Pegasystems’ agentic AI bets pay off with growing earnings and revenue – News

Business automation software company Pegasystems Inc. delivered encouraging third-quarter financial results today, showing impressive growth driven by its investments in artificial intelligence. Investors rejoiced, and its stock made strong gains in extended trading.

The company reported earnings before certain costs such as stock compensation of 30 cents per share, crushing Wall Street’s forecast of only a 20 cent per share profit, while revenue for the period jumped 17% to $381.4 million. That was a strong number too, with analysts targeting sales of just $351.6 million in the quarter.

The results illustrate a stark turnaround for the company, which posted a loss of 8 cents per share on sales of just $325 million in the year-ago quarter.

Pegasystems also reported strong growth in its annual contract value, which is a key metric that represents the average annual revenue generated from a typical customer contract. The company reported ACV of $1.56 billion at the end of the quarter, up 14% from a year earlier. Pega Cloud ACV was up 27% to $815.4 million.

There were other impressive numbers too. For instance, the company reported adjusted operating income of $55.2 million, cruising past the Street’s forecast of $39.4 million. All told, Pegasystems posted a net income of $43.4 million, swinging from a loss of $14.4 million in the year-ago period.

Pegasystems used to be focused on low-code business automation software, offering a “no-code” platform for creating programs that can automate repetitive tasks and accelerate business processes. However, in recent times, the company has evolved its Pega Cloud platform to focus on building more advanced AI agents, which are much more sophisticated systems capable of reasoning, enabling them to perform more advanced business tasks on behalf of humans, with minimal supervision. It provides various tools for building these agents, along with a selection of powerful large language models that act as the engine that drives them.

Its AI offerings also extend to the Pega GenAI Blueprint tool, which transforms user’s ideas for generative AI applications into interactive blueprints for building those apps. Meanwhile, the Pega Agentic Process Fabric service enables users to orchestrate fleets of AI agents and oversee their work.

While these offerings are all relatively new, they’re already very comprehensive and that has allowed the company to establish itself as a growing player in the nascent agentic AI industry, said Pegasystems founder and Chief Executive Alan Trefler (pictured). “Our differentiated AI strategy continues to resonate deeply with clients, prospects, and partners, unlocking new levels of speed, predictability, and scale in enterprise applications,” he said. “The results speak for themselves as clients and partners embrace Pega Blueprint and commit to strategic transformation with Pega.”

Investors clearly have a similar opinion, for Pegasystems’ stock made big gains in the extended trading session. At the time of writing, the stock was up more than 10%, having risen as much as 14% at one point. The market was clearly optimistic even before the company’s financial results were published, as the stock gained 4% during the regular trading session.

As is normal with Pegasystems, it didn’t offer any guidance for the current quarter, but analysts seem to think the good times will continue. The consensus estimate calls for fourth quarter earnings of 75 cents per share on revenue of $496.3 million. Today’s gains mean that Pegasystems continues to outperform the broader S&P 500 Index. Its stock is up more than 22% in the year to date, compared to the Index’s gain of just over 14%.

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