PEGASYSTEMS INC, 10-Q filed on 26 Apr 23
 | XBRL Documents
v3.23.1
COVER PAGE - shares
 3 Months Ended
Mar. 31, 2023
Apr. 19, 2023
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2023  
Document Transition Report false  
Entity File Number 1-11859  
Entity Registrant Name PEGASYSTEMS INC.  
Entity Incorporation, State or Country Code MA  
Entity Tax Identification Number 04-2787865  
Entity Address, Address Line One One Main Street  
Entity Address, City or Town Cambridge  
Entity Address, State or Province MA  
Entity Address, Postal Zip Code 02142  
City Area Code 617  
Local Phone Number 374-9600  
Title of 12(b) Security Common Stock, $.01 par value per share  
Trading Symbol PEGA  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   82,961,204
Amendment Flag false  
Entity Central Index Key 0001013857  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q1  
Current Fiscal Year End Date --12-31  
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 168,318 $ 145,054
Marketable securities 155,564 152,167
Total cash, cash equivalents, and marketable securities 323,882 297,221
Accounts receivable 201,585 255,150
Unbilled receivables 196,279 213,719
Other current assets 73,982 80,388
Total current assets 795,728 846,478
Unbilled receivables 79,704 95,806
Goodwill 81,434 81,399
Other long-term assets 324,975 333,989
Total assets 1,281,841 1,357,672
Current liabilities:    
Accounts payable 12,565 18,195
Accrued expenses 45,432 50,355
Accrued compensation and related expenses 56,574 127,728
Deferred revenue 342,591 325,212
Other current liabilities 17,802 17,450
Total current liabilities 474,964 538,940
Convertible senior notes, net 561,655 593,609
Operating lease liabilities 76,082 79,152
Other long-term liabilities 14,644 15,128
Total liabilities 1,127,345 1,226,829
Commitments and contingencies (Note 15)
Stockholders’ equity:    
Preferred stock, 1,000 shares authorized; none issued 0 0
Common stock, 200,000 shares authorized; 82,940 and 82,436 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 829 824
Additional paid-in capital 272,481 229,602
Accumulated deficit (97,287) (76,513)
Accumulated other comprehensive (loss) (21,527) (23,070)
Total stockholders’ equity 154,496 130,843
Total liabilities and stockholders’ equity $ 1,281,841 $ 1,357,672
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
shares in Thousands
Mar. 31, 2023
Dec. 31, 2022
Stockholders’ equity:    
Preferred stock, shares authorized 1,000 1,000
Preferred stock, shares issued 0 0
Common stock, shares authorized 200,000 200,000
Common stock, shares issued 82,940 82,436
Common stock, shares outstanding 82,940 82,436
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Revenue    
Total revenue $ 325,472 $ 376,307
Cost of revenue    
Total cost of revenue 97,934 88,197
Gross profit 227,538 288,110
Operating expenses    
Selling and marketing 149,797 162,236
Research and development 75,376 71,490
General and administrative 23,110 35,764
Restructuring 1,461 0
Total operating expenses 249,744 269,490
(Loss) income from operations (22,206) 18,620
Foreign currency transaction (loss) gain (2,675) 2,876
Interest income 1,485 207
Interest expense (1,918) (1,946)
Gain (loss) on capped call transactions 3,206 (30,560)
Other income, net 6,583 2,741
(Loss) before provision for (benefit from) income taxes (15,525) (8,062)
Provision for (benefit from) income taxes 5,249 (7,683)
Net (loss) $ (20,774) $ (379)
(Loss) per share    
Basic (in dollars per share) $ (0.25) $ 0
Diluted (in dollars per share) $ (0.25) $ 0
Weighted-average number of common shares outstanding    
Basic (in shares) 82,604 81,680
Diluted (in shares) 82,604 81,680
Subscription services    
Revenue    
Total revenue $ 187,509 $ 170,033
Cost of revenue    
Total cost of revenue 36,864 32,030
Subscription license    
Revenue    
Total revenue 84,527 137,533
Cost of revenue    
Total cost of revenue 719 622
Consulting    
Revenue    
Total revenue 53,033 61,301
Cost of revenue    
Total cost of revenue 60,348 55,511
Perpetual license    
Revenue    
Total revenue 403 7,440
Cost of revenue    
Total cost of revenue $ 3 $ 34
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Statement of Comprehensive Income [Abstract]    
Net (loss) $ (20,774) $ (379)
Other comprehensive income (loss), net of tax    
Unrealized (loss) gain on available-for-sale securities (46) 222
Foreign currency translation adjustments 1,589 (2,770)
Total other comprehensive income (loss), net of tax 1,543 (2,548)
Comprehensive (loss) $ (19,231) $ (2,927)
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive (Loss)
Balance, beginning of period (in shares) at Dec. 31, 2021   81,712      
Balance, beginning of period at Dec. 31, 2021 $ 416,088 $ 817 $ 145,810 $ 276,449 $ (6,988)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Repurchase of common stock (in shares)   (242)      
Repurchase of common stock (22,583) $ (2) (22,581)    
Issuance of common stock for stock compensation plans (in shares)   297      
Issuance of common stock for stock compensation plans (12,128) $ 3 (12,131)    
Issuance of common stock under the employee stock purchase plan (in shares)   35      
Issuance of common stock under the employee stock purchase plan 2,446   2,446    
Stock-based compensation 28,227   28,227    
Cash dividends declared ($0.03 per share) (2,455)     (2,455)  
Other comprehensive (loss) income (2,548)       (2,548)
Net (loss) (379)     (379)  
Balance, end of period (in shares) at Mar. 31, 2022   81,802      
Balance, end of period at Mar. 31, 2022 $ 406,668 $ 818 141,771 273,615 (9,536)
Balance, beginning of period (in shares) at Dec. 31, 2022 82,436 82,436      
Balance, beginning of period at Dec. 31, 2022 $ 130,843 $ 824 229,602 (76,513) (23,070)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock for stock compensation plans (in shares)   452      
Issuance of common stock for stock compensation plans 672 $ 4 668    
Issuance of common stock under the employee stock purchase plan (in shares)   52      
Issuance of common stock under the employee stock purchase plan 2,143 $ 1 2,142    
Stock-based compensation 42,557   42,557    
Cash dividends declared ($0.03 per share) (2,488)   (2,488)    
Other comprehensive (loss) income 1,543       1,543
Net (loss) $ (20,774)     (20,774)  
Balance, end of period (in shares) at Mar. 31, 2023 82,940 82,940      
Balance, end of period at Mar. 31, 2023 $ 154,496 $ 829 $ 272,481 $ (97,287) $ (21,527)
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares
 3 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Statement of Stockholders' Equity [Abstract]    
Cash dividend declared (in dollars per share) $ 0.03 $ 0.03
v3.23.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Operating activities    
Net (loss) $ (20,774) $ (379)
Adjustments to reconcile net (loss) to cash provided by operating activities    
Stock-based compensation 42,557 28,227
Deferred income taxes (126) (9,295)
(Gain) loss on capped call transactions (3,206) 30,560
Amortization of deferred commissions 14,277 17,221
Lease expense 4,594 3,919
Amortization of intangible assets and depreciation 4,724 4,171
Foreign currency transaction loss (gain) 2,675 (2,876)
Other non-cash (5,729) (1,100)
Change in operating assets and liabilities, net 29,115 (55,332)
Cash provided by operating activities 68,107 15,116
Investing activities    
Purchases of investments (39,401) (33,690)
Proceeds from maturities and called investments 36,475 20,915
Sales of investments 0 13,350
Investment in property and equipment (11,487) (6,657)
Cash (used in) investing activities (14,413) (6,082)
Financing activities    
Repurchases of convertible senior notes (29,901) 0
Proceeds from settlement of capped calls transactions 188 0
Dividend payments to stockholders (2,474) (2,454)
Proceeds from employee stock purchase plan 2,143 2,446
Proceeds from stock option exercises 1,779 0
Common stock repurchases (1,107) (35,910)
Cash (used in) financing activities (29,372) (35,918)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 782 (310)
Net increase (decrease) in cash, cash equivalents, and restricted cash 25,104 (27,194)
Cash, cash equivalents, and restricted cash, beginning of period 145,054 159,965
Cash, cash equivalents, and restricted cash, end of period 170,158 132,771
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]    
Cash and cash equivalents 168,318 132,771
Restricted cash included in other long-term assets 1,840 0
Total cash, cash equivalents and restricted cash $ 170,158 $ 132,771
v3.23.1
BASIS OF PRESENTATION
 3 Months Ended
Mar. 31, 2023
Accounting Policies [Abstract]  
BASIS OF PRESENTATION
NOTE 1. BASIS OF PRESENTATION
Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022.
In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.
All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for the full year 2023.
v3.23.1
MARKETABLE SECURITIES
 3 Months Ended
Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES
NOTE 2. MARKETABLE SECURITIES
March 31, 2023December 31, 2022
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair Value
Government debt$2,970 $— $(33)$2,937 $2,960 $— $(52)$2,908 
Corporate debt154,299 8 (1,680)152,627 151,906 — (2,647)149,259 
$157,269 $8 $(1,713)$155,564 $154,866 $— $(2,699)$152,167 
As of March 31, 2023, marketable securities’ maturities ranged from April 2023 to January 2026, with a weighted-average remaining maturity of 0.5 years.
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
Receivables
(in thousands)
March 31, 2023December 31, 2022
Accounts receivable$201,585 $255,150 
Unbilled receivables196,279 213,719 
Long-term unbilled receivables79,704 95,806 
$477,568 $564,675 
Unbilled receivables
Unbilled receivables are client-committed amounts for which revenue recognition precedes billing, and billing is solely subject to the passage of time.
Unbilled receivables by expected billing date:
(Dollars in thousands)
March 31, 2023
1 year or less$196,279 71 %
1-2 years64,812 24 %
2-5 years14,892 5 %
$275,983 100 %
Unbilled receivables by contract effective date:
(Dollars in thousands)
March 31, 2023
2023$51,895 19 %
202296,349 34 %
202187,278 32 %
202027,755 10 %
2019 and prior12,706 5 %
$275,983 100 %
Contract assets
Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation.
(in thousands)
March 31, 2023December 31, 2022
Contract assets (1)
$14,463 $17,546 
Long-term contract assets (2)
11,323 16,470 
$25,786 $34,016 
(1) Included in other current assets. (2) Included in other long-term assets.
Deferred revenue
Deferred revenue consists of billings and payments received in advance of revenue recognition.
(in thousands)
March 31, 2023December 31, 2022
Deferred revenue$342,591 $325,212 
Long-term deferred revenue (1)
3,323 3,552 
$345,914 $328,764 
(1) Included in other long-term liabilities.
The increase in deferred revenue in the three months ended March 31, 2023 was primarily due to new billings in advance of revenue recognition exceeding the $139.7 million of revenue recognized during the period that was included in deferred revenue as of December 31, 2022.
v3.23.1
DEFERRED COMMISSIONS
 3 Months Ended
Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
DEFERRED COMMISSIONS
NOTE 4. DEFERRED COMMISSIONS
(in thousands)
March 31, 2023December 31, 2022
Deferred commissions (1)
$124,069 $130,195 
(1) Included in other long-term assets.
Three Months Ended
March 31,
(in thousands)20232022
Amortization of deferred commissions (1)
$14,277 $17,221 
(1) Included in selling and marketing expense.
v3.23.1
GOODWILL AND OTHER INTANGIBLES
 3 Months Ended
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLES
NOTE 5. GOODWILL AND OTHER INTANGIBLES
Goodwill
Three Months Ended
March 31,
(in thousands)
20232022
January 1,$81,399 $81,923 
Currency translation adjustments35 108 
March 31,$81,434 $82,031 
Intangibles
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
March 31, 2023
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value (1)
Client-related
4-10 years
$63,094 $(58,983)$4,111 
Technology
2-10 years
68,085 (62,335)5,750 
Other
1-5 years
5,361 (5,361)— 
$136,540 $(126,679)$9,861 
(1) Included in other long-term assets.
December 31, 2022
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value (1)
Client-related
4-10 years
$63,076 $(58,623)$4,453 
Technology
2-10 years
68,056 (61,621)6,435 
Other
1-5 years
5,361 (5,361)— 
$136,493 $(125,605)$10,888 
(1) Included in other long-term assets.
Future estimated intangibles assets amortization:
(in thousands)
March 31, 2023
Remainder of 2023$2,884 
20243,163 
20252,613 
2026874 
2027327 
$9,861 
Amortization of intangible assets:
Three Months Ended
March 31,
(in thousands)20232022
Cost of revenue
$706 $629 
Selling and marketing
343 343 
$1,049 $972 
v3.23.1
OTHER ASSETS AND LIABILITIES
 3 Months Ended
Mar. 31, 2023
Other Assets and Liabilities [Abstract]  
OTHER ASSETS AND LIABILITIES
NOTE 6. OTHER ASSETS AND LIABILITIES
Other current assets
(in thousands)March 31, 2023December 31, 2022
Income tax receivables$22,344 $25,354 
Contract assets14,463 17,546 
Other37,175 37,488 
$73,982 $80,388 
Other long-term assets
(in thousands)March 31, 2023December 31, 2022
Deferred commissions$124,069 $130,195 
Right of use assets72,549 76,114 
Property and equipment55,775 55,056 
Venture investments16,265 13,069 
Contract assets11,323 16,470 
Intangible assets9,861 10,888 
Capped call transactions5,600 2,582 
Deferred income taxes4,827 4,795 
Restricted cash1,840 — 
Other22,866 24,820 
$324,975 $333,989 
Other current liabilities
(in thousands)March 31, 2023December 31, 2022
Operating lease liabilities$15,314 $14,976 
Dividends payable2,488 2,474 
$17,802 $17,450 
Other long-term liabilities
(in thousands)March 31, 2023December 31, 2022
Deferred revenue$3,323 $3,552 
Income taxes payable3,578 3,207 
Other7,743 8,369 
$14,644 $15,128 
v3.23.1
LEASES
 3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
LEASES
NOTE 7. LEASES
Expense
Three Months Ended
March 31,
(in thousands)20232022
Fixed lease costs$5,766 $5,093 
Short-term lease costs781 806 
Variable lease costs1,975 764 
$8,522 $6,663 
Right of use assets and lease liabilities
(in thousands)March 31, 2023December 31, 2022
Right of use assets (1)
$72,549 $76,114 
Operating lease liabilities (2)
$15,314 $14,976 
Long-term operating lease liabilities$76,082 $79,152 

(1) Included in other long-term assets.
(2) Included in other current liabilities.
Weighted-average remaining lease term and discount rate for the Company’s leases were:
March 31, 2023December 31, 2022
Weighted-average remaining lease term7.3 years7.5 years
Weighted-average discount rate (1)
4.1 %4.1 %
(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.
Maturities of lease liabilities:
(in thousands)March 31, 2023
Remainder of 2023$14,003 
202417,642 
202514,562 
202610,917 
20279,863 
20289,290 
Thereafter30,090 
Total lease payments106,367 
Less: imputed interest (1)
(14,971)
$91,396 
(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.
Cash flow information
Three Months Ended
March 31,
(in thousands)20232022
Cash paid for operating leases, net of tenant improvement allowances$5,038 $3,650 
Right of use assets recognized for new leases and amendments (non-cash)$721 $3,854 
v3.23.1
DEBT
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
DEBT
NOTE 8. DEBT
Convertible senior notes and capped calls
Convertible senior notes
In February 2020, the Company issued Convertible Senior Notes (the "Notes") with an aggregate principal of $600 million, due March 1, 2025, in a private placement. No principal payments are due before maturity. The Notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1, beginning on September 1, 2020.
In the three months ended March 31, 2023, the Company recorded a gain of $2.8 million in other income, net from the repurchase of Notes representing $33 million in aggregate principal amount.
Conversion rights
The conversion rate is 7.4045 shares of common stock per $1,000 principal amount of the Notes, representing an initial conversion price of $135.05 per share of common stock. The Company will settle conversions by paying or delivering cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate. The conversion rate will be adjusted upon certain events, including spin-offs, tender offers, exchange offers, and certain stockholder distributions.
Beginning on September 1, 2024, noteholders may convert their Notes at any time at their election.
Before September 1, 2024, noteholders may convert their Notes in the following circumstances:
•During any calendar quarter beginning after June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter.
•During the five consecutive business days immediately after any five consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day.
•Upon certain corporate events or distributions or if the Company calls any Notes for redemption, noteholders may convert before the close of business on the business day immediately before the related redemption date (or, if the Company fails to pay the redemption price in full on the redemption date, until the Company pays the redemption price).
As of March 31, 2023, the Notes were not eligible for conversion.
Repurchase rights
On or after March 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest, if the last reported sale price of the Company’s common stock exceeded 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice.
If certain corporate events that constitute a “Fundamental Change” occur, each noteholder will have the right to require the Company to repurchase for cash all of such noteholder’s Notes, or any portion of the principal thereof that is equal to $1,000 or a multiple of $1,000, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. A Fundamental Change relates to mergers, changes in control of the Company, liquidation/dissolution of the Company, or the delisting of the Company’s common stock.
Carrying value of the Notes:
(in thousands)March 31, 2023December 31, 2022
Principal$567,000 $600,000 
Unamortized issuance costs(5,345)(6,391)
Convertible senior notes, net$561,655 $593,609 

Interest expense related to the Notes:
Three Months Ended
March 31,
(in thousands)20232022
Contractual interest expense (0.75% coupon)
$1,125 $1,125 
Amortization of issuance costs
728 719 
$1,853 $1,844 
The average interest rate on the Notes in the three months ended March 31, 2023 and 2022 was 1.2%.
Future payments of principal and contractual interest:
March 31, 2023
(in thousands)PrincipalInterestTotal
Remainder of 2023$— $1,772 $1,772 
2024— 4,253 4,253 
2025567,000 2,126 569,126 
$567,000 $8,151 $575,151 
Capped call transactions
In February 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions covered approximately 4.4 million shares (representing the number of shares for which the Notes were initially convertible) of the Company’s common stock. In the three months ended March 31, 2023, Capped Call Transactions covering approximately 0.2 million shares were settled for proceeds of $0.2 million.
As of March 31, 2023, Capped Call Transactions representing approximately 4.2 million shares were outstanding.
The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The cap price of the Capped Call Transactions is subject to adjustment upon specified extraordinary events affecting the Company, including mergers and tender offers.
The Capped Call Transactions are accounted for as derivative instruments and do not qualify for the Company’s own equity scope exception in ASC 815 since, in some cases of early settlement, the settlement value of the Capped Call Transactions, calculated following the governing documents, may not represent a fair value measurement. The Capped Call Transactions are classified as other long-term assets and remeasured to fair value each reporting period, resulting in a non-operating gain or loss.
Change in capped call transactions:
Three Months Ended
March 31,
(in thousands)20232022
January 1,$2,582 $59,964 
Settlements(188)— 
Fair value adjustment3,206 (30,560)
March 31,$5,600 $29,404 
Credit facility
In November 2019, and as since amended, the Company entered into a five-year $100 million senior secured revolving credit agreement (the “Credit Facility”) with PNC Bank, National Association. The Company may use borrowings for general corporate purposes and to finance working capital needs. Subject to specific conditions and the agreement of the financial institutions lending the additional amount, the aggregate commitment may be increased to $200 million. The commitments expire on November 4, 2024, and any outstanding loans will be payable on such date. The Credit Facility, as amended, contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions.
The Company is required to comply with financial covenants, including:
•Beginning with the fiscal quarter ended March 31, 2022 and ending with the fiscal quarter ended December 31, 2023, Pegasystems Inc. must maintain at least $200 million in cash, investments, and availability under the Revolving Credit Loan.
•Beginning with the fiscal quarter ended March 31, 2023 and ending with the fiscal year ended December 31, 2023, maintain
Year to Date
(in thousands)March 31, 2023June 30, 2023September 30, 2023December 31, 2023
Minimum Consolidated EBITDA (as defined in the Credit Facility)$38,862 $59,894 $95,597 $214,590 
•Beginning with the fiscal quarter ended March 31, 2024, a maximum net consolidated leverage ratio of 3.5 to 1.0 (with a step-up for certain acquisitions) and a minimum consolidated interest coverage ratio of 3.5 to 1.0.
As of March 31, 2023 and December 31, 2022, the Company had no outstanding cash borrowings under the Credit Facility.
As of March 31, 2023, the Company had $27.3 million in outstanding letters of credit, which reduce the Company’s available borrowing capacity under the Credit Facility.
v3.23.1
RESTRUCTURING
 3 Months Ended
Mar. 31, 2023
Restructuring and Related Activities [Abstract]  
RESTRUCTURING
NOTE 9. RESTRUCTURING
Go-to-market plan and Salem office
During the fourth quarter of 2022, management committed to a restructuring plan aligned with the Company’s target organization go-to-market strategy. The plan resulted in a restructuring expense of $21.7 million, primarily associated with severance and benefits for impacted employees and expenses incurred as a result of the closure of the Company’s Salem, New Hampshire office.
Accrued employee severance and related benefits:
(in thousands)2023
January 1,$18,573 
Costs incurred220 
Cash disbursements(14,458)
Currency translation adjustments181 
March 31,$4,516 
v3.23.1
FAIR VALUE MEASUREMENTS
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 10. FAIR VALUE MEASUREMENTS
Assets and liabilities measured at fair value on a recurring basis
The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.
As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:
•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;
•Level 2 - significant other inputs that are observable either directly or indirectly; and
•Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions.
This hierarchy requires the Company to use observable market data, when available, and minimize unobservable inputs when determining fair value.
The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.
Assets and liabilities measured at fair value on a recurring basis:
March 31, 2023December 31, 2022
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents$41,088 $— $— $41,088 $2,526 $— $— $2,526 
Marketable securities $— $155,564 $— $155,564 $— $152,167 $— $152,167 
Capped Call Transactions (1)
$— $5,600 $— $5,600 $— $2,582 $— $2,582 
Venture investments (1) (2)
$— $— $16,265 $16,265 $— $— $13,069 $13,069 
(1) Included in other long-term assets. (2) Investments in privately-held companies.
Changes in venture investments:
Three Months Ended
March 31,
(in thousands)20232022
January 1,$13,069 $7,648 
New investments400 — 
Changes in foreign exchange rates58 (61)
Changes in fair value:
included in other income, net
3,802 2,741 
included in other comprehensive (loss)
(1,064)2,502 
March 31,$16,265 $12,830 
The carrying value of certain other financial instruments, including receivables and accounts payable, approximates fair value due to these items’ short maturities.
Fair value of the Notes
The fair value of the Notes outstanding (including the embedded conversion feature) was $507.8 million as of March 31, 2023 and $521.1 million as of December 31, 2022. In the three months ended March 31, 2023 the Company repurchased Notes representing $33 million in aggregate principal amount.
The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.
v3.23.1
REVENUE
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE
NOTE 11. REVENUE
Geographic revenue
Three Months Ended
March 31,
(Dollars in thousands)
20232022
U.S.$184,519 56 %$217,272 58 %
Other Americas15,011 5 %45,751 12 %
United Kingdom (“U.K.”)42,237 13 %30,932 8 %
Europe (excluding U.K.), Middle East, and Africa 51,318 16 %49,136 13 %
Asia-Pacific32,387 10 %33,216 9 %
$325,472 100 %$376,307 100 %
Revenue streams
Three Months Ended
March 31,
(in thousands)
20232022
Perpetual license$403 $7,440 
Subscription license84,527 137,533 
Revenue recognized at a point in time84,930 144,973 
Maintenance79,630 79,716 
Pega Cloud107,879 90,317 
Consulting53,033 61,301 
Revenue recognized over time240,542 231,334 
Total revenue$325,472 $376,307 
Three Months Ended
March 31,
(in thousands)20232022
Pega Cloud$107,879 $90,317 
Maintenance79,630 79,716 
Subscription services187,509 170,033 
Subscription license84,527 137,533 
Subscription272,036 307,566 
Perpetual license403 7,440 
Consulting53,033 61,301 
$325,472 $376,307 
Remaining performance obligations ("Backlog")
Expected future revenue from existing non-cancellable contracts:
As of March 31, 2023:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$235,315 $389,632 $35,346 $5,262 $41,203 $706,758 54 %
1-2 years
66,272 239,228 3,215 2,252 6,653 317,620 24 %
2-3 years
29,295 131,085 6,777 — 2,292 169,449 13 %
Greater than 3 years
7,479 106,778 — — — 114,257 9 %
$338,361 $866,723 $45,338 $7,514 $50,148 $1,308,084 100 %
As of March 31, 2022:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$228,984 $329,857 $47,428 $7,281 $40,661 $654,211 55 %
1-2 years
63,870 208,875 16,111 4,505 10,955 304,316 26 %
2-3 years
33,617 106,156 2,422 2,252 3,876 148,323 13 %
Greater than 3 years
22,611 44,596 1,758 — 522 69,487 6 %
$349,082 $689,484 $67,719 $14,038 $56,014 $1,176,337 100 %
v3.23.1
STOCK-BASED COMPENSATION
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION
NOTE 12. STOCK-BASED COMPENSATION
Expense
Three Months Ended
March 31,
(in thousands)20232022
Cost of revenue
$8,912 $6,378 
Selling and marketing
17,661 10,958 
Research and development
9,060 7,346 
General and administrative
6,924 3,545 
$42,557 $28,227 
Income tax benefit
$(672)$(5,311)
As of March 31, 2023, the Company had $178.6 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 2 years.
Grants
Three Months Ended
March 31, 2023
(in thousands)SharesTotal Fair Value
Restricted stock units
1,460 $68,352 
Non-qualified stock options
43 $615 
v3.23.1
INCOME TAXES
 3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 13. INCOME TAXES
Effective income tax rate
Three Months Ended
March 31,
(Dollars in thousands)20232022
Provision for (benefit from) income taxes$5,249 $(7,683)
Effective income tax rate(34)%95 %
The effective income tax rate in the three months ended March 31, 2023 was impacted by the valuation allowance on the Company’s U.S. and U.K. deferred tax assets and current taxes payable in the U.S. as a result of projecting taxable income that cannot be fully offset by net operating losses and available tax credits.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. Future realization of deferred tax assets ultimately depends on sufficient taxable income within the available carryback or carryforward periods. The Company’s deferred tax valuation allowance requires significant judgment and uncertainties, including assumptions about future taxable income based on historical and projected information. On a quarterly basis, the Company reassesses the need for a valuation allowance on its existing net deferred tax assets by tax-paying jurisdiction, weighing positive and negative evidence to assess its recoverability. In making such a determination, the Company considers all available and objectively verifiable negative and positive evidence, including future reversals of existing taxable temporary differences, committed contractual backlog (“Backlog”), projected future taxable income inclusive of the impact of enacted legislation, tax-planning strategies, and results of recent operations. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.
The Company intends to continue maintaining a full valuation allowance on the Company’s U.S and U.K. deferred tax assets until there is sufficient evidence to support the realization of these deferred tax assets.
v3.23.1
(LOSS) PER SHARE
 3 Months Ended
Mar. 31, 2023
Earnings Per Share [Abstract]  
(LOSS) PER SHARE
NOTE 14. (LOSS) PER SHARE
Basic (loss) per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted (loss) per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and convertible senior notes.
Calculation of (loss) per share:
Three Months Ended
March 31,
(in thousands, except per share amounts)20232022
Net (loss)$(20,774)$(379)
Weighted-average common shares outstanding82,604 81,680 
(Loss) per share, basic$(0.25)$— 
Net (loss)$(20,774)$(379)
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)
82,604 81,680 
(Loss) per share, diluted$(0.25)$— 
Outstanding anti-dilutive stock options and RSUs (4)
1,348 4,178 
(1) In periods of loss, all dilutive securities are excluded as their inclusion would be anti-dilutive.
(2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue approximately 4.2 million shares as of March 31, 2023.
(3) The Company’s Capped Call Transactions represent the equivalent of approximately 4.2 million shares of the Company’s common stock (representing the number of shares for which the Notes are initially convertible) as of March 31, 2023. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.
(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future.
v3.23.1
COMMITMENTS AND CONTINGENCIES
 3 Months Ended
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
NOTE 15. COMMITMENTS AND CONTINGENCIES
Commitments
See "Note 7. Leases" for additional information.
Legal proceedings
In addition to the matters below, the Company is or may become involved in a variety of claims, demands, suits, investigations, and proceedings that arise from time to time relating to matters incidental to the ordinary course of the Company’s business, including actions concerning contracts, intellectual property, employment, benefits, and securities matters. Regardless of the outcome, legal disputes can have a material effect on the Company because of defense and settlement costs, diversion of management resources, and other factors.
In addition, as the Company is a party to ongoing litigation, it is at least reasonably possible that the Company’s estimates will change in the near term, and the effect may be material.
The Company had no accrued losses for litigation as of March 31, 2023 and December 31, 2022.
Appian Corp. v. Pegasystems Inc. & Youyong Zou
As previously reported, the Company is a defendant in litigation brought by Appian in the Circuit Court of Fairfax County, Virginia (the “Court”) titled Appian Corp. v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 9, 2022, the jury rendered its verdict finding that the Company had misappropriated one or more of Appian’s trade secrets, that the Company had violated the Virginia Computer Crimes Act, and that the trade secret misappropriation was willful and malicious. The jury awarded damages of $2,036,860,045 for trade secret misappropriation and $1.00 for violating the Virginia Computer Crimes Act. On September 15, 2022, the circuit court of Fairfax County entered judgment of $2,060,479,287, consisting of the damages previously awarded by the jury plus attorneys’ fees and costs, and stating that the judgment is subject to post-judgment interest at a rate of 6.0% per annum, from the date of the jury verdict (May 9, 2022) as to the amount of the jury verdict and from September 15, 2022 as to the amount of the award of attorneys’ fees and costs. On September 15, 2022, the Company filed a notice of appeal from the judgment. On September 29, 2022, the circuit court of Fairfax County approved a $25,000,000 letter of credit obtained by the Company to secure the judgment and entered an order suspending the judgment during the pendency of the Company’s appeal. Appellate briefing is currently in process. Although it is not possible to predict timing, this appeals process could potentially take years to complete. The Company continues to believe that it did not misappropriate any alleged trade secrets and that its sales of the Company’s products at issue were not caused by, or the result of, any alleged misappropriation of trade secrets. The Company is unable to reasonably estimate possible damages because of, among other things, uncertainty as to the outcome of appellate proceedings and/or any potential new trial resulting from the appellate proceedings.
City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell
On May 19, 2022, a lawsuit was filed against the Company, the Company’s chief executive officer and the Company’s chief operating and financial officer in the United States District Court for the Eastern District of Virginia Alexandria Division, captioned City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:22-cv-00578-LMB-IDD). The complaint generally alleges, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder and that the individual defendants violated Section 20(a) of the Exchange Act, in each case by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices. The complaint seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between May 29, 2020 and May 9, 2022. The litigation has since been transferred to the United States District Court for the District of Massachusetts (Case 1:22-cv-11220-WGY), and lead plaintiff class representatives—Central Pennsylvania Teamsters Pension Fund - Defined Benefit Plan, Central Pennsylvania Teamsters Pension Fund - Retirement Income Plan 1987, and Construction Industry Laborers Pension Fund—have been appointed. On October 18, 2022, a consolidated amended complaint was filed that does not add any new parties or legal claims, is based upon the same general factual allegations as the original complaint, and now seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between June 16, 2020 and May 9, 2022. The Company moved to dismiss the consolidated amended complaint on December 19, 2022. The hearing on the motion to dismiss is scheduled for May 17, 2023. The Company believes the claims brought against the defendants are without merit and intends to defend against these claims vigorously. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit, the Company’s belief that the claims are without merit, and there being no specified quantum of damages sought in the complaint.
Mary Larkin, derivatively on behalf of nominal defendant Pegasystems Inc. v. Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Alan Trefler, Larry Weber, and Kenneth Stillwell, defendants, and Pegasystems Inc., nominal defendant
On November 21, 2022, a lawsuit was filed against the members of the Company’s board of directors, the Company’s chief operating and financial officer and the Company in the United States District Court for the District of Massachusetts, captioned Mary Larkin, derivatively on behalf of nominal defendant Pegasystems Inc. v. Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Alan Trefler, Larry Weber, and Kenneth Stillwell, defendants, and Pegasystems Inc., nominal defendant (Case 1:22-cv-11985). The complaint generally alleges the defendants sold shares of the Company while in possession of material nonpublic information relating to (i) the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and (ii) alleged misconduct by Company employees alleged in that litigation. On January 10, 2023, the Court entered an order staying the matter until after a final judgment dismissing the City of Fort Lauderdale matter referenced above, the denial of a motion to dismiss in the City of Fort Lauderdale action, or if any related derivative complaint is filed and not stayed for the same or longer duration. The Company believes the claims brought against the defendants are without merit and intends to defend against these claims vigorously. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit, the Company’s belief that the claims are without merit, and there being no specified quantum of damages sought in the complaint.
SEC Inquiry
Beginning in March 2023, the U.S. Securities and Exchange Commission (“SEC”) has requested certain information relating to, among other things, the accounting treatment of the Company’s above-described litigation with Appian Corporation. The Company is fully cooperating with the SEC’s requests.
v3.23.1
BASIS OF PRESENTATION (Policies)
 3 Months Ended
Mar. 31, 2023
Accounting Policies [Abstract]  
Basis of presentation
Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022.
In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.
All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for the full year 2023.
Assets and liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis
The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.
As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:
•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;
•Level 2 - significant other inputs that are observable either directly or indirectly; and
•Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions.
This hierarchy requires the Company to use observable market data, when available, and minimize unobservable inputs when determining fair value.
The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.
v3.23.1
MARKETABLE SECURITIES (Tables)
 3 Months Ended
Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
Schedule of Marketable Securities
March 31, 2023December 31, 2022
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair Value
Government debt$2,970 $— $(33)$2,937 $2,960 $— $(52)$2,908 
Corporate debt154,299 8 (1,680)152,627 151,906 — (2,647)149,259 
$157,269 $8 $(1,713)$155,564 $154,866 $— $(2,699)$152,167 
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables)
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
Summary of Receivables Receivables
(in thousands)
March 31, 2023December 31, 2022
Accounts receivable$201,585 $255,150 
Unbilled receivables196,279 213,719 
Long-term unbilled receivables79,704 95,806 
$477,568 $564,675 
Summary of Unbilled Receivables Unbilled receivables by expected billing date:
(Dollars in thousands)
March 31, 2023
1 year or less$196,279 71 %
1-2 years64,812 24 %
2-5 years14,892 5 %
$275,983 100 %
Summary of Unbilled Receivables by Contract Effective Date Unbilled receivables by contract effective date:
(Dollars in thousands)
March 31, 2023
2023$51,895 19 %
202296,349 34 %
202187,278 32 %
202027,755 10 %
2019 and prior12,706 5 %
$275,983 100 %
Summary of Contract Assets and Deferred Revenue
Contract assets
Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation.
(in thousands)
March 31, 2023December 31, 2022
Contract assets (1)
$14,463 $17,546 
Long-term contract assets (2)
11,323 16,470 
$25,786 $34,016 
(1) Included in other current assets. (2) Included in other long-term assets.
Deferred revenue
Deferred revenue consists of billings and payments received in advance of revenue recognition.
(in thousands)
March 31, 2023December 31, 2022
Deferred revenue$342,591 $325,212 
Long-term deferred revenue (1)
3,323 3,552 
$345,914 $328,764 
(1) Included in other long-term liabilities.
v3.23.1
DEFERRED COMMISSIONS (Tables)
 3 Months Ended
Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of Impairment of Deferred Contract Costs
(in thousands)
March 31, 2023December 31, 2022
Deferred commissions (1)
$124,069 $130,195 
(1) Included in other long-term assets.
Schedule of Amortization of Deferred Contract Costs
Three Months Ended
March 31,
(in thousands)20232022
Amortization of deferred commissions (1)
$14,277 $17,221 
(1) Included in selling and marketing expense
v3.23.1
GOODWILL AND OTHER INTANGIBLES (Tables)
 3 Months Ended
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Changes in Carrying Amount of Goodwill
Three Months Ended
March 31,
(in thousands)
20232022
January 1,$81,399 $81,923 
Currency translation adjustments35 108 
March 31,$81,434 $82,031 
Schedule of Amortizable Intangible Assets
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
March 31, 2023
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value (1)
Client-related
4-10 years
$63,094 $(58,983)$4,111 
Technology
2-10 years
68,085 (62,335)5,750 
Other
1-5 years
5,361 (5,361)— 
$136,540 $(126,679)$9,861 
(1) Included in other long-term assets.
December 31, 2022
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value (1)
Client-related
4-10 years
$63,076 $(58,623)$4,453 
Technology
2-10 years
68,056 (61,621)6,435 
Other
1-5 years
5,361 (5,361)— 
$136,493 $(125,605)$10,888 
(1) Included in other long-term assets.
Schedule of Estimated Future Amortization Expense Related to Intangible Assets Future estimated intangibles assets amortization:
(in thousands)
March 31, 2023
Remainder of 2023$2,884 
20243,163 
20252,613 
2026874 
2027327 
$9,861 
Schedule of Amortization Expense of Acquired Intangibles Amortization of intangible assets:
Three Months Ended
March 31,
(in thousands)20232022
Cost of revenue
$706 $629 
Selling and marketing
343 343 
$1,049 $972 
v3.23.1
OTHER ASSETS AND LIABILITIES (Tables)
 3 Months Ended
Mar. 31, 2023
Other Assets and Liabilities [Abstract]  
Schedule of Other Assets and Other Liabilities
Other current assets
(in thousands)March 31, 2023December 31, 2022
Income tax receivables$22,344 $25,354 
Contract assets14,463 17,546 
Other37,175 37,488 
$73,982 $80,388 
Other long-term assets
(in thousands)March 31, 2023December 31, 2022
Deferred commissions$124,069 $130,195 
Right of use assets72,549 76,114 
Property and equipment55,775 55,056 
Venture investments16,265 13,069 
Contract assets11,323 16,470 
Intangible assets9,861 10,888 
Capped call transactions5,600 2,582 
Deferred income taxes4,827 4,795 
Restricted cash1,840 — 
Other22,866 24,820 
$324,975 $333,989 
Other current liabilities
(in thousands)March 31, 2023December 31, 2022
Operating lease liabilities$15,314 $14,976 
Dividends payable2,488 2,474 
$17,802 $17,450 
Other long-term liabilities
(in thousands)March 31, 2023December 31, 2022
Deferred revenue$3,323 $3,552 
Income taxes payable3,578 3,207 
Other7,743 8,369 
$14,644 $15,128 
v3.23.1
LEASES (Tables)
 3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Schedule of Lease Expense
Three Months Ended
March 31,
(in thousands)20232022
Fixed lease costs$5,766 $5,093 
Short-term lease costs781 806 
Variable lease costs1,975 764 
$8,522 $6,663 
Schedule of Right of Use Asset and Lease Liabilities
(in thousands)March 31, 2023December 31, 2022
Right of use assets (1)
$72,549 $76,114 
Operating lease liabilities (2)
$15,314 $14,976 
Long-term operating lease liabilities$76,082 $79,152 
(1) Included in other long-term assets.
(2) Included in other current liabilities.
Schedule of Weighted Average and Discount Rate
Weighted-average remaining lease term and discount rate for the Company’s leases were:
March 31, 2023December 31, 2022
Weighted-average remaining lease term7.3 years7.5 years
Weighted-average discount rate (1)
4.1 %4.1 %
(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.
Schedule of Lease Maturities
Maturities of lease liabilities:
(in thousands)March 31, 2023
Remainder of 2023$14,003 
202417,642 
202514,562 
202610,917 
20279,863 
20289,290 
Thereafter30,090 
Total lease payments106,367 
Less: imputed interest (1)
(14,971)
$91,396 
(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.
Schedule of Supplemental Cash Flow Lease Information
Three Months Ended
March 31,
(in thousands)20232022
Cash paid for operating leases, net of tenant improvement allowances$5,038 $3,650 
Right of use assets recognized for new leases and amendments (non-cash)$721 $3,854 
v3.23.1
DEBT (Tables)
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Schedule of Carrying Value, Interest Expense, and Effective Interest Rate for the Notes
Carrying value of the Notes:
(in thousands)March 31, 2023December 31, 2022
Principal$567,000 $600,000 
Unamortized issuance costs(5,345)(6,391)
Convertible senior notes, net$561,655 $593,609 

Interest expense related to the Notes:
Three Months Ended
March 31,
(in thousands)20232022
Contractual interest expense (0.75% coupon)
$1,125 $1,125 
Amortization of issuance costs
728 719 
$1,853 $1,844 
Schedule of Future Payments of Principal and Contractual Interest Future payments of principal and contractual interest:
March 31, 2023
(in thousands)PrincipalInterestTotal
Remainder of 2023$— $1,772 $1,772 
2024— 4,253 4,253 
2025567,000 2,126 569,126 
$567,000 $8,151 $575,151 
Schedule of Change in Capped Call Transactions Change in capped call transactions:
Three Months Ended
March 31,
(in thousands)20232022
January 1,$2,582 $59,964 
Settlements(188)— 
Fair value adjustment3,206 (30,560)
March 31,$5,600 $29,404 
Schedule of Minimum Consolidated EBITDA Beginning with the fiscal quarter ended March 31, 2023 and ending with the fiscal year ended December 31, 2023, maintain
Year to Date
(in thousands)March 31, 2023June 30, 2023September 30, 2023December 31, 2023
Minimum Consolidated EBITDA (as defined in the Credit Facility)$38,862 $59,894 $95,597 $214,590 
v3.23.1
RESTRUCTURING (Tables)
 3 Months Ended
Mar. 31, 2023
Restructuring and Related Activities [Abstract]  
Schedule of Accrued Employee Severance and Related Benefit
Accrued employee severance and related benefits:
(in thousands)2023
January 1,$18,573 
Costs incurred220 
Cash disbursements(14,458)
Currency translation adjustments181 
March 31,$4,516 
v3.23.1
FAIR VALUE MEASUREMENTS (Tables)
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities Measured at Fair Value
Assets and liabilities measured at fair value on a recurring basis:
March 31, 2023December 31, 2022
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents$41,088 $— $— $41,088 $2,526 $— $— $2,526 
Marketable securities $— $155,564 $— $155,564 $— $152,167 $— $152,167 
Capped Call Transactions (1)
$— $5,600 $— $5,600 $— $2,582 $— $2,582 
Venture investments (1) (2)
$— $— $16,265 $16,265 $— $— $13,069 $13,069 
(1) Included in other long-term assets. (2) Investments in privately-held companies.
Schedule of Changes in Venture Investments Changes in venture investments:
Three Months Ended
March 31,
(in thousands)20232022
January 1,$13,069 $7,648 
New investments400 — 
Changes in foreign exchange rates58 (61)
Changes in fair value:
included in other income, net
3,802 2,741 
included in other comprehensive (loss)
(1,064)2,502 
March 31,$16,265 $12,830 
v3.23.1
REVENUE (Tables)
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue by Geographic Location Geographic revenue
Three Months Ended
March 31,
(Dollars in thousands)
20232022
U.S.$184,519 56 %$217,272 58 %
Other Americas15,011 5 %45,751 12 %
United Kingdom (“U.K.”)42,237 13 %30,932 8 %
Europe (excluding U.K.), Middle East, and Africa 51,318 16 %49,136 13 %
Asia-Pacific32,387 10 %33,216 9 %
$325,472 100 %$376,307 100 %
Schedule of Revenue Streams
Revenue streams
Three Months Ended
March 31,
(in thousands)
20232022
Perpetual license$403 $7,440 
Subscription license84,527 137,533 
Revenue recognized at a point in time84,930 144,973 
Maintenance79,630 79,716 
Pega Cloud107,879 90,317 
Consulting53,033 61,301 
Revenue recognized over time240,542 231,334 
Total revenue$325,472 $376,307 
Three Months Ended
March 31,
(in thousands)20232022
Pega Cloud$107,879 $90,317 
Maintenance79,630 79,716 
Subscription services187,509 170,033 
Subscription license84,527 137,533 
Subscription272,036 307,566 
Perpetual license403 7,440 
Consulting53,033 61,301 
$325,472 $376,307 
Schedule of Revenue for Remaining Performance Obligations Expected to Be Recognized
Expected future revenue from existing non-cancellable contracts:
As of March 31, 2023:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$235,315 $389,632 $35,346 $5,262 $41,203 $706,758 54 %
1-2 years
66,272 239,228 3,215 2,252 6,653 317,620 24 %
2-3 years
29,295 131,085 6,777 — 2,292 169,449 13 %
Greater than 3 years
7,479 106,778 — — — 114,257 9 %
$338,361 $866,723 $45,338 $7,514 $50,148 $1,308,084 100 %
As of March 31, 2022:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
MaintenancePega Cloud
1 year or less
$228,984 $329,857 $47,428 $7,281 $40,661 $654,211 55 %
1-2 years
63,870 208,875 16,111 4,505 10,955 304,316 26 %
2-3 years
33,617 106,156 2,422 2,252 3,876 148,323 13 %
Greater than 3 years
22,611 44,596 1,758 — 522 69,487 6 %
$349,082 $689,484 $67,719 $14,038 $56,014 $1,176,337 100 %
v3.23.1
STOCK-BASED COMPENSATION (Tables)
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Summary of Stock Based Compensation Expense
Expense
Three Months Ended
March 31,
(in thousands)20232022
Cost of revenue
$8,912 $6,378 
Selling and marketing
17,661 10,958 
Research and development
9,060 7,346 
General and administrative
6,924 3,545 
$42,557 $28,227 
Income tax benefit
$(672)$(5,311)
Summary of Stock Based Compensation Award Granted Grants
Three Months Ended
March 31, 2023
(in thousands)SharesTotal Fair Value
Restricted stock units
1,460 $68,352 
Non-qualified stock options
43 $615 
v3.23.1
INCOME TAXES (Tables)
 3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
Summary of Effective Income Tax Rate
Effective income tax rate
Three Months Ended
March 31,
(Dollars in thousands)20232022
Provision for (benefit from) income taxes$5,249 $(7,683)
Effective income tax rate(34)%95 %
v3.23.1
(LOSS) PER SHARE (Tables)
 3 Months Ended
Mar. 31, 2023
Earnings Per Share [Abstract]  
Summary of Calculation of (Loss) Per Share
Calculation of (loss) per share:
Three Months Ended
March 31,
(in thousands, except per share amounts)20232022
Net (loss)$(20,774)$(379)
Weighted-average common shares outstanding82,604 81,680 
(Loss) per share, basic$(0.25)$— 
Net (loss)$(20,774)$(379)
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)
82,604 81,680 
(Loss) per share, diluted$(0.25)$— 
Outstanding anti-dilutive stock options and RSUs (4)
1,348 4,178 
(1) In periods of loss, all dilutive securities are excluded as their inclusion would be anti-dilutive.
(2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue approximately 4.2 million shares as of March 31, 2023.
(3) The Company’s Capped Call Transactions represent the equivalent of approximately 4.2 million shares of the Company’s common stock (representing the number of shares for which the Notes are initially convertible) as of March 31, 2023. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.
(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future.
v3.23.1
MARKETABLE SECURITIES - Schedule of Marketable Securities (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Marketable Securities [Line Items]    
Amortized Cost $ 157,269 $ 154,866
Unrealized Gains 8 0
Unrealized Losses (1,713) (2,699)
Fair Value 155,564 152,167
Government debt    
Marketable Securities [Line Items]    
Amortized Cost 2,970 2,960
Unrealized Gains 0 0
Unrealized Losses (33) (52)
Fair Value 2,937 2,908
Corporate debt    
Marketable Securities [Line Items]    
Amortized Cost 154,299 151,906
Unrealized Gains 8 0
Unrealized Losses (1,680) (2,647)
Fair Value $ 152,627 $ 149,259
v3.23.1
MARKETABLE SECURITIES - Narrative (Details)
Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
Marketable debt security weighted-average remaining maturity 6 months
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Receivable (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Receivables [Abstract]    
Accounts receivable $ 201,585 $ 255,150
Unbilled receivables 196,279 213,719
Long-term unbilled receivables 79,704 95,806
Total receivables $ 477,568 $ 564,675
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Unbilled Receivables (Details)
$ in Thousands
Mar. 31, 2023
USD ($)
Receivables [Abstract]  
1 year or less $ 196,279
1-2 years 64,812
2-5 years 14,892
Total $ 275,983
Percentage of unbilled receivables, 1 year or less 71.00%
Percentage of unbilled receivables, 1-2 years 24.00%
Percentage of unbilled receivables, 2-5 years 5.00%
Total percentage of unbilled receivables 100.00%
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE- Contract Effective (Details)
$ in Thousands
Mar. 31, 2023
USD ($)
Receivables [Abstract]  
2023 $ 51,895
2022 96,349
2021 87,278
2020 27,755
2019 and prior 12,706
Unbilled revenue total $ 275,983
2023 19.00%
2022 34.00%
2021 32.00%
2020 10.00%
2019 and prior 5.00%
Total percentage of unbilled revenue 100.00%
v3.23.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Contract Assets and Deferred Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Receivables [Abstract]    
Contract assets $ 14,463 $ 17,546
Contract assets 11,323 16,470
Total contract assets 25,786 34,016
Deferred revenue 342,591 325,212
Long-term deferred revenue 3,323 3,552
Total deferred revenue 345,914 $ 328,764
Revenue recognized during the period that was included in deferred revenue $ 139,700  
v3.23.1
DEFERRED COMMISSIONS - Schedule of Impairment of Deferred Commissions (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Deferred commissions $ 124,069 $ 130,195
v3.23.1
DEFERRED COMMISSIONS - Schedule of Amortization of Deferred Commissions (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Amortization of deferred commissions $ 14,277 $ 17,221
v3.23.1
GOODWILL AND OTHER INTANGIBLES - Changes in Carrying Amount of Goodwill (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Goodwill [Roll Forward]    
Beginning balance $ 81,399 $ 81,923
Currency translation adjustments 35 108
Ending balance $ 81,434 $ 82,031
v3.23.1
GOODWILL AND OTHER INTANGIBLES - Schedule of Amortizable Intangible Assets (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Goodwill and Other Intangible Assets [Line Items]    
Cost $ 136,540 $ 136,493
Accumulated Amortization (126,679) (125,605)
Net Book Value 9,861 10,888
Client-related    
Goodwill and Other Intangible Assets [Line Items]    
Cost 63,094 63,076
Accumulated Amortization (58,983) (58,623)
Net Book Value 4,111 4,453
Technology    
Goodwill and Other Intangible Assets [Line Items]    
Cost 68,085 68,056
Accumulated Amortization (62,335) (61,621)
Net Book Value 5,750 6,435
Other    
Goodwill and Other Intangible Assets [Line Items]    
Cost 5,361 5,361
Accumulated Amortization (5,361) (5,361)
Net Book Value $ 0 $ 0
Minimum | Client-related    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 4 years 4 years
Minimum | Technology    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 2 years 2 years
Minimum | Other    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 1 year 1 year
Maximum | Client-related    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 10 years 10 years
Maximum | Technology    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 10 years 10 years
Maximum | Other    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 5 years 5 years
v3.23.1
GOODWILL AND OTHER INTANGIBLES - Estimated Future Amortization Expense Related to Intangible Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]    
Remainder of 2023 $ 2,884  
2024 3,163  
2025 2,613  
2026 874  
2027 327  
Net Book Value $ 9,861 $ 10,888
v3.23.1
GOODWILL AND OTHER INTANGIBLES - Amortization Expense of Acquired Intangibles (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of intangible assets $ 1,049 $ 972
Cost of revenue    
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of intangible assets 706 629
Selling and marketing    
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of intangible assets $ 343 $ 343
v3.23.1
OTHER ASSETS AND LIABILITIES (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Other Assets and Liabilities [Abstract]    
Income tax receivables $ 22,344 $ 25,354
Contract assets 14,463 17,546
Other 37,175 37,488
Other current assets 73,982 80,388
Deferred commissions 124,069 130,195
Right of use assets 72,549 76,114
Property and equipment 55,775 55,056
Venture investments 16,265 13,069
Contract assets 11,323 16,470
Intangible assets 9,861 10,888
Capped call transactions 5,600 2,582
Deferred income taxes 4,827 4,795
Restricted cash 1,840 0
Other 22,866 24,820
Other long-term assets 324,975 333,989
Operating lease liabilities 15,314 14,976
Dividends payable 2,488 2,474
Other current liabilities 17,802 17,450
Deferred revenue 3,323 3,552
Income taxes payable 3,578 3,207
Other 7,743 8,369
Other long-term liabilities $ 14,644 $ 15,128
v3.23.1
LEASES - Operating Lease Expenses (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Leases [Abstract]    
Fixed lease costs $ 5,766 $ 5,093
Short-term lease costs 781 806
Variable lease costs 1,975 764
Operating lease expenses $ 8,522 $ 6,663
v3.23.1
LEASES - Right of Use Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Leases [Abstract]    
Operating lease, right-of-use asset, statement of financial position Other long-term assets Other long-term assets
Right of use assets $ 72,549 $ 76,114
Operating lease, liability, current, statement of financial position Other current liabilities Other current liabilities
Operating lease liabilities $ 15,314 $ 14,976
Long-term operating lease liabilities $ 76,082 $ 79,152
v3.23.1
LEASES - Remaining Lease Term (Details)
Mar. 31, 2023
Dec. 31, 2022
Leases [Abstract]    
Weighted-average remaining lease term 7 years 3 months 18 days 7 years 6 months
Weighted-average discount rate 4.10% 4.10%
v3.23.1
LEASES - Lease Liability Maturity (Details)
$ in Thousands
Mar. 31, 2023
USD ($)
Leases [Abstract]  
Remainder of 2023 $ 14,003
2024 17,642
2025 14,562
2026 10,917
2027 9,863
2028 9,290
Thereafter 30,090
Total lease payments 106,367
Less: imputed interest (14,971)
Total lease liability $ 91,396
v3.23.1
LEASES - Cash Flow Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Leases [Abstract]    
Cash paid for operating leases, net of tenant improvement allowances $ 5,038 $ 3,650
Right of use assets recognized for new leases and amendments (non-cash) $ 721 $ 3,854
v3.23.1
DEBT - Convertible Senior Notes Narrative (Details)
 1 Months Ended 3 Months Ended
Feb. 29, 2020
USD ($)
day
$ / shares
Mar. 31, 2023
USD ($)
Mar. 31, 2022
Debt Instrument [Line Items]      
Gain (loss) on repurchase of convertible debt | $   $ 2,800,000  
Principal amount repurchased | $   $ 33,000,000  
Redemption percentage 100.00%    
On or After March 1, 2023      
Debt Instrument [Line Items]      
Redemption threshold trading days 40    
Redemption percentage 100.00%    
Convertible debt      
Debt Instrument [Line Items]      
Face amount | $ $ 600,000,000    
Interest rate 0.75% 0.75% 0.75%
Initial conversion rate 0.0074045    
Initial conversion price (in dollars per share) | $ / shares $ 135.05    
Average interest rate   1.20% 1.20%
Convertible debt | After the Calendar Quarter Ending on June 30, 2020      
Debt Instrument [Line Items]      
Threshold percentage of stock price trigger 130.00%    
Threshold trading days 20    
Threshold consecutive trading days 30    
Convertible debt | Measurement Period      
Debt Instrument [Line Items]      
Threshold percentage of stock price trigger 98.00%    
Threshold consecutive trading days 5    
Threshold consecutive business days 5    
Convertible debt | On or After March 1, 2023      
Debt Instrument [Line Items]      
Threshold percentage of stock price trigger 130.00%    
Threshold trading days 20    
Threshold consecutive trading days 30    
v3.23.1
DEBT - Net Carrying Amount (Details) - Convertible debt - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Debt Instrument [Line Items]    
Principal $ 567,000 $ 600,000
Unamortized issuance costs (5,345) (6,391)
Convertible senior notes, net $ 561,655 $ 593,609
v3.23.1
DEBT - Interest Expense (Details) - Convertible debt - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended
Feb. 29, 2020
Mar. 31, 2023
Mar. 31, 2022
Debt Instrument [Line Items]      
Interest rate 0.75% 0.75% 0.75%
Contractual interest expense (0.75% coupon)   $ 1,125 $ 1,125
Amortization of issuance costs   728 719
Interest expense   $ 1,853 $ 1,844
v3.23.1
DEBT - Future Payments of Principal and Contractual Interest (Details) - Convertible debt - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Principal    
2023 $ 0  
2024 0  
2025 567,000  
Principal, total due 567,000 $ 600,000
Interest    
2023 1,772  
2024 4,253  
2025 2,126  
Interest expense, total due 8,151  
Total    
2023 1,772  
2024 4,253  
2025 569,126  
Principal and interest, total due $ 575,151  
v3.23.1
DEBT - Capped Call Transactions (Details)
$ in Thousands, shares in Millions
 1 Months Ended 3 Months Ended
Feb. 29, 2020
$ / derivative
shares
Mar. 31, 2023
USD ($)
$ / derivative
shares
Mar. 31, 2022
USD ($)
Debt Instrument [Line Items]      
Number of shares issuable upon conversion (in shares) | shares 4.4 0.2  
Proceeds from settlement of capped calls transactions   $ 188 $ 0
Number of shares outstanding (in shares) | shares   4.2  
Cap price (in dollars per share) | $ / derivative 196.44 196.44  
Capped Call Transactions      
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]      
Beginning balance   $ 2,582 59,964
Settlements   (188) 0
Fair value adjustment   3,206 (30,560)
Ending balance   $ 5,600 $ 29,404
v3.23.1
DEBT - Credit Facility (Details)
 12 Months Ended
Nov. 30, 2019
USD ($)
Dec. 31, 2022
USD ($)
Mar. 31, 2024
Mar. 31, 2023
USD ($)
Debt Instrument [Line Items]        
Remaining borrowing capacity   $ 0   $ 0
Outstanding letters of credit       $ 27,300,000
PNC Bank, National Association | Forecast        
Debt Instrument [Line Items]        
Minimum consolidated coverage ratio     3.5  
Credit Agreement | PNC Bank, National Association        
Debt Instrument [Line Items]        
Minimum required cash and investments held   $ 200,000,000    
Credit Agreement | PNC Bank, National Association | Forecast        
Debt Instrument [Line Items]        
Maximum consolidated net leverage ratio     3.5  
Line of Credit | PNC Bank, National Association | Revolving Credit Facility        
Debt Instrument [Line Items]        
Revolving credit agreement term 5 years      
Senior notes $ 100,000,000      
Increase in aggregate commitment amount $ 200,000,000      
v3.23.1
Debt - Schedule of Minimum Consolidated EBITDA (Details) - Revolving Credit Facility - Credit Agreement - PNC Bank, National Association - Line of Credit - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2023
Jun. 30, 2023
Sep. 30, 2023
Dec. 31, 2023
Debt Instrument [Line Items]        
Minimum Consolidated EBITDA (as defined in the Credit Facility) $ 38,862      
Forecast        
Debt Instrument [Line Items]        
Minimum Consolidated EBITDA (as defined in the Credit Facility)   $ 59,894 $ 95,597 $ 214,590
v3.23.1
RESTRUCTURING - Narratives (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Restructuring and Related Activities [Abstract]      
Restructuring $ 1,461 $ 21,700 $ 0
Impairment operating lease right-of-use assets $ 1,200    
v3.23.1
RESTRUCTURING - Schedule of Accrued Employee Severance and Related Benefit (Details)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
USD ($)
Restructuring Reserve [Roll Forward]  
January 1, $ 18,573
Costs incurred 220
Cash disbursements (14,458)
Currency translation adjustments 181
March 31, $ 4,516
v3.23.1
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Fair Value Assets    
Marketable securities $ 155,564 $ 152,167
Capped call transactions 5,600 2,582
Cash equivalents    
Fair Value Assets    
Cash equivalents 41,088 2,526
Venture investments    
Fair Value Assets    
Venture investments 16,265 13,069
Level 1    
Fair Value Assets    
Marketable securities 0 0
Capped call transactions 0 0
Level 1 | Cash equivalents    
Fair Value Assets    
Cash equivalents 41,088 2,526
Level 1 | Venture investments    
Fair Value Assets    
Venture investments 0 0
Level 2    
Fair Value Assets    
Marketable securities 155,564 152,167
Capped call transactions 5,600 2,582
Level 2 | Cash equivalents    
Fair Value Assets    
Cash equivalents 0 0
Level 2 | Venture investments    
Fair Value Assets    
Venture investments 0 0
Level 3    
Fair Value Assets    
Marketable securities 0 0
Capped call transactions 0 0
Level 3 | Cash equivalents    
Fair Value Assets    
Cash equivalents 0 0
Level 3 | Venture investments    
Fair Value Assets    
Venture investments $ 16,265 $ 13,069
v3.23.1
FAIR VALUE MEASUREMENTS - Change in Investment in Privately Held Companies (Details) - Privately Held Investment - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]    
Beginning balance $ 13,069 $ 7,648
New investments 400 0
Changes in foreign exchange rates 58 (61)
Changes in fair value included in other income, net 3,802 2,741
Changes in fair value included in other comprehensive (loss) (1,064) 2,502
Ending balance $ 16,265 $ 12,830
v3.23.1
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Fair Value Disclosures [Abstract]      
Convertible debt fair value $ 507,800   $ 521,100
Repurchases of convertible senior notes $ 29,901 $ 0  
v3.23.1
REVENUE - Geographic Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Disaggregation of Revenue [Line Items]    
Revenue $ 325,472 $ 376,307
Percent of total revenue 100.00% 100.00%
U.S.    
Disaggregation of Revenue [Line Items]    
Revenue $ 184,519 $ 217,272
Other Americas    
Disaggregation of Revenue [Line Items]    
Revenue 15,011 45,751
United Kingdom (“U.K.”)    
Disaggregation of Revenue [Line Items]    
Revenue 42,237 30,932
Europe (excluding U.K.), Middle East, and Africa    
Disaggregation of Revenue [Line Items]    
Revenue 51,318 49,136
Asia-Pacific    
Disaggregation of Revenue [Line Items]    
Revenue $ 32,387 $ 33,216
Total Revenue | U.S. | Geographic Concentration Risk    
Disaggregation of Revenue [Line Items]    
Percent of total revenue 56.00% 58.00%
Total Revenue | Other Americas | Geographic Concentration Risk    
Disaggregation of Revenue [Line Items]    
Percent of total revenue 5.00% 12.00%
Total Revenue | United Kingdom (“U.K.”) | Geographic Concentration Risk    
Disaggregation of Revenue [Line Items]    
Percent of total revenue 13.00% 8.00%
Total Revenue | Europe (excluding U.K.), Middle East, and Africa | Geographic Concentration Risk    
Disaggregation of Revenue [Line Items]    
Percent of total revenue 16.00% 13.00%
Total Revenue | Asia-Pacific | Geographic Concentration Risk    
Disaggregation of Revenue [Line Items]    
Percent of total revenue 10.00% 9.00%
v3.23.1
REVENUE - Revenue Stream (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Disaggregation of Revenue [Line Items]    
Revenue $ 325,472 $ 376,307
Perpetual license    
Disaggregation of Revenue [Line Items]    
Revenue 403 7,440
Subscription license    
Disaggregation of Revenue [Line Items]    
Revenue 84,527 137,533
Subscription services    
Disaggregation of Revenue [Line Items]    
Revenue 187,509 170,033
Subscription    
Disaggregation of Revenue [Line Items]    
Revenue 272,036 307,566
Consulting    
Disaggregation of Revenue [Line Items]    
Revenue 53,033 61,301
Revenue recognized at a point in time    
Disaggregation of Revenue [Line Items]    
Revenue 84,930 144,973
Revenue recognized at a point in time | Perpetual license    
Disaggregation of Revenue [Line Items]    
Revenue 403 7,440
Revenue recognized at a point in time | Subscription license    
Disaggregation of Revenue [Line Items]    
Revenue 84,527 137,533
Revenue recognized over time    
Disaggregation of Revenue [Line Items]    
Revenue 240,542 231,334
Revenue recognized over time | Maintenance    
Disaggregation of Revenue [Line Items]    
Revenue 79,630 79,716
Revenue recognized over time | Pega Cloud    
Disaggregation of Revenue [Line Items]    
Revenue 107,879 90,317
Revenue recognized over time | Consulting    
Disaggregation of Revenue [Line Items]    
Revenue $ 53,033 $ 61,301
v3.23.1
REVENUE - Performance Obligations (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Mar. 31, 2022
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 1,308,084 $ 1,176,337
Revenue remaining performance obligation (in percent) 100.00% 100.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 654,211
Revenue remaining performance obligation (in percent)   55.00%
Expected timing of satisfaction   1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 706,758 $ 304,316
Revenue remaining performance obligation (in percent) 54.00% 26.00%
Expected timing of satisfaction 1 year 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 317,620 $ 148,323
Revenue remaining performance obligation (in percent) 24.00% 13.00%
Expected timing of satisfaction 1 year 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 169,449 $ 69,487
Revenue remaining performance obligation (in percent) 13.00% 6.00%
Expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 114,257  
Revenue remaining performance obligation (in percent) 9.00%  
Expected timing of satisfaction  
Maintenance    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 338,361 $ 349,082
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   228,984
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 235,315 63,870
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 66,272 33,617
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 29,295 22,611
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 7,479  
Pega Cloud    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 866,723 689,484
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   329,857
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 389,632 208,875
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 239,228 106,156
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 131,085 44,596
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 106,778  
Subscription license    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 45,338 67,719
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   47,428
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 35,346 16,111
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 3,215 2,422
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 6,777 1,758
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 0  
Perpetual license    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 7,514 14,038
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   7,281
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 5,262 4,505
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 2,252 2,252
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 0 0
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 0  
Consulting    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 50,148 56,014
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   40,661
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 41,203 10,955
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 6,653 3,876
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation 2,292 $ 522
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 0  
v3.23.1
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]    
Total stock-based compensation before tax $ 42,557 $ 28,227
Income tax benefit (672) (5,311)
Cost of revenue    
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]    
Total stock-based compensation before tax 8,912 6,378
Selling and marketing    
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]    
Total stock-based compensation before tax 17,661 10,958
Research and development    
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]    
Total stock-based compensation before tax 9,060 7,346
General and administrative    
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]    
Total stock-based compensation before tax $ 6,924 $ 3,545
v3.23.1
STOCK-BASED COMPENSATION - Narrative (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2023
USD ($)
Share-Based Payment Arrangement [Abstract]  
Unrecognized stock-based compensation expense $ 178.6
Weighted-average period of recognition of unrecognized stock-based compensation expense (in years) 2 years
v3.23.1
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Awards Granted (Details)
shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2023
USD ($)
shares
Restricted stock units  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Restricted stock units (in shares) | shares 1,460
Total Fair Value | $ $ 68,352
Non-qualified stock options  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Non-qualified stock options (in shares) | shares 43
Total Fair Value | $ $ 615
v3.23.1
INCOME TAXES - Summary of benefit from income taxes and discrete tax items (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Tax Disclosure [Abstract]    
Provision for (benefit from) income taxes $ 5,249 $ (7,683)
Effective income tax rate (34.00%) 95.00%
v3.23.1
(LOSS) PER SHARE (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2023
USD ($)
$ / shares
$ / derivative
shares
Mar. 31, 2022
USD ($)
$ / shares
shares
Feb. 29, 2020
$ / derivative
Earnings Per Share [Abstract]      
Net (loss) | $ $ (20,774) $ (379)  
Weighted-average common shares outstanding (in shares) 82,604 81,680  
(Loss) per share, basic (in dollars per share) | $ / shares $ (0.25) $ 0  
Weighted-average common shares outstanding, assuming dilution (in shares) 82,604 81,680  
(Loss) per share, diluted (in dollars per share) | $ / shares $ (0.25) $ 0  
Outstanding anti-dilutive stock options and RSUs (in shares) 1,348 4,178  
Convertible debt (in shares) 4,200    
Number of shares outstanding (in shares) 4,200    
Cap price (in dollars per share) | $ / derivative 196.44   196.44
v3.23.1
COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
Sep. 15, 2022
May 09, 2022
Mar. 31, 2023
Sep. 29, 2022
Loss Contingencies [Line Items]        
Outstanding letters of credit     $ 27,300,000  
Appian Corp. v. Pegasystems Inc. & Youyong Zou        
Loss Contingencies [Line Items]        
Outstanding letters of credit       $ 25,000,000
Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling        
Loss Contingencies [Line Items]        
Loss contingency, damages awarded, value $ 2,060,479,287      
Trade Secret Misappropriation | Appian Corp. v. Pegasystems Inc. & Youyong Zou        
Loss Contingencies [Line Items]        
Legal fees, post-judgement interest rate, percentage 6.00%      
Trade Secret Misappropriation | Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling        
Loss Contingencies [Line Items]        
Loss contingency, damages awarded, value   $ 2,036,860,045    
Violation of the Virginia Computer Crimes Act | Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling        
Loss Contingencies [Line Items]        
Loss contingency, damages awarded, value   $ 1.00