Pegasystems Q3 revenue, adjusted EPS miss estimates as contract growth slows

Pegasystems

Tue 21:13

Overview
Enterprise AI software firm's Q3 revenue rose 3% but missed analyst expectations
Adjusted EPS for Q3 missed analyst expectations
Company says slower growth reflects go-to-market execution challenges, client investment scrutiny and evolving purchasing behaviors

Outlook
Company says ACV growth rate may remain adversely affected for rest of 2026
Company expects cash flow generation may continue to be adversely affected for rest of year
Pegasystems targets $700 mln or more of free cash flow in 2028

Result Drivers
CLOUD ADOPTION - Pega Cloud ACV grew 20% in Q3 and reached 59% of total ACV, driven by expanding cloud adoption
CLIENT INVESTMENT SCRUTINY - Co said slower ACV growth was due to clients subjecting large technology investments to greater scrutiny as AI disrupts the industry
GO-TO-MARKET EXECUTION - Co attributed sluggish ACV growth through the first nine months to go-to-market execution challenges and said it is taking actions to accelerate growth

Company press release: ID:nBw6Nrzbka

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Revenue
Miss
$393.36 mln
$422.04 mln (10 Analysts)
Q3 Adjusted EPS
Miss
$0.35
$0.48 (10 Analysts)
Q3 EPS
 
$0.08
 
Q3 Adjusted Net Income
Miss
$59.75 mln
$82.46 mln (10 Analysts)
Q3 Net Income
 
$14.09 mln
 

Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 8 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the software peer group is "buy"
Wall Street's median 12-month price target for Pegasystems Inc. is $43.00, about 22.7% above its October 19 closing price of $35.04
The stock recently traded at 14 times the next 12-month earnings vs. a P/E of 10 three months ago

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For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)