Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Pegasystems Fourth Quarter and Fiscal Year-End 2022 Earnings Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kenneth Stillwell. Please go ahead.

Kenneth Stillwell

Thank you. gentlemen, earnings to call. and full QX ladies XXXX year evening, and Pegasystems welcome and Good

presentation expressions such likely statement statements, subject as identify deal Before should, usually are based will, our to the they similar variations The Certain and or projects, guidance, statements of this words was the Because safe strategies, future begin, Private expectations assumptions. are forward-looking estimates, of harbor speak be date we words various I'd Act intends, as forecast, statement. may, and and only statements like on Securities risks Litigation expects, which contained targets, current of events, uncertainties. defined anticipates, statements with such other or could, the made and as forward-looking to Reform read may in construed XXXX. in believes, plans,

that Form and filings such XXXX, forward-looking including annual Securities place XX-K matters on reliance achieved. Investors and in year Actual those announcing are to December the Factors the release the current its undue the its contained expectations. from results and beyond to company's year in will the and with contained be for are ended statements, for QX materially earnings are materially SEC. cause and results fiscal company's could forward-looking report the full Commission, year with on differ press statements the company's such in company's the recent filings differ assurances could XXXX that in and no XXXX Exchange the XX, expressed other statements from cautioned there not

of obligation we applicable information, and disclaim future these or specifically not except events statements, or the may subsequent otherwise. events cause Although update publicly undertake change, result view as to whether do to forward-looking revise new as by required law, our any

call that, and Pegasystems. Alan over turn Trefler, with to And Founder will the I of CEO

Alan Trefler

our team of Ken, and strengths adapted exceptional call. executed thank I'm on downtrading leveraged in how to you today's everyone and XXXX, our you, Thank proud resiliency.

said right, and challenges. further growth And We in our significant our people. ended XX% drive we the were, which year to a multiple our Rule despite and business company, become shareholders ACV value for where opportunities progress greater we invest our technology we're to making of XX will at distractions and

results reinforce Our tremendous of have to Ken we opportunities will we strategy the discuss call. for growth. effectiveness detail more customers target our in in know the later where

be investments, clients a very Digital for market for force dynamics key our think, are driving some type in improve their and indicators. The of The efficiency here, environment and us optimize given important going being to continues who expect positive -- we it to automation I be ways. are is clients effectiveness. well, looking continue uncertain to in top transformation we're of in to to for mind XXXX, the economic we're more even and Enterprise increase

a be IDC in all for $XX projected increasing IDC's years worldwide the the be the growing CEO know-how. to low-code will application increase developers. total latest At helps was by scarcity market time, clients. same from no-code is to and forecast XXXX, will XX% that to of low-code consistent one is what low-code think projects we're use XXXX. And the developers the over hearing digital technologies This to CEOs developer nearly from theme skill or According According success worldwide development Gartner, which billion from their Worldwide critical number next of of with no-code XXXX is there of skills, solutions. most drive three survey, an XXXX,

in what better and of driven going as of challenging expect dynamics. the ways faster met do will resources, me to face transformation things, especially customers. and scarcity key largest they leverage know economic need are true on with by They face a year. I some They it's perfectly to our CEOs and focused recently they to told strategic environment and digital they be be came of these and is to positioned to Davos, back Pega success, from most

have in strategy a year long this this and focus to We us a and beyond. history space clear

free is to vested maximize for automation and strategy Our very technology help change. clients designed boost and in low-code our most value, workflow Pega service technology. the and scalable is platform decisioning to much powerful to efficiency, adapt provides simplify AI-powered

their recognized leadership and dramatic recognized is led with industry by sophisticated the and proudly product to and most analysts has Our of world's partners. organizations successes many

and has Cloud now advancements. of more able on who to ever are than tremendous we've modernizing use progress made latest our Header accelerated adoption, innovation our clients make

strategic And deep in with so closely are biggest agile are this organization a trusted uncertain innovative and we technology strengthening efficient environment. clients they believe inspire we healthy, to partners. creative clients providers consolidate we proven And their and our are their significant their and accelerated to We with relationships likely to us. for solutions can that will building and more our clients translate and ideas choices directly challenges. value for work that with these trusted Finding growth

Now the on do will planned economic and and steps the to we've truly accordingly. be it going based a into all year, tough taken we expect good indicators, year

growth. of role outpaced improve been greater completed. our have Nearly drive operating historical for clarity alignment These tough especially early decisions make we're some enable changes our in driving To further and us help and to means focused and efficiency accountability, organization sharpen that where long-term were model. January, go-to-market changes our we the up investment had focus, on set our all short-term As client to go-to-market both announced to our having success. where

evaluations adherence So markets that some local processes. regs we're through working and in are there to

or to Like for those time care in growth know this buy well being Ken conservative the in Now that XXXX, for we're roles for later with backup lead values. those support changing afford many companies, our with transitions which about we're many who in we more eliminated I will And is more planning keeping to other to call. as working take are talk great as them. a saying colleagues, challenging deeply whose care

over focused Our overall to future we we're continue where approach our we well position cost continue on beyond growth clients focused go into adapt. as in this got I'm are cash generator will be our a to shown whether and and we've a financial years our the as making, where will gives do to significant And or related approach whether we've are time, us cutting, that Combined serve year for to excited strength the either and our us efficiency see which rapid clients technology coming are growth you are and flexibility impact on more see to and we changes projections. transition with in well can the organizational on is we to the invest years. positioned subscription And to business. completion. also the opportunities over the the results

had best effective Now innovation the clients success. industry. continue solutions been XXXX, our think, has and for on the central to I give I platform Pega, to a clients most think, our innovative Infinity always Pega focus low-code and has, provide in to the In enhance we

for apps new Some organizations Infinity, of faster, experiences customers version lets Pega and and of launching improve highlights the create employees. develop a smarter workflows included which

availability, and while reason scale We new operation where still Pega how clients workflows center, Infinity this are our to and good strain automation, built And teams, reducing choosing introduced well continue adoption. which Pega own could help we operation. global out on productivity Pega maintaining have while they also low-code on can Cloud their do. and running our to forces on see governance. over as Cloud services significantly uses IT bring cloud all can improve reliability on increased cloud we're focus that because organizations a templates, extensive We seeing to We're finding

for developers if But be to that isn't demand the developers sanctioned market Many by governance IT. tools silos costs lower-end With to or not count citizen low-code are if enterprise the development organizations create contributing proper in exceeding challenge. also or done. want tools today and of availability, to increase can and supported the citizen there get professional the tap are risk able to work

low-code clients maintainability. efficient any security, create the more practice, to when to in that add to And Pega's for approach robotics our would processes makes we what help and industry's capabilities efficiencies easier Pega robotics citizen governance that empowers best automate otherwise robotic and quickly uncover to hidden we most business make down and fix to enhanced of skill even the ensuring while to acquired Everflow automation capabilities operations. enabling log level users organization's of factory also sense. providing process it solution, is mining complete support hyper technology processing We've believe automations make intuitive scalability developers enforcement build

we're tracking. elements There's of also lot tactic interesting a

position For at offering help latest and And they on this, business example, of how I themselves dramatically we're our all that looking models. looking AI approaches We're to them carefully plays better. strength Pega. of make generative inside tackle at the historical think, technologies model-driven can

Pega June work. expect enhance share to is relationship PegaWorld news in potential exciting provide clients more as strengths. see our this of terrifically result take their value to some I of of have positioned lots customers. very to these at We a advantage and to we with will

new new this market announced a to Pega monetize LaunchPad, has and revenue also development build And new application to business-to-business applications. low-code for us. to and potential We an users designed streams platform, cloud-based provide interesting empower new SaaS the

Our and to where right several adopters launching goal during with we're be. to is on XXXX, sign early XXXX of in want up track in anticipation we

contribute results success. always why touch our innovation's view, what for are to never or continue make be we've about they homegrown because feature thought about grower and publicly business. for and of clients I'd on our our us their are sake The successful are or why first talk successful. clients to all is, to support many we innovation new our some to that's technology a and need from about leveraging software. see ultimately, We has goals impressive product highlights our the to from our so Whether been willing with how sure like how point strategy. client this required, clients' would to That's

number example, know Pega of tech our their your banking for for clients For their use a customer use NatWest Pega of awards won of life provider customer including solutions. and best management the recently cycle banking software,

automation Media have even to versus few. to credit IT customer up year Fargo, stories Banking banking Pega and a than and share Roche, XX of all at retail streamlining FDA, just Invoice in in awarded PegaWorld including the best Virgin cards, their for processes more this Wells Cloud. of success And built name iNspire Group signed on use clients June,

Vegas back so first for years. We're four our be in going to to PegaWorld excited Las in-person

including sponsors, clients, the are to EY, demonstrating others, forward signed and the to solutions be us look hear us joining their services stories Capgemini our more partners and addition PegaWorld than we they'll the There major already along many and website check Accenture, and live In XX up technology half. out technology our latest these with and to see and amazing Please in Innovation join there. Hub. first register

world like steady in our Cambridge to that visit this new from that's new executive our note of in-depth for from coming to exciting in really highly been clients I'd strategic center Australia, see stream to also a in-person Amsterdam conversations. again briefing

XX of So think challenging on the company be completion to ability results, to to we've leverage on right right in the coming capabilities deliver our strategy. transition us, as is effect front in right Rule business excited right and exit right resiliency times. opportunity. and at and to to began heritage that shown we in the significant summary, pace in the the have space, to XXXX. and a a are the of having to we see and I a subscription positive opportunity team right and we We're execute and our our the time on I'm with

financial results, you, it To let to back the turn provide more me color Ken. on

Kenneth Stillwell

strong, our our Alan. model, major recurring in collaboration Thanks, flow embarked of our ago. to stability brings five and hard uncertainty. to our the more thanks profitability partners. reason our Nothing on transition team And subscription our and resiliency especially been economic than and has work the we That's cash years with execution in business revenue, of clients times close

majority in say happy XXXX, Over $X this our we've increase five-year transition nearly which to of Pega's subscription And value revenue, from around few ago, revenue annual now of doubled and more in just coming XX% XX% period, than total represents the years achieved contract revenue, revenue the billion. remaining subscription services. top I'm professional a XXX% up with our is the a from

client through business Our helps rates retention especially with subscription and a operating leverage, improve build our scale profitability more expansion high opportunities. model and us resilient client and massive

our value contract annual momentum. in metric Growth growth measure key is business to the

on focused importance. almost During we the transition, ACV its of critical because exclusively

In as talk $X.X QX So ACV results. XX% annual contract in about value our year-over-year reported, XX% currency let's reaching XXXX, and constant increased billion.

was Our to by focus cross-selling strategy our where driven clients. ACV heavily existing go-to-market we on and growth our upselling

Cloud increase Pega $XX million. of million, over ACV reached an $XXX

Our commitments Cloud client XX% of were -- over from new XXXX. XX% deals our in Pega

success is in backlog or billion Another important growth our Total remaining our metric reported. backlog. to subscription measure reached performance obligation as transition during $X.XX

highlighted we compare earnings As QX high, our this year subscription tough XXXX, last backlog was resulting call of year. in license our in in unusually a

reported subscription Focusing maintenance, and includes with which on services, year-over-year, line growth backlog Cloud just in XX% our Pega grew ACV rate.

would. year we with our transition of profitability and are results in that we the we demonstrate as XXXX our final We expected exited improved the subscription currently months

examples. give you few me a Let

of First, our XXX% $X.XX, over increase non-GAAP year-over-year. an EPS reached

EPS in sales management, disciplined marketing. non-GAAP was by performance driven especially primarily expense and Our more

In slightly and costs sales year-over-year. total fact, down were marketing

You'll another profitability XXXX. later to increase hear in that a we significant expect little see in

as Pega as and that gross Pega points increased Second, driven Cloud basis margin drive Cloud efficiency. scale architecture innovation by well automation was cloud in improvement approximately further in increase margin gross XX%. our to helped improved The XXX

cash When complete, subscription flow our on will the critical free transition step to to path start normalize becoming a is generation

Difficulty] [Technical

Kenneth Stillwell

phone in We connection here our new lost office everyone. our Waltham. in Apologies,

think So profitability. up was where apologies which going for dropped that. to about pick off, I'm I talking I

year that profitability and We we with as exited our the transition, we demonstrate expected are results currently would. improved of XXXX the final we in months subscription our

you me give a Let few examples.

an increase our over non-GAAP $X.XX, EPS year-over-year. of reached First, XXX%

by sales Our primarily driven was non-GAAP especially and EPS management, expense performance more disciplined in marketing.

were down In costs fact, year-over-year. slightly total sales marketing and

that little later increase XXXX. You'll expect significant to hear in see in a we another profitability

as subscription in Cloud to in was of our improved further as XX%. we on company the our basis step to innovation flow The XXXX, approximately driven -- exit well the XXXX. points margin cash improvement When cash normalize automation, gross Second, free transition free which critical XX Rule start is increased generation will cloud Cloud architecture drove complete margin a XXX efficiency. gross to Pega increased in a Pega as path become by that

of we Rule exit The reminder, of outside XX free Rule as combination growth and which company a other the items flow I our we is bookings will toward the As XX reason cash because for ordinary ACV of the XXXX margin of year. course define we adjusts a are of business. say skewed as end become the

the our So significant to should to our you XXXX following to cash improvements exit in That normalized. tend flow Once 'XX. should year. free expect in collections cash collections we cash more in said, and bridge XXXX, see be

of provide remind our philosophy It's beginning the year, to you fiscal typically guidance guidance. update the Moving do practice want guidance. start, our XXXX to of To we and year I approach. to guidance our not at annual

ACV our sales and investment aggressively acceleration. we invested For incremental result guidance ACV our that marketing significant the marketing in growth sales our in philosophy to And would and growth reflected several belief years, rate. last in accelerate our

extremely changes times, we As about we than be go-to-market XXXX our events from important in environment. a during year this informed we well thought XXXX will tougher ever, is and will uncertain for at world we strategy the approach, everyone. current and less know view. experience we And XXXX by We focus our to that guidance believe is looked more our predictable that the made guidance the believe work

reduction in we announced global January, X% workforce. our In a

to selling on our sales into and net action of we're brands. focused spending which existing the base, and efficiency in largest up original respected improving versus is made further of result our over most that expect by client savings We plan million $XX our global

transformation an We are recommends an major often recommends existing role because project Pega. selectively. firm digital or a a a clients from with pursuing takes We because new of new a new as or land Pega clients prospect part client industry a buyer analyst because partner

Pega, cycles, longer assume experience Obviously, amount this could in risk rates uncertainty enterprise deal market. sales a reasonably high value deal companies, And and software that including there's compression. that of close lower there's we

we've decided into guidance. to these factor Given this our risks,

ACV growth at total focus. let's ability scale execution growth with full our We're efficiently XX% XX the rate We driving Total accelerate approximately year future overall of efficiently environment of get believe of in think not of XXXX. achieve So of to into our We the accelerating for indicative to But XX will XXXX. year-over-year. in be to such growth years. focused and slowing revenue the Rural numbers our billion. $X.X guidance ACV XX% grow be SBX is or reflective economic we any our Rule XXXX our of of hyper will on will opportunity the

about earnings non-GAAP per expect share. per $X.XX share of We

flow, what guidance free We Given project today, our From release. GAAP in deliver reconciliation million we've shareholders year, focus on we where our will our of estimates XXXX. added free increasing are these of and best A non-GAAP earnings new a we stand our to guidance cash metric contained this of our XXXX. cash cash in $XXX is flow in flow.

would provide think to to as thought We guidelines should also about how business XXXX. modeling in it people be additional our helpful

thoughts. a of So those few I'll share

a believe new X% First, and by between year $X full the will for client commitments represent recognized XX% XX% revenue in would impact Pega approximately Cloud shift projected Pega Cloud in we of million. the XXXX, mix

more half larger of of XXXX second XXXX. XXXX beginning as the our the to collections to to and the likely of will a of a more significant volume. it XXXX. into our in result and QX portion of a amount our growth ACV was of straddle Second, revenue occur in skewed year terms renewal typical in in QX And in dynamic XXXX year is This XXXX, renewal is of portfolio

Next, license backlog unusually a in saw was you QX high of first million, of the quarter at significantly XXXX, impact backlog $XXX XXXX. term in that revenue and

dynamic not to quarters the did that at expect of the more a XXXX, term have happen historical license pattern consistent with we of we first Given be XXXX end revenue for of QX of year.

your In and to renewal QX, When typical with XXXX. to significantly term incremental expect see XXXX higher contract having held but the Fourth, activity, greater. return QX a sales selling unusual, a to seasonality naturally, PegaWorld, QX the and similar other to on XXXX. XXXX a was are decisions in in for words, be of to focused marketing it seasonality person in event. we expected make our QX, you revenue is expect of existing because We to usual, are more we our level clients as likely commensurate in be of clients, first and conference of annual being customer half expenses license

year business, the due renewals. first to the expected be of part the irrespective think likely Last, of of seasonality half XXXX our fewer the softness having and the economic of we be would -- slower

Day us will held scheduled person our our to our Investor after the Las for event. Grand include you many in MGM have PegaWorld financials, will in technology so love annual Vegas, which our mark Our We'd The strategy, during this Nevada. join go-to-market from on is long-term Monday, for years model. and agenda calendars updates including your at away June be PegaWorld. Please XX XXXX

We Q&A host will event. section also this during a

further significant generation conferences of our in forward flow best-in-class which provide there March well investor invest becoming free opportunities look of many people. technology, in are clients in seeing will as weeks. result XX a Rule In our in coming driving of our in to cash you and number as a I early increase conclusion, company, we're a to toward the as

Operator, the please for line open questions.

Operator

to we Kevin And with Kumar first Instructions] Goldman Sachs. [Operator will go

Kevin Kumar

resiliency hoping are I just here, ACV. seeing kind you're of that guess the results that solid the how of that you pretty particularly And a on efficiency of function last sales reorg did you It's is much year? improvements for?

Kenneth Stillwell

take I'll Kevin, part that. of first the So

and to not I organizations, within our so to clients those there's but more in not capacity start us, expect a of target of surprise because focus around that more the from because actually they ACV we think of opportunity with would to future. tens our much that company we the -- -- So existing $X dollars got I clients those clients, it's see -- for precious engagement better clients think only those are because of billion also them, billions there's

was recalibration base. client So the helpful of our do to that I that think that, core

I necessarily we to would But go on if see victory so this don't those Alan? connection exact play efficiency say between think a and market engagement it's I stage efficiency with early. at would and works. I do

Alan Trefler

the much news the the midst take we're Yes, The the made. growth. having good of been changes is still of very changes have process in architecturally

material our this engagement to that we evidence lead but the the the of from have of think, very, from some that expect. to this is the pretty clients allocation as reallocation the the think what I been Those chunk the going spent I'm of also that that But I roles go-to-market. seeing We to we having, do good announced figuring the the exactly change resources the in most all organizations, positive. both year. So results of of kickoff And is to resources a out to is from was, make last staff to part of because things a sense year very response this the environment. wanted we increased

Kevin Kumar

on just quarter. And in question license license revenue term a the the then --

in number kind think of XQ of of that a of natural out of Anything return type quite Street I kind of a to was that was pull-forward a higher deals? kind than terms at. anything kind kind call dynamics? of where Or bit was of to terms cadence just in

Kenneth Stillwell

Good Yes. question.

to in Cloud a Client tended bit just absolutely think mix. At higher the little of year-end, point be QX a versus Pega the question is I last Cloud -- last you true. made there

So factor. I think that's definitely a

of those that came QX just of had number which deals happened go 'XX. to end XXXX. last be in mentioned, year, revenue year, backlog deals I the And some of the of this at as the QX we also, into our a of versus We of carried revenue QX timing of year, then the into

think the whether it -- December into do some So I goes was mix the whether it January on of -- not comes hits just or revenue And unexpected. backlog. X, but it I difference sometimes deal into or timing was a the think XX depending between on

Operator

we'll And Enders to next go Steve with Citi.

Steve Enders

bit that think are there? to of I seems what the about just I about seeing but should haven't outlook, If guess maybe being guide. it you in I things the I seems in the think macro. a that sorts that terms seen on typically kind right, clarify particularly it regards macro, say? to deal fair little it guess, much thinking really want and the you like of of those like is on with assumptions interpreting to impact I it date, we embedded I'm cycle of slowing underlying other it's tough think you're of you in about how to some guess, And down

Alan Trefler

talking are other kind of about a the think would candidly it's a candidly, move is CEOs very I is schizophrenic is tell about, sophisticated the us, we're kind ones in that most XX% XX% clearly, -- not more selection I the to for but large there I and down, reflected guidepost. companies. of particularly that little bit which to of bit the worried impacts because Well, that you

we many as entered market. away we did is impact and that But this conscious market. market, year, towards SMB lot be impact in so sadly, we from market last began wasting pivot did going going that's way the type which -- us that to I lot from gives on repivot pronounced than had be was action. a I money. more think, pivoted the economic it. -- the we think to more pivoted we that before think And which even a we what firms the Ukraine that a away a of I we resiliency other And

Kenneth Stillwell

tendency of the other to point, add is compressed, there have -- periods that value known heard be Pega. spend from you've is like where budget. may clients just you a concentrate propositions When and sure I'm terms incremental or with I in companies time known one also would of additional budgets for this vendors investment which

strategy so And occurs. our that well if into plays that as

Steve Enders

of you context there. any No, has competitively, dynamics that's kind of more negative market change have I one out maybe your know some there? competitors helpful news kind seen of guess in out been out And any that I putting there.

some to of understand there. what the recent trying potentially having point, just that's changes impact this So at

Alan Trefler

a rise of going lot to of low-code pace I'm the that not as in larger it they I are we're a possibly idea There little technology, these to we've kind Yes, is, a with The competitive in app the companies stand-alone enterprise looks going of in folks as to a tempted reality I'm idea pretty same I a that think seen an debt this are be. have and as might time. them. the have that to no-code of that particularly approaches and architecture new of it of believe seeing empower long creating way to having much And dynamics is risk factory things. generation that could maintain citizens continue but technical

it selectivity as and appetite There's describe would of lot of sophistication. level a I that for

competitively been this use years. to of So pretty language, last positioning compared and fact this us for that the companies who advantageous really talking enterprise uniquely enormously that, the helps as capability couple I the is an think about is all we've doing

more opposed you and competitive be able of dynamics as be kind really be say going do need end would or that much capable -- the are to are capable that to more also phase. chain able as doing -- describe of want for to to easy to organizations things, doing are femoral -- low more so of but are I organizations And to I worse

Operator

next And Capital from Markets. we RBC question with will move Rishi to our Jaluria

Richard Poland

range the mentioned comes This Richard I expansion to guess, logos. you've with past, for Rishi growth of somewhere existing of I the logos, XX% the think of on some on in in existing is just Jaluria. XX% one, Poland from

of As into upsell of mix? we you're And year? are look we we encouraged that, by see on think forward kind how kind -- of to of as about that head of kind should drivers growth that the what top next some driving you or next year, that that

Kenneth Stillwell

take I'll I'll upsell the that, part take and drivers. first the of let Alan

of right we few that getting from ago, is a existing part our ACV first The logos. years XX% growth you're that were XX% absolutely of to

new at couple quarters in we and opportunity won't project well or an you mean that doesn't ACV last our future. existing our If from go look new the XX% excess that It the out that we we think doesn't then in be get push will clients. be come logos. of to what that number of That that XXXX, we logos want number decide that in back on will and even the mean of will accelerator the won't

the in for XXXX, and clients. cases, of to and new some the be expansion targeted existing But got not size our of over the very upsell many average we deal logos that

there number talked Alan about then And of the opportunities think So about that excess being in ways see examples. some are of that we XX%. the

Alan Trefler

Yes.

the the an the that as we business to -- areas other when not division generally So redesign type of and into the even a companies up a we days work about we Australia talking three we strategy from for consider encouraging picking we do tough business and them companies distinct of and what's office wanted with. exactly it can much. some comment new What was for having of what economic to restrictions I'm spread wanted what is can Cambridge in is cases, and into for level seeing, which engagement do their to frankly happened is that go interesting major coming to about one have in entirely happening significant don't I we in how time a with might so really of can of Cambridge very be logos really the think logo company we for despite thing travel help is

will work. But And of believe -- clients, and lot we're seeing opposed now these increased response much working to working is advisers be a approach I increased the that, of conscious and seeing of consultative investment that just make the focus, think an us understanding in from approach. trusted really a more to and as transactional which this result a and energy with clients it's a staff we're more that is

Richard Poland

ISV we a as But been is a it Is integrator of good bit and any as basis seems a then of LaunchPad know that there partnerships kind follow-up. what and the strategy then you've kind of just to the there just be in ecosystem. some your there? go-forward think partner quarters. Pega up relationships picking driver global recent system With about a some And has the of there. update had, with on I

Alan Trefler

Yes.

call regarding have partners are change a with what's I sometimes actually which Their whom strategy them to that diamond a way interesting on customers, -- the significant of that they our with is they customers. relationship them So they lot are lot played relationships. new concentrating their think the what working, them new has the of most of is call the

sort from third that comes as from major key to seeing our we organization what and it account on-the-ground of of or to some responsibility thinking they top be that as with direct those That, as to from face-to-face directly. think relationships build and partner staff need positive, a And very, teams and meet have is on there. well I'm something at party stressed bank, through our think, partners opposed the to telco really I enthusiasm taken having top now to responsibility as very of is real that the

got want a be that about position the we've LaunchPad. up who of expecting hope any a sense just for potential we companies, trust. are we're numbers that a a there is we think, is there sure hope are what the in it way able at and And the be really but material That, of significant of that's getting really to we to LaunchPad than partners A here. lot to I and any I relationships I to to didn't excited be in producer frankly, about more terms 'XX. but makes be to LaunchPad able the to lot in interest any to to companies Citibank in from talk uptake. be the not revenue lot something we're can in work on we the a service, clear of revenue tee XXXX, saying it's have responsible making ground that direct that build you going sense Relative person for

Operator

we'll next Bora And JP move with from Pinjalim on question Morgan. to our

Pinjalim Bora

QX, us trying building using the the a Can some I'm one those help down and question Are some entering on understand to taking growth levers. year? of in? kind help expansion of maybe what QX, Maybe that close guidance. rates understand ACV you just close Just Ken, to approach the rates? those of quarter. taking baking you're thinking the you're saw down? guidance? your On understand you flowing us assumptions pipeline step in that ticking kind you of the of in through you Are rates kind

Kenneth Stillwell

Sure.

you at few coverage at. we existing events at in the a organizations because pipe the natural that look on look connected that client. pipe, pipe for factors there's is at we're We when to typically of example, focused look terms also Naturally, So we an like look renewals, in

[Technical Difficulty]

Kenneth Stillwell

And again. ladies we work and gentlemen, please stand by dropped to we while

So let's out... try it

Alan Trefler

dropping be to answer other is you've not clear and Ken whatever We're want to I questions the So mic. here sit got. happy

Kenneth Stillwell

I'm line power front dropped, anything. why our there's not no but sure issue

that of So we have renewal because higher-quality look look we pipe pipe, frankly, -- we pipe a statistical level -- actually we that adjust quite cetera, renewal rates, from. of specific opposed events we don't at to to population. broader look And and is tie the at we on some to at where coming close enough have pipe as the et that using can clients across at probability bigger look pipe the analysis tend

in. So a bunch factors of play there's that

the the basically covering, what of feeling there's with little where AEs, those a another are which were momentum who tenured the of bit what's orders then how is nuance are many ones. more AEs, factor, the And

there's measure we're orange we there's also specific we rates. that rates QX But we on to using we very It's be. think would of So not quantitative kind that the is or and use, what then not number it close a that some close -- factors historical see. use to that triangulate and pipe the

Pinjalim Bora

in that the the efficiency you in as down. What you sales apart maybe are about was QX, out, into are I us changes how with can year? the obviously, see, -- risk? S&M this you where And -- pointing were the that that, the risk talk beyond going from you And help seeing made

Kenneth Stillwell

in, that some frame. see weren't calibration saw it some July people was impacted reduction that came did many beyond its the really so in of the you That And adjustment year happen impact QX savings. out. then we Well, Maybe that not middle of those cost at QX. into would savings the in until talked time was the recall there expecting about, have of did that and QX, QX have of terms did in In the QX. that we we to because our none that come had the it to level that which you actions may in impact you closed

To actually like going had et vote target said, new our your organizations, on logos, on we're did were on The sales primary efficiency. the driver trying organizations in the efficiency partners quota biggest drive that marketing when key our on to actually biggest point Alan expanded our we what focused after cetera. pipe, where non-primary carriers where driver ratio things And efficiency is -- we we had like seeing ratio -- that me. of on to the and carriers we're excuse

of for to buildup that the for so we on then right that right yield being from cost and make We that we time in really the account expect focused the our around that account get speak, and the executive the back, organization. level organization level support to quarter

going So the our is investments productivity that to make where we really tie regions efficiency verticals. that going focused to because we're it's -- to drive around or

Alan Trefler

new focused alternative, who target know teams more and had candidly, have very qualification needed authority know line. as now who much response in organization we more different activity the more we credible very we a a credibility budget we in of very, would and had I you business. to not have with what a that that a account in tremendously have approach where If people a be specific that's to of companies. would where a for a deepening than XXXX the model they in business in position bans, to on relationships we're organization, organization when execs looking time of in lead and the the organizations efficient and Fortune already are in describe people get often trusted We're account We're classic which that building people

Operator

with Koenig Steve from Nikko. question next SMBC our to go We'll

Steve Koenig

financial questions of kind Both here.

this mix bit on of based ACV with growth? little forecasting you're X% a shift out cloud is parse but little kind offered. the one Is the year a your in there you've -- a commentary growth because First bit XX% to revenue weeds,

Kenneth Stillwell

actually into No, that of to a and QX of the at revenue. of really that relates makes that last kind of end good That the question, of because the backlog optics timing year the of had amount we bear Steve. rolled 'XX that XXXX little

Steve Koenig

makes actually. That sense,

great. that's Okay,

little bit other open-ended. more the maybe question, So a

haven't model. 'XX fiscal you updated So your

You session investor talked that's up the in about June. coming

thought of not your a of why you're of now. like that So then you're numbers, And in that. know maybe waiting I guidance, the that right around process questions long-term just terms offering Maybe model some later. couple on update offering to guidance

pretty us that that this any that looks -- XX% flow. look of growth which What directionally give tied you on of base would And to lastly, the this, questionable at what happen the all better why you Rule able probably to happen? much conversely, And that? Is should to potentially thoughts to kind feasible? kind not make then case year? you cash need XX you But ACV be do had But can on of now. free

Kenneth Stillwell

Yes.

long going terms not our preview term. to we're Investor Day So in of

some commentary on have that. will We

And to XX. that talking Rule Rule think forward I So look of your XX, in June. about of comment about

track think cash a on. that leaks QX. I land still think that was if work QX, we in XXXX, way think think were of were I flow. growth we on way will in the mind cash kind see year QX that we'll I in to our into that lot we in The directionally that the might on XXXX. math free of how and some we XXXX, in in kind remember, I be normal of flow lot a of But I We was a built there. that free cash we keep booked think

collection. that model, of one that use And a you reasons a about cash our of -- kind that's why of there years. back-end and little billing until puts exits normalized flow I talked free if only, that loaded measure bit -- So the is that we've of

Steve Koenig

fiscal year And like might the ways visibility 'XX, be the longer-term there looking half -- you'd you that by model? Do follow-up model for inform to -- first you -- that. what what or things have the the first just of long-term last that into are midyear, you maybe in in better on do the into --

Kenneth Stillwell

for November, thing month one months maybe now, after the will level now this continuing economy we or be that XXXX, will than be think We're see like we more see in year a February in out the we bit the growth that of our more shakes or interesting get into in right to every I see we we'll 'XX definitely whether definitely growth few And that whether to some normalcy get and through coming more a knew I is of how think -- know we year little think a start. know think challenged will to I a year. months. return bit in could a we XXXX normalcy inform little

be signs I have beginning I that the we'll of that situation, year this seeing goes. kind may not to we're maybe of how think -- think but we're XXXX, not see

Operator

to with And next we'll Mearus Joe Truist. go

Joe Meares

quarter. Nice

I Just a now, it. ever doesn't behind vendor any for, seem the few consolidation. in but about a companies we of hear it this from examples to have We've been it about specific hearing years theme lot space think,

the seen provide some think for to curious you part the the first like upside And -- any can of question if first on of come that? do the is, have actual the So -- question evidence not, and like it's 'XX? if still I'm guidance you

Alan Trefler

And see is I is see clearest it aren't now. you that who to think more look, as I seen actually which folks be. you'll the consolidation that, I if places not reluctance think great that think of to the historically you think, And you've which manifestation vendor in for they well. vendors, you'll want the I new introduce candidly,

Kenneth Stillwell

are the my I ERP. -- the think are on for to you that technologies. same other think CRM I've chain a trying heard, can't I they and number do vendor, creep just do like actually vendor, chains out having that is, a like do to this vendors to that thinking really -- as you years, you that with think keep I actually you vendors, end with Like an of right? actually my I you I so think Yes, thing force for owners heard what I've But a focus budget thing. supply or don't software the systems thing I can reality same drop mean limited constant of proliferating add say the not vendor X go and there's Joe, Pega, about is, heard are and think you've actually the But -- that. same joining that. really -- technologies supply don't a predating I do a CRM ERP know up

Alan Trefler

consolidating, for interested strength. who in And Pega's example, different workflow Yes. to want core are are systems we people to seeing

retiring weren't wanted technical they so it's able what And have things that to debt. or that targeted scale that

a go think, number going what us. for but not little positive a by vendor is the I of I consolidation, It's to down eaters XX%. would that's suppose is I So saying. put to the under like that Ken it's, close

Joe Meares

as Just follow-up. a

QX or that just think in I'm how million trended QX. purchases last than quarter? fourth you higher purchases I $X curious $X quarter, million the had were mentioned

Kenneth Stillwell

it typical kind frankly, quarter. with terms it -- a of kind was $X in that was was the of over whale a engage quite fairly of That -- million. not we of was There quarter, deals whale year. number a

engagement with think a broader the around more in engagement clients. dispersed deals were our lot I a

So didn't or one two deals. get on there we any

Joe Meares

Makes sense. sense. Makes

Alan Trefler

reiterate do time apologize know. lot XX. sure as importance is to informally XX rigorously. you that, are of to to office We're very June down new of shake you talk I we I of show. think really of to make And you that technical will think quite coming to want I'm to have for sorry I some I guys to available difficulties. always And the the I the going with a say many to Waltham up, -- our PegaWorld. stuff cool

like Have evening. call you to all to Thanks. a hard joining of business. you successful drive and a all let this I'd we're for great know And thank working us on

Kenneth Stillwell

everyone. Thanks,

Operator

this so concludes your you today's for Thank participation. And call.

You may now disconnect.

Pegasystems (PEGA) 15 Feb 232022 Q4 Earnings call transcript