Pegasystems stock price drops 5%, despite Q4 performance exceeding expectations, net income decreases year-over-year

LootboxPhobia · 2026-02-14T11:14:50+00:00

Pegasystems announced its Q4 earnings, with an adjusted EPS of $0.76 and revenue of $504.32 million, surpassing expectations. However, due to slowing growth indicators, the stock price fell by 5.8%. The company is optimistic about the fiscal year 2026 outlook, expecting revenue to reach $2 billion and significantly increasing share repurchase authorization. Despite strong financial performance, investors are concerned about the decline in net income.

LootboxPhobia

2026-02-14 11:14:50

Abstract generation in progress

WALTHAM, Mass. - Pegasystems Inc. (NASDAQ: PEGA) reported fourth-quarter earnings that exceeded analyst expectations, but the stock fell 5.8% after the announcement as investors appeared to focus on slowing growth metrics despite the company’s strong future outlook.

The company’s adjusted fourth-quarter earnings per share were $0.76, surpassing the consensus estimate of $0.73. Revenue reached $504.32 million, above the forecast of $492.92 million, representing a 3% year-over-year increase. Annual Contract Value (ACV) grew 17% year-over-year, and 14% at constant currency.

As a key growth metric, Pega Cloud ACV increased 33% year-over-year (28% at constant currency). Operating cash flow and free cash flow both grew 45% compared to the same period last year, highlighting improved financial efficiency.

“2025 is a year of significant progress and exceptional execution,” said Alan Trefler, Founder and CEO of Pega. “We are entering a transformative era filled with bold ideas and remarkable innovation. Our approach enables us to lead the industry, deliver extraordinary value to our clients, and help them overcome the limitations of traditional systems.”

Looking ahead, Pegasystems provided strong guidance for fiscal year 2026, expecting revenue of $2 billion, well above the analyst consensus of $1.854 billion. The company also forecasted 15% ACV growth, $595 million in operating cash flow, and $575 million in free cash flow.

Additionally, Pegasystems announced a significant increase in its share repurchase authorization, adding $1 billion to the plan.

Chief Operating Officer and Chief Financial Officer Ken Stillwell emphasized the company’s financial discipline: “Our 2025 results reflect strong financial discipline, surpassing our guidance range and exceeding the 40 Law. Our recurring business model and technological leadership position us to continue accelerating ACV growth, expanding profit margins, and increasing free cash flow.”

Despite these positive results and outlook, investors appeared concerned that quarterly non-GAAP net income declined 6% year-over-year, from $147.95 million to $139.55 million.

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