Quality Investor

Pegasystems Inc.

Rank #9Hypergrowth

PEGA · Nasdaq · Technology

Pegasystems Inc. (PEGA) — Rank #9 by gross profitability (GP/assets 0.96) · ROE 70.2% · Piotroski F-Score 6 / 9.

As-of 2026-09-15 · 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

Price History

PEGA-48.4% · -12.4% CAGRSPY+80.5% · +12.5% CAGR

Company Snapshot

P/S is the primary valuation lens — earnings are reinvested, not available for P/E.

Market Cap

$6.36B

P/E (annual)

18.1

P/S (annual)

3.6

P/B

11.3

P/OCF (annual)

12.6

Shareholder Yield

-135.1%

Employees

5,598

Industry

Software - Application

Exchange

Nasdaq

Signal Flags

4 green2 yellow
Revenue growth acceleratingGrowth rate increasing year over year
Operating leverage expandingOperating income growing faster than revenue
Deferred revenue growingRevenue and deferred revenue both growing — retention signal
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 1-quarter streak
Dilution above 2%Annual share count increase exceeds 2%. May be acceptable for high-growth companies funding talent via stock compensation
Disclosure regressionA previously-disclosed line item is no longer reported — worth checking the filing for why

Quality Profile

Profitability

1/1 pass
GP / assets
0.96
Return on equity
70.2%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
1.47
Current ratio
1.06×
Net cash
$361.91M

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
195.9%
Piotroski F-Score
6 / 9
Share dilution
135.3%

Terry Smith quality gate

Passes 3/5 Terry Smith thresholds

1 of 5 threshold not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

3.4%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Dilution drag: 135.3% — per-share value needs a total required return of 138.7% once share-count change is priced in.

vs. own 6-year median revenue growth: 15.8%

within its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

-0.7%

r = 10% (base)

3.4%

r = 12%

6.9%

Net debt / market cap: -5.1%

Base FCF: $490.7M3Y mean FCF: $71.7M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

349.2xExpensive
8.3xmed 26.1x349.2x

P / S

Price / revenue per share

4.2xExpensive
0.5xmed 1.0x4.2x

P / B

Price / book value per share

6.1xExpensive
1.0xmed 1.6x6.1x

P / GP

Price / gross profit per share

6.4xExpensive
0.8xmed 1.5x6.4x

P / FCF

Price / free cash flow per share

40.8xExpensive
5.9xmed 12.3x40.8x

Revenue growth and the path to profitability (margin trend) are the primary reads at this stage.

Profitability

Gross profitability (GP / assets)

0.96

Primary signal (Novy-Marx).

3rd of 13 SIC 7374 peers

Return on equity

70.2%

Gross margin

75.9%

5th of 13 SIC 7374 peers

Revenue growth (YoY)

195.9%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2012201320142015
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

1.47

9th of 11 SIC 7374 peers (best = lowest)

Current ratio

1.06×

12th of 13 SIC 7374 peers

Quick ratio

0.70×

Net cash

$361.91M

Cash & equivalents minus total debt.

Cash-flow health

Free cash flow

$490.72M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

0.25

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

8.9%

Stock-based comp intensity.

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 1.47 · IC N/A1/5 Weak

Piotroski F-Score

F-Score

6 / 9

Fundamental-strength score (0-9).

Lifecycle Phase History

20102015
Op. Leverage
Capital Return