We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pegasystems (PEGA) Down 8.3% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
It has been about a month since the last earnings report for Pegasystems (PEGA - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pegasystems due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Pegasystems Inc. before we dive into how investors and analysts have reacted as of late.
Pegasystems Q1 Earnings Miss Estimates, Revenues Decrease Y/Y
Pegasystems reported first-quarter fiscal 2026 non-GAAP earnings of 46 cents per share, missing the Zacks Consensus Estimate by 39.5%. Earnings also declined 39.5% year over year.
Revenues were $430 million, down 9.6% year over year, and missed the consensus mark by 11.7%. Even with the top-line shortfall, Pega Cloud momentum remained a bright spot, with Pega Cloud annual contract value rising sharply year over year.
PEGA Sees Cloud-Led Mix Shift in Q1 Results
The reported quarter’s revenue mix reflected a continued tilt toward subscription services. Pega Cloud revenue rose 36% year over year to $205 million, while total subscription services revenue increased 23% year over year to $280.3 million, supported by higher Pega Cloud contributions. The strength was offset by ongoing pressure in subscription license revenue, which fell 49% year over year to $94.9 million.
Maintenance revenue was essentially flat, edging down 1% year over year to $75.3 million. Consulting revenue also decreased 9% year over year to $54.8 million, consistent with the broader revenue contraction.
Pegasystems Expands ACV and Backlog on Cloud Demand
Total annual contract value (ACV) increased 12% year over year to $1.622 billion, or 11% in constant currency. The mix shift within ACV was notable, as Pega Cloud ACV climbed 29% year over year to $906.7 million, while maintenance ACV declined 7% year over year to $276.8 million.
Backlog also grew year over year, supporting longer-term revenue visibility. The company reported a total backlog of $2.011 billion as of March 31, 2026, up from $1.728 billion a year earlier. Pega Cloud backlog increased 21% year over year and represented 75% of total backlog, underscoring the role of cloud-driven demand in shaping the forward book.
PEGA’s Profitability Trends Reflect Higher Expense Base
In the first quarter of 2026, the gross margin contracted 330 basis points (bps) year over year to 75.2%.
Operating expenses rose to $286.1 million, up 16.2% year over year, with higher selling and marketing, research and development, and general and administrative costs. The result was a sizable decline in operating leverage for the quarter, though the business continued to emphasize AI-led workflow automation and cloud delivery as central to its strategy.
Operating income was $37.1 million, down sharply from $127 million in the year-ago quarter, reflecting both lower revenue and a higher expense base.
PEGA’s Balance Sheet & Cash Flow
As of March 31, 2026, cash and cash equivalents and marketable securities totaled $474 million, up from $425.8 million as of Dec. 31, 2025.
Cash provided by operating activities increased 4% year over year to $212.3 million. Free cash flow, defined as operating cash flow less investment in property and equipment, rose 2% year over year to $206.5 million.
During the quarter, Pegasystems repurchased roughly 3.5 million shares for $167.3 million at an average price of $47.47 per share, reflecting continued capital return alongside investment in the business.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted -14.69% due to these changes.
VGM Scores
At this time, Pegasystems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Pegasystems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Pegasystems (PEGA) Down 8.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Pegasystems (PEGA - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pegasystems due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Pegasystems Inc. before we dive into how investors and analysts have reacted as of late.
Pegasystems Q1 Earnings Miss Estimates, Revenues Decrease Y/Y
Pegasystems reported first-quarter fiscal 2026 non-GAAP earnings of 46 cents per share, missing the Zacks Consensus Estimate by 39.5%. Earnings also declined 39.5% year over year.
Revenues were $430 million, down 9.6% year over year, and missed the consensus mark by 11.7%. Even with the top-line shortfall, Pega Cloud momentum remained a bright spot, with Pega Cloud annual contract value rising sharply year over year.
PEGA Sees Cloud-Led Mix Shift in Q1 Results
The reported quarter’s revenue mix reflected a continued tilt toward subscription services. Pega Cloud revenue rose 36% year over year to $205 million, while total subscription services revenue increased 23% year over year to $280.3 million, supported by higher Pega Cloud contributions. The strength was offset by ongoing pressure in subscription license revenue, which fell 49% year over year to $94.9 million.
Maintenance revenue was essentially flat, edging down 1% year over year to $75.3 million. Consulting revenue also decreased 9% year over year to $54.8 million, consistent with the broader revenue contraction.
Pegasystems Expands ACV and Backlog on Cloud Demand
Total annual contract value (ACV) increased 12% year over year to $1.622 billion, or 11% in constant currency. The mix shift within ACV was notable, as Pega Cloud ACV climbed 29% year over year to $906.7 million, while maintenance ACV declined 7% year over year to $276.8 million.
Backlog also grew year over year, supporting longer-term revenue visibility. The company reported a total backlog of $2.011 billion as of March 31, 2026, up from $1.728 billion a year earlier. Pega Cloud backlog increased 21% year over year and represented 75% of total backlog, underscoring the role of cloud-driven demand in shaping the forward book.
PEGA’s Profitability Trends Reflect Higher Expense Base
In the first quarter of 2026, the gross margin contracted 330 basis points (bps) year over year to 75.2%.
Operating expenses rose to $286.1 million, up 16.2% year over year, with higher selling and marketing, research and development, and general and administrative costs. The result was a sizable decline in operating leverage for the quarter, though the business continued to emphasize AI-led workflow automation and cloud delivery as central to its strategy.
Operating income was $37.1 million, down sharply from $127 million in the year-ago quarter, reflecting both lower revenue and a higher expense base.
PEGA’s Balance Sheet & Cash Flow
As of March 31, 2026, cash and cash equivalents and marketable securities totaled $474 million, up from $425.8 million as of Dec. 31, 2025.
Cash provided by operating activities increased 4% year over year to $212.3 million. Free cash flow, defined as operating cash flow less investment in property and equipment, rose 2% year over year to $206.5 million.
During the quarter, Pegasystems repurchased roughly 3.5 million shares for $167.3 million at an average price of $47.47 per share, reflecting continued capital return alongside investment in the business.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted -14.69% due to these changes.
VGM Scores
At this time, Pegasystems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Pegasystems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.