Pegasystems Net Income Drops 62% to $32.8M as Revenue Falls in Q1 2026

Pegasystems Inc. (NASDAQ: PEGA), an enterprise software company, reported net income of $32.8 million for the quarter ending March 31, 2026, down 62% from $85.4 million in the same period a year earlier. Diluted earnings per share fell to $0.18 from $0.46. Read more earnings reports.

Total revenue declined 10% to $430.0 million from $475.6 million in the first quarter of fiscal 2025. Subscription revenue rose 36% to $205.0 million from $151.1 million, while perpetual license revenue plunged 49% to $94.9 million from $187.7 million. Maintenance revenue fell 1% to $75.3 million, and professional services revenue dropped 9% to $54.8 million.

Cost of goods sold increased 4% to $106.8 million from $102.5 million, resulting in gross profit of $323.2 million compared to $373.2 million in the prior-year quarter. Operating expenses climbed 16% to $286.1 million from $246.2 million, driven in part by research and development spending that increased 10% to $82.0 million from $74.3 million.

Operating income fell 71% to $37.1 million from $127.0 million. Income tax expense dropped to $6.9 million from $40.9 million a year earlier.

The company generated $212.3 million in cash from operations during the quarter, up 4% from $204.2 million in the first quarter of fiscal 2025. Cash from investing activities swung to an inflow of $2.8 million from an inflow of $261.9 million, while cash used in financing activities totaled $154.2 million compared to $576.0 million in the prior-year period.

Total assets stood at $1.55 billion as of March 31, 2026, down from $1.63 billion at the end of December 2025. Cash and cash equivalents increased to $270.0 million from $212.4 million at the prior quarter end. Accounts receivable declined to $173.9 million from $264.7 million.

Total stockholders' equity fell to $705.9 million from $787.4 million at December 31, 2025. Retained earnings rose to $491.1 million from $463.4 million. The company had 168.8 million common shares outstanding as of March 31, 2026, compared to 170.3 million shares at the end of the prior quarter.