Pegasystems Inc Q3 2025 Earnings Call Transcript

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

Question: Jake Roberge - William Blair Capital Partners - Analyst : Yeah, thanks for taking the questions, and great to hear that Blueprint continues to resonate with customers. Just on some of the newer predictable AI agency recently launched. Can you talk about the early feedback you're getting for those solutions? And just what's different about those agents versus what some of your competitors are doing? 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 22, 2025 / 12:00PM, PEGA.OQ - Q3 2025 Pegasystems Inc Earnings Call

Question: Jake Roberge - William Blair Capital Partners - Analyst : Very helpful. And then it's pretty clear the acceleration that Blueprint is driving within the existing base. But now that you've started to invest more in new logos over the past two quarters, can you talk about the doors that Blueprint is opening on that front? And just how that overall push has gone thus far?

Question: Jake Roberge - William Blair Capital Partners - Analyst : Very helpful. Congrats again on the great results.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Perfect. Congrats from me as well. Ken, one for you. Like, I was trying to understand your comments a little bit better when you talked about, like, the impact of more clouds that it does have on term and license. And you said you wanted to help us a little bit with Q4. So should we think about that speed acceleration or, like, you know, the -- that we saw on that third-client Clouds line of the business should continue, probably maybe a little bit more in Q4 as you gain momentum there. I'm just kind of trying to translate your words into your numbers. Thank you.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Yeah. No, it makes total sense. Yeah, it's really really good to see. And then hopefully that translates into guidance and -- into guidance as well -- and the guidance approach as well. The other question I had, Alan, is the other big area around AI that should be really interesting to you is application modernization because there's so much that can be done there. Can you speak a little bit about where we are on that journey?

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay, perfect. Thank you. Congrats.

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : Great. Thak you so much, and congratulations, you guys. Can we talk about how pricing is evolving maybe in this industry? In the script, there was -- I know you touched on it, but if we can go deeper, that would be great. In script, there was one comment about price on real work processed. And then you've got Bret Taylor, CEO of Sierra, talking a lot about outcome-based pricing and how that really shifts to playing field. So any thoughts you have on how pricing you might be involving would be super interesting.

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : [multiple speakers] in the right place, yeah.

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : That's right. As a follow-up, Alan, are you seeing any new players in the space? Are you seeing Sierra or Decagon or anyone else like that?

Question: Patrick Walravens - Citizens JMP Securities LLC - Analyst : Okay, thank you very much. 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 22, 2025 / 12:00PM, PEGA.OQ - Q3 2025 Pegasystems Inc Earnings Call

Question: Mark Schappel - Loop Capital Markets LLC - Analyst : Hi, thank you for taking my question. Nice job on the call, guys. A couple of questions around the legacy-transformation opportunity. Alan, starting with you, the newest Blueprint release introduces AI agents essentially analyze like legacy apps and automatically design workflows. Regarding that transformation opportunity, are you seeing customers actually integrate this capability into productions today or are they just still in the planning stages for that matter?

Question: Mark Schappel - Loop Capital Markets LLC - Analyst : Okay. And then as a follow-up. Ken, if I recall correctly, the legacy-transformation opportunity was supposed to add about 1 point of growth to ACV this year. Is it still tracking to that, or do you see the legacy opportunity outperforming that expectation?

Question: Mark Schappel - Loop Capital Markets LLC - Analyst : Great. That's helpful. Thank you. That's all for 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. OCTOBER 22, 2025 / 12:00PM, PEGA.OQ - Q3 2025 Pegasystems Inc Earnings Call

Question: Rishi Jaluria - Rbc Capital Markets - Analyst : Wonderful. Thanks so much for taking my question. Nice to continue to strengthen the business. I wanted to start by maybe thinking a little bit conceptually about Pega's role in this new AI ecosystem, broadly speaking. Alan, I know we've talked about this concept before, but as every kind of vendor and stack is building agents. One thing that we really haven't seen anyone truly crack the code on is the ability for someone to be kind of a neutral middleman and handle the agent orchestration layer and allow a lot of these agents to work with one another, especially at a time where MCP is still in its nascency and A2A probably even more so. Can you talk about maybe what potential role Pega can play in that, in assisting all these agents across so many different stacks? And then I've got a quick follow-up.

Question: Rishi Jaluria - Rbc Capital Markets - Analyst : Yeah. Got it. That's helpful. And then if we just think conceptually about growth drivers for ACV from here, clearly, a lot of it's been -- you have Blueprint as a potential driver of upside. But a lot of it has been within your existing customer base. If we think now about Blueprint and the lower barriers to entry, it feels like there really is an opportunity for net new logos to be a driver of -- key driver of growth over the next several years. Just conceptually, just how should we be thinking about what that mix over time could start to look like? And could we see new logos be a more meaningful driver of future ACV growth? Thanks.

Question: Rishi Jaluria - Rbc Capital Markets - Analyst : Really helpful. Yeah, very helpful. Thank you so much, guys.