Pegasystems Inc Citi’s 2026 Global TMT Conference

Thanks, Steve. Appreciate the invite again.

Sure. Pega's been helping enterprise clients for, gosh, four or five decades. The types of solutions or some examples of the things that we do to help our clients, it typically referred to as enterprise workflow, and specifically workflow where it's deterministic, which is things that either have a certain process that needs to be regulated or there's a requirement for a certain way that something gets done, or internally, clients may put those types of controls on their own internal processes. For example, things around ERP as one example, that might not be legally regulated, but you may have certain internal controls or processes that you need to have repeatable, that need to be very predictable, that can be proven after the fact that you followed a certain series of steps and stages to be able to execute that work. We've always had AI. We actually purchased a company in 2010 called Chordiant, which did statistical AI.

We integrated that in with our solutions as a Pega Customer Decision Hub of sorts with many people that know Pega will have heard that term before, where we helped drive certain statistical probabilistic-based decisions or outcomes. With generative AI, which we've introduced into the platform a few years ago, we're now leveraging gen AI both in the design and the runtime capabilities. Design being heavily when you're conceptualizing and modernizing a specific application, and runtime where you want to really try to take unnecessary human steps out of that workflow or just otherwise make it be more automated, whether that be the interaction with a customer or in just terms of the back office transaction flow.

Sure. One thing to start with is we only guide, for those that are not aware of this, we guide at the beginning of the year, and we do not re-guide. We don't guide quarterly, we guide for a full year. We don't re-guide. In that environment, what we tried to do is to help provide information that would help connect some of the views that we had around where the full year looked like it would land. Many of our sell-side analysts, including yourself, took that information and then kind of re-projected what they thought the year would look like. I think you guys have done a good job collating around where that was going to be.

One, I think the reason why we're not going to get to 15%, or I would say it's unlikely we're going to get to 15%, is we already had a lot of business in the back half of the year. For us, we don't have a lot of pipeline build and close within a 30, 60 or 90-day period. Our campaigns tend to progress over a quarter or two or three. For us to close something in, say, Q3, it likely would have had to been in the pipeline when the quarter started. So we just have a runway opportunity. The second point is that the ramp that we had in the back half of the year over what last year was a pretty significant ramp already in terms of the growth in net new ACV year over year.

We were kind of already targeting something like in the 30s in terms of the percentage increase year-over-year. We had a pretty aggressive ramp.

We don't have a very short pipe building to conversion process. What we saw in the first half of the year, I think probably we didn't do as good of a job in the back half of 2025, and maybe even into Q1, to try to think about leveling the year more, pulling things forward that we could, building back up pipeline bookings, et cetera. For the full year, I think the Street has us somewhere around 10% growth or something. If I had heard what we said on our call, I probably would have landed somewhere around that number.

A pretty big shift for us. We intended to embark on at the beginning of the year at our sales kickoff. Just to be honest with you, I don't think we fully internalized or pushed hard enough on this change. The change was, historically, Pega has been more of an account manager type selling motion, which is we have existing organizations. Those organizations spend with us. We look at expansion opportunities. We don't have a lot of new logo chasing. We don't have a lot of growth, even outside some of the buying centers that we've typically done business with. That has not been something that was, I would say, reflexive at Pega.

When we did our sales kickoff in January, we instrumented a number of activity measures that we wanted to measure, things like new contacts, new meetings, kind of think about them as more hunter or outbound type activities. One could probably argue that we should've probably always had some level of that motion, but we really wanted to intentionally do that in 2026. Few reasons. One, we were starting to see a little bit more interest in new logos. Two, we knew with AI, that with AI, everybody is telling a story with our clients around AI and how they're going to solve all their problems. We had to make sure that we were kind of instinctively going out and getting that message in front of clients. It turned out that in Q2, there was a lot of confusion with clients around AI. What's the value prop? Every single week, somebody would come out with some new industry that AI was going to put out of business, right?

There was a lot of talk, a lot of hype, a lot of anxiety, a lot of confusion. At that exact time, that's when we needed to execute on our hunter mentality, and I don't think we did a good job of executing that.