Pegasystems Inc Q1 2025 Earnings Call Summary

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

Question: Raimo Lenschow - Barclays - Analyst : Hey. Congrats from me as well. That's an amazing first quarter especially in this environment. The one quick question, if you look -- there was a big outperformance on term licenses. Can you speak a little bit about the factors there, and the one question I got from investors was like very, very strong ACV bookings on Paga Cloud as well. Pega Cloud revenue came in slightly lower. Can you talk about the difference there? I would expect this currency, but like maybe can you elaborate on that a little bit? Thank you.

Question: Raimo Lenschow - Barclays - Analyst : Lovely, very clear. Thank you, congrats.

Question: Pinjalim Bora - JPMorgan - Analyst : Oh, great. Thank you for taking the questions, and congrats on the quarter. [Alan Arken]. I think everybody's trying to figure out kind of the macro environment post March. Maybe talk about what are you hearing from customers in April in Q1 so far? How are they kind of bracing some of the macro uncertainties? Have you seen any changes in customer buying behavior in April, or are you seeing any changes in the sales cycle? Any color would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 12:00PM, PEGA.OQ - Q1 2025 Pegasystems Inc Earnings Call

Question: Pinjalim Bora - JPMorgan - Analyst : Yeah. I see. Okay. And then Ken, obviously, the ACV results are pretty solid. You probably added one of the highest sequential ACV ever in the company's history for Q1. But that follows Q4 when the ACV added was a little bit of a low bar for Q4. So wondering how much of the ACVL performance is kind of based on timing of deals from Q4 to Q1, or did you see any kind of a pull in from Q2 or rest of the year?

Question: Pinjalim Bora - JPMorgan - Analyst : Got it thank you so much.

Question: Steve Enders - Citi - Analyst : Okay, great. Thanks for getting questions this morning here. I guess maybe just to follow up on the ACV dynamics in the quarter. Just was there, I guess, what was the maybe quarter-on-quarter FX impact on ACV or is there a way to think about what the -- costing currency like net new ACV growth was in for 1Q.

Question: Steve Enders - Citi - Analyst : Okay. Perfect, all right. That's -- yeah, that's very, very helpful there. And then just in terms of -- it seems like macro seems like it's okay. But I guess when you're thinking about the future pipeline dynamics and maybe kind of building off of the potential this question as well of just -- with the uncertainty going on, have you seen any kind of change in how customers are talking about their future deal flow with you, or is there been any pauses, and I know there's some federal exposure there. So I guess, what impact is maybe -- that those conversations had on and specifically within the Federal side of the business?

Question: Steve Enders - Citi - Analyst : Okay, awesome. That's great to hear and thanks for taking the questions.

Question: Patrick Walravens - Citizens JMP - Analyst : Oh great. Can you guys hear me?

Question: Patrick Walravens - Citizens JMP - Analyst : All right perfect. Congratulations. First of all, it's great to see. Alan, I would love you to go a little deeper on the topic that you mentioned your prepared remarks where you were talking about how noisy it is out there with so many different vendors claiming to have agentic types of solutions. So can you talk a little bit more about what you're seeing there, how hard is it to cut through that noise, and then maybe specifically in terms of solutions you see from Salesforce and Microsoft. What do you think?

Question: Patrick Walravens - Citizens JMP - Analyst : Right, that's great. And then Peter, can I just ask you a follow up which is investors are so worried about the impact on closing rates, and you guys sound good, and SAT sounded good last night. We're -- you have any thoughts you can share with us in terms of where the disconnect is?

Question: Patrick Walravens - Citizens JMP - Analyst : Yeah. No, you don't sound bad at all, right? And SAP sounded pretty good. And so yeah, I just -- you can see from all the stocks how worried we all are. So it's just interesting that maybe it's not quite as bad out there. I don't know, any thoughts on that yeah no that's so.

Question: Patrick Walravens - Citizens JMP - Analyst : Okay, great. Thank you, both.

Question: Devin O'Rourke - KeyBank - Analyst : All right. Good morning. Thanks for taking my question. First one, I have is I also want to dig a little bit deeper into the strong ACV results in the quarter. But maybe I want to ask it through the lens of Blueprint. I know the last quarter you guys mentioned hundreds of millions of pipeline was driven by Blueprint. So I'm kind of curious if you can share any more color on that. It would be great to hear if you have any updates to share regarding what Blueprint has influenced deals wise in the quarter.

Question: Devin O'Rourke - KeyBank - Analyst : Got it. Okay, that's helpful. And then just one quick one on backlog. I think you just posted backlog growth of 21%, quite a meaningful step up from the 14% in 4Q. Peter, or can curious if you have any additional commentary on what drove that strong acceleration? Have you seen contract duration change, one way or the other, any color that would be helpful. Thank you.

Question: Devin O'Rourke - KeyBank - Analyst : Got it. Thank you for checking my questions, and congrats on a strong start of the year.

Question: Mark Chappelle - Loop Capital - Analyst : Hi, thank you for taking my question, and nice job on the quarter. Ken, with respect to the upside in the quarter, how much of that would you attribute to the sales changes that have been put in place over the past year or two versus say new product introductions like Blueprint?

Question: Mark Chappelle - Loop Capital - Analyst : Great, that's helpful. One other question Ken with respect to the Rule of 40 targets. What are your thoughts with respect to the mix between ACV growth and free cash flow margins going forward here given the other results in Q1? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 12:00PM, PEGA.OQ - Q1 2025 Pegasystems Inc Earnings Call

Question: Mark Chappelle - Loop Capital - Analyst : Great. Thank you.

Question: Blair Abernethy - Rosenblatt Securities - Analyst : Thanks very much. Great, great quarter guys. Just a question on the Q1 term license. Was there a change or an impact from contract term length like duration of what you signed in the quarter?

Question: Blair Abernethy - Rosenblatt Securities - Analyst : Okay, great. And then in terms of you go-to market at this point for '25, are you looking at sales and marketing capacity at all, and particularly, around new customer opportunities?

Question: Blair Abernethy - Rosenblatt Securities - Analyst : Great. Thanks, guys.