Q2 2024 Pegasystems Inc Earnings Call Transcript
Key Points
- Pegasystems Inc (PEGA) reported a 13% year-over-year growth in annual contract value (ACV) in constant currency, exceeding $1.3 billion.
- The company's Pega GenAI Blueprint has been well-received, with tens of thousands of Blueprints created, driving deeper client engagement and accelerating growth.
- Pega Cloud net new ACV contributed 81% of the total net new ACV added in the first half of the year, with Pega Cloud ACV growing 19% year over year.
- Free cash flow totaled $218 million in the first half of 2024, a record for the first half of the year, driven by improved sales execution and operational discipline.
- Pegasystems Inc (PEGA) achieved FedRAMP high ready compliance and in-process status for Pega Cloud for Government, enhancing its credibility and opportunities in the government sector.
- Despite the positive performance, the company acknowledged that the full impact of GenAI and Blueprint on revenue is still in the early stages and will take time to materialize.
- Subscription license revenue is expected to decline year over year in 2024, as more clients transition to Pega Cloud.
- Consulting revenue is growing at a more moderate pace than total revenue, which may indicate slower growth in certain service areas.
- The company faces challenges in maintaining positive cash flow in quarters with lower billings, such as Q3, due to the seasonality of its contract renewal cycle.
- There is a risk of over-reliance on existing clients for growth, as the company continues to focus on expanding within its current customer base rather than aggressively pursuing new logos.
(audio in progress)
(Operator Instructions)
I would now like to turn the call over to Vice President, Corporate Development and Investor Relations of Pegasystems, Peter Welburn. Please go ahead.
Good morning, everyone, and welcome to Pegasystems Q2 '24 earnings call.
Before we begin, I would like to read our Safe Harbor statement. Certain statements contained in this presentation may be construed as forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words expect, anticipate, intend, plan, believe, will, could, should, estimate, may, forecast, guidance, or variations of such words and other similar expressions identify forward-looking statements, which speak only as of the date the statement was made and are based on current expectations and assumptions.
Because such statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year
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