PEGASYSTEMS INC, 10-Q filed on 24 Jul 24
v3.24.2
Cover - shares
6 Months Ended
Jun. 30, 2024
Jul. 17, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
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, $.01 par value per share  
Trading Symbol PEGA  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   85,409,645
Amendment Flag false  
Entity Central Index Key 0001013857  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Current Fiscal Year End Date --12-31  
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 258,257 $ 229,902
Marketable securities 406,819 193,436
Total cash, cash equivalents, and marketable securities 665,076 423,338
Accounts receivable, net 165,723 300,173
Unbilled receivables, net 164,533 237,379
Other current assets 76,323 68,137
Total current assets 1,071,655 1,029,027
Long-term unbilled receivables, net 81,218 85,402
Goodwill 81,410 81,611
Other long-term assets 302,249 314,696
Total assets 1,536,532 1,510,736
Current liabilities:    
Accounts payable 16,682 11,290
Accrued expenses 44,875 39,941
Accrued compensation and related expenses 81,110 126,640
Deferred revenue 352,618 377,845
Convertible senior notes, net 500,604  
Other current liabilities 20,677 21,343
Total current liabilities 1,016,566 577,059
Long-term convertible senior notes, net 0 499,368
Long-term operating lease liabilities 70,202 66,901
Other long-term liabilities 14,362 13,570
Total liabilities 1,101,130 1,156,898
Commitments and contingencies (Note 15)
Stockholders’ equity:    
Preferred stock, 1,000 shares authorized; none issued 0 0
Common stock, 200,000 shares authorized; 85,369 and 83,840 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 854 838
Additional paid-in capital 473,030 379,584
(Accumulated deficit) (14,216) (8,705)
Accumulated other comprehensive (loss) (24,266) (17,879)
Total stockholders’ equity 435,402 353,838
Total liabilities and stockholders’ equity $ 1,536,532 $ 1,510,736
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
shares in Thousands
Jun. 30, 2024
Dec. 31, 2023
Stockholders’ equity:    
Preferred stock, shares authorized (in shares) 1,000 1,000
Preferred stock, shares issued (in shares) 0 0
Common stock, shares authorized (in shares) 200,000 200,000
Common stock, shares issued (in shares) 85,369 83,840
Common stock, shares outstanding (in shares) 85,369 83,840
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Revenue        
Total revenue $ 351,153 $ 298,268 $ 681,300 $ 623,740
Cost of revenue        
Total cost of revenue 96,946 96,140 191,604 194,074
Gross profit 254,207 202,128 489,696 429,666
Operating expenses        
Selling and marketing 139,761 143,858 267,456 293,655
Research and development 75,425 73,931 147,538 149,307
General and administrative 25,420 23,462 48,947 46,572
Litigation settlement, net of recoveries 0 0 32,403 0
Restructuring 635 2,167 798 3,628
Total operating expenses 241,241 243,418 497,142 493,162
Income (loss) from operations 12,966 (41,290) (7,446) (63,496)
Foreign currency transaction gain (loss) 437 (3,290) (2,825) (5,965)
Interest income 6,785 1,814 12,066 3,299
Interest expense (1,656) (1,778) (3,408) (3,696)
(Loss) income on capped call transactions (3,277) (1,361) 22 1,845
Other income, net 0 5,702 1,684 12,285
Income (loss) before provision for income taxes 15,255 (40,203) 93 (55,728)
Provision for income taxes 8,642 6,601 5,604 11,850
Net income (loss) $ 6,613 $ (46,804) $ (5,511) $ (67,578)
Earnings (loss) per share        
Basic (in dollars per share) $ 0.08 $ (0.56) $ (0.07) $ (0.82)
Diluted (in dollars per share) $ 0.07 $ (0.56) $ (0.07) $ (0.82)
Weighted-average number of common shares outstanding        
Basic (in shares) 85,157 83,039 84,712 82,823
Diluted (in shares) 88,500 83,039 84,712 82,823
Subscription services        
Revenue        
Total revenue $ 214,430 $ 197,105 $ 426,333 $ 384,614
Cost of revenue        
Total cost of revenue 36,238 36,783 72,062 73,647
Subscription license        
Revenue        
Total revenue 84,647 41,197 147,985 125,724
Cost of revenue        
Total cost of revenue 477 623 1,120 1,342
Consulting        
Revenue        
Total revenue 52,040 58,387 106,087 111,420
Cost of revenue        
Total cost of revenue 60,231 58,710 118,413 119,058
Perpetual license        
Revenue        
Total revenue 36 1,579 895 1,982
Cost of revenue        
Total cost of revenue $ 0 $ 24 $ 9 $ 27
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 6,613 $ (46,804) $ (5,511) $ (67,578)
Other comprehensive (loss) income, net of tax        
Unrealized (loss) on available-for-sale securities (72) (195) (818) (241)
Foreign currency translation adjustments (2,142) 361 (5,569) 1,950
Total other comprehensive (loss) income, net of tax (2,214) 166 (6,387) 1,709
Comprehensive income (loss) $ 4,399 $ (46,638) $ (11,898) $ (65,869)
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional paid-in capital
(Accumulated deficit)
Accumulated other comprehensive (loss)
Balance, beginning of period (in shares) at Dec. 31, 2022   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 (2,488)   (2,488)    
Other comprehensive income (loss) 1,543       1,543
Net income (loss) (20,774)     (20,774)  
Balance, end of period (in shares) at Mar. 31, 2023   82,940      
Balance, end of period at Mar. 31, 2023 154,496 $ 829 272,481 (97,287) (21,527)
Balance, beginning of period (in shares) at Dec. 31, 2022   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]          
Other comprehensive income (loss) 1,709        
Net income (loss) (67,578)        
Balance, end of period (in shares) at Jun. 30, 2023   83,212      
Balance, end of period at Jun. 30, 2023 145,396 $ 832 310,016 (144,091) (21,361)
Balance, beginning of period (in shares) at Mar. 31, 2023   82,940      
Balance, beginning of period at Mar. 31, 2023 154,496 $ 829 272,481 (97,287) (21,527)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock for stock compensation plans (in shares)   225      
Issuance of common stock for stock compensation plans 1,826 $ 2 1,824    
Issuance of common stock under the employee stock purchase plan (in shares)   47      
Issuance of common stock under the employee stock purchase plan 1,981 $ 1 1,980    
Stock-based compensation 36,227   36,227    
Cash dividends declared (2,496)   (2,496)    
Other comprehensive income (loss) 166       166
Net income (loss) (46,804)     (46,804)  
Balance, end of period (in shares) at Jun. 30, 2023   83,212      
Balance, end of period at Jun. 30, 2023 $ 145,396 $ 832 310,016 (144,091) (21,361)
Balance, beginning of period (in shares) at Dec. 31, 2023 83,840 83,840      
Balance, beginning of period at Dec. 31, 2023 $ 353,838 $ 838 379,584 (8,705) (17,879)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock for stock compensation plans (in shares)   1,139      
Issuance of common stock for stock compensation plans 18,656 $ 12 18,644    
Issuance of common stock under the employee stock purchase plan (in shares)   32      
Issuance of common stock under the employee stock purchase plan 1,758   1,758    
Stock-based compensation 34,781   34,781    
Cash dividends declared (2,550)   (2,550)    
Other comprehensive income (loss) (4,173)       (4,173)
Net income (loss) (12,124)     (12,124)  
Balance, end of period (in shares) at Mar. 31, 2024   85,011      
Balance, end of period at Mar. 31, 2024 $ 390,186 $ 850 432,217 (20,829) (22,052)
Balance, beginning of period (in shares) at Dec. 31, 2023 83,840 83,840      
Balance, beginning of period at Dec. 31, 2023 $ 353,838 $ 838 379,584 (8,705) (17,879)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Other comprehensive income (loss) (6,387)        
Net income (loss) $ (5,511)        
Balance, end of period (in shares) at Jun. 30, 2024 85,369 85,369      
Balance, end of period at Jun. 30, 2024 $ 435,402 $ 854 473,030 (14,216) (24,266)
Balance, beginning of period (in shares) at Mar. 31, 2024   85,011      
Balance, beginning of period at Mar. 31, 2024 390,186 $ 850 432,217 (20,829) (22,052)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock for stock compensation plans (in shares)   326      
Issuance of common stock for stock compensation plans 5,485 $ 4 5,481    
Issuance of common stock under the employee stock purchase plan (in shares)   32      
Issuance of common stock under the employee stock purchase plan 1,669   1,669    
Stock-based compensation 36,224   36,224    
Cash dividends declared (2,561)   (2,561)    
Other comprehensive income (loss) (2,214)   0   (2,214)
Net income (loss) $ 6,613     6,613  
Balance, end of period (in shares) at Jun. 30, 2024 85,369 85,369      
Balance, end of period at Jun. 30, 2024 $ 435,402 $ 854 $ 473,030 $ (14,216) $ (24,266)
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares
3 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Statement of Stockholders' Equity [Abstract]        
Cash dividend declared (in dollars per share) $ 0.03 $ 0.03 $ 0.03 $ 0.03
v3.24.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Operating activities        
Net (loss) $ 6,613 $ (46,804) $ (5,511) $ (67,578)
Adjustments to reconcile net (loss) to cash provided by operating activities        
Stock-based compensation 36,224 36,227 71,005 78,784
Amortization of deferred commissions 14,994 14,750 32,276 29,027
Amortization of intangible assets and depreciation     8,812 9,553
Lease expense     7,844 8,186
Foreign currency transaction loss (437) 3,290 2,825 5,965
(Gain) on capped call transactions 3,277 1,361 (22) (1,845)
Deferred income taxes     232 (136)
(Gain) on investments     (1,628) (4,430)
(Gain) on repurchases of convertible senior notes     0 (7,855)
Other non-cash     (5,056) 2,122
Change in operating assets and liabilities, net     109,466 61,959
Cash provided by operating activities     220,243 113,752
Investing activities        
Purchases of investments     (291,810) (69,662)
Proceeds from maturities and called investments     83,967 88,849
Sales of investments     0 10,725
Investment in property and equipment     (1,857) (13,933)
Cash (used in) provided by investing activities     (209,700) 15,979
Financing activities        
Repurchases of convertible senior notes     0 (88,989)
Dividend payments to stockholders     (5,065) (4,962)
Proceeds from employee stock plans     29,928 8,044
Common stock repurchases for tax withholdings for net settlement of equity awards     (2,360) (1,422)
Other     0 341
Cash provided by (used in) financing activities     22,503 (86,988)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     (2,842) 1,010
Net increase in cash, cash equivalents, and restricted cash     30,204 43,753
Cash, cash equivalents, and restricted cash, beginning of period     232,827 145,054
Cash, cash equivalents, and restricted cash, end of period 263,031 188,807 263,031 188,807
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]        
Cash and cash equivalents 258,257 186,874 258,257 186,874
Restricted cash included in other current assets 768   768  
Restricted cash included in other long-term assets 4,006 1,933 4,006 1,933
Total cash, cash equivalents, and restricted cash $ 263,031 $ 188,807 $ 263,031 $ 188,807
v3.24.2
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 2024
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, 2023.
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 2024.
v3.24.2
MARKETABLE SECURITIES
6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES
NOTE 2. MARKETABLE SECURITIES
June 30, 2024December 31, 2023
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair Value
Government debt$12,942 $— $(17)$12,925 $11,471 $33 $(1)$11,503 
Corporate debt394,521 (628)393,894 181,960 200 (227)181,933 
$407,463 $$(645)$406,819 $193,431 $233 $(228)$193,436 
As of June 30, 2024, marketable securities’ maturities ranged from July 2024 to January 2026, with a weighted-average remaining maturity of 0.4 years.
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
6 Months Ended
Jun. 30, 2024
Receivables [Abstract]  
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
Receivables
(in thousands)
June 30, 2024December 31, 2023
Accounts receivable, net$165,723 $300,173 
Unbilled receivables, net164,533 237,379 
Long-term unbilled receivables, net
81,218 85,402 
$411,474 $622,954 
Unbilled receivables
Unbilled receivables are client-committed amounts for which revenue recognition precedes billing. Billing is solely subject to the passage of time.
Unbilled receivables by expected collection date:
(Dollars in thousands)
June 30, 2024
1 year or less$164,533 67 %
1-2 years58,353 24 %
2-5 years22,865 %
$245,751 100 %
Unbilled receivables by contract effective date:
(Dollars in thousands)
June 30, 2024
2024$58,562 24 %
2023130,140 53 %
202229,241 12 %
202122,830 %
2020 and prior4,978 %
$245,751 100 %
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)
June 30, 2024December 31, 2023
Contract assets
$15,374 $16,238 
Long-term contract assets
19,997 20,635 
$35,371 $36,873 

Deferred revenue
Deferred revenue consists of billings made and payments received in advance of revenue recognition.
(in thousands)
June 30, 2024December 31, 2023
Deferred revenue$352,618 $377,845 
Long-term deferred revenue
2,443 2,478 
$355,061 $380,323 
The decrease in deferred revenue in the six months ended June 30, 2024, was primarily due to $272.7 million of revenue recognized that was in deferred revenue as of December 31, 2023.
v3.24.2
DEFERRED COMMISSIONS
6 Months Ended
Jun. 30, 2024
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
DEFERRED COMMISSIONS
NOTE 4. DEFERRED COMMISSIONS
(in thousands)
June 30, 2024December 31, 2023
Deferred commissions
$100,490 $114,119 
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Amortization of deferred commissions (1)
$14,994 $14,750 $32,276 $29,027 
(1) Included in selling and marketing.
v3.24.2
GOODWILL AND OTHER INTANGIBLES
6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLES
NOTE 5. GOODWILL AND OTHER INTANGIBLES
Goodwill
Six Months Ended
June 30,
(in thousands)
20242023
January 1,$81,611 $81,399 
Currency translation adjustments(201)194 
June 30,$81,410 $81,593 
Intangibles
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
June 30, 2024
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value
Client-related
4-10 years
$63,112 $(60,714)$2,398 
Technology
2-10 years
68,005 (65,198)2,807 
Other
1-5 years
5,361 (5,361)— 
$136,478 $(131,273)$5,205 
December 31, 2023
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value
Client-related
4-10 years
$63,117 $(60,035)$3,082 
Technology
2-10 years
68,138 (64,218)3,920 
Other
1-5 years
5,361 (5,361)— 
$136,616 $(129,614)$7,002 
Future estimated amortization of intangible assets:
(in thousands)
June 30, 2024
Remainder of 2024$1,399 
20252,605 
2026874 
2027327 
$5,205 
Amortization of intangible assets:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Cost of revenue
$447 $621 $1,068 $1,327 
Selling and marketing
342 342 685 685 
$789 $963 $1,753 $2,012 
v3.24.2
OTHER ASSETS AND LIABILITIES
6 Months Ended
Jun. 30, 2024
Other Assets and Liabilities [Abstract]  
OTHER ASSETS AND LIABILITIES
NOTE 6. OTHER ASSETS AND LIABILITIES
Other current assets
(in thousands)June 30, 2024December 31, 2023
Income tax receivables$16,060 $4,804 
Contract assets15,374 16,238 
Insurance receivable— 1,954 
Indirect tax receivable2,702 1,924 
Capped call transactions915 — 
Restricted cash768 — 
Other40,504 43,217 
$76,323 $68,137 
Other long-term assets
(in thousands)June 30, 2024December 31, 2023
Deferred commissions$100,490 $114,119 
Right of use assets68,293 64,198 
Property and equipment42,190 47,279 
Venture investments21,047 19,450 
Contract assets19,997 20,635 
Intangible assets5,205 7,002 
Capped call transactions— 893 
Deferred income taxes3,666 3,678 
Restricted cash4,006 2,925 
Other37,355 34,517 
$302,249 $314,696 
Accrued expenses
(in thousands)June 30, 2024December 31, 2023
Cloud hosting$15,152 $1,358 
Outside professional services9,539 10,419 
Marketing and sales program7,081 2,557 
Income and other taxes3,422 15,428 
Employee related4,966 4,486 
Other4,715 5,693 
$44,875 $39,941 
Other current liabilities
(in thousands)June 30, 2024December 31, 2023
Operating lease liabilities$15,254 $15,000 
Dividends payable2,561 2,515 
Other2,862 3,828 
$20,677 $21,343 
Other long-term liabilities
(in thousands)June 30, 2024December 31, 2023
Deferred revenue$2,443 $2,478 
Income taxes payable858 859 
Other11,061 10,233 
$14,362 $13,570 
v3.24.2
LEASES
6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
LEASES
NOTE 7. LEASES
Expense
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Fixed lease costs$5,271 $4,495 $9,533 $10,261 
Short-term lease costs410 696 953 1,477 
Variable lease costs1,763 2,186 3,372 4,160 
$7,444 $7,377 $13,858 $15,898 
Right of use assets and lease liabilities
(in thousands)June 30, 2024December 31, 2023
Right of use assets
$68,293 $64,198 
Operating lease liabilities
$15,254 $15,000 
Long-term operating lease liabilities$70,202 $66,901 
Weighted-average remaining lease term and discount rate for the Company’s leases were:
June 30, 2024December 31, 2023
Weighted-average remaining lease term6.4 years6.8 years
Weighted-average discount rate (1)
4.6 %4.0 %
(1) The rates implicit in 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)June 30, 2024
Remainder of 2024$7,954 
202518,784 
202614,384 
202713,387 
202812,813 
202910,099 
Thereafter21,650 
Total lease payments99,071 
Less: imputed interest (1)
(13,615)
$85,456 
(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
Six Months Ended
June 30,
(in thousands)20242023
Cash paid for operating leases, net of tenant improvement allowances$9,493 $10,540 
Right of use assets recognized for new leases and amendments (non-cash)$12,290 $1,465 
v3.24.2
DEBT
6 Months Ended
Jun. 30, 2024
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 September 1, 2020. In the three and six months ended June 30, 2023, the Company recognized gains of $5.1 million and $7.9 million, respectively, in other income, net from repurchases of Notes representing $64.7 million and $97.7 million, respectively, 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 conversion rate will be adjusted upon certain events, including spin-offs, tender offers, exchange offers, and certain stockholder distributions. 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.
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 June 30, 2024, 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)June 30, 2024December 31, 2023
Principal$502,270 $502,270 
Unamortized issuance costs(1,666)(2,902)
Convertible senior notes, net$500,604 $499,368 

Interest expense related to the Notes:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Contractual interest expense (0.75% coupon)
$942 $997 $1,884 $2,122 
Amortization of issuance costs
619 647 1,236 1,375 
$1,561 $1,644 $3,120 $3,497 
The average interest rate on the Notes in the six months ended June 30, 2024 and 2023 was 1.2%.
Future payments:
June 30, 2024
(in thousands)PrincipalInterestTotal
Remainder of 2024$— $1,883 $1,883 
2025502,270 1,884 504,154 
$502,270 $3,767 $506,037 
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 initially 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 and six months ended June 30, 2023, Capped Call Transactions covering approximately 0.5 million and 0.7 million shares, respectively, were settled for proceeds of $0.1 million and $0.3 million, respectively. As of June 30, 2024, Capped Call Transactions covering approximately 3.7 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 calculated following the governing documents may not represent a fair value measurement. The Capped Call Transactions are remeasured to fair value each reporting period, resulting in a non-operating gain or loss.
Change in capped call transactions:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$893 $2,582 
Settlements— (341)
Fair value adjustment22 1,845 
June 30,$915 $4,086 
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. On April 23, 2024, the Credit Facility was amended to extend the expiration date to February 4, 2025. The Credit Facility, as amended, contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. Beginning with the fiscal quarter ended March 31, 2024, the Company must maintain 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.
As of June 30, 2024 and December 31, 2023, the Company had $27.3 million in outstanding letters of credit under the Credit Facility, reducing available borrowing capacity, but no outstanding cash borrowings.
v3.24.2
RESTRUCTURING
6 Months Ended
Jun. 30, 2024
Restructuring and Related Activities [Abstract]  
RESTRUCTURING
NOTE 9. RESTRUCTURING
The Company has undertaken the following restructuring activities as it optimizes its go-to-market strategy and reassesses its office space needs:
(in thousands)Three months endedExpense
Office space reduction March 31, 2023$1,241 
Employee severance and related benefitsJune 30, 2023$1,581 
Employee severance and related benefits and office space reduction
September 30, 2023$17,236 
Office space reductionDecember 31, 2023$1,497 
Office space reductionJune 30, 2024$1,257 
Accrued employee severance and related benefits:
Change for all restructuring actions:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$8,095 $18,573 
Costs incurred(238)2,387 
Cash disbursements(3,852)(17,521)
Currency translation adjustments(169)185 
June 30,$3,836 $3,624 
Note: Accrued employee severance and related benefits is included in accrued compensation and related expenses.
v3.24.2
FAIR VALUE MEASUREMENTS
6 Months Ended
Jun. 30, 2024
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 with 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:
June 30, 2024December 31, 2023
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents$18,345 $— $— $18,345 $54,357 $— $— $54,357 
Marketable securities $— $406,819 $— $406,819 $— $193,436 $— $193,436 
Capped Call Transactions
$— $915 $— $915 $— $893 $— $893 
Venture investments (1)
$— $— $21,047 $21,047 $— $— $19,450 $19,450 
(1) Investments in privately-held companies
Changes in venture investments:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$19,450 $13,069 
New investments350 400 
Sales of investments— (2,773)
Changes in foreign exchange rates(19)119 
Changes in fair value:
included in other income, net
1,628 4,475 
included in other comprehensive income (loss)
(362)(1,908)
June 30,$21,047 $13,382 
The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.
Fair value of the Convertible Senior Notes
The fair value of the Notes outstanding (including the embedded conversion feature) was $485.3 million as of June 30, 2024, and $466.5 million as of December 31, 2023.
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.
v3.24.2
REVENUE
6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
REVENUE
NOTE 11. REVENUE
Geographic revenue
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)
2024202320242023
U.S.$189,214 54 %$150,385 50 %$370,197 55 %$334,904 54 %
Other Americas21,314 %19,505 %43,100 %34,516 %
United Kingdom (“U.K.”)38,628 11 %28,892 10 %70,745 10 %71,129 11 %
Europe (excluding U.K.), Middle East, and Africa 53,360 15 %54,353 18 %115,207 17 %105,671 17 %
Asia-Pacific48,637 14 %45,133 15 %82,051 12 %77,520 12 %
$351,153 100 %$298,268 100 %$681,300 100 %$623,740 100 %
Revenue streams
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)
2024202320242023
Subscription license$84,647 $41,197 $147,985 $125,724 
Perpetual license36 1,579 895 1,982 
Revenue recognized at a point in time84,683 42,776 148,880 127,706 
Maintenance80,344 82,042 161,345 161,672 
Pega Cloud134,086 115,063 264,988 222,942 
Consulting52,040 58,387 106,087 111,420 
Revenue recognized over time266,470 255,492 532,420 496,034 
Total revenue$351,153 $298,268 $681,300 $623,740 
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Pega Cloud$134,086 $115,063 $264,988 $222,942 
Maintenance80,344 82,042 161,345 161,672 
Subscription services214,430 197,105 426,333 384,614 
Subscription license84,647 41,197 147,985 125,724 
Subscription299,077 238,302 574,318 510,338 
Consulting52,040 58,387 106,087 111,420 
Perpetual license36 1,579 895 1,982 
$351,153 $298,268 $681,300 $623,740 
Remaining performance obligations ("Backlog")
Expected future revenue from existing non-cancellable contracts:
As of June 30, 2024:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
Pega CloudMaintenance
1 year or less
$470,379 $209,655 $23,931 $2,696 $25,953 $732,614 52 %
1-2 years
301,070 63,266 10,078 — 2,469 376,883 27 %
2-3 years
152,839 30,032 2,884 — 2,473 188,228 13 %
Greater than 3 years
90,474 17,953 97 — — 108,524 %
$1,014,762 $320,906 $36,990 $2,696 $30,895 $1,406,249 100 %
As of June 30, 2023:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
Pega CloudMaintenance
1 year or less
$397,183 $214,579 $35,616 $4,979 $37,355 $689,712 55 %
1-2 years
238,691 58,551 3,026 2,252 6,772 309,292 24 %
2-3 years
124,616 25,103 6,764 — 1,523 158,006 12 %
Greater than 3 years
101,494 7,592 — — — 109,086 %
$861,984 $305,825 $45,406 $7,231 $45,650 $1,266,096 100 %
v3.24.2
STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION
NOTE 12. STOCK-BASED COMPENSATION
Expense
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Cost of revenue
$7,092 $7,174 $13,664 $16,087 
Selling and marketing
13,564 15,349 27,452 33,009 
Research and development
7,825 7,851 15,471 16,911 
General and administrative
7,743 5,853 14,418 12,777 
$36,224 $36,227 $71,005 $78,784 
Income tax benefit
$(554)$(581)$(865)$(1,253)
As of June 30, 2024, the Company had $149.7 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.7 years.
Grants
Six Months Ended
June 30, 2024
(in thousands)
Quantity
Total Fair Value
Restricted stock units (1)
1,266 $78,071 
Non-qualified stock options
1,738 $44,874 
Performance stock options (2)
566 $13,921 
(1) Includes units issued when employees elect to receive 50% of the employee’s target incentive compensation under the Company’s Corporate Incentive Compensation Plan (the “CICP”) in the form of RSUs instead of cash.
(2) Performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date. For the performance stock options granted in the six months ended June 30, 2024, 25% can vest on the first anniversary of the grant date, and 75% can vest on the second anniversary of the grant date, based on the achievement of specific performance conditions. The options expire ten years from the grant date.
v3.24.2
INCOME TAXES
6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 13. INCOME TAXES
Effective income tax rate
Six Months Ended
June 30,
(Dollars in thousands)20242023
Provision for income taxes$5,604 $11,850 
Effective income tax rate*(21)%
* not meaningful
The Company’s effective income tax rate for the six months ended June 30, 2024, is impacted by the jurisdictional mix and timing of the actual compared to projected earnings (losses). It is also impacted by the valuation allowance on its deferred tax assets in the U.S. and U.K. and a near break-even pretax income resulting in a not meaningful high effective income tax rate.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. A deferred tax valuation allowance requires significant judgment and uncertainties, including assumptions about future taxable income. Quarterly, the Company reassesses the need for a valuation allowance on its net deferred tax assets by weighting all available and objectively verifiable negative and positive evidence, including projected future reversals of existing taxable temporary differences, committed contractual backlog (“Backlog”), projected future taxable income, including the impact of enacted legislation, tax-planning strategies, and recent operating results.
The Company intends to maintain a valuation allowance on its U.S. and U.K. net deferred tax assets until sufficient evidence exists to support their realization.
v3.24.2
EARNINGS (LOSS) PER SHARE
6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS (LOSS) PER SHARE
NOTE 14. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted earnings (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 earnings (loss) per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share amounts)2024202320242023
Net income (loss)$6,613 $(46,804)$(5,511)$(67,578)
Weighted-average common shares outstanding85,157 83,039 84,712 82,823 
Earnings (loss) per share, basic$0.08 $(0.56)$(0.07)$(0.82)
Net income (loss)$6,613 $(46,804)$(5,511)$(67,578)
Numerator for diluted EPS $6,613 $(46,804)$(5,511)$(67,578)
Weighted-average effect of dilutive securities:
Stock options2,164 — — — 
RSUs1,179 — — — 
Effect of dilutive securities3,343 — — — 
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)
88,500 83,039 84,712 82,823 
Earnings (loss) per share, diluted$0.07 $(0.56)$(0.07)$(0.82)
Outstanding anti-dilutive stock options and RSUs (4)
1,354 3,259 1,351 
(1) All dilutive securities are excluded when 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 3.7 million shares as of June 30, 2024.
(3) The Company’s Capped Call Transactions represent the equivalent of approximately 3.7 million shares of the Company’s common stock (representing the number of shares for which the Notes are convertible) as of June 30, 2024. 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 earnings (loss) per share. These awards may be dilutive in the future.
v3.24.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2024
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 for the below matters as of June 30, 2024 and December 31, 2023.
Appian Corp. v. Pegasystems Inc. & Youyong Zou
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. A panel of the Court of Appeals of Virginia heard oral arguments on November 15, 2023, and will issue a written opinion in the future. Although it is not possible to predict timing, the entirety of the 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 Company’s motion to dismiss took place on May 17, 2023. After hearing argument from both sides, the Court denied the Company’s motion from the bench and stated that a written opinion would follow. On June 30, 2023, the Company filed its Answer to the complaint. On July 24, 2023, the Court issued its written opinion denying the motion to dismiss as to the Company and Defendant Trefler but granting the motion without prejudice as to Mr. Stillwell.
On March 4, 2024, the parties agreed in principle to a proposed settlement of the litigation for an aggregate sum of $35 million. On April 23, 2024, the parties executed a stipulation of settlement. On April 23, 2024, the plaintiffs filed a motion seeking preliminary approval of the settlement. On May 15, 2024, the Court granted plaintiffs’ motion for preliminary approval of the settlement and scheduled a settlement hearing for September 19, 2024. The deadline for the proposed class of shareholders to object to the proposed settlement is August 29, 2024. In May 2024, the Company paid $32.4 million and the Company’s insurance carriers paid $2.6 million pending final approval of the settlement. It is possible that actual future losses related to the litigation could exceed the settlement amount if and to the extent that the court does not approve the proposed settlement.
In re Pegasystems Inc., Derivative Litigation
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 April 28, 2023, a lawsuit was filed in the United States District Court for the District of Massachusetts by Dag Sagfors, derivatively on behalf of nominal defendant Pegasystems Inc., asserting breach of fiduciary duty and related claims relating to the Virginia Appian litigation against the same defendants as the Larkin lawsuit. On May 17, 2023, the Larkin and Sagfors cases were consolidated and a joint motion to stay the consolidated case is pending before the Court. The Company also has received confidential demand letters raising substantially the same allegations set forth in the foregoing derivative complaints. On April 12, 2023, the Company’s board of directors (other than Mr. Trefler, who recused himself), formed a committee consisting solely of independent directors, to review, analyze, and investigate the matters raised in the demands and to determine in good faith what actions (if any) are reasonably believed to be appropriate under similar circumstances and reasonably believed to be in the best interests of the Company in response to the demand letters. On June 28, 2024, a lawsuit was filed against members of the Company’s board of directors, certain employees of the Company and the Company in the Business Litigation Section of the Superior Court in Suffolk County, Massachusetts, captioned John Dwyer and Ray Gerber, Plaintiffs, v. Alan Trefler, Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Larry Weber, Leon Trefler, Don Schuerman, Kerim Akgonul, and Benjamin Baril, Defendants, Pegasystems Inc., Nominal Defendant (Case 2484CV01734). The complaint generally alleges the defendants breached their fiduciary duties in connection with alleged misconduct by Company employees alleged in the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and alleges damages from the approximately $2 billion verdict in the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, the recent class action settlement, and litigation costs from various proceedings. On July 17, 2024, the parties filed a stipulation with the court in which they agreed to extend defendants’ time to respond to the operative complaint to 45 days following a decision from the Virginia Court of Appeals. The Company is unable to reasonably estimate possible damages or a range of possible damages in these matters given the stage of the lawsuits and there being no specified quantum of damages sought in the complaints.
SEC Inquiry
Beginning in March 2023, the U.S. Securities and Exchange Commission (“SEC”) has requested certain information relating to, among other things, the accounting treatment of the Company’s above-described litigation with Appian Corporation. The Company is fully cooperating with the SEC’s requests.
v3.24.2
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure            
Net income (loss) $ 6,613 $ (12,124) $ (46,804) $ (20,774) $ (5,511) $ (67,578)
v3.24.2
Insider Trading Arrangements
shares in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
shares
Jun. 30, 2024
shares
Trading Arrangements, by Individual    
Non-Rule 10b5-1 Arrangement Adopted false  
Rule 10b5-1 Arrangement Terminated false  
Non-Rule 10b5-1 Arrangement Terminated false  
Richard H. Jones [Member]    
Trading Arrangements, by Individual    
Material Terms of Trading Arrangement  
On April 30, 2024, Richard H. Jones, one of our directors, entered into a trading plan that provides for the sale of an aggregate of 50,000 shares of our common stock. The plan will terminate on April 30, 2025, subject to early termination for certain specified events set forth in the plan.
Name Richard H. Jones  
Title directors  
Rule 10b5-1 Arrangement Adopted true  
Adoption Date April 30, 2024  
Arrangement Duration 365 days  
Richard H. Jones Rule Trading Arrangement, Common Stock [Member] | Richard H. Jones [Member]    
Trading Arrangements, by Individual    
Aggregate Available 50 50
v3.24.2
BASIS OF PRESENTATION (Policies)
6 Months Ended
Jun. 30, 2024
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, 2023.
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 2024.
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 with 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.
v3.24.2
MARKETABLE SECURITIES (Tables)
6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Schedule of Marketable Securities
June 30, 2024December 31, 2023
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair Value
Government debt$12,942 $— $(17)$12,925 $11,471 $33 $(1)$11,503 
Corporate debt394,521 (628)393,894 181,960 200 (227)181,933 
$407,463 $$(645)$406,819 $193,431 $233 $(228)$193,436 
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables)
6 Months Ended
Jun. 30, 2024
Receivables [Abstract]  
Schedule of Receivables
Receivables
(in thousands)
June 30, 2024December 31, 2023
Accounts receivable, net$165,723 $300,173 
Unbilled receivables, net164,533 237,379 
Long-term unbilled receivables, net
81,218 85,402 
$411,474 $622,954 
Schedule of Unbilled Receivables
Unbilled receivables by expected collection date:
(Dollars in thousands)
June 30, 2024
1 year or less$164,533 67 %
1-2 years58,353 24 %
2-5 years22,865 %
$245,751 100 %
Schedule of Unbilled Receivables by Contract Effective Date
Unbilled receivables by contract effective date:
(Dollars in thousands)
June 30, 2024
2024$58,562 24 %
2023130,140 53 %
202229,241 12 %
202122,830 %
2020 and prior4,978 %
$245,751 100 %
Schedule 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)
June 30, 2024December 31, 2023
Contract assets
$15,374 $16,238 
Long-term contract assets
19,997 20,635 
$35,371 $36,873 

Deferred revenue
Deferred revenue consists of billings made and payments received in advance of revenue recognition.
(in thousands)
June 30, 2024December 31, 2023
Deferred revenue$352,618 $377,845 
Long-term deferred revenue
2,443 2,478 
$355,061 $380,323 
v3.24.2
DEFERRED COMMISSIONS (Tables)
6 Months Ended
Jun. 30, 2024
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of Impairment of Deferred Contract Costs
(in thousands)
June 30, 2024December 31, 2023
Deferred commissions
$100,490 $114,119 
Schedule of Amortization of Deferred Contract Costs
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Amortization of deferred commissions (1)
$14,994 $14,750 $32,276 $29,027 
(1) Included in selling and marketing.
v3.24.2
GOODWILL AND OTHER INTANGIBLES (Tables)
6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
Six Months Ended
June 30,
(in thousands)
20242023
January 1,$81,611 $81,399 
Currency translation adjustments(201)194 
June 30,$81,410 $81,593 
Schedule of Intangibles
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
June 30, 2024
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value
Client-related
4-10 years
$63,112 $(60,714)$2,398 
Technology
2-10 years
68,005 (65,198)2,807 
Other
1-5 years
5,361 (5,361)— 
$136,478 $(131,273)$5,205 
December 31, 2023
(in thousands)Useful LivesCostAccumulated Amortization
Net Book Value
Client-related
4-10 years
$63,117 $(60,035)$3,082 
Technology
2-10 years
68,138 (64,218)3,920 
Other
1-5 years
5,361 (5,361)— 
$136,616 $(129,614)$7,002 
Schedule of Future Estimated Intangibles Assets Amortization
Future estimated amortization of intangible assets:
(in thousands)
June 30, 2024
Remainder of 2024$1,399 
20252,605 
2026874 
2027327 
$5,205 
Schedule of Amortization of Intangible Assets
Amortization of intangible assets:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Cost of revenue
$447 $621 $1,068 $1,327 
Selling and marketing
342 342 685 685 
$789 $963 $1,753 $2,012 
v3.24.2
OTHER ASSETS AND LIABILITIES (Tables)
6 Months Ended
Jun. 30, 2024
Other Assets and Liabilities [Abstract]  
Schedule of Other Assets and Other Liabilities
Other current assets
(in thousands)June 30, 2024December 31, 2023
Income tax receivables$16,060 $4,804 
Contract assets15,374 16,238 
Insurance receivable— 1,954 
Indirect tax receivable2,702 1,924 
Capped call transactions915 — 
Restricted cash768 — 
Other40,504 43,217 
$76,323 $68,137 
Other long-term assets
(in thousands)June 30, 2024December 31, 2023
Deferred commissions$100,490 $114,119 
Right of use assets68,293 64,198 
Property and equipment42,190 47,279 
Venture investments21,047 19,450 
Contract assets19,997 20,635 
Intangible assets5,205 7,002 
Capped call transactions— 893 
Deferred income taxes3,666 3,678 
Restricted cash4,006 2,925 
Other37,355 34,517 
$302,249 $314,696 
Other current liabilities
(in thousands)June 30, 2024December 31, 2023
Operating lease liabilities$15,254 $15,000 
Dividends payable2,561 2,515 
Other2,862 3,828 
$20,677 $21,343 
Other long-term liabilities
(in thousands)June 30, 2024December 31, 2023
Deferred revenue$2,443 $2,478 
Income taxes payable858 859 
Other11,061 10,233 
$14,362 $13,570 
Schedule of Accrued expenses
Accrued expenses
(in thousands)June 30, 2024December 31, 2023
Cloud hosting$15,152 $1,358 
Outside professional services9,539 10,419 
Marketing and sales program7,081 2,557 
Income and other taxes3,422 15,428 
Employee related4,966 4,486 
Other4,715 5,693 
$44,875 $39,941 
v3.24.2
LEASES (Tables)
6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Schedule of Expense
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Fixed lease costs$5,271 $4,495 $9,533 $10,261 
Short-term lease costs410 696 953 1,477 
Variable lease costs1,763 2,186 3,372 4,160 
$7,444 $7,377 $13,858 $15,898 
Schedule of Right of Use Asset and Lease Liabilities
(in thousands)June 30, 2024December 31, 2023
Right of use assets
$68,293 $64,198 
Operating lease liabilities
$15,254 $15,000 
Long-term operating lease liabilities$70,202 $66,901 
Schedule of Weighted Average and Discount Rate
Weighted-average remaining lease term and discount rate for the Company’s leases were:
June 30, 2024December 31, 2023
Weighted-average remaining lease term6.4 years6.8 years
Weighted-average discount rate (1)
4.6 %4.0 %
(1) The rates implicit in 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 Maturities of Lease Liabilities
Maturities of lease liabilities:
(in thousands)June 30, 2024
Remainder of 2024$7,954 
202518,784 
202614,384 
202713,387 
202812,813 
202910,099 
Thereafter21,650 
Total lease payments99,071 
Less: imputed interest (1)
(13,615)
$85,456 
(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 Cash Flow Lease Information
Six Months Ended
June 30,
(in thousands)20242023
Cash paid for operating leases, net of tenant improvement allowances$9,493 $10,540 
Right of use assets recognized for new leases and amendments (non-cash)$12,290 $1,465 
v3.24.2
DEBT (Tables)
6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Carrying Value and Interest Expense Related to the Notes
Carrying value of the Notes:
(in thousands)June 30, 2024December 31, 2023
Principal$502,270 $502,270 
Unamortized issuance costs(1,666)(2,902)
Convertible senior notes, net$500,604 $499,368 

Interest expense related to the Notes:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Contractual interest expense (0.75% coupon)
$942 $997 $1,884 $2,122 
Amortization of issuance costs
619 647 1,236 1,375 
$1,561 $1,644 $3,120 $3,497 
Schedule of Future Payments
Future payments:
June 30, 2024
(in thousands)PrincipalInterestTotal
Remainder of 2024$— $1,883 $1,883 
2025502,270 1,884 504,154 
$502,270 $3,767 $506,037 
Schedule of Change in Capped Call Transactions
Change in capped call transactions:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$893 $2,582 
Settlements— (341)
Fair value adjustment22 1,845 
June 30,$915 $4,086 
v3.24.2
RESTRUCTURING (Tables)
6 Months Ended
Jun. 30, 2024
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring Activities and Accrued Employee Severance and Related Benefit
The Company has undertaken the following restructuring activities as it optimizes its go-to-market strategy and reassesses its office space needs:
(in thousands)Three months endedExpense
Office space reduction March 31, 2023$1,241 
Employee severance and related benefitsJune 30, 2023$1,581 
Employee severance and related benefits and office space reduction
September 30, 2023$17,236 
Office space reductionDecember 31, 2023$1,497 
Office space reductionJune 30, 2024$1,257 
Accrued employee severance and related benefits:
Change for all restructuring actions:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$8,095 $18,573 
Costs incurred(238)2,387 
Cash disbursements(3,852)(17,521)
Currency translation adjustments(169)185 
June 30,$3,836 $3,624 
Note: Accrued employee severance and related benefits is included in accrued compensation and related expenses.
v3.24.2
FAIR VALUE MEASUREMENTS (Tables)
6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities Measured at Fair Value
Assets and liabilities measured at fair value on a recurring basis:
June 30, 2024December 31, 2023
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents$18,345 $— $— $18,345 $54,357 $— $— $54,357 
Marketable securities $— $406,819 $— $406,819 $— $193,436 $— $193,436 
Capped Call Transactions
$— $915 $— $915 $— $893 $— $893 
Venture investments (1)
$— $— $21,047 $21,047 $— $— $19,450 $19,450 
(1) Investments in privately-held companies
Schedule of Changes in Venture Investments
Changes in venture investments:
Six Months Ended
June 30,
(in thousands)20242023
January 1,$19,450 $13,069 
New investments350 400 
Sales of investments— (2,773)
Changes in foreign exchange rates(19)119 
Changes in fair value:
included in other income, net
1,628 4,475 
included in other comprehensive income (loss)
(362)(1,908)
June 30,$21,047 $13,382 
v3.24.2
REVENUE (Tables)
6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Geographic Revenue
Geographic revenue
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)
2024202320242023
U.S.$189,214 54 %$150,385 50 %$370,197 55 %$334,904 54 %
Other Americas21,314 %19,505 %43,100 %34,516 %
United Kingdom (“U.K.”)38,628 11 %28,892 10 %70,745 10 %71,129 11 %
Europe (excluding U.K.), Middle East, and Africa 53,360 15 %54,353 18 %115,207 17 %105,671 17 %
Asia-Pacific48,637 14 %45,133 15 %82,051 12 %77,520 12 %
$351,153 100 %$298,268 100 %$681,300 100 %$623,740 100 %
Schedule of Revenue Streams
Revenue streams
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)
2024202320242023
Subscription license$84,647 $41,197 $147,985 $125,724 
Perpetual license36 1,579 895 1,982 
Revenue recognized at a point in time84,683 42,776 148,880 127,706 
Maintenance80,344 82,042 161,345 161,672 
Pega Cloud134,086 115,063 264,988 222,942 
Consulting52,040 58,387 106,087 111,420 
Revenue recognized over time266,470 255,492 532,420 496,034 
Total revenue$351,153 $298,268 $681,300 $623,740 
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Pega Cloud$134,086 $115,063 $264,988 $222,942 
Maintenance80,344 82,042 161,345 161,672 
Subscription services214,430 197,105 426,333 384,614 
Subscription license84,647 41,197 147,985 125,724 
Subscription299,077 238,302 574,318 510,338 
Consulting52,040 58,387 106,087 111,420 
Perpetual license36 1,579 895 1,982 
$351,153 $298,268 $681,300 $623,740 
Schedule of Remaining Performance Obligations
Expected future revenue from existing non-cancellable contracts:
As of June 30, 2024:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
Pega CloudMaintenance
1 year or less
$470,379 $209,655 $23,931 $2,696 $25,953 $732,614 52 %
1-2 years
301,070 63,266 10,078 — 2,469 376,883 27 %
2-3 years
152,839 30,032 2,884 — 2,473 188,228 13 %
Greater than 3 years
90,474 17,953 97 — — 108,524 %
$1,014,762 $320,906 $36,990 $2,696 $30,895 $1,406,249 100 %
As of June 30, 2023:
(Dollars in thousands)Subscription servicesSubscription licensePerpetual licenseConsultingTotal
Pega CloudMaintenance
1 year or less
$397,183 $214,579 $35,616 $4,979 $37,355 $689,712 55 %
1-2 years
238,691 58,551 3,026 2,252 6,772 309,292 24 %
2-3 years
124,616 25,103 6,764 — 1,523 158,006 12 %
Greater than 3 years
101,494 7,592 — — — 109,086 %
$861,984 $305,825 $45,406 $7,231 $45,650 $1,266,096 100 %
v3.24.2
STOCK-BASED COMPENSATION (Tables)
6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Stock Based Compensation Expense
Expense
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2024202320242023
Cost of revenue
$7,092 $7,174 $13,664 $16,087 
Selling and marketing
13,564 15,349 27,452 33,009 
Research and development
7,825 7,851 15,471 16,911 
General and administrative
7,743 5,853 14,418 12,777 
$36,224 $36,227 $71,005 $78,784 
Income tax benefit
$(554)$(581)$(865)$(1,253)
Schedule of Stock Based Compensation Award Granted
Grants
Six Months Ended
June 30, 2024
(in thousands)
Quantity
Total Fair Value
Restricted stock units (1)
1,266 $78,071 
Non-qualified stock options
1,738 $44,874 
Performance stock options (2)
566 $13,921 
(1) Includes units issued when employees elect to receive 50% of the employee’s target incentive compensation under the Company’s Corporate Incentive Compensation Plan (the “CICP”) in the form of RSUs instead of cash.
(2) Performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date. For the performance stock options granted in the six months ended June 30, 2024, 25% can vest on the first anniversary of the grant date, and 75% can vest on the second anniversary of the grant date, based on the achievement of specific performance conditions. The options expire ten years from the grant date.
v3.24.2
INCOME TAXES (Tables)
6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Schedule of Effective Income Tax Rate
Effective income tax rate
Six Months Ended
June 30,
(Dollars in thousands)20242023
Provision for income taxes$5,604 $11,850 
Effective income tax rate*(21)%
* not meaningful
v3.24.2
EARNINGS (LOSS) PER SHARE (Tables)
6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Calculation of Earnings (Loss) Per Share
Calculation of earnings (loss) per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share amounts)2024202320242023
Net income (loss)$6,613 $(46,804)$(5,511)$(67,578)
Weighted-average common shares outstanding85,157 83,039 84,712 82,823 
Earnings (loss) per share, basic$0.08 $(0.56)$(0.07)$(0.82)
Net income (loss)$6,613 $(46,804)$(5,511)$(67,578)
Numerator for diluted EPS $6,613 $(46,804)$(5,511)$(67,578)
Weighted-average effect of dilutive securities:
Stock options2,164 — — — 
RSUs1,179 — — — 
Effect of dilutive securities3,343 — — — 
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)
88,500 83,039 84,712 82,823 
Earnings (loss) per share, diluted$0.07 $(0.56)$(0.07)$(0.82)
Outstanding anti-dilutive stock options and RSUs (4)
1,354 3,259 1,351 
(1) All dilutive securities are excluded when 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 3.7 million shares as of June 30, 2024.
(3) The Company’s Capped Call Transactions represent the equivalent of approximately 3.7 million shares of the Company’s common stock (representing the number of shares for which the Notes are convertible) as of June 30, 2024. 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 $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.
(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted earnings (loss) per share. These awards may be dilutive in the future.
v3.24.2
MARKETABLE SECURITIES - Schedule of Marketable Securities (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Marketable Securities [Line Items]    
Amortized Cost $ 407,463 $ 193,431
Unrealized Gains 1 233
Unrealized Losses (645) (228)
Fair Value 406,819 193,436
US Government Agencies Debt Securities    
Marketable Securities [Line Items]    
Amortized Cost 12,942 11,471
Unrealized Gains 0 33
Unrealized Losses (17) (1)
Fair Value 12,925 11,503
Corporate Debt Securities    
Marketable Securities [Line Items]    
Amortized Cost 394,521 181,960
Unrealized Gains 1 200
Unrealized Losses (628) (227)
Fair Value $ 393,894 $ 181,933
v3.24.2
MARKETABLE SECURITIES - Narrative (Details)
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Marketable debt security weighted-average remaining maturity 4 months 24 days
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Receivables (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Receivables [Abstract]    
Accounts receivable, net $ 165,723 $ 300,173
Unbilled receivables, net 164,533 237,379
Long-term unbilled receivables, net 81,218 85,402
Total receivables $ 411,474 $ 622,954
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Unbilled Receivables (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Receivables [Abstract]  
1 year or less $ 164,533
1-2 years 58,353
2-5 years 22,865
Total $ 245,751
Percentage of unbilled receivables, 1 year or less 67.00%
Percentage of unbilled receivables, 1-2 years 24.00%
Percentage of unbilled receivables, 2-5 years 9.00%
Total percentage of unbilled receivables 100.00%
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE- Schedule of Unbilled Receivables by Contract Effective Date (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Receivables [Abstract]  
2024 $ 58,562
2023 130,140
2022 29,241
2021 22,830
2020 and prior 4,978
Unbilled revenue total $ 245,751
2024 24.00%
2023 53.00%
2022 12.00%
2021 9.00%
2020 and prior 2.00%
Total percentage of unbilled revenue 100.00%
v3.24.2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Contract Assets and Deferred Revenue (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Receivables [Abstract]    
Contract assets $ 15,374 $ 16,238
Long-term contract assets 19,997 20,635
Total contract assets 35,371 36,873
Deferred revenue 352,618 377,845
Long-term deferred revenue 2,443 2,478
Total deferred revenue 355,061 $ 380,323
Revenue recognized during the period that was included in deferred revenue $ 272,700  
v3.24.2
DEFERRED COMMISSIONS - Schedule of Impairment of Deferred Commissions (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Deferred commissions $ 100,490 $ 114,119
v3.24.2
DEFERRED COMMISSIONS - Schedule of Amortization of Deferred Commissions (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]        
Amortization of deferred commissions $ 14,994 $ 14,750 $ 32,276 $ 29,027
v3.24.2
GOODWILL AND OTHER INTANGIBLES - Schedule of Goodwill (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Goodwill [Roll Forward]    
Beginning balance $ 81,611 $ 81,399
Currency translation adjustments (201) 194
Ending balance $ 81,410 $ 81,593
v3.24.2
GOODWILL AND OTHER INTANGIBLES - Schedule of Intangibles (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Goodwill and Other Intangible Assets [Line Items]    
Cost $ 136,478 $ 136,616
Accumulated Amortization (131,273) (129,614)
Net Book Value 5,205 7,002
Client-related    
Goodwill and Other Intangible Assets [Line Items]    
Cost 63,112 63,117
Accumulated Amortization (60,714) (60,035)
Net Book Value 2,398 3,082
Technology    
Goodwill and Other Intangible Assets [Line Items]    
Cost 68,005 68,138
Accumulated Amortization (65,198) (64,218)
Net Book Value 2,807 3,920
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
v3.24.2
GOODWILL AND OTHER INTANGIBLES - Schedule of Future Estimated Intangibles Assets Amortization (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]    
Remainder of 2024 $ 1,399  
2025 2,605  
2026 874  
2027 327  
Net Book Value $ 5,205 $ 7,002
v3.24.2
GOODWILL AND OTHER INTANGIBLES - Schedule of Amortization of Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Acquired Finite-Lived Intangible Assets [Line Items]        
Amortization of intangible assets $ 789 $ 963 $ 1,753 $ 2,012
Cost of revenue        
Acquired Finite-Lived Intangible Assets [Line Items]        
Amortization of intangible assets 447 621 1,068 1,327
Selling and marketing        
Acquired Finite-Lived Intangible Assets [Line Items]        
Amortization of intangible assets $ 342 $ 342 $ 685 $ 685
v3.24.2
OTHER ASSETS AND LIABILITIES - Schedule of Other Assets and Other Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Jun. 30, 2023
Other current assets      
Income tax receivables $ 16,060 $ 4,804  
Contract assets 15,374 16,238  
Insurance receivable 0 1,954  
Indirect Tax Receivable 2,702 1,924  
Capped call transactions 915 0  
Restricted cash 768 0  
Other 40,504 43,217  
Other current assets 76,323 68,137  
Other long-term assets      
Deferred commissions 100,490 114,119  
Right of use assets 68,293 64,198  
Property and equipment 42,190 47,279  
Venture investments 21,047 19,450  
Contract assets 19,997 20,635  
Intangible assets 5,205 7,002  
Capped call transactions 0 893  
Deferred income taxes 3,666 3,678  
Restricted cash 4,006 2,925 $ 1,933
Other 37,355 34,517  
Other long-term assets 302,249 314,696  
Other current liabilities      
Operating lease liabilities 15,254 15,000  
Dividends payable 2,561 2,515  
Other 2,862 3,828  
Other current liabilities 20,677 21,343  
Other long-term liabilities      
Deferred revenue 2,443 2,478  
Income taxes payable 858 859  
Other 11,061 10,233  
Other long-term liabilities $ 14,362 $ 13,570  
v3.24.2
OTHER ASSETS AND LIABILITIES - Schedule of Accrued expenses (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Other Assets and Liabilities [Abstract]    
Cloud hosting $ 15,152 $ 1,358
Outside professional services 9,539 10,419
Marketing and sales program 7,081 2,557
Income and other taxes 3,422 15,428
Employee related 4,966 4,486
Other 4,715 5,693
Accrued expenses $ 44,875 $ 39,941
v3.24.2
LEASES - Schedule of Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Leases [Abstract]        
Fixed lease costs $ 5,271 $ 4,495 $ 9,533 $ 10,261
Short-term lease costs 410 696 953 1,477
Variable lease costs 1,763 2,186 3,372 4,160
Lease, cost $ 7,444 $ 7,377 $ 13,858 $ 15,898
v3.24.2
LEASES - Schedule of Right of Use Asset and Lease Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Leases [Abstract]    
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Other long-term assets Other long-term assets
Right of use assets $ 68,293 $ 64,198
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Other current liabilities Other current liabilities
Operating lease liabilities $ 15,254 $ 15,000
Long-term operating lease liabilities $ 70,202 $ 66,901
v3.24.2
LEASES - Schedule of Weighted Average and Discount Rate (Details)
Jun. 30, 2024
Dec. 31, 2023
Leases [Abstract]    
Weighted-average remaining lease term 6 years 4 months 24 days 6 years 9 months 18 days
Weighted-average discount rate 4.60% 4.00%
v3.24.2
LEASES - Schedule of Maturities of Lease Liabilities (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Leases [Abstract]  
Remainder of 2024 $ 7,954
2025 18,784
2026 14,384
2027 13,387
2028 12,813
2029 10,099
Thereafter 21,650
Total lease payments 99,071
Less: imputed interest (13,615)
Total lease liability $ 85,456
v3.24.2
LEASES - Schedule of Cash Flow Lease Information (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Leases [Abstract]    
Cash paid for operating leases, net of tenant improvement allowances $ 9,493 $ 10,540
Right of use assets recognized for new leases and amendments (non-cash) $ 12,290 $ 1,465
v3.24.2
DEBT - Convertible senior notes and capped calls (Details)
1 Months Ended 3 Months Ended 6 Months Ended 16 Months Ended
Feb. 29, 2020
USD ($)
day
$ / shares
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
day
Debt Instrument [Line Items]          
Gain (loss) on repurchase of convertible debt | $     $ 0 $ 7,855,000  
Redemption percentage     100.00%    
On or After March 1, 2023          
Debt Instrument [Line Items]          
Redemption threshold trading days         40
Redemption percentage         100.00%
Convertible senior notes          
Debt Instrument [Line Items]          
Face amount | $ $ 600,000,000        
Interest rate 0.75%   0.75% 0.75%  
Gain (loss) on repurchase of convertible debt | $   $ 5,100,000   $ 7,900,000  
Principal amount repurchased | $   $ 64,700,000   $ 97,700,000  
Initial conversion rate 0.0074045        
Initial conversion price (in dollars per share) | $ / shares $ 135.05        
Average interest rate     1.20% 1.20%  
Convertible senior notes | 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 senior notes | 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 senior notes | 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
v3.24.2
DEBT - Schedule of Carrying value of the Notes (Details) - Convertible senior notes - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]    
Principal $ 502,270 $ 502,270
Unamortized issuance costs (1,666) (2,902)
Convertible senior notes, net $ 500,604 $ 499,368
v3.24.2
DEBT - Schedule of Interest Expense Related to the Notes (Details) - Convertible senior notes - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended 6 Months Ended
Feb. 29, 2020
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Debt Instrument [Line Items]          
Interest rate 0.75%     0.75% 0.75%
Contractual interest expense (0.75% coupon)   $ 942 $ 997 $ 1,884 $ 2,122
Amortization of issuance costs   619 647 1,236 1,375
Interest expense   $ 1,561 $ 1,644 $ 3,120 $ 3,497
v3.24.2
DEBT - Schedule of Future Payments (Details) - Convertible senior notes - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Principal    
Remainder of 2024 $ 0  
2025 502,270  
Principal, total due 502,270 $ 502,270
Interest    
Remainder of 2024 1,883  
2025 1,884  
Interest expense, total due 3,767  
Total    
Remainder of 2024 1,883  
2025 504,154  
Principal and interest, total due $ 506,037  
v3.24.2
DEBT - Capped Call Transactions (Details)
shares in Millions, $ in Millions
1 Months Ended 3 Months Ended 6 Months Ended
Feb. 29, 2020
$ / derivative
shares
Jun. 30, 2023
USD ($)
shares
Jun. 30, 2023
USD ($)
shares
Jun. 30, 2024
$ / derivative
shares
Debt Disclosure [Abstract]        
Number of shares issuable upon conversion (in shares) (4.4) (0.5) (0.7)  
Proceeds from settlement of capped calls transactions | $   $ 0.1 $ 0.3  
Number of shares issuable upon conversion (in shares)       3.7
Cap price (in dollars per share) | $ / derivative 196.44     196.44
v3.24.2
DEBT - Schedule of Change in Capped Call Transactions (Details) - Capped Call Transactions - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]    
Beginning balance $ 893 $ 2,582
Settlements 0 (341)
Fair value adjustment 22 1,845
Ending balance $ 915 $ 4,086
v3.24.2
DEBT - Credit Facility (Details)
Nov. 30, 2019
USD ($)
Jun. 30, 2024
USD ($)
Dec. 31, 2023
USD ($)
Debt Instrument [Line Items]      
Outstanding letters of credit   $ 27,300,000 $ 27,300,000
Remaining borrowing capacity   $ 0 $ 0
Credit Agreement | PNC Bank, National Association      
Debt Instrument [Line Items]      
Maximum consolidated net leverage ratio   3.5  
Minimum consolidated coverage 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    
v3.24.2
RESTRUCTURING - Schedule of Restructuring Activities (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Restructuring Cost and Reserve [Line Items]              
Restructuring $ 635     $ 2,167   $ 798 $ 3,628
Office space reduction              
Restructuring Cost and Reserve [Line Items]              
Restructuring $ 1,257 $ 1,497     $ 1,241    
Employee Severance              
Restructuring Cost and Reserve [Line Items]              
Restructuring     $ 17,236 $ 1,581   $ (238) $ 2,387
v3.24.2
RESTRUCTURING - Schedule of Accrued Employee Severance and Related Benefit (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Sep. 30, 2023
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Restructuring Reserve [Roll Forward]          
Costs incurred $ 635   $ 2,167 $ 798 $ 3,628
Employee Severance          
Restructuring Reserve [Roll Forward]          
Restructuring Reserve, Beginning Balance   $ 3,624   8,095 18,573
Costs incurred   $ 17,236 1,581 (238) 2,387
Cash disbursements       (3,852) (17,521)
Currency translation adjustments       (169) 185
Restructuring Reserve, Ending Balance $ 3,836   $ 3,624 $ 3,836 $ 3,624
v3.24.2
FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Fair Value Assets    
Marketable securities $ 406,819 $ 193,436
Capped call transactions 915 893
Cash equivalents    
Fair Value Assets    
Cash equivalents 18,345 54,357
Venture investments    
Fair Value Assets    
Venture investments 21,047 19,450
Level 1    
Fair Value Assets    
Marketable securities 0 0
Capped call transactions 0 0
Level 1 | Cash equivalents    
Fair Value Assets    
Cash equivalents 18,345 54,357
Level 1 | Venture investments    
Fair Value Assets    
Venture investments 0 0
Level 2    
Fair Value Assets    
Marketable securities 406,819 193,436
Capped call transactions 915 893
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 $ 21,047 $ 19,450
v3.24.2
FAIR VALUE MEASUREMENTS - Schedule of Changes in Venture Investments (Details) - Privately Held Investment - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]    
Beginning balance $ 19,450 $ 13,069
New investments 350 400
Sales of investments 0 (2,773)
Changes in foreign exchange rates (19) 119
Changes in fair value:    
included in other income, net 1,628 4,475
included in other comprehensive income (loss) (362) (1,908)
Ending balance $ 21,047 $ 13,382
v3.24.2
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Fair Value Disclosures [Abstract]    
Convertible debt fair value $ 485.3 $ 466.5
v3.24.2
REVENUE - Schedule of Geographic Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 351,153 $ 298,268 $ 681,300 $ 623,740
Percent of total revenue     100.00% 100.00%
U.S.        
Disaggregation of Revenue [Line Items]        
Revenue 189,214 150,385 $ 370,197 $ 334,904
Other Americas        
Disaggregation of Revenue [Line Items]        
Revenue 21,314 19,505 43,100 34,516
United Kingdom (“U.K.”)        
Disaggregation of Revenue [Line Items]        
Revenue 38,628 28,892 70,745 71,129
Europe (excluding U.K.), Middle East, and Africa        
Disaggregation of Revenue [Line Items]        
Revenue 53,360 54,353 115,207 105,671
Asia-Pacific        
Disaggregation of Revenue [Line Items]        
Revenue $ 48,637 $ 45,133 $ 82,051 $ 77,520
Total Revenue | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 100.00% 100.00%    
Total Revenue | U.S. | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 54.00% 50.00% 55.00% 54.00%
Total Revenue | Other Americas | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 6.00% 7.00% 6.00% 6.00%
Total Revenue | United Kingdom (“U.K.”) | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 11.00% 10.00% 10.00% 11.00%
Total Revenue | Europe (excluding U.K.), Middle East, and Africa | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 15.00% 18.00% 17.00% 17.00%
Total Revenue | Asia-Pacific | Geographic Concentration Risk        
Disaggregation of Revenue [Line Items]        
Percent of total revenue 14.00% 15.00% 12.00% 12.00%
v3.24.2
REVENUE - Schedule of Revenue Streams (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 351,153 $ 298,268 $ 681,300 $ 623,740
Subscription license        
Disaggregation of Revenue [Line Items]        
Revenue 84,647 41,197 147,985 125,724
Perpetual license        
Disaggregation of Revenue [Line Items]        
Revenue 36 1,579 895 1,982
Maintenance        
Disaggregation of Revenue [Line Items]        
Revenue 80,344 82,042    
Pega Cloud        
Disaggregation of Revenue [Line Items]        
Revenue 134,086 115,063    
Consulting        
Disaggregation of Revenue [Line Items]        
Revenue 52,040 58,387 106,087 111,420
Subscription services        
Disaggregation of Revenue [Line Items]        
Revenue 214,430 197,105 426,333 384,614
Subscription        
Disaggregation of Revenue [Line Items]        
Revenue 299,077 238,302 574,318 510,338
Revenue recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Revenue 84,683 42,776 148,880 127,706
Revenue recognized at a point in time | Subscription license        
Disaggregation of Revenue [Line Items]        
Revenue 84,647 41,197 147,985 125,724
Revenue recognized at a point in time | Perpetual license        
Disaggregation of Revenue [Line Items]        
Revenue 36 1,579 895 1,982
Revenue recognized at a point in time | Consulting        
Disaggregation of Revenue [Line Items]        
Revenue     106,087 111,420
Revenue recognized over time        
Disaggregation of Revenue [Line Items]        
Revenue 266,470 255,492 532,420 496,034
Revenue recognized over time | Perpetual license        
Disaggregation of Revenue [Line Items]        
Revenue     895 1,982
Revenue recognized over time | Maintenance        
Disaggregation of Revenue [Line Items]        
Revenue 80,344 82,042 161,345 161,672
Revenue recognized over time | Pega Cloud        
Disaggregation of Revenue [Line Items]        
Revenue 134,086 115,063 264,988 222,942
Revenue recognized over time | Consulting        
Disaggregation of Revenue [Line Items]        
Revenue $ 52,040 $ 58,387 $ 106,087 $ 111,420
v3.24.2
REVENUE - Schedule of Remaining Performance Obligations (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 1,406,249 $ 1,266,096
Revenue remaining performance obligation (in percent) 100.00% 100.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 689,712
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]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 732,614 $ 309,292
Revenue remaining performance obligation (in percent) 52.00% 24.00%
Expected timing of satisfaction 1 year 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 376,883 $ 158,006
Revenue remaining performance obligation (in percent) 27.00% 12.00%
Expected timing of satisfaction 1 year 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 188,228 $ 109,086
Revenue remaining performance obligation (in percent) 13.00% 9.00%
Expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 108,524  
Revenue remaining performance obligation (in percent) 8.00%  
Expected timing of satisfaction  
Pega Cloud    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 1,014,762 $ 861,984
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 397,183
Expected timing of satisfaction   1 year
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 470,379 $ 238,691
Expected timing of satisfaction 1 year 1 year
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 301,070 $ 124,616
Expected timing of satisfaction 1 year 1 year
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 152,839 $ 101,494
Expected timing of satisfaction 1 year
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 90,474  
Expected timing of satisfaction  
Maintenance    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 320,906 $ 305,825
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 214,579
Expected timing of satisfaction   1 year
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 209,655 $ 58,551
Expected timing of satisfaction 1 year 1 year
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 63,266 $ 25,103
Expected timing of satisfaction 1 year 1 year
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 30,032 $ 7,592
Expected timing of satisfaction 1 year
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 17,953  
Expected timing of satisfaction  
Subscription license    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 36,990 $ 45,406
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 35,616
Expected timing of satisfaction   1 year
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 23,931 $ 3,026
Expected timing of satisfaction 1 year 1 year
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 10,078 $ 6,764
Expected timing of satisfaction 1 year 1 year
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 2,884 $ 0
Expected timing of satisfaction 1 year
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 97  
Expected timing of satisfaction  
Perpetual license    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 2,696 $ 7,231
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 4,979
Expected timing of satisfaction   1 year
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 2,696 $ 2,252
Expected timing of satisfaction 1 year 1 year
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 0 $ 0
Expected timing of satisfaction 1 year 1 year
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 0 $ 0
Expected timing of satisfaction 1 year
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 0  
Expected timing of satisfaction  
Consulting    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 30,895 $ 45,650
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation   $ 37,355
Expected timing of satisfaction   1 year
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 25,953 $ 6,772
Expected timing of satisfaction 1 year 1 year
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 2,469 $ 1,523
Expected timing of satisfaction 1 year 1 year
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 2,473 $ 0
Expected timing of satisfaction 1 year
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01    
Disaggregation of Revenue [Line Items]    
Revenue remaining performance obligation $ 0  
Expected timing of satisfaction  
v3.24.2
STOCK-BASED COMPENSATION - Schedule of Stock Based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax $ 36,224 $ 36,227 $ 71,005 $ 78,784
Income tax benefit (554) (581) (865) (1,253)
Cost of revenue        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 7,092 7,174 13,664 16,087
Selling and marketing        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 13,564 15,349 27,452 33,009
Research and development        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 7,825 7,851 15,471 16,911
General and administrative        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax $ 7,743 $ 5,853 $ 14,418 $ 12,777
v3.24.2
STOCK-BASED COMPENSATION - Narrative (Details)
$ in Millions
6 Months Ended
Jun. 30, 2024
USD ($)
Share-Based Payment Arrangement [Abstract]  
Unrecognized stock-based compensation expense $ 149.7
Weighted-average period of recognition of unrecognized stock-based compensation expense 1 year 8 months 12 days
v3.24.2
STOCK-BASED COMPENSATION - Schedule of Stock Based Compensation Award Granted (Details)
shares in Thousands, $ in Thousands
6 Months Ended
Jun. 30, 2024
USD ($)
shares
Restricted stock units  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Restricted stock units (in shares) | shares 1,266
Total Fair Value | $ $ 78,071
Restricted stock units | Corporate Incentive Compensation Plan  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Employee’s target incentive compensation percentage 50.00%
Non-qualified stock options  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Non-qualified stock options (in shares) | shares 1,738
Total Fair Value | $ $ 44,874
Performance stock options  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Restricted stock units (in shares) | shares 566
Total Fair Value | $ $ 13,921
Expiration period 10 years
Performance stock options | First anniversary  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Maximum vesting percentage 25.00%
Performance stock options | Second anniversary  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Maximum vesting percentage 75.00%
v3.24.2
INCOME TAXES (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Tax Disclosure [Abstract]        
Provision for income taxes $ 8,642 $ 6,601 $ 5,604 $ 11,850
Effective income tax rate       (21.00%)
v3.24.2
EARNINGS (LOSS) PER SHARE (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
USD ($)
$ / shares
$ / derivative
shares
Mar. 31, 2024
USD ($)
Jun. 30, 2023
USD ($)
$ / shares
shares
Mar. 31, 2023
USD ($)
Jun. 30, 2024
USD ($)
$ / shares
$ / derivative
shares
Jun. 30, 2023
USD ($)
$ / shares
shares
Feb. 29, 2020
$ / derivative
Basic              
Net income (loss) | $ $ 6,613 $ (12,124) $ (46,804) $ (20,774) $ (5,511) $ (67,578)  
Weighted-average common shares outstanding 85,157   83,039   84,712 82,823  
Earnings (loss) per share, basic (in dollars per share) | $ / shares $ 0.08   $ (0.56)   $ (0.07) $ (0.82)  
Diluted              
Net income (loss) | $ $ 6,613 $ (12,124) $ (46,804) $ (20,774) $ (5,511) $ (67,578)  
Numerator for diluted EPS | $ $ 6,613   $ (46,804)   $ (5,511) $ (67,578)  
Effect of dilutive securities (in shares) 3,343   0   0 0  
Weighted-average common shares outstanding, assuming dilution (in shares) 88,500   83,039   84,712 82,823  
Earnings (loss) per share, diluted (in dollars per share) | $ / shares $ 0.07   $ (0.56)   $ (0.07) $ (0.82)  
Outstanding anti-dilutive stock options and RSUs (in shares) 5   1,354   3,259 1,351  
Number of shares issuable upon conversion (in shares) 3,700       3,700    
Number of shares issuable upon conversion (in shares) 3,700       3,700    
Cap price (in dollars per share) | $ / derivative 196.44       196.44   196.44
Stock options              
Diluted              
Share-based payment arrangements (in shares) 2,164   0   0 0  
Restricted stock units              
Diluted              
Share-based payment arrangements (in shares) 1,179   0   0 0  
v3.24.2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Mar. 04, 2024
Sep. 15, 2022
May 09, 2022
May 31, 2024
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Sep. 29, 2022
Loss Contingencies [Line Items]                    
Litigation liability                 $ 0  
Outstanding letters of credit         $ 27,300,000   $ 27,300,000   $ 27,300,000  
Litigation aggregate $ 35,000,000                  
Litigation settlement, net of recoveries       $ 32,400,000 $ 0 $ 0 $ 32,403,000 $ 0    
Expected insurance coverage recovery       $ 2,600,000            
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