Capital Markets]

Got it. Super helpful context. Just a quick follow-up and just want to ask about the ACV strength in the quarter. Curious if any deals might have shifted one way or the other. And the multiple strategic wins that you have won in the quarter, have you seen, you know, sell cycle shorten and your ability to push the deals to close, to finish meaningfully earlier as a result of Blueprint, versus, you know, your your initial plan?

[Alan Trefler, Founder & CEO at Pegasystems]

I think Blueprint does two does a couple of things for us. One, when when customers say it, they when customers see it, we get we get the often unspoken feedback, but the clear feedback, oh, I now understand how I can apply AI in my business in a safe and predictable way, and that's something I I haven't really seen before this way. We got a lot of people saying, this is this is new and interesting. I think that helps us as a brand. That that just helps the company in terms of being more of the sort of player that they know, they can rely on in this in this AI world.

[Alan Trefler, Founder & CEO at Pegasystems]

I I think that the part of the sales cycle that Blueprint will help the most with is the front end part of the sales cycle even more than the back end. And we are seeing evidence of that. We are seeing it to be way easier to get in front of a customer and show them something. And, you know, what happens now is that routinely happens, you know, in a first meeting with a customer where you can show them something customer specific. We never ever or very rarely would do that.

[Alan Trefler, Founder & CEO at Pegasystems]

You sometimes have to wait to a fourth meeting or a fifth meeting to be able to put together a custom demo for a customer to get them to really kind of understand what Pega does. Now I think it's really helping customers understand Pega way sooner.

[Kenneth Stillwell, COO & CFO at Pegasystems]

And there no pull ins from future quarters of I mean that always happens in any business, but there was nothing unusual in the first half of the year that would say, Oh, that's the reason why the quarter was strong as we pulled some deal in from the future.

[Devin Au, AVP - Associate Analyst at KeyBanc Capital Markets]

Great. Thanks for taking my questions.

[Operator]

Your next question comes from the line of Patrick Walravens from Citizens Bank. Please go ahead.

[Patrick Walravens, Analyst at Citizens JMP Securities, LLC]

Oh, great. Thank you. And congratulations, you guys, on the the quarter. So, Alan, I I wanna go big picture with you if that's okay. So I hosted a fireside chat last week with the former head of AI for Salesforce.

[Patrick Walravens, Analyst at Citizens JMP Securities, LLC]

And he made this comment, which I think probably also applies to PEGNA, but I'd love to hear your thoughts on it. Here's what he said. He said, I do think, in general, a lot of the big SaaS players do have a massive advantage. They have the data. What are your thoughts on that?

[Alan Trefler, Founder & CEO at Pegasystems]

Well, look, Salesforce wants to become the owner of all the customers' data. I I think that there's gonna be a lot of resistance to that in many organizations. I think customers think they should own their own data. And I think the emergence of cloud native databases, you know, you you you look at things like the Databricks and the Snowflakes and others, yep, they won't own the data. There's a lot of hunger for data.

[Alan Trefler, Founder & CEO at Pegasystems]

In reality, I think what really makes a difference is process. I mean, you you you the the data is helpful, but we when we do our boot practice, this you may have seen it. I believe you've done one fabric. You we we actually grind through our best practices, now our partners' best practices. We go out to the Internet, and we pull in all the, you know, the data on the Internet on how to do those types of processes.

[Alan Trefler, Founder & CEO at Pegasystems]

We reconcile them. We don't trust any of them. We grind it together, and we show it to say, hey. Is this really what we wanna do? That's that is a process.

[Alan Trefler, Founder & CEO at Pegasystems]

That is a process that will operate on the transactional data that you wanna do when you're actually trying to do something. And that is enormously central to the whole way that, you know, business is run and the whole idea of legacy transformation. I I think there are lot of companies, Salesforce is one of them, that have really moved a lot into what I would describe the analytical space. And to be honest, that's a space where we expect to partner with organizations, and we expect our customers you know, we don't we don't provide the, you know, analytical framework that you might get from some of the other companies out there. And and we don't want we wanna be the process engine and the workflow engine that revolutionizes the way these businesses operate and that goes out in real time, which is what Blueprint does, and gets the data or gets additional information, which is is is what the system does.

[Alan Trefler, Founder & CEO at Pegasystems]

So I I think there are a lot of people who talk a lot about data. I'm happy to say we've got a different bet, and it's the bet we've done for forty years. So I'm pretty sure it's gonna work.

[Patrick Walravens, Analyst at Citizens JMP Securities, LLC]

Well, that a quick follow-up.

[Patrick Walravens, Analyst at Citizens JMP Securities, LLC]

So I was at at PegaWorld in the audience when you when you did process agentic process fabrics, Pega agentic process fabric. And I you guys said I think that it's gonna be generally available in q three twenty five. That was

[Alan Trefler, Founder & CEO at Pegasystems]

Yes. And that's we're hoping to have that out around Labor Day.

[Patrick Walravens, Analyst at Citizens JMP Securities, LLC]

Okay, perfect. Thank you.

[Operator]

Your next question comes from the line of Alexey Gogulov with JPMorgan. Please go ahead.

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Hello, everyone. I appreciate you letting me ask a question. This is my first earnings call with Pega. Great to speak to Alan and Ken and Peter. Alan, could I follow-up on the previous question?

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Can you talk about the booking momentum and demand trends after Pega Cloud conference?

[Alan Trefler, Founder & CEO at Pegasystems]

Yeah. The so welcome, Aleksey. The the, you know, Pega Cloud conference was really, really exciting. The customers were tremendously engaged and enthused. There was a huge amount of interest, and there has been great follow-up across the board.

[Alan Trefler, Founder & CEO at Pegasystems]

And, you know, what that means is that our our our our our pipeline is is nicely increasing. You know, you would expect coming off of a conference like that, it would be good. We have a lot of stuff to show, which you can check out on video and you can see. And some of which is in market, like the blueprint changes we've been putting in, some of which is imminent, but you can you can see what's coming, like, genetic process fabric that I I I I just mentioned. So we we we have a lot of interest from clients coming off of that.

[Alan Trefler, Founder & CEO at Pegasystems]

And, you know, that doesn't turn really into business so much necessarily this year, as in future years, but it's great to be able to see that sort of swell, I would say.

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Thank you, Alan. And Ken, if I could ask about your guidance. It feels that the margin expansion outlook is somewhat conservative. Are there any factors we should keep in mind that could limit margin expansion this year?

[Kenneth Stillwell, COO & CFO at Pegasystems]

That's a great question. And certainly, I don't want to lean in too much to our guidance. We don't re guide. And welcome, Alexei, by the way. We don't re guide.

[Kenneth Stillwell, COO & CFO at Pegasystems]

We don't we did adjust something in the PEGA world, but it's very rare. We just we try to execute, naturally, we aim to beat any of the numbers that we talk about every year. Margin expansion on the cost management side, I think there is zero risk. We execute we're executing incredibly well with a level of discipline that we've honestly never had in the history of the firm. But we are very dependent on growth naturally.

[Kenneth Stillwell, COO & CFO at Pegasystems]

So we want to keep the growth trajectory. If we grow faster, that will yield increased cash flow. So there is naturally an obvious connection there between us generating ACV growth to be able to achieve free cash flow growth. So that's that's the I mean, maybe an obvious statement, but there's nothing in the execution of the kind of business other than our, you know, booking and billing that, that I'm worried about.

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Thank you, Ken. Appreciate it. Great to speak to you both. All the best.

[Kenneth Stillwell, COO & CFO at Pegasystems]

See you, Alexia.

[Operator]

Your next question comes from the line of Mark Schappel with Loop Capital Markets. Please go ahead.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Hey, guys. Thanks for taking my question here and nice job on the quarter. Alan, question for you. I appreciate your commentary around BLUEPRINT in your prepared remarks. I was wondering if you could just talk about who Blueprint is often competing with.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Is it, for instance, internal development initiatives at customer sites? Or are you running up against other software vendors? And if it's other software companies, which ones would they be?

[Alan Trefler, Founder & CEO at Pegasystems]

So Blueprint really doesn't have a direct competitor the market as we see it. So the competition there's always competition. The competition is other ways of doing things. So, you know, And the types of competition you'd see would be companies like Salesforce or ServiceNow that come in more and say, hey. We've got this great app.

[Alan Trefler, Founder & CEO at Pegasystems]

We've got this great platform. Blueprint basically says, hey. Look. We're gonna we're gonna take this platform we have, but it's gonna be yours. And that, to my mind, is a really different message.

[Alan Trefler, Founder & CEO at Pegasystems]

So, of course, there's competition out there, and it's the usual, you know, to I would say, Salesforce and ServiceNow would be competitors. You know, we work with both of them as customers too. So, you know, it's a it's it's it's not a all or nothing world out there. But I would say those would be meaningful significant. You have people going into Microsoft and, you know, writing code and power apps and other types of things.

[Alan Trefler, Founder & CEO at Pegasystems]

But once again, the systems that we really, I think, can uniquely do aren't something you could easily write in a a in a power app. Certainly not in this agentic world. You know, I think I think this will move towards agents. And if you really understand what we're doing with the agent architecture and how that fits with our center out architecture, the fact that if you want an agent, you don't create some big fat prompt for two pages of of text. You just break the workflow, and we figure out Blueprint figures out.

[Alan Trefler, Founder & CEO at Pegasystems]

We figure out how to turn that workflow into an agent that executes what that workflow does. I I think that's a pretty exciting thing for some customers.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Great. Thank you. And then as a follow-up, regarding the recent strategic agreement with AWS, is it fair to assume that we could see similar partnerships in the future with some of the other hyperscalers?

[Kenneth Stillwell, COO & CFO at Pegasystems]

Yes. Yes. I think more than fair to assume. I would say look forward to sharing those with you.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Thank you.

[Operator]

Your next question comes from the line of Maximilian Percicco with RBC. Please go ahead.

[Max Persico, Equity Research Associate at RBC Capital Markets]

Great. Good morning, everybody, and thanks for taking the question. On the partner branded blueprint, that seems like it could be a really meaningful opportunity. So the question is, do you disclose roughly the mix of the business that currently goes through the channel versus direct? And then two parts, how does that fit recently?

[Max Persico, Equity Research Associate at RBC Capital Markets]

And how do you expect that mix to trend over time with some of the newer channel investments that you've made?

[Alan Trefler, Founder & CEO at Pegasystems]

Yes. At this point, a partner doing a partner branded blueprint not reselling Pega. You know, we're we'll we'll be on the AWS marketplace, the GCP marketplace. The the customer will be able to buy. We're really just facilitating that partner.

[Alan Trefler, Founder & CEO at Pegasystems]

That that partner gets charged for their own IP and for their own work, and that's how they have a business interest in in doing it in terms of the way we do. So we don't really have a meaningful channel business in the way that I think you're you're asking. That's pretty consistent. Yeah. We've been really so historically focused on the high end.

[Alan Trefler, Founder & CEO at Pegasystems]

It's really been consistent with the way those customers wanna buy. Those customers unquestionably want a direct relationship with us so that they could really engage. Who knows what might happen in future years? But, you know, this is still all emerging, though it's really, really exciting.

[Kenneth Stillwell, COO & CFO at Pegasystems]

We sometimes pay for transactions through partners. They might be the prime, we might be the sub, we might partner. That happens. But to Alan's point, we don't have a channel. Like we don't actually have a channel in the traditional sense that you're asking, which is we hand someone product and they go sell it on their own.

[Kenneth Stillwell, COO & CFO at Pegasystems]

This is the really the first entry point for us using Blueprint into that arena. So so any any opportunity we have here is is all new. It's all incremental.

[Max Persico, Equity Research Associate at RBC Capital Markets]

Okay. Very helpful. And and then just one follow-up. Just to double click on the macro, has has anything changed versus ninety days ago? I know, like, generally, it seems pretty stable.

[Max Persico, Equity Research Associate at RBC Capital Markets]

Doesn't seem like anything's being reflected in the numbers. Like, the second quarter is pretty solid. Have you seen any change in sentiment versus, say, in April or May?

[Alan Trefler, Founder & CEO at Pegasystems]

I I think there's a a slightly lower level of anxiety. I I think people are feeling calmer and a little more, sanguine about the, you know, the world inflation is not racing. You know, the world the world is continuing in a way that is, I I think, reassuring to some customers. So nothing nothing negative from a sentiment point of view. You know, there's still uncertainty about things like tariffs, but I think part of it is we're growing accustomed to living with a level of uncertainty.

[Kenneth Stillwell, COO & CFO at Pegasystems]

Yes. I would I pay close attention to this and talk to my peers. And I would say, generally speaking, the environment, I would say, is slightly better now than it was a quarter ago just because of what Alex said with like people realize like we're not the consumer is reasonably strong. Inflation has not been it's not reared its ugly head. Tariffs have taken probably a path of more rationality than I think people worried back in on Liberation Day.

[Kenneth Stillwell, COO & CFO at Pegasystems]

So I think in general, things are much more settled than they were ninety days ago.

[Max Persico, Equity Research Associate at RBC Capital Markets]

Great. Thanks, guys.

[Operator]

Your next question comes from the line of Blair Abernethy with Rosenblatt Securities. Go ahead.

[Blair Abernethy, MD & Senior Research Analyst at Rosenblatt Securities]

Thanks for squeezing me in guys and congrats on a very strong first half. Alan, just a quick question around some of your Gen AI technology that you fielded outside of Blueprint. So can you just talk a little bit about Gen AI Coach and KnowledgeBuddy and customer engagement Blueprint? What's sort of the take up? What are you seeing out there?

[Blair Abernethy, MD & Senior Research Analyst at Rosenblatt Securities]

And kinda where where can these these GenAI capabilities go to?

[Alan Trefler, Founder & CEO at Pegasystems]

Yeah. We we we're seeing customers really liking the way that we've been applying AI. Things like Coach. Coach is something that will kinda step in and help you finish a piece of work or tell you the right way to do things. KnowledgeBuddy is a is a way to be able to create a repository that, you can get processes and procedures.

[Alan Trefler, Founder & CEO at Pegasystems]

But us, by the way, KnowledgeBuddy is a tremendous asset because we're using KnowledgeBody to hold both our and our partners' IP. So it's a vehicle to be able to get IP and make it make it operational. So we've got dozens of these AI features, you know, those types of things, summarization features. You know, the way I described the PegaWorld is generative AI will be used through sets of features, and our customers will buy some of those from us. Some of them, they'll build themselves.

[Alan Trefler, Founder & CEO at Pegasystems]

Some of them, they'll buy from other companies. But Blueprint and the whole idea of design is the thing where I think our generative AI approach is extremely meaningful. And what I see, someone else is actually able to come close.

[Blair Abernethy, MD & Senior Research Analyst at Rosenblatt Securities]

Okay. Great. Thanks very much.

[Operator]

And that concludes our question and answer session. And I will now turn the call back over to Alan Treffler, CEO, for closing comments.

[Alan Trefler, Founder & CEO at Pegasystems]

Thank you, Krista. I really appreciate everyone paying attention, and we're really excited about where we are and how, we're doing. And the potential, I think, for this is well, it really plays well to our long history. It really builds on what we've been doing for a long time. So we look at the advent of AI really almost a wondrous thing.

[Alan Trefler, Founder & CEO at Pegasystems]

So with that, thank you, and look forward to talking to you all next quarter or before.

[Operator]

And this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Peter Welburn, VP - Corporate Development & IR
• Alan Trefler, Founder & CEO
• Kenneth Stillwell, COO & CFO

Analysts

• Raimo Lenschow, Managing Director at Barclays
• Steve Enders, Equity Research Analyst at Citigroup
• Jake Roberge, Equity Research Analyst at William Blair & Company, L.L.C
• Devin Au, AVP - Associate Analyst at KeyBanc Capital Markets
• Patrick Walravens, Analyst at Citizens JMP Securities, LLC
• Alexei Gogolev, Executive Director at JPMorgan Chase
• Mark Schappel, Managing Director at Loop Capital Markets LLC
• Max Persico, Equity Research Associate at RBC Capital Markets
• Blair Abernethy, MD & Senior Research Analyst at Rosenblatt Securities