Hello everyone, my name is Peter Welburn. I'm Vice President of Investor Relations for Pega. I'm excited to introduce you today to our 2021 Investor Briefing. Very excited to be with you. I'm excited for two reasons. This is the first time we've actually been here altogether at Pega headquarters in a long time, haven't seen Alan face-to-face for over a year. Just met Hayden yesterday. It's great for us to all be together today. In addition to that, I'm really excited about the agenda that we have today, looking forward to the agenda, Hayden. Over the last several months, we've actually been working closely with several of our investors to talk to you about what you'd be really interested in hearing about today. We're really proud of the agenda to hit the topics you're really interested in. Certainly everyone said they wanted to hear from Alan today. Alan's going to be kicking us off. You wanted to hear about our low-code platform and what that was all about. Stephanie's going to be talking about low-code and showing you the product live, which is very exciting. In addition to that, we have Hayden Stafford here. Hayden was definitely the number one requested executive that investors wanted to hear from. This will be Hayden's second time talking to investors for us. We're really excited about that. Don Schuerman for us today, the left-hander from Pittsburgh and Ken Stillwell. He's going to be covering a financial update for us. Very excited to hear from him. We'll wrap up today with a Q&A session. Hayden, let's go to the Q&A. For those of you who are on the Zoom today and want to ask questions, we really encourage you to do that. If you scroll down to the bottom of your screen, you can click Q&A and submit written questions. Alan can take a few questions. He'll be with us for about 15 minutes today, and then Hayden and Ken will take questions at the end of the session. Please feel free to submit questions during the session today. We're very excited to have Alan coming up, so Hayden, why don't we bring forward Alan's slide? Thank you. Thank you, Peter. I will say how exciting it is to see people in 3D. I'm starting to get used to these little pickups that actually did give me all that other sensibility of before we were vaccinated, there was this whole notion of conflict, in terms of an analogy. I want to just spend a moment or two and talk a little bit about what some of the takeaways were from PegaWorld, which was really exciting, hanging on for dear life, and talk a lot about our Infinity 8.6 platform, whatever we say. Pega had such a long, I think, history and profound understanding of what really low-code and no-code and model-driven is about, that we see that, frankly, things that we've come to understand deeply and we think are ultimately really important for the innovations that we scale up are ones where we have a profound advantage. I would argue the benefit of that because I think that's really key. The key is to not think of this as just the next generation of Lotus Notes or Visual Basic or other kinds of slapped-together this, but really thinking about how no-code and low-code and a real architecture can help an enterprise run really fast, empower their business users, and at the same time, create the right sort of standards that, particularly in these security-conscious times, are so absolutely critical and frankly, being ignored by a lot of the products and a lot of the choices out there. We'll give you a flavor to that. I think one of the things that we really try to build on is how do we use this deep heritage to our advantage? Not to say that we're doing things like we would've done them two decades ago, but to say that we've learned from those experiences, and that we can share with our customers and our partners, not prospects, how we can do this better and more pervasively in the cloud. A second major theme from PegaWorld had to do with partners, and we really are envisioning a very partner-friendly, partner-centric, partner-leverage set of models to go to market. That's not just about this year. That's about how we are building out our products, building out our ecosystem, building out our support systems to be able to get partners to both support our customers as we implement, but also as we go forward to really think about them being able to capture assets in a Pega architecture in a way that we frankly have not originally contemplated when we started, but now understand deeply what we need to do over the coming years. It's always terrific, and I always get great excitement out of seeing our customers stand up and volunteer to talk about what they're doing. We often are not allowed to talk about what they're doing because some of our customers, frankly, use our technology in competing categories. When you get companies like Wells Fargo or Pfizer willing to talk about how they are changing the way they go to market, how are they changing the way that they contemplate internal to external processes, that's hugely exciting. It also really clues the perception, which is an example of how organizations were able to use Pega during the pandemic, in this case, to really provide forbearance to hundreds of thousands of people in the U.K. who are being crushed by how do they respond to the lending and legal and other requirements, how do they make sense of it, and really being able to do very pragmatic things to help and get them done in record time. Those are the customer stories. If you haven't seen them. They're all available at pegaworld.com, and I strongly recommend that you go and listen. Everything is short. We made the decision to keep things crisp, keep things to just a couple of minutes. I also firmly believe that anything on pega.com should have a speed-up button because for some reason we're not going quite as fast as we want. We could bump it up 25%-50%. I would tell you that the feedback I get is that time spent on these sites is very valuable, both from a prospect point of view, but also from an investor point of view to really understand key points of differentiation. With that, I think we've got a good couple of hours planned. Other than customer matters, I will be going out there at 10:00 A.M. You know I always have to know what's happening on the day of that. In the meantime, I'm happy to take a question or two if any pop in. Yeah. We've got a few. The first one is, can you give us an update on Project fnx and Process Fabric? Sure thing. Process Fabric, we did talk about it at PegaWorld. I think it's really central to this idea that we don't want to have one sort of monolithic approach to process. We want to get a fabric where different applications, different needs, different customer segments can operate with a level of independence, but also an interdependence so that you can see all the work you're doing for a customer, that an individual can get the most important thing delivered to them at just the right time. That is the Process Fabric vision, which we introduced a year ago at PegaWorld. We're really excited we've got our early adopter customers now showing really the potential and power of the Process Fabric vision. Project fnx, which we actually announced about a year or two years ago, is the way that we have been using our model-driven low-code architecture, majorly changing key elements of our technology, but bringing our customers along on that journey, making it possible for us to move to a true microservices-oriented application environment without any customer saying to you, "Oh my God, I've got all this technical debt. I've got to go change everything that I do." Clients of ours like Lockheed Martin and Unilever, who use our products in a way that we intend, are very much insulated from technical change. That's a critical element of having a highly sophisticated low-code marketplace. With all the changes that go to market, Alan, what are you spending your time on now? Well, you know, it's interesting. This is really the good goal for me. I spend my time on two major things. One, I'm more engaged than I've ever been before, and I've been able to actually dial that up and spend more time on one-on-one and maybe a little bit of time on some of the administration. I would hate to talk about how we're doing a really good job of that. The other is I continue to be and have actually deepened my involvement with what the next generations of our technology should look like, what the intersection of the brain and the muscle of AI and process need to look like as we think about not just the current and immediate generations of low-code, no-code, but as we think about where this will go, which we can hear a lot of excitement. Okay, excellent. Our next question is about the citizen developer. We're hearing a lot about the citizen developer in the low-code and automation markets. Do you think that there will be a time when platforms become accessible enough for knowledge workers to deliver on a citizen developer promise? Do you think that the citizen developer model needs to work in order for you to sustain revenue growth? I think that citizen developers are a myth. We already have people we call business architects who are central to the way that our systems are evolved and developed. I think this is an example where there's a major mental mistake in a lot of the people who play in the market, who mistake the idea of citizen developer with folks who just like to stop and shout. The reality is we're here to help businesses create omnichannel end-to-end processes fast, effectively, and in ways that the citizen developers cannot just influence but can actually tune, adjust, and perfect. That's required as an architecture, a dimensional architecture. A lot of these RPA tools and a lot of these sort of point, I guess I'll call them sub-point solutions, just don't have a prayer of being able to deliver. I think what you're going to see is a bifurcation between the false promises of citizen developers, the ones who actually can't deliver what they're signing up for, and what customers like our customers are able to achieve, which is to really bring citizen developers in. I think that's increasingly important because businesses need to be able to own their outcomes, but they need to own it in a way that has maturity and security as they go. Next question is on RPA. Can you give us a refresher on your view on the overall RPA market and where Pega plays in the RPA market? Pega acquired and has beautifully integrated robotic process automation, RPA, capabilities. Our philosophy is quite different than that from the folks who say they're going to drop robots on every desktop, and somehow that's going to make the organizations operate correctly. We think that's pretty ludicrous, to tell you the truth. We need to think of robots as being participants in processes, but not themselves the driver of the process. That belongs in a system that has a brain, that belongs in a system that has a level of maturity, has an audit trail, it has the right controls. I think you're going to see increasing shaking out of that market in the next couple of years between the stuff that we'll continue with, the little toy stuff, which is okay. The more wholesome users, which is where Pega has partnered end-to-end solution. We have one more question for you, Alan, which is on the topic that you said you're spending most of a lot of your time on with your customers. How have your customer conversations changed as a result of the pandemic? Well, it's pretty remarkable. In the last 48 hours, I've been in Singapore in Southeast Asia. I was also in Germany yesterday. I was traveling the U.S. up until yesterday. There has been a real, I think, positive development out of the pandemic around accessibility and visibility. I think a lot of that will not go away. We will go back to in-person meetings. We will go back to working to organize our schedule so we can be in a physical room. Boy, it's been nice to be able to do things quite as spontaneously as we've been able to do a lot of these. Anyway, I'm going to turn it back to you, Peter. Thank you very much. Thank you, Alan. Thank you to our investors. Just know we're working really hard over there. Thanks, Alan. Okay, listen to you. Our next speaker today is going to be Stephanie Louis. Stephanie you may recognize from past PegaWorld. She's awesome on the main stage with Kerim. While we heard you already, if you didn't hear them update on low-code, we thought Stephanie was the perfect person to do that. Stephanie, it's all yours. Thank you, Peter. Hello, everyone. I wish I could see your beautiful faces. I'm very happy to be here. As Peter mentioned, well, first of all, I'm senior director of product organization, and I have been in the software industry for 20 years and 10 of those at Pegasystems. I'm very much a Pega fan. As you mentioned, I've been on PegaWorld stage since 2014. I've spoken at and hosted multiple CES events all the way from Australia to my own living room these past few years. I'm really looking forward to being back in person. What I'm here today is to talk about our low-code solution. I say solution very intentionally because we take innovative technology, and we couple that with both methodology and a prescriptive approach, which results in a truly differentiated solution unlike anything else in the market. First. I didn't know there was going to be this. Sorry. Who is Pega? Well, we are a leader in digital transformation. What does that mean? Well, let's actually go from right to left. Intelligent automation. What we've done is we've coupled the intelligence of robotic process automation and business process automation with our low-code platform so that our clients can automate all of their business processes and change their business outcomes. What's an automated business process without a great customer experience? That's where the customer engagement solutions come in and really work together with our platform. Our customer engagement solutions allow our clients to deliver the best experience at the right time, in the right place for their customers in a personalized way. It's truly powerful. What we're going to concentrate on today is the low-code capabilities of our platform. Why does low-code matter? Gartner has done quite a bit of research in this area, and what we're really finding is that the backlog of digital transformation projects are extremely large, and IT just can't keep up. A great way to solve for that problem is what Alan was just talking about, citizen development, also can be called low-code application development. What this does is it puts the power of building applications in the business teams. They can take their business subject matter expertise and put it directly into the application. It reduces friction between business and IT. It increases the speed to market. It increases the number of applications built and really, as Alan mentioned, creates the ownership of those outcomes in the business. Why do I say low-code is finally here? Because Pega has been model-driven since our inception in the 1980s. We have taken a model and always put it on top of the code of the day. It started way back in the day. We continue to evolve with the technology, always taking that model and putting that in the developer's hands so they don't need to worry about that. They don't need to remember these things. They don't need to go learn the next Java or the next React or whatever it happens to be. It is new things released that we always do that. That really increases the number of people that can develop the applications. Again, they're thinking about the business problem that they're trying to solve, not necessarily about the technology that's evolving or changing underneath them. As Alan mentioned, Pega Infinity is just the next version of this, taking advantage of the latest technology and extending it even further to embrace more, which is extremely, truly exciting. Another thing that Alan mentioned, and a huge differentiator of ours, is our ability to scale. Lots of vendors in this space play on that lower left. They create simple applications like request a new laptop, request time off. These are transformational and are going to change the business. They become vital departmental apps that are governed, are maintained, and don't really have a business impact. This is where our extremely powerful low-code capabilities take us to the next level. Now our customers can develop mission-critical and transformational applications. For example, Deutsche Bank started this way. They automated one of their processes and saw 50% reduction in manual labor and in time. They decided to automate thousands of business processes. That was so mission critical to them. You have Siemens, who automated 80% of their cognitive tasks, which resulted in 65% reduction in the onboarding time for their customers. That really transforms service, and they did it utilizing our low-code capabilities. You can see in this top list, and this was also mentioned by Alan, he mentioned to me earlier, so appreciate that, is the co-development between business and IT of governance and the process and the approach. We don't just talk about it, we've built it into everything that we do. The approach starts with what we like to call the Center-out Business Architecture. As I mentioned at the beginning, it's not just about the capabilities, but it's using them in the right way where you're putting the customer first, thinking about that customer experience, and that's what we talked about. You start with the customer, and what objectives are they trying to achieve in that moment, and then the outcome that they're trying to get to, which really results not only in that customer experience, but really recognition, agility for the adaptations to change as customer needs change. Again, as I said, we don't just talk about it, we've built it into the product. What we call the Pega Express methodology is just that. What this does is this is a guided experience for the low-code app developer. As we know, they're the business users. They're getting this tool and they're creating these, which is awesome. Let's help them. Let's give them those best practices and guide them. Not only does this increase the speed in which development can be done, but it really ensures maintainability, scalability, and governance so that all of the applications are developed with best practices. How it starts is first the user needs to define their outcome. What is the customer trying to achieve in that moment? We call this a Microj ourney or a case, which you'll see when we do the demo. You define who are all of the different types of personas those customers are going to be interacting with you, and where are they going to be interacting with you. Those are the front end channels. It's the data and interfaces. Data and interfaces. What data do they need to have access to, what interfaces do you need to talk to, and all of this is for that experience built into the product. With that, I'll share your screen. I'm here to show you the product. Let's go ahead and dive right into the demo. Let me take over the screen share. Let me do that. All right. Can everybody see that? There we go. All right. All right, let's set the stage. A lot of demos that you see, they're really fancy. They show you the final screens, and they're all pretty. I'm not going to do that. I'm actually going to start from scratch. If you don't have anything defined and you're going in for the first time and saying, "Hey, I know my customers want a balance transfer." Where do you start? I'm going to show you how easy it is. This is what we call App Studio. This is our low-code environment that low-code developers work in to build their applications. Folks, we are going to create a balance transfer product. Again, I know it's pretty basic. This is how easy it is. That's the point. All right, let's do balance transfer. When I logged in, the first thing that I saw was a Create screen. Obviously, when you start a balance transfer, you want to create. Some of these things, as I mentioned, we provide a very much a guided experience for these developers so they can focus on the problem to be answered and solved. Great, that's the first thing that has to be done in the balance transfer. This is how easy it is to define the steps in which the customer needs to go through to create that balance transfer. You can see there's a bar, you can see the steps, you get the nice icons, you can easily see what you're creating as you go. Obviously, once we've created it needs to be routed to someone in the back office for approval. Here, what I want to point out is this, these templates. I'll highlight in a second, you can see what I mean. By capturing these templates based into what you get out of the box with the ability to extend ensures, again, that reusability and maintainability so that everything is created in the same way. If that template changes behind the scenes, it changes everywhere that it's used. That really provides that governance and central ownership and really agility and ability to build with change. For example, here I'm going to choose Approve/Reject. Did you notice what happened with allowing right there? The Rejection was automatically created because obviously if you have the option to Approve, you need the option to Reject. We have built in the things that have to happen and the best practices so that the low-code developer can focus on those business problems and just fill out that template as they go along. Great. Yeah, very easy to rename, so we can call this whatever we want, but we're still utilizing that template. Next, I want to go to the Persona stage to show you what we call Smart Shapes. That's just a smart way of saying the integrated intelligence that we have taken to the next level so that you can create those mission-critical and transformational applications. This is where you're going to plug in that robotics process automation, because it's not just about that robot off doing its own thing. You want to make sure that that's integrated into the outcome of the customer trying to achieve. For example, what I'm going to show in this case is sending an email, Smart Shapes for integrated automation. If you didn't have this Smart Shape, as a low-code developer, you'd have to think about all of these words that you don't even know about, like your SMTP server method, sender, your address, your global address. You're going to have to think about all these emails. I'm going to say because all you need to do is hook into that AI that's using the automation that's being done and fill in the parameters such as email address, name, subject, and that's it. When this gets run, it will just work. Extremely, extremely powerful. Now that we have it defined, there's other things we can do. What I'm going to do is jump ahead because I just have a little bit of time, and I don't, again, intend to have to stop today. I'm going to use that same App Studio in a very graphical interface that I just showed you to define the fields. It's critical for all of us that are on maybe understanding the fields that you need to connect. I'm also going to define those additional channels that we talked about, with the express technology, and then define the data and interfaces here. Being able to hook up to that single source of truth for your account data is so critical, and that's available right in our low-code platform. Ready to roll. What I'm going to do next is show you how we design our application. Once you have that definition done, it's great. When I hit save and run, what's happening behind the scenes is Pega is going to generate the technology, the code, for this to run based on that model I just showed you, and it'll be immediately available. Let's watch this magic. Save and run. Here we go. Then I'm brought into the interface. That was the app interface that I created. Call this approval. We basically just have to do a message that you need to create. The first thing that you're going to see is the ability to create a new account transfer. Do you recognize create, select offer, identify transfer, review transfer? Hope so. That's what we just defined to those that I talked about. Here are the fields that I did create. We wanted to show it, and the first thing being the account number. How convenient is that? The first thing being the account number. What's critical here, as I mentioned with the data integration, is once I choose that account number, because we're pulling from that source of truth, I'm pulling back all of that account information. As soon as I select that account, I get all the information associated with it. You'll see that theme as we go along through these other fields, is some of them are going to be filled in. The next one is the offer. The offer has metadata associated with it that's pulled into the platform. Again, it is taking advantage of the architecture behind the low-code platform that's delivering in a low-code way that I think is easy to use for business developers. Okay, some of these things are going to fill in. These are all different field types. Super easy to create. This is a simple process. I really wanted to show you how easy it is to build from scratch. Now that that is created, I think you get the idea of how you create applications with AI. If you see the routing happening, it was really quick. Behind the admin, you can see the routing like this is our approval path. That routing automatically happens because we set it to no station. That's one of the automated business processes that I mentioned to you guys. Okay. All right, now I'm going to transition a little bit into what I call the next. This is going to be a different use case. We don't focus on the fields and the account transfer because it gets kind of defined to show you some of the other functionality of the low-code platform. The first thing I want to show you is the ability to change the layout within the same field. All right, we did the fields, we did the outline, but we don't know how it's going to look on the screen. Cool. We can change that. I'm going to define this section that I want to change. I want to change how we lay it out on the screen. The first thing I'm going to point out is templates. Templates are important. They are so important. Oh, yeah. I yeah. I mean, the ability to governance. Again, one change behind the scenes, all applications using that are changed. That really increases agility. We don't need to iterate. Sure, honestly, it has a better fit because if you're looking at a screen where things are laid out this way, and you have a screen laid out this way, it gets disorienting. It ensures consistency across applications as well. Okay. In this case, I'm going to choose to go from one column to three. Save that change, and immediately both fields change to the layout. When I'm done in my editing mode, real time, that takes effect. You can go from one column to three. It actually works. People have to drop the signal. It takes effect, which is pretty cool. All right, next. In this case, everything that we just created is ready to go from mobile. You have the ability to see it within the low-code platform. This is the desktop. You can see up here on the top, these are the different types of devices that we help create that you can do that on. You can go from desktop to tablet to mobile. Immediately everything that you just built automatically adjusts and is ready to go on a mobile device. You can change the mobile device, you can change the orientation, all those are right there. You can build your mobile app from there. Last, okay, we did all that. All of that also is readily available for you to extend to all of the different channels that your customers expect in your app. That is really how you can take a simple application for business transfer and make it truly transformational and improve their experience. I hope you learned something from me today. I was very excited to be here. I will leave you with that. Thank you much very much, Stephanie. Great job. Amazing to see a great low-code app during our investor presentation. Amazing. Excellent. I'm super excited about our next speaker, Hayden Stafford. His energy and enthusiasm is infectious, the work that he's been able to do already with our Partner Program has just been phenomenal to see him in action. I won't steal his thunder, he's going to go through his amazing background and experience. Hayden Stafford, welcome to the investor session. Thank you, Peter. Thanks a lot, and certainly thank you. I think you did a really good job showcasing in five minutes what our clients are actually going through, and she really just was the tip of the iceberg in giving an example of the power of Pega and what we can do. We have so many clients, be it the largest banks in the United States responding to COVID with PPP programs, or it's healthcare providers responding to vaccinations, governments in Europe building applications to deal with the pandemic. It's just amazing what our clients are doing in days and weeks, not months and years. I think that's a good showcase. I want to start with a little bit about my background before I speak to this actual chart. I think if you probably did a little bit of research on me or did any background checks, there are a couple of things that I think that you might find. First of all, I am extremely passionate about clients and spending a tremendous amount of time with clients. I am not a sit in the office, ivory tower, managed by spreadsheets. I'm in the trenches with the team, building relationships with clients, and staying committed after the sale. You get a sale, it's a sale after the first sale. So those client relationships are critical. Nothing gets me more excited than building robust, successful partners. Relationships with partners for me are the everything. So whether they're small, regional or multiple systems integrators and ISVs to the largest global system integrators, the relationships that we have there is absolutely critical. You also probably have heard I am not a micromanager, though I like to be in the field and I like to be in the trenches with the team. I believe in three very important characteristics or leadership principles: clarity, empowerment, and accountability. If you are very clear on what you want to do, and you empower your teams to do what they need to do in their own form, in their own region, but it's against the very clear directive, you hold them accountable. Those individuals are extremely accountable. With those three principles, I don't believe in micromanagement. Empower great leaders to go do great things. Finally, it is about structure and design and sticking to the details. My very first career out of college was the Navy. I was a U.S. Naval aviator. That was all about structure, that was all about discipline, chain of command, and really respecting the rules. I think that has really been a great grounding for me as I've moved through my professional career. I'd like to actually talk about that professional career. I'm going to work backwards from my most recent job, give you a example of kind of what I did, what I experienced, and how it's germane to what we're doing here at Pega. You see on the left-hand side is my experience. As I look at my first 45 - 60 days, really applying those experiences to what I call levers of growth. Taking the goodness and the not so goodness from each one of those companies and applying them here as kind of a green field white space of what we could do here to drive significant growth. If you think about Microsoft and what happened in the time that I was there, I joined shortly after Satya. While I would like to claim the growth and success that Microsoft in my view had started during Satya 's takeover as CEO, it's an amazing period of transformation. How did that happen? It goes back to the leadership principle that I talked about, and that's clarity. He was ultra clear on what was important. One Microsoft culture, vision, set that and reinforce it in everything you do. This was a lot about partners. He dropped in a quote in an article a couple of weeks ago, talking about 95% of the revenue that Microsoft derives is touched by a partner in one way or another. Very partner-centric and building at scale ecosystem of partners that are developing products with you, building the go-to-market models, selling together with you, and delivering together with you is a very powerful message to the partners, to your clients, and frankly, to your employees. The other thing that I talked about was the vision, having a unified mission, vision, and execution framework. You're all on the same page, and you're all rowing to the same beat. If you're all tuned to the same, then whatever the case may be, good things happen. It also limits standard deviations. Standard deviations drive variability drives up cost and low productivity. Being very, very focused on what you want to do as a business translates into the individual behaviors before that. Before that was about six years. Before that, I was at Salesforce, and Salesforce was this was 2011, 2012, going through 2014. This was a hyperscale period for Salesforce. I could say probably about 10 years have been a hyperscale period for them. Prior to me joining, it was a democratic business model, where it was non-industry aligned, democratized software for every industry. It was a period of time where I helped to build the industry go-to-market model, both the industry data models and industry products, but the industry go-to-market teams. It is very important to not come in with a generic or democratized piece of software, but to build a point of view about how I can help you impact and change your business, whether you're banking, airlines, telcos, having that point of view of expertise and product that matches is absolutely critical. Another thing that Salesforce did very well was they had a depth and breadth motion. Pega is a very enterprise direct sales model. I think there is an opportunity for Pega, as well as many companies, especially in pandemic, moving to a digital, velocity sales model to expand beyond just direct engagement, direct one-to-one, and move more to digital marketing, digital engagement, inside sales, et cetera. Very powerful scale motion along with the depth motion. During my days at IBM, that was all about discipline, that was all about managing the structure, that was all about change, that was all about forecasting. This was a period of time where I shaped my management acumen. I think much like you might have seen that companies like GE and IBM really churned out a lot of great management acumen. That's where I would say hallmark that period of time. Also, I was the Chief of Staff for the Global Head of Sales. I had a lot of experience of seeing the good, the bad, the ugly of management style. I was in the high potential program, so I had a lot of access, and spent a lot of time on Wall Street working directly with Ginni and Sam Palmisano and all the other leaders, and seeing what worked and what didn't work in discipline and sales effectiveness, which is really needed to run a next-scale business. When you're growing significantly, you want to have boundary conditions, you want to have management that is really dialed into what's happening. That's something that we're bringing here as well. Finally, from my years at IBM, that was about delivering consulting, delivering the sale after the sale, as well as international experience, having lived overseas. Stepping out of the American, the narrow-centric point of view and understanding your global clients, consultative selling, learning by listening, and focusing on delivery excellence so that you can come back, have a happy customer, and expand your base. This background for me provided a wonderful opportunity to take the best of each one of those and bring them to Pega. For me, since I worked with the board in my first 25 days, was the five levers of growth. If you can drive management discipline and you can drive sales effectiveness, everyone gets on the same page and you've got a sheet of music. If you drive delivery excellence, quick delivery means quick time to value, you can tap your customer opportunity to grow. If you're partner-centric, brings you an opportunity to scale and have a force multiplier, et cetera. Bringing that into the business here, those are all foundational elements of what we're doing. I want to give you a sense for the pathway to growth that we're applying these five levers into our thinking about our go-to-market model. First of all, a modernized approach where it's not just about an AE. AE is not the superhero or Superman that does everything. Right? Our model typically is an AE and an SE for all of our products, but especially as we talk about the low-code. We also have one-on-one customer engagement. Contact center specialists are very important to go in and speak the language of the contact center. Business values, business value and client innovation, building the business cases, the ROI, forward-ready documentation beyond just the sale to bringing in client innovation specialists, bringing in our customer service, our customer success team, integrating that with your consulting team so that you've got a monocular focus on the sale after the sale. Modernizing our sales approach. Expand our routes to market, right? The force multiplier of sales and fast growth is a vibrant ecosystem. Typically, in the world of direct sales with an AE, you can only handle so many opportunities at one time. I think the graphic on this chart really shows the idea of us embracing local system integrators, Global System Integrators, partnering with co-sell ISVs, and ultimately developing on our platform with ISVs as a chance to force multiply our revenue and routes to market. Finally, I think one of the most important things here is drive sales efficiency through repeatability, through scale motions. We were a company that were very dependent on large deals. Our pipeline was made up of very large deals, and we do very large deals. Getting that run-rate business where you can get wedge plays, entry plays that are repeatable, not necessarily packaged solutions. That's not really who we are, but patterns that resonate, patterns that we can replicate with our clients and our partners can do that as well. That means we can get bigger, we can have, to a certain degree, more run-rate revenue, and then work on the wells to really put us above and beyond our targets and our goals. When you bring a modernized approach, you expand your routes to revenue, and you drive sales efficiency through repeatable programs, repeatable offerings, and bringing that sales discipline, you've got a real opportunity to drive growth both beyond what we're seeing today. If we go to the next page, I want to share with you. We laid out our journey for our go-to-market piece. I want to talk a little bit about our organization structure, what we had to do in order to implement what I talked about with five levers of growth, as well as that kind of gives you the high-level rough figures of growth that I just talked about. I want to talk about our parts, clarity on what our objectives are. We have to all be orientated in consulting, in partner organization, in sales, aligning around common set of parts. Where we're going after 2023 and beyond. Let's focus on the organizational structure first, be quick one more time. There's a lot of faces and names on here, but really what I want you to anchor on is we are very centered to the culture of this business and building on the foundation of this business. A good portion of my management team that was from the foundation and historical background here at Pegasystems, it still remains. We've also brought a lot of scale leadership, a lot of diversity. I don't mean diversity just in gender, but in geographic diversity and diversity from an experience standpoint. If you look at these names and faces here, every one of these names you see, including myself, are new within the last year, by the way. This is no way their anniversary here at the company, and everyone on this chart is one year or less. This represents our go-to-market field organization. Again, backed by a lot of proven leadership that we have within the business. For each one of these leaders, I want to anchor you in, this isn't a wholesale change of the business. The goals and aims for each one of these leaders are new leader as well. We had to do some cleaning of the dials in terms of role points in some of our regions. We did that quickly. I want to anchor on the amount of time we took to select these leaders. Culture, experience, and discipline were so important to me, and identifying that they also understood that clarity and empowerment accountability is a way to run a business at scale. The interview processes, Rajan, on this chart here, is new this week. We've spent a lot of time. In the case of John Higgins, 20, 30, 40 interviews, making sure the fit was right to strike the scale that we need. I'm delighted to say that we are in a very good position with a new leadership team. I have, as of this week, no more key leadership roles filled within this business. We took the first four to six months about learning and listening about the company, taking the values and understanding what's core to Pega, then the last six months really bringing on board scale leadership so that we can drive this clarity, empowerment, and accountability. The other thing that's really important here is a lot of feedback. We're a Boston-based corporate culture company. I wanted to have leaders in their regions with their teams. Out with the idea of having a leader leading Asia, living in Asia, a leader leading EMEA, living in Europe. John Higgins, we brought together our consulting and our customer success teams one, living in the U.K. It's really important to me to be able to represent the gender, geographic, and point of diversity of this team. One other thing that's very important, as I said earlier, intermediation and variability is the bane of growth. We globalized a lot of these functions. We had a lot of bifurcated, disseminated leadership around the world regionally, which created some overlapping roles, some lack of productivity. We centralized and globalized a lot of these functions to create functional excellence. That way, we have the proverbial one throat to choke but one back to pat from the standpoint of excellence in consulting, excellence in partners, excellence in sales. A major shift, but the onboarding has been robust. I know, I just went through it. We applied my onboarding, which is effective to each one of these leaders. Already the folks who've been here for four to six months, Judy, Joaquin, Carol, and John, are already ramping and having a huge impact on the business. If you look at our priorities and focus, this is the outline of what we've laid for this year, everything we do now is around what I call the big five priorities. Big five priorities are on the left-hand side. Let's start with One Pega. What does that mean? That means we operate as one team. That means even though you are a leader of our consulting business, it is aligned to the strategy of the company, and our sales teams and our consulting teams work together, for example, as well as extending with our partner teams. This is all about having leadership that is aligned, that are sync to each other's sentences, and understand what success looks like and what failure looks like. Business systems. Driving business systems. Oh, by the way, I'm on Pega. I feel we've made great progress here. Alignment with legacy leaders like Ken and Alan and Adriana on people team and Kerim in our product team, together with all these new faces, it is important that we're all acting as one, not just within go-to-market organization. I think we're making huge progress with efficiency. I think we're three-quarters of the way there now. Of course, for me, the idea here is diversity. As a father of three daughters and a brother of five sisters, I understand that our client also buys global perspective, and we're making a disciplined and concerted effort to look like our client base. Pegasystems is about working together across functions and aligning go-to-market around three main solution areas, three main types. Instead of just folks one-offs, going and doing what you can do with your clients and see what comes back, it is very disciplined about when go-to-market around three solution areas and everything we do to support that, whether you're in marketing, you're enabling it through your partners or your sales play as enablement. We are aligned together as one business around three solution areas. This really drives productivity. You're not reinventing the wheel every time. You're going in together, knowing exactly what we need to go sell. I think we're making great progress here. A long way to go, but great progress. Discipline execution. This is our sales management cadence. Variability is the bane of growth. I said that before. If we're speaking the same language in our weekly forecast, our monthly forecast, our quarterly business reviews, going up the management chain and back down the management chain, we're all very clear on what needs to be done. I will say we had a high degree of variability in the past. We don't have that now. I think if you were to do an audit, you would quickly find out that our SMC, our sales management cadence, is catching to everyone's brain, and we are now very much operating towards a predictable, reliable process, whether you're an individual contributor right up to myself. Partner-centric, I don't need to speak too much more about that. What I can tell you is we have globalized that function. We've brought the partner team up to the senior leadership table to be in strategy invested in our partner enablement, partner development, as well as our go-to-market activities, partner selling, partner development, many new roles. Our partners need to understand we're there with them from the idea of a deal to the delivery of the deal, not just the delivery of the deal. We're looking at partner source bookings, total partner impact, et cetera. I just want to say about partner centric, I got up there on be half. I was telling you across the company, perhaps we over-communicated a bit on what partner centric means, so the message has gotten across. These things take time. Shifting from a pure direct sales mindset to a partner co-selling, partner impact business, this takes time. This is an 18 to 24-month process. I know there'll be some changes and there'll be some variability, but when we get the point across to the team about what our strategy is for partners, not only do we get it, but they get it. Doing real things like bringing partners into their own SKOs, sales kickoffs, and having a sales kickoff for partners. That never happened before. That's happening now. We launched our Partner Program at PegaWorld. Very significant progress in how we think about partners. As we move forward, starting to bring these teams together, right? Our SKO, sales kickoff. Bringing it together, our partners are integrated with our sellers. Not every one of our partners is resellers. They're just an extension of our teams. I need our teams to be thinking like that. Finally, the last piece. It may seem banal and simple, but make the number. This is not about an annual number. This is not about a quarterly number. This is about a monthly number. Commit to the business, and we commit to you to give you that empowerment to go execute. This is not just a license sales standpoint. We're bringing this discipline to consulting around bookings or possible leads to revenue. We're bringing it into the partner team around what they need to make their number, what they need for our marketing teams to make their number. This is going to take a little bit of time, but I do see green shoots that are starting to appear quite good in terms of accountability from our teams around that consistent thought of making the number. Finally, I want to close on two terms of growth. If you build a business around repeatability and you know what we're going to sell, what we sell is our three solution areas, and doing it with scale functions and force multipliers, like the repeatability, the enable and the values to help us do the heavy lifting. Partners are that force multiplier for us. We are selling beyond the Pega practice. That is an immediately important thing. Not just getting the partner practice, but working with the industry leaders, the global leaders, the practice leaders, getting the client account leads at Accenture, Wipro, even the smaller teams. Getting that going is very important. Not allowing standard deviations and having world-class rigor and discipline. That is, for me, that goes back 15 years in my experience, that really builds high-performance teams. Finally, when we do all this and we have an eye towards hiring global thought leaders, leading name companies, and diverse candidates, I want to be the employer of choice, the destination location for the top talent, top 25% talent around the world. I'll just conclude by saying we've made tremendous progress. There are parts of the business that may be unrecognizable from a year ago. I can assure all of you, we are all aligned around the values and culture of Pega, the teams are extremely excited by the transformation that's happening. I look forward to being back with you a year from now and talking about some of those successes. With that, Peter, back over to you. Great. Thank you, Hayden. Thank you very much, Hayden. As I mentioned earlier, we are going to be accepting questions today. At the bottom of your screen, if you click the Q&A button, you can submit questions. Hayden will be staying for the Q&A session at the end. Ken Stillwell will be participating as well. I'm going to bring Ken Stillwell up next. He's our Chief Financial Officer, and now he's also our Chief Operating Officer, which is pretty amazing to get promoted when you work from the basement of software. Thanks, Peter. Welcome, everyone. Hopefully, this is the last time that we have to do an Investor Day virtually. I've seen very few of you live. I look forward to seeing everyone in the very near future. I will tell you on my drive into Boston, I can assure you that lots of people are going to the office because I think traffic was worse than what I remember pre-pandemic. I am very happy to be able to come to the office on a semi-regular basis now. We're not fully open yet in terms of welcoming everyone back at Pega, we're starting to have people trickle in. I imagine as the summer hits and as we get through the summer, we'll probably be coming back with some sense of a capability, at least here in North America. We are still, although we're kind of benefiting from maybe being ahead on vaccinations and quite frankly, the natural immunity rate here in North America, we've got a lot of our offices that are really struggling, specifically India, Myanmar, Peru, [inaudible]. I think we're starting to hopefully see the light at the end of the tunnel for them. We've been doing everything we can to support them. Quite frankly, they've done an amazing job of minimizing any disruption to the business, even during these crazy times that they're dealing with. Our thoughts and prayers are with all of our employees around the world. One interesting thing, I'm going to touch on this real quick. This is a proxy statement. We've actually filed an 8-K this morning, for those of you that aren't aware. Same proxy statement is actually in that as well. If you can read that, you'll see a standard disclosure. I want to touch on one thing very quickly around Hayden. By the way, I'm actually coming up on my five-year anniversary. I can't believe it didn't call me legacy. I guess I'm legacy now. Five years goes fast. In fact, I think even after next year, I could be at anyplace than anywhere else I've worked in my career, which is kind of scary to think about the fact that five years went by. One of the things, the biggest thing, is when you have a sales leader, they tend to skew on one side or the other on style, right? To me, that's always been a problem. You have sales leaders that are hyper-focused on growth. They are growth machines. They're growing at 50%, 100%. The challenge with some of those go-to-market leaders is that they're not necessarily operationally focused because they're just thinking about the growth, and they're assuming that someone else will figure out the making sure that the bolts are tightened and business. You end up with this car going really fast but kind of shaky. What does that mean? It means suboptimal scalability for go-to-market. It means you're actually kicking the can down the road, fixing operational problems. The other extreme of go-to-market leaders are the deep operational leaders that don't take the necessary calculated risks in growing the business. That would be like, say, I would say I would probably be skewed more towards the operational side of that just because of my background. The challenge with either one of those is you either get a deeply operational person that doesn't really challenge the growth equation, or you get someone that's focused on growth who really doesn't know how to scale the business properly. You know what I mean? When we went through this process of thinking about bringing someone in like Hayden, Alan and I, and the board talked about, we really do need someone that can do both. We need someone that's seen both at another company. We need someone that appreciates the balance of the trade-off of scarcity, of being able to make investment decisions across different options and not just think that there's an unlimited amount of funding or quite frankly, they're only focused on productivity and they risk the growth, they're capturing new markets. That's kind of just an interesting summary of why we thought of Hayden as being a really good fit for us, which is someone that anyone who's experienced him, you've heard him talk, you can tell he's been in the growth machine, built a highly operational growth. What are we going to talk about today? What am I going to talk about today? I'm going to hit a bunch of things here, and some of this is updates from what I've talked about before, and some of it is a little bit different angle and view on how we look at our performance. We've talked about the market opportunities we have that we see in front of us. We're going to talk a little bit about the transition to cloud, which I've been talking to all of you about since I started. We're getting to the point now where we're finally at the end of this, and we're starting to see our numbers grow a lot. We're going to talk a little bit about why, just reinforce the anchor of why this model makes sense, not just from a valuation standpoint, but just from an overall health of the business and the addressable market. Then I'm going to update my views on our longer-term model that I first populated with everyone back in 2017. Next slide, please. The market that we're in is massive, and maybe I don't know that I need to go a lot further on this slide, right? We are in a market that is so materially bigger than the size of our company that I sometimes dismiss this. When folks in the lobby here go, "The market," I go, "Bigger than we can handle." There's so many opportunities here. I do think it's important to directionally connect. We believe our market size, and what we're showing in this slide, is about 50% to 60% of the overall market size for platform engineering. You might say, "Well, why is that?" Well, we're not in every vertical, and we're not in every organization. If you look at a pyramid of top companies in terms of size, down to the mid-market and smaller organizations, the overwhelming amount of spend tends to concentrate towards the top third of that pyramid, which is largely where we're focused. Big market, massive market. You might see these numbers and think, well, your competitors show $200 million as the market. That's true. We don't actually play in all of the verticals and all the mediums and all of the customers that some of our competitors do. It's still a massive market. Here's an interesting realization that came upon me just a few weeks ago, which is I looked at the IDC report that was published, and they predict that all of the new spend in technology, all of it. In fact, this chart is probably not even fully true because actually non-digital transformation spend is actually predicted to decline slightly. I show it here as a kind of flat line. Legacy software, non-digital transformation software, there's no investment for it. There's no incremental investment for it. All of the spend that clients are making in enterprise is digital transformation. We're well-positioned, huge market, where everybody is shifting their spend and growing at double digits. I think that we couldn't be in a better position in terms of the market that we're in, the solutions, where we fit with the Gartner and the Forrester in terms of how they rank our solution, and then where clients want to spend their money. Just to hit that high level. Why did we do this transition? Isn't it obvious to all of you? We went from a perpetual business where you are much less predictable, much more sensitive to fluctuations of big deal, not big deal. Too big deal, not one big deal. Quarter over quarter, year over year, really difficult to predict the business, very difficult to predict productivity, very sensitive to economic cycles. What that means is that, and Hayden actually touched on this, it means you're less efficient. It means that you have more costs to deliver the same amount of revenue. We knew we needed more. A business that is, I wouldn't say exclusively recurring, but I would say ultimately professional services, we're pretty much there, where we're all recurring ACV, which makes you predictable. Our retention rates, we went right to the head of time. Software retention rates are 90%+. Our retention rates are well over 95%. We're very predictable. We aim to now manage using that predictable model to be able to drive a balance of efficiency. What I did was just show the timeline here, and what it shows is that if we started it in 2017 and we end it as we enter 2023, we're a little bit further than halfway through this whole transition. Next slide, please. What are some of the key metrics? Now, these are key metrics that I specifically talked about at the beginning of the transition. These are key metrics that survived the transition. Annual contract value growth, ACV growth. Many companies refer to that as ARR. Think of ARR and ACV as being interchangeable. They are the same thing. They're the annual recurring spend that our clients commit to solutions with Pega. The growth in that number, because our retention rates are so high, the growth in that number is really all net new spend with our clients. Sometimes that's a new application, sometimes that's an expansion of an existing application. To us, both important. Sometimes it's new logos, sometimes it's an increased spend with our existing clients. Very critical to have a balance of that. We probably do skew a little bit high over the last few years on the amount of bookings that come from our existing clients. I think the partnership, and actually we've written about the expansion of the organizations that we cover, will help to balance our focus on that land and expand model. Make sure we do have enough new logo growth to create fertile ground for continued expansion. Pega Cloud bookings as a percentage of our overall business. When we started this transition, I thought maybe Pega Cloud might be 30%, 35% of our bookings. That number's been over 50% pretty much for every quarter for the last three years or so. Clearly, Pega Cloud is desired by our clients. Our sales teams are incented to sell it. Our product teams are focused on enabling it. I think we're really at a point now where Pega Cloud really has this momentum and this growth trajectory that could continue and should continue for years into the future. Remaining performance obligations, commonly called backlog. It's a confirmatory metric, right? What it shows you is that the nature of ACV, the nature of the business is healthy, and the duration of commitments from our clients is stable. That's kind of the three primary metrics for growth. We just made you've seen that our total ACV growth is around 20%, been about 20% for approximately maybe slightly more than 20% for the last three, four years. We do aspire to have this grow faster. Hayden talked about this push for trying to accelerate ACV growth, and I think all the things that we're doing to try to make that happen. What's really interesting about this slide is the dark blue, which is the Pega Cloud growth. Hopefully, it's dark blue on your monitor. I'm going to talk a little bit about that in the future. That number is really becoming significant as a percentage of our business, and it is the growth engine for us. That's our SaaS product. Pega Cloud is our fully managed SaaS product. This shows where Pega Cloud bookings were as a percentage of our business and where we think they will grow toward. I think the only thing holding us back from Pega Cloud being a bigger percentage of our business is that we are flexible with our clients. We allow them to choose whether they deploy on Pega Cloud or what we call Client Cloud, which is where they manage the Pega solution on their cloud of choice. Pega Cloud is where we manage that solution on Pega Cloud. We made a strategic decision to not force our clients to only buy Pega on Pega Cloud. If we did that, Pega Cloud could be 100% of our bookings. We do believe at this point in time, we would give up market wins if we actually forced our clients to only buy under that model. I think naturally, clients are moving in the direction to want to buy Pega Cloud and increasing. I don't think we have to force that. I think it will happen naturally. Next slide. I talked about remaining performance obligation or backlog. It is growing. It's growing faster than our ACV. Quite rightly, you would expect that because more of our remaining performance obligation is growing as a Pega Cloud percentage of that continues to become an increasing relevant piece of RPO. Because it is, and because it's growing at 50% +, it's actually our RPO is kind of growing in between total ACV and our Pega Cloud ACV. Next slide. I think what this slide highlights to me is this is a great slide, but a frustrating slide at the same time, right? The great part of this slide is we are consistently growing every quarter-over-quarter, year-over-year, in the 20% range. That's respectable. We're growing Pega Cloud 50% or so, actually a little bit more than that, but it's pretty impressive. It could be higher. That's the frustrating part. The frustrating part is why can't Pega Cloud be growing 100%? Why can't total ACV be growing 30% +? It certainly can be. It's eluded us. We are trying to do the activities to help unleash some of that acceleration and growth. It does take some time as we invest in go-to-market, we invest in the resources, we invest in partner and ecosystem to be able to help accelerate that. I view this slide as I'm proud of it in some ways because we're consistently producing, but I will tell you we can do better than this. That's not a guarantee. I can't tell all of you. We do need to execute, right? We do this sometimes. We need to do a little bit of what did you execute and try to accelerate the growth at growth levels like this. We are completely focused on increasing the capture rate of the addressable market that we have. The opportunity is right in front of us, and so we will continue to push to accelerate the ACV growth number. Next slide. Here's an interesting slide that I don't think I've ever visualized in this way. The numbers are all there. This is our ACV component. Maintenance term, which collectively are Client Cloud and Pega Cloud. What you're seeing is that Pega Cloud ACV is now bigger than our term license ACV for the first time. If you go back even to 2017, look at the relationship of Pega Cloud to our total ACV. We believe Pega Cloud ACV is going to be bigger than maintenance ACV within certainly within 2021. Who knows, next quarter or two, we might pass that number. That to me is really that next inflection point of where Pega Cloud is bigger than any ACV channel that we have. Remember that our maintenance ACV still has a significant amount of legacy perpetual maintenance in that number. That's a lot of business that was sold through perpetual channels years ago. Just to think about Pega Cloud becoming that big of a component of our ACV, By the way, one of the questions that I sometimes get asked is, does Pega Cloud continue to grow? Becomes a bigger percentage of ACV. Isn't that a lever to accelerate your total ACV growth? It absolutely is. That is the trick. The trick is that Pega Cloud continue to grow and outpace the overall growth rate of other items. As it's become a bigger part of the pie, therefore our overall ACV growth will accelerate. Next slide please. Another thing to reinforce, when we first started talking about this, or I should say, when I first started talking about this four years ago or so, I didn't think Pega Cloud was going to be growing at the pace that it's grown. If you go back and look at the data that I had, I actually said I thought it would grow 35%. It's been growing about 60%. It's really difficult to think about the ramifications of that unless you're as close to it as I am. There are certain implications of that. First off, it's great long term, but there are some shorter-term optics of having more of your business go fast. With fast, you have less revenue recognized upfront, more revenue over time. Your backlog will grow a little faster because more of your commitments are actually going into backlog. You may actually, because you're growing faster, you may have comps that are actually a little bit mismatched with your revenue growth, with your recorded revenue and your revenue growth. Overall, this is a tremendous positive for the business. The fact that Pega Cloud is growing at almost twice the rate of what we thought it would be, I mean, that far exceeds our expectations. We do need the practicality of how that impacts the results and in what time frame we see the benefit of that. Next slide. Pega Cloud margin expansion. One of the things that I would say I was a little nervous about, I will fully admit that, in the 2018, 2019 time frame was, what are the levers and how much operating leverage are we going to get as we grow Pega Cloud to be able to get our margins up closer to that 70%, which is originally that target that I set? Now we think the target should be higher than that. We actually think our Pega Cloud margin should be closer to 75% in the future. The way to think about this is Pega Cloud is growing faster. Revenue is delayed somewhat because Pega Cloud is higher, gives us a better chance to get more operating leverage around Pega Cloud, which should drive our gross margin up for Pega Cloud. Because this is such a big component of our business, the Pega Cloud margins are high, naturally it will be materially impactful to our overall. The other interesting thing that's happening is at the same time, more of our partners are supporting our clients on cloud as well, which means our professional services revenue isn't even growing as fast as they just did under the perpetual model. We have a bunch of things kind of moving generally in positive directions for us. We have a lower service mix. We have higher Pega Cloud gross margin, potentially helping to accelerate our growth rate above what we thought it would be over the last few years. Naturally, the offsets of how that plays out for 2022 and 2023 will be slightly different than what we originally modeled when we thought annual cloud would be a smaller proportion of our business than it's all good. It's exactly what we had hoped would happen. I think we're going to talk in the next few slides about how that will play out. Next slide. This is the competitor's journey. I'm not going to tell you who this was. You can probably guess. This is a large software company that went through a perpetual to cloud transition, starting in about 2010 or 2011. They did an excellent job of moving through this transition. They're almost the poster child for how you would want the transition to happen. If you go to the next slide, this is our transition. We actually didn't quite have the steep decline of the transition, and we're kind of tracking in a very similar fashion. As I show this, not to say that I'm guaranteeing that we will continue on that path of the way that the competitors growth. I'm just showing this is how cloud transitions work, right? It's just accounting. The numbers don't play out differently depending on the company. You will actually have a drop in your growth rate as you go from perpetual revenue to SaaS revenue, and that will take a few years to get through. What you're seeing now, year four for us would be 2021, and you'll see our growth rate is already starting to accelerate even above that 16%, certainly for Q1. I'm really excited about just the way this model is playing out and how close it is to what I originally had anticipated kind of that path would be. Next slide. I think maybe this is an obvious thing. It's something that I wanted to reinforce, though. Valuations for companies that are cloud versus perpetual are dramatically different. Three to four times higher in terms of enterprise value and revenue at the same growth rate. Why is that? It's for exactly the reasons I talked about earlier. The predictability, the fact that if you've got a perpetual model, it's impossible to have consistent predictability quarter in and quarter out. When you actually have a SaaS model, your bookings get kind of averaged more. You have the ability to actually build business in a more kind of fluid way that doesn't actually show significant volatility in revenue, EPS, and cost, and backlog, and ACV growth. Even though our business does have linearity built into it, and we don't have all of our business as SaaS, some of it is still Pega Cloud, which is subject to ASC 606 in terms of the revenue being a little bit lumpier. It's not nearly as dramatic as it was five, six, 10 years ago, where we would have one deal. When I started, one deal could completely change a year, maybe even a quarter, maybe even a year. That's not the case now. Our results are much more performance over multiple years. That's where the valuation comes in, because there's just this predictability, certainly in growth companies, which we consider ourselves to be in that category of a growth software company. Next slide. What does this mean? Well, near term, we still have a little bit of awkward revenue offsets, a little bit of the timing of the accounting isn't quite there yet, but we're in way better shape than we were a couple of years ago, where I would put up 22% ACV growth, and our revenue would decline, right? People would say, "What's going on?" If you've seen this movie, you know the way this plays out. Our focus is still going to be on total ACV growth. We believe only one element of it is missing, and we believe now that the kind of the mix of our business and the perpetual proportion of our new growth is very small, almost approaching zero. We believe our total ACV growth is really kind of an apples-to-apples comparison. Compare quarter-over-quarter, year-over-year. Pegasystems cloud backlog growth, once again, will be a confirming metric. Longer term, cash flows, revenue, billings, ACV, bookings, they will all closely correlate. We're not very far away from that. Even in 2021, you'll see some of that correlation. Certainly, when you get to 2022 and 2023, you're going to see this normalization. You'll see us kind of really starting to be much more predictable than we were in the past in terms of connecting ACV to revenue growth. Just to confirm, when I talk about Rule of 40, what I'm referring to is free cash flow margin, which is operating margin minus capital expenditure, and our ACV growth. The combination of those two, and thinking about that being a measure for Rule of 40. Rule of 40 is because I use it as simply a guidepost of what a best-in-class company would operate as a Rule of 40, meaning the combination of these two factors would be 40% or above. Historically, Pegasystems has been around 33%, 31%, 32% in terms of that Rule of 40. Some of our competitors, some companies in technology operate at a Rule of 50%, Rule of 55%, and that's really significant performance for companies that are able to do that. The average for technology is around 32% to 33%. Before we made this transition, we were slightly worse than average. We aspire to be much better than average, and that's kind of where we're moving towards this Rule of 40 concept. This is a slide from 2018 where I kind of gave maybe a guess to speak of our long-term targets, how I thought this would play out. I thought our growth rate would be in that 15%-17% range. I thought our non-GAAP operating margin would get us to where we added the two together, and we were kind of directionally close to that Rule of 40. I thought it would be 35% cloud revenue growth, and our cloud margin was going to be 70%. This was the best information that I had in terms of long-term targets back in that time period. If you fast-forward to today, I think our growth rate's going to be higher. Our growth rate as we approach 2023 into 2023, our growth rate's going to be in the low 20s%. Our free cash flow margin, you'll see I've inserted free cash flow margin there because non-GAAP operating margin is a challenging thing to measure. It's sometimes, for me anyway, even non-GAAP operating margin was more of a proxy to get close to free cash flow margin. I think from now on, let's just think about free cash flow margin as being a more representative connection point. I think we'll be in around the 15% range. That's lower than adding those up, you won't get to Rule of 40. You'll get to 36%-38%. The main thing that is driving that is the delay in the revenue recognition from the higher percentage of our SaaS business, which is Pega Cloud. There's a little bit of a lag there. Typically, the revenue lag for a SaaS business is about six months or so in terms of that timing. Our cloud revenue growth, we're growing it better than 50%. I'm projecting that we will be somewhere in that 45% range for the next few years. We might stay above 50%. I hope we do. I'm just kind of the way the model works and the law of bigger numbers, that average growth rate will kind of normalize a little bit down to that 45%-ish range. Still much faster than what we were showing originally. Now I think our cloud margin will be above 70%. 75% is achievable. Certainly, 72% is right in line of sight. I'm thinking we're somewhere in that kind of low to mid 70% range gross margin. Remember, if you look at our business as approaching a $500 million ACV business, which is if you do the math, which is where we'll be in a couple of years or even a year and a half or so, no software company saw the kind of gross margins that we are showing at only $500 million in our growth rates. If you go back and look at some of our competitors, and I won't name them, but you can do the math. We have competitors of ours with one, $2 million in revenue growing 30%-40% of their business, and their margins are 70%. I think we're getting to a respectable margin. That's not to say that that's the best we can do. We can actually, when we actually run efficiency next year, we have more multi-tenant people, we're using ISV, I certainly think that margin number can go higher. This is kind of our view of where we're striving to get to within the next few years. What does this all mean? The key for us is to sustain higher growth. The way to do that is be a recurring SaaS business. What does that allow us to do? It allows us to build efficiency into our model to drive higher margins. If we drive higher growth with an exclusively recurring business, it's going to give us the ability to get operating leverage, and shareholder value will be the outcome. The way that we measure that shareholder value calibration is can we get to a point where our growth rate and our free cash flow margin equals 40% or above? We're going to get pretty close when we enter 2023 into 2023. It's just a matter of letting that SaaS business normalize in terms of the revenue production, and we'll be there. I'm really excited about the journey we started. It's like, frankly, I think many of you were supportive but certainly watching to see how this played out. Now when you fast-forward a few years, it played out pretty close to the way we thought it would. We really appreciate all of your support. I look forward, we'll have some time, and we have some questions here in a second, so I look forward to seeing everyone live. Thank you for the great questions, the great feedback, the great support over the years. It's actually been really helpful for us to calibrate our discussion with everyone. With that said, I'm going to hand it back to Peter. Great. Super. Thank you very much, Ken. I know it's going to be up next. We are going to be taking questions next, so kind of keep it together. We will be there in case we want to go forward on one slide. As I mentioned earlier, if you go to the bottom of your screen, click the Q&A button, you can submit a question. We have gotten a bunch of questions for you guys. Actually, I know the first question. The first question is actually for Hayden. Hayden, can you give us an update on the Partner Program that was announced at PegaWorld? How's it going? Yeah. We're really excited about this Partner Program. In my opinion, it's obviously early days in it. We just announced it's a sign of maturity in our thinking. There are three highlights I'd like to highlight about it. First of all is we now have a single one-stop shop location with our Partner Program portal, Pega Partner Program portal. A lot of P there. It's a one stop for our partners to come for information, for us to track delivery health, for them to understand incentives, our enablement. Complete transparency for our partners and our clients to be able to see what they need to see to make decisions. That's number one. Number two is the tiering. Much more logical. I've never been a big fan of platinum, gold, silver, bronze. What do those things really mean? It's really two, right? It's authorized and specialized. Within specialized we have elite, but it's authorized and specialized. Authorized means you've got a heavy practice. You are capable, and you've got a certain amount of account and licensed practitioners. If you get into specialized, you are very good in one of our three solution areas. Remember I talked about our three solution areas being delivered around going to market around three areas? We want to be able to showcase partners that have a great practice, and not just delivery. These are the selling capacity, selling excellence, and delivery excellence. When someone is specialized and they have really demonstrated excellence, they are elite specialized. That's number two is the tiering. Number three is the incentives. We've rolled out new incentives that are not just oriented around delivery but now around co-sell. We have the MDF that is focused around reselling, source revenue, co-selling, and of course our standard recognition for delivery. I think it's those three examples that really showcase the program. Again, it's a month old, but we're putting a lot behind it and continue to make investments in this program. I'll add one point to that. Many of you have given me feedback from the sessions that you've had through channel checks with partners. One of the common things I've heard, I'll repeat it not because I've heard it from our partners or from Hayden, because I've actually heard it from all of you, is that our partners view us as somewhat of a combination of partnering and also competition. The reason why that happened was historically we had mouths to feed, so to speak, in our professional services organization, we would worry about billing, we had people incented on that, pipeline, backlog, utilization rates, we actually like to do certain work for certain clients. Our partners viewed that as a little bit contradictory to actually a true partner relationship. Now, we still do have all of those restraints. We do need to have our services P&L- wise. We do need to make sure that that's not a kind of an unreasonable cost center within the company. We have to balance that with the fact that our partners have a business being in the services business. Services is not our business. It is simply something that we have to have to be successful at software. Software is the business that we're in. Services is an enabler for us helping our clients with it. We need to be respectful of our partners. I think our partners are seeing and hearing from the new engagement and really optimism, and they're willing to make investments in Pega, where in the past they may have been a little bit more timid to make those investments. If I could just add one more thing. It's a really good point. I know a lot of our partners have said, "What's different? We've seen this before. We've heard this before." First of all, the role that I'm in is accountable across all the different parts of go to market, across sales, solution consulting partners, et cetera. Unification of a strategy that is not bifurcated across multiple leaders. That's one point. Number two is a very important point you said. We hired John Higgins from Salesforce. He ran international consulting for Salesforce. We are building a business in our consulting around enabling our partners, not necessarily competing. More advisory services, more expert services, more embedded technical architects. Yes, we will do consulting and implementation end to end, but more of the higher-end advisory services and packaged solutions. All right, great. The next question is for Ken. Ken is on RPA, which you and I have seen evolve quite a bit over the last several years since we acquired OpenSpan back in April 2016. The question around RPA is as follows. There's a lot going on in the RPA market today. Does Pegasystems itself as a contender in the core RPA market or as more of an integration and orchestration layer that sits over the top of other automation point solutions? I think with Pega, what we are, this isn't aspirational, what we do is we allow clients to do both, right? We have an RPA solution, a traditional robotic process automation solution where clients can actually use it to patch together systems that don't talk to each other. Files, Excel files, databases, places, even scraping information off of an email. Being able to use that as a way to scrape information and populate it in another place, an application or solution environment. When clients need to do that, we have a solution. About 10% or so of our business at Pega is directly or indirectly tied to that robotic aspect of what our clients do. When you actually think, now jump over to orchestration, which is where we think the real enterprise value is, which is clients trying to robotically automate inside of a workflow or inside of an integration between applications. Even though two applications talk to each other, there's still a lot of robotic automation that can be done to enable those systems. We think the trick is to do both. Clients are going to have those or going to use cases where they have to do, when they're moving data between Excel files and it's terribly inefficient, and they have data center capacity issues because they're doing data processing and they need to be able to handle it in a faster way. That won't go away. What we really view as an opportunity is this orchestration and making it automated when you're actually dealing with enterprise applications. An important, maybe another kind of nail in this discussion is we don't believe e nterprise clients are looking at the traditional scraping of data and populating between Excel files and Oracle databases as a strategic way that they want to move forward. That is a reality of their environment and how they're trying to patch things together. We also know that you can't snap your fingers and everybody's digitally transformed, but we also know that people aren't consciously going out saying, "Let's not sell systems. Let's continue to keep things fractured." We think it's important, but really it's not the way people would like to do business, and that's why we think we need to have both. Excellent. Okay. Next question is for Hayden. It's on large Global System Integrators. The question is, any updates on go-to-market with the largest Global System Integrator channel? I put a tremendous amount of time into building relationships. I already had a lot of great relationships with these large GSIs, but really getting our teams to extend beyond the Pega practice. We already had robust Pega practices within the likes of EY, Capgemini, Accenture, and others. It was largely limited to upselling and then handing the opportunity over to deliver with those Pega practices. We are spending a tremendous amount of time at vice chair levels, practice leader levels, and driving enablement and training with these GSIs, in order to build skill capability and knowledge within their account teams and their practice leads. Not only am I meeting with, for instance, the Vice Chair of a large GSI on a monthly basis and probably running regular quarterly business reviews, monthly business reviews, but we are doing the engagement of the legwork with those client account teams and making them aware of themselves. We have a number of new roles of these partner go-to-market executives that are building the relationships with the account execs that matter in those accounts. The other thing that I would add to that, Peter, is we are doing a lot more marketing to and with these partners. For the first time ever, we've invested in building our marketing team. Tom Libretto runs our marketing team. We have a partner marketing team that markets to, through, and with these partners to build awareness, not just in the market for our clients that we're linked with our partners, but also marketing to our partners. We met with the Head of Sales for all of Europe about six months ago. He said, "You need to get our team to aware of who Pega is. They don't know that they use Pega every day, and that Pega is in these large accounts. You need to market to them." It's a selling go-to-market effort as well as a marketing effort for them as well. Okay, great. The next question is for Ken. Ken, can you elaborate on how Pega financial would be impacted if term customers started converting existing deployments to Pega Cloud in greater numbers? Sure, I will lump that between term and legacy perpetual together because I think it's kind of implied in the question. This is a little bit customer specific because we don't know why people would want to pick one or the other. We know what they tell us. We know what we hear in the marketplace. It's kind of some of it's obvious around use cases, et cetera. Let me talk about the numbers. If all of our business right now, all of our client cloud business immediately said, "Flip to Pega Cloud." I'm using rough numbers. We have something like $575 million, I believe, of client cloud ACV. If you just immediately flipped all of that to Pega Cloud, you'd have probably at least a 50% uplift over that number. Naturally, if it's maintenance, it would be two to three times. If it's classic term that was just purchased in the last few years, it might be closer to 25%-30%. Let's just say it was 50%. That's about $300 million of incremental ACV that we could get just by becoming a 100% SaaS business. That is not a prediction it will be 100% SaaS. That's not guidance, that just gives you kind of an order of magnitude. If we got a 2X multiplier, that would be $500 million. $1 billion, actually, of uplift. Certainly there's some number that's greater than zero and less than a $1 billion of uplift around moving our clients there. I would say realistically, it's probably in the couple hundred million dollar range. If we're able to and successfully convince our clients that their best interest would be to move to Pega Cloud. I do think clients will move more and more as time goes on. There's a pretty good number that we could achieve over coming years. Okay, great. Hayden, you talked about this a little bit already today, but I do think it's a question that investors are really interested in. Could you provide a little bit more color on what you're doing differently with channel partners now that you're here versus what Pega has done in the past? The investor is just looking for a little bit more color on that. Yeah. I'm going to first talk about ISVs and then briefly into the GSIs. We have a lot of complementary products and relationships with a number of ISVs out there. Our products right now, we talked a bit about fnx and where we're going with our future platform. We are beginning to build the platform, the capability for when the platform's ready to have a full ISV build their business on Pega, and build business and go-to-market with business on Pega down the road. Six, 12, 18 months down the road, at some point down the road. Right now what we're doing is we're building relationships with partners that were classically competitors. They're in our competitive database. We have war sheets on them about working together. Our clients are asking for us to work together. They're stitching their two products together. I'll use an example, Adobe. We get a lot of competition, there's great examples of the products working together. We're working with a lot of these ISVs to build product truth within our engineering teams, our product teams, co-selling together. One plus one truly does equal three or four with some of these ISVs. Again, with the goal towards ultimately recruiting and developing ISVs to build on our platforms and new routes to revenue. Secondarily, we are being incredibly mindful of onboarding, recruiting, and developing these SIs. Getting them to develop repeatable solutions with Accenture as an example, building solutions in the life sciences space that we can go and take to the next life sciences account and the next. We've done that in several accounts with Accenture. We started getting these delivered as well around our segmentation, instead of just the big accounts and small accounts being delivered on different segments and having a different profile of coverage. We have a part of our segment that we refer to as partner power, and there is a segment that is Pega power. In these partner power segments, we are building more capacity to cover partners, partner development efforts, enablement training, onboarding, partner sales effects to sell with them, and taking our AEs for the Pega power segments. We're getting really clear about where we want to compete, or where we want to win together, and where we want to win alone, from the standpoint of working with partners. I think it's really big for them because they're being clear on specifically how we want to go to market with them. One thing I'll touch on is not a partner question, but I think hangs off the ISV point that Hayden was making. Our three biggest competitors in the CRM space are Microsoft, Adobe, and Salesforce. Just these those three. We have integrations with all three. We have clients running on Azure. We actually run on Azure ourselves. We actually have tons and tons of customers integrating with Salesforce, moving data between the two. We have integrations with Adobe. We've actually seen situations where one of us and one of those will compete with the other one in campaigns. Sometimes it's not what they want. I do think that there's a very open environment between all of those companies knowing that it doesn't do any good to close yourself off to actually integrating with the rest of the market. Naturally, you can't own all of the market. I think that for us, as we really view ourselves as landing, at least one of our solution areas lands as being that orchestration with the applications that are very open to connecting to other best in breed. Certainly we want to integrate with everybody. I think that that's just an important, kind of similar to ISV in that we want to make sure that we are, the Pega team, there's no restrictions or no artificial barriers to us being able to help our clients. Everybody has Salesforce, and everybody has Microsoft, and everybody has Adobe, and everybody has other solutions. We know that. It's really beneficial for us to try and work, even though we compete fiercely with all of them, and it's important for us to operate with them. Our clients are asking us to be better together with these partners or with these competitors. Case of Microsoft in Europe, we're working together with Microsoft and some banks, working with the highest levels of executives at Adobe on integrating our one-to-one Customer Decision Hub with their AEP platform. Salesforce, their Head of Service and Sales Cloud, working together with us about how they just built a better together in contact centers. We're not saying we necessarily want to partner with all of them, but we're working better together to make it more seamless for our clients. Our clients get the benefit of us at that point. The next question is for Ken, and it's on the topic of digital transformation. How long-lasting do you see these tailwinds, especially as we enter a hybrid workforce? I'll touch on a couple pieces of this. I showed you an IDC chart earlier. This isn't a Pega chart or a Ken chart. IDC predicts that through 2024, 2025, all of the growth spend will be in digital transformation. I would suspect it'll be much longer than that. I think that companies are going to spend the next 12 to 18 months at least trying to figure out where the workforce is and how this will all be. None of us know. We have a policy at Pega where we're trying to be as flexible as we can with employees, and we're trying to figure out how to make sure that we support our clients. Our clients don't know at this point, nor do we at Pega, nor do any of you. We're all just trying to figure this out. I think the reality is what we know is that things will be different. One thing we do know is that the digital engagement aspect of this, through mobile devices, through digital channels like computers and others, are absolutely going to be accelerated because of the pandemic. Some percentage of the population will not feel comfortable going back into the normal behavior that they did, or I should say not even normal, the pre-pandemic behavior that they did. Going to malls, going into crowded spaces, they're just not going to be comfortable. Many of us will go back to normal, but we will still take the leverage that we've learned from the pandemic around different ways of working. I would suspect that many of you will work remotely or at home or wherever that may be more frequently than you did before the pandemic. I certainly will. All of us will. It's not all bad. I think we learned a lot. I think digital transformation, to me, becomes the theme that companies need to think about over the next five to 10 years, because this isn't going to be done in two years. This is going to take a long time to get us through. Thankfully, the economic environment that's out there through the pandemic, our clients have weathered the storm really well. Thankfully, our employees and our clients' employees have done an amazing job of stepping up and figuring out ways to manage through this As we get to the new hybrid environment, I think that we'll be that much more dependent on digital. We have 6,000 employees in 20 some countries. We already had to get used to meetings where you'd have the giggling pictures and Alan mentioned about some people in a room, some people weren't. In fact, yesterday, we had a meeting in one of Hayden's sort of architecture sessions where we actually had seven people in a conference room and people all around the world in different spots. That'll be the normal. Guess what? You need telecommunication tools like the Zooms, the Webexes, the Microsoft Teams, and all those products, but that just scratches the surface. How are you going to interact digitally and at different times than you're used to, right? You might have people interacting at 3:00 A.M. from a different country. I definitely think it's exciting to think about that ability for you to interact with any company at any point in time digitally. I also think the interesting thing is just this onset of the digital transaction, digital commerce, digital currency, the ability to actually transact across borders, kind of almost like there are no borders. I think all of these things will play into the importance of digital transformation. I'll add one thing. We too are addressing our go-to-market motions around this new normal of digital engagement. We've made significant investments in our digital demand generation, digital marketing. We've done a lot more on our branding. The days of being able to walk into your clients in downtown Manhattan and catch them in a coffee shop or go to dinner, those are challenged. It's not necessarily going to be the same as Ken said. We are a company very much on face-to-face direct engagement. We are building that digital marketing as well as digital demand response and engagement within our go-to-market sales models as well to address these changing times. That said, for all the sales leaders watching, please go back to live events. Absolutely. Everybody in person. Totally. All right. Stephanie gave a great demonstration earlier about the low-code architecture that we had during the investor session, which I thought was very exciting. The next question is around low-code, and I think this is a good one for you. We've seen references to low-code and no-code platforms from tech companies increase almost 1,000% year-over-year during the pandemic. As you're meeting with customers and talking with customers, how do you view the adoption of low-code and no-code platforms evolving? Yeah. From my prior employer, I was there from the beginning on Power Platform and Power Apps and saw the build of where they're going with that. I'm sure you're aware of the growth there. It's a very real opportunity for us, given, as Stephanie said, there is so much backlog, particularly with digital transformation, is putting pressure on IT teams to innovate and modernize. There was so much pressure to create and update and then create again. Putting some of the power and some of the capability into the hands outside of IT to accelerate that transformation is absolutely critical. Now, it goes well beyond that. It's not just about building, as she said, a simple ask for onboarding or enablement of people or a cafeteria for ordering. It goes into stitching your new applications, your new services to the back end and driving intelligence into those applications. That's where the professional low-code, no-code citizen application development platforms truly differentiates here at Pegasystems versus some of the other companies that exist. It's not point-in-time, simple point solutions. It's integrated into the larger macro digital transformation initiative. What we're doing is not only just saying, "Okay, go ahead and build anything," but we see very clear patterns, loan origination as an example of use cases that we are then arming our teams with, our partners with, and going to clients with patterns that we're seeing elsewhere with accelerated templates for this low-code application that makes sense for you in loan originations. I think getting very specific on the use cases makes it a lot easier to develop, deploy, and manage and govern, which is typically a large challenge for a lot of CIOs, the governance of those citizen apps. I'll give just an interesting parallel for the low-code. If you have any question on whether low-code is going to have traction and continue on, I can go back and give specific examples that I worked with going back, my gosh, over 20 years where there were low-code. I remember the days, and all of you who are all probably mostly Power Excel experts, when they used to sell Power Toolbar and basically plug-ins for Excel because there were so many common formulas and so many things that you did, and everybody didn't want to do an at average, trying to get database calculations built up. What happened? They actually built a plug-in for Excel. What is that? Essentially low-code, right? They wanted to click a button and be able to pull a formula or a string of code. What were macros in Excel if not a way to streamline the processing of information? What about things like websites, right? When I first actually started dealing with websites, the only way you could build a website was to go use Publisher and be able to actually save a file on the website. Well now, my 10-year-old son can go build his own website, right? He actually did. The concept of low-code is not new, right? It's not something like nobody wants to write code unless you're a coder. Like, the rest of us don't want to be dependent on a continuing lack of supply of the people that have to write the strings of really complicated codes, which, by the way, are just expanding in terms of languages. If you think about what Stephanie showed on one slide that showed all the languages in our history. When this all started, I remember Alan saying to me in 1980, he's like, "I think there's only going to be two code languages." How wrong was he, right? How many code languages are there? Whatever you're coding in now isn't going to be the code language three years from now. That problem makes it hard for the citizen developer or the person who's trying to do something. For me, the whole low-code thing is like, duh. Anyway, we've been doing it for years. It's just a matter of now we're doing it for powerful applications. We're doing it for things that can actually be built in that way, maintained in that way. That's so cool to see that actually in enterprise applications as opposed to where, oh, we only have more kind of small business applications. I think the key with that, though, is to be able to go from simple to enterprise. If you just can build simple and you have to start over in another platform, that's what we aspire to be as the entire continuum of that development from simple all the way to enterprise. Some of the best conversations I've had with clients have been around their gratitude for the simplicity, scale, governance of the low-code apps that they built. I mentioned a few of them upfront, but those have been the most fulfilling conversations is what our clients are doing with our platform for quick deployment, particularly in the instance of macroeconomic and geopolitical things like the pandemic, being able to respond to that. Who would've known that last February, and being able to build apps quickly for that angle. Okay, excellent. My next question is for Ken. Ken, this is actually a question we get asked fairly commonly. Can you talk a little bit about where your new client commitments are coming from, whether they're coming from net new customers or from existing customers expanding, and how has that mix changed pre-pandemic to today's period? Can you talk a little bit about that? Sure. This, once again, is probably maybe a comment that sounds great in one way, but we have to be careful. Before the pandemic, we typically get about 70-ish% of our bookings came from existing logos. Someone that spends at least $100,000 a year with us, that would be considered an existing logo. About 30% were new logos. We typically have a land and expand model. We win a logo. The first deal we do is rarely the biggest deal. It's typically the third deal or the fourth deal that we do that becomes bigger. That normally takes three to five years to be able to build out that relationship. It's important to get new logos to be able to have that fertile ground, as I mentioned earlier, to expand. During the pandemic, that number went above 80%, meaning that slightly more than 80% of our new business, our growth, came from existing logos. You might say, "Well, that's really promising that you can sell that much to existing clients." Our net retention rate being slightly above 115% in some quarters we're like, "Yeah, that's great." We have to make sure we have new logos as well. We can't only get 10% or 20% of our new business from new logos, because that will create a deep concentration in our existing logos, which is great. It doesn't create enough fertile ground of having kind of people that do business with Pega, but not at the same scale as the Bank of America, the JPMorgan Chase, and the Anthem, and the Verizon, and the Sprint, and all the other logos that we show you, that we actually have really great relationships over many decades. I think it's important to have a balance there. Pandemic has shifted up higher. I do believe that will settle back a little bit, probably not until 2022, though, because people really are selling face-to-face right now, and they probably won't be selling face-to-face in the same way in the back half of 2021. I do think 2022, I do think sales will start to get back to a more balance of new versus existing. I only have one thing to that, Ken. We obviously have a high concentration of our go-to-market sellers on those premier top accounts. We're also starting to find balance with our partner teams as well as our marketing coverage of those new logos. We know that in order to grow, we need the next premier and key accounts for us. We're spending, you've probably seen it in the market, we're spending more brand awareness. We just launched a brand new brand campaign, GO!, yesterday within the business. We've moved into some sports sponsorship with brand ambassadors in golf, which is our target demographic. A lot of buyers are there, we just made an exciting announcement around our sponsorship of the Ryder Cup this past Tuesday. Getting our brand out there. People need to know that they're using Pega every day, and need to understand what we can do for them, not only on the low-code side, but also on the other elements of our business as well. By the way, yeah, one of the questions earlier, just to connect the dots here. The partner power segments, what Hayden talked about, those are in many ways new logo opportunities. Some of the impact of partners coming on in the back half of the year into 2022 will give us almost coverage, tell them that we have sales coverage on those markets. This is an interesting dynamic. I've been in software a long time, but I'm not sure that I really processed this until the last five years, maybe 10 years, which is our partners are everywhere. They're at all of our clients. They have better relationships than we do with those clients. They are there almost sometimes working there as an employee, as a true employee. They know. They are respected. They are advisors to those clients. For us to not leverage that is kind of silly because they're right there. I think that that's another way to get new logos. Great. Next question is for Hayden. It's on the topic of ESG, so Environmental, Social, and Governance. Hayden, you talked today, and maybe you've talked in the past about the importance of diversity and inclusion. Can you talk a little bit more about why that's important, what your perspective is, and how you think that could benefit Pega and other companies? I think first of all, it represents what our clients are doing, what our partners are doing. If we look and act a lot more like our clients and partners, we'll align better with them and we'll have great growth opportunity. My team, when we first met, I've been to this office twice since I've been in the company. We met earlier last year and we talked quite a bit about, we did an offsite for a full day on diversity inclusiveness. We all agreed and we are building plans for growth through our diversity inclusive initiatives. Our only path to growth, not our only, but our key path to growth is to reflect what's existing in the market. We are putting a tremendous amount of focus. We're building out ERGs, employee resource groups around diversity. In fact, today we have one of our brand ambassadors, Mel Reid, who's an LPGA golfer, doing a fireside chat with our team on the importance of diversity inclusiveness. We have members self-selected. They opted in into these groups to drive change for us in a number of different categories. Employee driven, executive sponsored to improve the way we drive inclusiveness within the business. For me, it's very important because as I mentioned earlier, because that's where I came from. I came from a family that from day one, it was very much ingrained into our business. For me, it's our employees are expecting it, our clients are expecting it, and I think it's better for our business. It gives us a far better worldly view of what's happening in the market. Yeah. I would say one final or one additional point on that is an excuse that is often made in technology is that, well, there's less talent available in some of the diverse groups. That can't be an acceptable answer. We need to make sure that Pega is the kind of employer that diversity wants to come to Pega. The only way to do that is to basically make sure that those that are already here are ambassadors to actually bring in and attract and recruit other talent. I do think that we want to represent the communities that we're in, the communities that we're in are diverse, the clients that we're in are diverse, the countries. I mentioned we're in over 20 countries. We're diverse in terms of geographic. We just need to make sure that we're helping people inside of Pega from all walks of life and all different types of individuals to make sure they're comfortable and they're engaged and they feel safe and they feel supported within Pega. That's the mission. It's not something we can just say we're done. Yeah. It's constantly something we're trying to work at. There are several questions, Ken, about the long-term targets that you laid out in 2018. Can you give some color on your perspective on those? You mean the change, the evolution? Evolution. Yeah. I would summarize the long-term target view I have now versus where I had in 2017 and 2018 as we're growing faster. I do believe there's an opportunity to accelerate that. Certainly that's our goal. I think more that is Pega Cloud, significantly more that is Pega Cloud. Our margins are actually better now than what I thought they would be on the trajectory in terms of gross margin for Pega Cloud. Some of that's actually just helping because Pega Cloud is bigger. That's just the curve has just pulled in a little bit on the gross margin. I would say that our sales and marketing expense investment compared to the revenue because of this kind of mismatch as we exit 2022 and go into 2023. A lot of that Rule of 40 kind of delaying a little bit is really just a matter of the timing of the accounting. I would say all that, higher growth, more to Pega Cloud, getting operating leverage faster. The trade-off for maybe an elongated revenue transition a little bit, not like we're talking about years, but few quarters to me is a very reasonable, quite frankly, desired trade-off. I would say that's my summary of where we are. Directionally, pretty much on pace to where we said we were going to be. Which it's kind of amazing that the market has been that close. Even people, investors, many of you've said to me like, "It's kind of scary that you keep growing like about 20% every quarter in and quarter out for many years." That's not what we want to do. We naturally want to grow faster. I do think you can see the stabilization, the normalization, the predictability that's being built into the business. I have a woman on my team that does not understand that growth above 20% is already a mandate for us. We're very much aligned in your statement there, Ken. We want to be respectful of people's time. Our expectation was today to run about two hours. I think we have maybe time for one more question, Ken, and then you might want to offer a few closing comments. We did have this slide earlier, but it also comes up quite a bit. This topic is on Pega Cloud gross margin. Pega Cloud has shown consistent improved 57% gross margins during the past two quarters and is approaching the 77%-75% target. What do you think longer term? Could Pega Cloud have the leverage to expand gross margins into the 80s% or 90% range that we see for many cloud-based vendors? What's your perspective on that? I'll frame that in what I have seen in terms of other companies. When you hit $500 million - $1 billion as a SaaS company, if you can get your gross margins close to 80%, I would consider you to be best in class. With $500 million - $1 billion, we will not likely be 80% gross margin. Why is that? Because we're not multi-tenant, we're single-tenant. With single-tenant, there is a level of overhead because of the enterprise aspect, data isolation and the way the applications are not delivered to mass markets with the exact same product like many multi-tenant applications are. That said, at $500 million - $1 billion, we'll be 75%, maybe even higher than that at that scale. I think that's very respectable, significantly better than any of our peers or most of our peers that are single-tenant. The real way we get to 80%, or above, which I think Salesforce is like 83% or 84%. They're at scale. They're at $20 billion+, low 80s%. They're multi-tenant. Their system is complete multi-tenant, except ClickSoftware and some of their other app acquisitions. Can we get to 80%? Yes, if we leverage this thing called Kubernetes, which many of you have heard, which is a way of virtualizing inside of a cloud environment. That can help single-tenant. You can get a few points of gross margin just on leveraging Kubernetes because you're virtualizing and you're essentially leveraging unused capacity in the way that you virtualize servers, as many of you know what Kubernetes is. That is one angle on single tenant, but really with Project fnx and more of our microservices being leveraged multitenancy, whether the clients are in their client cloud or it's in Pega Cloud, the combination of those two is how we get to 80% and above. Is it possible? Absolutely is. Right now, though, as most of you know, I'm focused on the next year or two. Let's get above 70%. Once we're above 70%, let's get to 75%. Let's get our growth rate up. Let's get the productivity. Let's get our cash flow targets. That's what we're focused on right now. Aspirationally, can we get to 80% for multitenancy? Absolutely. All right, great. It's been just about two hours, and I think at this point we should wrap up. Maybe you and Hayden have one or two closing comments to make, and we call it a day. I'll let you go first. I'll start. I think a lot of people have said to me that I've made the market a lot different. Pega has been talking about growth and growing the business. What's different now? There is a new mindset. Some of the new talent that we brought in, the organization, the structure, the discipline, the priority, and the single point of accountability, really have limited the standard deviation and variability within the business. We have an influx of great diverse talent, as I said, geographic, employment, and gender, that's embraced as well, the talent that is really bringing new insights. Nobody that is coming in is thinking about 20% growth. Nobody. Whether you're contributing in sales operations or direct frontline, AE sales or specialist sales, everybody is thinking north of 20%. It's a new day, a new sense of accountability. Single point of contacts drive this business. I think the leadership team is as close as you can get from engineering, finance. Our people functions, we're very aligned. We get along as friends as well as professional colleagues, and we're all aligned on one thing. We're aligned on growth. I think Hayden's touching on a really important piece of what Pega's been really good over the years at being a culture that really cares about our clients, and we're committed to each other and to the company goal. I think what we've done in the last, call it two years or so, certainly in the last year, is that we've brought in people that have seen growth in other companies. That have seen best practice, best in class in other companies. I think that the merging of a passionate founder-led company. Alan's been the CEO here of a founder-led company, the longest tenured technology CEO at a public company. That doesn't happen without him and the team that he built having passionate connection to the outcomes. I think that you need that. Right now, we've actually built the muscle around what's the best way to get to that next level. I think that we have that balance, and I think that's going to be our trick. Our trick is going to be technology, the foundation, the passion, the connection to our clients, connection to the verticals, and the best practice of people that have been there and done that at the same scale of growth, and how do you really put that recipe together? I think that's going to be our trick. Listen, I appreciate everyone's time and focus. We may have went a little long and lost some of you. Hopefully there's still a lot of you out there. I really appreciate your support, appreciate your questions. We couldn't get to all of them. We tried our best. We still have a few more weeks in the open window, which we'll still be taking calls. We'll be back on the circuit hopefully in the fall as events start to come more live. We are planning on a live PegaWorld next year, scale, whenever we were able to. If so, we'll have an Investor Day live there. It will be in Las Vegas, assuming that everything works out for us with the pandemic. I wish all of you the best. I hope everyone's in good health. Enjoy the rest of your week. Thanks, everyone. Thank you.