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PEGA's Cloud Backlog Climbs: A Sign of Strong Revenue Visibility?
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Key Takeaways
PEGA's Cloud backlog rose 30% y/y to $1.32B, with total backlog at $1.84B.
Annual Contract Value grew 16% to $1.514B, while Pega Cloud ACV jumped 28%.
Cloud backlog to convert in 12 months climbed 28%, ensuring near-term revenue visibility.
Pegasystems (PEGA - Free Report) is riding on the momentum of its robust cloud business, signaling strong prospects for future revenues. In the second quarter of 2025, Pega Cloud backlog rose 30% year over year to about $1.32 billion, with total backlog reaching $1.84 billion. This growth reflects significant committed business that has yet to be recognized as revenues, ensuring a healthy pipeline for the coming quarters.
Driving this momentum is Annual Contract Value (ACV) growth, which rose 16% year over year to $1.514 billion, while Pega Cloud ACV jumped 28%. This increase underscores strong demand for PEGA’s AI-powered solutions, such as Pega Blueprint and Predictable AI. The company’s pivot to a subscription-based model contributes the majority of its revenues, further enhances predictability, and minimizes reliance on one-time licenses.
Significantly, the current cloud backlog, expected to convert within the next 12 months, grew 28% year over year, offering near-term revenue visibility. Historically, backlog expansion has aligned with steady revenue growth. In early 2024, cloud backlog crossed $1 billion for the first time, and since then, quarterly revenues have consistently trended upward, with second-quarter 2025 revenues up 9% year over year.
With this robust backlog and strategic execution, PEGA appears well-positioned to sustain revenue growth. The Zacks Consensus Estimate for fiscal 2025 and 2026 indicates that revenues will grow 13.71% and 5.83%, respectively, on a year-over-year basis.
PEGA’s Key Competitors in Cloud & Enterprise Software
Pegasystems faces strong competition in the cloud market, particularly from Oracle (ORCL - Free Report) and Salesforce (CRM - Free Report) .
Oracle is gaining momentum through its expanding Oracle Cloud Infrastructure, supported by a full suite of Oracle Cloud Applications, including its CX platform. It now operates in 23 cloud regions with 47 more planned, reinforcing its global scale. With strengths in AI-driven databases, integrated enterprise solutions, and robust cash flow, Oracle is positioned to compete effectively with Pegasystems and others, while its growing cloud footprint secures the company’s long-term competitive advantage in the enterprise software market.
Salesforce stands as a leader in cloud-based CRM, leveraging its AppExchange marketplace, Einstein AI and scalable SaaS framework to deliver unmatched flexibility. Unlike Pegasystems’ hybrid and on-premise options, Salesforce is fully cloud-native, ensuring seamless access and integration across enterprises. The company consistently wins praise for its intuitive design, rapid adoption and strong third-party ecosystem. With superior usability and a vast developer community, Salesforce continues to set the benchmark in customer engagement and enterprise cloud solutions.
PEGA’s Price Performance, Valuation & Estimates
Pegasystems’ shares have gained 9.7% year to date, while the broader Zacks Computer and Technology sector has returned 10.8% and the Computer-Software industry has risen 16.3%.
PEGA’s YTD Price Performance
Image Source: Zacks Investment Research
PEGA has a Value Score of D. It is currently trading at a forward 12-month price-to-earnings ratio of 24.66X compared to the industry’s 32.73X.
PEGA’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEGA’s earnings is pegged at $1.98 per share for 2025, reflecting year-over-year growth of 31.13%, and rising 7.6% over the past 30 days.
Image: Shutterstock
PEGA's Cloud Backlog Climbs: A Sign of Strong Revenue Visibility?
Key Takeaways
Pegasystems (PEGA - Free Report) is riding on the momentum of its robust cloud business, signaling strong prospects for future revenues. In the second quarter of 2025, Pega Cloud backlog rose 30% year over year to about $1.32 billion, with total backlog reaching $1.84 billion. This growth reflects significant committed business that has yet to be recognized as revenues, ensuring a healthy pipeline for the coming quarters.
Driving this momentum is Annual Contract Value (ACV) growth, which rose 16% year over year to $1.514 billion, while Pega Cloud ACV jumped 28%. This increase underscores strong demand for PEGA’s AI-powered solutions, such as Pega Blueprint and Predictable AI. The company’s pivot to a subscription-based model contributes the majority of its revenues, further enhances predictability, and minimizes reliance on one-time licenses.
Significantly, the current cloud backlog, expected to convert within the next 12 months, grew 28% year over year, offering near-term revenue visibility. Historically, backlog expansion has aligned with steady revenue growth. In early 2024, cloud backlog crossed $1 billion for the first time, and since then, quarterly revenues have consistently trended upward, with second-quarter 2025 revenues up 9% year over year.
With this robust backlog and strategic execution, PEGA appears well-positioned to sustain revenue growth. The Zacks Consensus Estimate for fiscal 2025 and 2026 indicates that revenues will grow 13.71% and 5.83%, respectively, on a year-over-year basis.
PEGA’s Key Competitors in Cloud & Enterprise Software
Pegasystems faces strong competition in the cloud market, particularly from Oracle (ORCL - Free Report) and Salesforce (CRM - Free Report) .
Oracle is gaining momentum through its expanding Oracle Cloud Infrastructure, supported by a full suite of Oracle Cloud Applications, including its CX platform. It now operates in 23 cloud regions with 47 more planned, reinforcing its global scale. With strengths in AI-driven databases, integrated enterprise solutions, and robust cash flow, Oracle is positioned to compete effectively with Pegasystems and others, while its growing cloud footprint secures the company’s long-term competitive advantage in the enterprise software market.
Salesforce stands as a leader in cloud-based CRM, leveraging its AppExchange marketplace, Einstein AI and scalable SaaS framework to deliver unmatched flexibility. Unlike Pegasystems’ hybrid and on-premise options, Salesforce is fully cloud-native, ensuring seamless access and integration across enterprises. The company consistently wins praise for its intuitive design, rapid adoption and strong third-party ecosystem. With superior usability and a vast developer community, Salesforce continues to set the benchmark in customer engagement and enterprise cloud solutions.
PEGA’s Price Performance, Valuation & Estimates
Pegasystems’ shares have gained 9.7% year to date, while the broader Zacks Computer and Technology sector has returned 10.8% and the Computer-Software industry has risen 16.3%.
PEGA’s YTD Price Performance
Image Source: Zacks Investment Research
PEGA has a Value Score of D. It is currently trading at a forward 12-month price-to-earnings ratio of 24.66X compared to the industry’s 32.73X.
PEGA’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEGA’s earnings is pegged at $1.98 per share for 2025, reflecting year-over-year growth of 31.13%, and rising 7.6% over the past 30 days.
Image Source: Zacks Investment Research
PEGA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.