Pegasystems secures FedRAMP High ATO for cloud services

WALTHAM, Mass. - Pegasystems Inc. (NASDAQ: PEGA), a $6.26 billion market cap company specializing in enterprise transformation and workflow automation, has achieved the Federal Risk and Authorization Management Program (FedRAMP) High Authority to Operate (ATO) status for its Pega Cloud for Government, ensuring compliance with U.S. federal government cloud security standards. The company, which generates annual revenue of $1.49 billion with an impressive 74% gross profit margin, has demonstrated strong financial performance. According to InvestingPro analysis, PEGA is currently trading near its Fair Value.

The FedRAMP High ATO designation indicates that Pega Cloud for Government has met the rigorous security requirements necessary to handle the government’s most sensitive unclassified data in cloud computing environments. This certification process includes a comprehensive review of hundreds of security controls based on the National Institute of Standards and Technology (NIST) guidelines for security and risk management. InvestingPro data reveals that PEGA operates with a moderate level of debt and is expected to grow its net income this year, suggesting strong operational efficiency. InvestingPro subscribers have access to 10+ additional exclusive insights about PEGA’s financial health and growth prospects.

With this new status, government agencies can expedite the migration of their sensitive IT projects from on-premise Pega solutions to the cloud, leveraging enhanced scalability, reliability, and security. The cloud service, powered by AWS GovCloud, is designed to support high-impact workloads with stringent security needs.

Pega Cloud for Government offers workflow automation tools and operational support that aid government agencies in modernizing applications and improving efficiencies. It facilitates the integration of data and systems across various operational sectors, streamlining complexity while enhancing customer service. The solution’s scalability and compliance with government standards make it a flexible option for agencies adapting to changing requirements.

The FedRAMP High ATO is a step further from the FedRAMP High In-Process designation Pega obtained last year, demonstrating the company’s commitment to supporting government agencies’ digital transformation initiatives.

Pegasystems has been collaborating with numerous federal and state government agencies, providing solutions to modernize and transform their digital experiences. This certification is expected to bolster Pega’s position as a trusted partner for government IT modernization efforts.

The information for this article is based on a press release statement. For comprehensive analysis of PEGA’s financial performance and future prospects, including exclusive Fair Value calculations and detailed financial metrics, explore the full company research report available on InvestingPro, which covers over 1,400 US stocks with deep-dive analysis and actionable intelligence for smarter investing decisions.

In other recent news, Pegasystems Inc. reported impressive fourth-quarter 2024 earnings, surpassing Wall Street forecasts with an earnings per share (EPS) of $1.61 against the expected $1.47, and revenue reaching $490.83 million compared to a forecast of $468.36 million. Despite these strong financial results, Barclays adjusted its outlook on Pegasystems, reducing the stock price target to $97 from $103 while maintaining an Equalweight rating, citing mixed outcomes in the company’s earnings report. DA Davidson, on the other hand, raised its price target for Pegasystems to $90 from $80, maintaining a Neutral rating, following the company’s strategic market moves and product positioning.

Pegasystems’ Annual Contract Value (ACV) demonstrated significant growth, with a 21% increase in Pega Cloud ACV, contributing to an overall 11% year-over-year rise. Additionally, the company announced a proposed two-for-one stock split to enhance liquidity and attract more investors. Pegasystems has also updated its executive compensation plan for 2025, aligning incentives with shareholder interests and rewarding effective leadership. Barclays noted the company’s solid guidance for fiscal year 2025, with expectations of a 12% year-over-year ACV growth and operating cash flow guidance exceeding street expectations by approximately 10%.

The company continues to focus on its cloud services, with Pegasystems’ Blueprint offering and enhanced capabilities expected to sustain investment appeal. Despite these developments, analysts have recognized potential short-term pressure on the stock due to high expectations and recent performance. Pegasystems remains committed to its strategic focus on cloud services and AI integration, aiming to drive profitable growth in the coming years.

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