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On Wednesday, Pegasystems Inc . (NASDAQ:PEGA), currently trading near its InvestingPro Fair Value with a market capitalization of $5.88 billion, sustained its Market Outperform rating and $110 price target from Citizens JMP, following the release of its first-quarter financial results. The software company surpassed expectations with a non-GAAP EPS of $1.53, significantly higher than the consensus estimate of $0.49. With a strong gross profit margin of 74% and operating with moderate debt levels, Pegasystems reported a robust operating margin of 35.6%, compared to the anticipated 15.1%.
The company’s revenue reached $476 million, indicating a 44% year-over-year increase and greatly exceeding the consensus forecast of $357 million. This growth is attributed to the company’s strong performance in its cloud business and an expansion in its total Annual Contract Value (ACV). The total ACV for Pegasystems stood at $1.445 billion, a 14% rise from the previous year and slightly above the consensus of $1.411 billion.
Pegasystems’ Pega Cloud segment demonstrated remarkable growth, with ACV reaching $701 million, up 23% year-over-year. This figure not only surpassed the consensus of $679 million but also marked an acceleration from the 18% growth recorded in the last quarter. The company’s free cash flow was another highlight, coming in at $202 million, which was higher than the expected $187 million.
The earnings call, scheduled for this morning at 8 a.m. ET, is set to provide investors with additional insights into Pegasystems’ financial health and future prospects. The company’s impressive first-quarter performance has reinforced the positive outlook from Citizens JMP, keeping investor confidence steady with a reaffirmed price target. For deeper insights into PEGA’s valuation and growth potential, InvestingPro subscribers can access comprehensive analysis, including 10+ additional ProTips and detailed financial metrics in the Pro Research Report.
In other recent news, Pegasystems Inc. reported first-quarter earnings and revenue that significantly surpassed analyst expectations. The company announced adjusted earnings per share of $1.53, which exceeded the consensus estimate of $0.54 by $0.99. Revenue for the quarter reached $475.63 million, well above the projected $357.24 million, marking a 44% increase year-over-year. Pegasystems attributed this strong performance to substantial growth in its subscription business, with subscription revenue rising 50% year-over-year to $414.05 million. Within this segment, subscription license revenue surged by 195% to $186.56 million. The company’s Annual Contract Value (ACV) grew over 13% year-over-year, while Pega Cloud ACV increased 23% year-over-year. Additionally, operating cash flow rose to $204 million, and free cash flow reached $202 million in the first quarter. Despite these impressive results, Pegasystems did not provide specific guidance for future quarters or the full year.
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