Pegasystems Inc To Host Investor session Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steve Enders - Citi Investment Research (US) - Analyst : Okay, great. Steve Enders from Citi. Thanks for the great presentation and everything today. I guess maybe just to start, I want to ask about what you're seeing from customers, especially on the macro side, and the impact that AI is having. I mean, I think there's been a few challenging software prints recently. So it would be great to get your view of kind of where things are in that setup and how maybe AI is changing the decision making for customers today.

Question: Steve Enders - Citi Investment Research (US) - Analyst : I wish I had better ideas up there, but it feels like there's a lot of noise and there's some good signal here coming from you all. I guess maybe to clarify a little bit, when you're saying that the customers you're working with that they're seeing clarity or you're trying to help them with clarity, are they proceeding forward with AI initiatives with you all yet? Or is it still kind of early days of those initiatives?

Question: Steve Enders - Citi Investment Research (US) - Analyst : Perfect. I'll pass it along.

Question: Steve Enders - Citi Investment Research (US) - Analyst : Steve Enders from Citi again. You have this vision of the autonomous enterprise and customers deploying AI and automating things broadly. I guess, where do you feel like the customer base is today in terms of driving towards that vision? And I guess, what does the process look like to maybe get there to help customer 500 to 1,000 or some of the late adopters to get to that level and deploy Pega more fully?

Question: Steve Enders - Citi Investment Research (US) - Analyst : Awesome, great. Thanks for the demo. Steve Enders from Citi again. I guess I just want to understand like -- helpful to see this live -- what does it look like then taking this from a Blueprint into actual production? And does it maybe speed up the implementation time or the time to spin up a new Pega application?

Question: Steve Enders - Citi Investment Research (US) - Analyst : Great. Steve Enders from Citi again. I guess I want to clarify a little bit just on the Blueprint timeline and what that looks like. It sounds like something's coming in 3Q and maybe that's the GA, but just want to clarify that. And then I guess as you think about the monetization path line for that, what is being embedded in that kind of '27 guide or the '26 to '28 guide for the top line?

Question: Steve Enders - Citi Investment Research (US) - Analyst : Okay. So there is some level of like AI impact that's coming this year of monetization.

Question: Steve Enders - Citi Investment Research (US) - Analyst : Okay, helpful. And then on the free cash flow target, I've been thinking about the guide for this year. I think you're at like 25% free cash flow margin over the ACV guide. And if I'm looking out to '27, it's 25% free cash flow margin there doing that same math. So is that kind of implying not seeing scale in the business or being conservative with that view? Can you just help us kind of like walk that kind of flat margin expansion?

Question: Steve Enders - Citi Investment Research (US) - Analyst : Steve Enders from Citi again. I guess as we're thinking about the cloud migration impact, I guess, is there any change in incentives or carrots for customers to move there? And how do you kind of view the potentiality of disruption coming from that shift? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 10, 2024 / 7:00PM, PEGA.OQ - Pegasystems Inc To Host Investor session

Question: Steve Enders - Citi Investment Research (US) - Analyst : And last one for me, just on the competitive environment, I think specifically within the customer service or call center use case, it feels like that's been a big area of maybe focus on the AI front, especially from other vendors in the space. But have you seen any kind of changes in the competitive landscape or how you kind of view the GenAI impact into that marketplace?