Pegasystems Q2 adjusted EPS misses as AI shifts delay purchases
PEGA•Q2 results miss estimates
Pegasystems said second-quarter revenue rose 9% year over year, but missed analyst expectations. Adjusted earnings per share also missed estimates.
| Metric | Beat/Miss | Actual | Consensus Estimate |
|---|---|---|---|
| Q2 Revenue | Miss | $420.72 mln | $426.24 mln (11 Analysts) |
| Q2 Adjusted EPS | Miss | $0.35 | $0.43 (11 Analysts) |
| Q2 EPS | $0.08 | ||
| Q2 Adjusted Net Income | Miss | $59.53 mln | $78.96 mln (11 Analysts) |
| Q2 Net Income | $13.33 mln |
Outlook and analyst coverage
Pegasystems said AI market changes may continue to weigh on ACV growth for the rest of the year, and cash flow generation may remain under pressure through year-end.
The current average analyst rating on the shares is "buy," with 13 "strong buy" or "buy" ratings, no "hold," and no "sell" or "strong sell." The median 12-month price target is $57.00, about 79.9% above the July 20 closing price of $31.69. The stock recently traded at 11 times next 12-month earnings, versus a P/E of 15 three months ago.
AI market changes slow ACV growth
The company said unprecedented changes in the AI market led clients to delay purchasing decisions, slowing overall ACV growth. Pegasystems said Pega Cloud ACV rose 22% year over year, outpacing overall ACV growth.
The company also said clients reacted positively to its "no per-token cost" AI approach.
