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: Pinjalim Bora - JPMorgan Chase & Co, Research Division - Analyst
: Can I ask you about the term out performance? What drove that was federal part of it or anything else to kind of call out? Secondly, on cloud ACV
growth, that seems to continue to decelerate. And I hear your point on overall ACV growth being more important. But as you launch Infinity '23,
which adds kind of a lot of GenAI capabilities on the cloud side, I believe, should we expect cloud ACV growth to kind of trough at some point
going forward?
Question: Pinjalim Bora - JPMorgan Chase & Co, Research Division - Analyst
: Yes, understood. Just to be clear, for this quarter in term, were there any very large deals that swung kind of the number towards the positivity 1
or 2 large deals or just...
Question: Jacob Roberge - William Blair & Company L.L.C., Research Division - Analyst
: Alan, when you're talking to customers, where the dollars per AI spend coming from? Are they coming from existing IT budgets and maybe crowding
out other areas of spend? Are you seeing customers create net new budget dollars and potentially actually expand their overall IT spend to account
for those investments?
Question: Jacob Roberge - William Blair & Company L.L.C., Research Division - Analyst
: Very helpful. Then Ken, do you still feel Pega is on track to complete the subscription transition this year? And then I know you put out those targets
of being a Rule of 40 business as you exit 2024. Given constant currency ACV growth ticked down to 10% this quarter, how should we think about
the balance between growth and margin as you look to reach those targets?
Question: Rishi Nitya Jaluria - RBC Capital Markets, Research Division - Analyst
: Maybe I want to go back to better understanding the macro impact. And more specifically, think about what are customers and partners saying
about large-scale digital transformations because as we've been hearing from partners that those are things that a lot of customers might be
dragging their feet on given the uncertain macro. But simultaneously, I'd have to imagine as companies are contemplating their generative AI
strategy, digital transformation to enable that and integrate workflows becomes more and more important. So maybe can you help us understand
REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us
consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
OCTOBER 26, 2023 / 12:00PM, PEGA.OQ - Q3 2023 Pegasystems Inc Earnings Call
what you're seeing in terms of those and kind of weighing the puts and takes about both the near-term macro as well as how customers are kind
of trying to position themselves long term to embrace generative AI and your role in enabling that? And then I've got a quick follow-up.
Question: Rishi Nitya Jaluria - RBC Capital Markets, Research Division - Analyst
: Yes, absolutely. Very helpful. And then, Ken, just a follow-up for you on the gross margin side. So you continue to show a pretty impressive cloud
gross margin expansion. How should we be thinking about terminal gross margins on the cloud side, especially as you do have a little bit of
multi-tenancy around the core, you are embracing Kubernetes. Is this something that over time could become an 80% cloud gross margin business?
Or is there anything structure that might be holding you back from that?
|
