Quality Investor

Pegasystems Inc.

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PEGA · Nasdaq · Technology

Pegasystems Inc. (PEGA) — Rank #9 by gross profitability (GP/assets 1.00) · ROE 71.7% · Piotroski F-Score 7 / 9.

As-of 2026-10-30 · CIK 0001013857 · all metrics point-in-time as of the filing date.

About

Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific.

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It provides Pega Infinity, a software portfolio comprising of Pega Customer Decision Hub, a real-time AI-powered decision engine, which can predict a customer's behavior and recommend the next best action to take across channels in real-time; Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity; and Pega Platform, a software for AI-powered workflow automation for increasing the efficiency of clients' processes and operational workflows. The company also offers Situational Layer Cake that organizes logic into layers that map to the unique dimensions of a client's business, such as customer types, lines of business, geographies, etc.; Pega GenAI Blueprint to rapidly prototype and accelerate the development and deployment of applications; Pega Cloud that allows clients to develop, test, and deploy applications; Pega Catalyst, which helps clients to transform and prototype their customer journeys; Pega Academy, which offers enablement content for Pega product implementations, such as instructor-led and online training to its employees, clients, and partners; and global service assurance and client support services. It primarily markets its software and services to financial services, healthcare, communications and media, government, insurance, manufacturing and high tech, and consumer industries through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc.

was incorporated in 1983 and is headquartered in Waltham, Massachusetts.

Industry
Software - Application
Sector
Technology
State
MA
Filer Category
Large accelerated filer
Fiscal Year End
December 31
Website
pega.com

Company Snapshot

P/E and reverse DCF are the primary valuation lenses at this stage.

Market Cap

—

P/E (annual)

—

P/S (annual)

—

P/B

—

P/OCF (annual)

—

Shareholder Yield

—

Employees

5,598

Industry

Software - Application

Exchange

Nasdaq

10/12

Flags passed

PEGA passes 10/12 quality flags

2 cautions to review

  • CAUTION
    Dilution above 2%

    Annual share count increase exceeds 2%. May be acceptable for high-growth companies funding talent via stock compensation

  • CAUTION
    Disclosure regression

    A previously-disclosed line item is no longer reported — worth checking the filing for why

  • PASS
    Gross margin holding
  • PASS
    FCF not negative from investment
  • PASS
    Revenue not declining
  • PASS
    Operating margin holding
  • PASS
    Free cash flow intact
  • PASS
    Passes safety gate
  • PASS
    Balance sheet stable
  • PASS
    No competitive retreat
  • PASS
    SBC not compressing margin
  • PASS
    No valuation convergence

Strengths Revenue growth accelerating · Operating leverage expanding · Deferred revenue growing · RPO outpacing revenue · Sequential beat (rev + EPS)

A count of the 12 warning flags that could be evaluated. Unweighted: colour follows the worst flag.

Quality Profile

Profitability

1/1 pass
GP / assets
1.00
Return on equity
71.7%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
1.42
Current ratio
1.04×
Net cash
$309.71M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
8.9%

Growth

1/2 pass
Revenue growth
16.6%
Piotroski F-Score
7 / 9
Share dilution
3.1%

FCF yield, shareholder yield, and buyback activity are the primary reads at this stage.

Profitability

Does it make money well?

No warning flags · GP/assets 1.00

Gross profitability (GP / assets)

1.00

Primary signal (Novy-Marx).

3rd of 14 SIC 7374 peers

Return on equity

71.7%

Gross margin

75.9%

6th of 14 SIC 7374 peers

Revenue growth (YoY)

16.6%

RPO growth (YoY)

27.8%

Remaining performance obligations growth — RPO > revenue = forward demand building.

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

9.8%

Revenue CAGR (5Y)

11.4%

Earnings CAGR (3Y)

—

FCF CAGR (3Y)

—

Cash Flow Health

Is the cash real?

No warning flags · FCF 25% above net income

Free cash flow

$490.72M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF vs net income

24.7%

(FCF − net income) ÷ |net income|. Positive: cash above earnings. Negative: below.

FCF not below net income

Fails when free cash flow is below net income (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

8.9%

Stock-based comp intensity.

Balance Sheet Strength

Can it survive a storm?

Caution: Dilution above 2% · net cash $309.71M, F-Score 7/9

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

1.42

10th of 12 SIC 7374 peers (best = lowest)

Current ratio

1.04×

13th of 14 SIC 7374 peers

Quick ratio

0.65×

Net cash

$309.71M

Cash & equivalents minus total debt.

Piotroski F-Score

7 / 9

Fundamental-strength score (0-9).

Valuation

Is the price reasonable?

No warning flags

Dividend safety

Composite score

3.8 / 5

Good
Payout ratio
3.9%5/5 Strong
FCF coverage
31.82×5/5 Strong
Dividend growth streak
9 yr4/5 Strong
Balance-sheet health
D/E 1.42 · IC N/A1/5 Weak

Capital allocation quality

Composite score

1.7 / 5

Weak
Share count trend
3.1%1/5 Weak
Buyback timing
N/AN/A
Dividend growth consistency
9 yr4/5 Strong
Net debt trajectory
-19.3%0/5 Weak

Lifecycle Phase History

20202025
Startup
Capital Return

Price History

PEGA-46.3% · -11.7% CAGRSPY+82.9% · +12.8% CAGR