Earnings release
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EXHIBIT 99.1 Pega Cloud ACV Grows 20% in Q3 2026 • Cloud adoption continues to expand as Pega Cloud reaches 59% of total ACV in Q3 • Total ACV grows 6% as reported and 7% in constant currency year over year • Company takes actions to accelerate growth and capitalize on AI market opportunity WALTHAM, Mass. — October 20, 2026 — Pegasystems Inc. (NASDAQ: PEGA), the enterprise AI software company for mission-critical work, released its financial results for the third quarter of 2026. "The AI market is still sorting itself out, but we’re confident in our long-term winning strategy to harness models like Claude, OpenAI GPT, and Gemini to help enterprises achieve predictable business outcomes at predictable costs while maintaining the governance, security, and control required for mission-critical operations,” said Alan Trefler, founder and CEO, Pega. "Our edge is decades of expertise in workflow automation and decisioning, enabling enterprises to scale AI with confidence, control, and economic efficiency.” "While our ACV growth through the first three quarters of 2026 did not reflect the opportunity we see in the market, largely due to go-to-market execution challenges, our Q3 ACV add was the strongest of the year and reinforces our confidence in the demand for our solutions,” said Ken Stillwell, COO and CFO, Pega. “We are taking decisive actions to improve execution, accelerate growth, and keep us on track to deliver $700M or more of free cash flow in 2028.” 1
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EXHIBIT 99.1 (continued) Financial and performance metrics Purchasing behaviors continue to evolve as clients subject large technology investments to greater scrutiny as AI disrupts the industry. As a result, our ACV growth rate significantly slowed during the nine months ended September 30, 2026, as compared to the same period last year. These factors may continue to adversely affect the ACV growth rate for the rest of the year. Reconciliation of ACV and Constant Currency ACV (in millions, except percentages) September 30, 2025 September 30, 2026 1-Year Change ACV $ 1,557 $ 1,653 6 % Impact of changes in foreign exchange rates — 5 Constant currency ACV $ 1,557 $ 1,658 7 % Note: Constant currency ACV is calculated by applying the September 30, 2025 foreign exchange rates to current period shown. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures. (1) (1) 2
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EXHIBIT 99.1 (continued) Cash Flow As a result of the factors discussed under ACV above, our cash flow generation may continue to be adversely affected for the rest of the year. (Dollars in thousands,except per share amounts) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2026 2025 Change 2026 2025 Change Total revenue $ 393,359 $ 381,350 3 % $ 1,244,048 $ 1,241,495 — % Net income - GAAP $ 14,092 $ 43,364 (68)% $ 60,190 $ 158,863 (62)% Net income - non-GAAP $ 59,750 $ 55,164 8 % $ 202,351 $ 245,857 (18)% Diluted earnings per share - GAAP $ 0.08 $ 0.24 (67)% $ 0.35 $ 0.86 (59)% Diluted earnings per share - non-GAAP $ 0.35 $ 0.30 17 % $ 1.17 $ 1.34 (13)%
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(Dollars inthousands) Three Months EndedSeptember 30, Change Nine Months EndedSeptember 30, Change2026 2025 2026 2025 Pega Cloud $218,925 56 % $184,549 48 % $ 34,376 19 % $ 637,890 51 % $ 502,415 40 % $135,475 27 % Maintenance 72,653 18 % 79,649 21 % (6,996) (9)% 222,498 18 % 235,288 19 % (12,790) (5)% Subscriptionservices 291,578 74 % 264,198 69 % 27,380 10 % 860,388 69 % 737,703 59 % 122,685 17 % Subscriptionlicense 55,578 14 % 60,758 16 % (5,180) (9)% 232,458 19 % 329,153 27 % (96,695) (29)% Subscription 347,156 88 % 324,956 85 % 22,200 7 % 1,092,846 88 % 1,066,856 86 % 25,990 2 % Consulting 46,203 12 % 56,394 15 % (10,191) (18)% 151,202 12 % 174,639 14 % (23,437) (13)% Total revenue $393,359 100 % $381,350 100 % $ 12,009 3 % $1,244,048 100 % $ 1,241,495 100 % $ 2,553 — % Quarterly conference call A conference call and audio-only webcast will be conducted at 8:00 a.m. EDT on Wednesday, October 21, 2026. Members of the public and investors are invited to join the call and participate in the question and answer session by dialing 1 (833) 461-5787 (domestic) or 1 (626) 884-3620 (international) and using Conference ID 591038520, or via https://events.q4inc.com/attendee/591038520 by logging onto www.pega.com at least five minutes prior to the event's broadcast and clicking on the webcast icon in the Investors section. 3
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Discussion of non-GAAP financial measures Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. Management uses these measures to assess the performance of the company's operations and establish operational goals and incentives. They are not a substitute for financial measures prepared under U.S. GAAP. Refer to the schedules at the end of this release for additional information, including a reconciliation of GAAP and non-GAAP measures. Forward-looking statements Certain statements in this press release may be "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, including statements about the growth and development of our business and market. Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, positions, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements. These statements represent our views only as of the date the statement was made and are based on current expectations and assumptions. Forward-looking statements deal with future events and are subject to risks and uncertainties that are difficult to predict, including, but not limited to: • our future financial performance and business plans; • the adequacy of our liquidity and capital resources; • the successful execution of investments in artificial intelligence; • the timing of revenue recognition; • variation in demand for our products and services; • reliance on key personnel; • potential legal and financial liabilities, as well as damage to our reputation, due to cyber-attacks; • security breaches and security flaws; • our ability to protect our intellectual property rights, costs associated with defending such rights, intellectual property rights claims, and other related claims by third parties against us, including related costs, damages, and other relief that may be granted against us; • our ongoing litigation with Appian Corp. and associated legal proceedings; • our client retention rate; and • management of our growth. These risks and others that may cause actual results to differ materially from those expressed in such forward- looking statements are described further in Part I of our Annual Report on Form 10-K for the year ended December 31, 2025, and other filings we make with the SEC. Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included in such statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements, whether as the result of new information, future events, or otherwise. Any forward-looking statements in this press release represent our views as of October 20, 2026. 4
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About Pegasystems Pega delivers the platform to reimagine, run, and evolve the processes and decisions an enterprise can't afford to get wrong. We combine AI with proven architecture to keep mission-critical operations governed, scalable, and continuously adaptable. Since 1983, the world's largest organizations have trusted Pega to turn transformation ambition into durable results. Learn more at www.pega.com. Press contact: Ilena Ryan Director of PR ilena.ryan@pega.com 617-866-6722 Investor contact: Peter Welburn VP, Corporate Development & Investor Relations PegaInvestorRelations@pega.com 617-498-8968 All trademarks are the property of their respective owners. 5
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PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2026 2025 2026 2025 Revenue Subscription services $ 291,578 $ 264,198 $ 860,388 $ 737,703 Subscription license 55,578 60,758 232,458 329,153 Consulting 46,203 56,394 151,202 174,639 Total revenue 393,359 381,350 1,244,048 1,241,495 Cost of revenue Subscription services 54,490 42,978 157,880 122,616 Subscription license 268 314 1,006 1,066 Consulting 49,088 62,601 159,743 194,235 Total cost of revenue 103,846 105,893 318,629 317,917 Gross profit 289,513 275,457 925,419 923,578 Operating expenses Selling and marketing 143,754 140,129 464,765 425,329 Research and development 74,311 78,756 240,526 231,826 General and administrative 38,612 42,108 130,925 107,724 Litigation settlement 16,000 — 16,000 — Restructuring 1,975 (5) 4,557 (38) Total operating expenses 274,652 260,988 856,773 764,841 Income from operations 14,861 14,469 68,646 158,737 Foreign currency transaction gain (loss) 589 7,154 1,075 (12,179) Interest income 1,814 2,660 7,268 11,243 Interest expense (64) (144) (153) (1,172) (Loss) on capped call transactions — — — (223) Other income (loss), net 578 (43) (840) 19,247 Income before provision for (benefit from) income taxes 17,778 24,096 75,996 175,653 Provision for (benefit from) income taxes 3,686 (19,268) 15,806 16,790 Net income $ 14,092 $ 43,364 $ 60,190 $ 158,863 Earnings per share Basic $ 0.09 $ 0.25 $ 0.36 $ 0.93 Diluted $ 0.08 $ 0.24 $ 0.35 $ 0.86 Weighted-average number of common shares outstanding Basic 163,757 170,567 166,043 171,045 Diluted 168,642 184,095 173,064 185,005 6
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PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 202,190 $ 212,447 Marketable securities 107,521 213,352 Total cash, cash equivalents, and marketable securities 309,711 425,799 Accounts receivable, net 130,121 264,713 Unbilled receivables, net 151,240 166,478 Other current assets 112,807 121,305 Total current assets 703,879 978,295 Long-term unbilled receivables, net 79,355 102,544 Goodwill 81,270 81,506 Long-term deferred income taxes 172,493 175,472 Other long-term assets 293,296 294,027 Total assets $ 1,330,293 $ 1,631,844 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 57,619 $ 12,924 Accrued expenses 77,067 44,847 Accrued compensation and related expenses 91,609 148,797 Deferred revenue 429,469 509,275 Other current liabilities 23,231 21,935 Total current liabilities 678,995 737,778 Long-term operating lease liabilities 54,643 60,825 Other long-term liabilities 47,594 45,860 Total liabilities 781,232 844,463 Total stockholders’ equity 549,061 787,381 Total liabilities and stockholders’ equity $ 1,330,293 $ 1,631,844 PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Nine Months EndedSeptember 30, 2026 2025 Net income $ 60,190 $ 158,863 Adjustments to reconcile net income to cash provided by operating activities Non-cash items 179,196 182,243 Change in operating assets and liabilities, net 64,913 5,690 Cash provided by operating activities 304,299 346,796 Cash provided by investing activities 89,038 214,897 Cash (used in) financing activities (402,070) (756,391) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (2,590) 6,971 Net (decrease) in cash, cash equivalents, and restricted cash (11,323) (187,727) Cash, cash equivalents, and restricted cash, beginning of period 216,360 341,529 Cash, cash equivalents, and restricted cash, end of period $ 205,037 $ 153,802 7
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PEGASYSTEMS INC. RECONCILIATION OF SELECTED GAAP AND NON-GAAP MEASURES (in thousands, except percentages and per share amounts) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2026 2025 Change 2026 2025 Change Net income - GAAP $ 14,092 $ 43,364 (68)% $ 60,190 $ 158,863 (62)% Stock-based compensation 28,679 43,041 110,720 121,196 Legal fees 13,272 10,024 51,186 22,977 Litigation settlement 16,000 — 16,000 — Amortization of intangible assets 238 627 1,258 2,003 Restructuring 1,975 (5) 4,557 (38) Foreign currency transaction (gain) loss (589) (7,154) (1,075) 12,179 Interest on convertible senior notes — — — 394 Capped call transactions — — — 223 Other (750) 94 783 (19,386) Income taxes (13,167) (34,827) (41,268) (52,554) Net income - non-GAAP $ 59,750 $ 55,164 8 % $ 202,351 $ 245,857 (18)% Diluted earnings per share - GAAP $ 0.08 $ 0.24 (67)% $ 0.35 $ 0.86 (59)% non-GAAP adjustments 0.27 0.06 0.82 0.48 Diluted earnings per share - non-GAAP $ 0.35 $ 0.30 17 % $ 1.17 $ 1.34 (13)% Diluted weighted-average number of common sharesoutstanding - GAAP 168,642 184,095 (8)% 173,064 185,005 (6)% Capped call transactions — — — (1,599) Diluted weighted-average number of common sharesoutstanding - non-GAAP 168,642 184,095 (8)% 173,064 183,406 (6)% Our non-GAAP financial measures reflect the following adjustments: • Stock-based compensation: We have excluded stock-based compensation from our non-GAAP operating expenses and profitability measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to our revenues recognized during the periods presented and is expected to contribute to our future revenues, we continue to evaluate our business performance, excluding stock-based compensation. • Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance. • Litigation settlement: Cost to settle litigation arising from proceedings outside the ordinary course of business. See “Note 16. Commitments and Contingencies” in Item 1 of our Quarterly Report filing on Form 10-Q for the period ended September 30, 2026 and prior filings for further information. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance. • Amortization of intangible assets: We have excluded the amortization of intangible assets from our non-GAAP operating expenses and profitability measures. Amortization of intangible assets fluctuates in amount and frequency and is significantly affected by the timing and size of acquisitions. Investors should note that intangible assets contributed to our revenues recognized during the periods presented and are expected to contribute to future revenues. Amortization of intangible assets is likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods. • Restructuring: We have excluded restructuring from our non-GAAP financial measures. Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as these amounts are not representative of our core business operations and ongoing operational performance. • Foreign currency transaction (gain) loss: We have excluded foreign currency transaction gains and losses from our non-GAAP profitability measures. Foreign currency transaction gains and losses fluctuate in amount and frequency and are significantly affected by foreign exchange market rates. Foreign currency transaction gains and losses are likely to recur in future periods. We believe excluding these amounts provides a useful comparison of our operational performance in different periods. (1) (2) 8
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• Interest on convertible senior notes: In February 2020, we issued convertible senior notes (the “Notes”), due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity. We believe that excluding the amortization of issuance costs provides a useful comparison of our operational performance in different periods. • Capped call transactions: We have excluded gains and losses related to our capped call transactions held at fair value under U.S. GAAP. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance. • Other: We have excluded gains and losses from our venture investments and other one-time, non-operating items. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them are not representative of our core business operations and ongoing operational performance. • Diluted weighted-average number of common shares outstanding: • Capped call transactions: In periods of GAAP net income, the shares calculated by applying the if-converted method related to our Notes are included in the diluted weighted-average shares outstanding if they are dilutive. The capped call transactions were expected to reduce common stock dilution and/or offset any potential cash payments we must make, other than for principal and interest, upon conversion of the Notes. We believe that including the expected impact of the capped call transactions in our non-GAAP financial measures provides a useful comparison of our operational performance in different periods. (1) Stock-based compensation: Three Months EndedSeptember 30, Nine Months EndedSeptember 30, (Dollars in thousands) 2026 2025 2026 2025 Cost of revenue $ 6,124 $ 6,626 $ 20,751 $ 21,737 Selling and marketing 9,499 15,009 42,509 45,168 Research and development 6,010 7,914 23,972 23,789 General and administrative 7,046 13,492 23,488 30,502 $ 28,679 $ 43,041 $ 110,720 $ 121,196 Income tax benefit $ (5,466) $ (547) $ (21,720) $ (1,700) (2) Effective income tax rates: Nine Months EndedSeptember 30, 2026 2025 GAAP 21 % 10 % non-GAAP 22 % 22 % Our GAAP effective income tax rate is subject to significant fluctuations due to several factors, including our stock-based compensation plans, research and development tax credits, and the valuation allowance on our deferred tax assets in the U.S. and U.K. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors, including historical and forecasted earnings by jurisdiction, discrete items, and ability to realize tax assets. We believe it is beneficial for our management to review our non-GAAP results consistent with our annual plan’s effective income tax rate as established at the beginning of each year, given tax rate volatility. 9
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PEGASYSTEMS INC. RECONCILIATION OF FREE CASH FLOW AND OTHER METRICS (in thousands, except percentages) Nine Months EndedSeptember 30, Change2026 2025 Cash provided by operating activities $ 304,299 346,796 (12)% Investment in property and equipment (14,474) (8,485) Free cash flow $ 289,825 $ 338,311 (14)% Supplemental information Litigation settlement $ 9,750 $ — Legal fees 32,864 15,022 Restructuring 15,442 1,681 Interest paid on convertible senior notes — 1,754 Other (689) — Income taxes, net of refunds 22,609 7,993 $ 79,976 $ 26,450 (1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities and equipment. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP. (2) The supplemental information below identifies certain items included in operating cash flow that may affect comparability between periods. • Litigation settlement: Cost to settle litigation arising from proceedings outside the ordinary course of business. See “Note 16. Commitments and Contingencies” in Item 1 of our Quarterly Report filing on Form 10-Q for the period ended September 30, 2026 and prior filings for further information. • Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business. • Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities. • Interest paid on convertible senior notes: In February 2020, we issued the Notes, due March 1, 2025, in a private placement. The Notes accrued interest at an annual rate of 0.75%, paid semi-annually in arrears on March 1 and September 1. The outstanding Notes were repaid in their entirety at maturity. • Other: One-time cash flow items not part of our ongoing operations. • Income taxes, net of refunds: Direct income taxes paid net of refunds received. PEGASYSTEMS INC. ANNUAL CONTRACT VALUE (in thousands, except percentages) Annual contract value (“ACV”) - ACV represents the annualized value of our active contracts as of the measurement date. The contract's total value is divided by its duration in years to calculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors. September 30, 2026 September 30, 2025 Change Constant CurrencyChange Pega Cloud $ 975,991 $ 815,370 $ 160,621 20 % 20 % Maintenance 261,321 296,955 (35,634) (12)% (12)% Subscription services 1,237,312 1,112,325 124,987 11 % 12 % Subscription license 415,997 444,601 (28,604) (6)% (6)% $ 1,653,309 $ 1,556,926 $ 96,383 6 % 7 % (1) (1) (2) 10
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PEGASYSTEMS INC. BACKLOG (in thousands, except percentages) Remaining performance obligations (“Backlog”) - Expected future revenue from existing non-cancellable contracts: As of September 30, 2026: Subscription services Subscriptionlicense Consulting TotalPega Cloud Maintenance 1 year or less $ 730,041 $ 180,906 $ 32,317 $ 42,205 $ 985,469 49 % 1-2 years 416,308 85,371 1,476 1,463 504,618 25 % 2-3 years 233,510 46,416 7,348 574 287,848 14 % Greater than 3 years 216,977 12,544 945 963 231,429 12 % $ 1,596,836 $ 325,237 $ 42,086 $ 45,205 $ 2,009,364 100 % % of Total 80 % 16 % 2 % 2 % 100 % Change since September 30, 2025 $ 308,127 $ (35,197) $ (16,670) $ (1,422) $ 254,838 24 % (10)% (28)% (3)% 15 % As of September 30, 2025: Subscription services Subscriptionlicense Consulting TotalPega Cloud Maintenance 1 year or less $ 609,511 $ 199,651 $ 46,386 $ 43,979 $ 899,527 51 % 1-2 years 319,940 71,730 4,404 2,478 398,552 23 % 2-3 years 164,125 48,668 746 114 213,653 12 % Greater than 3 years 195,133 40,385 7,220 56 242,794 14 % $ 1,288,709 $ 360,434 $ 58,756 $ 46,627 $ 1,754,526 100 % % of Total 73 % 21 % 3 % 3 % 100 % PEGASYSTEMS INC. RECONCILIATION OF GAAP BACKLOG AND CONSTANT CURRENCY BACKLOG (in millions, except percentages) September 30, 2025 September 30, 2026 1 Year GrowthRate Backlog - GAAP $ 1,755 $ 2,009 15 % Impact of changes in foreign exchange rates — 10 Constant currency backlog $ 1,755 $ 2,019 15 % Note: Constant currency backlog is calculated by applying the September 30, 2025 foreign exchange rates to current period shown. 11