CAMBRIDGE, Mass. - Pegasystems Inc . (NASDAQ:PEGA), a leader in enterprise AI decisioning and workflow automation platform provider, reported a robust fourth quarter, surpassing analysts' expectations with an EPS of $1.77, significantly higher than the consensus estimate of $0.98. The company's revenue for the quarter also exceeded forecasts, coming in at $474.23 million against the anticipated $414.69 million.
The company's financial success is attributed to a year of strong performance, marked by an 11% growth in annual contract value (ACV) and a notable increase in Pega Cloud gross margin to 74% for 2023.
This financial milestone was bolstered by operational efficiencies, as both cash flow from operations and free cash flow exceeded $200 million for the first time in the company's history.
Looking ahead, Pegasystems provided an optimistic outlook for fiscal year 2024, with guidance for EPS at approximately $2.75, outpacing the analyst consensus of $2.43. Revenue projections for the upcoming year are also promising, with the company expecting around $1.5 million, slightly above the consensus estimate of $1.49 million.
In response to the positive earnings report and future guidance, Pegasystems' stock surged, rising 16% as investors reacted favorably to the results and forecasts that topped estimates.
CEO Alan Trefler expressed enthusiasm for the company's trajectory, stating, "We delivered transformative innovation to change the way the world builds software while deepening and expanding our client relationships."
COO and CFO Ken Stillwell highlighted the company's strategic balance of growth and profitability, crediting the team's focus on client success and a transformed go-to-market model for the record free cash flow and double-digit ACV growth.
"As we exited 2023, we hit our Rule of 30 target, a big transformation for how we run the business. And, we’re on track to achieve the Rule of 40 as we exit 2024," said Stillwell.
This financial report and the subsequent market response underscore Pegasystems' strong position and the confidence of its leadership in the company's continued growth and innovation in the coming year.