Pegasystems Investor
Presentation Q2 2024
NASDAQ: PEGA
pegainvestorrelations@pega.com

July 24, 2024
© Pegasystems Inc.

Safe Harbor Statement
Certain statements in this presentation may be “forward-looking statements” as defined in 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. These statementsrepresent our views only as of the date the statement was made and are based on current expectations and assumptions.
Factors that could cause the Company’s results to differ materially from those expressed in forward-looking statements are contained in theCompany’s press release announcing its Q2 2024 results and in the Company’s filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 2023 and other recent filings with the SEC.
Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the results included insuch statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do notundertake and expressly disclaim any obligation to publicly update or revise these forward-looking statements, whether as the result of new
information, future events, or otherwise. Any forward-looking statements in this presentation represent our views as of July 24, 2024.

Non-GAAP Financial Measures
Our non-GAAP financial measures should only be read in conjunction with our consolidated financial statements prepared in accordance withGAAP. We believe that these measures help investors understand our core operating results and prospects, which is consistent with howmanagement measures and forecasts our performance without the effect of often one-time charges and other items outside our normaloperations. Management uses these measures to assess the performance of the company's operations and establish operational goals andincentives. They are not a substitute for financial measures prepared under U.S. GAAP. Constant currency measures are calculated by applying theJune 30, 2023 foreign exchange rates to all periods shown. Reconciliations of GAAP and non-GAAP measures are in the Company’s press releaseannouncing its Q2 2024 results and at the end of this presentation.

Additional Notes
This presentation may contain industry market data, industry forecasts, and other statistical information. Such information was obtained frompublicly available information, industry publications, and other third-party sources, and the Company makes no representations as to the accuracyof such information. The Company has not independently verified any such information. Certain information in this presentation is based upon
management forecasts and reflects prevailing conditions and management’s views as of the date of this presentation, all of which are subject tochange.
© Pegasystems Inc.

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Pega Overview© Pegasystems Inc.

3

OUR VISIONTo change the way the world builds
software to unleash enterprise potential
OUR SOFTWAREEnterprise AI decisioning and workflow
automation platform
WHAT WE DO

Unlock business-transforming outcomes© Pegasystems Inc.

4

What we do

UNLOCK BUSINESS-TRANSFORMING OUTCOMES

How we do itwith a powerful LOW-CODE PLATFORM FOR WORKFLOW AUTOMATION AND AI-POWERED DECISIONING

Our Solutions areorganized into 3
Engagement
Strategies

ADAPT WITH EASE
Adapt instantly | Personalize for long term
loyalty | Engage with empathy

Intelligent
Automation

AUTOMATE & SAVE TIME
Resolve issues faster | Find new ways to cut
costs| Increase revenue & retention

MAXIMIZE VALUE
Streamline experiences| Automate
workflows at scale| Build critical apps fastIntelligent technology

Scalable architecture

Rapid Innovation

Client-centricity

Our Pega Infinity portfolio ofsoftware, all built on our open,
cloud-native platform, with AI
embedded everywhere, drives
smarter, more intuitiveworkflows, and customer andemployee experiences.

Our patented Situational Layer®
Cake transcends channels andinternal data silos and manages
variations for maximum reuseand enterprise scale.

Pega Express design-thinking
best practices are built right into
our low-code platform, so you
can design and deploy missioncritical workflows andexperiences quickly andcollaboratively

Our clients have a lot at stake,and we don’t let them down.
Ever. Together with our worldclass partners and highly
skilled Client Success teams,
we keep our promises every
step of your journey.

™

Why we’redifferent

Customer
Service

1:1 Customer
Engagement™

© Pegasystems Inc.

55

Personalize
Engagement

Automate
Customer ServiceStreamline
Operations

The world’s leading enterprise-scale organizations
are using Pega to connect workflows and interactions across the customer lifecycle:
Communications
service providers

Financialservices

Customer engagement
Order management
Customer service
Shared service
Service assurance
Network operations

Customer engagement
Onboarding & KYC
Lending
Customer service
Bank operations
Payment exceptions
Financial crime

Government

Healthcare

Insurance

Licensing
Investigative casemanagement
Grants & financialmanagement
Acquisition & supply chain
modernization
Citizen service
Enterprise modernization

Consumer engagement
Onboarding & enrollment
Customer service
Core operations
Care management services

Customer engagement
Sales
Distribution
Service excellence
Underwriting
ClaimsManufacturing
Customer engagement
Onboarding
Captive lending
Aftermarket services
Enterprise operations© Pegasystems Inc.

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Driving Growth and Free Cash Flow
Founded: 1983
HQ: Cambridge, MA
Employees: 5,000+

Q2 2024
19%

13%

Pega Cloud ACV
GrowthACV
Growth$218MFree Cash Flow

(1)(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property
and equipment fluctuates in amount and frequency and is significantly affected by the timing and size of investments in our facilities. 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.

© Pegasystems Inc.

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Corporate Social Responsibility at PegaES

GENVIRONMENTAL
We are committed to reducing theenvironmental impact of ouroperations on air, land, and water

SOCIALWe strive to be a responsible
corporate citizen and active
contributor in communities where
our employees, partners, andclients' work

GOVERNANCE
We believe that corporate
governance is important to ensurethat Pega is managed for the longterm benefit of all ourstakeholders

https://www.pega.com/corporate-social-responsibility

Pegasystems Inc.
©©Pegasystems
Inc.

88

Key Investment Highlights• Growing enterprise software company, with a view towards a $90B+ market
opportunity• Large enterprise client base in key verticals: financial services, insurance,telecommunications, health care, manufacturing, and public sector• A proven technology leader in customer engagement and intelligent automation• Mission critical to our clients• Strong business driving to Rule of 40 effectiveness© Pegasystems Inc.

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Solution Overview© Pegasystems Inc.

10

What are the Business Problems We Solve?
Pega drives better business outcomes by…

Making Decisions
Delivering 1:1 customer engagement
powered by real-time, omni-channel AI

Getting work done

Making customer and employee-facing
processes more efficient through endto-end automation & robotics…and very often we do both
For example, in the context of Customer
Service or KYC/CLM, when customer
interactions involve processing work toresolve a request.

© Pegasystems Inc.

1111

Pega Infinity™
1:1 Customer Engagement
Customer Service
Intelligent Automation

GET WORK
DONE

MAKE
DECISIONSREAL-TIME, OMNICHANNEL AI

END-TO-END
AUTOMATION &ROBOTICS

Industry-leading technology

MICROJOURNEYCENTRIC RAPID
DELIVERYSITUATIONAL™
LAYER CAKE

Start fast and scale

SOFTWARE THATWRITES YOURSOFTWARE

CLOUD CHOICEFuture proof your investment™

PEGA DX ARCHITECTURE© Pegasystems Inc.

1212

Unlock Business-Transforming Outcomes
Solving the problems no one else can. Delivering value, fast.

One-to-one
customerengagement

Maximize customer lifetime value

Customer
service

Simplify service and reduce costs

Intelligent
automation

Boost efficiency© Pegasystems Inc.

13

So How Do We Do It?

Our software can handle quick fixes, lasting transformation, and everything in between

Intelligent
technology

Scalablearchitecture

Rapidinnovation© Pegasystems Inc.

14

Pega’s Technology Difference
Architected differently to maximize revenue and efficiency at enterprise scale
Put decisions andworkflow at the center

Build layers of reuse
and variation

Personalize experiences
and optimize workflows

Automate across systems and channels
to streamline the total experience

Manage variations and adapt
instantly for continuous innovation

Drive empathetic, customer-relevant
engagement and optimize processes

With Pega’s Center-out
business architectureWith Pega’s patented
Situational Layer CakeWith Pega’s real-time AI

Scale across enterprise needs

With Pega’s enterprise-grade low-code platform, App Factory, and Process FabricFrom governed citizen development to the most mission-critical processes© Pegasystems Inc.

1515

Analysts recognize
Pega as a leader
for our enterprise AI
decisioning and workflow
automation platform#1 The Forrester Wave:

Real-Time Interaction Management, Q1, 2024

#1

Gartner MQ:

CRM Customer Engagement Center, Q4, 2023

#1 The Forrester Wave:

Robotic Process Automation, Q1, 2023

© Pegasystems Inc.

1616

Business Overview© Pegasystems Inc.

17

WHY PEGA WINS

DifferentiatedArchitecture

Ease ofIntegration

Depth of Platform
Functionality

StrongTeam

Deep VerticalExpertise

RobustROI© Pegasystems Inc.

18Selling High-Value Use Cases to Some of the World’s
Largest Companies
BUYER

OFFERING

VALUE PROPOSITION

RobertChief Customer
Officer

1:1 Customer
Engagement

Maximize top-line growth with a centralized, real-time
AI-powered customer decision hub that delivers nextbest-actions at every customer interaction, acrossvarious channels.

Teresa
SVP, Customer
ServiceCustomer
Service

ChenSVP,
Operations

Intelligent
Automation

Reduce cost and streamline service experiences forcustomers and employees with a state-of-the-art
customer service application and out-of-the-box,
industry-specific microjourneys.
Make customer and employee-facing processes
more efficient through intelligent automation
powered by end-to-end robotics and casemanagement.
© Pegasystems Inc.

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How Do Our Clients Drive Value Using Pega?
ILLUSTRATIVEUSE CASE

IMPACT AND RESULT

1:1 Customer
Engagement

Retaincustomers• 50 million next best action conversations delivered
across 18 channels• +12 lead in NPS over the competition

Customer
ServiceInquire into
account info

• Served over 40 million consumers• 100 processes automated• Dropped average handling time (AHT) by 3 minutes• 11-point increase in net promoter score (NPS)

CLIENT

Read more | https://www.pega.com/customers/cba-marketing

Read more | https://www.pega.com/insights/resources/anthem-nowelevance-health-creates-next-generation-service-desktop-pegaIntelligent
Automation

Streamline
processes &reduce costs• Implemented Pega in over 80 countries• 85,000 global users are using 22 Pega applications• Consolidated legacy workflows and business process
management across Siemens
Read more |https://www.pega.com/customers/siemens© Pegasystems Inc.

20

Financial Details© Pegasystems Inc.

21Financial Outlook
Massive Market Opportunity
Subscription Journey
Recurring Model
Margin Expansion Opportunities© Pegasystems Inc.

22

Pursuing a Massive MarketOpportunity in Platform & CRM
FY 27$130B+

FY 24
$90B+

Source: IDC Worldwide ICT Spending Guide (Feb. 2024)© Pegasystems Inc.

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Subscription Journey
From…

To…

Perpetual

RecurringLess Predictable

More Predictable

Lagging Growth & Margins

Rule of 40 Driven

SUBSCRIPTION
TRANSITIONTIMELINE

20172023© Pegasystems Inc.

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Recurring Subscription Model
Annual Contract Value (ACV)

Growth since June 30, 2023
ACV Reported: 12%ACV Constant Currency: 13%$1,400M$1,305M$1,300M$1,200M$1,164M$1,100M$1,000M$900M

June 30, 2023

June 30, 2024

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 tocalculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.
© Pegasystems Inc.

2525

Cash Flow Growth
Operating Cash Flow

Free Cash Flow

$250M

$250M

$220M

$218M

$200M

$200M

$150M

$150M

$114M
$100M

$100M

$50M

$50M

$0M

June 30, 2023

June 30, 2024
Year to Date

$0M

$100M

June 30, 2023

June 30, 2024
Year to Date

Note: For additional information refer to explanatory notes on slide 34© Pegasystems Inc.

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26

What Does this All Mean?

Strive to build a growing, recurring business to drive increased value

With a view towards:• Continuing our technology
leadership• Improving sales productivity• Driving ACV growth• Balancing growth & margin• Leveraging Cloud Choice
differentiation• Rule of 40 driven• Executing our target organization goto-market strategy© Pegasystems
Inc. Inc.
© Pegasystems

27

Pegasystems, Pega, and other Pega products and services mentioned herein
are trademarks of Pegasystems Inc. All other company, product, or service
names are trademarks or service marks of their respective owners.

Reported ACV

Pega Cloud and Client Cloud

Growth since June 30, 2023
Total ACV: 12%$1,305M$1,164M$594M

Pega Cloud ACV: 19%

$499M

$665M

$711M

June 30, 2023

June 30, 2024
Pega Cloud

Client Cloud ACV: 7%

Client Cloud

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 tocalculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.
© Pegasystems Inc.

2929

Reported ACV

Pega Cloud, Maintenance, and Subscription License (Term)

Growth since June 30, 2023
Total ACV: 12%$1,305M$1,164M$594M

Pega Cloud ACV: 19%

$499M

$311M

$315M

Client Cloud ACV: 7%
$350M

$400M

June 30, 2023

June 30, 2024

Pega Cloud

Maintenance

Subscription License (Term)

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 tocalculate ACV. ACV is a performance measure that we believe provides useful information to our management and investors.
© Pegasystems Inc.

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30

Pega Cloud Revenue
Trailing 12 Months

$281M
$257M
$233M

CloudTransition
Begins$51M $56M

Q4
2017

Q1
2018

$64M

Q2
2018

$73M

Q3
2018

$83M

Q4
2018

$95M

Q1
2019

$106M

Q2
2019

$149M
$134M
$119M

Q3
2019

Q4
2019

Q1
2020

$344M
$323M
$301M

$402M
$384M
$363M

$461M
$444M
$423M

$503M
$484M

$208M
$186M
$167M

Q22020Q32020Q42020Q12021

Q22021

Q32021

Q42021

Q12022

Q22022

Q32022Q42022

Q12023

Q22023

Q32023

Q42023

Q12024© Pegasystems Inc.

Q2202431
31

Backlog

Growth sinceJune 30, 2023

Total Backlog Up 11% as Reported (12% Constant Currency)$1,500M$1,406M$1,266M$1,250M$733$1,000M

6% Current

$690
$750M

$500M

$250M

$0M

$673

$576

June 30, 2023

17% Long-term

June 30, 2024
Current

Long-term© Pegasystems Inc.

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32

Pega Cloud Gross Margin

At or above a 75% gross margin, Pega Cloud generates higher gross profit dollars than Client Cloudin a timeless illustrative model

Pega Cloud Gross Margin (%)

90%

80%

80%

70%

67%

70%

75% =Gross Profit
Dollars Breakeven
Between Pega
Cloud and Client
Cloud

74%

63%
60%

53%

55%
51%

50%

2017

2018

2019

2020

2021

2022

2023

Timeless© Pegasystems Inc.

33

Operating and Free Cash Flow Reconciliation

Six Months Ended
June 30,(dollars in in thousands)

2024

Cash provided by operating activities$Investment in property and equipment$

Free cash flow

(1)

Change2023

220,243$

113,752(1,857) $(13,933)

218,386

99,81994 %119 %Supplemental information (2)Litigation settlement, net of recoveries$

32,403$—

Legal fees

2,701

2,950

Restructuring

3,852

17,521

Interest on convertible senior notes

1,884

2,250

—

—

Other
Income taxes

25,560$66,4006,627$

29,348(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates inamount and frequency and is significantly affected by the timing and size of investments in our facilities. We provide information on free cash flow to enable investors to assess ourability to generate cash without incurring additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP.
(2) The supplemental information 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.
• Litigation settlement, net of recoveries: Cost to settle litigation, net of insurance recoveries, arising from proceedings outside the ordinary course of business. See Note 15.
Commitments and Contingencies in our Quarterly Report for the three months ended June 30, 2024 for additional information.
• Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
• Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
• Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. The convertible senior notes accrue
interest at an annual rate of 0.75%, payable semi-annually in arrears on March 1 and September 1.
• Income taxes: Direct income taxes paid net of refunds received.
© Pegasystems Inc.

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