Pegasystems Inc. (NASDAQ: PEGA) released its financial results for the third quarter of 2026 on October 20, 2026. The company reported total revenue of $393.4 million for the three months ended September 30, 2026, representing a 3% increase compared to the same period in 2025. For the nine months ended September 30, 2026, total revenue was $1.244 billion, which was essentially flat year-over-year.
On a non-GAAP basis, the company reported diluted earnings per share of $0.35 for the quarter, an 17% increase from $0.30 in the prior year period. For the nine-month period, non-GAAP diluted earnings per share was $1.17, a 13% decrease from $1.34 in the prior year.
Annual Contract Value (ACV) grew 6% year-over-year to $1.653 billion as of September 30, 2026. When adjusted for foreign exchange rates, ACV grew 7% to $1.658 billion. The company noted that Pega Cloud ACV grew 20% in the quarter. Pega Cloud now represents 59% of total ACV, up from 51% in the prior year.
GAAP net income for the third quarter was $14.1 million, down 68% from $43.4 million in the prior year. For the nine months, GAAP net income was $60.2 million, a 62% decrease from $158.9 million in the prior year. The company cited litigation settlements and restructuring charges as factors contributing to the decline in GAAP profitability.
Management stated that while ACV growth through the first three quarters did not reflect the market opportunity, the Q3 ACV add was the strongest of the year. The company is taking actions to improve execution and aims to deliver $700 million or more of free cash flow in 2028.
