Enterprise workflow software provider Pegasystems (NASDAQ:PEGA) reported Q1 CY2025 results beating Wall Street’s revenue expectations , with sales up 44.1% year on year to $475.6 million. Its non-GAAP profit of $1.53 per share was significantly above analysts’ consensus estimates.
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Revenue: $475.6 million vs analyst estimates of $357.5 million (44.1% year-on-year growth, 33.1% beat)
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Adjusted EPS: $1.53 vs analyst estimates of $0.50 (significant beat)
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Operating Margin: 26.7%, up from -6.2% in the same quarter last year
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Free Cash Flow Margin: 42.5%, up from 18.8% in the previous quarter
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Market Capitalization: $5.68 billion
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Pegasystems’s sales grew at a sluggish 8.8% compounded annual growth rate over the last three years. This was below our standard for the software sector and is a poor baseline for our analysis.
This quarter, Pegasystems reported magnificent year-on-year revenue growth of 44.1%, and its $475.6 million of revenue beat Wall Street’s estimates by 33.1%.
Looking ahead, sell-side analysts expect revenue to decline by 1.6% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will face some demand challenges.
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The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
