Yahoo Finance Pegasystems (NASDAQ:PEGA) Delivers Impressive Q2
Enterprise workflow software provider Pegasystems (NASDAQ:PEGA) reported Q2 CY2024 results beating Wall Street analysts' expectations , with revenue up 17.7% year on year to $351.2 million. It made a non-GAAP profit of $0.52 per share, improving from its profit of $0.01 per share in the same quarter last year.
Is now the time to buy Pegasystems? Find out in our full research report.
Pegasystems (PEGA) Q2 CY2024 Highlights:
Revenue: $351.2 million vs analyst estimates of $324.7 million (8.1% beat)
EPS (non-GAAP): $0.52 vs analyst estimates of $0.29 (79.2% beat)
Gross Margin (GAAP): 72.4%, up from 67.8% in the same quarter last year
Free Cash Flow of $218.4 million, up 21.6% from the previous quarter
Market Capitalization: $5.34 billion
“Our approach to statistical AI and generative AI continues to be a significant differentiator,” said Alan Trefler, founder and CEO.
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Automation Software
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
Sales Growth
As you can see below, Pegasystems's revenue growth has been unremarkable over the last three years, growing from $325.7 million in Q2 2021 to $351.2 million this quarter.
This quarter, Pegasystems's quarterly revenue was up 17.7% year on year, above the company's historical trend. On top of that, its revenue increased $21.01 million quarter on quarter, a strong improvement from the $144.1 million decrease in Q1 CY2024. This is a sign of acceleration of growth and very nice to see indeed.
Looking ahead, analysts covering the company were expecting sales to grow 3.8% over the next 12 months before the earnings results announcement.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Pegasystems's free cash flow came in at $218.4 million in Q2, up 406% year on year.
Pegasystems has generated $499.1 million in free cash flow over the last 12 months, an eye-popping 33.5% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Pegasystems's Q2 Results
We were impressed by how strongly Pegasystems beat past analysts' EPS expectations. It also beat revenue expectations for this quarter. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock traded up 3.9% to $63.50 immediately after reporting.
Pegasystems may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
