Pegasystems Q3 revenue and adjusted EPS miss estimates as contract growth slows
PEGA•Pegasystems' third-quarter revenue rose 3% to $393.36 million, below the $422.04 million analyst estimate, while adjusted EPS of $0.35 missed the $0.48 estimate. The company said ACV growth may remain adversely affected for the rest of 2026 and set a target of at least $700 million in free cash flow in 2028.
1. Quarterly results
Pegasystems reported third-quarter revenue of $393.36 million, up 3% but below analysts' $422.04 million estimate. Adjusted EPS was $0.35, missing the $0.48 estimate; adjusted net income was $59.75 million, below the $82.46 million consensus.
2. Growth challenges
The company attributed slower ACV growth to go-to-market execution challenges, greater client scrutiny of large technology investments and evolving purchasing behaviors. Pega Cloud ACV grew 20% in the quarter and represented 59% of total ACV.
3. Outlook
Pegasystems said its ACV growth rate may remain adversely affected for the rest of 2026 and cash flow generation may continue to be affected for the rest of the year. It targets free cash flow of $700 million or more in 2028.
