Pega Cloud ACV Growth Slows to 20% in Third Quarter

The Tip Desk · November 8, 2026 · 3 min read

Pegasystems reported annual contract value of $1.65 billion, up 6% as reported and 7% in constant currency, as Pega Cloud reached 59% of the total.

Pegasystems Inc. (PEGA), the enterprise AI software company for mission-critical work, said annual contract value stood at $1.65 billion as of September 30, 2026, up 6% from a year earlier and 7% in constant currency. That pace slowed from 7% as reported (8% constant currency) at June 30, after 12% (11% constant currency) at March 31.

Pega Cloud ACV was $976.0 million, up 20% year over year. Cloud adoption continued to expand: Pega Cloud reached 59% of total ACV in the third quarter. Maintenance ACV declined 12% year over year to $261.3 million, and subscription license ACV declined 6% to $416.0 million.

Chief Operating Officer and Chief Financial Officer Ken Stillwell said ACV growth through the first three quarters of 2026 did not reflect the opportunity the company sees in the market, largely due to go-to-market execution challenges, and that the third-quarter ACV add was the strongest of the year. The company said purchasing behaviors continue to evolve as clients subject large technology investments to greater scrutiny as AI disrupts the industry, and that those factors may continue to adversely affect the ACV growth rate for the rest of the year. Cash flow generation may continue to be adversely affected for the rest of the year, the company said.

For the three months ended September 30, 2026, total revenue rose 3% year over year to $393.4 million. Pega Cloud revenue rose 56% to $218.9 million, and subscription services revenue rose 10% to $291.6 million. Subscription license revenue fell 9% to $55.6 million, and consulting revenue fell 18% to $46.2 million. Gross profit was $289.5 million.

GAAP net income fell 68% year over year to $14.1 million, including a $16.0 million litigation settlement. GAAP diluted earnings were $0.08 a share. Non-GAAP net income rose 8% to $59.8 million, or $0.35 a share. Income from operations was $14.9 million, after the litigation settlement and $2.0 million of restructuring.

Backlog, or remaining performance obligations, rose 15% year over year to $2.01 billion. Pega Cloud remaining performance obligations were up 24% from a year earlier, while subscription license remaining performance obligations were down 28%.

Cash, cash equivalents, and marketable securities were $309.7 million at September 30, 2026, down from $425.8 million at December 31, 2025. Deferred revenue was $429.5 million.

Stillwell said the company is taking decisive actions to improve execution, accelerate growth, and keep it on track to deliver $700 million or more of free cash flow in 2028. Founder and Chief Executive Officer Alan Trefler said the company is confident in its long-term strategy to harness models such as Claude, OpenAI GPT, and Gemini to help enterprises achieve predictable business outcomes at predictable costs while maintaining the governance, security, and control required for mission-critical operations.