The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: A lot of things I want to get into, but maybe a first place to start, I just want to maybe double-click on the opportunities that you're
pursuing with Pega. Maybe just double-click on what are you guys displacing when you guys go to market, the text that you guys
are kind of going after, but also the budget and buyers you guys are going after when you go to market with Pega?
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. Yes. I want to just quickly follow up on your expansion opportunity. I know Pega has had tremendous shop, really sticky
software, right? You guys have essentially zero churn and you guys have been able to sustain that 10% plus net expansion for quite
some time. Maybe just kind of talk about how much or what the penetration is among the installed base? And how much more room
can you guys penetrate in the long term?
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: So still a lot of room to grow.
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MARCH 05, 2025 / 7:00PM, PEGA.OQ - Pegasystems Inc at KeyBanc Capital Markets Emerging Technology
Summit
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. Got it. I want to switch gear a little bit and just touch on competition. I think that's an area that we get a lot of questions by
investors. And I know you guys have been around for quite some time, and I want to maybe ask about if the competitive landscape
has changed, especially with the rise of AI and Gen AI. Could you just kind of briefly speak about that.
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Yes, why don't we get into Blueprint a little bit because that's the product that you guys launched, I want to say, around a year ago,
right? And you guys have seen tremendous adoption, really good feedback, maybe just for the investors in the room that don't know
what Blueprint is? Just kind of walk through what that product is, but also how does it generate value to customers?
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. And maybe just a quick follow-up there. The most important question is how are you guys monetizing it? I'm guessing you
guys aren't really directly monetizing it. Maybe just speak to that a little bit.
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. Got it. I want to maybe just also want to quickly touch on the fourth quarter results that you guys just put up. You guys finished
the year with ACV growth of 11%. You guys are guiding to a slight acceleration in '25.
Maybe just give us a quick thought on how you guys are thinking about that growth target that you guys put out, but also how do
you reconcile some of these strong and momentum you've seen from Blueprint, how does that kind of be embedded into the
guidance, and of course.
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. No, I guess we'll have to progress and see how it goes through the year. I want to also touch on free cash flow, which I heard
is a topic that is near and dear to your heart. You guys guided '25, $440 million, which implies, I think, near 30% growth. I thought
that number was maybe listed by some investors on that print. Could you maybe just talk about the drivers of that strong growth
and think about the sustainability of that going forward?
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. Maybe just quickly touch on that. I think the $500 million target that you guys kind of provided at Analyst Day free cash flow,
that is I mean, you guys are generating pretty close to that today for this year. I mean do you guys have any updated thoughts on
that target?
It seems like you guys could grow free cash flow a little bit above ACV annually. Just any updated thoughts on how you think about
the targets that you have.
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MARCH 05, 2025 / 7:00PM, PEGA.OQ - Pegasystems Inc at KeyBanc Capital Markets Emerging Technology
Summit
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Okay. I think we have like a minute left. I just want to check and see if the audience has any questions. And then.
Unidentified Participant
With all the free cash (technical difficulty) (microphone inaccessible)?
Question: Devin Au - KeyBanc Capital Markets Inc. - Analyst
: Awesome. Well, with that, Ken, really appreciate it.
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