Pegasystems Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

Pegasystems PEGA reported third-quarter 2025 non-GAAP earnings of 30 cents per share, which beat the Zacks Consensus Estimate by 66.67% and increased 58% year over year.Revenues of $381.35 million beat the Zacks Consensus Estimate by 7.42% and increased 17% year over year.Pegasystems’ strong third-quarter 2025 performance is driven by its unique AI strategy, led by the Pega Blueprint platform. Growth was fueled by AI-integrated workflows, rising cloud subscriptions, and disciplined execution, resulting in higher ACV, backlog, and margin gains. PEGA stock rallied 22.4% in the year-to-date period, outperforming the Zacks Computer and Technology sector’s rise of 19.6%Pegasystems Inc. Price, Consensus and EPS Surprise Pegasystems Inc. price-consensus-eps-surprise-chart | Pegasystems Inc. QuotePEGA’s Quarterly PerformanceSubscription services revenues, comprising Pega Cloud and Maintenance, generated $264.2 million (contributing 69% to total revenues), up 18% on a year-over-year basis.Subscription license revenues (16% of total revenues) were $60.6 million, representing a 33% year-over-year growth.Total Subscription revenues, consisting of both subscription services and subscription licenses, rose 20% year over year to $324.8 million (contributing 85% to total revenues).Consulting revenues (15% of the total revenues) were $56.4 million. The reported figure is up 4% year over year.Perpetual license revenues (41.4% of the total revenues) were $158 million, declining 65% year over year. This segment remains a negligible contributor compared to others.Pega Cloud's Annual Contract Value (ACV) increased 27% year over year to 815 million.Maintenance and Subscription licenses, collectively referred to as Client Cloud ACV, rose 3% year over year to $742 million.The company reported that Total ACV increased 14% year over year on a reported and constant-currency basis, reaching $1.557 billion.The company's backlog grew 19% year over year on a reported basis and 18% on a constant currency basis, underscoring the sustained demand for its services and products and future revenue visibility.Pegasystems’ Q3 Operating ResultsIn the third quarter of 2025, the gross margin expanded 190 basis points (bps) year over year to 72.3%.Total operating expenses increased 8.7% year over year to $261 million. As a percentage of revenues, operating expenses decreased 550 bps.The company reported an operating income of $14.5 million, down 224.1% year over year. The operating margin expanded 740 bps from the year-ago quarter to 3.8%.PEGA’s Balance Sheet & Cash FlowAs of Sept. 30, 2025, cash and cash equivalents and marketable securities were $351.3 million compared with $411.6 million as of June 30, 2025.Operating cash flow rose more than 38% year over year to $347 million, while free cash flow grew 38% to approximately $338 million.PEGA repurchased 8.7M shares for $393 million in the year-to-date period.PEGA’s Zacks Rank & Stocks to ConsiderCurrently, Pegasystems carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Zacks Computer and Technology sector are Alkami Technology ALKT, AMETEK AME and Celestica CLS. While Alkami Technology sports a Zacks Rank #1 (Strong Buy), AMETEK and Celestica carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Alkami Technology is set to report third-quarter 2025 results on Oct. 30. Alkami Technology shares have lost 35.1% year to date.AMETEK is slated to report third-quarter 2025 results on Oct. 30. AMETEK shares have gained 4.5% year to date.Celestica is set to report third-quarter 2025 results on Oct. 27. Celestica shares have surged 186.8% year to date.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AMETEK, Inc. (AME): Free Stock Analysis Report Celestica, Inc. (CLS): Free Stock Analysis Report Pegasystems Inc. (PEGA): Free Stock Analysis Report Alkami Technology, Inc. (ALKT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks