Revenue growth has decelerated to 3.1% in 2026Q3 with operating margin at 3.8% and EPS declining 66.7% year-over-year, suggesting the shift to ratable cloud revenue is not yet translating into the operating leverage that a 73.6% gross margin business would typically support.
Pegasystems Inc. (PEGA) annual income statement — 30-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 | Dec'97 | Dec'96 |
|---|
| Sales/Revenue | 1.75B | 1.75B | 1.5B | 1.43B | 1.32B | 1.21B | 1.02B | 911.38M | 891.58M | 840.58M | 750.27M | 682.7M | 590M | 508.95M | 461.71M | 416.68M | 336.6M | 264.01M | 211.65M | 161.95M | 126.02M | 102.01M | 96.46M | 99.31M | 97.41M | 92.29M | 80.81M | 76.6M | 60.4M | 44.4M | 33.5M |
| Revenue Growth % | 0.93% | 16.61% | 4.51% | 8.71% | 8.76% | 19.08% | 11.65% | 2.22% | 6.07% | 12.04% | 9.9% | 15.71% | 15.92% | 10.23% | 10.81% | 23.79% | 27.49% | 24.74% | 30.69% | 28.51% | 23.54% | 5.75% | -2.87% | 1.96% | 5.55% | 14.21% | 5.49% | 26.82% | 36.04% | 32.54% | 50.9% |
| Cost of Goods Sold | 422.09M | 421.38M | 390.67M | 378.48M | 368.63M | 336.36M | 310.91M | 310.02M | 301.76M | 279.67M | 239.26M | 213.45M | 185.09M | 157.41M | 157.38M | 164.8M | 128.73M | 90.94M | 81.76M | 65.2M | 53.76M | 33.34M | 33.09M | 27.42M | 31.87M | 40.4M | 44.06M | 28.1M | 24.5M | 8.8M | 5.9M |
| COGS % of Revenue | - | 24.14% | 26.09% | 26.42% | 27.97% | 27.76% | 30.56% | 34.02% | 33.85% | 33.27% | 31.89% | 31.27% | 31.37% | 30.93% | 34.09% | 39.55% | 38.25% | 34.44% | 38.63% | 40.26% | 42.66% | 32.68% | 34.31% | 27.61% | 32.72% | 43.77% | 54.53% | 36.68% | 40.56% | 19.82% | 17.61% |
| Gross Profit | 1.33B | 1.32B | 1.11B | 1.05B | 949.21M | 875.29M | 706.6M | 601.36M | 589.82M | 608.79M | 522.97M | 469.25M | 404.91M | 351.55M | 304.33M | 251.88M | 207.87M | 173.08M | 129.89M | 96.75M | 72.26M | 66.87M | 70.2M | 71.89M | 65.54M | 54.67M | 39.42M | 48.5M | 37.3M | 35.6M | 27.6M |
| Gross Margin % | 75.86% | 75.86% | 73.91% | 73.58% | 72.03% | 72.24% | 69.44% | 65.98% | 66.15% | 72.43% | 69.7% | 68.73% | 68.63% | 69.07% | 65.91% | 60.45% | 61.75% | 65.56% | 61.37% | 59.74% | 57.34% | 65.55% | 72.78% | 72.39% | 67.28% | 59.23% | 48.78% | 63.32% | 61.76% | 80.18% | 82.39% |
| Gross Profit Growth % | - | 19.69% | 4.97% | 11.05% | 8.45% | 23.87% | 17.5% | 1.96% | -3.12% | 16.41% | 11.45% | 15.89% | 15.18% | 15.52% | 20.82% | 21.17% | 20.1% | 33.25% | 34.26% | 33.89% | 8.06% | -4.75% | -2.36% | 9.69% | 19.89% | 38.68% | -18.73% | 30.03% | 4.78% | 28.99% | 63.31% |
| Operating Expenses | 1.15B | 1.06B | 982.63M | 973.18M | 1.06B | 970.02M | 850.13M | 736.24M | 606.85M | 515.62M | 472.33M | 404.59M | 353.37M | 293.45M | 272.9M | 241.38M | 210.44M | 131.26M | 115.41M | 94.8M | 79.37M | 65.65M | 64.43M | 57.22M | 54.06M | 48.13M | 65.37M | 54.4M | 60.1M | 38.9M | 17.7M |
| OpEx % of Revenue | - | 60.79% | 65.63% | 67.93% | 80.33% | 80.06% | 83.55% | 80.78% | 68.06% | 61.34% | 62.95% | 59.26% | 59.89% | 57.66% | 59.11% | 57.93% | 62.52% | 49.72% | 54.53% | 58.53% | 62.98% | 64.36% | 66.79% | 57.62% | 55.5% | 52.15% | 80.9% | 71.02% | 99.5% | 87.61% | 52.84% |
| Selling, General & Admin | 790M | 727.36M | 647.63M | 655.92M | 742.52M | 709.39M | 613.14M | 531.03M | 425.14M | 352.73M | 323.88M | 278.13M | 244.1M | 210.69M | 196.18M | 175.66M | 141.26M | 92.39M | 83.94M | 68.6M | 56.67M | 46.19M | 44.49M | 35.63M | 32.78M | 27.32M | 34.48M | 27.8M | 30.7M | 20.6M | 7.9M |
| SG&A % of Revenue | - | 41.66% | 43.26% | 45.78% | 56.34% | 58.55% | 60.26% | 58.27% | 47.68% | 41.96% | 43.17% | 40.74% | 41.37% | 41.4% | 42.49% | 42.16% | 41.97% | 35% | 39.66% | 42.36% | 44.97% | 45.28% | 46.13% | 35.87% | 33.65% | 29.6% | 42.67% | 36.29% | 50.83% | 46.4% | 23.58% |
| Research & Development | 321.38M | 312.68M | 298.07M | 295.51M | 294.35M | 260.63M | 236.99M | 205.21M | 181.71M | 162.89M | 145.55M | 126.37M | 108.59M | 79.73M | 76.73M | 65.31M | 55.19M | 38.86M | 31.47M | 26.2M | 22.71M | 19.51M | 19.88M | 21.59M | 21.28M | 20.81M | 15.07M | 19.8M | 23.4M | 15.1M | 8.2M |
| R&D % of Revenue | - | 17.91% | 19.91% | 20.63% | 22.34% | 21.51% | 23.29% | 22.52% | 20.38% | 19.38% | 19.4% | 18.51% | 18.41% | 15.66% | 16.62% | 15.67% | 16.4% | 14.72% | 14.87% | 16.18% | 18.02% | 19.13% | 20.61% | 21.74% | 21.85% | 22.55% | 18.65% | 25.85% | 38.74% | 34.01% | 24.48% |
| Other Operating Expenses | 2.85M | 21.29M | 36.93M | 21.75M | 21.74M | 0 | 0 | 0 | 0 | 0 | 2.9M | 89K | 680K | 3.04M | 0 | 420K | 13.99M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 15.82M | 6.8M | 5.6M | 3.2M | 1.6M |
| Operating Income | 173.01M | 263.1M | 123.88M | 80.95M | -109.41M | -94.73M | -143.53M | -134.88M | -17.03M | 93.18M | 50.64M | 64.66M | 51.54M | 58.1M | 31.43M | 10.49M | -2.58M | 41.82M | 14.48M | 1.95M | -7.11M | 1.22M | 5.77M | 14.67M | 11.48M | 6.53M | -25.95M | -5.9M | -22.8M | -3.3M | 9.9M |
| Operating Margin % | 9.9% | 15.07% | 8.27% | 5.65% | -8.3% | -7.82% | -14.11% | -14.8% | -1.91% | 11.08% | 6.75% | 9.47% | 8.74% | 11.42% | 6.81% | 2.52% | -0.77% | 15.84% | 6.84% | 1.2% | -5.64% | 1.19% | 5.98% | 14.78% | 11.78% | 7.08% | -32.12% | -7.7% | -37.75% | -7.43% | 29.55% |
| Operating Income Growth % | - | 112.38% | 53.03% | 173.99% | -15.49% | 34% | -6.41% | -691.91% | -118.28% | 83.98% | -21.68% | 25.46% | -11.29% | 84.87% | 199.47% | 506.74% | -106.17% | 188.83% | 642.13% | 127.42% | -684.07% | -78.89% | -60.67% | 27.87% | 75.64% | 125.18% | -339.86% | 74.12% | -590.91% | -133.33% | 209.38% |
| EBITDA | 200.18M | 289.01M | 159.31M | 115.61M | -74.69M | -66.14M | -122.18M | -113.48M | 8.26M | 117.89M | 74.78M | 87.75M | 74.89M | 78.13M | 49.99M | 27.96M | 9.41M | 44.62M | 16.63M | 3.86M | -4.83M | 2.94M | 7.19M | 16.17M | 16.47M | 12.76M | -19.32M | 900K | -17.2M | -100K | 11.5M |
| EBITDA Margin % | 11.45% | 16.55% | 10.64% | 8.07% | -5.67% | -5.46% | -12.01% | -12.45% | 0.93% | 14.02% | 9.97% | 12.85% | 12.69% | 15.35% | 10.83% | 6.71% | 2.79% | 16.9% | 7.86% | 2.39% | -3.83% | 2.89% | 7.45% | 16.28% | 16.91% | 13.83% | -23.91% | 1.17% | -28.48% | -0.23% | 34.33% |
| EBITDA Growth % | -41.51% | 81.42% | 37.8% | 254.8% | -12.92% | 45.87% | -7.66% | -1473.38% | -92.99% | 57.65% | -14.78% | 17.18% | -4.15% | 56.29% | 78.82% | 197.15% | -78.92% | 168.28% | 330.55% | 179.98% | -264.12% | -59.06% | -55.55% | -1.81% | 29.04% | 166.05% | -2246.78% | 105.23% | -17100% | -100.87% | 144.68% |
| D&A (Non-Cash Add-back) | 27.17M | 25.91M | 35.43M | 34.66M | 34.72M | 28.59M | 21.35M | 21.4M | 25.3M | 24.71M | 24.14M | 23.09M | 23.35M | 20.04M | 18.57M | 17.46M | 11.99M | 2.8M | 2.15M | 1.91M | 2.28M | 1.73M | 1.42M | 1.5M | 4.99M | 6.23M | 6.63M | 6.8M | 5.6M | 3.2M | 1.6M |
| EBIT | 176.71M | 281.91M | 149.47M | 102.32M | -154M | -124.03M | -105.53M | -134.63M | -11.53M | 93.18M | 53.55M | 64.75M | 52.22M | 61.13M | 31.43M | 10.91M | 11.41M | 41.82M | 14.48M | 1.95M | -7.11M | 1.22M | 5.77M | 14.67M | 11.48M | 6.53M | -25.95M | -5.9M | -22.8M | -3.3M | 9.9M |
| Net Interest Income | 9.58M | 12.36M | 18.94M | 2.38M | -6.15M | -7.25M | -18.13M | 1.81M | 2.71M | 862K | 911K | 1.06M | 683K | 524K | 419K | 398K | 1.14M | 3.14M | 5.63M | 7.96M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Income | 9.67M | 13.64M | 25.78M | 9.26M | 1.64M | 704K | 1.22M | 1.81M | 2.71M | 862K | 911K | 1.06M | 683K | 524K | 419K | 398K | 883K | 3.49M | 5.63M | 7.96M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 88K | 1.28M | 6.83M | 6.88M | 7.79M | 7.96M | 19.36M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | 7.96M | 17.53M | 18.75M | 14.49M | -52.39M | -37.26M | 18.64M | 32K | 5.49M | -6.94M | -2.56M | -4.16M | -3.54M | -1.7M | -481K | 319K | -3.62M | 5.6M | 1.19M | 7.99M | 8.3M | 4.1M | 5.38M | 7.16M | 5.72M | 7M | -10.43M | 5M | 4.8M | 5.1M | 2.2M |
| Pretax Income | 180.97M | 280.63M | 142.64M | 95.44M | -161.8M | -131.99M | -124.89M | -134.85M | -11.54M | 37.1M | 35.2M | 60.51M | 47.99M | 56.39M | 30.95M | 10.81M | -6.2M | 47.41M | 15.67M | 9.94M | 1.19M | 4.61M | 11.13M | 21.83M | 17.2M | 13.53M | -20.56M | -900K | -19.5M | 1.8M | 12.1M |
| Pretax Margin % | 10.35% | 16.07% | 9.53% | 6.66% | -12.28% | -10.89% | -12.27% | -14.8% | -1.29% | 4.41% | 4.69% | 8.86% | 8.13% | 11.08% | 6.7% | 2.6% | -1.84% | 17.96% | 7.4% | 6.14% | 0.94% | 4.52% | 11.54% | 21.98% | 17.65% | 14.67% | -25.44% | -1.17% | -32.28% | 4.05% | 36.12% |
| Income Tax | -113.79M | -112.81M | 43.45M | 27.63M | 183.78M | -68.95M | -63.52M | -44.41M | -22.16M | 4.17M | 8.22M | 24.18M | 14.74M | 18.35M | 9.08M | 705K | -306K | 15.2M | 4.7M | 3.35M | -655K | -106K | 3.58M | 4.15M | 1.9M | 1M | 300K | 1.5M | -6.4M | 700K | 4.6M |
| Effective Tax Rate % | -62.88% | -40.2% | 30.46% | 28.95% | -113.59% | 52.24% | 50.86% | 32.94% | 191.98% | 11.23% | 23.34% | 39.97% | 30.71% | 32.54% | 29.33% | 6.52% | 4.94% | 32.06% | 29.96% | 33.67% | -55.18% | -2.3% | 32.12% | 19.01% | 11.05% | 7.39% | -1.46% | -166.67% | 32.82% | 38.89% | 38.02% |
| Net Income | 294.76M | 393.44M | 99.19M | 67.81M | -345.58M | -63.04M | -61.37M | -90.43M | 10.62M | 32.93M | 26.99M | 36.32M | 33.26M | 38.04M | 21.87M | 10.11M | -5.89M | 32.21M | 10.98M | 6.59M | 1.84M | 4.72M | 7.55M | 17.68M | 15.3M | 12.53M | -20.86M | -2.4M | -13.1M | 1.1M | 7.5M |
| Net Margin % | 16.86% | 22.54% | 6.63% | 4.73% | -26.22% | -5.2% | -6.03% | -9.92% | 1.19% | 3.92% | 3.6% | 5.32% | 5.64% | 7.47% | 4.74% | 2.43% | -1.75% | 12.2% | 5.19% | 4.07% | 1.46% | 4.63% | 7.83% | 17.8% | 15.7% | 13.58% | -25.81% | -3.13% | -21.69% | 2.48% | 22.39% |
| Net Income Growth % | 6.05% | 296.65% | 46.28% | 119.62% | -448.19% | -2.72% | 32.13% | -951.78% | -67.76% | 22.04% | -25.7% | 9.22% | -12.59% | 73.97% | 116.34% | 271.58% | -118.29% | 193.45% | 66.44% | 258.03% | -60.96% | -37.54% | -57.28% | 15.58% | 22.04% | 160.1% | -769% | 81.68% | -1290.91% | -85.33% | 158.62% |
| Net Income (Continuing) | 294.76M | 393.44M | 99.19M | 67.81M | -345.58M | -63.04M | -61.37M | -90.43M | 10.62M | 98.55M | 26.99M | 36.32M | 33.26M | 38.04M | 21.87M | 10.11M | -5.89M | 32.21M | 10.98M | 6.59M | 1.84M | 5.19M | 8.21M | 17.68M | 15.3M | 12.53M | -20.86M | -2.4M | -11.6M | 1.1M | 7.5M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.75 | 2.13 | 0.55 | 0.40 | -2.11 | -0.39 | -0.38 | -0.57 | 0.06 | 0.59 | 0.17 | 0.23 | 0.21 | 0.25 | 0.14 | 0.07 | -0.04 | 0.21 | 0.07 | 0.05 | 0.01 | 0.04 | 0.10 | 0.12 | 0.12 | 0.10 | -0.18 | -0.02 | -0.12 | 0.01 | 0.07 |
| EPS Growth % | 8.78% | 287.27% | 37.5% | 118.96% | -441.03% | -2.63% | 33.33% | -992.02% | -89.26% | 249.94% | -26.09% | 9.52% | -14.29% | 75% | 115.38% | 262.5% | -118.82% | 193.1% | 61.11% | 260% | -64.29% | -65% | -16.67% | 0% | 26.32% | 152.78% | -860% | 83.7% | -1250% | -85.71% | 133.33% |
| EPS (Basic) | - | 2.30 | 0.58 | 0.41 | -2.11 | -0.39 | -0.38 | -0.57 | 0.07 | 0.64 | 0.18 | 0.24 | 0.22 | 0.25 | 0.15 | 0.07 | -0.04 | 0.22 | 0.08 | 0.05 | 0.01 | 0.04 | 0.11 | 0.12 | 0.13 | 0.10 | -0.18 | -0.02 | -0.12 | 0.01 | 0.07 |
| Diluted Shares Outstanding | 168.64M | 184.79M | 179.27M | 169.83M | 163.89M | 162.77M | 160.67M | 158.11M | 166.13M | 165.66M | 159.46M | 158.09M | 157.06M | 155.95M | 155.44M | 157.62M | 148.12M | 152.45M | 150.42M | 149.73M | 148.54M | 145.85M | 74.09M | 143.03M | 143.92M | 133.74M | 116.82M | 128M | 114.42M | 110M | 110.77M |
| Basic Shares Outstanding | 163.76M | 170.78M | 170.53M | 166.32M | 163.89M | 162.77M | 160.67M | 158.11M | 157.13M | 154.86M | 152.69M | 153.01M | 152.65M | 151.89M | 151.41M | 149.98M | 148.12M | 144.83M | 144.58M | 143.5M | 140.92M | 143.1M | 71.38M | 138.07M | 135.34M | 130.71M | 116.82M | 115.79M | 114.42M | 110M | 105.59M |
| Dividend Payout Ratio | - | 3.92% | 10.28% | 14.69% | - | - | - | - | 88.84% | 28.17% | 34% | 25.31% | 20.67% | 8.99% | 25.97% | 44.47% | - | 13.49% | 39.79% | 65.31% | 115.2% | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying PEGA stock.
For fiscal year 2025, Pegasystems Inc. (PEGA) reported total revenue of $1.75B. This represents a 5111.4% increase compared to $33.5M in 1996.
Pegasystems Inc. (PEGA) is profitable, generating $393.4M in net income for the fiscal year ending 2025 with a net profit margin of 22.5%.
Pegasystems Inc. (PEGA) reported an operating income of $263.1M, resulting in an operating profit margin of 15.1%. This margin reflects the operational efficiency of the business before interest and taxes.
Pegasystems Inc. (PEGA) generated $1.32B in gross profit for the year, representing a gross profit margin of 75.9%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Growth deceleration and margin compression convergence
Metrics are mathematically derived from official filings.
Cloud Transition Obscures Growth Signal
Revenue growth has been highly volatile, swinging from -9.6% in Q1 2026 to 9.4% in Q2 2026 before decelerating to 3.1% in Q3 2026, suggesting the ongoing shift from upfront license recognition to ratable cloud revenue continues to obscure underlying demand momentum.
The pronounced Q4 concentration — reaching $504.3M in Q4 2025 versus a low of $325.1M in Q3 2024 — is consistent with enterprise budget exhaustion cycles rather than genuine quarterly demand variability. Critically, the sequential revenue decline through 2026 (from $430.0M in Q1 to $393.4M in Q3) alongside weakening year-over-year growth may indicate that the cloud transition is now subtracting more upfront revenue than it is adding in ratable bookings, making Annual Contract Value growth the more reliable indicator of underlying business health.
Gross Margin Volatility Reflects Revenue Mix
Gross margins have swung across a 930 basis point range — from 70.2% in Q3 2024 to 79.5% in Q4 2025 before settling at 73.6% in Q3 2026 — reflecting the revenue recognition mix between high-margin upfront licenses and lower-margin cloud and services revenue as reported in Pega's financial statements.
The consistent pattern of lowest gross margins occurring in Q3 quarters (70.2%, 72.2%, 73.6%) strongly suggests these periods carry a disproportionate share of professional services revenue relative to license and cloud revenue, given minimal term license recognition. As recurring cloud revenue grows as a percentage of the mix, structural gross margins may gravitate toward the mid-70s baseline, meaning the sub-71% quarters likely represent the emerging floor rather than anomalies — a shift investors should factor into long-term margin expectations.
Non-Operating Items Materially Inflate EPS
Q4 2025 net income of $234.6M exceeded operating income by $130.2M, and the anomalous negative SBC of -$45.8M in Q2 2026, both indicate that reported net income and EPS figures are being significantly influenced by non-operating events rather than operational performance.
The $130.2M gap between net income and operating income in Q4 2025 — producing a 46.5% net margin against a 20.7% operating margin — appears consistent with the reversal of the Appian litigation provision noted in recent company developments, which would represent a non-recurring, non-cash benefit. The wild EPS growth swings from -92.2% to +113.3% in consecutive quarters further underscore that headline earnings are unreliable as a measure of business quality; analysts should anchor on operating income, which presents a far more stable and interpretable earnings profile across the ten-quarter window.
SG&A Consumption Caps Operating Leverage
Despite revenue recovery from the Q3 2024 trough, SG&A has consumed 46-49% of revenue in recent quarters, confining operating margins to a narrow 3.8-8.6% band outside of Q4 license-heavy periods, which is materially below what a 73%+ gross margin business would typically generate.
Operating income in non-Q4 quarters has remained essentially flat at $14.5M-$37.1M across 2025-2026 despite revenue growing year-over-year, suggesting incremental revenue is not converting into proportional operating profit — a concerning signal for a company with a structurally high fixed-cost software model. Meanwhile, R&D spending has been trending upward from approximately $74M per quarter in 2024 to $74-84M in 2026, further consuming potential operating leverage as continued investment ahead of cloud monetization absorbs the gross profit gains that the model should theoretically produce.
Growth Deceleration Meets Margin Floor
The most recent quarter posted just 3.1% year-over-year revenue growth with a 3.8% operating margin and -66.7% EPS decline, raising the possibility that Pega's cloud transition is not generating the operating leverage its high gross margin architecture would theoretically support.
If the Q4 2025 operating margin spike to 20.7% was driven primarily by lumpy license recognition and legal settlement reversal rather than a sustainable shift in the revenue mix, then the structurally underlying business may be operating at a 3-5% operating margin profile — well below peer ServiceNow and even modest software peers. The convergence of decelerating top-line growth with a persistent operating margin floor near 4% suggests Pega may be caught between the elevated cost structure required for cloud competitiveness and a maturing growth trajectory, a combination that would warrant further scrutiny of the valuation multiple and may explain why the stock trades at a persistent discount to faster-growing workflow peers.