Hi, good afternoon. Brandon Daye with Morgan Stanley, Investment Banking. We have Ken Stillwell from Pega. Before we get into this Ken in real detail, maybe quickly give us, you know, kind of your quick background and your role. 'Cause I think what's unique about you is you serve dual roles as CFO and COO. Sure. So kind of just give a little flavor there, how you spend your day job. Sure. So, I had the, you know, the benefit of before Pega being kind of involved in a number of private equity-backed companies that actually went through subscription transitions. So, Dynatrace before, before Pega. So, so my background, although I've been a CFO many times, I have a little bit more of a, of a lean, not just on the business model, but also on kind of the operation of a, of a SaaS business. So when I started at Pega, we were... You know, we did have some term licenses. We had really very little SaaS business, and we were a, a business that was predominantly perpetual license with a little bit of term and a really tiny amount of SaaS. I mean, when I, when I started, I think the SaaS business was like, it was maybe like $15 million or $20 million, in revenue. And so we made a big shift when I came on, or maybe within that year that I came on, to really stop, you know, selling perpetual. Of course, that, you know, that was 2016, so we were, you know, we were a little bit behind on that model. But we also, as that happened, we saw clients really pushing for SaaS. And so we went. We made a quick pivot to say, "Let's not just be a subscription business. Let's actually move as fast as our clients are willing to be a SaaS business." That then carried into us building out, you know, a kind of world-class cloud operations team. We brought in a CISO. As that all happened, it was kind of natural for those areas to report to me. To collate, yeah. And then that's kind of how that, how my- Got it. ... title became CFO and COO. Okay. Okay, perfect. So obviously, you know, your background then lends itself nicely to that, and hopefully, you know, probably no one is as well equipped to usher out that leadership. So if we kind of focus this back on Pega for a second, now that, you know, we now fully understand you, your background and how you're kind of going to kind of lead the organization. You know, I think Pega, if folks who maybe aren't as familiar with the new story of Pega, they probably still think of it as a workflow software that's kind of doing blocking and tackling. Maybe just give a more current view of, you know, everything that Pega is doing more specifically, and kind of how they're going and, you know, solving some tough problems for clients. Sure. I mean, so just a, you know, maybe a really fast kind of evolution of Pega. We started as really building the platform as an alternative to writing code. That was kind of where we started. That was, t hat's our heritage. Really just a way to, you know, if you wanted to customize something, if you wanted to build something, don't write, don't use C++, or at the time, whatever language we were- Right. ... there, right? You know, and probably C. And move more towards something that created a level of structure. That then evolved into some really common use cases that were, that we were repeating. We kind of had what we called frameworks at the time, which were standard ways that you would deploy on the platform around certain use cases. That then carried in to where we, through an acquisition or two, but also just through kind of evolution. W e started to sell against companies like Salesforce. And it happened pretty fast. I mean, we went from being the kind of company that, like, wouldn't understand why we were in a campaign against Salesforce, to then all of a sudden seeing them, like, all the time in our campaigns. And so that then brought us into really being more of a CRM. CRM being, not necessarily us being a CRM company, but us selling CRM use cases. If you look at what Pega is. Pega really has, the majority of the business of Pega is around, you know, 20-30 different use cases that tie into marketing automation, customer, customer service, sales automation, and a number of things that are related to customer interaction, that may not be defined by one of those three components. Things like managing disputes and exceptions. Or, in financial services, kind of, loan origination. Or, in insurance, underwriting policies and renewal policies. Or, healthcare, bringing on new participants into a healthcare plan, or enrolling, a new, i n a new plan year. So those are all things that I would say are really heavily B2 C business models, but might not be the traditional way you think about CRM. Okay, great. Yeah. For some of those use cases that are customer focused, you mentioned financial services and, you know, a vast group of them there. When they're at the point of a buying decision and they're thinking about solutions, you know, how is it that, you know, Pega ultimately becomes the solution that's best for them for those needs? Considering there's a plethora of tools and services that people could adopt or could deploy to help solve some of the same needs, but, you know, why is it specifically for Pega in those unique industries there? So, so that's a great question. If you think of the, I'll, I'll maybe frame this as there's a dimension of solutions. There's on one extreme, a COTS solution that really can't be configured at all. A nd in enterprise, most use cases, they're not looking to buy that solution. Then there's the other extreme, which is, "I'm gonna, I'm gonna roll my own. I'm gonna just write custom applications." And unfortunately, in the enterprise space, there are still some companies that choose to do that. I would say, you know, and your peers. I would say not as prevalent as it was, say, 10, 20 years ago, but there are still decisions. You have a lot of engineers, you have a lot of technical talent people like to ideate. The two that kind of border those, one would be maybe the way that, like, a company like Salesforce might approach it, which is to have something that's largely configured. B ut then you're gonna try to maybe customize a little bit into a unique workflow. And that, a nd a client might pick that approach. Where we sit is a little bit more around the flexibility of the platform that can be standardized- Right. ... to not be a custom homegrown looking acting solution that can modernize. That can, you know, that we, we like to call it future-proof, which is when you build an application, you don't know what requirements are gonna happen five years from now. A nd you don't wanna have to rebuild the application. You wanna be able to configure, change the configuration. So when you get into that, we're not gonna build custom, and we're also not buying a COTS solution. There's a number of vendors that sit in that, you know, in that, across that paradigm. A nd we tend to be lean on the side of it's a, it's an enterprise-grade application that needs to have a level of supportability, repeatability, consistency, but yet also, we need to be able to make it our own. Right. We need to be able to include our own intellectual property of process inside that. So anything that's more commoditized, the more commoditized it is, the less likely we will fit there. Right. The more custom it is, we could actually be competing against a homegrown solution. B ut more and more it tends to fit more in the, you know, give me something that's 70% of the way there and let me configure the last mile. Sure. Great, so you don't have to deploy a bunch of implementation or service costs to do something, but you really have a platform that was designed with extensibility in mind. A nd therefore giving the customers the ability to plug in those workflow-specific items that are unique to them, to really deliver the 100% solution. And allow also a seamless integration, an orchestration- Yeah. ... of sorts with all the different best-in-breed applications. Yeah. COTS applications- Sure. ... that you might wanna use to do certain steps in that process. Okay, great. And if we shift to go-to-market. I think on the, you know, recent earnings calls, there's been a lot of focus on go-to-market, and I know you guys have really made efforts in terms of driving more productivity there. But if we think about the opportunity, as you see it regarding, you know, your current client base- Yep. ... and landing versus expanding, you know, how would you characterize, you know, the relationship there and kinda what is the opportunity, as you see it currently today? So for our clients do not always fit in the same profile of what, how they view Pega. Right? Some of our clients, unfortunately, view Pega as a little bit more of, you know, BPM workflow from- Right. ... and we sometimes, you know, we have to battle through that a little bit, right? So there are some clients where the selling process is they more might put us more in the process bucket. We have the majority of our clients understand that heritage, but have used us for use cases that are not just work, you know, workflow, kinda back office workflow process. And in that situation, the selling motion is much more fluid because you've got different buyers, different. You know, if you look at a company like Morgan Stanley, you've got, you know, maybe six or seven different business units. Pega might be client. You might be a client of ours in three of those. But there's a lot of opportunity to use the relationship you have with one division, say Retail, to be able to go into Wealth Management- Yeah. ... for example, or Investment Banking. In some clients, they only know the new Pega. They only know Pega in the last 10 years. So they view us as a CRM provider, really doing something like one-to-one customer engagement or digitizing the contact center, et cetera. And in those scenarios, the selling is, I mean, I would say, much more. It's accelerated in terms of that cross and upsell motion. So what we feel like, if you think about the clients that may view us as what Pega used to be- The legacy. ... our big- Right. ... movement there is moving them to Pega Cloud or getting them in a use case on Pega Cloud. Got it. We've got about 2/3 of our clients that have historically used us for workflow that actually have a Pega Cloud environment. Once they see Pega Cloud, that actually may not lead to them moving their existing legacy applications, but what it does do is it really opens up this view of like, "Yes, Pega did X, but they also do Y, and we're gonna use them for Z. Right. And so that's where Pega Cloud has been probably the most important, is showing that modern application- Yeah. ... that we have. Which, by the way, is the only application that we go to market with right now, but if you bought Pega 30 years ago, you might have this belief that it was what it used to be. Got it. And what would you say has been, you know, the biggest challenge? I, I think a lot of times, if you have someone who's viewing you as this legacy product from 10+ years ago- Yep. ... and you do have the capabilities that can solve some of their challenges today, but their mindset and their psyche has already said otherwise. A nd perhaps they have a view on their roadmap that is, you know, X, Y, or Z. How can you kind of insert yourself there to kinda really, really turn that dial? That's where the selling model is important. Good. The reason why we actually shifted to a deep target org model, where all of our selling resources were aligned behind our account management team, is for exactly that reason. Got it. The best way, the best success we've had is having clients engage with us in a deep relationship, you know, in an ideation, come to our enterprise briefing center, us taking teams to the client, workshopping, and that has been, that is the most important aspect for us in selling to the enterprise. What we were doing before we made this change was we actually had selling to the enterprise, but we also had a sort of territory selling model. Okay. Whereas it's much more of a lead response. It's much more of a, you know, you send out 10 quotes, you hope, you know, you hope you get into three. It's not really the relationship aspect. If you think about the way that Morgan Stanley Investment Banking sells, it's deep relationship, right? Yeah. Somebody's not gonna call you- Yeah, of course. ... and ask you to do, right? You, you might spend five years working with a client before you actually get an opportunity. So your model or a Bain Consulting or a BCG has a very similar model to us. You're really building a relationship. You're an expert in a vertical. Y ou're an expert around a use case, and you leverage that to be able to actually help the client think about the architecture and, and why Pega is better. Okay. And now that you mentioned architecture. I think it's a good segue to Gen AI, which has been a big theme of this conference. Yeah. I think one of your differentiating aspects that you have been, kind of going to market with and touting is that your unique Layer Cake architecture presents a unique opportunity for you all to capture this opportunity, maybe. Yep. ... kind of better than others. So how would you kind of describe that for folks that may not be familiar with it, and then how that's allowing you to kind of go out and prosecute against this use case? So let me first start by saying there are two dimensions of AI. We view it. There's more than two, but there's two that we think of. One is more the statistical AI. It's really around rules and probabilities and data, and it really looks at that, and it makes predictions. That's what we acquired when we bought Chordiant in 2010. It's been a fundamental part of how we leverage workflow. You've heard of us using Next Best Action, Next Best Offer. That's fundamentally what we call Customer Decision Hub, which is the statistical AI brain that sits inside the platform of Pega. Then there's Gen AI. Gen AI is not that great with data, right? It's much better with words, right? And statistical is not really relevant with words. And so you have these two different use cases, which can come together and help support clients. So we've always had the statistical that's been in our heritage. A nd now you flip over to, well, how are you gonna leverage this concept of Gen AI? And how does that kind of... how does that evolve into something that is really, you know, quite usable for our clients now and in the future? So for us, Gen AI becomes relevant in two ways. The first way is we have these, you know, these kind of Gen AI accelerator features that are licensable features. They're sellable. They're things like automating a call wrap-up in a call center, right? Things like there's ones that we call Buddies, which are essentially a chatbot that actually can tie to an LLM to be able to answer questions or provide insight, right? We have other use cases that are around connecting kind of discussions and themes and notes from a sales automation to create communication to the clients, follow-up emails, proposals, PowerPoint presentations that can actually pull together content and produce. Those are all very real, pragmatic use cases around AI. We have another. We think we're different, and we'll kind of tie into the—I know part of you're gonna ask me about Blueprint. Of course, that's what's next. Yeah. Yeah. I'll tie in a little bit to that Layer Cake and why our layering. Why our dimensionality aspect is so perfectly aligned with Gen AI and it fits into Blueprint a little bit. The way that Pega is architected is Pega has what we call the Layer Cake, which what it is, is it creates layers. The platform has layers of dimensionality that can have reuse across different use cases. I'll put that in more clear terms. If you're gonna build out, say, a sales automation application, you can build it out for North America. When you decide to apply that to Europe, all you've got to do is change the rules that relate to Europe, and the rest of the application stays intact. You can then have an application that can combine both regions, separate them. Now you add Asia. Now you decide you don't wanna just do sales automation, but you wanna layer in, say, entitlements. So the entitlements might fit into something that books, so now you've got another layer. Then you might have a layer that layers in the different products that you might sell. So what you're doing is you're creating an architecture, you're not creating it because it's native to Pega, that allows you to have maybe 50 different use cases all in the same application, all being able to leverage the data, but yet each application is in and of itself a separate application. So now you think about Gen AI. What's one of the biggest problems with Gen AI? It's being able to pull all of the information together across disparate systems to create the LLMs, to be able to understand the difference. What, what many clients are doing is they're creating multiple LLMs. Yeah. Like, "I want an LLM over here, but I don't want this information to be in this." In Pega, you can separate all of the LLMs through the Layer Cake structure of the... And it's so that dimensionality, which was not something we thought about Gen AI when we built this, you know, 40 years ago, but it has become highly valuable because it allows you to, to really leverage all the data, all the process, all the activities, all the events, but yet with the discrete understanding of where those events fit in the landscape of all your applications. Okay. And if we think about the use cases that people are deploying against Gen AI today with this Layer Cake approach and with Blueprint, what do you think that kind of unlocks for them? Just, it sounds like about unlimited permutations. Blueprint, yeah, Blueprint is a pretty targeted use case. It might become more than that in the future, but right now, it is a pretty targeted use case to address a really big problem for enterprise IT, which is, a client might have a list of 30 different problems they're trying to solve. And it's really difficult for them, quite frankly, to pick which one is the most important, because it's not just about which one is the biggest problem, it's also about the one that they feel like they can get the most- Yeah. ... value and be realistic about the deployment. So a client starts with 30 projects, and the way the process works without Blueprint is to say, "All right, let's pick a few. Let's get people in a room. Let's start ideating. Let's whiteboard. Let's figure out what applications we have now. What are we looking for? What are the security?" 'Cause you start architecting. Sure. This can take months; it can take years, right? And what happens is you never touch those 30 problems because you don't have enough time, you don't have enough bandwidth to be able to address assessing all the different, you know, aspects of the, of the problems. What Blueprint allows you to do is you log into a browser, I mean, it's essentially, it's our website, it's our browser. Sure. But you log into a browser, and as simple as just typing two or three sentences into a text box, you can say, "I'm a telecommunications company. I'd like to digitize my contact center. Give me a recommendation on how that should look." It will. In that scenario, it will go and look at all of the configurations that Pega has ever seen. It'll go to all the best practices, it'll go out to the internet, anything that that company wants to provide in terms of access, and within, you know, somewhere between 10 and 15 seconds, it will pop up the entire architectural diagram of how that needs to be built. It'll show you the steps, the stages, the integrations, what personas, what data feeds you need, what questions you need to ask. You can... If you don't like that, if you wanna go in and say, "No, that's not really the step," you can click Edit, and it'll give you maybe two paragraphs defining what that step is. You can delete all that and type your own, and it'll come up with a new step just for that. Wow! So at the end of that, you get a document. If this is, this is what it does now, and then I'll tell you what it's gonna do in about 30 days. Right now, it gives you a PDF document that actually shows you the architecture diagram for that application you wanted to build. If you ask our clients, what I just said can take as little as five minutes. Maybe it's an hour if you're really engaged- Sure. ... with the client and editing things. But within an hour, you've got an entire document that shows you the architecture of how you're gonna actually design the application. That would easily take 90 days, I mean, if you're lucky, plus flying people in, et cetera. And I'm being generous. You're being very generous. Right. So now, what's gonna happen in 30 days, maybe it's 30-60 days. What's gonna happen is, there's a button right next to Print PDF that says Implement. You click that button, and it goes into a Pega application and builds the application. So now it's version one, so it's not something... You're not, maybe not gonna put that into production, but you're gonna get an application that matches exactly the design document that you have, with all the controls, all the standards, no deviation, future-proofed. And it will also then give you, "Here's what needs to be done. Here's my estimate of the time that needs to be done. Here's the level of the implementation person that needs to be able to do it." It might even give you the estimate of the cost based on offshoring versus onshoring. This is, I mean, it is, it is revolutionary what it could do for us, because that's the biggest hurdle for us to sell with our clients. It's the time it takes to say, "Let's get a project, and let's figure out what, what, what it looks like to get it started," 'cause the clients can't do all 30. Sure. Even when they do one or two, there's a lot of starts and stops and, you know- Right. ... and you, you don't really necessarily land with a booking. So this allows us to build pipe for existing clients. Quite, quite frankly, we're giving it to all of them. We've already given it to all of our SIs, and we've said, "Use this as your selling tool and your design tool with all the clients." We're gonna give it to all of our clients. We're gonna tell them, "Run all your projects through it." All of our sales teams are gonna use it. It will... And nobody in the industry is thinking about AI like that. Sure. They're thinking about AI like the Buddies, like the call wrap-ups, and we'll do those things as well. But this is gonna transform how we design a Pega application. And then the last thing I would say is, which is the most interesting to me personally, is if you can sit down with a new logo and you can start with Blueprint, and you can get through a one-hour meeting with that new logo and ideate with a design document at the end of that. T he chance of you actually turning that into pipe and turning that in to an actual deal is infinitely higher than that 1-hour meeting where you try to explain to them how a Pega system might work- Yeah, of course. ... and what we do. Yeah, you trying to explain... and then going back to stakeholders internally, and then trying to then get the buy-in without having any of the architectural documents to underpin. Right. Understanding the sequence, the flows, the personas as you alluded to, the data models, how they're interacting. Those things are complex, and obviously, something probably gets lost in translation from the initial conversation to front. So great to hear about that. The logistics of getting people in a room. Yeah, of course. Right? Of course. Right. Even if it's virtual. I mean, this probably is basically gonna take away my undergrad experience. So you've obviated the need of everything I've done there, so thank you for, you know, just. So just kind of shifting gears here and talking about, you know, some of the accolades. More recently, you were named a leader in Forrester Wave for Real-Time Interaction Management. And I think just today, also, Forrester named you a leader in their Customer Service Solutions. So kind of maybe the question here is, you know, what has allowed you to kind of to win and really the leading question is to continue winning. I guess, sounds like, I hear all the innovation that you're doing, but kind of what's maybe underpinning all this innovation? So the one today we're really excited about, the customer service one with Forrester. B ecause not only are we a leader, we are actually the leader. We are the highest mark, you know, and right behind us is Salesforce, Microsoft, and ServiceNow, right? Those are the only four in the leader box- Yeah. ... and we're actually higher than all three of them. So it's pretty exciting. Now, naturally, we need to turn that into accelerated growth. We need to execute on that opportunity. But, I think what Forrester and Gartner and, quite frankly, our clients see is really the power of doing it the Pega way, which is allowing yourself to orchestrate and manage all of this, these enterprise-grade applications, leveraging Pega. B ut yet not alienating all the other applications that you want to use, even if Pega's not the system of record. Even if you, the system of record is the ERP system or your sales automation system or your licensing system, having an ability to create the orchestration with that. And then you think about customer service. The customer service use case is really a customer service person that's actually accessing all different- Yeah. ... systems. You know, if you think about a bank or an insurance company through acquisitions, they have all different types of operating systems. I mean, you know, I interned at a bank, you know, when I was in college. A nd I can remember when somebody would call in, you'd have to look at the city, and you'd say, "Oh, they're from Ohio. That was the... That was this acquisition." And you'd have to go in and, like, do a search to get into a different application to search for that person. Like, that still happens today. Yeah. So just that, that orchestration. And then when you get to the screen, using our Next Best Action, Next Best Offer, telling the you know, anticipating why is the person there- Yeah. ... what do they need to say? And that's where it's really interesting with customer service with Gen AI, which actually, Forrester did not actually even factor in our Gen AI solutions into that, which is the ability for us to really make that kind of a headless transaction, so to speak, right? Customer comes in, they're interacting with a bot, leveraging Voice AI to the actual system. And the system is using all the information to communicate back and forth, "I need to add a person on my cell plan. I need to change my address. I want to dispute a charge. I have a late payment. I want to refinance my mortgage," whatever those things are. It's, you know, it's, customer service is, like, the perfect disparate use case- Yeah. ... if you think about it, 'cause it's connecting, and when you interact, you're typically connecting to multiple things. Yeah. So we kind of hitting on a lot of concepts here around the capabilities and kind of what you're deploying, what you're prospecting against, and honestly, there seems to be a lot of opportunities to go and then kind of drive your ACV growth significantly going forward. But how do you all think about the total size of this market? 'Cause you're hitting on a bunch of different markets, and I'm just kind of curious if you could just kind of distill that down or codify how you see it, and kind of how that can enable you to continue to grow your ACV numbers. So we, if you add up all the markets that we're in, naturally, not all of those organizations are addressable. B ut if you add them all up, you're probably $150 billion, right, of spend in the coming couple of years. Now, admittedly, we cannot address all of those. We can't address all the organizations, all the use cases. But because we tend to sit, not tend to, we sit at the peak of the pyramid, we are in the largest organizations. If you pick a vertical, like banking is a good one, and you look at the amount of IT spend in the top 10 banks, it's bigger than the rest of the industry, right? By a long shot, right? If you just take the top five or six banks, it's probably bigger than the industry. So when you think about it that way, most of the spend sits in those large organizations. The verticals that we're in tend to have that same dynamic. They tend to have the concentration towards maybe 50 organizations, maybe 100. So we think of that $150 billion, if you just cut that in half, which is, I think, probably conservative, you're talking about approaching a $100 billion market, and we've got a $1.5 billion. Okay. So we think that we are really just scratching the surface. Even with our existing logos, the ones that we are very concentrated with. A nd I'm talking about companies that might use us for, you know, 100 different use cases, I don't think we're 25% concentrated with any of them. So I think there's a tremendous NRR opportunity with our existing orgs, and quite frankly, that's where a lot of spend is. Okay. And then kind of touch base on that, on that last comment about spend and NRR opportunity. How are you all seeing customers right now in their IT spends and their budgets, right? Obviously, where, from where we were last year to where we are now, I think a lot of people feel a lot better about it. I think you can probably start to see some of this translate to, you know, results given you had a great quarter. But I think it's kind of mixed across the board for some organizations, as you've probably seen some of the other earnings- Yeah. ... across enterprise software this quarter. So maybe for you all specifically in your customer base, what are you, what are you seeing? So I'll start by saying growth rates in enterprise spending have definitely come down. The growth in spending has come down over the last three or four years, right? I mean, some of that was COVID and some of the odd spending that was happening that might have been episodic, but spending has definitely come down. You know, if you just look at software in general as a space that probably was growing, you know, 18%-20%, it's probably growing more like 11% or 12%. So our growth rate has kind of trended pretty consistent with just overall tech spending. That said, in the last six months or so, you know, our clients are pretty durable on spend. It's been a pleasant surprise, quite frankly, 'cause I didn't really-- You know, when we hit Q2 and AI started distracting everyone, and then you hear about inflation, you know, being longer, you know, higher for longer, and just, you know, quite frankly, you know, regulation is not becoming less, you know, in not just the U.S., but in Europe. So these are all like, you know, they're all innovation headwinds, right? They're all risks that we have. But when you got to the late part of the summer and into Q4 and into Q1, I mean, our clients have digital transformation initiatives, and they're nowhere near where they need to be. Right. And the great thing about that is, there is no hiding of that. It's not like clients are trying to say that they're there, but they, you know, they don't want to admit it, but they're actually saying like, "Listen, we have big problems, and we're... we need to-" And by the way, the regulatory environments just make those problems bigger, right? KYC, data privacy, data residency. I mean, there's just, you know, the, you know, I'm sure that, many of you have read some of the press about just even, like, sanctioned, you know, account holders for banks and trying to, like, just how complicated that process is to figure out. Like, you know, are you letting, you're letting the, you know, the wife of a, you know, oligarch. Like, it's just, it's the world we live in. So I do think that the modernization aspect is a big push. Banking is just one. I mean, if you could go across all the verticals- Yeah. ... and you have the same issue. If we, at the onset, you kind of led into your dual roles and how some of your background was additive to the transition that you all started a couple of years ago- Yep. ... from just thinking about SaaS, but really having a true mindset and effort built around that with all the efficiencies. So you've focused investors on ACV as a kind of key metric as you look through this, but maybe just give us a quick update on where do you see the transition currently? Is it kind of complete or not? And then I think the follow-up question there becomes, you know, between Pega Cloud and Client Cloud. You said you're leading with Pega Cloud and kind of new initiatives, but kind of what's still kind of mixed with Client Cloud. A nd how are customers thinking about their deployments, and obviously, with the benefits of a cloud solution, that it's just always updated, it's there- Yep. ... it's easy to use, et cetera. Just some of the, some of the mindset or, that's kind of happening there with the customers. Sure. So the transition, we refer to the transition kind of in three phases, right? Phase one was the shift away from selling perpetual licenses into subscription slash SaaS license. That's done. The next transition was really this almost a reporting transition, right? Of moving away from revenue up front and billings up front to it being more kind of, you know, annually kind of recurring and consistent. We're done with that. I would just caveat by saying because some of our licenses are term licenses, you do have some weirdness between the revenue side, but the billings are definitely streamlined. They're recurring. It's been that way for a couple of years. The third phase was really where you really turn that into margin expansion, and I think you've seen that start in 2023 and certainly, you know, make a material move higher in 2024. So the transition is behind us. Okay. I would frame it that way. Now, in terms of the, the future of everybody being on Pega Cloud, I'll say it that way, right? Is the dream of, right, why wouldn't you want everybody on Pega Cloud? Our clients, if you look at new workloads, new applications, they're almost exclusively Pega Cloud. If you look at existing clients with Pega, they're moving to Pega Cloud for new applications and existing ones. But the, but the pace of that move really has to be on their terms. Of course. Because there's such operational dependency. If Morgan Stanley is using Pega for a really critical workflow, and it happens to be managed on their own for... we can't say to you, "Well, we want you to move now." We have to say to you, "What's your plan for how we can help you move?" No client is saying, to my knowledge no client is saying, "I don't want anything to do with Pega Cloud. It's more of a sequencing of when they're ready. And so, that's different than what we said two or three years ago, because two or three years ago, we were saying, "Cloud choice, buy whatever you want. Clients really want to buy cloud. They don't want to manage it. They want us to do the updates. They want us to manage it, security, elasticity, and, and it's been a tremendous journey. I mean, we're- Pega Cloud is now, you know, about 50% of our ACV, and, you know, that's up from, you know... I just remember when I, when I started, it was, you know, our ACV was $350 million, and Pega Cloud was like $20 million. You know, like, so it's a, it's a, it's a pretty big- That's good. Yeah. Sure. Yeah. I mean, maybe kind of building on that, you recently announced earnings, which were, which were great, right? I think 11% ACV growth. Pega Cloud was up 21% year-over-year. I think for the guide $1.5 billion of revenue. B ut more notably $350 million in, in free cash flow, right? That's, that's a number I don't think you've ever kind of come close to. B ut the 75% year-over-year increase, I believe, is what the math translates to. You know, give us some idea of, you know, how that's gonna come to fruition. Probably some, some margin efficiencies from kind of maturing- Yep. ... some of the platforms, but, you know, it's the improvement and the pace in which the improvement has occurred is certainly impressive. So just kind of help give some flavor there. So, in 2023, we did $200 million of free cash flow. B ut admittedly, it was probably more like $260 million-$265 million because we had one-time items in there. Okay. So if you start with a kind of a run rate of $260 million-$265 million, and you say, how do you get from there to $350 million? Well, I'm gonna be really kind of high level and say probably half of that comes from a restructuring that we did at the beginning of Q4 that has not fully annualized into the numbers, and will for 2024. And the other half is just the margin on ACV growth. Okay. So the incremental ACV that we've added and the margin on that. And so, that $350 million, which is—which we are, by the way, very proud of and very excited, because up until last year, we never had—I mean, to my knowledge, I don't think we had free cash flow more than $100 million in any year. No. Maybe had one year where we were close, right? That's a big shift for us. When you think about $350 million, it's really actually closer to $400 million. B ecause if you add back one-time item and direct federal taxes, if you look at EBITDA minus CapEx, i t's kind of more like $400 million. So, you know, that's, that's... The good thing of, you know, the great thing about that is, maybe a slightly humorous but maybe a little obvious statement, which is, you know, once you're 5'10", you're 5'10". You know, like, you're not- you're typically going higher, not lower, at least at our age- Yeah. ... or maybe at your age. But, like, so I think that that standpoint is, we know that the cash flow can only get better. Like, we're confident in that. Yeah. Because we won't allow ourselves to revert. We have a question. You had a medium-term target of, I think, 13%-14% in ACV growth. Yep. This year you were below that. Yep. And the guidance is also below that, so why the delta? And what is implied in terms of net expansion rate and churn in that 13%-14% target? Thank you. So, I'll use the 11%. It's about 10% of net retention rate, and about 1% from new logos. New logos, typically, even if we had a lot of new logos, it wouldn't contribute a lot of ACV in the first year. B ecause you typically don't sell bigger deals the first time. We had, when we had went out, we had kind of had a model of 13%-14%, and the difference of that to getting to Rule of 40 being free cash flow. The reality is, we've just seen... You know, we've been a little bit more, I would say, cautious with new logo expansion, because we wanted to make sure our sales model was anchored in, and really make sure that when we picked new logos, we didn't have a, a big risk of a lot of inefficiency. So we've leaned a little bit more on the side of trying to make sure that we got our free cash flow margins up closer to 30% before we d- we accelerated some investment in new logos. We, we, we aren't- we don't believe 11% is something that we should be proud of, and quite frankly, we think we should be growing faster. But more important than that right now was getting that free cash flow number up to a number that we could be-- that we felt was respectable. And so then I think then we can calibrate some of the investment on new logos, 'cause I do think new logos are gonna be an important part of our growth strategy. We just have to be smart about it. We can't fall into the trap that we did before. Yeah, we can do one more quick one. Okay. I have a question on balance sheet. So you have $500 million convertibles outstanding, due in less than 12 months. Yeah. O bviously, you don't have that much cash on balance sheet. Like, is the plan to issue new converts to retire the old converts? And that's one. And second, and can you talk about the $2 billion lawsuit with Appian? Like, what's the milestone from here, like, to the finish line? Thank you. Sure. On the balance sheet, we have just over... I believe we have just over $400 million in cash at the end of the year. I mean, with a reasonable cash flow in Q1 and Q2, we'll have enough cash to pay off the convert long before it comes due. So as of right now, our game plan would be to, you know, to-- that the convert would not be necess- it wouldn't be a needed part of our w- of our capital strategy. That doesn't mean we wouldn't consider another convert in the future, but our main thing was to give ourselves options and flexibility. So, and then on the Appian lawsuit, the... we had our appeal in November, on November 15th, and we're waiting on the appeal opinion right now. Unfortunately, the court's timing is the court's timing. So, I think it's reasonable to believe that you could see it in Q2 of this year. But once again, it's really, we don't really have any control over that. So we're anxious to see it, but we don't know when it's gonna be. Okay. Do you lose your- I think we have to see what the appellate court says. I can't... I'm not. I don't wanna be speculating on all the different scenarios. All right. So Ken, I think we're out of time here. B ut, maybe give you a second to wrap on- Sure. ...... PegaWorld coming up June. Thank you very much. Yep, everyone is invited to PegaWorld. It is June 9th to June 11th. It's in Las Vegas. It's at the MGM. You can register through the Pega website. You can also reach out to Peter Welburn at Pega, who can actually help you get a ticket to it. We will have an Investor Day on Monday and at noon, and we welcome investors and analysts. The reason why I think you might wanna consider coming to PegaWorld is because it's the best opportunity to hear directly from our clients and partners what we do to help our clients. And we don't restrict investors from going anywhere in the show. You can talk to anybody you want. And we've had really good, we've got, you know, we probably had 50 investors there last year, so. Great. Welcome. Everyone's welcome. Thank you, Ken. Appreciate the time. Thank you, Brendan.