PEGA - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Pegasystems' Fourth Quarter Fiscal Year Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to Peter Welburn. and Development Corporate President, Investor Relations. Vice may you begin. Peter,

Peter Welburn

and Thank Earnings QX Pegasystems Good Call. everyone, you, morning, welcome and to Krista. Fiscal Year XXXX

identify safe Litigation contained intends, Before statement. statements be expects, as begin, I and anticipates, forward-looking the and forecasts, which believes, and will, on other like plans, or of of of similar forward-looking such estimates, current expressions read we statement and Private XXXX. in as Securities could, words would construed only guidance as Certain Act words this the was in statements, variations speak our may, expectations statements date are defined presentation should, Reform may to the harbor The assumptions. made based

deal various cause future results subject differ for in contained in with materially Actual results materially are they expectations. statements from risks are could those the current year company's uncertainties. Factors statements XXXX beyond to fiscal events, that from company's Because and could differ forward-looking XX-K and December press such to expressed other XXXX filings including XXXX the the with and in Securities and the fiscal filings Exchange company's on release ended and QX with results report Form and annual Commission. year company's Exchange and announcing its XX, Securities Commission, XXXX, year the for its the recent the

such matters in reliance forward-looking and statements, contained no will such that place on are cautioned not the undue to Investors there are be assurances statements achieved.

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

should prepared with in They conjunction are substitute a financial this GAAP. considered accordance financial measures consolidated not under only non-GAAP in Our for GAAP. statements prepared U.S. in discussed be measures our financial with call

shown. all Reconciliation are XXXX its measures non-GAAP QX of exchange the XXXX, can by and rates the in GAAP be announcing periods results. XX, applying year foreign Constant release currency December found and fiscal calculated measures to press company's XXXX

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

Alan Trefler

results. Peter, you, XXXX, thank well I'm deliver to to changes how on our strong we've commitment to continue we demonstrated a while on delivering financial thrilled the In It's today's we highlights our to and history. our geographies, profitable through minutes. business call. plans, see across about you great that innovative in and balanced Ken executed most you everyone few the industries in and the and drive walk growth products Thank the to made team our across to delivering and will

accelerating. client been With in change great blueprint. see never business have energized easy practical we the is showcasing prospect of every capabilities. hands-on for unprecedented GenAI momentum to experiences way. clients, Blueprint and and the Pega is new every The has more team in to changing coming recently Pega driving understand Recruiting adding U.K. our conversation, week, engagement we power pace Blueprint the the drive and an release, press included of And Forces XXXX. we're Armed to in into announced Our transformative new user Service innovation like are technology thrilled

at are particularly about. least the do. It X worth we're haven't capabilities excited sets you it seen you if haven't There can month, what Blueprint And used twice is in of last seeing.

workflow empowers [ ]. to First, that every gen talk Blueprint now tech about more a We'll [indiscernible]. be

the place, believe, legacy a I rethink will what are capabilities be Pega clients helping new our opportunity that create, market massive our partners there for systems. and second, And by in

we've architecture. legacy Blueprint's been And power adding a of out dated past legacy logic onto our have transpiration, Now clients getting cloud applications capabilities. months, and business recognized many new to modern of accelerate in transformation their the

can defining can modeling to documents, Many process process common [indiscernible], For and approach clients updated maps. import BPMN now example, be the business these Blueprint thousands [ of which business called what's to the have ], now by hundreds just to minutes. these and processes. Blueprint in improve just create the ability Pega's modern not cognitive and We're actually AI We're superior. re-platforming to Pega's workflows enhanced them make experience model using or

that will work back-end data can a connect now Blueprint interact it systems this to models having the these a to provides automatically that the structures foundation workflows record has. create having on-premise of key existing and that And the import and their interfaces systems. to their the other Additionally, APIs to to have customer to client's with to -- systems and interfaces database their cloud terrific way for up to systems moving the

are we to going capabilities. enhance Now Blueprint with to additional continue

You'll ability shortly see upload to the documentation. client

apply our Blueprint bring So rethink and a [indiscernible] such we to and and can shift. user things the in future. to our transform This take and AI the do. technology what and of that to clients customers be best isn't as them lift able helps other to improve continue have to the use manuals simple want and for

And legacy talk customers, large our partners find teams applications we're product actively to a central we strategy. we that of to transformation thousands, Blueprint client that are our for every of not targets if legacy and working point when has Now hundreds, make transformation. with

business new think, I it central every this opportunity, perfect of Blueprint with And and exciting leaders supports sharing legacy before transformation transformation really into partners. legacy been a and huge example. legacy is in said their It practices. integrating transformation in vision is Blueprint tools there's that client to our this opportunities, our cloud and global interaction. expansion into the integrator their I interest into I've systems

terms talk in of well we'll much is want still to But so we people I there moment. Now I in marketplace. get about about that a the will at standing AI. lot remind AI, of a which talk look is There's about agents, how think just up

of it. There think AI X types are as about we

describe like Hub, our AI. for statistical now Ford see Decision global as experiences are you can This It Citibank, AI feel to their they Customer ], part which capabilities our [ The website, remains have and drives supporting Pega's entry need Wells customer shipping a job been for to contextual over we've a and what Fargo unmatched of doing. on first brands, real-time well Horizon we decade. valuated and high The great a for it's in what powers is we really customers. our significant business, customers key they do a competitors, that

frame sometimes been AI capability, is lot of well different technology, a underlying But have reality, would Now it I because generative hot. very, AI and complementary mathematical forgotten based statistical on in AI together. AI or has really a was people work so who very they generative

into be should X you. categories, all itself, AI of generative Now broken

or The things effort. productivity as conversations first like I summarizing customers is It instance, what self-service employees features. or AI This time and is customers generating for does that for described helps save providing and correspondence.

forward And companies the of productivity that them and we platform, things But those have our lots creating distinguish that aren't. dozens Now into the to that offerings vectors, they're be and of not of that to more. from keep going great. built from features going see ultimately, we these you're extremely believe lots successful are are really going we

And clients if is profoundly Now power transformative missing what Blueprint exactly transformative so workflows we've this to deliver which power was decades AI, with desired the perfecting our this customers structures of type is do to I business up-leveling run developed their organizations make our It's and operations. the is are their transformation and most, of competitors engage third spent the think already true focus this AI. needed of to Pega has outcomes, uniquely not and of features all to generative are focused to achieving. on scale. our And the them, decisions type our generative is at on productivity AI, their automate and that conversations change to because able

in approach Internet workflow [indiscernible]. we've on worked clients incorporates bring way of and from our the that wisdom experience it's the is a safe from we've AI all these and really for to that structure, to the model enabled lets learned things experience that in Blueprint from a breakthrough that to learned genetic us modern that practices, best decades, and industries has worked experience a

perfectly our Best existing of it architecture. fits all, into

Blueprint into our So AI an extraordinary us Yet, has and we products, scratched of allowed to can effectively integrate think do. quickly types these all believe just I what the having our we on it's clients. surface of we've and effect

Pega's AI AI we Pega or Experience, for agents. Experience announced ]. Gen the short. Pega Agent [ called Pega our approach of The world newest to offering, focused transformative Yesterday, Agent AgentX agentic is on

funding result, the manage organizations, think, despite along headlines height, bit by and the announcements, seen likely in some literally and new thousands thousands agents the agent many ways of them. Now a new you've many overwhelmed of are confused, or this. with are deluge And as a all the I to market,

the chatbox frustrated same little years. that of have for some are the seen agents underwhelming, Now than pretty often more we've a customers

[ Our governable, repeatable agents auditable do work. clients real ], want predictable, that

absolutely the And We moment. of is why we what made and do. workflow believe Pega critical agents is to and That's done have for I doesn't risky. that that best is believe know that workflow, orchestration we through be deploying chaotic agents this

capabilities experience agent agentic. new Our makes any workflow

workflows existing It that. repeat me agentic. Let their makes

chooses it and any want is brings chat the and the workflow or agent, So work and and then power ways it that right AgentX, they a Pega's that organization to else's, process still interface way to run of talk deploy, find somebody And it, in or latest auditable. the business with to Pega can the to you complete with their the to way together with follow workflow can predictable or the that interact.

needed whose be black large regulated [indiscernible] AI company. just procedures, them that a boxes. the by their task, manager or experience to clearly, boxes supervisors very their -- competitors and through Pega's trusted job established employees is do do. and on a competitors tells govern different of new the enterprises with are they like that ungoverned agents a throwing returns This away deploy AgentX counted are And ask proven step black and guide workflows follow agents their to that employees not proposing these into through guides can't should from thousands whatever processes Pega to step

of architecture. do. of talked most the a that textual be into enterprise. pasting by the agents made is prompts way every not prompts And building workflows to simple important that unlike time. And this Pega's the aren't most agent unacceptable have interpreted work, diagraphs our workflows or the we a channel same able Remember, communication sort about Instead, workflows copilot. core been do we've because have our always do physio we Now for the sophisticated can and may candidly, competitors

and And and deliver efficiently. need our AgentX agent, established power Pega allows since deploy and the security better workflows, we've that is AgentX an our whether operate enables to got workflows of design agents and to their serve industrial clients rapidly, leverage ensures approach Pega or they Blueprint And both clients any to another follows vendor, strength new customers the from protocols. fast. Pega rules to

With set central as a Pega from Pega part And together agent out calling agents AgentX, their clients a data allows an such architecture. other to making center Pega agents can and tasks, automate orchestrating this workflows of more invoke multiple complex documents. to of automatically seamlessly extract

drive workflows this and is they're around around around their back-end of traditional lets website, channels, their which around architecture, around everyone our see a around outcomes the way data where center the doing building build their systems do that sources. the that clients their can center, of because chatbot it, of else this contact instead of decisions you or engagement outcomes our those We

The right center become center orchestrating of AgentX entirely architecture heart is with agents. of of it And architecture, perfect the into has for our built agentic.

referring to architecture. center it agent out started our we've as fact, In

partners clicking on a agentic Blueprint, can into channels experience everyone call, how GenAI delivers to my Anywhere, several Blueprint. button the AgentX capability were conversation this of agent showed by our on within in new previewing and at Pega by blown across AgentX logging the kickoff, hundred they a workflow experience We've recent designing sales preview Pega conversational app away. then and this

expect can capabilities I new you power agentic coming to months. and think you And announce will be too. in us

that I've me now a ]. continuation autonomous enterprise, talk you've and candidly, is enterprise automation X the make leverages customer more vision for, decision-making, heard enhance of the vision years across a operations all This [ great about spoken the AI about of effective organization. make and self-optimizing service a to

are why is trusted technical they that to AI the what And deploy systems, To for around clear by platform. legacy of which a achieve this their able work and be legacy enhancing AgentX. Blueprint been agents must transformation, that's we're vision, accelerate with data orchestrated clients must Pega we've able to

our technology, to our and in on eager handling can while focusing lead AI be technology we focus deploying feel and care. We're people tests, strategy ways our advanced this innovation, routine on clients that positioned engaged we empower clients, partner better community that transformation. With with couldn't

we Ken results in XXXX, So delivered well from strong executed and in summary, a in moment. more

I entered momentum. think great we've with XXXX

We have advantages about and We're excited and achieve the great and the and this be ahead Gen AI of visions, it's and unique, can easily competitive truly help the that truly, of leveraging customers I'm enterprises it replicated. become to us. our opportunity leverage and to revolution, going in an embraced don't right AI incredibly autonomous approach their it believe company, position into heart is have a I to

To provide Ken. financial take more results, on color the away, it

Kenneth Stillwell

we Rule the company, Thanks, of at of XX new or the years margin, to excited and that growth XXXX, transition subscription cash cloud measure profitability. including business. company outcome balancing that becoming subscription growth today, Several share from be Alan. flow free I'm items. time, ago, strategy, a transition XX and annual our implemented subscription A critical to was supplemental of we're a new value a We and completed our in when contract Rule we

team's a resilience managed, the and hard determination to the to our back we've importantly, is most success milestone Looking commitment work, delivered, this our at clients. testament client we've challenges achieving

most ACV, in which the result to growth in increased That important XX% business, growth, the of constant our Pega metric increased ACV year-over-year constant in driven measure success currency. currency. year-over-year XX% by Cloud was

also model. growth our powered ACV target by focused account Our was sales

booking and anticipated and certainly less standpoint, be that's loaded the that out. here We back-end a year played discussed how would a XXXX from

value. GenAI acquainted Our clients an GenAI lets which incredibly to and prospects dramatically get Blueprint, client's them instantly Pega experiential speed in Pega Pega manner. are will using Blueprint time with

key growth, grew flow The by $XXX Cash year-over-year gross to and flow flow Pega expansion, improvement from driven in our and our go-to-market Cloud X free factors: $XXX was improvements XX% operations cash margin million. grew our cash ACV million, our XX% year-over-year in to efficiency. double-digit

lawsuit, would unplanned million. $XX into settlement our million our our flow guidance free exceeded take you cash the for $XX shareholder If account have by

So the opposite. slight shortfall exactly like is what for a looks XXXX

strong of and momentum capacity strong in Our cash flow March. debt balance off stock free those cash XXX,XXX occurring also of million our convertible $XXX in us for the pay gives put of necessary and which flexibility flow repurchase free XXXX as $XX.X XX, majority the us million, corresponding enabled momentum and sheet cash dilution repurchases investment position the to offsetting XXXX, of That shares our our QX. financial to with in December

in XXXX. XXXX jumping basis XX% from Pega by XXX XX% year-over-year, to Cloud approximately non-GAAP margins increased gross points in

approved investors, approval next in have ability X-for-X including subject employees our We Meeting. investors. of momentum split the the that shares transformation that to to disclosure our of our on XX retail make we our benefits, Annual Rule split, also our newly could in have our has several liquidity our stock may provide our Board at and strategy materials increased mindset, for business, including will shareholder Shareholder a in the and stock the noticed increasing You confidence execute arriving and digital believe strong

Think an constant guidance. a year-over-year guidance. to We reported by as of in see XX% as currency growing this our XXXX. Moving ACV and

drive Cloud ACV this goal. to We materially expect Pega

Pega us. guide could upside AI GenAI Cloud Pega ACV Gen XXXX a massive an growth be factor in adoption which for -- Blueprint, does of not Our

is It's our Let positive Pega. ACV GenAI clear, from do our believe feel impactful. me growth But we Blue modest the We assumes guidance XXXX. be part absolutely in driving a Pega benefits as for impact Blueprint clients. energy

QX And against our confidence compare, XXXX technology year. our in our in go-to-market finish our achieve and philosophy hard targets ability to us momentum gives strong Our ACV software a cash operating industry-leading that our to time should grow Best-in-class should accelerate while same per be flow at leverage. company increasing than is growth, ACV faster the growth. share free able this

of our ones X that I important earnings We want release, guidance in all but to highlight. provided metrics our press

free ACV for stock X-for-X Our the guide note mentioned, XX% our flow $XXX XXXX XX% of adjusted I guidance growth and split. a million, Please been EPS year-over-year. has cash year-over-year, not as of that our proposed increase annual

give it's modeling, that you going I feedback on continue to to do thoughts helpful so You'll provide when me that. I'm some financial

XXXX. more first business to fourth That slightly our we means First, ACV typical XXXX. of stronger new in expect follow the be add we quarter expect the cadence our will activity in quarter that net and

We the year. anticipate also growth don't variability ACV our in rate throughout significant

a revenue Second, U.S. XXXX. headwind a dollar strengthening to Cloud will Pega be growth in

current backlog total of in million. that Cloud revenue The about was For impact will vast headwind that of Cloud Pega backlog growth $XX million $XX to impacted from on alone, the XXXX then currency majority QX XXXX. Pega QX

going increase we're new pursue we to our in investment maintain to marketing expect to efficiency, but to our aggressively sales in logos. Third, XXXX more and commitment

XXXX by base. cross-selling sales we focusing through into reminder, and improve our XXXX upselling transformation go-to-market execution to on a As in and in our our order went installed

new the time sales to Given adoption our the of logos. selectively consider recent improvements to is go-to-market marketing coverage in more believe our Blueprint, increasing now and and efficiency we right pursue

Pega Cloud remain largely Cloud XXXX, XXXX. support in given to migrations cloud to in the flat Finally, making Pega we're margins investments in forecasting we're

an key our financial where in really now. growth and objectives, We right [indiscernible] and We business conclusion, balancing job I'm In is our doing we're hit outstanding profitability. XXXX. pumped well very

held weeks in New investors to road everyone wanted few Las that plan We June our forward and in our provide MGM session investor share the be in team. X to York. updates to the I let And Francisco Vegas. in remind will our seeing and San access PegaWorld the at everyone of several Grand -- the members leadership business on also next about to Monday, annual look at I on

With open questions. the that, line please for operator,

Operator

[Operator RBC. Jaluria line from first Rishi the comes from Instructions] question of Your

Rishi Jaluria

of continued increasing Nice into little in maybe making the momentum I want Can business. to near-term some drill talk to priorities? past, related see and wanted acquisition And maybe you go of new in bit longer-term Wonderful. that, a couple the logo the starts the game. that you're really about full investments you to had coverage. maybe the sales in a know you to I down net

then the with Blueprint Blueprint creating to Given using net you that new a these opportunities friction a able reduce having now can should workflows, success you're follow-up. door how be how in past? some creative for cases, And as we and about I've quick the haven't penetrate to got of that that thinking been front

Alan Trefler

question. attention and in been us have Great certainly to what new ways close have been might to think we've this done paying And how about the given have we than past. we how doing we've doing been engaging

often try theoretical for a bring very lot meetings the the terms create But interesting it to sales with I would concepts We out, somebody is X traditionally like customized in intrigue a I solution talked really is see know, then this. spend, in specialized should they would What's at a describe internalize X, which people the important. to they X, to in it, that concepts. the a concepts think selling while of center of is about trying or get to we don't conversation And to a takes to sort would consultant really convince And demo did customer of trying we [indiscernible] demonstration. guy was customer. knew way

now are shares I'll risk is the to should engaged do. that. same changed [indiscernible]. solution entirely the you, we're of has in the do specific And up pretty salespeople demo, custom they really consultants we right And that to almost CEOs. longer to to it We in organization, tell a client first no of demo every Blueprint meeting. and We level doing build the way to the need

for customer experiential. it play We feel it that have us. with themselves. AI becomes more it, much And then can doing try all can and see they it The and

of that go-to-market we're really So you, that already. with be it motion we're cost able be But to to will and what pursuits our both still to we changed tell also that change real. this. profile our should can at I existing new much takes terms going that's And make has completely more it Does show And our something organizations. customers it sense? to, with exciting. point calibrating think it I believe, I effective in get And means

Rishi Jaluria

Really appreciate Yes. the then And just... color, No, helpful. Alan. that's super

Kenneth Stillwell

new We very kind very fishing really we with as the know actually is add just when cover. me is let We the just work partners actual verticals. customers, we tight, Alan Alan we logos up connection model, What had those didn't of which follow on say, more allowed I a And what territory have understand logos more to Ken, color. went our what about before to we We It's the a of know on works well. our partners anywhere, little said, we to did works. we closely, after that is talking so would targeted and is speak.

-- organizational coverage. have So much process actually a we're around curated better

want don't of big those Secondly, to I a of insinuated, selling we need, they're logos need we because these we to actually highlight Blueprint. after Alan go different. I as had X don't just as things because very team as think new

Rishi Jaluria

Yes. then Rule No, want maybe about XX just of you've mics past to several that the ] of [ years. had And got think it. over kind That's the really I helpful.

XXXX. in now about talked You hitting that

implies of for Rule you'll or be at XX. guide around XXXX Your

actually about, Or kind growth of the two, this and further of even the balance we maintaining exceed optimize and XX? guess, a state? North model accelerate is kind to Star? the number should kind thinking how one, that potentially as of that number from be And here Rule durability end I maybe there Just is of of potential

Kenneth Stillwell

our do, improve So believe, think you think business. -- a I teams how no is I endpoint and this and can there fundamentally, that to is we

we're And at so Rule we're Pega. how of just for for absolutely the is at and it XX, done that's us to we of us, make suggest that that when opposite

for love that XX, Naturally, we right? improve. So on do growth, would backs next got keep to what's the of of We to to us, just Rule though. trying accelerated

So our our real to without to make able to much is focus and going to accelerate balance to and growth profitability, to engine. losing muscle ample of of higher margin the be focus kind growth drive to sure be that giving growth a but we want we're

Alan Trefler

needed fair. of some were way through we Yes, get from think to in the had very to a that that's where we've a point been I us internal sustainable. I everything to in Look, solidly done that camp. go Pega hear where believe is a of way XX go Rule Nothing discipline has completely the done years ago to reeducation to couple we the

heard talk we to that direction, our the focus do do wanting kind needs And teens back is growth the to me how back that to we've had But on you've ever or to to high go how [indiscernible] run But business. discipline we're going this the And focusing sustainability. not really, to to XX% and maintaining be open aperture sort next what I used about open the of growth. way while on we that we of going the be aperture think, that's year. we're get

Operator

with of Your Steve next the from Enders comes Citi. question line

Steven Enders

the of a way deal of maybe I that But of deals environment? for lightest And should want I to we I'm FX kind on on looks just here. or it's think if that, what maybe about question. in more, the think I ACV to since push what the do just going we on XQ the at like implications start, there. adjusting Great. or I QX? just like guess I into what's I'm give clarity in Or you're mean, looking something XXXX number, like I how like guess, I seeing if can that? XQ just Okay. and right just did ask yes, bit little guess, linearity

Kenneth Stillwell

Sure.

take linearity. I'll touch -- So I'll on

I the right you be impact massive pretty was currency bit impact. on think currency, might directionally You're for Currency a maybe the little but in minimizing us. QX

So the optics as of reported. the

was was or through If optically in like of the in year, quarters right, a like the $XX something you that currency it that way look QX. doesn't still headwind the year, XXXX QX look other stronger, million at just because but than

a number. pretty big it's So

But in of the we the a had look constant currency, in terms of knew through more take shaping be said, linearity kind that's we little hit balanced. the We some stuff doing hard of have you year middle to year, the bit in otherwise year and at that QX in saw as pull the as work up -- just stuff that to if of we you that is may can just fast weren't successful activity that.

enterprise have selling, don't aren't -- millions of where in deals. So does we happen there that

of hundreds have We deals.

can deals big do they quarters. So skew

the probably XXXX, But look it little ever year, will I shaping as QX in of of ACV is very growth. look a QX shape past we've terms be was it historically, more bit good and that. this in think, XXXX, the In adds we've a had think frankly, I We a of strongest like be terms year. ACV that think little different XXXX activity that more will And to had. net quite up will

Steven Enders

I the helpful to quarters couple and talking That's think of Great. past looks would go on would maybe over after be the playing couple the like then think I years? that maybe or here like see the about Can ask some of help about accelerated of out BPM next replacement of that stuff this? can And I kind just of highlighting that use context. guess what some And opportunities Okay. from Blueprint. of the opportunity. legacy different you some legacy the you replacement And think how us you that wanted or I with here cases be

Alan Trefler

legacy Pega use, used in systems. to and clients, quote working talk transformation was with used we renew would settings. actually Historically, to is the But Yes. we legacy about wrap

would other together have a here would do it ends processes, systems, to historically improve well. they as we would typically maybe So back what tie the system, but we with is we work their be

we what we've going now year let of introduced and the replace legacy we're here is systems. what last in say, and you ability to the rethink And your to middle into been "Hey, Blueprint building

able you you But want. So want ] be was wrap really what if turn [ their legacy do customers still systems. can them off to to to

of the big so can Blueprint brisk just systems a to immediately customer can database, we I'm environment, some automatically import redshift in database have part I'm now, But we've So their I up that that we did make now APIs I effort. system. Pega. want that it say, talk those like database would query workflow, Pega cloud a so of can or replace "Hey, financials into as something a SAP updated. the run that data or staggeringly I little to maybe going We that to do? database, that what a have to it want the data with have create Well, used generate some native system, to that live processes I a record and database can also maybe cloud to want capability native to controls added going to. in end cloud

of tremendous the in with a discussions replace, which us opportunity to gives early clients couple really this in been and months. last this, And do new to able our think of we has [indiscernible] breadth be

I'm we've that excited base, that SAP migrate around we've right for SAP with like aperture now in point putting are really our Pega, an pretty not migrations going SAP that, built with it, And big things SAP the to all their got customers on putting those customer think that the pressure of all on So everything are transformation. legacy here stuff wants an to sure. represents, do The around view, environment. from dramatically expanded into and But we opportunity. who financials a opened

Operator

comes of Bora question next Your line from with JPMorgan. Pinjalim the

Pinjalim Bora

Pega live? the applications understand and platform driving to has in of it's of up picked to through are want go-lives you, if going consumption hearing application from any I ask up kind in customers the created aggregate the what pace terms you of with? material Alan, Trying if of Blueprint

Alan Trefler

see with a is. for well completely clearly new think get to as new people work used Blueprint rethink Blueprint at adopted a It front. and up the completely customers mistake engine mean how a be I more Blueprint way pace. that something we like that's to to I -- a understood I -- look, you pretty different is clearly

Pega And last we've [indiscernible] year. since had XX,XXX ]. XX,XXX this in Blueprint work -- put out -- had [ really creator We've over we

genuine under we've just people a flight, those just on in are a but understanding. are started or those production. hundreds are of systems, these work to of hundreds building bunch Now and are either And deploy modified interested getting those people see into

a business, as not So business a just about and I I hasn't had center. that's wrong the think idea the Blueprint to think Blueprint somehow in X that single it. last conversation There's non-Blueprint a in the way the months this had that

Kenneth Stillwell

but thing meaning time just is our that And -- going kickoff, in is I'm like would Pinjalim, would actually been piece driven selling XXXX to Blueprint, Blueprint, kind of way, way I with to from millions in of been market of an you Blueprint of heard say, the there's with the actually of feedback at -- last Blueprint of being the right? down it with right, I'll teams the in clients -- add you our big here, go is our to clients. into realize our getting and hundreds give sales a If is hundreds have is to we our dollars value you actually are not year process our of the drive pipeline one empirical this color. have

So everywhere. it's

Pinjalim Bora

bit. like Ken, mix? guide, is you, about said think I'm in you seems little One XX% ACV I kind contribution and think obviously, maintenance to we for up excitement the [indiscernible] the of cloud. picked Definitely, the growth that Like question here. something think kind Understood. material should decline term like Yes. how trying maintenance of from a has

you to might point? to decline then that said maintenance. a decline see time And expect for last in some you steeper [indiscernible], at start think should I we XXXX

Kenneth Stillwell

Yes.

decline. to will -- I we decline. expect maintenance it's So would mean it

Alan Trefler

want decline. to We it

Kenneth Stillwell

Yes.

Alan Trefler

maintenance tell going We increased the want of what's with -- me because decline decline on. cloud to an coupled it

Kenneth Stillwell

right. migrating, are people [indiscernible]

more and rate maintenance expect we subdued potentially would at would much to So decline and we to a certainly expect term grow year-over-year. decline, well could as

these and happen is even lot will there that of migrations through into 'XX trick and a 'XX The 'XX.

might and just that than quarter-to-quarter of majority be growth coming because that of it's growth connected from our might engine. is will happen assume say, actually migrations. pinpoint coming -- actually how up to us Pega like is adapts to we through growth timing that Cloud our And the so from necessarily of year our more with I end Pega XXX% And the hard for it's that. But it Cloud, the would

Operator

next with line Jake question comes Roberge William Your of Blair. from the

Jacob Roberge

it pipeline impact on the or a Blueprint right Really how understand already? is hundreds thus of to for there far. the that's way is but helpful have of growth there financial tailwind way many closed Blueprint, you've think impacted of to millions about Like any far? caused to deals Just for you the how now quantify ACV that color Blueprint trying XXXX thus

Kenneth Stillwell

let's on calibrate Alan drive. and other one of will I'll that Blueprint There's of let's impacts -- X piece color. So big earlier, add what said really kind

new different faster The will faster more ability and connected sales help clients things, time existing with is engaged both they us our a engagement, to but And faster theme. drive are to first that They related. with that's Like for get drive cycles, clients. value logos. model, go-to-market are one and efficient to

the X those which client If us. I is what seeing faster, at seen you engaging one, with first think look things, value you've is

many clients in You're our already. of seeing that

a efficiency on bit you so it connects that lag when there we -- But that bookings. grow the rolled that the out. you would we you bookings. see that, get that being if see Jake, of yet sales kind going orgs -- sense. to target, in to it's addressable say it would the get because There's after, makes logos, of that scalability our as our kind still behind the there But actually, I would efficiency to of speak, phase implementation to we're that. one, not market, we sales little of starting would connects You're still a actually see We're

Jacob Roberge

understand you're more the more what Cloud, and can see of been And Really see of able year Pega us to you've uplift as to Okay. customers over these starting then you type past migrate price to helpful. help or so?

Kenneth Stillwell

bought between factors It does typically have -- there. the kind bought on But see it migrate, pricing kind models. of to a their whether XX% on end, stuff a see -- was, the well been because There's we high it they low as of end, vary really lot -- the every And perpetual, we what -- But above new in -- anywhere term, buying their they contract uplift. times depends XX% range. on been also clients customer-specific is it's lot you very, well. very of of because when in XXX% can they're it's

So that all gets the packaged relationship. of together kind in

It's almost clients, just some So be there it think but will really, move is really about not them, without. client-specific. of because clients all all uplift with of our may

mass to want model -- get can't of of I us we much because like science. much So don't a not too that it's a

Operator

Citizens Walravens question next from comes of with the Your Patrick JMP. line

Austin Cole

Wondering is Anything be... there guys about back-end front-end This Austin monetization, Infinity how any Pat. additional of kind you into monetization baked experiences? for Agent the announcement, for on Pega about are Experience the this Is versus experience? would thinking component whole Cole there Great. the

Alan Trefler

that done, [ that of workflows deploy the deploy levels We levels It's benefit our our of that contracts our customers the have get spirits the either should more to consumption work. or the use. in products, -- as completely monetize that believe, more workflows ongoing are I typically increases baked people. being Pega customers ]. automated its as involve Infinity our pricing customers is relates And from workflows should to into the the that Look, way

did One we, of vary other to some did, licenses really the having Typically our path went we the amount years work the hard things of that these of work-based amusement, from work. companies with all ago, do the of that down I that agreements customer couple counting and of moving user what didn't amount know price a the with licenses. in

that's or thinking vendors -- have customers I seats how And Certainly, difficult navigate by who that very no clue some years. is have think for being everybody X, next them. software should be it's go going seat, they think I of to the sold the I X down.

going be they another charge is, whether that at transaction, $X and stuff, vendor that what sustainable the about think I to We'll to all. see of to don't I heard wanting talk some charge do. were And they going that's happens. per sustainable that how

in where based of position all years, the on the last customers think a always quantum it's work. with the has new energetic several in been I Pega [indiscernible]. certainly that's perfect charged signed And for we've

Austin Cole

then And a follow-up. quick as Great. just maybe

deal? a On U.K. the Forces engagement Armed talk bit in came that guys about? you to deal, you allowed that how can about do little what And

Alan Trefler

to Air areas in them, And for U.K. being the had a there. we a the I the have is successful Force. of successfully the couple important think both of Sure. a It's success like privilege we highly Navy of Forces interesting, Armed silos. super able of and government really had lot do And recruitment, which environment

core terms decided And providing and they suspects impressive process, the a a to were using go [commander], they They weren't be strategic a in Pega. go formal to about an as go to honored and central very, it. XX we competitive, manage structured over consortium put bid, part the be to months. of that's had technology a would and who to with that, that decided usual very think, they may extremely how went highly together they the led both very way that the going all And really a [indiscernible], I used of company rigorous by in called very, Army talk well they market ahead through to

example be this worried these I very we're think they're obviously, real rigorous and environment. that everybody it's in our teams, using of defense on our extremely having And to is be and about a winning committed successful, So do that. we're their to days recruiting of technology thrilled here going merits to

Kenneth Stillwell

reimagine are broader opportunity public look to they a which back of is like. where of what transformation, the platform one global our to at public in kind a entities sector on digital good look would with that, add their example ends positioned is be help well also we And this I as able point

public And the And certainly that have in an to have we did. old right? and that player lot be a we space. need positioned sector, talk there's this of to think that I of that U.S. Governments example about refreshed, globally, they one in but been is to issue be and perfectly that's big a good are systems a

Operator

Loop Your line comes Mark with Markets. Capital the next from question Schappel of

Mark Schappel

here. for -- remarks, in was that In your leverage walk takes you Cloud a of expected flat to puts margins? believe Pega I gross just around coming Cloud prepared through are Pega the gross gross would be margins relatively I as if And scales have the I mentioned some you. some question wondering you could Cloud expected and Ken, maybe Pega year.

Kenneth Stillwell

not operating the might the at is scale we you why get that Mark, we reason only pace Yes, leverage think they clients. as migrate which

actually migrate a to sold. of that we clients of migration cost goods help with that make may some become technical investments if would specific faster, So we

actually So be our cost. it would in

that So but just improve, our may investments would it's make. would -- like models timeless we have still that we not

to So will that pace be the directly migrations. related of

Mark Schappel

But any one follow-up, realize for a it's And patterns of the in say, cases? you days or Alan. certain are as industries actually for customers are with, into production That's here. Blueprints still then helpful. types emerge that early Blueprint you, putting I use like seeing

Alan Trefler

rethink thing get to to emerge candidly, than this capability more need people we the think would and have to that historically I replace looking at because it sell that's the is rethink starting and talking really of been a from ability and to changing rethink rapid place, got lexicon the replace. the our And renew now we've way. with to then about teams recent they

could think see it an So I'm starting to significant. that quite and emerging be I as

expensive lousy issues, of database security lots forbid, [ with is lotus -- there have some their out out can really systems note system possibly there customers. that are still [indiscernible] and make, them There be God and are ] to of

we're are them lot seeing a is where of an area some idea And of more mainframe interest.

that We of history have Pega. at some

comfortable working we're with some very with that heritage. So of organizations

that's the legacy I see thing is exciting. the really So transformation emerging new yes, and I think biggest

Operator

Your of question Devin Oh Markets. Capital line ] comes next KeyBanc [ with the from

Unknown Analyst

post in result some seen of budget sort know the quarter wanted want deals kind as a result of you any quarter ACV any can I of curious year-end of fourth to, mentioned [indiscernible] here? as get color on I you kind off, if in first you've as election performance. closed the of more to maybe has flush come through just of kind or But flow Just provide? the that a budget in U.S. color expected.

Kenneth Stillwell

a way We Typically, year-end always did that's anticipated that way. have companies because have the heard There's do budgeting We we of the commission anything question are is that's unusual. the why you -- that it cycle. this it's any software enterprise QX budget not didn't year, we flush. see put But throughout it's plans structured, activity, transaction. -- other, the year-end some I'll are see in unusual the typically maybe larger

a budget like any call pretty wouldn't there was It I budget us. or, opportunities. looked quarter to or any of spend So normal frankly, big pullback quite flush

Unknown Analyst

drive has uptick been And Any seen color can you that some funnel efficiencies have looking or from activity of the of the just like Got And U.S. you're me. it. size at of context. then more federal federal public one business, just No, positioned sector look and kind and of appreciated. sort would top to be of could you that's great headlines of about kind how globally talked agencies, you any for if pipeline you different across it really just I provide well multiple of the kind trending? Maybe know in the just business. seen that kind of given administration generation there? we've kind

Alan Trefler

exactly pretty we -- federal Yes, news, we -- are service. frankly there's of at looking types able needs in to we about The -- a of we're in do tell it. things money, have confusing excitement providing saving terms There's feeling improving we space. a how the can by lot good and we efficiency of be engage the it's but about you government have what the as might lot think of

about on, So We that's Obviously, actually that about good there's we're what in lot and a place. but in we're good not going will feeling space, mean. sure pretty think that we're I'm for it. a everybody concerned true,

Kenneth Stillwell

I'm most constituents. looking sound. efficiencies, that governments not a focused that at where is the with it going interactions be general are you But to governments -- typically where might the if happen going about make as isn't on think to comment areas as it

solutions And or Or constituents, may if government be help actually at manage that look parties. -- other whether interactions Pega, interested many sell with of that taxpayers and it our communicate whether be right? our that we you

wasteful to out. feel the benefits But like sell and about in that support. targeted And we you the workflow read -- that that where solutions we the kind of spend like the good the happens that we the as so target in we so related what are all area that we of we feel within And to areas that plays a the are think that news, like solutions not well or now how agencies at anchored see we'll looks government, lot have least constituents. very it

Operator

closing our comments. concludes Trefler I Alan that And turn session. will question-and-answer conference now back for the And over to

Alan Trefler

you XXXX. really forward excited Thanks upon the with ended much, working your all. for how And to talking we're year. behalf we're pleased Thank and on again positioned just you really very we We're soon. how everyone. about We're know with look

Operator

Ladies your and now and for conference today's may does Thank gentlemen, you call. participation, disconnect. this conclude you

Pegasystems (PEGA) 13 Feb 252024 Q4 Earnings call transcript