NEW YORK, July 22, 2026, 13:11 EDT — U.S. markets start the session.
Pegasystems stock declined 16% to $25.99 on Wednesday as annual contract value growth decelerated significantly. To reach February’s initial 15% ACV goal, the company must now add approximately $230 million in the second half.
This figure is 2.4 times higher than the net ACV added in the second half of last year. It serves as the most evident indicator of Pega’s current execution risk.
Investors overlooked a 9% rise in revenue and all-time high cash generation in the first half. Focus shifted to worries over future demand, as AI-related uncertainty prompted delays in buying decisions.
Pega closed out 2025 with annual contract value at $1.608 billion. The company’s February forecast suggested reaching roughly $1.850 billion by December. As of June, ACV was reported at $1.620 billion.
| Reported ACV bridge | H2 2025 actual | H2 2026 needed |
|---|---|---|
| Starting ACV | $1.514 billion | $1.620 billion |
| Ending ACV | $1.608 billion | $1.850 billion |
| Net addition | $94 million | $230 million |
| H2 2025 multiple | 1.0 times | 2.4 times |
Based on reported ACV and the initial February target. Numbers are rounded. Pega has not issued a revised full-year ACV target.
Chief Financial Officer Ken Stillwell stated that making up for the shortfall from the first half “will be very difficult.” Stillwell noted that Pega had anticipated two-thirds of yearly net additions following June. Investing.com
Total ACV growth decelerated from 17% in December to 12% by March, and further to 7% in June. Cloud ACV growth moderated from 33% to 29%, then to 22%.
Revenue for the second quarter increased 9% to $420.7 million. Adjusted earnings were 35 cents per share, compared with 28 cents previously. These results were below analyst expectations of $427.4 million in revenue and earnings of 43 cents per share.
Free cash flow for the first half climbed 1% to $288.3 million, while operating cash flow grew 3% to $298.2 million. Pega cautioned that a slowdown in ACV growth may weigh on cash generation through the end of the year.
An intraday calculation shows the market value loss is about $850 million, which is roughly triple the free cash flow reported in the first half.
Shares of workflow competitors were also down, though to a lesser degree. Appian Corp. NASDAQ:APPN dropped 11%, ServiceNow Inc. NYSE:NOW slipped 5.5%, and Salesforce Inc. NYSE:CRM declined 3.6%. The Nasdaq Composite hovered close to unchanged at 12:10 p.m. EDT.
Pega attributed the results to buyer uncertainty regarding AI economics and decisions between building or purchasing solutions. Stillwell additionally noted that the company had fallen short in executing its go-to-market strategy change.
Chief Executive Alan Trefler described broad language-model deployment as “risky and expensive.” Pega is offering fixed pricing with no per-token fees. Pega
Key risks include extended customer purchase postponements, reduced cash flow, and continued Appian litigation. Legal expenses in the first half increased to $37.9 million, up from $13.0 million. Accelerating deal closings would help mitigate these risks.
Management anticipates an acceleration in ACV growth in the latter part of the year. With the June baseline, there is limited scope for reporting another soft quarter.
