Pegasystems Inc Q2 2025 Earnings Call Transcript

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

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Congratulations from me on an amazing quarter. Just a quick question on Pega Cloud. If I'm looking at my math, you just basically had like a record add on ACV. Is that already blueprint, or is that just kind of the normal momentum in terms of more customers coming from the client cloud over to you, like overall general market. Can you speak to that number because it's very strong, obviously, and it's a good indicator.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay, perfect. That's really helpful. And then on term, obviously, you had good renewals in Q1. It looks like Q2 looks good as well. Can you -- is that like -- kind of was that like if you think about the shape of the year, was that like this year, the core renewals were kind of more first half focused? Or how do I think about the rest of the year there? Thank you. Congrats from me. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call

Question: Steve Enders - Citi - Analyst : Okay, great. Thanks for checking the questions this morning. I guess I just want to start asking just on, I guess, what you are seeing in the deal environment. I mean, I guess, the numbers kind of speak for themselves. But I guess, what do you -- what are customers focused on? I think we keep hearing questions on like DOGE impact and tariffs. And I guess, it doesn't look like you're seeing nothing there, but just what impact have you seen, or how does that kind of discussion play out with the customers that you're heading now from the those factors?

Question: Steve Enders - Citi - Analyst : Okay, got it. That's helpful. And then just on, I guess, the ACV strand here, I guess, does that change maybe how you would think about the pace of ACV through the year or maybe how you think about the numbers exiting the year? And I guess, what was the impact of FX quarter-over-quarter on the ACV number in 2Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call

Question: Steve Enders - Citi - Analyst : Okay, alright. Thanks for that. That's helpful. Thanks for taking the questions.

Question: Jake Roberge - William Blair Capital Partners - Analyst : Yeah, thanks for taking the questions. Really impressive growth in net new ACV. If you had to parse out the growth acceleration between Blueprint opening up new deals, I know you talked about rising interest in digital transformation. So obviously, that bumps up Pega Cloud migrations or maybe just broader AI [tailwinds], what would you point us to as maybe the one or two largest factors driving that acceleration?

Question: Jake Roberge - William Blair Capital Partners - Analyst : Okay, that's helpful. And then just on that new logo topic, I know you've been investing more in that motion over the past few quarters just given the success with Blueprint. Can you talk about how that push has gone thus far? And if there have been any learnings for that motion as you've started to invest more in it?

Question: Devin O'Rourke - KeyBanc Capital Markets - Analyst : Hey, good morning. Thanks for taking my questions. I know you've kind of responded to this question, Steve's question on macro, it seems like there's nothing too material to point out, but I want to drill down on public sector just given how topical of the subject that is and especially after, I think, SAP kind of calling out deal elongation in the US open sector. Have you seen any similar elongation within the public sector business? Just curious how the compensation has been with new customers in that specific market.

Question: Devin O'Rourke - KeyBanc Capital Markets - Analyst : Got it. Super helpful contexts. Just a quick follow-up, and I just want to ask about the ACV strength in the quarter. Curious if any deals might have shifted one way or the other? And the multiple strategic wins that you have won in the quarter, Have you seen cell-cycle shorten and your ability to push the deals to close to finish meaningfully fairly as a result of Blueprint versus your initial plan?

Question: Devin O'Rourke - KeyBanc Capital Markets - Analyst : Great, thanks for taking my questions.

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : Great. Thank you and congratulations, you guys, on the on the quarter. So Alan, I want to go big picture with you, if that's okay. So I hosted a fireside chat last week with the former Head of AI for Salesforce. And he made this comment, which I think probably also applies to Pega, but I'd love to hear your thoughts on it. Here's what he said. He said I do think, in general, a lot of the big SaaS players do have a massive advantage, they have the data. What are your thoughts on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : A quick follow-up. So I was at PegaWorld in the audience when you did process agentic process fabrics, Pega Agentic process fabric. And you guys said, I think that was going to be generally available in Q3 '25.

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : Okay, perfect. Thank you.

Question: Alexei Gogolev - JPMorgan Chase & Co - Analyst : Hello, everyone. I appreciate you letting me ask a question. This is my first earnings call with Pega. Great to speak to Alan and Ken and Peter. Alan, could I follow up on the previous question? Can you talk about the booking momentum and demand trends after Pega Cloud conference? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call

Question: Alexei Gogolev - JPMorgan Chase & Co - Analyst : Thank you, Alan. And Ken, if I could ask about your guidance. It feels that the margin expansion outlook is somewhat conservative. Are there any factors we should keep in mind that could limit margin expansion this year?

Question: Alexei Gogolev - JPMorgan Chase & Co - Analyst : Thank you, Ken. I appreciate it. It's great to speak to you both. All the best.

Question: Mark Chappelle - Loop Capital Markets - Analyst : Hey, guys. Thanks for taking my question here, and nice job on the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call Alan, a question for you. I appreciate your commentary around Blueprint in your prepared remarks. I was wondering if you could just talk about who Blueprint is often competing with? Is it, for instance, internal development initiatives at customer sites, or are you running up against other software vendors? And if it's other software companies, which ones would they be?

Question: Mark Chappelle - Loop Capital Markets - Analyst : Great, thank you. And then as a follow up, regarding the recent strategic agreement with AWS, is it fair to assume that we could see some partnerships in the future with some of the other hyper scales?

Question: Maximillian Persico - RBC - Analyst : Great. Good morning, everybody, and thanks for taking the question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 12:00PM, PEGA.OQ - Q2 2025 Pegasystems Inc Earnings Call On the partner-branded Blueprint, that seems like it could be a really meaningful opportunity. So the question is, do you disclose roughly the mix of the business that currently goes through the channel versus direct? And then, two parts. How did that fit recently and how do you expect that mix to trend over time with some of the newer channel investments that you've made?

Question: Maximillian Persico - RBC - Analyst : Okay, very helpful. And then just one follow up, just to double click on the macro, has anything changed versus 90 days ago? I know like generally, seems pretty stable. It doesn't seem like anything's being reflected in the numbers like the second quarter is pretty solid. Have you seen any change in sentiment versus like, say, in April or May?

Question: Maximillian Persico - RBC - Analyst : Great. Thanks, guys.