The ACV deceleration from 12% to 6% YoY is the key metric to watch — if it does not re-accelerate in Q4, the 2028 FCF target may be at risk. Monitor the Q4 earnings call for updates on go-to-market restructuring and any guidance revision.
Price Chart
Executive Summary
Pegasystems reported Q3 2026 revenue of $393.4M (+3% YoY), slightly below the $421.1M consensus, and GAAP EPS of $0.08 (down 67% YoY) vs the $0.46 consensus. Total ACV growth slowed to 6% (7% constant currency), with Pega Cloud ACV growing 20% to 59% of total ACV. Management acknowledged go-to-market execution challenges and guided for a $700M+ free cash flow target in 2028, but the ACV deceleration and earnings miss are the dominant signals.
Key Financial Metrics
Key Facts
- Q3 2026 total revenue $393.4M, +3% YoY vs $421.1M consensus (miss)
- GAAP diluted EPS $0.08, down 67% YoY vs $0.46 consensus (miss)
- Non-GAAP diluted EPS $0.35, +17% YoY
- Total ACV $1.653B, +6% as reported (+7% constant currency) — decelerated from 12% YoY in Q1 2026
- Pega Cloud ACV $976M, +20% YoY, now 59% of total ACV
- Subscription license revenue $55.6M, -9% YoY; consulting revenue $46.2M, -18% YoY
- Operating cash flow $304.3M for 9M 2026, -12% YoY; free cash flow $289.8M, -14% YoY
- Backlog (RPO) $2.009B, +15% YoY
- Litigation settlement of $16M in Q3 2026
- Management cites go-to-market execution challenges and client scrutiny of large tech investments
- Company targets $700M+ free cash flow in 2028
Financial Impact
Revenue miss of ~$27.7M vs consensus; GAAP EPS miss of $0.38 vs consensus; ACV growth halved from 12% to 6% YoY
Segment Breakdown
| Segment | Revenue | Growth |
|---|---|---|
| Pega Cloud | $218.9M | +18.6% |
| Maintenance | $72.7M | -8.8% |
| Subscription services | $291.6M | +10.4% |
| Subscription license | $55.6M | -8.5% |
| Consulting | $46.2M | -18.1% |
Risk Factors
- ACV growth continued to decelerate (12% in Q1 → 6% in Q3), indicating structural slowdown
- GAAP net income fell 68% YoY to $14.1M, pressured by litigation settlement and higher legal fees
- Subscription license revenue declined 9% YoY; consulting revenue declined 18% YoY
- Free cash flow for 9M 2026 declined 14% YoY to $289.8M
- Management explicitly warned that ACV and cash flow headwinds may continue for the rest of the year
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001013857-26-000057 |
| Document: pega-20261020.htm | 0001013857-26-000057 |
| Document: 0001013857-26-000057-index-headers.html | 0001013857-26-000057 |
| Document: 0001013857-26-000057-index.html | 0001013857-26-000057 |
| Document: 0001013857-26-000057.txt | 0001013857-26-000057 |
| 8-K Data (Synthetic) | 0001013857-26-000057 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 5d ago | Court Ruling | $36.42 | awaiting T+20 | — | $36.71 (+0.80%) |
Oct 21, 2026 6d ago | Court Ruling | $36.65 | awaiting T+20 | — | $36.71 (+0.16%) |
Oct 20, 2026 6d ago | 8-K | $35.18 | awaiting T+20 | — | $36.71 (−4.35%) |
Sep 17, 2026 5w ago | Insider Cluster | $35.02 $34.54 | ▼ −1.37% | ▼ −1.57% | $36.71 (+4.83%) |
Sep 15, 2026 5w ago | Insider Cluster | $36.84 $33.83 | ▼ −8.17% | ▼ −10.23% | $36.71 (−0.35%) |
Sep 15, 2026 6w ago | Insider Cluster | $36.84 $33.83 | ▲ +8.17% | ▲ +10.23% | $36.71 (+0.35%) |
Jun 8, 2026 20w ago | 8-K | $34.16 $32.21 | ▼ −5.71% | ▼ −7.15% | $36.71 (+7.46%) |
Apr 24, 2026 26w ago | DEFA14A | $36.77 $34.33 | ▼ −6.64% | ▼ −11.59% | $36.71 (−0.16%) |
Apr 21, 2026 26w ago | 8-K | $37.48 $33.50 | ▲ +10.62% | ▲ +13.78% | $36.71 (+2.05%) |
Mar 10, 2026 33w ago | Insider Cluster | $44.66 $41.20 | ▼ −7.74% | ▼ −7.59% | $36.71 (−17.80%) |
US Market Status
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