AI-extracted from the 10-Q filed 2026-10-20 — Q3 FY2026 (quarter ended September 30, 2026). Every figure is machine-verified against the filing text on SEC EDGAR.
Pegasystems Q3 revenue grew 3% YoY to $393.4M, driven by 19% Pega Cloud growth, but ACV decelerated to 6% as customers postpone large AI investments amid economic scrutiny.
Biggest Revenue Drivers
Subscription Services$291.6M+10% YoY
Expanded adoption of Pega Cloud by clients; partially offset by shift from maintenance to cloud offerings.
Subscription License$55.6M-9% YoY
Timing of client contract renewals and absence of several large multi-year contracts recognized in prior year.
Biggest Revenue Drivers
Total revenue: $393.4M+3% YoY
Subscription Services$291.6M+10% YoY
Expanded adoption of Pega Cloud by clients; partially offset by shift from maintenance to cloud offerings.
Subscription License$55.6M-9% YoY
Timing of client contract renewals and absence of several large multi-year contracts recognized in prior year.
Consulting$46.2M-18% YoY
Decrease in consultant billable hours in Americas region.
Largest Expense Items
Selling and Marketing$143.8M+3% YoY
Marketing program spend of $2.9M to support future growth and higher headcount compensation.
Research and Development$74.3M-6% YoY
Decrease in incentive compensation, partially offset by cloud hosting and professional services investments.
General and Administrative$38.6M-8% YoY
Decrease in equity compensation; ongoing litigation legal fees ($28M YTD) expected to continue.
Litigation Settlement$16.0MN/A
Estimated cost to settle litigation from proceedings outside ordinary course of business.
Margins: Gross margin remained flat at 74% despite higher cloud operating costs; subscription services gross margin declined 3 percentage points due to personnel investments in cloud operations, while Pega Cloud margins compressed from 80% to 78% YoY.
Watch Items from the Filing
ACV growth decelerated to 6% (constant currency 7%) amid customer scrutiny of large AI investments; filing states purchasing behaviors have adversely evolved and factors may continue depressing ACV growth.
Appian litigation: Company faces retrial on trade secret misappropriation claims with Appian seeking $1.64B in damages ($284.6M for marketing/sales, $1.36B for platform revisions); jury trial scheduled November 30, 2026.
Operating cash flow declined 12% YoY to $304.3M, driven by $32.9M legal fees and $15.4M restructuring cash disbursements outside ordinary operations.
Maintenance revenue declined 9% YoY as clients migrate to Pega Cloud; subscription license declined 9% YoY on timing and absence of large multi-year contracts, creating revenue headwinds.
Company repurchased $432.2M of stock (10.9M shares) in nine months ended Sept 30, 2026, with $810.1M remaining authorization through June 30, 2027.
AI-extracted and verified against SEC EDGAR filing text. Not investment advice.
2 transactions in PEGA reported by 1 member of Congress under the STOCK Act, most recent trade Jan 13, 2022. Reported transactions, not recommendations.
About PEGASYSTEMS INC (PEGA): stock profile, AI score and financials
PEGASYSTEMS INC (PEGA) stock profile, AI quality score, and SEC EDGAR financial data, a Technology sector company. 13F Pro's AI-powered ranking engine scores PEGA at 67.6/100 on a composite quality score built from its SEC filings, placing it at rank #358 of 2,925 stocks — the top 25% of the AI-ranked universe. PEGA scores in the top quartile across balance sheet strength (96.9), free cash flow (79.5), profitability (76.1). Shareholder dilution risk is elevated at 17.0/100, reflecting ongoing share issuance or stock-based compensation. Based on the latest XBRL financial filings (Q3 2026), PEGASYSTEMS INC reports quarterly revenue of $393.4M, net income of $14.1M, an operating margin of 3.8%. Top institutional holders of PEGA by reported 13-F value include BlackRock, VANGUARD PORTFOLIO MANAGEMENT, AQR CAPITAL MANAGEMENT, based on the most recent SEC filings. PEGA trades on the Nasdaq exchange and files with the SEC under CIK 1013857. 13F Pro's AI research platform runs 10 specialized AI analysts — value, growth, momentum, macro, and activist specialists — that debate PEGA daily and publish AI-generated analysis with cited SEC sources. The platform aggregates historical XBRL financial facts, 10-Q and 10-K filings, insider Form 4 transactions, and institutional 13-F holdings for PEGASYSTEMS INC directly from SEC EDGAR.