10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

_____________________________________

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended September 30, 2023

OR

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-11859 

____________________________

PEGASYSTEMS INC.

(Exact name of Registrant as specified in its charter) 

____________________________

Massachusetts	04-2787865
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

One Main Street, Cambridge, MA 02142

(Address of principal executive offices, including zip code)

(617) 374-9600

(Registrant’s telephone number, including area code)

____________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	PEGA	NASDAQ Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No ¨            

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 83,555,919 shares of the Registrant’s common stock, $0.01 par value per share, outstanding on October 17, 2023.

PEGASYSTEMS INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	4
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) for the three and nine months ended September 30, 2023 and 2022	5
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2023 and 2022	6
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	8
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	29
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 5. Other Information	30
Item 6. Exhibits	30
Signature	31

2

PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	169,023	$	145,054
Marketable securities	167,286		152,167
Total cash, cash equivalents, and marketable securities	336,309		297,221
Accounts receivable, net	168,795		255,150
Unbilled receivables, net	199,948		213,719
Other current assets	71,438		80,388
Total current assets	776,490		846,478
Unbilled receivables, net	73,795		95,806
Goodwill	81,437		81,399
Other long-term assets	290,807		333,989
Total assets	$	1,222,529	$	1,357,672
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	20,541	$	18,195
Accrued expenses	43,624		50,355
Accrued compensation and related expenses	93,511		127,728
Deferred revenue	297,067		325,212
Other current liabilities	18,038		17,450
Total current liabilities	472,781		538,940
Convertible senior notes, net	498,753		593,609
Operating lease liabilities	68,874		79,152
Other long-term liabilities	14,485		15,128
Total liabilities	1,054,893		1,226,829
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred stock, 1,000 shares authorized; none issued	—		—
Common stock, 200,000 shares authorized; 83,523 and 82,436 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	835		824
Additional paid-in capital	343,259		229,602
Accumulated deficit	(151,370)		(76,513)
Accumulated other comprehensive (loss)	(25,088)		(23,070)
Total stockholders’ equity	167,636		130,843
Total liabilities and stockholders’ equity	$	1,222,529	$	1,357,672

See notes to unaudited condensed consolidated financial statements.

3

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue
Subscription services	$	201,578	$	174,885	$	586,192	$	516,750
Subscription license	74,342		31,112		200,066		210,245
Consulting	55,976		55,511		167,396		175,451
Perpetual license	2,747		9,223		4,729		18,929
Total revenue	334,643		270,731		958,383		921,375
Cost of revenue
Subscription services	35,906		34,541		109,553		103,104
Subscription license	629		628		1,971		1,923
Consulting	57,204		57,778		176,262		171,162
Perpetual license	24		103		51		173
Total cost of revenue	93,763		93,050		287,837		276,362
Gross profit	240,880		177,681		670,546		645,013
Operating expenses
Selling and marketing	131,598		153,517		425,253		472,951
Research and development	74,955		75,342		224,262		221,173
General and administrative	27,321		26,043		73,893		94,530
Restructuring	17,822		—		21,450		—
Total operating expenses	251,696		254,902		744,858		788,654
(Loss) from operations	(10,816)		(77,221)		(74,312)		(143,641)
Foreign currency transaction gain (loss)	1,994		3,826		(3,971)		8,415
Interest income	2,532		520		5,831		1,036
Interest expense	(1,533)		(1,992)		(5,229)		(5,882)
(Loss) on capped call transactions	(2,294)		(6,876)		(449)		(56,381)
Other income (loss), net	6,383		(29)		18,668		6,497
(Loss) before provision for income taxes	(3,734)		(81,772)		(59,462)		(189,956)
Provision for income taxes	3,545		11,748		15,395		190,239
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
(Loss) per share
Basic	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Diluted	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Weighted-average number of common shares outstanding
Basic	83,336		81,996		82,996		81,842
Diluted	83,336		81,996		82,996		81,842

See notes to unaudited condensed consolidated financial statements.

4

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) (in thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Other comprehensive (loss), net of tax
Unrealized (loss) on available-for-sale securities	(40)		(73)		(281)		(1,000)
Foreign currency translation adjustments	(3,687)		(6,700)		(1,737)		(20,936)
Total other comprehensive (loss), net of tax	(3,727)		(6,773)		(2,018)		(21,936)
Comprehensive (loss)	$	(11,006)	$	(100,293)	$	(76,875)	$	(402,131)

See notes to unaudited condensed consolidated financial statements.

5

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts)
	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive (Loss)		Total Stockholders’ Equity
	Number of Shares	Amount
December 31, 2021	81,712	$	817	$	145,810	$	276,449	$	(6,988)	$	416,088
Repurchase of common stock	(242)	(2)		(22,581)		—		—		(22,583)
Issuance of common stock for stock compensation plans	297	3		(12,131)		—		—		(12,128)
Issuance of common stock under the employee stock purchase plan	35	—		2,446		—		—		2,446
Stock-based compensation	—	—		28,227		—		—		28,227
Cash dividends declared ($0.03 per share)	—	—		—		(2,455)		—		(2,455)
Other comprehensive (loss)	—	—		—		—		(2,548)		(2,548)
Net (loss)	—	—		—		(379)		—		(379)
March 31, 2022	81,802	$	818	$	141,771	$	273,615	$	(9,536)	$	406,668
Repurchase of common stock	(38)	—		(1,925)		—		—		(1,925)
Issuance of common stock for stock compensation plans	117	1		(3,252)		—		—		(3,251)
Issuance of common stock under the employee stock purchase plan	59	—		2,357		—		—		2,357
Stock-based compensation	—	—		31,300		—		—		31,300
Cash dividends declared ($0.03 per share)	—	—		—		(2,459)		—		(2,459)
Other comprehensive (loss)	—	—		—		—		(12,615)		(12,615)
Net (loss)	—	—		—		(286,296)		—		(286,296)
June 30, 2022	81,940	$	819	$	170,251	$	(15,140)	$	(22,151)	$	133,779
Issuance of common stock for stock compensation plans	138	2		(2,198)		—		—		(2,196)
Issuance of common stock under the employee stock purchase plan	86	1		2,362		—		—		2,363
Stock-based compensation	—	—		33,774		—		—		33,774
Cash dividends declared ($0.03 per share)	—	—		—		(2,466)		—		(2,466)
Other comprehensive (loss)	—	—		—		—		(6,773)		(6,773)
Net (loss)	—	—		—		(93,520)		—		(93,520)
September 30, 2022	82,164	$	822	$	204,189	$	(111,126)	$	(28,924)	$	64,961

6

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share amounts)
	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive (Loss)		Total Stockholders’ Equity
	Number of Shares	Amount
December 31, 2022	82,436	$	824	$	229,602	$	(76,513)	$	(23,070)	$	130,843
Issuance of common stock for stock compensation plans	452	4		668		—		—		672
Issuance of common stock under the employee stock purchase plan	52	1		2,142		—		—		2,143
Stock-based compensation	—	—		42,557		—		—		42,557
Cash dividends declared ($0.03 per share)	—	—		(2,488)		—		—		(2,488)
Other comprehensive income	—	—		—		—		1,543		1,543
Net (loss)	—	—		—		(20,774)		—		(20,774)
March 31, 2023	82,940	$	829	$	272,481	$	(97,287)	$	(21,527)	$	154,496
Issuance of common stock for stock compensation plans	225	2		1,824		—		—		1,826
Issuance of common stock under the employee stock purchase plan	47	1		1,980		—		—		1,981
Stock-based compensation	—	—		36,227		—		—		36,227
Cash dividends declared ($0.03 per share)	—	—		(2,496)		—		—		(2,496)
Other comprehensive income	—	—		—		—		166		166
Net (loss)	—	—		—		(46,804)		—		(46,804)
June 30, 2023	83,212	$	832	$	310,016	$	(144,091)	$	(21,361)	$	145,396
Issuance of common stock for stock compensation plans	257	3		2,447		—		—		2,450
Issuance of common stock under the employee stock purchase plan	54	—		2,003		—		—		2,003
Stock-based compensation	—	—		31,299		—		—		31,299
Cash dividends declared ($0.03 per share)	—	—		(2,506)		—		—		(2,506)
Other comprehensive (loss)	—	—		—		—		(3,727)		(3,727)
Net (loss)	—	—		—		(7,279)		—		(7,279)
September 30, 2023	83,523	$	835	$	343,259	$	(151,370)	$	(25,088)	$	167,636

See notes to unaudited condensed consolidated financial statements.

7

PEGASYSTEMS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
	Nine Months Ended September 30,
	2023		2022
Operating activities
Net (loss)	$	(74,857)	$	(380,195)
Adjustments to reconcile net (loss) to cash provided by (used in) operating activities
Stock-based compensation	110,083		93,301
Deferred income taxes	(188)		169,489
Loss on capped call transactions	449		56,381
Amortization of deferred commissions	43,974		39,752
Lease expense	12,018		11,500
Amortization of intangible assets and depreciation	14,181		12,381
Foreign currency transaction loss (gain)	3,971		(8,415)
Other non-cash	(16,487)		(1,705)
Change in operating assets and liabilities, net	44,776		(5,935)
Cash provided by (used in) operating activities	137,920		(13,446)
Investing activities
Purchases of investments	(190,466)		(39,056)
Proceeds from maturities and called investments	169,836		53,952
Sales of investments	10,725		18,415
Payments for acquisitions, net of cash acquired	—		(922)
Investment in property and equipment	(14,271)		(22,285)
Cash (used in) provided by investing activities	(24,176)		10,104
Financing activities
Repurchases of convertible senior notes	(88,989)		—
Dividend payments to stockholders	(7,458)		(7,368)
Proceeds from employee stock purchase plan	6,127		7,166
Proceeds from stock option exercises	6,602		—
Common stock repurchases	(1,654)		(43,282)
Other	341		—
Cash (used in) financing activities	(85,031)		(43,484)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,621)		(5,513)
Net increase (decrease) in cash, cash equivalents, and restricted cash	27,092		(52,339)
Cash, cash equivalents, and restricted cash, beginning of period	145,054		159,965
Cash, cash equivalents, and restricted cash, end of period	$	172,146	$	107,626
Cash and cash equivalents	$	169,023	$	107,626
Restricted cash included in other long-term assets	3,123		—
Total cash, cash equivalents, and restricted cash	$	172,146	$	107,626

See notes to unaudited condensed consolidated financial statements.

8

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for 2023.

NOTE 2. MARKETABLE SECURITIES

	September 30, 2023								December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Government debt	$	17,931	$	—	$	(18)	$	17,913	$	2,960	$	—	$	(52)	$	2,908
Corporate debt	149,927		—		(554)		149,373		151,906		—		(2,647)		149,259
	$	167,858	$	—	$	(572)	$	167,286	$	154,866	$	—	$	(2,699)	$	152,167

As of September 30, 2023, marketable securities’ maturities ranged from October 2023 to January 2026, with a weighted average remaining maturity of 0.5 years.

NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

Receivables

(in thousands)	September 30, 2023		December 31, 2022
Accounts receivable, net	$	168,795	$	255,150
Unbilled receivables, net	199,948		213,719
Long-term unbilled receivables, net	73,795		95,806
	$	442,538	$	564,675

Unbilled receivables

Unbilled receivables are client-committed amounts for which revenue recognition precedes billing. Billing is solely subject to the passage of time.

Unbilled receivables by expected collection date:

(Dollars in thousands)	September 30, 2023
1 year or less	$	199,948	73	%
1-2 years	58,604		21	%
2-5 years	15,191		6	%
	$	273,743	100	%

Unbilled receivables by contract effective date:

(Dollars in thousands)	September 30, 2023
2023	$	90,227	33	%
2022	92,065		34	%
2021	62,729		23	%
2020	19,820		7	%
2019 and prior	8,902		3	%
	$	273,743	100	%

9

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contract assets

Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation.

(in thousands)	September 30, 2023		December 31, 2022
Contract assets (1)	$	13,263	$	17,546
Long-term contract assets (2)	10,732		16,470
	$	23,995	$	34,016

(1) Included in other current assets.

(2) Included in other long-term assets.

Deferred revenue

Deferred revenue consists of billings and payments received in advance of revenue recognition.

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	297,067	$	325,212
Long-term deferred revenue (1)	2,605		3,552
	$	299,672	$	328,764

(1) Included in other long-term liabilities.

Deferred revenue decreased in the nine months ended September 30, 2023, primarily due to $292.3 million of revenue recognized during the period included in deferred revenue as of December 31, 2022 exceeded new billings in advance of revenue recognition.

NOTE 4. DEFERRED COMMISSIONS

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions (1)	$	107,399	$	130,195

(1) Included in other long-term assets.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Amortization of deferred commissions (1)	$	14,947	$	11,597	$	43,974	$	39,752

(1) Included in selling and marketing.

NOTE 5. GOODWILL AND OTHER INTANGIBLES

Goodwill

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	81,399	$	81,923
Currency translation adjustments	38		(722)
September 30,	$	81,437	$	81,201

Intangibles

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.

		September 30, 2023
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,086	$	(59,661)	$	3,425
Technology	2-10 years	68,103		(63,579)		4,524
Other	1-5 years	5,361		(5,361)		—
		$	136,550	$	(128,601)	$	7,949

(1) Included in other long-term assets.

10

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

		December 31, 2022
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,076	$	(58,623)	$	4,453
Technology	2-10 years	68,056		(61,621)		6,435
Other	1-5 years	5,361		(5,361)		—
		$	136,493	$	(125,605)	$	10,888

(1) Included in other long-term assets.

Future estimated intangibles assets amortization:

(in thousands)	September 30, 2023
Remainder of 2023	$	964
2024	3,169
2025	2,615
2026	874
2027	327
	$	7,949

Amortization of intangible assets:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	622	$	705	$	1,949	$	2,017
Selling and marketing	343		343		1,028		1,028
	$	965	$	1,048	$	2,977	$	3,045

NOTE 6. OTHER ASSETS AND LIABILITIES

Other current assets

(in thousands)	September 30, 2023		December 31, 2022
Income tax receivables	$	19,663	$	25,354
Contract assets	13,263		17,546
Other	38,512		37,488
	$	71,438	$	80,388

Other long-term assets

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions	$	107,399	$	130,195
Right of use assets	65,871		76,114
Property and equipment	49,481		55,056
Venture investments	19,348		13,069
Contract assets	10,732		16,470
Intangible assets	7,949		10,888
Capped call transactions	1,792		2,582
Deferred income taxes	5,046		4,795
Restricted cash	3,123		—
Other	20,066		24,820
	$	290,807	$	333,989

Other current liabilities

(in thousands)	September 30, 2023		December 31, 2022
Operating lease liabilities	$	15,532	$	14,976
Dividends payable	2,506		2,474
	$	18,038	$	17,450

11

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other long-term liabilities

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	2,605	$	3,552
Income taxes payable	2,017		3,207
Other	9,863		8,369
	$	14,485	$	15,128

NOTE 7. LEASES

Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Fixed lease costs	$	4,718	$	4,688	$	14,979	$	14,747
Short-term lease costs	660		916		2,137		2,510
Variable lease costs	2,254		905		6,414		2,395
	$	7,632	$	6,509	$	23,530	$	19,652

Right of use assets and lease liabilities

(in thousands)	September 30, 2023		December 31, 2022
Right of use assets (1)	$	65,871	$	76,114
Operating lease liabilities (2)	$	15,532	$	14,976
Long-term operating lease liabilities	$	68,874	$	79,152

(1) Included in other long-term assets.

(2) Included in other current liabilities.

Weighted-average remaining lease term and discount rate for the Company’s leases were:

	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	7.0 years		7.5 years
Weighted-average discount rate (1)	4.0	%	4.1	%

(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.

Maturities of lease liabilities:

(in thousands)	September 30, 2023
Remainder of 2023	$	4,775
2024	17,976
2025	14,870
2026	10,853
2027	9,808
2028	9,245
Thereafter	30,054
Total lease payments	97,581
Less: imputed interest (1)	(13,175)
	$	84,406

(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.

Cash flow information

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for operating leases, net of tenant improvement allowances	$	14,378	$	11,628
Right of use assets recognized for new leases and amendments (non-cash)	$	1,782	$	6,618

12

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 8. DEBT

Convertible senior notes and capped calls

Convertible senior notes

In February 2020, the Company issued Convertible Senior Notes (the "Notes") with an aggregate principal of $600 million, due March 1, 2025, in a private placement. No principal payments are due before maturity. The Notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1, beginning September 1, 2020.

In the nine months ended September 30, 2023, the Company recognized a gain of $7.9 million in other income (loss), net from repurchases of Notes representing $97.7 million in aggregate principal amount.

Conversion rights

The conversion rate is 7.4045 shares of common stock per $1,000 principal amount of the Notes, representing an initial conversion price of $135.05 per share of common stock. The conversion rate will be adjusted upon certain events, including spin-offs, tender offers, exchange offers, and certain stockholder distributions. The Company will settle conversions by paying or delivering cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate.

Beginning on September 1, 2024, noteholders may convert their Notes at any time at their election.

Before September 1, 2024, noteholders may convert their Notes in the following circumstances:

•During any calendar quarter beginning after June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter.

•During the five consecutive business days immediately after any five consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day.

•Upon certain corporate events or distributions or if the Company calls any Notes for redemption, noteholders may convert before the close of business on the business day immediately before the related redemption date (or, if the Company fails to pay the redemption price in full on the redemption date until the Company pays the redemption price).

As of September 30, 2023, the Notes were not eligible for conversion.

Repurchase rights

On or after March 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest, if the last reported sale price of the Company’s common stock exceeded 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice.

If certain corporate events that constitute a “Fundamental Change” occur, each noteholder will have the right to require the Company to repurchase for cash all of such noteholder’s Notes, or any portion of the principal thereof that is equal to $1,000 or a multiple of $1,000, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. A Fundamental Change relates to mergers, changes in control of the Company, liquidation/dissolution of the Company, or the delisting of the Company’s common stock.

Carrying value of the Notes:

(in thousands)	September 30, 2023		December 31, 2022
Principal	$	502,270	$	600,000
Unamortized issuance costs	(3,517)		(6,391)
Convertible senior notes, net	$	498,753	$	593,609

Interest expense related to the Notes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Contractual interest expense (0.75% coupon)	$	827	$	1,125	$	2,949	$	3,375
Amortization of issuance costs	613		724		1,988		2,163
	$	1,440	$	1,849	$	4,937	$	5,538

13

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The average interest rate on the Notes in the nine months ended September 30, 2023 and 2022 was 1.2%.

Future payments:

	September 30, 2023
(in thousands)	Principal		Interest		Total
2024	$	—	$	3,767	$	3,767
2025	502,270		1,884		504,154
	$	502,270	$	5,651	$	507,921

Capped call transactions

In February 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions covered approximately 4.4 million shares (representing the number of shares for which the Notes were initially convertible) of the Company’s common stock.

In the nine months ended September 30, 2023, Capped Call Transactions covering approximately 0.7 million shares were settled for proceeds of $0.3 million. As of September 30, 2023, Capped Call Transactions covering approximately 3.7 million shares were outstanding.

The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The cap price of the Capped Call Transactions is subject to adjustment upon specified extraordinary events affecting the Company, including mergers and tender offers.

The Capped Call Transactions are accounted for as derivative instruments and do not qualify for the Company’s own equity scope exception in ASC 815 since, in some cases of early settlement, the settlement value calculated following the governing documents may not represent a fair value measurement. The Capped Call Transactions are classified as other long-term assets and remeasured to fair value each reporting period, resulting in a non-operating gain or loss.

Change in capped call transactions:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	2,582	$	59,964
Settlements	(341)		—
Fair value adjustment	(449)		(56,381)
September 30,	$	1,792	$	3,583

Credit facility

In November 2019, and as since amended, the Company entered into a five-year $100 million senior secured revolving credit agreement (the “Credit Facility”) with PNC Bank, National Association. The Company may use borrowings for general corporate purposes and to finance working capital needs. Subject to specific conditions and the agreement of the financial institutions lending the additional amount, the aggregate commitment may be increased to $200 million. The commitments expire on November 4, 2024, and any outstanding loans will be payable on such date. The Credit Facility, as amended, contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions.

The Company is required to comply with financial covenants, including:

•Through December 31, 2023, the parent company must maintain at least $200 million in cash, investments, and availability under the Credit Facility and the Company must maintain:

	Year to Date
(in thousands)	March 31, 2023		June 30, 2023		September 30, 2023		December 31, 2023
Minimum Consolidated EBITDA (as defined in the Credit Facility)	$	38,862	$	59,894	$	95,597	$	214,590

•Beginning with the fiscal quarter ended March 31, 2024, a maximum net consolidated leverage ratio of 3.5 to 1.0 (with a step-up for certain acquisitions) and a minimum consolidated interest coverage ratio of 3.5 to 1.0.

As of September 30, 2023 and December 31, 2022, the Company had $27.3 million in outstanding letters of credit, which reduced the Company’s available borrowing capacity under the Credit Facility and no outstanding cash borrowings under the Credit Facility.

14

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9. RESTRUCTURING

The Company has undertaken the following restructuring activities as it optimizes its go-to-market strategy and reassesses its office space needs:

	Three months ended	Expense
Employee severance and related benefits and closure of a US office	December 31, 2022	$	21,743
Office space reduction	March 31, 2023	$	1,241
Employee severance and related benefits	June 30, 2023	$	1,581
Employee severance and related benefits and closure of a foreign office	September 30, 2023	$	17,236

Accrued employee severance and related benefits:

Change for all restructuring actions:

	Nine Months Ended September 30,
(in thousands)	2023
January 1,	$	18,573
Costs incurred	19,921
Cash disbursements	(21,576)
Currency translation adjustments	(203)
September 30,	$	16,715

Note: Accrued employee severance and related benefits is included in accrued compensation and related expenses.

NOTE 10. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:

•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;

•Level 2 - significant other inputs that are observable either directly or indirectly; and

•Level 3 - significant unobservable inputs with little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data when available and minimize unobservable inputs when determining fair value.

The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.

Assets and liabilities measured at fair value on a recurring basis:

	September 30, 2023								December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	22,686	$	—	$	—	$	22,686	$	2,526	$	—	$	—	$	2,526
Marketable securities	$	—	$	167,286	$	—	$	167,286	$	—	$	152,167	$	—	$	152,167
Capped Call Transactions (1)	$	—	$	1,792	$	—	$	1,792	$	—	$	2,582	$	—	$	2,582
Venture investments (1) (2)	$	—	$	—	$	19,348	$	19,348	$	—	$	—	$	13,069	$	13,069

(1) Included in other long-term assets.

(2) Investments in privately-held companies.

15

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Changes in venture investments:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	13,069	$	7,648
New investments	400		400
Sales of investments	(2,773)		(3,954)
Changes in foreign exchange rates	27		(675)
Changes in fair value:
included in other income (loss), net	10,886		5,989
included in other comprehensive (loss)	(2,261)		2,502
September 30,	$	19,348	$	11,910

The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.

Fair value of the Notes

The fair value of the Notes outstanding (including the embedded conversion feature) was $460.3 million as of September 30, 2023 and $521.1 million as of December 31, 2022. In the nine months ended September 30, 2023 the Company repurchased Notes representing $97.7 million in aggregate principal amount.

The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.

NOTE 11. REVENUE

Geographic revenue

	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)	2023				2022				2023				2022
U.S.	$	154,741	47	%	$	148,200	55	%	$	489,645	51	%	$	513,197	56	%
Other Americas	23,497		7	%	18,546		7	%	58,013		6	%	80,558		9	%
United Kingdom (“U.K.”)	41,622		12	%	24,074		9	%	112,751		12	%	83,837		9	%
Europe (excluding U.K.), Middle East, and Africa	67,880		20	%	46,212		17	%	173,551		18	%	140,586		15	%
Asia-Pacific	46,903		14	%	33,699		12	%	124,423		13	%	103,197		11	%
	$	334,643	100	%	$	270,731	100	%	$	958,383	100	%	$	921,375	100	%

Revenue streams

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Perpetual license	$	2,747	$	9,223	$	4,729	$	18,929
Subscription license	74,342		31,112		200,066		210,245
Revenue recognized at a point in time	77,089		40,335		204,795		229,174
Maintenance	83,538		77,526		245,210		235,568
Pega Cloud	118,040		97,359		340,982		281,182
Consulting	55,976		55,511		167,396		175,451
Revenue recognized over time	257,554		230,396		753,588		692,201
Total revenue	$	334,643	$	270,731	$	958,383	$	921,375

16

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Pega Cloud	$	118,040	$	97,359	$	340,982	$	281,182
Maintenance	83,538		77,526		245,210		235,568
Subscription services	201,578		174,885		586,192		516,750
Subscription license	74,342		31,112		200,066		210,245
Subscription	275,920		205,997		786,258		726,995
Consulting	55,976		55,511		167,396		175,451
Perpetual license	2,747		9,223		4,729		18,929
	$	334,643	$	270,731	$	958,383	$	921,375

Remaining performance obligations ("Backlog")

Expected future revenue from existing non-cancellable contracts:

As of September 30, 2023:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	202,610	$	391,324	$	48,427	$	4,567	$	39,335	$	686,263	54	%
1-2 years	58,610		239,787		4,356		2,696		3,662		309,111		24	%
2-3 years	28,585		121,778		8,518		—		1,100		159,981		13	%
Greater than 3 years	17,478		89,870		2,664		—		—		110,012		9	%
	$	307,283	$	842,759	$	63,965	$	7,263	$	44,097	$	1,265,367	100	%

As of September 30, 2022:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	191,045	$	328,111	$	69,753	$	814	$	27,968	$	617,691	53	%
1-2 years	55,141		213,304		4,113		4,505		6,699		283,762		25	%
2-3 years	24,496		115,416		1,420		2,252		1,648		145,232		13	%
Greater than 3 years	16,198		82,807		1,734		—		508		101,247		9	%
	$	286,880	$	739,638	$	77,020	$	7,571	$	36,823	$	1,147,932	100	%

NOTE 12. STOCK-BASED COMPENSATION

Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	6,410	$	6,797	$	22,497	$	19,754
Selling and marketing	10,401		12,933		43,410		36,524
Research and development	7,375		7,724		24,286		22,425
General and administrative	7,113		6,320		19,890		14,598
	$	31,299	$	33,774	$	110,083	$	93,301
Income tax benefit	$	(316)	$	(600)	$	(1,569)	$	(1,505)

As of September 30, 2023, the Company had $137.5 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.8 years.

17

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Grants

	Nine Months Ended September 30, 2023
(in thousands)	Shares	Total Fair Value
Restricted stock units	1,514	$	70,962
Non-qualified stock options	911	$	19,142
Performance stock options (1)	906	$	18,265
Common stock	13	$	600

(1) Performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date. The options usually vest over two years and expire ten years from the grant date, subject to specific performance conditions.

NOTE 13. INCOME TAXES

Effective income tax rate

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2023		2022		2023			2022
Provision for income taxes	$	3,545	$	11,748	$	15,395		$	190,239
Effective income tax rate					(26)		%	(100)		%

The Company’s effective income tax rate in the nine months ended September 30, 2023 was primarily driven by the valuation allowance on the Company’s deferred tax assets in the U.S. and U.K. and projected taxable income in the U.S., partially offset by available tax credits and losses in the U.S.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. A deferred tax valuation allowance requires significant judgment and uncertainties, including assumptions about future taxable income. Quarterly, the Company reassesses the need for a valuation allowance on its net deferred tax assets by weighting all available and objectively verifiable negative and positive evidence, including projected future reversals of existing taxable temporary differences, committed contractual backlog (“Backlog”), projected future taxable income, including the impact of enacted legislation, tax-planning strategies, and recent operating results.

The Company intends to maintain a valuation allowance on the Company’s U.S. and U.K. net deferred tax assets until sufficient evidence exists to support the realization of these deferred tax assets.

NOTE 14. (LOSS) PER SHARE

Basic (loss) per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted (loss) per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and convertible senior notes.

Calculation of (loss) per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding	83,336		81,996		82,996		81,842
(Loss) per share, basic	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)	83,336		81,996		82,996		81,842
(Loss) per share, diluted	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Outstanding anti-dilutive stock options and RSUs (4)	2,255		3,019		1,652		3,589

(1) All dilutive securities are excluded in periods of loss as their inclusion would be anti-dilutive.

(2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue approximately 3.7 million shares as of September 30, 2023.

(3) The Company’s Capped Call Transactions represent the equivalent of approximately 3.7 million shares of the Company’s common stock (representing the number of shares for which the Notes are convertible) as of September 30, 2023. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.

18

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future.

NOTE 15. COMMITMENTS AND CONTINGENCIES

Commitments

See "Note 7. Leases" for additional information.

Legal proceedings

In addition to the matters below, the Company is or may become involved in a variety of claims, demands, suits, investigations, and proceedings that arise from time to time relating to matters incidental to the ordinary course of the Company’s business, including actions concerning contracts, intellectual property, employment, benefits, and securities matters. Regardless of the outcome, legal disputes can have a material effect on the Company because of defense and settlement costs, diversion of management resources, and other factors.

In addition, as the Company is a party to ongoing litigation, it is at least reasonably possible that the Company’s estimates will change in the near term, and the effect may be material.

The Company had no accrued losses for litigation as of September 30, 2023 and December 31, 2022.

Appian Corp. v. Pegasystems Inc. & Youyong Zou

As previously reported, the Company is a defendant in litigation brought by Appian in the Circuit Court of Fairfax County, Virginia (the “Court”) titled Appian Corp. v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 9, 2022, the jury rendered its verdict finding that the Company had misappropriated one or more of Appian’s trade secrets, that the Company had violated the Virginia Computer Crimes Act, and that the trade secret misappropriation was willful and malicious. The jury awarded damages of $2,036,860,045 for trade secret misappropriation and $1.00 for violating the Virginia Computer Crimes Act. On September 15, 2022, the circuit court of Fairfax County entered judgment of $2,060,479,287, consisting of the damages previously awarded by the jury plus attorneys’ fees and costs, and stating that the judgment is subject to post-judgment interest at a rate of 6.0% per annum, from the date of the jury verdict (May 9, 2022) as to the amount of the jury verdict and from September 15, 2022 as to the amount of the award of attorneys’ fees and costs. On September 15, 2022, the Company filed a notice of appeal from the judgment. On September 29, 2022, the circuit court of Fairfax County approved a $25,000,000 letter of credit obtained by the Company to secure the judgment and entered an order suspending the judgment during the pendency of the Company’s appeal. Appellate briefing in the Court of Appeals of Virginia is completed. The Court of Appeals of Virginia has set November 15, 2023 as the date for oral arguments in the appeal. Although it is not possible to predict timing, this appeals process could potentially take years to complete. The Company continues to believe that it did not misappropriate any alleged trade secrets and that its sales of the Company’s products at issue were not caused by, or the result of, any alleged misappropriation of trade secrets. The Company is unable to reasonably estimate possible damages because of, among other things, uncertainty as to the outcome of appellate proceedings and/or any potential new trial resulting from the appellate proceedings.

City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell

On May 19, 2022, a lawsuit was filed against the Company, the Company’s chief executive officer and the Company’s chief operating and financial officer in the United States District Court for the Eastern District of Virginia Alexandria Division, captioned City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:22-cv-00578-LMB-IDD). The complaint generally alleges, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder and that the individual defendants violated Section 20(a) of the Exchange Act, in each case by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices. The complaint seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between May 29, 2020 and May 9, 2022. The litigation has since been transferred to the United States District Court for the District of Massachusetts (Case 1:22-cv-11220-WGY), and lead plaintiff class representatives—Central Pennsylvania Teamsters Pension Fund - Defined Benefit Plan, Central Pennsylvania Teamsters Pension Fund - Retirement Income Plan 1987, and Construction Industry Laborers Pension Fund—have been appointed. On October 18, 2022, a consolidated amended complaint was filed that does not add any new parties or legal claims, is based upon the same general factual allegations as the original complaint, and now seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between June 16, 2020 and May 9, 2022. The Company moved to dismiss the consolidated amended complaint on December 19, 2022. The hearing on the Company’s motion to dismiss took place on May 17, 2023. After hearing argument from both sides, the Court denied the Company’s motion from the bench and stated that a written opinion would follow. On June 30, 2023, the Company filed its Answer to the complaint. On July 24, 2023, the Court issued its written opinion denying the motion to dismiss as to the Company and Defendant Trefler but granting the motion without prejudice as to Mr. Stillwell. The Company believes it has strong defenses to the claims brought against the defendants and intends to defend against these claims vigorously. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit, the Company’s belief that it has strong defenses to the claims asserted, its intent to defend against these claims, and there being no specified quantum of damages sought in the complaint.

19

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In re Pegasystems Inc., Derivative Litigation

On November 21, 2022, a lawsuit was filed against the members of the Company’s board of directors, the Company’s chief operating and financial officer and the Company in the United States District Court for the District of Massachusetts, captioned Mary Larkin, derivatively on behalf of nominal defendant Pegasystems Inc. v. Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Alan Trefler, Larry Weber, and Kenneth Stillwell, defendants, and Pegasystems Inc., nominal defendant (Case 1:22-cv-11985). The complaint generally alleges the defendants sold shares of the Company while in possession of material nonpublic information relating to (i) the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and (ii) alleged misconduct by Company employees alleged in that litigation. On April 28, 2023, a lawsuit was filed in the United States District Court for the District of Massachusetts by Dag Sagfors, derivatively on behalf of nominal defendant Pegasystems Inc. asserting breach of fiduciary duty and related claims relating to the Virginia Appian litigation against the same defendants as the Larkin lawsuit. On May 17, 2023, the Larkin and Sagfors cases were consolidated and a joint motion to stay the consolidated case is pending before the Court. The Company also has received confidential demand letters raising substantially the same allegations set forth in the foregoing derivative complaints. On April 12, 2023, the Company’s board of directors (other than Mr. Trefler, who recused himself), formed a committee consisting solely of independent directors, to review, analyze, and investigate the matters raised in the demands and to determine in good faith what actions (if any) are reasonably believed to be appropriate under similar circumstances and reasonably believed to be in the best interests of the Company in response to the demand letters. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit and there being no specified quantum of damages sought in the complaint.

SEC Inquiry

Beginning in March 2023, the U.S. Securities and Exchange Commission (“SEC”) has requested certain information relating to, among other things, the accounting treatment of the Company’s above-described litigation with Appian Corporation. The Company is fully cooperating with the SEC’s requests.

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains or incorporates forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, intends to, projects, forecasts, guidance, likely, and usually or variations of such words and other similar expressions identify forward-looking statements, which speak 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 continued payment of our quarterly dividends;

•the timing of revenue recognition;

•management of our transition to a more subscription-based business model;

•variation in demand for our products and services, including among clients in the public sector;

•reliance on key personnel;

•global economic and political conditions and uncertainty, including impacts from public health emergencies and the war in Ukraine;

•reliance on third-party service providers, including hosting providers;

•compliance with our debt obligations and covenants;

•the potential impact of our convertible senior notes and Capped Call Transactions;

•foreign currency exchange rates;

•the potential legal and financial liabilities and 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.;

•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, 2022, Part II of this Quarterly Report on Form 10-Q, and other filings we make with the U.S. Securities and Exchange Commission (“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.

The forward-looking statements in this Quarterly Report represent our views as of October 25, 2023.

NON-GAAP 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, consistent with how management measures and forecasts our performance without the effect of often one-time charges and other items outside our normal operations. They are not a substitute for financial measures prepared under U.S. GAAP. A reconciliation of GAAP and non-GAAP measures is located with each non-GAAP measure.

BUSINESS OVERVIEW

We develop, market, license, host, and support enterprise software that helps organizations build agility into their business so they can adapt to change. Our powerful low-code platform for workflow automation and artificial intelligence-powered decisioning enables the world’s leading brands and government agencies to hyper-personalize customer experiences, streamline customer service, and automate mission-critical business processes and workflows. With Pega, our clients can leverage our intelligent technology and scalable architecture to accelerate their digital transformation. In addition, our client success teams, world-class partners, and clients leverage our Pega Express™ methodology to design and deploy mission-critical applications quickly and collaboratively.

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Our target clients are Global 2000 organizations and government agencies that require solutions to distinguish themselves in the markets they serve. Our solutions achieve and facilitate differentiation by increasing business agility, driving growth, improving productivity, attracting and retaining customers, and reducing risk. Along with our partners, we deliver solutions tailored to the specific industry needs of our clients.

Performance metrics

We use performance metrics to analyze and assess our overall performance, make operating decisions, and forecast and plan for future periods, including:

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.

In 2023, the Company revised its ACV methodology for maintenance and all contracts less than 12 months as its overall client renewal rate exceeds 90%. The impact of the change was $3 million and 0.3% of Total ACV or less for all quarters in 2022. Previously disclosed ACV amounts have been updated to allow for comparability. This simplification, made possible by improvements to the Company’s financial systems, ensures that ACV for all contract types and lengths is consistently calculated as the total contract value divided by the duration in years. Previously, ACV for maintenance was calculated as the maintenance revenue for the quarter then ended, multiplied by four, and ACV for contracts less than 12 months was equal to the contract’s total value. The Company believes the simplified methodology better represents the current value of its contracts and better aligns its definition with comparable companies.

Reconciliation of ACV and Constant Currency ACV

(in millions, except percentages)	Q3 22		Q3 23		1-Year Change
ACV	$	1,040	$	1,169	12	%
Impact of changes in foreign exchange rates	—		(22)
Constant Currency ACV	$	1,040	$	1,147	10	%

Note: Constant currency ACV is calculated by applying the Q3 2022 foreign exchange rates to all periods shown.

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Cash flow (1)

Note: Starting in the third quarter of 2023, the Company has calculated free cash flow as cash provided by (used in) operating activities less investments in property and equipment. To ensure comparability, previously disclosed amounts have been updated.

(Dollars in thousands)	Nine Months Ended September 30,
	2023				2022
			Margin (2)				Margin (2)
Cash provided by (used in) operating activities	$	137,920	14	%	$	(13,446)	(1)	%
Investment in property and equipment	(14,271)				(22,285)
Free cash flow	$	123,649	13	%	$	(35,731)	(4)	%
Additional information (3)
Legal fees	$	5,867			$	37,944
Restructuring	21,576				—
Interest on convertible senior notes	4,134				4,500
Other	—				3,266
	$	31,577			$	45,710

(1) Our non-GAAP free cash flow is defined as cash provided by (used in) operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency and are significantly affected by the timing and size of investments in our facilities. 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) Operating and Free Cash Flow Margin are calculated by comparing the respective cash flow to Total Revenue.

(3) The additional information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational performance.

•Legal fees: Includes 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 on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. The Notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1, beginning September 1, 2020.

•Other: Includes fees related to capital advisory services, canceled in-person sales and marketing events, and incremental costs incurred integrating acquisitions.

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Remaining performance obligations (“Backlog”)

Reconciliation of Backlog and Constant Currency Backlog (Non-GAAP)

(in millions, except percentages)	Q3 22		Q3 2023		1-Year Growth Rate
Backlog - GAAP	$	1,148	$	1,265	10	%
Impact of changes in foreign exchange rates	—		(33)
Constant currency backlog	$	1,148	$	1,232	7	%

Note: Constant currency Backlog is calculated by applying the Q3 2022 foreign exchange rates to all periods shown.

CRITICAL ACCOUNTING POLICIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited condensed consolidated financial statements, which have been prepared following accounting principles generally accepted in the United States of America (“U.S.”) and the rules and regulations of the SEC for interim financial reporting. Preparing these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions, and expectations of what could occur in the future, given the available information.

For more information about our critical accounting policies, we encourage you to read the discussion in the following locations in our Annual Report on Form 10-K for the year ended December 31, 2022:

•“Critical Accounting Estimates and Significant Judgments” in Item 7; and

•“Note 2. Significant Accounting Policies” in Item 8.

There have been no other significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

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RESULTS OF OPERATIONS

Revenue

(Dollars in thousands)	Three Months Ended September 30,								Change				Nine Months Ended September 30,								Change
	2023				2022								2023				2022
Pega Cloud	$	118,040	35	%	$	97,359	36	%	$	20,681	21	%	$	340,982	36	%	$	281,182	31	%	$	59,800	21	%
Maintenance	83,538		25	%	77,526		29	%	6,012		8	%	245,210		25	%	235,568		25	%	9,642		4	%
Subscription services	201,578		60	%	174,885		65	%	26,693		15	%	586,192		61	%	516,750		56	%	69,442		13	%
Subscription license	74,342		22	%	31,112		11	%	43,230		139	%	200,066		21	%	210,245		23	%	(10,179)		(5)	%
Subscription	275,920		82	%	205,997		76	%	69,923		34	%	786,258		82	%	726,995		79	%	59,263		8	%
Consulting	55,976		17	%	55,511		21	%	465		1	%	167,396		18	%	175,451		19	%	(8,055)		(5)	%
Perpetual license	2,747		1	%	9,223		3	%	(6,476)		(70)	%	4,729		—	%	18,929		2	%	(14,200)		(75)	%
	$	334,643	100	%	$	270,731	100	%	$	63,912	24	%	$	958,383	100	%	$	921,375	100	%	$	37,008	4	%

•The increases in Pega Cloud revenue for the three and nine months ended September 30, 2023 were primarily due to the growth of the hosted client base as our clients continued to expand their use of Pega Cloud.

•The increases in maintenance revenue in the three and nine months ended September 30, 2023 were primarily due to continued demand for our subscription license offerings which are generally bundled with maintenance.

•The increase in subscription license revenue in the three months ended September 30, 2023 was primarily due to increased license deliveries in the three months ended September 30, 2023. The decrease in subscription license revenue in the nine months ended September 30, 2023 was primarily due to several large multi-year contracts recognized in revenue in the nine months ended September 30, 2022.

•The decrease in consulting revenue in the nine months ended September 30, 2023 was primarily due to lower consultant realization rates in the Americas.

•The decreases in perpetual license revenue in the three and nine months ended September 30, 2023 reflects our strategy of promoting subscription-based arrangements.

Gross profit

(Dollars in thousands)	Three Months Ended September 30,								Change				Nine Months Ended September 30,								Change
	2023				2022								2023				2022
Pega Cloud	$	88,553	75	%	$	68,673	71	%	$	19,880	29	%	$	250,943	74	%	$	194,350	69	%	$	56,593	29	%
Maintenance	77,119		92	%	71,671		92	%	5,448		8	%	225,696		92	%	219,296		93	%	6,400		3	%
Subscription services	165,672		82	%	140,344		80	%	25,328		18	%	476,639		81	%	413,646		80	%	62,993		15	%
Subscription license	73,713		99	%	30,484		98	%	43,229		142	%	198,095		99	%	208,322		99	%	(10,227)		(5)	%
Subscription	239,385		87	%	170,828		83	%	68,557		40	%	674,734		86	%	621,968		86	%	52,766		8	%
Consulting	(1,228)		(2)	%	(2,267)		(4)	%	1,039		46	%	(8,866)		(5)	%	4,289		2	%	(13,155)		*
Perpetual license	2,723		99	%	9,120		99	%	(6,397)		(70)	%	4,678		99	%	18,756		99	%	(14,078)		(75)	%
	$	240,880	72	%	$	177,681	66	%	$	63,199	36	%	$	670,546	70	%	$	645,013	70	%	$	25,533	4	%

* not meaningful

•The increases in Pega Cloud gross profit percent in the three and nine months ended September 30, 2023 were primarily due to increased cost efficiency, particularly for hosting services, as Pega Cloud continues to grow and scale.

•The decrease in maintenance gross profit percent in the nine months ended September 30, 2023 was primarily due to an increase in compensation and benefits as a result of increased headcount.

•The increase in consulting gross profit percent in the three months ended September 30, 2023 was primarily due to higher consultant utilization in the Americas. The decrease in consulting profit percent in the nine months ended September 30, 2023, was primarily due to lower consultant realization rates in the Americas.

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Operating expenses

(Dollars in thousands)	Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
	2023			2022							2023			2022
Selling and marketing	$	131,598		$	153,517		$	(21,919)	(14)	%	$	425,253		$	472,951		$	(47,698)	(10)	%
% of Revenue	39		%	57		%					44		%	51		%
Research and development	$	74,955		$	75,342		$	(387)	(1)	%	$	224,262		$	221,173		$	3,089	1	%
% of Revenue	22		%	28		%					23		%	24		%
General and administrative	$	27,321		$	26,043		$	1,278	5	%	$	73,893		$	94,530		$	(20,637)	(22)	%
% of Revenue	8		%	10		%					8		%	10		%
Restructuring	$	17,822		$	—		$	17,822	100	%	$	21,450		$	—		$	21,450	100	%
% of Revenue	5		%	—		%					2		%	—		%

•The decreases in selling and marketing during the three and nine months ended September 30, 2023 were primarily due to decreases in compensation and benefits of $18.6 million and $45.0 million, respectively. The decreases were due to reduced headcount as we optimize our go-to-market strategy. For additional information, see "Note 9. Restructuring" in Part I, Item 1 of this Quarterly Report.

•The increase in research and development for the nine months ended September 30, 2023 was primarily due to additional investments in our products and services.

•The changes in general and administrative in the three and nine months ended September 30, 2023 were primarily due to an increase of $2.3 million in the three months ended September 30, 2023 and a decrease of $21.4 million in the nine months ended September 30, 2023 in legal fees and related expenses arising from proceedings outside the ordinary course of business. We expect to continue to incur additional costs for these proceedings. See "Note 15. Commitments and Contingencies" in Part I, Item 1 of this Quarterly Report and “Risk Factors” in Part I, Item 1A of our Annual Report for the year ended December 31, 2022 for additional information.

•The increases in restructuring expenses during the three and nine months ended September 30, 2023 were primarily due to our efforts to optimize our go-to-market organization. For additional information, see "Note 9. Restructuring" in Part I, Item 1 of this Quarterly Report.

Other income and expenses

(Dollars in thousands)	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
	2023		2022						2023		2022
Foreign currency transaction gain (loss)	$	1,994	$	3,826	$	(1,832)	(48)	%	$	(3,971)	$	8,415	$	(12,386)	*
Interest income	2,532		520		2,012		387	%	5,831		1,036		4,795		463	%
Interest expense	(1,533)		(1,992)		459		23	%	(5,229)		(5,882)		653		11	%
(Loss) on capped call transactions	(2,294)		(6,876)		4,582		67	%	(449)		(56,381)		55,932		99	%
Other income (loss), net	6,383		(29)		6,412		*		18,668		6,497		12,171		187	%
	$	7,082	$	(4,551)	$	11,633	*		$	14,850	$	(46,315)	$	61,165	*

* not meaningful

•The changes in foreign currency transaction gain (loss) in the three and nine months ended September 30, 2023 were primarily due to the impact of fluctuations in foreign currency exchange rates associated with foreign currency-denominated cash and receivables held by our subsidiary in the United Kingdom.

•The increases in interest income in the three and nine months ended September 30, 2023 were primarily due to increases in market interest rates.

•The decreases in interest expense in the three and nine months ended September 30, 2023 were due to our repurchases of Convertible Senior Notes in the nine months ended September 30, 2023. For additional information, see "Note 8. Debt" in Part I, Item 1 of this Quarterly Report.

•The changes in (loss) on capped call transactions in the three and nine months ended September 30, 2023 were due to fair value adjustments for our capped call transactions.

•The increase in other income (loss), net in the three months ended September 30, 2023 was due to a $6.4 million increase in the value of equity securities held in our venture investments portfolio. The increase in other income (loss), net in the nine months ended September 30, 2023, was due to a $7.9 million gain from repurchases of our convertible senior notes and a $10.9 million increase in the value of equity securities held in our venture investments portfolio. For additional information, see “Note 8. Debt” and "Note 10. Fair Value Measurements" in Part I, Item 1 of this Quarterly Report.

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Provision for income taxes

	Nine Months Ended September 30,
(Dollars in thousands)	2023			2022
Provision for income taxes	$	15,395		$	190,239
Effective income tax rate	(26)		%	(100)		%

The effective income tax rate in the nine months ended September 30, 2023 was primarily driven by the valuation allowance on our deferred tax assets in the U.S. and U.K. and projected taxable income in the U.S., partially offset by available tax credits and losses in the U.S.

LIQUIDITY AND CAPITAL RESOURCES

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash provided by (used in):
Operating activities	$	137,920	$	(13,446)
Investing activities	(24,176)		10,104
Financing activities	(85,031)		(43,484)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,621)		(5,513)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	27,092	$	(52,339)

(in thousands)	September 30, 2023		December 31, 2022
Held by U.S. entities	$	217,735	$	248,389
Held by foreign entities	118,574		48,832
Total cash, cash equivalents, and marketable securities	$	336,309	$	297,221

We believe that our current cash, cash flow provided by operations, borrowing capacity, and ability to engage in capital market transactions will be sufficient to fund our operations, stock repurchases, and quarterly cash dividends for at least the next 12 months and to meet our known long-term cash requirements. Whether these resources are adequate to meet our liquidity needs beyond that period will depend on our future growth, operating results, and the investments needed to support our operations. We may utilize available funds or seek external financing if we require additional capital resources.

If it becomes necessary or desirable to repatriate foreign funds, we may have to pay federal, state, and local income taxes as well as foreign withholding taxes upon repatriation. However, estimating the taxes we would have to pay is impracticable due to the complexity of income tax laws and regulations.

Operating activities

The change in cash provided by (used in) operating activities in the nine months ended September 30, 2023 was primarily due to growth in client collections, the impact of our cost-efficiency initiatives, and lower legal fees and related costs arising from proceedings outside the ordinary course of business. We expect to continue to incur additional costs for these proceedings. For additional information, see “Note 9. Restructuring” and "Note 15. Commitments and Contingencies" in Part I, Item 1 of this Quarterly Report.

Investing activities

The change in cash (used in) provided by investing activities in the nine months ended September 30, 2023 was primarily due to our investments in financial instruments and reduced investment in property and equipment as we optimize our office space.

Financing activities

Debt financing

In February 2020, we issued $600 million in aggregate principal amount of convertible senior notes, which mature on March 1, 2025. In the nine months ended September 30, 2023, we paid $89 million to repurchase $97.7 million in aggregate principal amount of convertible senior notes. As of September 30, 2023, we had $502 million in aggregate principal amount of convertible senior notes outstanding due on March 1, 2025. For additional information, see "Note 8. Debt" in Part I, Item 1 of this Quarterly Report.

In November 2019, and as since amended, we entered into a five-year $100 million senior secured revolving credit agreement (the “Credit Facility”) with PNC Bank, National Association. As of September 30, 2023 and December 31, 2022, we had $27.3 million in outstanding letters of credit, which reduced the Company’s available borrowing capacity under the Credit Facility and no outstanding cash borrowings under the Credit Facility. For additional information, see "Note 8. Debt" in Part I, Item 1 of this Quarterly Report.

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Stock repurchase program

Changes in the remaining stock repurchase authority:

(in thousands)	Nine Months Ended September 30, 2023
December 31, 2022	$	58,075
Authorizations (1)	1,925
September 30, 2023	$	60,000

(1) On April 25, 2023, our Board of Directors extended the expiration date of our current share repurchase program from June 30, 2023 to June 30, 2024, and the amount of stock we are authorized to repurchase was increased to $60 million.

Common stock repurchases

	Nine Months Ended September 30,
	2023			2022
(in thousands)	Shares	Amount		Shares	Amount
Stock repurchase program	—	—		279	24,508
Tax withholdings for net settlement of equity awards	39	1,654		253	17,575
	39	$	1,654	532	$	42,083

In the nine months ended September 30, 2023 and 2022, instead of receiving cash from the equity holders, we withheld shares with a value of $1.0 million and $11.5 million, respectively, for the exercise price of options. These amounts are not included in the table above.

Dividends

We intend to pay a quarterly cash dividend of $0.03 per share. However, the Board of Directors may terminate or modify the dividend program without prior notice.

	Nine Months Ended September 30,
(in thousands)	2023		2022
Dividend payments to stockholders	$	7,458	$	7,368

Contractual obligations

As of September 30, 2023, our contractual obligations were:

	Payments due by period
(in thousands)	Remainder of 2023		2024		2025		2026		2027		2028 and after		Other		Total
Convertible senior notes (1)	$	—	$	3,767	$	504,154	$	—	$	—	$	—	$	—	$	507,921
Purchase obligations (2)	43,491		134,122		126,065		120,745		134,060		177		—		558,660
Operating lease obligations	4,775		17,976		14,870		10,853		9,808		39,299		—		97,581
Venture investment commitments (3)	500		500		—		—		—		—		—		1,000
Liability for uncertain tax positions (4)	—		—		—		—		—		—		2,017		2,017
	$	48,766	$	156,365	$	645,089	$	131,598	$	143,868	$	39,476	$	2,017	$	1,167,179

(1) Includes principal and interest.

(2) Represents the fixed amount owed for purchase obligations of software licenses, hosting services, and sales and marketing programs.

(3) Represents the maximum funding under existing venture investment agreements. Our venture investment agreements generally allow us to withhold unpaid funds at our discretion.

(4) We cannot reasonably estimate the timing of this cash outflow due to uncertainties in the timing of the effective settlement of tax positions.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in financial market prices and rates.

Foreign currency exposure

Translation risk

Our international operations’ operating expenses are primarily denominated in foreign currencies. However, our international sales are also primarily denominated in foreign currencies, partially offsetting our foreign currency exposure.

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A hypothetical 10% strengthening in the U.S. dollar against other currencies would have resulted in the following:

	Nine Months Ended September 30,
	2023		2022
(Decrease) in revenue	(4)	%	(4)	%
(Decrease) increase in net income	(5)	%	2	%

Remeasurement risk

We incur transaction gains and losses from the remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of the entities in which they are recorded.

We are primarily exposed to changes in foreign currency exchange rates associated with the Australian dollar, Euro, and U.S. dollar-denominated cash, cash equivalents, receivables, and intercompany balances held by our U.K. subsidiary, a British pound functional entity.

A hypothetical 10% strengthening in the British pound exchange rate in comparison to the Australian dollar, Euro, and U.S. dollar would have resulted in the following impact:

	Nine Months Ended September 30,
(in thousands)	2023		2022
Foreign currency (loss)	$	(11,351)	$	(6,335)

ITEM 4.     CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of September 30, 2023. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2023.

(b) Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

29

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in “Note 15. Commitments and Contingencies”, in Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

ITEM 1A.     RISK FACTORS

We encourage you to carefully consider the risk factors identified in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission. These risk factors could materially affect our business, financial condition, and future results and may cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report on Form 10-Q or elsewhere by management.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer purchases of equity securities (1)

Common stock repurchased in the three months ended September 30, 2023:

(in thousands, except per share amounts)	Total Number of Shares Purchased (2)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Program	Approximate Dollar Value of Shares That May Yet Be Purchased at Period End Under Publicly Announced Share Repurchased Programs
July 1, 2023 - July 31, 2023	3	$	55.81	—	$	60,000
August 1, 2023 - August 31, 2023	—	—		—	$	60,000
September 1, 2023 - September 30, 2023	4	48.92		—	$	60,000
	7	$	51.65	—

(1) For additional information, see "Liquidity and Capital Resources" in Part I, Item 2 of this Quarterly Report.

(2) Includes shares withheld to cover the option exercise price and tax withholding obligations for stock compensation awards subject to net settlement provisions.

ITEM 5.     OTHER INFORMATION

Rule 10b5-1 and non-rule 10b5-1 trading arrangements

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6.     EXHIBITS

Exhibit No.	Description	Incorporation by Reference			Filed Herewith
		Form	Exhibit	Filing Date
3.1	Restated Articles of Organization of the Registrant and Amendments thereto	10-Q	3.1	November 4, 2014
3.2	Amended and Restated Bylaws of Pegasystems Inc.	8-K	3.2	June 15, 2020
31.1	Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 of the Chief Executive Officer.				X
31.2	Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 of the Chief Financial Officer.				X
32	Certification pursuant to 18 U.S.C. Section 1350 of the Chief Executive Officer and the Chief Financial Officer.				+
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.				X
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	Inline XBRL Taxonomy Label Linkbase Document.				X
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.				X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)				X

+ Indicates that the exhibit is being furnished with this report and is not filed as a part of it.

30

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Pegasystems Inc.
Dated:	October 25, 2023	By:	/s/ KENNETH STILLWELL
			Kenneth Stillwell
			Chief Operating Officer and Chief Financial Officer
			(Principal Financial Officer)

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Alan Trefler, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Pegasystems Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: October 25, 2023    

/s/ ALAN TREFLER

Alan Trefler

Chairman and Chief Executive Officer

(Principal Executive Officer)

1

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kenneth Stillwell, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Pegasystems Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: October 25, 2023    

/s/ KENNETH STILLWELL

Kenneth Stillwell

Chief Operating Officer and Chief Financial Officer

(Principal Financial Officer)

1

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pegasystems Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Alan Trefler, Chairman and Chief Executive Officer of Pegasystems Inc., and Kenneth Stillwell, Chief Operating Officer and Chief Financial Officer of Pegasystems Inc., each certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: October 25, 2023

/s/ ALAN TREFLER

Alan Trefler

Chairman and Chief Executive Officer

(Principal Executive Officer)

/s/ KENNETH STILLWELL

Kenneth Stillwell

Chief Operating Officer and Chief Financial Officer

(Principal Financial Officer)

1

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Oct. 17, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	1-11859
Entity Registrant Name	PEGASYSTEMS INC.
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2787865
Entity Address, Address Line One	One Main Street
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02142
City Area Code	617
Local Phone Number	374-9600
Title of 12(b) Security	Common Stock, $.01 par value per share
Trading Symbol	PEGA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		83,555,919
Amendment Flag	false
Entity Central Index Key	0001013857
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 169,023	$ 145,054
Marketable securities	167,286	152,167
Total cash, cash equivalents, and marketable securities	336,309	297,221
Accounts receivable, net	168,795	255,150
Unbilled receivables, net	199,948	213,719
Other current assets	71,438	80,388
Total current assets	776,490	846,478
Unbilled receivables, net	73,795	95,806
Goodwill	81,437	81,399
Other long-term assets	290,807	333,989
Total assets	1,222,529	1,357,672
Current liabilities:
Accounts payable	20,541	18,195
Accrued expenses	43,624	50,355
Accrued compensation and related expenses	93,511	127,728
Deferred revenue	297,067	325,212
Other current liabilities	18,038	17,450
Total current liabilities	472,781	538,940
Convertible senior notes, net	498,753	593,609
Operating lease liabilities	68,874	79,152
Other long-term liabilities	14,485	15,128
Total liabilities	1,054,893	1,226,829
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred stock, 1,000 shares authorized; none issued	0	0
Common stock, 200,000 shares authorized; 83,523 and 82,436 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	835	824
Additional paid-in capital	343,259	229,602
Accumulated deficit	(151,370)	(76,513)
Accumulated other comprehensive (loss)	(25,088)	(23,070)
Total stockholders’ equity	167,636	130,843
Total liabilities and stockholders’ equity	$ 1,222,529	$ 1,357,672

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Thousands	Sep. 30, 2023	Dec. 31, 2022
Stockholders’ equity:
Preferred stock, shares authorized (in shares)	1,000	1,000
Preferred stock, shares issued (in shares)	0	0
Common stock, shares authorized (in shares)	200,000	200,000
Common stock, shares issued (in shares)	83,523	82,436
Common stock, shares outstanding (in shares)	83,523	82,436

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue
Total revenue	$ 334,643	$ 270,731	$ 958,383	$ 921,375
Cost of revenue
Total cost of revenue	93,763	93,050	287,837	276,362
Gross profit	240,880	177,681	670,546	645,013
Operating expenses
Selling and marketing	131,598	153,517	425,253	472,951
Research and development	74,955	75,342	224,262	221,173
General and administrative	27,321	26,043	73,893	94,530
Restructuring	17,822	0	21,450	0
Total operating expenses	251,696	254,902	744,858	788,654
(Loss) from operations	(10,816)	(77,221)	(74,312)	(143,641)
Foreign currency transaction gain (loss)	1,994	3,826	(3,971)	8,415
Interest income	2,532	520	5,831	1,036
Interest expense	(1,533)	(1,992)	(5,229)	(5,882)
(Loss) on capped call transactions	(2,294)	(6,876)	(449)	(56,381)
Other income (loss), net	6,383	(29)	18,668	6,497
(Loss) before provision for income taxes	(3,734)	(81,772)	(59,462)	(189,956)
Provision for income taxes	3,545	11,748	15,395	190,239
Net (loss)	$ (7,279)	$ (93,520)	$ (74,857)	$ (380,195)
(Loss) per share
Basic (in dollars per share)	$ (0.09)	$ (1.14)	$ (0.90)	$ (4.65)
Diluted (in dollars per share)	$ (0.09)	$ (1.14)	$ (0.90)	$ (4.65)
Weighted-average number of common shares outstanding
Basic (in shares)	83,336	81,996	82,996	81,842
Diluted (in shares)	83,336	81,996	82,996	81,842
Subscription services
Revenue
Total revenue	$ 201,578	$ 174,885	$ 586,192	$ 516,750
Cost of revenue
Total cost of revenue	35,906	34,541	109,553	103,104
Subscription license
Revenue
Total revenue	74,342	31,112	200,066	210,245
Cost of revenue
Total cost of revenue	629	628	1,971	1,923
Consulting
Revenue
Total revenue	55,976	55,511	167,396	175,451
Cost of revenue
Total cost of revenue	57,204	57,778	176,262	171,162
Perpetual license
Revenue
Total revenue	2,747	9,223	4,729	18,929
Cost of revenue
Total cost of revenue	$ 24	$ 103	$ 51	$ 173

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net (loss)	$ (7,279)	$ (93,520)	$ (74,857)	$ (380,195)
Other comprehensive (loss), net of tax
Unrealized (loss) on available-for-sale securities	(40)	(73)	(281)	(1,000)
Foreign currency translation adjustments	(3,687)	(6,700)	(1,737)	(20,936)
Total other comprehensive (loss), net of tax	(3,727)	(6,773)	(2,018)	(21,936)
Comprehensive (loss)	$ (11,006)	$ (100,293)	$ (76,875)	$ (402,131)

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive (Loss)
Balance, beginning of period (in shares) at Dec. 31, 2021		81,712
Balance, beginning of period at Dec. 31, 2021	$ 416,088	$ 817	$ 145,810	$ 276,449	$ (6,988)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock (in shares)		(242)
Repurchase of common stock	(22,583)	$ (2)	(22,581)
Issuance of common stock for stock compensation plans (in shares)		297
Issuance of common stock for stock compensation plans	(12,128)	$ 3	(12,131)
Issuance of common stock under the employee stock purchase plan (in shares)		35
Issuance of common stock under the employee stock purchase plan	2,446		2,446
Stock-based compensation	28,227		28,227
Cash dividends declared	(2,455)			(2,455)
Other comprehensive (loss) income	(2,548)				(2,548)
Net (loss)	(379)			(379)
Balance, end of period (in shares) at Mar. 31, 2022		81,802
Balance, end of period at Mar. 31, 2022	406,668	$ 818	141,771	273,615	(9,536)
Balance, beginning of period (in shares) at Dec. 31, 2021		81,712
Balance, beginning of period at Dec. 31, 2021	416,088	$ 817	145,810	276,449	(6,988)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive (loss) income	(21,936)
Net (loss)	(380,195)
Balance, end of period (in shares) at Sep. 30, 2022		82,164
Balance, end of period at Sep. 30, 2022	64,961	$ 822	204,189	(111,126)	(28,924)
Balance, beginning of period (in shares) at Mar. 31, 2022		81,802
Balance, beginning of period at Mar. 31, 2022	406,668	$ 818	141,771	273,615	(9,536)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock (in shares)		(38)
Repurchase of common stock	(1,925)		(1,925)
Issuance of common stock for stock compensation plans (in shares)		117
Issuance of common stock for stock compensation plans	(3,251)	$ 1	(3,252)
Issuance of common stock under the employee stock purchase plan (in shares)		59
Issuance of common stock under the employee stock purchase plan	2,357		2,357
Stock-based compensation	31,300		31,300
Cash dividends declared	(2,459)			(2,459)
Other comprehensive (loss) income	(12,615)				(12,615)
Net (loss)	(286,296)			(286,296)
Balance, end of period (in shares) at Jun. 30, 2022		81,940
Balance, end of period at Jun. 30, 2022	133,779	$ 819	170,251	(15,140)	(22,151)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for stock compensation plans (in shares)		138
Issuance of common stock for stock compensation plans	(2,196)	$ 2	(2,198)
Issuance of common stock under the employee stock purchase plan (in shares)		86
Issuance of common stock under the employee stock purchase plan	2,363	$ 1	2,362
Stock-based compensation	33,774		33,774
Cash dividends declared	(2,466)			(2,466)
Other comprehensive (loss) income	(6,773)				(6,773)
Net (loss)	(93,520)			(93,520)
Balance, end of period (in shares) at Sep. 30, 2022		82,164
Balance, end of period at Sep. 30, 2022	$ 64,961	$ 822	204,189	(111,126)	(28,924)
Balance, beginning of period (in shares) at Dec. 31, 2022	82,436	82,436
Balance, beginning of period at Dec. 31, 2022	$ 130,843	$ 824	229,602	(76,513)	(23,070)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for stock compensation plans (in shares)		452
Issuance of common stock for stock compensation plans	672	$ 4	668
Issuance of common stock under the employee stock purchase plan (in shares)		52
Issuance of common stock under the employee stock purchase plan	2,143	$ 1	2,142
Stock-based compensation	42,557		42,557
Cash dividends declared	(2,488)		(2,488)
Other comprehensive (loss) income	1,543				1,543
Net (loss)	(20,774)			(20,774)
Balance, end of period (in shares) at Mar. 31, 2023		82,940
Balance, end of period at Mar. 31, 2023	$ 154,496	$ 829	272,481	(97,287)	(21,527)
Balance, beginning of period (in shares) at Dec. 31, 2022	82,436	82,436
Balance, beginning of period at Dec. 31, 2022	$ 130,843	$ 824	229,602	(76,513)	(23,070)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive (loss) income	(2,018)
Net (loss)	$ (74,857)
Balance, end of period (in shares) at Sep. 30, 2023	83,523	83,523
Balance, end of period at Sep. 30, 2023	$ 167,636	$ 835	343,259	(151,370)	(25,088)
Balance, beginning of period (in shares) at Mar. 31, 2023		82,940
Balance, beginning of period at Mar. 31, 2023	154,496	$ 829	272,481	(97,287)	(21,527)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for stock compensation plans (in shares)		225
Issuance of common stock for stock compensation plans	1,826	$ 2	1,824
Issuance of common stock under the employee stock purchase plan (in shares)		47
Issuance of common stock under the employee stock purchase plan	1,981	$ 1	1,980
Stock-based compensation	36,227		36,227
Cash dividends declared	(2,496)		(2,496)
Other comprehensive (loss) income	166				166
Net (loss)	(46,804)			(46,804)
Balance, end of period (in shares) at Jun. 30, 2023		83,212
Balance, end of period at Jun. 30, 2023	145,396	$ 832	310,016	(144,091)	(21,361)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for stock compensation plans (in shares)		257
Issuance of common stock for stock compensation plans	2,450	$ 3	2,447
Issuance of common stock under the employee stock purchase plan (in shares)		54
Issuance of common stock under the employee stock purchase plan	2,003		2,003
Stock-based compensation	31,299		31,299
Cash dividends declared	(2,506)		(2,506)
Other comprehensive (loss) income	(3,727)				(3,727)
Net (loss)	$ (7,279)			(7,279)
Balance, end of period (in shares) at Sep. 30, 2023	83,523	83,523
Balance, end of period at Sep. 30, 2023	$ 167,636	$ 835	$ 343,259	$ (151,370)	$ (25,088)

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Cash dividend declared	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.03

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net (loss)	$ (7,279)	$ (93,520)	$ (74,857)	$ (380,195)
Adjustments to reconcile net (loss) to cash provided by (used in) operating activities
Stock-based compensation	31,299	33,774	110,083	93,301
Deferred income taxes			(188)	169,489
Loss on capped call transactions	2,294	6,876	449	56,381
Amortization of deferred commissions	14,947	11,597	43,974	39,752
Lease expense			12,018	11,500
Amortization of intangible assets and depreciation			14,181	12,381
Foreign currency transaction loss (gain)	(1,994)	(3,826)	3,971	(8,415)
Other non-cash			(16,487)	(1,705)
Change in operating assets and liabilities, net			44,776	(5,935)
Cash provided by (used in) operating activities			137,920	(13,446)
Investing activities
Purchases of investments			(190,466)	(39,056)
Proceeds from maturities and called investments			169,836	53,952
Sales of investments			10,725	18,415
Payments for acquisitions, net of cash acquired			0	(922)
Investment in property and equipment			(14,271)	(22,285)
Cash (used in) provided by investing activities			(24,176)	10,104
Financing activities
Repurchases of convertible senior notes			(88,989)	0
Dividend payments to stockholders			(7,458)	(7,368)
Proceeds from employee stock purchase plan			6,127	7,166
Proceeds from stock option exercises			6,602	0
Common stock repurchases			(1,654)	(43,282)
Other			341	0
Cash (used in) financing activities			(85,031)	(43,484)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			(1,621)	(5,513)
Net increase (decrease) in cash, cash equivalents, and restricted cash			27,092	(52,339)
Cash, cash equivalents, and restricted cash, beginning of period			145,054	159,965
Cash, cash equivalents, and restricted cash, end of period	172,146	107,626	172,146	107,626
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	169,023	107,626	169,023	107,626
Restricted cash included in other long-term assets	3,123	0	3,123	0
Total cash, cash equivalents, and restricted cash	$ 172,146	$ 107,626	$ 172,146	$ 107,626

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

BASIS OF PRESENTATION

NOTE 1. BASIS OF PRESENTATION

Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for 2023.

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MARKETABLE SECURITIES

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

MARKETABLE SECURITIES

NOTE 2. MARKETABLE SECURITIES

	September 30, 2023								December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Government debt	$	17,931	$	—	$	(18)	$	17,913	$	2,960	$	—	$	(52)	$	2,908
Corporate debt	149,927		—		(554)		149,373		151,906		—		(2,647)		149,259
	$	167,858	$	—	$	(572)	$	167,286	$	154,866	$	—	$	(2,699)	$	152,167

As of September 30, 2023, marketable securities’ maturities ranged from October 2023 to January 2026, with a weighted average remaining maturity of 0.5 years.

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

Receivables

(in thousands)	September 30, 2023		December 31, 2022
Accounts receivable, net	$	168,795	$	255,150
Unbilled receivables, net	199,948		213,719
Long-term unbilled receivables, net	73,795		95,806
	$	442,538	$	564,675

Unbilled receivables

Unbilled receivables are client-committed amounts for which revenue recognition precedes billing. Billing is solely subject to the passage of time.

Unbilled receivables by expected collection date:

(Dollars in thousands)	September 30, 2023
1 year or less	$	199,948	73	%
1-2 years	58,604		21	%
2-5 years	15,191		6	%
	$	273,743	100	%

Unbilled receivables by contract effective date:

(Dollars in thousands)	September 30, 2023
2023	$	90,227	33	%
2022	92,065		34	%
2021	62,729		23	%
2020	19,820		7	%
2019 and prior	8,902		3	%
	$	273,743	100	%

Contract assets

Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation.

(in thousands)	September 30, 2023		December 31, 2022
Contract assets (1)	$	13,263	$	17,546
Long-term contract assets (2)	10,732		16,470
	$	23,995	$	34,016

(1) Included in other current assets.

(2) Included in other long-term assets.

Deferred revenue

Deferred revenue consists of billings and payments received in advance of revenue recognition.

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	297,067	$	325,212
Long-term deferred revenue (1)	2,605		3,552
	$	299,672	$	328,764

(1) Included in other long-term liabilities.

Deferred revenue decreased in the nine months ended September 30, 2023, primarily due to $292.3 million of revenue recognized during the period included in deferred revenue as of December 31, 2022 exceeded new billings in advance of revenue recognition.

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DEFERRED COMMISSIONS

9 Months Ended

Sep. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

DEFERRED COMMISSIONS

NOTE 4. DEFERRED COMMISSIONS

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions (1)	$	107,399	$	130,195

(1) Included in other long-term assets.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Amortization of deferred commissions (1)	$	14,947	$	11,597	$	43,974	$	39,752

(1) Included in selling and marketing.

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GOODWILL AND OTHER INTANGIBLES

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

NOTE 5. GOODWILL AND OTHER INTANGIBLES

Goodwill

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	81,399	$	81,923
Currency translation adjustments	38		(722)
September 30,	$	81,437	$	81,201

Intangibles

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.

		September 30, 2023
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,086	$	(59,661)	$	3,425
Technology	2-10 years	68,103		(63,579)		4,524
Other	1-5 years	5,361		(5,361)		—
		$	136,550	$	(128,601)	$	7,949

(1) Included in other long-term assets.

		December 31, 2022
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,076	$	(58,623)	$	4,453
Technology	2-10 years	68,056		(61,621)		6,435
Other	1-5 years	5,361		(5,361)		—
		$	136,493	$	(125,605)	$	10,888

(1) Included in other long-term assets.

Future estimated intangibles assets amortization:

(in thousands)	September 30, 2023
Remainder of 2023	$	964
2024	3,169
2025	2,615
2026	874
2027	327
	$	7,949

Amortization of intangible assets:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	622	$	705	$	1,949	$	2,017
Selling and marketing	343		343		1,028		1,028
	$	965	$	1,048	$	2,977	$	3,045

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OTHER ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2023

Other Assets and Liabilities [Abstract]

OTHER ASSETS AND LIABILITIES

NOTE 6. OTHER ASSETS AND LIABILITIES

Other current assets

(in thousands)	September 30, 2023		December 31, 2022
Income tax receivables	$	19,663	$	25,354
Contract assets	13,263		17,546
Other	38,512		37,488
	$	71,438	$	80,388

Other long-term assets

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions	$	107,399	$	130,195
Right of use assets	65,871		76,114
Property and equipment	49,481		55,056
Venture investments	19,348		13,069
Contract assets	10,732		16,470
Intangible assets	7,949		10,888
Capped call transactions	1,792		2,582
Deferred income taxes	5,046		4,795
Restricted cash	3,123		—
Other	20,066		24,820
	$	290,807	$	333,989

Other current liabilities

(in thousands)	September 30, 2023		December 31, 2022
Operating lease liabilities	$	15,532	$	14,976
Dividends payable	2,506		2,474
	$	18,038	$	17,450

Other long-term liabilities

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	2,605	$	3,552
Income taxes payable	2,017		3,207
Other	9,863		8,369
	$	14,485	$	15,128

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LEASES

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

LEASES

NOTE 7. LEASES

Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Fixed lease costs	$	4,718	$	4,688	$	14,979	$	14,747
Short-term lease costs	660		916		2,137		2,510
Variable lease costs	2,254		905		6,414		2,395
	$	7,632	$	6,509	$	23,530	$	19,652

Right of use assets and lease liabilities

(in thousands)	September 30, 2023		December 31, 2022
Right of use assets (1)	$	65,871	$	76,114
Operating lease liabilities (2)	$	15,532	$	14,976
Long-term operating lease liabilities	$	68,874	$	79,152

(1) Included in other long-term assets.

(2) Included in other current liabilities.

Weighted-average remaining lease term and discount rate for the Company’s leases were:

	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	7.0 years		7.5 years
Weighted-average discount rate (1)	4.0	%	4.1	%

(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.

Maturities of lease liabilities:

(in thousands)	September 30, 2023
Remainder of 2023	$	4,775
2024	17,976
2025	14,870
2026	10,853
2027	9,808
2028	9,245
Thereafter	30,054
Total lease payments	97,581
Less: imputed interest (1)	(13,175)
	$	84,406

(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.

Cash flow information

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for operating leases, net of tenant improvement allowances	$	14,378	$	11,628
Right of use assets recognized for new leases and amendments (non-cash)	$	1,782	$	6,618

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DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

DEBT

NOTE 8. DEBT

Convertible senior notes and capped calls

Convertible senior notes

In February 2020, the Company issued Convertible Senior Notes (the "Notes") with an aggregate principal of $600 million, due March 1, 2025, in a private placement. No principal payments are due before maturity. The Notes accrue interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1, beginning September 1, 2020.

In the nine months ended September 30, 2023, the Company recognized a gain of $7.9 million in other income (loss), net from repurchases of Notes representing $97.7 million in aggregate principal amount.

Conversion rights

The conversion rate is 7.4045 shares of common stock per $1,000 principal amount of the Notes, representing an initial conversion price of $135.05 per share of common stock. The conversion rate will be adjusted upon certain events, including spin-offs, tender offers, exchange offers, and certain stockholder distributions. The Company will settle conversions by paying or delivering cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate.

Beginning on September 1, 2024, noteholders may convert their Notes at any time at their election.

Before September 1, 2024, noteholders may convert their Notes in the following circumstances:

•During any calendar quarter beginning after June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter.

•During the five consecutive business days immediately after any five consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day.

•Upon certain corporate events or distributions or if the Company calls any Notes for redemption, noteholders may convert before the close of business on the business day immediately before the related redemption date (or, if the Company fails to pay the redemption price in full on the redemption date until the Company pays the redemption price).

As of September 30, 2023, the Notes were not eligible for conversion.

Repurchase rights

On or after March 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest, if the last reported sale price of the Company’s common stock exceeded 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice.

If certain corporate events that constitute a “Fundamental Change” occur, each noteholder will have the right to require the Company to repurchase for cash all of such noteholder’s Notes, or any portion of the principal thereof that is equal to $1,000 or a multiple of $1,000, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. A Fundamental Change relates to mergers, changes in control of the Company, liquidation/dissolution of the Company, or the delisting of the Company’s common stock.

Carrying value of the Notes:

(in thousands)	September 30, 2023		December 31, 2022
Principal	$	502,270	$	600,000
Unamortized issuance costs	(3,517)		(6,391)
Convertible senior notes, net	$	498,753	$	593,609

Interest expense related to the Notes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Contractual interest expense (0.75% coupon)	$	827	$	1,125	$	2,949	$	3,375
Amortization of issuance costs	613		724		1,988		2,163
	$	1,440	$	1,849	$	4,937	$	5,538

The average interest rate on the Notes in the nine months ended September 30, 2023 and 2022 was 1.2%.

Future payments:

	September 30, 2023
(in thousands)	Principal		Interest		Total
2024	$	—	$	3,767	$	3,767
2025	502,270		1,884		504,154
	$	502,270	$	5,651	$	507,921

Capped call transactions

In February 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions covered approximately 4.4 million shares (representing the number of shares for which the Notes were initially convertible) of the Company’s common stock.

In the nine months ended September 30, 2023, Capped Call Transactions covering approximately 0.7 million shares were settled for proceeds of $0.3 million. As of September 30, 2023, Capped Call Transactions covering approximately 3.7 million shares were outstanding.

The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The cap price of the Capped Call Transactions is subject to adjustment upon specified extraordinary events affecting the Company, including mergers and tender offers.

The Capped Call Transactions are accounted for as derivative instruments and do not qualify for the Company’s own equity scope exception in ASC 815 since, in some cases of early settlement, the settlement value calculated following the governing documents may not represent a fair value measurement. The Capped Call Transactions are classified as other long-term assets and remeasured to fair value each reporting period, resulting in a non-operating gain or loss.

Change in capped call transactions:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	2,582	$	59,964
Settlements	(341)		—
Fair value adjustment	(449)		(56,381)
September 30,	$	1,792	$	3,583

Credit facility

In November 2019, and as since amended, the Company entered into a five-year $100 million senior secured revolving credit agreement (the “Credit Facility”) with PNC Bank, National Association. The Company may use borrowings for general corporate purposes and to finance working capital needs. Subject to specific conditions and the agreement of the financial institutions lending the additional amount, the aggregate commitment may be increased to $200 million. The commitments expire on November 4, 2024, and any outstanding loans will be payable on such date. The Credit Facility, as amended, contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions.

The Company is required to comply with financial covenants, including:

•Through December 31, 2023, the parent company must maintain at least $200 million in cash, investments, and availability under the Credit Facility and the Company must maintain:

	Year to Date
(in thousands)	March 31, 2023		June 30, 2023		September 30, 2023		December 31, 2023
Minimum Consolidated EBITDA (as defined in the Credit Facility)	$	38,862	$	59,894	$	95,597	$	214,590

•Beginning with the fiscal quarter ended March 31, 2024, a maximum net consolidated leverage ratio of 3.5 to 1.0 (with a step-up for certain acquisitions) and a minimum consolidated interest coverage ratio of 3.5 to 1.0.

As of September 30, 2023 and December 31, 2022, the Company had $27.3 million in outstanding letters of credit, which reduced the Company’s available borrowing capacity under the Credit Facility and no outstanding cash borrowings under the Credit Facility.

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RESTRUCTURING

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

RESTRUCTURING

NOTE 9. RESTRUCTURING

The Company has undertaken the following restructuring activities as it optimizes its go-to-market strategy and reassesses its office space needs:

	Three months ended	Expense
Employee severance and related benefits and closure of a US office	December 31, 2022	$	21,743
Office space reduction	March 31, 2023	$	1,241
Employee severance and related benefits	June 30, 2023	$	1,581
Employee severance and related benefits and closure of a foreign office	September 30, 2023	$	17,236

Accrued employee severance and related benefits:

Change for all restructuring actions:

	Nine Months Ended September 30,
(in thousands)	2023
January 1,	$	18,573
Costs incurred	19,921
Cash disbursements	(21,576)
Currency translation adjustments	(203)
September 30,	$	16,715

Note: Accrued employee severance and related benefits is included in accrued compensation and related expenses.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:

•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;

•Level 2 - significant other inputs that are observable either directly or indirectly; and

•Level 3 - significant unobservable inputs with little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data when available and minimize unobservable inputs when determining fair value.

The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.

Assets and liabilities measured at fair value on a recurring basis:

	September 30, 2023								December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	22,686	$	—	$	—	$	22,686	$	2,526	$	—	$	—	$	2,526
Marketable securities	$	—	$	167,286	$	—	$	167,286	$	—	$	152,167	$	—	$	152,167
Capped Call Transactions (1)	$	—	$	1,792	$	—	$	1,792	$	—	$	2,582	$	—	$	2,582
Venture investments (1) (2)	$	—	$	—	$	19,348	$	19,348	$	—	$	—	$	13,069	$	13,069

(1) Included in other long-term assets.

(2) Investments in privately-held companies.

Changes in venture investments:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	13,069	$	7,648
New investments	400		400
Sales of investments	(2,773)		(3,954)
Changes in foreign exchange rates	27		(675)
Changes in fair value:
included in other income (loss), net	10,886		5,989
included in other comprehensive (loss)	(2,261)		2,502
September 30,	$	19,348	$	11,910

The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.

Fair value of the Notes

The fair value of the Notes outstanding (including the embedded conversion feature) was $460.3 million as of September 30, 2023 and $521.1 million as of December 31, 2022. In the nine months ended September 30, 2023 the Company repurchased Notes representing $97.7 million in aggregate principal amount.

The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.

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REVENUE

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 11. REVENUE

Geographic revenue

	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)	2023				2022				2023				2022
U.S.	$	154,741	47	%	$	148,200	55	%	$	489,645	51	%	$	513,197	56	%
Other Americas	23,497		7	%	18,546		7	%	58,013		6	%	80,558		9	%
United Kingdom (“U.K.”)	41,622		12	%	24,074		9	%	112,751		12	%	83,837		9	%
Europe (excluding U.K.), Middle East, and Africa	67,880		20	%	46,212		17	%	173,551		18	%	140,586		15	%
Asia-Pacific	46,903		14	%	33,699		12	%	124,423		13	%	103,197		11	%
	$	334,643	100	%	$	270,731	100	%	$	958,383	100	%	$	921,375	100	%

Revenue streams

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Perpetual license	$	2,747	$	9,223	$	4,729	$	18,929
Subscription license	74,342		31,112		200,066		210,245
Revenue recognized at a point in time	77,089		40,335		204,795		229,174
Maintenance	83,538		77,526		245,210		235,568
Pega Cloud	118,040		97,359		340,982		281,182
Consulting	55,976		55,511		167,396		175,451
Revenue recognized over time	257,554		230,396		753,588		692,201
Total revenue	$	334,643	$	270,731	$	958,383	$	921,375

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Pega Cloud	$	118,040	$	97,359	$	340,982	$	281,182
Maintenance	83,538		77,526		245,210		235,568
Subscription services	201,578		174,885		586,192		516,750
Subscription license	74,342		31,112		200,066		210,245
Subscription	275,920		205,997		786,258		726,995
Consulting	55,976		55,511		167,396		175,451
Perpetual license	2,747		9,223		4,729		18,929
	$	334,643	$	270,731	$	958,383	$	921,375

Remaining performance obligations ("Backlog")

Expected future revenue from existing non-cancellable contracts:

As of September 30, 2023:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	202,610	$	391,324	$	48,427	$	4,567	$	39,335	$	686,263	54	%
1-2 years	58,610		239,787		4,356		2,696		3,662		309,111		24	%
2-3 years	28,585		121,778		8,518		—		1,100		159,981		13	%
Greater than 3 years	17,478		89,870		2,664		—		—		110,012		9	%
	$	307,283	$	842,759	$	63,965	$	7,263	$	44,097	$	1,265,367	100	%

As of September 30, 2022:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	191,045	$	328,111	$	69,753	$	814	$	27,968	$	617,691	53	%
1-2 years	55,141		213,304		4,113		4,505		6,699		283,762		25	%
2-3 years	24,496		115,416		1,420		2,252		1,648		145,232		13	%
Greater than 3 years	16,198		82,807		1,734		—		508		101,247		9	%
	$	286,880	$	739,638	$	77,020	$	7,571	$	36,823	$	1,147,932	100	%

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 12. STOCK-BASED COMPENSATION

Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	6,410	$	6,797	$	22,497	$	19,754
Selling and marketing	10,401		12,933		43,410		36,524
Research and development	7,375		7,724		24,286		22,425
General and administrative	7,113		6,320		19,890		14,598
	$	31,299	$	33,774	$	110,083	$	93,301
Income tax benefit	$	(316)	$	(600)	$	(1,569)	$	(1,505)

As of September 30, 2023, the Company had $137.5 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.8 years.

Grants

	Nine Months Ended September 30, 2023
(in thousands)	Shares	Total Fair Value
Restricted stock units	1,514	$	70,962
Non-qualified stock options	911	$	19,142
Performance stock options (1)	906	$	18,265
Common stock	13	$	600

(1) Performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date. The options usually vest over two years and expire ten years from the grant date, subject to specific performance conditions.

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INCOME TAXES

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13. INCOME TAXES

Effective income tax rate

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2023		2022		2023			2022
Provision for income taxes	$	3,545	$	11,748	$	15,395		$	190,239
Effective income tax rate					(26)		%	(100)		%

The Company’s effective income tax rate in the nine months ended September 30, 2023 was primarily driven by the valuation allowance on the Company’s deferred tax assets in the U.S. and U.K. and projected taxable income in the U.S., partially offset by available tax credits and losses in the U.S.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. A deferred tax valuation allowance requires significant judgment and uncertainties, including assumptions about future taxable income. Quarterly, the Company reassesses the need for a valuation allowance on its net deferred tax assets by weighting all available and objectively verifiable negative and positive evidence, including projected future reversals of existing taxable temporary differences, committed contractual backlog (“Backlog”), projected future taxable income, including the impact of enacted legislation, tax-planning strategies, and recent operating results.

The Company intends to maintain a valuation allowance on the Company’s U.S. and U.K. net deferred tax assets until sufficient evidence exists to support the realization of these deferred tax assets.

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(LOSS) PER SHARE

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

(LOSS) PER SHARE

NOTE 14. (LOSS) PER SHARE

Basic (loss) per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted (loss) per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and convertible senior notes.

Calculation of (loss) per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding	83,336		81,996		82,996		81,842
(Loss) per share, basic	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)	83,336		81,996		82,996		81,842
(Loss) per share, diluted	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Outstanding anti-dilutive stock options and RSUs (4)	2,255		3,019		1,652		3,589

(1) All dilutive securities are excluded in periods of loss as their inclusion would be anti-dilutive.

(2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue approximately 3.7 million shares as of September 30, 2023.

(3) The Company’s Capped Call Transactions represent the equivalent of approximately 3.7 million shares of the Company’s common stock (representing the number of shares for which the Notes are convertible) as of September 30, 2023. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.

(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15. COMMITMENTS AND CONTINGENCIES

Commitments

See "Note 7. Leases" for additional information.

Legal proceedings

In addition to the matters below, the Company is or may become involved in a variety of claims, demands, suits, investigations, and proceedings that arise from time to time relating to matters incidental to the ordinary course of the Company’s business, including actions concerning contracts, intellectual property, employment, benefits, and securities matters. Regardless of the outcome, legal disputes can have a material effect on the Company because of defense and settlement costs, diversion of management resources, and other factors.

In addition, as the Company is a party to ongoing litigation, it is at least reasonably possible that the Company’s estimates will change in the near term, and the effect may be material.

The Company had no accrued losses for litigation as of September 30, 2023 and December 31, 2022.

Appian Corp. v. Pegasystems Inc. & Youyong Zou

As previously reported, the Company is a defendant in litigation brought by Appian in the Circuit Court of Fairfax County, Virginia (the “Court”) titled Appian Corp. v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 9, 2022, the jury rendered its verdict finding that the Company had misappropriated one or more of Appian’s trade secrets, that the Company had violated the Virginia Computer Crimes Act, and that the trade secret misappropriation was willful and malicious. The jury awarded damages of $2,036,860,045 for trade secret misappropriation and $1.00 for violating the Virginia Computer Crimes Act. On September 15, 2022, the circuit court of Fairfax County entered judgment of $2,060,479,287, consisting of the damages previously awarded by the jury plus attorneys’ fees and costs, and stating that the judgment is subject to post-judgment interest at a rate of 6.0% per annum, from the date of the jury verdict (May 9, 2022) as to the amount of the jury verdict and from September 15, 2022 as to the amount of the award of attorneys’ fees and costs. On September 15, 2022, the Company filed a notice of appeal from the judgment. On September 29, 2022, the circuit court of Fairfax County approved a $25,000,000 letter of credit obtained by the Company to secure the judgment and entered an order suspending the judgment during the pendency of the Company’s appeal. Appellate briefing in the Court of Appeals of Virginia is completed. The Court of Appeals of Virginia has set November 15, 2023 as the date for oral arguments in the appeal. Although it is not possible to predict timing, this appeals process could potentially take years to complete. The Company continues to believe that it did not misappropriate any alleged trade secrets and that its sales of the Company’s products at issue were not caused by, or the result of, any alleged misappropriation of trade secrets. The Company is unable to reasonably estimate possible damages because of, among other things, uncertainty as to the outcome of appellate proceedings and/or any potential new trial resulting from the appellate proceedings.

City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell

On May 19, 2022, a lawsuit was filed against the Company, the Company’s chief executive officer and the Company’s chief operating and financial officer in the United States District Court for the Eastern District of Virginia Alexandria Division, captioned City of Fort Lauderdale Police and Firefighters’ Retirement System, Individually and on Behalf of All Others Similarly Situated v. Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:22-cv-00578-LMB-IDD). The complaint generally alleges, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder and that the individual defendants violated Section 20(a) of the Exchange Act, in each case by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices. The complaint seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between May 29, 2020 and May 9, 2022. The litigation has since been transferred to the United States District Court for the District of Massachusetts (Case 1:22-cv-11220-WGY), and lead plaintiff class representatives—Central Pennsylvania Teamsters Pension Fund - Defined Benefit Plan, Central Pennsylvania Teamsters Pension Fund - Retirement Income Plan 1987, and Construction Industry Laborers Pension Fund—have been appointed. On October 18, 2022, a consolidated amended complaint was filed that does not add any new parties or legal claims, is based upon the same general factual allegations as the original complaint, and now seeks unspecified damages on behalf of a class of purchasers of the Company’s securities between June 16, 2020 and May 9, 2022. The Company moved to dismiss the consolidated amended complaint on December 19, 2022. The hearing on the Company’s motion to dismiss took place on May 17, 2023. After hearing argument from both sides, the Court denied the Company’s motion from the bench and stated that a written opinion would follow. On June 30, 2023, the Company filed its Answer to the complaint. On July 24, 2023, the Court issued its written opinion denying the motion to dismiss as to the Company and Defendant Trefler but granting the motion without prejudice as to Mr. Stillwell. The Company believes it has strong defenses to the claims brought against the defendants and intends to defend against these claims vigorously. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit, the Company’s belief that it has strong defenses to the claims asserted, its intent to defend against these claims, and there being no specified quantum of damages sought in the complaint.

In re Pegasystems Inc., Derivative Litigation

On November 21, 2022, a lawsuit was filed against the members of the Company’s board of directors, the Company’s chief operating and financial officer and the Company in the United States District Court for the District of Massachusetts, captioned Mary Larkin, derivatively on behalf of nominal defendant Pegasystems Inc. v. Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Alan Trefler, Larry Weber, and Kenneth Stillwell, defendants, and Pegasystems Inc., nominal defendant (Case 1:22-cv-11985). The complaint generally alleges the defendants sold shares of the Company while in possession of material nonpublic information relating to (i) the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and (ii) alleged misconduct by Company employees alleged in that litigation. On April 28, 2023, a lawsuit was filed in the United States District Court for the District of Massachusetts by Dag Sagfors, derivatively on behalf of nominal defendant Pegasystems Inc. asserting breach of fiduciary duty and related claims relating to the Virginia Appian litigation against the same defendants as the Larkin lawsuit. On May 17, 2023, the Larkin and Sagfors cases were consolidated and a joint motion to stay the consolidated case is pending before the Court. The Company also has received confidential demand letters raising substantially the same allegations set forth in the foregoing derivative complaints. On April 12, 2023, the Company’s board of directors (other than Mr. Trefler, who recused himself), formed a committee consisting solely of independent directors, to review, analyze, and investigate the matters raised in the demands and to determine in good faith what actions (if any) are reasonably believed to be appropriate under similar circumstances and reasonably believed to be in the best interests of the Company in response to the demand letters. The Company is unable to reasonably estimate possible damages or a range of possible damages in this matter given the stage of the lawsuit and there being no specified quantum of damages sought in the complaint.

SEC Inquiry

Beginning in March 2023, the U.S. Securities and Exchange Commission (“SEC”) has requested certain information relating to, among other things, the accounting treatment of the Company’s above-described litigation with Appian Corporation. The Company is fully cooperating with the SEC’s requests.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net (loss)	$ (7,279)	$ (46,804)	$ (20,774)	$ (93,520)	$ (286,296)	$ (379)	$ (74,857)	$ (380,195)

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of presentation

Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

All intercompany transactions and balances were eliminated in consolidation. The operating results for the interim periods presented do not necessarily indicate the expected results for 2023.

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis

The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:

•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;

•Level 2 - significant other inputs that are observable either directly or indirectly; and

•Level 3 - significant unobservable inputs with little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data when available and minimize unobservable inputs when determining fair value.

The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.

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MARKETABLE SECURITIES (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Marketable Securities

	September 30, 2023								December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Government debt	$	17,931	$	—	$	(18)	$	17,913	$	2,960	$	—	$	(52)	$	2,908
Corporate debt	149,927		—		(554)		149,373		151,906		—		(2,647)		149,259
	$	167,858	$	—	$	(572)	$	167,286	$	154,866	$	—	$	(2,699)	$	152,167

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Schedule of Receivables

Receivables

(in thousands)	September 30, 2023		December 31, 2022
Accounts receivable, net	$	168,795	$	255,150
Unbilled receivables, net	199,948		213,719
Long-term unbilled receivables, net	73,795		95,806
	$	442,538	$	564,675

Schedule of Unbilled Receivables

Unbilled receivables by expected collection date:

(Dollars in thousands)	September 30, 2023
1 year or less	$	199,948	73	%
1-2 years	58,604		21	%
2-5 years	15,191		6	%
	$	273,743	100	%

Schedule of Unbilled Receivables by Contract Effective Date

Unbilled receivables by contract effective date:

(Dollars in thousands)	September 30, 2023
2023	$	90,227	33	%
2022	92,065		34	%
2021	62,729		23	%
2020	19,820		7	%
2019 and prior	8,902		3	%
	$	273,743	100	%

Schedule of Contract Assets and Deferred Revenue

Contract assets

Contract assets are client-committed amounts for which revenue recognized exceeds the amount billed to the client, and billing is subject to conditions other than the passage of time, such as the completion of a related performance obligation.

(in thousands)	September 30, 2023		December 31, 2022
Contract assets (1)	$	13,263	$	17,546
Long-term contract assets (2)	10,732		16,470
	$	23,995	$	34,016

(1) Included in other current assets.

(2) Included in other long-term assets.

Deferred revenue

Deferred revenue consists of billings and payments received in advance of revenue recognition.

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	297,067	$	325,212
Long-term deferred revenue (1)	2,605		3,552
	$	299,672	$	328,764

(1) Included in other long-term liabilities.

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DEFERRED COMMISSIONS (Tables)

9 Months Ended

Sep. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Impairment of Deferred Contract Costs

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions (1)	$	107,399	$	130,195

(1) Included in other long-term assets.

Schedule of Amortization of Deferred Contract Costs

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Amortization of deferred commissions (1)	$	14,947	$	11,597	$	43,974	$	39,752

(1) Included in selling and marketing.

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GOODWILL AND OTHER INTANGIBLES (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	81,399	$	81,923
Currency translation adjustments	38		(722)
September 30,	$	81,437	$	81,201

Schedule of Intangibles

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.

		September 30, 2023
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,086	$	(59,661)	$	3,425
Technology	2-10 years	68,103		(63,579)		4,524
Other	1-5 years	5,361		(5,361)		—
		$	136,550	$	(128,601)	$	7,949

(1) Included in other long-term assets.

		December 31, 2022
(in thousands)	Useful Lives	Cost		Accumulated Amortization		Net Book Value (1)
Client-related	4-10 years	$	63,076	$	(58,623)	$	4,453
Technology	2-10 years	68,056		(61,621)		6,435
Other	1-5 years	5,361		(5,361)		—
		$	136,493	$	(125,605)	$	10,888

(1) Included in other long-term assets.

Schedule of Future Estimated Intangibles Assets Amortization

Future estimated intangibles assets amortization:

(in thousands)	September 30, 2023
Remainder of 2023	$	964
2024	3,169
2025	2,615
2026	874
2027	327
	$	7,949

Schedule of Amortization of Intangible Assets

Amortization of intangible assets:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	622	$	705	$	1,949	$	2,017
Selling and marketing	343		343		1,028		1,028
	$	965	$	1,048	$	2,977	$	3,045

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OTHER ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2023

Other Assets and Liabilities [Abstract]

Schedule of Other Assets and Other Liabilities

Other current assets

(in thousands)	September 30, 2023		December 31, 2022
Income tax receivables	$	19,663	$	25,354
Contract assets	13,263		17,546
Other	38,512		37,488
	$	71,438	$	80,388

Other long-term assets

(in thousands)	September 30, 2023		December 31, 2022
Deferred commissions	$	107,399	$	130,195
Right of use assets	65,871		76,114
Property and equipment	49,481		55,056
Venture investments	19,348		13,069
Contract assets	10,732		16,470
Intangible assets	7,949		10,888
Capped call transactions	1,792		2,582
Deferred income taxes	5,046		4,795
Restricted cash	3,123		—
Other	20,066		24,820
	$	290,807	$	333,989

Other current liabilities

(in thousands)	September 30, 2023		December 31, 2022
Operating lease liabilities	$	15,532	$	14,976
Dividends payable	2,506		2,474
	$	18,038	$	17,450

Other long-term liabilities

(in thousands)	September 30, 2023		December 31, 2022
Deferred revenue	$	2,605	$	3,552
Income taxes payable	2,017		3,207
Other	9,863		8,369
	$	14,485	$	15,128

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LEASES (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Fixed lease costs	$	4,718	$	4,688	$	14,979	$	14,747
Short-term lease costs	660		916		2,137		2,510
Variable lease costs	2,254		905		6,414		2,395
	$	7,632	$	6,509	$	23,530	$	19,652

Schedule of Right of Use Asset and Lease Liabilities

(in thousands)	September 30, 2023		December 31, 2022
Right of use assets (1)	$	65,871	$	76,114
Operating lease liabilities (2)	$	15,532	$	14,976
Long-term operating lease liabilities	$	68,874	$	79,152

(1) Included in other long-term assets.

(2) Included in other current liabilities.

Schedule of Weighted Average and Discount Rate

Weighted-average remaining lease term and discount rate for the Company’s leases were:

	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	7.0 years		7.5 years
Weighted-average discount rate (1)	4.0	%	4.1	%

(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities:

(in thousands)	September 30, 2023
Remainder of 2023	$	4,775
2024	17,976
2025	14,870
2026	10,853
2027	9,808
2028	9,245
Thereafter	30,054
Total lease payments	97,581
Less: imputed interest (1)	(13,175)
	$	84,406

(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.

Schedule of Cash Flow Lease Information

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for operating leases, net of tenant improvement allowances	$	14,378	$	11,628
Right of use assets recognized for new leases and amendments (non-cash)	$	1,782	$	6,618

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DEBT (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Carrying Value and Interest Expense Related to the Notes

Carrying value of the Notes:

(in thousands)	September 30, 2023		December 31, 2022
Principal	$	502,270	$	600,000
Unamortized issuance costs	(3,517)		(6,391)
Convertible senior notes, net	$	498,753	$	593,609

Interest expense related to the Notes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Contractual interest expense (0.75% coupon)	$	827	$	1,125	$	2,949	$	3,375
Amortization of issuance costs	613		724		1,988		2,163
	$	1,440	$	1,849	$	4,937	$	5,538

Schedule of Future Payments

Future payments:

	September 30, 2023
(in thousands)	Principal		Interest		Total
2024	$	—	$	3,767	$	3,767
2025	502,270		1,884		504,154
	$	502,270	$	5,651	$	507,921

Schedule of Change in Capped Call Transactions

Change in capped call transactions:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	2,582	$	59,964
Settlements	(341)		—
Fair value adjustment	(449)		(56,381)
September 30,	$	1,792	$	3,583

Schedule of Minimum Consolidated EBITDA

	Year to Date
(in thousands)	March 31, 2023		June 30, 2023		September 30, 2023		December 31, 2023
Minimum Consolidated EBITDA (as defined in the Credit Facility)	$	38,862	$	59,894	$	95,597	$	214,590

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RESTRUCTURING (Tables)

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Activities and Accrued Employee Severance and Related Benefit

The Company has undertaken the following restructuring activities as it optimizes its go-to-market strategy and reassesses its office space needs:

	Three months ended	Expense
Employee severance and related benefits and closure of a US office	December 31, 2022	$	21,743
Office space reduction	March 31, 2023	$	1,241
Employee severance and related benefits	June 30, 2023	$	1,581
Employee severance and related benefits and closure of a foreign office	September 30, 2023	$	17,236

Accrued employee severance and related benefits:

Change for all restructuring actions:

	Nine Months Ended September 30,
(in thousands)	2023
January 1,	$	18,573
Costs incurred	19,921
Cash disbursements	(21,576)
Currency translation adjustments	(203)
September 30,	$	16,715

Note: Accrued employee severance and related benefits is included in accrued compensation and related expenses.

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a recurring basis:

	September 30, 2023								December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	22,686	$	—	$	—	$	22,686	$	2,526	$	—	$	—	$	2,526
Marketable securities	$	—	$	167,286	$	—	$	167,286	$	—	$	152,167	$	—	$	152,167
Capped Call Transactions (1)	$	—	$	1,792	$	—	$	1,792	$	—	$	2,582	$	—	$	2,582
Venture investments (1) (2)	$	—	$	—	$	19,348	$	19,348	$	—	$	—	$	13,069	$	13,069

(1) Included in other long-term assets.

(2) Investments in privately-held companies.

Schedule of Changes in Venture Investments

Changes in venture investments:

	Nine Months Ended September 30,
(in thousands)	2023		2022
January 1,	$	13,069	$	7,648
New investments	400		400
Sales of investments	(2,773)		(3,954)
Changes in foreign exchange rates	27		(675)
Changes in fair value:
included in other income (loss), net	10,886		5,989
included in other comprehensive (loss)	(2,261)		2,502
September 30,	$	19,348	$	11,910

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REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Geographic Revenue

Geographic revenue

	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)	2023				2022				2023				2022
U.S.	$	154,741	47	%	$	148,200	55	%	$	489,645	51	%	$	513,197	56	%
Other Americas	23,497		7	%	18,546		7	%	58,013		6	%	80,558		9	%
United Kingdom (“U.K.”)	41,622		12	%	24,074		9	%	112,751		12	%	83,837		9	%
Europe (excluding U.K.), Middle East, and Africa	67,880		20	%	46,212		17	%	173,551		18	%	140,586		15	%
Asia-Pacific	46,903		14	%	33,699		12	%	124,423		13	%	103,197		11	%
	$	334,643	100	%	$	270,731	100	%	$	958,383	100	%	$	921,375	100	%

Schedule of Revenue Streams

Revenue streams

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Perpetual license	$	2,747	$	9,223	$	4,729	$	18,929
Subscription license	74,342		31,112		200,066		210,245
Revenue recognized at a point in time	77,089		40,335		204,795		229,174
Maintenance	83,538		77,526		245,210		235,568
Pega Cloud	118,040		97,359		340,982		281,182
Consulting	55,976		55,511		167,396		175,451
Revenue recognized over time	257,554		230,396		753,588		692,201
Total revenue	$	334,643	$	270,731	$	958,383	$	921,375

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Pega Cloud	$	118,040	$	97,359	$	340,982	$	281,182
Maintenance	83,538		77,526		245,210		235,568
Subscription services	201,578		174,885		586,192		516,750
Subscription license	74,342		31,112		200,066		210,245
Subscription	275,920		205,997		786,258		726,995
Consulting	55,976		55,511		167,396		175,451
Perpetual license	2,747		9,223		4,729		18,929
	$	334,643	$	270,731	$	958,383	$	921,375

Schedule of Remaining Performance Obligations

Expected future revenue from existing non-cancellable contracts:

As of September 30, 2023:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	202,610	$	391,324	$	48,427	$	4,567	$	39,335	$	686,263	54	%
1-2 years	58,610		239,787		4,356		2,696		3,662		309,111		24	%
2-3 years	28,585		121,778		8,518		—		1,100		159,981		13	%
Greater than 3 years	17,478		89,870		2,664		—		—		110,012		9	%
	$	307,283	$	842,759	$	63,965	$	7,263	$	44,097	$	1,265,367	100	%

As of September 30, 2022:

(Dollars in thousands)	Subscription services				Subscription license		Perpetual license		Consulting		Total
	Maintenance		Pega Cloud
1 year or less	$	191,045	$	328,111	$	69,753	$	814	$	27,968	$	617,691	53	%
1-2 years	55,141		213,304		4,113		4,505		6,699		283,762		25	%
2-3 years	24,496		115,416		1,420		2,252		1,648		145,232		13	%
Greater than 3 years	16,198		82,807		1,734		—		508		101,247		9	%
	$	286,880	$	739,638	$	77,020	$	7,571	$	36,823	$	1,147,932	100	%

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Based Compensation Expense

Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of revenue	$	6,410	$	6,797	$	22,497	$	19,754
Selling and marketing	10,401		12,933		43,410		36,524
Research and development	7,375		7,724		24,286		22,425
General and administrative	7,113		6,320		19,890		14,598
	$	31,299	$	33,774	$	110,083	$	93,301
Income tax benefit	$	(316)	$	(600)	$	(1,569)	$	(1,505)

Schedule of Stock Based Compensation Award Granted

Grants

	Nine Months Ended September 30, 2023
(in thousands)	Shares	Total Fair Value
Restricted stock units	1,514	$	70,962
Non-qualified stock options	911	$	19,142
Performance stock options (1)	906	$	18,265
Common stock	13	$	600

(1) Performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date. The options usually vest over two years and expire ten years from the grant date, subject to specific performance conditions.

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate

Effective income tax rate

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2023		2022		2023			2022
Provision for income taxes	$	3,545	$	11,748	$	15,395		$	190,239
Effective income tax rate					(26)		%	(100)		%

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(LOSS) PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Calculation of (Loss) Per Share

Calculation of (loss) per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding	83,336		81,996		82,996		81,842
(Loss) per share, basic	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Net (loss)	$	(7,279)	$	(93,520)	$	(74,857)	$	(380,195)
Weighted-average common shares outstanding, assuming dilution (1) (2) (3)	83,336		81,996		82,996		81,842
(Loss) per share, diluted	$	(0.09)	$	(1.14)	$	(0.90)	$	(4.65)
Outstanding anti-dilutive stock options and RSUs (4)	2,255		3,019		1,652		3,589

(1) All dilutive securities are excluded in periods of loss as their inclusion would be anti-dilutive.

(2) The shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period. If the outstanding conversion options were fully exercised, the Company would issue approximately 3.7 million shares as of September 30, 2023.

(3) The Company’s Capped Call Transactions represent the equivalent of approximately 3.7 million shares of the Company’s common stock (representing the number of shares for which the Notes are convertible) as of September 30, 2023. The Capped Call Transactions are expected to reduce common stock dilution and/or offset any potential cash payments the Company must make, other than for principal and interest, upon conversion of the Notes, with such reduction and/or offset subject to a cap of $196.44. The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.

(4) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted (loss) per share. These awards may be dilutive in the future.

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MARKETABLE SECURITIES - Schedule of Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost	$ 167,858	$ 154,866
Unrealized Gains	0	0
Unrealized Losses	(572)	(2,699)
Fair Value	167,286	152,167
Government debt
Marketable Securities [Line Items]
Amortized Cost	17,931	2,960
Unrealized Gains	0	0
Unrealized Losses	(18)	(52)
Fair Value	17,913	2,908
Corporate debt
Marketable Securities [Line Items]
Amortized Cost	149,927	151,906
Unrealized Gains	0	0
Unrealized Losses	(554)	(2,647)
Fair Value	$ 149,373	$ 149,259

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MARKETABLE SECURITIES - Narrative (Details)	Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Marketable debt security weighted-average remaining maturity	6 months

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Receivables (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Accounts receivable, net	$ 168,795	$ 255,150
Unbilled receivables, net	199,948	213,719
Long-term unbilled receivables, net	73,795	95,806
Total receivables	$ 442,538	$ 564,675

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Unbilled Receivables (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Receivables [Abstract]
1 year or less	$ 199,948
1-2 years	58,604
2-5 years	15,191
Total	$ 273,743
Percentage of unbilled receivables, 1 year or less	73.00%
Percentage of unbilled receivables, 1-2 years	21.00%
Percentage of unbilled receivables, 2-5 years	6.00%
Total percentage of unbilled receivables	100.00%

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE- Schedule of Unbilled Receivables by Contract Effective Date (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Receivables [Abstract]
2023	$ 90,227
2022	92,065
2021	62,729
2020	19,820
2019 and prior	8,902
Unbilled revenue total	$ 273,743
2023	33.00%
2022	34.00%
2021	23.00%
2020	7.00%
2019 and prior	3.00%
Total percentage of unbilled revenue	100.00%

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RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Schedule of Contract Assets and Deferred Revenue (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Contract assets	$ 13,263	$ 17,546
Long-term contract assets	10,732	16,470
Total contract assets	23,995	34,016
Deferred revenue	297,067	325,212
Long-term deferred revenue	2,605	3,552
Total deferred revenue	299,672	$ 328,764
Revenue recognized during the period that was included in deferred revenue	$ 292,300

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DEFERRED COMMISSIONS - Schedule of Impairment of Deferred Commissions (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred commissions	$ 107,399	$ 130,195

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DEFERRED COMMISSIONS - Schedule of Amortization of Deferred Commissions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Amortization of deferred commissions	$ 14,947	$ 11,597	$ 43,974	$ 39,752

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GOODWILL AND OTHER INTANGIBLES - Schedule of Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Goodwill [Roll Forward]
Beginning balance	$ 81,399	$ 81,923
Currency translation adjustments	38	(722)
Ending balance	$ 81,437	$ 81,201

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GOODWILL AND OTHER INTANGIBLES - Schedule of Intangibles (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Other Intangible Assets [Line Items]
Cost	$ 136,550	$ 136,493
Accumulated Amortization	(128,601)	(125,605)
Net Book Value	7,949	10,888
Client-related
Goodwill and Other Intangible Assets [Line Items]
Cost	63,086	63,076
Accumulated Amortization	(59,661)	(58,623)
Net Book Value	3,425	4,453
Technology
Goodwill and Other Intangible Assets [Line Items]
Cost	68,103	68,056
Accumulated Amortization	(63,579)	(61,621)
Net Book Value	4,524	6,435
Other
Goodwill and Other Intangible Assets [Line Items]
Cost	5,361	5,361
Accumulated Amortization	(5,361)	(5,361)
Net Book Value	$ 0	$ 0
Minimum | Client-related
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	4 years	4 years
Minimum | Technology
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	2 years	2 years
Minimum | Other
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	1 year	1 year
Maximum | Client-related
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	10 years	10 years
Maximum | Technology
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	10 years	10 years
Maximum | Other
Goodwill and Other Intangible Assets [Line Items]
Useful Lives	5 years	5 years

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GOODWILL AND OTHER INTANGIBLES - Schedule of Future Estimated Intangibles Assets Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 964
2024	3,169
2025	2,615
2026	874
2027	327
Net Book Value	$ 7,949	$ 10,888

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GOODWILL AND OTHER INTANGIBLES - Schedule of Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 965	$ 1,048	$ 2,977	$ 3,045
Cost of revenue
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	622	705	1,949	2,017
Selling and marketing
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 343	$ 343	$ 1,028	$ 1,028

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OTHER ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Other Assets and Liabilities [Abstract]
Income tax receivables	$ 19,663	$ 25,354
Contract assets	13,263	17,546
Other	38,512	37,488
Other current assets	71,438	80,388
Deferred commissions	107,399	130,195
Right of use assets	65,871	76,114
Property and equipment	49,481	55,056
Venture investments	19,348	13,069
Contract assets	10,732	16,470
Intangible assets	7,949	10,888
Capped call transactions	1,792	2,582
Deferred income taxes	5,046	4,795
Restricted cash	3,123	0
Other	20,066	24,820
Other long-term assets	290,807	333,989
Operating lease liabilities	15,532	14,976
Dividends payable	2,506	2,474
Other current liabilities	18,038	17,450
Deferred revenue	2,605	3,552
Income taxes payable	2,017	3,207
Other	9,863	8,369
Other long-term liabilities	$ 14,485	$ 15,128

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LEASES - Schedule of Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Fixed lease costs	$ 4,718	$ 4,688	$ 14,979	$ 14,747
Short-term lease costs	660	916	2,137	2,510
Variable lease costs	2,254	905	6,414	2,395
Operating lease expenses	$ 7,632	$ 6,509	$ 23,530	$ 19,652

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LEASES - Schedule of Right of Use Asset and Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other long-term assets	Other long-term assets
Right of use assets	$ 65,871	$ 76,114
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other current liabilities	Other current liabilities
Operating lease liabilities	$ 15,532	$ 14,976
Long-term operating lease liabilities	$ 68,874	$ 79,152

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LEASES - Schedule of Weighted Average and Discount Rate (Details)	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term	7 years	7 years 6 months
Weighted-average discount rate	4.00%	4.10%

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LEASES - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
Remainder of 2023	$ 4,775
2024	17,976
2025	14,870
2026	10,853
2027	9,808
2028	9,245
Thereafter	30,054
Total lease payments	97,581
Less: imputed interest	(13,175)
Total lease liability	$ 84,406

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LEASES - Schedule of Cash Flow Lease Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Cash paid for operating leases, net of tenant improvement allowances	$ 14,378	$ 11,628
Right of use assets recognized for new leases and amendments (non-cash)	$ 1,782	$ 6,618

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DEBT - Convertible senior notes and capped calls (Details)	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 29, 2020 USD ($) day $ / shares	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023 USD ($)	Sep. 30, 2022
Debt Instrument [Line Items]
Gain (loss) on repurchase of convertible debt | $				$ 7,900,000
Principal amount repurchased | $				$ 97,700,000
Redemption percentage	100.00%
On or After March 1, 2023
Debt Instrument [Line Items]
Redemption threshold trading days	40
Redemption percentage	100.00%
Convertible debt
Debt Instrument [Line Items]
Face amount | $	$ 600,000,000
Interest rate	0.75%	0.75%	0.75%	0.75%	0.75%
Initial conversion rate	0.0074045
Initial conversion price (in dollars per share) | $ / shares	$ 135.05
Average interest rate				1.20%	1.20%
Convertible debt | After the Calendar Quarter Ending on June 30, 2020
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	130.00%
Threshold trading days	20
Threshold consecutive trading days	30
Convertible debt | Measurement Period
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	98.00%
Threshold consecutive trading days	5
Threshold consecutive business days	5
Convertible debt | On or After March 1, 2023
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	130.00%
Threshold trading days	20
Threshold consecutive trading days	30

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DEBT - Schedule of Carrying value of the Notes (Details) - Convertible debt - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Principal	$ 502,270	$ 600,000
Unamortized issuance costs	(3,517)	(6,391)
Convertible senior notes, net	$ 498,753	$ 593,609

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DEBT - Schedule of Interest Expense Related to the Notes (Details) - Convertible debt - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 29, 2020	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Interest rate	0.75%	0.75%	0.75%	0.75%	0.75%
Contractual interest expense (0.75% coupon)		$ 827	$ 1,125	$ 2,949	$ 3,375
Amortization of issuance costs		613	724	1,988	2,163
Interest expense		$ 1,440	$ 1,849	$ 4,937	$ 5,538

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DEBT - Schedule of Future Payments (Details) - Convertible debt - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Principal
2024	$ 0
2025	502,270
Principal, total due	502,270	$ 600,000
Interest
2024	3,767
2025	1,884
Interest expense, total due	5,651
Total
2024	3,767
2025	504,154
Principal and interest, total due	$ 507,921

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DEBT - Capped call transactions (Details) shares in Millions, $ in Millions	1 Months Ended	9 Months Ended
	Feb. 29, 2020 $ / derivative shares	Sep. 30, 2023 USD ($) $ / derivative shares
Debt Disclosure [Abstract]
Number of shares issuable upon conversion (in shares)	4.4	0.7
Proceeds from settlement of capped calls transactions | $		$ 0.3
Number of shares issuable upon conversion (in shares)		3.7
Cap price (in dollars per share) | $ / derivative	196.44	196.44

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DEBT - Schedule of Change in Capped Call Transactions (Details) - Capped Call Transactions - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 2,582	$ 59,964
Settlements	(341)	0
Fair value adjustment	(449)	(56,381)
Ending balance	$ 1,792	$ 3,583

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DEBT - Credit Facility (Details)		9 Months Ended
	Nov. 30, 2019 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Outstanding letters of credit		$ 27,300,000	$ 27,300,000
Remaining borrowing capacity		$ 0	$ 0
PNC Bank, National Association | Next Fiscal Year
Debt Instrument [Line Items]
Minimum consolidated coverage ratio		3.5
Credit Agreement | PNC Bank, National Association
Debt Instrument [Line Items]
Minimum required cash and investments held		$ 200,000,000
Credit Agreement | PNC Bank, National Association | Next Fiscal Year
Debt Instrument [Line Items]
Maximum consolidated net leverage ratio		3.5
Line of Credit | PNC Bank, National Association | Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit agreement term	5 years
Senior notes	$ 100,000,000
Increase in aggregate commitment amount	$ 200,000,000

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DEBT - Schedule of Minimum Consolidated EBITDA (Details) - Revolving Credit Facility - Credit Agreement - PNC Bank, National Association - Line of Credit $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
First Fiscal Quarter
Debt Instrument [Line Items]
Minimum Consolidated EBITDA (as defined in the Credit Facility)	$ 38,862
Second Fiscal Quarter
Debt Instrument [Line Items]
Minimum Consolidated EBITDA (as defined in the Credit Facility)	59,894
Third Fiscal Quarter
Debt Instrument [Line Items]
Minimum Consolidated EBITDA (as defined in the Credit Facility)	95,597
Fourth Fiscal Quarter
Debt Instrument [Line Items]
Minimum Consolidated EBITDA (as defined in the Credit Facility)	$ 214,590

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RESTRUCTURING - Schedule of Restructuring Activities (Details) - USD ($) $ in Thousands	3 Months Ended					9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Restructuring Cost and Reserve [Line Items]
Expense	$ 17,822				$ 0	$ 21,450	$ 0
Employee Severance
Restructuring Cost and Reserve [Line Items]
Expense	$ 17,236	$ 1,581		$ 21,743
Office space reduction
Restructuring Cost and Reserve [Line Items]
Expense			$ 1,241

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RESTRUCTURING - Schedule of Accrued Employee Severance and Related Benefit (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Restructuring Reserve [Roll Forward]
Restructuring Reserve, Beginning Balance	$ 18,573
Costs incurred	19,921
Cash disbursements	(21,576)
Currency translation adjustments	(203)
Restructuring Reserve, Ending Balance	$ 16,715

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FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value Assets
Marketable securities	$ 167,286	$ 152,167
Capped call transactions	1,792	2,582
Cash equivalents
Fair Value Assets
Cash equivalents	22,686	2,526
Venture investments
Fair Value Assets
Venture investments	19,348	13,069
Level 1
Fair Value Assets
Marketable securities	0	0
Capped call transactions	0	0
Level 1 | Cash equivalents
Fair Value Assets
Cash equivalents	22,686	2,526
Level 1 | Venture investments
Fair Value Assets
Venture investments	0	0
Level 2
Fair Value Assets
Marketable securities	167,286	152,167
Capped call transactions	1,792	2,582
Level 2 | Cash equivalents
Fair Value Assets
Cash equivalents	0	0
Level 2 | Venture investments
Fair Value Assets
Venture investments	0	0
Level 3
Fair Value Assets
Marketable securities	0	0
Capped call transactions	0	0
Level 3 | Cash equivalents
Fair Value Assets
Cash equivalents	0	0
Level 3 | Venture investments
Fair Value Assets
Venture investments	$ 19,348	$ 13,069

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FAIR VALUE MEASUREMENTS - Schedule of Changes in Venture Investments (Details) - Privately Held Investment - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 13,069	$ 7,648
New investments	400	400
Sales of investments	(2,773)	(3,954)
Changes in foreign exchange rates	27	(675)
Changes in fair value:
Changes in fair value included in other income (loss), net	10,886	5,989
Changes in fair value included in other comprehensive (loss)	(2,261)	2,502
Ending balance	$ 19,348	$ 11,910

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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Convertible debt fair value	$ 460.3	$ 521.1
Principal amount repurchased	$ 97.7

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REVENUE - Schedule of Geographic Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 334,643	$ 270,731	$ 958,383	$ 921,375
Percent of total revenue	100.00%	100.00%	100.00%	100.00%
U.S.
Disaggregation of Revenue [Line Items]
Revenue	$ 154,741	$ 148,200	$ 489,645	$ 513,197
Other Americas
Disaggregation of Revenue [Line Items]
Revenue	23,497	18,546	58,013	80,558
United Kingdom (“U.K.”)
Disaggregation of Revenue [Line Items]
Revenue	41,622	24,074	112,751	83,837
Europe (excluding U.K.), Middle East, and Africa
Disaggregation of Revenue [Line Items]
Revenue	67,880	46,212	173,551	140,586
Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenue	$ 46,903	$ 33,699	$ 124,423	$ 103,197
Total Revenue | U.S. | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of total revenue	47.00%	55.00%	51.00%	56.00%
Total Revenue | Other Americas | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of total revenue	7.00%	7.00%	6.00%	9.00%
Total Revenue | United Kingdom (“U.K.”) | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of total revenue	12.00%	9.00%	12.00%	9.00%
Total Revenue | Europe (excluding U.K.), Middle East, and Africa | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of total revenue	20.00%	17.00%	18.00%	15.00%
Total Revenue | Asia-Pacific | Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Percent of total revenue	14.00%	12.00%	13.00%	11.00%

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REVENUE - Schedule of Revenue Streams (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 334,643	$ 270,731	$ 958,383	$ 921,375
Perpetual license
Disaggregation of Revenue [Line Items]
Revenue	2,747	9,223	4,729	18,929
Subscription license
Disaggregation of Revenue [Line Items]
Revenue	74,342	31,112	200,066	210,245
Consulting
Disaggregation of Revenue [Line Items]
Revenue	55,976	55,511	167,396	175,451
Subscription services
Disaggregation of Revenue [Line Items]
Revenue	201,578	174,885	586,192	516,750
Subscription
Disaggregation of Revenue [Line Items]
Revenue	275,920	205,997	786,258	726,995
Revenue recognized at a point in time
Disaggregation of Revenue [Line Items]
Revenue	77,089	40,335	204,795	229,174
Revenue recognized at a point in time | Perpetual license
Disaggregation of Revenue [Line Items]
Revenue	2,747	9,223	4,729	18,929
Revenue recognized at a point in time | Subscription license
Disaggregation of Revenue [Line Items]
Revenue	74,342	31,112	200,066	210,245
Revenue recognized over time
Disaggregation of Revenue [Line Items]
Revenue	257,554	230,396	753,588	692,201
Revenue recognized over time | Maintenance
Disaggregation of Revenue [Line Items]
Revenue	83,538	77,526	245,210	235,568
Revenue recognized over time | Pega Cloud
Disaggregation of Revenue [Line Items]
Revenue	118,040	97,359	340,982	281,182
Revenue recognized over time | Consulting
Disaggregation of Revenue [Line Items]
Revenue	$ 55,976	$ 55,511	$ 167,396	$ 175,451

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REVENUE - Schedule of Remaining Performance Obligations (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 1,265,367	$ 1,147,932
Revenue remaining performance obligation (in percent)	100.00%	100.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		$ 617,691
Revenue remaining performance obligation (in percent)		53.00%
Expected timing of satisfaction		1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 686,263	$ 283,762
Revenue remaining performance obligation (in percent)	54.00%	25.00%
Expected timing of satisfaction	1 year	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 309,111	$ 145,232
Revenue remaining performance obligation (in percent)	24.00%	13.00%
Expected timing of satisfaction	1 year	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 159,981	$ 101,247
Revenue remaining performance obligation (in percent)	13.00%	9.00%
Expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 110,012
Revenue remaining performance obligation (in percent)	9.00%
Expected timing of satisfaction
Maintenance
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 307,283	$ 286,880
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		191,045
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	202,610	55,141
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	58,610	24,496
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	28,585	16,198
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	17,478
Pega Cloud
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	842,759	739,638
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		328,111
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	391,324	213,304
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	239,787	115,416
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	121,778	82,807
Pega Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	89,870
Subscription license
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	63,965	77,020
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		69,753
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	48,427	4,113
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	4,356	1,420
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	8,518	1,734
Subscription license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	2,664
Perpetual license
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	7,263	7,571
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		814
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	4,567	4,505
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	2,696	2,252
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	0	0
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	0
Consulting
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	44,097	36,823
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation		27,968
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	39,335	6,699
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	3,662	1,648
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	1,100	$ 508
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01
Disaggregation of Revenue [Line Items]
Revenue remaining performance obligation	$ 0

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STOCK-BASED COMPENSATION - Schedule of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation before tax	$ 31,299	$ 33,774	$ 110,083	$ 93,301
Income tax benefit	(316)	(600)	(1,569)	(1,505)
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation before tax	6,410	6,797	22,497	19,754
Selling and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation before tax	10,401	12,933	43,410	36,524
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation before tax	7,375	7,724	24,286	22,425
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation before tax	$ 7,113	$ 6,320	$ 19,890	$ 14,598

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STOCK-BASED COMPENSATION - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($)
Share-Based Payment Arrangement [Abstract]
Unrecognized stock-based compensation expense	$ 137.5
Weighted-average period of recognition of unrecognized stock-based compensation expense	1 year 9 months 18 days

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STOCK-BASED COMPENSATION - Schedule of Stock Based Compensation Award Granted (Details) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) shares
Restricted stock units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock units (in shares) | shares	1,514
Total Fair Value | $	$ 70,962
Non-qualified stock options
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-qualified stock options (in shares) | shares	911
Total Fair Value | $	$ 19,142
Performance stock options
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock units (in shares) | shares	906
Total Fair Value | $	$ 18,265
Vesting period	2 years
Expiration period	10 years
Common Stock
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock units (in shares) | shares	13
Total Fair Value | $	$ 600

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 3,545	$ 11,748	$ 15,395	$ 190,239
Effective income tax rate			(26.00%)	(100.00%)

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(LOSS) PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares $ / derivative shares	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2023 USD ($) $ / shares $ / derivative shares	Sep. 30, 2022 USD ($) $ / shares shares	Feb. 29, 2020 $ / derivative
Earnings Per Share [Abstract]
Net (loss) | $	$ (7,279)	$ (46,804)	$ (20,774)	$ (93,520)	$ (286,296)	$ (379)	$ (74,857)	$ (380,195)
Weighted-average common shares outstanding	83,336			81,996			82,996	81,842
(Loss) per share, basic (in dollars per share) | $ / shares	$ (0.09)			$ (1.14)			$ (0.90)	$ (4.65)
Weighted-average common shares outstanding, assuming dilution	83,336			81,996			82,996	81,842
(Loss) per share, diluted (in dollars per share) | $ / shares	$ (0.09)			$ (1.14)			$ (0.90)	$ (4.65)
Outstanding anti-dilutive stock options and RSUs	2,255			3,019			1,652	3,589
Dilutive effect of conversion of debt securities							3,700
Number of shares issuable upon conversion	3,700						3,700
Cap price (in dollars per share) | $ / derivative	196.44						196.44		196.44

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Sep. 15, 2022	May 09, 2022	Sep. 30, 2023	Dec. 31, 2022	Sep. 29, 2022
Loss Contingencies [Line Items]
Outstanding letters of credit			$ 27,300,000	$ 27,300,000
Appian Corp. v. Pegasystems Inc. & Youyong Zou
Loss Contingencies [Line Items]
Outstanding letters of credit					$ 25,000,000
Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling
Loss Contingencies [Line Items]
Loss contingency, damages awarded, value	$ 2,060,479,287
Trade Secret Misappropriation | Appian Corp. v. Pegasystems Inc. & Youyong Zou
Loss Contingencies [Line Items]
Legal fees, post-judgement interest rate, percentage	6.00%
Trade Secret Misappropriation | Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling
Loss Contingencies [Line Items]
Loss contingency, damages awarded, value		$ 2,036,860,045
Violation of the Virginia Computer Crimes Act | Appian Corp. v. Pegasystems Inc. & Youyong Zou | Judicial Ruling
Loss Contingencies [Line Items]
Loss contingency, damages awarded, value		$ 1.00