Annual contract value exceeds $1 billion in Q4 2021

• ACV grows 20 percent year over year
• Total Backlog up 25 percent year over year to $1.3 billion
• 2022 Revenue Guidance of $1.46 billion - $1.49 billion

CAMBRIDGE, Mass. — February 16, 2022 — Pegasystems Inc. (NASDAQ: PEGA), the software company that crushes business complexity, released its financial results for the fourth quarter and full-year 2021.

"Robust demand for digital transformation projects in both the front and back-office resulted in continued strong growth for Pega," said Alan Trefler, founder and CEO, Pegasystems. "In 2022 and beyond, our goal is to capitalize on this demand to become the enterprise standard workflow engine, servicing backbone, and centralized brain for the largest and most demanding enterprises globally."

"As we get closer to exiting the cloud transition, I’m excited to see Pega achieve ACV of $1 billion for the first time in its history," said Ken Stillwell, COO and CFO, Pegasystems. "We’re now experiencing improving profitability and cash flow that reveals the underlying power of our subscription model. This increasing profitability and accelerating ACV growth will keep us on the path to becoming a Rule of 40 business."

Financial and performance metrics ⁽¹⁾

⁽¹⁾ See the Schedules at the end of this release for additional information, including a reconciliation of our Non-GAAP and GAAP measures.

^(A) Revenue from term licenses.

Figure 1 Pegasystems Q4 2021 ACV (in millions)

Figure 2 Pegasystems Q4 2021 backlog growth (in millions)

Figure 3 Pegasystems Q4 2021 total backlog (in millions)

View full press release with financials

Quarterly conference call

A conference call and audio-only webcast will be conducted at 5:00 p.m. EST on February 16, 2022. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1-800-437-2398 (domestic), 1-323-994-2093 (international), or via webcast (https://viavid.webcasts.com/starthere.jsp?ei=1524699&tp_key=509709a596) by logging onto https://www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in the Investors section.

Discussion of Non-GAAP financial measures

We believe that Non-GAAP financial measures help investors understand our core operating results and prospects, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. The supplementary Non-GAAP financial measures are not meant to be superior to, or a substitute for, financial measures prepared under U.S. GAAP.

A reconciliation of our Non-GAAP and GAAP measures is at the end of this release.

Forward-looking statements

Certain statements in this press release may be "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, projects, forecasts, guidance, likely, and usually, or variations of such words and other similar expressions identify forward-looking statements, which are based on current expectations and assumptions.

Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to:

• our future financial performance and business plans;
• the adequacy of our liquidity and capital resources;
• the continued payment of our quarterly dividends;
• the timing of revenue recognition;
• management of our transition to a more subscription-based business model;
• variation in demand for our products and services, including among clients in the public sector;
• reliance on key personnel;
• the impact of actual or threatened public health emergencies, such as the Coronavirus (“COVID-19”);
• reliance on third-party service providers, including hosting providers;
• compliance with our debt obligations and covenants;
• the potential impact of our convertible senior notes and Capped Call Transactions;
• the relocation of our corporate headquarters;
• the continued uncertainties in the global economy;
• foreign currency exchange rates;
• the potential legal and financial liabilities and damage to our reputation due to cyber-attacks;
• security breaches and security flaws;
• our ability to protect our intellectual property rights, costs associated with defending such rights, as well as intellectual property rights claims and other related claims by third parties;
• our client retention rate; and
• management of our growth.

These risks and others that may cause actual results to differ materially from those expressed in such forward-looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, and other filings we make with the U.S. Securities and Exchange Commission (“SEC”).

Except as required by applicable law, we do not undertake and expressly disclaim any obligation to update or revise these forward-looking statements publicly, whether due to new information, future events, or otherwise. The forward-looking statements in this press release represent our views as of February 16, 2022.