Pegasystems Inc at Canaccord Genuity Growth Conference (Virtual) Transcript

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

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : So Ken, maybe just to start, for investors who are new to Pega, can you give us some background on the company? When was the business founded? Kind of what are the key solution areas? And we can dig in from there.

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. Yes. No, I mean, the evolution makes perfect sense when you laid out kind of the linearity of how it played out. So let's fast forward to today and talk about kind of some of the metrics you're managing the business to and what you're seeing. So I know ACV is a key metric for you guys now. Just talk a little bit about how ACV is different than ARR.

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes, yes. A good view of kind of the underlying growth of the business irrespective of kind of some of the ebbs and flows in the revenue line.

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Makes perfect sense. Okay. So digital transformation, right, is a key focus right now for many companies, right? We're seeing analog companies becoming digital, businesses being done in new ways. You brought up financial services as like a key vertical for you guys. It's clear that the financial services industry is kind of going through a revolution, right? Customer relationships used to be managed through the bank. Today, it's the branch, the call center, e-mail, text, mobile, right? There's all these different modes of engagement. Can you just talk about how Pega is helping companies kind of transform themselves in the new world?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. Yes, that makes sense. Maybe just to foot kind of some of those tailwinds to the current execution. If we look at the quarter you guys just put up, really solid. I think ACV growth was 21%. Maybe just talk about kind of execution in the current environment, how Pega has performed during COVID?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. Awesome. So you guys just made an important hire. You brought in Hayden Stafford from Microsoft, who's running the dynamics business. Maybe talk about kind of what the priorities are there for the rest of the year. Hayden's leadership and experience, how is that going to help Pega accelerate its growth?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : That's awesome. Okay. Let's move on and talk about the cloud transition a little bit. You kind of said that was the most recent evolution of the story. I think you guys are about a little past the halfway mark of what you said is going to be kind of a 4, 5-year process. Just talk about the impact to the business model when you go through one of these transitions, operating margins, profitability. And then as you start to think about kind of coming out of the other side, like free cash flow profitability and time lines to kind of when you'll get back there.

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. That makes sense. And I think Wall Street has probably seen enough of these model transitions by now that there's a degree of comfort with kind of how it progresses over the years. Maybe a product question, and I won't hit too hard given you're the finance guy. Process Fabric. It's a new offering. I think you guys are [GA-ing] it end of the year, second half. Just talk about what is Process Fabric and what could it mean for the business?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. Yes, makes sense. Public sector, I think, has been an exciting part of the business. You guys won an IRS deal, I think, that followed a U.S. Census win. Maybe just talk about what you're seeing in the public sector. Q3 is typically a seasonally important quarter there. Why are you guys winning in the public sector? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 13, 2020 / 2:30PM, PEGA.OQ - Pegasystems Inc at Canaccord Genuity Growth Conference (Virtual)

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes, makes sense. Okay. We're against the clock here, but maybe in the last, like 30 seconds, minute, I know you guys have an Analyst Day coming up end of the month, August 25. Do you want to give us a preview or show your hand about some of the exciting stuff you'd be talking about?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Perfect. Ken, thank you very much for doing this and participating. It sounds like a pretty interesting time to be paying attention to Pega.

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Okay. We'll talk soon. Take care.